uCloudlink Group Inc.

Thank you for standing by and welcome to the uCloud Link Group Incorporated fourth quarter and full year 2025 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 would like to ask a question, you'll 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. Xichao Gao at Company IR. Please go ahead.

Okay. Hello, everyone, and thank you for joining us on uCloud Link's fourth quarter and the full year 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. Zhi Ping Peng, co-founder and chairman of the board of directors, Mr. Chao Hui Chen, co-founder, director, and the chief executive officer. and Mr. Yi Mengshi, Xu Financial Officer. Mr. Chen will begin with an overview of our recent business highlights. Mr. Xu 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 previous Secretary Securities Litigation Reform Act of 1995. These four 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 projected or implied by these forward-looking statements. All forward-looking statements are expressly qualified in their entity by their culinary statements, risk factors, and the details of the component's feelings with the SEC. The component does not assume any obligation to reverse or update any forward-looking statements as a result of new information. Future events change the market conditions otherwise, except as required by law. Please also notice that Euclidean's earnings press release and this conference call include discussions of audit gap financial information and audit non-gap financial measures. Euclidean's press release contains a reclassification of the audit non-gap measures to the most directly comparable audit gap measures. I will now turn the call over to Mr. Chen. Please go ahead.

Thank you, Daniel, and good morning or evening, everyone. Despite significant microeconomic headwinds through year 2025, including tariffs, we remain steadfast in strategically investing across our three new business lines. Against this challenging backdrop, we maintain our financial health and deliver stable performance. Net income for the year increased 38.2% year-over-year to U.S. dollar 6.3 million with the net cash inflow from the operations reaching U.S. dollar 3.2 million. Total revenues from mainland China surged 16.5% from last year. underscoring how our EU-Cloud in 1.0 international data connectivity solutions are accelerating broader consumer adoption and further solidifying our leadership in the global loan market. This robust performance demonstrates the resilience of our core strategy and the strategic impact of the investments we've made. in our three new growth engines. This new product launch has diversified our business and allowed us to successfully navigate a persistently challenging microeconomic and trade environment. Through strict operational discipline and focus, we have laid a solid foundation to build upon and accelerate growth in year 2026. Moreover, our smart hardware and data are emerging as a key gateway to AI and big data connectivity. While our heavy investment in the pet AI, analyzing pet languages, health, behavior, and sent data continues to strengthen our industry leadership. We remain highly focused on overcoming the world's three fundamental digital divides through transformative connectivity solutions. We continue to dismantle the global connectivity divide by breaking down international looming barriers to ensure our users maintain seamless network access anywhere in the world. At the same time, we are tackling the single multi-network divide through our pro-riotry, cloud-thin, and hyper-con technologies, which are setting industry standards for intelligent multi-network connectivity and reliability. Lastly, and most innovatively, we are bridging the emotional digital divide with our AI-powered pet ecosystem. creating entirely new and meaningful connections between humans and their pets. I will now review the highlights for each of our key business lines. I will start with our growth community life business, which continues to generate solid growth momentum. Average daily active terminal during the first quarter surged 897.9% year over year, while average daily active users, which include platforms, increased 409.1% year-over-year. Within our broader growth community life portfolio, our industry-first Unicore Plus and Unicore Plus series remain highly competitive and continue to differentiate themselves with their seamless connectivity across multiple networks, safe test global positioning, and fast charging capabilities. This is further strengthening our competitive edge in the travel, automotive, and secure networking markets. At the same time, platform