uCloudlink Group Q4 2024 Earnings Call Transcript

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Provided by Quartr
March 13, 2025

There are 6 speakers on the call.

Operator

Good day, and welcome to the U. Cloud Link Group, Inc. Fourth Quarter and Full Year twenty twenty four Earnings Conference Call. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions.

Operator

Please note this event is being recorded. I would now like to turn the conference over to Daniel Gao. Please go ahead.

Speaker 1

Hello, everyone, and thank you for joining us on Yookling's fourth quarter and the full year twenty twenty four earnings call. The earnings release and our earnings presentation are now available on our IR website at ir.yoklin.com. Joining me on today's call are Mr. Zhi Ping Peng, Co Founder and Chairman of the Board of Directors Mr. Xiaokui Chen, Co Founder, Director and Chief Executive Officer and Mr.

Speaker 1

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.

Speaker 1

They will all be available to take your questions in the Q and A section that follows. Before we proceed, please note that this call may contain forward looking statements made pursuant to the Safe Harbor provisions of the Private Securities 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 company's control, which may cause actual results, performance or achievements of the company to be materially different from the results, performance or expectations implied by these forward looking statements. All forward looking statements are expressly qualified in their entirety by the cautionary statements, risk factors and the details of the company's filings with the SEC. The company does not assume any obligation to reverse or update any forward looking statements as a result of new information, future events, change in market conditions or otherwise, except as required by law.

Speaker 1

Please also note that Yuclin's earnings press release and this conference call include discussions of undoubted GAP financial information and undoubted non GAP financial matters. Yuclin's press release contains a reconciliation of the unaudited non GAP measures to the most directly comparable unaudited GAP measures. I will now turn the call over to Mr. Chen. Please go ahead.

Speaker 2

Thank you, Daniel, and good morning or evening everyone. We closed out the year with a solid performance as our expanding GlucoMii ecosystem continues to gain growth momentum. Revenues in year 2024 increased 7.1% year over year to US91.6 million dollars with net income US4.6 million dollars and net cash flow from operations of US9.2 million dollars representing a significant 41.2% increase from the last year. Total revenue during the year from the Mainland China region, in particular, increased 97.4% year over year, indicating that our U. Cloudy one point zero international data connectivity solutions are being more widely adopted by Chinese consumers and strengthening our leading position in a long wind market.

Speaker 2

Total revenue during the fourth quarter, which is typically impacted by seasonality, exceed the third quarter with peak summer activity, maintaining a consistent upward growth trajectory. Year '20 '20 '4 marks the ten years anniversary since our funding. Our comprehensive connectivity services powered by cloud SIEM and the HyperCon solutions cover over 150 more countries across six continents. We have served twenty eighteen business partners in 62 countries and regions, indicating a growing ecosystem of global mix solutions for daily use. While these impressive, we have much more installed for year 2025.

Speaker 2

Our Glocomid ecosystems continues to thrive as we broaden our portfolio of solutions to service a wider variety of user needs As artificial intelligence AI becomes more widespread, we have begun deploying it internally to enhance operational efficiency and integrated it into a number of our solutions to improve the users' experience, ensuring seamless connectivity for users globally. In addition to AI, we're leveraging our proprietary Hypercom, CloudSimple and SysTech positioning technologies to break barriers in connectivity, creating innovative solutions that enhance digital experience worldwide and revolutionize connectivity for IoT, people and pets. At MWC twenty twenty five, we showcased these new and exciting technologies that has been integrated into innovative solutions that will further strengthen the tailwinds behind our broader series of Glocomin and Glocomin Insight solutions. Furthermore, at CES year twenty twenty five, our Unicorp was honored with the Best of the CES twenty twenty five Breakthrough Award by Android Authority. Underscoring our commitment to innovation, in a significant milestone, one of UCLAR Link's subsidiary was among the first batch of the 13 foreign invested companies alongside affiliate of renowned multinational operations such as Deutsche Telekom, Siemens, Airbus and HSBC to receive approval from China Ministry of Industry and Information Technology, MIIT, for pilot operations of value added telecommunication services.

