Q2 2025 uCloudlink Group Inc Earnings Call

Speaker 4: Good day and welcome to the uCloudlink Q4 2025 conference call. All participants will be in 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 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 Mr. Daniel Gao. Please go ahead, sir.

Speaker #2: After today's presentation, there will be an opportunity to ask questions. You can ask a question you may press star then one on your telephone keypad.

Speaker #2: 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 Mr. Daniel Gao.

Speaker #2: Please go ahead, sir.

Speaker #3: Hello, everyone. I'm the CTO for joining us on uCloudlink's second quarter to Southern 25, earnings call. The earnings release and our earnings presentation are now available on our AR website.

Daniel Gao: Hello, everyone. I am very thankful for joining us on uCloudlink's Q4 2025 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. Qi Pingpeng, Co-founder and Chairman of the Board of Directors; Mr. Chaohui Chen, Co-founder and Director and Chief Executive Officer; and Mr. Yimeng Shi, Chief Financial Officer. Mr. Chen will begin with an overview of our recent business highlights. Mr. Shi will then discuss our financial and operational highlights for the quarter. They will all be available to take your questions in the Q&A section that follows. Before we proceed, please note that this call may contain forward-looking statements made pursuant to the Six Harbor Provisions of the Property Securities Litigation Reform Act of 1995.

Speaker #3: At ar.ucloudlink.com. Joining me on today's call are Mr. Zhu Pingpeng, Co-founder and Chairman of the Board of Directors; Mr. Chaohui Chen, Co-founder, Director, and Chief Executive Officer.

Speaker #3: And Mr. Yimeng Shi, Chief Financial Officer. Mr. Chen will begin with an overview of our recent business highlights, and Mr. Shi will then discuss our financial and operational highlights for the quarter.

Speaker #3: They will all be available to take your questions in the Q&A section that follows. Before we proceed, please note that this call may contain forward-looking statements, made pursuant to the safe harbor provisions of the appropriate securities litigation reform act of 1995.

Speaker #3: These forward-looking statements are based on management's current expectations and observations that involve known and unknown risks and uncertainties and other factors not under the compliance control.

Daniel Gao: 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 actual results, performance, or achievements of the company to be massively different from the results, performance, or expectations implied by these forward-looking statements. All forward-looking statements are expressly qualified in their entity by the quotationary statement's risk factors and the details of the company's dealings with the SEC. The company does not assume any obligation to reverse or update any forward-looking statements as a result of new information, future events, change in market conditions, or otherwise, except as required by law. Please also note that uCloudlink's earnings press release and this conference call include discussions of unaudited GAAP financial information and unaudited non-GAAP financial matters.

Speaker #3: Which may cause actual results performance or achievements of the component to be materially different from the results performance or expectations implied by these forward-looking statements.

Speaker #3: All forward-looking statements are expressly qualified in their entity by the quotation statements risk factors and the details of the component's feelings with the SEC.

Speaker #3: The component does not assume any obligation to reverse or update any forward-looking statements as a result of new information, filtering events, changes in market conditions, or otherwise.

Speaker #3: Except as required by law. Please also note that uCloudlink's earnings press release and this conference call include discussions of unaudited GAP financial information and unaudited non-GAP financial matters.

Speaker #3: uCloudlink's press release contains a reconciliation of the unaudited non-GAAP matters to the most directly comparable unaudited GAAP matters. I will now turn the call over to Mr. Chen.

Daniel Gao: uCloudlink's press release contains a reconciliation of their unaudited non-GAAP matters to their most directly comparable unaudited GAAP matters. I will now turn the call over to Mr. Chen. Please go ahead.

Speaker #3: Please go ahead.

Speaker #4: Thank you, Daniel, and good evening, everyone. We are celebrating three transformative growth months, focusing on a platform led by our global team, powered by the eSIM trio and global IoT.

Chaohui Chen: Thank you, Daniel. Good morning or evening, everyone. We are accelerating three transformative growth lines: GoCommerce Live led by a platform, GoCommerce Theme powered by eSIM Trio, and GoCommerce IoT, through focused investment in R&D, go-to-market capabilities, and brand building to drive sustainable market expansion, while simultaneously strengthening our legacy GoCommerce mobile broadband business line by proactively offsetting tariff impacts through strategic supply chain adjustments. Throughout this expansion, we maintain financial health as our foundation, ensuring disciplined investments drive sustainable profitability and laying a solid foundation for sustainable long-term value creation. Our GoCommerce ecosystem continues to gain traction and growth momentum. Our business remains profitable and continues to generate a stable margin, with total revenue of US$19.4 million and net income of US$0.7 million during the quarter.

Speaker #4: Through focused investment in R&D, go-to-market capabilities, and brand building to drive sustainable market expansion, while simultaneously strengthening our legacy global mobile broadband business line by proactively offsetting tariff impact through strategic supply chain adjustments.

