Welcome to Plover Bay's first half 2026 earnings call. In this call today, we have Alex Chan, founder of Plover Bay Technologies, and the rest of the management team, and also myself, I'm Christopher Tse, CFO of the company.

We just announced our results a few moments ago. You can find our announcement on the HKEXnews website.

The updated slides that I am currently using is also available on our website at ploverbay.com/investors/earnings. We will start with prepared remarks for the financial performance of first half 2026, and then we will have a business update section, followed by Q&A.

Please note that all dollar amounts will be in US dollars unless otherwise stated. Let me begin with the financial section.

In the first half of 2026, our revenue reached $74.6 million US dollars, up 18.5% year-on-year. Gross profit reached $43.8 million, up 25% year-on-year.

Our gross margin increased to 58.8%, thanks to product mix and some sort of economies of scale. Operating expenses and finance costs reached $11.6 million dollars, up 13% year-on-year.

Finally, net profit reached $27.7 million, up 28% year-on-year, with net profit margin reaching 37.2%. During the period, diluted EPS was 2.5 US cents per share, and we declared an interim dividend of 15.66 Hong Kong cents per share.

Let's go into the details. First, revenue breakdown by segment.

Fixed-First connectivity segment increased to $10.9 million dollars, increasing 44% year-on-year, while Mobile-First segment increased to $40.3 million, up 9% year-on-year. Overall, the increase in both segments was attributable to strong growth from purchases from MSP partners, and we also saw some of our edge computing products growing quite strong as well, which is reflected in the Fixed-First segment.

Next, the warranty and support services segment increased 21% year-on-year to $16.2 million dollars. Software licenses segment increased to $7.1 million, an increase of 41% year-on-year.

Overall, the increase in these two segments mainly came from the continued growth of recurring revenues from subscriptions. During the period, recurring revenues accounted for 30% of our total sales, reaching $22.1 million dollars and increasing 25% year-on-year.

In comparison, non-recurring revenues grew 16% year-on-year. Meanwhile, the number of devices with a subscription increased by 26% year-on-year from a year ago, and the take-up rate further increased to 41.4% compared to 38.6% from 6 months ago.

These indicators both point to continued future momentum of our recurring revenues. Next, in terms of geographic regions, our sales in North America grew 27% year-on-year to $43.7 million dollars.

Our sales in North America was driven by growth across a wide cross-section of customers and industries, which include the MSP customers that I previously mentioned. In EMEA, our sales decreased by about 3% to $19.9 million dollars, mainly due to the timing of a large multi-year project.

However, sales growth across multiple countries in this region also grew at a remarkable pace. Our sales in Asia and other regions also performed very well, together growing 35% year-on-year.

Growth was particularly strong in Australia and Japan. Moving on to gross margins, our gross margin increased to 58.8% during the period.

The increase in our gross margin was partly due to favorable product mix towards high-end products and also a higher mix in recurring revenues. Having said that, cost of components such as memory chips remain highly volatile, and we will do our best to maintain gross margins within our historic range in the coming months.

Next, our operating expenses. Our operating expenses increased 13% year-on-year to about $11.5 million dollars.

The increase was mainly from new hirings in R&D and marketing. The increase is modest compared to our revenue growth, so that once again points out our strong operating leverage.

In terms of percentage of sales, operating expenses was 15.4% of total sales compared to about 16.1% in the first half last year. Finally, on balance sheet and cash flow, the main changes are in inventories and trade and other receivables.

The increase in receivables is mainly due to commitments and deposits paid to manufacturers and suppliers to secure future components and allocation, and the increase in inventory is due to increase in raw materials. Our raw materials balance within inventory increased almost three times compared to December 2025 levels, and this is because we have taken steps to ensure we have enough components to build into finished products for customers and our growing markets.

Overall, we feel that the memory cost increase is manageable, and as said previously, we'll do our best to keep the gross margins within historical levels. This wraps up our sharing of financial results.

