Thank you for standing by and welcome to the uCloudlink Group Inc. 3rd Quarter 2026 Earnings Conference Call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Mr. Liam Scheer with Company IR. Please go ahead.

Hello, everyone, and thank you for joining us on UCarling's third quarter 2016 earnings call. The earnings release and our earnings presentation are now available on our IR website at ir.ucarling.com. Joining me on today's call are Mr. Zhi Ping Peng, co-founder and chairman of the board of directors, Mr. Chaohui Chen, co-founder, director, and chief executive officer, and Mr. Yimeng Shi, Chief Financial Officer. Mr. Chen will begin with an overview of our recent business highlights. Mr. Shi will then discuss our financial and operational highlights for the quarter. They will all be available to take questions in the Q&A session that follows. Before we proceed, please note that this call may contain forward-looking statements made pursuant to the safe harbor provisions of the private securities These forward-looking statements are based on measurements, current expectations, and observations that involve known and unknown races, uncertainties, and other factors not under the company's control, which may cause actual results, performance, or achievements of the company to be materially different from the results, performance, or expectations projected or implied by these forward-looking statements. All forward-looking statements are expressly qualified in their entirety by the questionnaire statement, risk factors, and details of the company's filings with the SEC. The company does not assume any obligation to write or update any forward-looking statements as a result of new information, future events, changes in market conditions, or otherwise is set as required by law. Please also note that UCarLink's earnings press release and this conference call include discussions of unaudited gap financial information and unaudited non-gap financial measures. UCarLink's press release contains the reconciliation of the unaudited non-gap measures to the most directly comparable unaudited gap measures. I will now turn the call over to Mr. Chen. Please go ahead.

Thank you, Liang. and good morning or evening, everyone. Our third quarter results mark a meaningful turning point for us. As anticipated, our total revenues regain a positive growth momentum on a year-over-year basis, landing at the high end of our guidance range. Despite micro-headwinds, geopolitical tensions, Rising memory chip costs and extended component lead times. We demonstrate the resilience of our business model with low-bust growth across our emerging new business lines. Importantly, we generated positive operating cash inflow of US dollar 1.1 million for the first time this year. further strengthening our financial foundation. Before I dive into the business lines, I want to share a strong belief of ours. Good connectivity is the foundation of artificial intelligence, AI. This is especially true when reliable networks are critical for safety during the turbulent periods are marked by nature disasters or conflict. Driven by this vision, we achieved key commercial breakthroughs across our business during the third quarter. I will now review the high line for each key business line. First, in our Girl Call Me, Meal Go business, we rapidly capitalized on two strategic opportunities. The first was in our premium segment, where our near-gold G50 masks with AI-powered hypercom technology, the world's leading sky-to-ground integrated mobile connectivity hub, generated better than expected sales, demonstrating that demand from the premium solutions remains highly resilient to micro-headwinds. was in local connectivity markets where our latest 4G, 5G, GPE solutions deliver strong sales growth and deepen our penetration. Powered by SAM AI-powered HyperCon technology, which provides intelligent switching between fixed and mobile network and real-time congestion detection, the solution delivery highly reliable connectivity for home and office environments. This reinforced our local broadband strategy and allow us to expand beyond on-time hardware sales into recurring data connectivity revenue. Next is our global Mi IoT business, which achieved impressive momentum with revenue surging 496.5% year-over-year. Growth was driven by the accelerating deployment of our integrated data connectivity solution across a growing in-store base of smart devices, particularly in key sectors such as in-car entertainment and security cameras. As the in-store base expands and data usage increases, Recurring data connectivity revenue is expected to scale. We remain well-positioned to capture further demand as smart hardware partners rapidly extend their international footprint. Qualcomm eSIM business forms another key growth driver. Our OTA and eSIM solutions rank among the top 10 products on major Chinese e-commercial platforms for key Asia-Pacific travel routes. Further demonstrating our technological strengths, the eSIM trail, called the Web with Mobile Watch Operator and Mobile Network Operator, leverage our hardware-based multi-EMC capability to provide enhanced security and a coverage for domestic and overseas use. In addition, global midlife business achieved steady MAU growth with its key solution, Unicorp Pro getting strong momentum. Before closing, I want to highlight our platform, Petco ecosystem. We continue to evolve our AI-powered social model are like sync function device on the market. Pet phone operates like a mobile phone, enabling anytime, anywhere, two-way communication between pets and their owners. We launched our pet AI agent on the Petco app and the device. And our next-generation pet cam and AI-powered cameras in its final stage of development and is set to launch in the first quarter. Following several quarters of significant marketing investment, platform consumer value proposition is now materializing and gaining meaningful market action. We are receiving highly positive feedback both at the major offline events such as IFA2026 and from users that influence us across leading global social media platforms. Our distribution is expanding as well. In Europe, we have placed platforms in a retail network of regional telecom operators. In China, we have been added to a centralized procurement catalog of three major telecom operators. which facilitators seen insurance and help build our own partner ecosystem. Looking ahead, we expect our revenue growth momentum to continue and further accelerate in the fourth quarter on year-over-year basis, delivering a higher growth rate than what we achieved in the third quarter. To achieve this, our focus Our focus will be on executing our strategy priorities to drive sustainable growth. We will continue to invest in R&D and marketing to scale our business lines while maintaining disciplined operator management to improve operating leverage. To share repurchase the program announced in the third quarter reflects management's confidence in our long-term fundamentals. We believe our solid execution and continued innovation will position us well to deliver long-term value to our shareholders.

