Welcome, ladies and gentlemen, and thank you for your patience. You've joined Xunlei's 2022 First Quarter Earnings Conference Call. At this time, all participants are in listen-only mode. Please be advised that today's conference is being recorded. I would now like to turn the call over to the host, Investor Relations Manager, Miss Luhan Tang.
Thank you, and good morning, everyone, and thank you for joining Xunlei's 2022 First Quarter Earnings Conference Call. On the call with me today are Eric Zhou, Chief Financial Officer, and Li Li, Senior Vice President of Finance. Now, you can find our earnings press release on our IR website, which is intended to supplement our prepared remarks during today's call. For today's agenda, I will read prepared opening remarks by our Chairman and CEO, Mr. Jinbo Li, on the highlight of our first quarter operations. Then Mr. Eric Zhou, our CFO, will go through the details of financial results and then wrap up with our guidance for the second quarter of 2022. We'd like to welcome any questions from you after the management's remarks. Today's call is recorded, and you can replay the call from our Investor Relations website.
Before we get started, I would like to take this opportunity to remind you that the discussion 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 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 forward-looking statements. Please refer to our SEC filings for a more detailed description of the risk factors that may affect our results. Xunlei assume no obligations to update any forward-looking statements, except as required under applicable law. On this call, we will be using both GAAP and non-GAAP financial measures. A reconciliation of non-GAAP measures to comparable GAAP measures can be found in our earnings press release.
Please note that all numbers are in U.S. dollars, unless otherwise stated. Now, the following is the prepared statement by Mr. Jinbo Li, Chairman and CEO of Xunlei Limited. Good day, everyone, and thanks for your participation in our first quarter earnings conference call. We're thrilled to see our operating and financial results have kept the momentum we saw in the previous quarter. Even we had to operate our business when the city was temporarily locked down in mid-March due to the Omicron outbreak in Shenzhen, where our headquarters is located. We were able to cope with the challenges and continued to serve our customers without interruption. In the first quarter, our total revenues reached $79 million, an increase of 11.1% compared to that of the previous quarter. This is also the sixth quarter in which we reached consecutive quarterly revenue growth.
Further, we achieved a net income of $5.4 million in the first quarter, compared with a net loss of $0.5 million in the fourth quarter of 2021. We had a good start for 2022, and I'm grateful to our diligent employees and the management for their dedication and successfully controlling costs and implementing our strategy of focusing on our competitive strengths. Our major line of products and businesses achieved solid growth during the first quarter. Cloud computing continued to be competitive in the market, where we strive to provide reliable, scalable, and cost-effective services to our clients. It achieved a 7% sequential growth and it generated $30.2 million in revenue in the first quarter of 2022. It is especially encouraging that the growth was built upon the momentum we achieved during the previous quarters.
We also made progress on our subscription business, which realized $25.3 million in revenue, an increase of 7% from the previous quarter. In general, the number of our subscribers has been growing since we launched the Cloud Drive function in summer 2020. The total number of subscribers grew to 4.61 million in the first quarter of 2022, from 4.39 million in the previous quarter. We're seeing stable member activities and looking forward to building a more engaging member community to retain and increase our user base. In the first quarter, our live streaming and other internet value-added services have made a significant improvement too, which generated $23.5 million in revenue, an increase of 22.1% from the last quarter.
In particular, our live streaming business realized an impressive 32.9% sequential increase compared to the previous quarter, driven by increased demand and market expansion. However, our internet advertising was especially hit by strict regulatory policies affecting the internet advertising, internet services, and gaming sectors. We expect our advertising business will continue to face headwinds in the coming quarters. We will closely monitor regulatory policies and industry trend and adopt business strategies to turn this business around if possible. Finally, we recently launched our digital collectibles product line. So far, it is an insignificant part of our product portfolio. We're largely relying on our existing resources to explore this new and exciting industry development, and we will strictly comply with relevant laws and government regulations. We understand it is an emerging business with an untested business model and an evolving regulatory environment, and we also face tremendous competition.