I'll now invite Alex to give us a business update.

Thank you, Chris. On the first half what we are particularly excited about is a few important things that is happening around Plover Bay.

We're working very closely with Starlink, and then it's the multi-Starlink solution that we have been pushing has been very well-received in the market. The market and the customers are realizing that with the multi-orbit, multi-Starlink solution, this can increase the uplink substantially, and it enables a lot more applications.

The Starlink thing is very exciting. Then it's we are working on a number of new products, including some new products that is related to the DTC market.

It's directly using mobile technology to connect to the satellite. Then it's so we also have the other things that's happening that's exciting, that is the physical AI.

We are working with a couple of leading autonomous manufacturers, and they're using our technology to make these autonomous systems, teleoperated systems, stay connected. I would say it's these two things are going to be a new growing market for us alongside with the market that we have been serving for the last 20 years.

I want to emphasize once again it's we serve a very long-tail market, we do not rely on one particular market because we make connectivity reliable, and this reliable connectivity is actually needed by almost all industries. I think we can take questions now.

Right. Feel free to raise hands or type your questions in.

First question is from Warren Yang.

Thanks, Chris, Alex. Congrats.

I'm just curious what... The mobile segment is growing [unclear] and [unclear].

Hi, sorry, Warren, I can't hear you very well.

Can you hear me now?

Yes. Hi,

yeah. Congrats on the great results.

I'm curious to hear what your views are on the Mobile-First segment growing 9% year-on-year, if that was lower than your expectations.

Warren, can you repeat your question, please?

Hi, Warren. Maybe we'll move on to the next question first from Adrian.

Hello, can you hear me?

Yes.

Hi. Done to the team.

Excellent results again. I got two questions.

The operating cash flow dropped quite a lot to about $15 million from $22 million the previous half. Just wondered whether you could provide a bit more color into that.

Secondly, I see that Starlink are making their own routers. I suppose Plover Bay supplies more the enterprise customer, but I just wanted your views on that as well, please.

Thank you.

Sure.

Sure. Operating cash flow is mainly because of the increases in trade and other receivables and also inventories, as you can see in our balance sheet, right?

Inventories increased a lot as well as to a lesser extent our trade receivables. I think that's a normal course of business.

As I said-- Let me add a little bit on that. Basically is, yes, we are stocking up a large of memory and cellular modules and the needed components to build products.

At the same time is these products all have a very long life cycle. It's again, it's we are not in the consumer business.

We are not in that space. Then it's so the inventory that we take is we see that as a strategic move.

That is actually important to make sure that we have the parts supplied to cope with the growth. That's why it's it might look like impacting the cash flow, but at the same time is these things are not sitting at the warehouse doing nothing.

It's you will see that these inventory are turning into products and turning into revenue and turning into profits. We are not too concerned about that cash flow issue.

Then so regarding your second question about the Starlink router, we do not address the consumer market. We're mostly on enterprise market.

Now with the enterprise market, the product requirements are very different. We do not compete with the Starlink router.

At the same time is we are just making the Starlink and other networking technology like 5G, other LEO technology, we just make them work better.

No, that's great. Thank you very much.

Just one more thing on, I suppose, capital allocation. You previously been paying a dividend.

Would you consider share buybacks with the share price has taken quite a drop, maybe from the all-time high about 30%? Whether that any thoughts about that?

Do you think it's due to jitters about the upcoming demerger?

Actually is we're very open in looking into different ways to increase the shareholders' value. I think it's that earlier today is there is there's an on sale, but we cannot do that this morning.

We cannot do that a couple hours before, right? I agree with you is when there's another moment like that is we should seriously look into the share buybacks.

Thanks very much.

Thanks.

Maybe Warren, would you like to try again?

Sure. Can you hear me now?

Oh yeah, very well, yeah.

Yeah. Congrats on the great result, and sorry my mic had an issue earlier.

Wanted to get your thoughts on the Mobile-First segment growing just 9% year-on-year in the first half. Was that lower than your expectations?

