uCloudlink Group - Q4 2025

Transcript

Speaker 2

Thank you for standing by, and welcome to the uCloudlink Group Inc. fourth quarter and full year 2025 earnings conference call. All participants are in listen-only mode. There will be a presentation followed by a question and answer session. If you would like to ask a question, you'll need to press the star key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Mr. Xichao Gao at Company IR. Please go ahead.

Speaker 1

Okay. Hello, everyone, and thank you for joining us on uCloudlink's fourth quarter and the full year 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 revise or update any forward-looking statements as a result of new information, future events, change in market conditions, otherwise, except as required by law. Please also notice that uCloudlink's earnings press release on this conference call include discussions of audited GAAP financial information and audited non-GAAP financial measures.

uCloudlink's press release contains a reclassification reconciliation of the audited non-GAAP measures to the most directly comparable audited GAAP measures. I will now turn the call over to Mr. Chen. Please go ahead.

Speaker 0

Thank you, Daniel, and good morning or evening, everyone. Despite significant macroeconomic headwinds through 2025, including tariff, we remained steadfast in strategically investing across our three new business lines. Against this challenging backdrop, we maintain our financial health and deliver stable performance. Net income for the year increased 38.2% year-over-year to $6.3 million, with the net cash inflow from the operations reaching $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 the strategic impact of the investments we made in our three new growth engines. This new product launch has diversified our business and allow us to successfully navigate a persistent challenging macroeconomic and trade environment. Through strict operational discipline and focus, we have laid a solid foundation to build upon and accelerate growth in 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 send data continues to strengthen our industry leadership. We remain highly focused on overcoming the world's worst fundamental digital divide through transformative connectivity solutions.

We continue to dismantle the global connectivity divide 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 proprietary CloudSIM and the HyperConn technologies, which are setting industry standards for intelligent multi-network connectivity and reliability. Lastly, and the most innovatively, we are bridging the emotional digital divide 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 continue to generate solid growth momentum. Average daily active terminal during the first quarter surged 897.9% year-over-year, while average daily active users, which exclude pet phones, increased 409.1% year-over-year.

Within our broader GlocalMe Life portfolio, our industry's first UniCord Plus and UniCord Pro series remain highly competitive and continue to differentiate themselves with their seamless connectivity across multiple networks, SafeTap, global positioning, and faster charging capabilities. This is a further strengthening our competitive edge in the travel, automotive, and the secure networking markets. 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 the CES in Las Vegas and MWC in Barcelona. As a highlight, we outlined our vision to eliminate the pet-people divide through the PetPogo ecosystem and the introduction of the all-new PetCam that complements the PetPhone.

This revolutionary AI-powered ecosystem will transform how we connect with and care for our pets and transcends a basic pet tracking function by interpreting a comprehensive safety awareness emotion connection loop that enable owners to see, hear, and interact with their pets in real time from anywhere in the world. The market response has been exceptional, generating significant global attention and validating our product domain. Purchase orders are growing alongside strong consumer feedback, laying solid foundation for us to drive scale commercialization in 2026. Also making its debut at the CES was the MeowGo G50 Max, an AI-powered connectivity hub with sky-to-ground 5G satellite and Wi-Fi integration that creates mobile Wi-Fi hotspot anywhere.

This solution provides a critical safety net with two-way messaging and emerging SOS via satellite networks, ensuring connectivity even when terrestrial networks are beyond reach. Powered by our patent AI HyperConn technology, it can intelligently switch between a terrestrial 5G networks and Wi-Fi networks to deliver a frictionless one device, one account roaming 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 maintain a robust growth trajectory with user adoption and revenue contribution increasing strongly on a year-over-year basis during the quarter. In the first quarter, average daily active terminals record 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 further expansion of our ecosystem. Turning to our GlocalMe SIM business line, our eSIM Trio solution continues to gain strong traction following its pilot programs last quarter, with cumulative SIM card sales now surpassing several hundred thousand units as growth momentum accelerates. This is creating a strong growth momentum with our average daily active terminals increasing 180.8% year-over-year during the quarter, validating both our carrier's partnership model and its market positioning as a permanent secondary SIM card for users. More importantly, our carrier co-issuance program has begun pilot deployment and is expanding fast, providing a highly effective low CapEx solution for operators that enhance their global roaming capabilities.

This fourth SIM model is gaining strong traction and is welcomed by both operators and users, confirming robust product market fit. Looking ahead, 2026 will be pivotal years of execution and the 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 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 resources and laying a solid foundation for long-term success.

