uCloudlink Group Q1 2025 Earnings Call Transcript

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Provided by Quartr
May 21, 2025

There are 6 speakers on the call.

Operator

Good day, and welcome to the YouCloud Link Group, Inc. First Quarter twenty twenty five Earnings Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note, today's event is being recorded.

Operator

I would now like to turn the conference over to Daniel Gao, Director of IR for the Company. Please go ahead.

Speaker 1

Hello, everyone, and thank you for joining us on Yucoinc's fourth quarter twenty twenty five earnings call. The earnings release and our earnings presentation are now available on our IR website at ir.youcloudlink.com. Joining me on today's call are Mr. Jiping Peng, Co Founder and Chairman of the Board of Directors Mr. Chaoyu Chen, Co Founder, Director and Chief Executive Officer and Mr.

Speaker 1

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.

Speaker 1

They will all be available to take your questions in the Q and 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 previous 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 implied by these forward looking statements. All forward looking statements are expressly qualified in their entirety 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.

Speaker 1

Please also note that YouclawLink's earnings press release and this conference call include discussions of unaudited GAAP financial information and unaudited non GAAP financial measures. Your CloudLink's press release contains a reconciliation 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.

Speaker 2

Thank you, Daniel, and good morning or evening, everyone. We kick off 2025 with a solid performance as our expanding global ecosystem continues to gain traction and build momentum. Total revenues during the quarter was $700,000 in line with the guidance, representing an increase of 3.4% year over year. Despite significant and increased investments in new product marketing and sales initiatives, we maintained a strong finance position, delivering an adjusted net income of million and a positive operating cash flow of US0.2 million dollars Our one point zero international data connectivity services business continued its robust growth. With the full speed five gs network coverage now available in 90 countries and regions.

Speaker 2

This expansion further strengthened our market share and reinforced our leading position in long wind market. A notable highlight this quarter was the showcasing of our newest innovative solutions for people, IoT, pets at MWC Barcelona twenty twenty five, including the eSyncTrue, CloudSimkit platform, new go G50 MAX and the G40 Pro. These new and exciting technologies have been integrated into our broader series of Glaucoma and Glaucoma Insight solutions, driving growth and increasing visibility and interest among consumers, global operators, enterprise customers and the business partners. With this strong tailwind starting from the second quarter of this year, our emerging business NAND Glaucoma Sync, Glaucoma Line, Glaucoma IoT are all projected to achieve active terminal growth terminal growth rate exceeding 100%, significantly contributing to our expansion and growth going forward as we build our global market data traffic sharing marketplace. Also, we expect that our Glaucoma Mobile fixed broadband business line will steadily grow by approximately 10%.

Speaker 2

Starting in the third quarter of the year twenty twenty five, we will begin regular disclosure of our key metrics, including user account numbers segmented by business lines to provide greater transparency and allowed investors to carefully track our progress in user growth. Following our MWC showcase, we are already capitalizing on high value opportunities by engaging in advanced commercial discussions with multiple major operators worldwide, with the several partners you could expect to be finalized in the coming months. At the recent MVNO World Congress year twenty twenty five, the premier exhibition for the MVNO industry. Our four latest solutions are unveiled, generating widespread recognition as a game changing innovations. These solutions are scheduled for commercial launch in May and June 2025 with scale product with the scale production expected to begin in the third quarter.

Speaker 2

In parallel, we have begun deploying AI intelligence to enhance operational efficiency and embedding it into a number of our solutions to improve the user experience and ensure seamless global connectivity. Alongside AI, our proprietary hyper count top seam fixed tech positioning technologies continue to break barriers in the connectivity, revolutionizing digital experience for IoT, people and pet worldwide. At CES twenty twenty five, our UNICOR was honored with the Best of CES Year 2025 Breakthrough Award by Android Authority, underscoring our commitment to innovation. Additionally, one of our subsidiaries hit a significant milestone as one of the first batch of 13 fully invested companies to receive approval from China, MII, for pilot operations of value add telecommunication services. Our inclusion in the first batch alongside the affiliates of the renowned multinational corporations such as Deutsche Telekom, Siemens, Airbus and HSBC reflects the growing impact we are having in the sector.

