Agora - Earnings Call - Q4 2020

Transcript

Speaker 0

Ladies and gentlemen, thank you for standing by and welcome to 4Q and Fiscal Year twenty twenty Financial Results Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would like to hand the conference over to your first speaker today, Ms.

Fiona Chen. Thank you. Please go ahead.

Speaker 1

Thank you, operator. Good evening and good morning, everyone. My name is Fiona. I'm the Investor Relations at Agora. Thank you for joining Agora's fourth quarter twenty twenty earnings conference call.

Joining me today are Tony Zhao, Founder, Chairman and CEO and Jin Ruo Wang, our CFO. Our earnings results press release and a slide deck can be found on our IR website at investor.agora.io. Reconciliations between our GAAP and the non GAAP results can be found in our earnings press release. During this call, we will make forward looking statements about our future financial performance and other future events and trends including guidance. These statements are only predictions that are based on what we believe today and actual results may differ materially.

These forward looking statements are subject to risks, uncertainties, assumptions and other factors that could affect our financial results and the performance of our business. We will discuss them in details in our filings with the SEC, including today's earnings press release and the risk factors and other information contained in the final prospectus relating to our initial public offering. Agora assumes no obligation to update any forward looking statements we may make on today's call. With that, let me turn over to Tony.

Speaker 2

Thank you, Fiona, and welcome, everyone. Reflecting on the year, the global pandemic has brought tremendous changes and challenge to every one of us. Despite the year's trauma, we have seen a significant acceleration in demand for online ways of living and working. There is a growing need for contextual real time video or voice engagement in almost any app we use. We are proud to be there when the world needed the real time engagement more than ever before.

Now on earnings. We finished the fourth quarter with revenue of $33,300,000 up 74% year over year. We reached more than 270,000 adjusted apps at the December, adding nearly 9,000 per month in the fourth quarter. Our number of active customers reached nearly 2,100, up 101% year over year. For the full year of 2020, our revenue was $134,000,000 which represents an increase of 107% year over year.

Besides numbers, 2020 was a year of innovation. We crossed a number of noteworthy milestones such as powering 40,000,000,000 millions of engagement per month. We continue to create industry first such as our experience level agreement or XRA. We further broadened our product offerings, We to to deliver positioned

Speaker 0

pleased

Speaker 2

The first one is interactive lecture performance hall. A large sized classroom with more than 100 students is widely considered as the most economical model for live online education. Previously, such classes are taught through one way video broadcasting powered by traditional content delivery technology, where latency is anywhere between three and ten seconds or even more. Given the high and uneven latency, there is very little room for students to interact with teacher or among themselves. Recently, we have been working with leading online education institutions on redefining the lecture hall experience.

Here, the interactive lecture hall runs entirely on our real time engagement platform and switch between one way broadcasting session and fully interactive breakout sessions. During the one way broadcasting session, students can enjoy real time non video interactions such as voting and posting emojis. During the breakout sessions, students from small groups to work students form small groups to work on assignments together. We believe that interactive lecture hall combines the engaging learning experience of small class and the cost effectiveness of large classroom and is an emerging trend in online education. The second one is audio livecast.

I believe most people are familiar with audio podcast. But what is audio livecast? Podcast is like radio channels. There is one speaker or sometimes multiple speakers in the same physical room and all the audience simply listen to the speakers. Live cast, on the other hand, create a virtual in the same room experience.

Here, multiple speakers can join from different locations worldwide and discuss spontaneously thanks to ultra low latency audio. Instead of just listening, the audience can raise their hand and come on stage to join the speakers anytime. We believe LivePast represents a new way for people to connect and learn, and we are particularly proud that our proprietary Nova Audio codec further enhance the experience by offering crystal clear actually audio. These are just two examples out of the many new use cases we see, such as virtual events, remote assistance, remote collaboration and virtual tours. We are really encouraged by the enthusiasm and creativity from our developers.

We also made solid progresses on new products that in this quarter. Recently, we released the first version of Agora Flexible Classroom, a low code application pass solution for education providers. It combines video, voice, messaging, whiteboard and recording functionalities into one cloud based solution that allows developers to build an online classroom in a matter of minutes. Compared with our standard SDK, a growing flexible classroom can significantly simplify software and shorten time to market. Compared with out of the box SaaS solution, Agora Flexible Classroom allows developers to use their own brands and have complete control of their own user data.

