Agora, Inc. (NASDAQ: API) (“Agora”), a pioneer and leading platform
for real-time engagement APIs, today announced its financial
results for the second quarter ended June 30, 2020.
“We delivered strong results in our first
quarter as a public company, with total revenues up 128%
year-over-year. Our efficient and scalable business model focused
on developers also contributed to positive GAAP profitability and
free cash flow in the quarter,” said Tony Zhao, founder, chairman
and CEO of Agora. “Developers around the world continue to use
Agora’s real-time engagement APIs to build immersive experiences
for their end users and enable meaningful human connections. The
successful completion of our IPO in June will provide additional
brand visibility and capital to drive our growth as we strive to
fulfill our mission of making real-time engagement ubiquitous.”
Second Quarter 2020
Highlights
- Total revenues for the quarter were $33.9
million, an increase of 127.5% from $14.9 million in the second
quarter of 2019.
- Active Customers as of June 30, 2020 were
1,486, an increase of 85.5% from 801 as of June 30, 2019.
- Constant Currency Dollar-Based Net Expansion
Rate was 183.2% for the trailing 12-month period ended
June 30, 2020.
- Net income for the quarter was $3.0 million,
compared to net loss of $2.0 million in the second quarter of 2019.
After excluding share-based compensation expense, non-GAAP net
income for the quarter was $4.7 million, compared to the non-GAAP
net loss of $0.3 million in the second quarter of 2019.
Adjusted EBITDA for the quarter was $5.7 million,
compared to $0.1 million in the second quarter of 2019.
- Cash and cash equivalents as of June 30, 2020
was $640.9 million, including $485.6 million in net proceeds from
the IPO and the concurrent private placement, after deducting
underwriting discounts and commissions and other offering expenses
payable by Agora.
- Net cash generated from operating activities
for the quarter was $7.5 million, compared to net cash used in
operating activities of $4.9 million in the second quarter of 2019.
Free cash flow for the quarter was positive $3.6
million, compared to negative $6.6 million in the second quarter of
2019.
Second Quarter 2020 Financial
Results
RevenuesTotal revenues were
$33.9 million in the second quarter of 2020, an increase of 127.5%
from $14.9 million in the same period last year, primarily due to
increased usage of our video and voice products as result of our
business expansion.
Cost of RevenuesCost of
revenues was $11.4 million in the second quarter of 2020, an
increase of 148.2% from $4.6 million in the same period last year,
primarily due to increase in bandwidth and co-location costs as we
continued to scale our business.
Gross Profit and Gross
MarginGross profit was $22.5 million in the second quarter
of 2020, an increase of 118.3% from $10.3 million in the same
period last year. Gross margin was 66.4% in the second quarter of
2020, a decrease of 2.8% from 69.2% in the same period last year,
primarily due to international expansion to regions with higher
infrastructure costs.
Operating ExpensesOperating
expenses were $20.2 million in the second quarter of 2020, an
increase of 64.3% from $12.3 million in the same period last
year.
- Research and development expenses were $10.9
million in the second quarter of 2020, an increase of 91.3% from
$5.7 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 $5.9 million
in the second quarter of 2020, an increase of 16.7% from $5.1
million in the same period last year, primarily due to increased
personnel costs as we continue to build our team and advertising
expenses.
- General and administrative expenses were $3.4
million in the second quarter of 2020, an increase of 121.2% from
$1.5 million in the same period last year, primarily due to
increased personnel costs as we continue to build our team and
professional services expenses.
Other Operating IncomeOther
operating income was $770 thousand in the second quarter of 2020,
compared to $14 thousand in the same period last year, primarily
due to additional value added tax deductions and income tax
refund.
Income/(Loss) from
OperationsIncome from operations was $3.1 million in the
second quarter of 2020, compared to loss from operations of $2.0
million in the same period last year.
Interest IncomeInterest income
was $120 thousand in the second quarter of 2020, an increase of
48.1% from $81 thousand in the same period last year, primarily due
to an increase in the average balance of cash and cash
equivalents.
Income Taxes Income taxes were
$0.2 million in the second quarter of 2020, an increase of 39.7%
from $0.1 million in the same period last year, primarily due to
increase in pre-tax income generated by our subsidiaries.