Speaker 2

This will enable us to provide Chinese consumer with a more diverse range of value added telecom services and solutions to better meet growing digital lifestyle needs. This marks a significant step into expanding our global footprint and delivering cutting edge connectivity solutions. I will now review highlights for each of our key product lines. I will start with Gluco Mi Lite, where we just unveiled our first pet connectivity solution at MWCA twenty twenty five, PETphone, a revolutionary addition to the digital ecosystem. PETphone is the world's first smartphone for pets, offering fun AI pet interaction, six tech global positioning for safety and AI smart Guardian Health Monitoring, pet phone is receiving exceptional market validation in the pet care market, indicating that it will attract more users in the future.

Speaker 2

It enable head owner to communicate with their pet while Glaucoma app, allowing them to call, send a voice message, play music, even set routines like setting times, playing reminders, pet can even initiate court. This device track exercise, running distance, calorie burning and activity levels, fostering a healthy lifestyle for pets. Pet owners can also join and create a community globally to engage with others like never before. These innovative groundbreaking devices redefine the bond between pets and their owners and will enhance NVMO and mobile network operator subscribers acquisition and the revenue growth going forward. Alongside Petphone, our Unicore Plus loan plug solutions provide additional secure and reliable connectivity for daily life, freeing users from composite devices while ensuring seamless and convenient experience.

Speaker 2

Turning to the Glaucoma IoT business, where we introduced the Closing Pit, an all in one game changing IoT solution. This revolutionary plug and play IoT solution was designed to deliver instant global full speed four gs and five gs connectivity for IoT and smart devices. This innovative solution can be seamlessly integrated into existing devices with SIM card slots, such as smartphone, CPE and other IoT enabled hardware. It is cost effect, enterprise grade and offer superior network quality, ensuring the best coverage without the need for any hardware or software modifications. The plug and play nature of our CloudScene technologies transform ordinary devices into enhanced connected assets.

Speaker 2

It offers a globally scalable asset with flexible carrier switching and a competitive economic, empowering the IoT ecosystem with seamless and reliable connectivity. We have already achieved significant penetration in the automotive infotainment and camera markets, especially among the mainstream Chinese vehicle brands, which advancing breakthrough in specialized segments like security and dashboard cameras, daily active IoT terminals increased 12 fold year over year in year February with positive user feedback. Our glaucoma SIM business just unveiled another game changing revolutionary leap in SIM technology, eSIM True. Positioned as the best second SIM and you can have, it enhances both domestic and international coverages by providing consumer with a single SIM solution for SIMRE's local and global connectivity. It addresses core challenges faced by NVMO and mobile network operators, such as poor network performance and limited international roaming and empowers Tier two and Tier three operator and NVMO that are unable to build independent network widely to deliver superior services and expand their market research market reach.

Speaker 2

ESIM Trill offer enterprise grade security, global coverage and at the best price, eliminate costly international roaming, deliver reliable high speed connectivity across multiple networks. Lastly, our people centric local MIMOBIO fixed broadband business just unveiled the MiuGo G50 MAX, a hypercon five gs mobile WiFi hotspot with AI driven sky to ground connectivity. This device enhanced network quality through AI powered real time congestion detection, ensuring seamless connection regardless of where you are. Our advanced Hypercon technology delivers hyper local global international access, ensuring that users have high speed connections and reliable network wherever they go without the limitation of traditional roaming and or carrier restriction. The upgraded G40 model supposed speak three times faster than the traditional four gs device.

Speaker 2

It's the world's first enabled in flight Wi Fi connectivity and integrating Wi Fi network across various environments such as homes, airports, office and cafes. All four business lines are now market ready, which will be commercially available in Q2 year twenty twenty five and attracting strong interest from partners, including global pet store chains, signaling significant market expansion potential as we engage in commercial discussions. As we innovative business lines increasingly diversify our revenue streams to a mix of value add services and mobile data traffic solutions that fit into our marketplace, Our user base is gradually diversifying and scaling up. With our expanding product portfolio, depending on partnership and AI integration, we are confident in driven growth through the remainder of the year remainder of the year. As the mature, regular disclosures of key metrics that will begin in twenty twenty five Q3, we have better reflect the direction our business is heading and provide investors with a clear understanding of the strategic progress we are making in building comprehensive global mobile data traffic sharing marketplace.

