Q1 2025 Agora Inc Earnings Call

May 28, 2025

And answer session.

To ask a question during the session you will need to press star one on your telephone.

You wouldn't 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 S. E SEC filings and a replay of today's call can be found on its IR website at investor don't occur adult.

I O J.

Joining me today are Tony Chao, founder, Chairman and CEO, Jim <unk>, the company's CFO.

Speaker Change: 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.

This 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.

And the final prospectus relating to its initial public offering.

Our garage remains no obligation to update any forward looking statements. The company may make on today's call.

Tony Chao: Let me turn it over to Tony. Please go ahead Tony.

Tony Chao: Thanks, operator.

Tony Chao: Welcome everyone to our earnings call.

Tony Chao: First we will our operational results from the past quarter.

Tony Chao: We're happy to report our second consecutive quarter of GAAP profitability in Q1, driven by double digit revenue growth year over year on a comparable basis.

Tony Chao: Disciplined cost management.

Tony Chao: This is a great achievement and I want to first Aurora and <unk> team for their efforts and dedication.

Tony Chao: Total revenue in Q1 were $3 $3 million.

Tony Chao: 12% year over year, excluding revenues from <unk> sales of low margin products with healthy business expansion and in house.

Tony Chao: The retention rate recovery from both the Agora onshore on site.

Tony Chao: Our GAAP net profit for the quarter, though still in the steel at a modest pace more than doubled from the previous quarter. As you know Q1, typically marks our seasonal low point.

Tony Chao: With fewer calendar days and reduced online activity during the new year holiday period.

Tony Chao: Consider the seasonal trend and our crew.

Tony Chao: Due to this momentum.

Tony Chao: We will maintain GAAP profitability for the remainder of the year.

Tony Chao: At the end of Q1, we had more than 800 active customers for Agora and close to 2004 Shaw excluding is mall, both representing an increase of 5%.

Tony Chao: Compared to one year ago.

Tony Chao: Now, let's turn to our business product and the technology updates for the quarter.

Tony Chao: In March we announced general availability of our conversational engine in China.

Tony Chao: Enabling developers to create interactive voice experience with any large loans intermodal.

Tony Chao: This product has been refined based on extensive customer feedback during the private and public beta phase.

Tony Chao: Today. This product is still in the public beta stage for the U S and the global markets.

Tony Chao: Alright, it delivers industry leading performance.

Tony Chao: We didn't see noise suppression interruption handling and network resilience.

Tony Chao: Our conversational AI engine unlocks innovation across multiple verticals and used cases.

Tony Chao: Marshall companions and shopping assistant to customer service and marketing.

Tony Chao: Particularly we believe education is where the conversational AI experience.

Tony Chao: A huge impact in boosting student engagement with personalized content and adaptive practice.

Tony Chao: Imagine.

Tony Chao: Teaching assistant that tops in real time, adjusting to each student's needs and providing truly personalized instructions at scale.

Tony Chao: We are already seeing this vision come to life.

Tony Chao: Several customers such as <unk> in China are in the advanced stage of developing AI powered language tutoring product with all of our solution.

Tony Chao: In Q1, we also launched our conversational AI device kit.

Tony Chao: <unk> took a turnkey Iot module, combining our sulfur call service and high performance Chiefs from Deca.

Tony Chao: This device kit enabled device manufacturers to add conversational AI to Iot devices.

Tony Chao: From toys and robotics to smart speakers.

Tony Chao: As a turnkey solution.

Tony Chao: <unk> significantly reduced upfront R&D cost and time to market for the us manufacturers.

Tony Chao: For example, our customer robot announced their latest AI companion robot for Hulu at the mobile World Congress.

Tony Chao: By our device kit for Google Loosens, Synthes and the response in real time, creating personalized support and even emotional connections with end users.

Tony Chao: We are also making exciting progress.

Tony Chao: Our open source initiatives and developers ecosystem.

Tony Chao: Ted.

Ted: Our sponsored open source project for building real time conversational agents continues to gain remarkable traction.

Operator: After the speaker's presentation, there will be a question and answer session.

Operator: To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again.

Tony Chao: With 6000 Github stars it is a fast focus for growing project in its category globally.

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

Tony Chao: Leading cloud providers, including AWS and Oracle cloud.

Operator: 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.

Tony Chao: Providing support for deploying 10 on their infrastructure.

Tony Chao: Recently, we launched voice activity detection and turn detection modules as part of our 10 project.

Tony Zhao: Joining me today are Tony Zhao, founder, chairman and CEO, Jingbo Wang, the company's CFO. During this call, the company will make four 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.

Speaker Change: Which outperforms our existing open source alternatives.

Speaker Change: Further demonstrating our commitment to the community.

Tony Chao: The conversational AI ecosystem.

Tony Chao: Over the past few months, we have seen a tremendous amount of interest in our conversational AI products and open source projects.

Tony Zhao: These four 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 final prospectus relating to its initial public offering. Inc.

Tony Chao: Products and adjust creations and inquiries following the product launch.

Tony Chao: <unk> reached record highs and our to offer workshops in Beijing, Tokyo, and San Francisco have attracted large passionate audience.

Tony Zhao: remains no obligation to update any fault looking statements the company may make on today's call.

Tony Chao: Today, many customers are working closely closely with us in proof of concept to bottleneck.

Tony Zhao: And with that, let me turn it over to Tony. Please go ahead, Tony.

Tony Chao: Yes.

Tony Chao: Before I wrap up I want to give special recognition to our incredible teams at Aurora. So long in this fast moving AI revolution their dedication.

