UCloudLink Group Inc. (NASDAQ: UCL), a global mobile data traffic sharing marketplace, has reported a positive financial performance for the second quarter of 2024. The company announced a slight increase in total revenue to $22.4 million, with a significant improvement in net income, recording $2.2 million compared to a net loss in the previous year. The introduction of three innovative Glocalmi Live products at Viva Technology 2024 marked a strategic move to diversify revenue streams. UCloudLink also noted a strong recovery in international travel, especially from mainland China, and forecasted revenue growth for the third quarter of 2024.
Key Takeaways
- UCloudLink's Q2 revenue rose to $22.4 million, a 1.7% year-over-year increase.
- Net income improved to $2.2 million, a turnaround from a net loss of $0.9 million last year.
- Gross margin increased to 49.2%, and operating cash inflow grew by 38.3%.
- The company launched three new products: KeyChecker, RoamPlug, and Unicore.
- International data connectivity services now cover 50 countries and regions.
- Q3 revenue is projected to be between $24.0 million and $28.0 million.
- UCloudLink holds 182 patents and has SIM card approvals from 392 MMOs globally.
Company Outlook
- UCloudLink expects Q3 2024 revenues to range from $24.0 million to $28.0 million.
- The company aims to expand Glocalmi Life, SIM, and IoT business lines into new markets such as elderly care, pet management, and item tracking.
Bearish Highlights
- There were no specific bearish highlights mentioned in the summary.
Bullish Highlights
- UCloudLink's growth in gross margin and operating cash inflow indicates a strong financial position.
- The successful launch of new products suggests potential for revenue diversification.
- The company's international data connectivity expansion aligns with the rebound in global travel.
Misses
- The earning call transcript summary did not disclose any misses.
Q&A Highlights
- CEO Xiaohui Chen emphasized the company's commitment to connecting and improving lives.
- Chen expressed confidence in the company's strategic direction for sustainable growth.
- CFO Yimeng Shi discussed efforts to improve UCloudLink's financial position for long-term stability.
In conclusion, UCloudLink's second quarter of 2024 reflects a company on the rise, with strategic product launches and a positive outlook for future revenues. The company's advancements in technology and expansion into new service areas indicate a forward-looking approach to growth and market adaptation.
Full transcript - Ucloudlink Group Inc (UCL) Q2 2024:
Conference Operator: Good day, and welcome to the UCloudLink Second Quarter 20 24 Earnings Conference Call. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Daniel Gao, Investor Relations Director.
Please go ahead.
Daniel Gao, Investor Relations Director, UCloudLink: Okay. Thank you. Hello, everyone, and thank you for joining us on Yucalind's Q2 2024 Earnings Call. The earnings release and our release presentation are now available on our IR website at ir. Yoklin.
Com. Joining me on today's call are Mr. Zhipin Peng, Co Founder and Chairman of Board of Directors Mr. Xiaohui 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. Xu will then discuss our financial and operational highlights for the quarter. They will both be available to take your questions in the Q and 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 implied by those forward looking statements. All forward looking statements are expressly qualified in their entirety by their counter narrative statements, risk factors and the 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 or otherwise, except as required by law. Please also note that Yucline's earnings press release and this conference call include discussions of audited GAP Financial Information and audited non GAP Financial Measures.
Yooqin's press release contents or reconciliations of their audited non GAP measures to the most directly comparable audited GAP measures. I will now turn the call over to Mr. Chen. Please go ahead.
Xiaohui Chen, Co-Founder, Director and Chief Executive Officer, UCloudLink: Thank you, Daniel, and good morning or evening, everyone. Continuing the solid start we had early in this year, growth momentum carried into the 2nd quarter with the total revenue reaching US22.4 million dollars in line with the guidance. Our financial position is improving with net income reaching $2,200,000 and operating cash flow increasing 38.3 percent year over year to US4.7 million dollars In the Q2 of 2024, aside from our Glocomi mobile fixed broadband business, comprehensive data connection solutions and business lines such as Glocalmi Life, Glocalmi SIM and Glocalmi IoT have made consistent progress in expanding beyond the travel sector into various aspects of daily life with an expanded array of the comprehensive data connectivity solutions to satisfy a wider range of our needs. Firstly, let me start with the progress we have made in our Growcomi mobile fixed broadband business line. Our 1.0 international data connectivity services business continued to grow in the Q2 of year 2024, further consolidating our leading position in the long run market and expanding our market share as the widespread adoption of our full speed 5 gs solutions gains momentum supported by the recovery in international travel.
