Ucloudlink Group Inc - ADR Aktie

Thank you for standing by, and welcome to the uCloudlink Second Quarter 2026 Earnings Conference Call. [Operator Instructions]

I would now like to hand the conference over to Mr. Daniel Gao, Company IR. Please go ahead.

Thank you. Hello, everyone, and thank you for joining us on uCloudlink's Second 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 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 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.

Please also note that uCloudlink's earnings press release and this conference call include discussions of unaudited GAAP financial information and audited non-GAAP financial measures. uCloudlink's press release contains regulations of their unaudited non-GAAP measures to their most directly comparable unaudited GAAP measures.

I will now turn the call over to Mr. Chen. Please go ahead.

Thank you, Daniel. Good morning or good evening, everyone. Total revenues for the quarter were USD 18.2 million, reflecting the continued impact of macroeconomic headwinds, geopolitical tensions affecting outbound travel from China and a significant surge in memory chip costs. Our uCloudlink 1.0 international data connectivity services remained under pressure from these factors. However, this impact is increasingly being offset by the rapid scaling of our uCloudlink 2.0 local data connectivity business, which delivered strong growth, particularly from our GlocalMe IoT business. We expect our uCloudlink 2.0 and the new business lines to fully offset the continued contraction in our 1.0 international business by the third quarter as we continue to execute on our strategic priorities.

We continue to see strong momentum across our new product portfolio during the second quarter. GlocalMe IoT and UniCord Pro, in particular, gained solid traction with revenue contribution steadily increasing as the transition out of the initial market ramp-up phase, each with key strategic milestones during the quarter, positioning us well for accelerated commercialization going forward.

Across our new growth engine, revenues from GlocalMe IoT and SIM increased by 392.4% and 78% year-over-year, respectively. To drive early adoption and fuel market leadership, we maintained an elevated level of investment in market for the PetPhone and PetPhone ecosystem during the quarter.

I will now review the highlights for each of our key business lines. I will start with the GlocalMe IoT, which saw its installed base expanded further with month reorder now contributing meaningfully to revenue and business operating profitability on a consistent basis. In the second quarter, revenue from the GlocalMe IoT grew 392.4% year-over-year. Our total installed base reached 3.34 million units and MAU grew 210% year-over-year.

User adoption is growing rapidly across key verticals as we further solidify our position in high-growth sectors, including in-car infotainment and security cameras.

Moving on to our PetPhone ecosystem, which has undergone to a comprehensive upgrade into a dedicated pet AI agent. Building on the AI-powered plus social model, we pioneered in the first quarter. This marks a major step forward in functionality and performance with redefining AI-powered communication between humans and their pets. The agent can precisely sense pet's conditions and emotional state and intelligently support owners at every stage of care from prevention through real-time response and engagement, delivering a seamless pet care experience. This powerful agent creates enormous opportunities across pet healthy, veterinary care, pet safety and the pet data analytics, each of which we see a source of new value creation.

As we -- as consumer acceptance of AI pet services grows, we expect to build both valuable data asset and a leading position in pet AI. We are now expanding our pet AI capabilities across communication, safety and health management.

On the market front, we have made significant progress in branding and promotional efforts, generating substantial external attention with select content pieces reach tens of millions of views in major platforms such as TikTok, Instagram, et cetera. We look forward to achieving even greater breakthrough in the second half of the year.

Turning to our GlocalMe Life and SIM business lines where our strategy is beginning to generate results. GlocalMe Life Solutions saw DAU growth exploded, increasing by 801.6% year-over-year, reflecting strong market adoption of the new product line. GlocalMe SIM continued to steadily expand as well with DAU increasing 132% year-over-year. Our eSIM solution is gaining strong momentum, leading the market in China and building market share steadily across East Asia and wider Asia Pacific region. Together, this result shows 2 product lines at a different stage of maturity with GlocalMe Life growing rapidly with exceptional triple-digit growth and GlocalMe SIM scaling consistently.

Our premium MeowGo G50 Max is the world pioneer leading Sky-to-Ground integrated mobile connectivity hub, delivering seamless connectivity across satellite, flight and ground networks. It offers the broadest 5G countries coverage in the industry, spanning nearly 100 countries and have been reliable across a wide range of scenarios from the urban environment to in-flight travel. Powered by our AI HyperConn technology, the G50 Max has built a market-leading position in the USD 500 plus premium MiFi segment and has set a new benchmark for premium mobile connectivity solutions.

While our uCloudlink 1.0 international data connectivity business has been affected by macro headwind, this same condition has created new opportunities for the G50 Max and the premium solution, driving demand from the resilient, reliable connectivity in critical environments. We also made solid progress and created new and strong revenue with our newly launched 4G and 5G CPE product during the second quarter for local connectivity services. Both have demonstrated stable performance and successfully passed smaller batch market validation, receiving positive market feedback. Several large orders are currently under negotiation, and we expect to accelerate market deployment and drive stronger growth in Q3.

We also achieved notable recognition during the quarter, winning the Customer Impact Award at the MVNOs World Awards in year 2026 and being shortlisted for Leading Consumer MVNO/Sub-Brand, further validating our technological leadership and market positioning. Looking ahead, we remain focused on strengthening operational management and cost discipline, with a clear priority on improving cash flow. Together, with the ongoing commercial progress of the PetPhone AI and social PetPhone, the ramp-up of MeowGo G50 Max and the continued expansion of GlocalMe IoT, CPE R50 and R55, we believe these efforts will position us to navigate the current market environment and emerge stronger. We remain committed to bridging the digital divides in cross-border connectivity as well as the emotional distance between people and their pets, while creating long-term value for our shareholders. With the disciplined optimism in mind, we are confident that we have the right strategy in place to drive sustainable growth going forward.

I will now turn the call over to Mr. Shi.

Thank you, Mr. Chen. Hello, everyone. I will go over our operational and financial highlights for the second quarter of 2026. Average daily active user, DAU, and monthly active users, MAUs, represent average number and unique users engaging with our GlocalMe service on a daily and monthly basis, respectively. Those metrics record robust growth in the second quarter.

Average DAUs in the second quarter were 376,376, representing an increase of 13.3% from 332,323 in the second quarter of 2025. GlocalMe IoT, GlocalMe SIM and GlocalMe Life all achieved substantial growth with average DAUs up 277.3%, 132% and 801.6%, respectively, for the same period last year. Average DAU from our GlocalMe MeowGo business declined by 7.3% year-over-year.

Average MAUs were 744,966, representing an increase of 6.6% from 698,862 in the second quarter of 2025. Average MAUs from our GlocalMe IoT, GlocalMe SIM and GlocalMe Life business line saw increase of 210%, 53.8% and 599.7%, respectively, from the same period last year. Average MAU from our GlocalMe MeowGo business decreased by 10.1% year-over-year. In the second quarter of 2026, average DATs were 341,511 with 12,763 owned by the company and 328,748 not owned by the company, representing an increase of 7.4% from the second quarter of 2025.

During the quarter, 56.3% of DATs were from uCloudlink 1.0 international data connectivity service and 43.7% were from uCloudlink 2.0 local data connectivity service. In June 2026, the average daily data usage per terminal was 1.5 gigabyte.

Average MATs in the second quarters were 306,382 (sic) [ 706,382 ], representing an increase of 6.5% from 663,197 in the second quarter of 2025. Growth was driven by strong momentum across our 3 new growth engines with average MATs from GlocalMe IoT, GlocalMe SIM, GlocalMe Life, increasing 93.6%, 35.4% and 843.2%, respectively, from the same period last year. Average MAT from GlocalMe MeowGo business decreased by 5.7% year-over-year.

