uCloudlink (UCL) Q2 2026 Earnings Call Transcript

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DATE

Tuesday, Aug. 18, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

• Company IR - Daniel Gao
• 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 -- $18.2 million, decreasing 5.9% year over year due to macroeconomic headwinds and geopolitical tensions affecting outbound travel from China.
• Net Loss -- $3.0 million, compared to net income of $0.7 million in the prior year period.
• Revised Full Year Revenue Guidance -- $75 million to $85 million, reduced from the previous range of $85 million to $100 million in response to global trade headwinds.
• Q3 2026 Revenue Guidance -- $19.0 million to $22.0 million, representing a year-over-year change of negative 10.4% to 3.8%.
• GlocalMe MeowGo Revenue -- $15.4 million, declining 13.1% year over year as international data connectivity services remained under pressure.
• GlocalMe IoT Revenue -- $0.8 million, growing 392.4% year over year driven by expansion in in-car infotainment and security camera sectors.
• PetPhone Revenue -- $0.2 million, increasing 1,527.3% year over year from a base of $10,000 in the second quarter of 2025.
• GlocalMe SIM Revenue -- $1.3 million, increasing 78% year over year while daily active users for the segment rose 132% to 17,519.
• Gross Margin -- 50.2%, down from 52.8% in the prior year period, reflecting industry-wide price increases for memory chips.
• Service Gross Margin -- 59.1%, increasing from 56.6% in the second quarter of 2025.
• Product Gross Margin -- 26.5%, decreasing from 41% year over year due to rising supply chain costs.
• Cash and Cash Equivalents -- $25.2 million as of June 30, 2026, compared to $28 million as of March 31, 2026.
• Total Daily Active Users -- 376,376, increasing 13.3% year over year across all platform services.
• GlocalMe Life DAU -- 14,471, representing an 801.6% increase year over year reflecting market adoption of local mobile broadband scenarios.
• Average Daily Active Terminals -- 341,511, of which 56.3% were from international data connectivity and 43.7% were from local data connectivity services.
• Research and Development Expenses -- $2.0 million, an increase of 29.8% year over year primarily due to higher staff costs.
• Sales and Marketing Expenses -- $6.7 million, increasing 20.9% year over year due to a $0.7 million increase in promotion fees.
• Operating Cash Outflow -- $3.0 million, compared to an outflow of $0.9 million in the second quarter of 2025.
• Japanese Market Contribution -- 36% of total revenues, increasing from 33.6% in the same period of 2025.
• Intellectual Property -- 212 patents as of June 30, 2026, with 184 approved and 28 pending.
• Total Data Consumed -- 46,641 terabytes, representing an increase of 2.6% year over year.
• Average Daily Data Usage -- 1.5 gigabytes per terminal as of June 2026.
• Total Monthly Active Users -- 744,966, representing an increase of 6.6% year over year.
• GlocalMe IoT DAU -- 57,859, growing 277.3% year over year as the installed base expanded further.

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RISKS

• CEO Chen stated, "memory chip cost... almost 5 to 10x increase," impacting product pricing and operational cash flow.
• Management reported that "uCloudlink 1.0 international data connectivity services remained under pressure" due to geopolitical tensions affecting outbound travel from China.
• The company revised its annual revenue guidance lower due to "persistent macroeconomic challenges and global trade headwinds."

SUMMARY

Management reported that growth in local data connectivity businesses is beginning to offset the contraction in the legacy international roaming segment. The company is transitioning its strategic focus toward the IoT, SIM, and life-solution business lines while navigating a challenging supply chain environment. uCloudlink Group Inc. (NASDAQ:UCL) is prioritizing operational efficiency and cost discipline during the commercialization of new products such as the PetPhone and MeowGo G50 Max. Management indicated that recent technological advancements in satellite and 5G integration are intended to differentiate its premium hardware offerings and expand market leadership in the premium mobile connectivity segment.

• CEO Chen stated, "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."
• The company completed the sale of its entire interest in Beijing Huaxianglianxin Technology Company in Aug. 2026, generating cash proceeds of approximately 11.4 million yuan.
• Management reported that the G50 Max mobile hub has established market leadership in the premium segment by integrating satellite, flight, and ground networks across nearly 100 countries.
• CFO Shi attributed the divergence between GlocalMe Life revenue and user growth to the cumulative nature of the active user base versus quarterly hardware delivery volumes.
• The company appointed Wen Gao as General Manager of Shenzhen Yulian Cloud Technology to lead the expansion of the IoT solution ecosystem, following his tenure as Chief Strategy Officer.
• CEO Chen noted, "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."

INDUSTRY GLOSSARY

• CPE R50/R55: Customer Premises Equipment, specifically the company's 4G and 5G terminal products for local connectivity.
• eSIM: Embedded SIM, a programmable SIM card that is built directly into a device to facilitate carrier switching without a physical card.
• HyperConn: The company's proprietary AI-driven technology for ensuring reliable and resilient mobile connectivity.
• MeowGo G50 Max: A premium mobile connectivity hub that integrates satellite, flight, and ground network connectivity.
• PetPhone: An AI-powered device and ecosystem designed for pet communication, safety, and health monitoring.
• PetPogo: The company's specialized platform for pet-related AI agents and social interactions.
• uCloudlink 1.0: The company's business model focused on international data connectivity for cross-border travelers.
• uCloudlink 2.0: The company's business model focused on local data connectivity services for domestic users and IoT applications.
• UniCord Pro: A specific product in the company's new growth portfolio focused on local data connectivity.

Full Conference Call Transcript

Operator: 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.

Daniel Gao: 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.

Chaohui Chen: 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.

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

Theodore O'Neill: 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?

Chaohui Chen: 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.

Theodore O'Neill: 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.

Yimeng Shi: 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.

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

Daniel Gao: 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.

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

Chaohui Chen: Thank you.

Yimeng Shi: Thank you.

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