In addition, Agora flexible classroom is modular is is modular, which means developer can customize their application to create differentiated user experience. Agora flexible classroom represents an important step in our low codeno code effort, which we believe will reduce the friction of adoption and expand our addressable markets. Moving on to the M and A slide. We recently agreed to acquire Ismop, a leading instant messenger instant messaging API provider and complete the acquisition of Netlist, a leading interactive whiteboard API provider. Both companies share our developer first philosophy and they bring highly complementary APIs to our product portfolio, which our developers and customers often ask for.

As a pioneer and long time market leader, Ysmore has also has a large and vibrant developer community. We believe that with these two acquisitions, we are uniquely well positioned to help developers build more immersive real time engagement use cases. Last but not the least, security, compliance and privacy protection are critical to our success. Recently, we reduced recently, we received SOC two Type one certificate as certified by Deloitte. Our network penetration, application vulnerability and compliance assessment were also recently completed by Trustwave Holdings, a global security specialist.

Looking forward, we will continue to work with leading experts to ensure that our security practice remains best in class. Overall, 2020 was a milestone year for us in many ways. We launched Agora seven years ago in the garage in Silicon Valley, and it's amazing how much we have accomplished in the past seven years. I want to take this moment to thank all the developers, customers, partners and investors for your trust in us. And above all, to all our awards, including new awards from Ismop and Netlist, thank you for your hard work and commitment serving our developers and customers.

There is a long journey ahead of us toward ubiquitous real time engagement. Let's start fresh just like seven years ago. Now let me turn things over to Jingbo, who will review our financial results.

Speaker 3

Thank you, Tony. Hello, everyone. Let me start first by reviewing our financial results for Q4 and then I will discuss our outlook for the fiscal year of 2021. Total revenues grew 74% year over year to US33.3 million dollars in the fourth quarter of twenty twenty. Total revenues for the fiscal year 2020 were US133.6 million which represented 107% year over year growth and exceeded the high end of our guidance by US3.6 million dollars In 2020, we have powered more than five hundred billion minutes of real time engagements in total.

As we mentioned in previous earnings calls, our revenues in Q1 and Q2 this year were positively impacted by the spike of usage due to COVID-nineteen in China. In order to help investors better understand our organic growth, excluding such short term impact, we calculate Q1 and Q2 adjusted total revenues as follows. For each customer in China, we use this revenue in Q4 twenty nineteen as a starting point and revenue in Q3 twenty twenty as the endpoint and calculate its adjusted revenue in Q1 and Q2 as an arithmetic progression from the starting point to the endpoint. Revenues from customers outside China remain unchanged. This would lead to adjusted total revenues of RMB22.2 million in Q1 and RMB27 million in Q2.

And the adjusted total revenues for the full year of 2020 were million. Our trailing twelve months constant currency dollar based net expansion rate is 179%. If we use adjusted total revenues, the adjusted expansion rate would be 149%. Now turning to cost, expense and margin. I will focus on non GAAP results, which exclude share based compensation expense.

Non GAAP gross margin for the fourth quarter was 60.5%, which was 5.9% lower than Q4 last year and 2% lower than Q3 this year. The decrease in gross margin was mainly due to our international expansion into regions with higher infrastructure costs, such as Southeast Asia, South America and Oceania, as well as capacity expansion in anticipation of future usage growth. Non GAAP R and D expense were RMB13 million in Q4, up 88% year over year as we continue to build our R and D team. Non GAAP R and D expenses were 39.2% of total revenues quarter, compared to 36.4% in Q4 last year. Looking forward, we'll continue to invest significant resources in our R and D capabilities in order to further strengthen our technology leadership and broaden our API portfolio.

Non GAAP sales and marketing expenses were million in Q4, up 34% year over year, mainly attributable to team expansion and the increased advertising and event expenses. For example, our RTE virtual conferences in October. Sales and marketing expenses represented 20.8% of total revenues in the quarter compared to 27.1% in Q4 last year. We believe this has again demonstrated the efficiency and scalability of a developer centric go to market model. Non GAAP G and A expense expenses were 5,700,000 in Q4, up 163% year over year, mainly due to team expansion and professional service fees.

G and A expenses represented 17% of total revenues in the quarter compared to 11.2% in Q4 last year. Non GAAP operating loss was million translating to a 14.4% non GAAP operating loss margin fourth quarter compared to a net loss margin of 8.1% in Q4 last year. Turning to cash flow, our operating cash flow was positive $2,000,000 in Q4 compared to positive $2,100,000 last year. Free cash flow was negative 1,400,000.0 compared to positive 900,000.0 last year. Net cash outflow in Q4 was mainly due to the purchase of servers and networks equipments as we continue to scale our business.