Following the stable growth last year, PetPhone continued to gain traction with user adoption and engagement increasing further during the quarter. In the second quarter, average DAU and MAUs were 1,519 and 1,845, respectively, while average DATs and MATs for PetPhone reached 507 and 1,028, reflecting the growing traction of this new offering.

As of June 30, 2026, the company had 212 patents with 184 approved and 28 pending approval, and a pool of SIM cards from 398 MNOs globally. Total revenue from the second quarter 2026 were USD 18.2 million, representing a decrease of 5.9% from USD 19.4 million in the same period 2025.

Total revenue across different business lines were as follows: GlocalMe MeowGo business, USD 15.5 million (sic) [ USD 15.4 million ], representing a decrease of 13.1% from USD 17.9 million in the second quarter of 2025. GlocalMe SIM business, USD 1.3 million, representing an increase of 78% from USD 0.7 million in the second quarter of 2025. GlocalMe IoT business, USD 0.8 million, representing an increase of 392.4% from USD 0.2 million in the second quarter of 2025. GlocalMe Life business, USD 0.5 million, representing a decrease of 21.1% from the USD 0.6 million in the second quarter 2025. PetPhone business, USD 0.2 million, representing an increase of 1,527.3% from USD 0.01 million in the second quarter of 2025.

Revenue from service were USD 13.3 million, representing a decrease of 9.2% from USD 14.6 million in the same period 2025. Revenue from service contributed to 72.9% of total revenue during the second quarter 2026 compared to 75.5% in the same period last year.

Geographically speaking, during the second quarter 2026, Japan contributed 36%, mainland China contributed 30.3%, North Americas contributed 13.5% and other countries and regions contributed the remaining 20.2% compared to 33.6%, 33.2%, 15.3% and 17.9%, respectively, in the same period 2025.

Our gross profit was USD 9.2 million compared to USD 10.2 million in the same period of 2025. Overall gross margins in the second quarter of 2026 was 50.2% compared to 52.8% in the same period 2025.

Gross margins on service were 59.1% in the second quarter 2026 compared to 56.6% in the same period 2025.

Excluding share-based compensation, total operating expenses were USD 11.5 million compared to USD 10.1 million in the same period 2025.

Net loss in the second quarter 2026 was USD 3 million compared to net income of USD 0.7 million in the same period 2025.

Adjusted EBITDA was negative USD 1.8 million in the second quarter 2026 compared to a positive USD 1.4 million in the same period of 2025.

For the second quarter of 2026, we record an operating cash outflow of USD 3 million compared to an outflow of USD 0.9 million in the same period 2025.

For the same period -- second quarter 2026, our capital expenditure were USD 0.04 million compared to USD 0.2 million in the same period 2025.

Turning to balance sheet items. Our cash and cash equivalents were USD 25.2 million as of June 30, 2026, compared to USD 28 million as of March 31, 2026. We continue strengthening our financial position, and we believe we're well positioned to drive growth in our business.

Turning to our outlook. For the third quarter 2026, we expect total revenue to be between USD 19 million and USD 22 million, representing a decreased of 10.4% to an increase of 3.8% compared to same period of 2025. For the full year 2026, we now expect total revenue to be in the range of USD 75 million to USD 85 million compared with the range of USD 85 million to USD 100 million we previously announced. We are revising our full year's guidance in line of persistent macroeconomic challenge and global trade headwinds, which have had and may continue to have a broader impact across industries. These estimates reflect our current view on market and operating conditions and customer demand, which are subject to change.

With that, operator, let's open it for Q&A.

[Operator Instructions] Your first question comes from Theodore O'Neill with Litchfield Hills Research.

I have 2 questions this morning. The first is about memory chips and sort of the supply chain and semiconductors in general. You cited here, which everyone has been seeing is memory chip cost increases. So what are you doing to ameliorate that? And are you seeing other issues in -- other supply chain issues in the semiconductor area as well?

Yes, I think there are several impacts because I think the supply chain for chipset and AI volume demand for supply chain in China. For the memory chip, everyone know it's almost 5 to 10x increase. It impacts our sales price for our consumers -- our customers. So in the early quarter, we had -- we increased more storage, try to offset the price increasing first. That -- you can see that's why our cash flow was somewhat impact -- somehow impacted because we increased the memory chip storage first.

And the second, you can see we have to cover some cost -- chipset costs increasing. I think also in the second half year, we -- just about several months later, we increased our sale price, but we have to consider I think the customer, I think, acceptance for the price. That's number two.

And number three, and also we have R&D revised for some large memory and expensive memory, we try to, I think, revise our hardware, try to minimize, I think, to reduce the memory requirements, it's number three.

And finally, and also we -- also like PCB, like all these components extend -- I think the period and the cost also is going up. I think, indeed, this year is worse in supply chain for our product, for like MiFi, like our PetPhone to the -- and our [ pet care ] to the customer.

My other question is about GlocalMe Life business. The -- here in the prepared remarks here, GlocalMe Life business revenue decreased year-over-year, but the average daily active users increased over the same period. So were they spending this money? I was wondering if you could explain why one is down, the other one is up.

Yes, sure. Yes, as this second quarter's figures, the Life's revenues increased in 2 parts. One part is the hardware's Life delivery to our customer. So that hardware's -- the volume of hardware delivery in the second quarter is a little bit down a bit. So that account for the total revenues a little bit down. But we delivered Life products in the past series quarters on a stable growth volume. And this Life product used to the local scenarios, local mobile broadband scenarios like our product charge cables that were very well welcome in Japan's local market.

So the MAU figures reflect a cumulative active historical sold hardware of Life. So that cumulative MAU metrics has increased dramatically compared with last year. The 2 figures -- 2 metrics, one's revenue reflects the second quarter scenarios. The MAUs reflects the cumulative, the whole historical selling stories. Yes.

Yes. I have more comment about this because for Life, on this product, I think because I just mentioned, as you mentioned, the supply chain impact by the AI industry because of the memory chip and the PCB, et cetera. That's why in the first quarter, before the price increase, we asked our customers to give more order. And so far, I think this is why in the first quarter, we got more bigger order and the second quarter order is a little bit lower. In the second quarter, you can see the order is a little bit lower. That's because of the supply chain impact and the price increase. But the total first half year, we compared to the first half last year, it's increased dramatically.

[Operator Instructions] There are no further questions at this time. I'll now hand back to Daniel Gao for closing remarks.

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

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

Thank you.

Thank you.

Thank you for standing by, and welcome to the uCloudlink Group, Inc. First Quarter 2026 Earnings Conference Call. [Operator Instructions]

I would now like to hand the call over to Mr. Xi Chao Gao, Company Investor Relations. Please go ahead.

Thank you, operator. Hello, everyone, and thank you for joining us on uCloudlink's First Quarter 2023 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 entity 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.

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 regulations 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 increase and the 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 for 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 2 quarters.

Each of these new products continue to make significant strategic progress during the quarter, laying the groundwork for accelerated commercial momentum going forward. Overall, our 3 new growth engine, 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 broader PetPogo ecosystem. While these investments will attempt 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 NWC 2026 and CX 2026 with the unveiling of our PetPogo ecosystem and 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 allow 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 user MAU reached 1,397 and early better 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 the sales volume and the market adoption accelerating rapidly by enabling a lighter, more convenient lifestyle with secure and reliable connectivity, freeing users from cumbersome device while ensuring seamless protective experience. GlocalMe Life solutions saw average daily active user DAU during the quarter increased 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 strategy 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 the year 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 solutions for operators that enhance 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 the connectivity when it matter most in conflict affecting market with disruptive terrestrial network, its resilient connectivity is a critical differentiator. Powered by our AI-driven HyperConn technologies is seamlessly switched between terrestrial in-flight, home Wi-Fi, creating a unique global experience.

