• Agora, Inc. Reports Second Quarter 2022 Financial Results

    Source: Nasdaq GlobeNewswire / 15 Aug 2022 17:00:00   America/Chicago

    SANTA CLARA, Calif., Aug. 15, 2022 (GLOBE NEWSWIRE) -- Agora, Inc. (NASDAQ: API) (“Agora”), a pioneer and leading platform for real-time engagement APIs, today announced its unaudited financial results for the second quarter ended June 30, 2022.

    "We delivered strong operational results this quarter as our top line returned to a quarter-over-quarter growth trajectory," said Tony Zhao, founder, chairman and CEO of Agora. "In particular, we see immense and increasing demand for our real-time engagement platform in the US and international markets, where our dollar-based net expansion rate has consistently exceeded 130%. With the recent streamlining of our organizational structure and promotion of key executives, we are well positioned to enhance our go-to-market efficiency and expand our platform globally."

    Second Quarter 2022 Highlights

    • Total revenues for the quarter were $41.0 million, a decrease of 3.2% from $42.3 million in the second quarter of 2021.
    • Active Customers as of June 30, 2022 were 2,877, excluding those for Easemob, an increase of 17.5% from 2,449 as of June 30, 2021.
    • Constant Currency Dollar-Based Net Expansion Rate (DBNER), excluding Easemob, was 95% for the trailing 12-month period ended June 30, 2022. Specifically, DNBER was above 130% for the US and International business, and approximately 80% for the China business.
    • Net loss for the quarter was $30.7 million, compared to net loss of $15.4 million in the second quarter of 2021. After excluding share-based compensation expenses, acquisition related expenses, amortization expenses of acquired intangible assets and income tax related to acquired intangible assets, non-GAAP net loss for the quarter was $20.8 million, compared to non-GAAP net loss of $5.8 million in the second quarter of 2021. Adjusted EBITDA for the quarter was negative $15.3 million, compared to negative $7.3 million in the second quarter of 2021.
    • Total cash, cash equivalents and short-term investments as of June 30, 2022 was $641.2 million.
    • Net cash used in operating activities for the quarter was $23.8 million, compared to $8.3 million in the second quarter of 2021. Free cash flow for the quarter was negative $24.2 million, compared to negative $11.5 million in the second quarter of 2021.

    Second Quarter 2022 Financial Results

    Revenues
    Total revenues were $41.0 million in the second quarter of 2022, a decrease of 3.2% from $42.3 million in the same period last year, primarily due to the decreased usage in the K-12 academic tutoring sector in China as a result of the implementation of the new online education regulation, which was offset in part by our global business expansion and usage growth in other sectors and regions.

    Cost of Revenues
    Cost of revenues was $14.4 million in the second quarter of 2022, a decrease of 12.8% from $16.5 million in the same period last year, primarily due to the decrease in bandwidth and co-location costs.

    Gross Profit and Gross Margin
    Gross profit was $26.6 million in the second quarter of 2022, an increase of 2.9% from $25.9 million in the same period last year. Gross margin was 64.9% in the second quarter of 2022, an increase of 3.8% from 61.1% in the same period last year, primarily due to the implementation of technical and infrastructural optimizations.

    Operating Expenses
    Operating expenses were $54.5 million in the second quarter of 2022, an increase of 20.4% from $45.3 million in the same period last year.

    • Research and development expenses were $32.4 million in the second quarter of 2022, an increase of 20.1% from $27.0 million in the same period last year, primarily due to increased personnel costs as we continue to build our research and development team.
    • Sales and marketing expenses were $13.1million in the second quarter of 2022, an increase of 19.1% from $11.0 million in the same period last year, primarily due to increased personnel costs as we continue to build our sales and marketing team, including an increase in share-based compensation from $1.3 million in the second quarter of 2021 to $1.9 million in the second quarter of 2022, as well as higher advertising expenses compared to the same period last year.
    • General and administrative expenses were $9.0 million in the second quarter of 2022, an increase of 23.1% from $7.3 million in the same period last year, primarily due to increased personnel costs as we continue to build our team, including an increase in share-based compensation from $1.6 million in the second quarter of 2021 to $2.0 million in the second quarter of 2022, as well as an increase in expected credit loss from $0.9 million in the second quarter of 2021 to $1.6 million in the second quarter of 2022.

    Other Operating Income
    Other operating income was $0.2 million in the second quarter of 2022, compared to $0.3 million in the same period last year, primarily due to less VAT related deductions.

