uCloudlink Group Inc. Q1 FY2026 Earnings Call

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

Thank you, operator. Hello, everyone, and thank you for joining us on uCloudlink's First Quarter 2026 Earnings Call. The earnings release and our earnings presentation are now available on our IR website at ir.ucloudlink.com. Joining me on today's call are Mr. Zhiping Peng, Co-Founder and Chairman of the Board of Directors; Mr. Chaohui Chen, Co-Founder, Director and Chief Executive Officer; and Mr. Yimeng Shi, Chief Financial Officer. Mr. Chen will begin with an overview of our recent business highlights. Mr. Shi will then discuss our financial and operational highlights for the quarter. They will all be available to take your questions in the Q&A section that follows. Before we proceed, please note that this call may contain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and observations that involve known and unknown risks, uncertainties and other factors not under the company's control, which may cause actual results, performance or achievements of the company to be materially different from the results, performance or expectations projected or implied by these forward-looking statements. All forward-looking statements are expressly qualified in their 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 revise or update any forward-looking statements as a result of new information, future events, change in market conditions or otherwise, except as required by law. Please also note that uCloudlink's earnings press release and this conference call include discussions of unaudited GAAP financial information and unaudited non-GAAP financial measures. uCloudlink's press release contains reconciliations of the unaudited non-GAAP measures to the most directly comparable unaudited GAAP measures. I will now turn the call over to Mr. Chen. Please go ahead.

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

Thank you, Mr. Chen, and hello, everyone. I will go over our operational and financial highlights for the first quarter of 2026. Average daily active users (DAU) and monthly active users (MAU) represent the average number of unique users engaging with our GlocalMe service on a daily and a monthly basis, respectively. Both metrics show strong growth momentum in the first quarter. Average DAU in the first quarter were 354,789, representing an increase of 10.2% from 321,836 in the first quarter of 2025. GlocalMe IoT, GlocalMe SIM and GlocalMe Life all delivered significant gains with average DAU up 246.5%, 193.6% and 559.9%, respectively, year-over-year. Average DAUs from our GlocalMe MeowGo business declined by 5.8% year-over-year. Average MAU were 337,274, representing an increase of 6% from 318,599 in the first quarter of 2025. Average MAUs from our GlocalMe IoT, GlocalMe SIM and GlocalMe Life business saw increases of 142.1%, 76.8% and 609%, respectively, from the same period last year. Average MAUs from our GlocalMe MeowGo business decreased by 7.3% year-over-year. In the first quarter of 2026, average DATs were 327,615 with 13,414 owned by the company and 314,201 not owned by the company, representing an increase of 6.1% from the first quarter of 2025. During the quarter, 58.6% of DATs were from uCloudlink 1.0 international data connectivity service and 41.4% were from uCloudlink 2.0 local data connectivity service. In March 2026, the average daily data usage per terminal was 1.57 gigabytes. Average MATs in the first quarter were 702,805, representing an increase of 7.7% from 652,810 in the first quarter of 2025. Growth was driven by strong momentum across our three new growth engines with average MAD for GlocalMe IoT, GlocalMe SIM and GlocalMe Life increasing 135%, 74.1% and 806.1%, respectively, from the same period last year. Average MAD from GlocalMe MeowGo business, which we previously referred to as GlocalMe mobile fixed broadband business, decreased by 4.1% year-over-year. Our platform is a newly launched service; we only just began to see user adoption and engagement grow during the quarter. In the first quarter, average DAU and MAU for the platform were 1,097 and 1,397, respectively, while average DATs and MATs for the platform reached 368 and 789, reflecting the growing traction of this new offering. As of March 31, 2026, the company had 212 patents with 183 approved and 29 pending approval and a pool of SIM card agreements from 397 MNOs globally. Total revenue for the first quarter of 2026 were USD 16.9 million, representing a decrease of 9.6% from USD 18.7 million in the same period of 2025. Revenue from services were USD 13.3 million, representing a decrease of 6.3% from USD 14.2 million in the same period of 2025. Revenue from services contributed 79.9% of total revenue during the first quarter of 2026 compared to 75.7% in the same period last year. Geographically speaking, during the first quarter of 2026, Japan contributed 32%, Mainland China contributed 30.3%, North America contributed 17.3% and other countries and regions contributed the remaining 20.4%, compared to 40.4%, 31.2%, 12.9% and 15.5%, respectively, in the same period of 2025. Our gross profit was USD 8.3 million compared to USD 9.7 million in the same period of 2025. Overall gross margin in the first quarter of 2026 was 49.1% compared to 51.7% in the same period of 2025. Gross margin on services was 54.5% in the first quarter of 2026 compared to 57.3% in the same period of 2025. Excluding share-based compensation, total operating expenses were USD 10.8 million compared to USD 9.9 million in the same period of 2025. Net loss in the first quarter of 2026 was USD 3.5 million compared to a net loss of USD 0.6 million in the same period of 2025. Adjusted EBITDA was negative USD 2.0 million in the first quarter of 2026 compared to a positive USD 1.4 million in the same period of 2025. For the first quarter of 2026, we recorded an operating cash outflow of USD 8.7 million compared to an inflow of USD 0.2 million in the same period of 2025. For the first quarter of 2026, our capital expenditures were USD 30,000 compared to USD 300,000 in the same period of 2025. Turning to balance sheet items, our cash and cash equivalents were USD 28.0 million as of March 31, 2026, compared to USD 32.8 million as of December 31, 2025. We continue to strengthen our financial position and believe we are well positioned to drive continued growth in our business. So operator, let's open it up for Q&A. Thanks.

