Q4 2023 Agora Inc Earnings Call

February 27, 2024

Operator: Good day, and thank you for standing by. Welcome to the Agora Inc. fourth quarter and fiscal year 2023 financial results conference call. To ask a question during the session, you will need to press star one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. The company's earnings results, press release, earnings presentation, SEC filings, and a replay of today's call can be found on its IR website at investor.agora.io. Joining me today are Tony Zhao, the founder, chairman, and CEO; and Jingbo Wang, the company's CFO. Reconciliations between the company's GAAP and non-GAAP results can be found in its earnings press release.

Okay.

Good day and thank you for standing by welcome to the Agora, Inc, fourth quarter and fiscal year 2023 financial results Conference call.

I'll ask a question during the session you will need to press star one one on your telephone you wouldn't hear an automated message advising you hand it straight.

To withdraw your question. Please press star one again.

Please be advised that today's conference is being recorded.

The company's earnings results press release earnings presentation, and SEC filings and a replay of today's call can be found on its IR website at investors that are going on that I O joining.

Joining me today are Tony Chao, founder, Chairman and CEO, Jim Boldt, Wang the company's CFO.

Reconciliations between the Companys GAAP and non-GAAP results can be found in its earnings press release.

Operator: During this call, the company will make forward-looking statements about its future financial performance and other future events and trends. However, these statements are only predictions that are based on what the company believes today, and actual results may differ materially. These forward-looking statements are subject to risks, uncertainties, assumptions, and other factors that could affect the company's financial results and the performance of its business and which the company discussed in detail in its filings with the SEC, including today's earnings press release and the risk factors and other information contained in the financial prospectus relating to its initial public offering. Inc. is under no obligation to update any forward-looking statements the company may make on today's call. With that, let me turn it over to Tony. Hi Tony.

During this call the company will make forward looking statements about its future financial performance and other future events and trends. Please.

These statements are only predictions that are based on what the company believes today and actual results may differ materially. These.

These forward looking statements are subject to risks uncertainties assumptions and other factors that could affect the companys financial results and the performance of its business in which the company discussed in detail in its filings with the SEC, including today's earnings press release, and the risk factors and other information contained in the financial.

Prospectus relating to its initial public offering.

<unk>, Inc remains no obligation to update any forward looking statements. The company may make on today's call.

With that let me turn it over to Tony Hi, Tony.

Yeah.

Bin Zhao: Thanks, operator, and welcome everyone to our earnings call. Let me first quickly reveal our operating result in 2.4. Revenue was $15.3 million for Agora, flat compared to last quarter, and $148.3 million RMB for Shenghua, an increase of 5% quarter over quarter, mainly driven by revenue growth from digital transformation customers. As of the end of 2023, we had close to 1,700 active customers for Agora and more than 4,100 for Sheng Wang, an increase of 18% and 12%, respectively, compared to one year ago. I'm pleased to announce that we achieved a non-gap net income of $1.4 million in Q4. Despite a very challenging operating environment, thanks to our effective cost control and relentless drive for revenue growth. Qingguo will discuss this in more detail shortly. Now moving on to our business, product, and technology update for the quarter. Let's start with Agora.

Thanks, I will trigger.

And welcome everyone to our earnings call. Let me first quickly review of all of our operating results in Q4 revenue was $15 3 million.

For Agora flat compared to last quarter, and $148 3 million RMB for somewhat an increase of 5% quarter over quarter, mainly drive.

Mainly driven by revenue growth fast digital transformation customers as of the end of 2000 ton of choice. We had close to 700 active customers for agora and more than.

40, 141, an increase of 8% and 12% respectively compared to one year ago.

I am pleased to announce I'm pleased to announce that we achieved non-GAAP net income of one $4 million in Q4, despite a very challenging operating environment. Thanks to our effective cost.

Cost control and a relentless drive for revenue growth.

Jim will discuss in more detail shortly.

Now moving onto our business.

And technology update for the quarter.

Start with Agora.

Bin Zhao: In this quarter, we held a series of webinars to discuss how real-time engagement, combined with state-of-the-art technologies in artificial intelligence and AR and VR, can greatly influence or even transform various industries, including live shopping, telehealth, and the Internet of Things. For example, in live shopping, we see more and more retail brands and platforms relying on interactive live streaming to redefine the way consumers make their buying decisions. By creating a personalized, social, and engaging experience for the audience, a loyal community of repeated buyers will thrive and help drive sales. The combination of RTE, AI, and ARVR is driving a rapid revolution of IoT use cases.

This quarter, we held a series of Webinars to discuss Hollywood had engagement with combined with state of art technology artificial intelligence and we are.

Greatly influence or even transform various industry <unk>.

Including life shocking protocols and internet of things.

For example in Love Hockey, we see more and more retail brands and platforms rely interoperable live streaming to redefine the way consumers makes their final Fisher.

Creating a personalized social and engaging experience for the audience.

Loyal community of repeated buyers will thrive and help drive sales.

The combination of Rte AI and VR is driving a rapid evolution of Iot use cases.

Bin Zhao: For example, heavy machinery operators can work remotely with an enhanced view that sees beyond blank spots, enabling them to carry out challenging tasks in a safe and efficient manner. For Autonomous Vehicles or AI-Powered Robotics, human operators can monitor their operations from remote locations and take over whenever necessary. This series of webinars was well-received and attracted thousands of participants globally.

For example, highly machinery operators.

Work remotely with.

<unk> real.

That fees beyond blank spots in there.

Evolving them to corral challenging task.

In a safe and efficient manner.

For autonomous drive autonomous vehicles or AI powered robotics.

Humor operators can monitor the accretions from remote location understand pickleworm whenever necessary.

This series of Webinars was well received and across thousands of risk globally.

Bin Zhao: We believe Agora is uniquely positioned to facilitate innovation in this industry, leveraging our cutting-edge RTE technology and deep understanding of industry-specific use cases. In this quarter, we also released a brand new beta version of our signaling product, which provides real-time data synchronization and low latency event notifications between devices and servers. The new version can now accommodate an unlimited number of users per channel, deliver better synchronization, support storage, and manage conflicting messages effectively. It enables a wide range of use cases, such as real-time bidding in live shopping, virtual gifting in live streaming, player status synchronization in online gaming, live pooling in education, and remote command of IoT devices. In December, Twilio announced the upcoming end-of-life of its programmable video product, which was a competing solution with our video calling product. We have published a series of blogs covering guidance and best practices for migrating from Twilio to Agora across major operating systems and developer platforms.

We believe our garage is uniquely positioned to facilitate.

Innovation in this industry.

By leveraging our cutting edge technology and deep understanding of industry specific use cases.

In this quarter, we also release.

We also released a brand new beta worthy of our seasonal product, which provides real time data synchronization and low latency.

Acacia between devices and pillars.

The new word can now accommodate an unlimited number of users per channel give you were asking foundation support storage and manage completing message effectively.

It enables a wide range of use cases, such as real time competing in large hockey versus gifting in large gaming play our startup synchronization in online gaming.

Large quoting in education, and remote command of Iot devices.

In December <unk>.

The upcoming end of life.

Programmable video product, which was a competing solution with our video quality of the product.

We have pushed a serious of block covers guidance and best profit for migrating from <unk> to overall across major operating system and golfer platforms, adding.

Additionally, we are offering up to two months free to customers, who switch from Korea.

Aurora is the IPO alternative for Twilio suite customers base and expect to enhance our global market share following close accurate.

We are also thrilled to see open AI recent launch a thorough our powerful AI model that can create realistic and invert you match Native video case based on tax for construction.

Bin Zhao: Additionally, we are offering up to two months of free service to customers who switch from Twilio. We believe Agora is the ideal alternative for Twilio's video customers and expect to enhance our global market share following Twilio's exit. We are also thrilled to see OpenAI's recent launch of Sora, a powerful AI model that can create realistic and imaginative video clips based on text instructions.

It aligns with our early will that multimodal capabilities of generic to AI models.

Advanced rapidly you've actually enabling human users to directly interact with AI models in wood and video format.

This technology breakthrough AI will greatly expand the boundaries of real time engagement and prudent about tremendous new possibilities.

I believe <unk> is well positioned to play a critical role in facilitating lastly, Cape transmission between AI models and human users.

Bin Zhao: It aligns with our early view that multimodal capabilities of generative AI models will advance rapidly, eventually enabling human users to directly interact with AI models in voice and video format, and bring about tremendous new possibilities. I believe Agora is well-positioned to play a critical role in facilitating massive data transmission between AI models and human users. [inaudible] Following the availability of Apple Vision Pro earlier this month, we have enabled many customers to launch applications in the Vision Pro app store. I have personally used Vision Pro, and I believe it marks an important breakthrough in XR technology. The high video resolution and the see-through capability of Vidium Pro demand higher quality video content and open the possibility for hologram video content consumption and interaction.

Moving on to show up.

Fuller.

Ability of Apple we <unk> earlier. This month, we have enabled many customers to launch applications in the bigger crop appstore.

Personally use we are in process and I believe the marks an important breakthrough in ISR technology.

The high video resolution and the C thru capability of video.

Prof demand higher quarterly video content and opens the possibility for a hologram video content consumption and interaction.

For example people will be able to watch live keynotes speech in holdover format on return path, our network is well positioned to par such content and in Russia.

Over the past few months.

Maybe again that all leased.

We do a lot of screaming have been gaining popularity among social platforms. For example around us boodle can serve.

Our speaker in a matchmaking group.

Live streaming channels can incur in corp. In crop team based mini games, where audience can participate by spending please.

Woody Charles and Keith.

We are partners with leading litigators developers to offer our customers a wide range of mini games that can be easily embed it into their application.

Early data from our customers. So that's a mitigate integration has resulted in increased user participation longer session duration and more monetize.

Bin Zhao: For example, people will be able to watch live keynote speeches in hologram format on Viren Pro. Our network is well-positioned to power such content and interaction. Over the past few months, many games that overlay video live streaming have been gaining popularity among social platforms. For example, a round of noodles can serve as an icebreaker in a matchmaking room.

Sunil.

In this quarter, we also introduced virtual sunpower.

And advanced feature that accumulate key component of our professional how worse on car such as the exciter compressor equalizer and.

Remember wheelabrator to process and user's voice in real time.

