Q3 2024 uCloudlink Group Inc Earnings Call
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Hello, and welcome to the New Cloud Link Group, Inc. Third quarter 2024 earnings Conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing Star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask question.
To ask a question you May press Star then one on your telephone keypad to 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 Daniel Gao Investor Relations of U Cloud link. Please go ahead.
Speaker Change: Hello, everyone and thank you for joining us on the nucleus. So the quarter to sell them 24 earnings call. The earnings release on our earnings presentation I know available.
Speaker Change: Oh I got website.
Speaker Change: Do you play Dot com joining.
Speaker Change: Joining me on today's call are Mr. Impulse co founder and Chairman our board of Directors, Mr. Tong <unk> co founder director and the chief exactly obese or items.
Speaker Change: Mr Moshe Chief Financial Officer.
Speaker Change: Mr. Chen will begin with an overview of our recent highlights.
Mr. Chen: Well without these costs our family so I don't know operational highlights for the quarter.
Speaker Change: We'll both be available to take your questions.
Mr. Chen: Joey section.
Speaker Change: Before we proceed. Please note that this call may contain forward looking statements made pursuant to the safe Harbor provisions of our pivot Socrates looking at yes.
Speaker Change: Lee neither shouldn't really fall off.
1990 495. These forward looking statements are based on management's current H H.
Speaker Change: It used to be patient on the survey shows that they involve alone.
Speaker Change: Uncertainties and other factors not under components control.
Speaker Change: You may cause actual results performance and our two minutes over that from 'twenty to be a mess it really different from the results performance or interpretation is amputation implied by these forward looking statements.
Speaker Change: All forward looking statements are expressly qualified in their entirety by the book.
Speaker Change: Traditional restatements basics bachelors and detail all of the components feelings ways of ICSC.
Speaker Change: <unk> does not assume any obligation to resource 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.
Speaker Change: Please also note that Youll cleans the earnings press release on the timber is kill include discussions of Nokia's G. A a P financial information and attitudes men's J P financial matters.
Speaker Change: Nucleus press released conscious.
The accreditation.
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Directly comparable.
A P measures.
Mr. Chen: I'll now turn the call over to Mr. Chen. Please go ahead.
Mr. Chen: Thank you Danielle and good morning.
Everyone. We've continued to gain growth momentum during the quarter with revenue increasing five 6% year on year to U S dollar $25 2 million in language.
Mr. Chen: Patients.
Mr. Chen: Our financial position remains solid.
Mr. Chen: With a net income rich U S dollar three plentiful minions.
Mr. Chen: Positive net cash inflow from operations all U S dollar to appoint a zillow muni.
Mr. Chen: During the quarter with what he really enhance our market presence.
Mr. Chen: Well I'll go call me ecosystem continues to thrive offering comprehensive solutions and I was not.
Mr. Chen: Including political and the like.
Mr. Chen: Well, let me see hang Brooklyn with Iot.
Mr. Chen: That's driving a lot of expansion beyond that tell us that.
Mr. Chen: Into various aspects of daily life.
Mr. Chen: <unk> pilot well does consolidation.
Mr. Chen: <unk> position in a lonely marquee so call me mobile baseball bat.
Mr. Chen: This expanding ecosystem is broadening our portfolio of solutions.
Mr. Chen: Allowing us to Qatar.
Speaker Change: Why Theyre battery kit.
Speaker Change: Does that mean.
Speaker Change: First let me stop wasting the progress we haven't met he also tell me more about baseball business not.
Speaker Change: One point, though in a nation that they tightened up here with you said with space.
Speaker Change: Our business continued to grow with full speed 15 megawatt courage, increasing from 75 countries and reached 50.
Speaker Change: The second quarter of 2020, we'll see early pilot.
Speaker Change: While the recovery of information that Teva and the increasing demand across our key market.
Speaker Change: Third we further consolidate our leading position in the market.
Speaker Change: Hendi.
Speaker Change: Thank you Shea in mainland, China and Japan.
Speaker Change: This growth highlights the strong performance of Chinese travelers from our survey.
The peak summer season.
Speaker Change: He and his pending settlement.
Speaker Change: I want a nation that's data that he was here.
Our next generation plausible fine pull that integrate with hydro constitution, where it belongs in the near future.
Speaker Change: Called into a more by economics.
