Q4 2021 Agora Inc Earnings Call

February 23, 2022

Good day and thank you for standing by welcome to Alcoa, Inc. Fourth quarter 2021 financial results Conference call. At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.

Ask a question during the session you will need to press star one on your telephone. Please be advised that today's conference is being recorded if you require any further.

Please press Star zero.

I'd like to hand, the call over to your first speaker today Ms. Fiona Zhang. Thank you. Please go ahead.

Thank you operator.

Morning, everyone and thank you for joining us for our garage fourth quarter and full year 2021 earnings conference call.

Our earnings results press release, SEC filings and a replay of today's call can be found on our IR website at Investor Day, I thought I'll.

Joining me today are <unk>, founder, chairman and CEO and imaging ball, along our CFO reconciliations between our GAAP and non-GAAP results can be found in our earnings press release. During this call. We will make forward looking statements about our future financial performance and other future events and trends.

These statements are only predictions that are based on what we believe today and actual results may differ materially. These forward looking statements are subject to risks uncertainties assumptions and other factors that could affect our financial results and performance of our business and which we discuss in detail in our filings.

With the SEC, including today's earnings press release, and the risk factors and other information contained in our final prospectus relating to our initial public offering.

It makes no obligation to update any forward looking statements. We may have on today's call with that let me turn it over to Tony.

Hi, Tony.

Yes.

Thank you Timna.

Welcome everyone to our earnings call.

And if anyone was a year of great opportunities and challenges.

I'm extremely proud how hard our team works together across the base.

Of course, I believe vertical to drive forward.

It is exciting to see how much we have accomplished and how much innovation, we have bolstered our real time engagement platform.

I am proud to say that as of the end of 2021.

Okay.

God globally more applications than any other real time video.

Very large market.

According to <unk> AI.

None.

Our technology and products in Malaysia.

Distinguish.

Pioneered the leader real time engagement.

Today, we are pausing the new norm.

And most of the human connection both virtually and rollout.

Not less.

All right.

We delivered another quarter of strong results.

Our revenue for the fourth quarter were $48 4 million.

Up 21% year over year.

At the end of December .

More than 400 Portland adjusted.

400, followed in regards to the App platform and our number of active customers reached nearly 700.

Adding nearly 600, yes.

All year.

For the full year of 221.

Lee part more than 600 billion minutes.

With high engagement.

Total.

Our revenue was 100 150.

$168 million.

Which represents an increase of 10% from <unk>.

If we look at our team market.

Revenue from <unk>.

In APAC, excluding China recorded a stronger growth in this quarter.

We are now powered many leading megawatt platform.

In both Korea.

Many leading online education companies in South Asia.

Many highly innovative interactive ecommerce audio live concert and the.

Most of the <unk> platform.

Sure.

In China.

Our market leadership was clearly demonstrated by a recent IDC report.

Our goal as the number one real time video and voice API provider.

With a market share greater than the naphtha seven providers combined.

In this quarter, despite the impact of the new Revolution on K 12 after school tutoring sector.

Revenue from other sectors remained healthy.

As real time engagement, you could continue to expand across regions.

Other revenue source have also become more diversified.

This quarter revenue contribution from usage, all federal China was 35%.

Hi, Ed.

Great.

Moving onto new use cases.

One of my favorite use cases in.

In 2000 tons of one is the blue for robotics.

This amazing company powered by <unk> technology.

Changing the way hospitalized with students.

Iraq with teachers classmate.

And the families through the emotional robot named Buddy.

Yes, Brad.

The robot.

Deploy to nearly two fold those school children and the firstly all brand has seen some quarter intending this program across the country.

In 2022, you would see much more from boardwalk Buddy and.

Paul in the award.

Bedroom.

In the Netherlands Conference composites.

Hybrid events engagement platform focused on global scientific and medical conferences.

Leverage.

<unk> interactive live technology lifestyle, and psychology to double their revenue.

And a bit closer to home.

The country from our Colorado, California, Hi, Peter.

The University of Maryland medical system build a fully integrated app.

Into all of their back end system to obtain patient information.

The name of it.

Pilot Port.

Hello, Paul is used across 14 hospitals and 200 departments.

Our goal is embedded in this platform for all video and audio engagement.

<unk> and patients as well as between providers and their staff.

In the longer term I believe <unk> will become one of the most important lukas.

We have made a significant investment in this field.

Recently announced several solution tailored build four megawatts for example, let us say TV and that is half.

Our medical TV solution.

Is that an expansion of our one stop online policy solutions that I mentioned in previous earnings call.

On top of our technology.

<unk> enables user to sing together at ultra low latency.

And our user or yogurt based corporate <unk> solution.

