Earnings call transcript Q1 2023

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Operator

Good morning, and welcome to the uCloudlink First Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Jillian Zeng, Investor Relations for uCloudlink. Please go ahead.

Jillian Zeng

us first joining call XXXX for today. everyone on quarter our earnings Thanks, is our available ir.ucloudlink.com earnings now The release on as newswire as our IR surveys. well at website

management of will Financial posted Co-Founder operation Chaohui recent and Shi CFO the Officer. of a to website. brief Chen, is I Chaohui overview and Directors; Mr. Officer. is Chairman Zhiping and our with will cover our our company’s presentation discuss CEO highlights highlights earnings Yimeng begin Mr. Co-Founder, Board results. our on give Director will uCloudlink which company’s our Mr. is financial will Peng then business an team. Mr. Co-Founder and IR introduction Chief Yimeng Chen of the Shi, our our Mr. Executive Chief

effective by future as or change assume conditions any law. results, with expressly result we and in based management’s not of All implied that SEC. involve the performance please qualified company’s pursuant current results, does Litigation other revise required from the call control, actual expectations cause the materially safe information, forward-looking update Private performance contain except forward-looking and observations of with to the These by the are provisions the XXXX. company statement to which events, as note expectations may forward-looking be Reform to otherwise, a may The the details known or any statements. and not company under on of forward-looking in Securities by statements factors different of are statements or these forward-looking the risks, new made harbor achievements Act obligation proceed, Before company’s company’s of and their filings entity or statements this uncertainties unknown that the statements market

UCloudlink’s press release an also measure. comparable financial release measures GAAP GAAP an non-GAAP directly includes measures. conference of reconciliation well unaudited information of as as earnings a that uCloudlink’s call this unaudited Please an non-GAAP note to and most press discussions unaudited unaudited contains

turn Mr. go will over call our to Please Chen. and CEO, I ahead. now the Co-Founder Chaohui

Chaohui Chen

good everyone. us on quarter earning we joining Julian, call. appreciate our Thank morning, you time. everyone's Today you, XXXX year Thank and of first for

as pleased COVID-⁠XX over in terminals market. continue XXXX quarter which generated flow operations this that is with off income in upward growth to the cash uCloudlink are accelerated the We positive pandemic. trend quarter start to demand with ecosystem, first average for we expand an our first PaaS results, time reflecting global XXX,XXX positive historic and daily we since market to The the both services of in strong the global the achieved outbreak revenue height across active be continue and SaaS of net from reached a and

business, connectivity is historically X.X services our has our and uCloudlink margin business data be key to which been of drivers. tends a growth of higher international line one

During million. the X.X XX.X% XXXX, business US$X.X increased year year-over-year to uCloudlink quarter revenues first of

across X.X our We significant markets in result international recovery major business accelerated a that as are demonstrates of delight particularly travel uCloudlink Japan. growth our

indicates period We Roamingman coverage Roamingman X.X the with markets terminals increased for brand strong of business. Average same from China active also Asia growth year observed our uCloudlink business XX.X% of are historically XXXX Southeast demand significant X.X by mainland increased and wide with our compared have daily which in business which

market to to X.X look International and grow Roamingman pick solidifying in further our to our users market continues Solutions in forward We business leading remain our optimistic globally thereby position we global our ability serving up. as the uCloudlink the

offering in reliable solve focuses during on took services challenges as opportunities the seize connectivity residents data carrier. local data services. local local the off we local our markets pandemic connection This the is X.X among which by and uCloudlink business, business the

business Over Japan their including we continue and patent cloud operator HyperConn two North Past America, and on SaaS we and resolve data our the where connectivity markets, including help based to strengthen local in improve connection through our partner our platform technology past presence SIM data technologies and problems and years, services solutions.

