UCLOUDLINK GROUP INC. Announces Unaudited First Quarter 2021 Financial Results
UCLOUDLINK GROUP INC. (NASDAQ: UCL) announced its unaudited financial results for Q1 2021. Total revenues dropped 47.2% to US$17.7 million compared to US$33.5 million in Q1 2020. Gross profit declined 53.3% to US$5.5 million, with a net loss of US$15.4 million, influenced by share-based compensation of US$5.5 million. Despite challenges from COVID-19, a 3.9% revenue increase was noted from Q4 2020. The company expects Q2 2021 revenues between US$18.0 million and US$19.0 million, reflecting a projected decrease of 9.5% to 14.3% year-over-year.
- Operational efficiency improved with operating expenses as a percentage of total revenue decreasing from 83% to 71% compared to Q4 2020.
- PaaS and SaaS service revenues increased 18.3% year-over-year, reaching US$2.3 million.
- Total revenues decreased 47.2% from US$33.5 million in Q1 2020.
- Gross profit fell 53.3% year-over-year.
- Net loss was US$15.4 million, compared to a net income of US$0.2 million in the same period last year.
HONG KONG, May 26, 2021 (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, 2021.
First Quarter 2021 Financial Highlights
- Total revenues were US
$17.7 million , representing a decrease of47.2% from US$33.5 million in the first quarter of 2020 and an increase of3.9% from US$17.0 million in the fourth quarter of 2020. - Gross profit was US
$5.5 million , representing a decrease of53.3% from US$11.8 million in the first quarter of 2020. - Loss from operations was US
$15.3 million , compared with income from operations of US$0.4 million in the first quarter of 2020. - Net loss was US
$15.4 million , including share-based compensation of US$5.5 million , compared with net income of US$0.2 million in the first quarter of 2020. - Adjusted net loss (non-GAAP) was US
$7.3 million , excluding share-based compensation of US$5.5 million , compared with an adjusted net income of US$0.2 million in the first quarter of 2020. - Adjusted EBITDA (non-GAAP) was negative US
$6.7 million , compared with positive US$1.0 million in the first quarter of 2020.
First Quarter 2021 Operational Highlights
- Total data consumed in the first quarter through the Company’s platform was 36,549 terabytes (3,901 terabytes the Company procured and 32,648 terabytes our business partners procured) representing a decrease of
32.1% from 53,843 terabytes in the first quarter of 2020. - Average daily active terminals in the first quarter were 205,082 (2,663 owned by the Company and 202,419 that are not), representing a decrease of
25.4% from 274,807 in the first quarter of 2020.66.1% of daily active terminals was from uCloudlink 2.0 local data connectivity services and33.9% of daily active terminals was from uCloudlink 1.0 international data connectivity services during the first quarter of 2021. Average daily data usage per terminal was 1.98 GB in March 2021. - As of March 31, 2021, we had served 2,160 business partners in 50 countries and regions. We had 156 patents with 74 approved and 82 pending approval, while our pool of SIM cards was from 227 MNOs globally as of March 31, 2021.
Executive Commentary
“Despite the lingering impact from the COVID-19 pandemic, we recorded a uplifted revenue of US
In the Chinese market, we made progress through hyper-connectivity solution with mobile and fixed broadband businesses (MBB+FBB) under various application scenarios such as home broadband and received positive feedback of our 5G/4G millisecond multi-network reselection technology. In the Japanese market, we formed new alliance with one of the mobile network operators (MNOs) and plan to cooperate with business partners in education industry, which we believe will contributes to our continuous growth momentum. In the US market, we had fast growth and recorded a high sale of GlocalMe mobile Wi-Fi hotspots via Amazon for the past 12 months ending in March 2021. After winning the patent litigation and excluding patent related interference, we will apply all our innovative technologies in the United States such as 5G millisecond multi-network reselection and hyper-connectivity solution. In Europe, we invested in iQsim, the leading provider of open virtual SIM (VSIM) platform and VSIM-enabled mobile devices based in France, which is an important component of our global investments. We will also officially release our new hyper-connectivity products and services in the near future and are proactively exploring opportunities in new industries such as internet of vehicle and education.
We expect that widespread vaccination will continue to increase recovery of cross-border activities and international tourism which we expect will benefit our 1.0 business. Leveraging our innovative technologies, we will continuously develop our 2.0 business and various IoT application scenarios with new industries which require high-quality data connectivity,” said Chaohui Chen, Director and CEO of UCLOUDLINK.