Tony Zhao: Thanks operator and welcome everyone to our earnings call. I'll first reveal our operating results from the past quarter. I'm very happy to report our second consecutive quarter of GAP profitability in Q1, driven by double-digit revenue growth year-over-year on a comparable basis and disciplined cost management. This is a great achievement, and I want to thank Agora and Sheng Wang team for their efforts and dedication. Total revenue in Q1 were $33.3 million, up 12% year-over-year, excluding revenues from certain end-of-sales low-margin products, with healthy business expansion and net retention rate recovery from both Agora and Shengwang sides. Our GAAP net profit for the quarter, though still at a modest base, more than doubled from the previous quarter.

Tony Chao: <unk> spirit.

Speaker Change: Allow us to pioneer the future of humor AI in Russia.

Speaker Change: Each day, we are not just keeping pace with chin with changes we are creating is unlocking new possibilities and shaping a new paradigm.

Tony Zhao: This is a great achievement, and I want to thank Agora and Sheng Wang team for their efforts and dedication. Total revenue in Q1 were $33.3 million, up 12% year-over-year, excluding revenues from certain end-of-sales low-margin products, with healthy business expansion and net retention rate recovery from both Agora and Shengwang sides. Our GAAP net profit for the quarter, though still at a modest base, more than doubled from the previous quarter. As you know, Q1 typically marks our seasonal low point, with fewer calendar days and reduced online activity during the New Year holiday period. Considering the seasonal trend and our current business momentum, we are confident that we will maintain GAAP profitability for the remainder of the year.

Speaker Change: The opportunities ahead.

Speaker Change: A truly exciting and I cannot wait to share our next chapter of progress with all of you.

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

Speaker Change: Thank you Tony Hello, everyone let.

Speaker Change: Let me start by first resilient financial results for the first quarter of 2025, and then I will discuss outlook for the second quarter.

Speaker Change: Total revenues for the first quarter reached $33 $3 million exceeding the high end of our guidance range.

Tony Zhao: As you know, Q1 typically marks our seasonal low point, with fewer calendar days and reduced online activity during the New Year holiday period. Considering the seasonal trend and our current business momentum, we are confident that we will maintain GAAP profitability for the remainder of the year. At the end of Q1, we had more than 1,800 active customers for Agora and close to 2,000 for Shenlong excluding Esmart, both representing an increase of 5% compared to one year ago.

Speaker Change: On a year over year basis, and excluding revenue from low margin products.

Speaker Change: <unk> growth accelerated.

Speaker Change: <unk>, 1% up from three 6% in Q4 last year.

Speaker Change: This demonstrates a clear pickup.

Speaker Change: Business momentum.

Speaker Change: Our core revenues reached $18 6 million in Q1.

Tony Zhao: At the end of Q1, we had more than 1,800 active customers for Agora and close to 2,000 for Shenlong excluding E-Smart, both representing an increase of 5% compared to one year ago.

Speaker Change: <unk> 17, 7% year over year, and six 9% sequentially.

Speaker Change: This sustained performance reflects our successful market expansion and growing adoption.

Speaker Change: Particularly in high potential verticals, such as shopping and entertainment.

Tony Zhao: Now let's turn to our business product and the technology updates for the quarter. In March, we announced the general availability of our conversational AI engine in China. enabling developers to create interactive voice experience with any large-language model. This product has been refined based on extensive customer feedback during the private and public beta phase.

Speaker Change: <unk> continues to grow.

Speaker Change: Shlomo revenues reached RMB $105 5 million in Q1.

Speaker Change: Excluding sort of enough sales low margin products turnaround revenues grew six 7% year over year and.

Speaker Change: And declined 13, 7% sequentially.

Tony Chao: The year over year growth reflects continued business expansion and adoption in key verticals such as entertainment No Iot.

Tony Zhao: Today, this product is still in the public beta stage for the U.S. and global markets, and it already delivers industry-leading performance on latency, noise suppression, interruption handling, and network resilience. Our conversational AI engine unlocks innovation across multiple verticals and utilities. from virtual companions and shopping assistants to customer service and all-around marketing.

Tony Chao: While the sequential decline is mainly due to normal seasonality with Q4, historically seen peak demand for digital transformation projects.

Tony Chao: In Q1 experiencing softer activity from social and application customers due to holidays.

Tony Chao: All our base naphtha retention rate at 96% for Cora and 85% functional.

Tony Zhao: Particularly, we believe education is where the conversational AI experience can have a huge impact in boosting student engagement with personalized content and adaptive practice. Imagine an AI teaching assistant that talks in real time, adjusting to each student's needs, and providing truly personalized instructions and skills. We are already seeing this vision come to life. Several ad-tech customers, such as Dou Shen AI in China, are in the advanced stage of developing AI-powered language tutoring products with our solution.

Tony Chao: Most improved from previous quarters.

Tony Chao: Moving onto cost expenses.

Tony Chao: Gross margin for the first quarter was 68%.

Tony Chao: We exclude gross profit from certain end of sale products gross margin of continuing business increased 6% year over year.

Tony Chao: One 4% quarter over quarter.

Tony Chao: As we mentioned in previous earnings calls, we restructured and reduced our global workforce in November 2024.

As a result operating expenses decreased $6 1 million from.

Speaker Change: Sorry, $2 $6 million in Q2, 2024, as the baseline and reached $26 5 million in the first quarter.