It also enables satellite-based two-way messaging and emerging SOS, extending connectivity from ocean to the earth. We expect this product to reach commercial deployment in the second quarter of year 2026. Looking behind its market potential, the MeowGo G50 Max not only represent our high-end brand aspiration, but also focus 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 line will continue to grow, driven by ongoing product ramp-ups and the 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 had 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 year 2021.

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 2026. Average daily active user DAU and monthly active user MAU represents the average number of unique users engaging with our Global Me 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, from the same period last year. Average DAUs from our GlocalMe MeowGo business declined by 5.8% year-over-year. Average MAUs were 337, 274, representing an increase of 6% from 695, 599 in the first quarter of 2025. Average MAUs from our GlocalMe IoT, GlocalMe SIM and GlocalMe Life business saw increase 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 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% for the first quarter 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 gigabyte. 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 Live 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 MAUs were 1,097 and 1,397, respectively, while average DATs and MATs for 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 from 397 MNOs globally.

Total revenue for the first quarter of 2026 were USD 69.9 million, representing a decrease of 10.1% from USD 18.7 million in the same period 2025. Revenue from service were USD 13.3 million, representing a decrease of 6.3% from USD 14.2 million in the same period 2025. Revenue from service 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 2026, Japan contributed 32% Mainland China contributed 30.3%. North America contributed 70.3% 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 2025. Our gross profit was USD 8.3 million compared to USD 9.7 million in the same period 2025. Overall gross margin in the first quarter of 2026 was 49.1% compared to 51.7% in the same period 2025. Gross margins on service was 54.5% in the first quarter 2026 compared to 57.3% in the same period 2025. Excluding share-based compensations, total operating expenses were USD 10.8 million compared to USD 9.9 million in the same period 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 2025. Adjusted EBITDA was negative USD 2.0 million in the first quarter 2026 compared to a positive USD 1.4 million in the same period 2025. For the first quarter of 2026, we record 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 2026, our capital expenditure were USD 30,000 compared to USD 300,000 in the same period 2025.

Turning to balance sheet items. Our cash and cash equivalents were USD 28 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...

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

My first question is about the G50 MAX.

And in your prepared remarks, you're talking about this being interesting to the market that's in conflict zones. And I'm hoping that it's a shrinking market, not a growing market. So could you talk about some other markets where this G50 Max would be appropriate?

And I think you mentioned SC, and I'm thinking perhaps very remote rural areas as well.

Yes. So our GMAX is our high-end product. It's 5G. We can roll out 5G in over 100 countries. That's most popular, we can offer 5G in the world. So compare like the other -- our competitors like AT&T, maybe just 75. So the first advantage is we can provide a maximized coverage of 5G worldwide. That's first.

And the second, we can provide about certified airline for the in-cabin 4G, 5G connection. The second, that means the business traveler in the air cabin, they can serve. And then it's about the satellite SOS and the messaging. So no matter you are in the outdoor or in the conflict area, you can get -- you never lost the connection.

And number 4 is if you are in the office and at home, of course, you can get WiFi available. But WiFi sometimes is not reliable, sometimes is unreliable -- during this case, we can backup by the 5G and 4G with the multi-carrier that enable your remote work and remote study and remote meeting network fell down. So we balance the best coverage and the best tariff. So that means one device and one account, you can enjoy the global best coverage and the best tariff. So that's why we believe that one device for every scenario. Not only at home at all base, so the people have to bring the multi-device, multi-package home WiFi in-cabin WiFi, we have leveraging eSim or local multi-carrier tariff, then you can get the similar coverage and solution. And now with our solution one device, simply one device, one account, you can get the best coverage and the tariff. That's our purpose.

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 the in-car infotainment and that's CarPlay. Majorly CarPlay devices -- major car play devices come from China. Major top 10, the partners all embed our solution. That means plug our -- this CarPlay device not only can get the entertainment in the car, but also can get the network in the car. So almost the top 10 these providers all use our solution. So that's for car infotainment.

And for the camera, so I think now more and more 4G camera, they use -- in the traditional, they need a SIM card inside. That means if the carrier network has some problem or coverage adjustment, you have to go to the high place to replace SIM card for the camera is very uncommon. But with our solutions, because 4G is more popular, the price is similar like Wi-Fi camera. You can see the 4G camera, the volume of the market share in the camera market is bigger and bigger.

So for this -- for the 4G camera, I think the currently, more and more support from China provider embed our software solution into their camera. That means the user -- end user still can use the SIM slot to put into SIM card. But it's expensive and coverage is good. But use our solution not only get a benefit from the better tariff, but also can get cross-carrier coverage. And that -- you can see our market share in this market grows dramatically. So you can see that our installation volume is about 3.9 million pieces for shipment. In the 6 months later, they will turn into the package and with our -- in operation about from shipment to the user and adopt our solution needs 6 months. So you can see 6 months later, we will get more user -- far more users than currently.

And my last question is about supply chain issues. You mentioned in the prepared remarks about memory prices being a headwind. But I was also wondering, are you seeing any supply chain issues in terms of availability?

Yes, I think compared to last year, memory chip is almost 5 to 10x higher. So that's heavy impact -- I think the cost of the device. So we have many -- we think a lot of ways. One side, we have a lot of deficit, we have -- but also we try to redesign to reduce the memory size and to lower the cost. And also, we're looking the instead of the Chinese local memory. So all these, we can overcome some part of the memory price going up, but we can't offset the total because the price is too high. That's definitely with some impact to our selling price. You can see our -- not only 2B and 2C selling price for the device is higher, about 20%, 30% up than compared last year.

[Operator Instructions] 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.

Thank you for standing by, and welcome to the uCloudlink Group, Inc. Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to Mr. Xiao Gao, Company IR. Please go ahead.

Okay. Hello, everyone, and thank you for joining us on uCloudlink's Fourth Quarter and Full Year 2024 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. Xu 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 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 entity 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.

Please also note that uCloudlink's earnings press release and this conference call include discussions of audited GAAP financial information and audited non-GAAP financial measures. press release contains relation of the unaudited non-GAAP measures to the most directly comparable audited GAAP measures. I will now turn the call over to Mr. Chen. Please go ahead.

Thank you, Daniel, and good morning or evening, everyone. Despite significant macroeconomic headwinds through year 2025, including tariff, we remain steadfast in strategically investing across our 3 new business lines. Against this challenging backdrop, we maintained our financial health and deliver stable performance. Net income for the year increased 38.2% year-over-year to USD 6.3 million with the net cash inflow from operations reaching USD 3.2 million.

Total revenues from Mainland China surged 16.5% from last year, underscoring how our uCloudlink 1.0 international data connectivity solutions are accelerating broader consumer adoption and further solidifying our leadership in the global roaming market. This robust performance demonstrates the resilience of our core strategy and strategic impact of the investments we made in our 3 new growth engines. This new product launch has diversified our business and allow us to successfully navigate a persistently challenging macroeconomic and trade environment.

Through strict operational discipline and focus, we have laid a solid foundation to build upon and accelerate growth in year 2026. Moreover, our smart hardware and data are emerging as a key gateway to AI and big data connectivity. While our heavy investment in the pet AI analyzing pet languages, health, behavior and sent data continues to strengthen our industry leadership. We remain highly focused on overcoming the world's 3 fundamental digital device through transformative connectivity solutions. We continue to dismantle the global connectivity device by breaking down international roaming barriers to ensure our users maintain seamless network access anywhere in the world. At the same time, we are tackling the single multi-network device through our prorietary, CloudSIM and HyperConn technologies, which are setting industry standards for intelligent multi-network connectivity and reliability. Lastly and most innovative, we are bridging the emotional digital device with our AI-powered pet ecosystem, creating entirely new and meaningful connections between humans and their pets. I will now review the highlights for each of our key business lines. I will start with our GlocalMe Life business, which continued to generate solid growth momentum. Average daily active terminals during the first quarter surged 897.9% year-over-year, while average daily active users, which exclude platform increased 40.1% year-over-year.