Speaker 2

Year 2025 marks our transformation year, during which our business expanded from one single line product line to four product lines. And the user figures to be released in Q3 will be crucial indicators of this transformation. With the optimism for the future in mind, I will conclude with our guidance for the next quarter. For the second quarter of year twenty twenty five, we expect total revenue will be between million dollars to US25 million dollars representing an increasing of 2.7% to 11.6% compared to the same period of year twenty twenty four. I will now turn the call over to Mr.

Speaker 2

Suh.

Speaker 3

Thank you, Mr. Chen. Hello, everyone. I will go over our operational and financial highlights for the first quarter of twenty twenty five. Average daily active terminal is an important operating metrics for us as it measures customer usage trends over the period and is reflective of our business performance.

Speaker 3

In the first quarter twenty twenty five, average DATs were 308,863, of which 17,803 owned by the company and 291,060 owned by our business partners, representing a decrease of 0.3% from the 309,906 in the first quarter of twenty twenty four. The average daily active terminal in the first quarter comprised 296,597 from GlobalMe mobile and fixed broadband business, six twenty one from GlobalMe live business, 5,219 from GlogonB SIEM business and 6,426 from GlogonB IoT business compared to 308,375, two hundred and one thousand eight hundred and 20 nine and five hundred and one thousand respectively in the first quarter twenty twenty four. During the first quarter twenty twenty five, '50 '6 point '2 percent of DAT were from Equalink one point zero international data connectivity service and 43.8% were attributed to UQA Link two point zero local data connectivity service. In March 2025, the average daily data usage per terminal was 1.59 gigabyte. As of 03/31/2025, the company had served 2,878 business partners in 63 countries and regions.

Speaker 3

The company had 183 patent applications with 159 approved and 14 patents approved. Wide pool of SIM card was from three ninety one MNOs globally as of 03/31/2025. Total revenue for the first quarter of twenty twenty five were US18.6 million dollars representing an increase of 3.4% from US18.1 million dollars in the same period of 2024. Revenue from service in the first quarter of twenty twenty five was US14.2 million dollars representing an increase of 4.9% from US13.5 million dollars in the same period of 2024. Revenue from service as a percentage of total revenue was 75.7% during the first quarter of twenty twenty five, slightly up from 74.7% during the same period last year.

Speaker 3

Geographically speaking, during the first quarter of twenty twenty five, Japan contributed 40.4% of our total revenue, Mainland China contributed 31.2%, North America contributed 12.9% and other regions and countries contributed the remaining 15.5% compared to 40.9%, twenty five point three %, fifteen point eight % and seventeen % respectively in the first quarter of twenty twenty four. Overall gross profit was US9.7 million dollars in the first quarter of twenty twenty five, representing a decrease of 3.1% from US10 million dollars in the first quarter of twenty twenty four. Overall gross margin in the first quarter of twenty twenty five was 51.7% compared to 55.2% in same period of 2024. The gross margins on service was 57.3 in the first quarter of twenty twenty five compared to 65% in the same period of 2024. The gross margins on sales of products was 34.3% in the first quarter of twenty twenty five compared to twenty six point two percent in the same period of 2024.

Speaker 3

Excluding share based compensation, total operating expenses were million dollars or 53% of total revenue in the first quarter of twenty twenty five compared to US8.5 million dollars or US0.47 dollars of total revenues in the same period in 2024. We record an adjusted net income, non GAAP, 400,000 compared to US1.3 million dollars in the first quarter twenty twenty four. Adjusted EBITDA was million dollars in the first quarter of twenty twenty five compared to US1.7 million dollars in the same period of 2024. For the first quarter of twenty twenty five, we achieved an operating cash inflow of million dollars compared to US1.9 million dollars in the same period of 2024. For the first quarter of twenty twenty five, our capital expenditure were million dollars compared to million dollars in the same period in 2024.

Speaker 3

We maintained a solid balance sheet with a cash and cash equivalent of million dollars as of 03/31/2025, up from US30.1 million dollars as of 12/31/2024. With that, operator, let's open up for Q and A.

Operator

Thank you. We will now begin the question and answer session. Today's first question comes from Theodore O'Neill with Litchfield Hills Research. Please go ahead.