Tony Zhao: In Q1, we also launched our conversational AI device our 10K turnkey IoT module combining our software, cloud service, and high-performance chips from Beckman. This device kit enables device manufacturers to add conversational AI to any IoT devices. from toys and robotics to smart speakers. As a turnkey solution, it can significantly reduce upfront R&D cost and time to market for device manufacturers.

Speaker Change: R&D expenses were.

Tony Chao: $14 million.

Tony Chao: One.

Tony Chao: Decreased 22, 7% year over year.

Tony Chao: R&D expenses represented 42, 1% of total revenue in the quarter compared with <unk> 54, 5% in Q1 last year.

Tony Chao: Sales and marketing expenses.

Tony Chao: $6 2 million in Q1 decreased eight 5% year over year.

Tony Chao: Sales and marketing expenses represented 18, 7% of total revenues in the quarter.

Tony Zhao: For example, our customer Robopod announced their latest AI companion robot, Fazuzu, at the Mobile World Congress. Powered by our device kit, Fazuzu listens, senses, and responds in real time, creating personalized support and even emotional connections with end users.

Tony Chao: Compared with 25% in Q1 last year.

Tony Chao: G&A expenses were.

Tony Chao: $6 2 million in Q1 decreased 25, 6% year over year.

Tony Chao: G&A expenses represented 18, 8% of total revenues in the quarter.

Tony Chao: Paired with 25, 2% in Q1 last year.

Tony Zhao: We are also making exciting progress on our open source initiatives and developers' ecosystems. Ten, our sponsored open source project for building real time conversational AI agents continues to gain remarkable traction. With 6,000 GHz stars, it is the fastest-growing project in its category globally. Leading cloud providers, including AWS and Oracle Cloud, are providing support for deploying TEN on their infrastructure. Recently, we launched voice activity detection and turn detection modules as part of our TEN project. which outperforms all existing open source alternatives. for demonstrating our commitment to the community and the conversational AI ecosystem. Over the past few months, we have seen a tremendous amount of interest in our conversational AI products and open source projects.

Tony Chao: Moving onto the bottom line.

Tony Chao: Net income.

Tony Chao: $4 million in Q1.

Tony Chao: Representing a one 2% net income margin.

Tony Chao: This represents a substantial turnaround from.

Tony Chao: On the 28, 7% net loss margin in Q1 last year.

Tony Chao: And marks our second consecutive quarter of GAAP profitability.

Tony Chao: With our current business momentum and visibility we have.

Tony Chao: Anticipate maintaining profitability throughout 2025.

Tony Chao: Now turning to cash flow.

Tony Chao: Operating cash flow was $17 6 million in Q1 compared to negative $6 5 million last year.

Tony Chao: A positive cash flow included $17 8 million in interest proceeds from maturity of Panther poses and financial covenants issue buybacks.

Tony Chao: Moving on to balance sheet, we ended Q1 with $388 eight.

Tony Chao: 8 million.

Tony Chao: In cash cash equivalents bank deposits and financial products issued by banks.

Tony Zhao: Product registrations and inquiries following the product launch have reached record highs, and our developer workshops in Beijing, Tokyo, and San Francisco have attracted a large, passionate audience. Today, many customers are working closely with us in proof-of-concept development.

Tony Chao: Net cash inflow in the quarter was mainly due to operating cash flow.

Tony Chao: $17 six minute.

Tony Chao: <unk> $3 5 million in discrete is cash.

Tony Chao: Which was offset in part by a share repurchase of one $2 million.

Tony Chao: Since our board approved share repurchase program in February 2022.

Tony Zhao: Before I wrap up, I want to give special recognition to our incredible teams at Agora and so on. In this fast moving AI revolution, their dedication and innovative spirit are what allow us to pioneer the future of human AI interaction. Each day, we are not just keeping pace with changes, we are creating it, unlocking new possibilities and shaping a new paradigm.

Tony Chao: We have when we purchased <unk>.

Tony Chao: 100.

Tony Chao: $16 4 million worth of shares through March 31, 2025.

Tony Chao: So far in Q2.

Tony Chao: Have already bought back over $8 million worth of shares.

Tony Chao: We remain committed to creating shareholder value. So this program, while preserving the financial flexibility needed to invest in future growth opportunities.

Tony Zhao: The opportunities ahead are truly exciting, and I cannot wait to share our next chapter of progress with all of you.

Tony Chao: Now turning to guidance for the second quarter of 2025, we currently expect total revenues to be between 33 and $35 million.

Jingbo Wang: With that, let me turn things over to Jingbo, who will reveal our financial results. Thank you, Tony.

Tony Chao: Imperative of $13 9 million in the second quarter of 2024.

Tony Chao: Representing year over year growth rate of six eight to 13 point.

Jingbo Wang: Hello, everyone. Let me start by first reviewing financial results for the first quarter of 2025, and then I will discuss outlook for the second quarter. Total revenues for the first quarter reached $33.3 million, exceeding the high end of our guidance range. On a year-over-year basis, and excluding revenue from certain end-of-sale low-margin products, revenue growth accelerated to 12.1 percent, up from 3.6 percent in Q4 last year. This demonstrates a clear pick up in a person's momentum. Agora Revenues reached 18.6 million in Q1, growing 17.7% year-over-year and 6.9% sequentially. This sustained performance reflects a successful market expansion and growing adoption.

Tony Chao: 3%.

Tony Chao: If revenues from certain of sale low margin products are excluded.

This outlook reflects our current and preliminary views on the market.

Tony Chao: And operational conditions, which are subject to change.

Tony Chao: In closing I'll.

Tony Chao: Want to take a moment recognize the exceptional work.

Tony Chao: Sure one teams.

