What Management Said

Read the full Q3 2025 transcript ↗

We're pleased to report our fourth consecutive quarter of GAAP profitability in Q3, supported by double-digit revenue growth and expanding margins. Our GAAP net profit for the quarter was $2.7 million, with a GAAP net margin of 7.8%. We expect our revenue and net profit to continue growing on a quarter-over-quarter basis in Q4. As you can see, our core real-time engagement path business is rebounding strongly and is on track to deliver its first full-year revenue growth since the pandemic, providing a stable, profitable foundation for us.

Just a few months ago, Greylock Partners, a leading venture capital firm, published a blog post titled, "Voice Agents: Easy to Use, Hard to Build." They nailed the core challenge. In short, we're not just providing the transmission pipeline for voice and video. Early adoptions from customers around the world have been encouraging, and our pipeline of use cases and prospects continues to grow as we head into next quarter. Our recent Convo AI and RTE Conference attracted more than 3,000 on-site attendees, a record for us, and made it the largest gathering focused on conversational AI technology globally.

Let me start by first reviewing financial results for the third quarter of 2025, and then I will discuss outlook for the fourth quarter. Total revenues for the third quarter reached $35.4 million, up 12% year-over-year, representing a third consecutive quarter of double-digit organic growth. If we look at the two business divisions, Agora revenues reached $18.2 million in Q3, representing 15.9% year-over-year growth and flat quarter-over-quarter. The strong year-over-year growth reflects our successful market penetration and growing adoption in verticals such as live shopping.

What went well
  • Reported a fourth consecutive quarter of GAAP profitability with net income of $2.7 million and a 7.8% net margin, a significant improvement from a year earlier.
  • Total revenue reached $35.4 million, up 12% year-over-year, marking a third consecutive quarter of double-digit organic growth.
  • Core real-time engagement business rebounded, on track for its first full-year revenue growth since the pandemic; the Agora division grew 15.9% year-over-year to $18.2 million and Shengwang grew 8.4% year-over-year to RMB 122.4 million.
  • Dollar-based net retention improved for a fourth straight quarter, reaching 108% for Agora and 90% for Shengwang.
  • Operating cash flow turned positive at $0.7 million (versus negative $4.6 million a year earlier), aided by cost discipline that lowered R&D, sales & marketing and G&A expenses year-over-year.
  • Advanced its AI roadmap: launched Conversational AI Engine 2.0 and Conversational AI Studio, drew a record 3,000+ attendees to its Convo AI and RTE Conference, and saw growing traction for the open-source TEN Framework.
What went wrong
  • Gross margin slipped to 66%, down 0.7 percentage points year-over-year and 0.8 percentage points sequentially, on the subscale mix of conversational-AI products.
  • Conversational AI revenue remained immaterial as most customers were still in proof-of-concept; sizable revenue was not expected until the first half of 2026.
  • Shengwang (China) dollar-based net retention stayed at 90%, still below 100%, indicating net contraction in that customer cohort.
  • Management stressed that real-time conversational AI remains technically hard (background noise, latency, turn-taking), lengthening the path from demo to production adoption.

Guidance Changes

MetricPeriodCurrent guidance
Total revenueQ4 2025$37M-$38M (7.2%-10.1% YoY growth)
GAAP net profitQ4 2025Expected to grow sequentially versus Q3
GAAP operating profitFull-year 2026Target: achieve full-year GAAP operating profit

Performance Breakdown

MetricYoYNote
Total revenue +12% Third consecutive quarter of double-digit organic growth led by US and international live commerce plus recovering China social, entertainment and IoT demand
Agora (overseas) revenue +15.9% Market penetration and adoption in verticals such as live shopping
Shengwang (China) revenue +8.4% Continued expansion in social, entertainment and IoT verticals
R&D expense -52.8% Cost discipline against an outsized prior-year base (R&D had been 92.7% of revenue in Q3 2024)
GAAP net income improved to $2.7M (7.8% margin) Revenue growth combined with operating leverage and lower operating expenses

Earnings Call Themes & Trends

TopicPrevious mentionCurrent periodTrend
Conversational AI maturityInitial product launchesEngine 2.0 and Studio launched; three lead use cases (call center, education, companionship toys) moving from POC to production—
Gross marginRoughly 66-67% range66%, a modest decline driven by subscale conversational-AI mix—
Capital returnOngoing buyback program$132.1 million cumulatively repurchased since the February 2022 authorization ($4.8 million in Q3)—

Q&A Summary

What are the key demand trends in the domestic (China) and international markets, and which sectors are driving growth?
In China the recovery trend continues, with social, entertainment and education demand rising and IoT and digital-transformation customers growing rapidly; in the US and international markets live commerce keeps growing quickly and other verticals are also up, at a pace slightly faster than China.
What is the latest on AI, and which scenarios could drive meaningful near-term revenue?
Agora is focused on real-time conversational AI (distinct from broader voice AI). Three use cases (call center, education and companionship toys) have advanced from proof-of-concept to real-world production; management expects some sizable conversational-AI revenue in the first half of 2026 and for it to become a meaningful contributor toward the end of 2026.
What is the profitability outlook for Q4 2025 and for 2026?
Q4 is seasonally strong, so management expects GAAP operating profit in Q4 and net profit growing above the Q3 level; for 2026 the target is full-year GAAP operating profit with year-over-year net income improvement, though net profit carries some uncertainty from potential interest-rate cuts.
What drove Q3 revenue coming in above the midpoint of the guidance range?
Strong demand across both US/international (live commerce, social, fintech) and China, where the Q3 summer vacation lifts social and education apps and IoT (smart cameras, wearables, smart toys) grew rapidly.
Which downstream AI applications show the strongest momentum, and how are companionship toys being adopted?
Strong pipelines exist for call center (outbound marketing and inbound service), and companionship-toy customer RoboPong shows impressive sales and usage while now charging end users a monthly subscription; other toy makers are integrating Agora's solution and expected to launch in the coming months.
How fast is conversational-AI usage growing, and how do you view the real-time-inference/CDN-like opportunity?
Conversational-AI usage grew more than 150% quarter-over-quarter; Agora is not a CDN company but its global distributed network of data centers positions it to offer real-time inference services that connect distributed ASR, TTS and large-language-model modules at ultra-low latency, a future expansion opportunity.

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Q3 2025 call
Reported 2025-11-20 · figures from the Agora, Inc. Q3 2025 earnings call.

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