uCloudlink Group Inc. Q1 2023 Earnings Call
Good day and welcome to the you called link first quarter 2023 earnings Conference call. All participants are in a listen only mode should you need assistance. Please signal a conference specialist by pressing star followed by zero.
After todays 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 Julien Zhang Investor Relations for your cloud like please go ahead.
Thanks, everyone. So journal almost first quarter 'twenty turnkey suite earnings call today. The earnings release is now available Oh, well I have upsides and I aren't all your plumbing they'll call and no bad news met Sally I will give a brief introduction to our you tell me.
Bank loan team meets those two team who is our co founder and chairman of Board of Directors. Mr. Calloway, Chen our co founder director and Chief Ex Q2 Officer. Mr. Female. She is our Chief Financial Officer, Mr. Wei Chen our co founder.
Oh, well began with an overview of the company's recent busy highlight wait too well how about the earnings presentation postpaid Oh, well I have absence makes the Imam <unk>. Our CFO will then discuss the company's operation operational highlights and the financial result.
He felt like Kristy. Please note that this call may contain forward looking statements made pursuit choose us say Papa probation. After the province, So killer T litigation, we from Exxon from 1995. This forward looking statements are based on mountain men Kim Collins he's back.
Patients and observation that's involved known and unknown risks I'll start I'll start and taste and other factors not under the company's control, which may cause actual results cause on that all achievements of the company to be materially different from the results because some of us all.
Patients in part by these forward looking statements.
All forward looking statements are expressly qualified in their entity by the culturally statements risk factors and details of the Companys filings with the FCC. The company does not assume any obligation to revise or update any forward looking statements as a result, helping you.
Information future events tend to in market conditions, or otherwise, except as required by law.
Please also note that you're calling on this press release and this conference call include discussions of non non nowadays to discuss our national inflammation and then according to the non-GAAP financial measures you can go on banks press release contains a reconciliation of the non.
non-GAAP measures children are not due to the most directly comparable GAAP measures.
I will now turn the call alerts our co founder and CEO . Mr. Chan. Please go ahead. Thank.
Thank you Dan and good morning, everyone.
Thank you for joining us.
First quarter <unk>.
1023 linked quarters date.
We appreciate everyone's tongue.
We are pleased to Stockholm.
2023 with toll first.
First quarter results.
It's the first time that we've achieved both positive net income and deposit fee cash flow Gen and Nike golf operations with gross revenue seems not.
Great.
19 synthetic.
The average daily.
Temenos continued tobey.
Afterwards.
And rich.
Hi, Oh well.
300000 in this quarter.
We continue to expand our global hospital staff safety.
Thanks, Tim.
Rick Becky.
Hello, Nike Marquis for Youll qualities, so it's a cost in the global market.
You probably want it.
Nathan on data connectivity is so in safe places.
Hey, thanks.
Which has to be a higher margin.
Paisley.
Has historically being one of our key growth drivers.
During the first quarter 2023, you'll Tony one basically revenues increased.
Eight 5% year over year to U S C H.
8 million.
We actually like that.
You called me one on the obesity that must change if they can grow.
South San Jose International recovery.
Across all of them.
And Lockheed Martin.
In Japan.
We also have increased demand.
Oh, the only man these days in mainland, China, and Southeast Asia, which is.
Totally great. So my case with what Horace Mann.
Right.
Every society.
For your coding won business increased by 55, 3% compared with the same Peoria Yeah 2022.
Which.
It does take an easy kind of grows.
Basic.
We remain optimistic in our ability to fund those growth.
Are you having one.
Yeah.
Slowly see applying our leading global position.
And the information on data alone mirror solutions market.
And we look forward to serving our users globally.
<unk> continues to pick up.
You called in coupon, though is our local data, let's hear what you hear somebody say basically which.
So it could be a local races.
So chetan just among the carriers.
This is not just non tech all took off you would end up pandemic. After we see the opportunity in the local market.
Offering reliable low code data collection services.
