Thank you for standing by and welcome to the uCloud Link second 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 one on your telephone keypad. I would now like to hand the conference over to Mr. Daniel Gao, Company IR. Please go ahead.

Thank you. Hello, everyone, and thank you for joining us on uCloudLink's second quarter, 2026 earnings call. The earnings release and our earnings presentation are now available on our IR website at ir.ucloudlink.com. Joining me on today's call are Mr. Zhiping Peng, co-founder and the chairman of the board of directors, Mr. Chaohui Chen, co-founder, director, and the 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 your questions in the Q&A section that follows. Please note that this call may contain forward-looking statements made pursuant to the safe harbor provision of the previous Secretary's Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and observations that involve known and unknown risks, uncertainties, and other factors not under the company's control. which may cause actual results, performance, or achievements of the company to be massively different from the results, performance, or expectations projected or implied by these four looking statements. All four looking statements are expressly qualified in their integrity by the questionnaire statement, risk factors, and detail of the company's feelings with the SEC. The company does not assume any obligation to reverse or update any forward-looking statement as a result of new information, future events, changes in market conditions, or otherwise, except as required by law. Please also note that your colleague's earnings, press release, and this conference call include discussions of unadopted JAP, uncapped financial information, and unadopted non-capped financial methods. Your colleagues' press release contains a reclassification of their unaudited non-GAAP methods to their most directly comparable unaudited GAAP methods. I will now turn the call over to Mr. Chen. Please go ahead.

Thank you, Daniel. Good morning or good evening, everyone. Total revenues for the quarter were U.S. dollar $18.2 million, reflecting the continued impact of microeconomic headwinds, geopolitical tensions affecting our bound travel from China, and a significant surge in very cheap costs. Our Euclidean 1.0 international data connectivity services remain under pressure from these factors. However, this impact is increasingly being offset by the rapid scaling of our uCloudLink 2.0 local data connectivity business, which delivered strong growth, particularly from our global mean IoT business. 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. as we continue to execute on our strategy priorities. We continue to see strong momentum across our new product portfolio during the second quarter. Glaucoma IoT and Unicorp Pro in particular gained solid traction with revenue contribution steadily increasing as the transition out of the initial market went up phase. each reached key strategy milestones during the quarter, positioning us well for accelerated commercialization going forward. Across our new growth engine, revenues from growth community IoT and SIEM increased by 392.4% and 78% year-over-year, respectively, to drive for early adoption and a few market leadership. We maintain an elevated level of investment in market for the platform and Papago ecosystem during the quarter. I will now review the highlights for each of our key business lines. I will start with the Glokomi IoT, which saw its in-store base expand further with the monthly order now contributing meaningfully to revenue and the business operating profitability on a consistent basis. In the second quarter, revenue from the global community IoT grew 392.4% year-over-year. Our total install base reached 3.34 million units, and the NAU grew 210 year-over-year. User adoption is growing rapidly across key vertical as it further solidifies our position in high growth sectors, including in-car infotainment and security cameras. Moving on to our platform ecosystem, which has undergone a comprehensive upgrade into a dedicated pet AI agent. Building on the AI power plus social model, We pioneered in the fourth quarter. This marked a major step forward in functionality and performance, redefining AI-powered communication between humans and their pets. The agent can precisely sense a pet's condition and emotion state and intelligently support owner at every stage of care from and Yimeng Shi. These powerful agents create enormous opportunities across pet health, veterinary care, pet safety, and the pet data analytics, each of which we see a source of new value creation. As consumer acceptance of AI pet services grows, we expect to build a both valuable data asset and a leading position in pet AI. We are now extending our pet AI capabilities across communication, safety, and health management on the market front. We have made significant progress in branding and promotional efforts, generating substantial external attention. We select content pieces, reach tens of millions of views in major platforms such as TikTok, Instagram, etc. We look forward to achieving even greater breakthrough in the second half of the year. turning to our Glocomi Life and Thin Business line, where our strategy is beginning to generate results. Glocomi Life solutions saw DAU growth explode, increasing by 801.6% year-over-year, reflecting strong market adoption of the new product line. Glocomi Thin continued to steadily expand as well with DAU increasing 132% year-over-year. Our eSIM solution is gaining strong momentum, leading the market in China and building market share stability across East Asia and the wider Asia Pacific region. Together, this result shows two product lines at a different stage of maturity. with Glokomi Live growing rapidly with exceptional triple digit growth and Glokomi themes scaling consistently. Our premium Mirgo G50 Max is the world's pioneering sky-to-ground integrated mobile connectivity hub, delivering seamless connectivity across satellite, flight, and ground networks. It offers the broadest 5G countries' coverage in the industry, spanning nearly 100 countries, and the performance is reliable across a wide range of scenarios, from the urban environment to in-flight travel. Powered by our AI hypercom technology, the G50 Max has built a market-leading position U.S. dollar 500 plus premium MiFi segments and has set a new benchmark for premium mobile connectivity solutions. While our uClouding 1.0 international data connectivity business has been affected by micro-having, this same condition has created new opportunities for the G50 Max and the premium solution. Driving demand from the resilience are all reliable connectivity in critical environments. We also make solid progress and create new and strong revenue with our newly launched 4G and 5G CPE products during the second quarter for local connectivity services. Both have demonstrated stable performance and successfully passed smaller batch market validation, receiving positive market feedback. Several large orders are currently under negotiation, and we expect to accelerate market deployment and drive stronger growth in Q3. We also achieved notable recognition during the quarter, winning the Customer Impact Award and the MVMO Awards in year 2026, and being shortlisted for leading consumer MVMO sub-brand. for validating our technology leadership and market positioning. Looking ahead, we'll remain focused on strengthening operational management and cost discipline with a clear priority on improving cash flow. Together with the ongoing commercial progress of the Petco AI and social platform, the ramp-up of MIRGO G50 Marks and the continued expansion of Glocomi IoT, CPE R50 and R55. We believe these efforts will position us to navigate the current market environment and emerging stronger. We remain committed to bridging the digital divide in cross-border connectivity as well as the emotion and Yimeng Shi. I will now turn the call over to Mr. Shi.