Users can now easily enhance and modify their voices with only cell phones without the need to push us a computer with a professional stockcar.

For example, a customer recently versus some cars into our online karaoke rooms yoga.

Bin Zhao: Live streaming channels can incorporate team-based mini games, where the audience can participate by sending bullet chats and GIFs. We have partners with leading minigame developers to offer our customers a wide range of minigames that can be easily embedded into their application. Early data from our customers shows that the minigame integration has resulted in increased user participation, longer session duration, and more monetized opportunities. In this quarter, we also introduce Virtual Sound Card, an advanced feature that simulates key components of a professional hardware sound card, such as the exciter. Compressor, Equalizer, and Reverberator to process end-users' voices in real-time. Users can now easily enhance and modify their voices with only a cell phone, without the need to purchase a computer with a professional sound card.

Our country from a range of Chris that especially to make there was this clear sweetener sweater.

Tetra or more mature slightly.

Slightly off key slightly off key nodes to also be adjusted automatically.

This capability mixed user more confident to participate there.

Therefore, putting user engagement and the thickness of our customers platform.

Before concluding my prepared remarks, I would like to thank both the Aurora and show our team for their commitment and diligent during this challenging period.

We not only delivered a consecutive quarter over quarter topline growth since the second quarter, but also achieved non-GAAP profitability in the fourth quarter.

Looking ahead at 2024, we will keep focusing on creating customer value and enhancing our competitive advantage with the <unk>.

<unk> of expanding our market share globally.

With that let me turn things over to Jim <unk>, who will review our financial results.

Thank you Tony.

Hello, everyone.

Let me start by first Julian financial results for the fourth quarter of 2023.

Bin Zhao: For example, a customer recently added a virtual sound card to their online karaoke room. Users can choose from a range of preset specifics to make their voices clearer, sweeter, gentler, or more mature. Slightly off-key notes can also be adjusted automatically.

And then I will discuss our outlook for the first quarter of 2024.

Total revenues were 66 million in the fourth quarter.

Increase of two 9% quarter over quarter, and a decrease of 10, 2% year over year.

Our core revenues.

$15 for a minute in the fourth quarter.

Compared to last quarter and decreased three 2% year over year.

The year over year decrease was primarily due to reduced usage from customers in emerging markets.

Bin Zhao: This capability makes users more confident to participate, therefore boosting user engagement and stickiness on our customer's platform. Before concluding my prepared remarks, I would like to thank both the Agora and Sheng Wang teams for their commitment and diligence during this challenging period. We not only delivered consecutive quarter-over-quarter top-line growth since the second quarter but also achieved non-gap profitability in the fourth quarter. Looking ahead to 2024, we will keep focusing on creating customer value and enhancing our competitive advantage, with the goal of expanding our market share globally. With that, I will turn things over to Qingbo, who will reveal our financial results. Thank you Tony. Hello everyone.

So a challenging macroeconomic environment and tightening financing conditions, starting from the second half of 2022.

Total revenues were RMB 148, corn shipment in the fourth quarter.

Increase of 5% quarter over quarter, and a decrease of nine 6% year over year.

Excluding revenues from the dispose the CEC business.

Quarter over quarter increase was primarily due to an increase in revenues from digital transformation customers are.

Large enterprises.

The year over year decrease was primarily due to slowing demand from internet customers due to regulation and the general economic conditions.

Other best in agitation rate and 93% fourth quarter and 82% excluding.

Excluding revenues from discontinued business.

Moving on to cost and expenses.

Well my following comments.

non-GAAP adjusted financial measures.

Which exclude share based compensation expenses.

Acquisition related expenses financing related expenses.

Transaction expenses of acquired intangible assets.

Income tax related to acquired intangible assets.

Impairment of goodwill depreciation on property and equipment and optimization of land use right.

Adjusted to cross market was fourth quarter was 65, 2%.

Jingbo Wang: Let me start by first reviewing financial results for the fourth quarter of 2023, and then I will discuss the outlook for the first quarter of 2024. Total revenues were $36 million in the fourth quarter, an increase of 2.9% quarter over quarter and a decrease of 10.2% year over year. Revenues were $15.3 million in the fourth quarter, slashed compared to the previous quarter and decreased 3.2% year-over-year. The year-over-year decrease was primarily due to reduced usage from customers in emerging markets due to the challenging macroeconomic environment and tightening financing conditions starting from the second half of 2022. Sheng Wang revenues were RMB 148.3 million in the fourth quarter, an increase of 5% quarter over quarter and a decrease of 9.6% year over year. The quarter of a quarter increase was primarily due to an increase in revenues from digital transformation customers or large enterprises. The year-over-year decrease was primarily due to slowing demand from Internet customers due to regulations and general economic conditions.

Was 23% higher than Q4, 'twenty one each year.

One 7% lower than in Q3 2023.

The year over year increase was mainly due to the changing product mix.

And the implementation of technical.

Infrastructural optimizations.

The quarter over quarter decrease was mainly due to an increase.

Premises solution revenue, which has a lower gross margin.

As we continue to implement effective expense controls.

Adjusted R&D expenses decreased 18% year over year.

$13 7 million in Q4.

Adjusted R&D expenses represented 38% of total revenues.

Quarter compared to 41, 6% in Q4 last year.

Adjusted sales and marketing expenses were $6 4 million for four decrease.

46% year over year.

Sales and marketing expenses represented 17, 5% of total revenue in the quarter.

Compared to the 26, 4% in Q4 last year.

Adjusted G&A expenses.

So were $5 8 million in Q4.

Decreased 25.

5% year over year.

G&A expenses represented 16% of total revenues in the quarter.

Compared to 18, 2% in Q4 last year.

Adjusted EBITDA was negative two minute.

Translating to a five 6%.

Just an EBITDA loss margin first quarter significantly lower than that.

Jingbo Wang: The dollar-based net retention rate is 93% for Agora and 82% for Shenlong, excluding revenues from discontinued business. Moving on to cost and expenses. For my following comments, I will focus on NONCAP as just a financial measure, which excludes Sherpa's compensation expenses. Wang, Yang Liu, Bin Zhao, Fionna Chen, Bing Duan, Huiqun Li, Harry Zhuang, Yue Tang, Agora, [inaudible] Income Tax Related to Acquired Intangible Assets, Impermanence of Geduo, Depreci Adjusted gross margin for the fourth quarter was 65.2%, which was 0.3% higher than Q4 2022 and 1.7% lower than Q3 2022. The year-over-year increase was mainly due to a change in product mix and the implementation of technical and infrastructural optimizations.

Adjusted EBITDA loss margin of 21, 1% in Q4 last year.

non-GAAP net income was $1 4 million in Q4 translating to a three 9% net income margin for the quarter.

Our net cat non-GAAP net loss margin.

39, 3% in Q4 last year.

Yeah.

As Tony has mentioned.

Effective cost controls.

<unk> strong revenue growth, we achieved profitability on a non-GAAP basis for the first time in more than three years.

This demonstrates the resilience of our business.

Challenging operating environment as.

As well as <unk>.

Continued discipline and efforts in optimizing our cost structure.

Now turning to cash flow.

Operating cash flow was positive $3 7 million in Q4.

Compared to negative $4 6 million last year.

Free cash flow was positive $3 4 million compared with $6 1 million asset.

Moving on to balance sheet.

And as Q4.

<unk> hundred $71 8 million in cash cash equivalents and.

Deposits and financial products issued by banks.

Or 4.0, sorry.

Yes.

Net cash outflow.

Net cash outflow in the quarter was mainly due to share repurchase of $10 $1 million, which was offset in part by free cash flow.

<unk> of $3 6 million.

Since the board approved a share repurchase program in February 2022.

Jingbo Wang: A quarter over quarter decrease was mainly due to an increase in on-premises solution revenue, which has a lower gross margin, as we continue to implement effective expense controls. All adjusted R&D expenses decreased 18% year-over-year to $13.7 million in Q4. Adjusted R&D expenses represented 38% of total revenues in a quarter compared to 41.6% in Q4 last year. Adjusted Sales and Marketing Expenses were $6.3 million in Q4, decreased 40.6% year-over-year.

And as of December 31st 2023.

We had to return approximately 100, and a $4 $3 million.

So shareholders so share repurchases.

Reducing our share count by roughly 18%.

So far we have.

Completed 52%.

You have 200 million share repurchase program.

We are pleased to announce that.

Our board has authorized another 12 months extension.

The $200 million share repurchase program.

In our February next year.

All other terms of unchanged.

Which is a vote of confidence to our.

Our financial strength and long term prospect.

<unk>.

Now turning to guidance.

There is no impact, especially reduced usage in certain use in certain regions.

Jingbo Wang: So the marketing expenses represented 17.5% of total revenue in the quarter. [inaudible] Addressed G&A expenses were 5.8 million yuan, a decrease 20.5% year-over-year. GLA centers represented 16% of total revenues in the quarter, compared to 18.2% in Q4 last year. Adjusted for Ibiza, which was an active two-minute, translating to a 5.6% adjusted EBITDA loss margin for the quarter, significantly lower than the adjusted EBITDA loss margin of 21.1% in Q4 last year. Long Debt Net Income was $1.4 million in Q4, translating to a 3.9% net income margin for the quarter, compared to a non-capitalized net loss margin of 39.3% in Q4 last year.

During the lunar new year for the first quarter of 2024.

Currently expect total revenues to be between.

32 and $34 million.

This forecast reflects our current and preliminary views on the market and operational conditions, which are subject to change.

In closing we're very.

Very proud of our execution and strong financial results given this challenging period.

Turning to profitability.

Monster.

Thank you propose a carton as shown on teams for their hard work and sacrifice in the past quarters.

Thank you everyone for attending our call today.

Let's open it up for questions.

Yes.

Thank you Sir.

As a reminder to ask a question you will need to press star one one on your telephone.

So we're Joe your question. Please press star one again.

Once again to ask a question. Please press star one one on your telephone.

Okay.

One moment, while we compile the Q&A roster.

And I show our first question.

Comes from the line of.

Yang Liu from Morgan Stanley.

Okay. Thank you thanks for the opportunity to ask questions first.

Okay. Congratulations on the non-GAAP profit.

Last quarter two.

