Q1 2024 uCloudlink Group Inc Earnings Call
Operator: Good day, and welcome to the Ucloudlink first quarter 2024 earnings conference call. All participants will be in the listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key, followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touchtone telephone. To withdraw your question, please press star, then 2. Please note, this event is being recorded. I would now like to turn the conference over to Liam Hsieh. Please go ahead.
Good day and welcome to the U class link first quarter 'twenty 'twenty four earnings conference call.
All participants will be in the listen only mode.
Should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
After todays presentation, there will be an opportunity to ask questions.
To ask a question you May press Star then one on a touchtone telephone.
Withdraw your question. Please press Star then two.
Please note this event is being recorded.
I would now like to turn the conference over to Leon Qi. Please go ahead.
Yeah.
Liam Hsieh: Hello everyone, and thank you for joining us on Ucloudlink's first quarter 2024 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. Zhi Ping 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.
Speaker Change: Hello, everyone and thank you for joining us.
Speaker Change: That's quite a chunky.
Speaker Change: On this call.
Speaker Change: And most of the release.
Speaker Change: The presentation and I believe well I.
I I wish that I saw your colleague Bill Com.
Speaker Change: Joining me on today's call.
Speaker Change: Uh huh.
Speaker Change: And the chairman of board of directors.
Speaker Change: He took how we China Covanta I read chair and Chief Executive Officer on May.
Speaker Change: <unk> Chief Financial Officer.
Speaker Change: Mr. Chen will begin with an overview of our recent business highlights.
Speaker Change: <unk> will then discuss our financial and operational highlights for the question.
Speaker Change: And we will all be available to pay your purchase in the Q&A session that follows.
Unknown Executive: 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 the actual results, performance, or achievements of the company to be materially different from the results, performance, or expectations implied by this forward-looking statement.
Speaker Change: Before we proceed. Please note that this call may contain forward looking statements made standards with the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Speaker Change: These are forward looking statements are based on management's current expectation observation backing up.
Speaker Change: All right.
Speaker Change: Great.
Speaker Change: Uncertainties and other factors not under the company's control.
Speaker Change: HMA cause I told me about fulfillment all of it.
Speaker Change: Shipments are up the company to be materially different from the results.
Speaker Change: That's our expectation.
Speaker Change: I think the forward looking statements.
Unknown Executive: All forward-looking statements are expressly qualified in the imperative 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 admins, press release, and this conference call include discussions of unaudited gap 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 compatible unaudited GAAP measures. I will now turn the call over to Mr. Chen. Please go ahead.
Speaker Change: All forward looking statements are expressly qualified in the impact at the cautionary statements risk factors and details of the economies are finding to be the S. E T.
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 is that as required by law.
Speaker Change: Please also note that the you're calling for any property.
Speaker Change: <unk> at this conference call included the discussion of RPT GAAP financial information.
Speaker Change: And audited non-GAAP financial measures.
Speaker Change: You called in the press release contains a reconciliation upbeat.
Speaker Change: I think he is a non-GAAP measure to the most directly compete and.
Speaker Change: And obviously Gavin Margaret.
Speaker Change: I will now turn the call over to meet Chen-chiang.
Speaker Change: Please go ahead.
Chaohui Chen: Thank you, Liang. And good morning or evening, everyone.
Speaker Change: Thank you yeah.
Chen-chiang: Good morning, or evening, everyone, we have called missing stuff for the year with total revenues up.
Chen-chiang: U S dollar and you can point to 1 million in line with guidance.
Chaohui Chen: We have a promising start to the year with total revenues of US$18.1 million, in line with guidance. With our business now healthy and back on a growth trajectory, and we maintain the profitability we regained last year, achieving a net income of US$0.4 million and generating a net operating cash inflow of US$1.9 million in the fourth quarter of 2024. Revenue growth was primarily driven by the continuous recovery of our 1.0 international data connectivity services business, and in particular, our Looming Membrane Services, which continue to perform strongly.
Chen-chiang: With our business now healthy and that our.
Chen-chiang: Our growth trajectory and we maintain that profitability.
Chen-chiang: We recorded last year.
Chen-chiang: Our net income of U S dollar.
Chen-chiang: They are a wonderful media and generating net operating cash inflow of U S. Dollar one 9 million in the fourth quarter of year 1000 people.
Chen-chiang: Revenue growth was primary driven by the continuous recovery.
Speaker Change: Oh intonation that data connected with yourselves.
Speaker Change: And in particular, our laundry and Mems Brian.
Speaker Change: Which continued to rebound strongly.
Chaohui Chen: With coverage expanding from 55 to 60 countries and regions, our full-spec 5G domain network solution further solidifies our leading position in this sector and helps expand our market share. According to the Mobile Economy 2024 report from the Global System for Mobile Communications Association, or the GSMA, the global number of 5G connections is expected to rise to 5.5 billion by 2027, from 1.6 billion at the end of the year 2023.
Speaker Change: Coverage is pending from 55 to 50 countries and regions although of course.
Speaker Change: <unk> <unk> solution.
Speaker Change: So let me fly our leading position in this sector.
Speaker Change: Expand our market share.
Speaker Change: According to a lot more part even though my 24000 tons, if I recall from the Oklahoma piston, while more fat communications saturation all of it yet.
Speaker Change: Goal number five SKU connections.
Speaker Change: Hate to drive two.
Speaker Change: 505 billion by 2020.
Speaker Change: From $1 billion.
Speaker Change: At the end of the year 2000 ton history.
