- Earnings call transcript Q3 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and thank you for standing by. Welcome to the Agora Inc.

Third Quarter 2022 Financial Results Conference Call. At this time, all participants are in the listen-only mode. After the speakers' presentation, there will be a question-and-answer session. advised conference be being Please Instructions] that is today's recorded. [Operator the I'd to like now, conference to And hand over Ms. Fionna Chen, Head of Investor Relations. you. Thank ahead, go ma'am. Please,

Fionna Chen

Thank quarter everyone, us you, morning, you operator. joining for and for earnings XXXX thank third conference call. Agora's Good

filings release, call found IR results our replay investor.agora.io. at be a SEC earnings of and Our on website press today's can

found press GAAP Joining our CFO. Wang, me CEO; and results and non-GAAP Jingbo today earnings are Chairman Tony in can be between release. Zhao, our our Founder, Reconciliations

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

Tony Zhao

everyone, welcome, and to our earnings Fionna, Thanks, call.

decrease and of Our revenue quarter-over-quarter. year-over-year a quarter X% million, the for $XX was flat

of we was one In platform to applications our extremely X.X end than past exceeded year more of our operating environment. During the an this new to on active few close the compared number total million. quarter XX,XXX customers register quarters, challenging of ago. adding registered number faced and X,XXX XXX applications At our September,

of market pressure, in our certain of continued some capital in turn, the limited in turbulence was products. expansion the plan usage More inflationary global reason customers ability recently, revenue which and to regulations was revenue the hit by which, have rate main funding, interest hikes behind their restrictive year-over-year markets, impacted decrease. Our through our and raise

appreciation -- continue the on had challenges macro really our the Lastly, denominated our macro despite challenges, -- the shopping of dollar use negative see video revenues. a products those didn't impact Despite strong changes in which demand cases, we non-US as also new market US to those for such ago. exist XX for live dollar months US

and why and any long-term and again engagement As products. history, we in is transform our activity can we technology technology optimistic engaging. online This about remain again immersive and more it have seen of the real-time our make potential

time. purity However, to likely remain cope our focus products, environment hard and the core some for we remain uncertainties, enhancing efficiency will go-to-market focused have operational on laser months, our experience improve been the priorities our we benchmark To strengthening winning and working use and entrepreneurial. such volatile efforts must of recent ease In customers. of macro and including with our of nimble, efforts

Shawn Mr. management difficult our made and reduce workforce. R&D our expanded appointing XXXX global global to organization. take month an a Scientist to changes few our on operations to as our redundancies, our Last Technology Zhong, We also and reduce have restructure streamline including made oversee to Chief Chief the we Officer also since role decision

journey. this friends Here, than the the market near-term. And in and I colleagues will ever. believe discuss and stronger challenging and I we his help along thank with the their will reduction in I right us financial think focus impact share execution, gain to are from well-positioned would uncertainties navigate impacted to emerge period those Jingbo of our for like contribution remarks. moves the again those

engagement quarter, which simpler SDK this more Moving more three to powerful. next-generation real-time has use, namely announce to upgrades thrilled major we launched flexible, I'm version to product in X.X, that and updates. key our on in officially areas,

has an of transmission more SDK loosely now each with modular standardized Developers end-to-end coupled create control our components architecture granular type by dozens their experience use the flexibility, on open interface the First, for design. and specific X.X for down into media to It enjoy the module. optimal path case. breaks much over entire

developers video backgrounds, reach lines AI on simplicity. noise a content on a suppression few and moderation, transcription, expansions as with flexible special and mean more. engaging easy does not just wide and range to integrate use Next compromise features With any and third-party effects, code, of virtual performance. can first-party of such audio, and Being easily audio

For now also one supports or X.X perfect use from X.X per require XK multiple use frames SDK such to up at single SDK that as streaming. cases sources is supports for which proprietary second. user, live professional high video media cases video online music XX recording

highly sound applications tracks require that combine same a karaoke, the to immersive speed at than participants synchronized transmission able such at our and SDK, innovative deliver and all next-generation those time. before. all For ever to developers latency be as can faster we With create and will precisely ultra-low online

Now, moving on to new use cases.

