Ucloudlink Group (NASDAQ:UCL) held its first-quarter earnings conference call on Wednesday. Below is the complete transcript from the call.

This transcript is brought to you by Benzinga APIs. For real-time access to our entire catalog, please visit https://www.benzinga.com/apis/ for a consultation.

Access the full call at https://edge.media-server.com/mmc/p/h9xks59f/

Summary

Ucloudlink Group reported total revenues of $15.9 million for Q4 2026 despite external challenges like macroeconomic volatility and rising costs.

New product lines, such as Platform and Unicore Pro, are gaining traction, with significant year-over-year revenue growth in the Glaucoma line, IoT, and Glaucomacine.

The Pepago ecosystem, featuring the Pepgo app, has launched its beta version, receiving positive feedback and showing strong potential for growth.

The Mirgo G50 Max, a high-end mobile connectivity hub, is expected to drive future growth with its unique capabilities in global 5G coverage and satellite messaging.

The company anticipates a return to positive year-over-year growth in the second quarter of 2026, with expected revenues between $19.5 million and $22.5 million.

Financial challenges include a decrease in total revenue by 10.1% year-over-year and a net loss of $3.5 million for the first quarter of 2026.

Management expressed confidence in their strategy to drive sustainable growth through continued investment in new growth engines and market validation from recent product launches.

Full Transcript

OPERATOR

Thank you for standing by and welcome to the Ucloudlink Group first quarter 2026 earnings conference call. All participants are in a listen only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question you would need to press the star key followed by the number one on your telephone keypad. I would now like to hand the call over to Mr. Xi Chao Gao, company investor relations. Please go ahead.

Xi Chao Gao (Investor Relations)

Thank you Operator. Hello everyone and thank you for joining us on Ucloudlink fourth 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. Zhi Pingpeng, Co Founder and Chairman of the board of directors Mr. Chao Hui Chen, Co Founder, Director and Chief executive officer and Mr. Yi Mengshi, chief financial officer. Mr. Chen will begin with an overview of our recent business highlights. Mr. Shu will then discuss our financial and original highlights for the quarter. They will all be available to take your questions in the QA SECtion that follows. Before we proceed, please note that this call may contain forward looking statements made pursuit to the safe harbor provisions of the previous SECurities Litigation Reform act of 1995. These forward looking statements are based on measurements, current expectations and observations that involve known and unknown risks, uncertainties and other factors not under component's control which may cause actual results, performance or treatments 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 of 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 earning press release and this conference call include discussions of unaudited GAAP financial information and unaudited non GAAP financial measures. Uclain's press release contains the reconciliations of the unaudited non GAAP measures to the most directly comparable unaudited GAAP measures. I will now turn the call over to Mr. Chen. Please go ahead.

Chao Hui Chen (Co Founder, Director and Chief Executive Officer)