Speaker 2

This approved grants us the ability to provide Internet access and information services in China, making a pivoter steps in expanding our global footprint and delivering cutting edge connectivity solutions. First, let me start with our Glocomi Life and Pet connectivity solutions, where we just unveiled platform at MWC twenty twenty five, a revolutionary addition to the digital ecosystem. The world's first smartphone for pets offers for pet offers funds, API pet interaction, safety, including the six tech global positioning, PLC Health, AI Smart Guardian and the community engagement global pet community. According to Morgan Stanley, annual spending growth in the pet industry could reach 7% by year 02/1930 year by year, Translating into the total industry spending will increase to RMB251 billion, reflecting the enormous opportunity we are tapping into with this solution. Platform makes a great addition alongside long track, Uniqor, HeCheck into our portfolio.

Speaker 2

Turning to Glocomid Internet Offsets IoT connectivity solutions, where we unveil the Cloud Sync Kit all in one IoT solution at MWC year twenty twenty five. Our Cloud Sync Kit is a revolutionary plug and play IoT solution designed to deliver instant global full speed four gs and five gs connectivity for IoT and the smart devices. These innovative solutions can seamlessly integrate it into existing device with the same car slots, such as smartphone, CPE router and IoT enabled hardware. By simplifying inside the cloud SIM kit into the SIM slot, users can unlock global connectivity without the need for additional hardware or software modifications, make it an ideal solution for a wide range of applications and scenarios. With the combination of the Cloud SIM kit, our pioneering software Cloud SIM technology and our innovative SIM card solutions, Glocomin's IoT offerings now comprehensively address the connectivity challenges across all IoT scenario.

Speaker 2

Whether for the existing legacy devices or new incremental markets. Our solution provides seamless, reliable and scalable connectivity. This breakthrough not only enhance the versatility of IoT application, but also significantly expand the market potential for Glocomplete, positioning us as a leader in global IoT connectivity solutions. Following the success, small scale commercial application of our soft sensing technology with several leading manufacturers in the security camera, dashboard camera, other related sector. The commercial application of our Glocomi IoT solutions scaled up significantly during the first quarter.

Speaker 2

Glocombe IoT user numbers are growing rapidly and are expected to ramp up going forward, allowing us to demonstrate the strength and the capabilities of our solutions to an even broader audience across IoT sectors. For our global midstream business, we just unveiled eSIM Trail at NWCE twenty twenty five, a revolutionary leap in SIM technology, positioned as the best second SIM car you can have. It enhanced both domestic and international car ranges, providing consumers with a single SIM solution for seamless local and global connectivity. Additionally, it empower Tier two, Tier three operator and the mobile watch operator by addressing challenges such as poor network performance, limited international roaming and inability to build independent networks, enabling them to deliver superior services and expand their market reach. This eliminate the need for costly international roaming and provides users with reliable high speed connectivity across mobile network operator networks.

Speaker 2

Lastly, for our people centric connectivity, our Glocomi mobile flexible band business line where we just unveiled the MiuGo G50 Max had a HyperCon five gs mobile Wi Fi hotspot with AI driven sky to ground connectivity at NWC twenty twenty five. This mobile Wi Fi hotspot improves network quality with AI powered real time congestion detection offering a seamless and better connection experience regardless of where you are. Our advanced HyperCon technology delivery local and global Internet access ensuring users have high speed connections and reliable network whatever they go without a limitation of the traditional roaming or carrier restriction. At NWCA twenty twenty five, we unveiled the revolutionary upgrade U40, capable of deliveries, big three times faster than traditional four gs device. This groundbreaking solutions seamlessly integrate Wi Fi networks across home, airport, cabin, office, cafe and mall, while also being the world's first device to support in flight Wi Fi connectivities.

Speaker 2

We also met breakthrough in developing retail channel for our Glocomi mobile fixed broadband and live solution during the quarter by signing cooperation agreements with North American largest airport retail channel and making them widely available across airport retail located in North America. We are now actively negotiating to expand this partnership across Europe soon and looking to replicate this process through other channels to expand their exposures to a broader audience. Following our successful launch at MWC25, all four product lines are now market ready with strong interest from partners, including global pet store chain, who had initiated high level discussion signaling significant market expansion potential. Our goal is to aggressively promote Lease NAND toward a full marketplace vision. Glocomuli Life, including the platform, aims for tens of millions of users.

