Good day, ladies and gentlemen, and thank you for your patience. You’ve joined Xunlei’s Second Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. We will have a question-and-answer session after a few management remarks. I would now like to turn the call over to your host Investor Relations Manager, Ms. Megnen Gau [ph]. Thank you. Please go ahead, ma’am.

Thank you. Good morning, and good evening, and thank you all for joining us today. We welcome you to this conference call to discuss Xunlei’s second quarter of 2020 earnings. Our agenda today, Mr. Jinbo Li, our CEO, will provide brief overview of our strategies and financial performance. After that Mr. Eric Zhou, our CFO, will provide additional details on the financial results, wrapping up with our revenue guidance for the third quarter of 2020. We will be happy to take your questions after our management’s remarks. Please be limited to two questions at a time, so others can get their question in as well. Today’s conference call is being recorded and a replay of the call will be available on our IR website afterwards. Our earnings press release was distributed earlier today and is now also available on our IR website. Before we get started, please note that the discussions today will contain certain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such statements are based on management’s current expectations under current market conditions and are subject to risks and uncertainties that are difficult to predict, which may cause actual results to differ materially from those made in forward-looking statements. Please refer to our SEC filings for a more detailed description of the risk factors that may affect our results. We do not undertake any duty to update any forward-looking statements, except as required under applicable laws. During this call, we will refer to both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP to the comparable GAAP measures can be found in our earnings press release. Please note that all numbers are in U.S. dollars unless otherwise stated. And with that, let me pass to our CEO, Mr. Jinbo Li, for prepared remarks.

Good morning, and good evening, everyone. Thank you for joining us for our second quarter of 2020 earnings call. The second quarter was a quarter of a transition and progress. As a first quarter for the new management to lead the company, we have taken several initiatives and streamlined our organizational structure to prepare the company for new milestone. Our primary focus will be to fully uncover Xunlei’s value and achieve improved performance as soon as possible. Now, I’d like to give you a recap of the financial highlights of the second quarter of 2020 and share with you some of the recent developments of the company. We met our revenue guidance for the second quarter, total revenues were $44.3 million and 8.3% decrease sequentially. The reduction in total revenues was primarily due to reduce the subscription and online advertising businesses. In the first quarter of this year, we experienced a significant increase in subscription membership due to extended China holidays. In the second quarter, domestic economic and social activities gradually returned to normal, leading to decrease the user activities on our platform as the pandemic-related temporary demand faded away. Our advertising business has been under pressure for some time and we have lately restructured the business and we’re monitoring progress in the coming quarters. For the second quarter, our total net loss was $11.8 million, as compared with a net loss of $5.5 million in the first quarter of 2020. Included in the net loss for this quarter was approximately $5 million for employee severance compensation expenses, which we expect to recoup in less than a year from anticipated cost savings. In addition, we also did some one-time write-off for assets and account receivables. We streamlined our operations to make our business more efficient. At the end of second…

Thank you, Jinbo. Hello, everyone. And thank you again for joining Xunlei’s second quarter of 2020 conference call. I will now go through the details of our financial results and wrap up with our revenue guidance for the third quarter of 2020. Total revenues for the second quarter of 2020 were $44.3 million, representing a decrease of 8.3% from the previous quarter. The decrease was primarily due to reduced subscription and online advertising business. Revenues from subscriptions were $20.7 million, a decrease of 11.4% from the previous quarter. The number of subscribers was approximately 3.9 million as of June 30, 2020, decreased from about 4.6 million as of March 31, 2020. The average revenue per subscriber for the first quarter of 2020 was RMB37.5 million, up from RMB35.9 million for the previous quarter. The decrease in subscription revenues was mainly attributable to decline in subscriber base compared with that in the first quarter, which was affected by the extended Chinese New Year holidays. Revenues from online advertising were $2.7 million, representing a decrease of 30.4% from the previous quarter. The decrease in the second quarter was mainly due to lower pricing and the decreased demand for our mobile advertising as compared with the first quarter. Revenues from cloud computing and other IVAS combined were $21 million, representing a decrease of 0.9% from the previous quarter. Cost of revenues was $23.9 million, representing 54% of the total revenues, compared with $24.4 million or 50.4% of our total revenues in the previous quarter. The decrease was mainly due to decreased bandwidth cost, partially offset by increased cost associated with a write-down of our inventory for OneThing Cloud hardware products of $2.5 million based on inventory impairment assessment. Bandwidth costs in the second quarter of 2020 were $13.9 million, representing 31.4% of our…

Thank you. [Operator Instructions] First question is from the line of Austin Rose of GAO Enterprise [ph]. Please go ahead.

