API - Earnings call transcript Q3 2024

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Operator

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

Third Quarter 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Please be advised that today's conference is being recorded.

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

Boon, Tony and Joining Founder, today CFO. are CEO; me Jim the company's Chairman

results between in be its Reconciliations found release. can and press company's GAAP the non-GAAP earnings

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

over it turn me Tony. let that, to With

Bin Zhao

third and from revenue Thanks, up end-of-sale macro regulatory such Changhong down in I cases, the business were our the operating use $XX.X X% our due past year-over-year, second certain as. mainly to were by low-margin operator, results X% year-over-year, driven quarter. certain XXX in revenues RMB quarter, earnings welcome, expansion quarter, environment. the products, excluding to challenging will million and in million in everyone, mainly call. first review Agora's revenue

quarter. products to for updates on our and technology moving Now business, this

to already know, developers computational recently to allow Open many to API real-time AI SDK of any our voice-driven application. bring in experience collaboration with AI As launched you we

distinct has advantages. solution joint X Our

better convert from need directly First, OpenAI can without process is input it to multimodal, respond words models. and to understand previous therefore, GPT means can to emotions voice text-based human and model than much X.X text the which human

previous can smart developers end of network IT. significant echo across a in network our conversation by or and enjoy and optimization often seen where speakers believe suppression verticals. lacks to global Internet impact had AI naturally with joint many use real-time even speak algorithms. and have features innovative understand market users well noise low various launch us smart developed Second, Since area will early Many real-time to One October, as or Agora's assistants, or to latency to under our so-called ability we challenging decisions. generation is of and request experiences conditions, with cases which being as advanced thanks have brought cancellation we fascinating making conversational unpleasant have OpenAI and our struggle

our on an natural can AI with feeds. easily IoT AI based video understand hold live actions model Now concessional advanced requests, and take SDK devices conversations connected complex to

that calling adapt interactive grows motion educational our to the X to SDK and their based XX. move child's the take used a parents behaviors -- and to for and around Mike robot between the a to now example, allow during makes video to robots and of parents SDK age Mike content learning AI storytelling companion can signaling and Previously, platform. advanced AI follow by our child The children customer, For SDK, interruptions, our its providing can in conversational add monitor a and a enable with response to child. video robots Mikko call. their advanced kids Thanks dynamic talk our and models on

record highs, continued technologies. Beijing, we hosted RTE conversational its Minimax, we developed At Both our interest with within unique interest industry-wide huge place attendance of around the AI company. AI Its potential business. a solution a and Conference conference, RTE focus leading Last on demonstrating RTE AI the hit jointly on also the excitement with and our use month in demoed ecosystem. AI Annual market registration developers real-time tenth and from and a conversational

for to be time, speeds developer We succeed, as to the of believe ecosystem need tools. a that and and such tax foundation building other speech, conversational foundational models AI to vibrant blocks, streaming,

ecosystem companies together. We other are leading foundational such build several to working closely and players model now with key an

performance building to we real-time integration community and in text for users a As text large AI interaction language Transformative developers project and sponsored source With capabilities. to speech the models. understand process, wide ensures and our a in agents our create models, extensions absolution with TEN part TEN offers naturally, Expansion is and called an can high open global AI flexibility camera. or this between with feeds from latency device cloud-based multimodal for short. to of speech this not only that developer but supports range agents talk low AI network architecture. Network video framework easily AI Throughout effort, users TEN It of also

agent To In can to IT summarize, will such create can interact new and human. in customer and significant explication user use voice we use gain essential for point many believe for support, experience adoption spite and multimodal drive where through these as This industry. natural will cases wellness. with enhancing AI match human in growth usage agent even that outperform is technology cases, AI opportunities RTE the the the

some position more real-time we our organization and opportunities build conversational These in the this the responsive pioneer help fashion. become a recently real-time well our leverage To industry an to technology a will made and As strengthen and AI key positioned real-time fully the as for accelerating us aligning leader to a for we space. are changes provider support infrastructure changes leaner operate AI in AI. faster, engagement and next-generation era structural engagement generative leader, vision, conversational

will the Roger as Chief leave Mr. company after that Security years X.X announced also we serving Today, Officer. our

been and our dedication and has Rogers foundation. strengthening security leadership for invaluable grateful His compliant in expertise. are We

Moving the stakeholders. protect will highest uphold assume company. to responsivity will Robin Roger adviser customers the to provide will continue and forward, Patrick and to to strategic continue the security in standard complex, an we Li for as advice and our

concluding and the accomplish for believe AI I Before technologies innovations to Sheng Zhong thank the prepared both and era. to together. can remarks, engagement in to Agora experiences are resilient teams positioned in well my best and we generating build I dedication real-time their harness emerging want believe what the we

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

Jingbo Wang

everyone. you, Hello, Thank Tony.