    Loss from Operations
    Loss from operations was $27.7 million in the second quarter of 2022, compared to $19.1 million in the same period last year.

    Exchange (Loss) Gain
    Exchange loss was $5.3 million in the second quarter of 2022, compared to exchange gain of $0.7 million in the same period last year, mainly due to the appreciation of the U.S. dollar against the Renminbi and an increase in the balance of Renminbi-dominated cash and short-term investments held by the subsidiaries in Hong Kong (whose functional currency is the U.S. dollar) in anticipation of funding Renminbi to subsidiaries in mainland China.

    Interest Income
    Interest income was $2.1 million in the second quarter of 2022, flat compared to the same period last year.

    Net Loss
    Net loss was $30.7 million in the second quarter of 2022, compared to $15.4 million in the same period last year.

    Net Loss per American Depositary Share attributable to ordinary shareholders
    Net loss per American Depositary Share (“ADS”)1 attributable to ordinary shareholders was $0.27 in the second quarter of 2022, compared to $0.14 in the same period last year.

    _________________________________

    1 One ADS represents four Class A ordinary shares.

    Share Repurchase Program

    During the quarter ended June 30, 2022, we repurchased approximately 6.3 million of our class A ordinary shares (equivalent to approximately 1.6 million ADSs) for approximately US$11.7 million under our share repurchase program, representing 6% of our US$200 million share repurchase program. During the six months ended June 30, 2022, we repurchased approximately 9.7 million of our class A ordinary shares (equivalent to approximately 2.4 million ADSs) for approximately US$19.8 million under our share repurchase program, representing 10% of our US$200 million share repurchase program. As of June 30, 2022, we had approximately 463.6 million ordinary shares (equivalent to approximately 115.9 million ADSs) issued and outstanding. Our current share repurchase program will expire by the end of February 2023.

    Financial Outlook

    Based on currently available information, Agora maintains the previous guidance that total revenues for the fiscal year ending December 31, 2022 are estimated to be between $176 million and $178 million. This outlook reflects Agora’s current and preliminary views on the market and operational conditions, and the outlook ranges for the year ending December 31, 2022 reflect various assumptions that are subject to change based on uncertainties, including but not limited to the impact of the COVID-19 pandemic.

    Earnings Call

    Agora will host a conference call to discuss the financial results at 6 p.m. Pacific Time / 9:00 p.m. Eastern Time on August 15, 2022. Details for the conference call are as follows:
    Event title: Agora, Inc. 2Q 2022 Financial Results
    The call will be available at https://edge.media-server.com/mmc/p/k3cju2u3
    Investors who want to hear the call should log on at least 15 minutes prior to the broadcast. Participants may register for the call with the link below:
    https://register.vevent.com/register/BIf7de89410642479ba03f3176a9054e82
    Please visit Agora’s investor relations website at https://investor.agora.io/investor-relations on August 15, 2022 to view the earnings release and accompanying slides prior to the conference call.

    Use of Non-GAAP Financial Measures

    Agora has provided in this press release financial information that has not been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). Agora uses these non-GAAP financial measures internally in analyzing its financial results and believes that the use of these non-GAAP financial measures is useful to investors as an additional tool to evaluate ongoing operating results and trends and in comparing Agora’s financial results with other companies in its industry, many of which present similar non-GAAP financial measures. Besides free cash flow (as defined below), each of these non-GAAP financial measures represents the corresponding GAAP financial measure before share-based compensation expenses, acquisition related expenses, amortization expenses of acquired intangible assets and income tax related to acquired intangible assets. Agora believes that such non-GAAP financial measures help identify underlying trends in its business that could otherwise be distorted by the effects of such share-based compensation expenses, acquisition related expenses, amortization expenses of acquired intangible assets and income tax related to acquired intangible assets that it includes in its cost of revenues, total operating expenses and net income (loss). Agora believes that all such non-GAAP financial measures also provide useful information about its operating results, enhance the overall understanding of its past performance and future prospects and allow for greater visibility with respect to key metrics used by its management in its financial and operational decision-making.

    Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures and should be read only in conjunction with Agora’s consolidated financial statements prepared in accordance with GAAP. A reconciliation of Agora’s historical non-GAAP financial measures to the most directly comparable GAAP measures has been provided in the tables captioned “Reconciliation of GAAP to Non-GAAP Measures” included at the end of this press release, and investors are encouraged to review the reconciliation.

    Definitions of Agora’s non-GAAP financial measures included in this press release are presented below.

