Xunlei Revenue Rises 12.9% to $101.3 Million as Profit Margin Slips
Key Facts
On November 12, Xunlei reported unaudited third-quarter 2026 revenue of $101.3 million, up 12.9% year over year, according to a company statement. The figure excludes Shenzhen Onething, classified as a discontinued operation, unless otherwise stated. Revenue came from subscriptions, live streaming and other services, with both categories growing year over year. The company said demand for subscriptions and live audio streaming in overseas markets supported revenue growth. It also noted that quarterly and annual growth rates moderated during the quarter amid intensifying competition and changing market conditions.
Subscription revenue was $44.1 million, up 8.5% from the same period a year earlier. Revenue from live streaming and other services reached $57.2 million, up 16.6% year over year. The latter category therefore exceeded subscription revenue during the quarter and posted a higher annual growth rate. Gross profit rose 1.6% to $56.5 million, a slower increase than revenue. Gross margin fell to 55.7% from 62.0% in the third quarter of 2025.
Xunlei attributed the lower margin to a larger share of lower-margin live streaming revenue in its revenue mix. This coincided with higher operating expenses in all three categories disclosed by the company. Research and development expenses were $25.6 million, compared with $18.3 million a year earlier; the company said the increase was related to higher labor costs. Sales and marketing expenses rose to $33.3 million from $24.5 million, reflecting higher marketing costs to acquire users. General and administrative expenses also increased to $12.4 million from $9.4 million, which the company attributed to employee-related costs.
Xunlei posted an operating loss of $14.8 million in the third quarter, compared with operating income of $3.3 million in the same period of 2025. Other losses, net, were $219.2 million, versus other income, net, of $547.5 million a year earlier. The company said the shift in this item was mainly due to changes in the fair value of its investment in Arashi Vision. On a non-GAAP basis, the company posted a net loss from continuing operations of $16.4 million. It had reported net income of $5.6 million on the same basis in the third quarter of 2025.
The non-GAAP diluted loss was $0.26 per American depositary share, compared with diluted earnings of $0.09 per share a year earlier. Revenue in the second quarter of 2026 had totaled $102.7 million, up 38.9% year over year, while gross margin was 55.8%. In the third quarter, annual revenue growth slowed to 12.9%, and margin was 55.7%. The comparison shows slower growth between the quarters, with margin broadly stable quarter over quarter. In June, the company had announced a share repurchase program of up to $20 million over 12 months, beginning July 1 and funded with cash.
Xunlei said it repurchased about 2.7 million American depositary shares during the third quarter for about $13.8 million, and that the previous program had reached its authorized share limit. The company announced a new repurchase program of up to $20 million, saying it would continue buybacks after exhausting the previous program's limit. Cash, cash equivalents and short-term investments totaled $265.1 million on September 30, down from $276.9 million on June 30. The company attributed the decline to operating cash outflows and repurchase payments. Cash and short-term investments had totaled about $303.6 million on March 31, according to the repurchase announcement issued in June.
Xunlei's management scheduled a call to discuss third-quarter results for November 12 at 7:00 a.m. U.S. Eastern Time, corresponding to 8:00 p.m. Beijing and Hong Kong time. The company said management would host the call to discuss quarterly results. The call is scheduled for the day the unaudited results are announced. The results cover the third quarter of 2026, with year-over-year comparisons against the same period in 2025. The scheduled call gives investors an opportunity to hear management's presentation of the results.