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

such or from verticals total RMB an year-over-year. of increased X.X% year-over-year. revenues live was products, due XX.X% increase the decreased low-margin were end-of-sale decrease certain Revenues X.X% decrease certain and X.X% usage in Shengwang certain year-over-year. million topic. of excluding from primarily a year-over-year X.X% of Agora's quarter-over-quarter third were sale quarter-over-quarter end X.X% $XX.X XXX.X revenues million margin of increased business in quarter-over-quarter if products, revenues quarter-over-quarter revenue increase quarter, X.X% an in revenues as and a of The quarter and decreased growth the Excluding to third and increase XX% and expansion

Things, during from increase as to Internet revenues Shengwang slowing vacation. to to was and excluding demand XX% is due and products revenues increase XX% discontinued net was Agora decrease well due primarily for social verticals due conditions. from The verticals Dollar-based vertical from general education as economic such in entertainment certain of usage quarter-over-quarter and business. NFC The from as for increase year-over-year summer and regulation rate retention primarily certain

Moving cost to and on expenses.

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

equity also awards mostly of awards price part employees. while the was in for higher. These the granted restructuring, were As stock remaining we our certain XXXX significantly canceled

stock stock share a grant, for price. in cash share-based expenses today's a awards, time the rules, lot of lower at million. which at awards cancellation to of According of is the is As the remaining the will of the recognition awards immediate although compensation compensation value the these price $XX.X cause much GAAP result, at a expense

that to awards these want are simply emphasize canceled. I However,

So $XX.X million with stock other or In option there employees. to the an any are in paying to is words, the relevant QX company, cash cost expenses only not is company no treatment. actual accounting

will Going forward, awards cancellation these burden. accounting free the us of from this

end this expect of higher on the this million year QX than was quarter. costs to we year mainly and roughly by million increase offset expenses savings in the than margin compared certain next in quarter in higher was of and products, QX was of last QX XX.X% severance third to XX.X%, in The $X.X forma million to this which year third low-margin $X is partially we If the year. sale which due exclude for for margin, year. QX of severance Postrestructuring, Gross quarter. the baseline gross $X X.X% QX higher was this operating pro X.X% see

R&D last which in X we revenues million pro R&D of QX, exclude the XX.X% $X expenses If QX equity total expenses million in to QX, XX.X% included these million. compared severance forma were $XX.X quarter. XX.X% in $XX.X $X.X and award in items, to representing million expense of decreased year-over-year of cancellation year.

QX exclude QX, were pro in compared included which in of expenses representing sales XX.X% severance, expenses million. the XX.X% quarter and in to Sales we forma QX, decreased in to total and over marketing severance $X.X of marketing If XX.X% million year. million $X.X year revenue last $X.X

of these award to in G&A XX.X% expense XX.X% total QX, in decreased which revenues the expenses items, million. in representing quarter expenses pro to forma included compared of $X.X $X.X were in last severance year. exclude equity we If million million QX G&A $X.X million QX $X.X year-over-year and of X XX.X% cancellation

million net Pro million, the line. $XX.X affiliates gross for exclude bottom for Moving to million award and Net loss loss X.X $X.X net equity million, expense was cancellation severance quarter. $XX.X to million. translating we from equity on if the of of was forma a margin of $X.X losses quarter XX.X%

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

or $X.XX We repurchase balance due mainly and in to Moving with issued $XXX.X million cash $X per cash cash the ADS. and by outflow million. products of cash, sheet. share banks to bank was QX flow quarter equivalents, of Net $X.X deposits free on negative in financial million ended

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

will intend to we return we and undertake February to repurchase of far, meaningful shareholders. completed XXXX, share expire have continue program, So at capital which XX% end to of our the this

Now guidance. turning to

expect total $XX of million million to to currently in we For fourth $XX.X million $XX.X revenues the XXXX, revenues be low-margin were third of fourth million from compared and if quarter quarter of the in and quarter same certain $XX end between XXXX of excluded. XXXX, products the

expect current and loss our income the also in are This outlook in which preliminary operating view to market fourth -- quarter. significant and reflects change. conditions, We in improvement the subject the also net first on

In this you during contribution teams you, Agora to Shengwang attending and for your closing, and both for call everyone, period. today. thank Thank the hard work

Let's open up questions. for it

Operator

comes [Operator Shengwang, And question first Senior from Instructions] of the Associate. our line

Unknown Analyst

questions. management taking my Thanks, for

collaboration the of upcoming quarters? on adjustment views the the you could of And the progress OpenAI? the what impact price. of of secondly, all, recent would recent the share organization update of so please earnings cash on be your First And please us your I on with wonder your

