uCloudlink Q2 2026 Earnings Call - New Growth Engines Offset Legacy Decline Amid Chip Cost Surge

Conference Operator: Thank you for standing by, and welcome to the uCloudlink second quarter 2026 earnings conference call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Daniel Gao, Company IR. Please go ahead.

Daniel Gao, Company IR, uCloudlink: Thank you. Hello, everyone, and thank you for joining us on uCloudlink second quarter 2026 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. Zhiping Peng, co-founder and chairman of the board of directors, Mr. Chaohui Chen, co-founder, director, and the 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 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 actual results, performance, or achievements of the company to be materially different from the results, performance, or expectations projected or implied by these forward-looking statements. All forward-looking statements are expressly qualified in their entirety by the cautionary statements, risk factors, and detail of the company’s filings with the SEC. The company does not assume any obligation to revise or update any forward-looking statement 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 earnings press release and this conference call include discussions of unaudited GAAP financial information and unaudited non-GAAP financial measures.

uCloudlink press release contains a reclassification of their unaudited non-GAAP measures to their most directly comparable unaudited GAAP measures. I will now turn the call over to Mr. Chen. Please go ahead.

Chaohui Chen, Co-founder, Director, and Chief Executive Officer, uCloudlink: Thank you, Daniel. Good morning or good evening, everyone. Total revenues for the quarter were US$18.2 million, reflecting the continued impact of macroeconomic headwinds, geopolitical tensions affecting outbound travel from China, and a significant surge in chip costs. Our uCloudlink 1.0 international data connectivity services remain under pressure from these factors. However, this impact is increasingly being offset by the rapid scaling of our uCloudlink 2.0 local data connectivity business, which delivered strong growth, particularly from our GlocalMe IoT business. We expect our uCloudlink 2.0 and the new business lines to fully offset the continued contraction in our 1.0 international business by the third quarter as we continue to execute on our strategic priorities. We continue to see strong momentum across our new product portfolio during the second quarter.

GlocalMe IoT and Unicompro, in particular, gained solid traction with revenue contribution significantly increasing as the transition out of the initial market wind-up phase. Each reached key strategic milestones during the quarter, positioning us well for accelerated commercialization going forward. Across our new growth engine, revenues from GlocalMe IoT and SIM increased by 392.4% and 78% year-over-year, respectively. To drive early adoption and fuel market leadership, we maintained an elevated level of investment in market for the platform and technical ecosystems during the quarter. I will now review the highlights for each of our key business lines. I will start with the GlocalMe IoT, which saw its install base expand further with monthly order now contributing meaningfully to revenue and the business operating profitability on a consistent basis. In the second quarter, revenue from the GlocalMe IoT grew 392.4% year-over-year.

Our total install base reached 3.34 million units, and the MAU grew 210 year-over-year. User adoption is growing rapidly across key verticals as we further solidify our position in high-growth sectors, including in-car infotainment and security cameras. Moving on to our platform ecosystem, which has undergone a comprehensive upgrade into a dedicated pet AI agent. Building on the AI-powered platform social model we pioneered in the fourth quarter. This marks a major step forward in functionality and performance, redefining AI-powered communication between humans and their pets. The agent can precisely sense a pet’s condition and emotion state, and intelligently support the owner at every stage of care, from prevention through real-time response and engagement, delivering a seamless pet care experience. This powerful agent creates enormous opportunities across pet health, veterinary care, pet safety, and pet data analytics, each of which we see a source of new value creation.

As consumer acceptance of AI pet services grows, we expect to build both a valuable data asset and a leading position in pet AI. We are now extending our pet AI capabilities across communication, safety, and health management. On the market front, we have made significant progress in branding and promotional efforts, generating substantial external attention, with select content pieces reaching tens of millions of views in major platforms such as TikTok, Instagram, et cetera. We look forward to achieving even greater breakthroughs in the second half of the year. Turning to our GlocalMe Life and SIM business line, where our strategy is beginning to generate results. GlocalMe Life solutions saw DAU growth explode, increasing by 801.6% year-over-year, reflecting strong market adoption of the new product line. GlocalMe SIM continued to steadily expand as well, with DAU increasing 132% year-over-year.

Our eSIM solution is gaining strong momentum, leading the market in China and building market share steadily across East Asia and the wider Asia-Pacific region. Together, this result shows two product lines at a different stage of maturity, with GlocalMe Life growing rapidly with exceptional triple-digit growth and GlocalMe SIM scaling consistently. Our premium MeowGo G50 Max is the world’s pioneering sky-to-ground integrated mobile connectivity hub, delivering seamless connectivity across satellite, flight, and ground networks. It offers the broadest 5G country coverage in the industry, spanning nearly 100 countries. The performance is reliable across a wide range of scenarios, from the urban environment to in-flight travel. Powered by our AI HyperConn technology, the G50 Max has built a market-leading position in the $500-plus premium MiFi segment and has set a new benchmark for premium mobile connectivity solutions.