“We continued to improve operational efficiency and strategically invest in R&D during the first quarter of 2021. Excluding share-based compensation, operating expense as a percentage of total revenue decreased from
First Quarter 2021 Financial Results
Revenues
Total Revenues were US
- Revenues from services were US
$8.4 million , representing a decrease of51.9% from US$17.4 million in the same period of 2020. This decrease was primarily attributable to the decrease in revenues from international and local data connectivity services to certain extent, mainly because of the continuous and prolonged impact of COVID-19 which resulted in international travel bans.- Revenues from data connectivity services were US
$6.1 million , representing a decrease of60.6% from US$15.4 million in the same period of 2020. The decrease was primarily attributable to the decrease in revenues from international data connectivity services from US$13.0 million in the first quarter of 2020 to US$5.5 million in the first quarter of 2021, and the decrease in revenues from local data connectivity services from US$2.4 million in the first quarter of 2020 to US$0.6 million in the first quarter of 2021. The decrease in revenues from international data connectivity services was mainly due to the prolonged negative impact from global travel bans as a result of the COVID-19 pandemic. - Revenues from PaaS and SaaS services were US
$2.3 million , representing an increase of18.3% from US$1.9 million in the same period of 2020. This increase was primarily due to the increase of our business partners that use our PaaS and SaaS services to provide local data connectivity services.
- Revenues from data connectivity services were US
- Revenues from sales of products were US
$9.3 million , representing a decrease of42.1% from US$16.1 million in the same period of 2020, primarily due to the continuous negative impact of the COVID-19 pandemic during the first quarter of 2020. - Geographic Distribution
During the first quarter of 2021, we had5.7% of total revenue coming from Mainland China,57.6% of total revenue coming from Japan and36.7% of total revenue coming from other countries and regions, compared to18.7% of total revenue coming from Mainland China,53.1% of total revenue coming from Japan and28.2% of total revenue coming from other countries and regions in the first quarter of 2020.
Cost of Revenues
Cost of revenues was US
- Cost of services was US
$5.4 million , representing a decrease of36.5% from US$8.5 million in the same period of 2020. - Cost of products sold was US
$6.8 million , representing a decrease of48.6% from US$13.2 million in the same period of 2020.
Gross Profit
Overall gross profit was US
Our gross profit on services was US
Our gross profit on sales of products was US
Operating Expenses
Total operating expenses were US
- Research and development expenses were US
$3.8 million , representing an increase of26.0% from US$3.0 million in the same period of 2020. The increase was primarily due to an increase of US$0.2 million in share-based compensation expenses, and an increase of US$0.6 million in professional service fees. - Sales and marketing expenses were US
$3.4 million , representing a decrease of24.2% from US$4.5 million in the same period of 2020. The decrease was primarily due to a decrease of US$0.5 million in staff costs related to cost control measures and policies for social security benefits and a decrease of US$0.7 million in promotion fees due to the impact of the COVID-19 pandemic on sales and marketing activities, partially offset by an increase of US$0.3 million in share-based compensation expenses. - General and administrative expenses were US
$10.9 million , representing an increase of143.5% from US$4.5 million in the same period of 2020. The increase was primarily due to an increase of US$5.0 million in share-based compensation expenses and an increase of US$1.5 million in professional service fees.
Loss from Operations
Loss from operations was US
Adjusted EBITDA (Non-GAAP)
Adjusted EBITDA (Non-GAAP), which excludes the impact of share-based compensation and fair value gain/loss in other investments, net of tax, interest expense, depreciation and amortization, was negative US
Net Interest Expenses
Net interest expenses were US
Net Loss
Net loss was US
Adjusted Net Loss (Non-GAAP)
Adjusted net loss, which excludes the impact of share-based compensation and the fair value gain/loss in other investments, was US
Basic and Diluted Loss per ADS
Basic and diluted loss per ADS attributable to ordinary shareholders were US
Cash and Cash Equivalents, Restricted Cash and Short-Term Deposits
As of March 31, 2021, the Company had cash and cash equivalents, restricted cash and short-term deposits of US
Capital Expenditures (“CAPEX”)
CAPEX was US
Business Outlook
For the second quarter of 2021, UCLOUDLINK expects total revenues to be between US
The above outlook is based on current market conditions and reflects the Company’s preliminary estimates of market and operating conditions and customer demand, particularly in light of the potential impact of COVID-19. The global outbreak of COVID-19, which had a severe and negative impact on the global economy since the first quarter of 2020, presents continuous and various global risks with the full impact of the outbreak continuing to evolve. We will carefully monitor COVID-19 related factors such as the vaccines roll-out, the impact of which is difficult to analyze and predict, and subject to change.