Net Income/(Loss)Net income was
$3.0 million in the second quarter of 2020, compared to net loss of
$2.0 million in the same period last year.
Net loss attributable to ordinary
shareholdersNet loss attributable to ordinary shareholders
for the quarter was $157.8 million, compared to net loss
attributable to ordinary shareholders of $13.0 million in the same
period last year, primarily due to accretion of preferred shares to
redemption value.
Net loss per American Depositary
ShareNet loss per American Depositary Share (“ADS”)1 was
$4.60, compared to net loss of $0.45 per ADS in the same period
last year.
Financial Outlook
Based on currently available information, Agora
expects total revenues for the full fiscal year ending December 31,
2020 to be between $125 million and $130 million. This forecast
reflects the Company’s current and preliminary views on the market
and operational conditions, and the outlook ranges for full year
2020 reflect a number of assumptions that are subject to change
based on uncertainties related to the impact of the COVID-19
pandemic.
Earnings Call
Agora will host a conference call to discuss its
financial results and outlook at 6 p.m. Pacific Time / 9 p.m.
Eastern Time on the same day. Details for the conference call are
as follows:Event title: Agora, Inc. 2Q 2020 Financial
ResultsConference ID: 3363465Direct Event online registration:
http://apac.directeventreg.com/registration/event/3363465Please
register in advance of the conference using the link provided
above. Upon registering, you will be provided with participant
dial-in numbers, a Direct Event passcode and a unique registrant
ID.Please visit Agora’s investor relations website at
https://investor.agora.io/investor-relations on August 17, 2020 to
view the earnings release and accompanying slides prior to the
conference call.A digital recording of the conference call will be
available for replay approximately two hours after the call’s
completion (dial-in number: US 18554525696, International +61 2
81990299; same conference ID as shown above) and remain up for
approximately one week.
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 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. We
believe that such non-GAAP financial measures help identify
underlying trends in our business that could otherwise be distorted
by the effect of such share-based compensation expenses that we
include in cost of revenues, total operating expenses and net
income (loss). We believe that all such non-GAAP financial measures
also provide useful information about our operating results,
enhance the overall understanding of our past performance and
future prospects and allow for greater visibility with respect to
key metrics used by our 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
expense.
Adjusted EBITDA
Agora defines Adjusted EBITDA as net income
(loss) before exchange gain (loss), interest income, income taxes,
depreciation and amortization, and adjusted to exclude the effects
of share-based compensation expense.
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 under
the caption “Risk Factors” and 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
application, anytime and anywhere. Agora’s platform provides
developers simple, flexible and powerful application programming
interfaces, or APIs, to embed real-time video and voice engagement
experiences into their applications.
For more information, please visit:
www.agora.io.
1 One ADS represents four Class A ordinary shares.
Agora, Inc.Condensed
Consolidated Balance Sheets(Unaudited, in US$
thousands)
|
As of |
|
As of |
|
June 30, |
|
December 31, |
|
2020 |
|
