Agora, Inc. (China) Q1 FY2025 earnings call

• Achieved second consecutive quarter of GAAP profitability in Q1, driven by double-digit revenue growth and disciplined cost management. - In March, announced general availability of conversational AI engine in China, with public beta in U.S. and global markets. - Launched conversational AI device kit enabling device manufacturers to add conversational AI to IoT devices. - TEN open source project for real-time conversational AI agent gaining traction, with leading cloud providers supporting its deployment. - Recognized the dedication of Agora and Shengwang teams in driving results.

Total revenue in Q1 was $33.3 million, up 12% year-over-year. Agora revenues reached $18.6 million in Q1, growing 17.7% year-over-year and 6.9% sequentially. Shengwang revenues reached RMB 105.5 million in Q1, excluding certain end of sale low margin products, growing 6.7% year-over-year. Dollar-based net retention rate is 96% for Agora and 85% for Shengwang, both improved from previous quarters. Agora's revenue contribution and growth reflect successful market expansion in high potential verticals like live shopping and entertainment. Shengwang's growth is due to continued business expansion in key verticals such as entertainment and IoT, though there was a sequential decline due to seasonality.

• For the second quarter of 2025, currently expect total revenues to be between $33 million and $35 million, representing year-over-year growth rate of 6.8% to 13.3% when excluding revenues from certain end of sale, low margin products. - Reflects current and preliminary views on market and operational conditions, subject to change.

Q: Hi management. Thanks Tony and Jingbo for the introduction, for the results. Firstly, congrats on the strong results in 1Q and the solid guidance, and I have two questions here. Number one is about the AI demand and the language model is getting more powerful, we see more human-machine interaction. What are the key areas you see more AI application, I think you mentioned like convenient toys and some edge AI devices as well. So, what could be the future growth drivers in the area of AI, that's number one. Number two -- for number two question is, regarding the breakdown for China and the overseas business and how do we see the demand trend in future, by volume or -- and by the ASP trend?

A: Tony Zhao talked about AI key use cases including education (language learning/practice), IoT (conversational toys), and call center services (marketing/outbound). Jingbo Wang discussed demand trends, noting growing adoption in U.S. and global markets, recovery in Asian markets (including India) for education and entertainment, stable pricing in more developed markets, and moderate pricing pressure in competitive markets.

Q: Hi, this is [indiscernible] from CICC and thank you for taking my questions. So, my first question is regarding your overseas e-commerce business. So, in the past we have seen the live shopping and the interactive features becoming increasingly popular in e-commerce, especially in the emerging market. So, could you please provide more details on your current actions and the strategy enabling overseas e-commerce platforms or the application. And my second question focuses on the AI landscape. So, could you elaborate on any issues that you have observed in the downstream demand for AI power real-time interaction capabilities?

A: Tony Zhao mentioned deep diving into live commerce use case, focusing on improving video quality for better shopping experience, and continuing to gain new customers with existing customers growing stably. On AI, focused on conversational AI, with POC stages of customer development nearing product launch, emphasizing product-market fit in vertical use cases.

Q: Thank you Tony and Jingbo for giving me the opportunity to ask questions. I have two. First is also about AI. So, how do we think about the timing for the massive adoption of the conversational AI as we think that -- currently, there are still some pricing premium, right, compared to the non-AI applications. So, when do we see this tipping points for the massive adoptions. And I think a second question is about the competition landscape in China and how do we think about the pricing trends for the overall business and the impact on the gross margins?

A: Tony Zhao said tipping points for conversational AI adoption occur gradually in specific vertical use cases as product-market fit is achieved for each industry's specific call center use cases. Jingbo Wang discussed competitive landscape in China, noting consolidation with fewer players, Agora's heavy investment in conversational AI giving competitive edge, and strategy of focusing on higher value use cases and technical optimization to maintain stable gross margins.