[Foreign Language]

Okay. That’s fine. Basically he asked in our adjustment, we said that, in the third quarter, we expect StellarCloud revenue would increase. But, overall, the revenue from the -- for the whole company were declined, so he is asking why this is so? Basically we -- the StellarCloud we expect continued growth in bandwidth usage sold and so we expect continued growth in the cloud revenue, but it is -- we expect it will be partially offset by some weakness in our subscription revenue, because the third quarter traditionally is weak and seasonally weak quarter for this business. And basically, he -- the second question he asked is, when shall we expect the whole company to become profitable in the future? And we usually do not provide any guidance on the bottomline. But based on our initiatives we took in the last several months, we strongly feel we would see improved the bottomline towards the end of this year. Thank you, sir.

[Foreign Language]

Thank you. Next question is from the line of Jason Wu of Shenzhen Yield Investments [ph]. Please go ahead.

[Foreign Language]

[Foreign Language]

Okay. We have two questions, the first one is, what your business plan to your products including [Technical Difficulty] licensing? For the company our core business our subscription business and cloud computing business, and we will continue to invest more resources in this two sectors. And while the live streaming and advertising business are now at core as of the subscription business and cloud computing business. So we are -- our focus will be to maintain the revenues and reduce the cost. So as the cloud computing is one of our growth drivers. We believe the implications of strategy will also at least potential edge computing, which I think we have areas of expertise and experience in several large clients. So in the following state we will pursue the economy of scale in our cloud computing business and pay more attention to improving the profitability. So for the second question, the second question is about the capital market and we assume you may have any significance investment financing or M&A plans in the future. For the time being we have no such plans. However, we will continue to explore our options in the capital markets to speed up our corporate development. Thank you for your question. So the next question, please.

Yes. Next question is from the line of Janet Zhang of China Evergreen Asset Management. Please go ahead.

Yeah. Thank you. [Foreign Language] We noticed that the company is under repurchase program and ESOP program in second quarter in 2020. Could you please talk about the consideration of these two clients? Thank you.

In the second quarter, the Board of Directors of the company approved a share repurchase program to repurchase up to $20 million of company stock within the next 12 months. We evaluate our expect cash flows and capital expenditure plan for the coming quarters and we anticipate sufficient liquidity to carry out the repurchase plan. I think this share repurchase plan then would achieve our management’s confidence in the company. And also in the second quarter, the Board of Directors of the company approved a new an ESOP plan to motivate employees and a management for better performance. We think that the new ESOP plan will further align the interests of the employees with those of our shareholders. And we hope that the new ESOP plan will also help to retain experienced management team and the key employees for the long-term development of the company. The new ESOP plan covers management team, key employees in the business segments and some high potential tenants. Thank you.

Thank you. Next question is from the line of Jim Yao of China States Capital Investment [ph]. Your line is open. Please go ahead.

[Foreign Language]

[Foreign Language]

You start translate this.

Okay. I will start for translate. The question is about Xunlei’s future strategy, what measures that those organization and business level you have taken to carry out your strategy? So the goal of the new management is to uncover Xunlei’s value and for the company to become profitable as soon as possible. To achieve this, we will concentrate on and investing our core 2C and 2B businesses. Meanwhile, based on the current product metrics, we will explore opportunities in new 2C products to enhance user experience and generate synergies in our product lines. In the second quarter, we took several initiatives to strengthen organizational capabilities and improve operating efficiency. The current market conditions bring us those opportunities and challenges. So we need entrepreneurship and strong cushion to carry out our strategies. To achieve this, we implemented a corporate downsizing and Board of Directors approved a new employee stock option plan to better align the interests of our employees we build up our shareholders. So in addition, we enhanced operating efficiency, paid more attention to input and output, and practice the prudent financial management. So as a result, we improved the cash flows in the second quarter, even though we incurred a significant amount of one-time expenses, we think we can help us with the cost savings in the coming quarters. Thank you for your question.

Thank you. [Operator Instructions] No question at the moment. Please continue.

Okay. Now we conclude today’s conference call. Please feel free to contact us if you have any questions. See you next time. Bye.

Thank you. Ladies and gentlemen, that concludes our conference for today. Thank you for participating.