uCloudlink Group, Inc. Q3 FY2024 earnings call

• Business growth: Revenue increased 5.6% year-over-year to $25.2 million, net income reached $3.4 million, and positive net cash inflow from operations was $2.0 million. - GoCloudMe ecosystem: Thrives with comprehensive data connection solutions and diverse business lines beyond travel, including local me live and programming IoT. - International data connectivity services: 1.0 international data connectivity services continue to grow, with full-speed 5G network coverage increasing from 75 countries and regions in Q2 2024 to 15 more in Q3 2024. Next-generation portable Wi-Fi product integrating with HyperCard solution to launch soon. - GoCloudMe mainline solutions: GoTo mainline solutions like KeyTracker, Unicorn, and LongPart made progress, with market campaign and new distribution channels developed. Launched at global expos and signed with a large US airport retail channel. - Local me business: Expanded market presence of OTA, with AllSeam solution under commercial testing and expected to launch near future, surpassing cross-carrier restrictions. - IoT business: GoCloudMe IoT business line advanced, with products in small-scale commercial applications, exploring additional application scenarios with leading manufacturers.

Total revenue for the third quarter of 2024 was $25.2 million, an increase of 5.6% from $23.9 million in the third quarter of 2023. Revenue from services was $17.3 million, up 3.9% from $16.6 million in the same period of 2023. Services revenue accounted for 68.6% of total revenue in Q3 2024, relatively stable compared to 69.7% in the same period last year. Geographically, Japan contributed 46.6%, Mainland China 27.8%, Latin America 12.8%, and other regions 12.8% in Q3 2024, vs. 44.2%, 17.2%, 26.3%, and 12.3% respectively in Q3 2023. Average daily active terminal (DAT) in Q3 was 320,452, with 55.4% from uCloudLink 1.0 International Data Connectivity Service and 44.6% from uCloudLink 2.0 Local Data Connectivity Service. Average daily data usage per terminal was 1.52 gigabytes as of September 2024. The company had served 2,759 business partners in 61 countries and regions as of September 30, 2024, with 183 patents (158 approved, 25 pending) and a SIM card pool from 389 MNOs globally.

• For the fourth quarter of 2024, total revenue is expected to be between $25 million and $30 million, representing an increase of 15.2% to 38.2% compared to the same period of 2023. - New products like GoCloudMe Live contribute to the growth in Q4 and future quarters as the company expands from one business line to four.

Q: About the AllSeam solution and its commercial launch milestones.

A: AllSeam solution (Yisim Trio) planned to launch at the end of Q4, overcomes limitations of first SIM card in roaming, domestic data connectivity, and flexibility, compatible with OTA SIM and physical SIM, and plans to attend MWC to announce.

Q: About Q4 guidance and confidence.

A: Guidance for Q4 is between $25 million and $30 million, higher than sequential past due to new products like GoCloudMe Live gaining revenue, growing from one business line to four.

Q: About sales and marketing expenses.

A: Will invest more in marketing in US, Japan, Europe for new products like GoCloudMe Live and AllSeam solutions, balancing financial positions to support growth while increasing marketing expenditures.

Q: About partnership with US airport retail channel.

A: Signed with a large US airport retail channel, products in 30 US airports, signed another major US channel, and made breakthroughs in Europe with big channels.

Q: About sustainability of PaaS and SaaS revenues.

A: PaaS and SaaS revenues have different models, with businesses willing to pay more for platform fees for efficiencies and improvements, choosing different packages.