Speaker Change: Our 2024 report stronger global system for mobile Communications, a south Asian.
Yes.
Speaker Change: The global number Apache connections if back to like 251 to 5 billion by year 2034, 1 billion at the end of the year 2000.
Speaker Change: And history.
Speaker Change: Secondly, no forced the three cocoa Milan I don't rely solutions, which include.
T Chek a.
Speaker Change: The only call and long products.
Speaker Change: Meg a synchrony so uniquely come progress even in the quarter with low all healthy monkey come head and he read is that a new distribution channel to support their lunch.
Speaker Change: Building, what we believe will be a problem, we've seen new revenue stream going forward.
Speaker Change: Following the introduction of our program in lifeboat serious.
Well technology in vain.
Speaker Change: Serious commercial launch in July it's wasn't plentiful, we further enhance our market exposure.
Speaker Change: Attending other leading cobalt is post such as how 'bout meet Asia pet that is pulp and I'm sorry 2024.
Speaker Change: Is that true.
Speaker Change: As you know, we make breakthroughs in developing repurchase.
Speaker Change: Signing with Wanda American not just the asphalt repair channels to union call long time ago and keep track.
Speaker Change: Among the products.
Speaker Change: Oh available at Paul across the U S.
Speaker Change: We have developed strategies partners ships with other key channel partners across the U S and Europe in the coming quarters with the other solution already.
Speaker Change: Government, we're looking forward to launching more new logos in the coming quarters.
Speaker Change: The third waiting a lot broadcom, you've seen even as we continue to expand the market person.
Oh, well often oh the M C.
Speaker Change: The more you as a rooftop ascribe to our days have planned stomach.
Which is having the wait for all like in no way keep all Siem solution. This solution, which consolidates O T. A C E C L.
Speaker Change: Pioneered cloud tech knowledge.
Speaker Change: I mean, how much of a testing and expect to commercially launch in the near future.
Speaker Change: While all Siem solution is uniquely position to correct cost carrier restrictions empower various muscle and set a new pioneer industry benchmark for more pad connectivity and convenience.
Speaker Change: Lastly, although.
So they'll call me by all key business, none continue to otherwise.
Speaker Change: With a cellular embedded our technology in a smaller scale commercial application.
Speaker Change: Most trading no strength and capabilities of our solutions.
Speaker Change: For all of their audience in the Iot industry.
Speaker Change: Leveraging our software cloud technology compatible with various Iot device chipset Pittsburgh.
Speaker Change: We are exploring additional applications scenarios as we engage with.
Speaker Change: We've several of reading favorite I reading and manufacturers in the security IP cannot.
Speaker Change: Basketball canola and related sectors.
We believe that that's a condition empower better like we have continued to leverage should go come alive.
Speaker Change: Let me see.
Speaker Change: I O T.
Speaker Change: And they are integrated in no way he call hyper Colo and cloud the same solutions to expand our global presence through a business partner and channel globally.
Speaker Change: While the past 10 years like local me mobile at all been business has accumulate millions of yours are AC.
Speaker Change: The average daily.
Oh, the a T in the third quarter.
Speaker Change: Uh huh.
Speaker Change: Certainly 200000.
It's Patty Propylamine life business, we accumulate a broader user base, who or what $10 million.
Speaker Change: Furthermore, all of both of the co Coleman C and in California, The Iot business.
Have a potential to bring us and use that as a 100 million in the future.
Speaker Change: Which will allow us to transition from a provider of mobile data hawkish solutions to an internal gate.
Speaker Change: Integrated and comprehensive marketplace.
Speaker Change: With each of the business.
Speaker Change: Facing into this marketplace with respect our user base towards diversifying beyond that have a sector and grows.
Speaker Change: Substantially going forward.
Speaker Change: We are hoping to land we have the right strategy in place to a generally soft 10 about growth in the coming quarters.
Speaker Change: First quarter of year 2024, we expect total revenue to be between U S. Dollar 25 million and U S. Dollar 30 media.
Speaker Change: Representing an increasing.
Speaker Change: 15 point of 2% to 38, 2%.
Speaker Change: Compared to last N P area of year 2000.
Speaker Change: Great.
Mr Suite: I will now turn the call over to Mr Suite.
Mr Suite: Thank you, Mr Chang and Hello, everyone.
So over our operational and financial highlights.
Mr Suite: Third quarter of 2024.
