Agora, Inc. Q2 2026 Earnings Call - Voice AI Agents Enter Commercial Production

Conference Moderator: Please be advised that today’s conference is being recorded. The company’s earnings results, press release, earnings presentation, SEC filings, and a replay of today’s call can be found on its IR website at investor.agora.io. Joining me today are Tony Zhao, Founder, Chairman, and CEO, Jingbo Wang, the company CFO. During this call, the company will make forward-looking statements about its future financial performance and other future events and trends. These statements are only predictions that we, based on what the company believes today, and actual results may differ materially. These forward-looking statements are subject to risks, uncertainties, assumptions, and other factors that could affect the company’s financial results and the performance of its business, and which the company discussed in detail in its filings with the SEC, including today’s press release and the risk factors of other information contained in the final prospectus relating to the initial public offering.

Agora, Inc. remains no obligation to update any forward-looking statements the company may make on today’s call. With that, let me turn the call over to Tony. Hi, Tony.

Tony Zhao, Founder, Chairman, and CEO, Agora, Inc.: Hey, thank you, Pritha, and welcome everyone to our earnings call. Let me begin with a review of our operating results for the quarter. I am pleased to report another quarter of accelerating top-line growth, as well as our seventh consecutive quarter of GAAP profitability. Total revenues for the second quarter of 2026 reached $40.4 million, an increase of 18% year-over-year. This performance reflects both the continued strength of our core Real-Time Engagement business and the growing contribution from our Conversational AI products as more customers move from proof of concept to commercial production. Our GAAP net profit for the quarter was $2.2 million, up 50% year-over-year, which demonstrates improved operating leverage and disciplined cost management across organizations. Our most important progress this quarter occurred in call center across the globe.

We are seeing strong momentum in adoption of our voice AI agents trained on the best sales and customer service playbooks. These agents deliver consistent high-quality performance across every conversation. They do not experience fatigue, lose focus, or vary in performance based on workload or time of day. They also maintain calm and steady interactions even during challenging calls. Further, customers are now seeing substantial cost savings from deploying our voice AI agents. Indeed, we are beginning to see them match or even surpass human performance in an increasing number of tasks in achieving targeted business outcomes. The first example is outbound marketing and buyer interest capture. Our voice AI agents are now being used to initiate calls, qualifying leads, collect information, and schedule meetings with prospect customers.

At a similar conversion rates with human reps, our voice AI agent also outperform in two other important areas: the volume of calls they can handle and the unit economics they deliver. The second example is market survey. Our voice AI agent can conduct in-depth interviews for consumer insights and product feedbacks while capturing structured data throughout each conversation. The high concurrency of our solution compresses the time it takes to conduct large-scale surveys that traditionally takes weeks or days into just a few hours. Marketing and surveying are only two examples of how voice AI agents can reshape call center worldwide. We see similar opportunities in financial services outreach, gaming user acquisition and retention, debt collection, and many other areas. We are already working with customers across these sectors, and we expect several of them to move from proof of concept to large-scale deployment in the coming quarters.

At the same time, we continue to invest in our developer ecosystem. This quarter, we launched Agora Skills and Agora CLI. Agora Skills package our platform knowledge so that AI coding assistants, including Claude Code, Cursor, or Codex, can work with our latest SDKs and best practices when building Real-Time Engagement or Conversational AI applications. The Agora CLI complements this with a simple command line interface for coding agents to do their work. Together, these tools make it easier for both human developers and AI coding agents to build and deploy Real-Time Engagement applications with us. We are also continuing to strengthen our technology ecosystem through strategic partnerships. This quarter, we announced a partnerships with Gradient, a leading voice AI platform recently founded by the research team behind Moshi and Hibiki, two speech models with strong recognition in the open source community.