I will now turn the call over to Mr. Su. Thank you, Mr. Chen. Hello, everyone. I will now go over our operational and financial highlights for the third quarter of 2026. First, let's look at users' metrics. First, average daily active user, means DAUs, and average monthly active users, means MAUs, record robust growth. Average DAUs reach 431,245, up 22.4% year-over-year. This growth was largely driven by strong momentum in our new business line. Specifically, DA yields for Globomy IoT, Globomy Theme, Globomy Life, and the platform business increased by 271.4%, 142.1%, 844.3%, and 572.9% respectively. Average DAU from our global meal goal bonus declined by 6.4% year-over-year, reflecting softer outbound travel demand from China amidst microeconomic headwinds and geopolitical uncertainties. Average MAUs were 867,935, up 14% year-over-year. fueled by broad base growth across our new emerging business line led in absolute terms by Globomy IoT and Globomy Thin business, which surged 241.8% and 67% respectively. This fully offset the 10.3% decline in Globomy Mirgo MAUs which continue to face external supply and micro-pressures. Finally, on technology assets, as of September 30, 2026, we had 184 approved patents and 33 patent application pending approvals and a global theme pool cover 396 MNOs. Moving to our financial results, Total revenue for the third quarter was $21.4 million at 1.1% year-over-year and at the high end of our guidance, mainly driven by strong product sales growth of 30.8% year-over-year. Breaking this down, while our GlobalMirgo service faced micro-high winds, we saw robust consumer demand from our premium and local connectivity solutions. Rather than being just a stand-alone product sales, this hardware deployment structures catalyst that pave the way for ongoing recurring data connectivity revenue as users engage with our network. Meanwhile, our new emerging business line continues to expand rapidly. Our globally-themed business revenue grew 40.3% year-over-year. while GlobalMe IoT business grew a remarkable 496.5%. GlobalMe Live business grew 189.9% and the platform business grew 285%. Revenue from service was $16 million, contributing 74.9% of total revenue. Compared with 80.6% last year, even so, our service cost margin improved 60.3% from 56.6, demonstrating the solid profitability of our connectivity business. Overall gross margins was 51.8%, reflecting the higher share of product sales in the mix this quarter. Looking at profitability, operating expenses, excluding share basis compensations were here broadly flat at $11.5 million. Our net loss narrowed sequentially to just $0.3 million. Our just EBITDA was negative $0.2 million. Our cash flow and balance sheet remained very healthy. We generated an operating cash inflow of $1 million this quarter, our first positive quarter this year, and a significant turnaround from $0.9 million. outflow in the same quarter of last year. Capital expenditure was $1.1 million. Our cash and cash equivalent increased to $26.1 million from $25.2 million last quarter, giving us a solid financial foundation to support our growth initiative. Turning to our outlook for the fourth quarter of 2026, we expect total revenue to be between 22.5 million US dollars and 25.5 million US dollars representing a year-over-year increase of 1.8% to 15.4%. Looking at the full years, we now expect total revenue for 2026 to range between 69 million US dollars and 82 million US dollars. This is our previous guidance range of 75 million US dollars to 85 million US dollars. This guidance reflects our current view of the market operating conditions as well as customer demand. These estimates are subject to change. With that, operator, please open for Q&A.

