Hello, and welcome to the uCloudlink Group Inc. first quarter 2022 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Jillian Zeng, investor relations of the company. Please go ahead.
Thanks, everyone, for joining us on our first quarter 2022 earnings call today. The earnings release is now available on our IR website at ir.ucloudlink.com, as well as via Newswire service. I will give a brief introduction to our uCloudlink management team. Zhiping Peng is our co-founder and Chairman of the Board of Directors. Chaohui Chen is our co-founder, director, and chief executive officer. Yimeng Shi is our chief financial officer. Zhu Tan is our vice president of marketing and sales. Our CEO will begin with an overview of our company and business highlights, which will cover section one of the earnings presentation posted on our IR website. Our CFO, Yimeng Shi, will then discuss our operation highlights and financial results as presented in sections two and three.
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 the 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 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 details of the company's filings with the SEC. The company does not assume any obligation to revise 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.
Please also note that uCloudlink's earnings press release and this conference call include discussions of the unaudited GAAP financial information, as well as unaudited non-GAAP financial measures. uCloudlink's press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly compared GAAP measures. I will now turn the call over to our Co-founder and CEO, Mr. Chaohui Chen. Please go ahead.
Yeah, thank you. Page four to page 12 are similar contents as the earnings presentation of first quarter of 2021. We still encourage you to review the quarter one, 2022 earnings presentation uploaded to our investor relations website with some latest updates. Hence, I will now elaborate on the past, similar to quarter four earnings results, but we instead focus on our most recent developments in the fourth quarter. Please turn to page 13. uCloudlink 1.0 is our international data connectivity services business, which has had a strong track record of high growth margins and profitability with ongoing growth potential. We have established an intelligent wholesale-to-retail repackaging solution to minimize unit cost of data traffic. In that, as data packages of single operators across mobile network operators, mobile virtual network operators are priced differently.
This is attributable to our large SIM card pool and our ability to acquire data packages at a local wholesale price from operators and partners. We further differentiate ourselves with our multi-network selection and combination technologies, which could ensure high-quality data connectivity and improve user experience. uCloudlink 1.0 business monetization model includes retail B2C, rental or selling to the end user. Wholesaler B2B for business partners and our PaaS and SaaS services such as CRM, billing management, device selling, and rental management, et cetera. For wholesaler B2B, we can act as a reseller or provide commission services to our business partners. We allow our business partners to share data traffic pools through our PaaS and SaaS platform and charge a commission fee.
During the first quarter of 2022, our 1.0 business revenues has slightly increased by 2.2% compared to the same period in 2021. As international travel restrictions around the world continue to abate over time, the number of daily active terminals, DAT, for the 1.0 business has increased during the first quarter of 2022, indicating that more and more customers are using our products and services. With an increasingly diversified geographic market composition, we are positive that the revenues from 1.0 business will steadily grow and exceed the pre-COVID-19 level in the future. We will continue to develop and enrich our 1.0 product offerings. Our goal, as always, is to provide the best quality products and services for our global customers, which ensure better international data connectivity.
Let's move to page 14. uCloudlink 2.0 is our local data connectivity services business, and it has become a new driver of revenue growth since 2020. Its business monetization model is similar to that of uCloudlink 1.0, with a massive potential local user base. Our new HyperConn technology contribute to the further development and growth of our uCloudlink 2.0 business. We have expanded the business scope of our local data connectivity services. Currently, our innovative HyperConn technology is widely accepted by mobile network operators and business partners in various industries with great growth potential, such as with local partners in China, U.S., and Japan.
In the past quarter, we have continued to strengthen our presence in our existing markets, including Japan, North America, Southeast Asia, where we have helped operators improve their data services and solve data connection problems through our PaaS and SaaS platform. We provide high quality data connection for 5G applications in response to the increased demand for better connectivity devices or services. Furthermore, as people get used to the new normal, our products and services provide better performing solution for the remote work and the learning, which require reliable connectivity as well. We adapt ourselves to evolving market by introducing innovative products to address various 2.0 business applications scenario.
During the first quarter of 2022, our various IoT solutions which have successfully started to gauge customers' interest and have been perceived as reliable and high quality data connectivity services in markets like Japan and North America achieved further recognition. Our revenues from 2.0 business increased 185.4% compared to the same period in prior years. Our customers were able to realize the reduced operating cost and improve data connectivity experience through these cutting-edge IoT solutions. We continue to focus on exploring new business prospects to serve a broader spectrum of partners with IoT needs.