Speaker 2

Glocomi SIMs and IoT target hundreds of millions and Glocomi mobile broadband strives for millions of users, driving impactful growth across all business lines. With this innovative business lines increasingly creating new revenue streams fed into our marketplace. Our user base is diversified and scaling up. We have been an exciting year 2025 ahead of us with many more solutions in the pipeline where we are we will further consolidate the convenient, secure and premium connectivity between mobile Internet, fixed broadband, Wi Fi and satellite communications with centralized AI management. With all these innovative solutions increasingly contributing to a new revenue streams and further scaling up our user base.

Speaker 2

I'm confident we are on the right track to build an integrated and comprehensive global mobile data traffic sharing marketplace that will create long term sustainable value for the shareholders. With the optimism for the future in mind, I will conclude with our guidance for the next quarter and the year. For the fourth quarter of year twenty twenty five, we expect total revenue to be between US80.2 million dollars and US90.5 million dollars representing an increase of 0.6% to 7.7% compared to the same period of the year 02/2004. For the year 02/2005, we expect total revenue to be between US95 million dollars and US130 million dollars representing an increase of 3.7% to 41.9% for long year 02/2004. I will now turn the call over to Mr.

Speaker 2

Si.

Speaker 3

Thank you, Mr. Chen. Hello, everyone. I will go over our operational and financial highlights for the fourth quarter and full year of 2024. Average daily active terminals is an important operating metrics for us as it measures customer usage trends over each period, which is reflective of our business performance.

Speaker 3

Average daily active terminal, DAT, in the fourth quarter were 308,386, of which 54.3% were from the EquiLink one point zero in national data connectivity service and 45.7% were from EquiLink two point zero local data connectivity service. Average daily data usage per terminal was 1.55 gigabytes in December of twenty twenty four. As of 12/31/2024, the company has served 2,818 business partners in 62 countries and regions. The company had 185 patents with 165 approved and 20 pending approval. While the pool of same cars are from three ninety one M and Ls globally as of 12/31/2024.

Speaker 3

Total revenue for fourth quarter were US26 million dollars representing an increase of 19.5% from US21.7 million dollars in the fourth quarter of twenty twenty three. Revenue from service was US50 million dollars representing an increase of 0.6% from US14.9 million dollars in the same period of 2023. Revenue from service as a percentage of total revenue was 57.8% during the fourth quarter of twenty twenty four compared to 68.7% during the same period of 2023. Geographically speaking, during the fourth quarter of twenty twenty four, Japan contributed 33.6 mainland China contributed 20% North America contributed 12.1% and other countries and regions contributed the remaining 14.3% compared to 43.1%, sixteen point five %, twenty one point three % and sixty one % respectively in the same period of 2023. Overall gross profit was RMB11.2 million in the fourth quarter twenty twenty four, relatively stable when compared to RMB 11,300,000.0 in the same period of 2023.

Speaker 3

Overall, gross margins was 43% in the fourth quarter of twenty twenty four compared to 52% in the same period of 2023. Gross margin on service was 58.6% in the fourth quarter of twenty twenty four compared to 60.1% in the same period of 2023. Gross margins on sales of products decreased to 21.7% in the fourth quarter of twenty twenty four from 34.2% in the same period of 2023. Excluding share based conversations, total operating expenses in the fourth quarter of twenty twenty four were US13.9 million dollars or 53% of total revenue compared to US11.6 million dollars or US53 million dollars of the total revenue in the same period in 2023. Late loss was US1.5 million dollars in the fourth quarter of twenty twenty four compared to US1.8 million dollars in same period 2023.

Speaker 3

Adjusted EBITDA was negative US2.3 million dollars in the fourth quarter of twenty twenty four compared to a positive US1.5 million dollars for the same period of 2023. Moving on to 2024 full year's financial results. Total revenue for 2024 increased by 7.1% to US91.6 million dollars from US85.6 million dollars in 2023, driven primarily by the revenue increase from data connectivity service and the past SaaS service. Revenue from data connectivity service were US47.6 million dollars representing an increase of 1.9 from US46.6 million dollars in 2023. Within data connectivity service, revenue from international data connectivity service rose to US39.5 million dollars in 2024 from US37.6 million dollars in 2023, driven primarily by the continued recovery of international recover, which was partially offset by a decrease in revenue from local data connectivity to service to $8,100,000 in 2024 from $8,800,000 in 2023.