While our uCloudlink 1.0 international data connectivity business has been affected by micro-halving, this same condition has created new opportunities for the G50 Max and premium solutions, driving demand from the resilient, reliable connectivity in critical environments. We also made solid progress and created new and strong revenue with our newly launched 4G and 5G CPE product during the second quarter for local connectivity services. Both have demonstrated stable performance and have successfully passed smaller batch market validation, receiving positive market feedback. Several large orders are currently under negotiation, and we expect to accelerate market deployment and drive stronger growth in Q3. We also achieved notable recognition during the quarter, winning the Customer Impact Award at the MVNOs World Awards in the year 2026 and have been shortlisted for Leading Consumer MVNO Startup Brand, further validating our technology leadership and market positioning.

Looking ahead, we remain focused on strengthening operational management and cost discipline with a clear priority on improving cash flow. Together with the ongoing commercial progress of the PetPhone AI and the social platform, the ramp-up of MeowGo G50 Max, and the continued expansion of GlocalMe IoT, CPE R50 and R55, we believe these efforts will position us to navigate the current market environment and emerge stronger. We remain committed to bridging the digital divide in cross-border connectivity, as well as the emotion distance between people and their pets, while creating long-term value for our shareholders. With that disciplined optimism in mind, we are confident that we have the right strategy in place to drive sustainable growth going forward. I will now turn the call over to Mr. Shi.

Yimeng Shi, Chief Financial Officer, uCloudlink: Thank you, Mr. Chen. Hello, everyone. I will go over our operational and financial highlights for the second quarter of 2026. Average daily active user, DAU, and monthly active users, MAUs, represent average number of unique users engaging with our GlocalMe service on a daily and monthly basis respectively. Both metrics record robust growth in the second quarter. Average DAUs in the second quarter were 376,376, representing an increase of 13.3% from 332,323 in the second quarter of 2025. GlocalMe IoT, GlocalMe SIM, and GlocalMe Life all achieved substantial growth, with average DAUs up 277.3%, 132%, and 801.6% respectively from the same period last year. Average DAU from our GlocalMe MeowGo business declined by 7.3% year-over-year. Average MAUs were 744,966, representing an increase of 6.6% from 698,862 in the second quarter of 2025.

Average MAUs from our GlocalMe IoT, GlocalMe SIM, and GlocalMe Life business line saw increase of 210%, 53.8%, and 599.7% respectively from the same period last year. Average MAU from our GlocalMe MeowGo business decreased by 10.1% year-over-year. In the second quarter of 2026, average DATs were 341,511, with 12,763 owned by the company and 328,748 not owned by the company, representing an increase of 7.4% from the second quarter of 2025. During the quarter, 56.3% of DATs were from uCloudlink 1.0 international data connectivity service, and 43.7% were from uCloudlink 2.0 local data connectivity service. In June 2026, the average daily data usage per terminal was 1.5 gigabytes. Average MATs in the second quarter were 306,382, representing an increase of 6.5% from 663,197 in the second quarter of 2025.

Growth was driven by strong momentum across our three new growth engines with average MATs from GlocalMe IoT, GlocalMe SIM, GlocalMe Life, increasing 93.6%, 35.4%, and 843.2% respectively from the same period last year. Average MAT from GlocalMe MeowGo business decreased by 5.7% year-over-year. Following the stable growth last year, platform continued to gain traction with user adoptions and engagement increasing further during the quarter. In the second quarter, average DAU and MAUs were 1,519 and 1,845 respectively. While average DATs and MATs for platform reached 507 and 1,028, reflecting the growing traction of this new offering. As of June 30th, 2026, the company had 212 patents with 184 approved and 28 pending approval, and approval of SIM cards from 398 MNOs globally. Total revenue from the second quarter of 2026 were $18.2 million, representing a decrease of 5.9% from $19.4 million in the same period, 2025.

Total revenue across different business line were as follows: GlocalMe MeowGo business, $15.5 million, representing a decrease of 13.1% from $17.9 million in the second quarter of 2025. GlocalMe SIM business, $1.3 million, representing an increase 78% from $0.7 million in the second quarter of 2025. GlocalMe IoT business, $0.8 million, representing an increase of 392.4% from $0.2 million in the second quarter of 2025. GlocalMe Life business, $0.5 million, representing a decrease of 12.1% from the $0.6 million in the second quarter of 2025. PetPhone business, $0.2 million, representing an increase of 1,527.3% from $0.01 million in the second quarter of 2025. Revenue from service were $13.3 million, representing a decrease of 9.2% from $14.6 million in the same period of 2025. Revenue from service contribute to 72.9% of total revenue during the second quarter of 2026, compared to 75.5% in the same period last year.

Geographically speaking, during the second quarter of 2026, Japan contributed 36%, Mainland China contributed 30.3%, North America contributed 13.5%, and other country or regions contributed the remaining 20.2%, compared to 33.6%, 33.2%, 15.3%, and 17.9%, respectively, in the same period, 2025. Our gross profit was $9.2 million, compared to $10.2 million in the same period of 2025. Overall gross margins in the second quarter of 2026 was 50.2%, compared to 52.8% in the same period, 2025. Gross margins on service were 39.1% in the second quarter of 2026, compared to 56.6% in the same period, 2025. Excluding share-based compensations, total operating expenses were $11.5 million, compared to $10.1 million in the same period, 2025. Net loss in the second quarter of 2026 was $3 million, compared to net income of $0.7 million in the same period, 2025.

