Ucloudlink Group Inc (UCL) 2025 Q3 法說會逐字稿

Hello and welcome to the Ucloudlink Group Inc. 3rd quarter 225 earnings conference call. (operator Instructions). I would now like to turn the conference over to Daniel Gao Investor relations of you Carling.

Thank you and over to you.

Hello. Everyone, and thank you for joining us on Yos 3rd quarter 2024, 2025 earnings call. The earnings release and our earnings presentation are now available on our IR website at IR.ycloud.com.

Joining me on today's call are Mr. Zhiping Peng, co-founder and the Chairman of the board of directors. Mr. Chaohui Chen, co-founder, director, and the Chief Executive Officer, and Mr. Yimeng Shi, Chief Financial Officer.

Mr. Chen will begin with an overview of our recent business highlights. Mr. Xu will then discuss our financial and operational highlights for the quarter. They will all be available to take your questions in the QA section that follows. Before we proceed, please note that this call may contain 4 looking statements made pursued to the safe harbor convergence of the previous Secretary Ligation Reform Act of 1,995.

These four looking statements are based on measurements, current, expectation, and observations that involve known and unknown risks and certainties and other factors not under the components control, which may cause actual results, performance, or achievements of the component to be massively different from the results, performance, or expectation. Projected or impeded by these four-looking statements.

All forward-looking statements are expressly qualified in their entity by their culinary statements, risk factors, and the details of the company's feelings with the SEC. The company does not assume any application or to reverse or update any forward-looking statements as a result of new information, future events, change in market conditions or otherwise except as required by law.

Please also notice that your colleague's earnings press release on this conference call include discussions of an audit GAAP financial information and an audit non-GAAP financial measures.

Your calling press release content or reconciling reconciliation of the audit and non-GAAP methods to the most directly comparable and aided GAAP methods.

I will now turn the call over to Mr. Chen. Please go ahead.

Thank you, Daniel, and good morning or evening, everyone. Amid a complex microeconomic and trade environment, we remain disciplined in our execution while maintaining operational profitability. This balanced approach allow us to successfully navigate these external challenges and reinforce the resilience of our business.

While also laying the foundation for long-term value creation, will remain profitable and continue to generate stable margins with total revenue of $21.1 million and the net income of $9.3 million during the quarter.

Our Groom ecosystem is gaining momentum as it grows in scale and global user adoption. Likewise, our 1.0 international data connectivity services business continues to grow with full speed 5G network coverage. Across 91 countries and regions as we continue to gain market shares and reinforce our leadership position in the global roaming sector.

We remain focused on overcoming the world's 1st 3 fundamental digital dividers through the through the transformative connectivity solutions. Firstly, we are eliminating the global connectivity divide by breaking down international roaming barrier and providing seamless network access worldwide.

Secondary, through our patent clouding and hypercom technologies, we tackle the single multi-network device by enabling intelligent and optimized connectivity across multiple networks.

Lastly, the most innovatively, we are bridging the emotional digital divide with our AI power pack technology, creating entirely new and meaningful connections between humans and their pets. Building on this mission.

Our strategic investment in R&D and marketing to accelerate innovation, enhance the user experience, and speed up. Commercial civilization of our three new growth engines are yielding strong results.

Our three new GlocalMe line, GlocalMeSIM , GlocalMe IOT saw remarkable year over year MAU growth during the quarter, increasing 382.3%, 188.2%, and 593.3% respectively. Feedback has been overwhelmingly positive. Reframing how our solution directly address the market demand and validating our investment strategy.

I will now review the highlights for each of our key business lines. I will start with our global li business now. In the 3rd quarter of the year 2025. The average monthly active terminal reached 3,903, representing an increase of 408.2% year over year. Within our broader GlocalMe life portfolio, which includes our industry first uCloudlink Plus, uCloudlink Pro, and Long plug.

MAT Grow by 69.3% excluding platform year over year revenue grow strong user adoption across this innovative guidelines. Building on this solid foundation of product excellence.

I will now highlight the significant progress we met with our flagship product platform. Designed to bridge the digital divide between humans and their pets. The platform is already gaining the momentum. After its initial commercial launch in September 2025 in Hong Kong.

And across the Middle East where it has already generated order for approximately 40,000 units as we continue to expand our distribution channels and partners.

At the IFA in 2025 in Berlin, platform was recognized as an honor in the communications and connectivity catalog of the inaugural EA Innovation Awards. It also received the Best of IFA in 2025 distinctions from Yanko Design, Holus, and the Marc Eli reviews.