Speaker 3

Overall gross margins was 48.4% in 2024, stable when compared to 49% in 2023. And our gross margins on service increased to 60.8% in 2024 from 58.5% in 2023. Excluding share based compensation, total operating expenses in 2024 were US40.8 million dollars or 45% of total revenue compared to US34.6 million dollars or 40% of total revenue in 2023. We achieved a net income of $4,600,000 in 2024, up from $2,800,000 in 2023. Adjusted EBITDA was $7,100,000 compared to $9,800,000 in 2023.

Speaker 3

For the full year 2024, our capital expenditure were $4,000,000 compared to $2,100,000 in 2023. For the full year 2024, we achieved positive operating cash flow of $9,200,000 compared to $6,500,000 in 2023. Moving on to balance sheet items. Our cash and cash equivalents increased to $30,100,000 as of 12/31/2024, compared to $27,700,000 as of 09/30/2024. We remain committed to enhancing the company's strategic positions over the course of the years and are well positioned to continue growing our business.

Speaker 3

With that, operator, let's open up for Q and A.

Operator

Thank you. We will now begin the question and answer session. The first question today comes from Theodore O'Neil with Litchfield Hills Research. Please go ahead.

Speaker 4

Yes. Thank you very much. My first question is about the pet phone. And what I'd like to know is what's the benefit of the pet phone and what will it allow me to do?

Speaker 2

Yes. So on the pet phone, I think we enable pet like children under seven years old, similar smart. They can use the smartphone to call their the other dog or other pets or their owners to express their needs, their moody, such as, for example, they are hungry, they are thirsty, they want to go outside, they are missing their friends, so they can use their body languages, They can use their special tone to express this message according to their different friends, different pets and their owners. So they are we shorten the distance. So no matter the owner of friends where they are, so they can contact their pets.

Speaker 2

They can express their caring each other. So that's quite unique. So a creation point. That's why in the NWC twenty twenty five, we get many, many attraction from the local seven I remember seven TV and a lot of very famous like this famous broadcaster, I think is approaching us to understand this product. It's not only just interaction with the people and the pets, but also we create, I think, pets community social.

Speaker 2

For example, if the dock with our platform would go to the park, so if another dock is approaching, so the platform, the light will flash and the tone will give a reminding, oh, you have new friend coming or you have a good friend coming or you have a bad friend, you have a light friend coming. So we can make this happen. So this is quite attractive. Also we have security, we have six positioning. We can find any other tracking tracker or air tech could notify because we have six positioning technology Cryunica we already flew in last year.

Speaker 2

So finally, we have also the geosensing, we have sports and we can understand they are moody and and we can monitor in, we can alert this if something wrong or improper behavior. So that's quite unique for this product. So we believe Le Pet deserve a handset. So that's why we bring out a huge market. By the way, I think that we get very a lot of the carrier like our product.

Speaker 2

So we are not just selling our this product we launched in April, but we are not just launching this product in the open market. But more important, we successfully attract carrier because we bring we help carrier create revenue not only from people and IoT, but more important, we create a new market like pet market. It's a growing market, so they can sell out their subscriber. They can sell the same car. That's quite important to the carrier in such competitive market.

Speaker 4

That's very interesting. You may have inadvertently answered my next question, but of the items you've introduced at MWC, the PetPhone, eSIM, Trio, CloudSIM kit and HyperCon, do you think the pet phone is going to have the biggest impact in 2025 of those?

Speaker 2

Yes. That's why I think we have become very famous in Spain because there are seven TV broadcast approaching us and a long time interview with our guys. That's why recently we just about after the NWCA several days later, we already had a successful meeting with the biggest pet channel in Spain. So in the past, that's unbelievable, but now it do happen. So that's why platform is quite unique.