Within our broader give portfolio, our industry first UniCord Plus and UniCord Pro series remain highly competitive and continue to differentiate themselves with the seamless connectivity across multiple networks, global positioning and fast charging capabilities. This is further strengthening our competitive edge in the travel, automotive and secure networking market. At the same time, PetPhone orders continue to scale and accelerate since its initial launch last quarter, reflecting strong market traction across the board. We kick off 2026 with a powerful showcase of our latest innovations at CES in Las Vegas and MWC in Barcelona.

As a highlight, we outlined our vision to eliminate the pet people device through the pet ecosystem and the introduction of the all-new PetCam that complement the platform. This revolutionary AI-powered ecosystem will transform how we connect with and care for our pets and transcends basic pet tracking function by establishing a comprehensive safety awareness emotion connection loop that enable owners to see, hear and interact with their pets in real time for anywhere in the world. The market response has been exceptional, generating significant global attention and validating our product mix. Purchase orders are growing alongside strong consumer feedback, laying solid foundation for us to drive scale commercialization in year 2026.

Also making it debut at CES was the MeowGo G50 Max and AI-powered connectivity hub with sky to ground 5G satellite and Wi-Fi integration that create mobile Wi-Fi hotspot anywhere. This solution provides a critical say with 2-way messaging and emerging SOS via satellite networks, ensuring connectivity even when terrestrial network are beyond reach, powered by our patent AI hyper technology, it can intelligently switch between terrestrial 5G networks and Wi-Fi networks to deliver a frictionless one device one account loading experience. At its core, it creates a reliable mobile Wi-Fi hotspot, ensuring unmatched coverages and truly seamless connection. Moving on to our GlocalMe IoT business.

We maintained a robust growth trajectory with user adoption and revenue contribution increasing strongly on a year-over-year base during the quarter. In the fourth quarter, average daily active terminals recorded a year-over-year increase of 434.8%, highlighting a strategic positioning and traction we are getting in high-growth sectors such as in-car infotainment and security cameras. Having established a strong initial presence in this key sector, we plan to scale these solutions into additional industry verticals in the future to drive to further expansion of our ecosystem. Turning to our GlocalMe SIM business line.

Our eSIM solution continues to gain a strong traction following its pilot programs last quarter with cumulative SIM card sales now surpassing several hundred thousand units as growth moment accelerators. This is creating a strong growth momentum with average daily active terminals increasing 180.8 year-over-year during the quarter. validating both our carrier partnership model and its market positioning as a permanent secondary SIM card for users.

More importantly, our carrier core insurance program has begun pilot deployment and expanding fast, providing a highly effective low CapEx solution for operators that enhance their global roaming capabilities. This first SIM model is gaining strong traction and is welcomed by both operators and users, confirming robust product market fit. Looking ahead, 2026 will be pro years of execution and transformation for us. We closed 2025 with a streamlined organizational structure. having integrated our branding online and offline sales and e-commerce teams to better align with our evolving strategy. Building on this foundation, we kick off the new year by onboarding highly experienced leaders with deep to customer expertise to strengthen our capabilities for next phase of growth.

At the same time, we are actively forging partnerships with world-renowned universities and leading global technology companies, integrating resource and laying a solid foundation for long-term success. The strong market feedback from the CES 2026 combined with accelerating sales of new solutions provides us with a multiple powerful growth engine. We are confident in our ability to scale our user base globally, further diversify our revenue streams and bridging critical digital device for cross-border connectivity to emotional distances between people and their pets. With the disc optimism in mind, we are confident that we have the right strategy in place to drive sustainable growth going forward. For the fourth quarter of year 2026, we expect total revenue to be between USD 16 million to USD 17 million, representing a decrease of 9.1% to 14.4% compared to the same period of year 2025. For year 2026, we expect total revenues to be between USD 85 million to USD 100 million, representing an increase of 4.4% to 22.9% from year 2025. I will now turn the call over to Mr. Shi.

Thank you, Mr. Chen. Hello, everyone. I will go over our operational and financial highlights for the fourth quarter and full year 2025. Average daily active terminals, DAT and average monthly active terminal, MAT are important operating metrics for us of the measure customer usage trend over the period and are reflective of our business performance. In the fourth quarter of 2025, average DAT was 328,847, of which 15,636 owned by the company and 313,211 not owned by the company, representing an increase of 6.6% from the fourth quarter of 2024. During the quarter, 5.1% of DAT were from uCloudlink 1.0 international data connectivity service and 42.9% were from uCloudlink 2.0 local data connectivity service. In December 2025, the average daily data usage per terminal was 1.59 gigabytes.

Average MAT in the fourth quarter were 704,393, representing an increase of 11.1% from 634,245 in the first quarter 2024. Growth was driven by strong momentum across our 3 new growth engines with average MATs for Global IoT, GlocalMe SIM and GlocalMe Life, increasing 127.5%, 133.8% and 616.9%, respectively, from the same period last year. Average MATs from GlocalMe MeowGo business, which were previously referred to as GlocalMe mobile fixed broadband business decreased slightly by 0.5% year-over-year, reflecting a relative stable user base in this segment. Average daily active user, DAU, and monthly active users, MAU represent the average number unique users engaging with our Globe service on a daily and monthly basis, respectively. Both metrics show strong growth momentum in the fourth quarter.

Average DAU in the fourth quarter were 353,278, representing an increase of 10.4% from 320.37 in the fourth quarter of 2024. GlocalMe IoT, GlocalMe SIM and GlocalMe Life all delivered significant gains with average DAU up 5.7%, 49.8% and 409.1%, respectively, from the same period last year. Average DAU from GlocalMe MeowGo business declined slightly by 4% year-over-year. Average MAUs were 738, 777, represented a 9.2% increase from 676, and 610 in the fourth quarter 2024.

Average MAUs from GlocalMe IoT, GlocalMe SIM, GlocalMe Life business line saw increase of 6% 53.3% and 46.2%, respectively, from the same period last year. Average MAU from GlocalMe MeowGo business decreased slightly by 2.2% year-over-year. As Phone is a newly launched business, we are beginning to see early user adoption during the quarter. In the fourth quarter, average DAT and MAT for Pone reached 257 and 571, respectively, while average DAU and MAU were 745 and 977, reflecting the initial traction of this new offering. As of December 31, 2025, the company had 206 patents 181 approved and 25 pending approved and approved SIM card from 398 MNOs globally.

Total revenue for the fourth quarter 2025 were USD 22.1 million, representing a decrease of 14.6% from USD 26 million in the same period of 2024. Revenue from service were USD 15.2 million, representing a 1.1% increase from USD 15 million in the same period 2025. Revenue from service contributed 68.5% of total revenues during the fourth quarter 2025 comparing to 57.8% in the same period last year. Geographically speaking, during the fourth quarter of 2025, Japan contributed 43.6%, Mainland China contributed 26.8%. North Americas contributed 11.2% and other countries and regions contributed remaining 18.4% compared to 33.6%, 20%, 12.1% and 14.3%, respectively, in the same period of 2024. Our gross profit was [ RMB 11.4 million ] in the fourth quarter of 2025 compared to [ RMB 11.2 million ] in the same period 2024. Overall gross margin in the fourth quarter of 2025 increased to 51.6% from 43% in the same period of 2025.

The gross margin on service was 61.7% in the fourth quarter compared to 5.6% in the same quarter 2024. Excluding share-based compensation, total operating expenses were USD 9.4 million compared with USD 13.9 million in the fourth quarter 2024. Net loss in the fourth quarter 2025 was USD 3.1 million compared with a net loss of USD 1.5 million in the same period 2024. Adjusted EBITDA was USD 3.1 million in the fourth quarter of 2025 compared with negative USD 2.3 million in the same period of 2025.