In the past two years, we continue to strengthen.
Hudson is no co market, including Japan, and North America, where we have operated basically its partner.
Nowadays how can that came with his stay with these unresolved data connection hope it is.
So a possible source.
Based on our patent technologies, including policy and how can technology said he wishes.
You called me and coupon business.
U S dollar $202 million in revenues.
By 37.
In the first quarter it was Huntington history.
Third to U S dollar $1 6 million in ascend Peoria, albeit 2022.
They see the condition.
We see it as partners.
So in our case not to Japan, and North America and continue our ethos.
Pending a popcorn soft pretzel ecosystem.
We expect our high quality reliable data is connected with you said with these faithful I'll walk in a waste heat pump technology.
We have received more industry there Felicia.
And applications, especially in the mobile and fixed broadband.
Paul based industry.
We expect to launch more in the late teens.
Post us Capri put a nice time.
That's more about what you all right.
Well sure.
Mobile operators basically its partners.
With your customers in the near future.
Oh, the Iot or internet of things Iot.
Side of our business, we have sheer update oh marquee efficacious scenario.
Our Iot module, including lifestyle with her.
10 minutes et cetera.
It has to be welcomed by our customers seem very a market for that complexity.
The web pages.
We are actively working with our partners.
Sprawl.
Applications scenario for the Iot pieces too.
To further improve data quality with ease.
For their customers.
Hello Cindy.
Our team continues to leverage 15, resulting.
And the research and do better.
The money to develop you'll cloudy.
Three pump business.
Now what the one stop mobile data traffic share in marketplace application is planned to launch in the fossil watches in the near future, which leverage is.
It is scalable uses basis through our U cloudy one.
Coupon to O low dose.
This is not the place naval and use this device to connect to a well a bone as well anytime anywhere.
He was he lives in the global clinical me asking it wasn't one.
We do remain healthy and the market conditions.
Oh, Yes 1023.
And we're prepared to put the one page of the peak season.
However, during the summer.
We believe our track record.
Did he learned at Apple and high quality data connectivity is still exist.
It's totally off.
So do you want to know what did he pulled out solutions enable us to maintain our leading position in the internet.
Nathan that states have come to a deal with him. So he says Duffy.
We are always committed to continuously.
He will then.
Innovative solutions and plan.
Our cloud and comm technologists, who wishes to more applications scenario.
To deliver value added services.
All of our customers by continuously improving our mobile data kind of acuity theaters.
And the way of continuing to execute.
That's a cute.
Oh strategies with our pending Offloading all parties.
I will now turn the call Oh, what's our staff base.
Sure.
Thank you Mr. Chen.
Everyone I will go over our operational and financial highlights for the first quarter of 'twenty penetration.
Average daily active turbulence D. A T is important operating metrics so it kind of links.
Sure. So the train of customer usage over the periods, reflecting our ongoing business performance in the fourth quarter of 2023 average daily active terminal.
304000 and 121.
So we started with 400.
Three owned by the company.
300638 owned by I've been pumped up by 11% from.
273800.
70 in the first quarter of 2022.
Are you, calling 1.0, you're correct to point out fitness accounted for around 42, 7%.
<unk> 57, 3% of the total tier twos, respectively. During the first quarter of 'twenty Street.
Steady state you said Tom.
<unk> was 162 gigabytes in March 2023.
Total revenue for the fourth quarter.
Three eight.
$18 million, representing an increase of 15, 3% from $15 6 million in the same period to a company too.
Revenue from service in the first quarter of 203 one.
0.2.
9 million U S dollar and increased.
So the one 4% from 9.8 million gets thrown at us in the same period, a friend Contra to revenue from service as a percentage of total revenue was 71, 7% during the first quarter of print in a straight up from 62, 9% during the same.
Periods of 2022.
During the first quarter of kind of history, Japan contributed 43, 1% North America contributed $33, 6% mainland China can you beauty five 1% in the other countries in the region contributed the remaining 18, 2% of the total revenue.
