Agora, Inc. (NASDAQ: API) (“Agora”), a pioneer and leading platform
for real-time engagement APIs, today announced its financial
results for the first quarter ended March 31, 2021.
“We opened the year with another quarter of
strong growth, as developers and innovators around the world
continue to create new immersive experiences with our real time
voice, video, chat and streaming APIs, transforming all
industries,” said Tony Zhao, founder, chairman and CEO of Agora.
“In particular, we are excited to see early signs of the emergence
of next-generation use cases such as extended reality and metaverse
on the Agora platform, and we are committed to helping developers
to bring about groundbreaking innovations.”
First Quarter 2021
Highlights
- Total revenues for
the quarter were $40.2 million, an increase of 13.1% from $35.6
million in the first quarter of 2020.
- Active Customers
as of March 31, 2021 were 2,324, excluding those for Easemob, an
increase of 97.6% from 1,176 as of March 31, 2020.
- Constant Currency
Dollar-Based Net Expansion Rate, excluding Easemob, was
131% for the trailing 12-month period ended March 31, 2021.
- Net loss for the
quarter was $14.7 million, compared to net income of $3.0 million
in the first quarter of 2020. After excluding share-based
compensation expense, acquisition related expenses, amortization
expense of acquired intangible assets and income tax related to
acquired intangible assets, non-GAAP net loss for the quarter was
$4.3 million, compared to the non-GAAP net income of $5.7 million
in the first quarter of 2020. Adjusted EBITDA for
the quarter was negative $3.7 million, compared to $6.7 million in
the first quarter of 2020.
- Total cash, cash
equivalents and short-term investments as of March 31,
2021 was $876.8 million.
- Net cash used in operating
activities for the quarter was $2.7 million, compared to
$0.9 million in the first quarter of 2020. Free cash
flow for the quarter was negative $8.0 million, compared
to negative $3.4 million in the first quarter of 2020.
First Quarter 2021 Financial
Results
RevenuesTotal revenues were
$40.2 million in the first quarter of 2021, an increase of 13.1%
from $35.6 million in the same period last year, primarily due to
increased usage of our video and voice products as a result of our
business expansion and usage growth in emerging use cases such as
interactive lecture hall and audio live cast.
Cost of RevenuesCost of
revenues was $16.9 million in the first quarter of 2021, an
increase of 52.1% from $11.1 million in the same period last year,
primarily due to increase in bandwidth and co-location costs and
depreciation of servers and network equipment as we continue to
scale our business.
Gross Profit and Gross
MarginGross profit was $23.4 million in the first quarter
of 2021, a decrease of 4.5% from $24.5 million in the same period
last year. Gross margin was 58.1% in the first quarter of 2021, a
decrease of 10.7% from 68.8% in the same period last year,
primarily due to international expansion to regions with higher
infrastructure costs and capacity expansion in anticipation of
future usage growth.
Operating ExpensesOperating
expenses were $39.7 million in the first quarter of 2021, an
increase of 86.8% from $21.2 million in the same period last
year.
- Research and
development expenses were $25.2 million in the first
quarter of 2021, an increase of 115.7% from $11.7 million in the
same period last year, primarily due to acquisition related
expenses of $4.0 million, as well as increased personnel costs as
we continue to build our research and development team, including
an increase in share-based compensation from $1.1 million in the
first quarter of 2020 to $3.8 million in the first quarter of
2021.
- Sales and
marketing expenses were $8.7 million in the first quarter
of 2021, an increase of 45.5% from $6.0 million in the same period
last year, primarily due to increased personnel costs as we
continue to build our team and incur advertising expenses.
- General and
administrative expenses were $5.7 million in the first
quarter of 2021, an increase of 61.4% from $3.5 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 $0.9 million in the first quarter of 2020 to $1.2
million in the first quarter of 2021, as well as higher
professional services expensed compared to prior year.
Other Operating IncomeOther
operating income was $0.3 million in the first quarter of 2021,
compared to $23 thousand in the same period last year, primarily
due to additional value added tax deductions.
(Loss) Income from
OperationsLoss from operations was $16.0 million in the
first quarter of 2021, compared to income from operations of $3.3
million in the same period last year.
Interest and Investment
IncomeInterest and investment income were $2.0 million in
the first quarter of 2021, compared to $97 thousands in the same
period last year, primarily due to an increase in the average
balance of cash and cash equivalents and short-term investments due
to proceeds from our initial public offering and concurrent private
placement in the second quarter of 2020 and the private placement
in the first quarter of 2021.
Income Taxes Income taxes were
$21 thousands in the first quarter of 2021, compared to $0.4
million in the same period last year, primarily due to decrease in
pre-tax income generated by our subsidiaries.