We expect our 2.0 business to grow with the support of our innovative Cloud SIM and HyperConn technology as we continue to introduce our solutions, services and products to the market and strengthen our collaborations with local partners. Let's move to page 15. Based on our innovative Cloud SIM and HyperConn technology solutions, we continue to develop and broaden our portfolio of offerings with new products and services, such as our self-developed terminals and third-party devices. Our HyperConn technology solution has been well perceived, and related products including industry Wi-Fi router, IP camera, power energy services like live broadcasting, e-commerce, autopilot, augmented reality and virtual reality, AR, VR, and cloud computing, etc., are gaining recognition proven by a growing user base across a wider spectrum of industries.
In the fourth quarter of 2022, we promote more innovative 5G products in countries and regions such as the U.S., Japan and Europe. Furthermore, we have a leading global 5G roaming solutions, which is an easier roaming solution for carriers, and we are one of few company that could provide 5G products with a global band and global roaming. These reflect our market confidence and continued efforts on elevating our user experience as this new product equipped with our innovative 5G technologies marks not only the gradual recovery, but also a new beginning for our growth path in the post-pandemic era. In terms of IoT side, we apply GMI, GlocalMe Inside solution in IP camera commercially, and it has been promoted among multiple markets. Going forward, we plan to launch more of these type of innovative products and services.
uCloudlink positions itself as the pioneer technology solution provider in the data connectivity market. Through our mature 1.0 business and the newer 2.0 business, uCloudlink is promoting the long-term development of the PaaS and SaaS ecosystem, which have been recognized by various business partners as it shows its increased revenue contribution by 7.8% in the first quarter of 2022. Additionally, we have entered two new regional markets during the period. PaaS and SaaS platform is built upon uCloudlink 1.0 and 2.0 business lines, and its growth reflects our ability to construct a healthy ecosystem. This requires our non-stop efforts in maintaining and expanding a strong partnership base, which includes mobile network operators, mobile virtual network operators, SIM card providers, our business customers and more.
We remain confident in our business development teams and to empower the building of our PaaS and SaaS ecosystem, and in our research and development team to address diversified needs our customers have posed to us. In the remainder of 2022, we expect PaaS and SaaS platform revenue to grow into a more significant driver of uCloudlink business, and that continues to enlarge its margins and improve margin profiles. We are able to reduce operating expense and decrease the net loss through streamlining our business operations, including optimizing labor cost compared to the fourth quarter of 2021. Going forward, we expect to further lower operating costs as a way to improve our operating and financial performance. We believe that from the connected to better connection, uCloudlink is a significant driving force in the transformation of a increasingly advanced information era.
We are committed to building a more connected future for more customers and users, and we strive to make a positive impact in serving the global user community. I will now turn it over to our CFO, Yimeng Shi, who will go through the business and financial highlights.
Thank you, Mr. Chen, and hello, everyone. Let us turn to page 17 for our business highlights. The left-hand side of the slide shows daily active terminals, DAT, as of March 31, 2022. Average daily active terminal in the first quarter were 273,870, of which 1,430 is owned by the company, and 272,442 owned by our business partner, representing an increase of 33.5% from 205,082 in the first quarter of 2021. Our uCloudlink 2.0 service accounted for around 69.5% of the total DAT during the first quarter of 2022. Average daily data usage per terminal was 1.74 GB in March 2022.
Let's now turn to page 18, which shows global diversification of our business. We have around 96% of total revenue from outside mainland China. During the first quarter of 2022, Japan contributed to around 40% of total revenue. For other countries' revenue, the U.S. market had the largest contribution to our business with further development of our U.S. business. We will continue to expand other markets such as Europe and Southeast Asia, et cetera. During the first quarter of 2021, we had 6% of total revenue coming from mainland China. 58% of the total revenue came from Japan, and 36% total revenue came from other countries in the region. Let us turn to page 20. I will go through our financial highlights for the first quarter of 2022.
Service-related revenue as a percentage of total revenue was 62.9% during the first quarter of 2022, compared with 47.4% during the first quarter of 2021. Revenue from local data connectivity service and platform as a service increased 185.4% and 7.8% year-over-year, respectively. This increase was primarily due to the expansion in the number of our business partners that use our platform as a service to provide local data connectivity service. Revenue from platform as a SaaS, as a percentage of total revenue, also increased to 15.8% during the first quarter of 2022, compared with 12.9% during the first quarter of 2021.
Let us move to page 21, which shows the revenue breakdowns of our two business segments, namely revenue from service and sales of products. Our total revenue decreased by 11.8% from $17.7 million in the first quarter of 2021 to $15.6 million in the first quarter of 2022. Due to the negative impact of local COVID-19 resurgence and subsequent lockdown in certain cities in China, including where our main manufacturer are based, which has impact on revenue from sales products. Revenue from service were $9.8 million, representing an increase of 17.2% from $8.4 million for the same period of 2021. This increase was primarily attributable to the increased revenue from local data connectivity service.
