--- title: "Xunlei’s Earnings Call: Growth Surges, Losses Cloud View" type: "News" locale: "en" url: "https://longbridge.com/en/news/288347542.md" description: "Xunlei reported Q1 2026 revenue of $98.6 million, up 54.1% YoY, driven by consumer services and overseas live streaming. Operating income turned positive to $4.3 million, but a $195.1 million non-cash fair value loss on investments resulted in a net loss of $192.4 million. The company deconsolidated its cloud business to focus on To-C growth, though gross margins compressed due to lower-margin live streaming revenues." datetime: "2026-06-02T00:39:39.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/288347542.md) - [en](https://longbridge.com/en/news/288347542.md) - [zh-HK](https://longbridge.com/zh-HK/news/288347542.md) --- # Xunlei’s Earnings Call: Growth Surges, Losses Cloud View Xunlei Ltd ((XNET)) has held its Q1 earnings call. Read on for the main highlights of the call. ### Claim 55% Off TipRanks - Unlock trusted, data-backed investing tools with TipRanks Premium, from analyst ratings and forecasts to breaking news and portfolio analysis. - Discover high-conviction stock picks and new investing opportunities with the TipRanks Smart Investor Newsletter Xunlei Ltd’s latest earnings call struck a mixed tone as strong operational momentum clashed with sizable non-operating losses. Management highlighted a 54.1% jump in revenue and a swing to operating profit, yet a large fair value loss on investments produced a deep net loss and underscored ongoing legal and regulatory overhangs. ## Surging Top-Line Driven by Consumer Focus Xunlei reported Q1 2026 revenue of $98.6 million, up 54.1% year over year, powered by consumer-oriented services. Executives stressed that growth was broad-based across core To C offerings, with both subscription and live-streaming businesses contributing meaningfully. ## Subscription Business Delivers Solid, High-Quality Growth Subscription revenue reached $45.0 million, a 26.2% increase from a year earlier, supported by record premium user additions. Management credited expanded distribution through device makers and platform partners, which helped deepen monetization of Xunlei’s existing user base. ## Overseas Live Streaming Becomes Primary Growth Engine Live streaming and other services generated $53.6 million, soaring 89.3% year over year, driven mainly by overseas audio live streaming. The company pointed to strong traction in Southeast Asia and the Middle East along with higher user engagement and improved monetization metrics. ## Gross Profit Rises Despite Margin Pressure Gross profit climbed 45.1% to $57.7 million, reflecting the robust top-line performance. However, management acknowledged that the mix shift toward lower-margin live streaming is weighing on profitability metrics. ## Operating Profitability Turns Positive After Restructuring Xunlei posted operating income of $4.3 million in Q1 2026 versus a $1.0 million operating loss a year ago, signaling an operational turnaround. Management attributed the improvement to restructuring moves and a sharper focus on scalable To C businesses. ## Non-GAAP Earnings Show Underlying Profit Improvement Non-GAAP net income from continuing operations rose to $4.1 million from $0.9 million, with non-GAAP diluted EPS improving to $0.07 from $0.02. These adjusted figures exclude large investment-related swings and were highlighted as a better indicator of core performance. ## Balance Sheet Strengthened by Higher Cash Reserves Cash, cash equivalents and short-term investments increased to $303.6 million as of March 31, 2026, up from $283.5 million at year-end 2025. The rise was fueled by positive operating cash flows and proceeds from disposing of a 50% stake in Shenzhen Onething. ## Strategic Refocus on Consumer and Overseas Markets The company completed a corporate restructuring that deconsolidated its cloud computing business and divested Shenzhen Onething. Management said this has clarified strategy, allowing Xunlei to concentrate resources on higher-potential consumer services and international expansion. ## Investment Losses Drive Large Reported Net Loss Despite operating gains, Xunlei recorded a net other loss of $195.1 million in Q1 2026, mainly from fair value changes in its long-term stake in Arashi Vision after that company’s IPO. This non-operating hit led to a net loss from continuing operations of $192.4 million for the quarter. ## Per-Share Results Hit by Non-Operating Volatility The large investment-related loss translated into a diluted loss per ADS from continuing operations of $3.06, versus essentially breakeven a year earlier. Management repeatedly emphasized that this swing is non-cash and does not reflect the trajectory of underlying operations. ## Gross Margin Compresses as Live Streaming Scales Gross margin slipped to 58.5% from 61.9% a year ago, largely due to a growing contribution from lower-margin live streaming. While management views the live business as a key growth pillar, they acknowledged that its economics differ from the higher-margin subscription segment. ## Cost of Revenues Climbs with Revenue Sharing Cost of revenues rose to $40.4 million, or 41.0% of revenue, from $24.1 million, or 37.8%, in Q1 2025. The increase was attributed mainly to higher revenue sharing expenses tied to overseas audio live streaming platforms and partners. ## Operating Expenses Rise but Become More Efficient Research and development spending increased to $20.2 million, while sales and marketing reached $22.4 million, reflecting investments in talent and user acquisition. As a share of revenue, however, both categories became more efficient, indicating better operating leverage as the business scales. ## Regulatory and Investment-Classification Risks Under Watch Management discussed potential risks under investment-company rules, noting that gains on holdings like Arashi could push asset ratios toward regulatory thresholds. The company is monitoring this closely and may trim appreciated securities to keep its profile centered on operating businesses. ## Legal Overhang from Hupu Litigation Xunlei also flagged ongoing litigation involving Hupu over alleged unauthorized use of NBA-related content, with claimed damages in the multi-million-dollar range. The company has booked allowances but stressed that the case remains unresolved, representing a continuing legal and operational risk. ## Non-Cash Investment Swings Obscure Core Performance Management cautioned that fair value fluctuations in strategic equity investments, especially Arashi Vision, introduce significant non-cash volatility into reported results. They encouraged investors to look at operating income and non-GAAP earnings to better gauge the underlying business trend. ## Guidance: Focused To C Expansion with Moderating Growth Looking ahead, Xunlei plans to double down on premium subscriptions and overseas audio live streaming, backed by ongoing R&D and marketing to deepen user engagement. Executives expect growth to remain healthy but potentially slower than the current 54.1% pace, while they use strong liquidity and active portfolio management to balance expansion with regulatory considerations. Xunlei’s quarter showcased a business gaining operational strength even as reported earnings are buffeted by market-driven investment marks and legal uncertainties. For investors, the call framed a company leaning into consumer and overseas growth, but whose headline profit figures may remain noisy until regulatory and litigation risks clear and equity valuations stabilize. ### Related Stocks - [XNET.US](https://longbridge.com/en/quote/XNET.US.md) - [688775.CN](https://longbridge.com/en/quote/688775.CN.md) ## Related News & Research - [eBay continues to bet on live shopping after record quarter](https://longbridge.com/en/news/295119937.md) - [Chinese Politburo Readout Stirs More Questions Than Answers](https://longbridge.com/en/news/294902486.md) - [Trupanion Q2 2026 earnings: Subscription growth lifts operating profit](https://longbridge.com/en/news/295017424.md) - [Genius Sports partners with Polymarket US on official data, live sports streaming rights](https://longbridge.com/en/news/294820403.md) - [Appian Q2 revenue rises 19% on cloud subscriptions growth](https://longbridge.com/en/news/295096642.md)