Xunlei Limited Q2 2025 Results: Strong Growth in Overseas Audio Live Streaming Revenues

Xunlei Limited reported Q2 2025 results with strong growth in overseas audio live streaming revenues, driven by its subscription and cloud computing business. The company's performance was boosted by the success of Insta360, a popular virtual reality camera brand. Xunlei's shares are trading at a discount, making it a potentially attractive investment opportunity.

Xunlei Limited (NASDAQ: XNET) reported robust second-quarter 2025 results, with a 30.6% year-over-year (YOY) increase in revenues to $104 million. The company's performance was bolstered by strong growth in overseas audio live streaming revenues, subscription services, and cloud computing. Notably, Xunlei's investment in Insta360, a leading virtual reality camera brand, significantly contributed to the company's financial turnaround.

The company's subscription services segment grew by 10.5% to $36.4 million, with a subscriber base of 6.4 million, representing a new multi-year high. Live-streaming and other services saw an 85.5% YOY increase to $37.6 million, driven by overseas audio live streaming and the recent acquisition of Hupu, China's leading sports media and data platform. Cloud computing revenues rose by 13.6% to $30 million, reflecting heightened demand from enterprise clients.

Xunlei's net income surged to $727.4 million in Q2 2025, primarily due to a $721.8 million unrealized gain from Arashi Vision (Insta360)'s June IPO. This gain, combined with a 15.4% YOY increase in gross profit margins, resulted in a significant improvement in the company's financial health.

The company's stock has shown strong momentum, trading at $7.21 as of August 21, 2025, above its 50-day, 100-day, and 200-day moving averages. The stock's weighted four-quarter relative strength rank of 95, classified as "Very Strong" by AAII, highlights its outperformance against peers and the broader market. Analyst sentiment has turned cautiously optimistic, with recent upgrades from Wall Street Zen to "Buy."

However, Xunlei's stock remains undervalued, trading at a P/E ratio of 0.59, compared to the software sector's average of 54.59 and the S&P 500's 28.64. The company's enterprise value has declined to new all-time lows, with investors now assigning a negative value of more than $1 billion to a growing, profitable business.

Despite the undervaluation, Xunlei's investment in Insta360 presents a compelling opportunity. As of the end of the second quarter, Xunlei held an approximately 7.8% stake in Arashi Vision, which has seen its share price rally, increasing the value of Xunlei's stake to approximately $1.3 billion. Even if Xunlei sells a significant portion of its Insta360 stake, the company's enterprise value could still be positive, with a near-term price target of $13.70 or more than 100% upside from current levels.

In conclusion, Xunlei Limited's strong Q2 2025 results, driven by its investment in Insta360, present a potentially attractive investment opportunity. The company's undervaluation, combined with its growing and profitable core business, makes it a compelling choice for investors seeking exposure to the digital economy.

References:
[1] https://seekingalpha.com/article/4817248-xunlei-limited-wildly-discounted-bet-on-insta360-strong-buy
[2] https://www.ainvest.com/news/xunlei-limited-xnet-high-momentum-growth-story-profitability-turnaround-2508/