Moving on to balance sheet. We ended Q4 million in cash, cash equivalents and short term investments compared to million at the end of Q3. Subsequently, we raised million by issuing ordinary shares to an accredited investor earlier this month. Now turning to guidance. COVID-nineteen is still an unprecedented variable to our business model, where historical experience may not apply.

Our guidance on full year revenue reflects a number of assumptions that are subject to change based on the uncertainties related to the impact of COVID-nineteen. With that, we currently expect total revenues for the fiscal year 2021 to be in the range of 178,000,000 to 182,000,000, which would represent approximately 35% year over year growth at midpoint. Or if we use adjusted total revenues for 2020, 59% year over year growth at midpoint. In closing, we executed very well and are proud of our strong performance we delivered in our first year as a public company. We'll continue to empower developers and meet customer needs around the world.

Thank you to the entire Agora team for your hard work this past year and hope you're healthy and safe. Let's open up for questions.

Speaker 0

Ladies and gentlemen, we will now begin the question and answer session. Your first question comes from the line of Yang Liu. Please ask your question.

Speaker 4

For the opportunity to ask questions. Three questions from my side. The first one is, can management share the revenue upside from penetrating the audio live broadcast use cases? How should we think about or how to think about the revenue upside and how to quantify that? And do we have other customer beyond Clubhouse?

The second question is how much is eSmoab revenue contribution in the full year 2021 guidance? And what is the organic revenue growth in the guidance? And the last question is gross margin outlook because we have new use cases, new acquisition, etcetera. Do you think the fourth quarter twenty twenty gross margin is sustainable going forward? Thank you.

Speaker 3

Thank you. So I guess I'll take all the three questions. On the first question, first of all, we have internal policies on customer disclosure and we cannot comment on particular customers other than what's already disclosed on our website. So we will not comment on any particular customer names. But regarding this use case, it's actually not an entirely new use case.

There have the previously what we call the audio chat room was a existing use case for a long time. And obviously, recently, there have been new developments in the area. We do see a significant pickup in usage. With that said, because audio price per minute is much lower than video price per minute. So audio, live cast as a whole, the revenue contribution is not that significant if you think about the overall picture.

So we wouldn't guide a very significant revenue upside from this one use case alone, given we have so many use cases on the platform. On the second question, currently, Eastmob has a revenue run rate of around $1,000,000 a month. And we are currently in the closing stage of the acquisition. We expect the acquisition to complete in the next few weeks. So with that, I would say the full year contribution would be something around $10,000,000 And lastly, on gross margin, current view is we think there will be short term pressure on gross margin in the near term.

We do not believe it will be very different from what we have already seen in Q4. There are mainly two factors at play. The first factor is international expansion. As we mentioned before, currently given a scale smaller scale in certain markets and higher infrastructure cost in those markets, our margin is relatively lower in those new markets. And as our revenue contribution from these markets increase, that will have a that will cause a drag on the overall GP margin.

The second factor is all the technical optimizations we are implementing. So in the short term, it's likely that the first factor will be stronger. So we'll have near term pressure on the margin, but we do expect things should recover in a few quarters' time as more and more optimizations take effect gradually.

Speaker 4

Thank you.

Speaker 0

Your next question comes from the line of Rich Valera from Needham. Please ask your question.

Speaker 5

Thank you. First question is a follow-up on the new voice model that you've been talking about. And just wanted to get a sense of how you actually get paid on that. Is it fair to think that each room in one of these voice based social apps would be one live interactive audio stream and you could have many participants in that stream that would effectively be free? I just wanted to try to understand how to think about that.

Speaker 3

Thanks. We actually charge based on per minute per participant. So let's say there are 10 participants in that room. There is a ten minutes of engagements. So that will be 10 times ten, one hundred minutes charge.

Speaker 5

Okay, got it. Thanks very much on that.

Speaker 2

And then one of the things I think you

Speaker 5

can say about your new active customer additions. They've been quite strong for the last several quarters. And just wondering how you're seeing them ramp relative to pre COVID. Are you seeing similar ramps? Just I wanted to get any sense of how your new customers have been ramping over the last couple of quarters?