orders continue to scale and accelerate since its initial launch last quarter, reflecting strong market traction across the board. We kick off 2026 with a powerful showcase of our latest innovations at the CES in Las Vegas and the NWC in Barcelona. As a highlight, we outline our vision to eliminate the pet-people divide through the PetProGo ecosystem and the introduction of the all-new PetCam that complements the platform. This revolutionary AI-powered ecosystem will transform how we connect with and care for our pets. transcends basic pet tracking functions by establishing a comprehensive safety-awareness-emotion connection loop that enables owners to see, hear, and interact with their pets in real time for anywhere in the world. The market response has been exceptional, generating significant global attention and validating our product domain. Purchase orders are growing alongside strong consumer feedback, laying solid foundation for us to drive scale commercialization in year 2026. Also making its debut at the CES was the Miracle G50 mask and AI power connectivity hub. with sky-to-ground 5G satellite and Wi-Fi integration that creates mobile Wi-Fi hotspots anywhere. This solution provides a critical safety net with two-way messaging and emerging SOS via satellite networks, ensuring connectivity even when terrestrial networks are beyond reach. Powered by our patent AI HyperCon technology, it can intelligently switch between a terrestrial 5G network and a Wi-Fi network to deliver a frictionless one-device, one-account learning experience. At its core, it creates a reliable mobile Wi-Fi hotspot, ensuring unmatched coverages, and truly seamless connection. Moving on to our global mean IoT business, we maintain a robust growth trajectory with user adoption and revenue contribution increasing strongly on a year-over-year basis during the quarter. In the fourth quarter, average daily active terminals record a year-over-year increase Highlighting a strategic positioning and traction we are getting in high growth sectors such as in-car infotainment and security cameras. Having established a strong initial presence in these key sectors, we plan to scale these solutions into additional industrial verticals. in the future to drive to further expansion of our ecosystem. Turning to our global meat seam business line, our e-seam tree solution continues to gain a strong traction following its pilot programs last quarter, with a cumulative seam car sales now surpassing several hundred thousand units as growth moment accelerators This is creating a strong growth momentum with our average daily active terminals increasing 180.8 year-over-year during the quarter, validating both our carrier's partnership model and its market positioning as a permanent secondary SIM card for users. Our carry core insurance program has begun pilot deployment and is pending fast, providing a highly effective low-typex solution for operators that enhance their global looming capabilities. This fourth theme model is gaining strong traction and is welcomed by both operators and users, confirming robust product market fit. Looking ahead, 2026 will be years of execution and transformation for us. We close 2025 with a streamlined organizational structure. Having integrated our branding, online and offline sales, and the e-commercial teams to that align with our evolving strategy. Building on this foundation, we kick off the new year by onboarding highly experienced leaders with deep to customer expertise to strengthen our capabilities for next phase of growth. At the same time, we are actively forging partnerships with world-renowned universities and leading global technology companies, integrating resources and laying a solid foundation for long-term success. The strong market feedback from the CES 2026, combined with accelerating sales of new solutions, provides us with a multiple powerful growth engine. We are confident in our ability to scale our user base globally, further diversify our revenue streams, and bridging critical digital divides for cross-border activities to emotional distance between people and their pets. With the discipline optimism in mind, we are confident that we have the right strategy in place to drive sustainable growth going forward. For the first quarter of year 2026, we expect total revenue to be between US dollar 16 million to 17 million, representing a decrease of 9.1% to 14.4% compared to the same period of year 2025. For year 2026, we expect total revenues to be between U.S. $85 million and $200 million, representing an increase of 4.4% to 22.9% from year 2025. I will now turn the call over to Mr. Shi.

