Agora (API) Q2 Earnings call transcript Aug 20, 2024

Agora, Inc. recently held its second-quarter 2024 earnings call, revealing a positive return to year-over-year revenue growth despite the challenging macro environment. Founder, Chairman and CEO, Tony Zhao, and CFO, Jingbo Wang, led the call, highlighting key achievements, product innovations, and financial updates.

Operating Results and Business Expansion

Agora reported revenues of $15.6 million in the second quarter, marking a 2% year-over-year increase. The growth was driven by business expansions in certain use cases, such as live shopping. Shengwang, a subsidiary of Agora, also saw an 8% quarter-over-quarter increase in revenue to RMB 132 million, boosted by usage growth in digital transformation and Internet-of-Things customers.

Product Innovations and Strategic Partnerships

Agora showcased its real-time speech-to-text product, which transitioned from beta to general availability in the second quarter. The product enhances accessibility and user experience by transcribing audio into text and distributing it as live captions to all channel participants. Notable collaborations include a partnership with Unity China to integrate voice calling capabilities in Unity China's UOS engine, enhancing multi-player voice channels for game developers.

Financial Performance and Outlook

Jingbo Wang discussed the financial results, revealing a total revenue of $34.2 million in the second quarter, representing a 3.6% quarter-over-quarter increase and a 0.5% year-over-year increase. Despite facing challenges from the pandemic, macroeconomic turmoil, and regulatory changes, Agora managed to return to year-over-year revenue growth for the first time since 2021. The company expects total revenues to be between $31.5 million and $33.5 million for the third quarter, with an anticipated increase in gross margin due to the termination of low-margin products.

Looking Ahead: Conversational AI and the Future of RTE

The call emphasized Agora's focus on conversational AI applications, with Bin Zhao discussing ongoing partnerships with leading language model companies to drive multi-model products and solutions. Agora also plans to launch a conversational AI framework, aiming for a significant competitive edge in serving AI developers and their applications.

Investor Questions and Future Plans

During the Q&A session, analysts inquired about the company's plans for low-margin products, breakeven targets, and revenue growth trends. Agora's management expressed a commitment to focusing on innovation and improving overall operating efficiency to drive sustainable growth. They also emphasized the importance of controlling expenses and maintaining cost discipline, with a goal to achieve breakeven on a GAAP basis and on a continued basis in 2024.

In conclusion, Agora, Inc.'s second-quarter earnings call highlighted the company's resilience in a challenging macro environment, with a return to year-over-year revenue growth and a focus on innovative product development, particularly in the field of conversational AI. Despite facing challenges from low-margin products and a competitive landscape, Agora remains optimistic about its future prospects and long-term growth potential.