Jingbo Wang: As Tony just mentioned, thanks to our effective cost controls and relentless drive for revenue growth, we achieved profitability on a non-gap basis for the first time in more than three years. This demonstrates the resilience of a business amid a very challenging operating environment, as well as our continued discipline and efforts in optimizing our cost structure, now turning to cash flow. Operating cash flow was positive 3.7 million in Q4. Pre-cash flow was positive 3.4 minutes compared to negative 6.1 minutes last year. Moving on to the balance sheet, we ended Q4 with $371.8 million in cash, cash equivalents, bank deposits, and financial products issued by banks, or 4.03 dollars per ADF. Now, cash offload. The net cash outflow in the quarter was mainly due to the shared repurchase of $10.1 million, which was offset in part by free cash flow of $3.6 million.

2023.

Three questions here.

The first one is.

What is management's outlook in turmoil for the 2020 for full year profit.

Do you think.

The profitability in the <unk>.

Fourth quarter will be sustained or even be imprudent.

In 2024, especially consider the guidance in first quarter imply some year on year revenue decline.

Whether the positive profit can be maintained.

That's the first question.

The second one is.

We would like to have some.

Update and cover off the.

Domestic internet companies going abroad, whether <unk> can benefit from that in the overseas market and.

What is the.

Revenue split between <unk> and <unk> in the coming 2020 for full year.

Do you think the core revenue contribution will continue to.

Jingbo Wang: Since the board approved our share repurchase program in February 2022 and as of December 31st, 2023, we have returned approximately $104.3 million to shareholders. [inaudible] Reducing our share count by roughly 18% So far, we have completed 52% of a U.S. dollar 200 million share purchase program. We are pleased to announce that... Apoorva also has another 12-month extension of the $200 million share repurchase program through the end of February next year, with all other terms unchanged, which is a vote of confidence on the financial strength and long-term prospects of the business. Now turning to guidance, due to seasonal impact, especially reduced usage in certain regions. During the Lunar New Year, for the first quarter of 2024, we currently expect revenues to be between This forecast reflects our current and preliminary views on the market and operational conditions, which are subject to change. In closing, we are very proud of our execution and strong financial results given this challenging period. Returning to profitability is a remarkable milestone. Thank you to both the Agora and Xiong Wang teams for your hard work and sacrifice in the past quarters.

Drop a little bit or will turn around.

Of the total contribution.

The third question is regarding the partnership with <unk>.

Vision probe.

What will be the revenue model behind this come down.

The partnership will be based on that.

The consumer time spent.

And if not what will be the yes.

Revenue model. Thank you.

Thank you okay.

First question.

Yes.

Revenue guidance would imply a year on year.

Revenue decrease.

And.

As you know Q1 is generally the low season for the business. If you look at a.

Remember in the past few years revenue generally take a little bit in Q1 sequentially compared to Q4.

Due to both seasonality as I mentioned in.

Some other vision, where we operate.

I was wondering the Chinese new year is low season for social apps for education.

Ernie so.

<unk> dropped during that holiday.

And also for digital digital transformation businesses, a lot of the projects tend to be well.

Consolidated revenues towards the end of the year. So Q1 is also a low season.

Compared to last year.

Dean.

China Internet.

Currently regulatory changes.

The environment in Q2, so last year Q1 was it.

Well I think Neal.

Yes.

So I'm sure guidance in.

In terms of full year 2024.

Obviously, it remains all of them.

Uncertainty around the world including G.

Economic environment from the environment and so on so I will try to give you my best estimate.

Operator: Thank you everyone for attending the call today. Let's open it up for questions. Thank you, sir.

We expect our revenue to grow.

On a year on year basis, starting from Q2.

Operator: As a reminder, to ask a question, you will need to press star 11 on your telephone. To enjoy your question, please press star one, one again. Once again, to ask a question, please press star 11 on your telephone.

And our goal is to.

Reach double digit revenue growth in Q4 year on year.

And.

Regardless of the revenue growth, we do not expect that expenses will grow this year.

<unk> most recent.

So it's going to be pretty stable.

Cost base.

The moderate revenue growth.

So if you run the numbers hopefully we'll be able to.

Yang Liu: Yang Liu from Morgan Stanley. Thank you. Thanks for the opportunity to ask questions. First, congratulations on the non-gap profit in the last quarter of 2023. I have three questions here.

Got codecs profit stability and even improve the profitability plus the second half of the year.

But as to Q1.

It will be challenging Q2 to achieve profitability in Q1, given the revenue dip.

Okay.

First question.

Yang Liu: The first one is, what is the management outlook in terms of the 2024 full-year profit? Do you think the profitability in the past quarter will be sustained or even be improved in 2024? Especially considering the guidance for the first quarter implies some year-on-year revenue decline, whether the positive profit can be maintained. That's the first question.

Yes about hockey.

Hawking, China Internet companies going overseas.

In a very strong unique position to help them because on one side, we do have a strong and.

Ori essential customer base in China, Internet industry, a lot of them.

We're actively planning going overseas or expanding in global market.

Jingbo Wang: The second one is we would like to have some update in terms of domestic Internet companies going abroad, whether Agora can benefit from that in the overseas market, and what is the revenue split between Agora and Shenwang in the coming 2024 full year. Do you think the Agora revenue contribution will continue to drop a little bit or will turn around in terms of the total contribution? The third question is regarding the partnership with Vision Pro. What will be the revenue model behind this kind of partnership? Will it be based on the consumer's time spent? And if not, what will be the revenue model? Thank you. Thank you. I'll take the first question.

While we help them, we collaborate a lot of our existing.

Partnership and customer based knowledge and the market knowledge with our global practice with local customer base in the market already and.

Hopping hawking people with.

With all of those knowledge and no horse alrighty and those other unique advantage, we could hope to to help them to grow into.

Into bigger global market.

And in terms of a revenue split.

We don't think that will change.

It varies significantly however, with two.

I'm more optimistic about our core business, given especially the U S.

So we have seen in the U S market and other developed market and also.

Some of the emerging use cases, we see there.

Tony mentioned exit that also give us additional room to grow in those markets. So we expect a moderate.

Jingbo Wang: Yes, the Q1 revenue guidance would imply a year-on-year revenue decrease. And as you know, Q1 is generally the lowest season for the business. If you look at numbers in the past few years, revenue generally decreases in Q1 sequentially compared to Q4. That's due to both seasonality, as I mentioned. In some other regions where we operate, the Lunar Chinese New Year is the lowest season for social apps and for education, apparently

Increase internally.

Network revenue contribution coming from your core business.

As we move along in 2024.

Yes.

<unk> the Roe.

Our new model is going to similar to what do we do we are still going to be.

Enable use cases that our customers are selling API based.

Our capabilities.

With the <unk>.

Increased offerings from our overall portfolio we might have.

More dive worst pricing model with all the different <unk> or different product.

We are selling into but overall it will tie to consumer use it on a return profile.

And.

Jingbo Wang: So usage will drop during that holiday. And also for digital transformation businesses, a lot of the projects tend to be, We tend to book through revenues towards the end of the year, so Q1 is also a low season. Compared to last year, obviously, we had... China Internet rapidly changes the technical environment in Q2. So last year, Q1 was relatively higher data. So that's what I'm kind of.

In mid term to long term, we do see that.

The powerful impact where <unk> can enable a lot more.

Attractive use cases, new use cases or make some new use cases.

More wobble or more.

Meaningful for consumer or business.

Use cases.

Sure.

We wouldn't be able to support both like persona based social interruptions or business collaborations.

In that platform so.

Jingbo Wang: In terms of the year 2024, obviously, there remains a lot of uncertainty, and so on. So I will try to give you my best estimate. So we expect our revenue to grow on a year basis, starting from Q2. And the goal is to...

And we also anticipated a lot of other authority wise, we're catching up with play catch up with swimming pool, so to make this quick.

To be available more widely.

For our customers and our consumers.

Thank you.

Jingbo Wang: I wish WTJ revenue growth in Q4 year-on-year. And regardless of revenue growth, we do not expect expenses to grow this year compared to the most recent days. So it's going to be a pretty stable cost base with moderate revenue growth. So if you run the numbers, hopefully, we'll be able to get closer to profitability and even improve our profitability for the second half of the year. [inaudible] Rabindranath Tewri.

Can I follow up with one quick question when Gymboree mentioned, the Opex will be flattish.

Do you mean, thats, a flattish versus 2023 full year or flattish versus last quarter in 2023.

Over the past year the.

The sequential quarterly.

Opex has been on a downward trend.

So I would like to clarify whether it's a year on year or based on first quarter. Thank you.

Jingbo Wang: Yes, you said the first question. Yes, about helping Chinese Internet companies go overseas, I think we are in a very strong, unique position to help them. Because on the one hand, we do have a strong and very influential customer base in the China Internet industry. A lot of them, you know, were actively planning to go overseas or expanding in the global market. While we help them, we can leverage a lot of our existing partnership and customer base knowledge and market knowledge with our global practice with local customer base and market knowledge already. And we have been helping people with all this knowledge and know-how already, and that is the unique advantage we could have to help them to grow into a bigger global market.

The pace will be fourth quarter.

Probably not be exactly the same they might fluctuate a little bit, but it will not be significantly higher from the pacing in Q4.

Got it thank you.

Thank you.

And I show. Our next question comes from the line of Harry Shrink from Bank of America. Please go ahead.

Okay.

Thanks management for taking my questions I also have three questions. The first one.

The demand outlook.

More color on the outlook competition landscape and powertrain.

Both overseas and domestic market and the second question is.

This maintenance the potential impact on our business from the <unk>.

Hey, Ross It's video January 3rd.

So.

The first question is on the <unk>.

And is your market share.

As I mentioned I said that.

Sure, it's when you're exiting the market.

As a company.

Sure.

How it will go up.

This opportunity and what is the current acceptance from the customer.

Jingbo Wang: And in terms of revenue split, we don't think it will change very significantly. However, we are a little more optimistic about Agora's business, given especially the resilience we have seen in the U.S. market and other developed markets, and also some of the emerging use cases we see there. Tony mentioned prelude exit, which also gives us additional room to grow in those markets. So we expect some moderate increases in terms of growth. [inaudible] About Veeam Pro, the revenue model is going to be similar to what we do; we are still going to be enabling use cases and customers by selling API-based capabilities. Although, you know, with an increased offering from our overall product portfolio, we might have, you know, a more diverse pricing model with all the different SKUs, different products we are selling.