Our extensive 5 gs roaming solution now cover 50 countries and regions and are generating a stable stream of revenue, creating significant growth opportunities for us going forward. According to the Mobile Economic 20 24 report from the Global Systems for Mobile Communication Association or CSMA. The global number of 5 gs connections is expected to rise to RMB5.5 billion by 2,030 from RMB1.6 billion at the end of 2023. 2nd, our global COVID-nineteen solution made significant progress in the Q2 of year 2024. We officially launched 3 Glaucomin Live solutions in May at Viva Technology 2024 in Paris.
The lineup of new solutions consisting of KeyChecker, Loan Plaque, Unicorp, has not only showcased our innovative capabilities, but also garnered widespread acclaim in the market, making the beginning of a promising new revenue stream going forward. With the unique market network, market base station, positioning and the IP radar reach for up to 100 meters. Our key tracker is technology ahead of the competition with its 6 advanced positioning technology, including GPS, ACPS, LPS, Wi Fi, Bluetooth and active radar. The roaming plant is more than just a universal travel adapter. It is all in one device that combines smart charging technology, 4 charging ports, including 3 USB C and 1 USB A and a built in mobile WiFi module.
Unicore is a dual has USB C cable with dual in mobile WiFi capabilities. LoanPlus and Unicore make greater local and global travel companion to charge and connect devices, while also providing reliable Internet connectivity without the need to carry a bucket hardware. Glucomi Live solutions allow people to stay connected to their loved ones, seamlessly offering as well as emerging communications. These solutions are expected to contribute more revenues in the coming quarters as we gradually expand this revenue stream with the recurring subscription and services revenue. 3rd, we continue to gradually expand the availability of our global Mi SIM solutions, including over the air OTA SIM and eSIM solutions in more countries and regions, powering the way for more powerful all SIM solutions that will allow us to engage with a broader and user base.
Our All SIM solutions, which consolidate OTA SIM, eSIM and Cloud SIM, are uniquely positioned to break cross carrier restrictions, empower various smartphones and set a new Pioneer industry benchmark for mobile connectivity and convenience when they launch in the near future. According to the more buyer economic 2024 report from the GSMA, SIM connections, excluding licensed cellular IoT, are expected to increase from CNY8.6 billion in 2023 to RMB9.8 billion by 2,030. In our local Me IoT business line, we are leveraging our soft cloud SIM technology compatible with various chipset platforms to engage with a broader spectrum of partners in the security camera, dashboard camera and the related sectors to explore additional application scenarios. This will allow us to demonstrate the strength and the capabilities of our technology to our broader audience. According to the Mobile Economic 20 24 report from the GSMA, licensed cellular IoT connections are expected to grow from RMB3.5 billion in year 2023 to RMB5.8 billion by 2,030.
Finally, as we transition beyond the portable Wi Fi terminal market, we are scaling up our user base beyond the travel sector into various comprehensive daily life application scenarios such as elderly care, pet management, item tracking and daily travel. This transition will diversify our revenue stream from the primary mobile data traffic solutions to a mix of value added services and mobile data traffic solutions. This will drive ongoing consolidation and development of our local ecosystem, positioning it as a leading global mobile data traffic sharing marketplace, while creating a long term sustainable value for our shareholders. We firmly believe that better connection empowers better life with the gradual commercialization of Growcom in Life seeing an IoT business lines gaining momentum. We expect to see them contribute more meaningfully to revenue in the coming quarter through various markets and channels.
We are confident that we have a right strategy in place to generate sustainable growth in the coming quarters. For the Q3 of year 2024, we expected total revenues to be between US24.0 million dollars to US28 million dollars representing an increasing of 0.4 percent to 17.2 percent compared to the same period of year 2023. I will now turn the call over to Mr. Si.
Yimeng Shi, Chief Financial Officer, UCloudLink: Thank you, Mr. Chen. Hello, everyone. I will go over our operational and financial highlights for the Q2 of 2024. Average daily active terminal is an important operating metric for us as it may share customer usage trend for each period, which reflected of our business performance.