Thank you Daniel and good morning or evening. It delivered total revenues of US$15.9 million in the fourth quarter of 2026. This result comes despite significant external headwinds including macroeconomic volatility, weak travel demand, rising energy prices, memory chipset, cost increase and conflict related supply chain disruption. More importantly, our new product lines have continue 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 Platform and Unicore Pro, revenues from our new business lines are increasing following an initial market one up period over the past two quarters. Each of these new products continue to make significant strategic progress during the quarter, laying the groundwork for accelerating commercial momentum going forward. Overall, our three new growth engine Glocomm line, Glocomm IoT and Glocommcine deliver 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 a platform and broader Pepgo 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 pepago Ecosystem Building on the exceptional global media attention and the market validation received at NWC 2026 and CEX 2026 with the unveiling of our Pepago ecosystem and the all new PetCam, we launched the beta version of the Pepgo app during the quarter. This differentiated and the pioneering AI power plus social platform for the pet technology industry leverages AI technologies and the platform to enable pet 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. Pepgo 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 Pepgo user MAU reached 1397 and the early beta feedback has been overwhelmingly positive, reinforcing our confidence in its user adoption and strong growth potential. Moving on to our Glaucoming Live business line, we continue to drive exponential growth with industry first innovations. Our Unicor 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 protected experience. Glocomm Live Solutions saw average daily activity. User DAU during the quarter increased 559.9% year over year. Turning to Glocomm IoT, our forward looking strategy is already beginning to generate initial result, the business maintained its strong growth trajectory with user adoption and revenue contribution continuing to expand rapidly year over year. We continue to solidify our strategic position to capture additional market share in high growth sector such as in car infotainment and security cameras. Average DAU for Glaucoma IoT increased by 246.5% compared to the fourth quarter of the year 2025 and as of March 31, 2026 our total IoT solutions install base reached 2.93 million. For our global missing business line, our eSIM Trial 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 theme for users. Furthermore, our carrier insurance program has begun 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 MIRGO G50 Max, the world's first sky to ground integrated mobile connectivity hub is expected to serve as a power powerful growth engine for the coming quarter. The near go G50 mask is redefining the connectivity when it matters most in conflict affected market with disruptive terrestrial network. Its resilient connectivity is a critical differentiator powered by our AI driven hyperconc technologies is seamlessly switch between terrestrial in flight home WI fi creating a unique 1/2 global fleeting experience. It also enables satellite based 2 way messaging and emerging SOS extending connectivity from ocean to desert. We expect this product to reach commercial deployment in the second quarter of year 2026. Looking behind its market potential, the MIRGO 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 Pepego beta feedback and sustained momentum in global MI IoT demonstrate how our diversified business strategy remains firmly on track. Looking at the coming quarter, 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 dual momentum our traditional business stabilizing and our new business scaling up continues as we expect, it is expected to further offset the the external headwind that had impact 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 divide in cross-border connectivity as well as the emotional distance between people and their pets while creating long term value for our shareholders. With that discipline 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 US$19.5 million and US$22.5 million, representing an increase of 0.5% to 16% compared the same period of year 20. I will now turn the call over to Mr. Shi.

Yi Mengshi (Chief Financial Officer)

Thank you Mr. Chen. 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 globalme service on a daily and monthly basis respectively. Both metrics show strong growth momentum in the first quarter. Average DAU in the first quarter was 354,789, representing an increase of 10.2% from 321,000 and 836 in the first quarter of 2025. Glocomm IoT, GlocommSIM and Glocomm Live all deliver significant gains with average DAU up 246.5%, 193.6% and 559.9% respectively from the same period last year. Average DA use from our Glocomm NearGo business declined by 5.8% year over year. Average MAUs were 337,274, representing an increase of 6% from 695,000 and 599 in the first quarter of 2025. Average MAUs from our Glucomb IoT Glucomy SIEM and Glucomb Live business saw increase of 142.1%, 76.8% and 609% respectively from the same period last year. Average MAUs from our Global Meal Gold business decreased by 7.3% year over year in the first quarter 2026. Average devices were 327,615, with 13,414 owned by the company and 314,201 not owned by the company, representing an increase of 6.1% from the first quarter 2025. During the quarters, 58.6% of DAUs were from UKuleleink 4.0 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 termina was 1.57 gigabyte. Average MAUs in the first quarter were 702,805, representing an increase of 7.7% from 652,000 and 810 in the first quarter. 2025. Growth was driven by strong momentum across our three new growth engines with average MAD for Glovomy IoT, Glucomy SIEM and Glucomy LIVE increasing 135%, 74.1% and 806.1% respectively from the same period last year. Average MA did from Glocomm NearGo business, which we previously referred to as Google Me Mobile Fixed Broadband business decreased by 4.1% year over year. The platform is a newly launched business. We only just began to see user adoption and engagement grow during the quarters. In the first quarter. Average DAU and MAUs were 1,097 and 1397 respectively, while average DAUs 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 cards from 397 MNOs globally. Total revenue for the first quarter 2026 were 69.9 million USD,, representing a decrease of 10.1% from US$18.7 million in the same period 2025. Revenue from service was US$13.3 million, representing a decrease of 6.3% from US$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 same period last year. Geographically speaking, during the first quarter of 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 US$8.3 million compared to US$9.7 million in the same Period 2025. Overall gross margin in the first quarter 2026 was 49.1% compared to 51.7% in same period 2025. Gross margins on service was 54.5% in the first quarter quarter 2026 compared to 57.3% in the same period 2025. Excluding share based compositions, total operating expenses were 10.8% million compared to US$9.9 million in the same period 2025. Net loss in the first quarter 2026 was US$3.5 million compared to a net loss of US$0.6 million in the same period 2025. Adjusted EBITDA was negative US$2.0 million in the first quarter 2026 compared to a positive US$1.4 million in the same period 2025. For the first quarter 2026, we record an operating cash outflow of US$8.7 million compared to an inflow of US$0.2 million in same period 2025. For the first Quarter 2026, our capital expenditure was US$30,000 compared to US$300,000 in the same period 2025. Turning to balance sheet items, our cash and Cash equivalents were $28 million as of March 31, 2026 compared to 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 operators, let's open it up for Q and A. Thanks.

