What Management Said

Read the full Q2 2026 transcript ↗

I am pleased to report another quarter of accelerating top-line growth, as well as our seventh consecutive quarter of GAAP profitability. Total revenues for the second quarter of 2026 reached $40.4 million, an increase of 18% year-over-year. We see similar opportunities in financial services outreach, gaming user acquisition and retention, debt collection, and many other areas. Together, these tools make it easier for both human developers and AI coding agents to build and deploy Real-Time Engagement applications with us.

We believe that continued improvements in our solutions will unlock additional demand and drive the industry shift towards AI-led workflows in call centers. Our software-defined real-time network, or SDRTN, has long been a foundational advantage for us. Total revenue for the second quarter reached $40.4 million, above the high end of the guidance range and representing 18% year-over-year growth. This marks our third consecutive quarter of accelerating growth, driven by continued expansion of our Real-Time Engagement services across sectors such as e-commerce, as well as growing customer adoption of our Conversational AI solutions.

Gross profit for the quarter was $25.7 million, representing 12.5% increase year-over-year. Gross margin was 63.7%, compared to 66.8% in the same period last year, and 63.4% in the first quarter of 2026. On the sequential basis, the increase was mainly driven by technical optimization. R&D expenses represented 38.1% of total revenue in the quarter, compared to 40.8% in the same period last year.

What went well
  • Reported a seventh consecutive quarter of GAAP profitability with net income of $2.2 million (a 5.4% margin), up 50% year-over-year.
  • Total revenue reached $40.4 million, up 18% year-over-year and above the high end of guidance, a third consecutive quarter of accelerating growth.
  • Dollar-based net retention rebounded to 104% (from 94% a year earlier), moving back above 100%.
  • Operating leverage improved as the GAAP operating loss narrowed to $1 million (from $3.1 million), with sales & marketing and G&A both down year-over-year and a goal of quarterly GAAP operating profitability by year-end.
  • Conversational AI gained commercial traction, with voice AI agents matching or surpassing human reps in outbound marketing and market surveys; launched Agora Skills and Agora CLI for AI coding agents (including Claude Code, Cursor and Codex) and partnered with Gradium on text-to-speech.
What went wrong
  • Gross margin declined to 63.7% from 66.8% a year earlier on the subscale conversational-AI product mix, though it edged up from 63.4% in Q1 on technical optimization.
  • The company was still at a GAAP operating loss of $1 million, not yet operating-profitable.
  • Operating cash flow was negative $2.1 million (versus negative $0.4 million), due to annual bonus payments and share repurchases.
  • Conversational AI remained subscale, so full-year 2026 contribution will be below the ~5% year-end run-rate target, and the ramp is a multi-year, use-case-by-use-case process.

Guidance Changes

MetricPeriodCurrent guidance
Total revenueQ3 2026$41M-$42M (15.8%-18.6% YoY growth)
GAAP operating profitabilityEnd of 2026Goal: achieve quarterly GAAP operating profitability by year-end
Conversational AI revenueEnd of 2026Target ~5% ARR run-rate by year-end (full-year 2026 below 5%)

Performance Breakdown

MetricYoYNote
Total revenue +18% Core RTE strength (including e-commerce) plus growing conversational-AI adoption as customers move from POC to production
GAAP net income +50.3% to $2.2M Improved operating leverage and disciplined cost management
Gross profit +12.5% to $25.7M Revenue growth partly offset by lower gross margin
Gross margin 63.7% vs 66.8% Product-mix change as subscale conversational-AI usage grows
Dollar-based net retention 104% vs 94% Meaningful improvement in the paying-customer cohort

Earnings Call Themes & Trends

TopicPrevious mentionCurrent periodTrend
Conversational AI in call centersPOC and pilot use casesVoice AI agents matching or surpassing humans in outbound marketing and market surveys, expanding into financial services, gaming and debt collection—
Developer and partner ecosystemAgent Studio (Q1)Launched Agora Skills and Agora CLI for AI coding agents, partnered with Gradium on TTS, and will host the IRTE conference in Beijing in October—
Capital return and insider alignment$156.2M cumulative (Q1)Roughly $159.9M cumulative (about 44.6 million ADS); the CEO's personal $20 million open-market purchase is planned, expected to begin around September—
Competitive positioningGeneral conversational-AI competitionAgora focuses on voice models, audio pre- and post-processing, low-latency infrastructure and the agent layer versus telecom-API-led (CPaaS) players—

Q&A Summary

How is demand trending in overseas and domestic markets, and which sectors are driving growth?
On RTE the trends are largely unchanged from last quarter: China social, entertainment and education demand keeps recovering on a more stable operating environment, while US and international live shopping, financial services and gaming continue to grow; overall demand looks healthy.
Beyond call centers, what other scenarios could drive meaningful conversational-AI demand, and what year-end contribution and margin trend?
Call center is a collection of use cases spanning easy to hard, and Agora is starting with the low-hanging fruit (outbound marketing and surveys) plus companionship devices (expanding into Japan and partnering with chip makers); management still targets roughly 5% revenue contribution by year-end.
What is the latest competitive landscape overseas versus major competitors?
Conversational AI has agent, model and infrastructure layers and players attack from different angles (for example telecom-API/CPaaS providers), while Agora focuses on voice models, audio pre- and post-processing, low-latency cloud infrastructure and the agent layer, leveraging deep experience handling noise, echo and packet loss.
Can you update on conversational-AI revenue progress and its full-year contribution?
A use case takes several months to ramp from POC to consistent at-scale deployment; the goal is a roughly 5% ARR run-rate by the end of Q4, so full-year 2026 will be below 5%, with significant room for growth in 2027 given a strong and growing pipeline.
Is there a three-to-five-year guidance on AI penetration of revenue and gross margin?
The call-center market will split into simple NLP-handled tasks, hard human-only tasks (such as 911 calls) and a large middle segment for intelligent voice agents; with close to 20 million call-center workers globally even a small share would be transformational, but it is too early for a precise penetration or margin figure, with long-run AI gross margin expected to match or exceed core RTE.
On the CEO's announced $20 million share purchase, how much has been bought and would you consider going private or a special dividend?
The $20 million personal purchase has not started due to blackout and legal restrictions and is expected to begin around September; the company has returned about $160 million via buybacks against a roughly $350-400 million market cap, is not considering taking the company private, and may consider a special dividend in the future but not at present.

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Q2 2026 call
Reported 2026-08-14 · figures from the Agora, Inc. Q2 2026 earnings call.

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