    Non-GAAP Net Income (Loss)

    Agora defines non-GAAP net income (loss) as net income (loss) adjusted to exclude share-based compensation expenses, acquisition related expenses, amortization expenses of acquired intangible assets and income tax related to acquired intangible assets.

    Adjusted EBITDA

    Agora defines Adjusted EBITDA as net income (loss) before exchange gain (loss), interest income, investment income (loss), other income, equity in income of affiliates, income taxes, depreciation of property and equipment, and adjusted to exclude the effects of share-based compensation expenses, acquisition related expenses and amortization expenses of acquired intangible assets.

    Free Cash Flow

    Agora defines free cash flow as net cash provided by operating activities less purchases of property and equipment. Agora considers free cash flow to be a liquidity measure that provides useful information to management and investors regarding net cash provided by operating activities and cash used for investments in property and equipment required to maintain and grow the business.

    Operating Metrics

    Agora also uses other operating metrics included in this press release and defined below to assess the performance of its business.

    Active Customers

    Agora defines an active customer at the end of any particular period as an organization or individual developer from which Agora generated more than $100 of revenue during the preceding 12 months. Agora counts customers based on unique customer account identifiers. Generally, one software application uses the same customer account identifier throughout its life cycle while one account may be used for multiple applications.

    Constant Currency Dollar-Based Net Expansion Rate

    Agora calculates Dollar-Based Net Expansion Rate for a trailing 12-month period by first identifying all customers in the prior 12-month period, and then calculating the quotient from dividing the revenue generated from such customers in the trailing 12-month period by the revenue generated from the same group of customers in the prior 12-month period. Constant Currency Dollar-Based Net Expansion Rate is calculated the same way as Dollar-Based Net Expansion Rate but using fixed exchange rates based on the daily average exchange rates prevailing during the prior 12-month period to remove the impact of foreign currency translations. Agora believes Constant Currency Dollar-Based Net Expansion Rate facilitates operating performance comparisons on a period-to-period basis as Agora does not consider the impact of foreign currency fluctuations to be indicative of its core operating performance.

    Safe Harbor Statements

    This press release contains ‘‘forward-looking statements’’ within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended and the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical or current fact included in this press release are forward-looking statements, including but not limited to statements regarding Agora’s financial outlook, beliefs and expectations. Forward-looking statements include statements containing words such as “expect,” “anticipate,” “believe,” “project,” “will” and similar expressions intended to identify forward-looking statements. Among other things, the Financial Outlook in this announcement contain forward-looking statements. These forward-looking statements are based on Agora’s current expectations and involve risks and uncertainties. Agora’s actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, risks related to the growth of the RTE-PaaS market; Agora’s ability to manage its growth and expand its operations; the continued impact of the COVID-19 pandemic on global markets and Agora’s business, operations and customers; Agora’s ability to attract new developers and convert them into customers; Agora’s ability to retain existing customers and expand their usage of Agora’s platform and products; Agora’s ability to drive popularity of existing use cases and enable new use cases, including through quality enhancements and introduction of new products, features and functionalities; Agora’s fluctuating operating results; competition; the effect of broader technological and market trends on Agora’s business and prospects; general economic conditions and their impact on customer and end-user demand; and other risks and uncertainties included elsewhere in our filings with the Securities and Exchange Commission, including, without limitation, the final prospectus related to the IPO filed with the SEC on June 26, 2020. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement, and Agora undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date hereof.

    About Agora

    Agora’s mission is to make real-time engagement ubiquitous, allowing everyone to interact with anyone, in any app, anytime and anywhere. Agora’s cloud platform provides developers simple, flexible and powerful application programming interfaces, or APIs, to embed real-time video, voice and chat experiences into their applications. Agora maintains dual headquarters in Shanghai, China and Santa Clara, California.

    For more information, please visit: www.agora.io.

    Investor Contact:
    Fionna Chen
    investor@agora.io

    Media Contact:
    Suzanne Nguyen
    press@agora.io


    Agora, Inc.
    Condensed Consolidated Balance Sheets
    (Unaudited, in US$ thousands)

     As of As of
     June 30, December 31,
     2022 2021
    Assets   
    Current assets:   
    Cash and cash equivalents150,849  285,668 
    Short-term investments490,314  469,636 
    Accounts receivable, net35,328  32,619 
    Prepayments and other current assets41,769  8,801 
    Contract assets1,357  962 
    Total current assets719,617  797,686 
    Property and equipment, net15,428  19,194 
    Operating lease right-of-use assets5,191  7,436 
    Intangible assets5,532  6,697 
    Goodwill56,142  56,142 
    Long-term investments70,857  53,925 
    Other non-current assets4,953  3,919 
    Total assets877,720  944,999 
        
