API - Earnings call 3 2023

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Operator

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

Third Quarter 2023 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. The company's earnings results press release, earnings presentations, SEC filings and a replay of today's call can be found on its IR website at investor.agora.io.

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

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

Bin Zhao

an Thanks, at everyone, welcome, quarter, to revenue was In our flat XXX million call. RMB last million of our earnings compared operator, and Agora, Shengwang, X.X% for quarter-over-quarter. increase $XX.X quarter the third to for

of Shengwang, As Agora X,XXX ago. to this than year more have XX% more and customers we for X,XXX X quarter, active increase X%, than respectively, for of and compared end an the of

product Now our updates to business, quarter. technology moving the on for and

account guide other market of worth ease. proud billion is e-commerce Agora. live marketplace and that can commerce retail. With with a [indiscernible], brands, and in announced the with transformed big shopping could was to China. estimated opportunity market highlighted trend. According lender platforms live recent live by the by We live XXXX. in XX% next experiences. believe for to soon live Let's developed start live shopping U.S. XXXX shopping In years, will and entire embrace to market to the also We video-based Gartner's the sales shopping in e-commerce seize mention leading general recently as for power availability now Agora Agora, We're solution recent the shopping catch of market and and $XX as be U.S. our live has shopping the up that disrupted

the we shows For sellers a new example, live by leading external their QR link into sending functionality for retailers code. host, Sellers fashion can introduce or recently them helped easily shopping influencers a that -- engaging and participants allows live celebrities, session to simply [indiscernible] easily to to while professional conversion. VIP invite boost host provide content we join to celebrate can customers do professionally shopping add or and their more platform

scale. virtual at to also functionalities spatial product through comprehensive This audio, interactive and can social work quarter, the interruptions because Agora and with persistent seamlessly streaming integrate and we which within stack, engagement promote Sandbox a the real-time partnered live chat. our gaming decentralized meters chat of leading Sandbox, video choose text The XD voice,

meaningful in As a result, collaborate connect, players' and metaverse the ability is communities significantly enhanced. to

our Moving on SDK, with RPE human engagement to Shengwang. We real-time large recently language a AITC connecting launched models. users solution

AI such models. with beta So AI direct voice in and inland between launched far, format. companies conversation their OpenAI, have largely recently, Only have interact people text users as models

or receive surely of delay to voice However, seconds a there is to a X significant X response. simple more

a response human-to-human Our conversations the users. natural real and that the seconds. new therefore, so much hear the experience response to solution designed engaging the can near This expected in within latency has for more pause been users tackle real-time X close issue and, is provide to

unique it range from use great a create [indiscernible] the wide in freedom AITC comes capabilities. AITC RT download fit RT its of to choose and application models, easily demo with Our Please their voices also free SDK be speech features can video our text try with solution presentation to found feel and language A large and on to also the case. earnings engines more yourself. app flexibility. our synthetic of with application can their demo details

we technical their to headquarters see Germany. delays move specialist to real-world cause site, could from assist BMW wait factories at could local XX in arrive engineers manufacturing before even delivery. needed support Next, had digital in the we the on time at They transformation to BMW in hours the and impact let's how least -- journey. when which specialist Historically, line

remote HD Our headquarter BMW latency. video the detail solution enables even at smallest specialist and inspect, to low remotely the

large see commitment provide of instructions, to In hub where the with month, makes solution consecutive ninth real-time specialist of we is our demonstrates devices. RT a in addition, artificial enterprise plays discuss when engagements. intelligence our becoming where initiatives. Last can conference specialist the trusted digital for exactly local or role the we inquiries engineers year AR with marking This the held transformation their partner for the

[indiscernible] AI the have We and enhance We time. that audio the improve been developed real-time real-time leveraging of long on experience in a cancellation engagement to device quality quality. noise significantly suppression power for actual AI

reduced deliver pursuit AI-based we like real-time latest have cases, business anyone integrated people devices utilities access SDK This of clean anytime algorithms, solid the have mission by to our electricity. With as Many resolution, are basic how SDK to around coding perceptual making RT segmentation, resolution. realize such Internet RT. and and substantially cooling, infrastructures, assessments to to to network limits our interact anywhere. wide everyone process quality of world, powered our our now to and the the high-speed front, of or profile without video the as with more to high-quality smartphones with upgrade. With and real-time even the those on-device technologies that quality can video of allowing enable access use worldwide and AI-driven a making of our customers means experience and engagement to they barrier SPK billions are our the water capabilities, latest more viewing of enjoy AI smartphones overcome just and On range efficient this with XK to such optimal have in to video us video adaptive we optic super device constant and up AI-powered

the We have language also closely AI of generating world. around and development followed the large model

earlier, developers mentioned RTE voice to users. AICTE enables with our AI-powered partners conversation solution into put As

closely have social see cases games customers foreign learn their working and companions assistance, AI some AI them We or launch expect personal help such use AI players soon, innovative users been with with deduction to to as tutors and language.