Through our partnership, developers can enable Gradient TTS within our Conversational AI Engine through a simple configuration without introducing additional latency hops. Looking ahead, we will first remain laser-focused on accelerating the transition of our conversational AI solutions from pilot to production across use cases. Each use case will present its own set of challenges, but each will also help us refine our technology. We believe that continued improvements in our solutions will unlock additional demand and drive the industry shift towards AI-led workflows in call centers. Second, we will continue to invest in our real-time infrastructure. Our software-defined real-time network, or SDRTN, has long been a foundational advantage for us. As we expand into human to AI interactions, the importance of this infrastructure does not diminish. On the contrary, it becomes more critical because smooth conversations require ultra-low latency inference and transmission.

We are confident that our investment in real-time inference and the communication infrastructure will serve as a decisive factor in our ability to compete and succeed in the conversational AI arena. Third, we will continue to strengthen our partner ecosystem and build our developer motion. On October 23rd and 24th, we will host our iconic annual conference, IRTE, or Intelligent Real-Time Engagement, in Beijing. We look forward to bringing together developers, partners, enterprises, and industry leaders to explore the next phase of Real-Time Engagement and Conversational AI. In summary, we believe the center of gravity in the AI industry is increasingly shifting from model capabilities towards infrastructure and harness layer required to operate with AI agents reliably at scale.

At the intersection of real-time engagement, AI, and global infrastructure, we believe Agora is uniquely positioned to help enterprise make this transition and create sustainable long-term value for both our customers and shareholders. Before I conclude, I would like to thank our customers, developers, partners, and shareholders for their continued trust and support, and our global Agora and Shengwang teams for their dedication and innovation. With that, let me turn it over to Jingbo, who will reveal our financial results.

Jingbo Wang, Chief Financial Officer, Agora, Inc.: Thanks, Tony. Hello, everyone. Let me start by first reviewing financial results for the second quarter of 2026. Then I will discuss outlook for the third quarter. Total revenue for the second quarter reached $40.4 million, above the high end of the guidance range and representing 18% year-over-year growth. This marks our third consecutive quarter of accelerating growth, driven by continued expansion of our real-time engagement services across sectors such as e-commerce, as well as growing customer adoption of our conversational AI solutions. Our dollar-based net retention rate for the quarter was 104%, compared to 94% in the second quarter of 2025. This represents a meaningful improvement and moves us back above 100%. Gross profit for the quarter was $25.7 million, representing 12.5% increase year-over-year. Gross margin was 63.7%, compared to 66.8% in the same period last year, and 63.4% in the first quarter of 2026.

On a year-over-year basis, the decline was primarily due to product mix change, as conversational AI products continue to see growing usage during the quarter, but has remained at a subscale stage. On the sequential basis, the increase was mainly driven by technical optimization. Turning to expenses, R&D expenses were $15.4 million in Q2, up 10.2% year-over-year. R&D expenses represented 38.1% of total revenue in the quarter, compared to 40.8% in the same period last year. The increase was primarily due to our continued investment in conversational AI products. Sales and marketing expenses were $6.4 million in Q2, down 1.5% year-over-year. Sales and marketing expenses represented 15.9% of total revenue in the quarter, compared to 19% in the same period last year. The decrease was primarily due to disciplined expense management. General and administrative expenses were $5.5 million in Q2, down 9.5% year-over-year.

G&A expenses represented 13.5% of total revenue in the quarter, compared to 17.6% in the same period last year. The decrease was primarily due to a lower allowance for current expected credit loss as customer credit conditions and collection outcomes improved. Turning to operating results, we recorded GAAP operating loss of $1 million in the second quarter, compared to a loss of $3.1 million in the same period last year, thanks to continued improvement in operating leverage. Based on our current business momentum, our goal is to achieve quarterly GAAP operating profitability by the end of this year. Moving on to the bottom line, we delivered net income of $2.2 million in Q2, up 50.3% year-over-year, and representing a net income margin of 5.4%. Now turning to cash flow.