X.X US$X.X by period the Our million US$X.X up in first new the revenues, XX% uCloudlink year XXXX to million quarter as XXXX. in business of year reported same in compared of

and America from recognition ecosystem. and Japan continue established expanding North business our in receive efforts and markets like PaaS We SaaS in our partners Platform

our will in broadband reliable especially the HyperConn fixed data our technology quality, industry. connectivity innovative high and services based mobile recognitions more expect applications, We receive and on industry

innovative We future. set launch near customers of business the mobile partners operators, virtual diverse catering needs individual to products in the HyperConn more to expect of a and

and Internet which experience their have our the scenarios been shared of team business. in existing customers business, one-stop application our leverage launch users leverages uCloudlink future including expand the to to our near uCloudlink our research based data support develop resources Things, traffic we uCloudlink connectivity At On to to IoT of the sharing by marketplace Mobile cetera, which through actively side IoT in fourth the IP X.X X.X The our business welcomed scenario with application their updates our customers. module in router, is the advantages. for efforts development and in In X.X by models. for IoT on for are scalable and continues explore various improve working our multi-application competitive mobile cameras, version data WiFi have Japan, same planned further business partners we et building markets to the time, the

leading connectivity believe connectivity in innovative and of a and reliable available industry. devices users historic data and in GlocalMe position maintain enable the international travel This international new quality the the solutions us to confident the utilized our data XXXX remain track to to products We our market of of prepared We for connect of record peak anywhere, ahead of summer. we're demand conditions high advantage year marketplace during experience end the delivering season version. app enables network in take introducing and services to anytime, the

uCloudlink are always solutions more We HyperConn to expand solutions of to and our technology plan development scenario. to committed continuous innovative application and

business value deliver our we'll portfolio strategies And services add to expanding offerings. experience. by mobile our their with Our continue connectivity our data to of growth improving to execute customers continuously aims

I turn the CFO, over will Shi. call now to our Mr. Yimeng

Yimeng Shi

operating month, daily highlights you, performance. I reflecting XXXX, Average ongoing And an operational customer go for financial will Thank our Chen. hello, In terminal, is Mr. quarter and as of quarter of of the everyone, it Active the Daily DAT XXXX, active the over measures first important first uCloudlink period our business trend metrics for over usage XXXX. average the the by partner, XXX,XXX X.X the DAT XX.X% and of total respectively uCloudlink by average a for XXX,XXX our of which X.X from of quarter during the around accounted quarter were the of first XX.X% and up owned XX% XXXX. owned X,XXX and in uCloudlink DAT first The Terminal by for XXX,XXX company business our business

terminal up quarter in daily the Revenue was service the US$XX of X.XX for million XXXX. in Revenue period XXXX was same revenue GB Average XX.X% revenue an the total US$XX.X XXXX. XX.X% XXXX. from first the from during period as was first for first from service in the increase same percentage from the from were same of XX.X% million, ‘XX per Total data in US$XX.X of during million, quarter March of an period of of million usage XX.X% representing of of US$X.X increase XXXX, XXXX. quarter

to the in XX.X% quarter the contributed margins of period XXXX, in XX.X%, on countries gross margins XX.X% quarter other the service Japan XX.X% our During of gross quarter to XXXX same the of first period XX.X%, XX% contributed regions in as quarter remaining to of contributed in mainland first increased first improved of the China to contributed compared the in XX.X%, respectively XXXX, XXXX. XX.X%, first and X.X% of compared the the total same from XX% of and XXXX XX.X% America XXXX. Overall North and and X.X% revenue,

total of of compensation, in total or period XX% US$X.X to first Excluding in XXXX. same decreased revenue compared US$X.X as to million the the million share-based the operating total revenues XX% or our of expenses XXXX of quarter

net compared improved line a compared our which in of million in Similarly, realized of XXXX million XXXX. US$X.X We XXXX, US$X.X quarter on represents first of during million as as loss XXXX. improvement to to period bottom first US$X.X adjusted EBITDA period million of net US$X.X same in income to quarter the results negative the same significant the the

as EBITDA has pleased this pandemic since for the are three positive net consecutive remained We we the adjusted positive quarters. of achieved outbreak income and is COVID-⁠XX first-time,

the have same flow to period positive during cash US$X.X first US$X.X of XXXX. quarter XXXX, We operating million the million compared achieved which negative during of

four for of quarter generated bottom from in have have We consecutive operation flow first improved our positive line quarters. significantly XXXX cash and the

that Our it strengths us strategies. to Q&A. for in operator, our open position financial growth let's execute enable With