Compared to 42%.
Seven, 9%, one, 9% and 18% respectively in the first quarter of 2022.
Overall gross margins improved to 47, 8% in the first quarter of 'twenty three.
<unk> to 37, 4% in the same curious for 2022.
Our gross margins on service increased to 55% in the first quarter of 2023 from 49% in the same period a 20.
Excluding the ship basics conversations our total operating expenses decreased to $6 $9 million or 38% of charter revenues in the first quarter of 'twenty three that's compared to <unk>.
$9.3 million or 60% of total revenue in the same period of 2022.
We realized net income of $2 1 million dollar in the first quarter of 'twenty Street.
Which represents a significant improvement on our bottom line results as compared to a.
Loss of $7 9 billion U S dollar the same care at 222 Similarly.
Similarly, adjusted EBITDA improved to $2 1 million during the first quarter of 223 as compared to elective $3 9 million against dollar.
Same here, if I kind of alluded to we're pleased this is the first time, we achieved that.
Net income since the outbreak of COVID-19, pandemic and adjusted EBITA has it remained pathetic for three consecutive quarters.
We have achieved positive operating cash flow $1 6 million startup during the first quarter of 'twenty, three which compared to elective ballpoint, a 4 million dollar during the same period of 2022.
We have significantly improved our bottom line in the first quarter of 223, and a half generating positive cash flow from operations for full cause acute at Cortez, Australia, we our strengthened financial position enabled us to execute our growth strategy.
With that upgrade test it's open for Q&A.
Okay.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
If youre using a speakerphone please pick up your handset before pressing the keys.
Draw. Your question. Please press Star then two.
At this time, we are pass momentarily to assemble our roster there.
Our first question today comes from Theodore O'neill with Litchfield Hills research.
Yeah.
Thank you very much can you hear me okay.
Yes.
Yes, good congratulations on the good quarter I have three questions for you. The first on gross profit I can see that.
The overall margin was better in the quarter, because you had a greater mix of of.
Our services, but I wanted to understand the margins got better on both products and services is that due to pricing or was there some efficiencies in the in the products.
Yeah.
So we I'd say your questions one by one so you just raised for that first question you're right.
Yes regarding the of course property that you are you where you will see is that will improve our gross profit margins in.
The past couple of quarters, so that's a massive improvement quarter to quarter basis.
For the service.
So this.
Cause I imagine.
The improving depending on there's a mix there.
Our categories. So that makes a mixture of the three category three categories of men service revenue why is like international.
And our bromine connectivity service why it's a low code connectivity surveys and the pasta and sauce.
So and that the improving gross margin as well.
It reflects that the proportions of the <unk>.
Revenue generation from National roaming service and from past us is growing.
Growing faster.
And then the low Costar I can't be service, so that's where we get this.
Proving as a result of that.
Gross margins improving over the past couple of quarters.
We look forward in the near future, yes, yes.
Is it because the board has been opened up and is that for most of the countries. So the people CASM moving cross border more free freely than before.
We expect there's a more revenue.
We're generating from the National roaming service. So if you zoom means that the proportion of international in the National roaming service that will be improving in the future. So we expect that overall service gross margin webbing.
Moving I bet at least keep stable in the following set in following quarters or this yes.
That's in my opinion.
Thank you. My next question is about the research and development expense.
It says that in the prepared remarks that you had a decrease.
Zero point $2 million in testing and certification expenses.
You give me some insight into how that number for testing and certification I would've thought it would sort of go up and down with new products, but can you give us a little more sense of how that goes up or down quarter to quarter.
Yeah.
Yeah.
The first the first part regarding the increasing R&D expenses that I'll, let CEO in May I'll give some color on the new product.
Yes.
It is a very.
We report that.
The <unk>.
Streamlines operations.
I think that.
Since yes, Tucson anyone.
And that's reflective of our.
Our overall head count is that it's decreasing.
Decreasing decreasing as that compared with the year.
2022.