format in of become uniquely transmitted day language large other models. advance AI to amount continue AI human human to data critical such and X As between need today's traffic, positioned human and that enables to information, and be human will the models to substantial infrastructure interact users video and generate through of in process of to surpass ability with -- multimodal their will audio such models data users video and volume date The we and are audio. to each

has in with Before a Directors. reasons. us Lico concluding my prepared Board Ms. ago. decade to like I inception Tak change our a his recognition remarks, of been personal due announce would since to voluntary our tendered also working has Tak

value to Shang our First, as our shareholders. With our the engagement forefront and company technology who invaluable let sincerely that our long-term our of over join expertise results. stay director welcome I'm things his I advice since Chief then as and currently Technology a a as and to me an And to investor, real-time been Board. Scientist board Board. Ms. Officer to confident like will XXXX. warmly thank appointed and on service create for would has and I Dong, dedicated to will turn to Shang's the review the would insights Chief Jingbo, director. Tak that, Shang help like financial

Jingbo Wang

you, Thank Tony. Hello, everyone.

million the results and XXXX, financial then for Total increase and me $XX an quarter I of outlook first decrease fourth for the were Let of of by XXXX. the third X.X% discuss reviewing third quarter-over-quarter the year-over-year. of will start XX.X% quarter, a quarter revenues in

and Our year. due to and core environment quarter, reduced million from markets pricing emerging was X.X% customers The to the sensitivity second $XX.X of tightening compared and starting decrease to financing were challenging year-over-year quarter primarily third half the from due decreased year-over-year. flat macroeconomic usage in last conditions, increased in revenues last

XXX.X business. revenues, increase quarter-over-quarter of was customers revenue transformation an This quarter-over-quarter or revenues digital growth primarily we're enterprises. strong past the revenues large in excluding seeing in million the an an to in due on quarter, years. a and third is The X.X% RMB year-over-year, from are increase from CIC So disposed X decrease of area X.X% we increase the where

to forward, and XX% slowing net Shengwang Going general certain we for market revenues due Agora conditions important become decrease downstream an XX% for increasingly believe will digital business. Dollar-based contributor revenue economic transformation regulations for from primarily rate business. The markets. excluding rotation was is and in Shengwang, evolving fast year-over-year discontinued profit and the

cost to on and Moving expenses.

share-based goodwill, excludes of I financial For acquired property tax focus and XXXX, gross intangible equipment the will than in of related expenses, expenses compensation acquisition-related X.X% of implementation expenses, technical land income adjusted was mainly higher the depreciation comments, which amortization of financing-related on acquired assets, intangible measures, expenses, QX non-GAAP due mix impairment the use XX.X%, and assets, and my to margin optimization. for to product the and and third amortization right. Adjusted change infrastructure quarter following

QX and last restructured workforce continued controls. global As we expense to calls, in implement effective earnings in previous year, our reduced and mentioned we've have

XX.X% net than last the investment margin of Investment companies margin X.X% year. a year. QX, $X.X XX.X% the $X.X marketing in QX non-GAAP QX the QX quarter translating private loss expenses were to loss XX.X% As of XX.X% XX.X% negative quarter, to to decreased in EBITDA and million in XX.X% in compared expenses year represented a quarter a in in quarter. last expenses were margin QX a last million of in last mainly to $X QX was loss revenue of in $XX.X represented year-over-year. Sales for R&D due year. in quarter significantly XX.X% $XX.X value EBITDA expenses G&A revenues in XX.X% and expenses XX.X% change Adjusted to of equity the translating loss the certain of revenues million. Non-GAAP in result, loss lower were in the $X.X Adjusted year-over-year. of and total Adjusted investments by to million QX million, investment loss, fair R&D loss fourth sales $X.X XX.X% XX% compared XX.X% was marketing total compared year-over-year. last year. QX, year. Adjusted XX.X% million million in represented adjusted in excluding was and decreased expenses G&A this million, QX, gross margin to $X.X adjusted net of net total decreased compared in

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

the due We products cash on to free bank deposits banks. equivalents, sheet. and cash in balance have Board the of financial share value the outflow demonstrating XXXX, repurchase, QX food, to our in XXXX returned share of mainly prospects on and to Net quarter ended safeguarding in shareholders $XX.X and as and the of company. repurchase long-term to million repurchase approximately cash, by $XXX.X we flow February share in shareholder $XX.X the million $X.X confidence Board's million to commitment of cash Moving million. Thanks was its the XX, program negative September with issued