In closing, I'd like to say that at Xunlei, we're constantly exploring new and innovative products and services. Our strong performance in the first quarter of 2022 further supports our confidence about the sustainability and promising outlook of our business. With a strong balance sheet, stable cash flows, and improving business, we believe our revenue growth and near-term trajectory will remain optimistic. With that, I will turn this call over to Mr. Eric Zhou, our Chief Financial Officer. Eric will cover the financial results in detail and share our outlook.
Thank you, Luhan. Hello, everyone, and thank you again for joining Xunlei's 2022 First Quarter Earnings Conference Call. I will now go through the details of our financial results and wrap up with our revenue guidance for the second quarter of 2022. For the first quarter of 2022, total revenues were $79 million, representing an increase of 11.1% from the previous quarter. The increase in total revenues was mainly attributable to increased revenues from our live streaming, cloud computing, and subscription business. Revenues from cloud computing were $30.2 million, representing a sequential increase of 7% as compared with $28.2 million in the previous quarter. The increase was mainly driven by increased demand for our cloud computing products. Revenues from subscription were $25.3 million, representing an increase of 7% from the previous quarter.
The number of subscribers was 4.61 million as of March 31, 2022, compared with 4.39 million as of December 31, 2021. The average revenue per subscriber for the first quarter was RMB 34.9, compared with RMB 34.3 for the previous quarter. Revenues from live streaming and other IVAS were $23.5 million, representing an increase of 22.1% as compared with $19.2 million in the previous quarter. The increase of live streaming and other IVAS revenues was mainly attributable to increased demand for our live streaming services, partially offset by reduced advertising revenue. Costs of revenues were $43.9 million, representing 55.5% of our total revenues, compared with $37.6 million, or 52.8% of the total revenues in the previous quarter.
The increased cost of revenues were mainly attributable to increased sales of our cloud computing and other IVAS services. Bandwidth costs as included in costs of revenues were $26.9 million, representing 34% of our total revenues, compared with $22.8 million or 32.1% of the total revenues in the previous quarter. The increased bandwidth costs were mainly due to increased sales of cloud computing products as well as additional bandwidth usage for the Cloud Drive feature, which has been added to our subscription product since summer 2020. The remaining costs of revenues mainly consisted of costs related to the revenue sharing costs for our live streaming business and depreciation of servers and other equipment. Gross profit for the first quarter was $34.9 million, representing an increase of 4.9% from the previous quarter.
Gross profit margin was 44.1% in the first quarter, compared with 46.7% in the previous quarter. The increase in gross profit was mainly due to increased live streaming, cloud computing, and subscription revenues. The decrease in gross profit margin was mainly due to increased portion of live streaming revenues to total revenues, which has a lower gross profit margin. Research and development expenses for the first quarter were $16.3 million, representing 20.6% of our total revenues, compared with $16.6 million or 23.3% of our total revenues in the previous quarter.
Sales and marketing expenses for the first quarter were $5.3 million, representing 6.8% of our total revenues, compared with $6.6 million or 9.3% of our total revenues in the previous quarter. The decrease was primarily due to decreased marketing and promotion activities carried out for our major products during the quarter. General and administrative expenses for the first quarter were $9.6 million, representing 12.2% of our total revenues, compared with $11.1 million or 15.6% of our total revenues in the previous quarter. The decrease was primarily due to the decreased legal and consulting expenses. Operating income was $3.9 million, compared with an operating loss of $1.7 million in the previous quarter.
The increase in operating income was primarily due to increased gross profit and decreased operating expenses as discussed above. Other income was $1.2 million, compared with other income of $1 million in the previous quarter. Net income was $5.4 million, compared with a net loss of half a million dollars in the previous quarter. Non-GAAP net income was $7.2 million in the first quarter of 2022, compared with a net income of $1.7 million in the previous quarter. The increased net income and a non-GAAP net income were primarily due to the improved gross profit and a decreased operating expenses, as discussed above.
