uCloudlink (UCL) Q3 2026 Earnings Call Transcript

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DATE

Nov. 11, 2026

CALL PARTICIPANTS

• Company IR - Liam Xie
• Co-Founder and Chairman of the Board of Directors - Zhiping Peng
• Co-Founder, Director and Chief Executive Officer - Chaohui Chen
• Chief Financial Officer - Yimeng Shi

TAKEAWAYS

• Total Revenue -- $21.4 million, representing an increase of 1.1% year over year driven by product sales growth in new business lines.
• Service Revenue -- reached $16 million, contributing 74.9% of total revenue compared to 80.6% in the prior year period.
• Product Sales -- grew 30.8% year over year, acting as a strategic catalyst for future recurring data connectivity revenue.
• GlocalMe IoT Revenue -- rose 496.5% year over year, fueled by the deployment of connectivity solutions in security cameras and in-car infotainment.
• PetPhone Revenue -- increased 285% year over year as management reported the ecosystem is gaining market traction.
• GlocalMe SIM Business Revenue -- rose 40.3% year over year, supported by OTA and eSIM solutions ranking among the top 10 products on major Chinese e-commerce platforms.
• GlocalMe Life Revenue -- grew 189.9% year over year, driven by the UniCord Pro solution.
• Service Gross Margin -- improved to 60.3% from 56.6% in the prior year, reflecting operational efficiencies and lower rental equipment costs.
• Overall Gross Margin -- landed at 51.8%, reflecting a higher concentration of product sales in the quarterly revenue mix.
• Operating Cash Inflow -- totaled $1.1 million, marking the first positive quarter for this metric in 2026 and a turnaround from a $900,000 outflow in the prior year.
• Average Daily Active Users -- reached 431,245, representing a 22.4% year-over-year increase fueled by broad-based growth in emerging segments.
• Average Monthly Active Users -- totaled 867,935, up 14% year over year as growth in IoT and SIM businesses offset declines in the MeowGo segment.
• GlocalMe MeowGo DAUs -- declined 6.4% year over year, reflecting soft outbound travel demand from China and geopolitical uncertainties.
• GlocalMe IoT DAUs -- surged 271.4% year over year, driven by the expansion of the smart device installed base.
• GlocalMe SIM DAUs -- rose 142.1% year over year, reflecting strong demand from travel users in the Asia Pacific region.
• GlocalMe Life DAUs -- grew 844.3% year over year, following increased momentum for the UniCord Pro solution.
• PetPhone DAUs -- increased 572.9% year over year, as the platform value proposition materialized following marketing investments.
• Net Loss -- narrowed sequentially to $0.3 million as management prioritized operating leverage.
• Cash and Cash Equivalents -- rose to $26.5 million from $25.2 million in the previous quarter.
• Fourth Quarter Revenue Guidance -- projected between $22.5 million to $25.5 million, which would represent growth of 1.8% to 15.4% year over year.
• Full Year 2026 Revenue Guidance -- narrowed to a range of $79 million to $82 million, reflecting management's view of current market demand.
• Technology Assets -- included 184 approved patents and 33 pending applications as of Sept. 30, 2026.
• Global SIM Pool -- covered 396 mobile network operators, enabling connectivity across a wide international footprint.
• Staffing Levels -- were reduced by 30 employees in the third quarter as management integrated AI tools to increase efficiency.
• Capital Expenditure -- was $0.1 million, as the company maintained a low capital investment strategy for its service infrastructure.

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RISKS

• Shi warned that rising supply chain costs for components and memory chips have impacted hardware margins, which resulted in "lower down our hardware margins to lower levels."
• Shi noted that average DAUs for the GlocalMe MeowGo segment declined 6.4% year over year, attributing the decrease to "softer outbound travel demand from China amid macroeconomic headwinds and geopolitical uncertainties."

SUMMARY

uCloudlink Group Inc. (NASDAQ:UCL) reported a return to year-over-year revenue growth in the third quarter, driven by performance in its IoT and SIM business segments. Management indicated that the company achieved positive operating cash flow for the first time in 2026 while narrowing its sequential net loss. The company is shifting its focus toward local connectivity and IoT solutions to mitigate the impact of reduced outbound travel from China. Financial results were supported by improved service margins despite rising component costs that pressured hardware margins.

