NEW YORK, Aug. 21, 2024 (GLOBE NEWSWIRE) -- 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 here. Highlights from the note include:

• Q2 Earnings and Revenues Exceed Expectations – uCloudlink reported its financial results for Q2 2024, with total revenues of $22.4 million, up 1.7% year over year, exceeding our estimate of $22.2 million. The increase was primarily due to a 0.5% YoY increase in revenues from data connectivity services, which was driven by the continued recovery of international travel, and a 3.9% increase in revenues from sales of products. In terms of geographic distribution, Japan remains UCL’s largest market, contributing 46.2% of total revenues, while revenues from mainland China increased significantly by 106% YoY to $5.3 million, contributing 23.5% of total revenues as international tourism continues to recover, indicating the company’s explosive growth potential in China. Margin profile continued to improve in Q2 2024: overall gross margin was 49.2% versus 44.9% in Q2 2023, with increased gross margins on both services and sales of products. Total operating expenses were $9.1 million compared with $9.0 million a year ago. UCL’s net income for Q2 2024 was $2.2 million, or $0.06 per basic and diluted ADS, versus a net loss of $0.9 million or $0.02 per basic and diluted ADS in the year-ago period, beating our estimate of a net income of $0.9 million or $0.02 per basic and diluted ADS. Backed by an improved cash position and balance sheet, we see the potential for the company to deliver sustainable long-term growth through diversified revenue streams, as the company launches more innovative solutions to generate meaningful revenues with further improved profit margins and operational efficiency.
  

• New GlocalMe Life Products Have Been Released And On Sale – uCloudlink introduced its first three new GlocalMe Life devices at VivaTech 2024: GlocalMe Life KeyTracker, a lightweight smart tracker that attaches to personal belongings and provides accurate tracking through proprietary connectivity and location technologies; GlocalMe Life RoamPlug, a universal travel adapter combining smart charging technology and a mobile hotspot to provide internet connectivity; and GlocalMe Life Unicord, a USB C to C cable with built-in mobile Wi-Fi capabilities that can be used not only for charging but also as a hotspot. The above products have all been launched for sale in June, allowing the company to target wider markets and engage with a broader end-user base in more frequent daily life scenarios besides travel. We view the launch of these solutions as further expanding the company’s product offerings and diversifying its revenue streams with long-term growth potential. The GlocalMe Life business is expected to generate additional meaningful revenues starting in Q3 2024.
  

• 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.