Average daily active terminal, DAT, in the second quarter were 306,289, of which 62.2% were from UclaLink 1.0 International Data Connectivity Service, representing an increase of 29% in DAT of 1.0 international data connectivity service compared to the same period of 2023. Average daily data usage per terminal was 1.35 gigabytes in June 2024. As of June 30, 2024, the company served 2,699 business partners in 61 countries and regions. The company had 182 patents with 153 approved and 29 pending approval. We approved a SIM card from 392 MMOS globally as of June 30, 2024.
Total (EPA:TTEF) revenue were US22.4 million dollars representing an increase of 1.7 percent from US22 $1,000,000 in the Q2 of 2023. Revenue from service were US14.2 million dollars representing an increase of 0.5 percent from US14.1 million dollars in the same period of 2023. Revenue from service as a percentage of total revenue was 63.4% during the Q2 of 2024, down from 64 point 1% during the same period last year. Geographically speaking, during the Q2 of 2024, Japan contributed 46.2 percent of our total revenue. North America contributed 14.6 percent.
Mainland China contributed 23.5 percent and other countries in the region contributed the remaining 15.7% compared to 43%, 29.5%, 11.6% and 15.9%, respectively, in the same period of 2023. Overall gross profit was US11 million compared to USD 9,900,000 in the same period of 2023. Overall gross margin was 49.2% in the Q2 of 2024 compared to 44.9% in the same period of 2023. Gross margin on service increased to 60.3% in the Q2 of 2024 from 58% in the same period of 2023. Gross margin on product increased to 30% in the Q2 2024 from 21.5 percent in the same period of 2023.
Excluding share based compensation, total operating expenses were US8.7 million dollars or 39% of total revenue in the same Q2 of 2024 compared to US7.3 million dollars or 33 percent of the total revenue in the same period in 2023. Net income was US2.2 million dollars compared to a net cost of $0.9 million in the same period 2023. Adjusted EBITDA was $3,300,000 in the second quarter of 2024 compared to US2.1 million dollars for the same period of 2023. For the Q2 2024, we generated operating cash inflow of US4.7 million dollars increasing by 38.3 percent from US3.4 million dollars in the same period of 2023. For the Q2 of 2024, capital expenditure were US1.6 million dollars compared to US0.5 million dollars in the same period 2023.
We maintained a solid balance sheet with cash and cash equivalents increasing to $26,800,000 as of June 30, 20 24, up from US24.7 million dollars as of March 31, 2024. With that, operator, let's open the call for Q and A.
Conference Operator: Thank you. We will now begin the question and answer session. The first question comes from Theodore O'Neill from Litchfield Hills Research. Please go ahead.
Theodore O'Neill, Analyst, Litchfield Hills Research: Thank you and congratulations on the results for the quarter. My first question is about uses for cash. You're profitable. You increased cash in the quarter. And I was wondering if you have some thoughts about how to utilize the cash balance you're growing, either acquisitions or dividends or more capital expenditures of some kind?
Yimeng Shi, Chief Financial Officer, UCloudLink: Yes. We have a strong cash inflow from operations as disclosed, the $4,700,000 generated in the 2nd quarter. So the overall cash equivalents now is more than US26 million dollars It's a strong trend positions indicators. We still will keep this to improve our firm position in the near future, say, this year and the next year. So far, we don't have a specific target for acquisitions.
We don't have a full discussion on any dividends planned. So that's so we still focus on improve our growth and improve our financial position. And we want to improve our financial position to make the company in safer positions for long term operations. Thank you.
Theodore O'Neill, Analyst, Litchfield Hills Research: Okay. My next question is about the Local Me Life Solutions. The you've highlighted the KeyTractor, Roam plug and Unicord here in the call. Are there additional products coming out into the local meat life solutions?
Xiaohui Chen, Co-Founder, Director and Chief Executive Officer, UCloudLink: Yes, we that's the first three product we launched for Grokomi. We have a continued more product we are coming in the following quarters.
Theodore O'Neill, Analyst, Litchfield Hills Research: Okay. My last question is about if you could talk about the outlook between UCloudLink 1.0 and UCloudLink 2.0. Can you talk about how the outlook of those 2 over the next quarter or 2?
Yimeng Shi, Chief Financial Officer, UCloudLink: Maybe add some column first, and the CEO will add more comments on that. Yes, as we have closed our guidance for the Q3, which is US24 $1,000,000 to US28 $1,000,000 for revenue. Yes, for this top line growth, mainly driven by this international connectivity service, especially as we disclosed in the second quarters, the mainland China's growth, the other boat traveler from mainland China to other countries grows significantly. And we think that trend where we have kept this same high and fast growth in the Q3 of this year. So for other loot, the main driven in the Q3, mainly from international travelers growth for Chinese outbound and other regions outbound as well.
