Agora(US:API)2025-11-20 02:00Financial Data and Key Metrics Changes - Total revenue in Q3 reached $35.4 million, up 12% year over year, marking the fourth consecutive quarter of GAAP profitability [3][9] - GAAP net profit for the quarter was $2.7 million, with a GAAP net margin of 7.8% [3][10] - Gross margin for Q3 was 66%, slightly decreased by 0.7% year over year [10] - Operating cash flow was $0.7 million in Q3, compared to negative $4.6 million last year [11] - The company ended Q3 with $374.3 million in cash and equivalents, with a net cash outflow mainly due to share repurchase of $4.8 million [11] Business Line Data and Key Metrics Changes - Agora revenues reached $18.2 million in Q3, representing 15.9% year-over-year growth [9] - Shenghua revenues reached RMB 122.4 million in Q3, up 8.4% year-over-year [9] - Dollar-based net retention rate is 108% for Agora and 90% for Shenghua, marking the fourth consecutive quarter of improvement for both businesses [9] Market Data and Key Metrics Changes - Demand recovery in China continues, with growth in social entertainment and education sectors [16] - In the US and international markets, live commerce demand is growing rapidly, with other verticals also showing growth [16] - The IoT sector, including smart cameras and wearable devices, is experiencing rapid growth [23] Company Strategy and Development Direction - The company is significantly increasing investment in conversational AI to address challenges in voice-based human-machine interaction [3][4] - The launch of Conversational AI Engine 2.0 aims to improve reliability and scalability of AI solutions [4][5] - The company is focused on building a robust real-time infrastructure to support conversational AI applications [6][8] Management Comments on Operating Environment and Future Outlook - Management expects revenue and net profit to continue growing on a quarter-over-quarter basis in Q4 [3][11] - The company anticipates total revenues for Q4 to be between $37 million and $38 million, representing year-over-year growth of 7.2% to 10.1% [12] - Management highlighted the complexity of real-time conversational AI and the expected growth in applications such as call centers and companionship toys [18][24] Other Important Information - The company repurchased 5.2 million ordinary shares in Q3, representing 1.4% of outstanding shares at the beginning of the quarter [11] - The recent Convo AI and RTE conference attracted over 3,000 attendees, indicating strong interest in conversational AI technology [7] Q&A Session Summary Question: Demand outlook and key trends in domestic and international markets - Management noted a recovery trend in China and rapid growth in IoT and digital transformation sectors, with live commerce demand growing in the US and international markets [16] Question: Update on AI application development and revenue contribution scenarios - Management clarified the focus on conversational AI, with advanced use cases in call centers, education, and companionship toys expected to drive revenue growth [18] Question: Profitability outlook for Q4 and 2026 - Management expects GAAP operating profit in Q4 and year-over-year net income improvement for 2026 [19] Question: Drivers of solid Q3 performance - Strong demand from the US and international markets, particularly in live commerce and social apps, contributed to Q3 performance [23] Question: Adoption trend for AI companionship toys - Management reported strong momentum from customers like RoboPong, with expectations for these use cases to contribute to financial results in the coming months [24] Question: Sequential growth trend for AI-related usage - Conversational AI usage increased by over 150% quarter-over-quarter, indicating strong customer interest and pipeline [30] Question: Potential for offering edge-side inference or security features - Management highlighted opportunities in real-time inference services for conversational AI, leveraging their global distributed network [32]