uCloudlink Group Inc. (UCL) Q1 2026 Earnings Report, Transcript and Summary

Thank you for standing by, and welcome to the uCloudlink Group, Inc. First Quarter 2026 Earnings Conference Call. [Operator Instructions] I would now like to hand the call over to Mr. Xi Chao Gao, Company Investor Relations. Please go ahead.

Thank you, operator. Hello, everyone, and thank you for joining us on uCloudlink's First Quarter 2023 Earnings Call. The earnings release and our earnings presentation are now available on our IR website at ir.ucloudlink.com. Joining me on today's call are Mr. Zhiping Peng, Co-Founder and Chairman of the Board of Directors; Mr. Chaohui Chen, Co-Founder, Director and Chief Executive Officer; and Mr. Yimeng Shi, Chief Financial Officer. Mr. Chen will begin with an overview of our recent business highlights. Mr. Shi will then discuss our financial and operational highlights for the quarter. They will all be available to take your questions in the Q&A section that follows. Before we proceed, please note that this call may contain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and observations that involve known and unknown risks uncertainties and other factors not under the company's control, which may cause actual results, performance or achievements of the company to be materially different from the results, performance or expectations projected or implied by these forward-looking statements. All forward-looking statements are expressly qualified in their entity by the cautionary statements, risk factors and details of the company's filings with the SEC. The company does not assume any obligation 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 note that uCloudlink's earnings press release and this conference call include discussions of unaudited GAAP financial information and unaudited non-GAAP financial measures. uCloudlink's press release contains regulations of the unaudited non-GAAP measures to the most directly comparable unaudited GAAP measures. I will now turn the call over to Mr. Chen. Please go ahead.