Speaker #4: Throughout this expansion, we maintain financial health as our foundation. Ensuring discipline investments drive sustainable profitable profitability and laying a solid foundation for sustainable long-term value creation.

Speaker #4: Our global ecosystems continues to gain traction and growth momentum. Our business remains profitable and continue to generate a stable margin. With total revenue of US dollar $19.4 million, and net income of US dollar $0.7 million during the quarter.

Speaker #4: Our $1.0 international data connectivity services business continues to grow, with full speed 5G network coverage across 86 countries and regions. As we continue to consolidate market share, especially in mainland China, and strengthen our leadership position in the global roaming sector.

Chaohui Chen: Our 1.0 international data connectivity services business continues to grow with a full speed 5G network coverage across 86 countries and regions as we continue to consolidate market share, especially in mainland China, and strengthen our leadership position in the global roaming sector. Our substantial strategy investments focus on R&D and marketing for our next-generation products to ensure they drive growth and improve our performance once launched. The development, refinement, and testing of these products progress smoothly with several major distribution partners as we build a robust pipeline and enter a final stage of commercialization. Feedback has been overwhelmingly positive, reflecting how our solution directly addresses market demand and has validated our investment strategy. This has set the stage for the launch of several groundbreaking products in the near future. In this quarter's earnings release, we have introduced a new metric: average monthly active terminals, MAT.

Speaker #4: Our substantial strategy investments focus on R&D and marketing for our next generation products to ensure they drive growth and improve our performance once launch.

Speaker #4: The development, refinement, and testing of these products progress smoothly, with several major distribution partners, as we build a robust pipeline and enter a final stage of commercialization.

Speaker #4: Feedback has been overwhelming positive reflecting how our solution directly addressed the market demand and have validated our investment strategy. This has set the stage for the launch of several groundbreaking products in the near future.

Speaker #4: In this quarter's earnings release, we have introduced a new metric: average month active terminals (MAT), our three new product lines: local midlife, local eSIM, and local IoT.

Chaohui Chen: Our three new product lines, GoCommerce Live, GoCommerce Theme, and GoCommerce IoT, demonstrated remarkable MAT growth of 105.2%, 120.1%, and 789.0% year-over-year respectively. I will now review highlights for each of our key business lines. I will start with GoCommerce Live business line, the upcoming commercial launch of the platform, where we already have over 20 potential strategy partners lined up, and we launched a brand in several countries in the third quarter of year 2005. In Hong Kong, we are collaborating with a premier telecommunications service operator to launch the platform, making a significant expansion in our global market research and the rollout of a powerful win-win cooperation model. This allows operators to monetize premium subscriptions, acquire high-value pet-owning customers, and diversify their revenue streams through our value-added services. Our technology amplifies their market research, and their infrastructure accelerates our scale.

Speaker #4: Demonstrated remarkable MAT growth of 105.2%, 120.1%, and 789% year-over-year, respectively. I have now reviewed highlights for each of our key business lines. I will start with the local midlife business line, the upcoming commercial launch of the platform, where we already have over 20 potential strategy partners lined up, and we launched the brand in several countries in the third quarter of 2005.

Speaker #4: In Hong Kong, we are collaborating with a premier telecommunications service operator to launch a platform, making a significant expansion in our global market research. Additionally, we are rolling out a powerful win-win cooperation model.

Speaker #4: This allows operators to monetize premium subscriptions acquired high-value pet owning customers. And diversify their revenue stream through our value-add services. Our technology amplifies their market research and their infrastructure accelerates our scale.

Speaker #4: We also make substantial with a leading global online pet retailer to further enhance pet forms accessibility and the market penetration within a short time.

Chaohui Chen: We also make substantial progress with a leading global online pet retailer to further enhance pet phones' accessibility and the market penetration within a short time. Alongside pet phones, our industry-first Unicall Plus series, which are highly competitive, innovative, and pioneering products, integrating seamless connectivity across multiple networks, six-stack global positioning, and fast charging capabilities, will further strengthen our competitive edge in the travel, automotive, and secure networking markets. Commercial application of our GoCommerce IoT solutions also continues to gain strong momentum, with user adoption growing over 10 times year over year after nearly three years of commercialization efforts. As revenue contribution increases, entering a new phase of accelerated growth. Beyond core connectivity revenue, we are also diversifying monetization through value-added services. We enable China's top manufacturers to accelerate their global expansion through customized IoT connectivity solutions.

Speaker #4: Alongside our platform, our industry-first Unicorn Plus and Unicorn Plus Series are highly competitive, innovative, and pioneering products. They integrate seamless connectivity across multiple networks and leverage six tech global positioning.

Speaker #4: And the fast charging capabilities. We are further strengthening our competitive edge in the travel automotive and secure networking markets. The commercial application of our local mid IoT solutions also continues to gain strong momentum.