Thank you, Mr. Chen. Hello, everyone. I will go over our operational and financial highlights for the fourth quarter and four years of 2025. Average daily active terminals, DATs, and average monthly active terminal, MATs, are important operating metrics for us. They measure customer usage over the period and are reflective of our business performance. In the fourth quarter of 2025, average DAT was 328,847, of which 15,636 owned by the company and 313,211 not owned by the company, representing an increase of 6.6% from the fourth quarter of 2024. During the quarter, 57.1% of DAT were from Eucalink 1.0 International Data Connectivity Service, and 42.9% were from Eucalink 2.0 Local Data Connectivity Service. In December 2025, the average daily data usage per terminal was 1.59 gigabytes. Average MATs in the first quarter were 704,393, representing an increase of 11.1% from 634,245 in the first quarter of 2024. Growth was driven by strong momentum across our three new growth engines with average MAPS, M-A-T-S for Global Mini IoT, Global Mini SIM, and Glocomy live, increasing 127.5%, 133.8%, and 616.9% respectively from the same period last year. Average MADs from Glocomy near-goal donors, which were previously referred to as Glocomy mobile fixed broadband donors, decreased slightly by 0.5% year-over-years reflecting a relatively stable user base in this segment. Average daily active user, DAU, and monthly active user, MAU, represent the average number of unique users engaging with our GlobalMe service on a daily and monthly basis, respectively. Those metrics show strong growth momentum in the fourth quarter. Average DAU in the fourth quarter 353,278, representing an increase of 10.4% from 320.37 in the fourth quarter of 2024. Glowhami IoT, Glowhami Scene, and Glowhami Live all deliver significant gains, with average DAU up 558.7%, 349.8%, and 409.1% respectively from the same period last year. Average DAU from global mere gold business declined slightly by 4% year-over-year. Average MAUs were 738,777, representing a 9.2% increase from 676 and 610 in the fourth quarter of 2024. Average MAUs from Gologami IoT, Gologami SYN, Gologami Live Business 9 saw increase of 66%, 153.3%, and 460.2% respectively from the same period last year. Average MAU from Gologami Mirgo Business decreased slightly by 2.2% year-over-year. As platform is a newly launched service, we are beginning to see early user adoption during the quarter. In the first quarter, average DAT and MAT for platform reached 257 and 571, respectively, while average DAU and MAU were 745 and 977. reflecting the initial attractions of this new offering. As of December 31, 2025, the company had 206 patents with 181 approved and 25 pending approved, and approved SIM cards from 398 MNOs globally. Total revenue for the fourth quarter, 2025, were $22.1 million. representing a decrease of 14.6% from $26 million in the same period, 2024. Revenue from service were $15.2 million, representing a 1.01% increase from $15 million in the same period, 2025. Revenue from service contributed 68.5% of total revenues during the first quarter of 2025, comparing to 57.8% in the same period of last year. Geographically speaking, during the first quarter of 2025, Japan contributed 43.6%, mainland China contributed 26.8%, North America contributed 11.2%, and other countries and regions contributed remaining 18.4%. compared to 33.6%, 20%, 12.1%, and 14.3% respectively in the same period of 2024. Our gross profit was $11.4 million in the first quarter of 2025 compared to $11.2 million in the same period of 2024. Overall gross margin in the first quarters of 2025 increased to 51.6% from 43% in the same period of 2025. The gross margins on service were 61.7% in the first quarter of 2025 compared to 58.6% in the same quarter of 2024. Excluding share-based compensation, total operating expenses were $9.4 million compared with $13.9 million in the first quarter of 2024. Lead loss in the first quarter of 2025 was $3.1 million dollars compared with a net loss of $1.5 million in the same period, 2024. Adjusted EBITDA was positive $3.1 million in the first quarter, 2025, compared with a negative $2.3 million in the same period, 2025. For the first quarter, 2025, we recorded operating cash inflows of 4.7 million US dollars compared to 0.5 million US dollars in the same period in 2024. For the first quarter of 2025, our capital expenditure was 20,000 US dollars compared to 0.6 million US dollars in the same period in 2024. Moving to 2025 full-year financial results, average DATs and MATs show similar patterns to those observed in the first quarters. For the four years, average DATs were 322,169, of which 18,449 owned by the company and 303,720 owned by a business partner, representing an increase of 1.7 from 316 In 2025, 56.3% DATs were from equally 1.0 international data connectivity service and 43.7% DATs were from equally 2.0 local data connectivity service. Average M80s in 2025 were 681,672, representing an increase of 8% from 631,137 in 2024. Growth was primarily driven by our three new growth engines with average M80s from Glocomi IoT, Glocomi Sim, Glocomi Live, increasing 360.7%, 119.8%, and 356.0% year-over-year respectively. Average DAU in 2025 was 340,036, representing an increase of 4.2 from 326,412 in 2024. This growth was supported by strong expansions in global media IoT, global media scene, and global media life, where average DAT is increasing 737.3%, 321.5%, and 349.1% year-over-year respectively. Average MAU in 2025 were 723,706, with printing increase of 8.9% from 664,815 in 2024. Average MAU from Globomy IoT, Globomy Sim, and Globomy Live increasing 251.2%, 167.5%, and 413% year-over-year respectively. Total revenue for 2025 reached 81.4 million US dollars compared with 91.6 million in 2024. Revenue from service was 61 million US dollars representing 1.8% year-over-year increasing from 50 million US dollars Revenue from data connectivity service were 47.8 million US dollars, a slight increase from 47.6 million in 2024. Within the segment, international data connectivity service remained the largest contributor, rising from 39.5 million US dollars in 2024 to 41.1 million US dollars in 2025. The rankings are 4% year-over-year increase. Overall gross margins was 52.4% in 2025, an increase when compared with 48.4% in 2024. Gross margin for service was 58% in 2025 compared with 6.8% in 2024. For the full year 2025, excluding share-based compensation, total operating expenses was $40.4 million compared to $40.8 million in 2024. Net income was $6.3 million in 2025 compared with $4.6 million in 2024 representing a 38.2% increase from 2024. Adjust EBITDA was $17.2 million in 2025 compared to $17.1 million in 2024. For the full years, our capital expenditure was $1.0 million compared to $4 million in 2024. We generated positive operating cash inflow of $3.2 million compared to $9.2 million in 2024. Turning to balance sheet items, our cash and cash equivalents increased to $32.8 million as of December 31, 2025, compared to $28.5 million as of September 30, 2025. We remain focused on strengthening our financial position and believe we are well positioned to drive continuous growth in our business. Please open up for Q&A.