• CEO Chen stated, "Good connectivity is the foundation of artificial intelligence, AI," emphasizing that reliable networks are critical for safety during natural disasters or conflicts.
• Management is integrating AI tools across R&D, sales, and customer service departments to drive efficiency and reduce staffing requirements.
• The company launched an AI-powered social model for the PetPhone ecosystem and plans to release an AI-powered camera in the first quarter of 2027.
• CFO Shi noted that service margins improved due to lower rental equipment costs and the effective management of service delivery costs.
• UCL expanded its distribution network in Europe by placing PetPhone in regional telecom retail networks and joining procurement catalogs for three major operators in China.
• CEO Chen stated, "PetPhone operates like a mobile phone, enabling anytime, anywhere 2-way communication between pets and their owners," distinguishing it from single-function devices.
• The company announced a share repurchase program in the third quarter, which management stated reflects confidence in long-term fundamentals.

INDUSTRY GLOSSARY

• HyperConn: A proprietary technology that allows for intelligent switching between different networks and carriers to ensure reliable connectivity.
• DAU: Average Daily Active Users, a metric measuring the number of unique users who engage with a service or platform within a 24-hour period.
• MAU: Average Monthly Active Users, a metric measuring the number of unique users who engage with a service or platform within a 30-day period.
• eSIM: An embedded SIM card that allows users to activate a cellular plan from a carrier without having to use a physical SIM card.
• OTA: Over-the-air technology, a method of distributing new software, settings, or data to devices via a wireless connection.
• CPE: Customer Premises Equipment, such as routers or terminals located at a subscriber's site to provide telecommunications services.
• GlocalMe MeowGo: A specific product line within uCloudlink's portfolio focused on portable Wi-Fi and mobile data solutions.
• Roamingman: A branded portable Wi-Fi service managed by uCloudlink specifically catering to international travelers.

Full Conference Call Transcript

Operator: Thank you for standing by, and welcome to the uCloudlink Group Inc. Third Quarter 2026 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to Mr. Liam Xie with Company IR. Please go ahead.

Liam Xie: Hello, everyone, and thank you for joining us on uCloudlink's Third 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 session that follows.

Before we proceed, please note that this call may contain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and observations that involve known and unknown risks, uncertainties and other factors not under the company's control, which may cause actual results, performance or achievements of the company to be materially different from the results, performance or expectations projected or implied by these forward-looking statements. All forward-looking statements are expressly qualified in their entirety by the cautionary statements, risk factors and details of the company's filings with the SEC.

The company does not assume any obligation to revise or update any forward-looking statements as a result of new information, future events, changes 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 a reconciliation 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.

Chaohui Chen: Thank you, Liam, and good morning or evening, everyone. Our third quarter results marked a meaningful turning point for us. As anticipated, our total revenues regained a positive growth momentum on a year-over-year basis, landing at the high end of our guidance range despite macro headwinds, geopolitical tensions, rising memory chip costs and extended component lead times, we demonstrate the resilience of our business model with robust growth across our emerging new business lines. Importantly, we generated positive operating cash flow -- cash inflow of USD 1.1 million for the first time this year, further strengthening our financial foundation. Before I dive into the business lines, I want to share a strong belief of ours.

Good connectivity is the foundation of artificial intelligence, AI. This is especially true when reliable networks are critical for safety during the turbulent periods marked by natural disasters or conflict. Driven by this vision, we achieved key commercial breakthroughs across our business during the third quarter. I will now review the highlights for each key business lines. First, in our GlocalMe MeowGo business, we rapidly capitalized on 2 strategic opportunities. The first was in our premium segment, where our MeowGo G50 Max with AI-powered HyperConn technology, the world's leading Sky-to-Ground integrated mobile connectivity hub generated better-than-expected sales, demonstrating that demand from the premium solutions remains highly resilient to macro headwinds.

