Xunlei's November Earnings Showed Broad Strength, and Margin Trade-Offs

Xunlei Limited (NASDAQ:XNET) is one of the best-performing small-cap tech stocks in the past three years.

On November 13, the company reported third-quarter results. Total revenue rose 57.7% year over year to $126.4 million, led by growth across all major lines: subscriptions ($40.7 million, +22%), live-streaming and other services ($49.1 million, +127%), and cloud computing ($36.6 million, +45%). Management said the surge reflected more subscribers, higher ARPU from a greater mix of premium users, rapid expansion of overseas audio live-streaming, stronger advertising, and increased demand from key cloud customers. Gross profit climbed 50% to $60.5 million, though gross margin eased to 47.9% given lower margins in cloud and a heavier mix from live-streaming.

Operating income reached $2.7 million (vs. a small loss a year ago). GAAP net income jumped to $550.1 million, primarily due to large unrealized gains tied to the company’s investment in Arashi Vision Inc.; on a non-GAAP basis, net income was $5.3 million with non-GAAP diluted EPS of $0.09. The company guided for Q4 revenue to be $131–$139 million (midpoint implies ~6.8% sequential growth). Management emphasized continued operational discipline while investing in strategic areas.

Founded in 2003, Xunlei Limited (NASDAQ:XNET) is a China-based technology company focused on distributed cloud services. Its portfolio spans cloud acceleration, shared cloud computing, and digital entertainment offerings designed to deliver faster, more efficient internet experiences.

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Disclosure: None.