Tony Chao: Dedication and execution.

Tony Chao: These outstanding results possible.

Tony Chao: Nice quarter.

Tony Chao: Perhaps deliver revenue above expectations.

Tony Chao: Achieved consecutive GAAP profitability and maintain a robust financial position.

Tony Chao: Thank you all for joining in today's call.

Tony Chao: We appreciate your ongoing support.

Tony Chao: After opening up for questions.

Tony Chao: Thank you.

Jingbo Wang: particularly in high potential verticals such as live shopping and entertainment, where usage continues to grow. Shunwang Revenues reached RMB105.5 million in Q1, excluding certain enough sales or margin products. Shunwang Revenues grew 6.7% year-over-year and declined 13.7% sequentially. The year-over-year growth reflects continued business expansion and adoption in key verticals such as entertainment and IoT. Well, the sequential decline in many of these normals is not a... with Q4 historically seeing peak demand for digital transformation projects and Q1 experiencing softer activity from social and education customers due to holidays. Follower-based net retention rate in 96% for Agora and 85% for Shunwang.

Speaker Change: We will now begin the question and answer session to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again.

Speaker Change: For our first question.

Speaker Change: Our first question comes from the line of Debbie Lee from Bank of America Securities. Please ask your question daily.

Speaker Change: Hi management I sense.

Speaker Change: Ah, Tony and Jim Volk for the introduction and for ourselves.

Speaker Change: Firstly congrats on that.

Speaker Change: Strong results in <unk> and some of the guidance and I have two questions.

Jingbo Wang: with Q4 historically seeing peak demand for digital transformation projects and Q1 experiencing softer activity from social and education customers due to holidays. Follower-based net retention rate in 96% for Agora and 85% for Shunwang. both improved from previous quarters.

Speaker Change: Number one is about the <unk>.

Speaker Change: Demand.

Speaker Change: And then my motor he is getting more powerful we see more.

Speaker Change: Human machine interaction what are the key areas that you see more application.

Speaker Change: I think you mentioned, an accompanying toys and.

Jingbo Wang: both improved from previous quarters.

Tony Chao: And that's something that you might see signs may or so.

Jingbo Wang: Moving on to cost expenses. Gross margin for the first quarter was 68 percent. If we exclude gross profit from certain end-of-sale products, gross margin of continuing business increased 0.6% year-over-year and 1.4% quarter-over-quarter. As we mentioned in previous earnings calls, we restructured and reduced our global workforce in November 2024. As a result, operating expenses decreased 6.1 million from so on and so forth. Earning expenses were $14 million in Q1, decreased 22.7% year-over-year. R&D expenses represented 42.1% of total revenues in a quarter compared to 54.5% in Q1 last year. So the marketing expenses were $6.2 million in Q1, decreased 8.5% year-over-year.

Tony Chao: What could be the future growth drivers.

Tony Chao: In the area of AI.

Tony Chao: That's number one and number two question. That's one number two question is.

Tony Chao: Regarding the breakdown for China, and overseas business and how do we see the demand trend in future.

Tony Chao: Volume or by the end by the ESP trend. Thank you.

Jingbo Wang: As we mentioned in previous earnings calls, we restructured and reduced our global workforce in November 2024. As a result, operating expenses decreased 6.1 million from so on and so forth. Earning expenses were $14 million in Q1, decreased 22.7% year-over-year. R&D expenses represented 42.1% of total revenues in a quarter compared to 54.5% in Q1 last year. So the marketing expenses were $6.2 million in Q1, decreased 8.5% year-over-year. So the marketing census represented 18.7% of total revenues in the quarter. compared to 20.5% in Q1 last year. Q&A expenses were 6.2 million in Q1, decreased 25.6% year-over-year. GNA expenses represented 18.8% of total revenues in the quarter.

Tony Chao: Okay.

Tony Chao: I'll talk about AI first Buffalo Air agent has been the biggest.

Tony Chao: Topic among tech communities. This year. However, we will focus on the conversational AI.

Tony Chao: <unk>, which is more directly related to our business.

Tony Chao: Several key.

Tony Chao: Use cases.

Tony Chao: Mostly active.

Tony Chao: First is the education use cases.

Tony Chao: Especially our own language learning and practice side as I just mentioned in the script.

Tony Chao: In my opening remark and also Iot.

Tony Chao: Side, especially a lot of.

Tony Chao: Effort trying to build a conversational toys that can't really talk to that.

Tony Chao: Keith.

Tony Chao: <unk> users.

Tony Chao: Meaningful content.

Jingbo Wang: So the marketing census represented 18.7% of total revenues in the quarter. compared to 20.5% in Q1 last year. Q&A expenses were 6.2 million in Q1, decreased 25.6% year-over-year. GNA expenses represented 18.8% of total revenues in the quarter. compared to 25.2% in Q1 last year.

Tony Chao: And also there is clear demand around.

Tony Chao: Kind of call Center services.

Tony Chao: Sure.

Tony Chao: Outbound calling.

Tony Chao: Marketing or other.

Tony Chao: No.

Tony Chao: Purpose and also customer service and call center use cases.

Tony Chao: Those are the most clear.

Tony Chao: Verticals or use cases.

Tony Chao: A recent engagement with our developers.

Jingbo Wang: compared to 25.2% in Q1 last year.

Tony Chao: Thank you Tony add horsepower demand.