Chaohui Chen: We also made significant progress in rolling out and expanding the rate of comprehensive data connectivity solutions during the quarter to explore opportunities beyond portable Wi-Fi technology. Let me start with the progress we have made in our Global Community Mobile and SIGs for Business Line. At the Mobile World Congress earlier this year in Barcelona, we showcased the GAFLEX Pro, our highly reliable dual broadband consumer premises equipment, or CPE, a solution which we believe will redefine the industry benchmark for high-reliable connectivity and innovation. Unlike other CPE solutions on the market, the GAFLEX Pro supports multiple mobile networks from all available major operators, in addition to standard local fixed networks.
Speaker Change: We also met pro.
Speaker Change: Progress in lowering power and is pending.
Speaker Change: Oh comprehensive data kind of turnkey solutions during the quarter.
Speaker Change: To explore opportunities beyond portable Wifi.
Chaohui Chen: This means it is able to intelligently select and automatically switch networks to maintain the connectivity, even when the fiber optic lines fail or are disruptive. Field pilot search in remote work on unlearning, Streaming platform In recent years, the demand for ubiquitous and reliable wireless connectivity is poised for substantial growth. Second, our Glowcomi live business made significant progress during the quarter with the initial rollout of new products. This brings seamless connectivity into various high-frequency daily life application scenarios, such as pet management, item checking, as well as emergency communication.
Speaker Change: Let me start with the progress we have Matt although coming more patents.
Speaker Change: Hey, Paul basis, basically it's not.
Speaker Change: Adding more in the mobile World Congress earlier this year.
Speaker Change: Barcelona, we showcased the Garth Brooks Cole.
Speaker Change: Our highly reliable fuel brand to broadband.
Speaker Change: Consumer pardon me phase equipment or PPE.
Speaker Change: So we can which we believe we are really finding cost prevention market.
Speaker Change: Hydro that both connectivity and innovation.
Speaker Change: I got a CPE solution on the market.
Speaker Change: That's correct, Paul I, suppose marquee Pope mobile network from all available major operators.
Speaker Change: Action to spend lower co fixed NASA work.
Speaker Change: They used to mean.
Speaker Change: Able to intelligently select and automatically create switched.
Speaker Change: Two men tend to kind of hey, what T.
Speaker Change: It wasn't a fiber uptake at launch all of these lumpy.
Speaker Change: Pilot.
Speaker Change: In remote work.
Speaker Change: Let me.
Speaker Change: Streaming platform in recent years.
Speaker Change: Mindful, you'll be priced and reliable wireless connectivity.
Speaker Change: <unk> is poised for a call center.
Second I'll also call me life business and conifer can progress during the quarter with the initial roll out.
Speaker Change: Neil quota.
Speaker Change: Are you seeing kind of hesitate into various high frequency daily life application scenarios.
Speaker Change: Such as pest management hyphen checking as well as in Medicine Emergency company patient, we soft launched our first theory life throws off a Cmos chip power.
Chaohui Chen: We soft launched our first daily life product, a smart tracker, powered by our innovation solutions that offer far more accurate and reliable checking, something that other similar tech or tech products on the market are unable to do. In addition, the Smart Tracker offers free local emergency internet access to users for security help.
Speaker Change: Powered by our innovation.
Speaker Change: Solutions.
Speaker Change: Also far more accurate and reliable checking.
Speaker Change: Something that the other thing and attack all checkup product on the market.
Speaker Change: On April two.
Speaker Change: In addition, that's the amount of check off a pretty low called emerging internet access to use it for security if you head on.
Chaohui Chen: Unlike other similar products on the market, which only support a single network or technology, such as Bluetooth, to track items, our tracker is able to intelligently select and automatically switch between multiple networks and six different location technologies. Additionally, Glaucoma Lite has an exciting slate of easy-to-use features.
Speaker Change: The other similar products on the market, which only sell a single NASA work, our technology, such as Bluetooth to check.
Speaker Change: I'll watch Hecka, it's painful to intelligently select and automatically switch between multiple networks.
Speaker Change: Six different locations technologies.
Speaker Change: Alrighty glaucoma life.
Speaker Change: An exciting slate of easy light.
Chaohui Chen: X-Series Products Under Development, which will enhance the daily life of smart device users, making it much easier and more convenient. We will unveil three GlocalMe Live products and upgrade the GlocalMe app on May 23 at Viva Technology, year 2024 in Paris; meaningful revenue generation from the Smart Tracker and EasyLine X-Series products is expected to begin in the third quarter and recurring; revenues from subscription and services are anticipated going forward by offering more intelligent, convenient, data-like products that satisfy a wide range of user needs.
Speaker Change: Serious protests.
Speaker Change: That is something.
Speaker Change: Which would enhance the daily life of smart device users.
Speaker Change: Second a much easier and more convenient.
Speaker Change: We will unveil three coke homey life product.
Speaker Change: Upgrading critical meet Oh may cause he served at the Viva technology, Yes, we saw some country fault in Paris.
Speaker Change: Meaningful revenue generation.
Speaker Change: There's some other tech or an easy life as the serious part us.
Speaker Change: Anticipated to begin in the third quarter and recurring.
Speaker Change: Revenues from subscription subscription and so let's say anticipating going forwards.
Speaker Change: Offering more in Paragon convenience data life posed to us.
Speaker Change: That stuff is quite a wide range of user needs.