Mr Suite: Average daily active terminals.
Mr Suite: Operating metrics for us as it may shows chest about usage trends.
Mr Suite: Curious.
Mr Suite: Which is reflective of our business performance.
Speaker Change: Average daily active tell me that Oh D. A T in the third quarter was 320452.
Speaker Change: Of of which 55.4% well from you crawling one point al International data connectivity service and 44.6% from <unk>.
Speaker Change: 2.0, local debt 50 service average daily data usage for terming up one point 52 gigabytes in September Tucson plentiful.
Speaker Change: At September 32 sometime before the company had Sars to solve than 759 fitness partner in 61 countries and regions.
Speaker Change: The company had 183 patents with 158 approve and twenty-five pending approval.
Speaker Change: Why is the pool of Sim cards from 389, and an OS globally as of September 32 started in 'twenty four.
Speaker Change: Revenue was $25 2 million, representing an increase of five 6% from.
Speaker Change: $23 9 million dollar in so quarter of Tucson, 23 revenues from service well was $17 3 million, representing an increase of three 9% from $15 6 million you start up the same theories of Tucson Twentyish three.
Revenue from service as a percentage of total revenue was 68, 6% during the third quarter of Tucson 24.
Speaker Change: We men reluctantly stable when compared to 69, 7% during the same period last years.
Joe Joe course kind of speaking steering is so quarter of a Tucson 20 full Japan can you go to 46.6% mainland China contributed 27, 8% loss of America contributed two 8% in all the countries and regions contributing.
The remaining tariff one 8% compared to 44, 2% 17, 2%, 23% and a 12, 3% respectively. In the same period 2023.
Speaker Change: Overall gross profit was a trigger point $19 million compared to 21 million you saw that in the same period 2023 overall gross margin was 48, 4% and so quarter of Tucson, 24, compared to 51, 2%.
Speaker Change: Same period 2023.
Speaker Change: Gross margins on service increased to Ctrip sand, so quarter, two shrunk any fall from 55, 9% in the same tier Tucson twenty-three gross margins on production decreased to 23 point of 1% so quarter Tucson plentiful from 40 41.
Speaker Change: <unk> same tier yourself to send 23, excluding share based compensation total operating expenses were $9 $7 million or 39% of total revenue in the third quarter 2024, compared to $8 seven plus $8 7 million you'll start up.
Speaker Change: 36 of the total revenue.
I'm curious in Tucson and history.
Speaker Change: Net income was three point, Nicole millions dollars compared to $3 5 million dollar in the same period of the Tucson in 'twenty three.
Adjusted EBITDA was $4 4 million you saw that in the quarter of Tucson, 24, compared to $4 1 million dollar for the same period 2023.
Speaker Change: So quarter Tucson, 24, we generated operating cash inflow of 2 million U S dollar compared to $2 8 million Stella in same period of 2023 for the third quarter. Two saw that 24 capital expenditures were one point or 1 million U S dollar compared to.
Speaker Change: 2.8 million he started out in the same period 2023.
We maintained a solid balance sheet with cash cash equivalents, increasing to 27.7 millions.
Speaker Change: September 30, Tucson, 24 up from $26.8 million as of June 30, Tucson plentiful with that operator, let's open the call for Q&A.
Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad. If you were using a speakerphone. Please pick up your handset before pressing the keys if at any time. Your question has been addressed and you would like.
Speaker Change: To withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
Speaker Change: The first question comes from Theodore O'neill with Litchfield Hills Research. Please go ahead.
Speaker Change: Thank you.
Speaker Change: Congratulations on the results in the quarter.
Speaker Change: I just have a couple of questions.
Speaker Change: My first question is about the the awesome solution.
Speaker Change: And your expectation that it will launch commercially launch in the near future can you give us an idea of what sort of milestones you.
Have to meet in order to get to their commercial launch stage.
Speaker Change: Yeah.
Ah Tony television and see a real counting so upon Oh seems first in the beginning I believe three years, we really get the experience from the same kind of business. We already said along the toll hot nearly 300 saw was solid.
Speaker Change: Okay.
Speaker Change: So we are now understand how to play in this industry. So Oh, Oh seems so which is also another name is Ah you seem to feel its official name and the way. It belongs AR at the end of the fourth quarter.
Speaker Change: So that's the first milestone so we were launching the product and this product I think is a we call it.