Jingbo Wang: Moving on to the bottom line, we delivered net income of $0.4 million in Q1, representing a 1.2% net income margin. This represents a substantial turnaround from the 28.7% net loss margin in Q1 last year. and Mark's second consecutive quarter of GAAP profitability. With our current business momentum and visibility, we anticipate maintaining profitability throughout 2025. mouth running too casual. Operating cash flow was $17.6 million in Q1 compared to $6.5 million last year. The positive cash flow included $17.8 million in interest proceeds from maturity of bank deposits and financial products issued by banks. Moving on to balance sheet, we ended Q1 with $380.8 million.

Jingbo Wang: Moving on to the bottom line, we delivered net income of 0.4 million dollars in Q1, representing a 1.2% net income margin. This represents a substantial turnaround from the 28.7% net loss margin in Q1 last year. and Mark's second consecutive quarter of GAAP profitability. With our current business momentum and visibility, we anticipate maintaining profitability throughout 2025.

Tony Chao: So in the U S and local market as you can see it's closer than it has.

Tony Chao: And now this quarter about 18% so close to 20% R&D. So we have seen growing adoption amount actually not just our customers are.

Tony Chao: More importantly, asking option among consumers.

Tony Chao: Bu.

Tony Chao: For live video based shopping and entertainment apps, especially in North America and Europe.

Tony Chao: Absolutely asking.

Tony Chao: We haven't really dominant in China for some time now.

Jingbo Wang: mouth running too casual. Operating cash flow was $17.6 million in Q1 compared to $6.5 million last year. The positive cash flow included $17.8 million in interest proceeds from maturity of bank deposits and financial products issued by banks.

Tony Chao: We're finally seeing some gaining traction in North America, and Europe as well.

Tony Chao: So.

Tony Chao: That's one of the most important growth driver in this quarter plus.

Tony Chao: And secondly for Asian customers.

Tony Chao: Are we finally seeing some demand recovery.

Tony Chao: Including India.

Tony Chao: Oh its application.

Tony Chao: And entertainment use cases.

Jingbo Wang: Moving on to balance sheet, we ended Q1 with $380.8 million. in cash, cash equivalents, bank deposits, and financial products issued by banks. That cash inflow in the quarter was mainly due to operating cash flow of 17.6 million and release of 3.5 million in discredited cash. which was offset in part by a share repurchase of 1.2 million dollars.

Tony Chao: Overall.

Tony Chao: You have a global market, where do you see pretty solid humana and things are still a lot of potential for further.

Jingbo Wang: in cash, cash equivalents, bank deposits, and financial products issued by banks. That cash inflow in the quarter was mainly due to operating cash flow of 17.6 million and release of 3.5 million in discredited cash. which was offset in part by a share repurchase of 1.2 million dollars. Sinfa board approved the share repurchase program in February 2022. We have repurchased. 16.4. million worth of shares sued March 31st, 2025 So far in Q2, we have already bought back over $8 million worth of shares. We remain committed to creating shareholder value through this program while preserving the financial flexibility needed to invest in future growth opportunities.

Tony Chao: Patricia.

Speaker Change: And also in terms of the pricing.

Speaker Change: With the exception of certain patient markets overall, and the pricing has been.

Speaker Change: Stable.

Speaker Change:

Speaker Change: In more developed markets.

Speaker Change: So in China.

Speaker Change: The closer it hasn't.

Speaker Change: Come to the level, we see in.

Jingbo Wang: Sinfa board approved the share repurchase program in February 2022. We have repurchased. Li. So far in Q2, we have already bought back over $8 million worth of shares. We remain committed to creating shareholder value through this program while preserving the financial flexibility needed to invest in future growth opportunities.

Speaker Change: U S global markets.

Speaker Change: You can see for the Huron business in Q1 year over year. It also delivered six 7% a year.

Speaker Change: Gross so.

Speaker Change: So overall the demand recovery Oh several fronts.

Speaker Change: So the chemicals, we see that as regulation more stable now.

Speaker Change: There is less.

Speaker Change: Free.

Speaker Change: <unk> impact as we saw.

Speaker Change: We saw last year and the year before.

Speaker Change: Our application demand is also.

Jingbo Wang: Now turning to guidance, for the second quarter of 2025, we currently expect total revenues to be between $33 and $35 million. compared to 30.9 million in the second quarter of 2024, representing year-over-year growth rate of 6.8 to 13.3%. If revenues from 30N of sale, all margin products are excluded. This outlook reflects our current and preliminary views on the market and operational conditions, which are subject to change.

Speaker Change: Recovery plan.

Speaker Change: How's Humana.

Speaker Change: And Iot and digital transformation.

Speaker Change: <unk> seen pretty strong demand.

Speaker Change: In the past few years.

Speaker Change: Pricing wise outsource to you its a very competitive market compared to last.

Speaker Change: Last year and the year before pricing pressure. He is also more moderate this year.

Speaker Change: So overall it looks more oh.

Jingbo Wang: This outlook reflects our current and preliminary views on the market and operational conditions, which are subject to change.

Speaker Change: More positive then.

Speaker Change: In previous years.

Speaker Change: Yeah.

Speaker Change: Thank you Tony and thank you.

Jingbo Wang: In closing, I want to take a moment to recognize the exceptional work of the Agora and Shengwang Yi. So dedication and execution have made these outstanding results possible. This quarter, we are proud to have delivered revenue above expectations, achieved consecutive gap profitability, and maintained a robust financial position.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the lineup.

Speaker Change: They won from the ICC. Please ask your question Kimberly.

Speaker Change: Hi, This is <unk> from CIC and thank you for taking my question.

Speaker Change: My first question is regarding safety.