The strong market feedback from the CES 2026, combined with accelerating sales of new solution, provides us with a multiple powerful growth engine. We are confident in our ability to scale our user space globally, further diversify our revenue streams, and bridging critical digital divides for cross-border connectivities to emotional distances between people and their pets. With the disciplined optimism in mind, we are confident that we have the right strategy in place to drive sustainable growth going forward. For the first quarter of year 2026, we expect total revenue to be between $15 million-$17 million, representing a decrease of 9.1%-14.4% compared to the same period of year 2025.

For year 2026, we expect total revenues to be between $85 million and $200 million, representing an increase of 4.4%-22.9% from year 2025. I will now turn the call over to Mr. Shi.

Speaker 5

Thank you, Mr. Chen. Hello, everyone. I will go over our operational and financial highlights for the fourth quarter and full year of 2025. Average daily active terminals, DATs, and average monthly active terminals, MATs, are important operating metrics for us that measure the customer usage trend over the periods and are reflective of our business performance. In the first 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, 57.1% of DAT were from uCloudlink 1.0's international data connectivity service, and 42.9% was from uCloudlink 2.0 local data connectivity service. In December 2025, the average daily data usage per terminal was 1.59 GB. Average MATs in the first quarter were 704,393, representing an increase of 11.1% from 634,245 in the first quarter of 2024.

Growth was driven by strong momentum across our three new growth engines, with average MATs for GlocalMe 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 NearGo business, which were previously referred to as GlocalMe Mobile Fixed Broadband business, decreased slightly by 0.5% year-over-year, reflecting a relatively stable user base in this segment. Average daily active user, DAU, and monthly active user, MAU, represent the average number of unique users engaging with our GlocalMe service on a daily and monthly basis, respectively. Those 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 320,037 in the fourth quarter of 2024. GlocalMe IoT, GlocalMe Scene, and GlocalMe Live all deliver significant gains with average DAU up 558.7%, 349.8%, and 409.1% respectively from the same period last year. Average DAU from GlocalMe MiaO business declined slightly by 4% year-over-year. Average MAUs were 738,777, representing 9.2% increase from 676,610 in the fourth quarter 2024.

Average MAUs from GlocalMe IoT, GlocalMe Scene, GlocalMe Live business line saw increase of 66%, 453.3%, and 460.2% respectively from the same period last year. Average MAU from GlocalMe MiaO business decreased slightly by 2.2% year-over-year. As Platform is a newly launched business, we are beginning to see early user adoption during the quarter. In the first quarter, average DAT and MAT for Platform reached 257 and 571 respectively, while average DAU and MAU were 745 and 977, reflecting the initial tractions of this new offering.

As of December 31, 2025, the company had 206 patents with 181 approved and 25 pending, and approved SIM cards from 398 MNOs globally. Total revenue for the fourth quarter 2025 were $22.1 million, representing a decrease of 14.6% from $26 million in the same period of 2024. Revenue from service were $15.2 million, representing a 1.1% increase from $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 same period last year.

Geographically speaking, during the fourth quarter of 2025, Japan contributed 43.6%, Mainland China contributed 26.8%, North America 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 profits was $11.4 million in the fourth quarter 2025, compared to $11.2 million in same period, 2024. Overall gross margin in the fourth quarter of 2025 increased to 51.6% from 43% in same period of 2025.

The gross margins on service were 61.6% in the fourth quarter 2025, compared to 58.6% in the same quarter, 2024. Excluding share-based compensations, total operating expenses were $9.4 million compared with $13.9 million in the fourth quarter 2024. Net loss in the fourth quarter 2025 was $3.1 million compared with a net loss of $1.5 million in same period, 2024. Adjusted EBITDA was positive $3.1 million in the fourth quarter of 2025, compared with negative $2.3 million in the same period of 2025.

For the fourth quarter of 2025, we recorded operating cash inflows of $4.7 million compared to $0.5 million in same period of 2024. For the first quarter of 2025, our capital expenditure were $20,000 compared to $0.6 million in same period, 2024. Moving to 2025 full year's financial results. Average DATs and MATs show similar patterns to those observed in the fourth quarters.

For the full years, average DATs were 322,169, of which 18,449 owned by the company, and 303,720 owned by business partner, representing an increase 1.7% from 316,688 in 2024. In 2025, 56.3% DATs were from uCloudlink 1.0 international data connectivity service, and 43.7% of DATs 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 three new growth engines, with average MATs from GlocalMe IoT, GlocalMe SIM, GlocalMe Life, increasing 360.7%, 190.8%, 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 expansions in GlocalMe IoT, GlocalMe SIM, and GlocalMe Life, where average DAT is increasing 737.3%, 321.5%, and 349.1% year-over-year respectively.

