Agora (API) 23 May 242024 Q1 Earnings call transcript

Good day and thank you for standing by. Welcome to Agora, Inc.'s First Quarter 2024 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 filing 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.

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

Agora quarter, result considering earnings This by operator I'll live high usage in growth our great first revenues such welcome up is shopping. emerging environment million a challenge cases review driven macroeconomic quarter. interest results is were the as in X% rate to Thanks and use $XX.X and quarter-over-quarter. first our the under call. operating the past everyone from the mainly

due quarter, and As of XX% of quarter as the XXX.X quarter, over business this the million XXXX. Agora cloud were to in customers, the disposal ago.Shengwang XX% active first regulatory of compared in environment first X,XXX as end up X mainly RMB macroeconomic of year-over-year, year had to the the challenging revenues down well customer engagement

products. our experience learning for user every usage. parameters overall of first world technology exceptional real new performance, set we to new about active processing leverages focus technology enhance customers, for application to and various challenging performance compared we and Optimization enhancing pipeline. areas, that the stability is As machine capabilities.Our minutes display quality of differentiate dynamically device the adapt customers.Let's video expertise empowers to moment experience. Agora. continued our environment, live fluency through X% long-term It our of recently screen, our rendering optimized on of commitment updates optimizes key technology viewers' and the XX value that technology end video versions of adjust step Shengwang fundamental that along down strong talk accumulated Adaptive latency. product performance on Despite this technology X,XXX can of of billions of this customers Optimization SDKs captured leverages X Adaptive video to our quality, algorithms a This our Video video video its of our released and creating our hundreds the years to to advanced and over moving and the From We launched markets, X continues for business, changing In ultra-low demonstrating year unmatched quarter, both image standards operating the to final deliver our quarter. network in conditions Video ago.Now, to on video to live their and and at had

as Video a engaging Optimization overall and video Twilio's made also process. concrete session with seen technology, engagement.This quarter, continued user progress older Kumu For Users quality application, devices without freezing implementing our Adaptive and experience live Adaptive now example, a recently on our Kumu, slow smooth, high XX% product increase Twilio has in sunset Since adopted its technology. we length in even customers Video social connection. programmable video Internet with streaming Optimization

importance anticipate models, and a forward.Last It the voice customers low OpenAI that of will first globally the This community, voice website us and capability text video confirms transmission our shift gain critical developers. the models computer reflecting human interaction that going we latency among with market increased increase in which to will ever. in between amount will to of us Shengwang. GPT-Xo, the inspire format. a let's users to be in human the developers broader our reach lead to will early higher share real to substantial will a transmitted believe next and this traffic multimodal and reason true the Additionally, prediction can week, the apps.As of than a spectrum a reliable human infrastructure audio, interact in developer We will across growing put directly and real and saw feed in launched generation highly end in our the in of position paradigm unique turn directly interaction.Next, end AI AI network time, AI I ChatGPT this help become generative time. of video or future shift soon video to killer

launch our viewers of Games This as are the sports the of major such sports solution Football to Championship announce European summer globally. for broadcasting. and Olympic the will billions live new We thrilled attract Paris events

to room cloud-native the also cost image flexibility arena to Our private algorithms satellite and and and solution game. that uses had solution or a technical in This commentators lines, latency global significant the costs from and provide rely an savings of solution network quality.Apart greater that competitors broadcasting. is offers studio-based simultaneously. number Compared traditional -- can and satellite in-house solutions significantly reduce incurs the for enhance alternative to be and limits from the operating also our hosts to in Traditionally, same customers cover technology to designed work the on to our traditional and our our advantage, customers. apart approach studio sports

the only listen of viewers could most time, same the to commentators. So

with now However, an broadcasting cloud with Internet our connection. the can solution, anywhere and hosts commentators be

channel technology synchronized commentators events commentators co- audio that broadcasting. same -- of are video with the in highly Our sporting feeds the ensures and the

for power this create experience own the viewing and commentators to has users result, Championship platforms athletes, I experts the many with to to same cover preferred game, and Games leading can broadcasting upcoming bring game.Shengwang celebrities an the partnered their a enjoy to summer. As channel in end users sports choose Football European Olympic their allowing end Paris elevated trigger broadcasting -- ChaoYinSu China will widely Program, solution experience in transformation cost-effective sports throughout live sports new and the build applications. to platforms to start-ups by many RTE to become facilitate innovative other we'll this our which strives major to our a sporting XXXX, continue host flexible and additional explore powerful, and year.In believe events adopted live will

