Earnings call transcript Q4 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 Fourth Quarter 2022 Financial Results. [Operator Instructions].

I would now like to hand the conference over to your speaker today, Fionna Chen. Please go ahead.

Fionna Chen

operator. you, Thank good and Good evening, morning everyone. for Fourth Agora's you today Conference for XXXX and us Quarter Full Thank Call. joining Fiscal Earnings Year

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

are our Founder, today Wang, CEO; Chairman Zhao, CFO. Tony me and Jingbo Joining our

press our GAAP can Reconciliations non-GAAP between be found release. results and in our earnings

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

over turn that, let Tony. With me to Tony?

Tony Zhao

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

for the revenue $XX same fourth at the with Our quarter quarter compared million flat remained last year.

of to our new During X end on number of our number total And to applications active were XXX registered adding this XXX,XXX. customers platform. year close compared applications the XXXX, quarter, our was of exceeded At registered ago. X,XXX,

well speech-to-text under as delivers with Working the and product performance speech-to-text recently, partners products individuals beta reliable synchronization network transcription issue. in cases due that product technology, conditions. we performance such talking for in environment, Traditional to engagement. simultaneously noisy developed poor multiple our in a cloud-native with device specialized the industry-leading of side, of use a speech-to-text launched we and product RTE On do not work challenge real-time version

product, consistent cloud-native additional range required performance is is a As and wide a devices. no across processing local of

enhance user in can believe end experiences ways. product many We this

hearing For people an product naturally. to auto-translation with streaming live different language or each empower mingle and cultural live impaired this example, watch with can people backgrounds can bid easily barriers auction. with a in overcome Leveraging model, now other

has the In laid addition, for such speech-to-text transcript complementary content also recording. other and features foundation as

This new first-party XD users. spatial quarter, experiences availability end suppression, X and more will engaging their and we audio create AI-powered also the announced developers enable for of general which to noise immersive expansions,

modular these easily With the calling, such flexibility and architecture, streaming. live core open be integrated expansions into and can RTE of products, video our Agora X.X SDK voice calling interactive as

X have been During beta received expansions by the developers. phase, public these well

for By For language has speakers. removed regularly unwanted a platform environment. example, their background experience by and noises, learning, to of found a AI Hello, suppression, is social language way new best users Agora's a learning leveraging learn distraction-free regardless streaming worldwide the have native with speaking noise that live ensuring Hello

cases. About our use new

use quarter, This cases to and emerging gaining continue adoption. we new see

U.S. in in mentioned we video are attracted live as shopping rapidly and expanding well-known market investing who brands example, For previously, capabilities. has is some these

live an last example, Agora its quarter with to that American began shopping traditionally audiences working vast For specialized in television home important with provide shopping. network interactive

share Now XXXX back to some like product looking that looking ahead a XXXX. at my I latest take we have would when discussed cases, use and thoughts and our to of to moment

agree extremely challenging many was you XXXX of think with. I an which year, would

of $X $XXX a million, was million XXXX. full compared decrease year revenue X% with Our or

million was sector from by However, please $X $XX mind during in to the down bear million KXX China our tutoring in alone $XX period, million. from that revenue this academic

and use environment funding. in we market venture our segment, cases challenging especially products inflation new global macro as new consider to such feat, as thanks also correction, no This small video expansion, if XX%, of shopping was the mainly revenue our capital tightening such streaming. the stock broadcast live increased XXXX this such Excluding as and

call, reorganized international reduced earnings our our last our streamlined content our the teams experience challenging the U.S. our team and in we the refocused in in focus environment, months, and strategic and marketing markets. R&D we improve considering global operating overall to few October mentioned past efficiency. and priorities In developer As on and workforce further

efforts I teams customer-centric commercialization We more will also markets. believe China, steps Operating on lead appoint Chief market. become these to help local as Officer, and in our our that focused more