For hundreds of thousands of fans.

Tax.

<unk> produces an old school car <unk> and the Woodward.

With all of our seniors and audiences.

Stages fertilize and it's green.

Always beautiful <unk> rendering.

In this virtual co locate room.

Others are able to sing and dance almost dates.

Sure.

I'll bet.

And it's here and see each other in real time.

Our <unk> solution.

Allowing users to create and customize olive bars with hundreds of options.

Bren.

Actual bar or coffee.

And engage with each other through was 10 in the third module space.

Both <unk> TV and <unk> supported by our largest <unk> spatial audio technology.

Our latest <unk> leasehold audio technology.

Which allows users to precede song I was coming from different locations and defense.

Around the yogurt in.

In the virtual space.

Technically this is.

Very challenging task because all of the phone.

Generated by users and the environment need to be updated in real time as users more inside the virtual space.

Despite the technical talent.

I believe <unk> audio is an important technology that makes the virtual world via rail.

With spatial audio users will fuel more presence and engaged.

Whether they are in the live class low cost per session.

Okay.

This R&D investment.

Enabled fast go.

Go to market for our customers.

We are seeing many innovation.

Many weighted metal work use cases from all over the world.

Leveraging our <unk> technology.

Example, we helped oasis pulp.

Pablo metalwork platform in Brazil.

Enable horst parties.

Yogurt virtual home.

Part by our medically TV solution.

A company called ISR space built on online karaoke platform called partly on.

And I welcome you to experience it for yourself.

It's available on both smartphones and.

<unk> devices.

Now moving on to security.

Compliance and privacy protection.

As always there.

Critical to our success.

Recently, we were awarded the ISO 2701 certification.

Our information security management system.

We also partnered.

With key soft Fox to improve our ability to defend will work.

Okay.

Looking forward, we will continue to work with leading experts to ensure that our security practice remains best in class.

Lastly, I would like to take the opportunity to serve our customers and our developer community for their innovation and a passion to build rte all the way with us.

I also want to say, thank you to all of the awards for their hard work and dedication to our customers' success.

I feel quite incredible a covenant.

Embrace the promising future of real time engagement.

Create and enjoy it together.

Now, let me turn things over to Jean <unk>, who will review our financial results.

Okay.

Thank you Tony.

Hello, everyone.

Let me start by first.

<unk> financial results for the Q4, and then I will discuss.

For the fiscal year of 2022.

Total revenues grew 21% year over year to $40 4 million in the first quarter of 2021.

Total revenues for the fiscal year of 2021.

168 minutes.

And at 26% year over year growth.

And exceeded the high end of.

Our guidance range by $3 million.

Number of active customers.

2600, excluding gross mark up 27% year over year.

The growth in revenue and active customers.

Mainly driven by continued adoption of our technology worldwide developers as well as margins.

Most of new use cases.

As we mentioned in previous earnings calls our revenue growth in the quarter.

<unk> impacted by the new regulation on K 12.

Turning sector in China.

We expect such impact to continue and hopefully bottom out in the first quarter of 2022.

Our trailing 12 month constant currency dollar base.

Right.

And 4% excluding his model.

The end of 2021.

We also calculated.

After the expansion rate to exclude the impact from COVID-19 in the first half of 2020.

Just it would be 124%.

Moving on to costs and expenses.

My following comments I will focus on non-GAAP results, which exclude share based compensation expenses acquisition related expenses.

Physicians persist.

Tangible assets and income tax related to acquired intangible assets.

non-GAAP gross margin for the fourth quarter was 64%, which was three 5% higher than Q4 2020.

As we mentioned in previous earnings cost increase.

Italy, driven by technical and <unk>.

Construction optimizations, we are being implemented since the beginning of 2021.

non-GAAP R&D expenses.

$23 $5 million in Q4 up 82% year over year.

We continue to hire talented employees and strengthen our R&D team.

As well as the consolidation of <unk> R&D team.

non-GAAP R&D expenses.

58, 1% of total revenues in the quarter compared to 39, 2% in Q4 last year.

Our strategy is to focus on long term growth opportunities.

Innovation instead of maximizing short term profitability.

We will continue to invest significant resources.

R&D capabilities.

To further strengthen our technology leadership.

<unk> provided a more diverse product portfolio and empower emerging use cases around his work.

non-GAAP sales and marketing expenses.

<unk> 2 million in Q4 up 76, 1% year over year.

Scrutable team expansion and increased advertising.

Including expenses related to our 2021 conferences.

Sales and marketing expenses represented 32% of our total revenues in the quarter compared to 28% in Q4 last year.

non-GAAP G&A expenses were $7 3 million in Q4 up 29, 5% year over year.