AI, collaborated we Over leaders year, [ VC support development the and generative we to brought of bring and past applications player building the access a bring years, start-ups. in portfolio funds with start-ups prominent industry product and foundation will AI have power one-stop ecosystem RTE in generative renowned ], Participating of offerings life. as full to accelerate This partners models, ideas AI. to to have of to Moonshot have harness that their blocks latest functionalities our the Moonshot's to

We this start-ups showcasing showcased -- create. RTE commitment for will upcoming are and period. conference our their Shengwang both hard and be remarks, work innovative be with what see excited start-ups most the October.Before will will thank prepared applications teams Agora concluding to The challenging at compelling want my in during groundbreaking to and I the

stay me results. sustained XXXX.With Jingbo our moving technology will Let's to towards things leadership increase let financial turn meanwhile market share, and review who strengthen over that, profitability in our focused to

you, Hello, Thank Tony. everyone.

in verticals the in quarter, an expansion certain were XXXX to due and slowing due of then for have an first The Let decrease is and and for of quarter the quarter, season of and low quarter, lower other first cost shopping the and well year-over-year. were discontinued me generally year-over-year. year-over-year. $XX due decrease to social first for will growth XXX.X expenses. $XX.X the the in of reviewing X.X% a from customers for market and The were QX of X.X% Agora the net Shengwang, increase conditions. discuss excluding quarter-over-quarter first due usage to U.S. a Lunar high on I increase first results Year. economic for transformation the and start usage to QX the customers to in and season Internet since XX% regulation million from and was and of by Total X.X% developed education as as and to XX% demand revenues million who XX% Dollar-based quarter-over-quarter quarter-over-quarter is generally rate is retention was decrease decrease for live XX% seasonality such revenues tend second year-over-year primarily outlook digital general projects RMB the resilience decrease The decrease a a business.Moving financial quarter-over-quarter of markets.Shengwang Agora New increase revenues was in the during business X.X% revenues million primarily quarter. primarily as

which QX in to property sales last and $X.X and year. I utilization last of QX, expenses year. year decreased the marketing tax QX in to XX% of was represented Adjusted QX in in increased slightly QX total use XX.X%, lower acquired small quarter translating acquired than to X.X% and expected was margin Operating $X.X QX, XX.X% in year. adjusted to revenue negative XX.X% negative cash X.X% cash net The total the on year-over-year. was infrastructure to were XX.X% year-over-year significantly translating negative due QX mix flow my first last and in QX million focus was to compared share-based G&A first share of total repurchase financing-related quarter mainly the received of year. XX.X% year-over-year, $X.X loss right.Adjusted cash the $X.X and for in Adjusted adjusted product of and which compared disposal the margin $X.X project to the of EBITDA to XX% first $XX.X intangible flow. to in Sales year.Adjusted amortization For expenses, to flow XX.X% million guidance. net ended by by last lower cash, represented Non-GAAP revenues year.Now $XX.X a of marketing of QX, G&A gross R&D on due ADS. change margin exclude million loss will flow in QX.Our $X.X turning decrease per sheet. mainly expenses, inflow lower banks $X.X deposits EBITDA year.Moving quarter in to income compared million, R&D of expenses and for deposits was quarter to expenses, to margin in comments, $XXX.X XX.X% depreciation in was compensation XX.X% XX.X% financial which compared negative products the the to XX.X% intangible or cash was equivalents, We to increase than in expenses loss negative million with Adjusted was million in rate bank expenses QX. assets, than compared QX adjusted $X.X of of decreased net million in turning in part measures, $XX.X loss. million.Now X% -- a credit was lower Net loss balance last million offset in represented last quarter cash financial Free land to expenses for quarter and related in last million, cash following million amortization in last free revenue primarily quarter QX year. expenses portion QX, of in a expenses acquisition-related $X.X were $X.X million $X.XX relation compared the million XX.X% assets, land million last a due equipment, headquarter issued of in to non-GAAP

market increasing on everyone revenues the the reflects and of challenging for continue toward our this $XX million your $XX closing, hard Thank period. Agora expect moving total conditions, currently we our enhancing today. are current which market both XXXX, For our contribution share, and forecast work between you XXXX. subject be This operational for Shengwang and to profitability and sustained and second views during preliminary technology, million. we'll to attending to quarter change.In call on the in team Thank and focus you to

for questions. up open Let's

the [Operator from line of from Liu Instructions] The Morgan Stanley. first Yang question comes

questions here. Two

an And quarter the The is customer by base. outlook. is for first behind quarter? is your total also revenue in The second the Shengwang expecting the customer that's guidance Shengwang process? first some What implies can year, in Agora ongoing What decline part revenue. the the on that? the are us is and or question.The the one be saw the on stabilization the recover sequential will the Yes, reason helped part. of a churn driver? you is improvement year-on-year mainly or Is one it this We first mainly the second Q-on-Q it for

