Agora Q2 Earnings Call Highlights

Agora (NASDAQ:API) reported second-quarter 2026 revenue of $40.4 million, up 18% from a year earlier and above the high end of its guidance range, as the company cited continued growth in its real-time engagement services and increasing adoption of conversational AI products.

Founder, Chairman and CEO Tony Zhao said the quarter marked the company’s seventh consecutive quarter of GAAP profitability. GAAP net income totaled $2.2 million, a 50% year-over-year increase, while the company recorded a GAAP operating loss of $1 million, narrowing from a $3.1 million loss in the prior-year period.

Chief Financial Officer Jingbo Wang said Agora’s dollar-based net retention rate improved to 104% from 94% in the second quarter of 2025, moving above 100%. The company expects third-quarter revenue of $41 million to $42 million, which would represent year-over-year growth of 15.8% to 18.6%.

Conversational AI Focuses on Call Centers

Zhao said Agora’s most significant progress during the quarter came from call-center deployments of voice AI agents. The company is seeing adoption of agents trained on sales and customer-service playbooks, which can handle outbound calling, lead qualification, information collection and meeting scheduling.

According to Zhao, the agents are achieving conversion rates similar to those of human representatives in certain outbound marketing applications, while offering higher calling capacity and different unit economics. He also cited market-survey applications, where voice AI agents can conduct consumer and product-feedback interviews while collecting structured information.

“We are beginning to see them match or even surpass human performance in an increasing number of tasks in achieving targeted business outcomes,” Zhao said.

The company said its technology can compress large-scale market-survey work that would traditionally take days or weeks into hours because of its ability to handle a high volume of concurrent conversations. Agora is also working with customers on use cases including financial-services outreach, gaming user acquisition and retention, and debt collection.

Management expects several customers to move from proof-of-concept projects to larger deployments in coming quarters. However, Wang said scaling an AI use case from an initial proof of concept to consistent production performance generally takes several months.

Agora continues to target conversational AI representing 5% of revenue by the end of 2026 on a fourth-quarter or annualized run-rate basis. Wang noted that the contribution for the full year will be below 5% because the business is still ramping. He said the company has a “strong pipeline” that it expects to expand by year-end, leaving room for further growth in 2027.

Product, Infrastructure and Partnerships

During the quarter, Agora introduced Agora Skills and Agora CLI, tools intended to help human developers and AI coding assistants build real-time engagement and conversational AI applications using the company’s software development kits and best practices.

The company also announced a partnership with Gradient, a voice AI platform founded by the research team behind the Moshi and Hibiki speech models. Zhao said the integration enables developers to use Gradient text-to-speech through Agora’s Conversational AI Engine without additional latency hops.

Zhao said Agora will continue investing in its software-defined real-time network, or SDRTN, which it views as a central advantage as it expands from human-to-human interactions into human-to-AI communications. He said smooth AI conversations require low-latency inference and transmission, making the company’s communications infrastructure increasingly important.

On competition, Zhao said conversational AI includes agent, model and infrastructure layers. He identified Twilio as a company that can leverage telecommunications APIs and phone numbers from its communications-platform business, while Agora is focusing on voice models, audio preprocessing and postprocessing, low-latency cloud infrastructure and the agent layer.

Zhao said Agora’s experience handling issues such as noise, echoes and packet loss can improve voice AI experiences. The company also expects to host its Intelligent Real-Time Engagement conference in Beijing on Oct. 23 and Oct. 24.

Margins, Expenses and Market Trends

Second-quarter gross profit rose 12.5% year over year to $25.7 million. Gross margin was 63.7%, compared with 66.8% a year earlier and 63.4% in the first quarter. Wang attributed the year-over-year decline primarily to product mix, as conversational AI usage increased while remaining at an early scale stage. The sequential improvement reflected technical optimization, he said.

Research and development expense increased 10.2% to $15.4 million, driven by investment in conversational AI. Sales and marketing expense declined 1.5% to $6.4 million, while general and administrative expense fell 9.5% to $5.5 million. Wang attributed those decreases to expense discipline and improved customer credit and collection outcomes, respectively.

Management’s goal is to reach quarterly GAAP operating profitability by the end of 2026. Wang said conversational AI gross margin is currently lower because the business is subscale and geographically dispersed, and because the company has prioritized experience improvements over cost optimization. Over time, management expects AI gross margin to become similar to or higher than Agora’s real-time engagement business margin.

In China, Wang said demand from social, entertainment and education customers continued to recover amid a more stable operating environment. In U.S. and international markets, demand from live shopping, financial services and gaming use cases continued to grow.

Cash Position and Share Repurchases

Operating cash flow was negative $2.1 million in the second quarter, compared with negative $0.4 million a year earlier. Agora ended the quarter with $361.7 million in cash equivalents, bank deposits and bank-issued financial products. The company said its cash balance declined mainly because of annual bonus payments and share repurchases.

Agora repurchased about 1 million American depositary shares for approximately $2.7 million during the quarter. As of June 30, it had repurchased about 44.6 million ADS for approximately $159.9 million under its current authorization, with 83.8 million ADS outstanding. The repurchase program expires at the end of February 2027.

During the question-and-answer session, Wang said Zhao’s separately announced plan to purchase an additional $20 million of shares had not yet begun because of blackout and legal restrictions. Zhao said the company was not considering taking Agora private and has not considered a special dividend at present.

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.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].

Where Should You Invest $1,000 Right Now?

Before you make your next trade, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.

Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list.

They believe these five stocks are the five best companies for investors to buy now...

See The Five Stocks Here

Source MarketBeat