Agora Inc (API) 2022 Q2 法說會逐字稿

Good day, and thank you for standing by. Welcome to Agora Inc.'s Second Quarter 2022 Financial Results Call. (Operator Instructions) Please be advised that today's conference is being recorded.

美好的一天，感謝您的支持。歡迎參加 Agora Inc. 的 2022 年第二季度財務業績電話會議。 （操作員說明）請注意，今天的會議正在錄製中。

I'd now like to hand the conference over to Ms. Fionna Chen, Head of Investor Relations. Thank you. Please go ahead, ma'am.

我現在想將會議交給投資者關係主管 Fionna Chen 女士。謝謝你。請繼續，女士。

Thank you, operator. Good evening, everybody, and good morning for people in Asia, and thank you for joining us for Agora's second quarter 2022 earnings conference call. Our earnings results press release, SEC filings and a replay of today's call can be found on our IR website at investor.agora.io. Joining me today are Bin Zhao, our Founder, Chairman and CEO; Jingbo Wang, our CFO.

謝謝你，接線員。大家晚上好，亞洲人早上好，感謝您參加 Agora 2022 年第二季度財報電話會議。我們的收益結果新聞稿、SEC 文件和今天電話會議的重播可以在我們的投資者關係網站investor.agora.io 上找到。今天和我一起的是我們的創始人、董事長兼首席執行官趙斌；我們的首席財務官王靜波。

Reconciliations between our GAAP and non-GAAP results can be found in our earnings press release.

我們的 GAAP 和非 GAAP 結果之間的調節可以在我們的收益新聞稿中找到。

During this call, we will make forward-looking statements about our future financial performance and other future events and trends. 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 and which we discuss in detail 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 remains no obligation to update any forward-looking statements we may make on today's call.

在本次電話會議中，我們將對我們未來的財務業績以及其他未來事件和趨勢做出前瞻性陳述。這些陳述只是基於我們今天所相信的預測，實際結果可能存在重大差異。這些前瞻性陳述受風險、不確定性、假設和其他因素的影響，這些因素可能會影響我們的財務業績和我們的業務表現，我們在提交給美國證券交易委員會的文件中詳細討論了這些因素，包括今天的收益新聞稿和風險因素以及最終招股說明書中包含的與我們的首次公開募股有關的其他信息。 Agora 沒有義務更新我們在今天的電話會議上可能做出的任何前瞻性陳述。

With that, let me turn it over to Tony. Tony?

有了這個，讓我把它交給托尼。托尼?

Yes, thanks, Fionna, and welcome, everyone, to our earnings call. Our revenue for the quarter was $41 million, a decrease of 3.2% year-over-year and an increase of 6% quarter-over-quarter, bringing us back on the growth track after regulatory change in the K-12 education sector in China. During this quarter, 33,000 new applications registered on our platform. At the end of June, our number of active customers exceeded 2,800, adding over 400 compared to 1 year ago.

是的，謝謝，Fionna，歡迎大家參加我們的財報電話會議。我們本季度的收入為 4100 萬美元，同比下降 3.2%，環比增長 6%，使我們在中國 K-12 教育行業監管發生變化後重回增長軌道.在本季度，我們的平台上註冊了 33,000 個新應用程序。截至 6 月底，我們的活躍客戶數量超過 2,800 家，比一年前增加了 400 多家。

In the U.S. and international markets, demand for our real-time engagement platform remained strong. Our revenue for this segment recorded a 63% increase compared with the same period last year, with a dollar-based net expansion rate consistently above 130% since 2021.

在美國和國際市場，對我們實時互動平台的需求依然強勁。該部門的收入與去年同期相比增長了 63%，自 2021 年以來，以美元計算的淨擴張率持續高於 130%。

Following our announcement of the promotion of several key executives in May, I'm confident that we are well-positioned to enhance our go-to-market efficiency and expand our platform globally. In recent months, we have witnessed a strong response to our sub-second interactive live streaming product globally. We believe this product has the potential to disrupt the traditional CDN-based live streaming market as we can deliver live streaming experiences at lower latency in a highly synchronized fashion with only a moderately higher cost.