And also, we expect our new solutions like Gumi live series products as we launch in the second quarters, which will bring more revenue stream into our account in Q3 and more in the 4th quarters. So that's we so we believe there's a growth driver is more than just international roaming service but also from a live series service. Yes.
Xiaohui Chen, Co-Founder, Director and Chief Executive Officer, UCloudLink: I'm Joe Chen. So for our 1.0 business, because we understand China we have 2 markets, China and Japan market. They are still on the way of recovering. So I believe in the next year, from now on, still on the way of recovering from the pandemic. So I need the time, okay?
And also for the 2.0 business, now we are developed most high reliable connection fixed broadband backup. This market also give us more advantage for this drug series market for 2.0. So we can see some opportunity in 2.0 business for high reliable connection that we can bring to the customer. And for the new product, because end of the second quarter, we just newly launched the 3 products. And I think in the quarter 3 and mainly in the quarter 4, we bring us generate more revenue bring the new revenue for this new product.
Of course, bring not only data, but also the subscriber and the services revenue.
Theodore O'Neill, Analyst, Litchfield Hills Research: Thank you very much. That answers my questions.
Conference Operator: The next question comes from Vivien Zhang from Diamond Equity Research. Please go ahead.
Vivien Zhang, Analyst, Diamond Equity Research: Good morning and evening everyone. So thanks for taking my questions and congrats on the strong quarter achieved. So my first question will be about the commercialization of glaucomyLife. So how are the sales of the 3 newly launched products so far? Are there any other sales channels besides selling directly on your official website?
Hello?
Xiaohui Chen, Co-Founder, Director and Chief Executive Officer, UCloudLink: Yes, yes, yes. So we both and that's both from the online and offline and also for channel. We were selling all this wireless online and offline also channel to sell our new product. We are some is under our own brand, some we are under our core brand with our partner. So and so far, I think the progress is very good.
So it's our partner, they are and also the feedback from the partner and end user is quite positive because we bring better connection in power better life. Let us not only just tech revenue from data connection, but we are more come from and more revenue will come from the services such as the pad tracking. I think in the future also for the convenience for the traveler. Also, I think like a unicorn, not only for traveler, but also it's a daily use like a car, like also car power and also home IoT connections. We can bring the home IoT connections such as Wi Fi camera to the outdoor, to the worldwide.
So that's our quite unique value point. So that can simplify that can make our users more easy and more relaxed, more safety and more high quality for travel life.
Vivien Zhang, Analyst, Diamond Equity Research: Okay. I see. So my next question is that the guidance for the quarter is quite strong. So any drivers behind that? Thank you.
Xiaohui Chen, Co-Founder, Director and Chief Executive Officer, UCloudLink: Yes. I think for the next quarter, I think because our follow-up traditional product is growth, I think, is very stable. But I think the big jump of our revenue will come from our new product. So because we just newly launched the product, so we needed some time to bring back the revenue. So I think that's the flip base is very good.
I would still have some uncertainty for the period of how quick we can bring the revenue back for this new product.
Vivien Zhang, Analyst, Diamond Equity Research: Okay. So do you think this like this 3 newly launched lab products, they will affect your margin gross margin next quarter? Or you think you will keep current level? I
Daniel Gao, Investor Relations Director, UCloudLink: expect
Yimeng Shi, Chief Financial Officer, UCloudLink: the service gross margins should be in the similar range as we deliver in this year, like the 2nd quarters. As now, the main driven, the main part of revenue is coming from international roaming service, which is a higher gross margin service in our account. And like a subsequent fee related to the new Gourmet Live series product is I believe that the additional highest gross margin solutions, and we will see how we deliver to the market in various regions and channels. So we believe we will keep we have this good service margins in this year and the future as well.
Conference Operator: This concludes our question and answer session. I would like to turn the conference back over to Daniel Gao for closing remarks.
Daniel Gao, Investor Relations Director, UCloudLink: Okay. Thank you once again for joining us today. If you have further questions, please feel free to contact Yokine's Investor Relations through the contact information provided on our website or speak to our Investor Relations firm, Christensen anniversary. We look forward to speaking to you or again on our next quarterly call. Thank you.
Conference Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Yimeng Shi, Chief Financial Officer, UCloudLink: Thank you.
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