For the fourth quarter of 2025, we recorded operating cash inflows of USD 4.7 million compared to USD 0.5 million in the same period 2 first quarter 2025, our capital expenditure were USD 20,000 compared to USD 0.6 million in the same period in 2024. Moving to 2025 full year financial results. Average DATs and MATs show similar patterns to those observed in the fourth quarter. For the full year, average DATs were 322,169, of which 18,449 owned the company and 3,720 owned by business, representing an increase of 1.7% from 315,688 in 2024.

In 2025, 36.3 DATs was from uCloudlink 1.0 international data connectivity service and 43.7% DAT were from uCloudlink 2.0 local data connectivity service. Average MATs in 2025 were 681,672, representing an increase of 8% from 631,137 in 2024. Growth was primarily driven by our new 3 new growth engines with average MATs from GlocalMe IoT, GlocalMe SIM, GlocalMe Life increasing 360.7%, 119.8% and 356.0% year-over-year, respectively.

Average DAU in 2025 were 340,036, representing an increase of 4.2% from 326,412 in 2024. This growth was supported by strong expansion in GlocalMe IoT, GlocalMe SIM and GlocalMe Life, where average DAUs increased 737.3%, 321.5% and 349.1% year-over-year, respectively.

Average MAU in 2025 were 723,706, representing an increase of 8.9% from 664,815 in 2024. Average MAUs from GlocalMe IoT, GlocalMe SIM and GlocalMe Life increasing 251.2%, 167.5% and 413% year-over-year, respectively.

Total revenues for 2025 reached USD 81.4 million, compared with $91.6 million in 2024. Revenue from services was USD 61.0 million in 2025, representing a 1.8% year-over-year increase from USD 60 million in 2024. Revenues from data connectivity services were USD 47.8 million, a slight increase from $47.6 million in 2024. Within this segment, international data connectivity services remained the largest contributor, rising from USD 39.5 million in 2024 to USD 41.1 million in 2025, representing a 4% year-over-year increase.

Overall gross margin was 52.4% in 2025, an increase when compared with 48.4% in 2024. Gross margin for services was 58% in 2025, compared with 60.8% in 2024.

For the full year 2025, excluding share-based compensation, total operating expenses were USD 40.4 million compared to USD 40.8 million in 2024.

Net income was $6.3 million in 2025, compared with $4.6 million in 2024, representing a 38.2% increase from 2024. Adjusted EBITDA was USD 7.2 million in 2025, compared to $7.1 million in 2024.

For the full year, our capital expenditures were USD 1.0 million, compared to USD 4 million in 2024. We generated positive operating cash inflow of USD 3.2 million, compared to USD 9.2 million in 2024.

Turning to balance sheet items, our cash and cash equivalents increased to USD 32.8 million as of December 31, 2025, compared to USD 28.5 million as of September 30, 2025. We remain focused on strengthening our financial position and believe we are well positioned to drive continuous growth in our business.

With operator, lets open it up for Q&A.

[Operator Instructions] Your first question today comes from Theodore O'Neill from Litchfield Hills.

Looking at your guidance for 2026 implies a fairly strong second half of the year. And I was wondering if you could talk about that growth in terms of what product lines or geographic areas you expect to see -- participate the most in that growth.

Thanks, Neil. Yes, the outlook for the year 2026, we expect a growth robust growth trend for our overall business. The main growth driver as we disclosed in the year 2025, the 3 new business line are main growth driver, which are GlocalMe IoT, GlocalMe SIM and GlocalMe Life as well as a new business line PetPhone separated from GlocalMe Life business line. This year is a separate business line for PetPhone business. So all the 4 business lines will drive our main business growth in terms of revenue.

Our legacy business, WiFi, mobile broadband WiFi, has kept stable business, which will contribute solid cash flow to support our investments on our 4 new business. So as we disclosed last year, in the year 2025, we invest massively on 4 new business lines. All these investments came from the cash inflow generated from our legacy business, mobile broadband business.

So last year, in the year 2025, the operational metrics has told us the growth driver will come into revenue for the year 2026. As we disclosed the DAU, MAU metrics for these 3 new business, IoT, SIM and Life, the growth massively a couple of times more than the previous year 2024. So this will carry on this driver for our growth in year 2026. Yes.

And could you give us some more information about GlocalMe IoT? Are there particular industries that -- where you see growth for the IoT part of the business? Or is it very broad-based?

Our IoT business because we not just invest last year, we almost invested nearly 10 years. But from last year, we finished our IoT product into the industry IoT leaders. We finished all the trial. That's why we can see a largely increase because they already embed our IoT cloud SIM product solution into their, like a camera, like a car infotainment. These, even the battery monitoring because you know all the Chinese manufacturer and this smart device more and more go to the outside China and go to worldwide.

So we would just enable them to cross the networks in each country easily. So this help us gain volume customer increase. All these our partner, so give us the forecast this year, their IoT products like security camera, like CarPlay, like the power monitoring and battery monitor, et cetera, and they will have a large volume deployed with our solution. Before that, we just finished the test before last year. But from the second half of last year, we see more and more these industry players embed our solution because our solution is much better than currently just practicing inside. So that's why we get -- we have more confidence in the next couple of years, we can get millions of connections and revenues from these partners.

[Operator Instructions] Your next question comes from Vivian Chang from Diamond Equity Research.

This is Vivian Zhang with Diamond Equity Research. Congratulations on the results achieved. I got several questions. Firstly, can you provide more details about the recently introduced PetPogo ecosystem and the PetCam? And how do you expect them to drive the growth of sales and profit margin?

Okay. Last quarter, so year 2000, the first quarter, we are in the last October, we newly launched our PetPogo product in Asia area then to U.S. area. I think that we already started, I think the solution and the PetPogo solution, bridging the digital gap between the people and pets. And also we get a very popular during the CES exhibition and also MWC in Barcelona. So like CBS, like, Reuters and even Chinese Xinhua, they all give a very focused report about our new product.

And also last CES, we also launched a new pet chem and also the pet camera shoot, I think, is integrated and PetPhone and the PetCam. So now we can provide not only just the voice connection with the people and the pet, but also we can provide the camera, I think the video connection with the pet. That means we can provide the connection through the pet, the pet view, we call it for FPV. Also, we can use this PetCam as a CCTV to monitor to understand the, the pet, the mood, the behavior and their security, et cetera.

So that's why we are not only just starting on the voice for PetPhone, but we have more device and more function coming like PetCam. This is first PetCam can, I think can do the live broadcast live video also can be add as a CCTV. So it's very useful to improve the safety and the communication effect with the pet -- and also we -- our PetPogo, this is hardware pet camera and the PetPhone. Our ecosystem, our app, we call the pet and digital world is our PetPogo.

So in the international version, we call the PetPogo, for Chinese version, we call it PetWoof. It's separated because of data security arrangement. So I think for this PetPogo, we can provide, we can solve it. I think the first is the communication between the pet and the people. We can provide the AI translation for the AI translation for the multi languages. That's the first part. And the second, we can sort it end-to-end for pet safety, including the tracking and the training. Also, we can provide in the health care for the pet is end-to-end. So we can see that once the PetPogo launch end of this month, we can see the PetPhone significantly apply different with the current tracker and the current pet training device.

We -- the PetPhone, finally, we understand it can sort it in 3 major anxieties. First is about the communication. The second is about the safety and the third is about the health. So it compares the last just a single function device and PetPhone and PetPogo can provide more effective and pinpoint anxiety solutoins. So PetPogo, I think we mentioned PetPogo will include not only just PetPhone.