Net (Loss) IncomeNet loss was
$14.7 million in the first quarter of 2021, compared to net income
of $3.0 million in the same period last year.
Net Loss Attributable to Ordinary
ShareholdersNet loss attributable to ordinary shareholders
for the quarter was $14.7 million, compared to net loss
attributable to ordinary shareholders of $36.4 million in the same
period last year, which was primarily due to accretion of preferred
shares to redemption value before the completion of our initial
public offering.
Net Loss per American Depositary
ShareNet loss per American Depositary Share (“ADS”)1 was
$0.14, compared to net loss of $1.21 per ADS in the same period
last year.
_____________________________
1 One ADS represents four Class A ordinary
shares.
Financial Outlook
Based on currently available information, Agora
maintains the previous guidance that total revenues for the fiscal
year ending December 31, 2021 are estimated to be between $178
million and $182 million. This outlook reflects the company’s
current and preliminary views on the market and operational
conditions, and the outlook ranges for fiscal year 2021 reflect a
number of assumptions that are subject to change based on
uncertainties such as 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 the same day. Details for the conference call are as
follows:Event title: Agora, Inc. 1Q 2021 Financial
ResultsConference ID: 5096287Direct Event online registration:
http://apac.directeventreg.com/registration/event/5096287 Please
register in advance of the conference using the link provided
above. Upon registering, you will be provided with participant
dial-in numbers, Direct Event passcode and unique registrant ID.A
digital recording of the conference call will be available for
replay two hours after the call’s completion (dial-in number: US
18554525696, International +61 2 81990299; same conference ID as
shown above).Please visit Agora’s investor relations website at
https://investor.agora.io/investor-relations on May 24, 2021 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 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 expense of acquired
intangible assets and income tax related to acquired intangible
assets. 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,
acquisition related expenses, amortization expense of acquired
intangible assets and income tax related to acquired intangible
assets 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,
acquisition related expenses, amortization expense 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 and investment income,
income taxes, depreciation and amortization, and adjusted to
exclude the effects of share-based compensation expense,
acquisition related expenses, amortization expense of acquired
intangible assets and income tax related to 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.
Impact of the Recently Adopted
Accounting Pronouncement
Agora adopted ASU 2016-02, Leases (“ASC 842”)
beginning January 1, 2021 and elected to use the modified
retrospective method with the optional transition that allows for a
cumulative-effect adjustment to the opening balance of retained
earnings recorded on January 1, 2021, with no adjustments to prior
periods presented. No cumulative effect adjustment to the opening
balance of retained earnings was required. Upon adoption of ASC 842
on January 1, 2021, Agora recognized right of use assets as well as
lease liabilities of $6.5 million for operating leases. Agora does
not have any finance leases. The adoption of the new guidance did
not have a material effect on our results of operations, financial
condition or liquidity.
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 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 |
|
March 31, |
|
December 31, |
|
2021 |
|
2020 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
209,454 |
|
|
111,218 |
|
Short-term investments |
667,347 |
|
|
524,220 |
|
