Welcome, ladies and gentlemen, and thank you for your patience. You've joined Luoxin's second quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. I would now like to turn the call over to your host, Investor Relations Manager, Ms. Luhan Tang.

Good morning and good evening, everyone, and thank you for joining Xunlei's Q2, 2026 earnings conference call. With me today are Eric Zhou, CFO, and Li Li, Vice President of Finance. Our IR website has our earnings press release to supplement our prepared remarks during the call. Today's agenda includes a prepared opening remark from Chairman and CEO, Mr. Jinbo Li, on Q2 operational highlights. followed by CFO Eric Zhou's presentation of financial results details of Q2 before we open up the floor to your questions in the Q&A session. Please note that this call is recorded and can be replayed on our investor relations website at iot.shunlight.com. Before we get started, I'd like to take this opportunity to remind you that the discussion today will contain certain follow-up statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such statements are based on our management's current expectations on the existing market conditions that are subject to risks and uncertainties that are difficult to predict, which may cause actual results to differ materially from those made in the following statements. Please refer to our SPC filings for more detailed descriptions of the risk factors that may affect our results should assume no obligation to update any for-loop statements except as required under applicable law. On this call, we'll be using both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to comparable GAAP measures can be found in our earnings press release. Please note that all numbers are in the U.S. dollars unless otherwise stated. Now, the following is prepared statement by Minister Jinbo Li, Chairman and CEO of Xunlei Limited. Good morning and good evening, everyone. Thank you for joining our Q2 2026 earnings call. We're pleased to report continued top-line growth this quarter, building on a solid consumer-focused growth foundation we established in Q1. These results serve as clear validation that our strategic pivot towards a consumer-centric business model is delivering tangible results. Our two primary growth drivers, subscription services and overseas audio live streaming, each posted steady year-over-year increase in revenue. Let me walk you through the performance of these core consumer-facing businesses individually. First, our subscription business remains our stable cash flow foundation and reliable growth anchor. Q2 subscription revenue reached $44.5 million, up 22.6% year-over-year. While the growth rate softened marginally on the sequential basis, this segment maintained resilient user retention and steady monetization performance. During the quarter, we continue upgrading premium user experiences by rolling out new AI-powered features, optimizing existing functionality, deepening long-term cooperation with leading domestic smartphone partners, and scaling our ecosystem's user acquisition channels as planned. Looking ahead, we will continue refining our differentiated member perks to boost user penetration and expand and divide corporation coverage, capturing incremental user acquisition and revenue growth in the second half of the year. Second, our overseas audio live streaming business once again emerged as our primary growth engine. In Q2, this segment generated $58.2 million in revenue, representing a significant 54.8% year-over-year increase. We continued deploying targeted investments in high-potential emerging markets, including Southeast Asia, the Middle East, Turkey, and further expansion into Latin America. Concurrently, we enhanced localized product iteration and operational capabilities optimizing our product matrix across one-on-one social interaction scenarios and multi-person chat rooms. Additionally, we saw notable quarterly momentum for our Hoku business, which contributed $9.1 million in Q2 revenue, benefiting from the peak advertising season and a slate of major global sporting events. User discussion activity across the platform reached new highs. Our newly rolled out AI-powered features also meaningfully boosted user engagement and different interactive activities, creating an additional stream of incremental revenue across our consumer ecosystem. As we communicated in our previous quarterly reports, competition in the overseas entertainment market remains intense. Accordingly, we will stick to our long-term localized operational and marketing strategies instead of chasing near-term scale expansion, fostering sustainable business growth across all our core consumer verticals. Beyond operational performance, to further reinforce market confidence and deliver long-term shareholder returns, we announced a new million-dollar shared repurchase program at the end of June. We believe that this initiative demonstrates our unwavering confidence in the company's solid fundamentals and long-term growth potential. It will maintain disciplined capital allocation, prioritize investment in core consumer product innovation and international market expansion, while returning excess capital to shareholders when appropriate. Looking ahead, we will stay firmly committed to our user-centric development strategy. We will further accelerate feature iteration for our subscription offerings, deepen market penetration within our established overseas markets, selectively pursue new regional growth opportunities, and uphold strict cost discipline to expand profit margins across all business lines. By balancing growth with profitability and through rigorous capital and operational management, we aim to promote balanced and sustainable corporate development. Against the backdrop of an evolving global market landscape, our targeted consumer positioning, few core business structures, advanced technological strengths, and localized operations serve as our key competitive edges. We are optimistic about delivering sustained long-term value to our users and shareholders alike. With that overview, I will now turn the call over to our CFO, Eric Zhou, who will walk you through our Q2 financial metrics in detail.

