uCloudlink Group (UCL) Q2 2026 earnings call transcript

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. Chao Hui Chen, co-founder, director, and the chief executive officer, and Mr. Yi Mengshi, 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 forelooking statements made pursuant to the safe harbor perversion of the previous Secretary's Litigation Reform Act of 1995. These forelooking 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 massively different from the results, performance, or expectations projected or implied by these forelooking statements. All forelooking statements are expressly qualified in their integrity by their questionnaire statements, risk factors, and detail of the company's feelings with the SEC. The company does not assume any obligation to reverse or update any forelooking statement as a result of new information, future events, change in market conditions or otherwise, except as required by law.

Please also note that uCloudlink earnings press release on this conference call include discussions of unadopted GAP, Gap financial information and unaudible non-gap financial matters. Your colleagues press release contains a reclassification of their unaudible non-gap methods to their most directly comparable unaudible non-gap methods. 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 US dollar 18.2 million, reflecting the continued impact of microeconomic headwinds, geopolitical tensions affecting outbound travel from China, and a significant surge in very cheap costs. Our uCloudlink 1.0 international data connectivity services remain 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 deliver strong growth, particularly from our global 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 strategy priorities, we continue to see strong momentum across our new product portfolio during the second quarter.

Glockomi IoT and Unicore Pro in particular gain solid traction with revenue contribution. Stimulating increasing as the transition out of the initial market one up phase. Each reached key strategy milestones during the quarter. Additionally, ask where for accelerated commercialization going forward. Across our new growth engine, revenues from Glaucomi IoT and Sim increased by 392.4% and 78% year over year respectively. To drive early adoption and fuel market leadership, we maintain an elevated level of investment in market for the platform and PepperGo ecosystem during the quarter. I will now review the highlights for each of our key business names. I will start with the Glocomint IoT, which saw its in-store base expand further with the monthly order, Now contributing meaningfully to revenue and the business operating profitability on a consistent basis.

In the second quarter, revenue from the Glocomi IoT grew 392.4% year over year. Our total install base reached 3.34 million units, and the MAU grew 210 year over the year. User adoption is growing rapidly across key verticals as the further solidify our position in high growth sectors, including in-car infotainment and security cameras.

Moving on to our platform ecosystem, which has undergone to a comprehensive upgrade into a dedicated pet AI agent. Building on the AI power plus social model, we pioneered in the fourth quarter. This marked a major step forward in functionality and performance, redefining AI power communication between humans and their pets. The agent can precisely sense a pest condition and emotion state, and intelligently support owner at every stage of care, from prevention through real-time response and engagement. Delivery a seamless pet care experience. This powerful agent creates enormous opportunities across pet health, veterinary care, pet safety, and the pet data analytics, each of which we see a source of new value creation. As consumer acceptance of AI pet services growth we expect to view a valuable data asset and a leading position in pet AI We are now extending 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. We select content pieces, reach tens of millions of views in major platforms such as TikTok, Instagram, etc. We look forward to achieving even greater breakthrough in the second half of the year.

Turning to our global global me life and the same business land where our strategy is beginning to generate results. Glockomi Live Solutions thought DAEU growth is proved increasing by 801.6% year over a year reflecting strong market adoption of the new product. Glockomi Sim continued to steadily expand as well with DAEU increasing 132% year over year. Our eSIM solution is gaining strong momentum, leading the market in China and building market share stability across East Asia and the wider Asia-Pacific region. Together, this result shows two product lines at a different stage of maturity, with Glaucomic Life growing rapidly with exceptional triple-digit growth and Glaucomic seems scaling consistently. Our premium, Mirgo G50 Max, is the world's pioneering 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, spending nearly 100 countries, and the performance reliable across a wide range of scenarios from the urban environment to in-flight travel. Powered by our AI hypercom technology, the G50 marks has built a market leading position in the US dollar 500 plus premium Mi 5 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 micro-heaving, these same conditions has created new opportunities for the G50 mark and the premium solution. Driving demand from the resilient, reliable connectivity in critical environments. We also make solid progress and create new and strong revenue with our newly launched 4G and 5G CPE products 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 the Q3. We also achieved notable recognition during the quarter. We did the customer impact award and the MVMO's awards in the year 2026, and the finisher to this for leading consumer MVMO's stock of brand. Further validating our technology 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 petgold AI and the social platform, the ramp up of the mealgold G50 marks and the continued expansion of Glaucomy IoT, CPE R50 and R55, we believe these efforts will position us to navigate the current market environment and emerging stronger. We remain committed to bridging the digital divide in cross-border connectivity as well as the emotion distance between people and their pets, while creating long-term value for our shareholders. With less discipline optimism in mind, we are confident that we have a 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 of unique users engaging with our global media service on a daily and monthly basis, respectively. Those metrics recall robust growth in the second quarter. Average DAUs in the second quarter were 376,000 and 376, representing an increase of 13.3% from 332,000 and 323 in the second quarter of 2025. Glogamy IoT, Glogamy Sine, and Glogamy 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 global meal goal bonus declined by 7.3% years over year.