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

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

Yes. So our G50 Max is our high-end product. It's 5G and we can roll out 5G in over 100 countries. That's most popular; we can offer 5G in many places worldwide. Compared to other competitors like AT&T, who may cover about 75 countries, our first advantage is that we can provide maximized coverage of 5G worldwide. Second, we can provide certified airline in-cabin 4G and 5G connectivity. That means business travelers in the aircraft cabin can be served. Third, it's about satellite SOS and messaging. So whether you are outdoors or in a conflict area, you will not lose connection. Fourth, if you are in the office or at home, you can get Wi-Fi available, but Wi-Fi sometimes is unreliable. In those cases, we can provide backup with 5G and 4G via multi-carrier support so your remote work, remote study and remote meetings won't be disrupted. We balance the best coverage and the best tariff. So with one device and one account, you can enjoy global best coverage and competitive tariffs. That's why we believe one device can cover many scenarios. Users do not need to bring multiple devices or multiple packages for home Wi-Fi and in-cabin Wi-Fi. By leveraging eSIM or local multi-carrier tariffs, you can get similar coverage and seamless connectivity with our solution. Our purpose is simply one device, one account, the best coverage and tariff.

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

Yes. I think that's about our IoT business. We embed our cloud SIM and HyperConn solution into in-car infotainment systems such as CarPlay. Many major CarPlay devices come from China. The top partners embed our solution, which means these CarPlay devices not only provide entertainment in the car, but also provide network connectivity in the car. Almost the top 10 providers use our solution. For cameras, more and more 4G cameras are being adopted. Traditionally, cameras need a physical SIM card inside, so if the carrier network has coverage issues you may need to replace the SIM card in a high or hard-to-reach place, which is uncommon and costly. With our solution, because 4G is popular and pricing becomes similar to Wi-Fi cameras, the volume of the 4G camera market is growing. Many Chinese providers embed our software solution into their cameras. Users can still use a SIM slot with a physical SIM, but that is costly and has limited coverage. Using our solution, users benefit from better tariffs and cross-carrier coverage. You can see our market share in this segment grows dramatically. Our installation volume is about 3.9 million pieces shipped. In six months, these shipments will convert into active packages and operations, and it takes around six months from shipment to user adoption of our solution. So you can expect far more users in six months than currently.

And my last question is about supply chain issues. You mentioned in the prepared remarks about memory prices being a headwind. Are you seeing any supply chain issues in terms of availability?

Yes. Compared to last year, memory chips are almost 5 to 10 times higher in price, so that's a heavy impact on the cost of devices. We are taking multiple actions. On one side, we are redesigning to reduce memory size and lower cost. We are also looking at alternative suppliers, including local Chinese memory vendors. All these measures can offset some of the memory price increases, but we cannot entirely offset the total impact because the price is very high. This has some impact on our selling price; both B2B and B2C device prices are higher, roughly 20% to 30% up compared to last year.

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

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

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