Fubotv earnings beat by $0.10, revenue topped estimates
Agora, with a market capitalization of $515.2 million, has reported its financial results for the fourth quarter of 2024, marking a significant milestone by achieving GAAP profitability for the first time in several years. The company reported a total revenue of $34.5 million, reflecting a 4% year-over-year increase. The net income for the quarter was $200,000, with a net income margin of 0.5%. Agora’s gross margin stood at 66.6%, and the company maintained cash and equivalents totaling $363.8 million. According to InvestingPro analysis, the stock appears to be undervalued based on its Fair Value assessment.
For detailed insights into Agora’s valuation and growth prospects, investors can access the comprehensive Pro Research Report available on InvestingPro, which covers over 1,400 US stocks with expert analysis and actionable intelligence.
Key Takeaways
- Agora achieved GAAP profitability, a notable milestone for the company.
- Revenue increased by 4% year-over-year, reaching $34.5 million.
- The company launched a new conversational AI engine and an open-source project.
- Operating expenses decreased significantly due to a global workforce reduction.
- Agora is focusing on generative AI opportunities for future growth.
Company Performance
Agora’s performance in Q4 2024 was characterized by a return to profitability, driven by a modest increase in revenue and effective cost management. The company has been reducing its operating expenses, which decreased by $4.1 million following a global workforce reduction in November 2024. This strategic move has allowed Agora to achieve a net income of $200,000, marking its first profitable quarter in recent years.
Financial Highlights
- Total (EPA:TTEF) Revenue: $34.5 million (4% YoY increase)
- Net Income: $200,000 (0.5% net income margin)
- Gross Margin: 66.6%
- Cash and Equivalents: $363.8 million
- Operating Cash Flow: $4.5 million
Outlook & Guidance
Looking ahead, Agora has provided revenue guidance for Q1 2025, projecting between $31 million and $33 million. The company aims to sustain profitability throughout 2025, with a focus on generative AI opportunities and maintaining a gross margin around 67%. Agora anticipates stronger bottom-line growth compared to top-line growth, reflecting its strategic emphasis on profitability. InvestingPro data shows the company maintains a FAIR Financial Health Score of 2.17, with particularly strong marks in price momentum (3.21) and cash flow management (2.32).
Executive Commentary
CEO Tony Zhao highlighted the company’s achievement: "We achieved GAAP profitability, a significant milestone for our company." He also emphasized Agora’s competitive edge in AI: "Our real-time engagement technology is uniquely positioned to enable seamless voice-based interactions between human and AI models." CFO Jingbo Wang added, "We expect to see a stronger growth on the bottom line compared to the top line."
Risks and Challenges
- Market Competition: The increasing competition in AI and IoT sectors may pressure Agora to innovate continuously.
- Economic Uncertainty: Macroeconomic factors could impact demand for Agora’s services.
- Technological Advancements: Rapid changes in technology require constant adaptation and investment in R&D.
- Workforce Management: Further reductions or restructuring could affect employee morale and productivity.
- Regulatory Changes: Changes in technology regulations could impact Agora’s operations globally.
Agora’s strategic focus on AI innovations and cost management has positioned it well for future growth, despite the challenges it faces in a competitive and rapidly evolving market. The stock’s beta of 0.41 suggests lower volatility compared to the broader market, which could appeal to risk-conscious investors. For comprehensive analysis of Agora’s market position and growth potential, including Fair Value estimates and peer comparisons, visit InvestingPro.
Full transcript - Advanced Photonix Inc (API) Q4 2024:
Operator/Moderator, Agora: 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 and Jingbo Wang, the company’s CFO. Reconciliations between the company’s GAAP and non GAAP results can be found in its earnings press release. 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 that are 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 and which the company discussed in detail in its filings with the SEC, including today’s earnings press release and the risk factors and other information contained in the final prospectus relating to its initial public offering. Agora Inc. Has 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.
Tony, you may begin.
Tony Zhao, Founder, Chairman and CEO, Agora: All right. Thank you, operator, and welcome everyone to our earnings call. I’ll first review our operating results from the past quarter. This quarter, we achieved GAAP profitability, a significant milestone for our company. This success is a result of strong revenue growth from new use cases and disciplined cost management.
