Agora, Inc.

Good day and thank you for standing by. Welcome to the Agora, Inc. Second Quarter 2026 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. The company's earnings results, press release, earnings presentation, SEC filings, and a replay of today's call can be found on its IR website at investor.agora.io. Joining me today are Tony Zhao, founder, chairman, and CEO, Jingbo Wang, the company's CFO, During this call, the company will make forward-looking statements about its future financial performance and other future events and trends. These statements are only predictions based on what the company believes today and actual results may differ materially. These forward-looking statements are subject to risks, uncertainties, assumptions, and other factors that could affect the company's financial results and the performance of its business in which the company discussed in detail in its filings with the SEC, including today's press release and the risk factors of other information contained in the final prospectus relating to the initial public offering. Agora, Inc. remains no obligation to update any forward-looking statements the company may make on today's call. With that, let me turn the call over to Tony. Hi, Tony.

Hey, thanks Ferriter, and welcome everyone to our earnings call. Let me begin with a review of our operating results for the quarter. I'm pleased to report another quarter of accelerating top line growth, as well as our seventh consecutive quarter of gap profitability. Total revenues for the second quarter of 2016 reached $40.4 million, an increase of 18% year-over-year. This performance reflects both the continued strength of our core real-time engagement business and the growing contribution from our conversational AI products as more customers move from proof of concept to commercial production. Our gap net profit for the quarter was $2.2 million, up 50% year-over-year, which demonstrates improved operating leverage and disciplined cost management and many more. Our most important progress this quarter occurred in call center across the globe. We are seeing strong momentum in adoption of our voice AI agents. Trained on the best sales and customer service playbooks, these agents deliver consistent, high-quality performance across every conversation. They do not experience fatigue, lose focus, all vary in performance based on workload or time of day. They also maintain time and steady interactions even during challenging calls. Further, customers are now seeing substantial cost savings from deploying our voice AI agents. Indeed, we're beginning to see them match or even surpass human performance in an increasing number of tasks. in achieving target business outcomes. The first example is outbound marketing and buyer interest capture. Our voice AI agents are now being used to initiate calls, qualifying leads, collect information, and schedule meetings with prospect customers. At a similar conversion rate with human reps, our voice AI agents also all perform in two other important areas, the volume of calls they can handle and the unique economics they deliver. The second example is marketing. Thirdly, our voice AI agents can conduct in-depth interviews for consumer insights and product feedbacks. While capturing structured data throughout each conversation, the high concurrency of our and many more. This solution compresses the time it takes to conduct large-scale service that traditionally takes weeks or days into just a few hours. Marketing and serving are only two examples of how voice AI agents can reshape call centers worldwide. We see similar opportunities in financial services outreach, gaming user acquisition and retention. that collection and many other areas. We are already working with customers across these sectors and we expect several of them to move from proof of concept to large-scale deployment in the coming quarters. At the same time, we continue to invest in our developer ecosystem. This quarter, we launched Agora Skills and Agora CLI. Agora Skills package our platform knowledge so that AI coding assistants, including Call Code, Cursor, or Codex, can work with our latest SDKs and best practices when building real-time engagement or conversational AI applications. The Agora CLI complements this with a simple command line interface for coding agents to do their work. These tools make it easier for both human developers and AI coding agents to build and deploy real-time engagement applications with us. We are also continuing to strengthen our technology ecosystem through strategic partnerships. This quarter, we announced a partnership with Gradium, a leading voice AI platform recently founded by the research team behind Moshi and Hibiki, two speech models with strong recognition in the open source community. Through our partnership, developers can enable Gradient TDS within our conversational AI engine through a simple configuration without introducing additional latency hops. Looking ahead, we will first remain later focused on accelerating the transition of our conversational AI solutions from pilot to production across use cases. Each use case will present its own set of challenges, but each will also help us refine our technology. We believe that continued improvements in our solutions will unlock additional demand and drive the industry's shift towards AI-led workflows in call centers. Second, we will continue to invest in our real-time infrastructure. Our software-defined real-time network, or SDRTN, has long been a foundational advantage for us. As we expand into human to AI interactions, the importance of this infrastructure does not diminish On the contrary, it becomes more critical because smooth conversations require ultra-low latency inference and transmission. We are confident that our investment in real-time inference and the communication infrastructure will serve as a decisive factor in our ability to compete and succeed in the conversational AI arena. And third, We will continue to strengthen our partner ecosystem and build up developer man-share. On October 23rd and 24th, we will host our iconic annual conference, IRTE, or Intelligent Real-Time Engagement in Beijing. We look forward to bringing together developers, partners, enterprises and industry leaders to explore the next phase of real-time engagement and conversational AI. In summary, we believe the center of gravity in the AI industry is increasingly shifting from modal capabilities towards infrastructure and harness layer required to operate voice AI agents reliably at scale. At the intersection of real-time engagement AI, and global infrastructure. We believe Agora is uniquely positioned to help enterprises make this transition and create sustainable long-term value for both our customers and shareholders. Before I conclude, I would like to thank our customers, developers, partners, and shareholders for their continued trust and support. and our global Agora and Shenglong teams for their dedication and innovation. With that, let me turn it over to Jingbo who will reveal our financial results.