Speaker #4: With user adoption growing over 10 times year-over-year after nearly three years of commercialization efforts. As revenue contribution increase, entering a new phase of accelerated growth.

Speaker #4: Beyond core connectivity revenue, we are also diversifying monetization through value-add services. We enable China's top manufacturers to accelerate their global expansion through customized IoT connectivity solutions.

Speaker #4: Strategy partner with more industry leader in the battery monitoring dash cams vehicle information infotainment and smart security camera sectors. Accelerating our expansion into high growth verticals.

Chaohui Chen: Strategic partners with more industry leaders in the battery monitoring, dashcams, vehicle infotainment, and the smart security camera sectors are accelerating our expansion into high-growth verticals, further consolidating IoT as a key pillar for our business. Turning to our GoCommerce Theme business line, our success isn't an accident. It is a result of a successful business evolution. We have already sold over 300,000 OTA theme and eSIM units since year 2024. Outperforming competitors in this phase nine segment, we achieved top-ranking market share in our outbounding travelers of mainland China, traveling to Hong Kong, Japan, and Korea. These operational maturity positions are distinctly from market entrance. Building on this foundation, eSIM Trio represents our second more advantageous real life. While competitors remain focused on the legacy theme or eSIM technologies, we have advanced to redefine industry standards through this innovation.

Speaker #4: Further consolidifying IoT as a key pillar for our business. Turning to our local eSIM business line, our success isn't accident. It is a result of a successful business evolution.

Speaker #4: We have already sold over 300,000 OTA SIM and eSIM units since the year 2024, outperforming competitors in this Phase Nine segment. We achieved top-ranking market share in our outbound travel from mainland China.

Speaker #4: Traveling to Hong Kong, Macau, Japan, Korea. This operational maturity position us distinctly from market entrants. Building on this foundation, eSIM trio represents our second more advantageous realize.

Speaker #4: While competitors remain focused on the legacy SIM or eSIM technologies, we have advanced to redefine industry standards through this innovation. The eSIM trio has been recognized as a transformative solution.

Chaohui Chen: eSIM Trio has been recognized as a transformative solution, receiving the top NWC Innovation Award from the Slash Guild. Its groundbreaking capabilities generate significant industry attention at both Mobile World Congress 2025 in Barcelona and MWMO's World Congress 2025 in Vienna. Our comprehensive marketing campaign for eSIM Trio, executed in partnership with top media outlets, substantially increased its market visibility and exposure. We are synergistically addressing two critical pain points for the industry with this product. First, as the ultimate permanent secondary theme for consumers, it ensures seamless global coverage by dynamically connecting to multiple networks, eliminating the need for postery international roaming and providing users with reliable, high-speed connectivity across devices.

Speaker #4: Receiving the top NWC innovation award from the last year. It's groundbreaking capabilities generating significant industry attention. As both mobile world congress ess year 2025 in Barcelona, and MMOs world congress year 2005 in Vienna.

Speaker #4: Our comprehensive marketing campaign for the eSIM trio executive, in partnership with top media outlets, substantially increased its market visibility and exposure. We are addressing two critical pain points for the industry with this product.

Speaker #4: First, as the ultimate permanent secondary SIM for consumers, it ensures seamless global coverage by dynamically connecting to multiple networks. This eliminates the need for costly international roaming and provides users with reliable high-speed connectivity across devices.

Speaker #4: Secondary, through our carrier core insurance program, we solved a critical pain point for operators. Especially tier two, tier three mobile network operators and mobile virtual operators.

Chaohui Chen: Secondarily, through our carrier core insurance program, we solved a critical pain point for operators, especially Tier 2, Tier 3 mobile network operators and mobile virtual operators, by upgrading their network performance and global roaming capabilities without the need for infrastructure investment and buying power. With nearly 1,000 trial units distributed, strong user feedback kicked bristles in carrier partnership programs and the sample car production and testing with multiple operators' schedules for the next quarter. We are poised to begin large-scale commercial deployment during the third quarter with strong market confidence. Lastly, our GoCommerce mobile fixed broadband business line, we pilot-launched the upgraded MUGO G40 Pro late in the second quarter, with supposed speed three times faster than traditional 4G devices. It is the world's first enabled infrared Wi-Fi and connects to Wi-Fi networks across several application scenarios, such as home, airport, office, and cafes.

Speaker #4: By upgrading their network performance and global roaming capabilities, without the need for infrastructure investment and buying power. With nearly 1,000 trial units distributed strong user feedback keep thresholds in carrier partnership programs and sample car production and testing with market multiple operator schedule for next quarter.

Speaker #4: We poised to begin large scale commercial deployment during the third quarter with strong confidence. Lastly, our local mobile fixed broadband business line with pilot launch the upgraded new goal G40 Pro late in the second quarter with supposed speed three times faster than traditional 4G devices.