Speaker 4

Thank you and congratulations on the results for the quarter and your outlook. My first question is about, about the pet phone product and if you could give us any highlights into the regions or the demographics of the customers you expect will be the most likely to be early adopters of this product.

Speaker 2

Yes. I think we were launched in our Bacanona exhibition, we first announced we were launching a platform in this industry. So it caused a lot of interesting. So since we will launch this product in the May for commercial launch, we have many products. There are three main type of users.

Speaker 2

The first one is we wire the channel, channel like a pet channel. So we approach a lot of the pet channel like in Europe, in Asia and also in U. S. Like a cherry. So we already own the commercial progress.

Speaker 2

So it's quite uptaking, and I think we will be closed recently, so in Q2. That's fourth channel. The second channel is wire carrier, wire mobile watch operator or virtual operator. So we help them to promote eSIM or SIM card into our platform and have the carrier to acquire pet users. So expand create a new we have carrier not only just from the traditional people, IoT now expand to the pet users.

Speaker 2

So we already have several carrier, nearly finished the contract with us about as we sell our pet phone product. The service, our traditional electronic channel. So they are also interesting to sell our product. So I think so far, everything's progress and testing is so good. Now waiting for our commercial version available and this be launched.

Speaker 4

That's very helpful. My second question is about sort of the tariffs that are being raised and lowered. I'm wondering if the changes in all these tariffs are having any impact on your business.

Speaker 3

So the question regarding the tariffs, So far, we don't have implications by this tariff barriers between U. S. And China. We have a stock product in U. S.

Speaker 3

As a channel. So that's available for our sales for a while. And also, we have other sourcing manufacturers in other, say, VLAN. We recruit manufacturers outsourcing and manufacturers terminal device in VLAN and other countries. We have a low tariffs between The U.

Speaker 3

S. And the other countries. So we expect that The U. S. Market is a growing market for our new business lines like pet phone, like IoT solutions.

Speaker 3

So we prepare this solutions and in place to manufacture our product to overcome this tariff barriers between The U. S. And China.

Speaker 4

Okay. Thank you very much. That

Operator

you. And our next question today comes from Vivien Zhong with Diamond Equity Research. Please go ahead.

Speaker 5

Hello. Thank you so much. So firstly, can you explain in detail the reason for the increase in the cost of services and whether you will take any measures to control this cost extension?

Speaker 3

Yes, you have two relevance. One is regarding the cost of service. This is reflecting as we discussed the service gross margins a little bit lower than the same period last year. And that's because we mix shift sales different sales categories across region and country. For instance, in the first quarter of this year, our outbound roaming service for Chinese outbound travelers increased significant.

Speaker 3

And this Chinese outbound travelers rent our terminals, Wi Fi hotspot terminals for their roaming connections traveling outbound. So in that case, there's a revenue service generated by the Chinese outbound traveler have a significant weight in the overall service. So that's something impact our overall service margins a little bit lower than the same period last year. That's the first answer your first question regarding the cost of service. And the second is regarding the expenditures related to expansion of business.

Speaker 3

Yes, as we disclosed, the first quarter of this year, we spent more expenditure than the first quarter of last year. The extras expenditures on sales and marketing for this new business. So we attend quite a lot of market exhibitions across worldwide. And we invest over more than US1 billion dollars compared to last year's on this marketing and promotions. We believe this is expeditious on the marketing, so we'll bring the more volumes of business to our futures periods.

Speaker 3

So I think that's the revenues related to the new business line will come into account later this year or next year. So as one other metrics as we disclose is daily active terminal related there's three new business lines, especially for IoT daily active terminal is increased twelve first compared to last year's same period. So this year, we expect the three new business lines IoT, SIM and the live series, their daily active terminals number will increase over one year time compared with last year. So we are on the right track to deploy our strategies from one business line NBB expansion to four business line to grow. We believe that I think that we follow the right strategies to support growth.

Speaker 5

Okay. I see. That makes sense. My next question is about the partnership you mentioned. Can you please share like can you please provide some information on the areas of collaboration you expect to see in the coming months?

Speaker 2

So in the last question, I already mentioned some partners in the past, our partnership is more like international data and the local mobile broadband. That's our partner in the airport in MVMO. So since we have three new product lines, so our partner become more and more partner. For example, first is our carrier customer do interest in our product line. For example, like our mobile virtual operator and Tier two, Tier three carrier operator.