Diluted earnings per ADS in the first quarter of 2022 was approximately $0.08, as compared with a diluted loss per ADS of $0.01 in the fourth quarter of 2021. As of March 31, 2022, the company had cash equivalents and short-term investments of approximately $269.9 million, compared with $239 million as of December 31, 2021. The increase of cash and cash equivalents was mainly due to increased bank borrowings to support the construction of our new headquarters and research and development building and net cash generated from operations. Turning to our revenue guidance. For the second quarter of 2022, Xunlei estimates total revenues to be between $77 million and $82 million, and the midpoint of the range represents a quarter-over-quarter increase of approximately 0.6%.
These estimates represents management's preliminary view as of the date of this release, which is subject to change, and any change could be material. Now we conclude prepared remarks for the conference call. Operator, we are ready to take questions.
Thank you. Dear participants, we will now begin the question-and-answer session. As a reminder, if you wish to ask a question, please press star and one on your telephone keypad and wait for a name to be announced. The first question comes from the line of Wendy Kang from Industrial Investor. Please ask your question.
你好，管理层。恭喜你们呈现了一份出色的季报。我这里有两个问题。第一个问题是，迅雷除了已有的传统业务以外，请问在未来还有哪一些想要重点发展的领域？谢谢。
His question is, and besides, it's Xunlei's traditional business, you know, what other business Xunlei may develop in the future? I answer in English first, and then Luhan will translate into Chinese. Besides cloud computing and subscription business, we strive to seek additional growth opportunities by exploring new and innovative products and services in order to speed up corporate development. Xunlei has its unique competitive edges and years of operating experience, and we hope to incubate and invest in exciting products and services that will meet the customer's need and it will ensure long-term and sustainable development of the company. For example, we have lately added cloud drive function to our membership subscription product. We expanded live streaming service to new markets and launched digital collectibles products.
All these products and services are the extension of our value chain or center around our core competitive strengths. Thank you for asking.
谢谢你的问题。我们的主要的业务呢，除了云计算和会员业务以外，我们也在努力研发新的产品和服务来加快公司的发展。迅雷有着自己的技术壁垒，也有多年的运营经验，我们希望在扎实的基础能力——技术能力下，去孵化出满足消费者需求，以及满足迅雷长期发展的产品和服务。比如我们近期推出了云盘的业务，拓展了直播的业务，以及也推出了数字藏品等产品。这些产品和服务是我们的价值链的延伸，也围绕着我们的核心竞争优势。谢谢您的提问。
好的，谢谢回答。我还有一个问题。我们注意到公司最近的股价呈下降趋势，这可能也跟中外股整体的趋势有关。然后公司前段时间宣布了两千万的回购计划，可以更新一下这个回购计划目前执行的情况吗？谢谢。
The question is that recently the company's stock price reached a historically low level. The company announced a share buyback program to purchase up to 20 million Xunlei stock. Could you please provide some updates? Thanks for the question. The board of directors announced a share purchase program on March 31st. The company has also signed an engagement letter with a securities brokerage firm to conduct transactions based on a predetermined trading algorithm. For the time being, we cannot disclose the specific information. The board will review the share purchase program periodically and adjust its size and terms if needed. Thank you.
公司董事会在
好的。
好。公司董事会呢，在三月三十一号宣布了股票回购，公司也与券商签订了回购运作的一个协议，会在约定的机制下回购总金额不超过两千万美元的股票。具体信息呢，目前不方便透露。公司董事会会时刻关注资本市场的动态，根据届时的情况来调整股票回购的数量和期限。谢谢您的问题。
谢谢。
Thank you. The next question comes from the line of John Galf, an Individual Investor. Please ask your question.
I'm quite interested in the non-fungible token. That people have different points of view of NFT, and some of them regard it as an important part of metaverse, and sometimes it's only a short-term hype. I know that many of the top-tier Chinese e-commerce, they are actually already participate in the NFT market. Could you please explain what are Xunlei's output in NFT artworks both in China and overseas market? Thank you.