So that the number of head count has been cut off or some tenths of pods for improving our operation operation.
Patients to eat and so that's the way is a reflecting on comparable basis. So oh.
Oh rules expenses expenditures have been decreased from year to year basis, and that's assuming that still rates, thus far that the IMD.
R&D functions.
Sanctions as well.
We invest a lot.
In the past you've in the past couple of years.
We invest.
Investments.
Search and development functions. So that does support our every year, we'll launch a different a new a different new product, new futures and upgrades our platform our platform as well.
So.
But we will still invest leverage on these <unk> to support to develop a new product. So regarding the new product development I feel will give some more color on that.
Yes.
How many times a year.
Come on because you know so we are two years ago, we have with how we invest in R&D side you can see we are.
Oh I lost the last US two years ago that we lost because of we are heavily invested in R&D site. So tier five key tier the head count. We finished all the you know keep medicine that then we end.
And.
Last year, we started with control of cost and control the R&D investment, but do.
No in pet Oh, Wow, you know a new product launch in D. C is so our eyes are in the in my presentation I already had a son.
The the choose we will launch in near future for all high Pecan Court.
Lisa will meet for a more pad okay.
D C is a huge opportunity.
For the mobile operator market.
I think in the next quarter, we are preparing for launches.
Or is the only time, we would announce new protests either way.
We'll put that in the second quarter and also quota. So we're continuing these head count proton launch to enhance.
High quality rock with Apple quantity because no matter. Please Paul then or more painful operator their network. We are faced with a failure once they do happen. We could have done to you know improve spirit's. That's a power unit consideration is pin these high hydro conditions.
Two we spent with deep roots in the army for carrier and therefore, the cable carrier a crystal ball, but carry a mobile carrier and so we will launch some new product for one point the old business too.
This is like you know.
The two to me the more convenient more compact and the more come out in our five key product leading position in both of these two directions and we were launching more new products to meet a 1.0 fast growth market as well.
And also for Iot. So we launched the I always keep hold on to improve the reliable. We are proud of the hydro com is a technology into the Iot product because we know the autopilot.
Like a lot, but you know.
Uh huh.
I took notes nationality also need that will be highly reliable condition. So in this highly reliable condition. We do a lot of popular press you would hope in the coming quarters that we can.
I'll keep this good news to everyone.
So basically.
Once the once the.
Oh Allah Oh.
Close of a recovery from the pandemic, so Andy we Oh, so cute, but it's stable investment and also our new product new solution because all his career investment.
Felicia Yeah, we would keep it oh, so spending a lot on the investment I believe we will get.
More Oh the result in the future for all our type of kind of coaching.
Okay. Thank you and my last question is about accounts receivable.
Done a remarkable job of keeping receivables low relative to revenue is that primarily because the services are prepaid.
Yeah, and I think it says are they.
They are improving on a balanced account receivable.
Depends on all of the cutbacks that affect us.
Yeah and we.
The first one is that we are we pay when.
We paid more attention and Asa, while improving our goodness Dennis Tam.
The assays that mentioned, a prepay prepaying tons and there could be times that shortens that could be 10 and some.
And.
And we we have some more so I'm a big Oh that from this.
A good credit a cast them as well so that's the first that I think as fast that contributed for the improving as a a AR balance.
And it says it's pecans that part I think that we pay <unk> to correct. The cash from that from some that agents are currently stay about was that some some cast them S. I stop this pandemic.
When kids go two years ago, so now they recover.
Gradually I intend to make.
Making profit something that's generating more cash or cash flow from that Dennis activities. So we we have our eyes.
Basketball and calculations have a good.
She was a positive result.
Have reducing that are improving that balance after the economy stay at those.
And.
And then the third part the third part is the dependents.
We are selling we sell into them more.
More.
To any of your customers why have you come out of ice them all on our website. So that this the ecommerce generate just a.
That's a cash prepaid cash at all.
Pete before they use our service so there's always the virus that contributes as a half hour improving stuff.