Following the showcase of our solutions at the EFcorlin 2025, we are now in advanced discussions with several major retail channels, including one key partners. Furthermore, we successfully entered into a partnership with a leading online pet retail platform in North America where initial product shipment has already begun.

With the strategic foothold being established across Hong Kong, the Middle East, North America, and Europe, we plan to establish a new operational structure and raise additional capital to accelerate the global expansion of our tech business.

We also plan to develop Pet tech as a state-alone application that extend beyond smart hardware and build a comprehensive systematic platform integrating social. Entertainment leaving a stream. And a comprehensive pet ecosystem.

The initial version of this new app is expected to launch in the first quarter of the year 2025. Our com IoT business maintained its strong growth trajectory with user adoption and revenue contribution showing substantial year over year improvements. In the third quarter, every month active terminal for GlocalMe IOT record a year to year increase of 580.

583.0%. We secure order for in-car infotainment system while our initiatives in the secretary camera sectors are now fully deployed and enter a phase of Expansion supported by broaden partnerships across several high growth verticals. Having established an initial presence in this key sector, we plan to extend our solution into additional industry in the future.

Turning to our GlocalMe SIM business now.

Over the past 9 months, GlocalMe SIM has surpassed 400,000 cumulative cars sold. Including OTA SIM, T SIM, and Estriol. Again changing solution demonstrating clear technology leadership in the industry.

The ESI field was named as a best of EA year 2025 by Mark Elis Reviews, further highlighting its innovation and market recognition.

This momentum has filled our goals, driving at 269.5% year over year increase in average month active terminal during the third quarter. The Eri solution has continued to gain strong traction following the widespread distribution of 10,000 trial units under a pilot program. It generates a positive user feedback and at the more than 75% in user registration and more than 30% in active engagement.

Validating both our carrier partnership model and product market fit. Our carry coinsurance program has also make significant progress. We have complete pilot negotiations with multiple operators and expect to commence joint testing and pilot initiatives in the coming quarters, laying the groundwork for future larger scale carrier partnerships.

Lastly, our GlocalMe mobile broadband business remains stable, with growing order momentum expected to provide a stable foundation of our future growth.

The launch of our MeowGo G40 Pro and the cutting edge MeowGo G50 mask are expected to serve as a growth engines for the coming quarters. The MeowGo G40 Pro is a revolutionary upgrade and a milestone product enabling users to stay connected to one single device and one account. The product began deliveries by the end of the quarter and is the world's first device to support in-flight Wi FY and connect seamless across several usage scenarios such as home, airports, office, and the cafes.

With the MeowGo G40 Pro, we are transforming portable connectivity from an international travel-only solution into a true multi-scenario companion powered by our patent AI hypercom technology. It seemly serves users through one single intelligent device and one account regardless. Of where they are.

How can our industrial leading solution, also lay the foundation for larger scale product iteration and the future upgrades. Furthermore, we will launch the MeowGo G50 max with sky to ground 5G satellite integration and the AIG with network switching.

Further, So, solidifying our innovative leadership in the mobile fixed broadband industry. This device also enhance network quality through AI power, real-time congestion detection, delivering a faster and more reliable user experience.

Looking ahead We are entering the next phase of expansion where we will scale our global user base. Further diversify our revenue streams, drive innovation across our ecosystem, and so a healthy financial performance.

The launch of MeowGo G40 Pro and cutting edge MeowGo G50 max, combining with the launch of the platform, the strong validation of the EE Trio pilot, the robust expansion of our IOT solutions, provides us with several robust growth engines going forward.

Laying a solid foundation for future growth. Having successfully navigated external challenges, we are confident in our ability to scale our user base, expand our global partnership and delivery growth in the coming years as we continue to innovate and bridge digital devices for users worldwide.

We are confident that we have the right strategy in place to generate sustainable growth in the coming quarter. For the first quarter of the year 2025, we expected total revenues to be between $22 million to $226.5 million representing a decrease of 15.4 to an increase of 1.9 compared to the same period of the year 2024.

For the full year of year 25. We currently expected revenue to be in a range of $81.3 to $85.8 million. The company is revising its guidance in light of the persistent microeconomic challenges and global headwinds which have had and may continue to have a broad impact across the industry.

I will now turn the call over to Mr. Shi.

Thank you, Mr. Chen. Hello, everyone. I will go over our operational and financial highlights for the 3rd quarter of 2025.