one Shopping, we very fast growing is is Video already Live have several customers. and The which benchmark first

real-time platform each where where For as a fast auctions engage the marketplace auction the between collectibles customers course seconds. Twitch a XX in marketplace other be It in video platform streaming to can and video. the with site auctions leverages hold and as Its sellers auction CEO real-time fast-paced example, provides the live our and completed through eBay. leading auctions environment, can describes

ability technology with people and users rooms its network creators is live second The our and channel. provide world influencers speakers networking. conversations make broader join stage connections interactive A to social post over all on is one These professional the hire professional power the live audio networking event. can and leading global to social leveraging

global in quality the perfectly network. coverage as and social them ensures premium quality, position Our matching world throughout professional a technology audio their a

program we developers, and year leaders thought in-person Nearly in hosted our people November, close October number XXX RTE This by conference. over together XXX various plans attended Moving we XXX,XXX. participants. from and iconic discuss to exceeded registered the the future been to for XX,XXX session, year and engagement. of global views first countries explore the consecutive for online more and marks attended real-time In of also conferences sessions hosted conference, time on customers which in-person to lively that session APAC where total dedicated received Francisco the joined and RTE our San eighth RTE well has local

like Here highlight observations some and the from key messages of I the the conference. would to

on experience deliver. that is to and business build First they end use on geographies customers' profoundly that the continues user can depending experience. the our across end-user business Evidence success

building for team a example, in user audio increase and an in will it's significantly have Therefore, reduce For in AI for advanced the freeze chat in-game provider most session, offers real-time increase lands order adding small rate will RTE audio in lines. section engagement rates to noise the suppression partner paramount reliable experiences. to the creating and with retention capable tariff blocks most

the video. trend high-definition of Second on

us. an on expect from of things increase mainstream for in XXXp to with super algorithm XX% and video video enhancing local Based in this in real-time X% steadily being bandwidths of demand usage resolution can for issue overall resolution platform, to XXXp customers and session. end see quality. better response video equal will We bring our resolution other XXXp take for case In by the care business conditions and to increase to approximately usage. more engagement video This network resolution bandwidth, required same the in growing cannot through upgrade in quality memory our only accommodate the changing XXXp opportunities CPU the users leads our to increased from experience

have since beginning leap As already XXXp of in seen year. the this we a huge sessions

we were experience for Examples human are that generally enabling with one trend devices – higher IoT with lens this is machines of cameras device, to classes fundamental study for real-time their the capabilities be streaming growth. RTE plain sold pet IoT's with video, classmates. technologies and include collaborate students thanks with and vanilla feeders believe we premium screened model type of compared live possible This Lastly, projection seeing will AR only drivers generally future of are to RTE touch and on of capabilities, RTE such treadmills the without with rolling at to adding features capabilities.

Before long-term – potential and concluding quarter, to want work all engagement hard your fundamentals I challenging real-time for despite for my environment. Agora's The remains and this remarks the commitment of turbulent the thank turbulence market period. prepared despite technology during this same, the

are stage we nor pessimistic our and overoptimistic a early of great the the neither company. still industry are We in future about of overly building

keep help Agora Tomorrow strategy I'm and day harder. said, even although will succeed ability and confident will growth, over help we be review is results. someone that who is – need executing to it's I determination our our things people that, will As ability be mean, once after succeed. turn our With in to today focus. you your for all. financial great, dead Thank before Agora that. with Jingbo, difficult. most let to What in me The to

Jingbo Wang

Hello, Tony. you, everyone. Thank

the we business usage and look growth of reduce rate reviewing by last interest customers' third the outlook versus ability certain at decrease of X% restrictive markets, the hikes compared impacted part tightening financing in The and financial recent will QX, by and to led quarter. funding, raise a platform. mainly this regulations for fiscal in Total regions. their which results quarter which QX year-over-year, of decrease first for revenue was environment and QX million Let I our the me our offset of year, some $XX in has XXXX, revenues of on in the XXXX. year-on-year to to start sectors to If due and then was year discuss were other flat

revenues In impacted non-US US addition, US dollar into when our appreciation translated has of dollar-denominated amount. dollar continued the

excluding currency XX rate months constant XX%, is dollar-based trailing Easemob. expansion net Our

China international certain mainly net XXX% XX% was approximately healthy strong Specifically remain business, expansion and other for to US restrictive for markets. in which regulations the and base rate due business the and above

Moving on cost to and expenses.

