Xunlei Revenue Up from Year Ago, but Dips from Fourth Quarter; Stock Down 10% Intraday
The Chinese cloud computing firm reported its revenue doubled from last year, but a decline in revenue from the fourth quarter sent Xunlei's stock down 10 percent in early trading on Tuesday.
Xunlei Ltd. (Nasdaq: XNET) reported its revenue in the first quarter more than doubled year-over-year, but the company's shares fell in early trading today as it showed signs of slowing from the previous three months.
The Shenzhen-based company said revenue in the first quarter was $78.8 million, up 118 percent from the same period last year. Net income was $8 million, or 12 cents per ADS, in contrast to a loss of $6.7 million, or 10 cents per share, for the same period last year.
The cloud-based acceleration technology company attributed the growth to increased cloud computing, livestreaming, and mobile advertising businesses. In particular, cloud computing revenue of Xunlei grew nearly 400 percent year-over-year.
However, compared with the last three months of 2017, first quarter revenue showed a 5 percent decline from $82.4 million, which negatively resonated with U.S. stock markets. Shares of Xunlei dropped 10 percent intraday to $12 per American depositary share after the quarterly financials were released.
The company attributed the slight sequential revenue decrease to cooperation in the fourth quarter with electronics and software company, Xiaomi Inc. That partnership resulted in an additional $5.8 million service income that ended in December. Xunlei said if it wasn't for the partnership, the revenue in the first quarter of 2018 would have increased 3 percent from the fourth quarter.
The company also mentioned the negative impact of the Chinese holiday season on revenue in the first quarter.
"We achieved solid performance in the first quarter despite the seasonality impact as a result of the Chinese New Year holidays," chief executive officer of Xunlei, Lei Chen, said in a statement.
In September, the company launched a blockchain-based smart hardware device to serve as a personal cloud, tapping into China's market of more than 400 million personal cloud users. In an earnings conference Tuesday, Chen said the device, OneThing Cloud, "provides better privacy, security, and user experience than traditional personal cloud service."
Additionally, earlier this year, the company launched ThunderChain, a blockchain platform that it claimed could simultaneously conduct over 1 million transactions per second.
"We are very excited about the prospects of building a Xunlei blockchain ecosystem," Chen said.
About the company's ongoing innovation and expansion projects, Chen said: "Going forward, we will continue to invest in shared computing technology and expand our service portfolio. We will expand into overseas markets to seek new growth opportunities."
For the second three months of this year, Xunlei said it expected revenue between $56 million and $62, representing a 53 percent increase from the first quarter at the midpoint range.
"I look forward to reporting to you our progress in the coming days," Chen said.
Shares of Xunlei dropped 10 percent in early trading after the company reported its quarterly results Tuesday.
By afternoon, stock was at $12.41, down 7 percent.
(Source: Thomson Reuters Eikon)