Average MAU in 2025 were 723,706, representing increase of 8.9% from 664,815 in 2024. Average MAU from GlocalMe IoT, GlocalMe SIM and GlocalMe Life, increasing 251.2%, 167.5%, and 413% year-over-year respectively. Total revenue for 2025 reached $81.4 million, compared with $91.6 million in 2024. Revenue from service was $60 million, representing 1.8% year-over-year increase from $60 million in 2024. Revenue from data connectivity service were $47.8 million, a slight increase from $47.6 million in 2024.

Within the segment, international data connectivity service remained the largest contributor, rising from $39.5 million in 2024 to $41.41 million in 2025, representing four percent year-over-year increase. Overall, gross margins was 52.4% in 2025, an increase when compared with 48.4% in 2024. Gross margin for service was 58% in 2025, compared with 6.8% in 2024. For the full year 2025, excluding share-based compensation, total operating expenses was $40.4 million compared to $40.8 million in 2024.

Net income was $6.3 million in 2025, compared with $4.6 million in 2024, representing 38.2% increase from 2024. Adjusted EBITDA was $17.2 million in 2025, compared to $7.1 million in 2024. For the full years, our capital expenditure were $1.0 million compared to $4 million in 2024, which generated positive operating cash inflow of $3.2 million compared to $9.2 million in 2024. Turning to balance sheet items, our cash and cash equivalents increased to $32.8 million as of December 31, 2024, compared to $28.5 million as of September 30, 2025.

We remain fixed on strengthening our financial position and believe we are well positioned to drive continuous growth in our business. Operator, please open up for Q&A.

Speaker 2

Thank you. If you would like to ask a question, please press star one on your telephone and wait for your name to be announced. If you would like to cancel your request, please press star two. If you are on a speaker phone, please pick up the handset to ask your question. Your first question today comes from Theodore O'Neill from Litchfield Hills Research. Please go ahead.

Speaker 3

Thank you very much. Looking at your guidance for 2026 implies a fairly strong second half of the year. 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.

Speaker 5

Thanks, Theo. Yes. The outlook for the year 2026, we expect a growth.

Speaker 0

A robust growth trend for our overall business. The main growth driver, as we disclose in 2025, the three new business lines main growth driver, which are GlocalMe IoT, GlocalMe SIM, and GlocalMe Life, as well as a new business line, PetPogo, separated from the GlocalMe Life business line. This year is a separate business line for PetPogo business. All four business lines will drive our main business growth in terms of revenue.

Our legacy business, Wi-Fi, mobile broadband Wi-Fi, has kept a stable business, and will contribute a solid cash flow to support our investment on our four new business. As we disclosed last year, in the year 2025, we invest massively on four new business line. All these investments came from the cash inflow generated from our legacy business, mobile broadband business. 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 have disclosed, the DAU, MAU metrics for these three new businesses, IoT, SIM and Life, they grow massively, a couple of times more than the previous year, 2024. This will carry on. This driver for our growth in year 2026.

Speaker 3

Thank you. 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?

Speaker 0

Yeah. Yeah. Our IoT business, because we not just invest, last year, we are almost invest nearly 10 years. From last year, we finished our IoT product embed into the industry, you know, 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, you know, monitoring. These, because you know, all the Chinese manufacturer and this smart device more and more go to the outside China and go to the worldwide. We would just embed, enable them to cross the, you know, networks in each country easily.

This help us gain a volume customer increase. I all these our partner, so give us the forecast this year, their IoT product like security camera, like a CarPlay, like you know, the power monitoring and battery monitor, et cetera. They will have a large volume deployed with our solution. Before that is we just finished the test before last year. From the second half of last year, we see more and more this industry player embed our solution because our solution is much better than currently just practicing inside. That's why we have more confidence. In the next couple of years, we can get millions of connections and the revenues from these partners.

Speaker 3

Okay. All right. Thank you very much.

Speaker 2

Thank you. Once again, if you would like to ask a question, please press star one on your telephone and wait for your name to be announced. Your next question comes from Vivian Zhang from Diamond Equity Research. Please go ahead.

Speaker 4

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? How do you expect them to drive the growth of sales and profit margins?

Speaker 0

Okay. At 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 start, I think the solution, the PetPogo solution, bridging the digital gap between the people and the pets. We get a very popular during the CES exhibition and also MWC in Barcelona. Like CBS, like, Reuters and even a Chinese Xinhua, they all give a very focused report about our new product. Also, last CES, we also launch a new PetCam.

Also, the pet camera shoot, I think, is integrate the PetPhone and the PetCam. 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, you know, the pet view we call it for FPV. Also, we can use this PetCam as a CCTV to monitor to understand the pet, you know, the mood, the behavior and their security, et cetera.