繼我們在 5 月宣布提升幾位關鍵高管後，我相信我們已做好準備，可以提高我們的上市效率並在全球範圍內擴展我們的平台。近幾個月來，我們見證了我們的亞秒級互動直播產品在全球範圍內的強烈反響。我們相信該產品有可能顛覆傳統的基於 CDN 的直播市場，因為我們可以以高度同步的方式以較低的延遲提供直播體驗，而成本僅適中。

We already have several benchmark customers in the sports and gaming live streaming sector. Powered by this product, our customers can create a wide range of engaging and interactive experiences for their end users, such as chat among audience and in-game live betting. For example, MBC Group, the largest media country in the Middle East and North Africa, uses this product on their social gaming platform, WIZZO, to offer game players high-quality interactive live streaming and it has become one of the biggest attraction of the WIZZO platform. With Agora-powered live streaming in place, MBC has already seen a 10% increase in new user growth.

我們已經在體育和遊戲直播領域擁有多個基準客戶。在此產品的支持下，我們的客戶可以為他們的最終用戶創造廣泛的互動體驗，例如觀眾之間的聊天和遊戲內的現場投注。例如，中東和北非最大的媒體國MBC集團在其社交遊戲平台WIZZO上使用該產品，為遊戲玩家提供高質量的互動直播，已成為該公司最大的吸引力之一。 WIZZO 平台。借助 Agora 支持的直播，MBC 的新用戶增長已經增長了 10%。

And South Asia's leading video live streaming platform, Bolo Live, is also powered by this product. We provide your platform's technology platform, powering live streaming and interactive features that enable content creators, entertainers and influencers to forecast interactive live streaming to their audience and to monetize directly through consumer transactions from their fans. We believe this product will substantially enlarge our total addressable market as more and more live streaming platforms with legacy technology embrace our sub-second live streaming solutions.

而南亞領先的視頻直播平台Bolo Live也由該產品提供支持。我們為您的平台提供技術平台，支持直播和互動功能，使內容創作者、藝人和影響者能夠預測互動直播給他們的觀眾，並直接通過粉絲的消費交易獲利。我們相信，隨著越來越多采用傳統技術的直播平台採用我們的亞秒級直播解決方案，該產品將大大擴大我們的整體潛在市場。

Next, onto our new products. In U.S. and international markets, we beta-released Agora Chat, which is a powerful tool for developers to add messaging to any application. Agora Chat provides comprehensive features and functions such as rich media messages, message translations, user presence and type indicator, chat history export, content moderation and much more.

接下來，我們的新產品。在美國和國際市場，我們測試版發布了 Agora Chat，它是開發人員向任何應用程序添加消息傳遞的強大工具。 Agora Chat 提供全面的特性和功能，例如富媒體消息、消息翻譯、用戶狀態和類型指示器、聊天記錄導出、內容審核等等。

Agora Chat has the broadest compatibility with operating systems and third-party [development] frameworks among similar messaging API products in the market. It is also very easy to use, especially for those who are already using our real-time video or voice product. Through a few lines of code, developers can similarly create an immersive and engaging experience for their end users to some messages, emojis and multimedia files from within their real-time engagement sessions.

在市場上同類消息 API 產品中，Agora Chat 與操作系統和第三方 [開發] 框架的兼容性最廣泛。它也非常易於使用，特別是對於那些已經在使用我們的實時視頻或語音產品的人。通過幾行代碼，開發人員可以類似地為他們的最終用戶從他們的實時參與會話中創建一些消息、表情符號和多媒體文件的身臨其境和引人入勝的體驗。

I'm also glad to say that Agora Chat is the perfect demonstration of the business synergies from our integration of Easemob over the past year. By combining Easemob experience in providing messaging APIs in Asian market with Agora's industry-leading global infrastructure, we're able to offer a highly competitive product for customers in the U.S. and international markets.

我也很高興地說，Agora Chat 是過去一年我們與 Easemob 整合業務協同效應的完美體現。通過將 Easemob 在亞洲市場提供消息傳遞 API 的經驗與 Agora 行業領先的全球基礎設施相結合，我們能夠為美國和國際市場的客戶提供極具競爭力的產品。

Now let's move to our business update in China. Revenue from China in this quarter recorded a 1% quarter-over-quarter increase as a shortfall in K-12 academic tutoring sector was more than compensated for by the growth in other sectors. Our revenue in sectors other than K-12 continue to grow healthily with an approximately 13% increase compared with the same period last year.

