Agora, Inc. Reports First Quarter 2025 Financial Results

Agora, Inc. reported Q1 2025 revenues of $33.3 million, a 0.8% increase year-over-year, driven by a 17.7% increase in Agora revenues to $18.6 million, while Shengwang revenues decreased 13.9% to $14.7 million due to the end-of-sale of certain products. The company achieved GAAP profitability for the second consecutive quarter with a net income of $0.4 million, compared to a net loss of $9.5 million in Q1 2024, and highlighted growing interest in its Conversational AI Engine. Agora expects Q2 2025 revenues to be between $33 million and $35 million.

Analysis

Agora, Inc. (API) reported its second consecutive quarter of GAAP profitability in Q1 2025, achieving a net income of $0.4 million compared to a $9.5 million net loss in Q1 2024, signaling a significant operational turnaround. Total revenues reached $33.3 million, a marginal 0.8% year-over-year increase; however, this figure was substantially impacted by the discontinuation of certain end-of-sale products which contributed $3.3 million in Q1 2024, resulting in an underlying revenue growth of approximately 12.1% when these are excluded. The Agora segment, the company's international arm, demonstrated robust performance with revenues of $18.6 million, a 17.7% increase YoY, driven by business expansion, particularly in live shopping. Conversely, Shengwang revenues (primarily China market) decreased by 13.9% to $14.7 million, a decline also attributed to the end-of-sale products ($3.3 million in Q1 2024); excluding these, Shengwang's core business grew approximately 5.8%. Gross margin significantly improved to 68.0% from 61.2% YoY, primarily due to phasing out these lower-margin products. Operating expenses fell by 20.5% YoY to $26.5 million, reflecting disciplined cost management through workforce optimization and reduced share-based compensation (total $1.95 million in Q1 2025 vs $4.43 million in Q1 2024). The company maintains a strong financial position with $388.0 million in cash, cash equivalents, bank deposits, and financial products, and generated $17.6 million in net cash from operating activities. Agora is actively investing in its new Conversational AI Engine, launched in March, which is reportedly gaining significant developer interest and is expected to become a future revenue contributor. While active customer numbers grew (Agora +5.0% to 1,806, Shengwang +5.2% to 1,994), the Dollar-Based Net Retention Rate for Agora was 96% and for Shengwang was 85%, indicating areas requiring improvement in customer expansion and retention. The company continues its share repurchase program, having utilized 58.2% of its $200 million authorization. For Q2 2025, Agora projects revenues between $33 million and $35 million, suggesting continued underlying growth compared to an adjusted $30.9 million in Q2 2024.

Key Decisions for Investors

• Investors should acknowledge the positive shift to GAAP profitability and the core Agora segment's 17.7% revenue growth, viewing the new Conversational AI Engine as a key potential catalyst for future expansion.
• Critical monitoring of the Dollar-Based Net Retention Rates is advised, particularly Agora's 96% and Shengwang's 85%, as improvements are crucial for demonstrating sustainable long-term customer value and growth.
• The company's strong cash position of $388.0 million and active share repurchase program offer a degree of support, but focus should remain on the execution of AI initiatives and the trajectory of adjusted revenue growth guided at $33-$35 million for Q2 2025.