my income was quarter revenues the will intangible revenue expenses, total assets. exclude contributed which Non-GAAP of in X.X% mainly For on XX% I lower XX.X%, due intangible our was the to broadcast and increased XXXX QX expenses third comments, compensation lower approximately at expenses, tax our to and related quarter product, acquired margin. expenses, which streaming than margin gross which from amortization of results, non-GAAP acquired financing-related focus acquisition-related for gross share-based following assets

Tony to associated month. just As reflected are severance a $X.X global workforce made expenses of operating restructure million now, mentioned in costs decision our and QX. difficult reduce last in The we

and in the costs other $XX million We expenses in approximately of cash non-GAAP compared operating to was a operating sales $X.X expansion $XX.X XX% margin expenses XX.X% to to savings to X.X% QX and total XX.X% revenue QX, of quarter compared in quarterly total rental revenue software Non-GAAP due earned Sales quarter, year-over-year forma was and to to provision the severance roughly in the represented $X margin expenses in reduced expenses R&D on in in marketing the compared due also to Non-GAAP million quarter $XX.X R&D were pro year. expenses mainly QX Non-GAAP expenses. expansion increased in XX.X% the year. expect revenues million last expenses severance last million. loss XX.X% $X.X expenses were US. of and QX we operating team expenses of last exclude loss this see a international the of to benefits, of QX which US loss advertising. If XX.X% fourth and QX. year. compared in were Together, costs as and the quarter, up QX advertising we million QX XX.X% to operating XX.X% event XX.X% such certain of non-GAAP in Non-GAAP marketing Non-GAAP year. in compared QX up year-over-year, in from team million, XX.X% total mainly QX last increased in translating G&A included G&A operating markets, represented year. expenses

million Free last to cash $X.X $XX flow. to was Now $X.X cash compared flow cash negative last million compared QX, year. in year. negative turning negative Operating million flow million to $XX.X was negative

our end of to We equivalents paid for prepayment million QX million purchase deposit was flow and land to of term short of repurchase ended approximately QX. ADS Moving free million investments, million, the cash By million, at our net A to cash right million quarter $X.X use balance equivalent million the on with due Net $X.X negative or refunded end long-term program. we of mainly to share class of $X.X repurchase repurchased cash share cash approximately outflow and million of $XXX of XX% QX, $XXX million X.X investments for of $XX.X $XXX.X the ordinary in million. compared cash, of sheet. in representing shares $XX.X $XXX

variable business is model, an may to apply. guidance. experience not where to unprecedented COVID-XX historical Now still turning our

reflects subject various the impact that Our on guidance the revenues on to based are assumptions related full year to COVID-XX uncertainties of change dynamic.

expect to macroeconomic challenging be $XXX under macroeconomic of and that environment of have full and year this our the of limit markets With turn we turbulence which million. million of we responding a some viabilities tough XXXX a total the in in to environment. addition, usage made impacted customers' revenues in closing, for $XXX uncertain In quarter products. decisions global business in capital could In our expansion challenging and their range

believe from efficiency I with a entire we key forward, Agora well laser right focus and today. for to long-term attending positioned up to on Thank for hard and open Operator gain operational challenging you and improve let's to and are focus emerge continuing than Looking stronger the we our the execution. our the questions. thank market share you stick the priorities period it team will work this strategy, ever. everyone to call for

Operator

you. Thank

David. the [ph] from now David comes question, first of Bank America Our question-and-answer session begin Please will Instructions] question [Operator Securities. Lee We from ask

Unidentified Analyst

management. I Hi, Thanks have taking questions. two for my questions.

and Firstly, and we My margin customer growth that domestic overseas and the in the the the seems gross change the could you. QX, demand or is, last implied year-over-year falling for on color you trends especially market do the margin. QX? overseas How profit of It regarding gross second in quarter profit in share ARPU QX. ARPU business question year? Thank see ARPU declined versus in more

Tony Zhao

has markets, largely. I'll take passed the international COVID the demand question. In US and already

new recent demand COVID, our live also I use to also here in was but by driven such, as China, in whole video quarantine Similarly use macro in and affecting the as adoption COVID as more COVID So not drives rather cost live increasing cases earlier anything by really or related shopping, mentioned quarters, such -- mature telecoms. and cases education COVID economy. and