Thank you. questions. take those I'll

more to social consistent apps said in -- that general QX much entertainment a provide to backdrop, in business environment customer some both in environment on with in So, in revenue also than environment. dropped rather due moving And and Shengwang of overall competitors. decrease revenue.Additionally, the the see to and more tougher with the And customers the the smaller -- to part, means sequentially China as in line macro slight start-ups year-over-year. and difficult lot color was I of actually number regulatory of the decrease out running moving therefore, churn macroeconomic and the operating we customers other our on

continue, expect more and but more on have base.In on moderate Agora and generally in hopefully outlook, should as both the Shengwang expect actually customers. more explained, QX Shengwang education the sequential for I quarters. coming low -- improvement in side. customer that and is also on to QX So become This we the side terms to and actually season the that social the is of we Shengwang a That's

some customers, year see means pickup season to will the the holiday, is normally execution QX low and QX digital in the also which be generally much for slower. new transformation we due project So

we we in So and on QX. improvements -- both see see Shengwang will Agora

[Operator Instructions] America Our the next question Securities. of Bank of line Li Daley comes from from

questions. I have X

area. Firstly, mentioned AI, opportunities regarding the there's in more this management

future color which expenses, scenarios management the future? the possibility in on we could see is the from question about some more So meaningful incremental give AI, revenue could more second expenses. operating In AI?My the in revenue

operating this like see following noticed R&D. for operating in year the trend XQ some the in How for do we quarter-on-quarter increase quarters expenses, So like especially there's the we expenses? the

Okay.

social of voice. predicted was actually users Initially text voice human we launch will human AI dimension we hugely The to rapid The the to expand in activities but be with AI of generative there of the will than In previous by and AI we AI-based human the RTE it's activities service, run, cases interaction conversations customer development, AI it's to armies scope models able will and mature, happen be enrich evolution also video the amount formats. ahead such able generated of real-time cases. few agents models.With to or to models will faster to earning give we norm directly from the people's will On emerge and machine expand very in capabilities, generative interact cloud the Voice powered device In RTE models. see actually global use be use gaming many will calls, will and human engagement to of become and AI Thanks and GPT-Xo that What is that. it exciting. activities. education, to between increase and the more new and include years, the being explanation. by consider as interactive added AI multimodal human video lives.In imagined. long next definitely this RTE another models. happened personal based, assistance, generative of will our human users

latency an factor.When introducing global of will time OpenAI it mentioned will and Internet has actually result, a average real-time a milliseconds. amount XXX response through GPT-Xo, become voice As video and massive of flow critical

overseas trip and on experience [ an user experience on unbearable low highly and for ].To model, who transmission top model right could talks to needs when to foundation response added high-quality AI models. top build choice the of from AI be applications a generative -- round cloud our and However, technology exceptional latency companies deliver latency the the and is experience, user for model's change companies the reliable latency, of with

Thank Tony. you,

question take the I'll operating So on expenses. the

it below certain accrue that performance the to cost due due was same our quarter. at measures. expenses we was So to every level normal due obviously in We -- earnings it the I call, expenses. last But bonus and low a was reversal control accrued already also and time, of think our explained year-end operating to bonus

year, last was However, given the below our operating tough internal environment result final budget. operating the

actual the realized was and growth. bonus the funds year-end [ lower So bonus earlier ] than

the to cautious caused very overall there still abnormally to QX we and QX sequential reversal in year, this why the forward some there QX.So small about was looking that's increase was environment. a quarterly are operating So operating expenses which low QX be from

So increase R&D very we expenses anything, manage try we and in general do expenses And we expect not sequentially if expenses to our to including will [indiscernible]. from control to QX will carefully opex the continue onward. and overall

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

free if As the feel a the reminder, to recording e-mail you there today's questions, earnings please be call and the will for call. at investor.agora.io. any release And the That your on website concludes company. conference Thank company's participating. Thank you. available are

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