Summary of Agora Inc. Q2 2026 Earnings Call

1Key Financial Results and Metrics

Total Revenue: $40.4 million, an 18% increase year-over-year, exceeding guidance.

GAAP Net Profit: $2.2 million, a 50% year-over-year increase, reflecting improved operating leverage.

Gross Profit: $25.7 million, with a gross margin of 63.7%, down from 66.8% year-over-year due to a shift in product mix.

Operating Cash Flow: Negative $2.1 million, worsening from negative $0.4 million in Q2 2025.

Cash Position: $361.7 million in cash and equivalents; share repurchase of approximately 1 million ADS for $3.7 million during the quarter.

Dollar-Based Net Retention Rate: 104%, up from 94% in Q2 2025.

2Strategic Updates and Business Highlights

Continued growth in the core real-time engagement (RTE) business and conversational AI products, particularly in call centers.

Successful deployment of voice AI agents, which are now matching or surpassing human performance in tasks like outbound marketing and market surveys.

Launch of developer tools: Agora Skills and Agora CLI to enhance the developer ecosystem.

Strategic partnership with Gradium to integrate advanced voice AI capabilities without latency costs.

Upcoming annual conference, IRTE, aimed at fostering collaboration among developers and industry leaders.

3Forward Guidance and Outlook

Q3 2026 Revenue Guidance: Expected between $41 million and $42 million, representing year-over-year growth of 15.8% to 18.6%.

Targeting a 5% revenue contribution from conversational AI by the end of 2026, with optimism for significant growth in subsequent years.

4Bad News, Challenges, or Points of Concern

Gross Margin Decline: The decrease in gross margin attributed to a product mix shift as conversational AI products are still in a subscale stage.

Operating Cash Flow: Negative cash flow indicates potential liquidity concerns.

Competition: The conversational AI market is becoming increasingly competitive, with various players targeting different technology layers, which could pressure Agora's market position.

Long Conversion Cycles: Transitioning AI use cases from proof of concept to production is time-consuming, potentially delaying revenue realization.

5Notable Q&A Insights

Demand remains stable in both domestic and international markets, with growth driven by e-commerce, financial services, and gaming sectors.

The company sees a long-term transition from human call center representatives to AI agents, which could reshape the industry.

The management is cautious about providing long-term revenue penetration rates for AI, citing the market's early stage and the complexity of various use cases.

There are no immediate plans for a special dividend or taking the company private, as management focuses on operational improvements and shareholder value through share repurchases. Overall, Agora Inc. reported a strong quarter with solid revenue growth and profitability, while also highlighting the potential and challenges within the conversational AI landscape.