Operating cash flow was negative $2.1 million in Q2, compared to negative $0.4 million in the second quarter of 2025. Moving on to balance sheet. We ended Q2 with $361.7 million in cash equivalents, bank deposits, and financial products issued by banks. The decrease in our cash balance was mainly due to annual bonus payment as well as share repurchase during the quarter. During Q2, we repurchased approximately 1 million ADS for approximately $2.7 million. As of June 30, 2026, we had repurchased approximately 44.6 million ADS in total for approximately $159.9 million under the current share repurchase program. As of June 30, 2026, we had 83.8 million ADS outstanding, compared to 87.3 million ADS at the end of 2025. The current share repurchase program will expire at the end of February 2027. Now turning to guidance.

Based on currently available information, we expect total revenue for the third quarter of 2026 to be between $41 million and $42 million, representing year-over-year growth of 15.8%-18.6%. This outlook reflects our current and preliminary views on the market and operational conditions, which are subject to change. In closing, this was another strong quarter for us, both in terms of revenue growth and profitability. At the same time, we are increasingly encouraged by the usage momentum and commercial potential in conversational AI, and we will continue to invest with discipline to support our long-term growth. Thank you all for joining today’s call. Let’s open it up for questions.

Conference Moderator: Thank you. As a reminder, to ask a question, please press

Harry Zhao, Analyst, BofA Securities: Hi, and thanks, management, for taking my questions, and congratulations on the strong results and guidance. I have three questions. The first one is regarding the demand. How is the demand trend in overseas and domestic market, and what are the keys of sectors driving the growth? Second one is regarding AI. We are happy to see that the call center application scenario is growing really fast. What are the other potential scenarios that could drive a meaningful conversational AI demand growth? What will be the revenue contribution from conversational AI by end of the year and the gross margin trend? Lastly, about the competition. Could management share the latest competitive landscape in overseas market against our major competitors? Thank you.

Jingbo Wang, Chief Financial Officer, Agora, Inc.: Okay. In terms of demand, I will talk about the RTE side, and Tony can talk about the AI side. On the RTE side, actually, things haven’t changed that much. Overall, what we see this quarter in both China and U.S. and international markets are largely the same as the last quarter. In China, thanks to a more stable operating environment, demand from social, entertainment, and education customers continue to recover. We’re seeing that looking pretty stable here. On the U.S. and international side, demand from live shopping, financial services, gaming use cases continue to grow. Demand looks healthy on the RTE side.

Tony Zhao, Founder, Chairman, and CEO, Agora, Inc.: Yes. On AI side, I think it’s fair to say our vision has been validated and reinforced on a daily basis with the rapid development and continued improvement we achieve on the ground. In call centers, as I mentioned in the remarks, with the agents matching and sometimes even surpass human reps on call and certain tasks with solid measurable business outcome for the enterprise customers. This is just the beginning of a very long run, and I believe we will witness the transition from human call center reps to voice AI agents around the world, just like how large language model has reshaped the software engineering. This is actually a very good thing for people and the society, because it will free people from the very tedious and stressful line of work.

Keep talking to different person for hours about the same task and keeps the conversation strictly professional, is very exhausting and emotionally draining.

Jingbo Wang, Chief Financial Officer, Agora, Inc.: Yep. In term of the use case for conversational AI, I can talk about two verticals, right? Call center and the companionship devices. Tony already talked about, covered a lot on the call centers. I want to highlight one point. When we talk about call centers, it’s not a single use case. It’s a collection of many use cases, each with different features and different domain knowledge. When we talk about these use cases, actually, in term of the difficulty for replacement by voice AI agents, actually they form a spectrum from the easy one on the left-hand side to the hard one on the right-hand side. Now we are only beginning to explore a few use cases on the left-hand side, such as outbound marketing and survey. These are the low-hanging fruits.

As we continue to refine our solutions and accumulate more experience of working with our customers, we will convert more and more use cases from impossible to proof of concept to real-world production. It has a very long runway. It’s not as you want to see one single use case we can conquer in one quarter, in one year. It’s going to be a multi-year process. Secondly, on the companionship device, we talked about customer Roblox in the past. In this quarter, they actually expanded into new markets in Japan and other countries, and the initial market feedback has been quite encouraging. We also partner with several chip makers to make our solution compatible with more chips, because these are not mobile phone chips. These are very specialized LTE chips, and this will make our solution available on a wide range of smart devices, including robots.