Mainly due to team expansion and expected credit losses credit loss provisions.

G&A expenses represented.

18, 1% of total revenues in the quarter compared to 17% in Q4 last year.

non-GAAP operating loss was 15 four.

One minute contributing to a 38, 2%.

GAAP operating loss margin fourth quarter Kim.

Compared to operating loss margin of four.

Two 4% in Q4 last year.

Okay.

Turning to cash flow.

Operating cash flow was positive $5 one minute in Q4 compared to positive 2 million Aussie.

Free cash flow was positive $2 9 million compared to negative $1 4 million last year.

Moving on to balance sheet.

We ended Q4 with 755 million in cash cash equivalents and short term investments.

<unk>.

767 million.

Q3.

Net cash outflow in the quarter was mainly due to consideration.

<unk> acquisition.

$13 9 million.

Now turning to guidance.

COVID-19, still unprecedented variable cost model, where historical experience may not apply.

Our guidance.

Full year revenues.

Various assumptions.

Object to change based on uncertainties related to the impact of the COVID-19 pandemic.

In addition, as mentioned before we expect the new regulation on K 12 tutoring sector in China will continue to have a significant market impact.

Revenues in the near term.

Was that and currently expect total revenues for the fiscal year of 2020 to be in the range of.

176, many well I understand.

Which would represent approximately five 4% year over year growth at the midpoint.

Today, we announced that our board of directors has authorized a share repurchase program.

$200 million.

The program.

Our confidence in the fundamental strategy and long term potential.

And our commitment to enhancing shareholder value.

With more than $750 million of cash on hand at the end.

2021, we believe we will be able to continue to invest.

Allergy and business expansion at the same time.

In closing we are very.

Executions from performance in this market.

Regardless of all the difficulties and challenges.

Confident about.

Prospect.

Yes.

Thank you to the entire IR team for their hard work.

Turning the call today.

We are healthy and safe.

Let's open it up for questions.

Thank you management as a reminder to ask a question you will need to press star one on your telephone.

Withdraw your question. Please press the pound or Heskey. Please standby, while we compile the Q&A roster.

First question comes from the line of Jan.

Young Liu from Morgan Stanley . Please go ahead.

Thanks for the opportunity.

Two questions one regarding to the overall overseas.

Business opportunity.

The first one is how do management think about the growing opportunities.

With current guidance range or what is the growth.

For the overseas market.

Contribution.

Full year revenue contribution in 2022 for overseas market.

And the second question.

So.

Can management update us in terms of.

For oversea market gross margin profile.

For Q.

And they tend to order book.

Thank you.

Okay.

Sure.

I'll talk about the first part.

On the <unk> opportunity.

I'm actually very excited about the opportunities for us in North America, Europe , and APAC, excluding China. Many countries in this region have largely reopens the economy, but it will continue to be strong usage numbers.

It is clear to me that the.

Pandemic has permanently changed how people work culbert collaborate in the study.

I'll mention a few areas where latency enormous growth opportunities first.

First.

Hey, Charles work.

This would include virtual office platforms.

Virtual events.

<unk> online collaboration platforms.

Creating graphics documents and to move it and so on.

In the past year.

Added many virtual event customers.

All kinds of events.

These shows to celebrate a team costs.

Our platform.

Also help several calibrated the one platform to enable live discussion between users while working on the design project.

We are working with virtual <unk> platforms, such as Luke and Bala to define how distributed team will work together in the future.

Most recently, we also helped one of the largest company in the world by market cap.

Long term audio live concerts awesome for the workplace.

<unk> got the tonnes.

A lot of the real time engagement features previously only available in social apps are now coming to professional apps.

With this customer we went through a very rigorous vendor selection process.

And how proven and have proved that our product to meet the requirements of large enterprise customers in the U S.

I believe it will.

And the door.

Many more enterprise opportunities in the future.

Second.

Around education.

Right.

Strong new <unk> growth from education customers in South Asia, Middle East Europe and U S.

Even after we opened.

We know par many of the largest education technology Unicorn.

South Asia.

What we see is that they are basically replicating what we deal on the TL did successfully in the past in China.

That's it.

<unk> leverage <unk> capabilities to build branded on the prior part here as that offer better online classroom experience.

Our conferencing apps.

This market.

Huge help this market.

Huge population.

And in the future of RPM powered online education is still very low.

Which means there is huge revenue potential for our growth.

Third.

My doors related use cases.

<unk> talked a lot about the metal ores in my opening remarks, now we already power several leading <unk> platforms in both Korea, and Brazil and removal.

We also just announced the solutions such as the medical Division in Medicine hat.

However, I believe we are only at the beginning of a multiple year trend that will extend how people live their lives online.

