Agora, Inc. (NASDAQ:API) Q4 2021 Earnings Conference Call February 22, 2022 8:00 PM ET Company Participants Fionna Chen - Director, IR Tony Zhao - Founder, CEO & Chairman Jingbo Wang - CFO Conference Call Participants Yang Liu - Morgan Stanley Vincent Yu - Needham & Company Bing Duan - Nomura Securities Allen Li - JPMorgan Chase & Co. Operator Good day and thank you for standing by. Welcome to Agora, Inc. Fourth Quarter 2021 Financial Results Conference Call. [Operator Instructions]. I would now like to han ...

Financial Data and Key Metrics Changes - Total revenue for Q3 2021 was $45 million, representing a 46% year-over-year increase and a 6% quarter-over-quarter increase [6][17] - The number of active customers reached over 2,500, up 41% year-over-year [17] - Non-GAAP gross margin for Q3 was 65.5%, an increase of 2.7% year-over-year and 4% quarter-over-quarter [19] - Non-GAAP operating loss was $11.1 million, translating to a 24.6% operating loss margin [22] Business Line Data and Key Metrics Changes - The company launched two new products: Fusion CDN live streaming and Full-Path Accelerator (FPA) [7][8] - Revenue from outside China grew 90% year-over-year, accounting for nearly 30% of total revenues [26] - Non-GAAP R&D expenses were $22.9 million, up 112% year-over-year, reflecting investment in talent and technology [20] Market Data and Key Metrics Changes - The US and Rest of World markets have seen revenue contribution increase from less than 10% to nearly 30% over the past three years [15] - The company noted a significant impact from new regulations on the K-12 academic tutoring sector in China, which is expected to affect revenue in the upcoming quarters [17][36] Company Strategy and Development Direction - The company aims to enhance its capabilities in real-time engagement technology to become a key infrastructure provider for the metaverse [14][15] - There is a focus on long-term growth opportunities and innovation rather than maximizing short-term profitability [20] - The company plans to continue investing in the US and Rest of World markets to capture growth potential [15][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term business prospects despite short-term challenges due to regulatory impacts [23] - The company anticipates that the digital transformation trend will continue post-pandemic, with hybrid work models becoming the norm [27][28] - Management highlighted the importance of adapting to changing market demands and the emergence of new use cases [29][30] Other Important Information - The company ended Q3 with $767 million in cash and short-term investments, down from $827 million at the end of Q2 [22] - The company is cautious about headcount growth in the upcoming year, focusing on the US and Rest of World markets while moderating growth in China [52] Q&A Session Summary Question: What is the outlook for the overseas business and growth drivers going into 2022? - Management noted strong demand from developers in the US and APAC, with revenue from outside China growing 90% year-over-year [26][27] Question: What are the key drivers behind the sequential decline in Q4? - The decline is attributed to the impact of new regulations on the K-12 education sector in China, which has seen reduced usage [35][36] Question: How does the gross margin outlook look moving forward? - Management indicated that while gross margin has improved due to technical optimizations, lower usage from education customers may negatively impact it [36][37] Question: What is the company's approach to pricing for large customers? - The company aims to provide a competitive performance-to-price ratio and has historically passed on cost savings to customers, leading to gradual price reductions [47] Question: Will the company build its own CDN network? - The company will integrate existing CDN services rather than building its own, enhancing them with proprietary technology for better performance [50][51]

Agora, Inc. (NASDAQ:API) Q2 2021 Earnings Conference Call August 9, 2021 9:00 PM ET Company Participants Fionna Chen - Director, Investor Relations Tony Zhao - Founder, Chairman & Chief Executive Officer Jingbo Wang - Chief Financial Officer Conference Call Participants Yang Liu - Morgan Stanley Emerson Chan - BofA Securities Vincent Yu - Needham and Company Bing Duan - Nomura John Wang - Macquarie Operator Good day and thank you for standing by and welcome to the Agora Incorporated Second Quarter 2021 Fina ...

Agora, Inc. (NASDAQ:API) Q1 2021 Earnings Conference Call May 24, 2021 9:00 PM ET Company Participants Fionna Chen - Director, IR Tony Zhao - Founder, Chairman and CEO Jingbo Wang - CFO Conference Call Participants Yang Liu - Morgan Stanley Emerson Chan - BofA Securities Vincent Yu - Needham and Company Bing Duan - Nomura Hua-Chen Wang - Macquarie Operator Good day and thank you for standing by. Welcome to Agora Incorporated First Quarter 2021 Financial Results. At this time, all participants are in a liste ...