Chaohui Chen: We are expanding our market research and establishing a broader market presence to diversify our revenue stream and generate long-term sustainable growth. By extending our business beyond the travel sector into various aspects of daily life and commercial life, customers will enjoy a more intelligent and convenient life through our high-quality data connections in a range of everyday scenarios. Third, our newly launched Glocomix theme made solid progress during the quarter, ranking highly on a number of e-commercial platforms for travelers heading to destinations such as Japan and Hong Kong.
Speaker Change: We are spending our market.
Speaker Change: Research and publishing a parole.
Speaker Change: The term market has been to diversify our revenue streams and generate long term sustainable growth.
Speaker Change: By expanding our basically beyond let's have a sector into various aspects of daily life and commercial life customers will enjoy a more intelligent and convenient life.
Speaker Change: Our high quality data connections.
Speaker Change: Range of everyday scenarios.
Speaker Change: Our newly launched glaucoma C met our solid progress during the quarter.
Speaker Change: Hi.
Speaker Change: Number of E commercial pest phone, what's hurt us having to destinations such as Japan and Hong Kong.
Chaohui Chen: Our global me-thin solutions, including our hourly-air OTA-thin and e-thin solutions, will continue to evolve into our innovative all-thin solution, allowing us to engage with a broader end-user base beyond those in the portable Wi-Fi terminals market. This pioneering all things solution is uniquely able to break cross-carrier restrictions and empower various smartphones. According to the Mobile Economics Year 2024 report from the GSMA, SIM connections excluding licensed cellular IoT are expected to increase from $8.6 billion in the year 2023 to $9.8 billion by the end of the year 2030.
Speaker Change: Our midstream solutions, including our <unk>, Oh tea ice cream and Ive seen solutions, we have continued to evolve into our innovation all siem solution.
Speaker Change: Us to engage with a broader and use our space.
Speaker Change: One dose in a portable Wi Fi time in those markets.
Speaker Change: These pioneering all screen solution is uniquely.
Speaker Change: Paul.
Speaker Change: <unk>.
Speaker Change: Two frac cost carrier restriction and empower various smartphone.
Speaker Change: According to a more economic if 2024.
Speaker Change: From that yes.
Speaker Change: In connection is cooling license cellular Iot.
Speaker Change: They take two increase from $8 6 billion in year 2020, 329 billion by the end of the year 2030.
Chaohui Chen: Last but not least, within our IoT business plan, we complete testing of our soft cloud-themed technology for consumer IoT devices, which we expect to begin commercializing in the near future. This unique technology is compatible with a broader array of mainstream chipset platforms found in many IoT devices and eliminates the need for global IoT manufacturers to seamlessly deploy it through software pre-installation.
Speaker Change: I know this within.
Speaker Change: Iot business none.
Speaker Change: We completed testing of our salt cloud technology.
Speaker Change: Sure My Iot devices, which we expect to begin commercializing in the near future. This unique technology is compatible with our protest right now.
Speaker Change: <unk> chipset platform.
Speaker Change: In many Iot device.
Speaker Change: Eliminate the need from hardware Ricky Sun.
Speaker Change: Development.
Speaker Change: Allowing global Iot manufacturers to seamlessly deployed.
Speaker Change: So you will start to wear off quick installation.
Chaohui Chen: This turnkey solution is expected to create significant opportunities for us in the consumer IoT market by having our technology deployed in products such as WikiTalky, Security Cameler, and two-wheel electric scooters, which already have a substantial end-user base and can significantly contribute to data connectivity services revenue. According to the Mobile Economic Year 2024 report from the GSMA, licensed serial IoT connections are expected to grow from $3.5 billion in the year 2023 to $5.8 billion by 2030. We believe... We believe that better connection empowers a better life.
Speaker Change: This turnkey solution is better.
Speaker Change: To create could create significant opportunities for us in the consumer Iot market by having our technology deployed impulse items, such as what we could call Kate Securities, Canada, and two wheel electric scooters, which already has.
Speaker Change: As such.
Speaker Change: Substantial and user base.
Speaker Change: I can't think of an infrequently country viewed two data kind of tell you what you said with phase two Avenue.
Speaker Change: According to the more economic it doesn't country for recall from the chip and a license to say your Iot connections.
Speaker Change: To grow from $3 5 billion.
Speaker Change: In years 4000 countries three to $5 8 billion by 2030, we're busy.
Speaker Change: We believe that better condition empower specialized.
Chaohui Chen: We will segment ourselves into four distinct business lines starting from the year 2024 to leverage our existing R&D resources and cutting-edge technologies to explore business opportunities beyond portable Wi-Fi terminals, and we are expanding a range of comprehensive data connectivity to satisfy a wide range of users' needs by extending our business beyond the travel sector into various aspects of daily and commercial life. These solutions will allow us to engage with a broader user space by leveraging our cloud theme and hyperconnectivity technology, optimally build out our broader GlobalMe ecosystem, and the global leading mobile data traffic sharing marketplace.
Speaker Change: Recognize all.
Sterling: Sure Sterling.
Sterling: First is pink business line, starting from 2024 to leverage our existing R&D resource and cutting edge technologies to explore business opportunities to be young portable Wifi temenos.
Speaker Change: Uh huh.
Speaker Change: Our range of comprehensive data connectivity solutions to satisfy a wide range of use our users needs.
Speaker Change: That is pending our basically beyond let's have a sector into various aspects of daily and commercialize these.
Speaker Change: These solutions will allow us to engage with our Florida and use our space.
Speaker Change: Reaching our cloud <unk> and high Tech.
