Earnings call transcript Q2 2023

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Operator

Good day, and welcome to the uCloudlink Group, Inc.

Second Quarter 2023 Earnings Conference Call. All participants’ will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded.

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

Jillian Zeng

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

Shi will brief Cofounder, Mr. Directors. Yimeng our Officer. Officer Chaohui is our introduction I and Financial uCloudlink Zhiping Chief Mr. Mr. of team give of our our is Board a Director Executive Peng Cofounder to Chief management is and Chairman Chen

highlights Mr. Chaohui our with cover company's highlights, Chen, Yimeng discuss our CEO, and on will operational CFO, will website. IR Co-Founder recent the an begin and our financial the which posted then Shi, the results. overview presentation Mr. earnings of will business company's

please that forward-looking that statements performance current on expectations based of the not control, statements. actual management's results, may contain proceed, to safe different or under Act we the cause Reform statements automations expectations These Litigation and and these call which by the note of may harbor forward-looking involve the the this XXXX. results, other factors are from Private risks, and provisions achievements pursuant made based Before are to be company's of performance company materially known forward-looking implied or uncertainties unknown Security

as not new law. trends factors does or a statements, All company as the forward-looking with market statements to update information, are any the SEC. any their by except and due event revise details or result The risk of statements entity expressly company’s otherwise, qualified conditions in obligation filings forward-looking required the by of in or company's assume

unaudited release unaudited GAAP that of Press and a call the include press reconciliation note measures. non-GAAP the uCloudlink conference financial most the this Release contains measures directly also non-GAAP to and financial Earnings unaudited an information of unaudited discussions measures, uCloudlink GAAP Please comparable

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

Chaohui Chen

earnings and We our Julian everyone's for Thank us time. you, call today. morning, good everyone. you joining XXXX appreciate on Thank year quarter second

pleased to from cash flow for consecutive were We positive a have quarter. fifth achieved operations

reported period the During average revenues at the once total the terminals daily million year and from prior record XX.X% to active strong growth reached quarter, with and increase of again over increase highs top line we a XXX,XXX. $XX continues

by the as X.X International Connectivity uCloudlink Services During daily revenues from in X.X a uCloudlink we primarily $X increased average increased terminals and year business, of to call of year-over-year, second quarter the travel. result XX.X% by active from XX.X% XXXX, business year-over-year recovery uCloudlink million business X.X Data international

XXXX. somewhat brand our connectivity an increasingly first-half travel services. tourists, While services of configurable the our Roamingman remained the international bank from here have year Chinese in to China data contributed limited amount utilizing

from and terminals enable to ability elevate widely portable Wi-Fi experience XG the data will traffic Our to the which unique roaming positions in packages for the by our are global recognized XG XG across to various leading broader market. maintain the audience, a the us users' market

In July data to business. XXXX, card which GlocalMe clearly SIM to allows sim card. few sim year use our technology, This cloud customers multiple by X.X achieve as developments backed in launched pleased a and we I'm patent our global need. our share the is plans

its and countries and countries, launch, XX expand United including availability this additional to regions. Japan, destination major Australia, sim gradually we expect cover to of As the GlocalMe States,

SIM certify and their the experience enable we business X.X business will achieved roaming roaming a competitive sales in a have scenarios performance. that demands, we global our be we enabled comprehensive data leading users which are smallest of In Wi-Fi innovative our as of cross-border portfolio expanding portable the to GPS addition, we roaming so driving world. launching The GlocalMe the Wi-Fi, in one cover tracking enhance zero believe GPS card terminals portable product tracking ever has terminals range advantage uCloudlink various -- offerings, that pilot application

business uCloudlink a report about business, key and we that quarter [XXXX] believe the services to maintained optimistic $X.X prospect continuous development, call X.X continue business assess (ph). connectivity X.X uCloudlink to local as business the future. up from this remain will million We million margin in growth year higher the X.X the of by in revenue, which second $X.X XX.X% of driving uCloudlink

fixed During for use. a traditional equipment, based this commercially. was hefty office a CPE quarter, broadband substitute serving customer transition as SIM This product and fixed sub-suitable home mobile network, premise our enables connection line between for upgraded and Internet

are that we broadband, market allow CPE fixed share in upgraded to the will call the gain us We confident market. FBB further

discussed data like services outlines of I see would connectivity solutions, a just now business. great What uCloudlink highlight PaaS/SaaS which our business we attention. to I line where is

years a within IoT Japan the making network expansion be the major IoT scenarios. module of application On significant side, in began uCloudlink into operators IoT into devices will commercially a XXXX, mobile embedded to

