Agora NASDAQ: API reported first-quarter 2026 revenue above its guidance range and posted its sixth consecutive quarter of GAAP profitability, as management pointed to continued growth in real-time engagement services and rising demand for conversational AI products.
Founder, Chairman and CEO Tony Zhao said total revenue for the quarter reached $37.7 million, up 13.5% from a year earlier. GAAP net profit was $1.1 million, more than double the level from the first quarter of 2025. Zhao said the results reflected “continued expansion” of real-time engagement use cases globally and a growing contribution from AI-related applications built with Agora’s solutions.
CFO Jingbo Wang said revenue exceeded the company’s guidance range of $36 million to $37 million. He attributed the performance to usage growth in real-time engagement services across areas including U.S. live shopping, social and entertainment, and financial services.
Revenue Growth Accelerates, Profitability Continues
Wang said Agora’s dollar-based net expansion rate, or DBAR, was 99% in the first quarter, compared with 95% in the prior-year period. The company also changed its disclosure approach beginning this quarter, saying it will no longer separately report revenue and active customer metrics for Agora and Shengwang. Wang said the DBAR methodology was refined to compare quarterly revenue from the same cohort of paying customers year over year.
Gross profit was $23.9 million, up 5.7% year over year, while gross margin fell to 63.4% from 68% a year earlier. Wang said the decline was mainly due to product mix changes, particularly conversational AI products that remain at a subscale stage.
Operating expenses were mixed. Research and development expense rose 2.9% to $14.4 million, driven by continued investment in conversational AI. Sales and marketing expense declined 4.8% to $5.9 million, while general and administrative expense fell 6.4% to $6 million. Wang said the G&A decline was mainly due to lower allowances for expected credit losses, reflecting improved customer credit conditions and collections.
Agora generated $5.7 million in operating cash flow in the quarter, including $4.3 million of interest received. The company ended the quarter with $366.1 million in cash equivalents, deposits and bank-issued financial products.
The company also continued to repurchase shares. Wang said Agora bought back approximately 12.5 million Class A ordinary shares, or 3.1 million American depositary shares, during the quarter for about $13.1 million. As of March 31, the company had repurchased 174.7 million Class A ordinary shares, or 74.7 million ADS, for approximately $156.2 million under its $200 million repurchase program, which expires at the end of February 2027.
Conversational AI Products Move Toward Deployment
Zhao highlighted Agora’s March launch of Agent Studio, a visual no-code environment designed to help developers and enterprises build, test and deploy voice AI agents. The company also introduced conversational AI agents for inbound use cases such as customer service and outbound use cases focused on sales and marketing.
Zhao said many enterprises still face challenges deploying voice AI in production, citing the complexity of coordinating automatic speech recognition, large language models, text-to-speech systems and real-time infrastructure while maintaining low latency and reliability. He said Agora’s solution combines agent design tools, AI orchestration and its global real-time network infrastructure.
As an example of early deployment, Zhao said one customer implemented a survey and polling agent in the first quarter that matched 10% of the conversion rate of human agents, enabling the customer to scale data collection and reward distribution without adding operational headcount.
In the question-and-answer session, Wang said conversational AI usage has grown by more than 150% sequentially every quarter since the company launched its Conversational AI Engine product in March of last year. He said call centers and Internet of Things applications are expected to be the largest contributors to conversational AI revenue this year, and the company expects conversational AI to contribute around 5% of revenue “towards the summer.”
Wang said the product currently has a negative gross margin because of proof-of-concept customers and experimentation that generate little revenue but create costs. He said management expects gross margin for the product to turn positive as customers move from proof of concept to deployment and scale usage, and said the long-term gross margin could be similar to or higher than the company’s current real-time engagement products.
New Enterprise Product and AI Partnerships
Zhao also discussed the launch of Agora’s Intelligent Meeting Engine, which offers end-to-end encryption, deployment options including on-premises and private cloud, and tools intended to keep meeting content within a customer’s controlled infrastructure.
The product includes AI-powered functions such as real-time transcription, translation, intelligent meeting summaries and automated follow-up workflows that can connect with customers’ existing business systems. Zhao said the product has been well received in industries including finance, government and healthcare.
Agora also continued to expand AI ecosystem partnerships. Zhao said the company has integrated models such as Google’s Gemini and xAI’s Grok into its conversational AI solutions, and that Google has featured Agora as a recommended partner for building real-time conversational AI.
The company also announced a strategic partnership with NetEase Smart Enterprise, the enterprise services division of NetEase. Zhao said the partnership will combine Agora’s real-time engagement infrastructure with NetEase’s AI and content moderation expertise to deliver integrated solutions across areas including real-time video, content moderation and AI agents.
Regional Trends and Competitive Landscape
During the Q&A session, Wang said both Agora’s China business and its U.S. and international business are growing rapidly, with the U.S. business still growing somewhat faster. In China, he said demand from traditional verticals such as social, entertainment and education continued to recover. Internationally, he cited live shopping, financial services and gaming as among the strongest areas of demand.
Wang said video-based live shopping remains new in the U.S. and developed markets, but Agora continues to see growing demand from a customer that hosted a successful event highlighted in the prior quarter. He also said Agora recently won another fast-growing U.S. video-based e-commerce customer from a competitor.
In China, Wang said demand is growing quickly in IoT categories such as cameras, doorbells, cars and wearable devices. He also said the domestic competitive environment is showing further consolidation, with some competitors shifting away from scale and toward profitability or reducing staff in real-time engagement operations. Wang said this trend could gradually support Agora’s revenue growth and margins.
Second-Quarter Outlook Points to Faster Growth
Agora guided for second-quarter 2026 revenue of $39 million to $40 million, compared with $34.3 million in the second quarter of 2025. That implies year-over-year growth of 13.7% to 16.6%.
Wang said that even at the low end of the range, Agora expects faster revenue growth than it delivered in the first quarter. He also said the company expects operating income and net income to grow sequentially each quarter from the first quarter through the fourth quarter, with GAAP net income significantly higher than last year. Management’s goal is to achieve GAAP operating profit in the second half of 2026.
“We will continue to invest in AI with discipline, and we are confident that it will become an increasingly important driver of long-term growth,” Wang said.
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.
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