uCloudlink (UCL) 30 Nov 212021 Q3 Earnings call transcript

00:03 Good morning and good evening, ladies and gentlemen. Thank you for standing by and welcome the uCloudlink Group Incorporated Third Quarter twenty twenty one Earnings Conference Call. At this time, all participants are in a listen-only mode. After prepared remarks by the management team, there will be a question-and-answer session. [Operator Instructions] Today's conference call is being recorded. like Mr. the now your over would today, host I to conference turn to XX:XX Deputy Relations Shen, Bob Investor company. Director of the Please ahead. go

Co-Founder Thanks Peng via today. to UCL us Chairman twenty XX:XX of IR brief website Chaohui and now Director, joining X introduction third and will as Directors; CEO our Chief is I and Executive highlights, business for twenty the well Officer; Marketing is Chen team. of will ir.ucloudlink.com, quarter Zhu a as our of available cover posted presentation on on NASDAQ one services. Board earnings earnings XX:XX our company Our Officer; XX:XX begin The our IR our call our which will is with uCloudlink's at on Zhiping release newswire is of Chief and is earnings our everyone Sales. our President Vice an Co-Founder, Yimeng overview website. Section Financial Tan our Shi of give

a Our are conference by as may statements, by that any SEC. in obligation X. result with statements. pursuant factors, the as Section company's not and or the different also provisions forward-looking known or financial which entity to revise update company's All that of forward-looking implied their call made CFO, presented law. company market release these on the unaudited be unknown contain materially operational cautionary safe highlights by The unaudited risks, actual and or GAAP based changes the conditions, are future uCloudlink's Securities information, qualified details proceed, statements as required and control, press as X to any most of and XX:XX and reconciliation discussions results, events, this observations from nineteen uncertainties, financial then and factors of contains uCloudlink's will unaudited may Please in current the Section otherwise involve five. the expectations of forward-looking of performance, and measures. the press These information, statements measures well Before the to in forward-looking note the Yimeng under the management's except ninety other that turn Chaohui not of results, results expectations Please expressly Chen. earnings company does and the new achievements cause risk a ahead. we statements filing please assume or note financial Reform this directly over non-GAAP call to our the Co-Founder measures. call XX:XX the harbor Private Litigation to XX:XX release will discuss Shi, as Act forward-looking statements GAAP non-GAAP comparable I our CEO, Mr. unaudited now go of include performance,

similar there and year twenty Yes, the we as and during development presentation one second recent content will Great. of twenty call the XX:XX major earning the outline are quarter highlights. of this

profitability and with international the had and and X.X track record over long abate ongoing move gross high growth term COVID-XX of XX:XX our and the time as data Let's of potential. data trend Even magazine more restriction of strong use. are a connectivity a international of challenges continue is connectivity of into thirteen. in new we international In to page travel positive gradual uCloudlink to margins services benefit vesting recovery international business. and a the still because come more travel international for recently confident pandemic travel

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of development further expand data connectivity to business local business we our contributed of our services. uCloudlink technology Hyperconn and scope the X.X and growth new Our

with US by network uCloudlink X.X various potential. with X.X massive experience of less potential partners partner resilience user mobile that business business operators, and potential the business is negative proven high in similar uCloudlink during shows impact in Our X.X widely and growth with local technology growth to as basically demand pandemic, base. Hyperconn local industries model and Such monetization Our overall. with XX:XX is accepted Japan. greater China,

and more We our data network mobile with have through connections continued this handset total in operators efforts and which alliance scenario such with increase hyper one mobile strong the uCloudlink the with China be had been and to be we in business. by broadband in expanding is Autopilot, lifted fixed operators partner connectivity restrictions revenue mobile to due term, appreciation to indication inclusive in to mobile will let of with increase both business, high SaaS in third network bring in our IoT GMI soft business able service our our to more and operator the progress AR, XX:XX manufacturers has in travel of cloud the successful such our the accelerate X.X we Inside, major and network international and as mobile business year corporation the solution branded will and And long under as broadband smartphones, Hyperconn, quarter technology of and XG also that development in offline we compared superior fixed believe awareness businesses impact revenues opportunities XX:XX us FBB the to we X.X short-term online MBB from a especially home US applications one saw would and platform platform quality XG broadband, various such twenty XG Cloud XX:XX the target as mobility one high make arrival as future. and leveraging et the in quality. XG the We GlocalMe provinces. a of of growth data cetera. The requirement expand The twenty connection will computing addition through which in in faster VR, application through smartphone. with second data users twenty our and to era connectivity quarter allows by ensure channels of market. launched new connectivity. for We twenty more Further,

introduce to strategy new market. use of is into -- our will and business. services the to product Such Our development innovative product this further accelerate X.X technology

been equipped new education. SIM Hyperconn have industries as cloud in such Our new with promoted tablets technology and