Accounts receivable, net |
34,476 |
|
|
27,840 |
|
Prepayments and other current assets |
8,520 |
|
|
7,459 |
|
Contract assets |
822 |
|
|
- |
|
Total current assets |
920,619 |
|
|
670,737 |
|
Property and equipment, net |
18,382 |
|
|
16,754 |
|
Operating lease right-of-use assets |
5,789 |
|
|
- |
|
Intangible assets |
8,320 |
|
|
209 |
|
Goodwill |
56,142 |
|
|
3,089 |
|
Deferred tax assets |
507 |
|
|
511 |
|
Other non-current assets |
1,175 |
|
|
1,604 |
|
Total assets |
1,010,934 |
|
|
692,904 |
|
|
|
|
|
Liabilities and shareholders' equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
10,298 |
|
|
7,721 |
|
Advances from customers |
7,975 |
|
|
1,339 |
|
Taxes payable |
1,793 |
|
|
2,172 |
|
Current operating lease liabilities |
2,361 |
|
|
- |
|
Accrued expenses and other current liabilities |
87,235 |
|
|
25,075 |
|
Total current liabilities |
109,662 |
|
|
36,307 |
|
Long-term payable |
335 |
|
|
82 |
|
Long-term operating lease liabilities |
3,158 |
|
|
- |
|
Deferred tax liabilities |
1,242 |
|
|
52 |
|
Total liabilities |
114,397 |
|
|
36,441 |
|
|
|
|
|
Shareholders' equity: |
|
|
|
Class A ordinary shares |
36 |
|
|
33 |
|
Class B ordinary shares |
8 |
|
|
8 |
|
Additional paid-in-capital |
1,073,315 |
|
|
818,428 |
|
Accumulated other comprehensive income |
1,817 |
|
|
1,941 |
|
Accumulated deficit |
(178,639 |
) |
|
(163,947 |
) |
Total shareholders' equity |
896,537 |
|
|
656,463 |
|
Total liabilities and shareholders’ equity |
1,010,934 |
|
|
692,904 |
|
|
Agora, Inc. |
Condensed Consolidated Statements of Comprehensive Income
(Loss) |
(Unaudited, in US$ thousands, except share and per ADS
amounts) |
|
|
|
Three Month Ended March 31, |
|
2021 |
|
2020 |
Real-time engagement service revenues |
39,487 |
|
|
35,446 |
|
Other revenues |
738 |
|
|
114 |
|
Total revenues |
40,225 |
|
|
35,560 |
|
Cost of revenues |
16,853 |
|
|
11,082 |
|
Gross profit |
23,372 |
|
|
24,478 |
|
Operating expenses: |
|
|
Research and development |
25,216 |
|
|
11,688 |
|
Sales and marketing |
8,735 |
|
|
6,002 |
|
General and administrative |
5,721 |
|
|
3,545 |
|
Total operating expenses |
39,672 |
|
|
21,235 |
|
Other operating income |
288 |
|
|
23 |
|
(Loss) income from operations |
(16,012 |
) |
|
3,266 |
|
Exchange loss |
(695 |
) |
|
(7 |
) |
Interest and investment income |
2,037 |
|
|
97 |
|
(Loss) income before income taxes |
(14,670 |
) |
|
3,356 |
|
Income taxes |
(21 |
) |
|
(369 |
) |
Net (loss) income |
(14,691 |
) |
|
2,987 |
|
Less: cumulative undeclared dividends on convertible redeemable
preferred shares |
- |
|
|
(3,399 |
) |
Less: accretion on convertible redeemable preferred shares to
redemption value |
- |
|
|
(35,964 |
) |
Net loss attributable to ordinary shareholders |
(14,691 |
) |
|
(36,376 |
) |
Other comprehensive loss: |
|
|
Foreign currency translation adjustments |
(124 |
) |
|
(501 |
) |
Total comprehensive loss attributable to ordinary shareholders |
(14,815 |
) |
|
(36,877 |
) |
|
|
|
Net loss per ADS attributable to ordinary shareholders, basic and
diluted |
(0.14 |
) |
|
(1.21 |
) |
Weighted-average shares outstanding used in computing net loss per
ADS attributable to ordinary shareholders, basic and diluted |
431,636,717 |
|
|
119,882,136 |
|
|
|
|
Share-based compensation expenses* included in: |
|
|
Cost of revenues |
133 |
|
|
116 |
|
Research and development expenses |
3,760 |
|
|
1,121 |
|
Sales and marketing expenses |
956 |
|
|
564 |
|
General and administrative expenses |
1,226 |
|
|
871 |
|
* In the fourth quarter of 2020, Agora formally
implemented the Venture Partners Plan, which was a new incentive
plan that can be settled in shares or cash at the discretion of the
plan administrator. Therefore, $1.2M, $1.1M and $1.1M accrued in
the first, second and third quarter of 2020, respectively, was
reclassified from cash bonus expenses to share-based compensation
expenses to reflect the costs related to the new incentive
plan.