Average daily active terminal, and average monthly active terminal, MAT are important operating metrics for us. They measure customer usage trends over the period and are reflective of our business performance. In the third quarter of 2025, average ET were, 332,674 of which 21,484 owned by the company and 311,190 not owned by the company. Represented an increase of 3.8% from third quarter of 2024. During this third quarter of 2025, 37.3% of DATs were from Ucloudlink 1.0 in the international data connectivity Service.

And 42.7% were from Ucloudlink 2.0 local data connectivity service. In September 2025, the average daily data usage per terminal was 1.57 gigabytes. Starting from this quarter, we are disclosing our average daily active users. EAU and monthly active users, MAU, which represents the average number of Unique users engaging with our GlocalMe service on a daily and monthly basis respectively.

We believe this metrics will better reflect the progress we are making in driving user engagement across our different business lines and how we are managing and monetizing our user bases as we scale up. Growth in average DAU and MAUs follow a similar patterns with a strong momentum. Average MAUs in the third quarter were 760, 1,586, representing an increase of 11.9% from 680,0609 in the third quarter of 2024. Average M, From GlocalMe IOT, GlocalMe SIM, and GlocalMe Life devices increase of 593.3%, 188.2% and 382.3% respectively from the same period of last year.

Average MAU use from GlocalMe mobile and fixed broadband business decreased slightly by 0.8% year over year. On September 30, 2025. The company had 201 patents with 168 approved and 33 pending approved. The proof of SIM card was from 392 MNOs globally as of September 30, 2025. Total revenue for the third quarter 2020. Was $21.1 million, representing a decrease of 16% from $25.2 million in the same period of 2024. Revenue from service was $17 million US dollars in the third quarter 2025. Representing a decrease of 1.4% from $17.3 million in the same period 2024, revenue from service contributed 80.6% of the total revenue during the third quarter of 2025 compared to 68.6%. In the same period last year.

Geographically speaking, during the third quarter of 2025, Japan contributed to 33.2%. Mainland China contributed 35.1%, North America contributed 15.4%, and other countries and regions contributed the remaining 15.3% compared to 46.6.

6%, 27.8%, 12.8%, and 12.8% respectively in the same period, 2024. Our gross profit was $11.3 million US dollars in the third quarter of 2025 compared to $12.2 million US dollars in the same period, 2024. Overall gross margins in the third quarter of 2025. Further rose to 53.6% from 48.4% in the same period of 2024. The gross margins on service was 36.6% in the third quarter of 2025 compared to 60% in the same period of 2024, excluding shared basis compensations. Total operating expenses was $11Billion or 52% of total revenue in the third quarter of 2025 compared to $9.7 million, 39% of total revenue in the same period in 2024. Net income in the third quarter of 2005 was $9.3 million compared to $3.4 million in the same period of 2024.

Adjusted EBITDA was $1.4 million in the third quarter of 2025 compared to $4.4 million in the same period of 2024. For the third quarter 25, we record an operating cash outflow of $0.9 million compared to an operating cash inflow of $2 million in the same period of 2024.

For the third quarter 2025, our capital expenditures were $0.5 million. Compared to $1.1 million in the same period as 2024, we maintain a solid balance sheet with a cash equivalent of $28.5 million as of September 30, 2025 compared to $30.1 million as of December 31.

2024. With that apparatus, let's up for Q&A.

Vivian Zhang, Diamond.

Hello. Thank you for taking my question. So firstly, could you share with us the sources of this $9 million in other income and how it was identified? Was it a one-time payment?

Yes, as we disclosed about 80 million of the gain, from the fair values, other investments that's a change, a fair values in the accounts, yes

Okay, I see. So, next second question is that, can you elaborate on the reasons for the decline in product sales?

Yes, in the 3rd quarters, the sales, product, Decrease, $4 million in total, and this, split into two parts. One part is, $2.6 million , sales decreasing from the product related, data, which is, very low margins. Product. So, this, for the 3rd quarters for this, very low margin product, the amount, the sale amount, quite low compared with, last year. And the second part is, the sales terminus, decreasing.

$1.1 million something, which is, we mention is, a Japanese, customer, delay, the 2, Mbps orders. One is related to the 5G, portable Wifi, one is, related to, the 4G, mobile, Wi FY hotspot. And, this order will be, we expect will be, coming in the fourth quarter. So, that's a delay, a little bit delay, in terms of periods. But, as we disclose, the DATs and MATs.

DAU and MAUs all increasing compared with last year's. That means that the number of the terminal other than, Mobile broadband, the volumes of the new business, our GlocalMe SIM , our GlocalMe IoT, and the GlocalMe Science, and so increasing, dramatically compared with last year. And this operation metrics shows a couple of times increased growth compared to the same period of last year, but the revenues contributions in terms of proportions are small to account as we, in terms of the pricing the terminal, the life series pricing. Is quite a small proportion compared with 5G portable Wi FY.