Jingbo Wang

first the take question. I'll

in So to compared operating million million QX. on about which as be lower $X The restructuring to basis QX because million I was is expenses a $XX.X QX about this expect compared in to is said the more QX saving November. just $X now, lower the in we in baseline and reason happened in about GAAP year, QX

months expect hand, So we not the a quarter. other who to still revenues. left we on about on for employees significant restructuring had impact salary the of And the X.X have do this the company

translate will line. savings improvement So Tony? the bottom most these on into of

Bin Zhao

in group we audio infrastructure OpenAI also, and Meanwhile, areas make of smooth lot a improve the under design conversational interaction we more certain AI. future. still mostly of developers On the of hope and of OpenAI Yes. launch customers. cases customers still near and our to data. realtime from stage, human there to the are cooperation even terms Current some a technology side use we API, and POC work And parallel API see with see on actually with launch experience on is the and to stage interest happen in quality of between

We that are bring with to sooner. working market partners to

Jingbo Wang

Okay.

still input, than and might On us, offering which the the cash what input is pricing It very to cheaper X price. closely bring But watching for voice all certainly for has pricing to that the the standard that's cash I has developers, on is way now is standard XX% is X cash not changed. the including but $XX, down cash $XXX emphasize happen The repetitive air That input is is next. which question, is per cost already. yes, basically are want seen of million order token. input, that input. price The pricing lower

not took more which token. for lot The the use a of say the hit with changed, say high Xx cash pricing hard to input expensive. percentage has actually really you cash various price for cases. -- use the is differs. cases, the price a And achieve So is the different the for can auto rate for input it's

So that not changed? much. term, will the With overall medium pricing significant reduction. said, has The be there for believe that cost . changed do we actually has in that room

Operator

for you. One moment, our Thank question. next please,

question America. of line comes Lee from next of Our with Bank Daley the

Huiqun Li

questions X here. have I

the our will about for XQ to China demand compared revenue be for revenue. about trend the kind It the color seems key better is question quite about And QX? give more Could QX. regarding Mainland better overseas of for you drivers First in helpful. business and more guidance color

how model application see The the the the RTE like change third about -- the and between do also the -- AI, language we large how with based conversational the about this China in the we players the AI? and trend see domestic question of terms open progress and AI, in conversational

Jingbo Wang

first the Thank you, take I'll question. Daley.

in for of QX. million $XX terms guidance $XX is our million compared So revenue, QX to to

markets actually million in million also was about China sequentially, So driven and that both increase, $X.X by U.S. implies demand to and international that market. $X.X and

social the customer in so-called shopping creator So international also of market, in live see . economies Asia. in we U.S. more demand and space

had especially about As market the recent talked are the Asia in a Middle East. pretty we past in recovery East most earnings in but India, quarter, we seeing the years, and and Southeast in Middle actually, we calls, some previous challenging in Southeast X and environment Asia

transformation. a So that's In season U.S. transformation QX. for see high and in international. improvement QX on digital we IoT China, traditionally, age is And

We share expansion in also China. see some market

successful led still the to because also So challenging conditions QX our overall expanding market economic to growth also sequential share. in been we revenue That have QX. in compared

Bin Zhao

question. will I take the AI side of the

more most financial well. talked the are in experiment as model There's stage. have even in use we conversational generally cooperation model events kind blocks. or lot with cases case build development also remarks. partnership of interest POC of to the announced We as foundation few see with to a companies, possibilities of we and build opportunities, leveraging about exploring AI amount huge a our in a But the opening companies period in algorithms companies use of and leveraging a nonfinancial building various We features

take see mature become the for use IoT real-time domestic for available to to fit time education, into some cases And will clear customer wise, models. companionship. and technology in social generally API we service, It

Operator

comes Our of next Shi Gushing from the Jun Securities. question with line

Unknown Analyst

Management I year. towards for the have question outlook next a

also breakeven and could that outlook next -- our point and revenue will cash us color year we our you we year flow look more year. -- So our next please give on achieve mentioned next

the we point. what will that on we based So do assumptions think achieve breakeven

Jingbo Wang

Sure.

year actually GAAP assumptions. yes, new for XXXX always very in under and got markets achieve target So have we to that's that we full conservative

technology to additional revenue for to And we existing goal growth drive our internal use from AI So cases. be and technologically certainly for ready the us conversational organizationally moderate -- cases. want demand use is

with the So in savings. guidance believe in very XXXX. revenue changed. breakeven of operating conservative now summary, that a expenses about has talk to assumption, level savings the be we'll not And And able of I with just we

Operator

you, today. Thank questions. further no company's for are the attending There you. Thank everybody, call

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

Jingbo Wang

Thank you. Bye-bye.

Bin Zhao

Bye.

Agora (API) 26 Nov 242024 Q3 Earnings call transcript