|
Agora, Inc. |
Condensed Consolidated Statements of Cash
Flows |
(Unaudited, in US$ thousands) |
|
|
|
Three Month Ended March 31, |
|
2021 |
|
2020 |
Cash flows from operating activities: |
|
|
Net (loss) income |
(14,691 |
) |
|
2,987 |
|
Adjustments to reconcile net (loss) income to net cash used in
operating activities: |
|
|
Share-based compensation expense |
6,075 |
|
|
2,672 |
|
Depreciation of property and equipment |
1,899 |
|
|
745 |
|
Amortization of intangible assets |
207 |
|
|
- |
|
Deferred tax expense |
(30 |
) |
|
- |
|
Amortization of right-of-use asset and interest on lease
liabilities |
795 |
|
|
- |
|
Change in the fair value of short-term investments |
(50 |
) |
|
- |
|
Changes in assets and liabilities, net of effect of
acquisition: |
|
|
Accounts receivable |
(6,433 |
) |
|
(15,446 |
) |
Contract assets |
(128 |
) |
|
- |
|
Prepayments and other current assets |
(802 |
) |
|
(2,166 |
) |
Other non-current assets |
150 |
|
|
19 |
|
Accounts payable |
4,463 |
|
|
4,788 |
|
Advances from customers |
24 |
|
|
(138 |
) |
Taxes payable |
(440 |
) |
|
232 |
|
Operating lease liabilities |
(1,027 |
) |
|
- |
|
Accrued expenses and other liabilities |
7,246 |
|
|
5,387 |
|
Net cash used in operating activities |
(2,742 |
) |
|
(920 |
) |
Cash flows from investing activities: |
|
|
Purchase of short-term investments |
(193,481 |
) |
|
- |
|
Proceeds from sale and maturity of short-term investment |
50,000 |
|
|
- |
|
Purchase of property and equipment |
(5,233 |
) |
|
(2,496 |
) |
Purchase of intangible assets |
(165 |
) |
|
- |
|
Cash paid for acquisition, net of cash received |
(1,419 |
) |
|
- |
|
Net cash used in investing activities |
(150,298 |
) |
|
(2,496 |
) |
Cash flows from financing activities: |
|
|
Proceeds from the private placement, net of issuance costs
paid |
250,000 |
|
|
- |
|
Proceeds from issuance of Series C+ convertible redeemable
preferred shares, net of issuance costs of nil |
- |
|
|
50,000 |
|
Payment of deferred initial public offering cost |
- |
|
|
(231 |
) |
Proceeds from exercise of employees’ share options |
1,035 |
|
|
- |
|
Net cash provided by financing activities |
251,035 |
|
|
49,769 |
|
Effect of foreign exchange rate changes on cash, cash equivalents
and restricted cash |
317 |
|
|
(303 |
) |
Net increase in cash, cash equivalents and restricted cash |
98,312 |
|
|
46,050 |
|
Cash, cash equivalents and restricted cash at beginning of period
* |
111,298 |
|
|
105,683 |
|
Cash, cash equivalents and restricted cash at end of period ** |
209,610 |
|
|
151,733 |
|
Supplemental disclosure of cash flow information: |
|
|
Cash payments included in the measurement of operating lease
liabilities |
1,027 |
|
|
- |
|
Right-of-use assets obtained in exchange for operating lease
obligations |
413 |
|
|
- |
|
Non-cash financing and investing activities: |
|
|
Payables for acquisition |
53,350 |
|
|
- |
|
Proceeds receivable from exercise of employees’ share options |
314 |
|
|
- |
|
Payables for property and equipment |
359 |
|
|
936 |
|
Accretion to redemption value of convertible redeemable preferred
shares |
- |
|
|
35,964 |
|
Payables for deferred initial public offering cost |
- |
|
|
949 |
|
Payables for issuance costs of the private placement |
50 |
|
|
- |
|
|
|
|
* includes restricted cash balance |
80 |
|
|
80 |
|
** includes restricted cash balance |
156 |
|
|
80 |
|
|
Agora, Inc. |
Reconciliation of GAAP to Non-GAAP Measures |
(Unaudited, in US$ thousands, except share and per ADS
amounts) |
|
|
|
Three Month Ended March 31, |
|
2021 |
|
2020 |
GAAP net (loss) income |
(14,691 |
) |
|
2,987 |
|
Add: |
|
|
Share-based compensation expense |
6,075 |
|
|
2,672 |
|
Acquisition related expenses |
4,122 |
|
|
- |
|
Amortization expense of acquired intangible assets |
192 |
|
|
- |
|
Income tax related to acquired intangible assets |
(30 |
) |
|
- |
|
Non-GAAP net (loss) income |
(4,332 |
) |
|
5,659 |
|
|
|
|
Net (loss) income |
(14,691 |
) |
|
2,987 |
|
Excluding: |
|
|
Exchange loss |
(695 |
) |
|
(7 |
) |
Interest and investment income |
2,037 |
|
|
97 |
|
Income taxes |
(21 |
) |
|
(369 |
) |
Depreciation of property and equipment |
1,899 |
|
|
745 |
|
Share-based compensation expense |
6,075 |
|
|
2,672 |
|
Acquisition related expenses |
4,122 |
|
|
- |
|
Amortization expense of acquired intangible assets |
192 |
|
|
- |
|
Adjusted EBITDA |
(3,724 |
) |
|
6,683 |
|
|
|
|
Net cash used in operating activities |
(2,742 |
) |
|
(920 |
) |
Purchase of property and equipment |
(5,233 |
) |
|
(2,496 |
) |
Free Cash Flow |
(7,975 |
) |
|
(3,416 |
) |
Net cash used in investing activities |
(150,298 |
) |
|
(2,496 |
) |
Net cash provided by financing activities |
251,035 |
|
|
49,769 |
|
|
|
|
|
|
|
Investor Contact:
Fionna Chen
investor@agora.io
Media Contact:
Suzanne Nguyen
press@agora.io
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