His question is about NFT, and he said basically, you know, there are different opinions, you know, about NFT. Some people are very positive and some people may not quite positive about it. In China, there are some, you know, big players in this market, and he wants to know what Xunlei is doing and what is our outlook of the future. Thanks for asking. It's a good question. First, I'd like to clarify that overseas people use NFT to describe the product, and we at home often use the words digital collectibles instead. They are similar but are different in several aspects.
Xunlei recently launched its digital collectibles product line. So far, it is an insignificant part of our product portfolio. We understand that it's an emerging business with a yet untested business model and an evolving regulatory environment. We are largely relying on existing resources to explore this new and potentially exciting opportunity. Further, we will strictly comply with relevant rules and regulations of the government.
In several aspects, domestic digital collectibles are different from the NFT in overseas markets, and these differences may determine that they may have different development trends and prospects. Some of the differences include that overseas NFTs use public chains, while domestic digital collectibles use alliance chains. In overseas, cryptos can be used as a means of payment, and at home, people use renminbi and the equivalent. In overseas, NFT may be traded freely, while at home there are restrictions on trading and exchanging.
Finally, in overseas, and depending on the host country of the NFT platforms, government oversight is usually open and transparent, while at home, we still yet need to develop or improve relevant laws and regulations, particularly for this new development. In spite of the difference, I think there are opportunities for this digital collectible market at home. Among us, some people enjoy collecting stamps, coins and antiques, etcetera. In an era of digitalization, there will be some people, especially the younger generation, would like to collect digital assets, and the potential market could be huge.
Of course, this is an emerging market and it needs cultivation as well as the support of pertinent regulations and reasonable oversight. Therefore, personally, I think it is an opportunity worth exploring and potentially rewarding for the participants of this new industry development. Thank you for your question.
这位投资人问到，目前数字藏品平台的一个情况，因为我们迅雷最近有推出这个产品。近来国内外投资者的兴趣开始降低，国内会有机会吗？那国外市场和国内又有什么不同呢？首先这是一个非常好的问题，我们也想澄清一下，在国内我们通常称它为数字藏品，而不是NFT，两者是有类似的地方，但是也有不同的地方。我们最近也推出了数字藏品的一个产品线，可是目前为止来说，它也只是我们产品组合中的一个比较小的部分，产品的商业模式也还未经检验，也不是很成熟。对于数字藏品来讲，我们认为这是一个新兴的行业，监管的环境也在不断地变化。我们主要依靠现有资源来探索这一具有挑战性也很有潜力的一个新的机会，并且我们将严格遵守有关的法律规定和政府的政策。国内的数字藏品和国外的NFT有点不同，而这些不同之处，决定于它们可能在未来的发展道路上的不同以及远景不同。一些不同之处包括：海外的是用的公链，国内的是用联盟链。海外支付可以用加密货币，而国内只能用人民币或者等价物。海外的NFT可以自由交易，但是国内的公司对数字藏品的交易和交换都是有很多限制的。还有就是监管环境不同，在海外，取决于你所在的哪个国家，NFT的监管一般来说是比较公开以及透明的，而国内我们目前还没有专门的针对数字藏品的法律，有关监管政策也还处于发展和完善当中。尽管如此，我们认为数字藏品在国内还是有一定的市场的。在我们的人群当中，也是有人喜欢收集邮票、硬币、文物等稀有的物品。在数字化的时代，相信我们年轻人，特别是年轻的一代，也会非常喜欢收藏数字藏品，而且这个市场潜力非常的大。然而这市场刚刚兴起，还需要时间培养和发展，同时也需要更多配套的监管政策来支持和维护。所以我们认为这是一个值得尝试的机会，有可能也会给参与到其中的人带来较大的益处。谢谢您的提问。
Thank you. The next question comes from the line of Li Deng, Private Investor. Please ask your question.