IoT apart Adding services, will to connectivity portable CPE. Wi-Fi services, and tracking security embed and application the user sales our revenue look services solution generate and from and offering emergency products. the to data PaaS/SaaS growth the to upgraded additional GPS revenue. scenario of applying terminals expanding including our PaaS/SaaS We the roaming communication provide recurring and of to services, GPS tracking enabled among others, our and management module, contributing forward base customer This the services revenues services

full services. the the assess beyond capabilities us Wi-Fi the we are will in-stock a for portable that more the portfolio During their in enable users approaching users full to in users application beyond to our a of marketplace believe APP, users our prepare marketplace bit we which launch initiation of comprehensive APP, We confident one-step quarter, to We and APP attract to platform centralized of allows remain continued our near-term. the of step-by-step. launch customers teams that

achieved in improved our initiatives, growth in first-half well have were as the year. the we of the have met conclusion, results we pleased progress In we with as the financial

the innovative pleased demonstrates are be SIM cloud growth. the for the portfolio continue our foundation innovation at future on development strong offerings and forefront technology to solid of expect and capability, research solutions, to which HyperConn our a based laying expanding and our of We

the be revenues compared to same the For between $XX.X expects quarter total an uCloudlink to XX.X%, of to of million, million XXXX. of year third to year representing $XX.X XXXX, increase XX.X% period

life continue will customers more better enable believe significant solutions various convenient We and and trading connection. life integrating and our connected we be users our connectivity to into in from truly intelligent a data high-quality to part experience that scenarios leave

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

Yimeng Shi

will the for the operational and our everyone. XXXX. performance. terminal highlights reflecting quarter ongoing business Average of of the Hello, active financial Chen. Mr. measure go customer you, I our over period, DAT over usage trend second Thank daily

partners, quarter owned second company XXXX X.X business average by was XXXX. X.X for DAT, the around, second our for The of daily our terminal from and the by DAT by accounts the daily June In XX.X% XXXX. X,XXX XXXX. usage gigabytes total XX.X% uCloudlink business per active respectively, average terminal uCloudlink of owned of in data second XXX,XXX XXX,XXX Average X% X.XX X,XXX was which up and and in of the quarter quarter of during

of period of XXXX. as from XX.X%, the a million, period $XX XXXX from the service representing second of quarter were from an total million Revenues of $XX.X XXXX. XX.X% was for $XX an same from the million of increase million, increase of XXXX. XX.X% from were of same revenue the same revenue in Revenue up XX.X% during service $XX.X Total period in percentage

XX.X%, quarter second XXXX, respectively. X.X% remaining XX.X% the XX.X% America and in contributed percentage same our of of other contributed During Japan total XX.X%, XX.X%, of and the as China as period to the countries contributed and Mainland revenue, contributed XX%, compared region XXXX, North a XX.X%, the

brand as XXXX. to on in The second XX% in the XXXX. revenue XXXX, increased service. ’XX, of China service Chinese margins international in from as same same margin tourist from due XX.X% in of recovery was utilizing period significantly, the XX.X% primarily Overall second to of gross travel to the compared the Mainland the quarter was quarter the of XX.X% Roamingman compared period Gross

the or total of [Technical loss share-based compared compensation, of $X.X expenses to total the in revenue XX% in the of million as operating revenue quarter in million quarter XXXX, to of second in $X.X second total Excluding XXXX. the compared Difficulty] second net to [Indiscernible] XX% period were or XXXX, quarter million significantly of $X.X million same XXXX. of net a loss of

quarter in the Adjusted EBITDA during XXXX, quarter $X.X of the non-GAAP million compared $XX.X XXXX. a positive compared the active operating same to flow flow We XXXX. improved during $X.X million flow, same quarter, as from accumulating cash of operating the $X as period $X.X We of the million million to achieved successfully million periods. cash of five to second second positive achieved for during period consecutive three operations XXXX, through of

our quarter and performance, that execute our second of growth continue the initiative. In to from XXXX, believe to we it financial positioned are well improve we we

Q&A. please for With that, open operator, up

Operator

Thank you.

O'Neill We question Research. will Please Instructions] Litchfield question-answer Theodore begin now from [Operator from ahead. the Our comes Hills session. go first

Theodore O'Neill

for question about there a particular sales the were bit. that quite First product quarter. versus Thank you Is Quarter, is reason very much. QX? in My the They a up first from in strength QX sequentially

Chaohui Chen

regarding question of first quarter your… the XXXX. with revenues, second the your So this That's compared quarter

Theodore O'Neill

in in only wondering I products, if was for not QX. strong product going QX on that services, there just from QX different for products was QX. growth the But something was just Yes. strength was versus

Chaohui Chen

Yes.