Certainly. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, Please press star 2. If you are on a speakerphone, please pick up your handset to ask your question. Your first question comes from Theodore O'Neill with Litchfield.

Please go ahead. Thank you very much and congratulations on a good quarter. My first question is about your gross profit margins, which were up. sequentially for the third quarter in a row. And so my question is, given that so many other manufacturers are struggling with the cost for components, for memory chips, I was wondering if you could give us some insight into how you were able to achieve this growing gross profit margin in the face of what for everyone else is sort of rising underlying component costs.

Yes, as we disclose our service gross margins improving to 60% compared with last year's. I think the reasoning behind this improvement is we deliver quality premium service to the market. and we're managing the cost on track and also we improve the operational efficiencies to support this improvement. For instance, as we disclosed, the capital's investment is a small amount. So this, we invest our equipment, our rentings for the service, for this roaming service. So there's the rental cost of a rental equipment, a device, down to our small levels. So all this contributes to our improving service margins. Yeah, and for hardware side, we impact by this supply chain cost up, but that's lower down our hardware margins. to lower levels. But overall, combined together, our gross margins is more than 51%. I think that's a good result we developed in the third quarter.

Yeah, by the way, we redesigned some hardware to reduce the memory chip, try to reduce the impact from AI, cost, for example, like memory size. try to minimize the impact.

Okay, thank you. R&D expenses were up year over year, and I'm wondering at the current rate, $1.9 million, is that sort of the level we should expect going forward into Q4? And the same question for sales and marketing expense, which also increased. Is that at a level or is that going to go up some more Do you have more shows that you're going to attend?

Yes, we discipline our cost management budget in the third quarters. In these third quarters, we... We reduced headcount to about 30 staff numbers. This cost reduction will reflect to our third quarter and the following periods. In the third quarter, sales and marketing expenses increased over years. We still invest on our brand-new platform on the overseas market on this online platform. That's attracted very good, a wide spread of feedback, political feedback from the online platform. So that's why I still increase sales and marketing budgets on new platforms. pay phone business. The same for R&D's budgets. We put more weight on these expenses onto the new business, say pay phone business as well. And as you see, the new business pay phones business increase very, very fast track. So this investment is for futures. We believe this investment for future will have a return in the next campus quarters and the next years.

Yeah, by the way, I think we are not just trying to reduce staff. That's because in Q1, Q2, we applied a lot of AI tools and AI stuff. So start to take effect and get more efficient. in R&D side and our customer side and the sales side. So that's the key reason.

Okay, that answers my questions. Thank you very much.

Thank you.

There are no further questions at this time. I'll now hand back to Mr. Liam Chiu for closing remarks.

Thank you once again for joining us today. If you have further questions, please feel free to contact your current investor relations through the contact information provided on our website or speak to our investor relations firm, Quintention Advisory. We look forward to speaking with you all again on our next quarterly call. Thank you.

That does conclude our conference for today. Thank you for participating. You may now disconnect.