PetPhone, we believe it will be like iPhone with app inside first. And the second, PetPogo with community and with more functional and even AI agent inside, so like translation, like a video camera, healthy AI, et cetera, all put into here. And also we have a community with all the people and the pet, they live together and they check together and they talk together. So that's like pet worlds like WeChat that we call Pet WeChat and Pet TikTok.

So we integrate more and more functions in the PetPogo. The initial version is quite different because we have now a community for pet these owners. We are more understanding each other. And I believe in the future, PetPogo will grow up become a digital society for pets and the people. That's all. Thank you.

Okay. Got it. My next question will be about the R&D expenses declining a lot in the fourth quarter. So we would like to know if this will impact the company's ability of researching and developing new products.

Now, the figures, the expenditures related to R&D figures, tell us we improve our R&D's efficiency via investment in more efficiency in program management and also AI tools. Some like AI coding, AI-coded program. All this improves our company R&D's efficiency improving. We invest R&D resources more on new business line as we say more R&D resource invest on PetPhone business. And that investment in R&D is not enough. So this year, we will carry on investments in R&D for new business.

As we filed the 6-K in the last year, I think in October, we spin off PetPhone business as a separate subsidiary. So we have start to a new financings, a risk finance for PetPhone business -- so the PetPhone business will have -- I believe we have a new fundraising deal in this year sometime. So we will invest this new fund on new business like platform business typical. So we will still invest increased investment on R&D for new business, invest on our new features.

We are more spending on rather than just traditional business.

Okay. Got it. Got it. My last question is that, can you elaborate on the reasons for the decline in product sales? Do you think this decline will continue?

Sorry, which one?

Yes. Can you elaborate on the reasons for the decline in product sales? Do you think this decline will continue?

Mobile broadband business decline or which business are you?

Decline in product sales. Yes.

Sorry, can you say again?

Can you explain why the product sales declined? Like, do you think this decline will continue?

We disclosed a little bit the revenues generated from the mobile broadband hardware deliveries was a little bit decline last year. But the revenue -- the service revenues was increasing a little bit over the year 2024. As we disclosed, the MAUs, the metrics was increased about 10% over the last year, which will show our revenue -- service revenue related to this active user will come back to our account on recurring basis in the year 2026 and over. So and as I will say, we -- the new growth engines came from the 3 -- the 4 new business lines, as I mentioned, IoT, PetPhone, SIM, Life service. So the mobile WiFi, the legacy business as a contributor of cash flow for us to invest on our new business. So that's...

More comment because our current legacy product from international part is heavily impacted by the, I think the economic tariff. For example, last year, so you can see in the last summer, it's our -- I think the travel is good season. But at the moment, we suffer from the earthquake rumors in Japan. So that impact the first. The second and also we can see the Sino-U.S. trade war during the last -- middle of last year around June. So you can see the fourth quarter, we suffered from the China and the Sino and U.S. and Sino and Japan relationship, and this year it is the same.

So the fourth quarter, we suffer from the Middle East war. So all this have an impact about the traveler this part. But for the domestic part, it will see a stable growth. So we have to overcome the traveler business. That's very heavy by the economic and the situation, the political situation worldwide. So if the worldwide situation getting better, I think this will regain the benefit we will regain from this part.

There are no further questions at this time. I'll now hand back for any closing remarks.

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

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

Hello, and welcome to the uCloudlink Group, Inc. Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note that this event is being recorded.

I would now like to turn the conference over to Daniel Gao, Investor Relations of uCloudlink. Thank you, and over to you.

Hello, everyone, and thank you for joining us on uCloudlink's Third Quarter 2024 -- sorry, 2025 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 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 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. 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 our reconciliation of the unaudited and 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, everyone. Amid a complex macroeconomic and the trade environment, we remain disciplined in our execution while maintaining operational profitability. This balanced approach allow us to successfully navigate these external challenges and reinforce the resilience of our business while also laying the foundation for long-term value creation. We remain profitable and continue to generate stable margins with total revenue of USD 21.1 million and net income of USD 9.3 million during the quarter.

Our GlocalMe ecosystem is gaining momentum as it grows in scale and global user adoption. Likewise, our 1.0 international data connectivity services business continues to grow with full speed 5G network coverage across 91 countries and regions, as we continue to gain market shares and reinforce our leadership position in the global roaming sector.

We remain focused on overcoming the world's first 3 fundamental digital dividers through the transformative connectivity solutions. Firstly, we are eliminating the global connectivity divide by breaking down international roaming barriers and providing seamless network access worldwide. Secondly, through our patent cloud SIM and HyperConn technologies, we tackle the single multi-network divide by enabling intelligent and optimized connectivity across multiple networks.

Lastly, the most innovatively, we are bridging the emotional digital divide with our AI-powered technology, creating entirely new and meaningful connections between humans and their pets. Building on this mission, our strategic investment in R&D and marketing to accelerate innovation, enhance user experience, and speed up commercial stabilization of our 3 new growth engines are yielding strong results. Our 3 new product lines, GlocalMe Life, GlocalMe SIM, GlocalMe IoT, saw remarkable year-over-year MAU growth during the quarter, increasing 382.3%, 188.2% and 593.3%, respectively. Feedback has been overwhelmingly positive, reflecting how our solution directly addresses the market demand and validating our investment strategy.

I will now review the highlights for each of our key business lines. I will start with our GlocalMe Life business. In the third quarter of year 2025, the average monthly active terminal reached 3,903, representing an increase of 408.2% year-over-year. Within our broader GlocalMe Life portfolio, which includes our industry-first Unicore+, Unicore Pro, and LP, MAT grew by 369.3%, excluding PetPhone year-over-year, reflecting strong user adoption across the innovative product lines.

Building on this solid foundation of product excellence, I will now highlight the significant progress we made with our PetPhone product platform, designed to bridge the digital divide between humans and their pets. PetPhone is already gaining the momentum after its initial commercial launch in September 2025 in Hong Kong and across the Middle East, where it has already generated orders for approximately 40,000 units as we continue to expand our distribution channels and partners. At IFA Year 2025 in Berlin, PetPhone was recognized as an honoree in the communications and connectivity catalog of the inaugural IFA Innovation Awards. It also received the best of IFA Year 2025 distinctions from Yanko Design, Home Crux, and Mark Ellis Reviews.

Following the showcase of our solutions at IFA Berlin 2025, we are now in advanced discussions with several major retail channels, including one key partner. Furthermore, we successfully entered into a partnership with a leading online pet retail platform in North America, where initial product shipments have already begun. With the strategy foothold being established across Hong Kong, the Middle East, North America, and Europe, we plan to establish a new operational structure and raise additional capital to accelerate the global expansion of our Pet tech business. We also plan to develop PetTech as a stand-alone application that extends beyond smart hardware and build a comprehensive systematic platform, integrating social entertainment, living stream, and a comprehensive pet ecosystem. The initial version of this new app is expected to launch in the first quarter of year 2025.

Our GlocalMe IoT business maintained its strong growth trajectory with user adoption and revenue contribution showing substantial year-over-year improvements. In the third quarter, average monthly active terminal for GlocalMe IoT recorded a year-over-year increase of 583.0%. We secured orders for in-car infotainment system, while our initiatives in the secretary camera sectors are now fully deployed and enter a phase of expansion, supported by broadened partnerships across several high-growth verticals. Having established an initial presence in this key sector, we plan to expand our solution into additional industries in the future.

Turning to our GlocalMe SIM business line. Over the past 9 months, GlocalMe SIM has surpassed 400,000 cumulative cars sold, including OTA SIM, and eSIM, and eSIM TRIO, a game-changing solution demonstrating clear technology leadership in the industry. The eSIM TRIO was named as a best of IFA Year 2025 by market reviews, further highlighting its innovation and market recognition. This momentum has fueled our growth, driving at 269.5% year-over-year increase in average monthly active terminal during the third quarter.

