NEW YORK, March 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:
- UCL Fourth Quarter and Fiscal Year 2023 Financial Results - uCloudlink reported its financial results for Q4 2023, with total revenues of $21.7 million, up 10.8% year over year, compared to $19.6 million in the same period of 2022. The increase was primarily due to a 19.1% YoY increase in services revenues driven by the accelerated recovery of international travel and surging demand for data connectivity services. Overall gross margin was 52.0%, compared to 51.3% in Q4 2022. Total operating expenses increased from $11.2 million to $12.1 million as the company strengthened the sales force to promote its newly launched products. UCL’s net loss for Q4 2023 was $1.8 million, or $0.05 per basic and diluted ADS, compared to a net loss of $1.1 million, or $0.03 per basic and diluted ADS a year ago. For the fiscal year 2023, UCL continued its growth momentum with total revenues reaching $85.6 million, up 19.8% from $71.5 million in 2022, highlighting the renewed growth of its international data connectivity business as markets rebounded. Overall gross margin for 2023 increased to 49.0% from 45.5% over the year, while total operating expenses were $37.9 million, compared to $37.4 million in 2022, net income was $2.8 million, or $0.08 per basic and diluted ADS. UCL’s return to profitability for the fiscal year 2023 is in line with our expectation. We see the company has the potential to continue this growth momentum with further potential improved profitability in 2024, as it targets increased revenues from resuming its international data connectivity business, while launching more products to expand its product mix.
- Expanded Products Lines Accelerate Long-Term Growth Potential – In addition to growth, we believe another highlight for the company in 2024 is its business restructuring. Beyond traditional UCL 1.0 and 2.0 data connectivity businesses, the company expects to expand into broader consumer markets by introducing four product lines, which include Mobile Broadband Solution, All SIM Solution, GlocalMe Life, and IoT Solution to a global audience, with each line having a set of products. The company’s newly announced GlocalMe Life aims to integrate technology with daily life through higher-quality connections, enabling UCL to extend its business into more frequent life scenarios besides travel, such as item tracking, pet management, and emergency communication. We believe UCL appears well-positioned to deliver potential long-term sustainable growth with an expanded market presence, as its reorganized product lines backed by proprietary cloud SIM technology target a broader consumer base with more diversified products to be launched starting Q2 2024, targeting large market opportunities.
- 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 382 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 03/21/2024 the issuer had paid us $105,000 for our services, consisting of $20,000 for an initiation report and $15,000 for six update notes in the first year of coverage and $35,000 in the second and third year of coverage for update notes during each term, which commenced 06/01/2021 and is renewable annually. 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 03/21/2024. 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 potential loss of their investment. Investors can find various risk factors in the initiation report and in the respective financial filings for uCloudlink Group Inc.
Contact:
Diamond Equity Research
research@diamondequityresearch.com
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