Speaker Change: It's equal in this space a bit in the costs, we have seen the light shopping and indirectly feature is becoming increasingly popular e-commerce, especially in the emerging market.

Jingbo Wang: Thank you all for joining in today's call. We appreciate your ongoing support.

Operator: Let's open it up for questions. Thank you.

Operator: Let's open it up for questions. Thank you. We will now begin the question and answer session.

Speaker Change: Could you. Please provide more details on your current actions and the strategy enabling.

Operator: We will now begin the question and answer session. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Operator: To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Speaker Change: Equaled the capacity or the application.

Speaker Change: And my second question focuses on the landscape.

Speaker Change: Could you elaborate on any shape.

Operator: A moment for office questions.

Speaker Change: In the downstream demand at how real time interaction capabilities. Thank you.

Debbie Lee: Our first question comes from the line of Debbie Lee from Bank of America Securities. Please ask your question, Debbie.

Speaker Change: Okay.

Speaker Change: So low commerce use case, we are.

Speaker Change: We are deep diving into the east coast and continue to maximizing the penetration into the space there.

Debbie Lee: Hi, my name is... introduction for the results. Firstly, congrats on the Guidance. And I have two questions here. Number one, about the EEI demand and the language model is getting more powerful. Machine Interaction, what are the key areas you see more AI applications? you mentioned like a convenient toys and at AI devices as well. So what could be the future growth drivers? area of AI. That's number one.

Tony Zhao: Hi, my name is... introduction for the results. Firstly, congrats on the Guidance. And I have two questions here. Number one, about the EEI demand and the language model is getting more powerful. Machine Interaction, what are the key areas you see more AI applications? you mentioned like a convenient toys and at AI devices as well. So what could be the future growth drivers? area of AI. That's number one.

Speaker Change: There is clarity nine and we see a lot of value creation.

Speaker Change: Essential for us to two two to deliver to our customers.

Speaker Change: And we are continuing to gain new customers, while the existing customer's volume as Steve.

Speaker Change: Stable April core OEM.

Speaker Change: On.

Speaker Change: One side of the effort is trying to improve the video quality, which will will keep shoppers online shopping.

Speaker Change: Participant better experience in.

Speaker Change: In luxury walking use case.

Debbie Lee: And number two, for number two question is regarding the breakdown for China and the overseas business and how do we see the demand trend in future by volume or by the and by the AI?

Tony Zhao: And number two, for number two question is regarding the breakdown for China and the overseas business and how do we see the demand trend in future by volume or by the and by the AI?

Speaker Change: A lot of the customers actually where local.

Speaker Change: Life shopping platform, so theres literally almost no impact by the recent tariff.

Speaker Change: Our reforms.

Speaker Change: About AI.

Speaker Change: Again, we will continue to focus on artificial yet which is.

Tony Zhao: I'll talk about AI. First off, AI agent has been the biggest topic among tech communities this year. However, we will focus on the conversational AI side, which is more directly related to our business. What we see is several key use cases that are most active. First is education use cases, especially around longer learning and practice side, as I just mentioned in the script in my opening remark. And also, IoT side, especially a lot of effort trying to build a conversational toy that can really talk to kids or users with meaningful content. And also, there's clear demand around kind of call center services, where, you know, there's outbound calling for marketing or other, you know, purpose, and also customer service in call center use cases.

Speaker Change: Really the afternoon related to all of our business.

Speaker Change: The recent interest in building conversational AI agent is very clear and a lot of our customers schools.

Speaker Change: In the POC stage of.

Speaker Change: There are development.

Speaker Change: Is getting close to put our launch.

Speaker Change: No.

Speaker Change: The key for our.

Speaker Change: Growth in terms of surface water.

Speaker Change: Eventual eventually the value created for the customer base is really depending on.

Speaker Change: A product that has.

Speaker Change: Has already find product market fit in.

Speaker Change: The key to that is all of those.

Speaker Change: Customers product actually did a lot of.

Speaker Change: Deep dive into the vertical use case and.

Speaker Change: Leverage.

Speaker Change: And build build.

Speaker Change: Good product by finding enough no horse in that vertical use case, so that customer experience is smooth.

Tony Zhao: Those are the most clear verticals or use cases, you know, in our recent engagement with our developers.

Speaker Change: And.

Speaker Change: Compelling enough.

Speaker Change: And.

Speaker Change: That process is why a lot of the customers has been working with us for a while but it still.

Tony Zhao: at other segments of the economy. in this quarter, about 18%, so close to 20% already, so we are seeing growing adoption among, actually not just our customers, more important we are seeing growing adoption among consumers for live video. Live Video-Based Shopping and Entertainment Apps, especially in North America and Europe. These apps we have seen become really dominant in China for some time, but now we are finally seeing them gaining traction in North America and Europe as well.

Tony Zhao: in Cantonese. in this quarter, about 18%, so close to 20% already, so we are seeing growing adoption among, actually not just our customers, more important we are seeing growing adoption among consumers for live video. Live Video-Based Shopping and Entertainment Apps, especially in North America and Europe. These apps we have seen become really dominant in China for some time, but now we are finally seeing them gaining traction in North America and Europe as well.

Speaker Change: Before it can really achieve a part of our fleet it will take some time.

Speaker Change: Okay.

Speaker Change: Do you have any follow up question Kelly.

Kelly: No. That's it. Thank you. So it is comprehensive and that that was really helpful.

Kelly: Thank you.

Speaker Change: As a reminder people we take our next question. It is star one one for questions.

Speaker Change: Our next question comes from the line of thin client from Nomura. Please go ahead.