When Easemob's business. Engagement The recently sale we our business. addition, Easemob has segments: and business chat Customer fully the completed chat in it had business CEC CEC, Cloud, business acquired into API X platform. integrated or In been we the of the API XXXX, early

other business the CEC products hand, help not the is business us. CEC of On will market focus core for markets. The the a our resources core sale on and us

the about in but continue opportunities cautious I'm to global market. see new XXXX, RTE the at environment, looking macro Now

macro side, will tough and inflation countries product reopening for reduce use more the demand likely the On for remain, financing will our and certain in environment post-COVID cases.

clear On the for us. other hand, opportunities there are

large recently product down market shut For a this competitor in and due to pressure. key investment competitive its a significantly example, reduced

certain from verticals. We untapped to previous also start see demand

can strategy advantage laser enhance gain simply Facing focused for into our challenges and following: competitive be share. summarized market these value, on and customer opportunities, the XXXX

acting our value a effect, value leveraging create innovation strengthen our customers, partner enhance and our can for feedback Also, will customers. for customer creation we leverage map. our refine to latest flywheel we First, as to our an help customer-centric road innovation

services voice best-performing for ease of and RTE users best-in-class on focus delivering end experience use real-time with developers. for unrivaled Second, and video we world's and product will the

and same above, continue expand will efficiency to continue the operational share structure. At competition will our our our win Supported the over we improve to by and we the optimize market cost globally. time,

cherish the prepared and big shoulder and work small. memory always our remarks, will concluding and of all obstacles thank shoulder Agorans celebrating commitment their us year. Before to extraordinary facing for this wins, want I my during I to hard

Let's XXXX. all. creating on value, focused product market advantage competitive customer of you enhancing core the our Thank stay share and gaining laser in

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

Jingbo Wang

Thank Hello, Tony. everyone. you,

results discuss Let me the will start fiscal of first the year reviewing financial outlook for and for QX, then by XXXX. I

regions. Total $XX.X of to revenues from XXXX, quarter of compared of year and to revenues a a due offset fourth tutoring was decrease business from growth usage a KXX and divested from decrease decrease million in markets to academic quarter-over-quarter certain to Customer quarter-over-quarter. changes due The decrease usage the in expansion following revenues in and divested business decrease Engagement due X.X% a in X.X% decrease decrease from the a by were QX Customer in was last regulatory macroeconomic the mainly the markets significant which Cloud in in the Engagement and international part sector were challenging sectors business revenue decrease environment. and U.S. and other Cloud of year-over-year The

just some mentioned venture and our to Tony ability pricing funding now, products our of negatively of rate increased led customers' and capital which and have of financial raise As hikes, interest reduced the conditions impacted worldwide funding pressure sensitivity. usage inflationary tightening their to

especially persist would from continue to trend which in revenues, negatively term, near our impact to the markets. the U.S. expect and international We

KXX decrease $XXX.X XXXX increased drop due million, from a $XX.X revenues to changes. the academic XXXX. represented The this Total million were markets revenues which from exclude $XXX.X year If to to of million XXXX in revenue X.X% would fiscal $XXX.X tutoring in million the of certain we XXXX. segment, mainly decrease have from for our sector regulatory due XX% was in

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

and XXX% Specifically, KXX academic was by business, XXX% net U.S. excluding for in regulatory approximately and the tutoring changes China business expansion rate for business international sector. impacted the the

and expenses. Moving to on cost

I on of non-GAAP exclude amortization related intangible results, and acquisition-related For my of expenses, goodwill. acquired share-based compensation expenses, intangible expenses which expenses, assets, assets following to impairment income financing-related focus comments, acquired tax would

from streaming was gross margin was broadcast lower X.X% has for which Non-GAAP margin. this revenue increased thanks our quarter, which was optimizing in mainly quarter the due XXXX, in quarter last Non-GAAP our ongoing architecture. and higher than gross to gross product, than to fourth our infrastructure efforts X.X% margin lower QX XX.X%,

reduced non-GAAP in million we $XX.X QX. October. QX saved to compared mentioned we our call, workforce As quarterly in last restructured and expenses global We the operating on in earnings