Speaker 3

Overall, I would say the ramp up is normal. However, one thing I do need to stress is similar to what we did with the adjusted revenue and adjusted expansion rate. There was a short term impact from COVID, particularly in China. So during the height of the COVID situation, obviously, a lot of new apps, new developers came to the platform and they start to experiment. And as you can imagine, as COVID quickly passed, some of those developer and those use cases disappear.

So that would cause some distortion in the revenue and also expansion rate as well as the number of customers. So that is the kind of the abnormal factor here. But if we take that out, I think everything else is pretty normal, not drastically different from what we saw before.

Speaker 2

Got it. And my final one is on OpEx. I was wondering if you could give

Speaker 5

us any help for modeling in terms of how to think of OpEx in 2021 versus 2020, either in absolute dollars or in percentage of revenue?

Speaker 3

We do not provide specific guidance on exact operating margin. However, as we mentioned earlier, we'll continue to invest very heavily on R and D. So R and D will remain the main component within OpEx. And G and A, the ratio we saw in Q4 is high. We do think it will be lower than that given we had a few professional fees projects related to security audit, as Tony mentioned earlier in his opening remarks, completed in Q4.

So Q4, we have a few nonrecurring items. So the G and A expense would be lower as a percentage of revenue. Sales and marketing would be around similar levels as percentage of revenue compared to 2020.

Speaker 5

Got it. Thank you very much.

Speaker 0

Your next question comes from the line of Emerson Chan from Bank of America. Please ask your question.

Speaker 6

Hi, thank you management. I have three questions. My first question is about our overseas market. How much revenue is contribute from overseas in Q4? And what we see differently now versus, let's say, one year ago in terms of customer acquisition in the oversea market, in terms of course, our brand awareness and the developer outreach.

And my second question is regarding, the LTE use case in the audio live cast we mentioned before. How should we think about our technology leadership in the audio use case, whether it is less less significant on audios than the video use case given, know, audio traffic may look less demanding. And what are our competitive advantage on the audio use case that our competitors do not offer? And my last question is about the usage of the audios, live cast use case. I just wonder if listen only audience, also need to use LTE, And what are the alternative technology that can accommodate those listen only audience and what are their quality and cost difference versus our LTE?

Thank you.

Speaker 3

Thank you, Emerson. I will take the first question and Tony will take the other two questions. So in terms of the overseas revenue mix, in the most recent quarter in Q4, actually revenue from U. S. And other markets, so non China markets, was already close to 30%.

It's little less than 30%. So it's significantly more than, let's say, one year ago or two year ago. And in terms of the overall situation in the now China market, we have seen developer sign up continue to be very strong worldwide. The monthly developer registration to new apps registered on the platform outside China right now is almost three times as many as one year ago. And if you just do some simple search engine search on the main keywords like video haul, video streaming, you can see that a lot of times we are already ahead of major competitors.

So we have gone a long way, and we are in much stronger situation compared to one or two years ago. But there's still a lot of work to do. We recently added quite a few development frameworks such as React Native, Flutter, Unreal, and we are working on a few more. And then we recently launched the startup program. So we'll better help startups to get free credit, get technical support so that they can better build their innovative use cases.

So overall, we think we are on the right track, but we still need to be more proactive and be more strategic to really solidify our position as the go to platform for RT APIs worldwide.

Speaker 2

Okay. I'll address a question around our technical technology leadership, whether it's less significantly than on auto only use cases and about the amenities. It's actually very clear to us that our technology leadership is not less significant on audio only use cases. I'll explain why. Because video is commonly known for more demanding than audio in terms of traffic and CPU usage.

But that doesn't mean audio is easy to do because people are more sensitive to audio quality. For example, in the video call, if the video frame freeze for like a second or so or some or have has some color blocks for a few seconds, it's less than ideal, but you won't feel too uncomfortable or, you know, hard to continue the conversation. But if the audio breaks up for, like, a second or, you know, a few seconds or there's a sharp noise happening, like, in this call, then, you know, you would very much likely to feel really uncomfortable or not able to continue the conversation. In terms of our advantage in audio use cases, you know, there are at least three of those advantages. We have a proportant codec to provide higher quality, and we have a much better network to cover global audience.

And also, we leverage AI technology to further enhance audio experience on our services. You know, we have a proprietary codec called Nova, which is widely used in today's live cast use case, where it provide full audio, full band audio with very low bit rate, which is a killer feature for audio live cast use cases. And, again, our network, which is called SDRTN, provides the best global coverage in this market in any country, especially across long distance. It's hard to really ensure the the experience across region and various type of devices. And we also use artificial intelligence to improve various aspect of audio quality.