Operator

[Operator Instructions]

today The O'Neill first comes Theodore question from Research. Litchfield with Hills

Theodore O'Neill

you me, much. hear okay? very on questions good. Thank you Yes, have the I you. good quarter. for three Can Congratulations

understand on both mix Is first But greater or efficiencies the of had wanted can services. because in the due that gross got that I in pricing The margins was there margin was on to you a services. overall some see better the profit, the quarter I products better products? to and

Yimeng Shi

one one. So by we questions answer your

past see Yes, in profit, raised couples right. gross you the gross will improve just gross So the quarters. profit, we the you question first regarding margins of

basis. improvements massive that's So quarter-to-quarter on

categories. service depending margin is gross service of the mix on the For improving a

mixture and connectivity is that's categories local a One connectivity the the a is and one of three the revenues. SaaS service service. So roaming service main of service; international PaaS

improving from revenue is than SaaS gross service. and proportions the roaming growing the the PaaS, from margins the of So connecting international local will service reflect generating faster

the where over result couple of of improving past we the get quarters. that's margins improving So the gross

the in open than so near can before. future border the been border people most countries cross year look So this in forward move we because has up more for the freely

will roaming generate there's international the from service. revenue expect We more connected

So if international improving in the roaming of proportions be future. you service will the zooming

be So That's overall margin the a cost will expect year. my bit this opinion. stables for at in we keep improving quarters least following service

Theodore O'Neill

that question in you that remarks how had up and goes and expenses. testing expense. and down sense can some the you you. of with and would $X.X go the would Thank have is insight more a sort number next little how in research for a about says Can down, products, me development certification new give it million you us up give My of quarter-to-quarter? of I or into testing thought prepared but certification? decrease It that

Yimeng Shi

answer half expenses. decreasing you regarding the first part I Yes, and the

some year and we reflecting streamlines year give the account decreasing Yes, that's may on XXXX product. since compared CEO with the the our our Our XXXX. is operations new colors report head overall the

been that's basis. operational efficiency on our has improving part headcounts of so off number the comparable cut and for reflecting some certain So for with

every similar a on functions platform that's year but still past upgrades and our for functions. different, new that a years, So basis lot investments story invest, , been to have year-to- overall we R&D in our support develop decreases on and a couple different the and product. new invest features this on so expenditures we to launch research of support huge leverage will R&D year We development as we new well this invest

So new developments, give regarding on our some will CEO more the products color that.

Chaohui Chen

did two the some all the this ago HyperConn, Yes, two not heavy you cost invest in end product see we ago investment. launch last control last side because our loss comment years so these control invested of I'm Chaohui new because in R&D that's Chen. can R&D the then we finish side, years. I have the year our we impact add loss and we R&D years and to But start XX in development

This So Mobile broadband meet choose, and in tell I near is the will will future a in launch already opportunity broadband market. my our -- for for fixed mobile the for This operator broadband. product. HyperConn we presentation, huge

we we new the around and the prepared this series in products of time, also I think launch new in are to quarter. next second launch quarter this quarter will

to improve broadband this quality, can the we HyperConn operator, launch their broadband help because mobile quality face high network to failure Once the So will fixed experience. we the reliable product or continue enhance happened, failure. matter them no

the X.X autopilot to unique will IoT meet We and product connection. to leading scenario compact to and into fast more directions HyperConn well. more will know this also, the new we launch expand meet solution. we we reliable we IoT, And and That's both different for IoT for to to technology as and cable so two carrier, scenario broadband product more the very convenient, product high like X.X need we this broadband mobile carrier product to because carrier a XG products new carrier. enhance, will tradition improve an reliable, apply technology for fixed launch expand market IoT some a a Lobot and growth the HyperConn more these launch quite connection business this for the also also product like And

high this coming do news of hope everyone. to quarter reliable a can give in breakthroughs, So we lot we we in connection, good this the

