uCloudlink Group (NASDAQ:UCL) reported second-quarter revenue of $18.2 million, down 5.9% from a year earlier, as macroeconomic pressures, geopolitical tensions affecting outbound travel from China and rising component costs weighed on its international connectivity business.
The company recorded a net loss of $3 million for the quarter, compared with net income of $700,000 in the second quarter of 2025. Adjusted EBITDA was negative $1.8 million, versus positive $400,000 a year earlier. Chief Executive Officer Chaohui Chen said the company expects growth in its local connectivity operations and newer product lines to increasingly offset pressure on its legacy international data-connectivity business.
Legacy Business Pressure Offsets New Growth Engines
However, several newer business lines posted substantial growth. GlocalMe IoT revenue rose 392.4% year over year to $800,000, while GlocalMe SIM revenue increased 78% to $1.3 million. PetPhone revenue rose to $200,000 from $10,000 in the prior-year quarter. GlocalMe Life revenue declined 12.1% to $500,000.
Chen said GlocalMe IoT’s installed base reached 3.34 million units, with monthly orders beginning to make a meaningful revenue contribution. The business was consistently operating profitably during the quarter, according to the CEO. The company cited adoption in verticals including in-car infotainment and security cameras.
“We expect our uCloudlink 2.0 and the new business lines to fully offset the continued contraction in our 1.0 international business by the third quarter,” Chen said.
Average daily active users across the company’s GlocalMe service increased 13.3% year over year to 376,376, while average monthly active users rose 6.6% to 744,966. Average daily active users grew 277.3% for GlocalMe IoT, 132% for GlocalMe SIM and 801.6% for GlocalMe Life. MeowGo daily active users declined 7.3%.
Margins and Cash Flow Decline
Gross profit fell to $9.2 million from $10.2 million a year earlier, while total gross margin declined to 50.2% from 52.8%. Service gross margin fell to 39.1% from 56.6% in the prior-year period.
Revenue from services declined 9.2% to $13.3 million and accounted for 72.9% of total revenue, down from 75.5% a year earlier. Excluding share-based compensation, operating expenses increased to $11.5 million from $10.1 million.
Operating cash outflow was $3 million, compared with an outflow of $900,000 in the second quarter of 2025. Capital expenditures totaled $40,000, down from $200,000 a year earlier. Cash and cash equivalents stood at $25.2 million as of June 30, down from $28 million at the end of the first quarter.
Chief Financial Officer Yimeng Shi said the company believed it remained positioned to support business growth despite the lower cash balance.
Chip Costs Prompt Inventory, Pricing and Product Changes
During the question-and-answer session, Chen said rising memory-chip prices and longer lead times for components such as printed circuit boards had created a difficult supply-chain environment for products including MiFi devices, PetPhone and PetCam offerings.
Chen said memory-chip prices had risen “almost 5-10x,” increasing costs and affecting customer pricing. In response, the company built additional memory-chip inventory before further price increases, which he said contributed to pressure on cash flow.
- The company has absorbed part of the higher chipset costs.
- It began increasing selling prices in the second half, while considering customer acceptance.
- Its research and development team is revising hardware designs to reduce memory requirements for products using larger, more expensive memory components.
Regarding GlocalMe Life, Chen said the revenue decline reflected lower hardware deliveries in the second quarter, while active-user metrics reflect cumulative usage from hardware sold over prior periods. Shi added that some customers placed larger orders during the first quarter ahead of anticipated supply-chain price increases, contributing to lower second-quarter ordering activity.
Outlook Reduced for Full Year
For the third quarter, uCloudlink forecast revenue of $19 million to $22 million, representing a year-over-year range from a 10.4% decline to 3.8% growth.
The company reduced its full-year 2026 revenue outlook to $75 million to $85 million, from a previous range of $85 million to $100 million. Shi said the revision reflected persistent macroeconomic challenges and global trade headwinds that have affected, and could continue to affect, industries more broadly.
Chen said uCloudlink is prioritizing operational management, cost discipline and cash-flow improvement while pursuing commercialization of its PetPhone AI and social platform, MeowGo G50 Max premium connectivity hub, GlocalMe IoT products, and CPE R50 and R55 offerings.
About uCloudlink Group (NASDAQ:UCL)
uCloudlink Group Inc is a technology company specializing in global mobile data connectivity solutions. The company’s core offering is a cloud SIM virtualization platform that enables seamless roaming for consumers and enterprise users without the need for physical SIM cards. Leveraging proprietary CloudSIM technology, uCloudlink provides portable Wi-Fi hotspot devices, embedded IoT connectivity modules, and eSIM products designed to deliver high-speed data access in multiple countries.
Through its CloudSIM platform, uCloudlink dynamically switches between multiple mobile network operators to optimize coverage and data speeds while controlling costs.