[First Quarter 2021 Highlights](index=1&type=section&id=First%20Quarter%202021%20Highlights) Agora experienced strong growth in Q1 2021, driven by real-time engagement APIs and emerging use cases like extended reality and metaverse - Agora opened 2021 with strong growth, driven by developers creating new immersive experiences with its real-time engagement APIs, noting the emergence of next-generation use cases like extended reality and metaverse on its platform[1](index=1&type=chunk) Q1 2021 Financial Highlights | Metric | Q1 2021 | Q1 2020 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $40.2M | $35.6M | +13.1% | | Active Customers | 2,324 | 1,176 | +97.6% | | Net (Loss) Income (GAAP) | ($14.7M) | $3.0M | - | | Non-GAAP Net (Loss) Income | ($4.3M) | $5.7M | - | | Adjusted EBITDA | ($3.7M) | $6.7M | - | | Free Cash Flow | ($8.0M) | ($3.4M) | - | - The **Constant Currency Dollar-Based Net Expansion Rate** was **131%** for the trailing 12-month period ending March 31, 2021, indicating strong revenue growth from existing customers[2](index=2&type=chunk) - As of March 31, 2021, the company held **$876.8 million** in total cash, cash equivalents, and short-term investments[2](index=2&type=chunk) [First Quarter 2021 Financial Results](index=1&type=section&id=First%20Quarter%202021%20Financial%20Results) The company's Q1 2021 financial results show a significant shift from profit to loss, driven by increased costs and operating expenses despite revenue growth [Revenues](index=1&type=section&id=Revenues) Total revenues increased by 13.1% year-over-year to $40.2 million, primarily driven by increased usage of video and voice products in emerging use cases Total Revenues | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Total Revenues | $40.2M | $35.6M | - Revenue growth was primarily due to increased usage of video and voice products, particularly from business expansion and growth in interactive lecture halls and audio live casts[3](index=3&type=chunk) [Cost of Revenues](index=1&type=section&id=Cost%20of%20Revenues) Cost of revenues rose significantly by 52.1% to $16.9 million, attributed to increased bandwidth, co-location costs, and depreciation as the company scaled its business Cost of Revenues | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Cost of Revenues | $16.9M | $11.1M | [Gross Profit and Gross Margin](index=2&type=section&id=Gross%20Profit%20and%20Gross%20Margin) Gross profit slightly decreased by 4.5% to $23.4 million, while gross margin contracted by 10.7 percentage points to 58.1%, due to international expansion and capacity costs Gross Profit and Gross Margin | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Gross Profit | $23.4M | $24.5M | | Gross Margin | 58.1% | 68.8% | [Operating Expenses](index=2&type=section&id=Operating%20Expenses) Operating expenses surged by 86.8% to $39.7 million, driven by increased personnel costs, higher share-based compensation, and acquisition-related expenses Operating Expenses | Expense Category | Q1 2021 | Q1 2020 | Change | | :--- | :--- | :--- | :--- | | Research & Development | $25.2M | $11.7M | +115.7% | | Sales & Marketing | $8.7M | $6.0M | +45.5% | | General & Administrative | $5.7M | $3.5M | +61.4% | | **Total Operating Expenses** | **$39.7M** | **$21.2M** | **+86.8%** | - A significant driver for the increase in R&D expenses was **$4.0 million** in acquisition-related expenses[8](index=8&type=chunk) [(Loss) Income from Operations](index=2&type=section&id=%28Loss%29%20Income%20from%20Operations) The company reported a loss from operations of $16.0 million, a sharp reversal from a prior-year income, reflecting higher costs and operating expenses (Loss) Income from Operations | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | (Loss) Income from Operations | ($16.0M) | $3.3M | [Net (Loss) Income](index=3&type=section&id=Net%20%28Loss%29%20Income) Agora recorded a net loss of $14.7 million, compared to a net income of $3.0 million in Q1 2020, with net loss per ADS at $0.14 Net (Loss) Income | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Net (Loss) Income | ($14.7M) | $3.0M | | Net Loss per ADS | ($0.14) | ($1.21) | - The net loss attributable to ordinary shareholders was **$14.7 million**, a significant improvement from a loss of **$36.4 million** in Q1 2020, primarily impacted by preferred share accretion before the IPO[14](index=14&type=chunk) [Financial Outlook](index=3&type=section&id=Financial%20Outlook) Agora maintained its full fiscal year 2021 revenue guidance between $178 million and $182 million, subject to ongoing uncertainties like the COVID-19 pandemic - Agora maintained its full fiscal year 2021 guidance, with total revenues estimated between **$178 million** and **$182 million**[15](index=15&type=chunk) - This outlook is subject to change based on uncertainties, including the ongoing impact of the COVID-19 pandemic[15](index=15&type=chunk) [Use