That's why we are not only just staff on the voice for PetPhone, but we have more devices and more functions coming like a PetCam. This is first PetCam can, I think, do the live broadcast, live video, also can be add as a CCTV. It's very useful to improve the safety and the communication effect with the pet. Our PetPogo, this is hardware, it's PetCam and the pet, and the PetPhone. Our ecosystem, our app, we call the pet and digital world is our PetPogo. In the international version, we call the PetPogo. For Chinese version, we call it PetWoof. It's separated because of data security arrangement.

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 in the AI translation for the multiple languages. That's the first part. The second we can sort it end-to-end for pet safety, including the tracking and the training. Also we can provide in the healthcare for the pet is end-to-end. We can see that once the PetPogo launch end of this month, we can see the PetPhone significantly different with the current tracker and the current pet training device. The PetPhone finally we understand it can sort it in three major anxieties. First, it's about communication.

The second is about safety, and the third is about health. It compares to that of just a single function device. PetPhone and the PetPogo can provide a more effective, you know, pinpoint anxiety solutions. PetPogo, I think, we mentioned PetPogo is will include not only just PetPhone. PetPhone, we believe it will be like a iPhone with app inside first. The second, PetPogo with a community and with a more, you know, functional and even AI agent inside. Like a translation, like a video camera, healthy AI, et cetera, all put into here.

We also have a community with all the people and the pet, and they live together, and they share together, and they talk together. That's like a pet worlds like a WeChat that we call the Pet WeChat and the Pet TikTok. We integrate more and more functions in the PetPogo. The initial version is quite different because we have now a community for pet owners. We are more understanding each other. I believe in the future PetPogo will grow up become a digital society for pets and the people. That's all. Thank you.

Speaker 4

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

Speaker 0

The percentages. Now, the figures, the expenditures related to R&D, tell us we improve our R&D's efficiency via investment in more efficiency in program management and also AI tools.

Speaker 5

Some like AI coding, AI-coded program. All this improves our company's R&D efficiency, improving. We invest R&D resources more on a new business line, as we say, to invest more R&D research on platform business. Yeah. I mean, last investments on these is not enough. This year we will carry on investments in R&D for new business. As we filed the Form 6-K in the last year, I think in October, we spun off platform business as a separate subsidiary. We have started to do new financings, a risk finance for platform business.

The platform business I believe will have a new fundraising deal in this year sometime. We will invest this new fund on new business like platform business typical. We will still invest, increase investment on R&D on new business, invest on our new features.

Speaker 4

Okay. I see.

Speaker 5

Yeah. I think we are more.

Speaker 4

Mm-hmm.

Speaker 5

Yeah. We are spending more on rather than just traditional business.

Speaker 4

Oh, okay. 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?

Speaker 5

Sorry, which one?

Speaker 4

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

Speaker 5

Decline means mobile broadband business decline?

Speaker 4

No, I mean.

Speaker 5

Which business are you?

Speaker 4

Decline in product sales. Yes.

Speaker 5

Sorry. Can you say again?

Speaker 4

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

Speaker 5

We disclosed a little bit the revenues generated from mobile Wi-Fi mobile broadband's hardware deliveries was a little bit declined a lot last year. The service revenues was increasing a little bit over the year 2024. As we disclosed the MAUs the metrics was increasing about 10% over the last year. Which will show our service revenue related to this active user will come back to our account on recurring basis in the year 2027 and over.

As I will say, is that we, the new growth engines came from the four new business line, as I mentioned, IoT, platform, GlocalMe, Life service. The mobile Wi-Fi, the legacy business as a contributor of a cash flow for us to invest in our new business. That's

Speaker 0

Yeah. More common because our current legacy products are from international part is heavily impacted by the, I think, the economic and tariffs. For example, last year, we can see in the last summer, it's, I think, that the travel is our good season, but at that moment, we suffer from the, you know, earthquake and rumors in Japan. That's the impact, the first. The second, also, we can see the Sino-US trade war during the middle of last year, around June.

You can see the fourth quarter, we suffer from the Sino-US and Sino-Japan relationship, and this year it is the same. The fourth quarter we suffer from the Middle East war. All this is having impact about the traveler this part. For the domestic part, it was still a stable growth. We have to overcome the traveler business that's very heavy by the economic and the political situation worldwide. If the worldwide situation getting better, I think this will regain the benefit we will regain from this part.

Speaker 4

Oh, okay. That helps a lot. Thanks for sharing the details. That's all. Thank you.

Speaker 5

Thank you.

Speaker 2

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

Speaker 0

Okay. Thank you once again for joining us today. If you have further questions, please feel free to contact uCloudlink 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.

Speaker 2

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