Tony Zhao: So that's one of the most important course travel in this quarter for us. And secondly, for Asian customers, we are finally seeing some demand recovery, even including India. for education and entertainment use cases. So brah You have a global market where you see pretty solid demand. We think there's still a lot of potential for further penetration. And also in terms of the pricing, with the exception of certain Asian markets. Overall, the pricing has been quite stable in India.

Speaker Change: Thank you Tony.

Speaker Change: For.

Speaker Change: Given me the opportunity to ask questions I have two.

Speaker Change: First <unk>.

Speaker Change: Also about AI. So how do we think about the timing for the massive adoption of conversational AI.

Tony Zhao: So rough... You have a global market where you see pretty solid demand. We think there's still a lot of potential for further penetration. And also in terms of the pricing, with the exception of certain Asian markets. Overall, the pricing has been quite stable in India. So in China, although gross rate hasn't... come to the level we see in the US and global markets. But as you can see, for the Shumang business, in Q1 year over year, it also delivered 6.7% year over year growth. So overall, the demand is recovering.

Speaker Change: We think that the.

Speaker Change: Currently there are still some.

Speaker Change: Pricing premium right compared to the non AI applications. So when do we see this tipping point so.

Speaker Change: For the massive adoptions and I think.

Speaker Change: Second question is about the.

Tony Zhao: So in China, although gross rate hasn't...

Speaker Change: The competition landscape.

Speaker Change: On the China and.

Speaker Change: How do we think about.

Tony Zhao: of the Declaration of Independence. So, social and economic folks, we see that regulation more stable now. So there's less regulatory. impacts as we saw last year and the year before. Education demand is also recovering in quite a healthy manner. and IoT and digital transformation, we have been seeing pretty strong demand. and even past two years.

Speaker Change: The pricing trends for the overall business and the impact on gross margins. Thank you.

Speaker Change: Okay.

Speaker Change: Alright.

Speaker Change: Tipping point.

Speaker Change: <unk> actually talked about fuel use cases or verticals that.

Tony Zhao: So on, several fronts. So, social and economic folks, we see that regulation more stable now. So, there's less regulatory.

Speaker Change: Most active in our.

Speaker Change: Work with customers and developers onto pointed out further that.

Tony Zhao: for a little bit of information. and IoT and digital transformation, we have been seeing pretty strong demand. and even past two years. our to market compared to Last year and year before, pressure is also more moderate. So overall it looks more positive than in previous years.

Speaker Change: Even within each and every of those use cases.

Speaker Change: Not one.

Speaker Change: One category of product, let's say for <unk> use case.

Speaker Change: Each.

Speaker Change: The type of our call Center service.

Speaker Change: Actually a different industry have different no halls, and so so that the product market fit will happen gradually for each industry is specific.

Tony Zhao: of Beihang University. Last year and year before, pressure is also more moderate. So overall it looks more positive than in previous years.

Speaker Change: Call Center use cases.

Speaker Change: We'll achieve Panama feed one by one down the road really depend on how those are.

Speaker Change: Product.

Speaker Change: Like I said.

Speaker Change: Finding out all the necessary know hall, so to build up a small stuff.

Tony Zhao: Thank you, Tony. Thank you.

Speaker Change: <unk>.

Speaker Change: And the three important really relies on the maturity of part of August feet of those specific use case.

Qianlei Wang: Our next question comes from the line of Qianlei Wang from CICC. Please ask your question, Qianlei. Hi, this is Wang Chenlei from CICC, and thank you for taking my question.

Speaker Change: One is matured and having a market fit.

Speaker Change: The volume for that specific product will grow significantly and it will naturally expand to all similar.

Qianlei Wang: My first question is regarding your OVS's e-commerce business. So in the past, we have seen the live shopping and interactive features becoming increasingly popular in e-commerce, especially in the emerging market. So could you please provide more details on your current traction and the strategy in enabling OVS's e-commerce platform or the application?

Tony Zhao: My first question is regarding your OVS's e-commerce business. So in the past, we have seen the live shopping and interactive features becoming increasingly popular in e-commerce, especially in the emerging market. So could you please provide more details on your current traction and the strategy in enabling OVS's e-commerce platform or the application?

Speaker Change: Product.

Speaker Change: <unk> in the same sector ordering the same use case.

Speaker Change: Each will.

Speaker Change: Grow our.

Speaker Change: Volume.

Speaker Change: So that's the that's something.

Speaker Change: However, I do want to mention that the.

Speaker Change: The maturity of such products.

Qianlei Wang: And my second question focuses on AI landscape. So could you elaborate on any shifts that you have observed in the downstream demand for AI-powered real-time interaction capabilities? Thank you.

Tony Zhao: And my second question focuses on AI landscape.

Speaker Change: It's not <unk>.

Tony Zhao: So could you elaborate on any shifts that you have observed in the downstream demand for AI-powered real-time interaction capabilities? Thank you.

Speaker Change: Decided by US, it's really decided by the the.

Speaker Change: Each and individual.

Speaker Change: Vertical use cases for their industry know half and product designs.

Tony Zhao: Okay, so on live commerce use case, we are deep diving into the use case and continue to maximizing the penetration into the space. There's clear demand and we see a lot of value creation potentials for us to deliver to our customers. And we are continuing to gain new customers while the existing customers volume is steadily growing. You know, one side of the effort is trying to improve the video quality, which will give shoppers, online shopping, you know, participant a better experience. A lot of the customers are actually very local live shopping platforms, so there's literally almost no impact by the recent tariff fall.