Overall, we are still targeting 5% revenue contribution from conversational AI by the end of this year. Competition, Tony. Want to talk about competition?

Tony Zhao, Founder, Chairman, and CEO, Agora, Inc.: Okay. You want to talk about gross margin or not?

Jingbo Wang, Chief Financial Officer, Agora, Inc.: No. That’s all.

Tony Zhao, Founder, Chairman, and CEO, Agora, Inc.: Okay. About competition, especially on conversational AI. Conversational AI has several distinct technology layers, from agent layer that orchestrates and optimize the call center or the call experience to model layer that includes large language model and voice models such as ASR or TTS, and finally infra layer such as telecom APIs and cloud. Different players attack this market from different angles. For example, Twilio would leverage its strength in telecom APIs and phone numbers from their CPaaS business. We are focused on the voice models, audio pre-processing and post-processing, low latency cloud infrastructure, and agent layer to deliver the best possible call experience. Given the huge potential of the conversational AI market, it is natural to have competition. In fact, a lot of the technology in conversational AI involves audio processing, such as handling noise, echoes, or packet loss.

Obviously, we have a lot of experience in those areas, which can hugely improve conversational AI experience. We remain confident about our position in this market.

Jingbo Wang, Chief Financial Officer, Agora, Inc.: Harry, can you answer your question?

Harry Zhao, Analyst, BofA Securities: Yeah. Thanks. Yes, very helpful. Thanks, Tony and Jingbo. Congratulations again on the results. Thank you.

Conference Moderator: Thank you. One moment for our next question. Our next question comes from the line of Yusiu with China Securities Co., Ltd. Your line is open. Please go ahead.

Yusiu, Analyst, China Securities Co., Ltd.: Hi, management. Thanks for taking my question, and congrats on another strong quarter. My first question regards Convo AI. Could you please update on Convo AI revenue progress and its projected contribution to full year revenue? My second question is the conversion cycle for AI use cases. Could you disclose the current backlog for these AI use cases or maybe just customer accounts? How would you view the trend for AI revenue for the coming quarters, maybe next year?

Jingbo Wang, Chief Financial Officer, Agora, Inc.: Thank you. I will take this question. We already talked a lot about the use cases. First of all, I want to explain that it actually takes quite some time for a use case to really ramp up from the start of the POC to the point where AI agents can deliver consistent performance and can be deployed at scale. It usually takes several months. I talk about there are many use cases. We need to attack them one by one, but also we can do a few in parallel, but still it is going to be a gradual process. As I mentioned earlier, we are targeting 5% revenue contribution by the end of the year. Basically, our goal is in Q4 or in terms of the run rate, ARR run rate, we want to achieve 5% by the end of the year.

Obviously, that means for the full year of 2026, it is not going to be 5%. It is going to be smaller than that. If we achieve 5% by the end of the year, and given the strong pipeline we already have on hand, which will only become bigger by the end of the year, we believe there will be still significant room for growth next year. We remain quite optimistic about the outlook in this market.

Conference Moderator: Thank you, and one moment for our next question. Our next question comes from the line of Zhong Xin Yang with CITIC Securities. Your line is open. Please go ahead.

Zhong Xin Yang, Analyst, CITIC Securities: Okay. Thanks for taking my question. I just have one question regarding our AI business. Have you ever given a guidance on the long term, for about 3 to 5 years, for the AI penetration rate for our total revenue and also for the gross margin guidance? Okay.

Tony Zhao, Founder, Chairman, and CEO, Agora, Inc.: All right. I will take the question. In the end, the call center market will have three segments. First is the easiest tasks, such as simple notifications. This will be handled by NLP-based technology, which has no real intelligence but can understand simple keywords from human. The second would be the hardest tasks or most important tasks, such as handling complaints from high-value customers or emergency situations, which will continue to be handled by human. Even if AI agent is technically able to handle the task, in some cases, only humans can take certain responsibilities, such as in a 911 call. The third would be everything else in the middle of the previous two. Those will be handled by voice agents with real intelligence. It is hard to say exactly how big this part will be, but it will be a significant portion of the entire market.

