• Agora, Inc. Reports Third Quarter 2022 Financial Results

    ソース: Nasdaq GlobeNewswire / 21 11 2022 18:00:00   America/New_York

    SANTA CLARA, Calif., Nov. 21, 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 third quarter ended September 30, 2022.

    “We delivered robust operational results this quarter despite a very challenging global macroeconomic environment,” said Tony Zhao, founder, chairman and CEO of Agora. “In recent months, we have been working hard to improve our operational efficiency and focus our efforts on priorities including enhancing the quality of experience and ease of use of our core products, strengthening our go-to-market efforts, and winning benchmark customers, which will help us navigate near term uncertainties and emerge as a stronger and healthier company.”

    Third Quarter 2022 Highlights

    • Total revenues for the quarter were $41.0 million, a decrease of 9.0% from $45.0 million in the third quarter of 2021.
    • Active Customers as of September 30, 2022 were 2,987, excluding those for Easemob, an increase of 16.5% from 2,564 as of September 30, 2021.
    • Constant Currency Dollar-Based Net Expansion Rate (DBNER), excluding Easemob, was 84% for the trailing 12-month period ended September 30, 2022. Specifically, DNBER was above 130% for the US and International business, and approximately 70% for the China business.
    • Net loss for the quarter was $27.7 million, compared to net loss of $21.1 million in the third quarter of 2021. After excluding share-based compensation expenses, acquisition related expenses, financing related expenses, amortization expenses of acquired intangible assets and income tax related to acquired intangible assets, non-GAAP net loss for the quarter was $17.6 million, compared to non-GAAP net loss of $11.4 million in the third quarter of 2021. Adjusted EBITDA for the quarter was negative $16.4 million, compared to negative $9.1 million in the third quarter of 2021.
    • Total cash, cash equivalents and short-term investments as of September 30, 2022 was $483.4 million.
    • Net cash used in operating activities for the quarter was $8.8 million, compared to $14.0 million in the third quarter of 2021. Free cash flow for the quarter was negative $9.9 million, compared to negative $15.6 million in the third quarter of 2021.

    Third Quarter 2022 Financial Results

    Revenues
    Total revenues were $41.0 million in the third quarter of 2022, a decrease of 9.0% from $45.0 million in the same period last year, primarily due to a challenging global macro environment and restrictive regulations in certain markets, which were offset in part by our business expansion and usage growth in other sectors and regions.

    Cost of Revenues
    Cost of revenues was $16.6 million in the third quarter of 2022, an increase of 6.1% from $15.7 million in the same period last year, primarily due to the increase in bandwidth and co-location costs.

    Gross Profit and Gross Margin
    Gross profit was $24.3 million in the third quarter of 2022, a decrease of 17.0% from $29.3 million in the same period last year. Gross margin was 59.4% in the third quarter of 2022, a decrease of 5.8% from 65.2% in the same period last year, mainly due to an increase in revenue from our broadcast streaming product which had lower gross margin.

    Operating Expenses
    Operating expenses were $55.6 million in the third quarter of 2022, an increase of 10.4% from $50.4 million in the same period last year.

    • Research and development expenses were $29.8 million in the third quarter of 2022, a slight increase of 0.3% from $29.7 million in the same period last year.
    • Sales and marketing expenses were $14.6 million in the third quarter of 2022, an increase of 14.7% from $12.7 million in the same period last year, mainly due to team expansion in the US and certain international markets as well as higher advertising expenses compared to the same period last year.
    • General and administrative expenses were $11.3 million in the third quarter of 2022, an increase of 40.8% from $8.0 million in the same period last year, primarily due to increased professional services expenses.

    Other Operating Income
    Other operating income was $2.4 million in the third quarter of 2022, compared to $0.2 million in the same period last year, primarily due to the receipt of government subsidies in the third quarter of 2022.

    Loss from Operations
    Loss from operations was $28.9 million in the third quarter of 2022, compared to $20.8 million in the same period last year.

    Interest income
    Interest income was $2.5 million in the third quarter of 2022, compared to $2.2 million in the same period last year, primarily due to the increase in interest rate.

    Net Loss
    Net loss was $27.7 million in the third quarter of 2022, compared to $21.1 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 $0.25 in the third quarter of 2022, compared to $0.19 in the same period last year.

    ____________________
    1 One ADS represents four Class A ordinary shares.

    Share Repurchase Program

    During the quarter ended September 30, 2022, we repurchased approximately 3.5 million of our class A ordinary shares (equivalent to approximately 0.9 million ADSs) for approximately US$3.5 million under our share repurchase program, representing 2% of our US$200 million share repurchase program. During the nine months ended September 30, 2022, we repurchased approximately 13.2 million of our class A ordinary shares (equivalent to approximately 3.3 million ADSs) for approximately US$23.2 million under our share repurchase program, representing 12% of our US$200 million share repurchase program. As of September 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 has adjusted the previous guidance and now expects that total revenues for the fiscal year ending December 31, 2022 are estimated to be between $160 million and $162 million. This revised 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 5 p.m. Pacific Time / 8:00 p.m. Eastern Time on the same day. Details for the conference call are as follows:
    Event title: Agora, Inc. 3Q 2022 Financial Results
    The call will be available at https://edge.media-server.com/mmc/p/6rshpuvm
    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/BIe9583c1e69af4c4e991651496aa4b338
    Please visit Agora’s investor relations website at https://investor.agora.io/investor-relations on November 21, 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, financing 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, financing 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, financing 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, financing 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.