to Walkie allow the our we to developed continued spectrum feedback have recognize move Based value fifteen. our SIM page broaden services, and services and a increasing a of related network Our require e-commercial applications. with including and and third number receive users industry, XG retail and our industries. develop of and data our by and with SaaS offline our Our and education, such on new hardware enter strategy scope our party device. of wide Talkie as positive partner barrier to terminals product expand reliable local new new strengthen Hyperconn XX:XX and channel our connections, product services, collaborations high-quality and products platform Let's a and and distributed our by Hyperconn partners live Hyperconn across broadcasting and been cloud e-commercials, technology emergency products have other to which IoT XX:XX business innovative

has twenty For our world’s our example, twenty first in technology new Hyperconn solution We near device; our Wi-Fi camera, to a Genie business launch positive Numen mobile commercial and tablet cooperate XG unveiled one, Numen, the of year market feedback after in one, partners, as we quarter and more for IPC Genie, have the we to come the the our June HyperConn and product year XX:XX and the products IP launched with Hyperconn and twenty twenty device. third continue such to expected and future. pre-testing technology in for we

embedding more innovative our services with globally. with Inside, products and GMI, to will expand partners we business HyperConn we and Going users further GlocalMe and forward, our our through launch continue and SaaS ecosystem PaaS more

mobile to for elevate technology and compatible education, us data connectivity through in will as solution quality response, PaaS and in financial such continued Our who we Hyperconn to Everything. industrial, XX:XX CFO, keep of new such business industries technology reliable and turn high highlights as I will requiring XG our enter Our as to and the and now services CPE, power launching SaaS tablet, such investing also and cetera. solution believe Internet Yimeng XX:XX electric online et go our is the services various data as connection connection, scenarios R&D market innovative cetera. will smart over et Shi, application expand ecosystem section. facilitate products Hypercom We with emergency to highly and hardware data phone,

you, XX:XX Thank Chen. everyone. Mr. Hello,

DATs eight from per XX:XX of over and daily as hundred that terminal impacts four, from X.X Daily The and twenty fifty Our sixty during. Active COVID-XX third active twenty. Let's point usage twenty point from five around for in data China. representing percent third five of quarter one one. of uCloudlink Average business. one quarter to shows global one ninety seven eighteen, and Mainland twenty two the September percent percent of six increase and shows one third terminals page Please shows outside twenty slide Terminals, and two the twenty twenty of becoming the for is an was Average thousand total quarter turn turn two fifty total of sixty of accounted side were twenty thirty, daily which left-hand six to hundred hundred had twenty gigabyte page thousand two in twenty stable. diversification of seventeen, DAT September twenty. our XX:XX service revenue one. data We the third in

business the one of third it twenty cetera. contributed China, forty of business will market expand as be the had and total Southeast contribution revenue et our of to twenty revenue, market other to continue the U.S. our During to for US such Europe country's largest business. Asian, XX:XX continue development Japan, Japan single largest for our For and quarter seven further market, the to other percent we and the

of revenue six other data we twenty and go and twenty. our twenty Japan total from percent page Mainland twenty third percentage came from percent Service quarter China, percentage products. financial of quarter million point during PaaS quarter the Revenue which with breakdown was increase SaaS one. primarily one. quarter twenty percent PaaS total total of percent point business had connectivity page in of XX:XX due point a increased of increased the of third Let's revenue one PaaS our six two coming one, in dollars twenty revenue twenty. of eighty Let's percent thirteen of one will one as and during This twenty twenty as Revenue revenue eight forty was compared I with service four turn during to partner one. twenty fifty to of third of twenty segments, from third also from from through countries two twenty of twenty second business twenty during expansion total number twenty third sales the five XX:XX related third eight service and of in the thirty service local the and highlights percent and point seven of XX:XX percent During regions. our nine in dollars SaaS our five use revenue came twenty quarter seventy quarter quarter to of from two five namely revenue quarter to move to revenue a percent twenty one SaaS that service. point of provide third one million from eight of shows revenue compared to point of

primarily an the SaaS total Our seven was due of offset a point one. data of in service percent percent three by connectivity four by million for point point business. in Revenue revenue dollars twenty from turn representing were in from from decrease nineteen dollars twenty. dollars quarter in to increase of partially same increase third service, million service. million, Let’s higher twenty gross point twenty increased to twenty period nine eighteen six page four quarter third eight two five This twenty revenue margins for PaaS, from XX:XX our to of twenty revenue point million ten

margin forty increased and six is decrease of one mainly during cost third twenty overall service point to the thirty three percent twenty our percent due gross three percent in chain during compensation third twenty quarter revenue. highest gross move gross eight margin our to supply rising the the mix, third primarily twenty twenty this twenty due point of twenty, five material to three a to product concerns quarter PaaS, bases others. The thirty over of XX:XX compared decreased margin Our increase margin quarter of breakdown respectively. gross and excluding six SaaS of of because point one, twenty other and percent overall of margin share one expenses, revenue third XX:XX increase quarter has twenty operating which during service the The our one. page global gross shows of to three, twenty to Let's which is point