2019 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
640,854 |
|
105,603 |
Accounts receivable, net |
27,940 |
|
16,248 |
Prepayments and other current assets |
4,484 |
|
1,381 |
Total current assets |
673,278 |
|
123,232 |
Property and equipment, net |
11,093 |
|
6,282 |
Deferred tax assets |
824 |
|
836 |
Other non-current assets |
492 |
|
809 |
Total assets |
685,687 |
|
131,159 |
|
|
|
|
Liabilities, mezzanine equity and shareholders' equity
(deficit) |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
5,839 |
|
4,088 |
Advances from customers |
957 |
|
921 |
Taxes payable |
2,059 |
|
2,493 |
Accrued expenses and other current liabilities |
21,896 |
|
10,979 |
Total current liabilities |
30,751 |
|
18,481 |
Total liabilities |
30,751 |
|
18,481 |
|
|
|
|
Mezzanine equity |
- |
|
239,970 |
|
|
|
|
Shareholders' equity (deficit): |
|
|
|
Ordinary shares |
- |
|
12 |
Class A ordinary shares |
33 |
|
- |
Class B ordinary shares |
8 |
|
- |
Additional paid-in-capital |
811,194 |
|
- |
Accumulated other comprehensive loss |
(1,459) |
|
(988) |
Accumulated deficit |
(154,840) |
|
(126,316) |
Total shareholders' equity (deficit) |
654,936 |
|
(127,292) |
Total liabilities, mezzanine equity and shareholders’ equity
(deficit) |
685,687 |
|
131,159 |
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, |
|
2020 |
2019 |
|
2020 |
2019 |
Real-time engagement service revenues |
33,672 |
14,863 |
|
69,118 |
28,150 |
Other revenues |
232 |
38 |
|
346 |
113 |
Total revenues |
33,904 |
14,901 |
|
69,464 |
28,263 |
Cost of revenues |
11,377 |
4,584 |
|
22,459 |
8,736 |
Gross profit |
22,527 |
10,317 |
|
47,005 |
19,527 |
Operating expenses: |
|
|
|
|
|
Research and development |
10,919 |
5,708 |
|
22,607 |
9,908 |
Sales and marketing |
5,913 |
5,067 |
|
11,915 |
9,073 |
General and administrative |
3,396 |
1,535 |
|
6,941 |
3,097 |
Total operating expenses |
20,228 |
12,310 |
|
41,463 |
22,078 |
Other operating income |
770 |
14 |
|
793 |
19 |
Income (loss) from operations |
3,069 |
(1,979) |
|
6,335 |
(2,532) |
Exchange gain |
7 |
31 |
|
- |
13 |
Interest income |
120 |
81 |
|
217 |
124 |
Income (loss) before income taxes |
3,196 |
(1,867) |
|
6,552 |
(2,395) |
Income taxes |
(190) |
(136) |
|
(559) |
(326) |
Net income (loss) |
3,006 |
(2,003) |
|
5,993 |
(2,721) |
Less: cumulative undeclared dividends on convertible redeemable
preferred shares |
(3,316) |
(2,490) |
|
(6,715) |
(4,980) |
Less: accretion on convertible redeemable preferred shares to
redemption value |
(157,502) |
(8,550) |
|
(193,466) |
(18,729) |
Net loss attributable to ordinary shareholders |
(157,812) |
(13,043) |
|
(194,188) |
(26,430) |
Other comprehensive loss: |
|
|
|
|
|
Foreign currency translation adjustments |
31 |
(405) |
|
(470) |
(84) |
Total comprehensive loss attributable to ordinary shareholders |
(157,781) |
(13,448) |
|
(194,658) |
(26,514) |
|
|
|
|
|
|
Net loss per ADS attributable to ordinary shareholders, basic and
diluted |
(4.60) |
(0.45) |
|
(6.04) |
(0.93) |
|
|
|
|
|
|
Weighted-average shares used in computing net loss per ADS
attributable to ordinary shareholders, basic and diluted |
137,167,618 |
114,842,026 |
|
128,524,877 |
114,048,078 |
Agora, Inc.Condensed
Consolidated Statements of Cash Flows(Unaudited,
in US$ thousands)
|
Three Month Ended |
|
Six Month Ended |
|
June 30, |
|
June 30, |
|
2020 |
2019 |
|
2020 |
2019 |
Cash flows from operating activities: |
|
|
|
|
|
Net income (loss) |
3,006 |
(2,003) |
|
5,993 |
(2,721) |
Adjustments to reconcile net income (loss) to net cash generated
from (used in) operating activities: |
|
|
|
|
|
Share-based compensation expense |
1,651 |
809 |
|
3,098 |
1,739 |
Depreciation of property and equipment |
