Agora Q4 Earnings Call Highlights

Agora (NASDAQ:API) reported its fifth consecutive quarter of GAAP profitability in the fourth quarter of 2025 and said the year marked its first full year of GAAP profitability since 2018, citing sustained double-digit revenue growth, improved operating leverage, and cost discipline.

Q4 results: revenue growth and continued GAAP profitability

For the fourth quarter, total revenue was $38.2 million, up 10.7% year-over-year and above the high end of management’s guidance. GAAP net income was $4.9 million, implying a 12.9% net margin.

CFO Junbo Wang said the quarter marked the company’s fourth consecutive quarter of double-digit organic growth. By division, management reported:

• Agora revenue: $19.9 million, up 14.4% year-over-year and 9.3% sequentially, which the company attributed to market penetration and adoption in areas including live shopping.
• Shengwang revenue: RMB 129.2 million, up 5.7% year-over-year and 5.6% sequentially, driven by expansion and adoption in social, entertainment, and IoT.

Dollar-based net retention was 109% for Agora and 89% for Shengwang.

Margin and expense trends

Gross margin was 65.1%, down 1.5 percentage points year-over-year and 0.9 percentage points sequentially. Wang attributed the decline primarily to conversational AI-related products, saying usage is still ramping while the business remains “sub-scale.” He added that some customers are still in pilot stages and are not being charged for proof-of-concept work, meaning revenue growth is lagging usage growth.

On operating expenses, the company emphasized cost discipline:

• R&D expense: $13.6 million, down 7.7% year-over-year; 35.8% of revenue versus 42.9% a year earlier.
• Sales and marketing expense: $7.1 million; 18.7% of revenue versus 21.1% in Q4 2024 (management characterized the change as essentially flat year-over-year in dollars).
• G&A expense: $5.4 million, down 16.5% year-over-year, primarily due to lower provisions for credit losses following improved customer collections; 14.1% of revenue versus 18.7% a year earlier.

Business highlights: large-scale live shopping and conversational AI momentum

CEO Tony Zhao highlighted what he described as validation of the company’s real-time engagement platform during a “high-profile” live streaming event over Super Bowl weekend. Zhao said MrBeast hosted a broadcast on Walmart’s video-based shopping platform—described as a long-standing Agora customer—and that Agora delivered full HD video to nearly 600,000 peak concurrent viewers globally with sub-second latency. Zhao quoted a customer technical blog post stating time to first stream stayed under one second and latency remained consistently low as the systems were pushed to extreme load. He said the company believes the event was the largest live video shopping event in U.S. history.

Management also pointed to growing adoption of its Conversational AI Engine, launched in March 2025. Zhao said usage has “more than doubled each quarter” since launch, and that early customer experiments have moved toward real-world deployments across customer service, smart devices, education, and AI-powered consumer applications.

Zhao cited “companionship toys” as one early area of traction, including a product called Fuzozo, and said a “leading consumer hardware giant” recently launched a companionship toy built on Agora’s technology. He also said the company’s Conversational AI Device Kit—which integrates a voice module and an emotion display screen—has been widely adopted by manufacturers.

At CES 2026, Zhao said Agora introduced an upgraded Device Kit with enhanced multimodal capabilities, including vision understanding and motion control, aimed at enabling embodied AI hardware and robotics. He gave an example of a customer, Luwu Dynamics, developing a desktop embodied AI robot using the solution.

In addition to one-on-one human-to-agent interactions, Zhao said Agora supported Agnes AI in launching an AI group chat and multi-agent collaboration platform, which he framed as a next frontier for AI-driven productivity.

Cash, buybacks, and updated repurchase authorization

Operating cash flow was $9.3 million in Q4, up from $4.5 million in the prior-year quarter. The company ended Q4 with $374.9 million in cash equivalents, bank deposits, and bank-issued financial products.

Wang said net cash outflow in the quarter was mainly due to share repurchases totaling $10.9 million. During Q4, the company repurchased 12 million ordinary shares (or 3 million ADSs), representing 3.3% of outstanding shares at the beginning of the quarter. Since the board approved the repurchase program in February 2022, the company has repurchased $143.1 million worth of shares through Dec. 31, 2025, representing 71.6% of its $200 million authorization.

The company also announced that its board authorized a 12-month extension of the repurchase program through Feb. 28, 2027, with other terms unchanged.

Outlook and management commentary on 2026 priorities

For the first quarter of 2026, management guided for total revenue of $36 million to $37 million, compared with $33.3 million in Q1 2025, representing year-over-year growth of 8.1% to 11.1%.

On profitability, Wang said the company expects net income to grow in 2026 versus 2025, based on business momentum and visibility. Addressing questions on margins, he said the company expects gross margin to be roughly flat compared with Q4 2025 in its internal forecasts, while noting it could take a couple of quarters for gross margin to “fully recover” as conversational AI scales and monetization catches up with usage.

Wang also said the company expects operating income to improve significantly compared with 2025 and set a goal to achieve GAAP operating profit in Q4 2026. He noted this outlook includes roughly $6 million of share-based compensation in 2026 and nearly $4 million of amortization related to a headquarters project.

In the Q&A session, management said demand in China for real-time engagement from social entertainment and education customers is growing at a “modest rate,” while it sees “vast growth potential” in IoT and digital transformation. Management also said competitive pressure in China has abated and expects continued industry consolidation. Internationally, management highlighted live shopping as a key opportunity, saying the large event helped reinforce brand awareness and should lead to more opportunities in that vertical.

For conversational AI, management said revenue contribution remains relatively low because many customers are still in proof-of-concept stages, but it expects revenue contribution to ramp through the year. Wang said the company’s goal is for conversational AI to approach 5% of “AR contribution” toward the end of the year. Zhao added that use cases include customer service, companionship devices, education, and interactive avatars, and said the company is working with global customers on scenarios such as outbound marketing, appointment scheduling, and order confirmation. On adoption, management characterized progress as use-case-by-use-case rather than tied to a single inflection point, while also noting that model costs are trending down and should not be a blocking factor.

About Agora (NASDAQ:API)

Agora, Inc operates a Real-Time Engagement (RTE) platform that enables developers to embed voice, video and interactive broadcasting capabilities into mobile and web applications. By providing a suite of software development kits (SDKs) and application programming interfaces (APIs), the company delivers low-latency audio and video streaming, real-time messaging and live interactive streaming services. Its platform is designed to support high-quality interactions across various network environments, making it suitable for use cases in social media, online gaming, distance learning, telehealth and enterprise communication.

The company’s core offerings include voice and video calling SDKs, interactive broadcast SDKs for one-to-many streaming, real-time messaging services and data stream APIs for synchronized data exchange.