So COVID-XX, because Asia. all I it's over [Indiscernible] think the Japan, happen. in of Southeast world there One are two is China, reasons including

quarter for the the So just first first opening. quarter China, just

that So over. of COVID-XX everything summer growth second the and first And the a not customers that's worldwide because the is prepare season. for still is why, our is fast reason is

reasons equipment these the So two grows.

Theodore O'Neill

enabled about feed portable theft? inside GPS to selection? the GPS Is is question info that GPS does the -- the next the a Or terminal, My card tracker is does having it Tracker -- prevent that SIM Okay. into terminal.

Chaohui Chen

question? can repeat Sorry, your you

Theodore O'Neill

is enabled from the SIM GPS The Is a the there, from tracker Yes. GPS -- portable terminals. GPS does tracker that feed being in prevent to the selection? or into information terminal the card stolen GPS

Chaohui Chen

Yes.

Let me answer.

a the quarter. second We new have newly launched in product

-- a weight card. launch XX-gram, than it's down card, and you is smaller can think business than smaller tiny very business it's small, I XX the about smaller So very volume gram

we So HyperConn product, to not function best people enable portable get market coverage. the and because will the try only our market we kind let it's and Why understand this uCloudlink launched function. because of in network for that's tracking to It's people Wi-Fi SoS more technology with a convenient. connection, GPS

better better we on these coverage into much for on can because apply easier, goods of So connection, better not enable lost we also because we find connection, -- get people loss technology, to only but or can material the XG, the be the easily people for and is find lose to get SoS information to via who and can lost GPS the set -- to a people server -- [Indiscernible]. our the easy send other that the back connection

be from the we So of health to who our coverage now that's better are a business that and need need people these the tracking reason requirement. expanding and connection

Theodore O'Neill

very Oh, That you. much. you my thank questions. completes Thank

Operator

Instructions] from go Please Vivian Equity Research. next [Operator comes Zang Our with Diamond question ahead.

Vivian Zang

Equity Diamond you. questions with quarter. Vivian I two have on [Indiscernible] the Research. for Congratulations nice

about sales the while XX% First development expenses one research because XX%. and over over is quarter, expenses the the in increased expenses, and marketing operating decreased by

So can be the the this will on mean focused company happens? Does why you that marketing explain spending side? this more

Chaohui Chen

increased this have count control as business well. cost revenue this measures. the our other we're INDs, the of is grow. driven Yes, and manage for managing head cost will program you expenses how the tightly the Even and expect figures business head the managing and We're increasing activities -- tight we Yes, we on year, tells also count. Yes. relevant

head compared one lot contributes count tourists. revenue ER, explained guide growth the side, to other last we head a expectations, as from R&D, increases, but revenue Roamingman [Indiscernible] on and our the on saw, sector last the not year year increasing. to sales the for as the brand service This of count compared with market -- period in So increasing is expenses, you guide the came sales as outbound sales Chinese

count head So our China increase. budget. this the business maintenance our head is But in increase count for all

budget growth with line And we so growth that's control our in our reflecting and activities.

Yimeng Shi

Yes.

more add me Let more comments. two

that's I think one from quite we very product, good quarter, still more are XG R&D three the XG come only traditional worldwide and strong. second our for the popular means generate products, than launch revenue is popular, the traditional but our revenue. quite currently QX because a major connection. especially product, new the But That in we products. our launched is capabilities This our

and I get can is upgraded think more and the These we have the our think, then three high one GlocalMe So two network, can next see launch And us products, this in just and new and job. in -- enterprise new no high-level next CPE, quarter, to year, can and office second products network about is quarters reliable win quarter. our the end second product revenue enable users. of SIM fixed first their secure and a you three I CPE, home to we

So for recovery. disaster

one the last this just people. daily size, smallest Wi-Fi and to product. we the So the card And go product can of checking life launched

second three very demonstrate strong R&D these I new last we think can a new products, all during painful quarter. product So capability our even launch years, has in the the still our

I are this year, generating users Thank revenue new more quarter product in and you. just I next we following mentioned us. So the believe and for the

Vivian Zang

Okay.

understand. I Okay.

in you because Can our see your China this is next growth could from revenue to that continue? what momentum increased revenue of proportion a growth question lot strategy there, elaborate this China the expect drove we like growth the you. quarter. and products Thank I and on So company's

