Agora (API) Q2 FY26 earnings call: guidance and Q&A

What are the demand trends in overseas and domestic markets? What are other meaningful conversational AI use cases beyond call centers, and what is the projected AI revenue contribution and gross margin trend? What is the competitive landscape?

Demand for RTE is stable across China (social, entertainment, education) and international markets (shopping, financial services, gaming). For AI, call centers are a broad category with many use cases, and the company is expanding into companionship devices in Japan. They target 5% AI revenue contribution by year-end. Gross margin for AI is currently low due to subscale but expected to improve with scale and optimization. Competition is diverse, with players attacking different technology layers, but Agora is confident due to its audio processing expertise.

“So overall, we are still targeting a 5% revenue contribution from conversational AI by the end of this year.”

asked by Harry Zhuang · answered by Jingbo Wang

Can you update on conversational AI revenue progress and projected full-year contribution? What is the conversion cycle for AI use cases, current backlog, customer accounts, and the trend for AI revenue in coming quarters and next year?

The company is targeting 5% revenue contribution from conversational AI by the end of the year (Q4 run rate), meaning full-year 2026 contribution will be smaller. It takes several months for a use case to ramp up from POC to large-scale deployment. They have a strong pipeline and expect significant growth next year, remaining optimistic about the market.

“So basically our goal is in Q4 or in terms of the run rate, AI run rate, we want to achieve 5% by the end of the year. Obviously, that means for the full year of 2026, it's not going to be 5%. It's going to be smaller than that.”

asked by Yue Xu · answered by Jingbo Wang

Have you given any long-term guidance (3-5 years) for AI penetration rate in total revenue and gross margin?

The call center market will eventually be split into three segments: easiest tasks (IVR), hardest tasks (humans), and everything in between (voice AI agents). The middle segment will be significant. While it's hard to give exact numbers due to the early stage of the market, even a small part of this market would be transformational. AI gross margin is currently low due to subscale and lack of technical optimization focus, but is expected to be similar to or higher than RTE business margins once scale is achieved and optimization efforts are made.

“It's hard to say exactly how big this part will be, but it will be a significant portion of the entire market.”

asked by Zongxuan Yang · answered by Bin Zhao

Regarding Tony's $20 million share purchase, how much has been purchased? What valuation reflects Agora's intrinsic value? Have you considered taking the company private or returning additional capital via special dividend/accelerated buyback?

Tony's $20 million share purchase has not started yet due to blackout periods and legal restrictions, but is expected to begin in 2-3 weeks (September/October). The company has already returned $160 million through share repurchases. A special dividend has not been considered at present but might be in the future. The company has no plans to go private, preferring to remain public to communicate with the capital market and focus on business operations and technical advancements.

“I don't think we will consider take the company off the market. We will want to keep communicate with capital market and for ourselves focused on business operation and improve our overall technical and operation strengths.”

asked by Unknown Analyst · answered by Jingbo Wang