Non-GAAP Financial Measures
To supplement the financial measures prepared in accordance with generally accepted accounting principles in the United States, or GAAP, this press release presents, adjusted net (loss)/income and adjusted EBITDA, as supplemental measures to review and assess the Company’s operating performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. Adjusted net (loss)/income is defined as net (loss)/income excluding share-based compensation and fair value gain/loss in other investments. Adjusted EBITDA is defined as net (loss)/income excluding share-based compensation and fair value gain/loss in other investments, net of tax, interest expense, depreciation and amortization.
The Company believes that adjusted net (loss)/income and adjusted EBITDA help identify underlying trends in its business that could otherwise be distorted by the effect of certain expenses that are included in (loss)/income from operations and net (loss)/income. The Company believes that adjusted net (loss)/income and adjusted EBITDA provide useful information about its operating results, enhance the overall understanding of its past performance and future prospects and allow for greater visibility with respect to key metrics used by its management in its financial and operational decision-making.
The non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. The non-GAAP financial measures have limitations as analytical tools. One of the key limitations of using adjusted net (loss)/income and adjusted EBITDA is that they do not reflect all items of income and expense that affect the Company’s operations. Share-based compensation and fair value gain/loss in other investments have been and may continue to be incurred in the Company’s business and is not reflected in the presentation of adjusted net (loss)/income. Further, the non-GAAP financial measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore their comparability may be limited.
The Company compensate for these limitations by reconciling the non-GAAP financial measure to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating its performance. The Company encourages investors and others to review its financial information in its entirety and not rely on a single financial measure.
Reconciliation of each of these non-GAAP financial measures to the most directly comparable GAAP financial measure is set forth at the end of this release.
Conference Call
UCLOUDLINK will hold a conference call at 8:00 a.m. Eastern Time on Wednesday, May 26, 2021 (8:00 p.m. Beijing Time on the same day) to discuss financial results and answer questions from investors and analysts. Listeners may access the call by dialing:
| International: | +1-412-902-4272 |
| US (Toll Free): | +1-888-346-8982 |
| UK (Toll Free) | 0-800-279-9489 |
| UK (Local Toll) | 0-207-544-1375 |
| Mainland China (Toll Free): | 400-120-1203 |
| Hong Kong (Toll Free): | 800-905-945 |
| Hong Kong (Local Toll): | +852-3018-4992 |
| Singapore (Toll Free): | 800-120-6157 |
| Australia (Toll Free): | 1-800-121301 |
Participants should dial in at least 10 minutes before the scheduled start time and ask to be connected to the call for “uCloudlink Group Inc.”
Additionally, a live and archived webcast of the conference call will be available at https://ir.ucloudlink.com.
A telephone replay will be available one hours after the end of the conference until June 2, 2021 by dialing:
| US (Toll Free): | +1-877-344-7529 |
| International: | +1-412-317-0088 |
| Canada (Toll Free): | 855-669-9658 |
| Replay Passcode: | 10156730 |
About UCLOUDLINK GROUP INC.
UCLOUDLINK is the world’s first and leading mobile data traffic sharing marketplace, pioneering the sharing economy business model for the telecommunications industry. The Company’s products and services deliver unique value propositions to mobile data users, handset and smart-hardware companies, mobile virtual network operators (MVNOs) and mobile network operators (MNOs). Leveraging its innovative cloud SIM technology and architecture, the Company has redefined the mobile data connectivity experience by allowing users to gain access to mobile data traffic allowance shared by network operators on its marketplace, while providing reliable connectivity, high speeds and competitive pricing.