As a summarized the optimization of our clear, it's now up to us to execute.

<unk> to up to the wall on our strategy and convert it into a business outcome.

Two more may add.

More financial buyers.

Thank you Tom So yes, the guidance at the midpoint.

And about 5% year over year growth.

To understand what it means what the guidance means.

When you really break down our business into three parts.

The first easy.

Yes.

Non China business that we just discussed.

China, K 12 business.

The China lung kick off business.

So.

The K 12 business in China last year represented about 25% of total revenues.

Expect to lose almost all of that.

That revenue stream almost entirely in 2022.

So.

Hey.

So just not Apple to Apple comparison.

Sure.

$168 million and the.

Got it.

For next year.

Apple to Apple comparison would be 2022 guidance versus 2000, <unk> revenue excluding <unk> in.

China.

And in that case the guidance.

Healthy growth rate.

We put down the street.

Three parcels.

The China market hospitals.

Expect SKU.

Moderate in 2022, driven by vertical such as our key traditional enterprises.

I'll call it digital transformation.

And also.

New products like <unk> and.

Okay.

So and also a lot of you.

Solutions.

Least mackie and match so at sea.

<unk> closely in China.

All the China plant when you talk about it so we are quite confident.

To deliver.

Very strong gross Sunshine.

So in terms of the margins actually.

In the latest quarter the.

Gross margin.

I'm trying to ask.

Most of the same.

As we mentioned before we would expect as we continue to.

Expand our footprint.

In different regions.

Scale infrastructure, when you should get additional cost benefit.

We expect our GP.

Exactly.

Sure.

Arthur Shannon.

Thanks, a lot.

Thank you for the questions as a reminder, if you'd like to ask a question. Please press star one and boyfriend name to be announced.

Next question comes from the line of Vincent Yu from Needham and company. Please go ahead.

Yes.

Hi can you hear me.

Yes.

Okay sure.

Thank you management for taking my question I have two.

So the first question is on our expenses.

Especially for the marketing expenses.

How we.

Thank you.

Our marketing expenses going forwards.

Should we expect more and more expenses on these parts it yourself.

And in the overseas market. My second question is on the.

Utilization of the cash and in addition to the.

The stock.

Okay.

But what I can.

Do we have any idea or a plan to make more investments or acquire sun China in this to expand the overseas business development. Thank you.

Sure I guess I'll take both questions. So the first one.

I think in the near term our sales and marketing expenses.

At a moderate pace in absolute dollar terms.

As we continue to invest in branding.

Marketing.

Up to half of community.

Especially in markets like the United States.

No.

But indeed.

Medium to long term, we think.

Right.

Operating average here once we pick.

Yep.

And once our platform.

Credit into our customers' apps it becomes quite sticky.

I don't need as much marketing and sales expense.

Come out now so.

And in longer term sales and marketing expenses.

Revenue.

It should be at a lower level.

Actually if you consider the complex and.

Developer driven nature of them.

Thanks.

Yeah.

On the balance sheet.

Yes.

We do have a pretty strong balance sheet will continue to invest in our business.

Especially in markets outside China.

We're investing.

Brand marketing develop community customer support.

Perfect localization.

In hindsight.

We expect the size of the teams.

Silicon Valley, Singapore, India.

So rapidly.

While the total headcount in China would remain flat.

Us.

We will not in terms of acquisition.

Oh, the possibility but.

It is to complement our product before.

And part of strategy. So there is no guarantee we will be able to find a suitable target.

Okay.

Got it.

Thank you.

Thank you for the questions. Once again to ask question. Please press star, one and with brand name to be announced.

Your question is from the line of Ping Huang from Nomura. Please go ahead.

Hi, Thank you management.

Can you hear me.

Yes.

Oh. Thank you. Thank you management for asking.

So.

I have.

Two questions one is about the.

The competition landscape.

You've mentioned Dana opening remarks that the.

Our goal.

Now over $40 stand up the market share.

So can you give us more colors on how do you think about the competition in.

In the future.

<unk>.

So far the demand change in China and overseas market do we expect a more competitors in this market.

RTD market going forward and.

Do do we see any like a pricing pressure.

In the next couple of quarters.

And.

My second question is about also about the the overseas.

Expansion.

So.

Can we say that the.

The gross margins and expense profiles.

We will continue to be under pressure in the next couple of quarters, because we do need to tap into the new opportunity in overseas market. Thank you.

Yes.

Yes, let me talk about the competition side I think.

The overall comp.

Competitive landscape, but wasn't changed much.

Bill.

<unk> earned.

Don't expect to change drastically going forward with that said I do see more players trying to ensure the RP market from different angles.

For example.

Sulfur from video and live streaming angle and Dolby audio processing angle.