Thank you, Daniel, and good morning or evening. We delivered total revenues of USD 16.9 million in the first quarter of 2026. These results come despite significant external headwinds, including macroeconomic volatility, weak travel demand, rising energy prices, memory chipset cost increase and the conflict-related supply chain disruption. More importantly, our new product lines have continued to warm up and scale, gradually offsetting the negative impact on our traditional business for these external headwinds. With the continued ramp-up of new products such as the PetPhone and UniCord Pro, revenues from our new business lines are increasing following an initial market run-up period over the past 2 quarters. Each of these new products continue to make significant strategic progress during the quarter, laying the groundwork for accelerated commercial momentum going forward. Overall, our 3 new growth engine, GlocalMe Life, GlocalMe IoT, and GlocalMe SIM, delivered remarkable year-over-year revenue growth of over 400%, 300% and 170%, respectively, to accelerate commercialization and capture early market leadership, we strategically increased marketing spending during the quarter on the platform and broader PetPogo ecosystem. While these investments will attempt near-term profitability and cash flow, we are confident they will yield substantial long-term payoffs and contribute to sustainable growth going forward. I will now review the highlights for each of our key business lines. I will start with the PetPogo ecosystem. Building on the exceptional global media attention and the market validation received at NWC 2026 and CX 2026 with the unveiling of our PetPogo ecosystem and all-new PetCam. We launched the beta version of the PetPogo app during the quarter. This differentiated and pioneering AI-powered plus social platform for the pet technology industry leverages AI technologies and the platform to enable pets and their owners to communicate seamlessly by effectively transforming the pet ownership experience into an interactive social and connected community. We are fostering unparalleled engagement and continuous interaction. PetPogo also allow pet owners to manage their pet care journey across three stages. Before, during and after activities. This social platform is expected to complete commercial validation in Q2 2026 and begin driving growth, starting in Q3 2026. During the quarter, average monthly active user MAU reached 1,397 and early better feedback has been overwhelmingly positive, reinforcing our confidence in its user adoption and strong growth potential. Moving on to our GlocalMe Life business line. We continue to drive exponential growth with industry-first innovations. Our UniCord Pro gained strong traction during the quarter with the sales volume and the market adoption accelerating rapidly by enabling a lighter, more convenient lifestyle with secure and reliable connectivity, freeing users from cumbersome device while ensuring seamless protective experience. GlocalMe Life solutions saw average daily active user DAU during the quarter increased 559.9% year-over-year. Turning to GlocalMe Internet of Things, IoT. Our forward-looking strategy is already beginning to generate initial results. The business maintained its strong growth trajectory with user adoption and revenue contribution continuing to expand rapidly year-over-year. We continue to solidify our strategy position to capture additional market share in high-growth sectors such as in-car infotainment and security cameras. Average DAU for GlocalMe IoT increased by 246.5% compared to the fourth quarter of the year 2025 and as of March 31, 2026. Our total IoT solutions installed base reached 2.93 million. For our GlocalMe SIM business line, our eSIM TRIO solution continues to gain strong traction and growth momentum with average DAU increasing 193.6 year-over-year during the quarter. This validates both our carrier partnership model and its market positioning as a permanent secondary SIM for users. Furthermore, our carrier insurance program has gained pilot deployment, providing a highly effective low CapEx solutions for operators that enhance their global roaming capability. This model is gaining strong traction and is welcomed by both operators and users, confirming a robust product market fit. Lastly, the launch of our cutting-edge MeowGo G50 Max, the world's first sky-to-ground integrated mobile connectivity hub is expected to serve as a powerful growth engine for the coming quarter. The MeowGo G50 Max is redefining the connectivity when it matter most in conflict affecting market with disruptive terrestrial network, its resilient connectivity is a critical differentiator. Powered by our AI-driven HyperConn technologies is seamlessly switched between terrestrial in-flight, home Wi-Fi, creating a unique global experience. It also enables satellite-based two-way messaging and emerging SOS, extending connectivity from ocean to the earth. We expect this product to reach commercial deployment in the second quarter of year 2026. Looking behind its market potential, the MeowGo G50 Max not only represent our high-end brand aspiration, but also focus on driving increased sales and elevating our brand across the entire portfolio of mobile connectivity solutions. Looking ahead, we remain in the early high-growth stages of our transformation. Throughout 2026, we will continue investing strategically in our new growth engines. The strong market validation from MWC 2026 and CES 2026, positive PetPogo beta feedback and the sustained momentum in GlocalMe IoT demonstrate how our diversified business strategy remains firmly on track. Looking at the coming quarters, we expect our traditional business to gradually stabilize, reaching a level where further downside is limited. At the same time, our new business line will continue to grow, driven by ongoing product ramp-ups and the market adoption. Together, if this momentum, our traditional business stabilizing and our new business scaling up continues as we expect. It is expected to further offset the external headwinds that had impacted our performance. As a result, we believe the second quarter of 2026 will be a turning point in our overall business trajectory with a return to positive year-over-year growth. We are building towards sustainable growth by scaling our user base globally and bridging the digital device in cross-border connectivities as well as the emotional distance between people and their pets while creating long-term value for our shareholders. With that disciplined optimism in mind, we are confident that we have the right strategy in place to drive sustainable growth going forward. For the second quarter of 2026, we expect total revenues to be between USD 19.5 million and USD 22.5 million, representing an increase of 0.5% to 16% compared to the same period of year 2021. I will now turn the call over to Mr. Shi.