compensation, twenty is with revenue turn continue XX:XX share Excluding to percent third twenty twenty sixty our total quarter during business maintained of as of expenses the one in the twenty to quarter four. operating twenty percentage will efficiency in improve and compared to percent of page sixty Let’s of the at based third five our a operation one future. it

one from during eight EBITDA zero twenty CapEx quarter during dollars twenty four during increased million percent revenue quarter point of twenty point to you. one one. point in one zero million million Our twenty. the dollars point third page of we one dollars twenty twenty the percent five three Net quarter negative twenty were was compared point to third loss to CapEx third And third five. zero let quarter move million during quarter four that, Thank Let’s of as to dollars twenty nine during third quarter of twenty session. compared seven twenty twenty. million of twenty Adjusted compared of twenty. during our a today's XX:XX five million me during third total during of third seven With dollars twenty to Q&A conclude dollars twenty presentations. one XX:XX four of was quarter third start point quarter negative of percentage

you. Thank XX:XX

Zhang Vivian go the come the begin And We [Operator session. will from with question will first ahead. Please Equity. Instructions] now question-and-answer Diamond

Vivian XX:XX Good from evening. Diamond XX:XX is Hello. This Equity Research.

the I questions. two congratulations results. First, on have

months So its new were like is products, Hyperconn the ago. related that, launched we first thing your technology including know tablets several and

of PaaS provide SaaS does and the my is lot related you that the data services. this see sales quarter. second a the any XX:XX increased revenue the question revenue? part? this So regarding My We to how impact is, question Can

provide can develop on So in area. partners Thanks. you you color how this business keep expanding new and

first [indiscernible] question XX:XX tablet. the So let answer me for

So tablet tablets, third the launch in we quarter. the

So Hyperconn we the product the September. September launched in product in launched -- in

along tablet. quarter, Since totally the third with for eighteen yeah. [indiscernible] Speakers] So how I delivered the [Multiple thousand September many we think actually think -- delivery devices I in devices

used we and for PaaS United SaaS for So order So Japan question the for answer [indiscernible] more second can in and the States. mainly continue the have tablet, you in quarter first to XX:XX revenue.

Yes. XX:XX

of our and with -- weight connectivity local relates years. revenues Regarding SaaS the revenue SaaS as strategy this since compared last uCloudlink’s improving has and platform the in a service. PaaS This been centric

deliver So our PaaS, on when device need we data worldwide to our that carriers, they to provide to local system, platform still and the package platform SaaS more SIM and to terminal users. from more business rely solution and service or cloud partner Hyperconn procures

past core in users XX:XX and terminal for more business active well also as SaaS So with active well. expect PaaS, in more business of as years and our used partner our line our We in our increasing this be strategies PaaS, delivered to the terminal SaaS is weight and well. and more future a one the by service service daily --

very that's revenue our has also we profitability most a a SaaS and you. lot our account come margins. performance as cash higher improve And have important flow Thank well. this So into as to have service gross of SaaS business for overall where on lot

market way seamlessly to and of our Shen. such our Vivian. I solution Bob innovative the our some facilities mobile tablets times. as and our our the point education we example connected Japanese just of business that, with DD, our XX:XX new enable mentioned tablet new plus for new such fixed technology is the For Hyperconn of solution technology education. Hi, at networks as for always X.X tablet. you recent technology pave quick our comes development us This technology as network X.X example further equipped Hyperconn want one to This new as like enter is that online new in know And Yes, all to broadband partners broadband XX:XX it our add the products. available in And industry, and cooperate businesses. our our and with development to

sense. XX:XX you, Bob. Thank Shi. Thank That you, makes and Chen

Our Thompson ahead. come Investment with [Operator next go Lisa XX:XX from question Zacks will Please Research. Instructions]

we congratulations way on only to settle returning sentence to press SIMO. conversation, goes with It's and and there's Hello, to first of growth. said this XX:XX question no great the because would last release, the revenue you My you see. had

far you So now how do you that having will you any save that litigation? not as settled more SIMO, money with expenses much year of next think as

Yimeng, questions is I’ll your Yes. This answer Yes. XX:XX

might settlement the a litigation expenses with And third that quite there be will in we is twenty So that's agreements this on quarter from XX:XX saving we expense, this [indiscernible] process SIMO than past You disclosed of of three than -- segments, we And long this expenses see from significant. see And that's one. dollars SIMO. litigation years the enrolled more reductions we more eighteen couple twenty know, past with in significant twenty years. of very in seventeen years litigation the million -- three litigation

we So I in think we expenditure will significant the kind have of -- that's litigation in futures. think don't we this where

think as control future expenditure So big see. we in terms the I in that's of a -- that's improvement

So this will be reflected and periods Thank year next in our performance in you. this following year.

