Xunlei Limited

Welcome, ladies and gentlemen, and thank you for your patience. You've joined Shinlei's 2023 First Quarter Earnings Conference Call. At this time, all participants are in listen-only mode. Please be advised that today's conference has been recorded. I would now like to turn the call over to the host, Investor Relations Manager, Ms. Luan Tang. Please go ahead.

Thank you. And good morning, everyone. Thank you for joining Shinlei's 2023 First Quarter Earnings Conference Call. On the call with me today is Eric Zhou, Chief Financial Officer. Now you can find our earnings press release on our IR website, which is intended to supplement our prepared remarks during today's call. For today's agenda, I will first read a prepared opening remarks by our Chairman and CEO, Mr. Tim Worley, on the highlight of our first quarter operations. Then Mr. Eric Zhou, our CFO, will go through the details on the financial results and wrap up with our revenue guidance for the second quarter of 2023. We'd like to welcome any questions from you after the management's remarks. Today's call is recorded and you can replay the call from our investor relations website. Before we get started, I would like to take this opportunity to remind you that the discussion today will contain certain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations on their current market conditions that are subject to risks and uncertainties that are difficult to predict, which may cause actual results to differ materially from those made in the forward-looking statements. Please refer to our SEC filing for a more detailed description of the risk factors that may affect our results. Xunlei assumes no obligation to update any forward-looking statements except as required under applicable laws. On this call, we will be using both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to comparable GAAP measures can be found in our earnest press release. Please note that all numbers are in U.S. dollars unless otherwise stated. Now, the following is the prepared statement by Mr. Gimbaldi, Chairman and CEO of Chainlay Limited. Good morning, everyone, and thank you for participating in our first quarter earnings conference call. We kicked off 2023 with an all-time record revenue of $99.2 million in the first quarter, representing a year-over-year increase of 25.5%. Further, we have maintained profitable momentum for the fifth consecutive quarter, which we believe demonstrated our strong business resilience despite volatile macro environment. I want to acknowledge the invaluable contribution by all our employees whose steadfast commitment has been pivotal in achieving We're encouraged by the progress we have made in our top-line growth and all of our major businesses achieved robust growth during the first quarter as compared with the same period of last year. Despite the fierce competition in an industry, our cloud computing business leveraged its competitive edge in shared cloud technology to provide reliable, scalable, and cost-effective services to our clients. And it achieved an 8.2% year-over-year growth and generated $32.7 million in revenue in the first quarter of 2023. We're continuously conducting proactive research and development of edge computing applications to effectively compete in industry and mitigate pricing pressure on the CDM business. As you may already have known, OneThing recently launched two hardware product lines, OES and OEC, aiming to construct an autonomous and a controllable cloud computing infrastructure through technical improvement to support a broader range of edge application scenarios for both corporate clients and households. We're glad that user feedbacks are encouraging and we expect the demand will continue to grow as the industry evolves. Now turn to our subscription business. Benefiting from the demand from our loyal users, in revenue in the first quarter of 2023, representing a year-over-year increase of 15.8%. Furthermore, we are delighted to observe a growing propensity amount of subscribers to pay for the quality of services, as evidenced by the increase in the average revenue per subscriber from 34.9 RMB to 41 RMB in the first quarter of 2023 as compared with the same period last year. This is a testament of the effectiveness of our efforts to create a more engaging member community and enhance user experience. As our growth driver, live streaming and other internet value-added services generated $37.2 million in revenue in the first quarter of this year, with an increase of 58.4% year-over-year, driven by the high demand for our diverse products in our product portfolio both domestically and internationally. Our efforts to continuously refine product functions and iterate features enhance our product synergies and improve user experience. However, conducting business operations across different countries and regions is always challenging due to volatile geopolitical factors as well as varying compliance and regulatory policies. It's especially so for us, as it's one of our newly developing businesses. We're mindful of potential headwinds and even setbacks during the course of our business development. We will closely monitor the involving regulatory and operating environment, as well as changing industry training, while focusing on improving localized operational efficiency and maintaining regulatory compliance. In closing, I'd like to say that at Xunlei, we are constantly striving for leveraging our competitive edge and the business synergies that can fuel both our top and bottom lines across all of our businesses. Our consecutive growth demonstrated the validity of our endeavor and its successful results. Going forward, we will focus on exploring new growth opportunities and test innovative ideas and will continue to improve our existing products and services to drive sustainable business development. With a healthy balance sheet and solid track record of our recent performance, I'm optimistic about our business for the foreseeable future. With that, I will turn the call over to Eric. Eric will cover our financial results in detail and provide a revenue guidance for the second quarter of 2023.

Thank you, and thank you, everyone, and thank you, Dean, for joining CUNY's 2023 first quarter earnings conference call. I will now go through the features of our financial results and wrap up with our revenue balance for the second quarter of 2023. For the first quarter of 2023, total revenues were $99.2 million of 20 years of years. The increase in total revenues was mainly attributable to increased revenues generated from our large streaming, subscription and cloud computing businesses. Revenues from cloud computing were $32.7 million, representing an increase of 8.2% year-over-year. The increase in cloud computing revenues was mainly due to increased demand for cloud computing services as well as increased sales of cloud computing hardware devices. Revenues from subscriptions were $29.3 million, representing an increase of 15.8% year-on-year. The increase in subscription revenues was mainly due to higher average revenue per subscriber and more subscribers as compared with the same period last year The number of subscribers was 4.84 million as of March 31, 2023 compared with 4.61 million as of March 31, 2022 The average revenue subscriber for the first quarter of 2023 was 41 R&D, compared with 34.9 R&D in the same period of 2022. IVS revenues were mainly driven by the higher demand from our live streaming services and our enhanced monetization capability. Cost of revenues were 59.3 million dollars representing 59.8% of our total revenues, compared with 43.9 million dollars, or 55.5% of the total revenues in the same period of 2022. The increase of were $29.1 million, but 99.3% of our total revenues, compared with $26.9 million, were 34% of the total revenues in the same period of 2020. This increase in bandwidth costs was mainly due to more human-led cloud users and an increased demand for cloud computing services. There are many costs of revenues, many consecutive costs related to the revenue.

Dear participants, please stand by. We will resume shortly. Dear participants, please continue to stand by. Your conference will be resumed shortly. Thank you for your patience.