Why Did Xunlei Stock Plunge 8% After Q2 Earnings?

Xunlei Ltd XNET reported second-quarter FY21 revenue growth of 24.5% year-on-year to $55.2 million. Revenue improved 3.6% Q/Q.
Segments: Cloud computing and other internet value-added services revenues increased 5.8% Q/Q to $28.9 million; Subscription revenues rose 3% Q/Q to $22.7 million; Online advertising revenues decreased 8.7% Q/Q to $3.5 million.
The gross margin expanded 650 bps Y/Y to 52.5%. The margin declined 120 bps Q/Q due to decreased revenues of the higher-margin online advertising. At the same time, the costs rose 9.4% Y/Y due to increased revenue-sharing prices of live streaming business and bandwidth costs.
It posted a positive non-GAAP operating margin of 0.2% and a Non-GAAP EPS of $0.00.
Xunlei held $245 million in cash and equivalents.
Xunlei met its revenue guidance and delivered total revenues of $55.2 million for Q2 2021, with growth primarily in its live streaming and subscription businesses.
Xunlei entered the last phase of completing its headquarters and research center under construction.
It is forging cooperation with a leading domestic university to develop critical technologies for extensive data asset management based on decentralized networking technology.
Price Action: XNET shares closed lower by 8.37% at $3.72 on Thursday.

Earnings Calendar