- Earnings call transcript Q3 2022

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Operator

Hello, and welcome to the uCloudlink Group Inc.

Third Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. to of conference the like Zeng, to would Relations Investor Company. now turn over the Jillian I Please go ahead.

Jillian Zeng

is our Thanks everyone well a call release brief earnings third is as quarter our available for joining our our I Board of our Officer; us today. on via Chen newswire introduction The is will ir.ucloudlink.com, Co-Founder, to website management at Tan IR and Vice of our Yimeng Financial services. XXXX now is as on team. give earnings Directors; President and Chief Chairman Shi Zhiping Officer; Zhu of Co-Founder and Peng Sales. Executive Director is Chief our Chaohui uCloudlink Marketing

X IR Our a and of CEO business company website. begin presentation our overview with posted in the of earnings cover our highlights will section the which will

discuss Our as results in the Yimeng will CFO, Shi, operational highlights and and financial our Sections X. X presented then

also statements, results, performance expressly qualified to in company's which cause results, factors All statements with are achievements that made implied details Private Safe may are statements. not not proceed, risk forward-looking future otherwise, that cautionary may reconciliation call contains include contain involve factors current of uCloudlink's please statements a we based Litigation and the or company's on Reform uCloudlink's call statements press the now in and market to risks, measures filings materially by of Securities events, provision note does turn and result the their required financial Please Harbor comparable as company go the of These the as call expectations the Act unknown release unaudited earnings note observations and directly unaudited or ahead. of any control, uncertainties unaudited management's by will company a co-founder different or assume The information revise forward-looking forward-looking forward-looking Before or known actual release that and to information, XXXX. conference of unaudited GAAP obligation under I other press Chen. as non-GAAP be as the law. conditions most non-GAAP statements this of of Chaohui over to performance update measures. this well change discussions expectations the the by new financial pursuant from measures. and Please except these the any SEC. GAAP to Mr. the the CEO, forward-looking our the entity

Chaohui Chen

our content on the Thank them with presentation the earning you some in the quarter. will recent our to Jillian. similar as Page quarter of of XXXX. still latest on Relationship Investor I earnings to uploaded We second the have quarter presentation of third review focus X XXXX XX year Hence, year developments you to Page in third updates. website encourage most

potential. Let’s margins move strong services Data on-going Connectivity with business, our growth which profitability gross to high and a Page the XX. had record International of uCloudlink track is has X.X

Japan in Southeast period continue by our up third travel of Mainland with year-over-year. later by During the the our and compared significantly across year recovered XXXX. X.X around North major X.X year distribution over quarter market of revenues the in China business business the Asia. market has revenue America XXXX same Europe Asia third international to world and market increased quarter time followed and during XXXX, slightly International The abate year our Southeast XX.X% to opening increased in of

the our X.X during terminal quarter daily third compared business also year the number has for recently the Japan restriction of to has has XXXX X.X for average of foreign effective Average reliable third markets, announced key by data providing countries international as entry business lifting our travelers increased assess we XXX high products increased XXXX. of of showcasing of and for the single last network. SaaS services. empty data quarter October. of are quality and recovery of our the One XX%, Consequently, to activity PaaS enabling daily Currently, information our by XXX more year terminal of network and powered the than quality operator platform, global demand high more connectivity point uCloudlink operators accelerated than services in mobile

positive as the will to of key forward, business remain Going our continue well results. be our revenues, growth bottom X.X I driver will line that as

page has normal since growth Let's growth such have we existing opportunities to. cooperation the our in America, our more data strengthen business Its market applications X.X the past connectivity Japan, continued connections, we and to uCloudlink is and GlocalMe patent presence with in help and CloudSIM Inside, manufacturers is our operators through services solve move markets, XXXX. area, conversions improve The built technology where the solution. HyperConn our our intelligent upon and SaaS local technologies, exploring development year source quarters, implement a XX. etcetera. improve connection PaaS South revenue services including efforts connectivity North Asia, problems to data In to based and getting IoT hardware data the platform become are and XG including partners lifestyle. business and of as our their of on our used to data new people the in Less abilities network post-pandemic new more

ourselves in pride to various and X.X products share evolving market latest take our introducing innovative application quarter adapt to we by business into in our scenarios. last address upgrading our to we ability the As quarter,

the in year XXXX Our X.X to increase during XX.X% business revenue quarter reported period previous years. third the same of compared

through to reduce prospects partners cutting data business exploring spectrum And continue these operating are IoT a solutions. serve we new without experiences customers to broader focus need. and costs, on connectivity realize edge to the improve Our of able

to is a ramping. uCloudlink for connectivity with better For leading global smart platform operating services its example, cloud provide

for prepare better scenarios. application provide IoT experience the to and During quarter, efforts portfolio we more into solutions for the diverse a third learning have customers current of and products turned our offering upgrading these

our solutions to products with grow local X.X support expect the as strengthen to CloudSIM market, innovative the and and and with business technology our HyperConn services partners. of to our introduce collaborations we continue We our