Speaker Change: Or even launching <unk>.

Speaker Change: What would.

Speaker Change: We'll decide whether the product is going to be successful or not and whether the product market fit is reached or steel.

Speaker Change: Need more work. So that's the thing I cannot really give a specific timing for hull <unk> product will mature and start to grow.

Speaker Change: But potentially higher what I want to say is it's not going to be blend product.

Speaker Change: It's not going to be even 10 or 10, new product is going to be hundreds of different products and gradually reaching that tipping point, that's my view.

Tony Zhao: You know, one side of the effort is trying to improve the video quality, which will give shoppers, online shopping, you know, participant a better experience. A lot of the customers are actually very local live shopping platforms, so there's literally almost no impact by the recent tariff fall.

Speaker Change: Okay I'll take the question on the competitive landscape so.

Speaker Change: You mentioned, China, Yes, China has been very competitive market.

Speaker Change: All of the major cloud providers have.

Speaker Change: At some point competed in this market.

Speaker Change: And pretty hard.

Speaker Change: Not only was still remaining pretty yeah Jess.

Tony Zhao: about AI. Now, again, we will continue to focus on conversational AI, which is, you know, really directly related to our business. The recent interest in building conversational AI agent is very clear and a lot of our customers who's in the TOC stage of their development is getting close to product launch. Now the key for our growth in terms of service volume or eventually the value created for the customer base is really depending on a product that has already found a product market fit and the key to that is all those customers' products actually did a lot of deep dive into the vertical use case and leverage and build a good product by finding out enough know-how in that vertical use case so that the customer experience is smooth and compelling enough.

Speaker Change: Just thinking here, but.

Speaker Change: No meaningful market share.

Speaker Change: That short haul competitive market, but I think in the past few years, a clear trend of consolidation.

Speaker Change: No.

Speaker Change: There have been less and less players today.

Speaker Change: The name <unk>.

Speaker Change: Three.

Speaker Change: Awesome conversation really have become more and more important we believe the competition will not be Justin.

Speaker Change: And communication.

Speaker Change: And communication class conversation really high and we have invested heavily.

Speaker Change: On this new area, we cannot say the same for our competitors. So we hopefully that will give us stronger competitive position in the future.

Speaker Change: In terms of margin.

Speaker Change: Yes.

Speaker Change: Competition is fierce in China, and margin slightly lowering kind of comparisons global and U S markets, but philosophy.

Speaker Change: First of all we focus on we tend to focus on.

Speaker Change: Higher value use cases.

Speaker Change: Which tend to have higher margins and secondly, we continue to do a lot of technical optimization on the cost in and Thats why we have been able to maintain relatively stable gross margin as you have seen.

Tony Zhao: And that process is why a lot of the customers have been working with us for a while but still before it can really achieve a product market fit, it will take some time.

Speaker Change: Earnings so.

Speaker Change: We're continuing to be our strategy going forward.

Speaker Change: Thank you Tony Thank you Kimberly.

Speaker Change: Thank you.

Speaker Change: Once again to ask a question. Please press star one on your telephone keypad.

Qianlei Wang: Do you have any follow-up questions, Stanley? No, that's it. Thank you for those comprehensive answers. That was really helpful. Cheers. Thank you.

Speaker Change: Alright, there are no further questions. Thank you everybody for attending the Companys call today as a reminder, the recording in the earnings release will be available on the company's website at investor.

Operator: As a reminder, before we take our next question, it is star 11 for questions.

Our next question comes from the line of Bing Duan from Nomura. Please go ahead, Bing. Hi. Thank you, Tony and Jingbo for giving me the opportunity to ask questions. I have two.

Bing Duan: Our next question comes from the line of Bing Duan from Nomura. Please go ahead, Bing. Hi. Thank you, Tony and Jingbo for giving me the opportunity to ask questions. I have two. First is also about AI.

Speaker Change: The other Gora don't Idaho, and Italy, if there are any questions. Please feel free to email the company and so with that we conclude the program. Today you may now disconnect your line.

Tony Zhao: So how do we think about the timing for the massive adoption of the computational AI as we think that currently there are still some price and premium, right, compared to the non-AI applications? So when do we see this tipping point for the massive adoptions?

Tony Zhao: And I think a second question is about the competition landscape in China and how do we think about the pricing trends for the overall business and the impact on the gross margins? Thank you.

Tony Zhao: Okay, I'll take the question on the competitive landscape. So, I think you mentioned China. Yes, China has been a very competitive market. In fact, all the major cloud providers have at some point competed in this market and really, really hard, but now only one of them is still remaining, really. The others are just... and many more. today, really just three. And as conversational AI becomes more and more important, we believe the competition will not. just like real-time communication, it will be real-time communication plus conversational AI. And we have invested heavily on this new area. We cannot say the same for our competitors.

Tony Zhao: So hopefully, that will give us a stronger competitive position in the future.

Tony Zhao: and all mother nature.

Tony Zhao: First of all, we focus on, we tend to focus on the Chen, Bezi, Zhu, Yang Zai, Li Bai, Liu Tian, Yang Zou Ied Feng, Guo Ling, Wen Lin, Vinger, Wen Lin, Zhi Song, Thank you, Tony. Thank you, Jingbo. Thank you.

Operator: Once again, to ask a question, please press star 11 on your telephone keypad. There are no further questions. Thank you, everybody, for attending the company's call today. As a reminder, the recording and 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.

Operator: And so with that, we conclude the program today. You may now disconnect your line.

Q1 2025 Agora Inc Earnings Call

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