Trending Technology Stock: Xunlei Ltd (NASDAQ:XNET)

On Wednesday, Shares of Xunlei Ltd (NASDAQ:XNET) gained 3.34% to $ 3.72. Trading volume recorded for this company was about 273,214.00 shares as contrast to its average volume of 68,072.00 shares. The stock’s intraday range was $3.51 to $3.71. The company has the total of 368.88M outstanding shares, while its market capitalization is about $244.34M.

Xunlei Limited (XNET), a leading cloud-based acceleration technology company in China, today declared its unaudited financial results for the fourth quarter and the fiscal year ended December 31, 2016, and changes in its board of directors.

Fourth Quarter 2016 Results:

Total Revenues

Total revenues were US$39.50M, up 12.30% on a year-over-year basis and decrease 3.60% sequentially. The increase in total revenues on a year-over-year basis was mainly attributable to the growths from mobile advertising, cloud computing, and subscription.

Subscription: Revenues from subscriptions were US$21.70M, up 9.50% on a year-over-year basis and down 8.20% sequentially. The decrease in subscription revenue was mainly attributable to decline in subscribers’ number. The subscribers’ number was 4.97M as of December 31, 2016, down from 5.14M as of September 30, 2016 and down from 5.02M as of December 31, 2015. The average revenue per subscriber for the fourth quarter was RMB30.10, up from RMB25.30 as of December 31, 2015, but down from RMB30.70 as of September 30, 2016.

Online advertising (counting mobile advertising): Revenues from online advertising were US$4.60M, up 164.10% on a year-over-year basis and down 2.0% sequentially. The year over year growth was driven by mobile advertising which started monetization during the last quarter of 2015. Mobile advertising revenue raised 185.10% on a year-over-year basis.

IVAS: Revenues from IVAS (counting revenues from cloud computing) were US$13.20M, down 2.90% on a year-over-year basis and up 4.40% sequentially. Cloud computing revenues grew by 80.40% and 7.80% on a year-over-year and sequential basis, respectively. The decline in online game revenues contributed to the decrease in IVAS revenues on a year-over-year and sequential basis.

Cost of Revenues: Cost of revenues was US$20.20M, representing 51.20% of total revenues.

Bandwidth costs: Bandwidth costs were US$14.40M, representing 36.60% of total revenues, contrast with 37.90% in the previous quarter.

Gross Profit and Gross Margin: Gross profit for the fourth quarter was US$19.0M, down 3.1% sequentially. Gross margin was 48.20%, contrast with 48.0% in the previous quarter.

Operating Expenses: Total operating expenses for the fourth quarter were US$29.10M, representing 73.80% of total revenues, contrast with 74.0% in the previous quarter.

Research and Development Expenses: Research and development expenses for the fourth quarter were US$18.0M, representing 45.70% of total revenues, contrast with 43.60% in the previous quarter.

Sales and Marketing Expenses: Sales and marketing expenses for the fourth quarter was US$4.90M, representing 12.50% of total revenues, contrast with 12.30% in the previous quarter.

General and Administrative Expenses: General and administrative expenses for the fourth quarter were US$6.20M, representing 15.60% of total revenues, contrast with 18.10% in the previous quarter.

Operating Loss: Operating loss was US$10.10M, contrast with operating loss of US$10.60M in the previous quarter. The company continue to invest in a range of new technologies and services, counting cloud computing, which is still loss-making.

Net Loss and Loss Per Share: Net loss from continuing operations was US$7.0M in the fourth quarter of 2016, contrast with US$7.60M in the previous quarter. Non-GAAP net loss from continuing operations was US$4.40M in the fourth quarter of 2016, contrast with a loss of US$5.30M in the previous quarter.

Diluted loss per ADS from continuing operations in the fourth quarter of 2016 was US$0.1055. Non-GAAP diluted loss from continuing operations per ADS in the fourth quarter of 2016 was US$0.0670.

Cash Balance: As of December 31, 2016, the Company had cash, cash equivalents and short-term investments of US$381.50M, contrast with US$432.10M as of December 31, 2015. The decline in cash equivalents and short-term investments was mainly because of planned investments the Company made during the period and Company’s on-going share repurchase program.

Unaudited Financial Results for the Fiscal Year ended December 31, 2016:

Total Revenues

Total revenues were US$157.0M, up 20.70% on a year-over-year basis. The increase in cloud computing, mobile advertising and subscription revenues were the primary contributors of the increase.

Subscription: Revenues from subscriptions were US$90.20M, a boost of 9.40% on a year-over-year basis. The increase was mainly attributable to the growth in average revenue per subscriber.

Online advertising (counting mobile advertising): Revenues from online advertising were US$16.90M, a boost of 252.20% on a year-over-year basis. The increase was mainly because of the growth in mobile advertising which started monetization during the last quarter of 2015.

IVAS: Revenues from other internet value-added services were US$49.90M, up 16.70% on a year-over-year basis. The increase was mainly attributable to the growth in cloud computing.

Cost of Revenues: Cost of revenues was US$80.30M, up 33.80% on a year-over-year basis, mainly because of a boost in bandwidth costs for cloud computing.

Bandwidth costs: Bandwidth costs were US$55.10M, up 48.10% on a year-over-year basis. The growth was mainly because of a boost in bandwidth costs for cloud computing.

Gross Profit and Gross Margin: Gross profit for the year was US$75.80M, contrast with US$69.60M in 2015. Gross margin was 48.30%, contrast with 53.50% in 2015, mainly because of the continued investments in cloud computing which is still incurring losses.

Operating Expenses: Total operating expenses for the year were US$109.30M, up 33.20%.

Research and Development Expenses: Research and development expenses for the year were US$64.40M, representing 41.0% of total revenues, contrast with 29.40% in 2015. The increase was mainly because of the continued investments and growth in cloud computing.

Sales and Marketing Expenses: Sales and marketing expenses for the year was US$18.80M, representing 12.0% of total revenues, contrast with 11.60% in 2015.

General and Administrative Expenses: General and administrative expenses for the year were US$26.20M, representing 16.70% of total revenues, contrast with 22.10% in 2015.

Operating Loss/Income: Operating loss was US$33.50M, contrast with an operating loss of US$12.50M in 2015. The Company continued invest in a range of new technologies and services, counting cloud computing.

Net Loss/Income and EPS: Net loss from continuing operations was US$24.0M, contrast with a net loss of US$2.40M in 2015. Non-GAAP net loss from continuing operations was US$14.60M, contrast with an income of US$7.40M in 2015.

For the fiscal year ended December 31, 2016, diluted loss per ADS from continuing operations was US$0.3575 and non-GAAP diluted loss per ADS from continuing operations was US$0.2180.

Guidance for First Quarter 2017: For the first quarter 2017, Xunlei estimates total revenues to be between US$39.0M to US$41.0M, the midpoint of the range representing a year-over-year increase of 4.0%. This estimate represents administration’s preliminary view as of the date of this release, which is subject to change and any change could be material.

Technical Analysis:

The stock price is going up to its 52-week low with 4.52% and lower from its 52-week high with -50.60%. The stock has shown its weekly performance of -1.10% and monthly performance stands at -4.01%. The stock price is moving down from its 200 days moving average with -23.83% and downward from 50 days moving average with -3.65%.

Analyst recommendation for this stock stands at 2.00.

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