While we faced challenges over the past few years from the pandemic to regulatory changes and macroeconomic pressures, our team’s hard work, innovation and focus have brought us back to profitability. As we look ahead to 2025, we remain committed to driving operational efficiency and delivering sustainable profitable growth. Total revenue in the fourth quarter were $34,500,000 up 4% year over year. Excluding revenues from certain end of sales low margin products, mainly driven by business expansion in certain use cases such as live shopping and entertainment. As of the end of twenty twenty four, we had over 1,700 active customers for Agora and close to 2,000 for Sheng Wang excluding Eastmall, an increase of 28% respectively compared to one year ago.
Now, let’s turn to our business product and technology updates for the quarter. The generative AI revolution is advancing at incredible pace. Over the past few months, we’ve seen groundbreaking developments from OpenAI’s reasoning model O1 to Google (NASDAQ:GOOGL)’s multimodel Gemini two point zero as well as remarkable open source innovations like DeepSeq. This transformation presents extraordinary opportunity for our business. Our real time engagement technology is uniquely positioned to enable seamless voice based interactions between human and AI models.
By moving beyond basic text chat to multimodal conversations, we are the key technology to enable and ensure more intuitive and expressive communication experiences. It also introduced entirely new use cases where text input simply is not practical or efficient. However, many large language models today still lack robust voice interaction capabilities. For those that do support voice interaction, the experience often falls short with high latency, awkward pauses, interruptions and sensitivity to background noises, which can lead to frustrating user experience. To address this gap, we supported and contributed to an open source project in our developer community called the transformative extensions network or 10.
10 is an orchestration framework that enables developers to rapidly build multimodal AI agents. It integrates building blocks for speech to text, large language models, text to speech, retrieval argument generation, video understanding and many other useful useful modules, enabling developers to easily create real time low latency AI experiences. Essentially, this framework can enable any text based large language model to deliver a conversational voice based conversational experience. For example, a developer can use 10 to quickly build a voice agent combining Microsoft (NASDAQ:MSFT) STT, DeepSeek’s large language model and Fish Audio’s text to speech, all in a matter of minutes. Since its launch, 10 has become the fastest growing project of its camp, earning over 4,500 gigabytes stars in just a few months.
On multiple occasions, 10 topped the trending list as the number one patent project on GitHub and remained on the list of on the list for several days. Building on TENS success, I’m excited to announce the launch of our conversational AI engine, an enterprise grade solution that empowers developer to create interactive voice experiences with any AI model. Whether it’s a customer built model deployed on premise or a leading large language model accessed via API, our conversational AI engine can make it talk and interact naturally with humans. What sets this solution apart is its ability to integrate easily with new AI models. For instance, we integrated with Google Streamlight’s multimodal live API within twenty four hours of its release in last December.
The same twenty four hour integration was true for DeepSeat in January. Our solution is also compatible with many popular STT and TTS modules. But broad compatibility is not only advantage. Our conversational AI engine elevates the conversational experience in three key areas. First, conversation dynamics.
To create natural human like interactions, The engine intelligently detects and pauses for user interactions within three fifty milliseconds, ensuring conversations feel smooth and intuitive. Second, voice processing. Our selective attention algorithm enables the AI models to focus solely on the prime speaker primary speaker and target, filtering out distractions from irrelevant speakers in the background. Additionally, our advanced noise suppression and echo cancellation algorithms ensure that the AI model receives crystal clear human inputs necessary for generating high quality responses. Lastly, latency.
Leveraging our global infrastructure, the engine responds to queries in as little as five hundred milliseconds, dynamically handling packet loss and minimize delays across different network conditions. We have been working closely with customers to build and test conversational AI applications across various use cases from virtual companions and live language tutoring to smart IoT devices, virtual shopping assistant and customer support. We believe this innovation will accelerate the adoption of conversational AI across industries and become a key driver of our future growth. Before I wrap up, I want to take a moment to thank the incredible teams at Agora and Sheng Wang. Our dedication your dedication and hard work in this fast evolving environment have been nothing short of inspiring.
Today, we are pushing the boundary of real time AI interactions and unlocking new possibilities for human AI communication. I’m excited about what lies ahead, and I look forward to sharing more updates with you soon. With that, let me turn things over to Jingbo, who will review our financial results.