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

     As of As of
     September 30, December 31,
     2022  2021 
    Assets   
    Current assets:   
    Cash and cash equivalents30,819  285,668 
    Short-term investments452,587  469,636 
    Accounts receivable, net33,130  32,619 
    Prepayments and other current assets7,639  8,801 
    Contract assets1,316  962 
    Total current assets525,491  797,686 
    Property and equipment, net13,616  19,194 
    Operating lease right-of-use assets4,194  7,436 
    Intangible assets4,947  6,697 
    Goodwill56,142  56,142 
    Long-term investments63,388  53,925 
    Other non-current assets167,960  3,919 
    Total assets835,738  944,999 
        
    Liabilities and shareholders’ equity   
    Current liabilities:   
    Accounts payable8,551  5,309 
    Advances from customers9,027  9,068 
    Taxes payable852  2,435 
    Current operating lease liabilities3,278  3,957 
    Accrued expenses and other current liabilities41,827  53,034 
    Total current liabilities63,535  73,803 
    Long-term payable546  495 
    Long-term operating lease liabilities793  3,452 
    Deferred tax liabilities735  988 
    Total liabilities65,609  78,738 
        
    Shareholders’ equity:   
    Class A ordinary shares38  37 
    Class B ordinary shares8  8 
    Additional paid-in-capital1,126,441  1,099,369 
    Treasury shares, at cost(23,221) - 
    Accumulated other comprehensive income(11,516) 3,149 
    Accumulated deficit(321,621) (236,302)
    Total shareholders’ equity770,129  866,261 
    Total liabilities and shareholders’ equity835,738  944,999 
          

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

     Three Month Ended Nine Month Ended
     September 30, September 30,
     2022 2021  2022 2021 
    Real-time engagement service revenues38,860 42,390  115,120 122,234 
    Other revenues2,128 2,648  5,432 5,362 
    Total revenues40,988 45,038  120,552 127,596 
    Cost of revenues16,639 15,689  45,520 49,016 
    Gross profit24,349 29,349  75,032 78,580 
    Operating expenses:     
    Research and development29,771 29,668  93,247 81,887 
    Sales and marketing14,607 12,734  41,580 32,478 
    General and administrative11,257 7,996  29,439 20,988 
    Total operating expenses55,635 50,398  164,266 135,353 
    Other operating income2,365 210  3,593 840 
    Loss from operations(28,921)(20,839) (85,641)(55,933)
    Exchange gain (loss)62 (189) (4,969)(208)
    Interest income2,490 2,154  6,468 6,280 
    Investment loss(971)(2,314) (1,059)(967)
    Loss before income taxes(27,340)(21,188) (85,201)(50,828)
    Income taxes(132)93  (384)(353)
    Equity in income of affiliates(227)-  264 - 
    Net loss(27,699)(21,095) (85,321)(51,181)
    Net loss attributable to ordinary shareholders(27,699)(21,095) (85,321)(51,181)
    Other comprehensive loss:     
    Foreign currency translation adjustments(11,696)493  (13,526)882 
    Unrealized (loss) gain on available-for-sale debt securities(613)65  (1,139)152 
    Total comprehensive loss attributable to ordinary shareholders(40,008)(20,537) (99,986)(50,147)
          
    Net loss per ADS attributable to ordinary shareholders, basic and diluted(0.25)(0.19) (0.76)(0.47)
          
    Weighted-average shares outstanding used in computing net loss per ADS attributable to ordinary shareholders, basic and diluted448,554,483 443,732,607  448,733,032 438,984,051 
          
    Share-based compensation expenses included in:     
    Cost of revenues165 152  760 456 
    Research and development expenses4,150 5,873  14,342 15,053 
    Sales and marketing expenses1,244 1,326  5,050 3,603 
    General and administrative expenses1,671 1,179  5,492 4,017 


