This article first appeared on GuruFocus .
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Total Revenue:$102.7 million, up 38.9% year over year.
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Subscription Revenue:$44.5 million, up 22.6% year over year.
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Live Streaming and Other Services Revenue:$58.2 million, up 54.8% year over year.
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Hupu Business Revenue:$9.1 million in Q2, benefiting from peak advertising season and major global sporting events.
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Cost of Revenues:$44.8 million, accounting for 43.6% of total revenues.
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Gross Profit:$57.3 million, up 23.1% year over year.
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Gross Margin:55.8%, compared with 63% in the prior-year period.
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R&D Expenses:$21.4 million, representing 20.8% of total revenues.
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Sales and Marketing Expenses:$27.9 million, representing 27.2% of total revenues.
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G&A Expenses:$12.7 million, equal to 12.4% of total revenues.
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Operating Loss:$4.8 million, a reversal from operating income of $0.3 million in the same period last year.
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Net Other Loss:$213.8 million for the quarter, driven by fair value volatility on a long-term investment in Arashi Vision, Inc.
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Net Loss from Continuing Operations:$218.5 million, compared with net income of $726.4 million in Q2 2025.
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Non-GAAP Net Loss from Continuing Operations:$2.1 million, down from non-GAAP net income of $7.2 million in the prior-year period.
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Diluted Loss per ADS from Continuing Operations:$3.43, compared with diluted EPS of $11.47 in Q2 2025.
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Non-GAAP Diluted Loss per ADS from Continuing Operations:$0.03, versus non-GAAP diluted earnings of $0.12 per ADS in the same period last year.
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Cash, Cash Equivalents, and Short-Term Investments:$276.9 million as of June 30, 2026, down from $303.6 million as of March 31, 2026.
Release Date: August 13, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Total revenues grew 38.9% year-over-year to $102.7 million, driven by strong performance in Subscription and Overseas Audio Live Streaming.
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Subscription revenue increased 22.6% year-over-year to $44.5 million, supported by AI-powered features and partnerships with smartphone makers.
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Overseas Audio Live Streaming revenue surged 54.8% year-over-year to $58.2 million, with expansion in Southeast Asia, the Middle East, Turkey, and Latin America.
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Hupu business contributed $9.1 million in Q2 revenue, benefiting from peak advertising season and major global sporting events.
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Announced a new $20 million share repurchase program, with $5.9 million already spent on buybacks as of August 12, demonstrating confidence in long-term growth.
Negative Points
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Gross margin declined to 55.8% from 63% in the prior-year period, due to a revenue mix shift toward lower-margin live streaming.
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Operating loss of $4.8 million was reported, reversing from an operating income of $0.3 million in Q2 2025, due to higher selling, marketing, and G&A expenses.
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Net loss from continuing operations was $218.5 million, driven by a $213.8 million net other loss from fair value volatility on the Arashi Vision investment.
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Non-GAAP net loss from continuing operations was $2.1 million, compared to non-GAAP net income of $7.2 million in the prior-year period.
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Cash and short-term investments decreased to $276.9 million from $303.6 million sequentially, due to operating cash outflows, loan repayments, and buyback disbursements.
Q & A Highlights
Q: What is the status of the company's newly announced $20 million share repurchase program, and why wasn't it reflected in the press release? A: CFO Eric Zhou confirmed that the Board approved the new $20 million repurchase program at the end of June, with the buyback officially commencing on July 1. As of August 12, the company had repurchased approximately 1.07 million shares, spending around $5.9 million. The program remains ongoing, and detailed disclosures will be provided in the third-quarter financial report.
Q: What progress has Xunlei made in reducing its stake in Arashi Vision Inc., and what are the plans for the proceeds? A: CFO Eric Zhou stated that Xunlei currently holds a 7.8% equity stake in Arashi Vision. The company is going through regulatory procedures to prepare for an orderly reduction of its stake, but has no specific disposal plans at this time. He also addressed the 1940 Investment Companies Act, noting that Xunlei is consulting advisors to ensure its investment securities do not exceed 45% of total assets (excluding government securities and cash), reaffirming the company's commitment to its core consumer-facing business rather than becoming an investment entity.
Q: What drove the significant year-over-year revenue growth in the second quarter of 2026? A: CFO Eric Zhou reported total revenues of $102.7 million, up 38.9% year over year. This growth was primarily driven by a 22.6% increase in Subscription revenues to $44.5 million and a 54.8% surge in live streaming and other services revenues to $58.2 million, fueled by the rapid expansion of Overseas Audio Live Streaming and improved Hupu advertising revenue during the peak sports season.
Q: Why did the company's gross margin decline from 63% to 55.8% year over year? A: CFO Eric Zhou explained that the gross margin decline was due to a structural revenue mix shift. As the lower-margin live streaming business now accounts for a larger share of total revenue, it compressed the overall gross margin, despite gross profit increasing 23.1% year over year to $57.3 million.
Q: What caused the swing to an operating loss of $4.8 million in Q2 2026? A: CFO Eric Zhou attributed the operating loss to a significant rise in selling, marketing, and general administrative expenses. Sales and marketing expenses increased to $27.9 million (27.2% of revenue) due to promotional investments in Subscription and Overseas Audio Live Streaming, while G&A expenses rose to $12.7 million, driven by provisions for ongoing legal litigations and higher employee-related costs.
Q: What was the reason behind the massive net other loss of $213.8 million in Q2 2026? A: CFO Eric Zhou explained that the dramatic swing from a net income of $721.5 million in Q2 2025 to a net other loss of $213.8 million was primarily driven by fair value volatility on the company's long-term investment in Arashi Vision, Inc., which is accounted for on a mark-to-market basis using public stock prices following its IPO in June 2025.
Q: How did the company's cash position change during the quarter? A: CFO Eric Zhou noted that cash, cash equivalents, and short-term investments totaled $276.9 million as of June 30, 2026, down from $303.6 million at the end of Q1. The decrease was driven by net operating cash outflows, bank loan repayments, disbursements related to the new share repurchase program, and deferred consideration payments related to the Hupu acquisition.
Q: What are the key strategic priorities for the company going forward? A: Chairman and CEO Jinbo Li emphasized the company's commitment to its user-centric development strategy. Key priorities include accelerating feature iteration for subscription offerings, deepening market penetration in established overseas markets, selectively pursuing new regional growth opportunities, and upholding strict cost discipline to expand profit margins across all business lines, balancing growth with profitability.
Q: How is the company addressing competition in the overseas entertainment market? A: CEO Jinbo Li stated that competition remains intense, and the company will stick to its long-term localized operational and marketing strategies instead of chasing near-term scale expansion. This approach is designed to foster sustainable business growth across all core consumer verticals, including the Overseas Audio Live Streaming business.
Q: What contributed to the strong performance of the Hupu business in Q2 2026? A: CEO Jinbo Li highlighted that Hupu contributed $9.1 million in Q2 revenue, benefiting from the peak advertising season and a slate of major global sporting events. User discussion activity reached new highs, and newly rolled out AI-powered features meaningfully boosted user engagement and deepened interactive activity, creating an additional stream of incremental revenue.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