September a XX, total reflecting outstanding, had the repurchase program January the before of XXXX, As company approximately compared in XX% ADS million started. shares XX, to XXXX, outstanding reduction share $XX.X

have So repurchase capital as its to return intend expire shareholders. share and XX% will $XXX to our February far, in a undertake million which XXXX, meaningful of completed to we continue we and program,

guidance. to turning Now

proud revenues XXXX, this to ] revenues million and and of execution we improvement forecast efficiency. quarter profitability. improving on between to our our market current in strategy subject which currently change. In reflects We'll we of laser connected quarter, especially closing, fourth operational are preliminary $XX.X total this and on This driving very be stick [ and to the in expect focused the our be million. and are view For $XX.X conditions,

attending engagement. Thank of For just run, excited AI we combine well mentioned, real-time Tony prepared see and trust. Thank you the Shengwang teams and to we up investors use as everyone, and for to for and our the the generative open for long to hard power are emerging let's you, it both call cases, your their today. developers Operator, to IT for work questions. are help Agora

Operator

Morgan [Operator Stanley. Instructions] Tom First from Tang is from

Yue Tang

I [indiscernible]. from have just questions on

So X questions. I have

have and business? regarding is outlook the between regarding what breakdown the first X China question And it So in both and and intake for is position the Agora XXXX second Shengwang overseas. -- a

Bin Zhao

our to for global for growth status think and The and I market Sure. both Agora overall the Shengwang optimistic long demand growth about in side, term. of midterm

consumer I think is one actually pandemic factor really big the changed behaviors.

The conferencing. et people use only the basically market, that U.S. get with is Before experience, all video use or scenario like real-time other co-working, where cetera. the audit cases used people pandemic, web not are familiar

Now consumers of activities are with use as or all decreased, online, cases, sessions live co-working the to more the volume after such although and engagement adapt relating of some online, with pandemic, or conversations in watch real-time live type but party. shopping

change I think environment it help of lot growth use volume. Meanwhile, behavior in consumer the operating can for those challenging, overall, this cases companies all us but the see still is in to macro and market. both a is

actually As a matter start see difficulties. into to of fact, small financial we some run competitors

XXXX, stabilize For continue new regulatory market, our platform use already probably our China is In headwinds, usage a new as our and to and of you on lot grow grow. goal macro know, to business existing cases. regions into and but

also year. than year. digital enterprise grew And Our in adoptions business market large also share more this nearly XX% this serving transformation XX% our new increased

price growers digital I use business change continue to the to the the challenging there is gain frame. has to market see I our to of near for mentioned as mode continue more pricing and emerging number hope cases also actually of mentioned live further term will both stable for some we be expect give the in lot as but market. there. our and grow in operation, the but long-term growth impact and such we more in about And healthy the the business grow, a emerge share. And on XXXX, transformation market, environment markets Internet the And users about goal growth more volume. Overall, still to to time those consumer For developed into is Also, shopping. in been potential demand potentials start our question customers and the pressure at still earlier. in us medium- behavior that Pricing-wise, XX%,

demand such stable online in healthy. attractive as digital mentioned. Pricing generally is demand Internet and -- year, digital dropped our stable karaoke sector Internet each this with as broadcasting in remains gross We strong more margin some from overall, customers, spots streaming transformation China, products. side, is in premium In from also demand transformation bright market. see XX% about I but Pricing

Operator

Daley we Next, Li Securities. BofA from have

Huiqun Li

Manon AI. question the about

application -- could et which potential business scenarios in more of more you for think the teams And our or in You do the have future? AI mentioned really application drive AI you when like meaningful growth there's systems, the our AI think can to cetera. contribution which much do business revenue have have

Bin Zhao

Yes, right. you're

like As all cetera. potentials I talked about, AI AI also et there are many companies, players, in sorts of use cases game

also and I real-time going in but of AITCRP/SDK human we audio/video a as do However, view not more rolled few a just out this among be very those concept, potentials, a humans to in have much long-term between domestic last module there's basic models. just the That's mentioned, future. traffic We months.

undergoing. still is development the However,

player to bring in AI and together of really next to That's and lot term to realize, in I and overestimate partners language case to the the customers each and few our every in able and where with our think there's company we it that This work of to personas near through we model a such the a human-like want or don't like to be large hard [indiscernible] is and state quarters. growth. trying customers like really validate break use lot a of certain partners in into try for I to act as since games. the

Operator

this questions. call are for you, There today. everybody, Instructions] [Operator further no Thank attending company's

Thank at have the there's free day. the feel if available you, the reminder, to company. a questions, the any e-mail on great release and earnings And in recording will company's website a investor.agora.io. As be please

Bin Zhao

you. Thank

Agora (API) 22 Nov 232023 Q3 Earnings call transcript