Jingbo Wang, CFO, Agora: Thank you, Tony. Hello, everyone. Let me start by first reviewing financial results for the fourth quarter of twenty twenty four, and then I will discuss outlook for the first quarter of twenty twenty five. Total revenues were $34,500,000 in the fourth quarter. Excluding revenues from certain end of sale low margin products, total revenues increased 9.1% quarter over quarter and 3.6% year over year.
Agora revenues were $17,400,000 in the fourth quarter, an increase of 10.8% quarter over quarter and an increase of 13.7% year over year. The increase was primarily due to business expansion and usage growth in certain verticals, such as live shopping and entertainment. Shunlong revenues were RMB 122,200,000.0 in the fourth quarter, excluding revenues from certain end of sale low margin products. Shown on revenues increased 8.2% quarter over quarter and decreased 5.4% year over year. The quarter over quarter increase was primarily due to an increase in revenues from digital transformation customers.
The year over year decrease was primarily due to slowing demand from social and entertainment verticals due to regulation and general economic conditions. Dollar based net retention rate is 95% for quarter and 79% for Shiongou, excluding revenues from certain end of sale products and discontinued business. Moving on to cost and expenses. Gross margin for the fourth quarter was 66.6%. If we exclude gross profit from certain end of sale products, gross margin of continuing business slightly decreased 0.1% over quarter over quarter and 0.8% year over year.
As we mentioned in the last earnings call, we restructured and reduced our global workforce in November 2024. Operating expenses were $28,500,000 in the fourth quarter, decreased $4,100,000 from $32,600,000 in Q2 twenty twenty four as a baseline. We expect to see additional savings on operating expenses in Q1 twenty twenty five. R and D expenses were $14,800,000 in Q4, decreased 9.3% year over year. R and D expenses represented 42.9% of total revenue in the quarter compared to 45.3% in Q4 last year.
Sales and marketing expenses were $7,300,000 in Q4, increased 3.1% year over year. Sales and marketing expenses represented 21.1% of total revenue in the quarter compared to 19.6% in Q4 last year. G and A expenses were $6,400,000 in Q4, decreased 18.4% year over year. G and A expenses represented 18.6 of total revenues in the quarter compared to 21.9% in Q4 last year. Moving on to the bottom line.
Net income was $200,000 in Q4, translating to a 0.5% net income margin fourth quarter compared to a net loss margin of 7.2% in Q4 last year. As Tony just mentioned, we achieved a significant milestone this quarter, profitability on GAAP basis for the first time in several years. This not only demonstrates our ability to deliver our commitments, but also reflects our unwavering focus on creating long term value for our shareholders. Looking ahead, we remain committed to driving innovation, optimizing operations and maintaining the financial discipline necessary to ensure continued success. Now turning to cash flow.
Operating cash flow was $4,500,000 in Q4 compared to $3,700,000 last year. Free cash flow was $4,300,000 compared to $3,400,000 last year. Moving on to balance sheet, we ended Q4 with $363,800,000 in cash, cash equivalents, bank deposits and financial products issued by banks. Net cash inflow in the quarter was mainly due to free cash flow of $4,300,000 which was offset in part by share repurchase of $1,400,000 Since the Board approved our share repurchase program in February 2022, and as of the end of twenty twenty four, we have completed 58% of our $200,000,000 share repurchase program. We are pleased to announce that our Board has authorized another twelve month extension of our share repurchase program through 02/28/2026, with all other terms unchanged.
This decision reflects the Board’s confidence in the company’s long term growth potential and our commitment to delivering values to our shareholders. Now turning to guidance. For the first quarter of twenty twenty five, we currently expect total revenues to be between $31,000,000 and $33,000,000 compared to $29,700,000 dollars in the first quarter of twenty twenty four, if revenues from certain end of the low margin products are excluded. Looking forward, our goal is to maintain sustained profitability through 2025 throughout 2025, driven by strategic initiatives, operational efficiency and emerging market opportunities in generative AI. This outlook reflects our current and preliminary views on the market and operational conditions, which are subject to change.