Speaker 2

We create this new device and for the new market. So that's first. Also, our second start product is the eSIM TRIO and SIM kit because we enable from the user from the subscriber side, if the end user use our EaseenTrail or our SIM kit, that means they will no more coverage issue, roaming issue, congestion issue. So that's why in this case it has a very unique it's a long term I think people will need a second SIM slot or second SIM card for permanently for permanent use because we can solve such three problems that force the SIM card. We are facing these three challenges.

Speaker 2

And also we are also more important, we enable a Tier two, Tier three carrier. They are no longer have this roaming issue, congestion issue, coverage issue. That means they can use our eSIM Trio and the same kits to use the other carriers network to build their to gain their business and service. So without our technology, I don't think in a domestic, they can use the other carrier network to build their business without coverage, without revenue. But now we change this situation.

Speaker 2

We can have a Tier two, Tier three carrier. So use the other carrier network for roaming and for domestic roaming and international roaming for congestion and for country as well. So that's quite unique part. So also a lot of Tier two, Tier three carrier approaching us. They are quite interesting because we can say they are spending in the base station building.

Speaker 2

They are no longer need to immediately to build a local and a domestic currency. So there are no dispatch anymore. They can quickly expand their business. So to the future, they can build their own base station based on their need and their data. So by the way, also we have the third product last year, we just show our Unicore product.

Speaker 2

So now we have three products for the Unicore, this family. We are offering so a cable with a power charge of 60 watt, but also with four gs capability in this cable, just $5 more for our unicode entry level. We have a middle tier level that's very compact we call compact model. You can screw up your wire in very smaller, extreme portable. So for battery inside, for MiFi inside, for GPS for six positioning inside with this unique core, we call, I think, this is extremely portable.

Speaker 2

So it's extremely good for your business and your car and at safety because positioning always you never missing the car, you can find your car always. You never losing your luggage. Also, you get the data. And anyway, it's good for your possible it's pretty portable for your cable you need a cable for power. So also we have another we call multi purpose multi functions, unicore.

Speaker 2

This is high end. They can provide high speed for eight people use or five people use Internet, data charge and also can be a computer dock. So and we are not occupied the Type C. It also with the battery and with the positioning, so you never lost your goods, your property. So just one cable, we can solve the safety, convenience and easy your trip and your safety your product your property.

Speaker 2

So that's the third product. The final product is about our we provide hypercom technology and satellite connection into our traditional MiFi product, mobile hotspot worldwide. So that means our traditional our mobile WiFi only be applied into the during the people travel outside. So to provide a multi user mobile broadband worldwide at the high speed at the high quality, at high five gs. Gs.

Speaker 2

That's our quite unique position. But now we expansion this function not only four gs five gs, but also we can manage all the Wi Fi network. This Wi Fi network including the satellite Wi Fi or the airport WiFi, StarPark WiFi or I think the cabin, air flight cabin WiFi. So and also even you are at home office, so you still need this device. Because one device, you never need to change the connection.

Speaker 2

For example, if normally our handset go to the outside, you need to connection four gs, five gs. Go to the airport, you need to go to connect to airport WiFi. Go to home, you go to your home Wi Fi. That is extremely inconvenient. So for our mobile Wi Fi can smartly, AI enable to choose the suitable network for you.

Speaker 2

At home and office, you still have in serving with the WiFi high speed and free, but also we guarantee the reliability for four gs and five gs backup to robust your network. So in the airport, in the flight cabin WiFi, you don't need to scan and connection to the cabin WiFi again. So we can automatically switch to the cabin WiFi for you. So one device for every scenario, not at home or outside is extremely convenient. So that's why all our four products become more and more attractive and quite unique in MWC year 2025.

Speaker 2

We are currently unique. We are met alive more easily, more convenient and connected more better and more safety.

Speaker 4

Okay. Well, thank you. My last question is about international travel. In your forecast for full year revenue, I'm wondering what assumptions you may have made about international travel going up or down. And the reason I'm asking is because and it may be too soon to tell is that Delta Airlines last week said they're seeing a drop off in flyers in their forecast.

Speaker 4

And I was wondering what you if you've made any assumptions about international travel in your full year 2025 forecast?

