What Management Said

Read the full Q4 2025 transcript ↗

Total revenue for the fourth quarter were $38.2 million, representing 10.7% year-over-year growth. Our GAAP net profit for the quarter was $4.9 million, with a GAAP net margin of 12.9%. To quote our customer's own word from their technical blog, "On event day, Agora's real-time media pipeline performed reliably at peak. The strong market interest and media coverage coming out of CES further validates the growing demand for real-time human-like re-interaction embedded directly into smart devices.

Looking ahead, we remain focused on driving revenue growth and advancing conversational AI innovation throughout 2026. We enter the new year with strong momentum, supported by an expanding customer pipeline, growing production deployments, and increasing ecosystem partnership. Let me start by first reviewing financial results for the fourth quarter of 2025, and then I will discuss outlook for the first quarter of 2026. Total revenues for the fourth quarter reached $38.2 million, representing a 10.7% year-over-year increase and exceeding the high end of our revenue guidance.

If we look at the two business divisions, Agora revenues reached $19.9 million in Q4, representing 14.4% year-over-year growth and 9.3% quarter-over-quarter growth. The strong growth reflects our successful market penetration and growing adoption in verticals such as live shopping. Gross margin for this quarter was 65.1%, down 1.5 percentage points year-over-year, and 0.9 percentage points sequentially. The slight decline was primarily driven by the lower margin profile of our conversational AI-related products, as usage is still ramping up and remains at a sub-scale level.

What went well
  • Reported a fifth consecutive quarter of GAAP profitability and the first full year of GAAP profitability since 2018; Q4 net income was $4.9 million (a 12.9% net margin).
  • Total revenue reached $38.2 million, up 10.7% year-over-year and above the high end of guidance, a fourth consecutive quarter of double-digit organic growth.
  • The Agora division grew 14.4% year-over-year (and 9.3% sequentially) to $19.9 million with 109% dollar-based net retention, led by live shopping.
  • Delivered what management called the largest US live video-shopping event in history, MrBeast on the Whatnot platform over Super Bowl weekend, streaming full HD to roughly 600,000 peak concurrent viewers at sub-second latency exclusively on Agora's platform.
  • Operating cash flow roughly doubled to $9.3 million (from $4.5 million); cost discipline lowered R&D, sales & marketing and G&A year-over-year, and the board extended the $200 million buyback program 12 months to February 28, 2027.
What went wrong
  • Gross margin declined to 65.1%, down 1.5 percentage points year-over-year and 0.9 points sequentially, dragged by the subscale, pilot-stage conversational-AI product mix.
  • Shengwang (China) growth decelerated to 5.7% year-over-year with dollar-based net retention of 89%, below 100%.
  • Conversational AI revenue contribution stayed low as many customers remained in unpaid proof-of-concept; only a roughly 5% ARR contribution was targeted by the end of 2026.
  • Management flagged 2026 profitability headwinds of about $6 million of share-based compensation and nearly $4 million of headquarters-project amortization.

Guidance Changes

MetricPeriodCurrent guidance
Total revenueQ1 2026$36M-$37M (8.1%-11.1% YoY growth)
GAAP operating profitQ4 2026Goal: achieve GAAP operating profit in Q4 2026
Gross marginFull-year 2026Forecast roughly flat versus Q4 2025
Conversational AI revenueEnd of 2026Target approaching ~5% of ARR contribution

Performance Breakdown

MetricYoYNote
Total revenue +10.7% Fourth straight quarter of double-digit organic growth led by live shopping and broader RTE penetration
Agora (overseas) revenue +14.4% Live-shopping adoption, including the high-profile Super Bowl-weekend event
Shengwang (China) revenue +5.7% Continued expansion in social, entertainment and IoT
GAAP net income grew to $4.9M (12.9% margin) Revenue growth, operating leverage and lower G&A on improved collections
Operating cash flow $9.3M vs $4.5M Higher profitability and working-capital improvement

Earnings Call Themes & Trends

TopicPrevious mentionCurrent periodTrend
Conversational AIEngine 2.0 and Studio launchedMultimodal Conversational AI Device Kit (vision and motion control) shown at CES 2026; companionship toys (Fuzozo) and embodied-AI robots scaling; multi-agent collaboration via Agnes AI—
Platform-scale proof pointConference and product milestonesLargest US live video-shopping event (MrBeast on Whatnot), roughly 600,000 peak concurrent viewers, run exclusively on Agora—
Gross margin trajectory66% (Q3 2025)65.1%, with 2026 guided to roughly flat—
Capital return$132.1M cumulative (Q3 2025)$143.1M cumulative (71.6% of the $200M program); program extended to February 2027—

Q&A Summary

What is the overall RTE demand trend in China and overseas, and which industries are the key drivers?
In China, social/entertainment/education demand grows modestly while IoT and digital transformation offer the biggest upside and competitive pressure keeps abating; in the US and international markets the massive single-channel live-streaming success solidified Agora's live-shopping position and should bring more opportunities and market share.
Can you give more color on Conversational AI Device Kit applications and the targeted conversational-AI revenue?
Use cases span companionship toys and physical-AI equipment; since the Engine's March 2025 launch usage has more than doubled every quarter, but revenue lags because customers are in POC, so the goal is for conversational AI to approach ~5% of ARR toward the end of 2026, with the solution becoming a de facto industry standard for companionship devices.
Gross margin declined year-over-year to about 65%; is this mix-driven and temporary or more structural, and what is the 2026 trend?
It is mix-driven and temporary: pilot/POC conversational-AI usage is not charged and runs sub-scale, dragging the blend; management forecasts roughly flat gross margin for 2026 and expects recovery as usage and revenue ramp, though it may take a couple of quarters.
After full-year GAAP profitability in 2025, how do you think about 2026 operating income and margin drivers?
Operating income should improve significantly on revenue growth and operating leverage, with a goal of GAAP operating profit in Q4 2026, even after absorbing about $6 million of share-based compensation and nearly $4 million of headquarters amortization.
With recent volatility in US software stocks amid AI concerns, how is an infrastructure/API company positioned in the AI era?
System- and infrastructure-level PaaS and API services face increasing rather than decreasing demand as AI and web coding proliferate, because hardcore low-level real-time infrastructure is hard to disrupt, and rising demand for real-time multimodal AI interaction directly benefits Agora.
Will coding agents replace or use real-time-engagement infrastructure?
A coding agent such as Claude Code building a real-time app will call an API rather than rebuild the underlying real-time communication infrastructure, so Agora expects to be used by, not replaced by, coding agents.
What is the future margin trend for the AI product, and have AI toys and customer service hit an adoption inflection point?
At normal utilization and decent scale the AI product should match or exceed core RTE margins; today's low margin reflects sub-scale operation and unpaid POCs. Adoption grows use-case-by-use-case (companionship toys and outbound calling already working) rather than at a single turning point, with falling model costs not a blocking factor.

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Q4 2025 call
Reported 2026-03-03 · figures from the Agora, Inc. Q4 2025 earnings call.

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