Oh Warren, yeah, you know what? Actually is when we look into the products, I think is the Mobile-First or Fixed-First, sometimes is this is getting harder and harder to differentiate.

The reason why is, as I mentioned earlier, we address a very long-tail market. It's when people are working in the construction site, when people are using our product in the construction site, then most of the time is that is a fixed deployment.

Then it's when people are using that in the boat or in the train, and then it's that's a mobile deployment. Then it's we are getting more and more powerful devices, and these more and more powerful devices it's getting harder and harder to differentiate whether that is a Mobile-First or Fixed-First.

That's why I think maybe you can look into the hardware devices as one bucket.

Sure, that's very clear. Also a question on your operating expenses.

It grew much slower than revenue growth, but still higher than history. I'm just curious if this should be the normal rate of growth in operating expenses going forward.

Oh,

of course. We need to treat our team very well.

We need to have salary increase. Right.

Sure.

I would say actually our biggest cost is salary. We keep hiring people, and then it's also it's the salary cost is actually the single biggest cost for our SG&A.

I would say is you can assume is that SG&A will keep growing.

Understood. Just one final question from me.

I think you mentioned that the Europe, Middle East region had the effect of a high base because of a multi-year project. Has this multi-year project concluded or it was just not very active during the first half of this year?

Oh no, no, no, no, no.

It's mainly project timing, the delivery schedule didn't happen in the first half. That's it.

Let me clarify that. That is EMEA, EMEA, Europe, Middle East, Africa.

It's not particular to Middle East. It's the whole region.

Understood. Thank you very much, and congrats again.

Thanks.

We can take some questions from the chat. First is from Lucas Liu: "Level 2 bridging network poses significant risk to retail or branch offices.

With the new generation of SASE architecture, all equipment can incorporate to ZTNA moving from L2 to L3 levels. Will this reduce the client's need for the company's expertise in L2 bridging?"

Oh no, not really, not really at all. Yeah.

I think it's the fundamental value that people look into our products is to make it more reliable. It's the multi-WAN capability is actually more important.

The bonding capability is more important. Then it's with all these SASE architecture, zero-touch architecture, Layer 2, Layer 3, and all these kind of things, this is a very industry standard.

There are tons of solutions being able to do that. It's our biggest value is the multi-WAN bonding.

Next question is: "Marlink is Starlink's authorized integrator and a major MSP in maritime market. Has the company considered collaborating with Marlink to provide, for example, ship side link bonding services?

In addition, will mainstream shipping companies, such as Maersk, consider to bypass MSPs, such as Marlink, and partner directly with the company in future?" It's

we have a very strong ecosystem, and our ecosystems is including it's a MSP, distributors, and resellers. Our partners are super important to us.

Then it's also it's it is always not our intention to bypass anyone for better margin or anything like that. We don't need to do anything like that.

At the same time is we keep rolling out new products, new technology, and solutions with our channel partners to address the market need. It's we are very open and we're open in working with everybody in the industry.

Actually is we have some really exciting partnership that is going on. It's we are not going to name these names here.

I would say it's in general is our technology is being recognized as the market leading technology. Then it's also it's we have a lot of partners, they treasure and value our technology and wants to work together.

At the same time it's we respect their knowledge in the vertical market as well as the market presence. It's we would love to partner with all these partners.

Okay. Next question comes from Mufasa Capital.

The first question is: "What opportunities do you see in space data centers? Are you doing anything proactive to capture this market?"

Oh, that is

Okay. We are doing what we are doing very well.

That is to bond multiple links reliably. Then it's also it's this is our fundamental business, and this is what we should focus on right now.

Then it's also whatever happens in the future about the space data centers and things like that, just like any other opportunities. We'll have something when it happens.

And

"Are there any updates in the robotics vertical?"

Oh yes, robotics is very exciting. We are seeing is that there are a lot more robotics, physical AI devices around.