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “confident” and similar statements. Among other things, the financial guidance and quotations from management in this announcement, as well as UCLOUDLINK’s strategic and operational plans, contain forward-looking statements. UCLOUDLINK may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including but not limited to statements about UCLOUDLINK’s beliefs and expectations, are forward-looking statements. Forward looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: UCLOUDLINK’s strategies; UCLOUDLINK’s future business development, financial condition and results of operations; UCLOUDLINK’s ability to increase its user base and usage of its mobile data connectivity services, and improve operational efficiency; competition in the global mobile data connectivity service industry; changes in UCLOUDLINK’s revenues, costs or expenditures; governmental policies and regulations relating to the global mobile data connectivity service industry, general economic and business conditions globally and in China; the impact of the COVID-19 pandemic to UCLOUDLINK’s business operations and the economy in China and elsewhere generally; and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in the Company’s filings with the Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of the press release, and UCLOUDLINK undertakes no duty to update such information, except as required under applicable law.
For more information, please contact:
| In China: |
| UCLOUDLINK GROUP INC. |
| Bob Shen |
| Tel: +852-2180-6111 |
| E-mail: ir@ucloudlink.com |
| The Piacente Group, Inc. |
| Yang Song |
| Tel: +86 (10) 6508-0677 |
| E-mail: UCL@tpg-ir.com |
| In the United States: |
| The Piacente Group, Inc. |
| Brandi Piacente |
| Tel: +1-212-481-2050 |
| E-mail: UCL@tpg-ir.com |
| UCLOUDLINK GROUP INC. UNAUDITED CONSOLIDATED BALANCE SHEETS (In thousands of US$, except for share and per share data) | |||||||
| As of December 31, | As of March 31, | ||||||
| 2020 | 2021 | ||||||
| ASSETS | |||||||
| Current assets | |||||||
| Cash and cash equivalents | 21,989 | 24,715 | |||||
| Restricted cash | 8,237 | - | |||||
| Short-term deposit | 196 | 195 | |||||
| Accounts receivable, net | 6,745 | 9,672 | |||||
| Inventories | 5,847 | 6,196 | |||||
| Prepayments and other current assets | 7,477 | 7,912 | |||||
| Other investments | 19,185 | 16,321 | |||||
| Amounts due from related party | 2,264 | 819 | |||||
| Total current assets | 71,940 | 65,830 | |||||
| Non-current assets | |||||||
| Prepayments | 2,116 | 1,918 | |||||
| Long-term investments | 1,306 | 1,538 | |||||
| Other investments | 17,824 | 18,164 | |||||
| Property and equipment, net | 3,029 | 2,571 | |||||
| Intangible assets, net | 1,039 | 1,006 | |||||
| Total non-current assets | 25,314 | 25,197 | |||||
| TOTAL ASSETS | 97,254 | 91,027 | |||||
| LIABILITIES | |||||||
| Current liabilities | |||||||
| Short term borrowings | 3,704 | 4,895 | |||||
| Accrued expenses and other liabilities | 25,742 | 25,946 | |||||
| Accounts payable | 8,701 | 9,715 | |||||
| Amounts due to related party | 1,503 | 1,496 | |||||
| Contract liabilities | 889 | 883 | |||||
| Total current liabilities | 40,539 | 42,935 | |||||
| Non-current liabilities | |||||||
| Other non-current liabilities | 321 | 306 | |||||
| Total non-current liabilities | 321 | 306 | |||||
| TOTAL LIABILITIES | 40,860 | 43,241 | |||||
| SHAREHOLDERS’ EQUITY | |||||||
| Class A ordinary shares | 8 | 8 | |||||
| Class B ordinary shares | 6 | 6 | |||||
| Additional paid-in capital | 220,292 | 226,325 | |||||
| Accumulated other comprehensive (loss)/income | (429 | ) | 286 | ||||
| Accumulated losses | (163,483 | ) | (178,839 | ) | |||
| TOTAL SHAREHOLDERS’ EQUITY | 56,394 | 47,786 | |||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 97,254 | 91,027 | |||||
| UCLOUDLINK GROUP INC. UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS) (In thousands of US$, except for share and per share data) | |||||||
| For the three months ended | |||||||