Yes.
Management's so we will start taking this this imagine mezz.
In the futures, we have maintained our maintaining well.
Cash positions, so we I.
I expect our operating cash flow will be keeping just a pathetic train in the following in a couple of as is yes. I think we will I believe we will achieve a better achieve a beta test that then not a lot yet not that we are.
Yeah, you know kind of the way you know because our customer situation financial situation Oh, so its much much better compared to the ER during the pandemic, so and yeah.
Yeah. We're in talks at all I'm more you know better.
In our opinion condition.
Thank you very much that concludes my questions.
Again, if you have a question. Please press Star then one the next question comes from Vivian Zhang with Diamond Equity Research. Please go ahead.
Okay.
Yeah.
Hello.
Then John with Salman Al Qadi Ah Congrats on the great call. There are most of my questions have been answered, but I still have one now.
You do get gardens or in your business the mobile data traffic sharing marketplace application can you give I guess the first thing they can update on this.
Yes, and the one thing he is back in the air to be launched and generated minutes I'll wrap up now.
Thank you okay.
So because you know commentary we are only a major I think not only is majorly weird sterling, both local and local EBIT information of data.
And if they pay as high quality and reliable class carrier network. So let's kind of columns. They are basically the major it comfortable.
I know in this industry, we have people they named they didn't maybe no waiting to carry to carry to carry on.
Sure Me fine.
Our glaucoma insight.
So you've seen sort to see yeah. Many kinds of some technology, even that connection quality may I know as good as our cargo team, but they have some other ones as well for example, more convenient no need.
Is true up me fine.
And we couldn't know waiting for our cloud as seen in back here, Michael can meet our insight in Petro Hunt.
Even Vicki is we allow our local medium size for you on our progress.
We already see.
All are sharing market patient use concept. So we will launch a month a marketplace.
Marketplace content.
Say, what technology can sign not only including the coffee pounds of Esim and also seeing the softness in best where we.
We can provide all kinds of all of the data coming up here with me.
And you know Oh, the one page and accompanying and that's comprised of high quality deal flow and you know a competitor a requirement.
Data connect comes down that comes out to a quality another.
Convenient scenario pull down to meet the different use as a requirement for example, like the Eiffel now you can use our <unk> solution to provide a better condition for sending us a lot of people use our best of course getting into work Oh. So you can embed our.
Surpassing all of our you know our ECM solution.
And we can provide the more users and where you pay some people.
I understand that the past him understand Oh that one stop providing all kinds of technology and these all kind of technology at least one or two COVID-19. You'll department then we can at least marketplace can help us.
First of all we were show demonstrate in all out Ala Bryan on the offer and then we have a copy of these technologies and these brands. These are at least a tsunami of two or better.
Is it possible then it needs to become a marketplace and decent way or have us Oh I feel great.
In March our user base, because we are currently only.
People know us another 70%, 80% having gives all technology.
With new launch also Vegas, Washington, after marketplace, where we have all the technology all of the common off no users they have a.
Our partner to meet all the requirements of the use of application so have a quite a huge base of the users.
That's a lot closer to watch and we will launch it in a in Nielsen.
So these are much place Oh I'll go first and then we have a copy of these went to a partner that's Oh Wow.
Initial planning.
Okay that makes sense. Thank you.
The next question comes from Katherine Lee with China, Great Wall Securities. Please go ahead.
Hi, Yeah.
I'm So for me from trying to quit for security.
Can hear me.
Yes.
Okay I have a small question about starts and hot sector, because like from the I reported on our first quarter.
The revenue hockey and stuff like.
Girls March from the year on year or quarter to quarter. So.
And what's the plan and then also the outlook for the whole year on the sector. Because I think this is also the main focus of our company and I want you to know about Hum, what's our plan for the passing and the like the.
Clients expand or what's the technology development in this sector yeah. Thank you.
Okay. Thank you.
Uh huh.
And so if there's questions.
And then I might say.