Thank you, Mr. Chen. Hello, everyone. I will go over our operational and financial highlights for the second quarter of 2026. Average daily active user, DAU, and monthly active users, MAUs, represent average number of unique users engaging with our global media service on a daily and monthly basis, respectively. Those metrics recall robust growth in the second quarter. Average DAUs in the second quarter were 376,376,376, representing an increase of 13.3% from 332,323 in the second quarter of 2025. Glogomy IoT, Glogomy Scene, and Glogomy Live all achieved substantial growth with average DAUs up 277.3%, 132%, and 801.6% respectively from the same period last year. Average DAU from our Glogomy Miracle business declined by 7.3% year-over-year. Average MAUs were 744,966, representing an increase of 6.6% from 698,862 in the second quarter of 2025. Average MAUs from our global IoT from our Globomy theme and Globomy live business line saw increase of 210%, 53.8%, and 599.7% respectively from the same period last year. Average MAU from our Globomy near-goal business decreased by 10.1% year-over-year. In the second quarter of 2026, average DATs were 341,511 with 12,763 owned by the company and 328,748 not owned by the company, representing an increase of 7.4% from the second quarter, 2025. During the quarter, 56.3% of DATs were from Eucalink 1.0 International Data Connectivity Service, and 43.7% were from Eucalink 2.0 Local Data Connectivity Service. In June, 2026, the average daily data usage per terminal was 1.5 gigabyte. Average MATs in the second quarters were 306,388. representing an increase of 6.5% from 663,197 in the second quarter of 2025. Growth was driven by strong momentum across our three new growth engines with average MADs from Golubi IoT, Golubi Sim, Golubi Live increasing 93.6% 35.4% and 843.2% respectively from the same period last year. Average MAT from globally near-goal business decreased by 5.7% year-over-year. Following this stable growth last year, platforms continued to gain traction with user adoptions and engagement increasing further during the quarter. In the second quarter, average DAU and MAUs were and Yimeng Shi respectively, while average DATs and MATs for platforms reached 507 and 1,028, reflecting the growing traction of this new offering. As of June 30, 2026, the company had 212 patents with 184 approved and 28 pending approvals. and a pool of SIM cards from 398 MNOs globally. Total revenues from the second quarter of 2026 were $18.2 million, representing a decrease of 5.9% from $19.4 million in the same period, 2025. Total revenue across different business lines were as follows. Global mere gold business 15.5 million US dollars representing a decrease of 13.1% from 17.9 million US dollars in the second quarter, 2025. Globami SIM business 1.3 million US dollars representing an increase 78% from 0.7 million US dollars in the second quarter, 2025. Globami IoT business 0.8 million US dollars representing an increase of 392.4% from US$0.2 million in the second quarter of 2025. Global Meat Life Business, US$0.5 million representing a decrease of 12.1% from the US$0.6 million in the second quarter of 2025. Half Home Business, US$0.2 million representing an increase and Yimeng Shi. Revenue from service were $13.3 million, representing a decrease of 9.2% from $14.6 million in the same period of 2025. Revenue from service contribute to 72.9% of total revenue during the second quarter, 2026, compared to 75.5% in same period last year. Geographically speaking, during the second quarter, 2026, Japan contributed 36%, mainland China contributed 30.3%, North Americans contributed 13.5% and other countries and regions contributed remaining 20.2% compared to 33.6%, 33.2%, 15.3% and 17.9% respectively in the same period of 2025. Our gross profit was $9.2 million compared to $10.2 million in the same period of 2025. Overall gross margins in the second quarter of 2026 was 50.2% compared to 52.8% in same period 2025. Gross margins on service were 59.1% in second quarter 2026 compared to 56.6% in same period 2025. Excluding share-based compensations, total operating expenses were $11.5 million. compared to $10.1 million in the same period, 2025. Late loss in the second quarter of 2026 was $3 million compared to late income of $0.7 million in the same period, 2025. Adjusted EBITDA was negative $1.8 million in the second quarter of 2026 compared to a positive for the second quarter of 2026, we record an operating cash outflow of 3 million US dollars compared to an outflow of 0.9 million US dollars in the same period of 2025. For the second quarter of 2026, our capital expenditures were 0.3 million US dollars. and Yimeng Shi. We continue to strengthen our financial position and we believe we are well positioned to drive growth in our business. Turning our outlook For the third quarter of 2026, we expect total revenue to be between $19 million and $22 million, representing a decrease of 10.4% to an increase of 3.8% compared to the same period of 2025. For the full year of 2026, we now expect total revenue to be in the range of $75 million to $85 million, compared with the range of and others. We are revising our four-year guidance in line of the persistent microeconomic challenge and global trade headwinds, which may continue to have a broader impact for industries. These estimates reflect our current view on market and operating conditions and customer demand. which are subject to change. With that, operator, let's open it for Q&A.