of Non-GAAP Financial Measures and Operating Metrics](index=3&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures%20and%20Operating%20Metrics) This section explains the company's use of non-GAAP financial measures and operating metrics to provide a clearer view of underlying business performance [Explanation of Non-GAAP Measures](index=4&type=section&id=Explanation%20of%20Non-GAAP%20Measures) Agora uses non-GAAP measures like Non-GAAP Net Income, Adjusted EBITDA, and Free Cash Flow to evaluate ongoing operating results by excluding non-cash or non-recurring items - Non-GAAP measures are used internally for financial analysis and are considered useful for investors in comparing Agora's performance with industry peers[18](index=18&type=chunk) - These measures are not a substitute for GAAP measures and should be read in conjunction with the consolidated financial statements[19](index=19&type=chunk) [Definitions of Key Metrics](index=4&type=section&id=Definitions%20of%20Key%20Metrics) The company defines key non-GAAP and operating metrics, including Non-GAAP Net Income, Adjusted EBITDA, Free Cash Flow, Active Customers, and Constant Currency Dollar-Based Net Expansion Rate, to assess business performance - **Non-GAAP Net Income (Loss):** Net income (loss) excluding share-based compensation, acquisition-related expenses, and amortization of acquired intangible assets[20](index=20&type=chunk) - **Adjusted EBITDA:** Net income (loss) adjusted for interest, taxes, depreciation, amortization, and other non-recurring or non-cash items[21](index=21&type=chunk) - **Free Cash Flow:** Net cash from operating activities less purchases of property and equipment[22](index=22&type=chunk) - **Active Customer:** An entity generating over **$100** in revenue during the preceding 12 months[25](index=25&type=chunk) - **Constant Currency Dollar-Based Net Expansion Rate:** Measures the change in revenue from a consistent cohort of customers over a trailing 12-month period, adjusted for currency fluctuations[26](index=26&type=chunk) [Financial Statements](index=7&type=section&id=Financial%20Statements) This section presents the company's condensed consolidated financial statements, including balance sheets, income statements, and cash flow statements [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a significant increase in total assets to over $1.01 billion, primarily due to a rise in cash, cash equivalents, and short-term investments, alongside growth in liabilities and shareholders' equity Condensed Consolidated Balance Sheets (in millions) | Balance Sheet | As of Mar 31, 2021 | As of Dec 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$1,010.9** | **$692.9** | | Cash, cash equivalents & short-term investments | $876.8 | $635.4 | | **Total Liabilities** | **$114.4** | **$36.4** | | **Total Shareholders' Equity** | **$896.5** | **$656.5** | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) The income statement for Q1 2021 details a transition from net income to a net loss, driven by increased cost of revenues and operating expenses outpacing revenue growth Condensed Consolidated Statements of Comprehensive Income (Loss) (in millions) | Income Statement | Three Months Ended Mar 31, 2021 | Three Months Ended Mar 31, 2020 | | :--- | :--- | :--- | | Total Revenues | $40.2 | $35.6 | | Gross Profit | $23.4 | $24.5 | | (Loss) income from operations | ($16.0) | $3.3 | | **Net (loss) income** | **($14.7)** | **$3.0** | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For Q1 2021, net cash used in operating activities was $2.7 million, investing activities used $150.3 million, and financing activities provided $251.0 million, resulting in a net increase in cash Condensed Consolidated Statements of Cash Flows (in millions) | Cash Flow | Three Months Ended Mar 31, 2021 | Three Months Ended Mar 31, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | ($2.7) | ($0.9) | | Net cash used in investing activities | ($150.3) | ($2.5) | | Net cash provided by financing activities | $251.0 | $49.8 | [Reconciliation of GAAP to Non-GAAP Measures](index=12&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) This section reconciles GAAP figures to non-GAAP metrics, showing how a GAAP net loss of $14.7 million was adjusted to a non-GAAP net loss of $4.3 million for Q1 2021 Reconciliation to Non-GAAP Net Loss (in millions) | Reconciliation to Non-GAAP Net Loss | Q1 2021 | | :--- | :--- | | GAAP net (loss) income | ($14.7) | | Share-based compensation expense | $6.1 | | Acquisition related expenses | $4.1 | | **Non-GAAP net (loss) income** | **($4.3)** | Reconciliation to Adjusted EBITDA (in millions) | Reconciliation to Adjusted EBITDA | Q1 2021 | | :--- | :--- | | Net (loss) income | ($14.7) | | Adjustments (Taxes, Interest, D&A, etc.) | $4.9 | | Share-based compensation & Acquisition expenses | $10.2 | | **Adjusted EBITDA** | **($3.7)** |