The second was in local connectivity markets, where our latest 4G/5G CPE solution delivered strong sales growth and deepened our penetration, powered by same AI-powered HyperConn technology, which provides intelligent switching between fixed and mobile network and real-time congestion detection, the solution delivering highly reliable connectivity for home and office environments. This reinforced our local broadband strategy and allow us to expand beyond one-time hardware sales into recurring data connectivity revenue. Next is our GlocalMe IoT business, which achieved impressive momentum with revenue surging 496.5% year-over-year. Growth was driven by the accelerating deployment of our integrated data connectivity solution across a growing installed base of smart device, particularly in key sectors such as in-car infotainment and security cameras.

As the installed base expands and data usage increase, recurring data connectivity revenue is expected to scale. We remain well positioned to capture further demand as smart hardware partners rapidly extend their international footprint. GlocalMe SIM/eSIM business forms another key growth driver. Our OTA and eSIM solutions rank among the top 10 products on major Chinese e-commerce platform for key Asia Pacific travel users, further demonstrating our technological strength. The eSIM Trio, co-developed with mobile virtual operator and mobile network operator leverages our hardware-based multi- capability to provide enhanced security and coverage for domestic and overseas use. In addition, GlocalMe Life business achieved steady MAU growth with its key solution, UniCord Pro, gaining strong momentum.

Before closing, I want to highlight our PetPhone/PetPogo ecosystem. We continue to evolve our AI-powered social model unlike single function device on the market. PetPhone operates like a mobile phone, enabling anytime, anywhere 2-way communication between pets and their owners. We launched our pet AI agent on the PetPogo app and device and our next-generation PetCam, an AI-powered camera, is in its final stage of development and is set to launch in the first quarter. Following several quarters of significant marketing investment, platform consumer value proposition is now materializing and gaining meaningful market traction. We are receiving highly positive feedback both at major offline events such as IFA 2026 and from users and influencers across leading global social media platforms.

Our distribution is expanding as well. In Europe, we have placed PetPhone in a retail network of regional telecom operators. In China, we have been to a centralized procurement catalogs of 3 major telecom operators, which facilitate SIM issuance and help build our own partner ecosystem. Looking ahead, we expect our revenue growth momentum to continue and further accelerate in the fourth quarter on year-over-year basis, delivering a higher growth rate than what we achieved in the third quarter. To achieve this, our focus will be on executing our strategic priorities to drive sustainable growth.

We will continue to invest in R&D and marketing to scale our business lines while maintaining disciplined operator management to improve operating leverage to share repurchase program announced in the third quarter reflect management's confidence in our long-term fundamentals. We believe our solid execution and continued innovation will position us well to deliver long-term value to our shareholders. I will now turn the call over to Mr. Shi.

Yimeng Shi: Thank you, Mr. Chen. Hello, everyone. I will now go over our operational and financial highlights for the third quarter of 2026. First, let's look at users metrics. Both average daily active user means DAUs and average monthly active users means MAUs record robust growth. Average DAUs reached 431,245, up 22.4% year-over-year. This growth was largely driven by strong momentum in our new business line. Specifically, DAUs for GlocalMe IoT, GlocalMe SIM, GlocalMe Life and PetPhone business increased by 271.4%, 142.1%, 844.3% and 572.9%, respectively. Average DAU from our GlocalMe MeowGo business declined by 6.4% year-over-year, reflecting softer outbound travel demand from China amid macroeconomic headwinds and geopolitical uncertainties.

Average MAUs were 867,935, up 14% year-over-year, fueled by broad-based growth across our new emerging business line led in absolute terms by GlocalMe IoT and the GlocalMe SIM business. which surged 241.8% and 67%, respectively. This fully offset the 10.3% decline in GlocalMe MeowGo MAUs, which continue to face external supply and macro pressures. Finally, on technology assets, as of September 30, 2026, we had 184 approved patents and 33 patent application pending approval and a global SIM pool covers 396 MNOs. Moving to our financial results. Total revenue for the third quarter were USD 21.4 million, up 1.1% year-over-year and at the high end of our guidance, mainly driven by strong product sales growth of 30.8% year-over-year.

Breaking this down, while our GlocalMe MeowGo service faced macro headwinds, we saw robust consumer demand from our premium and local connectivity solutions rather than being just a stand-alone product sales, the hardware deployments are strategic catalysts that pave the way for ongoing recurring data connectivity revenue as user engage with our network. Meanwhile, our new emerging business line continued to expand rapidly, with GlocalMe SIM business revenue grew 40.3% year-over-year, while GlocalMe IoT business grew a remarkable 496.5%. GlocalMe Life business grew 189.9% and the PetPhone business grew 285%.