OPERATOR

Thank you. We will now begin the question and answer session. To ask a question, you may press Star then one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then 2. If you are on a speakerphone, please pick up the handset to ask your question. And our first question today will come from Theodore o' Neil with Lynchfield Hills Research. Please go ahead. Thank you for taking my questions. My first question is about the G50 Max and in your prepared remarks you're talking about this being interesting to the market. It'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 at sea, and I'm thinking perhaps very remote rural areas as well.

Cao Hui Zhen

Yeah, I'm Cao Hui Zhen. So our G50 Max is our high end product. It's a 5G. We can roll out 5G in over hundred countries that that's most popular we can offer in the 5G in the world. So compare like the other our competitor like AT&T maybe just 75. So the first advantage is we can provide maximize coverage of 5G worldwide. That's first. And the second we can provide about 35 airlines for the in cabin 4G 5G connection. The second that means the business traveler in the air cabin they can surf the internet. And then it's about satellite SOS and the messaging. So no matter you are in the outdoor or in a conflict area, you can get you never lost the connection. And the number four is if you are in the office and at home, of course you can get Wi-Fi available. But Wi-Fi sometimes is not reliable, sometimes it's unreliable. During this case you we can backup by the 5G and 4G with the multicarrier that enable your remote work and remote study and remote meeting never fail. So we balance the best coverage and the best tariffs. So that means one device and one account. You can enjoy the global best coverage and the best tariffs. So that's why we believe that one device for every scenario. Not only at home, at office consult people have to bring the multi device, multi package home Wi-Fi. In cabin Wi-Fi we have roaming eSIM or roaming or local multi-carrier tariffs. Then you can get similar coverage and solution. And now with our solution, one device, simply one device, one account, you can get the best coverage and tariffs. That's our purpose.

Theodore o' Neil

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

Cao Hui Zhen

Yes, I think that's about our IoT business. We embed our cloud SIM and HyperConn solution into in car infotainment and CarPlay. The major league car infotainment devices. This major car infotainment devices is come from China major top 10. This partner all embed our solution. That means plug our this CarPlay device not only can get entertainment in the car but also can get the network in the car. So Almost the top 10 these provider all use our solution. So that's for car infotainment and for camera. So I think the car now more and more you know 4G-enabled cameras they use in the traditional they need to plug a SIM card inside. That means if the carrier network has some problem or courage adjustment, you have to go to the high place to replace SIM card for the camera. It's very inconvenient. But with our solutions, because 4G is more popular, the Price is similar like wi fi camera. You can see the 4G-enabled cameras. The volume of the marketet share in the camera marketet is bigger and bigger. So for this big 4G-enabled cameras I think that currently more and more is the top 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 poor. But use our solution not only get a benefit from the better but also can get cross carrier coverage. You can see our marketet share in this marketet grows dramatically. So you can see our installation volume is about 2.9 2.93 million pieces for shipment. In the six months later they will turn into the package and with our in operation about from the shipment to the user and adopt our solution needs about six months. So you can see six months later we will get more user far more user than currently.

Theodore o' Neil

Thank you. 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 supply chain issues in terms of availability?

Cao Hui Zhen

Yes, I think compared last year memory chip is almost five to ten times higher. So that's a heavy impact. You know the I think the cost of the device. So we have many. We think a lot of ways one side we have a lot of deposits we have, you know. But also so we try to, you know redesign to reduce the memory size and to lower the cost. And also we looking to the Chinese local memory. So all these we can overcome some of of the memory price going up but we can't offset the total because the price is too high. That definitely we have 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 then compared last year.

OPERATOR

Thank you very much again. If you have a question, please press star then one. As there are no further questions at this time, I would like to hand the call back over to Mr. Gow for any closing remarks. Please go ahead.

Xi Chao Gao (Investor Relations)

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

OPERATOR

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

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.