However, so far I think none of our competitors can match the overall QE.

The complete feature set of our pillar portfolio.

As such serious developers, who really understand RPE technology tend to choose to go.

And this was confirmed as you mentioned by the.

The latest data.

For example, the latest App Annie data, which shows that although SDK is integrated into more unique.

Any other competitor by a large margin.

In almost every geography.

In 2021.

We actually invested 100 $111 million.

R&D.

More than any other competitor in the art RPE space.

In the future we will continue to be the most.

Hello.

Telephone line.

Problem.

Yes.

The second question first.

Yes.

I was cutting off right.

Yes.

Mitchell.

Sure.

Sorry for this part I can continue.

Why don't we just start from the beginning.

Sure.

Okay.

After I talk about it after I talk about any data cutoff.

Oh, okay.

Right.

And the data was was.

So.

Understood.

<unk>.

Kind of data to pool our.

Our our market.

The condition and time.

Time to beat that in 2021, we absolutely invested $100 million R&D.

Are there any other competitors in the Rte stake.

In the future we will continue to be the most focused the company on our team and continue to invest in the most at risk.

Resources.

So we are confident that our goal will continue to meet this market.

And Jim will.

Yeah sure so in terms of.

Profit outlook for this year.

Absolutely.

As we mentioned earlier.

Our priorities this year is to ensure.

<unk>.

Especially in the markets outside China.

<unk>.

We do expect this to cause pressure on the margin in the near term.

As you can imagine a lot of it.

<unk> marketing expense R&D expense.

The G&A expenses.

Not directly correlated with revenue with the loss of revenue from the K 12 sector in the near term. So as we continue to expand expenses. So.

Pressure on the market in that market.

With our balance sheet, reducing we will be able to weather through this.

And we think it's in the best interest.

Company and our shareholders.

To invest for the future.

Thank you Patrick.

Sorry about the previous technological problem.

During this call.

Two separate locations Tony is currently in content Hotel company.

Coming back to China.

So operator, if we experience another outage of this.

Top of line. Please let me know.

Thank you.

Okay.

Mr. <unk> you have follow up questions.

No. That's all my questions. Thank you very much. Thank you for your question.

Well move onto the next question is from the line in the upstate Jpmorgan. Please go ahead.

Hi, Yes, Thanks management for taking my question I have a follow up question on the competition and pricing. So understand that you have a clear age in technology, but still want to get a sense.

What's your pricing strategy, especially in overseas market.

Given the revenue drivers seems to shift to overseas.

Recently and also I'm wondering what's the revenue price trend in China, given all the relatively weak demand due to regulation and the micro slowdown. Thank you.

Okay, maybe I'll take this question so what do we see in the <unk>.

Non China market, so far especially in March.

Developed markets like the United States and Europe .

And accordingly.

Sales leader.

With Nomura.

Hey, Scott.

No customer because we are cheap.

So customer always through the quarter because of our quality of feature set.

Uh huh.

In this market because RT experience.

So critical to the success of many applications and the fact that users can perceive that difference very clearly.

You have a hiccup.

Immediately all the participants in that session, we will feel that.

So actually.

These customers are willing to pay for a higher quantity.

Table service and better security and privacy protection standards.

Okay.

It is fair to say.

Most of our markets.

Welcome Sam.

Pricing is good.

<unk>.

Kind of the number one factor.

In terms of competition.

In less developed markets.

Ranking price competition.

However, it's too.

Partially.

Fashion to take into.

Constellation, but this one of the considerations.

In China as we mentioned before this market has been around for several years now.

We are seeing.

Similar to many other types of services.

Pricing is.

Cutoff pricing.

And Paramount discount.

Beer.

Year on year change.

Range of 10% to 15% in the past.

Four five years.

Last year was no different.

Our strategy is try to.

The same time.

Got it.

Okay.

At a similar pace so that we can maintain.

The stable margin.

Okay got it thank you.

Okay.

Thank you for the questions.

Once again to ask question. Please press star one.

There are no further questions at this time I would like to hand.

Call back to the management for closing remarks.

Yes.

Well, thank you operator, and thank everyone for attending today's call later on we will have the transcript of the call to be posted on our website, which is investor dog or at the IR also along with our earnings filings and D. A.

The presentation of this call.

Well. Thank you have a great day ahead.

Thank you. Thank you.

This concludes today's conference call. Thank you for participating you may now disconnect.

Okay.

[music].

Good day, and thank you for standing by while come to Alcoa, Inc. Fourth quarter 2021 financial results Conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During the session you will need to press star one on your telephone.

Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero I would now like to hand, the call over to your first speaker today Ms. Fiona Zhang. Thank you. Please go ahead.