Speaker Change: Congrats hey with tape technologies.
Speaker Change: Kate.
Speaker Change: Our patent make today be without our product broke on me ecosystem and global leading mobile data traffic share in mass.
Chaohui Chen: Finally, I would like to review our guidance for the second quarter of 2024. We are optimistic about our future growth prospects. For the second quarter of year 2024, we expect total revenues to be between US$22 million and US$24 million, representing an increase of 0.1% to 9.2% compared to the same period of year 2023. We maintain our outlook for the year with total revenues expected to be between US$95 million and US$112 million, representing an increase of 11% to 30.8% from 2023. I will now turn the call over to Mr. Shi. Thank you, Mr. Chen. Hello everyone,
Speaker Change: Finally, I would like to review our guidance for the second quarter of year 2024.
Speaker Change: Obviously, my optimistic about our future growth prospects.
Speaker Change: For the second quarter of 2010 before we expect total revenues to be between U S dollar a ton.
Speaker Change: 22 million.
Speaker Change: The U S dollar 24 million, representing an increase on the 1% to nine 2% compared to the S&P area, albeit 2023, we maintain our outlook for the year with total revenue expected to be between.
Speaker Change: U S dollar 19, 5 million and the U S 110 million, representing an increase of 11% to.
Speaker Change: 238.
Speaker Change: Full year 2023.
Speaker Change: I will now turn the call over to Mr.
Yimeng Shi: We'll go over our operational and financial timelines for the first quarter of 2024. Average Daily Active Terminus, DAT, is an important metric for us as it measures customer usage trends over the period and is effective for business performance. In the first quarter of 2024, average DHE was... 309,906 of which 13,622 were owned by the company and 296,284 were owned by our business partner, representing an increase of 1.9% from 304,121 in the first quarter of 2023.
Speaker Change: Thank you Mr. Chen Hello, everyone. Let me go over.
Speaker Change: Operational.
Speaker Change: It's kind of nice.
Speaker Change: This quarter of the 2024.
Speaker Change: Average daily active terminals D O T. It's been imported appraising metric.
Speaker Change: In misha customer usage trends over the periods and effective about business performance.
Speaker Change: In the first quarter absent any soul Hello, Richard Phd.
Speaker Change: 309906 of which 13622 owned by the company and.
Speaker Change: 296000, and 284 owned by alternate punish the.
Speaker Change: Representing a increase of one 9% from.
Speaker Change: 304 for Sundance and the 121 in the first quarter 'twenty necessary. During this first quarter attempt any full 57, 9% of D. A key for the from you cannot link 1.0 International data connectivity service and a 42 one points.
Yimeng Shi: During the first quarter of 2024, 57.9% of DAT was from Ucloudlink 1.0 International Data Connectivity Service, and 42.1% was attributed to Ucloudlink 2.0 local data connectivity service. In March 2023, the average daily data usage per terminal was 1.56 gigabytes, 1st of March to 31st.
Speaker Change: Pointing to 1%.
Speaker Change: Was that your beauty to 2.0.
Speaker Change: Local debt connectivity service in <unk>.
Speaker Change: Much of 2023, the average daily data usage per terminal was 176 gigabyte.
Speaker Change: As of March.
So the first.
Yimeng Shi: 2024. The company had 178 patents, with 141 approved and 37 pending approval. Meanwhile, the pool of SIM cards was from 382 MNOS globally as of March 31, 2021.
Speaker Change: Tucson 24, the company had 178 patents with 141 approve and its 37 pending approval why are you the same cost up from 382.
Speaker Change: S globally.
Speaker Change: March 31st 2021.
Yimeng Shi: Total revenue from the first quarter of 2024 was $18.1 million, representing an increase of 0.7% from $18 million in the same period of 2023. Revenue from service in the first quarter was $13.5 million, representing an increase of 4.8% from revenue during the first quarter of 2023, up from 71.7% during the same quarter last year. Geographically speaking, during the first quarter of 2024, Japan contributed 40.9% of our total revenue, North America contributed 16.8%, Mainland China contributed 25.3%, and other countries and regions contributed their... remaining 17% compared to 43.1%, 33.6%, 5.1%, and 18.2%, respectively, in the first quarter of 2023.
Total revenues in the first quarter 2024.
Speaker Change: $18 1 million, representing an increase of <unk>, 7% from $18 million in the same period, a 23 revenue from service in the first quarter was $13 5 million, representing an increase of four 8% from.
Speaker Change: $12 $9 million in the same periods of 2023.
Speaker Change: From service as a percentage of total revenue was 74, 7%.
Speaker Change: During the first quarter totally full.
Speaker Change: From 71, 7% given the same quarter last year.
Geographically speaking during the first quarter 'twenty for Japan contributed 49% of our total revenue lost Americas contributed 16, 8% mainland China contributed 25, 3% in the other country in the regions can you beat it.
Speaker Change: The.
Speaker Change: The remaining 17% compared to 43, 1% 33, 6% five 1% and 18, 2% respectively in the first quarter of 23.
Yimeng Shi: Our gross profit rose to $10 million in the first quarter of 2024, representing an increase of 60.3% from $8.6 million in the first quarter of 2023. Overall gross margin in the first quarter of 2024 further rose to 55.2% from 43.8% in the same period of 2023. The gross margin on service increased to 65% in the first quarter from 60.5% in the same period of 2023, excluding share-based compensation.
Speaker Change: Gross profit rose to 10 million startup in the first quarter of 24.