Customers.

Transiting from tubular service job. Thank you.

Alright.

I'll take the.

Those questions first of all in terms of the market is.

Competitive landscape we.

We see in U S.

National markets, we do see strong growth momentum in media and entertainment sector and Palo House verticals.

Shocking Iot, particularly in developer market those are the areas that we see strong growth momentum.

Pricewise we.

We see more pressure in emerging market, where it's impacted by macro alignment including.

The currency exchange rate, etc price has been healthy and stable in developed market U S and the European market.

Curious about to isolate our.

Jingbo Wang: But overall, it will tie to consumer usage of Veeam Pro, and in the mid-term to long-term, we do see a powerful impact where Veeam Pro can enable a lot more attractive new use cases or make some new use cases more valuable or more, you know, meaningful for consumer or business use cases, where we would be able to support both, like, persona-based social interactions or business collaborations on that platform. And we also anticipate a lot of other AXR devices will be catching up, will catch up with Sphere Pro, so this capability will be available more widely for customers. Thank you. Can I follow up with one quick question?

What are we seeing in terms of competition to ask there is only a fine of.

Competitors, leaving the market is not as clear there are other startup competitors, who are struggling and downsizing of their operations.

We expect we will be gaming market share with those thoughts.

With both <unk> and.

In China market, we see growth potentials in going overseas.

All of the SP.

Especially internet companies are based in China now.

Looking heavily in going overseas expenditure and auto also digital transformation is still.

Having a clear trend to grow and also.

Yang Liu: When Jinbo mentioned the OPEX will be flattish, do you mean that flattish versus 2023 full year or flattish versus last quarter in 2023? Because over the past year, the sequential quarterly OPEX has been on a downward trend. So I would like to clarify whether it's a year-on-year or based on first quarter. Thank you. The pace will be fourth quarter.

Iot Fiat Alfa customer base are seeing more actively growth overall usage in both market, we actually see what's still growing despite all the regulatory and macro changes, which is the foundation of overall customer value growth and revenue growth are priced.

<unk> in China market generally dropped about 10% over the last few years and often happened in beginning of the year. This puts some pressure to our Q1 results together with the seasonality issue.

Jingbo Wang: It will probably not be exactly the same. It might fluctuate a little bit, but it will not be significantly higher from the pace in Q4. Got it.

Like Chinese new year activity changed customer behavior change our gross margin.

But our gross margin remains quite healthy.

Operator: Thank you. Thank you. And I show our next question comes from the line of Harry Zhuang from Bank of America. Please go ahead.

In terms of a competitive landscape.

Largely unchanged in China market during the past quarter well. There are we continue to see there are more competitors kind of backing off which in last quarter. We see another large internet company reduce their team in this area in Q4.

Harry Zhuang: Thanks management for taking my questions. I also have three questions. The first one is the demand outlook. Can management share more color on the demand outlook, the competition landscape, and price trend in both overseas and domestic markets? And the second question is, what does management see the potential impacts on business from the open AI video generator, and so on? And the third question is about potential market share gain. And management said that after Trilio exits the market, the company could potentially gain share. And how will Agora seize this opportunity? And what is the current acceptance from customers transiting from Trilio services to other services? Thank you. All right, you know, I'll take those questions.

I expect market will continue to consolidate.

On the last question is about the <unk>.

The opening I offer you readers generation I think this is only the early stage of video format genera.

Generation model.

But we can see the huge potential in a possibility life life ahead.

The model is able to generate a short video clips based on tax image or video problems, prompting and it can already be used in some of customers use case to enhance user experience. For example, the virtual background of a video chat room live streaming session can be a short video.

Short video clips generated by modal.

As we're all background it could be either a realistic or imaginary to perfectly match. The contacts are topics of the channel.

Jingbo Wang: First of all, in terms of the market and competitive landscape, we see in U.S. and international markets, we do see strong growth momentum in the media and entertainment sector and telehealth verticals. Life shopping, IoT, particularly in the developer market, those are the areas that we see strong growth momentum. Price-wise, we see more pressure in emerging markets, where it's impacted by the macro environment, including the currency exchange rate, et cetera. Price has been healthy and stable in developed markets, the U.S. and European markets. Regarding Twilio's exit, what we've seen in terms of competition, Twilio's exit is only a sign of competitors leaving the market. It's not just Twilio.

This will create more engaging and immersive experience for audience.

In the future weekly humor user will be able to directly interact with and models in voice and video format. As we mentioned before this will make us the crucial the critical infrastructure as massive amount of data we will flow between users.

And AI models in real time.

Yeah.

Yes.

Maybe to add a little to produce assays.

We think.

Like I said.

It's only really a fine of competitors, leaving the.

Market not backing off our focusing on their more minutes grid business.

And we see this happens in both a global market and China market, including.

U S market is not just <unk> there are some other smaller competitors also downsizing or stopped working in this area. The comparator arm moment with that we see is clearly improving.

Jingbo Wang: There are other startup competitors who are struggling and downsizing their operations. In the Chinese market, we see growth potential in going overseas, you know, all the especially internet companies, you know, based in China, now, you know, looking heavily for overseas expansion. And also, digital transformation is still seeing a clear trend to grow. And also, the IoT side of the customer base is seeing more actively growth. Overall usage in both markets, we actually see it still growing despite all the regulatory and macro changes, which is the foundation of overall customer value growth and revenue growth. Price-wise, in the Chinese market, it generally drops about 10% over the last few years and often happens at the beginning of the year.

Of course <unk> has.

Still a sizable customer base, which we are or they start to work on.

To cover that so this is a clear room for us to grow into.

Thank you Richard.

Thank you.

As a reminder to ask a question you will need to press star one one on your telephone.

To withdraw your question. Please press star one again.

Once again to ask a question. Please press star one on your telephone and I show. Our next question comes from the line of <unk> from Nomura. Please go ahead.

Yeah.

Yes, hi, Thank you management for the opportunity to ask a question just the one follow up question from me about Twilio exits.

Programmable video product segment.

So can you share more color about the reason behind US. This is more of a concept competition fears or competition or because of.

Jingbo Wang: This puts some pressure on our Q1 results. Together with the seasonality issue of Chinese New Year activity change or consumer behavior change, our gross margin, you know, but our gross margin remains quite high. In terms of the competitive landscape, it's largely unchanged in the Chinese market during the past quarter. While there are, we continue to see more competitors kind of backing off, which last quarter we saw another large internet company reduce their team in this area in Q4. I expect the market to continue to consolidate. The next question is about the latest OpenAI offering for video generation. I think this is only the very early stage of the video format generation model, but we can see the huge potential and the possibility lies ahead. Currently, the model is able to generate a short video clip based on text, image, or video prompting, and it can already be used in some customers' use cases to enhance user experience. For example, the virtual background of a video chatroom or live streaming session can be a short video clip generated by an AI model as the overall background.

The demand is.

Not.

Growing strongly in the U S market.

And.

<unk>.

And about <unk> <unk>.

For two months free customers switch from Twilio.

Do we think that that would affect our user growth and top line growth in the next one or two quarters. Thank you.

I do think the two newest asset.

Because of the fierce competition in this area because as we are routinely.

State.

This area is a very tech savvy sector, whereas offerings requires a lot of investments in technology and product.

Some competitors product the only build on top of web RTC open source projects are.

A simple.

Other sleep.

<unk> a leader of <unk>.

Technology add ons, which can only saw a friction part of the demand for our key use cases, which of course limited there.

And the growth in this area.

And.

Especially for a company like <unk>, they might want to be more focused on their midstream.

Jingbo Wang: It could be either realistic or imaginary to perfectly match the context or topics of the channel. This will create a more engaging and immersive experience for audiences. In the future, we believe human users will be able to directly interact with AI models in voice and video format, as we mentioned before. This will make us the critical infrastructure, as a massive amount of data will flow between users and AI models in real time. Maybe to add a little to Twilio's asset, we think, you know, like I said, it's only a sign of competitors leaving this market; they're backing off or focusing on their more mainstream business. And as I mentioned, we see this happen in both the global market and the Chinese market, including, let's say, you know, in the US market; it's not just Twilio. There are some other smaller competitors also downsizing or stopping working in this area. The competitive environment with that, we see it's clearly improving. Of course, Twilio still has a sizable customer base, which we have already started to work on to convert. So this is a clear room for us to grow.

Business.

See that's the main reason.

Arisen.

There could be a reason that colgate.

Demand is also a fading away, but as I mentioned earlier statement.

All right.

While the Covid demand is fading away, we do see there are gross where active cases growth in developer market in global market. So.

I would rather just put that as another factor in the inner leaf.

In terms of our offerings.

I think the two months free offer for a lot of small and midsized customers itself are important.

For them to consider and makes them.

Easier to these five to jump onto our platform.

We do have some other.

Stress and <unk>.

Collaborations or work with.

Another large customer base, which our teammates are ultimately to help them to migrate to our platform.

Thank you very much.

Thank you.

Once again, if you have a question at this time, please press star one on your telephone.

I'm showing no further questions in the queue.

This concludes our Q&A session.

Thank you everybody for attending the Companys call today.

As a reminder, they are recorded in the earnings release will be available on the company's web site at Investor that GOR that Io and if there are any questions. Please feel free to email the company. Thank you.

Jingbo Wang: Thank you very much, and I wish you a very clear day, and [inaudible] Thank you. [inaudible] To withdraw your question, please press star 11 again. Once again, to ask a question, please press star one on your telephone, and I will show you our next question comes from the line of Bing Duan from Namur. Please go ahead.

And have a good day.

Thank you.

Goodbye.

Okay.

[music] okay.

Jingbo Wang: Is this more because of competition, the fear of competition, or because demand is not growing strongly in the US market? And about should we offer two months of free customer switch from Twilio? How do we think that would affect our user growth and top line growth in the next one or two quarters? I do think Twilio's exit is mainly because of the fierce competition in this area, because, as we repeatedly state, this area is a very tech-savvy sector, where all the offerings require a lot of investment in technology and products. Some competitors' products only build on top of WebRTC, open-source projects, or, a simple, you know, rather slim layer of technology add-ons, which can only serve a friction part of the demand for our RTE use cases, which of course limits their ability to expand and grow in this area.