Thank you. If you would like to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you would like to cancel your request, please press star 2. If you are on a speakerphone, please pick up the handset to ask your question. Your first question today comes from Theodore O'Neill from Lynchfield Hills Research. Please go ahead.

Thank you very much. Looking at your guidance for 2026 implies a fairly strong second half of the year, and I was wondering if you could talk about that growth in terms of what product lines or geographic areas you expect to see participate the most in that growth.

Thanks, Neil. Yes.

The outlook for the year 2026, we expect a growth, a robust growth trend for our overall business. The main growth driver as we disclosed in the year 2025, the three new business line are main growth driver. which are GoloGumi IoT, GoloGumi Theme, and GoloGumi Live, as well as a new business line, Patform, separated from the GoloGumi Live business line. This year is a separate business line for Patform business. So all these four now is the four business line will drive our main business growth in terms of revenue. Our legacy business, Wi-Fi, mobile broadband Wi-Fi, has kept stable business, which will contribute solid cash flow to support our investments on our four new business. So as we disclosed last year, in the year 2025, We invest massively on four new business lines. All these investments came from the cash inflow generated from our legacy business, mobile broadband business. So last year, in the year 2025, the operational metrics has told us the growth driver will come into play. revenue for the year 2026. As we are disclosed, the DAU, MAU metrics for these three new business, IoT, SIEM, and LIFE, they've grossed massively, a couple times more than the previous year, 2024. So this will carry on as a driver for our growth in year 2026. Yeah.

Thank you. And could you give us some more information about Gokomi IoT? Are there particular industries where you see growth for the IoT part of the business? Or is it very broad-based?

Yeah, you had... Our IoT business, because we not just invest last year, we are almost invest nearly 10 years. But from last year, we finished our IoT product impact into the industry, you know, IoT leaders. We finished all the trials. That's why we can see a largely increase because of the They already embed our IoT cloud-based input solution into their, like a camera, like a car infotainment. Even the battery, you know, monitoring. Because you know all the Chinese manufacturers and these smart devices more and more go to outside China and go to worldwide. So we just... enable them to close the network in each country easily. So this helps us gain a volume customer increase. All these are our partners, so give us the forecast this year. They are IoT products like security cameras, like CarPlay, like the power battery monitor, etc., and then we have a large volume deployed with our solution. Before that, we just finished the test before last year. But from the second half of last year, we see more and more these industry players embed our solution because our solution is much better than currently just practicing inside. So that's why we get more confidence in the next couple of years. we can get millions of connections and revenues from these partners.

All right. Thank you very much.

Thank you. Once again, if you would like to ask a question, please press star 1 on your telephone and wait for your name to be announced. Your next question comes from Vivian Zhang from Diamond Equity Research. Please go ahead.

Hello. Hello. This is Vivian Zhang with Diamond Equity Research. Congratulations on the results achieved. I got several questions. Firstly, can you provide more details about the recently introduced PAD4Go ecosystem and the PADCAM, and how do you expect them to drive the growth of sales and profit margins?