So that, that's quite a much difference. So even we see more volume of a new product terminal to the market, but, convert to the revenue is smaller, but our user numbers. Growth as we disclose that we overall 10%, more than 10% of the user number in terms of the MAU increasing compared with last year. So we believe this will contribute to our future growth in terms of service next year for this growth of user base. Thank you.

Yes, I have some more, sorry, I have some more common because the hard, that means, the hardware because of, tax and the, I think the trading headwind, so the customer, I think the, I think more hesitate about the, microeconomic and the decision will be. The decision maker period will be longer than normal. Normally about 30 days, now go to the, maybe two months. That's the, what caused the delay, but the orders come in.

So, that's first and the second, hardware, I think because the high value, hardware like 5G, our ship volume is delayed that caused the impact of the total rev revenue number.

But fortunately, we have more, user number, like for. SIM and, this live product, they will generate even the hardware cost is lower, it's smaller, but I think the contribution for the, data, so will increase in the future because, monthly and yearly they have to pay the same usage for the data.

Okay, got it. Thank you. That makes sense. And my, hello, can you hear me? Okay. My next question is that, the Mainland China, the revenue from mainland China has increased a lot and become the largest market. So what are the main drivers behind that?

Yes, as we disclosed the in the 1.0 revenue in a national data connected service, always. Increasing over the over the years. The main driven is from the Chinese outbound traveler, contribute to use our roaming main branding service. So that that's the main driven for our Ucloudlink 1.0 business growth in this year.

So, Since the pandemic, COVID-19, the Chinese outbound travel business is in the recovery over the past couple of years. So, I was revenue related to this this part is on the recoveries. Trend. So we believe this growth from this, traveling, we have, is on the growth track in the future as well.

So more so about the Chinese revenue increase. There are 3 reasons. The first is, our 5G much year higher, and, 5G, our, revenue, including the total, revenue in China, our percentage is, much higher than last year. That means Our 5G quality and leadership was recognized by the users. So here increased because in China 5G is more popular.

Once the people use the 5G, they don't want to use the 4G, and we are the leading, we cover 95. 91 countries and it's far more advanced than the other carrier and also we are far more fast and the coverage is much better. So that's the year for 5G. We are higher, grows faster. the 1st, second, we have more products available in China. We are first to launch our, traditional 5G.

We are in the leading to get more market share and more good technology for 5G. But we have more product like live and like our sim card and our Etri this new product so we can cover more, business in the history we haven't entered this part, like in for the for the roaming market, we only occupy the WIFI. Currently we have eSIM. We have OTA SIM. We have, eSIM Trio. This part, I think we are not, we have more product and a more, convenient product, not only just high-quality but also more convenient product available, and we enter this new, segment.

So here is, 80% of the new market we never touched before. So we believe in the future, I think our market share in China will keep increase and our SIM card and the ESM trio will gain more market share in the one person or two person in outbound travel market. And finally, I think the last point is about, in China, I think, we should be more, last year and more revenue in the quarter 3, if without, I think the total, I think the Chinese people travel outside. In the summer still suffer from like, in Japan, like earthquake, rumor, and also like some unstable economic situation.

So, September, during July and June is the most difficult period. I know the trade war with the US, all its impact. So I think in the once this economic situation becomes more stable, I think we will get more market share in this part.

Okay, that answers my last question because I want to ask about the trade tensions that appear to have eased recently. So what other like potential impacts do you anticipate on the market and the company? Is it likely to contribute to a recovery in sales?

I think. Yes, we, if you look at this, the trade war, I think it will, we believe there is some limited impact, for our donors, as, Especially for our new business, say, paid the phone, a new launch, we have a new launch in US market, coopertion with a leading paid online retailer. The name is, we know is a big name, Chui. So, we are new product solutions has entered into, a US big channel, say, Walmart.

And other famous channels as well. So, one with more and more, the tier one channels has our product on the shelf, I believe, the US markets shares, we sold more. Product into US market and the US market as revenues contribution will gain and growth in the future and that's our belief that US markets will grow in the future.

Yes, so, yes I have more, comment about these questions. The first, our traditional mobile broadband business. So, I think we can see, it is suffer from the microeconomic, and also the trade war, but I think now getting stable and we see the cost now is, I think our in Japan, in China. So for the mobile, business now, the order is coming in the 4th quarter, so we can see now the past period is over. It's, from the current situation, we believe it will go better.