Speaker Change: <unk>, an increase of 63% from $8 6 million in the first quarter of two in dentistry.
Speaker Change: Gross margin in the first quarter 'twenty any fault further rose to 55, 2% from 47, 8% and same theories attempting a story.
Speaker Change: The gross margin.
Speaker Change: On the service increased to six 5% in the first quarter from 65% in the same period of 2000 and history.
Yimeng Shi: Total operating expenses were $8.5 million, or $0.47 of total revenue, in the first quarter of 2024, compared to $6.9 million, or 38% of total revenue, in the same period in 2023. Net income was $0.4 million in the first quarter of 2024, compared to $2.1 million in the same period in 2023. Adjusted EBITDA was $1.7 billion in the first quarter of 2024, compared to $2.1 million for the same period of 2023. For the first quarter of 2024, we achieved an operating cash inflow of $1.9 million, up from $1.6 million for the same period of 2023.
Speaker Change: Excluding share based compensation total operating expenses were $8 5 million startup all 47 of the total revenue in the first quarter of 'twenty, four compared to $6 9 million or so.
Speaker Change: 8% of total revenue in the same period in 2023 net income was <unk> 4 million in the first quarter of 224 compared to $2 1 million U S. Dollar in the same period of 2000 history. Adjusted EBITA was $1 7 billion dollar in the first quarter.
Speaker Change: Cause any fault compared to $2 1 billion dollar for the same period, a Tucson 'twenty three.
Speaker Change: For the first quarter Tucson, 'twenty four we achieved an operating cash inflow of $1 9 billion up from $1 6 million installer in same period of 2023 for the first quarter of 2024, our capital expenditure was <unk> 6 million.
Yimeng Shi: For the first quarter of 2024, our capital expenditure was $0.6 million, compared to $0.4 million in the same period of 2023. We maintained a solid balance sheet with cash and cash equivalents, increasing to $24.7 million as of March 31, 2024, up from $23.4 million as of December 31, 2023. With that operator, let's open it up for Q&A.
Speaker Change: This compare to a point for bidding Stella in same period in Tucson, and history, we maintained a solid balance sheet with cash cash equivalents, increasing to $24 7 million. That's much 30 says Tucson 24 up from $23 4 million.
Speaker Change: U S dollar as of December 31st two sided 23 with that operator, let's open it up for Q&A.
Speaker Change: Yes.
Speaker Change: Certainly thank you.
Operator: We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been answered and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Theodore O'Neill, from Litchfield Health Research. Please go ahead.
Speaker Change: We will now begin the question and answer session.
Speaker Change: To ask a question you May Press Star then one on your Touchtone phone.
Speaker Change: If youre using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: At any time your question has been addressed and you would like to withdraw your question.
Speaker Change: Please press Star then two.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: The first question comes from Theodore O'neill.
From Litchfield Hills Research. Please go ahead.
Unknown Executive: Thank you very much and congratulations on a good quarter. My first question is about the good profit margins in the quarter, and I was wondering if you could talk about why those numbers came in so well. Is it a pricing issue? Was it mixed? Give us some more detail on how you were successful in the gross profit margins in the quarter.
Speaker Change: Thank you. Thank you very much and congratulations on a good quarter.
Unknown Executive: My first question is about the good profit margins in the quarter and I was wondering if you could talk about.
Speaker Change: Why those numbers came in so well is it a pricing issue was it mix them give us some more detail on how.
Speaker Change: You were successful in the gross profit margins in the quarter.
Unknown Executive: Yeah, thanks Leo. Let me answer the first question.
Speaker Change: Oh, yeah. Thanks Leo.
Speaker Change: Let me answer the first.
Speaker Change: First question.
Unknown Executive: Yes, as we disclosed, the service gross margins are improving significantly in the first quarter of 2024 from 64% to 65% on the service part. The main attribution for this improvement is improving the proportion of international roaming service. The DAT of roaming service is more than 53%. So that's the major contribution from improving the proportion of international roaming service. Yeah, that's a major contribution.
Speaker Change: Yes.
We reached close there's Oh service gross margins are improving sick leave into the east in the first quarter 'twenty 'twenty four two from 660% to 65%.
Speaker Change: On the service part.
Speaker Change: And the men attributions for this improvement is improving.
Speaker Change: Propulsion.
Speaker Change: International roaming service as we are.
Speaker Change: Proportions.
Speaker Change: Is.
Speaker Change: The D O T a S.
Speaker Change: I will miss a relation of the roaming service is more than 53%, so and that the major contributions.
Speaker Change: From the E P.
Speaker Change: Proving the proportions of bromine and bromine services Yeah. That's that's a that's a major contribution I also we are with its close sauce.
Unknown Executive: Also, we disclose our SaaS. [inaudible] So looking forward to this year, we expect that as the recovery accelerates in international roaming travel, our roaming service revenue will be improving in the next couple of quarters. So we expect this higher service cost margin will be maintained in the next couple of quarters. And here we have more revenue from the new product service related to, for example, global missing sales, which is a no margin service. So overall, we expect this year the driver for this performance will be the main driver is the international roaming service. So that's my answer to your question. Thank you, and m-m-m-m-
Speaker Change: Our sources of revenue in the first quarter, improving compared with last year as well so there's a there's two sectors.
Speaker Change: The high gross margins, so which will contribute our cyclical improvement in our.
Speaker Change: Gross margins on service.
Speaker Change: So looking forward to this year's.
