Agora : Q1 2023 Earnings Prepared Remarks

Q1 2023 Earnings Prepared Remarks

May 30, 2023

Legal Disclaimer

This document contains forward-looking statements about our future financial performance and other future events and trends, including guidance. These statements are only predictions that are based on what we believe today, and actual results may differ materially. These forward-looking statements are subject to risks, uncertainties, assumptions, and other factors that could affect our financial results and the performance of our business. We will discuss them in detail in our filings with the SEC, including today's earnings press release, and the risk factors and other information contained in the final prospectus relating to our initial public offering. Agora assumes no obligation to update any forward-looking statements we may make on this document.

Zhao Bin, founder, chairman and CEO

Thanks Fionna, and welcome everyone to our earnings call.

Before diving into our operational results for the quarter, I would first like to make a few remarks regarding recent changes in the organizational structure of our company.

Since our inception 9 years ago, we have mostly operated under the "Agora" brand globally. To better meet the requirements of our customers and compete more effectively in the unique markets we serve, we will now operate two independent divisions under the same holding company. Our Agora division will focus on our business in the US and international markets and our Shengwang division will focus on our business in the China market.

Agora and Shengwang will each be run by a local management team and adopt local standards and best practices. We have appointed Stanley Wei as Chief Operating Officer of Agora and Robbin Liu as Chief Operating Officer of Shengwang.

We believe this strategic reorganization will allow us to optimally focus our resources on the specific needs and priorities of each business. Agora will focus on the acceleration of growth and on gaining market share in US and international markets, leveraging our leading technology and comprehensive product offerings. Shengwang will focus on enhancing our quality of experience advantage and improving the ease of adoption of our products, further strengthening our competitive position in the China market.

By empowering the local management team of each division, we will be able to respond more quickly to the needs of our customers and become more agile as new opportunities emerge.

From this quarter onward, we will report our revenues and operating metrics separately for Agora and Shengwang to help investors better understand the dynamics and our operational results in each of these markets.

Our revenue for the first quarter was 15.1 million dollars for Agora, up 10 percent year on year, and 21.3 million dollars for Shengwang, down 14 percent year on year. Agora's revenue growth was primarily due to business expansion and usage growth in US and international markets. Shengwang's decrease in revenue was primarily due to the appreciation of US dollars, our disposal of Easemob's customer engagement cloud business, and decrease in usage from K12 academic tutoring customers. After adjusting for these factors, Shengwang's revenue would have increased by 3 percent compared to the same quarter last year.

As of the end of this quarter, we had nearly 1,500 active customers for Agora and nearly 4,000 for Shengwang, an increase of 31 percent and 2 percent, respectively, compared to one year ago.

Now moving on to our product and technology updates.

First, starting with Agora, the Flexible Classroom, our low-code aPaaS solution designed for building scalable and customizable online classrooms, has continued to gain momentum in the US and global market as the demand for online learning continues to grow. Recently, the Flexible Classroom was named a finalist by 2023 The EdTech Awards in the "e-learning, blended, flipped solution or remote solution" category.

Previously, we mentioned our partnership with HTC to accelerate the adoption of real-time engagement in VR applications. In HTC's VIVE ecosystem, developers use our video SDK to power real-time collaboration between end users within virtual environments. Recently, we were recognized as a Webby Award honoree under the category Metaverse, Immersive & Virtual - Best Realtime Experience, for how our technology is used in HTC's VIVE Sync VR ecosystem.

To further increase the value of our Premium and Enterprise Support packages for our customers, we have added integrations with Okta and Datadog. The Okta integration enables customers to manage team members' access to the Agora Console throughOkta identity management tools. The Datadog integration with Agora Analytics enables customers to push analytics data covering usage, quality, and performance directly to the Datadog platform for analysis and visualization.

Moving on to Shengwang, we recently upgraded our real-time Karaoke product. When this solution was first launched in 2021, it could accommodate two users singing together at the same time. If a third user wanted to join, one of the two current users would have to give up their microphone. This limitation was mainly due to the technology challenges at the time of mixing multiple real-time soundtracks in a highly synchronous manner and delivering the output to all users with low latency. With our latest version, up to eight users can now sing together, which unlocks a wide range of new features for our customer's applications. For example, all users in a virtual Karaoke room can now participate in a singing battle or take random turns singing parts of a song together. Empowered by our upgraded product, our customers can now replicate the in-person Karaoke experience within their applications.