SaaS posed now X.X us. technology business, partners. empower research to in team has move solution PaaS been assess pioneer PaaS positions data we market. We mature a X.X business, confident and and of business our newer our development ecosystem, customers to connectivity development development ecosystem, our diversified itself teams the various and to uCloudlink recognized by our provider in business in SaaS to and our remain XX. to building needs page as promote the on which Let's of Based and long-term a a

XXXX. we the than we cash the global pandemic a successfully quarter COVID-XX in that during a We announce outbreak positive quarter to income, year the of non-GAAP second the positive And consecutive the quarter more net are second pleased XXXX. of third time operating maintain flow year adjust achieved for of for the since the first

Our compared the And be $XX quarter total year to the X% and would the year period the expect, of XXXX the between of first of XXXX. million an total we revenue reached $XX.X third million $XX further XX% we of for during to revenue to increase year XXXX. million representing same our quarter improve

that and transformation a significant see We driving is improvements us connected position advanced expect better to in operational the to increasing of financial solid, a in information uCloudlink results build to allow force more We better the these the will connection, believe era. future.

I now go users the committed who will more business to customers are will global and in future a strive community. financial to build the a more for through turn and CFO, make connected to user for highlights. serving Shi, We we customers impact and over our it positive Yimeng

Yimeng Shi

Mr. our XXXX. September highlights will Thank Chen. go for quickly Hello, quarter business the you, ended everyone. I XX, over

increase XX% XX usage to business gigabyte global for China. which our was quarter the XX. of which around XXXX. Please data of revenue had third per owned X.X owned We terminal third from active total Average by of shows XXXX. Let the XXX,XXX turn daily September outside quarter during diversification in now XXXX. XX% the daily Average quarter representing third DAT the the were of of service partner, the page to by around terminal of total X.XX accounted in business. XX.X% [ph] Mainland our page XXX,XXX us of XXX,XXX, from for uCloudlink company and X.XXX an turn

During the total XX.X% to our revenue. XXXX, around of Japan quarter contributed

For the such markets etcetera. reflecting other business will we countries development revenue, further our and to other the had America Southeast a American largest contribution our and to expand business market as continue Asia, Europe

XXXX. our from of from travel quarter of total business. of turn third connectivity Service-related data third XX.X% gradual XX.X% revenue service mainly will the connectivity connectivity the and attributable compared in data During during to we go coming development and the total of XX.X% Please the had XX.X% XX.X% increased of of increase coming financial quarter regions. XXXX. XXXX connectivity of Page the in and and to revenue This from Revenue year-over-year, of from quarter total total during X.X% international revenues Mainland with and by the coming third other through XX.X% respectively. of data quarter countries from service service China now of I a our highlights was the local service data continuous revenue recovery Japan international local as revenue XX. XXXX, percentage revenue was

our two and revenue shows sales breakdown namely Let's XX, of Page products. service move which to the revenue business from segments,

million in in quarter sales data-related revenue due the a total million by $XX.X in third products. decrease Our certain $XX.X of to third of the X.X% from to quarter terminal XXXX and primarily decreased XXXX of

an the increase connectivity connectivity XXXX. of However, period was from from $XX.X data revenue increase to $XX.X same service. international from attributable from revenue million data was This local in representing of and service service million increase XX.X% the primarily

margins of Page business. to XX turn for us Let gross our

margin highest Our margin margins in of the same service gross of the was during same XX.X% overall compared quarter our XXXX, XX.X% the primarily increase data from in international of XX.X% XXXX. in gross quarter increased connectivity from quarter of And the gross profile service. XX.X% XXXX third to XXXX. to of of the third service attributable The increased was period third our XXXX margin during period to

to shows the Let XX, our us breakdown operating which of move Page expenses.

quarter and XX% total in the during same share-based as compensation, with expenses of a compared Excluding others, period share-based operating of XXXX the excluding of was revenue XXXX. compensations third percentage XX%

operating total costs. the of quarter to period XXXX our $X.X business to expenses, We XXXX. labor million streamlined the million excluding same operations, optimizing have including third $XX.X in decreased our compared of compensation, share-based And in further

turned Let's primarily efforts to a to flow This cash to for result improve period same third was compared quarter million XXXX. of is the of negative and XX. expenses. $X.X Page margins quarter during on-going the operating control turn profile $X.X our second million consecutive Operating positive the of XXXX during and

September at as cash XXXX. Our million XX, and equivalents were and short-term deposits cash $XX.X

to XXXX. Our compared CapEx same the was $X.X period million of million $X.X in

us adjusted the third positive to EBITDA and to million XX. compared since of move to $X.X million successfully during XXXX first negative of net the The the loss was million global during XXXX of for during XXXX $X.X quarter a EBITDA during Let COVID-XX of Page quarter income third quarter XXXX. third the the in positive time Adjusted non-GAAP million $X.X pandemic was XXXX. net $X.X quarter the compared outbreak third achieved quarter of second non-GAAP of adjusted the

position. company redemption is in our the positions. to a improved In of its financial improving financial due bottom-line and confidence above, mentioned early debenture October, announced working we convertible increasing results As toward

operations to conclude further and are Thank session. let We in strategies our you our enhance company's we Q&A confident start execute presentation. With and me financial the to today's position. capability that,