Revenue from service were USD 16 million, contributing 74.9% of total revenue compared with 80.6% last year, even so our service gross margin improved to 60.3% from 56.6%, demonstrating the solid profitability of our connectivity business. Overall gross margin was 51.8%, reflecting the higher share of product sales in the mix this quarter. Looking at profitability, operating expenses, excluding share-based compensation, were held broadly flat at USD 11.5 million. Our net loss narrowed sequentially to just USD 0.3 million. Adjusted EBITDA was negative USD 0.2 million. Our cash flow and balance sheet remain very healthy.

We generated an operating cash inflow of USD 1 million this quarter, our first positive quarter this year and a significant turnaround from $0.9 million outflow in the same quarter of last year. Capital expenditure was USD 0.1 million. Our cash and cash equivalents increased to USD 26.5 million from USD 25.2 million last quarter, giving us a solid financial foundation to support our growth initiatives. Turning to our outlook for the fourth quarter of 2026. We expect total revenue to be between USD 22.5 million and USD 25.5 million, representing a year-over-year increase of 1.8% to 15.4%. Looking at the full year, we now expect total revenue for 2026 to range between USD 79 million and USD 82 million.

This narrow our previous guidance range of USD 75 million to USD 85 million. This guidance reflects our current view of the market operating conditions as well as customer demand. These estimates are subject to change. With that, operator, let's open for Q&A...

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

Theodore O'Neill: Congratulations on a good quarter. My first question is about your gross profit margins, which were up sequentially for the third quarter in a row. And so my question is, given that so many other manufacturers are struggling with the cost for components, for memory chips. I was wondering if you could give us some -- give us some insight into how you're able to achieve this growing gross profit margin in the face of what for everyone else is sort of rising underlying component costs.

Yimeng Shi: Yes. As we disclosed our service gross margins improving to 60% compared with last year. I think the reasoning behind this improvement is we deliver quality premium service to the market, and we're managing the cost on track. And also, we improved the operational efficiencies to support this improvement. For instance, as we disclosed, we -- the capital investment is a small amount. So this -- we invest our equipment for the service for this roaming service. So the rental cost of rental equipment device narrow down to small levels. So all this contributes to our improving service margins. And for hardware side, we impact by this supply chain cost up.

But we -- that lower down our hardware margins to lower levels. But overall, combined together, our gross margin is more than 51%. I think that's a good result we deliver in the third quarter.

Chaohui Chen: Yes. By the way, we redesigned some hardware, right, to reduce the memory chip, try to reduce the impact from AI cost, for example like memory size and try to minimize the impact.

Theodore O'Neill: Okay. The R&D expenses were up year-over-year. And I'm wondering at the current rate of $1.9 million, is that sort of the level we should expect going forward into Q4? And the same question for sales and marketing expense, which also increased. Is that at a level? Or is that going to go up some more? Do you have more shows that you're going to attend?

Yimeng Shi: Yes, yes, we declined our cost management budget in the third quarter. In this third quarter, we reduced headcount about 30 staff numbers. We -- this cost reduced will reflect to our third quarter and the following periods. And yes, in the third quarter, sales and marketing expenses increased year-over-year. We still invest on our business on overseas market on this online platform that attracted very good wide spreading feedback from the online platform. So that's our -- that's why still increased sales and marketing budget on new business. Same for R&D budgets, we put more weight R&D expenses on the new business, say, PetPhone business as well.

And as you see the new business PetPhone business increased very, very fast track. So this investment is for futures. We believe these investments for future will be -- have a return in the next couple of quarters and the next years.

Chaohui Chen: Yes. By the way, I think we are not just try to reduce the staff. That's because in the Q1, Q2, we apply a lot of AI tools and AI stuff. So start to take effect and get more efficient in the R&D side and our customer side and the sales side. So that's the key reason.

Operator: There are no further questions at this time. I'll now hand back to Mr. Liam Xie for closing remarks.

Liam Xie: 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, Christensen Advisory. We look forward to speaking with you all again on our next quarterly call. Thank you.

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

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