1,005 |
429 |
|
1,750 |
771 |
Changes in assets and liabilities: |
|
|
|
|
|
Accounts receivable |
3,320 |
(2,141) |
|
(12,126) |
(1,006) |
Prepayments and other current assets |
(980) |
(307) |
|
(3,146) |
68 |
Other non-current assets |
(17) |
32 |
|
2 |
17 |
Accounts payable |
(3,236) |
(1,315) |
|
1,552 |
(85) |
Advances from customers |
184 |
560 |
|
46 |
426 |
Taxes payable |
(631) |
112 |
|
(399) |
95 |
Accrued expenses and other current liabilities |
3,149 |
(1,110) |
|
9,761 |
(619) |
Net cash generated from (used in) operating activities |
7,451 |
(4,934) |
|
6,531 |
(1,315) |
Cash flows from investing activities: |
|
|
|
|
|
Purchase of short-term investments |
- |
(2,935) |
|
- |
(9,605) |
Proceeds from sale and maturity of short-term investments |
- |
6,604 |
|
- |
8,086 |
Purchase of property and equipment |
(3,825) |
(1,645) |
|
(6,321) |
(2,409) |
Net cash generated from (used in) investing activities |
(3,825) |
2,024 |
|
(6,321) |
(3,928) |
Cash flows from financing activities: |
|
|
|
|
|
Proceeds from issuance of Series C+ convertible redeemable
preferred shares, net of the issuance costs of nil |
- |
- |
|
50,000 |
- |
Proceeds from the IPO and concurrent private placement, net of
underwriter discounts and commissions and other offering costs
paid |
485,555 |
- |
|
485,324 |
- |
Net cash provided by financing activities |
485,555 |
- |
|
535,324 |
- |
Effect of foreign exchange rate changes on cash, cash equivalents
and restricted cash |
20 |
(212) |
|
(283) |
(18) |
Net increase (decrease) in cash, cash equivalents and restricted
cash |
489,201 |
(3,122) |
|
535,251 |
(5,261) |
Cash, cash equivalents and restricted cash at beginning of period
* |
151,733 |
106,459 |
|
105,683 |
108,598 |
Cash, cash equivalents and restricted cash at end of period ** |
640,934 |
103,337 |
|
640,934 |
103,337 |
Supplemental disclosure of cash flow information: |
|
|
|
|
|
Income taxes paid |
724 |
411 |
|
724 |
411 |
Non-cash financing and investing activities: |
|
|
|
|
|
Accretion to redemption value of convertible redeemable preferred
shares |
157,502 |
8,550 |
|
193,466 |
18,729 |
Payables for property and equipment |
921 |
130 |
|
921 |
130 |
Payables for deferred initial public offering cost |
1,690 |
- |
|
1,690 |
- |
* includes restricted cash balance |
80 |
80 |
|
80 |
80 |
** includes restricted cash balance |
80 |
80 |
|
80 |
80 |
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, |
|
2020 |
2019 |
|
2020 |
2019 |
GAAP net income (loss) |
3,006 |
(2,003) |
|
5,993 |
(2,721) |
Add: |
|
|
|
|
|
Share-based compensation expense |
1,651 |
1,656 |
|
3,098 |
2,586 |
Non-GAAP net income (loss) |
4,657 |
(347) |
|
9,091 |
(135) |
|
|
|
|
|
|
Net income (loss) |
3,006 |
(2,003) |
|
5,993 |
(2,721) |
Excluding: |
|
|
|
|
|
Exchange rate gains |
7 |
31 |
|
- |
13 |
Interest income |
120 |
81 |
|
217 |
124 |
Income taxes |
(190) |
(136) |
|
(559) |
(326) |
Depreciation and amortization expense |
1,005 |
429 |
|
1,750 |
771 |
Share-based compensation expense |
1,651 |
1,656 |
|
3,098 |
2,586 |
Adjusted EBITDA |
5,725 |
106 |
|
11,183 |
825 |
|
|
|
|
|
|
Net cash generated from (used in) operating activities |
7,451 |
(4,934) |
|
6,531 |
(1,315) |
Purchase of property and equipment |
(3,825) |
(1,645) |
|
(6,321) |
(2,409) |
Free Cash Flow |
3,626 |
(6,579) |
|
210 |
(3,724) |
Net cash generated from (used in) investing activities |
(3,825) |
2,024 |
|
(6,321) |
(3,928) |
Net cash provided by financing activities |
485,555 |
- |
|
535,324 |
- |
Investor Contact:
Fionna Chen
investor@agora.io
Media Contact:
Suzanne Nguyen
press@agora.io
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