Thank you, Luhan, and thank you all for participating in today's conference call. I will now walk you through our financial results for the second quarter of 2026. For Q2 2026, total revenues came in at $102.7 million, up 38.9% year-over-year This steady top-line growth was primarily driven by rising revenues from our subscription business and our overseas audio-lab streaming business as well as improved U-boost advertising business Breaking down our revenue performance Subscription revenues reached 44.5 million, a 22.6% year-over-year increase. This performance reflected sustained user demand for a full suite of premium product offerings. Revenue from large streaming and other services totaled 58.4 million, representing a 54.8% year-over-year increase. This strong performance was driven chiefly by rapid expansion of our overseas audio live streaming operations alongside the growth in expiring revenue from our hukou sports community during the peak sports season Cost of revenues was $44.8 million during the quarter, accounting for 43.6% of total revenues By comparison, in Q2 2025, cost of revenues came to 27 million or 36.6% of total revenues The uptake in our core space largely aligned with the expansion of our live streaming revenue driven mainly by increased revenue sharing expenses for our overseas audio live streaming operations Turning to profitability, we generated $57.3 million in gross profit during the second quarter of 2026, up 23.1% year-over-year. Gross margin stood at 55.8%, compared with 63% in the prior year period. The gross profit improvement was fueled by both our subscription business and our hotel advertising revenue. The notable margin decline stems from a structural revenue mix shift. Since live streaming carries a lower gross margin than subscription and advertising billions, its larger share of total revenue mix modestly compresses our overall gross margin. On the expense front, R&D expenses were $21.4 million in K02-2026 representing 20.8% of total revenues compared with $16.6 million or 32.4% of total revenues in K02-2025 The year-over-year increase was mainly due to higher labor costs Sales and marketing expenses rose to $27.9 million during the second quarter of 2026, representing 27.2% of the revenue, compared with $20.7 million or 28% of total revenues in Q2 2025 The increase in absolute marketing spending reflects ramp-up promotional investment across our subscription and overseas audio live streaming operations as we continue to proactively prioritize acquisition and brand visibility GNA expenses came in at 12.7 million equal to 12.4% of total revenues versus 8.5 million or 11.6% of total revenues in Q2 2025 The increase was primarily driven by provision for ongoing legal litigations and higher employee related costs year over year At the operating level, we posted an operating loss of $4.8 million this quarter, a reversal from operating income of $0.3 million in the same period last year. This swing would largely due to the sequential and year-over-year rise in our selling, marketing and general administrative expenses outlined above. We posted a net other loss of $213.8 million for the quarter versus net income of $721.5 million in K02-2025 The dramatic swing was mainly driven by fair value volatility on our long-term investment in Arashia Vision Inc., which is accounted for on a mark-to-market basis using public stock prices after the company's IPO in June 2025. Unlike Q1, there were no discontinued operations to report for K02-2026 following the disposal of our Shenzhen Wangxin business last quarter Our net loss from continuing operations was $218.5 million this quarter compared with net income of $726.4 million in K02-2025 The net loss was mainly due to the material net other loss just mentioned partially offset by positive growth in our core consumer facing business On a non-GAAP basis, we posted a non-GAAP net loss from continuing operations of $2.1 million down from non-GAAP net income of $7.2 million in the prior year period On a per share basis, diluted loss per ADS from continuing operations was $3.43 for the quarter, compared with diluted EPS of $11.47 in K02-2025. Our non-GAAP diluted loss per year from continuing operations came to $0.03 with non-GAAP diluted earnings of $0.12 per year in the same period last year. Finally, on our balance sheet, as of June 30, 2026, cash, cash equivalents, and short-term investments totaled $276.9 million, down from $303.6 million as of March 31, 2026 The sequential decrease was primarily driven by less operating cash outflows, bank loan repayments, disbursements related to our newly announced share repurchase program, and deferred consideration payments related to our report acquisition. This concludes our prepared remarks. Hopefully we are now ready to open the line for questions.