Most of these devices are actually small robots or small delivery robots. All these robots, this is a very interesting market because it's when people are running a fleet of robotics, a fleet of small delivery robots, they need good reliable connectivity for these devices to download the mission data and to upload the operations data for AI training purpose.

These people is they see mission-critical connectivity is important, and that is exactly the market that we do very well. We are seeing this market is very exciting, and we are going to have a lot more products heading into that market segment.

Another question from Mufasa Capital is: "When can we expect the spinoff in of the US business?"

At this moment, we do not have a concrete timeline to provide. However, all the preparation work is underway.

We are seeing the project is still going smoothly. For what I would add is just for the spinoff exercise, we are not just wanting to rush it and get it done.

We want to do it right as well. When times come where we have a concrete timeline that we can provide, we will definitely be sharing with you all.

Then

the next question is from Gerard Ahole: "Is there a catch-up effect on US revenues after soft numbers in 2025? Is the momentum still good in the US for the second half of 2026?"

Oh, absolutely. We are seeing is that the momentum is still very strong for US and EMEA.

Next question, Lucas Liu: "Regarding to manufacturers in the autonomous driving field, will the company sell modules integrated into their ICs or sell them complete router products?"

It's we are working on a number of a new generation of products. Ideally is we want people to feel like it's they can have a plug and play module for their robotics systems to make the connectivity reliable.

That is our goal.

Again from Gerard Ahole: "Beyond Australia and Japan, have you opened new countries recently?"

Not really. Not really.

I think it's maybe I can share our philosophy with everyone. We always look for quality instead of quantity.

We want to be the market leader, or we want to be the most lovable product in the space that we work with. Then it's also, yeah, Australia and Japan is actually these two countries are not our new market.

We have been working in this markets for more than 6 years. Then it's also I would just say is, just like most of our business, we grow organically.

Then it's also growing organically takes time, but then we see is that this approach is actually doing very well for the company, and it is way more sustainable and more robust. We are going to continue with this.

That's why it's we are not really rushing into entering new markets. Oh, okay, put it this way, new countries.

Yes, new markets, new applications, new vertical markets, yes, we always have a lot of new exciting vertical markets coming up because we serve a very long-tail market. In terms of geographics, we would rather focus on the market that we're starting to have infrastructure in place, we're starting to have a strong partners, resellers, distributors, and customers.

We will continue to work on this approach.

Next question from Andy Chan: "Can we provide more colors on the increase of receivables?" As I said, the increase of receivables is mainly because of commitments paid to our suppliers to secure production capacity or future supplies.

Next, Jonathan Tan: "Going forward, margins is 58%, even higher than 55%. Is this 58%, is this a sustainable level to keep or do we expect to keep going up, given that memory price is also increasing?"

Jonathan, I think it's because we are seeing some customers are deploying more and more higher-end models from us. Traditionally, our higher-end models have a higher margin, actually is a much higher margin than the entry-level products.

I would say is that the memory price increase is not really the big contributing factor for our products. I would say it's along the road is that we have more and more software features, software subscriptions, and the higher-end models deployed by the market.

These things are making a bigger impact on our gross margin than the memory price. I would say this is more like a product mix.

The increase in the margin is actually contributed by a different product mix. We are seeing customers are deploying more and more higher-end models from us.

I think it's the US US spinoff timing, it's Cherry just shared that the status with everyone.

The latest percentage of 5G 5G products. In terms of sales, it's around it's over half of our our our hardware sales now.

In terms of volume, it's also over half. "Have you increased your selling prices to take into account the higher cost of memory and components?"

Yes, we do, but it has not reflected yet because the effective date is on 1st of July.

From Jonathan Wong: "How does the Middle East conflict create any risk for our business?"

We group everything into EMEA, Europe, Middle East, and Africa. Our Middle East business is actually relatively small, it's not really that affected.

Next is from Jonathan Tan: "Take-up rate is 41.4% today, and do we still target a 50% to 60% take-up rate as our long-term goal?" Oh, absolutely.