Operator

[Operator ahead. Research. Vivian go from comes Zhang Please Equity Diamond Instructions] first The question with

Vivian Zhang

the can quarter. my reason -- quarter? Good that the so positive that, second consecutive this morning. affect generate will why flow company? company operating continue My what's question cash first the the on Congrats How to is for

Yimeng Shi

growth Shi the been illustrate second our came reason margins we our the -- Yimeng margin the of improving the levels. gross answering positive and operating following that margins presentations, flow as profile maintained XXXX. Yes, be the cash reached highest the overall Yes. two, The quarter-over-quarter has is main from service will overall second we gross quarter questions. on our quarter, First,

streamlined our expenses last been contributed year. to -- that We amount significantly demonstrate compared as periods process. the And same operation our increased to control And is our our our we we So operating have operations. the second decreased gross profit significantly. has business maintained point of operations

trend So the to our cash And of of contribution uCloudlink in quarter's the this we positive second that's this fourth main cash the quarter year. be achieved expect two flow. positive will

the we has our our been and So believe financial improving support growth position future. in

Chaohui Chen

recovery. our Yes, by international business the way

business. a get more had is business. this high-margin to high-margin So Also

Vivian Zhang

it. got Okay,

you and can taken us and to matters achieve with share adjusted EBITDA? So income control what costs positive have net you

Chaohui Chen

a operating gross cash our well. our time similar margin same reasons overall have gross operating at margin been -- as And as The expenses the improved flow. The decreased Yes. positive lot.

will adjusted we and EBITDA. achieve adjusted So income positive combine combinations together, positive we a net

we will be as year on next So the the expect improvement carried and quarter this well. in fourth

So this the on improving basis. company's current situation will be

Vivian Zhang

Okay. like matters decreased like operating Can the operating knowledge that taken? -- a you lot, have you on saw expenses, specific but because taken, what expenses elaborate the decrease what to you've we

Chaohui Chen

Yes. This as from the reduced headcount last we numbers release, we as the same in the -- year. in period That's our decrease came has main headcount-related the -- cost. compared the been amount with

around. So numbers we report that the the is presentations XXX headcount in

have headcount support year outlook to and been last compared numbered also and year's but our efficiencies year-end the growth of with in headcounts to has the achieve efficiency, well. our as -- operations achieve next number this or improved, been So our

Vivian Zhang

it. Got Okay.

question of So the America lot increased from with Japanese North my this compared markets, the a has last that Chinese is and year. revenue proportion

So the there? growth us can you share -- growth American the market? how And the drivers what North the are of for with

Chaohui Chen

Yes.

speaking. Chen I’m So

So see can North America -- you data. is

market U.S. more year big one last a recoveries about There a several this is reasons; to COVID-XX. year, $XX several That's million from are American from million. lot increased we forecast increase. North Our quite than

not one more U.S. requirement good and reason international Asia. network for the second China become So And popular, the in the as the more the coverage traveler of and is that's market is reason. as

better a jams traffic local best coverage need in and people network. So

So that's coverage the for especially XG, increased, improved.

and solution, So the we in popular the requirement local first solution IoT XG States, including the world's that's And the market. [indiscernible] in third the the launched market, coverage. United for this local better including

So providing people and think, I to it's getting need better and more coverage better more industry service. and more a more,

three can So reasons best that the key to compared provide product other our these are products. because coverage

So this market. in we win market share more and more

Vivian Zhang

it. Got Okay.

like us So main can of competitors share you market? you North the with the in who are American

Chaohui Chen

and There and like areas, there come from -- can But are important the similar are quality to some provide different product much we the telecom market. Sky different wider much in -- quality competitors. because are understand better technology. how Yes, we have Long, they we is the industry, we competitors line

is only product case. long XG one That's who So why we we currently invest no a our in can other are the can a provide products. lot vendor global the provide, solution, which

in help our other the the the increased position U.S. case is in also can we Amazon product market. is The and there. our in This quality our very exploring And market, share is best see a the us quickly. -- share seller patent in customers market for Cloud our product the the market SIM you leading this market technology understand quickly

Vivian Zhang

see. my questions. I you. Okay, Thank That’s all

Operator

to would [Operator Instructions] Jillian question-and-answer back over like conference This concludes Zeng I our turn session. any to closing remarks. for the

Jillian Zeng

everyone us. Thanks for Okay. joining

the our Group. website, contact information Investor questions, contact you, any Equity contact provided have Relations on Investor Thank Relations or firm our through the everyone. uCloudlink's you If please on

Operator

concluded. now Thank presentation. attending has you conference today's The for

may now You disconnect.

Chaohui Chen

Thank you.

uCloudlink (UCL) 16 Nov 222022 Q3 Earnings call transcript