UCLOUDLINK GROUP INC. Announces Unaudited First Quarter 2022 Financial Results

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HONG KONG, May 31, 2022 (GLOBE NEWSWIRE) — UCLOUDLINK GROUP INC. (“UCLOUDLINK” or the “Company”) (NASDAQ: UCL), the world’s first and leading mobile data traffic sharing marketplace, today announced its unaudited financial results for the three months ended March 31, 2022.

First Quarter 2022 Financial Highlights

Total revenues were US$15.6 million, representing a decrease of 11.8% from US$17.7 million in the first quarter of 2021.
Gross profit was US$5.8 million, representing an increase of 5.5% from US$5.5 million in the first quarter of 2021.
Loss from operations was US$7.6 million, compared to a loss from operations of US$15.3 million in the first quarter of 2021.
Net loss was US$7.9 million, compared to a net loss of US$15.4 million in the first quarter of 2021.
Adjusted net loss (non-GAAP) was US$4.3 million, compared with an adjusted net loss of US$7.3 million in the first quarter of 2021.
Adjusted EBITDA (non-GAAP) was negative US$3.9 million, compared with negative US$6.7 million in the first quarter of 2021.

First Quarter 2022 Operational Highlights

Total data consumed in the first quarter through the Company’s platform was 42,049 terabytes (6,501 terabytes the Company procured and 35,548 terabytes our business partners procured), representing an increase of 15.0% from 36,549 terabytes in the first quarter of 2021.
Average daily active terminals in the first quarter were 273,870 (1,430 owned by the Company and 272,440 owned by our business partners), representing an increase of 33.5% from 205,082 in the first quarter of 2021. 69.5% of daily active terminals was from uCloudlink 2.0 local data connectivity services and 30.5% of daily active terminals was from uCloudlink 1.0 international data connectivity services during the first quarter of 2022. Average daily data usage per terminal was 1.74 GB in March 2022.
As of March 31, 2022, we had served 2,240 business partners in 56 countries and regions. We had 184 patents with 110 approved and 74 pending approval, while our pool of SIM cards was from 305 MNOs globally as of March 31, 2022.

Executive Commentary

“Despite the negative impact of local COVID-19 resurgences and subsequent lockdowns in certain cities in China, including where our main manufacturers are based, which has impacted our revenues from sales of products, we still recorded a total revenue of $15.6 million during the first quarter of 2022, which was in line with our projections. Our gross profit from service-related business improved significantly, primarily attributable to the increased revenue contribution across all of our service-related business lines, including international and local data connectivity services and PaaS and SaaS services. Our number of average daily active terminals has experienced notable growth in the first quarter of 2022 compared to the same period of 2021, which is a testament to the market resilience and the demand for our reliable, high-quality and innovative data connectivity services. At the same time, we have promoted more innovative 5G products to meet the flourishing market demand for faster and better data connectivity service. During the first quarter of 2022, we have stayed vigilant in seizing new opportunities in the field of Internet of Things (“IoT”). Our innovative IoT solutions have been well-received in multiple existing markets, bringing additional value to our customers by reducing operating costs and improving data connectivity experience for them. We plan to carry on our ongoing business strategy to consciously shift our business focus to the development of PaaS and SaaS platform centric service and ecosystem, as we are confident in our market potentials and future prospects of long-term substantial growth for UCLOUDLINK,” said Chaohui Chen, Director and CEO of UCLOUDLINK.

Yimeng Shi, Chief Financial Officer of UCLOUDLINK, stated, “In the first quarter of 2022, our service gross margin was significantly improved to 49.0%, compared to that of 35.9% in the same period of 2021. Revenues from services were US$9.8 million, representing an increase of 17.2% from US$8.4 million in the same period of 2021, as a result of the increased revenues from international and local data connectivity services as well as PaaS and SaaS services. We had further streamlined our business operation including optimizing labor costs, and our total operating expenses were decreased to US$10.1 million in the first quarter of 2022, compared to US$18.1 million in the same period of 2021. We believe we are well-positioned financially and operationally to continue to deploy our growth strategy in the year of 2022.”

First Quarter 2022 Financial Results

Revenues

Total Revenues were US$15.6 million, representing a decrease of 11.8% from US$17.7 million in the same period of 2021.