So question. my is XX:XX this

I less my to would next it in much spent year? Just so then how you spend can So year this somehow? model you have have

basis, additional figure the discussion Yes, this specifics XX:XX have can we after we will okay? discuss in call. for this as projection this categories For expense this comparable

millions --but for the So this dollars of XX:XX in is it year?

litigation than more we this millions. a related couple spend litigation year more expenses. It's than -- is expense millions Yes, dollars XX:XX

your then hands agreement? did in out money settlement Okay. curiosity, And any change XX:XX of

in -- withdrawal house with cash. that’s related Just expenses XX:XX with of [indiscernible] the

didn't anything? anything they So didn't you you XX:XX and pay them pay

withdraw doesn't settlement, No all case. No. the XX:XX

to next coming guidance in less that XX:XX revenues Good. down gave this you -- next to you this What quarter? that right, is Okay. you're do sequentially guiding quarter. from? will All quarter think quarter Where your be from be In

quarter in XX:XX assumptions still carry those to chain, supply That's million for this expirations just to of we to orders the chance need We global supply eighteen this seventy is reason supply million curious on deliver discussed chain fourth constraint in five the from guidance constraints. and chain dollars. prepare point

guidance and that will that achieve we try -- will disclose guidance. we achieve we that So to

the – but -- products. is have constraints. orders did so Mr. Chen, years. the -- manage but believe supply there chains we risk it, And the some we latest we next do coming is and you we believe a of color And still for for

the go XX:XX of the Products will grow. will still and rest down business

XX:XX That's some you Chen have expectation. do the that? Yes. comment Mr. on

XX:XX So for to yes, litigation. comment

it’s in in So we money to a major us are think waste consideration. good valuable That's don't position. We litigation. the the for

So that’s for question. first

order constrain than the have chain can we so Second, supply because the we of volume deliver. more of

us So for the next that's delivery challenging in quarter.

particular And all any for XX:XX is that ones? products or the

products. XX:XX I the think all

including major you all in surprising. because can So [indiscernible] even are in -- supply see everything the the chipset the

XX:XX Okay.

in now you tablet to twenty going of delivery you than And twenty so, two thinking thought be lower let’s you're is this? are say because

going depends XX:XX COVID-XX. on I is think it don't so, because up, tablet

So we if will have launch, February COVID-XX is product still go the serious, more we I because So have up think headcount.

more have come more like up. We product we [indiscernible] and product have key

also end, a such brand IP middle and GlocalMe end join high Inside, more product. including we have Camera, [indiscernible] more have [indiscernible] we you can product So as see

order. think year will will product launch more we more bring I next and

don't about you are that? with XX:XX think All selling the countries? Could you partners reminds IP mentioned, And to question. what it going I are to that's little you bit And a right. camera? to? been me Who other the be talk working of sell that

is Hyperconn and accepted our Because company. XX:XX more camera more by [indiscernible]

with one OEM has IP big a news share [indiscernible] working company and So ago. market We China release camera in we who months worldwide. have bigger

the user company need the very come change really up and their when for the SIM impact. we our SIM like solution, because So for XX:XX software change users. do That's camera, camera. outdoor camera the to this outdoor not card, embed don't So technology our need challenging his into

this the the companies. IoT get we and -- and like data. why avoid That's camera can corporation we for for -- traffic the IP the So power company best also and best have more smart for more and

Okay. XX:XX

it they're cameras their going with be because their selling going put them to it? name just on software, just in So you're

Yeah. XX:XX

many in in I service solution they our think many brand. --

IPC. of the So, we in brand sell one choice. will joint to bring a That’s

bring will but revenue more our We offline and connection and share partner shop, for And to camera their we other this into get in joint we our better embed provide will partners. also online can software users. branding

show or product in SaaS or in sales other? XX:XX in up does works? PaaS, revenues How So, would that

XX:XX Both, if sell But then data joint partner and we just only revenue layout if in revenue. camera, data get PaaS, branding, hardware we only for customer, SaaS. get we

Great. That release Alright, Are a going you sounds press XX:XX good. product release? anytime soon a with

XX:XX Yeah.

-- quarter we Next is finished will because third testing. quarter

available, First quarter we launching.

great. forward you. Look it. all questions. seeing That's Okay, XX:XX my to Thank

remarks. XX:XX management go are [Operator to further over conference would team the the there no As closing I to Instructions] ahead. questions, for any like back turn Please

Thank once for today. again you us joining XX:XX

If through uCloudlink’s further provided the contact you our Relations questions, website Investor group information free Investor please have Relations. to contact on feel

XX:XX The has call concluded. conference

now disconnect may You your line. you. Thank