Oh, CEO will give us some more supplementary yeah.
For the first quarter, it's a there's.
Yeah. So we are it seems that the past source revenue is still growing.
Compared with a loss yesterday, just small small.
Small as a percentage of gross.
By three 7%.
And that's where else are comparable to the same tariffs I lost yes, but a nice analyzes speaker.
And all of us.
Daily.
Daily activities told me that has had to achieve historical highest over 300000.
And you will see our.
Revenue.
What was the revenue generated from that one point on the tubing, though increased massively a compare last yes athletes for example, the national roaming service gross.
Gross up over a.
0.5% over the last few years and are you kind of get to a point on gross 37% over that last yes. So in the Ah Theres motors that are past soft patch play a central platform and to build out our global ecosystem to support our global business partner.
To provide a beta high qualities are connected connectivity service either to roaming.
Me too of low code a restage response, so it wasn't that they give us a more flexible.
Finished model with our partners, so all kind of options.
Either to pay a pass off service.
To us and the supply that was Uh huh I did that from their own the resource or they can choose.
I buy from them. That's a package from you called a link and then we provide that the soft function to support that provide that service to their to their customers. So we will treat as a overall our service our pockets in our one poor's to view our gross trend.
So in the future as we we keep at this option a flexibility to our tenant partners.
So for this are you in the future.
We expect that we disclose our our guidance that's warehouse so that.
Just give us a gross.
Is that a trend.
Around the.
Trying to something not too bad.
The guidance 80, 585 millions to billions of revenues. This growth. This guidance I think the overall gross well Ah well will give us that.
Our message.
Power source.
And I think that.
One point to kind of finesse, whether it be growing us warehouse.
In this guidance.
Yeah.
Yeah, Okay. So I know that's a more common because when you look in the issue you know recovery Uh huh.
International travel for all know COVID-19 is a is it step by step so at this stage Oh, My Gosh, Oh, a partner now.
Police ought to use our data Len immediately increases our pasta sauce.
Capacity. So that's the reason I answer why our trophy.
It's a proper English law type up purchase loan no increase such a secret.
Synchrony frequently that's because on the reason our nation test and personally I believe the what is it that you know the second quarter or so a quarter the recovery from the chapter on the China, Japan Southeast Asia.
Countries or international.
Intonation aluminum business becomes a staple and up and up.
Recovery more more.
Apparently on the most frequently I think that some part of all of our data we are transferred to pass off to you know increase so that's the reason.
Personally I believe the fall are past us for one point the old business. Following the quarter. We are keep continue increase this fall.
The first part and the second part I just mention it because commentary.
Our solution, we launched a new solution.
For mobile broadband baseball been for hype.
Serious new product in the second quarter third quarter diesel will bring a lot of covenant pasta sauce, and you know our revenue for us.
Following quarter.
Oh, so for Iot I think we have some.
Some are a lot of the bigger customer not own a wait.
So if this customer we apply them I've seen the pasta sauce, we will be increased as well finally, so I mentioned, our you know our marketplace. All our first new version, where it belongs you're in Newton and also once we call could these new modelo to our partner also.
We are pretty.
Ah the past us increase.
I think put up especially for Hong Kong for the you know for the mobile broadband fixed broadband carrier. These carry a major is a is a operator they are pretty fun you know our posture as a solution for all of these are at least a solution for the hyper counsel you know for fixed.
Our solution.
Ah was achieved adopt by more and more carrier I believe the pasta sauce and all revenue will increase at all that's the generally inflammation.
Okay, that's very clear to me that makes sense yeah.
[noise].
[noise]. This concludes our question and answer session I would now like to turn the conference back over to Julien Zhang for any closing remarks.
Thank you once again for joining us today.
Or have further questions. Please feel free to contact you calling feedback the relation so that sounds like the information provided all of that stuff.
Our Investor Relations that Astra grip look forward to speaking to you all again I went back to quality call. Thank you.
Thank you.
Hello, everyone.
This conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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