Thank you, Mr. Chen, and hello, everyone. I will go over our operational and financial highlights for the first quarter 2026. Average daily active user DAU and monthly active user MAU represents the average number of unique users engaging with our Global Me service on a daily and a monthly basis, respectively. Both metrics show strong growth momentum in the first quarter. Average DAU in the first quarter were 354,789, representing an increase of 10.2% from 321,836 in the first quarter of 2025. GlocalMe IoT, GlocalMe SIM and GlocalMe Life all delivered significant gains with average DAU up 246.5%, 193.6% and 559.9%, respectively, from the same period last year. Average DAUs from our GlocalMe MeowGo business declined by 5.8% year-over-year. Average MAUs were 337, 274, representing an increase of 6% from 695, 599 in the first quarter of 2025. Average MAUs from our GlocalMe IoT, GlocalMe SIM and GlocalMe Life business saw increase of 142.1%, 76.8% and 609%, respectively, from the same period last year. Average MAUs from our GlocalMe MeowGo business decreased by 7.3% year-over-year. In the first quarter 2026, average DATs were 327,615 with 13,414 owned by the company and 314,201 not owned by the company, representing an increase of 6.1% for the first quarter 2025. During the quarter, 58.6% of DATs were from uCloudlink 1.0 international data connectivity service and 41.4% were from uCloudlink 2.0 local data connectivity service. In March 2026, the average daily data usage per terminal was 1.57 gigabyte. Average MATs in the first quarter were 702, 805, representing an increase of 7.7% from 652,810 in the first quarter of 2025. Growth was driven by strong momentum across our three new growth engines with average MAD for GlocalMe IoT, GlocalMe SIM and GlocalMe Live increasing 135%, 74.1% and 806.1%, respectively. From the same period last year, average MAD from GlocalMe MeowGo business, which we previously referred to as GlocalMe mobile fixed broadband business decreased by 4.1% year-over-year.Our platform is a newly launched service, we only just began to see user adoption and engagement grow during the quarter. In the first quarter, average DAU and MAUs were 1,097 and 1,397, respectively, while average DATs and MATs for platform reached 368 and 789, reflecting the growing traction of this new offering. As of March 31, 2026, the company had 212 patents with 183 approved and 29 pending approval and a pool of SIM card from 397 MNOs globally. Total revenue for the first quarter of 2026 were USD 69.9 million, representing a decrease of 10.1% from USD 18.7 million in the same period 2025. Revenue from service were USD 13.3 million, representing a decrease of 6.3% from USD 14.2 million in the same period 2025. Revenue from service contributed 79.9% of total revenue during the first quarter of 2026 compared to 75.7% in the same period last year. Geographically speaking, during the first quarter 2026, Japan contributed 32% Mainland China contributed 30.3%. North America contributed 70.3% and other countries and regions contributed the remaining 20.4% compared to 40.4%, 31.2%, 12.9% and 15.5%, respectively, in the same period 2025. Our gross profit was USD 8.3 million compared to USD 9.7 million in the same period 2025. Overall gross margin in the first quarter of 2026 was 49.1% compared to 51.7% in the same period 2025. Gross margins on service was 54.5% in the first quarter 2026 compared to 57.3% in the same period 2025. Excluding share-based compensations, total operating expenses were USD 10.8 million compared to USD 9.9 million in the same period 2025. Net loss in the first quarter of 2026 was USD 3.5 million compared to a net loss of USD 0.6 million in the same period 2025. Adjusted EBITDA was negative USD 2.0 million in the first quarter 2026 compared to a positive USD 1.4 million in the same period 2025. For the first quarter of 2026, we record an operating cash outflow of USD 8.7 million compared to an inflow of USD 0.2 million in the same period of 2025. For the first quarter 2026, our capital expenditure were USD 30,000 compared to USD 300,000 in the same period 2025. Turning to balance sheet items. Our cash and cash equivalents were USD 28 million as of March 31, 2026, compared to USD 32.8 million as of December 31, 2025. We continue to strengthen our financial position and believe we are well positioned to drive continued growth in our business. So operator, let's open it up for Q&A. Thanks...

[Operator Instructions] And our first question today will come from Theodore O'Neill with Litchfield Hills Research.

My first question is about the G50 MAX. And in your prepared remarks, you're talking about this being interesting to the market that's in conflict zones. And I'm hoping that it's a shrinking market, not a growing market. So could you talk about some other markets where this G50 Max would be appropriate? And I think you mentioned SC, and I'm thinking perhaps very remote rural areas as well.