Speaker #4: It's the world's first enabled in-flight Wi-Fi and connect to Wi-Fi network across several application scenarios such as home, airport, office, and the cafes. With new goal G40 Pro, we are transforming portable connectivity from the international travel only solution to a true market scenario companion.

Chaohui Chen: With MUGO G40 Pro, we are transforming portable connectivity from an international travel-only solution to a true market scenario companion with our patented AI hypercon technologies. Similarly, serving users through a single intelligent device and one account regardless of where they are. Furthermore, in the third quarter, we will launch the MUGO G50 Max with the sky-to-ground 5G satellite integration and AI-driven network switching, further solidifying our innovative leadership in the mobile fixed broadband industry. This device enhances network quality through AI-powered real-time condition detection and network reselecting. In summary, we are ideally positioned to capitalize on our strategy and operation momentum. Despite trade and macroeconomic headwinds, we remain committed to executing our strategic R&D and marketing investment for new products while sustaining a healthy finance performance.

Speaker #4: With our patented AI hypercon technologies, seamlessly serving saving use a seamless saving user through as a single intelligent device and one account regardless where they are.

Speaker #4: Furthermore, in the third quarter, we will launch the new goal G50 Max with the Sky to ground 5G satellite integration and AI-driven network switching.

Speaker #4: Further solidifying our innovative leadership in the mobile fixed broadband industry. This device enhanced network quality through AI-powered real-time condition detection and the network reselecting.

Speaker #4: In summary, we are ideally positioned to capitalize our strategy and operation momentum. Despite trade and the microeconomic headwinds, we remain committed to executing our strategy R&D and the marketing investment for new products while sustaining a healthy financial performance.

Speaker #4: These three products from our core business line: local eSIM, led by eSIM trio, local midlife angle by platform, and the local mid IoT. Have all achieved successful transformation in the second quarter.

Chaohui Chen: These three products from our core business line, GoCommerce Theme led by eSIM Trio, GoCommerce Live and Unicall Plus series by pet phone, and GoCommerce IoT have all achieved successful transformation in Q2, laying a solid foundation for future growth with the potential to reach a real multimillion of users in the future. Our diversifying product portfolio provides multiple pathways for us to drive growth throughout the remainder of the years as we scale up our user base and build a comprehensive global market data traffic and sharing marketplace. We are confident that we have the right strategy in place to generate sustainable growth in the coming quarters. For Q3 of 2025, we expect total revenue to be between US$22.0 million to US$26 million, representing a decrease of 12.7% and a decrease of 3.2% compared to the same period of 2024.

Speaker #4: Laying a solid foundation for future growth with the potential to each real multi-million of users in the future. Our diversifying products portfolio provides multiple pathways for us to drive growth through our reminder of the years.

Speaker #4: As we scale up our user base and build a comprehensive global market data trap and sharing marketplace. We are confident that we have a right strategy in place to generate sustainable growth in the coming quarters.

Speaker #4: For the third quarter of year 2025, we expect total revenue to be between US dollar 22.0 million to US dollar 26 million. Representing a decrease of 12.7% to an increase 3.2% compared to the same period of the year 2024.

Speaker #4: The company currently expects its revenue from the full years of the year 2025 to be the range of US dollar 85 million to US dollar 95 million.

Chaohui Chen: The company currently expects its revenue from the full years of 2025 to be in the range of US$85 million to US$95 million, as compared with a range between US$95 million to US$130 million as previous announcements. The company is revising its guidance in light of the present macroeconomic challenges and the global trade headwinds, which have had and may continue to have a broader impact across the industries. Now I will turn the call over to Mr. Shi.

Speaker #4: As compared with a range between US dollar 95 million to US dollar 130 million. As previous announced, the company is revising its guidance in light of the present microeconomic challenges.

Speaker #4: And the global trade headwinds. Which have had and may continue to have a broader impact across the industries. Now I will turn the call over to Mr. Si.

Speaker #5: Thank you, Mr. Chen. Hello everyone. I will go over our operational and financial highlights for the second quarter of 2025. Average daily active terminal DAT and average monthly active terminal MAT are important operating metrics for us.

Yimeng Shi: Thank you, Mr. Chen. Hello, everyone. I will go over our operational and financial highlights for the second quarter of 2025. Average daily active terminal, DAT, and average monthly active terminal, MAT, are important operating metrics for us. They measure customer usage trend over the period, and they reflect our business performance. In the second quarter of 2025, average DATs were 317,957, of which 18,863 owned by the company and 299,094 not owned by the company, representing an increase of 3.8% from 306,289 in the second quarter of 2024. During the second quarter of 2025, 55.7% of DAT were from uCloudlink 1.0 International Data Connectivity Service and 45.3% were from uCloudlink 2.0 Local Data Connectivity Service. In June 2025, the average daily data usage per terminal was 1.59 gigabytes.