For for example, AI based noise noise reduction and cancellation. You know, on the third question were about listening only audience use cases, you know, on on RT. I think, you know, it's important to understand that listen only, you know, use cases is is so called podcast. And listen most of the time, but can jump in any time to discuss is hugely different from strictly listening only. You know, you need to understand because this is a new use case where psychologically, the audience or the participant feel really different from strictly listening only.

Having the ability to interact gives people the feeling of being there or being together. The the whether they make any response or not means a lot, you know, in that environment. And people do come on stage to interact from time to time. They hear something they are really passionate about, which makes the whole discussion more spontaneous. So that's a very different from strictly listening only.

That's why we see it's necessary for such use case to use our team.

Speaker 6

Thank you.

Speaker 0

Your next question comes from the line of Collin Liu from China Renaissance. Please ask your question.

Speaker 7

Good morning management. Thanks for the opportunity to ask your question. I have just one on the acquisition of Eastmob. With the I'm capabilities to be added to Agora's platform, what do you think of the new business cases we we should actually focus on? And are these new business cases gonna bring some new customers that we may never across in the past before?

And also, I noticed that actually before the acquisition and the cooperation with Agora, Eastmob also outlined some overseas expansion plan particularly in the ASEAN market. So how do we see the potential opportunities in overseas markets regarding the cooperation with East Mobile in the future? Thank you.

Speaker 3

I would say the acquisition of East Mobile and the addition of instant messaging API is less about penetrating into customers we can never penetrate before. It's more about offering a more complete and more similar solution to customers. Actually, this is not something we imagine. It's during our experience with developers and with customers. In fact, instant messaging API is one of the most frequently requested feature from our developer community.

So, if you imagine all the apps you have used, if an app has video or voice engagement functionality embedded, actually, there's very high chance it also needs instant messaging function. So now as I'm APIs on the platform as well, we can offer these developers and customers a more seamless integration of our features. And if you think about it, actually, the primary way for people to interact in app, basically video, voice and messaging. So now we have all of these covered. So that's really the logic.

So we think this is a very natural move.

Speaker 2

I think to add a little bit to that, the instant messaging APIs falls under a bigger umbrella of RTE APIs, which we've been working on for a long time. It does give us complementary features and more APIs to solve our customer base, which will help customer to more easily to build their actual use cases or their apps. This will definitely help us a lot in growing our developers. Plus, on international expansion, there are past effort for Ismop to expand internationally. I think with the acquisition, they can leverage our existing operation globally, which proven to be successful in the past to further penetrate to serve global developers instead of in the past, more serving China developers.

Speaker 0

Your next question comes from the line of Eric Nguyen from Blue Lotus. Please ask your question.

Speaker 8

Good morning. Thanks answering my questions and congratulations on a good quarter. My question is regarding this other revenues. We noticed that our other revenues has grown quite a bit this quarter. Does this represent trial customers or more customization requirements or it represents a new class of revenues we plan to continue to develop in the future?

And if you can comment on what is the gross margin profile of these other revenues, that would be very helpful. Thanks.

Speaker 3

Sure. So this other revenue is mainly due to one enterprise customer, where we provide essentially the same product and same service, but the contract is structured as a license as requested by the customer. So it's booked as other revenue, But essentially, it's really the same service. But given this is one case where it was one particular customer, we actually don't think this will constitute a new line of business. It seems like this will happen from time to time, but we don't consider this as anything different from what we already do.

Speaker 8

Okay. Thanks.

Speaker 0

Your next question comes from the line of Akita Erkan from China Securities. Please ask your question.

Speaker 9

Thank you management for taking my question. So there are three questions from my side. The first one is about online education. I was wondering if management update us in terms of progress of penetrating online education customers. So at present, what is the proportion of revenue contributed by small classes versus large classes?

And how we see the potential market size of ARTE in online education sector in China? And my second question is about the strategy of product development and R and D. So what is the focus of R and D and product development currently? And what's the most challenging part? And apart from education and entertainment sectors, are there any innovative R and application emerging from other fields such as finance and IoT and so on?

And my third question is about overseas business. So for 2021 and also for the mid to long term, what is the expected proportion of revenue contributed by overseas business? And it would be appreciated if you can talk a bit more about your strategy to develop the global market. Thank you.