Absolutely. The goal is to increase the take-up rate for this.

A question from Kenneth Yip: "Please elaborate more about the future of edge computing. Do you see your customers using Peplink edge computing products for AI applications?"

Yes, absolutely. We are seeing is the edge computing is a very interesting area.

I hope I can share some of our new product roadmap with you right now, but I couldn't. Yes, you're right.

We're seeing is customers are deploying more and more edge AI applications, and we'll have a product series to address that.

From Adrian Cheng again: "Any news on who will be the CEO of the retained group? Is it a promotion from within or external?"

Oh, absolutely. We have identified that person, and the person has been with us since day one.

He's not a young guy, but he is well-respected in the company.

From Jonathan Tan: "You mentioned physical AI in your remarks. How material is this now and in say 5 years?

How big can this vertical be?"

Right. I think it's a lot of new technologies are very exciting, but this market, we know this is a true market, this is a real market.

I would say is the physical AI in our world is more like autonomous systems, teleoperated systems. Then we all know this is not talking about a consumer space.

This is talking about a construction site or this is talking about is the dangerous or hard-to-reach areas. We are very optimistic about that market because in that application, it demands reliable connectivity, super reliable connectivity.

Also is in those areas, usually these areas are hard to reach and having challenge in standard connectivities.

There's another question from Kate Luong. Kate asked that are we worried about competition from Starlink, asking because they have been moving into mobile.

Oh, no. We don't worry about that because I think, again, fundamentally is we are a multi-WAN company.

We just love multiple connections. Then it's also is that the value of multiple connections will just make the network more reliable, just to make the network more resilient, and to make the uplink faster, and to make the downlink faster.

With all these kind of things, no matter that is a satellite connection or that is a mobile connection or fiber connection or a wireless point-to-point connections, we can add substantial value to these connections. We are not concerned about that.

From Gerard: "Will we keep the same payout ratio for the new US Listco?"

Actually our way of operations or the way that we operate the business, it won't change. Of course, as I would say is, it also depends on the market situation at that time.

Our approach is always is to distribute the excessive cash that we don't need back to shareholders.

From Jonathan again: "So looking at our operating cash flow, should we expect inventory to normalize during the second half and cash conversion to return towards historical levels, or is this structurally a new working capital requirement as we grow?"

Actually is it all depends. For example, is if we are seeing the memory price or components cost, if we see all these things keep going up, of course is that we would like to stop the inventory.

Then it's at the same time is also depends on the software business, the subscription business. Cuz don't forget it's our business model is whenever we sell the devices, the hardware, then it goes along with a subscription.

Then it's also with all these subscriptions, it generates pretty good cash. I would say is it's hard to predict at this time, but I don't think there is anything we need to worry about the inventory level and the cash flow.

A follow-up question, I think this is in relation to the competition with Starlink. Steve Wang asked about the competition from Digi International or Cradlepoint.

Yeah.

We have been working for 20 years, and these guys are also in the industry as long as we do. We know each other and we grow together, and then, yeah, we all live in the same planet.

Then we don't see we're killing each other, and it looks like everybody's doing a good job.

From Brian Cheung: "Do you mind sharing Peplink position in direct-to-cell?"

Yes, absolutely. This is actually very exciting.

Imagine that when there is a direct-to-cell, that means everybody's cell phone can connect to the satellite. This is great.

Because that it also means that any cellular radio can talk to the space. Then it's also is when there's a situations like that, then people will started to see, "Hey, can I have a faster speed?

Can I have a more reliable connection?" In that case, then they will need a product from us to bond these multiple cellular connections together.

I think this is just expanding the market that we have. Actually is we are also working on some interesting products that I'm very excited, and that is the direct-to-cell is another technology we'll benefit from.

I don't see any new questions from the chat or from our other participants. Thanks everyone for dialing in to the call.

Thanks for your support. Okay.

We'll end the call now.

Thank you, everyone.