That's from our traditional mobile business. For the new business, it's going very well. So, most of our new launch in the Q3. For example, our platform, launched in September, and MeowGo 40, our one com one device hypercom as in a multi scenario, multi-purpose. Multi scenario, device, also, the new function we launch also end of the 3rd quarter. So majorly in the 3rd quarter, our new product, new solution launched in this quarter. So, I, but I think the feedback and, from the end user and from channel is quite positive, as I mentioned, disclosure in the information. So we, get a big order, for, platform. So the fourth order is, it's 40,000, units.

So it's much bigger than our expectation. So the our sim card get feedback from the end user, it's quite very positive. I just mentioned we about, 10,000, pilot. We get a very good feedback for the quality and the convenience and in technology, we prove we are in the leading position. This is innovation, super Sim for the people, for a permanent second thing. We prove this concept. And also, we get a very positive and, operation data. The register rate is about, more than, 75%.

And the active rate is about, more than 30%. That means, this very high percentage of the user in our, we will increase in our future DATMU, we are adding more, value to our business. So I think, also the IOT, you can see we have faster growth. Even the smaller, the foundation is smaller, but every month we have more than 30% increase. Every month it's not less.

So, it's now it's for the, carplay market and the camera market, so we almost cover all the big tier one player, so we believe. We will get more, fast growth in the coming months.

So, I think more for the platform, for aim, and for the, our live product and IoT or this new 3 new products and get a very, good, potential. So, I believe, in the coming quarter, we will get a better, revenue, than the Q3 and the and the and the and the Q2.

And this year we believe, the, once we, because we have an investment in the marketing and R&D, we spend, that that's why you can see this year compared with last year, we spend more than $3 million More than last year in the marketing campaign in R&D, and this will generate the, I think the good, increase in the future. Thank you.

Okay, I see. Okay, thank you for the detailed information that's all my question.

Okay.

Theodore O'Neill, Litchfield Hills Research.

Thank you very much. I just want to follow-up on the pet phone. The 40,000 unit order, is that going to the US?

No, as we, Disclosed in the PR, a month ago, 1 Mideast, tier one channel, who order, 30,000 units paid the phone into the Middle Eastern market.

that's a, that's the account for 70% something of the 40, 000 units. The, yes, the remaining, Will sold to the US market, but I believe the more telephones units will be sold to US market when we, co launch campaigns with, Tres and Walmart, this, tier one, channels, in the near future.

Yes, we believe the US is the biggest, pet market, and we also believe that, I think, we, I think we're, bridging the digital GAAP, between the people and the pets. This, concept, I think it's, far more than just a tracker, just a CCTV, just a single direction to monitor and managing the pet. So we are providing a mutual. Call and mutual communication between the people and pets, but the problem is we need to, I think, more education for this opportunity like iPhone many years ago, we believe iPhone changed the mobile internet in the world. And then and now to convince people and let people know that dog and pets can use the phone and the social like people.

So, and we will, we are very confident about that, but we need to get more campaign and more marketing spending and in the US and the rest of the world. That's why we try to separate this business to try. Continue because the initial data for the more than 1 month get least about 40,000 orders. I think, 30 come from the Middle East and another 10,000 come from US. All this data, I think, is, give us confidence. We want to more and he invest in R&D side and also in the marketing campaign in the US and worldwide.

Thank you.

Thank you

My next question is about the in-car infotainment system. It's in your, press release, you say you've secured orders for that, and I was wondering if you could give us any more detail on those orders and what the future might hold for your business there.

Yes, so in-car infotainment, so, majorly, I think for tradition traditional oil car, this, in-car, infotainment. Majorly come from the Chinese, providers. We almost cover all these providers. That means the new generation all use our solution.

We already integrated our solution into the, this provider and they majorly in the North American, Latin American, and also the Middle East and the, and the Europe market. So I think we almost cover all the providers from the from the 12, almost to number 17. So we already finished this initial presence and in battle with them. So we can see the fast growth for in, for like a car, like, in tenant.

I think, this will give us a huge increase and huge revenue in the future.

Thank you very much.

Mr President, This concludes our question answer session. I would now like to turn the conference back to Daniel Gao for any closing remarks.

Okay. Thank you once again for joining us today. If you have further questions, please feel free to contact your colleagues investor relations through the contact information provided on our website or speak to our investor relations for criticism advisory. We look forward to speaking with you or again our next quarterly call.

Thank you.

Thank you. The conference has now concluded. Thank you for attending this presentation, you may now disconnect. Thank you.

Thank you. Bye bye.