Diamond Equity Research Releases Update Note on uCloudlink Group Inc. (NASDAQ: UCL)
New York, Dec. 03, 2024 (GLOBE NEWSWIRE) -- Diamond Equity Research Releases Update Note on uCloudlink Group Inc. (NASDAQ:UCL)
Diamond Equity Research, a leading equity research firm with a focus on small capitalization public companies has released update note on uCloudlink Group Inc. (NASDAQ:UCL). The update note includes information on uCloudlink Group Inc.'s financial results, management commentary, recent developments, outlook, risks, and our revised valuation estimates.
The update note is available below.
uCloudlink Group Update Note December 2024
Highlights from the note include:
•Third Quarter Earnings Highlights - uCloudlink reported its financial results for Q3 2024, with total revenues of $25.2 million, up 5.6% year over year, compared to our estimate of $25.7 million. The increase was primarily due to a 29.1% YoY increase in PaaS and SaaS service revenues, which was driven by increased use of services by business partners to improve operational efficiencies, and a 9.3% increase in product sales with the launch of new GlocalMe products. The overall gross margin was 48.4% versus 51.2% in Q3 2023, with the service gross margin continuing to expand to 60.0% and the gross margin of product sales declining to 23.1%. Total operating expenses were $10.0 million compared with $9.2 million a year ago, mainly due to the increase in S&M expenses as the company continued to invest in promoting its newly launched products. UCL's net income for Q3 2024 was $3.4 million, or $0.09 per basic and diluted ADS, versus a net income of $3.5 million or $0.09 per basic and diluted ADS in the year-ago period, beating our estimate of a net income of $2.5 million or $0.07 per basic and diluted ADS. As of September 30, 2024, UCL's cash and cash equivalents totaled $27.7 million, compared to $26.8 million as of June 30, 2024. uCloudlink's cash position continued to improve in line with our expectations. Backed by a strengthened cash position and balance sheet, the company appears well-positioned to expand revenue streams through a synergistic product pipeline and achieve sustainable long-term growth with further improved operational efficiency.
•New Sales Channel Cooperation Highlighting Future Growth Potential – uCloudlink has entered into an agreement with one of the largest airport retail channels in the U.S., aiming to expand the sales channels of its GlocalMe products and promote future sales growth more efficiently. As of November 2024, there have been three GlocalMe Life products, including Unicord, RoamPlug, and KeyTracker, available in stores at 38 U.S. airports to facilitate people's travel through this partnership, according to the company. uCloudlink expects to sign an agreement with another major U.S. airport retail channel in Q4, with cooperation with other airport channels in Europe and the U.S. being in progress. We view UCL's cooperation with global airport retail channels as positive, which is expected to further expand the sales channels of its products and enhance the company's brand value while driving UCL's sales efficiently and bringing long-term growth potential.
•Valuation Update – Our valuation for UCL remains $10.00, combining discounted cash flow and comparable company analysis, which is contingent on the company maintaining its successful execution.
About uCloudlink Group Inc.
uCloudlink operates as an innovative mobile technology company that offers the world's first and leading mobile data traffic sharing marketplace to users globally, with aggregated mobile data allowances from over 389 MNOs (mobile network operator) globally. Leveraging its integral cloud SIM technology, it allows users to enjoy a smooth mobile connectivity experience without limitation to one MNO. uCloudlink was incorporated in 2014 and is headquartered in Hong Kong.
For more information, visit https://ucloudlink.gcs-web.com.
About Diamond Equity Research
Diamond Equity Research is a leading equity research and corporate access firm focused on small capitalization companies. Diamond Equity Research is an approved sell-side provider on major institutional investor platforms.
For more information, visit https://www.diamondequityresearch.com.
Disclosures:
Diamond Equity Research LLC is being compensated by uCloudlink Group Inc. for producing research materials regarding uCloudlink Group Inc. and its securities, which is meant to subsidize the high cost of creating the report and monitoring the security, however the views in the report reflect that of Diamond Equity Research. All payments are received upfront and are billed for research engagement. As of 12/03/24 the issuer had paid us $140,000 for our research services, consisting of $20,000 for an initiation report and $15,000 for six update notes and $35,000 in the second, third and fourth year of coverage for update notes during the term, which commenced 06/01/2021. Diamond Equity Research LLC may be compensated for non-research related services, including presenting at Diamond Equity Research investment conferences, press releases and other additional services. The non-research related service cost is dependent on the company, but usually do not exceed $5,000. The issuer has not paid us for non-research related services as of 12/03/2024. Issuers are not required to engage us for these additional services. Additional fees may have accrued since then. Although Diamond Equity Research company sponsored reports are based on publicly available information and although no investment recommendations are made within our company sponsored research reports, given the small capitalization nature of the companies we cover we have adopted an internal trading procedure around the public companies by whom we are engaged, with investors able to find such policy on our website public disclosures page. This report and press release do not consider individual circumstances and does not take into consideration individual investor preferences. Statements within this report may constitute forward-looking statements, these statements involve many risk factors and general uncertainties around the business, industry, and macroeconomic environment. Investors need to be aware of the high degree of risk in small capitalization equities including the complete loss of their investment. Investors can find various risk factors in the initiation report and in the respective financial filings for uCloudlink Group Inc. Please review update note attached for full disclosure page.
Contact:
Diamond Equity Research
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