The eSIM TRIO solution has continued to gain strong traction following the widespread distribution of 10,000 trial units under a pilot program. It generates a positive user feedback and at more than 75% in user registration and more than 30% in active engagement, validating both our carrier partnership model and product market fit. Our carrier insurance program has also made significant progress. We have complete pilot negotiations with multiple operators and expect to commence joint testing and pilot initiatives in the coming quarters, laying the groundwork for future large-scale carrier partnerships.

Lastly, our GlocalMe mobile fixed broadband business remains stable with growing order momentum expected to provide a stable foundation of our future growth. The launch of our MeowGo G40 Pro and the cutting-edge MeowGo G50 Max are expected to serve as a growth engine for the coming quarters. The MeowGo G40 Pro is a revolutionary upgrade and a milestone product, enabling users to stay connected through one single device and one account. The product began deliveries by the end of the quarter and is the world's first device to support in-flight WiFi and connect seamlessly across several usage scenarios, such as home, airports, office, and cafes.

With the MeowGo G40 Pro, we are transforming portable connectivity from an international travel-only solution into a true multi-scenario companion. Powered by our patent, AI HyperConn technology, it seamlessly serves users through one single intelligent device and one account, regardless of where they are. HyperConn, our industry-leading solution, also lay the foundation for large-scale product iteration and future upgrades. Furthermore, we will launch the MeowGo G50 Max with Sky to ground 5G satellite integration and AI-driven network switching, further solidifying our innovative leadership in the mobile fixed broadband industry. This device also enhanced network quality through AI-powered real-time congestion detection, delivering a faster and more reliable user experience.

Looking ahead, we are entering the next phase of expansion, where we will scale our global user base, further diversify revenue streams, drive innovation across our ecosystem, and sustain a healthy financial performance. The launch of MeowGo G40 Pro and cutting-edge MeowGo G50 Max, combining with the launch of the PetPhone, the strong validation of the eSIM TRIO pilot, the robust expansion of our IoT solutions, provides us with several robust growth engines going forward, laying a solid foundation for future growth.

Having successfully navigated external challenges, we are confident in our ability to scale our user base, expand our global partnership, and deliver growth in the coming years as we continue to innovate and bridge digital devices for users worldwide. We are confident that we have the right strategy in place to generate sustainable growth in the coming quarters. For the first quarter of year 2025, we expect total revenues to be between USD 22 million to USD 26.5 million, representing a decrease of 15.4% to an increase of 1.9% compared to the same period of year 2024. For the full year of year '25, we currently expect revenue to be in the range of USD 81.3 million to USD 85.8 million. The company is revising its guidance in light of the persistent macroeconomic challenges and global trade headwinds, which have had and may continue to have a broader impact across the industry.

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 third quarter of 2025. Average daily active terminal and average monthly active terminal MAT are important operating metrics for us as they measure customer usage trends over the period and are reflective of our business performance. In the third quarter of 2025, average DAT was 332,674, of which 21,484 owned by the company and 311,190 owned by the company, representing an increase of 3.8% from the third quarter of 2024. During the third quarter of 2025, 57.3% of DAT were from uCloudlink 1.0 international data connectivity service, and 42.7% were from uCloudlink 2.0 local data connectivity service.

In September 2025, the average daily data usage per terminal was 1.7 gigabytes. Starting from this quarter, we are disclosing our average daily active users, DAU, and monthly active users, MAU, which represent the average number of unique users engaging with our GlocalMe service on a daily and monthly basis, respectively. We believe these metrics will better reflect the progress we are making in driving user engagement across our different business lines and how we are managing and monetizing our user bases as we scale up.

Growth in average DAUs and MAUs follow a similar patterns with a strong momentum. Average MAUs in the third quarter were 761,586, representing an increase of 11.9% from 680, and 609 in the third quarter of 2024. Average MAUs from GlocalMe IoT, GlocalMe SIM, and GlocalMe Life business saw increase of 593.3%, 188.2% and 382.3%, respectively, from the same period of last year. Average MAUs from GlocalMe mobile and fixed broadband business decreased slightly by 0.8% year-over-year. By September 30, 2025, the company had 201 patents, with 168 approved and 33 pending approved. The pool of SMCR was from 392 MNOs globally as of September 30, 2025.

Total revenue for the third quarter 2025 was USD 21.1 million, representing a decrease of 16% from USD 25.2 million in the same period of 2024. Revenue from service was USD 17 million in the third quarter of 2025, representing a decrease of 1.4% from USD 17.3 million in the same period 2024. Revenue from service contributed 80.6% of the total revenue during third quarter 2025, compared to 68.6% in the same period last year.

Geographically speaking, during third quarter 2025, Japan contributed to 33.2%, Mainland China contributed 35.1%, North America contributed 15.4%, and other countries and regions contributed the remaining 16.3% compared to 46.6%, 27.8%, 12.8% and 12.8%, respectively, in the same period 2024. Our gross profit was USD 11.3 million in the third quarter of 2025 compared to USD 12.2 million in the same period 2024. Overall gross margins in the third quarter of 2025 further rose to 53.6% from 48.4% in the same period of 2024. The gross margin on service was 56.6% in the third quarter of 2025 compared to 60% in the same period of 2024.

Excluding share-based compensation, total operating expenses was USD 11. million or 52% of total revenue in the third quarter of 2025, compared to USD 9.7 million or 39% of total revenue in the same period in 2024. Net income in the third quarter of 2025 was USD 9.3 million compared to USD 3.4 million in the same period of 2024. Adjusted EBITDA was $1.4 million in the third quarter of 2025 compared to USD 4.4 million in the same period of 2024. For the third quarter 2025, we record an operating cash outflow of USD 0.9 million compared to an operating cash inflow of USD 2 million in the same period of 2024. For the third quarter 2025, our capital expenditures were USD 0.5 million compared to USD 1.1 million in the same period 2024.

We maintained a solid balance sheet with a cash and cash equivalents of USD 28.5 million as of September 30, 2025, compared to USD 30.1 million as of December 31, 2024.

With that, operator, let's open it up for Q&A.

[Operator Instructions] We have the first question from the line of Vivian Zhang from Diamond Equity Research.

So firstly, could you share with us the sources of this $9 million in other income and how it was identified? Was it a one-time payment?

Yes. As we disclosed, the 8 million gain from the fair values of other investments. That's a change fair values in account, yes.

So second question is that can you elaborate on the reasons for the decline in product sales?

Yes. In the third quarter, the sales of product decreased by USD 4 million in total. This split into 2 parts. One part is USD 2.6 million sales decreasing from the product-related debtors, which is very low margin product. So this -- for the third quarter, for this very low margin product, the amount -- so amount quite low compared with last year. And the second part is the sales terminals decreasing USD 1.1 million something, which we mentioned is a Japanese customer delay the 2 MBBs orders.

One is related to the 5G portable WiFi, one is related to the 4G's mobile WiFi hotspot. This order will be -- we expect will be coming in the fourth quarter. So that's a delay, a little bit delay in terms of period. But as we disclosed, the DATs and MAT DAU and MAUs all increasing compared with last year. That means the number of the terminal other than mobile broadband, the volumes of the new business, our GlocalMe Life, our GlocalMe IoT, and GlocalMe SIM sold increasing dramatically compared with last year. As this operation metric shows a couple of times growth compared to the same period last year. But the revenue contributions in terms of proportions are small to account as we -- in terms of the pricing terminal, the live service product pricing is quite small proportion compared with 5G portable Wi-Fi.