Thank you operator, and good morning, everyone and thank you for joining us for our garage fourth quarter and full year 2021 earnings Conference call. Our earnings results press release, SEC filings and a replay of today's call can be found on our IR website at Investor day around the IOL.

Joining me today are 20, <unk> founder Chairman and CEO Antiaging ball, along our CFO reconciliations between our GAAP and the non-GAAP results can be found in our earnings press release. During this call. We will make forward looking statements about our future financial performance and other future events and trends are these statements are only predictions.

<unk> that are based on what we believe today and actual rates at all results may differ materially. These forward looking statements are subject to risks uncertainties assumptions and other factors that could affect our financial results and performance of our business and which we discuss in detail in our filings with the SEC.

Today's earnings press release, and the risk factors and other information contained in our final prospectus relating to our initial public offering.

Our goal remains no obligation to update any forward looking statements. We may have on today's call with that let me turn it over to Tony.

Hi, Tony.

Yes.

Thank you Jeremy and welcome everyone to our earnings call.

I know, it's only one was a year of great opportunities and challenges.

I'm extremely proud to see how hard our team works together across the base.

I wouldnt vertical to drive their afford.

It is exciting to see how much we have accomplished and how much innovation, we have fostered with our real time engagement platform.

I am proud to say that as of the end of 2021.

Our garage at Teekay.

God globally in more applications than any other real time video voice.

Word large margin.

According to <unk>, AI, Hey, Berkeley known Anthony.

Our technology and products in Malaysia.

What distinguished.

Pioneered the leader real time engagement.

Today, we are pouring the new more engagement and emotional human connection both virtually and in real life.

Now, let's shift to our earnings.

We delivered another quarter of strong results.

Our revenue for the fourth quarter were $48 4 million.

Up 21% year over year.

At the end of December .

More than 400 Portland suggested.

400, followed in regards to the App.

Platform and our number of active customers reached nearly 800 700.

Adding nearly 600, yes.

Oh, yes.

For the full year of 2801.

Lee part more than 600 billion minutes.

Real time engagement and <unk>.

Total.

And our revenue was 100 151.

$168 million.

Which represents an increase of 10% from Pendleton.

If we look at our key market.

Revenue from <unk>.

In APAC, excluding China recorded the strongest growth in this quarter.

We are now targeting many leading megawatt platform.

In bulk Korea.

Many leading online education companies in South Asia.

When a highly innovative rocket E Commerce audio live concert and the virtual events platform.

In China.

Our market leadership.

It demonstrated by a recent IDC report.

Which ranked <unk> as.

As the number one real time video and voice API provider.

With a market share greater than the map the self employed are combined.

And this quarter, despite the impact of the new regulation on K 12 after school tutoring sector.

Revenue from other sites are remained healthy.

Our real time engagement, you could continue to expand across region.

The revenue source have also become more diversified.

This quarter revenue contribution from usage, all federal China was 35%.

Our history.

Moving onto new use cases.

One of my favorite use cases.

In 2000 tonnes of one <unk>.

Blue for robotics.

This amazing company powered by <unk> technology is changing the way hospitalized with students interact with teachers classmate.

And finally through the emotional robot named Buddy.

Your friend.

The robot.

Deployed to nearly two fold those school children and the firstly all brand has been some quarter extending this program across the country.

In 2022, you will be seeing much more from bullfrog, Buddy and haul Agora is pouring award for the bedroom.

In the Netherlands.

Conference call.

Hybrid events engagement platform focused on global scientific and medical conferences.

<unk> <unk>.

<unk> interactive.

<unk> technology lifestyle and pathology to double their revenue.

And a bit closer to home.

Across the country from our Colorado, California, Hi, Peter.

Diversity of Maryland medical system build a fully integrated app.

To all of their back end system to obtain patient inflammation.

The name of it.

Port.

The port is used.

Working hospitals and 200 departments.

Our goal is embedded in this platform for all video and other engagement.

Between <unk> and patients as well as between providers and their staff.

In the longer term I believe <unk> will become one of the most important to you because as for Agora.

We have made a significant investment.

Build on the recently announced several solution pillow build four megawatts for example.

How could you meet and manage that.

Our <unk> solution.

Is that an expansion of our one stop online Carla <unk> solution that I mentioned in previous earnings call.

On top of our technology that enables user to sing together at ultra low latency.

And overall user or usage based corporate <unk> solution.

For hundreds of thousands of.

It's on track.

Medicaid the big producers and old school karaoke room in the woods reward.

With all of our seniors and audiences.

Pages.

And it's great.

Always beautiful <unk> rendering.

In this virtual co locate room.

Others are able to sing and dance almost stage.