Revenues from services were US$9.8 million, representing an increase of 17.2% from US$8.4 million in the same period of 2021. This increase was primarily attributable to the increase in revenues from local data connectivity services.
- Revenues from data connectivity services were US$7.2 million, representing an increase of 19.1% from US$6.1 million in the same period of 2021. This increase was primarily attributable to the increase in revenues from local data connectivity services from US$0.6 million in the first quarter of 2021 to US$1.6 million in the first quarter of 2022, and the increase in revenues from international data connectivity services from US$5.5 million in the first quarter of 2021 to US$5.6 million in the first quarter of 2022. This increase in revenues from local data connectivity services was mainly due to our continuous development in Southeast Asia, North America and Japan.
- Revenues from PaaS and SaaS services were US$2.5 million, representing an increase of 7.8% from US$2.3 million in the same period of 2021. This increase was primarily attributable to the expansion in the number of our business partners that use our PaaS and SaaS services to provide local data connectivity services.
Revenues from sales of products were US$5.8 million, representing a decrease of 37.9% from US$9.3 million in the same period of 2021, primarily due to the continuous negative impacts of the COVID-19 pandemic.
Geographic Distribution
During the first quarter of 2022, as a percentage of our total revenues, Japan contributed 40.2%, Mainland China contributed 3.9% and other countries and regions contributed the remaining 55.9%, compared with 57.6%, 5.7% and 36.7% contributed by Japan, Mainland China and other countries and regions, respectively, in the first quarter of 2021.

Cost of Revenues

Cost of revenues was US$9.8 million, representing a decrease of 19.6% from US$12.2 million in the same period of 2021. The decrease was mainly attributable to the decline in revenues from sales of products.

Cost of services was US$5.0 million, representing a decrease of 6.7% from US$5.4 million in the same period of 2021.
Cost of products sold was US$4.8 million, representing a decrease of 29.8% from US$6.8 million in the same period of 2021.

Gross Profit

Overall gross profit was US$5.8 million, or 37.4% overall gross margin, compared to US$5.5 million, or 31.3% in the same period of 2021.

Our gross profit on services was US$4.8 million, or 49.0% gross margin related to services, compared to US$3.0 million, or 35.9% in the same period of 2021.

Our gross profit on sales of products was US$1.0 million, or 17.6% gross margin related to sales of products, compared to US$2.5 million, or 27.0% in the same period of 2021.

Operating Expenses

Total operating expenses were US$10.1 million, compared to US$18.1 million in the same period of 2021.

Research and development expenses were US$2.7 million, representing a decrease of 29.4% from US$3.8 million in the same period of 2021. The decrease was primarily due to a decrease of US$0.6 million in professional service fees, a decrease of US$0.2 million in staff costs related to cost control measures and a decrease of US$0.2 million in share-based compensation expenses.
Sales and marketing expenses were US$2.8 million, representing a decrease of 19.0% from US$3.4 million in the same period of 2021. The decrease was primarily due to a decrease of US$0.4 million in staff costs related to cost control measures and a decrease of US$0.3 million in share-based compensation expenses.
General and administrative expenses were US$4.6 million, representing a decrease of 58.2% from US$10.9 million in the same period of 2021. The decrease was primarily due to a decrease of US$4.4 million in share-based compensation expenses, a decrease of US$1.4 million in professional service fees and a decrease of US$0.7 million in staff costs related to cost control measures.

Loss from Operations

Loss from operations was US$7.6 million, compared with loss from operations of US$15.3 million in the same period of 2021.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA (Non-GAAP), which excludes the impact of share-based compensation, fair value gain/loss in other investments, share of profit/loss in equity method investment, net of tax, interest expense, income tax expenses and depreciation and amortization, was negative US$3.9 million, compared to negative US$6.7 million in the same period of 2021.

Net Interest Expenses

Net interest expenses were US$0.2 million, compared to US$0.04 million in the same period of 2021.

Net Loss

Net loss was US$7.9 million, compared with net loss of US$15.4 million in the same period of 2021.

Adjusted Net Loss (Non-GAAP)

Adjusted net loss, which excludes the impact of share-based compensation, fair value gain/loss in other investments and share of profit/loss in equity method investment, net of tax, was US$4.3 million, compared with an adjusted net loss US$7.3 million in the same period of 2021.

Basic and Diluted Loss per ADS

Basic and diluted loss per ADS attributable to ordinary shareholders were US$0.27 in the first quarter of 2022, and basic and diluted loss per ADS was US$0.54 in the same period of 2021.

Cash and Cash Equivalents, Restricted Cash and Short-Term Deposits

As of March 31, 2022, the Company had cash and cash equivalents and short-term deposits of US$11.2 million, compared to US$8.1 million as of December 31, 2021. The increase was primarily attributable to proceeds of US$4.7 million from issuance of convertible debenture and proceeds of US$4.5 million from bank borrowings, partly offset by outflow of US$4.4 million for operations and repayments of US$1.5 million for bank borrowings.

Capital Expenditures (“CAPEX”)

CAPEX was US$6 thousand compared to US$0.1 million in the same period of 2021.

Business Outlook

For the second quarter of 2022, UCLOUDLINK expects total revenues to be between US$16.5 million and US$17.5 million, representing a decrease of 8.9% to 14.1% from the same period of 2021.

The above outlook is based on current market…