Okay.

[music].

Jingbo Wang: And, you know, especially for a company like Cluedio, they might want to be more focused on their mainstream business. I see that's the main reason, you know, there could be a reason that COVID demand is also fading away. But as I mentioned in our latest statement, we, you know, while the COVID demand is fading away, we do see growth, very active UPSS growth in the developer market, and in the global market. So I would rather just put that as another factor in their leaving.

Jingbo Wang: In terms of our offerings, I do think the two-month free offer for a lot of small, mid-sized customers is a very important reason for them to consider and makes them, you know, easier to decide to jump on our platform. We do have some other strengths and collaborations or work with the rather large customer base, which our team is focusing on to help them migrate to our platform. Thank you very much.

Operator: Thank you. Once again, if you have a question at this time, please press star 11 on your telephone. I'm showing no further questions in the queue.

Operator: This concludes our Q&A session. Thank you everybody for attending the company's call today. As a reminder, the recording of the earnings release will be available on the company's website at investor.agora.io. And if there are any questions, please feel free to email the company. Thank you. And have a good day.

Operator: Thank you. Bye-bye. Thank you. Yang Liu, Bin Zhao, Fionna Chen, Bing Duan, Huiqun Li, Harry Zhuang, Yue Tang, Agora. Yang Liu, Bin Zhao, Fionna Chen, Bing Duan, Huiqun Li, Harry Zhuang, Yue Tang, Agora. In the name of the Almighty, the Most Gracious, the Most Merciful, the Most Merciful. Amen.

Operator: Thank you. Thank you. [inaudible] To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising that your hand is raised.

Operator: To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. The company's earnings results, press release, earnings presentation, SEC filings, and a replay of today's call can be found on its IR website at investor.agora.io. Joining me today are Tony Zhao, the founder, chairman, and CEO; and Jingbo Wang, the company's CFO. Reconciliations between the company's GAAP and non-GAAP results can be found in its earnings press release.

Operator: During this call, the company will make forward-looking statements about its future financial performance and other future events and trends. However, these statements are only predictions that are based on what the company believes today, and actual results may differ materially. These forward-looking statements are subject to risks, uncertainties, assumptions, and other factors that could affect the company's financial results and the performance of its business and which the company discussed in detail in its filings with the SEC, including today's earnings press release and the risk factors and other information contained in the financial prospectus relating to its initial public offering. Ng remains no obligation to update any forward-looking statements the company may make on today's call. With that, let me turn it over to Tony. Hi Tony.

[music].

Bin Zhao: Thanks, operator, and welcome everyone to our earnings call. Let me first quickly reveal our operating result in 2.4. Revenue was $15.3 million for Agora, flat compared to last quarter, and 148.3 million RMB for Shenghua, an increase of 5% quarter over quarter, mainly driven by. As of the end of 2023, we had close to 1,700 active customers for Agora and more than 4,100 for Sheng Wang, an increase of 18% and 12%, respectively, I'm pleased to announce that we achieved a non-gap net income of $1.4 million in Q4. This was achieved despite a very challenging operating environment, thanks to our effective cost control and relentless drive for revenue growth. Qingguo will discuss this in more detail shortly. Now, moving on to our business, product, and technology update for the quarter. Let's start with Agora.

Okay.

[music].

Yes.

Okay.

Yes.

Okay.

Yes.

Thank you.

[music].

Sure.

[music].

Good day, and thank you for standing by and welcome to the <unk>, Inc. Fourth quarter and fiscal year 2023 financial results Conference call.

To ask a question during the session you will need to press star one one on your telephone you will then hear an automated message advising your hand is raised.

To withdraw your question. Please press star one again.

Please be advised that today's conference is being recorded.

The company's earnings results press release earnings presentation, and SEC filings and a replay of today's call can be found on its IR website at Investor day, our GOR that Io.

Bin Zhao: For example, heavy machinery operators can work remotely with an enhanced view that sees beyond blind spots, enabling them to carry out challenging tasks in a safe and efficient manner. Furthermore, human operators can monitor their operations from remote locations and take over whenever necessary. [inaudible] Globally, we believe Agora is uniquely positioned to facilitate innovation in this industry. Leveraging our cutting-edge RTE technology and deep understanding of industry-specific use cases, in this quarter, we also released a brand new beta version of our signaling product, which provides real-time data synchronization and low-latency event notifications between devices and servers. The new version can now accommodate an unlimited number of users per channel, deliver better synchronization, support storage, and manage conflicting messages effectively.

Joining me today, Alright, Tony Zhao founder Chairman and CEO, Jim Boldt, Wang the company's CFO.

Reconciliations between the Companys GAAP and non-GAAP results can be found in its earnings press release.

During this call the company will make forward looking statements about its future financial performance and other future events and trends.

These statements are only predictions that are based on what the company believes today and actual results may differ materially. These.

Prospectus relating to its initial public offering.

Bin Zhao: [inaudible] such as real-time bidding in live shopping, virtual gifting in live streaming, player status synchronization in online gaming, live pooling in education, and remote command of IoT devices. In December, Twilio announced the upcoming end of life of its programmable video product, which was a competing solution with our video calling product. We have published a series of blogs covering guidance and best practices for migrating from Twilio to Agora across major operating systems and developer platforms.

Gora, Inc remains no obligation to update any forward looking statements. The company may make on today's call.

With that let me turn it over to Tony Hi, Tony.

Yeah.

Thanks, I will trigger.

And welcome everyone to our earnings call. Let me first quickly review our operating results in Q4 revenue was $15 $3 million for Agora flat compared to last quarter.

104 to eight points really meaning RMB four somewhat an increase of 5% quarter over quarter, mainly drive.

Driven by revenue growth from digital transformation customers as of the end of 2020 story, we had close to seven 800 active customers for agora and more than.

4100, fortune, one an increase of 18% and 12% respectively compared to one year ago.

Bin Zhao: Additionally, we are offering up to two months free to customers who switch from Twilio. We believe Agora is the ideal alternative for Twilio's video customers and expect to enhance our global market share following Twilio's exit. We are also thrilled to see OpenAI's recent launch of Sora, a powerful AI model that can create realistic and imaginative video clips based on text instructions. It aligns with our early view that multimodal capabilities of generative AI models will advance rapidly, eventually enabling human users to directly interact with AI models in voice and video format. This technological breakthrough in AI will greatly expand the boundary of real-time engagement and bring about tremendous new possibilities. I believe Agora is well positioned to play a critical role in facilitating massive data transmission between AI models and human users. Moving on, to Xiong Wang

I am pleased to announce.

I am pleased to announce that we achieved non-GAAP net income of $1 4 million in Q4, despite a very challenging operating environment.

Our effective cost control and relentless drive for revenue growth.

Jim will discuss in more detail shortly.

Now moving onto our business product and technology update.

The quarter.

Start with Agora.

This quarter, we held a series of Webinars to discuss how real time engagement, which combined with state of art technology artificial intelligence and <unk> we are greatly.

Greatly influence or even transform various industry.

Including life shocking protocol and Internet of things.

For example in lab Hawking, we see more and more brands and platforms rely our interactive live streaming to redefine the way consumers makes the buying Fisher.

By creating a personalized social and engaging experience for the audience.

Bin Zhao: Following the availability of Apple Vision Pro earlier this month, we have enabled many customers to launch applications in the Vision Pro app store. I have personally used Vision Pro, and I believe it marks an important breakthrough in XR technology. The high video resolution and see-through capability of William Paul demand higher-quality video content and open the possibility for hologram video content consumption and interaction.

Our loyal community of repeated buyers will thrive and help drive sales.

The combination of Rte, AI and AR VR is driving a rapid resolution of Iot use cases.

For example, highly machinery operators can work remotely with.

<unk> wheel.

Fees beyond planned spot, enabling them to corral challenging path.

In a safe and efficient manner.

For autonomous drive autonomous vehicles or AI powered robotics.

Humor operators can monitor the accretions from remote locations and pick a world whenever necessary.

This series of Webinars was well received and across thousands of participants globally.

We believe our garage is uniquely positioned to facilitate.

Innovation in this industry.

By leveraging our cutting edge technology and deep understanding of industry specific use cases.

In this quarter, we also release.

We also released a brand new beta worthy of our signaling product, which provides real time data synchronization and low latency.

Bin Zhao: Live streaming channels can incorporate team-based mini games, where the audience can participate by sending bullet chats and GIFs. We have partners with leading minigame developers to offer our customers a wide range of minigames that can be easily embedded into their applications. Early data from our customers shows that the minigame integration has resulted in increased user participation, longer session durations, and more monetized opportunities. In this quarter, we also introduced Virtual Soundcard, an advanced feature that simulates key components of a professional hardware soundcard, such as the exciter. Compressor, Equalizer, and Reverberator to process end-users' voices in real-time. Users can now easily enhance and modify their voices with only a cell phone, without the need to purchase a computer with a professional sound card.

Acacia between devices and <unk>.

The new word can now accommodate an unlimited number of users per channel give you were asking the foundation support storage and manage completing message effectively.

It enables a wide range of use cases, such as real time bidding.

Beating in large hockey virtual gifting in last screaming play our startup synchronization in online gaming.

Like cooling in education, and remote command of Iot devices.

In December <unk>.

<unk> announced the upcoming end of life.

<unk> programmable video product, which was a competing solution with our lead quality and product.

We have pushed a serious of block coverage guidance and best profit for migrating from <unk> to overall across major operating system and go off our platforms.

Additionally, we are offering up to two months free to customers, who sweet trumpf.

We believe <unk> is the ideal opportunity for Twilio suite customers base and expect to enhance our global market share following kudos ethic.

Bin Zhao: For example, a customer recently added a virtual sun card to their online karaoke room. Users can choose from a range of preset specifics to make their voices clearer, sweeter, gentler, or more mature. Slightly off-key notes can also be adjusted automatically.

We are also thrilled to see open AI recent launch a thorough our powerful AI model that can create realistic and.

<unk> native video based.

Based on tax and construction.

Alliance with our early will that multimodal capabilities of generic to AI models with advanced rapidly eventually enabling human users to directly interact with AI models in wood and video format.

