The Buzz Surrounding uCloudlink Group Inc. (NASDAQ: UCL)

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.”

For full release: https://www.globenewswire.com/en/news-release/2022/05/31/2452915/0/en/UCLOUDLINK-GROUP-INC-Announces-Unaudited-First-Quarter-2022-Financial-Results.html

UCLOUDLINK GROUP INC. (“uCloudlink” or the “Company”) (NASDAQ: UCL), the world’s first and leading mobile data traffic sharing marketplace, today announced, effective as of May 23, 2022, the Company has dismissed PricewaterhouseCoopers Zhong Tian LLP (“PwC”) and engaged Audit Alliance LLP as the Company’s independent registered public accounting firm. The change of the Company’s independent registered public accounting firm was approved by the audit committee of the board of directors of the Company.

Audit Alliance LLP is engaged to audit and report on the consolidated financial statements of the Company for the year ending December 31, 2022.

The reports of PwC on the Company’s consolidated financial statements for the two most recent fiscal years have contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principle. During the Company’s two most recent fiscal years and through the subsequent interim period on or prior to May 23, 2022, there were no (i) disagreements (as defined in Item 16F(a)(1)(iv) of Form 20-F and the related instructions to Item 16F of Form 20-F) between the Company and PwC on any matter of accounting principles or practices, financial statement disclosure, or audit scope or procedure, which disagreements if not resolved to the satisfaction of PwC would have caused them to make reference in connection with their opinion to the subject matter of the disagreement, or (ii) reportable events pursuant to Item 16F(a)(1)(v) of the instructions to Form 20-F, except that as of December 31, 2020 and 2021, the Company did not maintain effective internal control over financial reporting due to the material weaknesses identified, including: (i) lack of sufficient resources regarding financial reporting and accounting personnel in the application of U.S. GAAP and the reporting requirements set forth by the Securities and Exchange Commission, and (ii) lack of comprehensive U.S. GAAP accounting policies and financial reporting procedures.

During the Company’s two most recent fiscal years and through the subsequent interim period on or prior to May 23, 2022, neither the Company nor anyone on its behalf has consulted with Audit Alliance LLP on either (a) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report nor oral advice was provided to the Company by Audit Alliance LLP that Audit Alliance LLP concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue, or (b) any matter that was the subject of a disagreement, as that term is defined in Item 16F(a)(1)(iv) of Form 20-F (and the related instructions thereto) or a reportable event as set forth in Item 16F(a)(1)(v) of Form 20-F.

The Company is working closely with PwC and Audit Alliance LLP to ensure a seamless transition. The audit committee would like to express its sincere gratitude to PwC for its professionalism and quality of services rendered to the Company over the past years.

For full release:  https://www.globenewswire.com/en/news-release/2022/05/23/2448276/0/en/UCLOUDLINK-GROUP-INC-Announces-Changes-of-Independent-Registered-Public-Accounting-Firm.html

UCLOUDLINK GROUP INC. (“uCloudlink” or the “Company”) (NASDAQ: UCL), the world’s first and leading mobile data traffic sharing marketplace, today provides an update on its status under the Holding Foreign Companies Accountable Act (the “HFCAA”).

The Company is aware that it has been provisionally identified by the United States Securities and Exchange Commission (the “SEC”) as a Commission-Identified Issuer under the HFCAA on May 4, 2022 U.S. Eastern Time. The Company understands that such identification may have resulted from its filing of the annual report on Form 20-F for the fiscal year ended December 31, 2021 with the SEC on April 27, 2022.

The Company understands the SEC made such identification pursuant to the HFCAA and its implementation rules issued thereunder, and this indicates that the SEC determines that the Company used a registered public accounting firm whose working paper cannot be inspected or investigated completely by the Public Company Accounting Oversight Board of the United States (the “PCAOB”) to issue the audit opinion for its financial statements for the fiscal year ended December 31, 2021.

In accordance with the HFCAA, if the SEC determines that the Company filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit the shares or American depositary shares of the Company from being traded on a national securities exchange or in the over-the-counter trading market in the United States.

The Company has been actively exploring possible solutions. It will continue to comply with applicable laws and regulations in both China and the United States and strive to maintain its listing status on the Nasdaq Stock Market.

For full release: https://www.globenewswire.com/en/news-release/2022/05/09/2438488/0/en/UCLOUDLINK-GROUP-INC-Provides-Update-on-Status-under-Holding-Foreign-Companies-Accountable-Act.html

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 and year ended December 31, 2021.

Fourth Quarter 2021 Financial Highlights

• Total revenues were US$17.6 million, representing an increase of 3.2% from US$17.0 million in the fourth quarter of 2020.
• Gross profit was US$5.4 million, representing an increase of 1.8% from US$5.3 million in the fourth quarter of 2020.
• Loss from operations was US$15.4 million, compared with a loss from operations of US$12.3 million in the fourth quarter of 2020.
• Net loss was US$15.5 million, including share-based compensation of US$1.2 million, compared to a net loss of US$12.4 million in the fourth quarter of 2020, including share-based compensation of US$5.9 million.
• Adjusted net loss (non-GAAP) was US$5.8 million, excluding share-based compensation of US$1.2 million, compared to an adjusted net loss of US$8.5 million in the fourth quarter of 2020, excluding share-based compensation of US$5.9 million.
• Adjusted EBITDA (non-GAAP) was negative US$5.1 million, compared to negative US$7.9 million in the fourth quarter of 2020.

