Financial Highlights for the Third Quarter of 2020
- Total revenues were
US$18.0 million , representing a decrease of 59.2% fromUS$44.1 million in the third quarter of 2019. - Gross profit was
US$5.6 million , representing a decrease of 70.2% fromUS$18.9 million in the third quarter of 2019. - Loss from operations was
US$9.6 million , compared with income from operations ofUS$3.9 million in the third quarter of 2019. - Net loss was
US$9.7 million , compared with net income ofUS$3.8 million in the third quarter of 2019. - Adjusted net loss (non-GAAP) was
US$5.7 million , compared with an adjusted net income ofUS$3.8 million in the third quarter of 2019. - Adjusted EBITDA (non-GAAP) was negative
US$5.0 million , compared with positiveUS$4.6 million in the third quarter of 2019.
Operational Highlights for the Third Quarter of 2020
- Total data consumed through the Company’s platform was 49,774 terabytes, including 3,638 terabytes the Company procured and 46,136 terabytes our business partners procured, representing an increase of 99.2% from 24,993 terabytes in the third quarter of 2019.
- Average daily active terminals were 252,265, including 3,095 owned by the Company and 249,170 not owned by the Company, representing an increase of 21.4% from 207,853 in the third quarter of 2019. 73.6% of daily active terminals was from uCloudlink 2.0 local data connectivity services and 26.4% of daily active terminals was from uCloudlink 1.0 international data connectivity services during the third quarter of 2020. Average daily data usage per terminal was 2.13 GB in
September 2020 . - As of
September 30, 2020 , we had served 2,079 business partners in 49 countries and regions. We had 132 patents with 53 approved and 79 pending approval, while our pool of SIM cards was from 216 MNOs globally as ofSeptember 30, 2020 .
“The COVID-19 pandemic continued to linger longer and deeper than anticipated, so did its negative impact on international tourism and consequently, our third quarter 2020 results. However, we expect international travel will recover with the launch of COVID-19 vaccines and effective testing and tracing.
Our uCloudlink 2.0 local data connectivity services continue to be a very important business for us. The sales of mobile Wi-Fi terminals and services were steady during the second and third quarter of 2020 through online sales and offline distribution channels with our business partners.
In order to elevate our local service brand, we are enhancing our e-commerce efforts in strategic key markets with high growth potential such as
Mobile network operators (MNOs) are the major players in the data connectivity service markets and our uCloudlink 2.0 business has great potential through global alliances and cooperation with MNOs and business partners globally. We have already established an alliance ecosystem with various MNOs such as
5G provides great opportunities for us. We can help carriers to improve their coverage, connectivity services and investment efficiency in 5G networks. Our full series of 5G mobile Wi-Fi, Customer Premises Equipment (CPE) and GlocalMe Inside (GMI) embedded in various brands of 5G related mobile phones are under development for commercial trials in the near future. We believe that there is great potential for the application of those devices in 5G mobile broadband connectivity service due to low network latency and expansive network coverage for end users. We also believe it can facilitate us to establish the leading technological position of our PaaS and SaaS platform in the early stage of 5G.
Our Cloud SIM technology, such as instant switching network technology is both highly compatible with and brings unique advantages to various Internet-of-thing (IoT) applications scenarios such as Internet of Vehicles, autopilot, cargos, logistics and other car equipment. We are cooperating with business partners in various aspects of IoT applications such as cargo vehicles and cross-border railway transportations where we see high potential for our business.” said
“While COVID-19 has been well controlled in
Third Quarter 2020 Financial Results
Revenues
Total Revenues were
- Revenues from services were
US$9.8 million , representing a decrease of 60.8% fromUS$25.1 million in the same period of 2019. This decrease was primarily attributable to the decrease in revenues from international data connectivity services and PaaS and SaaS services to certain extent, mainly because of continuous and prolonged impact of pandemic of COVID-19 and resulted international travel ban.- Revenues from data connectivity services were
US$8.2 million , representing a decrease of 63.5% fromUS$22.5 million in the same period of 2019. The decrease was primarily attributable to the decrease in revenues from international data connectivity services fromUS$21.8 million in the third quarter of 2019 toUS$5.7 million in the third quarter of 2020, partially offset by the increase in revenues from local data connectivity services fromUS$0.7 million in the third quarter of 2019 toUS$2.5 million in the third quarter of 2020. The decrease in revenues from international data connectivity services was mainly due to the prolonged negative impact of global travel ban as a result of the COVID-19 pandemic. On the other hand, the demand of our local data connectivity services was not impacted by the international travel ban with continuous growth potential. - Revenues from PaaS and SaaS services were
US$1.5million , representing a decrease of 30.3% fromUS$2.1 million in the same period of 2019. This decrease was primarily due to the negative impact of COVID-19 on our partners that use our PaaS and SaaS services to provide international data connectivity services. In the meantime, the demand of our local data connectivity services business partners was not affected.