In closing, I’d like to express my sincere gratitude to both Agora and Shawarm teams for incredible effort and commitment. That’s what made these achievements possible. And thank you to everyone for attending the call today. Let’s open it up for questions.
Operator/Moderator, Agora: Our first question comes from the line of Harry Huang from Bank of America Securities. Your question please.
Harry Huang, Analyst, Bank of America Securities: Hi, management. Thanks for taking my question. I’m asking on behalf of Fei Li. I have a few questions. Firstly, on the demand side, what are the trends in overseas and China market?
And what are the key sectors that are driving growth in 2025? Secondly, on the AI side, has management recently seen an increase in AI related demand? And in what scenarios have we seen the application of our AI related technologies? And lastly, on the profitability side, what are the gross profit margin and GAAP profit targets for 2025? Thank you.
Tony Zhao, Founder, Chairman and CEO, Agora: Okay. I’ll talk about the demand side. On China side, we see demand mostly on IoT side and the digital transformation side. And of course, the AI comes in with more activities to explore the potentials. On global market, we see live commerce, creator economy and Chinese company go overseas are driving force to the growth.
After our big launch of our conversational AI engine, we have received quite a lot of customer interests actively exploring the opportunity to build with that. So that’s in general on the demand side, specifically around AI. We see growing interests from developers and customers, particularly with recent model launch, such as Deepstick and Gemini and a lot of open source model launch. Our conversational AI engine product is a great fit with that trend to build voice agent for voice AI based applications. We see some huge potentials in a couple of use cases like companionship in apps and in both apps and IoT devices, such as companion robots and smart toys for children.
And voice AI can also be widely applied in education platform, especially for language learning and practicing. In enterprise level applications such as call center or customer service, there is a clear demand and a lot of experimental activities. On those areas, we actually see many similarities in all major markets. So it happens in parallel in different markets at this moment. In general, we see a lot of interest in exploring all kinds of use cases based on large Android model.
But our view is the methodologies and tools to build agents are far from mature. So it will still take a long time for sophisticated agents to be built and launched. In long term, those agents will be disruptive and creates huge volume for us. However, given the reality that the whole technology community is still actively improving the foundation models, infrastructures, tools and frameworks to off street agents, we expect current AI adoption to be faster in existing mature use cases where voice AI agent could be used to only replace a segment of whole customer experience. That kind of experience have a much higher chance to success.
And especially those replacements focus on replacing some of the human functions, so to improve the productivity or increase the efficiency rather than creating a whole new use case or a whole new user experience.
Jingbo Wang, CFO, Agora: That’s a
Tony Zhao, Founder, Chairman and CEO, Agora: more successful path we are seeing in the whole experiment of new AI based use case. We are working closely with a group of customers in the POC at the POC stage and hope we can see some application launch in the coming months. Pufu? Sure.
Jingbo Wang, CFO, Agora: I’ll talk about the gross profit and net profit outlook. So in terms of the gross margin, we expect it to maintain at a healthy level around 67% as we saw in the fourth quarter. We think that’s the right balance between profitability and also competitive pressure on peer competitors. So in terms of the bottom line, I want to start with the revenue, right? So if you look at our revenue guidance for Q1, the at midpoint, it implies a year on year growth rate of 7.7%.
And our plan is certainly to maintain this growth rate throughout the year, if not accelerate. And on the other hand, we don’t expect any significant increase in term of operating expenses. So as a result, we expect to see a stronger growth on the bottom line compared to the top line.
Harry Huang, Analyst, Bank of America Securities: Okay. Thanks, management. Thank you.
Operator/Moderator, Agora: Thank you. And our next question comes from the line of Liping Zhao from CICC. Your question please.
Liping Zhao, Analyst, CICC: Good morning, Tony and Jingbo. Thanks for taking my questions and congratulations for the GAAP profitable quarter. And I got two questions here. First is that, I noticed that Agora growth rating for Q reached 13.7% year over year. And could you give more color on the strong recovery of the growth rate?
And should we expect the growth momentum of Agora to continue in 2025? And second question is about the Dixie impact. As we see that Dixie has significantly boosted adoption in both enterprise side and also consumer side, how do you view the demand for voice and multimodal interaction in next two years? And which scenarios will be prioritized for Agora and Sheng Wang to focus on in the next two years? Thank you.