And sure the bump up there.

And this year and see each other in real time.

Right.

Our <unk> solution.

Allowing users to create and customize olive bars with hundreds of option.

My friend.

Actual bar or coffee.

And engaged with each other through was 10 in the third module space.

Both <unk> and <unk> are supported by our largest <unk> spatial audio technology.

Our latest audio technology.

Which allows users to precede thumbed are coming from different locations and defense.

Around the yogurt in.

In the virtual space.

Technically this is.

Very challenging task.

All of the phone.

Generated by users and the environment need to be updated in real time as users inside the workflow space.

Despite the technical talent.

I believe <unk> audio is an important technology that makes the virtual world fuel rail.

With spatial audio users will feel more present and engaged.

Whether they are in the life cost low cost of session.

Okay.

This R&D investment.

Enabled fast.

Go to market for our customers.

We are seeing many innovation.

Weighted metal work use cases from all over the war.

Leveraging our RPE technology.

Example, we helped oasis.

Popular matter worst platform in Brazil too.

Enable hoff parties.

Users virtual home.

Part by our metal CTV solution.

A company called ISR space built on online karaoke platform called pardon me off.

And I welcome you to experience it for yourself.

It's available on both smartphones and.

Devices.

Now moving on to security.

Compliance and privacy protection.

That's all in.

They are critical to our success.

Recently, we were awarded the ISO 2701 certificate.

On our information currently amendment system.

We also partnered with key soft Fox.

<unk>, our ability to defend will work.

Got it okay.

Looking forward, we will continue to work with leading experts to ensure that our security profit remains best in class.

Lastly, I would like to take the opportunity to thank our customers and our developer community.

Our novation and the passion to build RPE all the way.

I also want to say, thank you to all the organs.

Their hard work and dedication to our customers' success.

I feel quite incredible a confident.

Embraced the promising future of real time engagement.

Create and enjoy it together.

Now, let me turn things over to Jean <unk>, who will review our financial results.

Thank you Tony.

Hello, everyone.

Let me start by us.

<unk> financial results for the Q4, and then I will discuss our outlook.

For the fiscal year of 2022.

Total revenues grew 21% year over year to <unk> 41.

In the first quarter of 2021.

Total revenues for the fiscal year of 2021.

168 minutes, which represented 26%.

On a year growth.

And exceeded the high end of.

Our guidance range by $3 million.

Number of active customers.

<unk> thousand 600, excluding east mop up 27% year over year.

The growth in revenue and active customers.

Mainly driven by continued adoption of our technology worldwide developers as well as the emergence of new use cases.

As we mentioned in previous earnings calls.

Revenue growth in the quarter.

<unk> impacted by the new regulation on K 12.

Turning sector in China.

We expect such impact to continue and hopefully bottom out in the first quarter of 2022.

Our trailing 12 month constant currency dollar based.

Right.

And 4% excluding these mob.

The end of 2021.

We also calculated adjusted expense rate to exclude the impact from COVID-19 in the first half of 2020.

Adjusted.

Would it be 124%.

Moving on to costs and expenses.

My following comments I will focus on non-GAAP results, which exclude share based compensation expenses.

Acquisition related expenses.

Physicians, Kansas of acquired intangible assets and income tax related to acquired intangible assets.

non-GAAP gross margin for the fourth quarter was 64%, which was three 5% higher than Q4 2020.

As we mentioned in previous earnings cost increase.

Mainly driven by infrastructure.

Infrastructure optimizations wrapping implemented since the beginning of 2021.

non-GAAP R&D expenses.

$23 5 million in Q4 up 82% year over year as we continue to hire talented employees.

Our R&D team as.

As well as the consolidation of these marks R&D team.

non-GAAP R&D expenses.

58, 1% of total revenues in the quarter compared to 39, 2% in Q4 last year.

Our strategy is to focus on long term growth opportunities.

Innovation instead of maximizing short term profitability.

We will continue to invest significant resources.

R&D capabilities.

To further strengthen our technology leadership.

Provide a more diverse product portfolio and empower emerging use cases around the work.

non-GAAP sales and marketing expenses.

<unk> 2 million in Q4 up 76, 1% year over year.

Ah Scrutable team expansion and increased advertising.

Including expenses related to our key 2021 conferences.

Sales and marketing expenses represented 32% of total revenues in the quarter compared to 28% in Q4 last year.

non-GAAP G&A expenses were $7 3 million in Q4 up 29, 5% year over year.

Mainly due to team expansion and expected credit losses credit loss provisions.

G&A expenses represented.

18, 1% of total revenues in the quarter compared to 17% in Q4 last year.

non-GAAP operating loss was 15 four.

One minute contributing to a 38, 2%.