So that's quite much difference. So even we sell more volumes of a new product terminal to the market. But compared to the revenue, the revenue is smaller, but our users numbers growth as we disclosed, we overall more than 10% of the user number in terms of the MAU increasing compared with last year. So we believe this will contribute our future growth in terms of service next year for this growth of user basis.

Yes. I had some more comments because that means the hardware because of tax, and I think the trading headwind. So the customer, I think more say about the macroeconomic and the decision will be -- the decision period will be longer than normal. Normally, about 30 days now goes to maybe 2 months. That's what caused the delay, but the orders coming. So that's first. And the second, hardware, I think because the high-value hardware like 5G, our ship volume is delayed, that caused the impact of the total revenue number. But unfortunately, we have more user number like for eSIM and the Life products, they will generate -- even the hardware cost is lower, is smaller. But I think the contribution for the data, so will increase in the future because monthly and yearly, they have to pay the same usage for the data.

My next question is that the Mainland China, the revenue from Mainland China has increased a lot and become the largest market. So what are the main drivers behind that?

Yes. As we disclosed, the uCloudlink 1.0 revenue in the national data connected service is increasing over this year. The main driven is from the Chinese outbound traveler to use our roaming branding service. So that's the main driven for our uCloudlink 1.0 business growth in this year. So since the pandemic COVID-19, the Chinese outbound travel business is in the recovery over the past couple of years. So our revenue related this part is on the recovery trend. So we believe this growth from this traveling sectors will have -- is on the growth track in the future as well.

More comments about the Chinese revenue increase, there are 3 reasons. The first is our 5G market share higher and 5G, our revenue, including the total revenue in China, our percentage is much higher than last year. That means our 5G quality and leadership was recognized by the users. So here increased because in China, 5G is more popular. Once the people use the 5G, they don't want to use the 4G, and we are leading. We cover 91 countries and it's far more advanced than the other carrier and speed side also we are far more fast and the coverage is much better. So that's the market share for 5G. We are higher growth fast. That's the first.

Second, we have more products available in China. We first launched our traditional 5G. We are in the leading to get more market share and more good technology for 5G. But we have more products like Life and like our SIM card and our eSIM TRIO, this new product. So we can cover more business. In the history, we haven't entered this part. Like for the roaming market, we only occupy the Wi-Fi. Currently, we have eSIM, we have OTA SIM, we have eSIM TRIO. This part, I think we are now -- we have more product and more convenient product, not only just high quality, but also more convenient products available, and we enter this new segment. So here it's 80% of the new market we never touched before. So we believe in the future, I think our market share in China will keep increasing and our SIM card and eSIM TRIO will gain more market share in the 1-person or 2-person in outbound travel market.

And finally, I think the last point is about -- in China, I think we should be more market share and more revenue in the quarter 3, without I think the total, I think the Chinese people travel outside in this summer still suffer from like in the Japan earthquake and also like some unstable economic situation. So still in the September -- still in July and June is the most difficult period I know the trade war with the U.S., all this impact. So I think once this economic situation becomes more stable, I think we will get more market share in this part.

That answers my last question. I want to ask about the trade tensions that appear to have eased recently. So what other like potential impacts do you anticipate on the market and the company? Is it likely to contribute to a recovery in sales?

We -- if you look at this trade war, I think it will -- we believe there is some limited impact for our business as especially for our new business, say, paid phone, new launch we have a new launch in U.S. market, cooperation with a leading paid online retailer. The name we know is a big name, Chewy. So we are new product solutions has entered into U.S. big channel, say, Walmart and other famous channels as well. So with more and more the Tier 1 channels has our product on the shelf. I believe the U.S. market shares, we sold more products into U.S. market. And the U.S. market revenue contribution will gain and growth in the future. And that we -- our belief that U.S. markets will be growing in the future.

Yes. So more comment about these questions. The first, our traditional mobile broadband business. So I think we can see it is suffering from the macroeconomic and also the trade war. But I think now is stable, and we see the customer now is I think our customer in Japan, in China, so for the mobile broadband business, now the order is coming in the fourth quarter. So we can see now the best period is over from the current situation, we believe it will go better. That's from our traditional mobile business.

For the new business, it's going very well. So most of our new product launched in the Q3, for example, our platform launched in September -- in September, and our G40, our device multipurpose and multi-scenario device, also the new function we launched also end of the end of the third quarter. So majorly in the third quarter, our new product new solution launched in this quarter. So -- but I think the feedback from the end user and from channel is quite positive, as I mentioned disclosure in the information. So we get a big order for PetPhone. So the fourth order is 40,000 units. So it's much bigger than our expectations. So that's first.

Our SIM card get feedback from the end user is quite very positive. I just mentioned, we -- about 10,000 pilot. We get a very good feedback for the quality and the convenience -- and in technology, we are in a leading position. This is innovation super for the people for a permanent second thing. We proved this concept. And also, we get a very positive operation data. The resist rate is about more than 75, and the active rate is about more than 30%. That means this very high percentage of the user in our -- increase in our future DAT MAU will add more value to our business. So I think also IoT, you can see we have faster growth. Even the smaller -- the foundation is smaller, but every month, we have more than 30% increase every month, it is not less.

So now for the car play market and the camera market. So we almost cover all the big Tier 1 players. So we believe we will get more fast growth in the coming months. So I think for the platform for SIM and for our live product and IoT, all these new 3 new products get a very good potential. So I believe in the coming quarter, we will get a better revenue than Q3 and Q2. And this year, we believe once we -- because we have an investment in the marketing and R&D, we spend -- that's why you can see this year compared with last year, we spent more than USD 3 million more than last year in the marketing campaign and R&D. And this will generate, I think, the good increase in the future.

We have the next question from the line of Theodore O'Neill from Litchfield Hills Research.

I just want to follow up on the PetPhone. The 40,000-unit order, is that going to the U.S.?

No. As we disclosed in the PR a month ago, one Mid East Tier 1 channel who order 30 million -- sorry, 30,000 units PetPhone into the Middle East market. That's account for 70% something of the 40,000 units. Yes, the remaining was sold to the U.S. market. But I believe more PetPhone units will be sold to U.S. market when we launch campaigns with Chewy and Walmart, these Tier 1 channels in the near future.

We believe -- sorry, we believe the U.S. is the biggest pet market. And we also believe I think we -- I think we're bridging the digital gap between the people and the pets. This concept, I think is far more than just a tracker, just CCTV, just a single direction to monitor and manage the pet. So we provide a mutual call and mutual communication between the people and pets. But the programs we need to, I think, more education for this opportunity like iPhone many years ago. We believe iPhone changed the mobile Internet in the world. And now people to convince people and let people know the dog and pet can use the phone and the social like people. So -- and we will -- we are very confident about that, but we need to get more campaign and more marketing spending in the U.S. and the rest of the world.

That's why we will try to separate this business to try continue because the initial data for more than 1 month get this about 40,000 orders. I think 38 comes from the Middle East and another 10,000 come from U.S. All this data, I think, give us confidence we want to more and heavy invest in the R&D side and also in the marketing campaign in the U.S. and worldwide.

My next question is about the in-car infotainment system. In your press release, you say you've secured orders for that. And I was wondering if you could give us any more details on those orders and what the future might hold for your business there?

Yes. So in-car infotainment, so majorly, I think for traditional car, this in-car infotainment majorly come from the Chinese providers. We almost cover all the providers. That means the new generation all use our solution. We already integrated our solution into this provider. They majorly provide in the North American, Latin American, and also the Middle East and the Europe market. So I think we almost cover all the provider from the #1, #2, almost 17. So we already see this initial presence and embed with them. So we can see the fast growth for in-car like in-car tenant. I think this will give us a huge increase and huge revenue in the future.

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

Okay. 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, Critizen Advisory. We look forward to speaking with you all again on our next quarterly call. Thank you.

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

Thank you. Bye-bye.