Speaker 3

Yes, of course. The guidance for the year 2025 is the range $95,000,000 to $130,000,000 We factor in the recoveries of international travel carry on in the year 2025. So that's underlines

Speaker 2

assumptions

Speaker 3

at 20% of the growth powered by the recovery of the international travel. And also we are factoring the new business lines growth as Mr. Chen mentioned that we launched so attractive and innovative new solutions and attract widespread market attentions. So we expect the new business like platform, Cloud Sync Key and e SIM CHU will expand in this year from starting a point of view. So both new business and the legacy's business in a major traveling country will provide momentum growth for the year 2017.

Speaker 3

So that's the background we disclosed the guidance this year.

Speaker 4

Thank you very much. That answers my questions.

Operator

The next question comes from Vivien Zhang with Diamond Equity Research. Please go ahead.

Speaker 5

Hello, everyone. Thank you so much. Most of my questions have been answered, but I still have two. The first one is that can you elaborate on the trends in your cost structure? Because we have seen a significant increase in sales and marketing expenses over the past year.

Speaker 5

Will this trend continue this year?

Speaker 3

Yes. As you seen this, our disclosures for the year 2024, the last year, we invested a lot on new business. So we have three new business launched in the second half years of 2024. So we invested a large budget spend a larger budget on promotion and market exposure for the new business. So that's compared with the year of 2023, we invested USD 5,000,000 more than last year.

Speaker 3

I think these investments will gain return in the year 2025 as we just talking about the guidance range for the top lines of the forecast. We try to deliver our new business and grow our new business from this year's. I think the return business will be come back for this year's. So that's for this year, we will carry on investments on the new business. So we expect the sales and marketing's budget this year will have a growing a growing a growing proportion compared to the year 2025.

Speaker 3

So I think that's very important for our long term growth and very important we invest on future on our to gaining our used number from now is millions level to 10,000,000 level in the next couple of years. So investments from now, we're going forward to invest on our future. Thank you.

Speaker 2

Yes. I think basically, last year and this year is our very important year. So we are staff from the major company become 2B and 2C and also more focused on 2C company. That's why we need a team capability. I think also to say need a more heavy investment in promotion and branding.

Speaker 5

Okay, got it. I see. So my last question is that what was the key drivers of revenue growth from Mainland China last year? And how do you expect this to evolve in the coming quarters?

Speaker 3

Yes. For last year, the 2024, we the growth the revenues growth rate was nearly 100%. So the many are driven by the other bone the Chinese other born traveling. So the more Chinese overseas travelers, they're booking our service. So our brandings our first branding name, Romimans, is very famous as a leading brandings lane for Chinese outbound travelers.

Speaker 3

We are in the leading positions. So that's driven our growth for The Mainland and China. As we also disclosed, we just got approval of pilot operations, the value added telecom service in Mainland China recently. So that's quite a huge momentum for our business to expand in Mainland China domestically, not only for outbound business, but also for inbound business as well. So that's a great potential for our grow our business in Mainland China domestically and internationally.

Speaker 3

Yes. So I have some more comment. You can see in China domestic

Speaker 2

travel to the worldwide. So our market share last year is growing. And we also so last year, we have a Chinese New Year Chinese New Year, we have very successful branding and promotion and give end user emphasize our five gs full speed and our service quality compared with China traditional operator like China Mobile roaming service. So our quality and our service is much better. So now we are gradually view our brand, long been brand for five gs quality, high quality service is exceeding, is far more better than China telecom and also the telephone global travel scene.

Speaker 2

So these become very successful. In the Chinese New Year, we are almost more than 50% increase compared to year '20 '20 '4. So we are confident. So we will take more market share from traditional operator and global same car travel roaming market. So we believe we can grow the 3% to 5% to 6% this year.

Speaker 2

So in our target, we can go more than 10%. So we have confidence we can achieve that.

Speaker 5

Okay. Thanks for the details. That helped a lot. So that's all my questions. Thank you.

Speaker 5

That's all.

Operator

This concludes our question and answer session. I would like to turn the conference back over to Daniel Gao for any closing remarks.

Speaker 1

Thank you once again for joining us today. If you have further questions, please feel free to contact Yoclim's Investor Relations through the contact information provided on our website or speak to our Investor Relations form, Christensen Anniversary. We look forward to speaking to you all again on our next quarterly call. Thank you.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Speaker 2

Thank you.

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uCloudlink Group Q4 2024
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