GAAP operating loss margin fourth quarter Kim.

Compared to operating loss margin of 14, 4% in Q4 last year.

Turning to cash flow.

Operating cash flow was positive $5 1 million in Q4.

Compared to positive 2 million last year.

Free cash flow was positive $2 9 million compared to negative $1 4 million last year.

Moving on to balance sheet.

We ended Q4 with 555 million in cash cash equivalents and short term investments.

567 nine.

Yes.

Net cash outflow in the quarter was mainly due to consideration if mop acquisition.

$13 9 million.

Now turning to guidance.

COVID-19, still unprecedented variable cost model, where historical experience may not apply.

Our guidance.

Revenues reflect various assumptions about subsea.

Subject to change based on uncertainty related to the impact of the COVID-19 pandemic.

Yes.

As mentioned before we expect the new regulation on K 12 tutoring sector in China will continue to have a significant negative impact on revenues in the near term.

Was that.

We expect total revenues for the fiscal year of 2022 to be in the range of 176 million well I understand.

Which would represent approximately five 4% year over year growth at the midpoint.

Okay.

Today, we announced that our board of directors has authorized a share repurchase program.

Up to $200 million.

The program demonstrates our confidence in the fundamental strategy and long term potential of the car.

And our commitment to enhancing shareholder value.

With more than $750 million of cash on hand.

The end of 2021, we believe we will be able to continue to invest in our technology and business expansion at the same time.

In closing we are very.

We're proud of the execution and strong performance in this market all year.

Regardless of all the difficulties and challenges we are confident about long term.

Prospect.

Yes.

Thank you to the entire IR team for their hard work and then everyone attending the call today.

We are healthy and safe.

Let's open it up for questions.

Thank you management as a reminder to ask a question you will need to press star one on your telephone.

Withdraw your question. Please press the pound or Heskey. Please standby, while we compile the Q&A roster.

First question comes from the line of Jan.

Liu from Morgan Stanley . Please go ahead.

Thanks for the opportunity.

Two questions one regarding to the overall overseas.

Business opportunities.

First one is how do management think about the growing opportunities with current guidance range or what is the growth.

For the overseas market and.

Contribution.

Full year revenue contribution in 2022 for overseas market.

The second question.

So.

Can management update us in terms of the four.

Oversea market gross margin profile.

For Q.

Turning to outlook.

Thank you.

Okay.

Sure.

I'll talk about the first part.

I'm actually very excited about the opportunities for us in North America, Europe , and APAC, excluding China.

Many countries in this region have largely reopens the economy, but it will continue to be strong usage numbers it.

It is clear to me that the pandemic.

Pandemic has permanently changed how people work culbert collaborate in the study.

I'll mention a few areas, where we see enormous growth opportunities first.

First.

T cells work.

This would include virtual office platforms.

Virtual events.

That forms online collaboration platforms.

<unk> graphics documents and to move it and so on.

In the past year.

Adding that many virtual event customers.

All kinds of events.

It shows to celebrate 18 cost through.

Our platform.

Also helped several calibrated the one platform to enable live discussion between users while working on the design project.

We are working with virtual <unk> platforms, such as Luke and the labella could define how distributed team will work together in the future.

Most recently, we also hubs one of the largest company in the world by market cap.

Downtown audio live cost for the workplace.

<unk> got the tonnes.

A lot of the real time engagement features previously only available in social apps and all coming to professional apps.

With this customer we then through a very rigorous vendor selection process.

And how proven and have proved that our product to meet the requirements of large enterprise customers in the U S.

I believe it will.

The door.

Many more enterprise opportunities in the future.

Second.

Around education.

Currently we see strong new unit growth from education customers in South Asia.

Europe and U S. Even.

Even after the rule.

Okay.

We now power many of the largest education technology Unicorn in South Asia.

What we see is that.

They are basically replicating what we deal on the TL.

It successfully in the past in China.

Weighted which is leverage <unk> capabilities to build branded on the prior paratore apps that offer better online classroom experience.

And our conferencing apps.

This market.

Hi.

Hope this market.

How huge population.

Penetration of RPM powered online education is still very low.

Which means there is huge revenue potential for our growth.

Third.

My doors related use cases.

I already talked a lot about <unk> in my opening remarks, now we already power several leading malware it platforms in both Korea and Brazil.

And we also just announced the solutions such as the medical Division in Medicine hat.

<unk> I believe we are only at the beginning of a multiple year trend that we would spend how people live their lives online.

As I summarized the authorization for our clear.

Now up to us to execute well.

<unk> to up to the wall on our strategy and I covered this opportunity into a business outcome.

Two more may add.

Q4 2021 Agora Inc Earnings Call

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