Adjusted EBITDA was negative $1.8 million in the second quarter of 2026, compared to a positive $0.4 million in the same period of 2025. For the second quarter of 2026, we recorded an operating cash outflow of $3 million, compared to an outflow of $0.9 million in the same period, 2025. For the second quarter of 2026, our capital expenditures were $0.04 million, compared to $0.2 million in the same period, 2025. Turning to balance sheet items, our cash equivalents were $25.2 million as of June 30, 2026, compared to $28 million as of March 31, 2026. We continue stressing our financial position, and we believe we are well-positioned to drive growth in our business.

Turning our outlook for the third quarter of 2026, we expect total revenue to be between $19 million and $22 million, representing a decrease of 10.4% to an increase of 3.8% compared to the same period of 2025. For the full year of 2026, we now expect total revenue to be in the range of $75 million to $85 million, compared with the range of $85 million to $100 million we previously announced. We are revising our full-year guidance in light of the persistent macroeconomic challenges and global trade headwinds, which have had and may continue to have a broader impact for industries. This estimate reflects our current view on market and operating conditions and customer demands, which are subject to change. With that, operator, let’s open it up for Q&A.

Conference Operator: Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. Your first question comes from Theodore O’Neill with Litchfield Hills Research. Please go ahead.

Theodore O’Neill, Analyst, Litchfield Hills Research: Oh, thank you for taking my questions. I have two questions this morning. The first is about memory chips and sort of the supply chain of semiconductors in general. You cited here, which everyone has been seeing, is memory chip cost increases. So, what are you doing to ameliorate that, and are you seeing other supply chain issues in the semiconductor area as well?

Chaohui Chen, Co-founder, Director, and Chief Executive Officer, uCloudlink: Yeah, I think there are several impacts because I think the supply chain for chipset and the AI volume demand for supply chain in China. For the memory chip, everyone know it’s almost 5 to 10 times increase. It impact our sales price for our customer. So, in the early quarter, we increased more storage, try to offset the price increasing first. You can see that’s why our cash flow was somehow impact, because we increased the memory chip storage first. And the second, you can see we have to cover some chipset cost increasing. I think also in the second half years, we just about several months later, we increase our sale price. But we have to consider, I think the customer acceptance for the price. That’s number two. And number three, also, we have R&D revise.

For some large memory and expensive memory, we try to revise our hardware, try to reduce the memory requirements. That is number three. And finally, also, like a PCB, all these components extend the period, and the cost also is going up. I think indeed this year is worse in supply chain for our product. For like MiFi, like our PetPhone, and our PetCam to the customer.

Theodore O’Neill, Analyst, Litchfield Hills Research: Thank you. My other question is about GlocalMe Life business. Here in the prepared remarks here, GlocalMe Life business revenue decreased year-over-year, but the average daily active users increased over the same period. So were they spending less money? I was wondering if you could explain why one’s down, the other one’s up.

Chaohui Chen, Co-founder, Director, and Chief Executive Officer, uCloudlink: Yeah, sure. Yeah, this second quarter’s figures, the Life revenues include two parts. One part is the hardwares of Life delivery to our customer. So the volume hardware delivery in the second quarter is a little bit down a bit. So that account for there’s a total revenues a little bit down. But we deliver Life products in the past series of quarters on a stables gross volume. And this Life product used to the local scenarios, local mobile broadband scenarios, like our products, charge cables. That’s very well welcome in Japan’s local market. So the MAUs figures reflect a cumulative active historical sold hardware of Life. So that cumulative MAUs matrix is increased dramatically compared with last year’s. So there are two matrix. One’s revenue reflect the second quarter scenarios. The MAUs reflects the cumulative, the whole historical sales stories. Yeah. Yeah, I have more comment about this.

Because for Life, this product, I think, because I just mentioned, as you mentioned, the supply chain impact by the AI industry because of the memory chip and the PCB, et cetera. That is why in the first quarter, before the price increased, we asked our customer give more order. So far, I think this is the why in the first quarter, we get a more bigger order. The second quarter order is a little bit lower. The second quarter, you can see the order is a little bit lower. That is because of the supply chain impact and the price increase. But the total, the first half years, we compare the first half last year is increased dramatically.

Theodore O’Neill, Analyst, Litchfield Hills Research: Okay. Thank you very much. That answers my questions.

Conference Operator: Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. There are no further questions at this time. I will now hand back to Daniel Gao for closing remarks.

Daniel Gao, Company IR, uCloudlink: Okay. Thank you once again for joining us today. If you have further questions, please feel free to contact the Collins Investor Relations through the contact information provided on our website or speak to our investor relations firm, Christensen Advisory. We look forward to speaking with you again our next quarterly call. Thank you.

Conference Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.

Chaohui Chen, Co-founder, Director, and Chief Executive Officer, uCloudlink: Thank you. Thank you.