R&D in QX XX.X% Non-GAAP R&D QX, decrease XX.X% Non-GAAP a year-over-year. to of of year. in XX.X% was total compared $XX.X expenses million expenses last were quarter the in revenues

last sales million the marketing were and in expenses Sales revenues to Non-GAAP in total marketing and year. XX.X% $XX.X expenses QX, of XX.X% represented QX quarter compared year-over-year. decreased in XX.X%

QX, G&A the in revenues compared represented last were in year-over-year. to in QX XX.X% of million expenses XX.X% G&A $X.X slightly increased Non-GAAP expenses total quarter year. X.X%

last compared loss year. to million, translating to $XX.X XX.X% was XX.X% fourth in of QX loss loss operating margin operating margin quarter an non-GAAP Non-GAAP operating a

Adjusted significantly EBITDA $X.X QX adjusted quarter, in margin recent year, and is efforts. lower thanks than last translating QX EBITDA in XX% loss was XX.X% fourth a negative to our loss control this EBITDA adjusted million, year the which cost to margin of XX.X%

Easemob Impairment our environment minority million the performance of of $X.X expectations. back The XXXX. fell which primarily in the challenging we companies at difficulties investment impairment business million original to Cloud was goodwill as Engagement QX, was related divested $XX.X Investment due impairment financial in the to Customer loss of equity funding of due made investments. and in certain several to caused minority macroeconomic have equity QX, primarily in tightening below

the latest making the situation a decision. taken evaluating We have impairment prudent and approach,

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

equivalents maturity at on repurchase QX. year mainly the balance $XX sheet. outflow in with $XXX Moving $XXX to cash paid share million. with over term cash end in short to QX deposits ended was We quarter the compared cash, investments X cash $XX of and of time for of due million million million Net to and

approximately $XX.X million XXXX, to we XX% million equivalent representing approximately of of $XXX ordinary ADS our Class repurchase program. approximately In million, repurchased X $XX.X shares, share million A our for

an Our reflects stock the Board's of Board again of our Board's extension Directors strategies authorized undervalued unchanged. long-term Agora. has fundamentals, existing February terms XX, program share the in view growth and the to Extension with all currently demonstrates and of that potential confidence other the is XXXX, repurchase

million market management our We Zhao, personal informed by funds were purchase open Founder total X.X under ADS he had of approximately split. of in also $XX XXXX, his the used the share end CEO, Tony as million that his purchase and a of to of

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

challenging are Our uncertainties environment revenues year that dynamic, global assumptions to on reflects on based full the COVID-XX impact change markets. and macroeconomic capital guidance to various the of subject prevalent the related

Cloud currently to $XXX business million in of to XXXX to fiscal Engagement $XXX for we total total excluding that, the range be $XXX million expect year of revenues XXXX. the of divested With compared revenues million, in Customer the

want In us. to to work deepest I closing, for team challenging this entire appreciation and for to their hard our year Agora in the trusting express my extremely investors

call Thank you, today. everyone, for our attending

it open questions. for up Let's

Operator

[Operator Instructions].

the first question of will Liu Stanley. from Our line from come Yang Morgan

Yang Liu

Two questions side. my from

The in the first point to is terms would see we respectively. future of overseas and for when could like inflection the one market, management's I view market the hear in domestic

second to fourth question the margin breakeven quarter would the whether with this just XXXX. previously gross I be And I target? you're by predicted is what And behind remember and Like, so, this be target? double-check the this revenue management what had could breakeven assumption still to if reach staying target? want

Tony Zhao

existing more and represents term growth pressure also about challenges don't in this as talk also long use to temporary there and in emerging I cases, by pressure. This optimistic slowdown new post-COVID recent has real-time use cases demand countries. revenue for due are further caused The the driven demand pricing demand engagement and about and side. But remain We a change think fundamental was I'll macroeconomic in of medium demand in adoption reopening well. mainly technology.

shopping increased And in last For new to severalfold use the months. XX from U.S. continue demand cases, video the in China. example, see revenue in from we both live new and

meaningful this revenue contribution year. Some of will them have

as internal in our I to want products want on the I conclusion, to as in don't long provide predict and market. focus not the best we'll work worried how to I concrete efficiency also am improve about So demand. possibilities.