- Revenues from data connectivity services were
- Revenues from sales of products were
US$8.2 million , representing a decrease of 57.1% fromUS$19.0 million in the same period of 2019, primarily due to the continuous negative impact of COVID-19 pandemic during the third quarter of 2020. - Geographic Distribution
During the third quarter of 2020, we had 5.4% of total revenue coming from Mainland China, 56.4% of total revenue coming fromJapan and 38.2% of total revenue coming from other countries and regions.
Cost of Revenues
Cost of revenues was
- Cost of services was
US$6.2 million , representing a decrease of 32.6% fromUS$9.2 million in the same period of 2019. - Cost of products sold was
US$6.2 million , representing a decrease of 61.6% fromUS$16.0 million in the same period of 2019.
Gross Profit
Overall gross profit was
Our gross profit on services was
Our gross profit on sales of products was
Operating Expenses
Total operating expenses were
- Research and development expenses were
US$4.8 million , representing an increase of 31.4% fromUS$3.6 million in the same period of 2019. The increase was primarily due to an increase ofUS$1.9 million in share-based compensation expenses, partly offset by a decrease ofUS$0.6 million in staff costs related to internal cost control measures while optimizing R&D efficiency and policies for social security benefits. - Sales and marketing expenses were
US$5.7 million , representing a decrease of 9.1% fromUS$6.3 million in the same period of 2019. The decrease was primarily due to a decrease ofUS$0.4 million in staff costs related to cost control measures and policies for social security benefits and a decrease ofUS$1.7 million related to promotion fee due to the suspended impact of COVID-19 pandemic on sales and marketing activities, partially offset by an increase ofUS$2.0 million in share-based compensation expenses. - General and administrative expenses were
US$9.2 million , representing an increase of 110.1% fromUS$4.4 million in the same period of 2019. The increase was primarily due to an increase ofUS$4.0 million in share-based compensation expenses and an increase ofUS$1.3 million account receivable bad debt provision during the pandemic period, partly offset by the decrease ofUS$0.9 million in legal counsel charge.
Loss from Operations
Loss from operations was
Adjusted EBITDA (Non-GAAP)
Adjusted EBITDA (Non-GAAP), which excludes the impact of share-based compensation and fair value gain/loss in other investment, net of tax, interest expense, depreciation and amortization, was negative
Net Interest Expenses
Net interest expenses were
Net Loss
Net loss was
Adjusted Net Loss (Non-GAAP)
Adjusted net loss, which excludes the impact of share-based compensation and the fair value gain/loss in other investment, was
Basic and Diluted Loss per ADS
Basic and diluted loss per ADS attributable to ordinary shareholders were
Cash and Cash Equivalents, Restricted Cash and Short-Term Deposits
As of
Capital Expenditures (“CAPEX”)
CAPEX was
Business Outlook
For the fourth quarter of 2020,
During
We further invested in
Non-GAAP Financial Measures
To supplement the financial measures prepared in accordance with generally accepted accounting principles in
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
The Company compensate for these limitations by reconciling the non-GAAP financial measure to the nearest
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
International: | +1-412-902-4272 |
US (Toll Free): | +1-888-346-8982 |
800-279-9489 | |
Mainland | 400-120-1203 |
800-905-945 | |
800-120-6157 |
Participants should dial in at least 10 minutes before the scheduled start time and provide the Conference ID to the operator to be connected to the conference. Due to conditions surrounding the outbreak of COVID-19, participants may experience longer than normal hold period before being assisted to join the call. The Company thanks everyone in advance for their patience and understanding.
