Mr. Jinbo Li, Chairman and Chief Executive Officer of Xunlei, stated that, “We had a good start to the year delivering Q1 revenue in line with our expectations and quarterly profitability, driven by a higher gross margin and an increased gross profit. In particular, our subscription revenue grew by 12.9% year-over-year as a result of a larger premium subscriber base and our continuing efforts on user acquisition. I am deeply grateful to our team for their unwavering efforts to manage and grow our existing businesses while exploring growth opportunities.” “During 2024, we will accelerate our efforts to transform our business. Among our initiatives, we intend to proactively embrace decentralized and AI-driven technologies and harness their capabilities to strengthen our operations, enrich user experience and gain a competitive edge as large language models (LLMs) are emerging as a revolutionary technology that will profoundly change our lives. Although we expect it to be an uphill task, we have strong confidence that we can make progress given Xunlei’s rich heritage of innovation and entrepreneurial spirit. In addition, we will consider all options to make our Company more nimble and focused to pursue growth opportunities,” concluded Mr. Li.
Costs of revenues were US$37.1 million, representing 46.2% of our total revenues, compared with US$59.3 million, or 59.8% of the total revenues, in the same period of 2023. The decrease in costs of revenues was mainly attributable to the decreased revenue-sharing costs for our live streaming business, which was consistent with the decrease in live streaming revenues. Bandwidth costs, as included in costs of revenues, were US$27.1 million, representing 33.8% of our total revenues, compared with US$29.1 million, or 29.3% of the total revenues, in the same period of 2023. The decrease was primarily due to the decreased bandwidth usage for the development of innovative products and the decrease in revenues of cloud computing service during the quarter. The remaining costs of revenues mainly consisted of costs related to the revenue-sharing costs for our live streaming business, payment handling charges, cost of inventories sold and depreciation of servers and other equipment.
Gross profit for the first quarter of 2024 was US$42.8 million, representing an increase of 8.2% year-over-year. Gross profit margin was 53.3% in the first quarter, compared with 39.9% in the same period of 2023. The increase in gross profit was mainly driven by the increase in gross profit generated from our subscription business. The increase in gross profit margin was mainly attributable to the increased portion of subscription revenues to total revenues, which has a higher gross profit margin as well as the decreased portion of live streaming revenues to total revenues, which has a relatively lower gross profit margin.
Research and development expenses for the first quarter were US$17.6 million, representing 22.0% of our total revenues, compared with US$18.0 million, or 18.2% of our total revenues, in the same period of 2023. The decrease was primarily due to the decrease in employee compensation incurred during the quarter. Sales and marketing expenses for the first quarter were US$10.1 million, representing 12.5% of our total revenues, compared with US$9.3 million, or 9.4% of our total revenues, in the same period of 2023. The increase was primarily due to more marketing expenses incurred during the quarter for our subscription and overseas live streaming businesses as part of our ongoing efforts on user acquisition. General and administrative expenses for the first quarter were US$11.1 million, representing 13.9% of our total revenues, compared with US$11.7 million, or 11.8% of our total revenues, in the same period of 2023. The decrease was primarily due to the decreased share-based compensation expenses, partially offset by the increase in labor costs during the quarter.
Operating income was US$4.0 million, compared with an operating income of US$0.7 million in the same period of 2023. The increase in operating income was primarily attributable to the increase in gross profit from our subscription business during the quarter. Other income, net was US$0.3 million, compared with other income, net of US$1.4 million in the same period of 2023. The decrease was primarily due to a one-time write-off for one of our long-term investments and a decrease in subsidy income we received during the quarter. Net income was US$3.6 million, compared with US$1.2 million in the same period of 2023.