Jingbo Wang, Chief Financial Officer, Agora, Inc.: Yeah. Tony talked about the 5-year outlook for the call center market, which is a huge market. There are literally close to 20 million people working in call center today in the world. As Tony said, there will be three categories in the future, and probably the middle category will be the biggest, and that will be handled by voice agents. Even taking a small part of that market, that would be transformational for our company. At this point, it is hard to give a clear number as this market is still at a very early stage. The overall penetration of voice agents is still very low, so it is hard to say exactly how big this will become, but it certainly will be transformational for us. In terms of the gross margin, today, the gross margin is not high for us.

We talked about that last quarter. It is crossing the maximum possible line width. It is still around there. It is not because any fundamental reason. It is because, one, we are subscale. The volume is small, and the volume happening at different geographies. So at each single geography, the volume is even smaller. So subscale. Secondly, we have not really focused that much on the technical optimization. Right now, our optimization is more focused on the experience than on the cost. Once we have a larger scale and also be more focused on the technical optimization on cost, we believe in the end, the gross margin will be similar to, if not higher than what we have right now in the RTE business.

Zhong Xin Yang, Analyst, CITIC Securities: Great. It is very clear. Thanks. No more questions.

Conference Moderator: Thank you. As a reminder, if you would like to ask a question at this time, please press 11 on your telephone. Our next question comes from the line of Tristan Yang with DoubleLine Capital. Your line is open. Please go ahead.

Tristan Yang, Analyst, DoubleLine Capital: Hey. Nice results today. Tony, regarding your announcement to purchase the additional $20 million of shares on the open market, I am wondering how much have you purchased to date, and what valuation do you believe appropriately reflects Agora’s intrinsic value? Given your existing ownership stake, have you considered taking the company private or returning additional capital to shareholders through a special dividend or an accelerated buyback program? Thank you.

Jingbo Wang, Chief Financial Officer, Agora, Inc.: Let me answer this question because it is quite technical. Tony has not started due to a certain blackout and legal restrictions. But once these are cleared, he will start repurchasing. As he is certainly obviously an insider, and he has previous purchases in the past, beginning of this year. There are certain legal restrictions. As to the $20 million, that has not started yet. We have returned, up to this point, about $160 million of capital back to the shareholders through share repurchase. And that compares to, about $400 million, $350 million on market cap of the company, which is substantial and probably among the most substantial among any public company in the world. We will continue to do that. But at this point, we have not considered a special dividend, which we might consider in the future, but not at present.

Tony Zhao, Founder, Chairman, and CEO, Agora, Inc.: Yeah, I think Mike purchase will start in 2, 3 weeks, right?

September.

Jingbo Wang, Chief Financial Officer, Agora, Inc.: Yeah. Subject to certain conditions.

Tony Zhao, Founder, Chairman, and CEO, Agora, Inc.: Okay. Great.

Tristan Yang, Analyst, DoubleLine Capital: Got it.

Tony Zhao, Founder, Chairman, and CEO, Agora, Inc.: I don’t think we will consider take the company off the market. We will want to keep communicated with capital market, for ourselves, focus on the business operation and improve our overall technical and operation status. We feel very confident that the future of our direction has a very big potential. We think by focus on our business operations and technical advancement, we will be able to make a lot of value for our customers, our shareholders, and our employees.

Tristan Yang, Analyst, DoubleLine Capital: Got it. Very clear. Thank you.

Conference Moderator: Showing no further questions, this will conclude today’s Q&A session. Thank you, everybody, for attending the company’s call today. As a reminder, a recording and the earnings release will be available on the company’s website at investor.agora.io. If you have any questions, please feel free to email the company. Thank you. You may now disconnect. Everyone, have a great day.