Thank you very much. We will now conduct Sunlei's question and answer session. To ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Please give a moment. Just a moment for our first question, please. First question comes from the lines of Zoe Zhang, retail investor. Please go ahead. Zoe Zhang, please go ahead.

Hello. Hello, management. I would like to ask you about the return of stock at the end of June. However, there is no disclosure in this financial report. So I would like to ask if you are returning the stock? And what is the situation?

The question is, the company announced a shared purchase program at the end of June but she didn't see any shared purchase information in our press release and she does not know what's going on with the buyback program Thanks for asking. The board of directors of the company approved a new share repurchase program of $20 million at the end of June and the repurchase officially commenced on July 1st and as of August 12th We bought back approximately 1.07 million shares over 8 years and spent approximately $5.9 million and the approaches program remains ongoing and more details will be discussed in our third quarter financial report Thank you

I would like to make a comment. At the end of June, our company approved a new round of return on stock of US$2,000,000. This return was officially initiated on July 1. As of yesterday, August 12, we have already repurchased about 1.07 million shares of ADF. We spent a total of about US$5.9 million. Thank you. Just a moment for our next question. As a reminder, to ask a question, please press star 11 on your telephone keypad.

Next, we have XJ, Individual Shareholder.

管理層,你們好。 我想問一下,飲食創新已經在六月份解禁了。 那麼在上一個季度的業績會裡面, 公司說會在解禁的前後, 對於這部分的一個股票後續怎麼去處理, 做出一個公告。 Thank you.

Okay, basically, his question is surrounding our stakeholders in Inse, Gufeng, or Eurasia Vision Inc. And he'd like to know our progress in reducing our stake in this investment and what our plans for the proceeds for the future Thank you for the question, Alan. Currently, we hold more than 5% of shareholders, or exactly 7.8% of insured equity stake. and we need to follow certain regulatory rules and regulations when we begin to sell the stock and do it in an ordinary manner and make time disclosure and for the time being we are following going through certain procedures to get ready to reduce our stake in the company but at this time we have no specific plans for the share of disposal for the time being and he also asked a question regarding the 1940 Investment Company Act and according to that in the 1940 Investment Act a listed company needs to follow certain regulations to be in compliance with the requirements of the Investment Act and we will continue to monitor our holdings of our appreciated assets and we've been consulting with relevant advisors and if needed we will gradually seek to adjust our holdings so that Xunlei holds investment securities with a value not exceeding 45% of the company's total assets excluding government securities and cash items In line with the company's intention to mainly engage in the core business which is consumer-facing business, 2C business, we never intend to be an investment company. Thank you.

Let me translate it for you. Currently, Xunlei holds more than 5% of the food. So we need to follow the regulation of the regulation, and continue to reduce and disclose. Currently, we are also preparing for this process. Currently, we do not have a clear plan for the reduction. In the process of preparation, we will continue to monitor the assets of the holders and the relevant intermediary institutions. Thank you for your question.

Thank you. I see no further questions at this time. I will now turn the conference back to Eric for closing remarks. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.