Speaker Change: We expect that Oh.
Speaker Change: Recoveries are celebrities in the international roaming.
Speaker Change: Travis.
Speaker Change: And we all our roaming service revenue will improve.
Improving.
Speaker Change: I said in the past couple of quarters. So we expect this this higher services gross margin will be maintained in a in the lakes are a couple of quarters and tiers. We have are more rare.
Speaker Change: Revenue from the new our new product service related parameters.
Speaker Change: <unk> seen sales, which is a no margins service so.
Speaker Change: Overall, we expect this year the fever for this for this our performance is the main driver is the is our in the launch and that will mean a service. So that's the answers to your questions.
Unknown Executive: Thank you. And my next question is about GlobalMe Life.
Speaker Change: Thank you.
Speaker Change: My next question is about vocal my life I was wondering is there in terms of expenses to launch that product.
Unknown Executive: I was wondering, in terms of expenses to launch that product, obviously, there's going to be some expenses associated with the Paris launch of it, but is there any substantial CAPEX or R&D expense that we should associate with this new product line, or is this primarily unlocking features that were already existing in the systems that you're selling?
Speaker Change: There's going to be some expense associated with the Paris launch of it but is there any substantial capex or R&D expense that we should associate with.
Speaker Change: This new product line or is this primarily unlocking features that were already existing in the system six you're you're you're selling.
Speaker Change:
Unknown Executive: Yeah, let me let me answer this investment in this new product, Glow Me Live. And now about the opportunities for this new business. I will pass this question to our CEO, Mr. Chen. So yeah, as we disclosed, we invest in this new product development. So in the first quarter of 2024, the headcount related to R&D is 148, which is 10 more headcounts compared to the same period as last year.
Speaker Change: Yeah, Let me let me.
Speaker Change: And so these are.
Speaker Change: The investments on this.
Speaker Change: The new products, the Columbia life and now.
About opportunities for there's a news news Ben as well.
Speaker Change: Pass this question to our CEO Mr. Chen.
Speaker Change: Yeah.
Speaker Change: <unk>.
How can we just close on that.
Speaker Change: As are we.
Chaohui Chen: We invest we invest them on this new product developments so in the first quarter of 2024.
Chaohui Chen: I was the head counts and the head count related to R&D.
Chaohui Chen: Is.
Speaker Change: 148, head accounts, which is a 10 10 mohit accounts compared to the same periods last year's R&D.
Unknown Executive: But the most investment, headcount on investment, is for sales and marketing departments. So for the end of the first quarter of 2024, the headcount for sales is 183 employees, which is 50 more than the headcount of sales and marketing departments in the same period of 2023.
But the most.
Speaker Change: Okay.
Speaker Change: Oh, you missed them.
Speaker Change: Is that for sales and marketing departments, so for their first cope with it.
Speaker Change: For the end of the first quarter to something for the head count for sales is 183 head counts.
Speaker Change: Which is a 50 50 more than they hate accounts, our sales and marketing departments in the same period, a Tucson and history, so that we invest.
Unknown Executive: So thus, we invest in headcount a lot in sales and marketing. We expect this will support our unveiling of opportunities in our traditional Wi-Fi business and also in the new business as well. We launched three new business lines this year on top of the Wi-Fi down goals. So I think I'll pass the question to Ms. Chen to give more comments on this opportunity for Columbia Life.
Speaker Change: You missed the head counts a lot on sales and marketing we.
Speaker Change: We expect well, which will support all of them there.
Speaker Change: Opportunity in all of us.
Speaker Change: Traditional <unk>.
Speaker Change: Wi Fi wildfires, but then there's also some new and new business as well.
Speaker Change: We launched a suite of new business nine this yes on the on that.
Speaker Change: On the top of the Wi Fi done goes so I think part of the question to Mr. Chan to give more colors on this opportunity for Columbia knife.
Chaohui Chen: Yeah, so you know, for global green life, you know, we mentioned here, I think like a way we can launch our product in the next next week. So we have a meeting, we have an event, a launch event in Paris, in Vivo, 2023. So I think, of course, we increase R&D for the headcount, not so much, but more efficient. And also, we have used because, you know, most of our R&D, so we, during COVID-19, we already did the R&D in this 4.9.
Speaker Change: So oh Crookery lives.
Speaker Change: We mention here I think Nicola our way with our launch our product in the next.
Speaker Change: Next week, so we have meeting.
Speaker Change: Ben.
Speaker Change: A launch event in Paris and in vivo.
Speaker Change: The 10 to 20.
Speaker Change: So I think.
Speaker Change: We increased.
Speaker Change: Increased R&D for the head count no so much but more accretion.
Speaker Change: So suddenly you have use because in a major U L. A and D. So we during the COVID-19, we already are.
Two the R&D in this will put them on now is the time for Lee and we we suite are critical for the for the new product. So.
Chaohui Chen: Now is the time for us, for the new product. So, of course, I think we will continue to invest in this R&D, including AI, in the future. We already have a lot of research and R&D for not just the current product but also for the long-term product. So we run about 10 to 15% of our R&D cost, expanding it two or three years later.
Speaker Change: Of course, I think we will continue to invest in this R&D, including the eye in the future. We already have a lot covered on our research and the R&D for the economy.
Speaker Change: In a long time for that so we at Apollo.
Speaker Change: I apologize.
Speaker Change: 10% to 50% of our R&D cost is spending in the two or three years now you said isn't it.
Speaker Change: Yeah.
Unknown Executive: Thank you very much.