Bin Zhao: This capability makes users more confident to participate, therefore boosting user engagement and speediness on our customers' platforms. Before concluding my prepared remarks, I would like to thank both the Agora and Sheng Wang teams for their commitment and diligence during this challenging period. We not only delivered consecutive quarter-over-quarter top-line growth since the second quarter but also achieved non-gap profitability in the fourth quarter. Looking ahead to 2024, we will keep focusing on creating customer value and enhancing our competitive advantage, with the goal of expanding our market share globally. With that, I will turn things over to Jingbo, who will reveal our financial results. Thank you Tony. Hello everyone.

This technology breakthrough AI will greatly expand the boundaries of good hand engagement.

And Britain about tremendous new possibility.

I believe <unk> is well positioned.

A critical role in facilitating lastly, Cape transmission between AI models and human users.

Moving onto Soma.

Following the availability of Apple we <unk> earlier. This month, we have enabled many customers to launch applications in the biggest crop appstore.

Personally used we employ.

Any remarks, an important breakthrough in ISR technology.

The high video resolution and the C thru capability.

We do import.

<unk> demand higher quarterly video content and opens the possibility for a hologram video content consumption and interaction.

For example people will be able to watch live keynotes speech in hollow bond format on return prop our network is well positioned to par such content and in Russia.

Over the past few months.

Video games that overlays on radio last screening have been gaining popularity among social platforms.

Russell a round of Boodle, Ken Zerbe.

Our speaker in a matchmaking group.

Live streaming channels in core incorporate in crop team based mini games, where audience can participate by swimming pool.

<unk> chat and Keith.

We are partners with leading litigators developers to offer our customers a wide range of mini games that can be easily embed it into their application.

Early data from our customers. So that will mitigate integration has resulted in increased user participation longer session duration and more monetize.

Sunil.

In this quarter, we also introduced virtual some car.

And advanced feature that assimilate key component of our professional hardware stock car such as the exciter compressor equalizer and <unk>.

Remember, we elaborate our two process end user's voice and real time.

Jingbo Wang: The quarter of a quarter increase was primarily due to an increase in revenues from digital transformation customers or large enterprises. The year-over-year decrease was primarily due to a slowing demand from Internet customers due to regulations and general economic conditions. The dollar-based net retention rate is 93% for Agora and 82% for Xiongnu, excluding revenues from discontinued business. Moving on to cost and expenses. For my following comments, I will focus on non-GAAP as just a financial measure, which excludes share compensation expenses, acquisition related expenses, and financing related expenses. [inaudible] income tax related to acquired intangible assets, such as impairment of goodwill, depreciation of property and equipment, and optimization of land use rights.

Users can now easily enhance and modify their voices with only a cellphone without the need to purchase a computer with a professional suncorp.

For example, a customer recently versus some car into our online karaoke rooms.

Users can choose from a range of Chris that especially to make there or was it clear our sweetener sweater.

Jaguar or more mature.

Slightly off key slightly off key nodes to also be adjusted automatically.

This capability mixed use are more confident to participate there.

Therefore, putting user engagement and the big news on our catalyst platform.

Before concluding my prepared remarks, I would like to SaaS, both the Aurora and show our team for their commitment and get event during this challenging period.

We not only delivered a contracted quarter over quarter top line growth since the second quarter, but also achieved non-GAAP profitability in the fourth quarter.

Looking at 2024, we will keep focusing on creating customer value and enhancing our competitive advantage with the goal of expanding our market share globally.

Jingbo Wang: Adjusted gross margin for the fourth quarter was 65.2%, which was 0.3% higher than Q4 2022 and 1.7% lower than Q3 2022. The year-over-year increase was mainly due to a change in product mix and the implementation of technical and infrastructural optimization. The quarter-over-quarter decrease was mainly due to an increase in on-premises solution revenue, which has a lower cost margin. As we continue to implement effective expense controls, All adjusted R&D expenses decreased 18% year-over-year to $13.7 million in Q4.

With that let me turn things over to Jim who will review our financial results.

Thank you Tony.

Hello, everyone.

Let me start by Firstly Joanne financial results for the fourth quarter of 2023.

Then I will discuss our outlook for the first quarter of 2024.

Total revenues were 36 million in the fourth quarter.

Increase of two 9% quarter over quarter, and a decrease of 10, 2% year over year.

Our core revenues.

$15 for M&A in the fourth quarter.

That compared to last quarter and decreased three 2% year over year.

The year over year decrease.

Primarily due to reduced usage from customers in emerging markets.

So challenging macroeconomic environment and tightening financing condition, starting from the second half of 2022.

Shlomo revenues were RMB 148 points of momentum in the fourth quarter.

Jingbo Wang: The adjusted R&D expenses represented 38% of total revenues in the quarter compared to 41.6% in Q4 last year. The adjusted sales and marketing expenses were $6.3 million in Q4, decreased 40.6% year-over-year. Hence, marketing expenses represented 17.5% of total revenue in the quarter, compared to 26.4% in Q4 last year. Adjusted G&A expenses were $5.8 million in Q4, equal to 20.5% year-over

Increase of 5% quarter over quarter, and a decrease of nine 6% year over year.

Excluding revenues from that is part of the CEC business.

Quarter over quarter increase was primarily due to an increase in revenues from digital transformation customers are large enterprises.

The year over year decrease was primarily due to slowing demand from internet customers due to regulation and the general economic conditions.

Other risks and agitation rate and 93% of fourth quarter and 82% excluding.

Excluding revenues from discontinued business.

Moving on to costs and expenses.

Well my following comments.

Fox on a non-GAAP adjusted financial measures.

Which exclude share based compensation expenses.

Acquisition related expenses financing related expenses.

Jingbo Wang: GLA census represented 16% of total revenues in the quarter, compared to 18.2% in Q4 last year. Adjusted Ibiza was an active two-minute, translating to a 5.6% adjusted EBITDA loss margin for the quarter, significantly lower than the adjusted EBITDA loss margin of 21.1% in Q4 last year. Long gap net income was 1.4 million in Q4, translating to a 3.9% net income margin for the quarter, compared to a non-GAP net loss margin of 39.3% in Q4 last year.

Validation expenses of acquired intangible assets and.

Income tax related to acquired intangible assets.

Impairment of goodwill depreciation on property and equipment and optimization of land use right.

Adjusted the cross market, but fourth quarter was 65, 2%, which was 23% higher than Q4 2000 colleagues here at <unk>.

One 7% lower in Q3 of 2023.

The year over year increase.

Mainly due to the change in product mix.

The implementation of technical.

Infrastructure optimization.

The quarter over quarter decrease was mainly due to an increase.

Premises solution revenue, which has a lower gross margin.

As we continue to implement effective expense controls.

Adjusted R&D expenses decreased 18% year over year to $13 7 million in Q4.

Jingbo Wang: As Tony just mentioned, thanks to our effective cost controls and relentless drive for revenue growth, we achieved profitability on a non-gap basis for the first time in more than three years. This demonstrates the resilience of a business amid a very challenging operating environment, as well as our continued discipline and efforts in optimizing our cost structure, now turning to cash flow. Operating cash flow was positive 3.7 million in Q4, compared to an active 4.6 million last year. Free cash flow was positive 3.4 minutes compared to negative 6.1 minutes last year. Moving on to the balance sheet, we ended Q4 with $371.8 million in cash, cash equivalents, bank deposits, and financial products issued by banks, or 4.03 dollars per ADS. Now, cash offloading. Net cash outflow in the quarter was mainly due to shared repurchase of $10.1 million, which was offset in part by free cash flow of $3.6 million.

Adjusted R&D expenses represented 38% of total revenues.

Quarter compared to 41, 6% in Q4 last year.

Adjusted sales and marketing expenses were $6 4 million before.

Increased 46% year over year.

Sales and marketing expenses represented 17 point in carpet.

Revenue in the quarter.

Compared to the 26, 4% in Q4 last year.

Adjusted G&A expenses.

<unk> were $5 8 million in Q4.

Increased 20.

5% year over year.

G&A expenses represented 16% of total revenues in the quarter compared to 18, 2% in Q4 last year.

Adjusted EBITDA was negative two minute.

Translating to a five 6%.

Just an EBITDA loss margin first quarter significantly lower than that.

Adjusted EBITDA loss margin of 21, 1% in Q4 last year.

non-GAAP net income was $1 4 million in Q4 translating to a three 9% net income margin first quarter.

Our net cat non-GAAP net loss margin.

39% in Q4 last year.

Okay.

As Tony has mentioned.

Effective cost controls.

<unk> revenue growth, we achieved profitability on a.

non-GAAP basis for the first time in more than three years.

This demonstrates.

Our business.

It's a very challenging operating environment as.

As well as our COO.

Continued discipline and efforts in optimizing our cost structure.

Now turning to cash flow.

Operating cash flow was positive $3 7 million in Q4.

Compared to negative $4 6 million last year.

Free cash flow was positive $3 4 million compared with $6 1 million gotcha.

Okay on the balance sheet.

And if Q4 with $371 8 million in cash cash equivalents and.

Deposits and financial products issued by banks.

Or 4.0, sorry.

Yes.

Net cash outflow.

Net cash outflow in the quarter, mainly due to share repurchase of $10 $1 million, which was offset in part of our free cash flow.

A $3 six minute.

Jingbo Wang: During the Lunar New Year, for the first quarter of 2024, we currently expect total revenues to be between 32 and 34 million dollars. This forecast reflects our current and preliminary views on the market and operational conditions, which are subject to change. In closing, we are very proud of our execution and strong financial results given this challenging period. Returning to profitability is a remarkable milestone. Thank you to both the Agora and Xiong Wang teams for your hard work and sacrifice in the past quarters.

Since the board approved a share repurchase program in February 2022.

And as of December 31st 2023.

We had to return approximately $104 million to.

Shareholders.

Share repurchases.

Our share count by roughly 18%.

So far we have completed 52%.

You have 200 million share repurchase program.

We are pleased to announced that our board has authorized another 12 months extension.

Our $200 million share repurchase program through the end of February next year.

All other terminal unchanged.

Which is a vote of confidence.

Our financial strength and long term prospect of the <unk>.

<unk>.

Operator: Thank you everyone for attending the call today. Let's open it up for questions. Thank you, sir. As a reminder, to ask a question, you will need to press star 11 on your telephone. To enjoy your question, please press star one, one again.