Thank you. 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 the handset to ask your question. Your first question comes from Theodore O'Neill with Litchfield Hills Research. Please go ahead.

Thank you for taking my questions. I have two questions this morning. The first is about memory chips and sort of the supply chain of semiconductors in general. You cited here, which everyone has been seeing, is memory chip cost increases. So what are you doing to... Ameliorate that and are you seeing other issues in other supply chain issues in the semiconductor area as well?

Yeah, I think there are several impacts because I think the supply chain for chipset and AI volume demand for supply chain in China. For the memory chip, everyone knows it's almost five to ten times increase. It impacts our sales price, you know. for our customers. So in the early quarter, we increased more storage, tried to offset the price increasing first. You can see that's why our cash flow was somewhat impacted because we increased the memory chip storage first. And the second, you can see we have to cover some chipset costs increasing. In the second half year, we just About several months later, we increased our sale price. But we have to consider the customer's acceptance for the price. That's number two. And number three, and also we have RMD revised. for some large memory and expensive memory, we try to, I think, revise our hardware, try to minimize, I think, to reduce the memory requirement. That is number three. And finally, and also we, also like a PCB, like all these components, Thank you. My other question is about the LocalMe Life business.

Here in the prepared remarks here, local meat life business revenue decreased year over year, but the average daily active users increased over the same period. So were they spending less money? I was wondering if you could explain why one's down, the other one's up.

Yeah, sure. Yeah, as this second quarter figures, there's live revenues including two parts. One part is the hardware's live delivery to our customer. So that's the volume of hardware delivery in the second quarter is a little bit down a bit. So that accounts for the total revenues a little bit down. but we deliver live products in the past series of quarters on a stable gross volume. This live product is used to the local scenarios, local mobile broadband scenarios, like our products charge cables. We are very welcome in Japan's local market. So the MAU's figures reflect cumulative active historical assault hardware of life. So that cumulative MAU's matrix is increased dramatically compared with last year's. So there are two figures, two matrix, one revenue reflect the second quarter scenarios, The MAUs reflect the communities, the whole historical salience stories.

I have more comments about this. Because for life, this product, I think because I just mentioned, as you mentioned, the supply chain impact by the AI industry because of the memory chip and the PCB, etc. That's why in the first quarter, before the price increased, We asked our customers to give more orders and so far I think this is why in the first quarter we get more bigger orders and the second quarter the order is a little bit lower. The second quarter you can see the order is a little bit lower. That's because of the supply chain impact and the price increase. But the total, the first half years, we are comparing the first half last year, it increased dramatically.

Thank you very much. That answers my questions.

Once again, if you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. There are no further questions at this time. I'll now hand back to Daniel Gao for closing remarks.

Okay. Thank you once again for joining us today. If you have further questions, please feel free to contact Collin's Investor Relations through the contact information provided on our website or speak to our Investor Relations form, Creighton Adversary. We look forward to speaking with you again on our next call. Thank you.

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