| March 31, 2020 | March 31, 2021 | ||||||
| Revenues | 33,521 | 17,694 | |||||
| Revenues from services | 17,430 | 8,383 | |||||
| Sales of products | 16,091 | 9,311 | |||||
| Cost of revenues | (21,679 | ) | (12,163 | ) | |||
| Cost of services | (8,458 | ) | (5,370 | ) | |||
| Cost of products sold | (13,221 | ) | (6,793 | ) | |||
| Gross profit | 11,842 | 5,531 | |||||
| Research and development expenses | (3,016 | ) | (3,799 | ) | |||
| Sales and marketing expenses | (4,537 | ) | (3,441 | ) | |||
| General and administrative expenses | (4,497 | ) | (10,948 | ) | |||
| Other income, net | 599 | (2,664 | ) | ||||
| Income/(loss) from operations | 391 | (15,321 | ) | ||||
| Interest income | 11 | 4 | |||||
| Interest expenses | (122 | ) | (39 | ) | |||
| Income/(loss) before income tax | 280 | (15,356 | ) | ||||
| Income tax expenses | (31 | ) | - | ||||
| Net income/(loss) | 249 | (15,356 | ) | ||||
| Accretion of Series A Preferred Shares | (689 | ) | - | ||||
| Income allocation to participating preferred shareholders | - | - | |||||
| Attributable to: | |||||||
| Equity holders of the Company | (440 | ) | (15,356 | ) | |||
| Non-controlling interests | - | - | |||||
| Loss per share for Class A and Class B ordinary shares | |||||||
| Basic | (0.00 | ) | (0.05 | ) | |||
| Diluted | (0.00 | ) | (0.05 | ) | |||
| Loss per ADS (10 Class A shares equal to 1 ADS) | |||||||
| Basic | (0.02 | ) | (0.54 | ) | |||
| Diluted | (0.02 | ) | (0.54 | ) | |||
| Shares used in earnings per Class A and Class B ordinary share computation: | |||||||
| Basic | 232,451,900 | 282,716,985 | |||||
| Diluted | 232,451,900 | 282,716,985 | |||||
| Net income/(loss) | 249 | (15,356 | ) | ||||
| Other comprehensive income, net of tax | |||||||
| Foreign currency translation adjustment | 261 | 715 | |||||
| Total comprehensive income/(loss) | 510 | (14,641 | ) | ||||
| UCLOUDLINK GROUP INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands of US$) | |||||||
| For the three months ended | |||||||
| March 31, 2020 | March 31, 2021 | ||||||
| Net cash generated from/(used in) operating activities | 6,694 | (6,708 | ) | ||||
| Net cash used in investing activities | (1,021 | ) | (285 | ) | |||
| Net cash (used in)/generated from financing activities | (249 | ) | 1,896 | ||||
| Increase/(decrease) in cash, cash equivalents and restricted cash | 5,424 | (5,097 | ) | ||||
| Cash, cash equivalents and restricted cash at beginning of the period | 40,274 | 30,226 | |||||
| Effect of exchange rates on cash, cash equivalents and restricted cash | (248 | ) | (414 | ) | |||
| Cash, cash equivalents and restricted cash at end of the period | 45,450 | 24,715 | |||||
| UCLOUDLINK GROUP INC. UNAUDITED RECONCILIATIONS OF NON-GAAP AND GAAP RESULTS (In thousands of US$) | |||||||
| For the three months ended | |||||||
| March 31, 2020 | March 31, 2021 | ||||||
| Reconciliation of Net Income/(Loss) to Adjusted Net Income/(Loss) | |||||||
| Net income/(loss) | 249 | (15,356 | ) | ||||
| Add: | share-based compensation | - | 5,547 | ||||
| fair value loss in other investments | - | 2,524 | |||||
| Adjusted net income/(loss) | 249 | (7,285 | ) | ||||
| For the three months ended | |||||||
| March 31, 2020 | March 31, 2021 | ||||||
| Reconciliation of Net Income/(Loss) to Adjusted EBITDA | |||||||
| Net income/(loss) | 249 | (15,356 | ) | ||||
| Add: | |||||||
| Interest expense | 122 | 39 | |||||
| Income tax expenses | 31 | - | |||||
| Depreciation and amortization | 609 | 576 | |||||
| EBITDA | 1,011 | (14,741 | ) | ||||
| Add: | share-based compensation | - | 5,547 | ||||
| fair value loss in other investments | - | 2,524 | |||||
| Adjusted EBITDA | 1,011 | (6,670 | ) | ||||
FAQ
What were UCLOUDLINK's total revenues for Q1 2021?
What is the net loss reported by UCLOUDLINK for Q1 2021?
How do UCLOUDLINK's Q1 2021 revenues compare to Q1 2020?
What is the revenue outlook for UCLOUDLINK for Q2 2021?
What percentage of total revenue did PaaS and SaaS services contribute in Q1 2021?