Chaohui Chen

we we the is Yes, of growth same quarter's will period third as XXXX. guidance, the -- the -- disclosed compared around, to to rate XX% go be

the holiday yes some outbound for and expect -- peak tourists. is Chinese for season We a this same

is So time year. this -- years for for -- peak some some of product the

came So we from pickup travel, growth momentum expect the time. this international

main gross our also quarter will third our of driver adjusted this position contribute our for operating revenue financial in the and So that's strongest net income. terms in and contribute the improving service flow, and our margins cash gross to still a

Yimeng Shi

Yes.

to more add comment. still I So

from the report can government. see the we First,

China only of recover year outbound first-half The tourists XX%.

you see compared year XX% a only recovery. So it's smaller, COVID-XX, can before

groups. -- people this the Day, around National government the holiday, forecast like So during bigger the to almost go next XX% we another figure,

visa understand, possible because the and issue reason issue the the Another we COVID-XX. during of

third So opening passport a smaller we Chinese increase [Indiscernible] and us from overcome, brand. problem once haven't much the percentage Roamingman already quarter believe a quarter and I the these was problem boundary people, will the in give revenue. the become even fourth We China the this believe barrier get for from revenue more seen I a visa of we think and better good market big

Vivian Zang

Okay, you. That’s that’s all questions. Thank help. my

Yimeng Shi

you. Thank

Operator

go comes Please next ahead. Our from with Wall Li Yanxin Great question Securities.

Yanxin Li

have First Hi, increased, this a this the revenue is from Wall Great the -- have service, obviously I compared about Securities. to of doesn't question see we part And the Quarter. because PaaS/SaaS like

process at to yes. -- I want the time, the of development So know the maybe PaaS/SaaS this service

Yimeng Shi

Yes, yes.

the revenues. quarter, you report connect historical place rate, three see local roaming of our is terms our 'XX, it's with a quarter second terms roaming growth app a So PaaS/SaaS in is in of reached the increased in XXX,XXX. second daily connect three third growth more revenue PaaS/SaaS we significantly service service service we mix one, segment the the but service. rate. a of International number increase, main types terminal record over in high growth as and Among service; service categories, And

foundation growth activity reflect foundation is to our our that's and So growing.

growth monetized is models. place. our business in the PaaS/SaaS Why revenue It depends is third on this rate

BXC main the We the third business thickest models, and three business business PaaS/SaaS retail have wholesale platform. model and model BXBXC once

models business So which choose, it depends them. the is suitable if product for business

and wholesale So PaaS/SaaS -- don't in from commercial to And so wholesale roaming that packets choose will double platform. people we the roaming have partner term. a we we don't service BXBXC model charge generated sectors, sometimes, more this

the So growth overall, our is line growing total. that's activity in -- but of

operate GPC and delivered And card as and products Japan. three we disclosed to Wi-Fi track the network this as well, launched operator this in -- a the in mobile Wi-Fi IoT GlocalMe smallest function modules and we of portable main with quarter SIM

our service generate future like will other the account modules IoT deliveries the PaaS/SaaS future. functions in well accounts. more tracker PaaS/SaaS this GPS generate service to will most also this platform And for service So in as to

still momentum the growth So is for PaaS/SaaS revenue strong.

So categories, in performance three we main overall our -- service terms of but managing of of sector.

Chaohui Chen

Yes.

PaaS/SaaS we expecting mentioned are a volume, GPS just we because and services like think from service, connection and area, revenue new availability and the new where expansion the I tracking. we the to on now launched high think traditional checking, I but not is our resolution data I new high come products

So unique our services. that's

the for future percentage the emergency about SOS in Also in high services.

of buy So is reliable high-reliable people smaller, all the -- even like high for data CPE, usage quite type high-level also or these emergence. router, but CPE, buy

type think, buy rather like this And connections and So we the revenue than easy as in by of more services future. of far, I PaaS/SaaS people, be high-quality the for services insurance more kind connection. the think understanding will this the generate more the I services aware the

Yanxin Li

it. got I Yes.

very you thank Okay, much.

Operator

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

Jillian Zeng

Thank today. joining you us once again for

further Relations on Thank Equity our information provided to feel free Group. have through quarter. please firm, look relation speaking you. We our you The or on the website to contact Investor you questions, IR uCloudlink to If forward contact again our next contact

Chaohui Chen

Thank you.

Operator

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

You disconnect. may now

uCloudlink (UCL) 16 Aug 232023 Q2 Earnings call transcript