Agora (API) Q2 2024 earnings summary

Executive summary

• Q2 2024 total revenues ranged from $34.2 million to $41.0 million, marking a return to year-over-year growth for the first time since 2021, driven by innovation, AI adoption, and expansion in live shopping and IoT verticals despite a challenging macro environment.

• Agora segment revenue was $15.6 million, up 2% year over year; Shengwang segment revenue was RMB 131.9 million ($18.6 million), up 0.3% year over year and 7.6% quarter over quarter.

• Launched real-time speech-to-text for live captions and meeting summaries, and enabled AI-powered features such as real-time transcription in smartwatches and voice-based AI assistants.

• Partnered with Unity China to integrate in-game voice calling and advanced audio features in the Tuanjie engine and Unity Online Services.

• Announced the upcoming 10th Real-Time Engagement Conference in Beijing focused on AI and real-time engagement.

Financial highlights

• Adjusted gross margin for Q2 2024 was 63.4%, down year over year but up sequentially; gross profit was $21.2 million, and gross margin declined to 62.0% from 63.3% due to product mix.

• Adjusted EBITDA was -$6.0 million, with a 17.6% loss margin, improved from last year; non-GAAP net loss was -$6.0 million, a 17.5% net loss margin, improved from 19.4% last year.

• Net loss narrowed significantly to $9.2 million from $45.3 million year over year; net loss per ADS was $0.10, improved from $0.45.

• Operating cash flow was -$7.6 million; free cash flow was -$7.9 million.

• Ended Q2 with $371 million in cash, cash equivalents, bank deposits, and financial products.

Outlook and guidance

• Q3 2024 revenue expected between $31.5 million and $33.5 million, reflecting the discontinuation of low-margin products; gross margin expected to improve due to product mix shift.

• Terminated products had gross margins below 10% and generated $3.3 million in Q2 2024 revenue.

• Sequential revenue growth anticipated for Q3 and Q4 in core products, with healthy gross margins; GAAP breakeven targeted for 2025.

• Management continues to invest in AI and real-time engagement technologies, focusing on customer engagement and product innovation.

• Guidance incorporates current market and operational conditions and may change.