Live-Streaming and Cloud Services Propel Revenue 42.5% Higher
Xunlei Limited (NASDAQ: XNET) announced on March 12 that its total revenue for the 2025 fiscal year climbed 42.5% to $462.4 million. The performance was powered by strong demand across its core business segments, particularly in high-growth areas. Fourth-quarter revenue reached $143.3 million, a 70% increase year-over-year that exceeded the company's guidance.
The primary engine of this growth was the live-streaming and other value-added services (IVAS) division, where revenue expanded by 97.5% to $170.2 million for the full year. According to CEO Jinbo Li, this was driven by the company's expansion into the overseas audio live-streaming market. Cloud computing revenue also posted a robust 31.4% increase to $137.4 million, while the legacy subscription business grew by a more modest 15.8% to $154.8 million.
Investment Gain Masks Q4 Loss, Inflates Profit to $1.048 Billion
While Xunlei reported a GAAP net income of $1.048 billion for 2025, a dramatic increase from $0.7 million in 2024, this figure was overwhelmingly influenced by non-operational activities. The company recorded "Other Income, Net" of $1.038 billion, which it attributed to fair value changes from its long-term investment in Arashi Vision Inc. following its initial public offering in June 2025. In contrast, Xunlei's operating income from its core businesses was just $6.6 million for the entire year.
The volatility of this investment was also evident in the fourth quarter, where a paper loss of $232.6 million on the same asset drove a quarterly GAAP net loss of $228.9 million. This result stands in sharp contrast to the non-GAAP net income of $4.8 million for the quarter, which excludes such investment-related value changes. The figures highlight that while the company's balance sheet benefited from the IPO, its core profitability remains modest.
Growth Strategy Squeezes Gross Margin to 47.0%
The strategic shift toward faster-growing but less profitable segments has resulted in margin compression. Xunlei’s full-year gross profit margin declined to 47.0% in 2025 from 51.7% in the previous year. The company stated this was due to the increased revenue contribution from its overseas audio live-streaming and cloud computing businesses, which carry lower gross margins compared to its higher-margin subscription services.
This trend is also reflected in the company's cost structure. Costs of revenues increased to $242.9 million for the year, up from $155.6 million in 2024, partly due to higher bandwidth costs associated with increased cloud demand. Looking ahead, CEO Jinbo Li has positioned 2026 as a "pivotal year" where the company will focus on "internet pan-entertainment products and services," signaling a continued strategic emphasis on the very segments that are driving top-line growth at the expense of profit margins.
We finished 2025 with strong financial performance in the fourth quarter. Q4 revenue totaled $143.3 million, exceeding the high end of our guidance and representing a remarkable 70.0% increase year over year.
— Jinbo Li, Chairman and CEO of Xunlei.