Speaker #5: As measures customer usage trend over the period and it reflective our business performance. In the second quarter of 2025, average DATs were 317,957 of which 18,863 owned by the company and 299,094 not owned by the company.

Speaker #5: Representing an increase of 3.8% from 306,289 in the second quarter of 2024. During the second quarter of 2025, 55.7% of DAT were from equal link 1.0 international data connectivity service and 45.3% were from equal link 2.0 local data connectivity service.

Speaker #5: In June 2025, the average daily data usage per terminal was 1.59 gigabytes. Average monthly active terminal MAT in the second quarter were 663,197. Representing an increase of 5.6% from 628125 in the second quarter of 2024.

Yimeng Shi: Average monthly active terminal, MAT, in the second quarter were 663,197, representing an increase of 5.6% from 628,125 in the second quarter of 2024. First, average MAT in the second quarter of GoCommerce IoT business was 42,095, representing an increase of 791% from 4,725 in the second quarter of 2024. Average MAT in the second quarter from GoCommerce Theme business was 42,271, representing an increase of 120.1% from 19,208 in the second quarter of 2024. Third, average MAT in the third quarter from GoCommerce Live business was 2,633, representing an increase of 105.2% from 1,283 in the second quarter of 2024. Fourth, average MAT in the second quarter from GoCommerce Mobile Fixed Broadband Business was 576,198, representing a decrease of 4.4% from 602,909 in the second quarter of 2024. As of June 30, 2025, the company had 183 patents with 167 approved and 16 pending approved.

Speaker #5: First average month in the second quarter of local mid IoT business was 42.095. Representing an increase of 791% from 4,725 in the second quarter of 2024.

Speaker #5: Average MAT in the second quarter from local mid SIM business was 42,271. Representing an increase of 120.1% from 19,208 in the second quarter of 2024.

Speaker #5: Third, average MAT in the third quarter from local mid life business was 2,633 representing an increase of 1005.2% from 1,283 in the second quarter of 2024.

Speaker #5: Fourth, average MAT in the second quarter from local mid mobile fixed broadband business was 576,198. Representing a decrease of 4.4% from 602909 in the second quarter of 2024.

Speaker #5: As of June 30, 2025, the company had 183 patents with 167 approved and 16 pending approved. The proof of SIM card was from 391 mobile network operator globally as of June 30, 2025.

Yimeng Shi: The approval of SIM cards was from 391 mobile network operators globally as of June 30, 2025. Total revenue for the second quarter of 2025 was $19.4 million, representing a decrease of 13.3% from $22.4 million in the same period of 2024. Revenue from service was $14.6 million in the second quarter of 2025, representing an increase of 3.3% from $14.2 million in the same period of 2024. Revenue from service contributed 75.5% of the total revenue during the second quarter of 2025, compared to 63.4% in the same period last year. Geographically speaking, during the second quarter of 2025, Japan contributed 33.6%, mainland China contributed 33.2%, North America contributed 15.3%, and other countries and regions contributed the remaining 70.9%, compared to 46.2%, 23.5%, 14.6%, and 15.7% respectively in the same period of 2024.

Speaker #5: Total revenue for the second quarter of 2025 was 19.4 million US dollars representing a decrease of 13.3% from 22.4 million US dollars in the same periods of 2024.

Speaker #5: Revenue from service were 14.6 million in the second quarter of 2025. Representing an increase of 3.3% from 14.2 million in the same periods of 2024.

Speaker #5: Revenue from service contribute 75.5% of the total revenue during the second quarter of 2025. Compared to 63.4% in the same period last year. Geographically speaking, during the second quarter of 2025, Japan contributed 33.6%, mainland China contributed 33.2%, North America contributed 15.3%, and other country and regions contributed the remaining 70.9%.

Speaker #5: Compared to 46.2%, 23.5%, 14.6%, and 15.7% respectively, in the same period of 2024. Our gross profit was 10.2 million US dollars in the second quarter of 2025.

Yimeng Shi: Our gross profit was $10.2 million in the second quarter of 2025, compared to $11 million in the same period of 2025. Overall gross margins in the second quarter of 2025 further rose to 52.8% from 49.2% in the same period of 2024. The gross margins on service were 56.6% in the second quarter of 2025, compared to 60.3% in the same period of 2024. Excluding share-based compensations, total operating expenses were $10.1 million, or 51.9% of the total revenue in the second quarter of 2025, compared to $8.7 million, or 39.1% of total revenue in the same period in 2024. Net income in the second quarter of 2025 was $0.7 million, compared to $2.2 million in the same period of 2024. Adjusted EBITDA was $1.4 million in the second quarter of 2025, compared to $3.3 million in the same period of 2024.

Speaker #5: Compared to 11 million US dollars in the same periods of 2025. Overall gross margin in the second quarter of 2025 further rose to 52.8% from 49.2% in the same period of 2024.