So product so we more R&D basically historic pandemic and after new our I strengthen the of and once new growth will also think recovery investment cloud investment and keep HyperConn this will very bright for our will of I R&D investment from our also and we because year also stable future solution get our result believe SIM. good our

Theodore O'Neill

accounts last you. question about is my Okay, thank And receivable.

relative that to a You revenue. because Is services are the have done remarkable receivables prepaid? primarily keeping at job low

Yimeng Shi

of account depends on the improvements on couples factors. the the I Yes, balance think receivable

we business term, is term pay prepared credit and as we good orders the say, the you one some, as bigger mentions and attention from improving more credit effort short this have term, some on customer more credit our first terms term The well.

ago. So receivables And part collect the from the ago, account this suffered the one agents customers I second contributors two some effort for balance. years improving think pay pandemic cash think I we to that's year the first, some first

So now or they flow activities. cash from making its recover something, gradually more in of terms then profit generate

individual cash ecommerce of have we're a use the so all cash our more ecommerce this the our That -- service. third generates cash depends they website So collections helped the part just via receivables. balance via at And our reducing, selling on positive account some efforts prepay result. achieved before improving customers to

So varies improving our this managements. help also contributors

will in we So the take our maintain future. this well positions. managements We'll cash

will this couples flow So in I we we this a than better yes. achieve the I that year. cash trend following expect, year expect operating last keep will positive our believe of

Chaohui Chen

more because also our customer condition. much accept situation willing so the to compared are better situation are during to finance pandemic By our they way, the and better so payment

Operator

comes question Research. Diamond next with from Equity Vivian Zang The

Vivian Zang

Thank Hello, you this answered my update data launched regarding traffic generate questions which give you the Congrats this application. most meaningful expect on left, sharing the your new it you. but revenue? to and is one business, Equity. marketplace of when specific Vivian us Zhang on have Diamond do with Can quarter, great I still business is and mobile have be a

Chaohui Chen

high local we are so and majorly currently And this I network. cross and because reliable only yes, Okay, quality we think international data. sell in carrier is data both

we So to MiFi. But willing come that's currently they have our not business majorly people from. be the extra I know this carry industry, may

SIM a We good not have Even they like advantage as their our are technology. softer cloud eSIM, Inside kinds many of some quality GlocalMe as well. connection also but as have may there SIM,

this sphere even for example, concept. we more Inside the on and For marketplace already need no develop GlocalMe then but eastward convenient, in our waiting SIM MiFi now [inaudible] progress could our GlocalMe handset the share years, cloud we our these

launch technologies and softer cloud not several including also will only SIM, marketplace. as SIM, we So eSIM inside well. This the physical SIM contains marketplace

provide can quality data data and and of connectivity and kinds users the and to meet convenient scenario competitive high price product We quality, and advantage all different requirement, convenient different requirement. connectivity, different

of marketplace meet we one that all And users can technology requirements. Then our use two stop are example, us. like to family help this if also a customer you at provide understand soft our MiFi all kinds multiple them. can our can least can eSIM educate one now or your For can we embed network. provide or iPhone this you for quality provide best Then But better of all and use can the solution. they connection and understand use, more solution People SIM technology. kind

business in people are we First, XX% currently we our our our brand. this us becomes this our scenario brand partner. to show copy us. will only Then will Then And marketplace. XX% brand, Because we under a base. technology and this enlarge this or demonstrate will help user know this all

haven't users. technology. us user meet the the of we or our all all partner version this of XX% helps technology, With requirement This will all launch XX% used help of requirements our the the and new cover to the the Another marketplace, of application.

the marketplace acquire in we of we then this term huge a base. base That's help will app So when launch near And That's one version our of app, user plan. first. copy this us partner. for first our GlocalMe our initial to