Speaker Change: Currently our best or your second <unk>.
Speaker Change: For a for those people who has origin assume cotton we are the best I've seen comp for choice because of we overcome the closest comp limitation for roaming.
Speaker Change: <unk> also.
Speaker Change: For domestic Ah Ah they took on it he was hey, fallout congestion and a coward courage Easter Oh, Oh, Canada finally seem to have gone up.
Speaker Change: Flexibility after the data package. So oh, so listen we are 40, something you seem challenging about.
So what do you think has the biggest challenges for at that Oh handset or some handset so when the weekend, our hosting cut that to all our handset.
Speaker Change: Also so we can suppose.
Speaker Change: You see in all of that is that not only has a new style of handset week, which can suppose you seem to understand that they need a new handset because of all that I think that's all the one page. So we call our wholesale is compatible with the OTC fish casino.
Speaker Change: Cassini clouds easing. So that's all a sudden wishes are unique in this industry. So I think it's quite.
Speaker Change: In a leading position in this industry. So we hope next year.
Speaker Change: We will get more promotion and a more you know let the market understand we can walking with a partner in the worldwide no coal and the carrier.
Speaker Change: With that second here also T a carrier and a mobile operator. So are we we are I think attend.
Speaker Change: And do you see to allow these news about this new solution.
Okay. That's around the progress we would have in the future.
Speaker Change: Okay and.
Speaker Change: And in regards to your guidance into Q4.
Speaker Change: Your your sequential revenue from Q3 to Q4 historically some of the quarters. Some of the Q4 quarters have been lower.
And then Q3 and your guidance here at the high end of the ranges that Q4 will come in.
Speaker Change: So much better than than sequentially.
Speaker Change: Have that growth higher growth than you've had in the past what gives you confidence that you're you could come in at the near the higher end of the range for for Q4.
Speaker Change: Okay.
Yeah.
Speaker Change: Yeah.
Speaker Change: You attention just a guidance for the first quarter. So this yes.
Speaker Change: Which is a range is.
Speaker Change: Between 25 million you start us to $30 million.
Speaker Change: Yeah in the past in the past, yes that you you say there is that the fourth quarter. Our revenue is is normally used at lower than the third quarter revenue that that's not the past patterns. Our revenues are in the.
Speaker Change: Legacy legacies are they.
Speaker Change: Legacy <unk>.
Speaker Change: It's a revenue stream from a portable portable Wi Fi yeah, but this year the fourth quarter or are we in that the guidance.
Speaker Change: There is a little bit higher than that so called test revenue.
We think oh well.
Speaker Change: Our new product like gloomy life.
Speaker Change: Gloomy life series product has been launched to the market and again, some again, sometimes that revenues in our fourth quarter as well and also.
Speaker Change: And that's a that's a trend we growth.
Speaker Change: More than just portable Wi Fi I told me that I think this trend will this trends.
Speaker Change: Various revenue streams.
Speaker Change: More than a portable total Wi Fi well wont be significant in the next years, so that that show our strategy is to strategy to grow from one finished nine two fulton's nine that's where I'll be.
Speaker Change: Coming to our accounts.
Speaker Change: This there saltwater and then in the following quarters next year.
Speaker Change: Okay that makes sense understood. My last question is about the sales and marketing expenses in the quarter.
Speaker Change: I understand there were some there was some expenses for trade shows and product launch can you talk about whether or not you expect the expense.
Speaker Change: Is in the Q3.
Speaker Change: Sales and marketing expense will continue with that level or will that will that come down somewhat going forward.
Speaker Change: Yeah.
Speaker Change: Yeah, we're we're spend more.
Speaker Change: Well are you span.
Speaker Change: More on my team.
Speaker Change: And that and different countries like the U S U S market.
Speaker Change: Japan market and European market and.
Speaker Change: As we disclosed we are we has a corporate we saw one of our biggest.
Speaker Change: Paul a retail channel.
Speaker Change: And we will.
Speaker Change: Hi, Scott.
Corporate was more that's a pump.
Speaker Change: No.
Speaker Change: And U S and European So also we will have have enhance our magazines exposure for our new new product like Columbia life.
Speaker Change: And when a gloomy seen the whole Siem solutions will be launch to the market. That's that's the solution. These are innovative to the market. So we need to invest more on the market and to get awareness of our product our values.
Speaker Change: The market, so well well well well invest the mall.