你好，非常感谢刚才对第一季度的情况的介绍。我这边主要有两个问题，第一个问题是国内的新冠政策，包括封城等措施会不会对迅雷的营收和运营成本造成影响？谢谢。
His question is, you know, he wants to know if the domestic COVID policies will affect company's operations and its costs. In mid-March, there was a large scale one week lockdown in Shenzhen. As Xunlei is an internet company and that we had ample time to prepare for that event. That time we didn't see any material adverse impact on our operations. In fact, in the early phase of COVID-19 outbreak in 2020, our subscription business actually grew due to an increase in customer demand during a period of extended spring holidays, you know spring festival holidays, when people had more time surfing the internet. Therefore, generally speaking, we don't expect the current Omicron pandemic will have any material adverse impact on our operations unless something extreme and not foreseeable happens. Thank you.
3月中旬，我们总部的所在城市深圳进行了为期一周的大规模临时封锁。由于迅雷是一家互联网公司，事先我们也做了充足的准备，公司的收入和业务的运营也都没有受到影响。事实上，我们在2020年新冠疫情爆发的最早阶段，我们的会员业务实际上是增长的，原因是因为当时的疫情导致了春节假期的延长，人们有更多的时间上网。所以总的来讲，目前我们的业务不受Omicron的影响，除非发生极端的不可预料的事情。谢谢。
好的，谢谢。我还有一个问题是，我看到财报上迅雷的毛利率这个季度都在降低，请问能不能详细地解释一下背后的原因，以及预期未来毛利率是否会继续降低？
His question is, he noticed, the company had a declining gross margin rates, for the last several quarters. He also wants to know what is our forecast of the gross margin, for the coming quarters. Thank you for your question, you know. In the past, our subscription business, which has a high gross margin than other products, was the major revenue component of the company. In the last several quarters, our new live streaming business has become a significant contributor of the total revenues. Because our live streaming business has a lower gross margin than the subscription business, the overall gross margin was reduced. However, you know, however, our gross profits grew to $34.9 million. That is an increase of 4.9% from the previous quarter.
The increase in gross profit was mainly due to increased live streaming, cloud computing, and subscription revenues. In the coming quarters, we expect the trend may gradually stabilize. Thank you.
Thank you. The next question comes from line of Marcel Munch from Deutsche Bank. Please ask your question.
Hi, thanks for taking my question, and congratulations for a good quarter. I've got several questions. The first one is, the company has very large cash reserves, and so what is the reason for borrowing more cash for the new headquarters? The second question would be, the growth guidance is quite stable for the next quarter. What's your view on the entire year? Do you think the growth has already peaked? The third and last question is, which steps are you taking for the potential event of a delisting? Is there any possibility for a secondary listing or anything else that helps current shareholders? Thank you very much.
Thanks for the question. I try one by one. For the question, you know, we have, you know, healthy cash flows. The reasons for borrowing is basic, you know, leverage, because we believe, you know, we can use the owner's capital, you know, for better returns and better investment opportunities. The borrowing rate for us is relatively very low. We are paying less than 5% of the interest rate for the construction loans. I believe, and probably you may agree, the cost of equity is much higher than 5%. For the second question, regarding the growth outlook, for the second quarter, we forecast a growth rate, revenue growth rate of about 0.6%.
For a couple of reasons, you know, I think most importantly is usually the second quarter is kind of, you know, seasonally weak and, you know, and the first quarter and last quarter is usually the strongest, you know. We take into account this kind of seasonality when providing the forecast. The second is we also, you know, currently we are trying to, you know, adjust and optimize our operations. Probably, you know, there are evolving changes in the Chinese industry, and many companies are taking actions.
We are basically trying to take a conservative view, you know, approach to our development, and we try to make sure we are able to grow our company on a stable basis rather than make quite dramatic moves when the environment is not quite stable at this time. The third question is about delisting. You know, the reason for the delisting possibility is because of the Holding Foreign Companies Accountable Act, you know, passed by the U.S. Congress. Xunlei is audited by a well-known auditor whose work papers cannot be audited or examined completely by the PCAOB. As a result, Xunlei has been put on the list of the potential divestment in the future.
If for the next three years, the company we will still be on the list. For the time being, we are closely monitor this development, and we will closely monitor the negotiations between relevant Chinese and U.S. regulatory agencies. We may take actions depending on the outcome of the negotiation. We will keep the market informed in the future. Thank you.