Let's turn to page 22 for gross margins of our business. Our service gross margin increased to 49% in the first quarter of 2022, compared to 35.9% in the first quarter of 2021. Our overall gross margin was 37.4% in the first quarter of 2022, increased from 31.3% during the same period, 2021. The increase of service gross margin during the first quarter of 2022 was primarily attributable to the increase of our platform as a service revenue and data connectivity service via e-commerce and retail sales, both of which have higher gross margins over other business lines. Let us move to page 23, which shows the breakdown of operating expenses, excluding share-based compensations and others.
Excluding share-based compensations, operating expenses as a percentage of total revenue was 60% in the first quarter of 2022, compared with 71% during the first quarter of 2021. We have further streamlined our business operations, including optimizing labor costs. Our total operating expenses, excluding share-based compensation, were decreased to $9.3 million in the first quarter of 2022, compared to $12.6 million in the same period of 2021. Let's now turn to page 24. Operating cash flow was negative $1.4 million during the first quarter of 2022, compared to negative $6.7 million during the first quarter of 2021. Our cash and cash equivalents and short-term deposits were $11.2 million as of March 31, 2022.
Our CapEx was $6,000, compared to $0.1 million in the same period of 2021. Let us move to page 25. Net loss during the first quarter of 2022 was $10.9 million compared to $15.4 million during the first quarter of 2021. Adjusted EBITDA was negative $3.9 million during the first quarter 2022, compared to negative $6.7 million during the first quarter of 2021.
As mentioned above, the company is working towards improving its bottom line results and financial positions. With that, let me conclude today's presentation. Thank you. We start our Q&A session.
We will now begin the Q&A session. To ask a question, you may press star then one on your telephone keypad. If you're using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you'd like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Vivian Zhang with Diamond Equity Research. Please go ahead.
Good evening. This is Vivian Zhang from Diamond Equity Research. Thanks for taking my questions. My first question is that can you give us some additional color on your Internet of Things solution and its market opportunity?
Yeah. Yeah.
Thanks, Vivian.
Mr. Chen, can you answer the question? Yeah.
For international business, we believe we can see that from the DAU. We can see the first quarter of 2022, we can see the data is recovering. DAU is increased. That's the data performance from our product side. We not only have the normal Cloud SIM solution. Now we have HyperConn solution. HyperConn means we can provide much better, you know, experience for multi-network handover from more than 10 seconds, now can go to the millisecond. That's one of the new product, new service. Another is for 5G.
We provide a 5G product, so we are now very few vendor. Almost it's the only one vendor who can provide a global 5G network roaming. Because our 5G product with almost all countries 5G radio band and also the 5G, you know, roaming capability, that's very rare in the industry. All these preparation is let us in a good position for, you know, in a recovery of the COVID-19, after COVID-19. I think we are in a good position.
Okay, I see. My second question is regarding the COVID-19 impact, 'cause we've seen some Chinese cities like Shenzhen reopen in the second quarter after the lockdown. There are some controls that may still be in place in these cities. Do you think there will be some recovery in revenues from sales of products in the second quarter, or those controls continue to affect your launch and manufacturing of 5G products, given that your main manufacturers are based in Guangdong, China?
Yes, it has impact in the first quarter, especially both Shenzhen and Shanghai because part of our supply chain is based in Shenzhen and some part of our partner is based in Shanghai. It is impacted by the lockdown during the COVID-19 in China. I think we can see that in Guangdong, it's early recovery. I think the second quarter is not any problems from the current you know scenario. We are also removing some of our supply chain from Shanghai to Shenzhen. In the second quarter, we believe the impact from the COVID-19 will be almost disappear. I think the heavy impact in quarter one.
Quarter two, we can see it's much, much better. That's one of the situations. Another is because our first quarter, our new device products delivery it is impact because lockdown in the first quarter for manufacturer and also it's come because of the, this quarter, the first quarter of the revenue and delivery, the source order is come from the last quarter, last quarter in the year. Quarter four. Quarter four is a heavy impact by the, you know, OMICRON variant, COVID-19. I think second quarter will be much better.
Okay. That's all. Thank you.
Again, if you have a question, please press star then one. This concludes our question and answer session. I would like to turn the conference back over to Jillian Zeng for any closing remarks.
Thank you once again for joining us today. If you have any further questions, please feel free to contact uCloudlink Investor Relations through the contact information provided on our website, or contact our investor relations firm, The Equity Group.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.