SHENZHEN, China - Xunlei Limited (NASDAQ:XNET), a prominent cloud services provider in China, has initiated a new share repurchase program, authorizing up to $20 million of its American Depositary Shares (ADSs) or common shares over the forthcoming 12 months. This move follows a similar program launched in June 2023, under which the company repurchased $4.7 million of its shares by March 31, 2024.
The repurchase program is set to be funded from Xunlei's substantial cash reserves, which were reported to be around $272.5 million in cash, cash equivalents, and short-term investments as of the end of March 2024. The company's board of directors will maintain oversight of the program, with the flexibility to adjust its size and terms if deemed necessary.
Repurchases may be made on the open market at prevailing market prices, through algorithmic trading, privately negotiated transactions, block trades, or other legally permissible methods, depending on market conditions and in accordance with applicable regulatory requirements.
Jinbo Li, Xunlei's chairman and chief executive officer, expressed confidence in the company's business operations and a commitment to future business development. The board considers the share repurchase program to align with best practices and the company's interests.
Founded in 2003, Xunlei has established itself as a leading technology firm offering a variety of services including cloud acceleration, shared cloud computing, and digital entertainment, aiming to create an efficient, smart, and secure internet experience.
The company has cautioned that statements regarding its future business plans and operations are forward-looking and subject to risks and uncertainties. These could affect the company's ability to innovate, meet technological changes, manage user demands, convert users to premium services, and handle copyright claims, as well as react to internet content scrutiny by the Chinese government and maintain effective competition.
This article is based on a press release statement, and it reflects the company's current plans and expectations, which may change.
In other recent news, Xunlei reported a revenue of $80.4 million in the first quarter of 2024, a 4.2% growth from the prior quarter, despite a 19% year-over-year decline. This decline was attributed to the downsizing of their domestic audio live streaming business since June 2023. However, subscription revenue saw a rise to $33.1 million, driven by an increase in subscribers and conversion rates. The company also reported a slight decrease in the cloud computing segment's revenue.
In addition, Xunlei has a robust cash position, with $272.5 million in cash and short-term investments, and has utilized $4.7 million of its $20 million share buyback program. The company's plans for the latter half of 2024 include a shift towards decentralized and AI-driven technologies.
Xunlei also expects the downsizing of the domestic audio live streaming business to minimally impact future financial results and is focusing on expanding operations in international markets. The company estimates its Q2 2024 revenues to be between $79 million and $84 million. These are among the recent developments for Xunlei.
InvestingPro Insights
In light of Xunlei Limited's (NASDAQ:XNET) announcement of a new share repurchase program, investors may find the following metrics and InvestingPro Tips particularly illuminating. The company's market capitalization stands at $117.12 million, with a Price/Earnings (P/E) ratio of 7.15, reflecting a potentially undervalued stock compared to industry peers.
Adjusting for the last twelve months as of Q1 2024, the P/E ratio slightly decreases to 6.7. Moreover, the Price/Book ratio during the same period is notably low at 0.36, which could indicate that the company's stock is trading below its net asset value.
Among the InvestingPro Tips, it's worth noting that Xunlei holds more cash than debt on its balance sheet, which is a strong indicator of financial stability and supports the feasibility of their share repurchase program. Moreover, the company has been profitable over the last twelve months and has seen a robust return over the last three months, with a 23.13% price total return. These factors, combined with a high shareholder yield and the fact that liquid assets exceed short-term obligations, paint a picture of a financially sound company with a shareholder-friendly approach.
While Xunlei does not pay a dividend, the strength of its balance sheet and share performance may offer other forms of shareholder value. For investors interested in a deeper analysis, there are 9 additional InvestingPro Tips available at: https://www.investing.com/pro/XNET. To access these valuable insights, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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