Jingbo Wang

second the take I'll question.

compared to you as flat can basically year. see our So full revenue from year last guidance, it's

are mentioned. Tony we given this relatively challenges a to slow all macroeconomic So start off just the year

this from to revenue year, this level at we'll and In optimize XXXX. will costs meantime, finish we into to adjust dynamically operations a higher we but possible, increase we continue QX during So will the efficiency than drive and likely see the we our year. structure actual cost growth expect revenue quarter-by-quarter taking wherever

target year. OpEx this improve So our revenue fixed this determined to point, at don't have but a and we health are significantly financial we throughout

Operator

Daley question line Our the from of Bank America. of come will Li from next

Daley Li

one, share but questions. overseas the for last number ASPs trend more the have decline. we color and quarter-on-quarter, domestic both ASP and could the first for Fourth Maybe quarter of overseas see like two see the I market? still quarter-on-quarter stable about some year, management clients quite domestic

how trend the So in we do see quarters? following the

employee further given target outlook the second question optimization the our the Would My and is we regarding of current growth profitabilities? consider structure. improving

Jingbo Wang

I'll Thank both take you. questions.

So in in presentation, continued adoption the and have terms our customers, market. in steadily, the number our and both release of that also also the see of been international quite markets you can technology increasing U.S. as our shows customers in number Again, and of of China globally. press

pricing in that are you the expect X past that U.S. pricing, we the quarters, the So near and in faced pressure to in especially markets, in a term. more we challenging of persist do terms international and correct

little I'll is about again case. explain the a that why

do of of number early-stage as a So companies customers. first relatively companies all, we as the our start-up have large as well

the well. XX%, our We In that used products the interest to for to healthy, them has We so rate drop in don't and that different which our will more actually, also increased previous our the in as those given to sensitivity. adoption which anything this expect see more ASP the much limited years. the raise year, is inflation, term. continued usage term harder widely pricing do near market, factors So and is funding. their it their become has product will pressure China experience change of near industries. we has and And high X% average how pricing become don't Past see been gain every from across hikes,

year. anything that, this So we with different don't see

focused at this continue for fashion, we the team, And where then of really terms in a we we'll team don't across and we'll see improving workflow, also and on So low, in the the where for on expansion, plan the team, year, our optimize look any also investing confidence of redundancies. in We'll have by team. very detailed is see to investment return will improving we collaboration this teams optimize.

don't for we So have cut large in the near plans a future.

Operator

Instructions]. [Operator

comes Our line from next question from the of Duan Bing Nomura.

Bing Duan

two. I have

a on the is follow-up one demand first The side.

may of slow maybe might right, our verticals we for than in industry higher is outlook, AIGC. Easemob? And down then we recently, any there see or or is application a strong of kind what So current growth? do global phenomenon revenue side. lower that or excluding currently accelerate driving about ChatGPT which or that kind demand XXXX, Do on drive flat, the is development, and applications That's volume related applications, that see our

is the second take about question about the ASP the So or rate.

applications expected there to compared year, will for So new applications difference grow our our be to previous this any verticals? or

Tony Zhao

several live different shopping but use cases on used It can digital there speech-to-text. potential, and there the be regional On cases. mentioned we cases to side, use opportunities I opportunities in be verticals like growing also are think are continuing in on Latin emerge social already can I demand that Europe there like also, in China. including And are transformation more use America. a see used bigger And like

resolution demand over end that of users is natural or use for going sessions, to it in and all quality as television, just enhance and not cases to would that, well. their of that even attach our a improve for will, for by cases, our or platform experience time. for our Besides all us, audio product, clarity all we the customers' of use It's in enhancing development video across see also turn, rate increase us the the