Speaker #5: The gross margins on service was 56.6% in the second quarter of 2025. Compared to 60.3% in the same periods of 2024. Excluding share-based conversations, total operating expenses were 10.1 million US dollars or 51.9% of the total revenue.

Speaker #5: In the second quarter of 2025, compared to 8.7 million US dollars or 39.1% of total revenue in the same periods, in 2024. Late income in the second quarter of 2025 was 0.7 million US dollars compared to 2.2 million US dollars in the same periods of 2024.

Speaker #5: Adjusted EBITDA was 1.4 million US dollars in the second quarter of 2025, compared to 3.3 million US dollars in the same period of 2024.

Speaker #5: For the second quarter of 2025, we record operating cash outflow of 0.9 million US dollars compared to an operating cash inflow of 4.7 million US dollars in the same periods of 2024.

Yimeng Shi: For the second quarter of 2025, we recorded operating cash outflow of $0.9 million, compared to an operating cash inflow of $4.7 million in the same period of 2024. For the second quarter of 2025, our capital expenditure was $0.2 million, compared to $1.6 million in the same period of 2024. We maintained a solid balance sheet with cash and cash equivalent: $30.2 million as of June 30, 2025, compared to $31.1 million as of March 31, 2025. Operators, let's open up for Q&A.

Speaker #5: For the second quarter of 2025, our capital expenditure was 0.2 million US dollars compared to 1.6 million in the same period of 2024. We maintained a solid balance sheet with cash and cash equivalent 30.2 million US dollars as of June 30, 2025, compared to 31.1 million US dollars as of March 31, 2025.

Speaker #5: With operators, please open up for Q&A.

Speaker #6: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad.

Speaker 4: Thank you. 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 are using a speakerphone, please pick up your handset before pressing the keys. At any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. The question is from Theodore O'Neill, Litchfield Hills Research.

Speaker #6: If you are using a speakerphone, please pick up your handset before pressing the keys. At any time, if your question has been addressed and you would like to withdraw your question, please press star, then two.

Speaker #6: At this time, we will pause momentarily to assemble our roster. Question is from Theodore O'Neill. Litfield Hills Research.

Speaker #7: Thank you. My first question is about the local MID ecosystem. We're seeing strong growth in the quarter, and I was wondering how much you expect that to continue.

Theodore O'Neill: Thank you. My first question is about the GoCommerce ecosystem. You are seeing strong growth in the quarter, and I was wondering how much you expect that to continue in terms of growth.

Speaker #7: In terms of the growth.

Speaker #4: I put some colors first, and then I see the CEO has had more comments on that. In this second quarter, we just made statements in this call.

Yimeng Shi: I will put some colors first, then I see the CEO has had more comment on that. In this Q2, we just had statements in this IR call. There were some three new businesses. Three new businesses, GoCommerce IoT business, the GoCommerce Theme business, and also GoCommerce Live business. These three businesses have shown strong and rapid growth in terms of average monthly active terminals. As the figure tells us, the IoT business and the MAT increased nearly eight times on a year-over-year basis. The GoCommerce Theme's MAT growth was more than 100% compared with the same period last year. The GoCommerce Live business, in terms of MAT growth, was 105% on a year-over-year basis. Even the revenue generated from these three new businesses is small proportionately, but the growth trend is massive.

Speaker #4: I was mentioning three new business sales: probably IoT business, SIM business, and also live business. These three businesses have shown strong and rapid growth in terms of average monthly active terminals.

Speaker #4: Even this as the figure tells us, the IoT business the MAT increased nearly eight times a year over years basis. And the same MATs growth more than 100% compared with the same period last years.

Speaker #4: The live business, in terms of MAT growth, is 105% year-over-year. Even though the revenue generated from these three new businesses is small proportionally, the growth trend is massive.

Speaker #4: So we expect the new business IoT SIM and live will scale our use basis to a multi-millions basis. So that's the give us a future strong growth potentials to 10 million use basis in the next couple of years.

Yimeng Shi: We expect the new business, IoT, GoCommerce Theme, and GoCommerce Live, will scale our use basis to a multimillion basis. That gives us the future's strong growth potential to 10 million use basis in the next couple of years.

Speaker #4: Yeah. And Jeff, add some more comments about these, because we put a lot of R&D resources into the branding and marketing. So, there has been a significant investment in these three new products for over a year now.

Chaohui Chen: Yeah, I'm Jeff. I have some more comments about this. Because we put a lot of R&D resources into branding and marketing, so investment in these three new products we already have nearly more than one year. For IoT, we already invested here for three years. We can see the IoT part. It is now going to a new stage because we already finished the testing period with the major leader in the industry for IoT. Now it is starting to launch the product. We can see the faster growth from the revenue side and the MAT side. You can see some, for example, like the measure meter, maybe every month just active ones. MAT can more reflect the IoT growth. We can see now it is on the right track. We believe the trend of every month we can see the data is fast growing.