Now turning to guidance.

Seasonal impact, especially reduced usage in certain use in certain regions.

During the lunar new year.

First quarter of 2024.

Currently expect total revenues to be between.

32 and $34 million.

This forecast reflects our current and preliminary views on the market and operational conditions, which are subject to change.

Operator: Once again, to ask a question, please press star one on your telephone. One moment while we compile the Q&A roster, and I show our first question comes from the line of Yang Liu from Morgan Stanley. Thank you.

In closing, we're very proud of our execution and strong financial results given this challenging period.

Turning to profitability it has remarkable milestone.

Thank you to pose a carton as shown on teams.

Hard work and sacrifice in the past quarters.

Thank you everyone for attending our call today.

Let's open it up for questions.

Yang Liu: Thanks for the opportunity to ask questions. First, congratulations on the non-gap profit in the last quarter of 2023. I have three questions here.

Thank you Sir.

As a reminder to ask a question you will need to press star one one on your telephone.

Your question. Please press star one again.

Once again to ask a question. Please press star one one on your telephone.

Yang Liu: The first one is, what is the management outlook in terms of 2024 full-year profit? Do you think the profitability in the past quarter will be sustained or even be improved in 2024? Especially, considering the guidance for the first quarter implies some year-on-year revenue decline, whether the positive profit can be maintained. That's the first question.

Yeah.

One moment, while we compile the Q&A roster.

And I show our first question.

It comes from the line of.

Yang Liu from Morgan Stanley.

Okay. Thank you thanks for the opportunity to ask questions first.

Congratulations on the non-GAAP profit.

Last quarter.

2023.

Three questions here.

Yang Liu: The second one is, we would like to have some update in terms of domestic internet companies going abroad, whether Agora can benefit from that in the overseas market, and what is the revenue split between Agora and Sheng Wang in the coming 2024 full year. Do you think the Agora revenue contribution will continue to drop a little bit or will turn around in terms of the total contribution? The third question is regarding the partnership with Vision Pro. What will be the revenue model behind this kind of partnership? Will it be based on the consumer's time spent? And if not, what will be the revenue model? Thank you. Thank you. I'll take the first question.

The first one is.

What is the management's outlook in turmoil for the 2020 for full year profit.

Do you think.

The profitability in the <unk>.

First quarter will be sustained or even be imprudent.

In 2024, especially consider the guidance in first quarter imply some year on year revenue decline.

Whether the poverty profit can be maintained.

That's the first question.

The second one is.

We would like to have some update in terms of off the.

Domestic internet companies going abroad, whether <unk> can benefit from that in the overseas market.

What is the.

Our revenue split between <unk> and <unk> in the coming 2020 for full year.

Do you think the core revenue contribution will continue to.

Drop a little bit or will turn around.

Some of the total contribution.

The third question is regarding the partnership with <unk>.

Vision pro.

What will be the revenue model behind this come down.

The partnership will be based on that.

The consumer time spent.

Jingbo Wang: So usage will drop during that holiday. And also, for digital transformation businesses, a lot of the projects tend to be, We tend to book through revenues towards the end of the year. So Q1 is also a low season.

And if not what will be the yes.

Revenue model. Thank you.

Thank you I'll take your first question yes.

Yes, the Q1 revenue guidance would imply a year on year.

The decrease.

Uh huh.

As you know Q1 is generally the low season for the business. If you look at.

In the past few years revenue generally tablet submitted in Q1 sequentially compared to Q4.

Jingbo Wang: Compared to last year, obviously, we had the... China Internet rapidly changed the technical environment in Q2. So last year, Q1 was relatively a higher base. So that's what I'm sure I'm kind of.

That's due to both seasonality.

Yes, somewhat vision, where we operate.

I was wondering in Chinese new year is a low season for social apps for education.

Ernie So yes, it will drop during that holiday and also for digital digital transformation businesses, a lot of the projects tend to be well.

Jingbo Wang: In terms of the year 2024, obviously, there remains a lot of unanswered questions about the world, including the macroeconomic environment, funding environment, and so on. So I will try to give you my best estimate. So we expect revenue to grow on a year basis, starting from Q2. [inaudible] a rich double-digit revenue growth in Q4 year-on-year. And regardless of revenue growth, we do not expect expenses to grow this year compared to the most recent rate.

We tend to control revenues towards the end of the year.

Your line is also a low season.

Compared to last year.

<unk>.

China Internet.

Correctly regulatory changes.

Passenger environment in Q2, so last year Q1.

Well I think Neal.

So I'm sure guidance.

In terms of full year 2024.

Our destiny that remains.

Turning to uncertainties around the world, including the macro economic environment funny environment. So long so ill try to give you my.

Estimate.

So we expect our revenue to grow.

I'm here on a year basis, starting from Q2.

And our goal is to.

Reach double digit revenue growth in Q4 year on year.

And.

Regardless of revenue growth, we do not expect our expenses will grow this year comparator Z motivation.

Jingbo Wang: So it's going to be a pretty stable cost base with moderate revenue growth. So if you run the numbers, hopefully, we'll be able to get closer to profitability and even improve our profitability for the second half of the year. [inaudible] Achieve Profitability in Q1 Given Z, Rabindranath Tagore. Yes, you said the first question.

So it's going to be pretty stable.

Cost base.

Moderate revenue growth.

So if you run the numbers hopefully we'll be able to.

Got codecs profitability and improve the profitability plus in the second half of the year.

I would ask to Q1.

Challenging Q2 to achieve profitability in Q1, given the revenue dip.

Okay.

First question.

Jingbo Wang: Yes, about helping Chinese Internet companies going overseas, I think we are in a very strong, unique position to help them. Because, on the one hand, we do have a strong and very influential customer base in the Chinese Internet industry. A lot of them, you know, were actively planning to go overseas or expanding in the global market. While we help them, we can leverage a lot of our existing partnership and customer-based knowledge and market knowledge with our global practice, which has a local customer base and market already. And we have been helping people with all this knowledge and know-how already, and those are the unique advantages we could have to help them to grow into a bigger global market. And in terms of revenue split, we don't think it will change very significantly.

Yes about.

Hawking, China Internet companies going overseas I think we are in.

Very strong unique position to help them because on one side, we do have a strong and.

Ori you potential customer base in China, Internet industry, a lot of them.

We're actively planning going overseas, our expanding in global market.

While we help them be collaborating a lot of our existing.

Partnership and customer base knowledge, and the market knowledge with our global practice with local customer base in the market already and.

Hopping hawking people with.

With all of those knowledge and no horse already and those other unique advantage, we could haul to to help them to grow into.

Into a bigger global market.

And in terms of a revenue split.

We don't think that will change.

Jingbo Wang: However, we are a little bit more optimistic about Agora's business, given especially the resilience we have seen in the U.S. market and other developed markets and also some of the emerging use cases we see there. As Tony mentioned, the exit also gives us additional room to grow in those markets, so we expect some moderate increases in terms of the economy. [inaudible] About Veeam Pro, the revenue model is going to be similar to what we do, you know; we are still going to be enabling use cases and customers by selling API-based capabilities. Although, you know, with an increased offering from our overall product portfolio, we might have, you know, a more diverse pricing model with all the different SKUs, so different products we are selling into.

Very significantly however linked to whether they're more optimistic about our core business given especially the resilience that we have seen in the U S market and as a developed market.

So.

Some of the emerging use cases, we see there.

Tony mentioned Toyota exit that also give us additional room to grow.

Market, So we expect a moderate.

And Chris internally.

Network revenue contribution coming from your core business.

As we move along in 2024.

Yes.

Paul.

Our new model is going to similar to what do we do we are still going to be.

Enable use cases that customers selling API based.

Capabilities, although with.

Increased offerings from our overall portfolio we might have.

More dive worst pricing model with all the different <unk> all these different product.

Jingbo Wang: But overall, it will tie to consumer usage of Veeam Pro, and in the mid-term to long-term, we do see a powerful impact, where Veeam Pro can enable a lot more attractive new use cases or make some new use cases more viable or more, you know, meaningful for consumer or business use cases, where we would be able to support both, like, persona-based social interactions or business collaborations on that platform. And we also anticipate that a lot of other AXR devices will catch up with Sphere and Probe, so this capability will be available more widely for customers. When Jinbo mentioned the OPEX will be flattish, do you mean that flattish versus the 2023 full year or flattish versus the last quarter in 2023? Because over the past year, the sequential quarterly OPEX has been on a downward trend. So I would like to clarify whether it's year-on-year or based on the first quarter. Thank you. The base will be the fourth quarter.

We are selling into but overall it will tie to consumer usage return Paul and.

In mid term to long term, we do see that.

The powerful impact where even Paul can enable a lot more.

Attractive use cases, new use cases or make some new use cases.

More wobble are more.

Meaningful for consumer or business.

Use cases.

Sure.

We wouldn't be able to support both like persona based social interruptions or business collaborations.

In that platform so and.

Also anticipated a lot of other authority wise, we're catching up with play catch up with Sweden crop so to make this company.

To be available more widely.

For our customers and our consumers.

Thank you.

Can I follow up with one quick question when Gymboree mentioned, the Opex will be flat.

<unk>.

Do you mean, thats, a flattish versus 2023 full year or flattish versus last quarter in 2020 through it because.

Over the past year the.

The sequential quarterly.

Opex has been on a downward trend.

So I would like to clarify whether it's a year on year or based on first quarter. Thank you.

Uh huh.

The pace will be fourth quarter.

Jingbo Wang: It will probably not be exactly the same. It might fluctuate a little bit, but it will not be significantly higher from the base in Q4. Got it.

Well, probably not be exactly the same they might fluctuate a little bit, but it will not be significantly higher from the pacing in Q4.

Jingbo Wang: Thank you. Thank you. And I show our next question comes from the line of Harry Zhuang from Bank of America. Please go ahead.

Got it thank you.

Thank you.

And I show. Our next question comes from the line of Harry <unk> from Bank of America. Please go ahead.

Okay.

Harry Zhuang: Thanks, management, for taking my questions. I also have three questions. The first one is the demand outlook. Can management share more color on the demand outlook, the competition landscape, and price trends in both overseas and domestic markets? And the second question is, what does management see the potential impact on business from the open AI's video generator, etc.? And the third question is about potential market share gain. And management said that after Trillio exits the market, the company could potentially gain share. And how will Agora seize this opportunity?