A telephone replay will be available approximately two hours after the call until
US (Toll Free): | +1-877-344-7529 |
International: | +1-412-317-0088 |
Replay Passcode: | 10146997 |
A live and archived webcast of the conference call will be available at http://ir.ucloudlink.com
About
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the
For more information, please contact:
In |
Tel: +852-2180-6111 |
E-mail: ir@UCLOUDLINK.com |
Tel: +86 (10) 6508-0677 |
E-mail: UCL@tpg-ir.com |
In |
Tel: +1-212-481-2050 |
E-mail: UCL@tpg-ir.com |
UNAUDITED CONSOLIDATED BALANCE SHEETS
(In thousands of US$, except for share and per share data)
As of | As of September 30, | ||||||||
2019 | 2020 | ||||||||
ASSETS | |||||||||
Current assets | |||||||||
Cash and cash equivalents | 37,320 | 24,330 | |||||||
Restricted cash | 2,954 | 8,237 | |||||||
Short-term deposit | 193 | 196 | |||||||
Accounts receivable, net | 25,767 | 9,942 | |||||||
Inventories | 10,518 | 8,033 | |||||||
Prepayments and other current assets | 7,828 | 9,103 | |||||||
Other investments | - | 17,496 | |||||||
Amounts due from related party | 692 | 710 | |||||||
Total current assets | 85,272 | 78,047 | |||||||
Non-current assets | |||||||||
Prepayments | - | 599 | |||||||
Long-term investment | 430 | 1,251 | |||||||
Other investments | - | 17,477 | |||||||
Property and equipment, net | 3,793 | 3,401 | |||||||
Intangible assets, net | 602 | 713 | |||||||
Total non-current assets | 4,825 | 23,441 | |||||||
TOTAL ASSETS | 90,097 | 101,488 | |||||||
LIABILITIES | |||||||||
Current liabilities | |||||||||
Short term borrowings | 6,659 | 763 | |||||||
Accrued expenses and other liabilities | 21,319 | 21,532 | |||||||
Accounts payables | 16,728 | 11,906 | |||||||
Amounts due to related party | 1,022 | 1,553 | |||||||
Contract liabilities | 1,925 | 1,561 | |||||||
Total current liabilities | 47,653 | 37,315 | |||||||
Non-current liabilities | |||||||||
Other non-current liability | - | 335 | |||||||
Total non-current liabilities | - | 335 | |||||||
TOTAL LIABILITIES | 47,653 | 37,650 | |||||||
MEZZANINE EQUITY | |||||||||
Series A redeemable convertible preferred shares | 22,977 | - | |||||||
TOTAL MEZZANINE EQUITY | 22,977 | - | |||||||
SHAREHOLDERS’ EQUITY | |||||||||
Pre-IPO ordinary shares | 11 | - | |||||||
Class A ordinary shares | - | 8 | |||||||
Class B ordinary shares | - | 6 | |||||||
Additional paid-in capital | 118,818 | 214,121 | |||||||
Accumulated other comprehensive income | 706 | 804 | |||||||
Accumulated losses | (100,068 | ) | (151,101 | ) | |||||
TOTAL SHAREHOLDERS’ EQUITY | 19,467 | 63,838 | |||||||
TOTAL LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY | 90,097 | 101,488 |
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
(In thousands of US$, except for share and per share data)
For the three months ended | For the nine months ended | |||||||||||||||||||
September 30, 2019 | September 30, 2020 | September 30, 2019 | September 30, 2020 | |||||||||||||||||
Revenues | 44,103 | 17,996 | 104,685 | 72,543 | ||||||||||||||||
Revenues from services | 25,070 | 9,839 | 66,558 | 37,137 | ||||||||||||||||
Sales of products | 19,033 | 8,157 | 38,127 | 35,406 | ||||||||||||||||
Cost of revenues | (25,231 | ) | (12,366 | ) | (58,661 | ) | (49,584 | ) | ||||||||||||
Cost of services | (9,245 | ) | (6,234 | ) | (27,174 | ) | (21,092 | ) | ||||||||||||
Cost of products sold | (15,986 | ) | (6,132 | ) | (31,487 | ) | (28,492 | ) | ||||||||||||
Gross profits | 18,872 | 5,630 | 46,024 | 22,959 | ||||||||||||||||
Research and development expenses | (3,626 | ) | (4,766 | ) | (11,645 | ) | (21,326 | ) | ||||||||||||
Sales and marketing expenses | (6,281 | ) | (5,710 | ) | (17,339 | ) | (23,797 | ) | ||||||||||||
General and administrative expenses | (4,367 | ) | (9,173 | ) | (14,112 | ) | (33,637 | ) | ||||||||||||
Other income, net | (667 | ) | 4,439 | 382 | 5,092 | |||||||||||||||
Income/(loss) from operations | 3,931 | (9,580 | ) | 3,310 | (50,709 | ) | ||||||||||||||
Interest income | 10 | 8 | 169 | 34 | ||||||||||||||||
Interest expenses | (141 | ) | (43 | ) | (336 | ) | (271 | ) | ||||||||||||