Speaker Change: Okay. Thank.
Speaker Change: Thank you very much.
Speaker Change: Yeah.
Speaker Change: Thank you.
Wei Zhang: The next question comes from the line of Vivian Zhang from Diamond Equity Research. Please go ahead.
Speaker Change: The next question comes from the line of Vivian Zhang from Diamond Equity Research. Please go ahead.
Wei Zhang: Hello, hello. This is Vivian with Diamond Equity Research. Congratulations on the quarter. Most of my questions have been answered, I think, regarding selling expenses. So we see the company's L&M expenses increased over 38% in the quarter, while product sales were down about 10%. So I'd like to know how you are allocating resources to drive product sales. Thanks.
Wei Zhang: Hello, Hello. This is that they then we've done a good fish congratulations on the quote here most of my questions have been answered I think how long regarding the selling expenses.
Speaker Change: We see the companies often expenses increased over a 38% in the quarter well the product sells well, it's down about 10%. So I'd love to know how you are allocating like they.
Speaker Change: But historically, it's to drive the product now.
Speaker Change: Thanks.
Unknown Executive: Okay, let's further explain this expenditure related to sales. As I just mentioned in the previous questions, the sales expenses are increasing due to the headcount. 50 more headcounts have increased compared with the same period last year.
Speaker Change: Okay.
Speaker Change: And that's it.
Speaker Change: Further explain this this expenditures related to the sale.
Speaker Change: Yeah as I just mentioned just mentioned in the previous questions.
Speaker Change: Then there's the sales expenses are increasing.
Speaker Change: Due to the head counts.
Speaker Change: 50, more headcounts increase compare compared with the same period of last years.
Speaker Change: And then there's the sick teams are is are we English the.
Speaker Change: Additional.
Unknown Executive: $7.7 million on promotions and marketing, like exhibitions. We mentioned the Barcelona exhibitions and CES, CES in America, and also the marketing events and promotions on eCommerce platforms. So we believe this promotion is beneficial to awareness of our brand name, Global Meats, and we are also preparing for launching a new product. We mentioned we have four Business 9, and three Business 9 will be expanding and will be launched and commercialized in the near future. So we expect our revenue guidance for this year will maintain this guidance for the whole year, as mentioned by our CEO, Mr. Chen. So when our revenues increase in the next couple of quarters, I believe that the OPEX margin will be lower and improving compared with the first quarter of this year. Thank you. Yeah, let me add some color.
Speaker Change: And then a point $7 million on promotions and marketing like our exhibitions.
Speaker Change: When mentioned plus a little exhibitions honestly, yes. She is in in America and also the marketing events and promotions on E. Commerce platform. So we are we believe there's a there's a promotions is Ah Ah is a benefit.
Speaker Change: Q2 awareness our problem Deans are named Galago knees and also we are we are preparing for launches a new product.
Speaker Change: We mentioned we have a full a full finished nine.
Speaker Change: And three a bench line will be a waiver spendings and launch and commercialize in the near future. So we expect all our revenue guidance for this year and is a women tend as a guidance for the whole, yes, as I mentioned by our CEO Mr. Chang.
Speaker Change: So the way we our revenues.
Speaker Change: Increase in the lakes.
Speaker Change: A couple of quarters I believe.
Speaker Change: The the opec's opec's, our margin will be will it be as.
Speaker Change: Lola and improving.
Speaker Change: In the compared with the first quarter of this this yes.
Speaker Change: Thank you.
Speaker Change: And there's some kind of so I think that's totally a three point the first point to a lot of spending in our in our marketing and sales to the size of the increases because we lived recovery now worldwide.
Wei Zhang: So I think that, overall, it's three points. The first point is our spending in the market and sales size increases because we're recovering the worldwide, our sales team, and marketing worldwide for different countries after COVID-19. Second, we are preparing the resources and a campaign for the headcount and in the Chinese market for sales and marketing. Because the summer season is coming, we need a quarter early to prepare for all these resources and preparations.
Speaker Change: Our sales team and marketing are well liked for different countries. After COVID-19.
Speaker Change #100: The second.
Speaker Change #100: We are prepare the resource and a campaign for the.
Speaker Change #101: <unk> had come in in China market for the sales and marketing because the summer season is coming we need.
Speaker Change #101: Quarter to prepare for all these resource and preparation and number three is our you know are we preparing for the new product and a fuller event in our spending Oh, So as you know this.
Wei Zhang: Number three is we prepare for a new product and for the event and the spending also. This is a new product, like an e-sim and a sim card, and Global Midlife is more to say business to consumer business, and that's totally new for us in some regions. So we need to prepare for this marketing campaign.
Speaker Change #102: So you said new products like a siem Siem caught and Brooklyn, the life is a mall.
Speaker Change #102: <unk> business to consumer business, and that's a totally new for us.
Speaker Change #102: In some region, so we need to prepare for this marketing campaign.
Speaker Change #103: Yep. Thank you.
Unknown Executive: Okay, I got it. Thank you. That's all. Thank you.
Speaker Change #104: Okay got it. Thank you that's all thank you.
Speaker Change #104: Thank you.
Unknown Executive: Again, if you have a question, please press star, then 1, and others. The next question is from the line of Xin Li from China Great Wall Securities; please go ahead.
Again, if you have a question. Please press Star then one.
Speaker Change #104: Okay.
Speaker Change #104: Yeah.
The next question is from the line of Shan Li from China, Great Wall Securities. Please go ahead.
