Agora, Inc. Q4 FY2025 earnings call

We're pleased to report our fifth consecutive quarter of GAAP profitability in Q4, marking our first full year of GAAP profitability since 2018. Our platform's scalability and reliability were validated during a high-profile live streaming event over the Super Bowl weekend. We are witnessing rapid adoption of our conversational AI engine product. Since its launch in March 2025, usage has more than doubled each quarter. We started the year with a strong reception of our conversational AI solution for physical AI at CES 2026 in January. We supported Agnes AI in launching its next-generation AI group chat and multi-agent collaboration platform. As AI becomes more interactive and multimodal, we have made substantial investments in areas like advanced audio processing, ultra-low latency networking, etc., to bridge the gap between AI model capabilities and production-grade user experiences.

Total revenue for the fourth quarter were $38.2 million, representing 10.7% year-over-year growth. Growth revenues reached $19.9 million in Q4, representing 14.4% year-over-year growth and 9.3% quarter-over-quarter growth. Long revenues reached RMB 129.2 million in Q4, up 5.7% year-over-year and 5.6% sequentially. Our gap net profit for the quarter was $4.9 million, with a gap net margin of 12.9%.

For the first quarter of 2026, we currently expect total revenues to be between $36 and $37 million, representing year-over-year growth rate of 8.1 to 11.1%. We expect net income to grow compared to 2025. Our board has authorized a 12-month extension of our share repurchase program through February 28, 2027.

Q: Firstly, could you update us the overall rt demand trend in china and overseas and what industries are the key demand drivers secondly you have released the combo ai device kit and could you please share more color on the conversational AI applications and what industries and applications are the key drivers. And besides, I'm not sure, could you share some color about your targeted revenue for the conversational AI this year?

A: For the real-time engagement market trend in China, Demand from social entertainment and education customers continue to grow at a modest rate, while we remain optimistic on the vast growth potential of IoT and digital transformation customers to drive our China revenue. In U.S. and international markets, our success in one of the massive single channel live streaming event solidifies our position and brand awareness among live shopping customers, which will bring more business opportunities for us. We do expect our conversational AI revenue to continue to grow...

Q: Can you work us through the key factors behind that gross margin decline? Should we view this as Mixed-driven and temporary or more structural given AI rents have cost, how should we think about margin trend into 2026? My second question is on profitability for 2026. After achieving four-year gap profitability in 2025, how do you think about operating income and operating margin next year What are the main drivers that could support further margin expansion?

A: The slight decrease in gross margin was mainly due to the impact of conventional AI-related products because some of the customers are still in early pilot stage... We expect operating income to improve significantly...

Q: how do you think of the, maybe like the infrastructure and the security companies position on this AI era? And also maybe like other companies, leaders, on this issue and the upper company's position in the AI space.

A: SaaS service is threatened because of the drastic cost reduction in building UI, UX and application layer logic of software by web coding or AI coding... We are heavily invested in the AI development and the AI info front...

Q: The first question is regarding the gross profit margin. We see this quarter the gross profit margin is kind of dropped down by AI investment. How do you forecast for future AI product margin trend? And the second question is, how do you view the growth trajectory for the AI account quarters for AI toys and customer service? And have you seen the inflection point for adoption in these verticals?

A: In terms of cross-margin, we actually think the conversational AI product has greater margin potential... In terms of the AI product adoption, we do expect adoption to grow throughout this year...