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

     Three Month Ended Nine Month Ended
     September 30, September 30,
     2022 2021  2022 2021 
    Cash flows from operating activities:     
    Net loss(27,699)(21,095) (85,321)(51,181)
    Adjustments to reconcile net loss to net cash used in operating activities:     
    Share-based compensation expense7,230 8,530  25,644 23,129 
    Allowance for current expected credit losses788 1,758  3,697 3,031 
    Depreciation of property and equipment2,334 1,994  7,231 5,978 
    Amortization of intangible assets576 574  1,732 1,355 
    Deferred tax expense(84)(84) (252)(199)
    Amortization of right-of-use asset and interest on lease liabilities1,013 985  3,124 2,727 
    Change in the fair value of investments976 2,345  861 1,064 
    Interest income on available-for-sale debt securities(101)(101) (300)(194)
    Equity in income of affiliates227 (66) (264)(66)
    Changes in assets and liabilities, net of effect of acquisition:     
    Accounts receivable155 (4,456) (6,545)(10,559)
    Contract assets(34)(97) (498)(273)
    Prepayments and other current assets(163)(344) (6)(897)
    Other non-current assets3,142 (344) 3,112 (299)
    Accounts payable2,088 (1,611) 4,031 (1,476)
    Advances from customers671 49  784 (121)
    Taxes payable(631)(167) (1,509)(732)
    Operating lease liabilities(1,148)(1,150) (3,335)(2,972)
    Deferred income- 185  145 185 
    Accrued expenses and other liabilities1,827 (887) (822)6,450 
    Net cash used in operating activities(8,833)(13,982) (48,491)(25,050)
    Cash flows from investing activities:     
    Purchase of short-term investments(159,340)(42,298) (531,279)(432,745)
    Proceeds from sale and maturity of short-term investments193,501 157,834  542,631 407,912 
    Purchase of long-term investment(1,657)(20,759) (19,762)(47,111)
    Prepayment for long-term investments(1,476)-  (1,949)- 
    Withdrawal of long-term investments2,113 -  2,113 - 
    Purchase of property and equipment(1,085)(1,638) (2,707)(10,081)
    Purchase of intangible assets- (42) - (243)
    Deposit for land use right purchase- -  (34,159)- 
    Withdrawal of deposit for land use right purchase34,159 -  34,159 - 
    Prepayment for land use right purchase(171,592)-  (171,592)- 
    Cash paid for an acquisition- (20,902) - (36,630)
    Net cash (used in) generated from investing activities(105,377)72,195  (182,545)(118,898)
    Cash flows from financing activities:     
    Proceeds from the private placement, net of issuance costs paid- -  - 249,950 
    Proceeds from exercise of employees’ share options87 382  970 1,835 
    Payment of financing cost- -  (621)- 
    Repurchase of Class A ordinary shares(3,079)-  (22,839)- 
    Net cash (used in) provided by financing activities(2,992)382  (22,490)251,785 
    Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash(2,829)194  (1,326)270 
    Net (decrease) increase in cash, cash equivalents and restricted cash(120,031)58,789  (254,852)108,107 
    Cash, cash equivalents and restricted cash at beginning of period *151,004 160,616  285,825 111,298 
    Cash, cash equivalents and restricted cash at end of period **30,973 219,405  30,973 219,405 
    Supplemental disclosure of cash flow information:     
    Income taxes paid- -  55 966 
    Cash payments included in the measurement of operating lease liabilities1,148 1,150  3,335 2,972 
    Right-of-use assets obtained in exchange for operating lease obligations198 2,148  198 3,636 
    Non-cash financing and investing activities:     
    Payables for acquisition- -  - 18,539 
    Proceeds receivable from exercise of employees’ share options66 33  66 33 
    Deposits utilized for employees’ share option exercises- -  7 - 
    Payables for property and equipment228 917  228 917 
    Payables for long-term investment- 5,897  - 5,897 
    Payables for treasury shares, at cost383   383  


    * includes restricted cash balance    		155 156  156 80 
    ** includes restricted cash balance154 156  154 156 


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

     Three Month Ended Nine Month Ended
     September 30, September 30,
     2022 2021  2022 2021 
    GAAP net loss(27,699)(21,095) (85,321)(51,181)
    Add:     
    Share-based compensation expense7,230 8,530  25,644 23,129 
    Acquisition related expenses236 656  749 5,355 
    Financing related expenses2,166 -  2,166 - 
    Amortization expense of acquired intangible assets556 556  1,668 1,305 
    Income tax related to acquired intangible assets(84)(84) (252)(199)
    Non-GAAP net loss(17,595)(11,437) (55,346)(21,591)
          
    Net loss(27,699)(21,095) (85,321)(51,181)
    Excluding:     
    Exchange gain (loss)62 (189) (4,969)(208)
    Interest income2,490 2,154  6,468 6,280 
    Investment loss(971)(2,314) (1,059)(967)
    Equity in income of affiliates(227)-  264 - 
    Income taxes(132)93  (384)(353)
    Depreciation of property and equipment2,334 1,994  7,231 5,978 
    Share-based compensation expense7,230 8,530  25,644 23,129 
    Acquisition related expenses236 656  749 5,355 
    Financing related expenses2,166 -  2,166 - 
    Amortization expense of acquired intangible assets556 556  1,668 1,305 
    Adjusted EBITDA(16,399)(9,103) (48,183)(20,166)
          
    Net cash used in operating activities(8,833)(13,982) (48,491)(25,050)
    Purchase of property and equipment(1,085)(1,638) (2,707)(10,081)
    Free Cash Flow(9,918)(15,620) (51,198)(35,131)
    Net cash (used in) generated from investing activities(105,377)72,195  (182,545)(118,898)
    Net cash (used in) provided by financing activities(2,992)382  (22,490)251,785 

    Investor Contact:
Fionna Chen
investor@agora.io

Media Contact:
Timothy Gray
press@agora.io

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