Full Year 2021 Financial Highlights

• Total revenues were US$73.8 million, representing a decrease of 17.6% from US$89.6 million in 2020.
• Gross profit was US$21.8 million, representing a decrease of 22.9% from US$28.3 million in 2020.
• Loss from operations was US$45.9 million, compared with a loss from operations of US$63.0 million in 2020.
• Net loss was US$46.0 million, including share-based compensation of US$8.8 million, compared with a net loss of US$63.4 million in 2020, including share-based compensation of US$50.6 million.
• Adjusted net loss (non-GAAP) was US$25.2 million, excluding share-based compensation of US$8.8 million, compared with an adjusted net loss of US$17.7 million in 2020, excluding share-based compensation of US$50.6 million.
• Adjusted EBITDA (non-GAAP) was negative US$22.6 million, compared to negative US$15.0 million in 2020.

Fourth Quarter and Full Year 2021 Operational Highlights

• In the fourth quarter of 2021, total data consumed through the Company’s platform was 42,184 terabytes (4,502 terabytes the Company procured and 37,682 terabytes our business partners procured) representing an increase of 12.3% from 37,553 terabytes in the fourth quarter of 2020.
• In the fourth quarter of 2021, average daily active terminals were 265,595 (1,585 owned by the Company and 264,010 owned by our business partners), representing an increase of 28.7% from 206,400 in the fourth quarter of 2020. During the fourth quarter of 2021, 69.0% of daily active terminals were from uCloudlink 2.0 local data connectivity services and 31.0% of daily active terminals were from uCloudlink 1.0 international data connectivity services.
• During fiscal year 2021, total data consumed through the Company’s platform was 162,879 terabytes (19,040 terabytes the Company procured and 143,839 terabytes our business partners procured), representing a decrease of 15.8% from 193,467 terabytes in 2020.
• During fiscal year 2021, average daily active terminals were 241,046 (2,154 owned by the Company and 238,892 owned by our business partners), representing a decrease of 2.3% from 246,618 in 2020. In 2021, 67.7% of daily active terminals were from uCloudlink 2.0 local data connectivity services and 32.3% of daily active terminals were from uCloudlink 1.0 international data connectivity services. Average daily data usage per terminal was 1.73 GB in December 2021.
• As of December 31, 2021, we had served 2,214 business partners in 54 countries and regions. We had 179 patents with 100 approved and 79 pending approval, while our SIM card pool included SIM cards from 239 MNOs globally as of December 31, 2021.

Executive Commentary

Chaohui Chen, Director and Chief Executive Officer of uCloudlink, noted, “In 2021, we began to see a positive trend in the top line results during the second half of the year as a result of our continued resilience and ability to grow our business despite a weakened international travel market due to lingering effects of the COVID-19 pandemic. During the year, uCloudlink made conscious efforts to strengthen our innovative advantages as the pioneer technology solution provider using its PaaS and SaaS platform based on cloud SIM and hyper-connectivity (“HyperConn”) technology solution in the early stage of the 5G cloud era. We were able to initiate and deepen existing and potential relationships with our business partners during 2021, and are now supported by an increasingly diversified revenue streams from Japan, North America, Mainland China and other countries and regions.”

Mr. Chen continued, “We remain optimistic about the future of our 1.0 and 2.0 business as well as our PaaS and SaaS services with the gradual recovery of international travel and the growth of demand for better data connectivity. While we do anticipate the COVID-19 pandemic will continue to have some impacts on our business in 2022, we expect to overcome these challenges by expanding our scope of innovative solutions, services and products. With our patented technologies including HyperConn technology via our PaaS and SaaS platform following years-long investment, uCloudlink looks forward to extending its footprint into more application scenarios, including but not limited to Internet of Things (“IoT”) modules, industry Wi-Fi router, IP Camera, Power, emergency services, live broadcasting e-commerce and Autopilot by working closely with our business partners and are actively exploring new business prospects to serve a broader spectrum of IoT applications.

We will further strengthen our global PaaS and SaaS ecosystem with additional emphasis on the partnerships with Mobile Network Operators (“MNOs”), through which uCloudlink can access a greater market for local connectivity services both domestically and internationally. We believe that people have shifted their focus from the basic availability of network connection to a better and high-quality connection, and we are dedicated to leading the change by meeting that demand.”

Yimeng Shi, Chief Financial Officer of uCloudlink, stated, “Revenues from PaaS and SaaS services increased 88.4% year over year to US$10.8 million attributable to more business partners choosing our PaaS and SaaS services. In the fourth quarter of 2021, our average Daily Active Terminals (“DAT”) increased 28.7% year over year, bringing in a positive momentum for the development of our business going forward. We expect continued efforts into improving the operation efficiency of our business while being able to realize our long-term growth vision by optimizing our investment strategy in research and development (“R&D”). We believe we are well-positioned to carry out our growth strategy and create value for our customers, partners and shareholders.”

For full release: https://www.globenewswire.com/en/news-release/2022/03/24/2409127/0/en/UCLOUDLINK-GROUP-INC-Announces-Unaudited-Fourth-Quarter-and-Full-Year-2021-Financial-Results.html