Yeah.
Unknown Executive: Hi, this is Xinyi from China Great Wall Security, and many questions have also been answered before. I have a question and want to get more details, because we got like 18 million in the first quarter, and we expected to have revenue between 20 to 24 million. And for the whole year, we also have very positive expectations. So I want to know, do we have any foreseeable or stable sales orders for our new products?
Shan Li: Oh, Yeah, hi.
Speaker Change #106: You can choose from China.
Speaker Change #107: Oh, great sponsor community and.
Speaker Change #107: Hum.
Speaker Change #107: Okay.
I'm I'm, sorry, before I have a question and I wanted to get some more detail them because we like.
Speaker Change #107: Like 18 million.
Speaker Change #107: The first quarter and are we expecting them to have like a revenue.
Speaker Change #108: <unk> tonnage up to 24 million.
Speaker Change #108: For the whole year. Our we also have a very like puppies expectation. So how long do they have them like foreseeable all stable South, Florida like our new products.
Unknown Executive: For the, let me answer a bit first. For this reason, the guidance for the second quarter is $22 million to $24 million. Yeah, we, this, the range of outlook for the second quarter is will show a small, a small growth compared with the same period last year, a lot of very significant. But we, but the peak selling time is the summer, summertime, which is the third quarter. And also, we, we have, we have a launch, launch this new product in this, in this, this May. And we have an event in Paris where we will launch this new products, Gourmet Life related products in Paris this, this month.
Speaker Change #109: And for the and then my name is I'm just a bit.
First for this.
Speaker Change #109: The guidance for the second quarter of.
20, 22 million to 24 millions yeah.
Speaker Change #109: We are there's a there's a the range, but I don't look for this for the second quarter is a where show a small a small gross.
Speaker Change #109: Compared with the same period of last years, a lot of very significant but we.
Speaker Change #110: But the peaks the peaks.
Speaker Change #110: Since that time is that there's some summer time.
Speaker Change #111: Which is the third quarters and so and also we are we have a we have a lunch launch this new product.
Speaker Change #111: In this in this that isn't just made them, we have how 'bout event in Paris, where well where lunch lunch and there's a new producers are going to be life related to put us in.
Speaker Change #111: In Paris.
Speaker Change #111:
Speaker Change #111: This month.
Unknown Executive: So we expect that all the new product sales will generate revenue in the third quarter and fourth quarter as well. So we maintain this guidance for the whole year, which is $95 million to $112 million. Yeah, so some more comments.
Speaker Change #111: So we expect the olden do you are you a product with sales.
Speaker Change #111: Generally it into a really accounts are in the third quarter and fourth quarter as well. So we are we maintain this oh the whole years, that's the guidance, which is at $95 million to one just half a million dollars.
Unknown Executive: Our traditional portable Wi-Fi business is very stable and close because we can see that in the first half years, Japan and China are the major markets. So I think global travel is not as close as we expected. It is slightly close.
Speaker Change #112: Yeah. So some some will come in and our traditional portable last night business, a very stable gross because.
Speaker Change #112: Because we can see that in the first half years, Japan, and China, all major market. So the no I've seen that Trevor a global travel is no close as expected it is slightly a cruise.
Unknown Executive: It continues to grow, but the recovery speed is lower than our expectations. So that's one of the reasons. And for the new product, we just launched it in the second quarter, and we generated revenue from Q3, Q4. Mostly, I think it comes from Q4. Because of this new product, there is a big potential. So that's why we also have some uncertainty. So that's why we still keep the same forecast.
Speaker Change #113: The continued growth.
Speaker Change #113: Recovery speak it's no wonder our expectation so that's one of the reasons and for the new product. So we just launched it in the quote in the second quarter and we have generated a you know ER revenue from Q3 Q4 major themes come from Q4 because of these new product yeah.
Speaker Change #114: A big potential. So that's why we are also starting to have some uncertainty. So that's why we still keep the same you know our forecast.
Unknown Executive: Okay, yeah, thanks for the answer. I have no questions. Thank you.
Speaker Change #114: Okay Yeah.
Speaker Change #114: Okay.
Speaker Change #115: I have no questions. Thank you.
Thank you.
Operator: Ladies and gentlemen, there are no further questions at this time. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Thank you once again for joining us today. If you have further questions, please feel free to contact Ucloudlink in virtual reality.
Speaker Change #116: Ladies and gentlemen, there are no further questions at this time the.
Speaker Change #117: The conference has now concluded.
Speaker Change #118: Thank you for attending today's presentation you may now disconnect.
Speaker Change #118: Uh huh.
Unknown Executive: Thank you once again for joining us today. If you have further questions, please feel free to contact Ucloudlink Investor Relations through the contact information provided on my website, or speak to our Investor Relations firm, Chris Tanton Advisory. We look forward to speaking to you all again on our next quarterly call.
Speaker Change #119: Thank you once again for China activity.
unknown: [inaudible]
If you have further questions. Please.
Speaker Change #119: Feel free to contact you heard anything back to emulation.
Speaker Change #119: The contact information provided on our website.
Speaker Change #120: Victor in batch irritation.
Speaker Change #120: Chris Thompson and my summary.
Speaker Change #120: We look forward to speaking to you all again on our next country.
Speaker Change #121: I want to recall.
Speaker Change #121: Yeah.
Speaker Change #122: Thank you.
Speaker Change #122: Okay.
Speaker Change #122: [music].
Speaker Change #122: Yes.
Speaker Change #122: [music].