    Liabilities and shareholders' equity   
    Current liabilities:   
    Accounts payable7,099  5,309 
    Advances from customers8,773  9,068 
    Taxes payable1,528  2,435 
    Current operating lease liabilities3,728  3,957 
    Accrued expenses and other current liabilities51,990  53,034 
    Total current liabilities73,118  73,803 
    Long-term payable517  495 
    Long-term operating lease liabilities1,475  3,452 
    Deferred tax liabilities819  988 
    Total liabilities75,929  78,738 
        
    Shareholders' equity:   
    Class A ordinary shares38  37 
    Class B ordinary shares8  8 
    Additional paid-in-capital1,114,635  1,099,369 
    Treasury shares, at cost(19,760) - 
    Accumulated other comprehensive income792  3,149 
    Accumulated deficit(293,922) (236,302)
    Total shareholders' equity801,791  866,261 
    Total liabilities and shareholders’ equity877,720  944,999 


    Agora, Inc.
    Condensed Consolidated Statements of Comprehensive Income (Loss)
    (Unaudited, in US$ thousands, except share and per ADS amounts)

     Three Month Ended Six Month Ended
     June 30, June 30,
     20222021
    		 20222021
    Real-time engagement service revenues39,203 40,357  76,260 79,844 
    Other revenues1,776 1,976  3,304 2,714 
    Total revenues40,979 42,333  79,564 82,558 
    Cost of revenues14,370 16,474  28,881 33,327 
    Gross profit26,609 25,859  50,683 49,231 
    Operating expenses:     
    Research and development32,442 27,003  63,476 52,219 
    Sales and marketing13,117 11,009  26,973 19,744 
    General and administrative8,952 7,271  18,182 12,992 
    Total operating expenses54,511 45,283  108,631 84,955 
    Other operating income190 342  1,228 630 
    Loss from operations(27,712)(19,082) (56,720)(35,094)
    Exchange (loss) gain(5,297)676  (5,031)(19)
    Interest income2,142 2,090  3,978 4,126 
    Investment (loss) income(88)1,347  (88)1,348 
    Loss before income taxes(30,955)(14,969) (57,861)(29,639)
    Income taxes(255)(425) (252)(446)
    Equity in income of affiliates532 -  491 - 
    Net loss(30,678)(15,394) (57,622)(30,085)
    Net loss attributable to ordinary shareholders(30,678)(15,394) (57,622)(30,085)
    Other comprehensive loss:     
    Foreign currency translation adjustments(1,832)513  (1,830)389 
    Unrealized (loss) gain on available-for-sale debt securities(429)87  (526)87 
    Total comprehensive loss attributable to ordinary shareholders(32,939)(14,794) (59,978)(29,609)
          
    Net loss per ADS attributable to ordinary shareholders, basic and diluted(0.27)(0.14) (0.51)(0.28)
          
    Weighted-average shares outstanding used in computing net loss per ADS attributable to ordinary shareholders, basic and diluted446,614,083 441,449,908  448,823,787 436,570,420 
          
    Share-based compensation expenses included in:     
    Cost of revenues349 171  595 304 
    Research and development expenses4,839 5,420  10,192 9,180 
    Sales and marketing expenses1,859 1,321  3,806 2,277 
    General and administrative expenses1,986 1,612  3,821 2,838 


    Agora, Inc.
    Condensed Consolidated Statements of Cash Flows
    (Unaudited, in US$ thousands)