Average MAUs were 744,966, representing an increase of 6.6% from 698,862 in the second quarter of 2025. Average MA yields from our Glogami IoT Glogami SIEM and Glogami Live Burnett 9 saw increase of 210 53 and 599 respectively from the same period last year Average MAU from our global meal goal bonus decreased by 10 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 GB. Average MATs in the second quarter were 306,382, representing an increase of 6.5% from 663,197 in the second quarter of 2025. Growth was driven by strong momentum across our three new growth engines with average MATs from Gologami IoT, Gologami Thin, Gologami Life increasing 93.6%, 35.4%, and 843.2% respectively from the same period last year. Average MAT from globally mere gold bonus decreased by 5.7% year over year. Following the stable growth last year, platform continued to gain traction with user adoptions and engagement increasing further during the quarter.

In the second quarter, average DAU and and MAUs were 1519 and 1845 respectively, while average DATs and MATs were performed by 507 and 1028, reflecting the growing traction of this new offering. As of June 30, 2026, the company had 212 patents with 184 approved and 28 pending approvals, and approved of same call from 398 M&O's globally. Total revenue from the second quarter, 2026, were $18.2 million, representing a decrease of 5.9% from $19.4 million in the same period, 2025. Total revenue across different business lines were as follows. Global media gold business, $15.5 million, representing a decrease of 13.1% from $17.9 million in the second quarter, 2025. Global Meet thin business, 1.3 million US dollars, representing an increase 78% from 0.7 million US dollars in the second quarter of 2025.

Global Meet IoT business, 0.8 million US dollars, representing an increase of 392.4% from 0.2 million US dollars in the second quarter of 2025. Gloomy live business, . 5 million US dollars, representing a decrease of 1% from the . 6 million US dollars in second quarter, 2025. Half-home business, . 2 million US dollars, representing an increase of 1,527.3% from . 01 million US dollars in the second quarter of 2025. Revenue from service were 13.3 million dollars, representing a decrease of 9.2% from 14.6 million in the same period of 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 3.3%, North Americans contributed 13.5%, and other countries and regions contributed remaining 20.2%, compared to 33.6%, 33.2%, 15.3%, and 17.9% respectively in the same year.

In the same period of 2025, our gross profit was $9.2 million compared to $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 of 2025. Gross margins on surveys were 59.1% in second quarter of 2026, compared to 56.6% in same period, 2025. Excluding share-based conversations, total operating expenses were $11.5 million, compared to $10.1 million in same period, 2025. Late loss in the second quarter of 2026 was $3 million, compared to late income of $0.7 million in the same period of 2025. Adjusting EBITDA was negative $1.8 million in the second quarter of 2026, compared to a positive $0.4 million in the same period of 2025.

For the second quarter of 2026, we record an operating cash outflow of $3 million compared to an outflow of $0.9 million in the same period of 2025. For the second quarter of 2026, our capital expenditure were $0.04 million compared to $0.2 million in the same period of 2025.

Turning to balance sheet items, our cash equivalents were $25.2 million as of June 30, 2026, compared to $28 million as of March 31, 2026. We continue stressing our financial position, and we believe we're in a well-positioned to drive growth in our balance. Turning our outlook, for the third quarter, 2026, we expect total revenue to be between $19 million and $22 million, representing a decrease 10.4% to an increase of 3.8% compared to the same period of 2025. For the full year of 2026 we now expect total revenue to be in the range of 75 million to 85 million dollars compared with the range of 85 million dollars to 100 million dollars we previously announced We are revising our full year's guidance in line of the persistence microeconomic challenge and global trade headwinds, which may continue to have a broader impact for industries.

This estimate reflects our current view of market and operating conditions and customer demands, which are subject to change.

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

And are you seeing other supply chain issues in the semiconductor area as well? Yeah, 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 knows it's almost five to ten times increase. It impacts our sales price, you know, for our consumer, our customer. So in the early quarter we increased more storage, tried to offset the price increasing first. You can see that's why our cash flow was somewhat impact, somehow impact because we increased the memory chip storage first. And the second, you can see we have to cover some chipset cost increasing. In the second half years, about several months later, we increased our sale price.

But we have to consider the customer acceptance for the price. That's number two. And number three, and also we have R&D, you know, revise. For some large memory and expensive memory, we try to, I think, revise our hardware, try to minimize, I think, to reduce the memory requirement. That is number three. And the finally, and also we also like a PCB like all these components extend the I think the period and the cost also going up. I think indeed this year is worth inspiration for our product for like my E5, like our platform and our webcam to the customer.

Thank you.

Yeah, sure. Yeah, as this second quarter's figures, the live revenues include two parts. One part is the hardware's live delivery to a customer. So that hardware, the volume hardware delivery in second quarter is a little bit down a bit. So that account for total revenues a little bit down. But we deliver live products in the past series of quarters on a stable growth volume. And this life product used to the local scenarios, local mobile broadband scenarios, like our products, charge cables. That's very well welcome in Japan's local market. So the MAU's figures reflect cumulative, active, historical assault, hardware of life. So that cumulative MAU's matrix is increased dramatically compared with last year. So there are two figures, two metrics.

One is revenue reflects the second quarter scenarios. The MAU reflects the communities, the whole historical salience stories. Yeah, I have more comment about this. Because for life, 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, That's why in the fourth quarter before the price increase we ask our customer give more order and so far I think this is why in the fourth quarter we get a more bigger order and the second quarter order is a little bit lower. 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, the first half years we are comparing the fourth half last year is increased dramatically.

Okay. Thank you once again for joining us today. If you have further questions, please feel free to contact your colleagues in investor relations through the contact information provided on our website or speak to our investor relations forum, Creations and Adversary. We look forward to speaking with you again on our next colleague call. Thank you.