Speaker #4: And for IoT, we have already invested here for three years. So we can see the IoT part. It has not gone to a new stage because we have already finished the testing period with the major leader in the industry.

Speaker #4: For IoT. So now it's starting to launch the product. So we can see the faster growth from revenue side and the MAT side. Because you can see some for example like the major matter maybe every month just active ones.

Speaker #4: So MAT more can more reflect the IoT growth. So we can see now it's on the right track right under we believe the trend of the every month we can see the data is fast growing.

Speaker #4: So we believe IoT will be the fourth one to see the to make a positive profit. So after three years investment. That's the first.

Chaohui Chen: We believe IoT will be the first one to make a positive profit. After three years' investment, that is the first. Second, from the SIM card, we already sold a SIM card for 300 pieces. We get the experience. We know how to play the game in this industry. In some travel lines, for example, like China, travel to Hong Kong, travel to Macau, travel to Japan, we already go to the tier one sector. For in this SIM card service in China. Now we are more confident because we have a new product for eSIM Trio. This innovative super SIM card came out, and we just launched at the end of June. Through the, I think we do the promotion with the FunZone, okay, for the live advertisement. It gets a very fast growth as well. Finally, you can see our GoCommerce Live product.

Speaker #4: And second, from the SIM card, we already sold SIM card for 300 pieces. So we get the experience we know how to play the game in this industry.

Speaker #4: So in some travel lines, for example, like China travel to Hong Kong, travel to Macau, travel to Japan, we have already gone to the tier one sector.

Speaker #4: So for in this SIM card service in China. So now we are more confident because we have new product for eSIM trio. This innovative SIM card come up.

Speaker #4: And we just launched end of the June. So through the I think we do the promotion in the with the phone zone okay for the live advertisement.

Speaker #4: So it gets a very fast growth as well. So the finally, so you can see our local midlife product currently the smaller revenue is if we start to launch our local midlife product end of last years.

Chaohui Chen: Currently, the smaller revenue is we start to launch our GoCommerce Live product end of last year. It is for cable. It is our Unicall. It is a fourth product and a loan product. In the second quarter, end of second quarter, we had a new second generation of the live product come out, like Unicall Plus, like this new Unicall Pro. This new product comes out. It is more stronger capability, more high performance. It will be winning more market share. More important, I just emphasize here is our pet phone product. I think it is our we already finished many trials. Also, we try to improve our product better and better. We keep in our R&D, and we just let our product reach our requirements. That is why we delayed the launch of the commercial launch.

Speaker #4: So it's for cable; it's our unicorn, it's our fourth product and a long plug. At the end of the second quarter, we have the new second generation of the live product coming out.

Speaker #4: Like a unicorn plus like this new a unicorn pro, this new product come out is more stronger capability, more high performance. It will be with more market share.

Speaker #4: So a more important I just emphasize here is our platform product. I think it's our we already the platform we already finished many trial.

Speaker #4: So and also we try to improve our improve our product better and better. We keep in our R&D and we just let up product to reach our requirement.

Speaker #4: So that's why we delay the launch of the commercial launch our previous we supposed to launch in the second quarter but now we are postponed to the August as middle of the middle of this August we will launch the global widely.

Chaohui Chen: Our preview is we were supposed to launch in the second quarter, but now we are postponed to the August. As middle of this August, we will launch the GlocalMe world phone series of our pet phone. I think currently the feedback and the trial is very positive for our new version. We believe this will lead to fast growth after our heavy investing in the branding and the marketing. I just give a brief about our three new product line growth. Although we have some impact on the tariff, as I mentioned, for tariff impact for our traditional product, I think we can see the fast growth for new products.

Speaker #4: Our platform, I think, currently has received very positive feedback during the trial for our new version. So we believe this will lead to fast growth and support our heavy investing in branding and marketing.

Speaker #4: So that's the I just give a brief about our three new product now growth. Although we have some impact from the tariff as I mentioned from for micro for tariff the impact for our traditional product.

Speaker #4: But I think we can see the fast growth for new product.

Speaker #3: Thank you very much. My next and my last question is about sales of products were below expectations and I was wondering if you could give us some more detail on that.

Theodore O'Neill: Thank you very much. My next and my last question is about sales of products were below expectations. I was wondering if you could give us some more detail on that. Was that tariff-related? Is it particular geographies?

Speaker #3: Was that tariff related? Is it particular geographies?

Speaker #4: Yeah. As difficult this own it for the second quarters. Our the quarter revenues is achieved below the guidance. And 23 million US dollars. The main reason for this for this low is revenues achievements.