这位投资人呢，问了三个问题。第一个问题是我们的现金存量比较大，但为什么我们还要借款？我们的回答是，因为我们想更优化我们的投资和我们现金的使用，所以我们将资金投入到回报率更高的项目当中，而我们的贷款的利率是非常低的，所以我们认为这样的一个资产投资优化是比较合理的。第二个问题，他问到我们目前对第二个季度的收入增长预期非常的小，0.6%。为什么？我们的回答是，首先第一个原因是因为季节性的原因。一般来讲，我们第四季度和第一季度的增长都是比较高的，而我们第二季度一般来讲会降缓。第二个呢，也是因为我们现在总体中国的宏观大环境的经济影响，我们公司希望能够更加保守地去预估我们的未来。但是在这个前提下，我们也会稳扎稳打地去发展我们的技术，我们的产品，希望在受到一些大环境影响的同时，我们也可以有一个非常好的结果。第三个问题是我们有没有可能，因为预摘牌，因为我们上了预摘牌的一个名单，我们有没有可能退市或者有其他的一些安排。那我们现在，大家都知道，现在我们是因为外国公司问责法，被SEC放到了预摘牌的公司名单上。那我们公司的审计师是PwC，然后这家审计师目前是没有办法受到PCAOB的检查的。所以呢，我们才被放在这个list。目前来讲，公司呢，会继续关注这一个法案之后的进展，同时也会关注中美两国有关监管部门的谈判。我们也会，有任何的信息，我们也会让市场和投资人知晓。谢谢您的问题。
Thank you. Dear participants, as a reminder, if you wish to ask a question, please press star and one on your telephone keypad. The next question comes to the line of Yuzhang, and he is a Retail Investor. Please ask your question.
我想问一下，就是管理层对目前的股价维护有没有什么新的举措？除了股票回购以外，能不能做得更多一点，比如说公司现在已经盈利了，而且现金储备也很多，能否考虑分红？
His question is and basically, you know, because of the lower stock price, at this time, he wants to know, in addition to the share buy program, the company has any other actions that may take, for example, giving out a dividend. First, you know, the management believe, you know, the stock price is influenced by, you know, a number of factors, and some of us are really beyond our control, you know. That being said, you know, first, we will continue, you know, to stick to our, you know, operating strategies and try to grow our business and try to create value, for the company out of operations, you know.
Second is, you know, for the cash, you know, there are different ways of using it, you know, paying out the dividend is one way, but the other use of the cash could be like acquisitions, investments in new opportunities and research and development of new and potential innovative products. These options, you know, we will consider carefully for paying out the dividend. Thank you for suggesting and I will bring this matter to the next meetings of the board of directors. It's really not in my capacity to make a decision. But anyway, thank you for your question.
这位投资人的问题是，除了股票回购以外，我们还有别的措施，比如说分红。那我们的杰夫的回答是，我们认为有些因素其实不在我们掌控之内的。但是呢，现在我们将继续专注于我们的运营，我们的战略化的执行力，然后希望在我们的运营当中创造更多的价值。那第二个，我们觉得我们的现金也会有其他不同的用处，比如说我们可以收购，可以投资，或者去寻找一些潜在的创新的产品，或者是公司作为潜在投资。当然也非常感谢您的提问和建议，我也将会在下一次董事会召开的时候，把您的建议提出来。目前这不是我们这一方就可以决定的，可能要把这个问题带给更多的董事会的成员一起来讨论。谢谢。
我还有一个问题，如果我还连线呢，我还有一个问题想问一下，就是迅雷大厦的一些那个Office space出租的情况。
His question is about the rental status of the Xunlei headquarters building under construction. Currently the building is still in a final stage of internal finish up you know. Because of some delays due to Omicron in spring of this year, the moving date has been delayed and we expect moving sometime you know in around September or October. Because the building has not been completed or not ready for rental yet you know. So far we don't have any tenants yet. Remember this building is largely for internal use. But we are in the process of hiring or trying to find the potential tenants for the excess spaces in the building. We will provide some market updates in the next several months. Thank you.