Yes. So our GMAX is our high-end product. It's 5G. We can roll out 5G in over 100 countries. That's most popular, we can offer 5G in the world. So compare like the other -- our competitors like AT&T, maybe just 75. So the first advantage is we can provide a maximized coverage of 5G worldwide. That's first. And the second, we can provide about certified airline for the in-cabin 4G, 5G connection. The second, that means the business traveler in the air cabin, they can serve. And then it's about the satellite SOS and the messaging. So no matter you are in the outdoor or in the conflict area, you can get -- you never lost the connection. And number 4 is if you are in the office and at home, of course, you can get WiFi available. But WiFi sometimes is not reliable, sometimes is unreliable -- during this case, we can backup by the 5G and 4G with the multi-carrier that enable your remote work and remote study and remote meeting network fell down. So we balance the best coverage and the best tariff. So that means one device and one account, you can enjoy the global best coverage and the best tariff. So that's why we believe that one device for every scenario. Not only at home at all base, so the people have to bring the multi-device, multi-package home WiFi in-cabin WiFi, we have leveraging eSim or local multi-carrier tariff, then you can get the similar coverage and solution. And now with our solution one device, simply one device, one account, you can get the best coverage and the tariff. That's our purpose.

Okay. My next question is about the in-car infotainment and security cameras. Can you give us any more detail about the actual market share or the growth of that exposure of that business?

Yes. I think that's about our IoT business. We embed our cloud SIM and HyperConn solution into the in-car infotainment and that's CarPlay. Majorly CarPlay devices -- major car play devices come from China. Major top 10, the partners all embed our solution. That means plug our -- this CarPlay device not only can get the entertainment in the car, but also can get the network in the car. So almost the top 10 these providers all use our solution. So that's for car infotainment. And for the camera, so I think now more and more 4G camera, they use -- in the traditional, they need a SIM card inside. That means if the carrier network has some problem or coverage adjustment, you have to go to the high place to replace SIM card for the camera is very uncommon. But with our solutions, because 4G is more popular, the price is similar like Wi-Fi camera. You can see the 4G camera, the volume of the market share in the camera market is bigger and bigger. So for this -- for the 4G camera, I think the currently, more and more support from China provider embed our software solution into their camera. That means the user -- end user still can use the SIM slot to put into SIM card. But it's expensive and coverage is good. But use our solution not only get a benefit from the better tariff, but also can get cross-carrier coverage. And that -- you can see our market share in this market grows dramatically. So you can see that our installation volume is about 3.9 million pieces for shipment. In the 6 months later, they will turn into the package and with our -- in operation about from shipment to the user and adopt our solution needs 6 months. So you can see 6 months later, we will get more user -- far more users than currently.

And my last question is about supply chain issues. You mentioned in the prepared remarks about memory prices being a headwind. But I was also wondering, are you seeing any supply chain issues in terms of availability?

Yes, I think compared to last year, memory chip is almost 5 to 10x higher. So that's heavy impact -- I think the cost of the device. So we have many -- we think a lot of ways. One side, we have a lot of deficit, we have -- but also we try to redesign to reduce the memory size and to lower the cost. And also, we're looking the instead of the Chinese local memory. So all these, we can overcome some part of the memory price going up, but we can't offset the total because the price is too high. That's definitely with some impact to our selling price. You can see our -- not only 2B and 2C selling price for the device is higher, about 20%, 30% up than compared last year.

[Operator Instructions] As there are no further questions at this time, I would like to hand the call back over to Mr. Gao for any closing remarks. Please go ahead.

Thank you once again for joining us today. If you have further questions, please feel free to contact uCloudlink's Investor Relations through the contact information provided on our website or speak to our Investor Relations firm. Persistent Advisory. We look forward to speaking with you all again on our next quarterly call. Thank you.

That does conclude our conference for today. Thank you for your participation. You may now disconnect.