Yimeng Shi: Yeah. Because there's earnings for the second quarter, our quarterly revenues achieved below the guidance, that's $23 million. The main reason for this low revenue achievement is the legacy mobile broadband business. The order from Japan was delayed, that was a couple of million U.S. dollars. But this order will be placed in this quarter, the third quarter. This is the main reason for the second quarter's revenues achieved below the guidance. The second is the macroeconomic reasons and trade headwinds. Our sales on the U.S. market have not reached the expectations. The major geographic reason is the Japanese market's delayed orders. The second is the trade headwinds. That's a little bit impacted our sales in the U.S. market.

Speaker #4: Because it's the legacy mobile broadband business. The order from Japan was delayed, which amounted to a couple of million US dollars.

Speaker #4: But this order will be placed in this quarter third quarters. This main reason for the second quarters revenues achieved below the guidance. And the second micro reasons microeconomics and trade headwinds.

Speaker #4: That's we our sales on the US market have not reached the expectations. So that's the major geographic reasons is Japan's markets delayed orders. The second is the trade headwinds.

Speaker #4: So, that's a little bit impacting our sales in the U.S. market. Yeah.

Speaker #3: Thank you very much.

Theodore O'Neill: Thank you very much.

Speaker #6: Next question is from Vivian Zhang, Daimon Equity Research.

Speaker 4: Next question is from Vivian Zhang, Diamond Equity Research.

Speaker #8: Hello. And good morning and evening everyone. Thank you for taking my questions. So my question is regarding the company's upcoming products such as the platform.

Vivian Zhang: Hello. Good morning and evening, everyone. Thank you for taking my questions. My question is regarding uCloudlink Group Inc.'s upcoming products such as the pet phone. Do you think these upcoming products will be affected by the industry headwinds and result in lower than expected sales?

Speaker #8: Do you think this upcoming product will be affected by the industry headwinds and result in lower-than-expected sales?

Speaker #4: Because this new product I think is I think it's I think it's a new concept, a new innovation in the industry. So I from the we already have hundreds of pieces already commercial trial so all the positive is very all the feedback is very positive also to improve adopt there are some cost consumers you know opinion.

Chaohui Chen: Because this new product, I think it is a new concept, a new innovation in the industry. We already have hundreds of pieces already in commercial trial. All the feedback is very positive. Also, we improve, we adopt some customer consumers' opinion that this product is better and more, I think, competitive in the industry. Because it is a new product, new concept, from currently, we can see the feedback from the users, feedback from investments, feedback from our channel, feedback from the mobile operator, all is very positive. I believe this product will be very successful. That is why we are now having, we are very confident. We already have invested in R&D design. Also, we were more invested in the branding. You can see that from this month, we start to launch products in Hong Kong, U.S., and with some big channels.

Speaker #4: That is more this product more better and more I think the competitive in the industry. So because it's a new product, new concept, from currently we can see the feedback from the users, feedback from investment, feedback from our channel, feedback from the mobile operator, all is very positive very all believe this product will be very successful.

Speaker #4: And that's why we are now heavy we are very confident we will have we already heavy invest in our design. And also so we will more invest in the branding.

Speaker #4: So you can see that from this month we start to launch the product. So in Hong Kong, the US, and with some big channels, we have 10 countries in our plan. Country by country, we will, with our local big channel partners, start to launch this product.

Chaohui Chen: We have 10 countries in our plan, country by country. We will land with our local big channel partner. We start to launch this product. We have not placed a big forecast in our annual product asset revenue because I believe this is from the concept to the big volume needs two or three quarters. That is our current believing. The product, we have not placed a big order here. We believe in the future, this will bring us a very successful product. We believe so, and our partner also believes so.

Speaker #4: But we haven't placed a bigger forecast in our anywhere in a product I think revenue. Because I think I believe this is from the concept to the bigger volume need two or three quarter that's our current believing.

Speaker #4: So the product we haven't placed a big order here. But we believe in the future this will bring us very successful product we believe so and our partner also believe so.

Speaker #6: Okay. I see. Thank you for answering my questions. I thought my questions were relevant. Thank you. This concludes our Q&A session. I would like to turn the conference back to Mr. Gao for any closing remarks.

Vivian Zhang: Okay, I see. Thank you for answering my questions. Thank you.

Speaker 4: This concludes our Q&A session. I would like to turn the conference back to Mr. Gao for any closing remarks.

Speaker #9: Okay, thank you once again for joining us today. If you have further questions, please feel free to contact Ukraine's investor relations through the contact information provided on our website, or speak to our investor relations phone.

Yimeng Shi: Okay. Thank you once again for joining us today. If you have further questions, please feel free to contact uCloudlink Group Inc.'s investor relations through the contact information provided on our website or speak to our investor relations for Christensen Advisory. We look forward to speaking to you all again on our next Q3 call. Thank you.

Speaker #9: Chris Simpson, advisory. We look forward to speaking to you all again on our next quarterly call. Thank you.

Speaker 4: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.