However, significant adjustment. is, demand indirectly Currently, the it's environment macro anymore the the on challenge driver the on demand also policy rather for not on main direct economy side us. from COVID

slowed cutting their which year, As recent for growth earnings, Many we internet in our growth have companies, down. target revenue companies and user of or growth seeing have been also of company internet flat their significantly limiting usage next been products. are

incremental areas from small it IoT we those Those areas. on up However, time traditional more or demand ramp we into, adoption and some more industries invest will see do that continue enterprises a sectors. few will but take the to continue to will

Jingbo Wang

take GP the I'll the and ARPU on margin. question

South in as see The and affect these recently. US -- we has also So which marketing international ARPU the these currency continued against, in Asia, because continue than charge markets, XX%, Southeast products has more main market these lot dollar more quite currencies, was And challenge emerging ARPU appreciated made in pricing US the has the actually, more pressure, US so global a stable, price markets we such in than been do we on some because expensive XX%. Asia. from dollar. in cases of markets, our In of depreciation more market effectively local

So competitive also give drive these and very regions, those in we markets. be additional demand discount in to to to need better

with in ARPU. broadly business of these me, market margin hike a by affected demand difficult, speaking some made behind the more weakness in So rate capital reason And mentioned, inflation, has that's tightening the also turn and the markets. environment the more a which customers' financing ARPU lot turbulence, Tony in as

as a and think we these will actually change. GP stable a margin pricing I GP to product relatively the earlier, forward due in extent, this mentioned looking shift in due quarter, decrease mix and from looking mix So mainly was forward, product the to not markets emerging will remain actually lesser pressure to further

incremental from there pressure So not seeing are see we -- QX. we don't

Unidentified Analyst

you. Thank Jingbo. and Tony you, Thank

Operator

Thank you for your question.

next ask Stanley. Morgan Tom. line Tang Please Our of from your the question, comes from Tom [ph] question

Unidentified Analyst

if had further our any quick on we Management, just outlook. release question new our XXXX there's can wondering Since insights the guidance. a guidance, have I on just we offer

mentioned, As -- there's the of you. by -- you have if to end bring XXXX, if plan? Thank want you breakeven to previously we wondering there's any if just changes

Jingbo Wang

take Sure. I'll this one.

XXXX noticed, year out you we this the for was to So as have guidance lowered and full mainly a due macroeconomic challenges. recent

just that. I mentioned, hikes, environment As the financing the rate all and

high operating uncertain committed We But emerging these to any a very on but are breakeven still XX% also to So the in to international of markets still a we all the give in targeting moderate the again highly the very markets level it basis non-GAAP as China. China. terms are US early too and US to growth we And is guidance, environment same of growth targets XX% and in in still time, in are XXXX, and moving guidance. aim by given macroeconomic end breakeven to official XXXX.

Unidentified Analyst

Okay. you. Thank

Operator

you. Thank

the ask Duan Our comes Bing. your Please from Nomura. next of question, Bing line from question

Bing Duan

Hi. Good one morning. ask for question. the having Thank you just management I have questions.

So how you. affect R&D next do about estimate year? headcount what few the will the operating we Do the have and marketing quarters? the the and expense growth And next Thank think growth employees? QX QX of in growth in this sales we an

Bin Zhao

Yeah. part. take I'll first the

before workforce. we think take reduce make I serious and we a to the restructure very consideration decision the

on I to see expand road we anything other Jingbo costs. add. if efficient trying don't practice to has continue more the operation we operate the and leaner to similarly Again, in to the know we and quarters next don't workforce. few want So to will down

Jingbo Wang

Yeah.

from Just few a to perspective. a financial add words

QX compared middle the happened $X the additional QX, actually about see us we million some because reduction to in to bring will in QX to reduction the of savings and of QX. in And expect savings restructuring QX. recent compared So cash

still expect higher So month we And QX. cost not Tony one XXXX. in we to do first as had in of headcount increase mentioned,

Bing Duan

Thank you, you, Okay. Jingbo Thank Tony.

Operator

turn further back [Operator I'll call for management closing question. the remarks. team No Instructions] to the

Fionna Chen

Thank website. be are, Again, Today's please presentation Thanks. call you, there operator and information, and website. the our any attending you posted you more everybody. thank the speakers' today. If IR thank for also on visit our will also everybody remarks

Jingbo Wang

you. Thank Bye-bye.

Tony Zhao

you. Thank

Operator

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

now may You disconnect.

Agora (API) 22 Nov 222022 Q3 Earnings call transcript