more also terms to our a also is going we single believe could generate to potential on adoption, this for of happen more our developers create that in to just also platform. new would reduce cases in trend use to help serving help experience or spend resources we so demand. more and to developer customers will easily grow Plus, apps our that's us continue that industry. those improve demand new the friction So to All

interesting our the ChatGPT of I'll shows social area think own inspiring potential just one development around time, maybe side. discussions possible. is lot now, we About see And potential and customers' apps or like ChatGPT, an I around becomes in a in our practice. in this real it. it do that a mention conversation the industry human-like

characters this interest So our someone language. in a is in some like And to the start model apps, social specific a quite freedom ideal use with some conversational their to They large sort that attracts platform. background having by their create customers of the and personality talking of see we also defined of own with gives language from imagination, because partner. consumers that that, even relationship

So invention just that's interesting recently. an

kind in control things happen machine chat conversation customer time. a a large But and the human including only dry, sort machine command could also, totally people the be engagement In naturally the conversation in But like there can could now way, could interaction the that But would a similarly, do were the Alexa interface real somewhat very boring. use and those language cases. be from smart human that past, imagine with to Siri. past becomes of service, We of such model, to side, or disruptive. ensure we interaction enhance interface, On conversation. this

will we potentials possibilities. all see, have be but We are more. those close on a those there do could So eye

Jingbo Wang

I'll side. on and the quickly pricing in rate chime take

financial enterprises, cases, mentioned with transformation see the that's like market digital very institutions. China, a remains U.S. pricing very a the we live healthy. few There, in And use Tony different large new So in shopping

different we us. market is But there, very see believe for still it's a it profitable what So model. requires we pricing a

Operator

Li line our from question Allen JPMorgan. of And from the come next will

Allen Li

questions. two have I

live some breakdown shopping? give categories XXXX, maybe in you us and rising as please entertainment, other such firstly, on So the color like by could some education revenue categories key video

is hold question seemed second KXX, China business quite excluding a storage. bit on in revenue, X past non-China to We business our see while my And well. quarters, down up slowed have

and more think between like is we there So allocate markets behind this going a do Or And going you international are that? thing? temporary China reasons to resource how is structural forward? any the

Jingbo Wang

take Okay. both I'll questions.

the terms operate talk China and first X of will I so vertical first separately. the all, one U.S. Obviously, are of and international in the we markets about the markets, them -- market. different, So slightly markets in in breakdown X those okay, the

So social by what in the the largest include And work. that things call U.S. international still and vertical, will in markets, live shopping. video followed future is online like event collaboration, we

education. biggest The is second

I year. almost is In Things, now. also social much main the was and a in contribute zero then education part meaningful And something are the think China, smaller sector now, these has dominant also Internet regulation last previously business doorbells, like on large contribution a breakup. And TV, the these because smart transformation, obviously, of That's revenue IoT, enterprises smart now will to digital of change, XXXX. the start verticals. after is much, traditional so

In terms factors. of like are a few up there past quarters, China few revenue the think holding in I

GP all, to with product, been broadcast the of what new call streaming revenue had very First product, pickup. nice lower do the we it has but has margin which

So China now already. XX% to contributes revenue about that of in

apps example, secondly, expanding their on markets. China, focused but in customers overseas So not also, have in for in in with working we that's just business XXXX. And new been something China

business, that's digital XXXX. another And growing almost didn't transformation as I So exist in mentioned, business. lastly, the that

Operator

moment. back remarks. any showing queue I'm for And turn conference like closing Fionna questions this the the not at to I'd in to further any

Fionna Chen

post please questions, this presentation thank the e-mail. Again, And call. the remarks on again. our call. to at have also reach today's this you also and or this earnings posted out replay our if Thank us IR will we you our website of is any further our on, IR for operator. attending for call you, you, call Later for website. Thank everybody, Again,

Operator

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

a day. disconnect. great You may have Everyone, now

Tony Zhao

Thank you.

Jingbo Wang

Thank you.

Agora (API) 27 Feb 232022 Q4 Earnings call transcript