Operator

The next question comes Great China from [inaudible] Wall Securities. with

Unidentified Analyst

have our first me? Securities. PaaS hear and a not I question did Hi. the [inaudible] China Yes. And of revenue Wall report SaaS much from small year-on-year or about quarter-to-quarter. the Okay, of SaaS like quarter like sector Great I'm grow and you because the PaaS from from can

what's plan technology So And feel the is for for this our also focus whole main I want outlook to the in sector the what's company. client I know development plan the the because Thank of sector. the about on this you. PaaS, and or expands also year this our the

Yimeng Shi

thank Okay, you.

questions give see answer supplementary. will some these I CEO, and I'll more then our First,

For the with growth first SaaS the last percentage growth compared year. last revenue PaaS, quarter, X.X% it growing small with the seems still same compared year by is period

this revenue, you terminal our from higher activities see last X.X achieved over year's. daily XXX,XXX X.X has compared increase service and and revenue underlying massively But our will generated historical figure

uCloudlink international service the XX.X% years. example over For XX% and last roaming X.X over over the grows last the grows years

PaaS, So roaming connectivity provide play partner to quality build in restraint. our local better ecosystem SaaS to a up high business a support global a to to international central either or to global business service platform models, our a roaming,

this with So partners. business model more us flexible gives

resource supply data their package they buy So service either they data us uCloudlink. a from to options have from pay our SaaS a choose own their can and or to partners from PaaS,

to provide the to we customers. to provide then support, the service And SaaS function

in our overall package will treat So service pool to this one growth we trend. view

future, give in So partners. business to the this option flexibility we our

the So we as for this expect guidance in disclose our well. future, we

gives will PaaS, us overall the the guidance, something $XX think million message, a SaaS to be as a $XXX I guidance. revenues. million XX growth trend in it's growth, [inaudible] around this So this growing X.X, a guidance us In guidance give the well and to will

Yimeng Shi

Yes, okay.

the initially step. from step add COVID-⁠XX more because international from I recovery by is comment So travel

they stage, then their data increase at capacity. prefer So our immediately to partner, use PaaS, SaaS this our

lot, a believe and such I China, the Personally, So Southeast traffic that's increase significantly. more why quarter platform apparently the for significantly. and the or answer these I international once mentioned reason reason of That's the from increase Asia first. I recovery third no becomes data our but stable second recovery roaming more business because quarter, countries Japan, a all

part think be increase. transfer I our of some to data will SaaS PaaS,

this reason. believe That's continue solution, mentioned PaaS, we the the of mobile quarter. ⁠series keep the the the launch following broadband, quarter for well currently new And PaaS, SaaS the in will for new lot fixed second for HyperConn quarter. revenue This that's quarter first bring new following business, product for Personally, part. part solution So will X.X us will a for broadband, I in increase. third second I just as our because SaaS and

also a lot will have think the IoT, big And on the customer now I way. IoT for of

be think SaaS increased customer the acquire, PaaS if So well. this as will we I ,

HyperConn for will SaaS this believe mentioned and more by to general more the SaaS our we the for broadband increase. HyperConn a revenue first our we model new this I Finally, the major solution solution for new That's and especially broadband mobile And the carrier, carrier, marketplace, copy And our lot. once this increase adopt bring the information. PaaS. follow fixed partner, once operator. have They also and version I for are we been carrier think is achieved, launching SaaS preferring PaaS, so [inaudible]. also I PaaS fixed solution,

Operator

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

Jillian Zeng

joining for again once you Thank us today.

Equity the further our contact Thank call. Or our to have you information you feel you. The to website. through to uCloudlink forward Group. quarterly Investor contact contact speaking provided free next Relations please on again our on questions, If firm, Investor Look Relations

Yimeng Shi

Thank you.

Chaohui Chen

you. Thank

Operator

attending This now today's is presentation. conference for Thank concluded. you

may now disconnect. You

uCloudlink (UCL) 18 May 232023 Q1 Earnings call transcript