Thanks management for taking my questions I also have three questions.

First of all.

The demand outlook.

Hear more color on the non outlook competition landscape and powertrain.

Both overseas and domestic market.

The second question is.

What does management see the potential impact on our business from the Obama era.

Video January 3rd.

And the third question is on the.

The potential market share.

Can you imagine that.

Tara Twilio exiting the market.

The company today.

Thank you Ricky.

How it will go up.

Jingbo Wang: And what is the current acceptance from customers transiting from Trillio service to other services? Thank you. All right, you know, I'll take those questions.

This opportunity and what is the current acceptance from the.

Customers.

Transiting from tubular service job search.

Alright.

I'll take the question. So first of all in terms of the market.

Landscape.

We see in U S.

The international markets, we do see strong growth momentum in media and entertainment sector and Tallahassee verticals lapsed.

Shocking Iot politically in developer market those are the areas that we see strong growth momentum.

Pricewise.

See more pressure in emerging market, where it's impacted by macro alignment, including the currency exchange rate et cetera.

Jingbo Wang: Price has been healthy and stable in developed markets, U.S. and European markets. About Twilio's exit, what we've seen in terms of competition, Twilio's exit is only a sign of competitors leaving the market; it's not just Twilio. There are other startup competitors who are struggling and downsizing their operations. In the Chinese market, we see growth potential in going overseas, you know, all the especially internet companies, you know, based in China, now, you know, looking heavily for overseas expansion, and also digital transformation is still, you know, having a clear trend to grow.

<unk> has been healthy and stable in developed market U S and the European market.

Curious about to activate our.

<unk>.

What are we seeing in terms of our competition to ask there is only a fine of.

Competitors, leaving the market is not as clear there are other startup competitors who are struggling.

And downsizing of their operations.

We expect we will be gaming market share with those thoughts.

<unk>.

With both <unk> and.

China market, we see growth potential in going overseas.

All the.

Especially internet companies based in China now.

Looking heavily in going overseas expenditure and although also digital transformation is still.

Having a clear trend to grow and also.

Jingbo Wang: And also, you know, the IoT side of the customer base is seeing more active growth. Overall usage in both markets is still growing, despite all the regulatory and macro changes, which is the foundation of overall customer value growth and growth. Price wise, in the Chinese market, generally drops about 10% over the last few years and often happens at the beginning of the year.

Iot fire off the customer base are seeing more actively growth overall usage in both market, we actually see what's still growing despite all the regulatory and macro rule changes, which is the foundation of overall customer value growth and revenue growth are priced.

Wise in China market generally dropped about 10% over the last few years and often happens in beginning of the year. This puts some pressure to our Q1 results together with the seasonality issue.

Jingbo Wang: This puts some pressure on our Q1 results, together with the seasonality issue of like Chinese New Year activity change or consumer behavior. Our gross margin, you know, but our gross margin remains quite high. [inaudible] In terms of the competitive landscape, it's largely unchanged in the Chinese market during the past quarter. While there are, we continue to see more competitors kind of backing off, which in the last quarter we saw another large internet company reduce their team in this area in Q4. I expect the market to continue to consolidate. The next question is about the latest OpenAI offering video generation. I think this is only the very early stage of the video format generation model, but we can see the huge potential and the possibility lies ahead. Currently, the model is able to generate a short video clip based on text, image, or video prompting, and it can already be used in some customers' use cases to enhance user experience. For example, the virtual background of a video chat room or live streaming session can be a short video clip generated by the AI model as a overall background.

Like Chinese new year activity change customer behavior change our gross margin.

But our gross margin remains quite healthy.

In terms of a competitive landscape.

Largely unchanged in China market during the past quarter well. There are we continue to see there are more competitors kind of backing off.

In last quarter, we see another large compared to our company reduce their team in this area in Q4.

I expect market will continue to consolidate.

On the last question is about the <unk>.

It is the open offer you readers generation I think this is only the early stage of video format.

<unk> model.

But we can see the huge potential in a possibility life life ahead.

Currently the modal is able to generate a short video clips based on past image or video prom promptly and it can already be used in some of our customers use case to enhance user experience. For example, the virtual background of a video chat room live streaming session.

<unk> short video.

Short video clips generated by modal as we're all background it could be either a realistic or imaginary to perfectly match. The contacts are topics of the channel.

Jingbo Wang: It could be either realistic or imaginary to perfectly match the context or topics of the channel. This will create a more engaging and immersive experience for the audience. In the future, we believe human users will be able to directly interact with AI models in voice and video format, as we mentioned before. This will make up the critical infrastructure, as a massive amount of data will flow between users and AI models in real time. Maybe to add a little to Twilio's asset, we think, you know, like I said, it's only a finding of competitors leaving this market; they're backing off or focusing on their more mainstream business. And as I mentioned, we see this happen in both the global market and the Chinese market, including, let's say, you know, in the US market; it's not just Twilio. There are some other smaller competitors also downsizing or stopping working in this area. The competitive environment with that, we see it's clearly improving. Of course, Twilio still has a sizable customer base, which we have already started to work on to convert. So this is a clear room for us to grow.

This will create more engaging and immersive experience for audience in.

In the future, we humor user will be able to directly interact with AI models in voice and video format. As we mentioned before this will make us the crucial the critical infrastructure as massive amount of data we will flow between the users.

And AI models in real time.

Yeah.

Okay.

Maybe to add a little to produce assays.

We think.

Like I said.

It's only really a fine of competitors, leaving the.

Market not backing off our focusing on their more ministers visits.

And we see this happens in both a global market and China market, including.

U S market is not just <unk> there are some other smaller competitors also downsizing or stopped working in this area. The comparator Armand with that we see is clearly improving.

Of course <unk> has.

Thoughtful customer base, which we already started to work on.

To cover that so this is a clear room for us to grow into.

Okay.

Jingbo Wang: Thank you very much, and I wish you were all clear. Thank you. Thank you. As a reminder, to ask a question, you will need to press star 11 on your telephone, to which are your questions? Please press star one one again. Once again, to ask a question, please press star one one on your telephone, and I will show you our next question comes from the line of Bing Duan from Namur. Please go ahead.

Okay.

Thank you Rajeev.

Thank you.

As a reminder to ask a question you will need to press star one one on your telephone.

To withdraw your question. Please press star one again.

Once again to ask a question. Please press star one one on your telephone.

Our next question comes from the line of being drawn from Nomura. Please go ahead.

Bing Duan: Yeah, hi, thank you management for the opportunity to ask the question. Just one follow-up question from me about Twilio's exit in the programmable video product segment. So can you share more color about the reason behind this? Is this more because of the competition, the fears of competition, or because demand is not growing strongly in the US market?

Okay.

Yes, hi, Thank you management for the opportunity to ask a question just the one follow up question from me about Twilio exits.

Our programmable video product segment.

So can you share more color about.

The reason behind US this is more because of the competition fears or competition or because of.

That demand is.

Jingbo Wang: And about should we offer two months of free customer switch from Twilio, how do we think that would affect our user growth and top line growth in the next one or two quarters? Thank you. I do think Twilio's advantage is mainly because of the fierce competition in this area. Because, as we repeatedly state, this area is a very tech-savvy sector, where all the offerings require a lot of investment in technology and products. Some competitors' products only build on top of WebRTC, open-source projects, or, you know, a simple, you know, rather slim layer of technology add-ons, which can only serve a friction part of the demand for our RTE use cases, which, of course, limits their ability to expand and grow in this area. And, you know, especially for a company like Twilio, they might want to be more focused on their mainstream I would say that's the main reason.

Not.

Growing strongly in the U S market.

About.

And about we offer two months free customers switch from Twilio, how do we think that that would affect our user growth and topline growth for the next one or two quarters. Thank you.

I do think this asset is mainly because of the fierce competition in this area because as we are routinely.

I'll State. This area is a very tech savvy sector, whereas all the offerings that requires a lot of investments in technology and product.

Competitors product the only build on top of web RTC open source projects are.

Uh huh.

Jean Paul.

Rather our fleet.

<unk> a leader of <unk>.

Technology add ons, which can only store.

Friction part of the demand for our key use cases.

Which of course limited there.

And the growth in this area.

And.

Especially for a company like Twilio, they may want to be more focused on their midstream.

Business.

See that's the main reason.

Jingbo Wang: You know, you know, there could be a reason that COVID demand is also fading away. But as I mentioned in our latest statement, we, you know, while COVID demand is fading away, we do see growth, very active UPSS growth in the developer market, in the global market. So I would rather just put that as another factor in their leaving.

Sure.

There could be a reason that Colgate <unk>.

Demand is also a fading away, but as I mentioned earlier statement.

<unk>.

While the Covid demand is fading away, we do see there are gross where active cases growth in developer marketing and global market. So.

I would rather just put that as another factor in the in their.

Jingbo Wang: In terms of our offerings, I do think the two-month free offer for a lot of small, mid-sized customers is a very important reason for them to consider and makes them, you know, easier to decide to jump on our platform. We do have some other strengths and collaborations or work with their rather large customer base, which our team is focusing on to help them migrate to our platform. Thank you very much. Thank you. Once again, if you have a question at this time, please press star 11 on your telephone. I'm showing no further questions in the queue.

Leaving in terms of our offering is I do think the two months free offer for a lot of small and mid sized customers is a very important.

A reason for them to consider and makes sense.

<unk> decided to jump all our platforms, we do have some other.

Stress and.

Collaborations.

Our work with <unk>.

Large customer base.

Our team, yes, I was hoping to.

To help them too to migrate to our platform.

Yeah.

Thank you very much.

Thank you.

Once again, if you have a question at this time, please press star one on your telephone.

I'm showing no further questions in the queue.

Operator: This concludes our Q&A session. Thank you, everybody, for attending the company's call today. As a reminder, the recording of the earnings release will be available on the company's website at investor.agora.io. And if there are any questions, please feel free to email the company. Thank you. And have a good day.

This concludes our Q&A session.

Thank you everybody for attending the Companys call today.

As a reminder, they are recorded in the earnings release will be available on the company's website at investor that GOR that Io and if there are any questions. Please feel free to email the company.

Thank you and have a good day.

Q4 2023 Agora Inc Earnings Call

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