针对这个问题，杰夫的回答是，我们目前的总部大楼正在进行最后阶段的内部装修，但是由于之前疫情和种种原因，我们目前要把搬进去这个时间移到九月到十月的样子。那现在我们因为大楼还没有完成，所以不在出租的一个状态，目前还没有更好的信息透露。然后大部分的我们的大楼的使用都是内部使用，当然我们也会有部分出租。接下来我们也会找一些潜在的比较好的租户或租赁公司。但是之后我们接下来的一个租赁的情况可能在接下来几个月才会对大家公布，目前暂时没有其他的信息。谢谢。
我还有想问最后一个问题，就是财报里边的迅雷的成本一直都是比较难以预测的。我注意到去年就是2021年，相比2020年的员工数量增加了很多，然后R&D的那个expense也增加了很多。请问今年迅雷的员工数量会不会大幅增长？
Basically he said you know the, it's difficult to forecast Xunlei's operating expenses and he noticed you know we have some increase in employee headcounts and, employee-related expenses last year. He wants to know if we will have a large increase in headcounts this year. Basically you know the increase in headcounts is you know due to we are exploring new products and services and we hired you know additional manpower to do research and development and for marketing purposes, which result in a increase in, operating expenses.
Further you know we at Xunlei you know we maintained you know annual salary increase for the majority of our employees. We treat our employees you know, first we respect our employees' contribution and we respect their you know hard work. That's why we you know if possible you know we will try to you know treat our employees well and hopefully you know they will in return and make contributions to the company and to our shareholders. Regarding the headcount of this year and to my knowledge and as of now, we don't have any plan for a large increase of headcounts this year. On the contrary, we will work hard to control expenses and to optimize our operations this year. Thank you.
针对您这个问题，目前公司的员工人数增长是因为我们正在探索和创新一些新的产品和服务，所以人数增加。其次，我们的研发成本的增加，也是因为我们在研发上面和创新上面增加了投入，所以增加了成本。然后在我们的人员工资方面，因为我们很珍惜我们的员工的成果以及他们付出的努力，所以在过去一年我们有大部分的员工都有增加涨薪。目前来讲，我们没有大批量增加员工人数的这样的一个计划。当然接下来我们也会努力地去控制我们的成本，优化我们的成本，然后创造更多的利润。谢谢你的问题。
我还想再问最后一个问题，就是公司的PCDN的带宽业务，想问一下中国关于这个个人的这种用家里的闲置带宽上传的这个模式，有没有遇到一些政策方面的阻挠，或者是一些监管。就是这个情况是不是有所改善，因为以前就是听说中国政府，或者是中国国有的这个电信的运营公司对这些监管是非常非常严厉的，有很多情况都把那些散户的网线都拔了，现在有没有情况有所改善？
Basically his question is regarding in our PCDN business, and he wants to know if, you know, there's any regulatory pressure on our sharing economy model. So far we haven't, you know, received any government sanctions on business model. We try to do the way, you know, which, you know, is based on the, on the sharing economy and which will be in compliance with the existing government regulations. That being said, we will monitor future development and both industrial development and regulatory development and take appropriate actions to maintain our operations. Thank you.
针对这个问题，目前我们并没有收到政府的一些反馈说我们政策上有任何的问题。然后，我们也希望在未来的共享经济，我们共享贷款这个工作上，尽量地去配合政府的一些监管制度。谢谢。
谢谢。
Thank you, dear participants. As a reminder, if you wish to ask a question, please press star and one on your telephone keypad. There are no further questions at this time. Please continue. I would like to hand the call back to the speaker for closing remarks.
Thank you again for your time and participation. If you have any questions then please visit our website at ir.xunlei.com or send emails to our Investor Relations. Have a good day and operator we conclude today's conference call. Thank you.
Thank you. That does conclude our conference for today. Thank you for participating. You may all disconnect. Have a nice day.