Speaker 3

Thank you. So in terms of revenue contribution from different class formats, right now, we so the small class is still the majority format. We have about half of revenue from small class. And the other half, it's between one and one use cases and then large class or the lecture hall. But we believe lecture hall use case, as Tony discussed earlier, has a significant potential.

Because as Tony explained, that class format is most economical. You can have one teacher or few teacher teaching hundreds or even thousands of students. So the model itself is very has great economics. So we do expect the contribution from large class or lecture hall to increase substantially in the future. With that said, we're saying even for small class and one on one class, there is still a lot of room to grow.

Currently, the overall online education market is growing very rapidly, not just in China, but globally. And secondly, there are still significant volumes, significant usage currently served by in house solutions. And we are working hard to convert more and more customers to switch from in house solutions to professional third party solution like our own solution. So that's the first question. On the second one, we actually don't think the technology is perfect.

In fact, we think the technology is far from perfect at the moment. If you actually ask some of our customers, they will tell you they like our quality relative to competitors, but they don't think the quality is good enough in absolute sense. So if our quality can be 20%, 30% better, they are more than happy to pay us more. So if you think about use cases like high definition four ks or VR, AR or for a more challenging use case across geography, there's still a long way to go. And if you think about the use cases, I will say people talk about social and education.

But actually, under these two umbrella, there are numerous new innovative use cases like audio livecast, right? That's still social, but that's probably something people didn't do before. So even within the two verticals, we think there's still a lot of room to grow. It is hard to predict what new use cases will emerge because by definition, right, it's new because we don't know it yet. We haven't developed it yet.

So it's hard to predict. But as history has shown, right, people will always innovate and they need to learn and they need to interact will not go away. So that's on the verticals. But we will not just stay at the path or SDK level and wait for customers to build apps. We'll also at same time try to verticalize ourselves.

So the education APAS, a core flexible classroom is one of the first efforts from us in terms of verticalization. So this will because APaaS is a low code solution. So basically, it will reduce frictional adoption and allow companies with a smaller development team or let's say, a more traditional enterprise rather than a pure technology company will allow them to be able to adopt our technology and build apps much more easily and that will expand the addressable market, addressable developer or customer base and that can also create new revenue opportunities. So that's the second question. The third question, overseas revenue.

This year, it's hard to say given a lot of things are moving, including the development of the COVID situation, right? We expect revenue contribution from outside China will be similar or slightly higher than what we saw in Q4, so around 30%. And we do think the non China market has huge potential given all the news cases starting to really ramp up and gain popularity. So we do expect to have revenues from other China to level revenues in China from within China in three to five years.

Speaker 0

Thank you. You have a follow-up question from the line of Emerson Chan from Bank of America. Please ask your question.

Speaker 6

Hi management. May I have one follow-up questions on the overseas market? I know we have a global pricing plan, but as far as I know, customer may have some discount. So I'm curious on what are the ASP difference in the overseas versus China after the discount we've given to our clients? And how should we think about the competition intensity in the overseas market versus China?

Thank you.

Speaker 3

In fact, in terms of ASP, in the most recent quarter, the two markets are not that different. Non China market still has slightly lower ASP, but it's not drastically different. I'm talking about real ASP, the after discount ASP. But as we mentioned earlier, the challenge is really the infrastructure cost. The scale in China, the network capacity in China is much higher.

So we are able to get relatively efficient procurement cost. But in other channel, also the overall scale is not as small, but as distributed across many different geographies, many different countries. So in one particular country, the scale could be quite small and that causes the infrastructure cost to be higher. That's the challenge at the moment. In terms of competition, I guess, people have saying that recently, there have been new entrants into the market, including some large companies, which we actually think again confirms the potential of this market.

In terms of the difference, I would say the non China, U. S. And rest of the world market is less well defined and still shaping up compared with China. In China, the market has been well defined primarily by us and there are competitors who compete with us in more direct way. But also China, I think we also play a key role in defining the market, but we see competitors from various different background and they try to offer some overlapping products, but very few are competing with everything we do.

Some of them do a little bit of video call, some do a little bit of voice, some do streaming. But we don't see a lot of competitors really try to do the same thing we do, that is to power all kinds of immersive engagement use cases. So I would say the market of China overall is still less developed.

Speaker 0

There are no further questions at this time. I would like to hand the conference back to today's presenters. Please continue.

Speaker 1

Thank you, everyone. Feel free to e mail us or contact us through investor. Agora. Io. Thank you again.

Speaker 0

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may all disconnect.

Speaker 3

Thank you. Goodbye.