Thanks Tony. Hello everyone. Let me start by first reviewing financial results for the second quarter of 2026. Then I will discuss outlook for the third quarter. Total revenue for the second quarter reached 40.4 million. above the high end of the guidance range and representing 18% year-over-year growth. This marks our third consecutive quarter of accelerating growth driven by continued expansion of our real-time engagement services across sectors such as e-commerce, as well as growing customer adoption of our conversational AI solutions. Our dollar-based net retention rate and others. In the first quarter, the gross profit for the first quarter was 104%, compared to 94% in the second quarter of 2025. This represents a meaningful improvement and moves us back above 100%. Gross profit for the first quarter was 25.7 million, representing 12.5% increase year-over-year. Gross margin was 63.7%, compared to 66.8% in the same period last year. and 63.4% in the first quarter of 2026. On a year-over-year basis, the decline was primarily due to product mix change, as conversational wire products continued to see growing usage during the quarter, but it remained at a subscale stage. On the sequential basis, the increase was mainly driven by technical optimization. Turning to expenses, R&D expenses were 15.4 million in Q2, up 10.2% year-over-year. R&D expenses represented 38.1% of total revenue in the quarter, compared to 14.8% in the same period last year. The increase was primarily due to our continued investment in conversational air products. Total marketing expenses were 6.4 million in Q2, down 1.5% year-over-year. Sales and marketing expenses represented 15.9% of total revenues in the quarter compared to 19% in the same period last year. The decrease was primarily due to disciplined expense management. General elements trade expenses were 5.5 million Inc. 9.5% year-over-year. GNV expenses represented 13.5% of total revenue in the quarter compared to 17.6% in the same period last year. The decrease was primarily due to a lower allowance for highly expected credit loss as customer credit conditions and collection outcomes improved. According to operating results, we recorded gap operating loss of one million in the second quarter, compared to a loss of 3.1 million in the same period last year. Since continued improvement in operating leverage, based on our current business momentum, our goal is to achieve quarterly gap operating profitability by the end of this year. Moving on to the bottom line, we've delivered net income of 2.2 million in Q2, up 50.3% year-over-year, and representing a net income margin of 5.4%. Now turning to cash flow. Operating cash flow was negative 2.1 million in Q2, compared to negative 0.4 million in the second quarter of 2025. Moving on to balance sheet, we admit Q2 with $361.7 million in cash, cash equivalents, bank deposits, and financial products issued by banks. The decrease in our cash balance was mainly due to annual bonus payment as well as share repurchase during the quarter. During Q2, we repurchased approximately $1 million ADS for approximately $3.7 million. As of June 30, 2026, We had repurchased approximately 44.6 million ADS in total for approximately $159.9 million under the current share repurchase program. As of June 30, 2026, we had 83.8 million ADS outstanding compared to 87.3 million ADS at the end of 2025. The current share repurchase program will expire at the end of February 2027. Now turning to guidance. Based on currently available information, we expect the revenue for the third quarter of 2096 to be between $41 and $42 million, representing year-over-year growth of 15.8% to 18.6%. Let's all look. reflect our current and preliminary views on the market and operational conditions, which are subject to change. In closing, this was another strong quarter for us, both in terms of revenue growth and profitability. At the same time, we are increasingly encouraged by the usage momentum and commercial potential in conversation and will continue to invest with discipline to support our long-term growth. Thank you all for joining today's call. Let's open it up for questions.