OK. Last quarter, so year 2000, the first quarter, we are in the last October. Last October, we newly launched our platform product in Asia area, then to U.S. area. I think that we already started, I think, the solution, the platform for solution, bridging the digital gap between the people and the past. And also we get a very popular during the CES exhibition and also NWC in Barcelona. So like CBS, like Reuters, and even Chinese Xinhua, they all give a very focused report about our new product. And also, last three years, we also launched a new pet cam. And also, the pet camera shoot, I think, integrates the pet phone and the pet cam. So now we can provide not only just the voice connection with the people and the pet, but also we can provide the camera, I think the video, connection with the pet. That means we can provide the connection through the pet view. We call it FPV. Also, we can use this pet camera as a CCTV to monitor, to understand the pet, the mood, the behavior, and their security, etc. So that's why we are not only just staff on the voice for pet phone, but we have more device and more function coming, like a pet cam. This is for the pet cam can, I think, can do the live broadcast, live video. Also, it can be added as a CCTV. So it's very useful to improve the safety and the communication effect with the pet. And also, our pet goal, this is hardware, it's pet camera and the pet phone. Our ecosystem, our app, we call the digital world, it's our pet goal. So in the international version, we call the pet goal. For Chinese version, we call the pet wolf. is separated because of data security arrangement. So I think for this PEPPER goal, we can provide, we can solve it. I think first is the communication between the pet and the people. We can provide in the AI translation for the Moody languages. That's the first part. And the second, we can sort it end-to-end for pet safety, including the checking and the training. Also, we can provide healthcare for the pet. It's end-to-end. So we can see that once the PEPGO launch end of next month, we can see the platform significantly apply different ways, the current checker. and the current PET training device. The PET phone, finally, we understand it can solve three major anxieties. First, it's about communication. The second is about safety. And the third is about health. So it compares the last single function device. And PetPhone and the PetGo can provide more effective, you know, pinpoint and anxiety solutions. So PetGo, I think we mentioned, PetGo will include not only just PetPhone. PetPhone, we believe, it will be like an iPhone. with app inside first. And the second, Pepper Go, with a community and with a more, you know, functional and even AI agent inside. So like a translation, like a video camera, healthy AI, et cetera, all put into here. And also we have a community with all the people and the pet and they live together and they shake together and they talk together. So that's like a pet words, like a WeChat, that we call the pet WeChat and the pet TikTok. So we integrate more and more functions in the Pepper Go. The initial version is quite different because we have now a community for pet these owners. We are more understanding each other. And I believe in the future, Pepper Go, will grow up and become a digital society for pets and people. That's all. Thank you.

Okay, got it. My next question will be about the R&D expenses declining a lot in the fourth quarter, so we would like to know if this will impact the company's ability of researching and developing new products.

Now, the figures, the expenditures related to R&D, the figures tell us we improve our R&D's efficiency by investing more efficiency on program management. and also AI tools, some AI coding programs. All this improves our company's R&D efficiency, improving. So we invest R&D resources more on a new business mind, as we say. the more R&D research invest on platform of business. And that investment in R&D is not enough, so this year we will carry on investments on R&D for new business. As we are filing the 6K in the last years, I think in October, we spin off platform business as a separated subsidiary. So we have a start to a new financing, a risk finance for platform business. So the platform business will have, I believe, will have a new fundraising program. deal in this year sometime. So we will invest as a new fund on new business, like platform business, so we will still invest, increase investment on R&D's, on new business, invest on our new futures.

Okay, okay.

Yeah, I think we are more, yeah, we are more spending on other than just traditional business.

Got it. Got it. My last question is that can you elaborate on the reasons for the decline in product sales? Do you think this decline will continue?

Sorry, which one?

Yes, can you elaborate on the reasons for the decline in product sales? Do you think this decline will continue?

It means mobile broadband business declined.

No, I mean . Yes.

Sorry, can you say again?

Can you explain why the product sales declined? Like was it under, do you think this decline will continue?

We disclosed a little bit the revenues generated from mobile broadband hardware delivery was a little bit declined in the last years, but the revenue, the service revenues was increasing a little bit over the year 2004. As we get close, the MAU's matrix was increasing about 10% over the last years, which will show our revenue, service revenue, related to this active user will come back to our account. on recurring basis in the year 2076 and over. So as we say, the new growth engines came from the four new business lines, as I mentioned, IoT, platform, scene, live series, so the mobile Wi-Fi as a legacy business, as a contributor of a cash flow for us to invest on our new business.

So that's... Yeah, a more common, because our current legacy product from international part is heavily impacted by, I think, the economic and tariff. For example, last year, so you can see in the last summer, I think that the cover is good season, but at the moment we suffer from the earthquake in Japan. So that's impact, the first. The second, and also we can see the Sino-U.S. trade war during the middle of last year, around June. So you can see the fourth quarter we suffer from the China and Sino-Japan relationship, and this year is the same. So in the first quarter, we suffer from the Middle East war. So all these have an impact about the traveler, this part. But for the domestic part, it will be a stable growth. So we have to overcome the traveler business that's very heavy by the economic and the the situation, the political situation worldwide. So if the worldwide situation is getting better, I think this will regain the benefit. We will regain from this part.

Oh, okay. That helps a lot. Thanks for sharing the details. That's all. Thank you.

Thank you.

Thank you. There are no further questions at this time. I'll now hand back for any closing remarks.

Okay, thank you once again for joining us today. If you have further questions, please feel free to contact your colleague's Investor Relations through the contact information priority on our website or speak to our Investor Relations form. We look forward to speaking with you again on our next quarterly call. Thank you.

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