     Three Month Ended Six Month Ended
     June 30, June 30,
     20222021 20222021
    Cash flows from operating activities:     
    Net loss(30,678)(15,394) (57,622)(30,085)
    Adjustments to reconcile net loss to net cash used in operating activities:     
    Share-based compensation expense9,033 8,524  18,414 14,599 
    Allowance for current expected credit losses1,637 750  2,909 1,273 
    Depreciation of property and equipment2,424 2,084  4,897 3,983 
    Amortization of intangible assets577 574  1,156 781 
    Deferred tax expense(84)(84) (168)(114)
    Amortization of right-of-use asset and interest on lease liabilities1,034 947  2,111 1,742 
    Change in the fair value of investments(80)(1,230) (115)(1,280)
    Interest income on available-for-sale debt securities(100)(93) (199)(93)
    Equity in income of affiliates(532)-  (491)- 
    Changes in assets and liabilities, net of effect of acquisition:     
    Accounts receivable(8,247)853  (6,700)(6,103)
    Contract assets(104)(48) (464)(176)
    Prepayments and other current assets(728)249  157 (553)
    Other non-current assets742 (105) (30)45 
    Accounts payable761 (4,328) 1,943 135 
    Advances from customers17 (194) 113 (170)
    Taxes payable354 (125) (878)(565)
    Operating lease liabilities(817)(796) (2,187)(1,823)
    Deferred income145 -  145 - 
    Accrued expenses and other liabilities849 90  (2,649)7,336 
    Net cash used in operating activities(23,797)(8,326) (39,658)(11,068)
    Cash flows from investing activities:     
    Purchase of short-term investments(128,194)(196,966) (371,939)(390,447)
    Proceeds from sale and maturity of short-term investments122,997 200,078  349,130 250,078 
    Purchase of long-term investment(4,175)(26,352) (18,105)(26,352)
    Prepayment for long-term investments(473)-  (473)- 
    Purchase of property and equipment(450)(3,209) (1,622)(8,442)
    Purchase of intangible assets- (37) - (202)
    Deposit for land use rights purchase(34,159)-  (34,159)- 
    Cash paid for an acquisition- (14,309) - (15,728)
    Net cash used in investing activities(44,454)(40,795) (77,168)(191,093)
    Cash flows from financing activities:     
    Proceeds from the private placement, net of issuance costs paid- (50) - 249,950 
    Proceeds from exercise of employees’ share options260 418  883 1,453 
    Payment of financing cost(621)-  (621)- 
    Repurchase of Class A ordinary shares(12,157)-  (19,760)- 
    Net cash (used in) provided by financing activities(12,518)368  (19,498)251,403 
    Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash1,387 (241) 1,503 76 
    Net (decrease) increase in cash, cash equivalents and restricted cash(79,382)(48,994) (134,821)49,318 
    Cash, cash equivalents and restricted cash at beginning of period *230,386 209,610  285,825 111,298 
    Cash, cash equivalents and restricted cash at end of period **151,004 160,616  151,004 160,616 
    Supplemental disclosure of cash flow information:     
    Income taxes paid55 966  55 966 
    Cash payments included in the measurement of operating lease liabilities817 796  2,187 1,822 
    Right-of-use assets obtained in exchange for operating lease obligations- 1,076  - 1,489 
    Non-cash financing and investing activities:                           
    Payables for acquisition- -  - 39,441 
    Proceeds receivable from exercise of employees’ share options26 156  26 156 
    Deposits utilized for employees’ share option exercises- -  7 - 
    Payables for property and equipment671 331  671 331 
    Payables for deferred financing cost- -  610 - 

    * includes restricted cash balance    		156 156  156 80 
    ** includes restricted cash balance155 156  155 156 


    Agora, Inc.
    Reconciliation of GAAP to Non-GAAP Measures
    (Unaudited, in US$ thousands, except share and per ADS amounts)

     Three Month Ended Six Month Ended
     June 30, June 30,
     20222021 20222021
    GAAP net loss(30,678)(15,394) (57,622)(30,085)
    Add:     
    Share-based compensation expense9,033 8,524  18,414 14,599 
    Acquisition related expenses357 577  513 4,699 
    Amortization expense of acquired intangible assets556 556  1,112 748 
    Income tax related to acquired intangible assets(84)(84) (168)(114)
    Non-GAAP net loss(20,816)(5,821) (37,751)(10,153)
          
    Net loss(30,678)(15,394) (57,622)(30,085)
    Excluding:     
    Exchange (loss) gain(5,297)676  (5,031)(19)
    Interest income2,142 2,090  3,978 4,126 
    Investment (loss) income(88)1,347  (88)1,348 
    Equity in income of affiliates532 -  491 - 
    Income taxes(255)(425) (252)(446)
    Depreciation of property and equipment2,424 2,084  4,897 3,983 
    Share-based compensation expense9,033 8,524  18,414 14,599 
    Acquisition related expenses357 577  513 4,699 
    Amortization expense of acquired intangible assets556 556  1,112 748 
    Adjusted EBITDA(15,342)(7,341) (31,784)(11,065)
          
    Net cash used in operating activities(23,797)(8,326) (39,658)(11,068)
    Purchase of property and equipment(450)(3,209) (1,622)(8,442)
    Free Cash Flow(24,247)(11,535) (41,280)(19,510)
    Net cash used in investing activities(44,454)(40,795) (77,168)(191,093)
    Net cash (used in) provided by financing activities(12,518)368  (19,498)251,403 



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