Speaker Change: <unk> market.
Speaker Change: Expenditures and that's absolutely that we where we need to do that but at the same time, we will balance the financial positions, while we support and invest in growth. So maybe that they're in marketing expenditures will be a webby.
Speaker Change: Chris.
Chris: With the balance we have still maintained a maintain gross profit.
Chris: Profit and.
Chris: Because it is operating cash flow.
Speaker Change: Thank you okay. Thank you. Thank you very much that completes my questions. Thank you.
Speaker Change: The next question comes from Vivian Zhang with Diamond Equity Research. Please go ahead.
Speaker Change: Hello.
Speaker Change: Good morning, and evening. This is live in January.
Speaker Change: Serge.
Congratulations on another strong quarter. So my first a classroom will be about the partner she'd be adjusted mentioned ways that you asked airports retail channels. So can you provide us some more color on this cooperation and how it will impact the future projects.
Speaker Change: Yes.
Speaker Change: We even though we are in the progress in the second quarter, we made a we just in.
Speaker Change: In the iPhone and we.
Speaker Change: No. We are we bought we've escape you shouldn't we announced that we would launch into a girl can rely upon that.
Speaker Change: The lunch.
Speaker Change: Our three new product Ah in July so and then after a quarter ever. So end of Q3, we signed a contract with one of the largest U S Airport a partner channel partner so.
Speaker Change: So I think if you I mean.
Speaker Change: You are really you can see in a certainly a U S air pole.
Ah in no shop, so in a post shop, you can fly off three product quote our unit call for loan problems and Oh Wow.
Speaker Change: Once a checkup so teach.
Speaker Change: So you kind of given the city's street for that so.
Speaker Change: I think they've got the launch of this product in a no win but Amit on the window. So you can see the pull that we sign the contract end up the Q3 and pull that leased in the shop.
Speaker Change: In the Middle office.
Speaker Change: No window.
Speaker Change: I can also keeps.
Speaker Change: Keeps on our guidance and in the Q4.
Speaker Change: We already signed another.
Speaker Change: And then can be the channel. So that's the that's the total tube channel in the U S. Alcohol, we all courage and the second one with the with everything we need kind of a contract.
Speaker Change: In our Q2 fall and now we're ready to put that in the next Q1.
Speaker Change: That's the progress for all our progress in the in our U S Airport channel two biggest I think in the following quarter. We will continue alpha in the other U S. A big pop.
Speaker Change: Top three channel continue to be affected by.
Speaker Change: <unk> channel buyer also so we have some breakthrough in a key was twofold. So Ah in Europe. Some big channel. So we already successfully to sign a contract and that's the progress just in them.
Speaker Change: Three or six months I think we can but through some top tier a channel in the airport.
Speaker Change: So I hope next year, we can actually more top tier channel are with the consumer or pet channel.
Speaker Change: The next few years.
Speaker Change: Okay.
Speaker Change: Got it. So my next question is that can you elaborate on why like why Paas and SaaS services revenue increase.
Speaker Change: It is good to me like over.
Speaker Change: 29% in the third quarter and is this girl.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: Yeah, we we corporate we sell a global partner and virus way and Oh I'll pause stops are revenues are there.
Speaker Change: Is mobile processor revenues they have.
Speaker Change: No way.
Speaker Change: Hi can you hear me.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Yeah, that's there.
Speaker Change: The fourth quarter past that revenues are increased significantly said cause.
Speaker Change: Some.
Speaker Change: Some up in the past.
How willing willing to pay.
Speaker Change: More a platform fee for that towards that future set for the future operations efficiencies.
Speaker Change: Prudent so that that's a that's a.
Speaker Change: Oh I've been the Peanuts choice you can't even get.
Speaker Change: There you can buy different package for our platform our service.
Speaker Change: Okay got it okay that makes sense, that's all my questions. Thank you.
Speaker Change: Thank you.
This concludes our question and answer session I would like to turn the conference back over to Daniel <unk> for any closing remarks.
Speaker Change: Okay. Thank you once again for joining us today.
Speaker Change: You have further questions. Please feel free to contact nucleus and you bought the relations through the contact information provided on our website that I'll speak to our Investor Relations Paul Kris Simpson anniversary, we look forward to speaking to you Oh, Okay. In our next quarterly call. Thank you.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Yeah.
Speaker Change: [music].