Income/(loss) before income tax | 3,800 | (9,615 | ) | 3,143 | (50,946 | ) | ||||||||||||||
Income tax expense | - | (50 | ) | - | (87 | ) | ||||||||||||||
Net income/(loss) | 3,800 | (9,665 | ) | 3,143 | (51,033 | ) | ||||||||||||||
Accretion of Series A Preferred Shares | (636 | ) | - | (1,905 | ) | (1,293 | ) | |||||||||||||
Income allocation to participating preferred shareholders | (137 | ) | - | (137 | ) | - | ||||||||||||||
Attributable to: | ||||||||||||||||||||
Equity holders of the Company | 3,027 | (9,665 | ) | 1,101 | (52,326 | ) | ||||||||||||||
Non-controlling interests | - | - | - | - | ||||||||||||||||
Earnings/(loss) per share for Class A and Class B ordinary shares | ||||||||||||||||||||
Basic | 0.01 | (0.03 | ) | 0.00 | (0.21 | ) | ||||||||||||||
Diluted | 0.01 | (0.03 | ) | 0.00 | (0.21 | ) | ||||||||||||||
Loss per ADS (10 Class A shares equal to 1 ADS) | ||||||||||||||||||||
Basic | (0.34 | ) | (2.07 | ) | ||||||||||||||||
Diluted | (0.34 | ) | (2.07 | ) | ||||||||||||||||
Shares used in earnings per Class A and Class B ordinary share computation: | ||||||||||||||||||||
Basic | 232,451,900 | 281,551,900 | 232,122,814 | 252,819,307 | ||||||||||||||||
Diluted | 232,451,900 | 281,551,900 | 232,122,814 | 252,819,307 | ||||||||||||||||
Net income/(loss) | 3,800 | (9,665 | ) | 3,143 | (51,033 | ) | ||||||||||||||
Other comprehensive income, net of tax | ||||||||||||||||||||
Foreign currency translation adjustment | (528 | ) | 250 | (460 | ) | 98 | ||||||||||||||
Total comprehensive income/(loss) | 3,272 | (9,415 | ) | 2,683 | (50,935 | ) |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of US$)
For the three months ended | For the nine months ended | ||||||||||||||||||
September 30, 2019 | September 30, 2020 | September 30, 2019 | September 30, 2020 | ||||||||||||||||
Net cash generated from/(used in) operating activities | 296 | (433 | ) | 4,699 | 3,488 | ||||||||||||||
Net cash used in investing activities | (1,195 | ) | (955 | ) | (2,404 | ) | (35,306 | ) | |||||||||||
Net cash generated from/(used in) financing activities | 8 | (3,570 | ) | 1,524 | 23,893 | ||||||||||||||
(Decrease)/increase in cash, cash equivalents and restricted cash | (891 | ) | (4,958 | ) | 3,819 | (7,925 | ) | ||||||||||||
Cash, cash equivalents and restricted cash at beginning of the period | 41,382 | 37,136 | 36,627 | 40,274 | |||||||||||||||
Effect of exchange rates on cash, cash equivalents and restricted cash | (641 | ) | 389 | (596 | ) | 218 | |||||||||||||
Cash, cash equivalents and restricted cash at end of the period | 39,850 | 32,567 | 39,850 | 32,567 |
UNAUDITED RECONCILIATIONS OF NON-GAAP AND GAAP RESULTS
(In thousands of US$)
For the three months ended | For the nine months ended | ||||||||||||||||
September 30, 2019 | September 30, 2020 | September 30, 2019 | September 30, 2020 | ||||||||||||||
Reconciliation of Net Income/(Loss) to Adjusted Net Income/(Loss) | |||||||||||||||||
Net income/(loss) | 3,800 | (9,665 | ) | 3,143 | (51,033 | ) | |||||||||||
Add: share-based compensation | - | 7,870 | 169 | 44,724 | |||||||||||||
Less: fair value gain in other investments | - | (3,869 | ) | - | (2,873 | ) | |||||||||||
Adjusted net income/(loss) | 3,800 | (5,664 | ) | 3,312 | (9,182 | ) |
For the three months ended | For the nine months ended | ||||||||||||||||||||
September 30, 2019 | September 30, 2020 | September 30, 2019 | September 30, 2020 | ||||||||||||||||||
Reconciliation of Net Income/(Loss) to Adjusted EBITDA | |||||||||||||||||||||
Net income/(loss) | 3,800 | (9,665 | ) | 3,143 | (51,033 | ) | |||||||||||||||
Add: | |||||||||||||||||||||
Interest expense | 141 | 43 | 336 | 271 | |||||||||||||||||
Income tax expenses | - | 50 | - | 87 | |||||||||||||||||
Depreciation and amortization | 708 | 550 | 2,354 | 1,712 | |||||||||||||||||
EBITDA | 4,649 | (9,022 | ) | 5,833 | (48,963 | ) | |||||||||||||||
Add: share-based compensation | - | 7,870 | 169 | 44,724 | |||||||||||||||||
Less: fair value gain in other investments | - | (3,869 | ) | - | (2,873 | ) | |||||||||||||||
Adjusted EBITDA | 4,649 | (5,021 | ) | 6,002 | (7,112 | ) |
Source:
2020 GlobeNewswire, Inc., source