Speaker 2

They are now very interesting our SIM kits and SIM Trio. They think this is a killer application product because we bring international roaming to mobile watch operator, less this never happen to this industry for mobile watch operator, first. And the second, we have Tier two, Tier three carrier improve their long mean parking power and their long mean service quality. Normally compared with the Tier one carrier, Tier two, Tier three carrier, their long mean quality and network and partner is very weak. Now working with us, they can become the superior to the number one of carrier for the quality of the roaming.

Speaker 2

And also, we can have the carrier and Tier two and mobile watch operator compromise of their network coverage in local. So normally, they have a few investment in the base station. They have poor coverage. With our solution. Now under their coverage, they can use their original SIM card, original SIM information.

Speaker 2

But outside their coverage, they can use our SIM card and data traffic. So that's quite help them to improve their quality for long lead and create new revenue for our SIM and SIM Trio. By our new product or platform, I think it's very popular no matter if Tier one or Tier two carrier or MVNO carrier. They all like this solution because we create new revenue for these partners. So and that's the fourth product in the industry.

Speaker 2

Carrier promote a product is much faster than traditional other channels. So they can, for example, buy data and give a free device, etcetera. We help them to develop to gain new users on the pet market. So also our UniCore, our LifeSerial product can enhance the loyalty of the customer, can make the retention of customer become more loyalty. So that help the customer to get more revenue from the retention also from the I think the combining with the Origin SIM card and our live product with a bundled package, customers become more loyalty.

Speaker 2

So that all these reasons, that means in the last year, we have very few of these or carrier partner. And now since the MWC and last week, MBMO World Congress, so we get a lot of interesting. So recently, I think we will close some deal with this carrier. You can wait for our IR in the coming months. And finally, so we also we have invested into still invested in our traditional mobile broadband product.

Speaker 2

And our traditional product majorly is used for travel, for our people travel outside. But now our new product in one device, one account to let our users not only for travel, but also in home, at office, even in air flight. They don't need to switch the account and the device. Just one device, one account, they can enjoy the best network quality worldwide and for the best connection. Also, they can get most cost effect.

Speaker 2

So for example, like a home and office, we prefer to use the free WiFi, office WiFi or home WiFi. But once the WiFi coverage is poor, coverage is bad, we can back up by the four gs and five gs network. That means we can provide the best connection and cost effect in the world with one device and one account. So here also is more enterprise user now interested or travel users interested working with us. So I just keep this information about the new partner and then new channel working with us.

Speaker 5

Okay, got it. That's very helpful. Thank you. That's all my questions.

Operator

Thank you. This concludes the question and answer session. I would like to turn the conference back over to Daniel Gao for any closing remarks.

Speaker 1

Thank you, once again, for joining us today. If you have further questions, please feel free to contact UCLAUDINX Investor Relations through the contact information provided on our website or speak to our Investor Relations form, President and Advisory. We look forward to speaking to you all again on our next quarterly call. Thank you.

Operator

Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

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Key Takeaways

  • Yucoinc delivered US$18.6 million in Q1 2025 revenue (up 3.4% YoY), an adjusted net income of US$0.4 million, and positive operating cash flow of US$0.2 million, despite ramped‐up investments in new product marketing and sales.
  • The company now operates four distinct product lines—Mobile/Fixed Broadband, eSIM True, CloudScene IoT and Petphone—which are all market‐ready in Q2 2025 and expected to drive emerging line growth of over 100% in active terminals.
  • Yucoinc’s international data connectivity continues to gain traction with full‐speed 5G coverage in 90 countries, supporting an average of 308,863 daily active terminals in Q1.
  • Strategic collaborations are advancing with major global operators and MVNOs, and the company’s subsidiary earned pilot approval from China’s Ministry of Industry and Information Technology alongside leading multinationals, underpinning its telecom services expansion.
  • For Q2 2025, management guides to US$19.5 – 20.25 million in revenue (+2.7% to 11.6% YoY) and will begin regular disclosure of segmented user metrics starting in Q3 2025 for enhanced transparency.
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Earnings Conference Call
uCloudlink Group Q1 2025
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