Jingbo Wang, CFO, Agora: I’ll take the first question. So yes, Agora delivered a very nice growth rate in the fourth quarter. And as we guided the multi time in the past, so it was driven really by expansion of usage in some novel use cases, for For example, live commerce, we’ve talked about this many quarters. I had before, two years ago, live commerce was virtually zero, was another revenue contributor for us. And in less than two years, it grew to more than 10% of revenue globally and close to 20% of revenue for Agora.
And it is still growing. And we believe it’s still in the early stage of video based shopping experience video based live shopping experience in The U. S. And other Western markets. Video based live shopping is already everywhere in all the apps in China.
All the shopping apps have functionality. But in Western markets, still you can only see that in some newer generation apps and not in the mainstream e commerce apps. So we believe there’s still a long way to go. And in addition to that, we have a creative economy with fan based social networks, which we don’t really see that many in China, but it’s a pretty interesting use case. So that has been growing very well.
And in Daxion, we have some customer with Chinese background, but operating completely in Western or Middle East or Southeast Asian markets. They have also delivered growth in past quarter. So overall, we are still optimistic about the Agora business, and we certainly hope to see further growth.
Tony Zhao, Founder, Chairman and CEO, Agora: Yes. I can add more on the growth areas for both sides. As I said, the use case of AI enabled conversational AI enabled can be divided into two categories, basically service agent for efficiency and saving time. And companionship is basically for entertainment and maybe spend people’s more time on on having a better emotional support or other social demands. We see companionship apps is very active, especially with IoT devices.
And education use cases are also the trend. We already see real volume start to grow on that, but we see a huge potential down the road in the next two years to continue to grow. IoT devices aside on companionship is having a clear chance to grow into volume in the next two years. Customer service and call center would transform a lot of the initial volume, maybe outbound calls first to agent enabled use case. And some other use cases, including for efficiency side on helping people to run all type of co pilot and those co pilot all have a chance to turn into conversational user interactions or interface.
So, those are the areas we see might have a good chance. And of course, AI community development will also give some strong push like the open source community gain a stronger power. And the price is definitely the price of such a large language model kind of keep dropping quite quickly, all hoping for us to enable those growth. On the overall channel side,
Jingbo Wang, CFO, Agora: can you repeat the second question?
Liping Zhao, Analyst, CICC: The second question is about DeepSeq because the company has like significantly boosted the adoption of AI in both enterprise side and consumer side. So I don’t know whether like our brand, Xiongwa, want to find some trends in these areas and which kind of like key business focused areas for in the next two years?
Tony Zhao, Founder, Chairman and CEO, Agora: Yes. For DeepSeq, as I mentioned just now a little bit on, it definitely gave a strong push to the whole community and agent builders where it supplies a high talent intelligence and low cost model and open source model on the demand side. So, and not just on the cost side and the open source side, but also on intelligence side, it enhanced the quality of the language model capabilities. So that will enable agent building a lot. So we are seeing agent building to be the new buzzword and growing very fast.
Technology innovations around building agent is kind of quite active and start to gain more developer attentions and we are part of it, especially in enabling voice conversational experiences for all agents. And in the next two years, multimodal or voice conversational AI experience will start to grow into more practical use cases. Multi model understanding will also help enrich the power and the kind of the reach of such use cases. Voice interactions will be much more efficient compared to currently like tax based interactions and will likely to become a critical capability of AI agents. As the multimodal capabilities of AI agents continue to rise, there are more new use cases to be unlocked.
On framework side, I think there will be more evolution around multi agent collaboration, agent orchestration to help developers agent building activities. This will enable multi agent coordination and data exchange paving the way for more complex interactive use case among human users and AI agents. So those are
Operator/Moderator, Agora: all
Tony Zhao, Founder, Chairman and CEO, Agora: factors that’s going to accelerate the growth of our agent in the next two years.
Liping Zhao, Analyst, CICC: Thanks, Tony and Jingbo. That’s very helpful.
Operator/Moderator, Agora: Thank Thank you, everybody, for attending the company’s call today. As a reminder, the recording in the earnings release will be available on the company’s website at investor.agora.io. And if there are any questions, please feel free to e mail the company. Thank you.
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