現在讓我們來看看我們在中國的業務更新。本季度來自中國的收入環比增長 1%，因為 K-12 學術輔導部門的不足被其他部門的增長所彌補。我們在 K-12 以外的行業的收入繼續健康增長，與去年同期相比增長約 13%。

Our leading market position in China is once again demonstrated by IDC's recent published report on the video cloud market in 2021. According to the IDC report, Agora maintained its #1 position in RTC solution in China, with a market share greater than the next 7 companies combined. Agora also recorded the largest revenue growth among all players.

IDC 近期發布的 2021 年視頻雲市場報告再次證明了我們在中國市場的領先地位。根據 IDC 報告，Agora 在中國的 RTC 解決方案中保持第一的位置，市場份額超過後 7公司合併。 Agora 在所有參與者中也錄得最大的收入增長。

In China, we formed a partnership with the China Audio-Video Copyright Association, also known as CAVCA, the only association approved by the National Corporate Administration to undertake collective rights management for copyright and related rights in video and audio works in China. Through this partnership, we are now able to provide a one-stop solution for our customers to manage their use of music work in their live streaming sessions and, more importantly, in full compliance with the latest copyright laws and regulations in China.

在中國，我們與中國音像著作權協會（簡稱CAVCA）結成合作夥伴關係，該協會是經國家工商總局批准的唯一一家在中國對音像作品的著作權及相關權進行集體權利管理的協會。通過此次合作，我們現在能夠為客戶提供一站式解決方案，以管理他們在直播會話中對音樂作品的使用，更重要的是，完全符合中國最新的版權法律法規。

Under our digital rights management system that covers more than 100,000 music works in high definition, each and every usage of this works in our customers' application is now traceable. Our customers can choose from paying per usage for a flat fee with unlimited access and copyright owners will then be duly compensated. We believe our partnership with CAVCA and this one-stop solution bring profound value to our customers and will help make our (inaudible) TV a go-to product for delivering immersive real-time [priority] experience in the networks.

在我們涵蓋超過 100,000 首高清音樂作品的數字版權管理系統下，這些作品在客戶應用程序中的每一次使用現在都是可追溯的。我們的客戶可以選擇按使用次數支付固定費用，無限訪問，然後版權所有者將得到適當補償。我們相信，我們與 CAVCA 的合作以及這一一站式解決方案為我們的客戶帶來了深遠的價值，並將有助於使我們的（聽不清）電視成為在網絡中提供沉浸式實時 [優先] 體驗的首選產品。

Before concluding my prepared remarks for this quarter, I would like to invite all of you to attend our RTE 2022 conferences. The North American conference will take place from October 10 to October 12, and you are welcome to join either online or in person in San Francisco. The Asia Pacific Conference will be held online from October 21 to October 24. We expect to bring the brightest minds in the business and technology field to explore the future of voice video, Internet of Things, metaverse and more.

在結束我為本季度準備的發言之前，我想邀請大家參加我們的 RTE 2022 會議。北美會議將於 10 月 10 日至 12 日舉行，歡迎您在舊金山在線或親自參加。亞太會議將於 10 月 21 日至 10 月 24 日在線舉行。我們期待帶來商業和技術領域最聰明的頭腦，共同探索語音視頻、物聯網、元界等的未來。

With that, let me turn things over to Jingbo who will review our financial results.

有了這個，讓我把事情交給靜波，他將審查我們的財務業績。

Thank you, Tony. Hello, everyone. Let me start by first reviewing financial results for Q2, and then I will discuss our outlook for the fiscal year of 2022.

謝謝你，托尼。大家好。讓我首先回顧一下第二季度的財務業績，然後我將討論我們對 2022 財年的展望。

Total revenues were $41 million in the second quarter of 2022, a decrease of 3.2% year-over-year and an increase of 6.2% quarter-over-quarter. As we mentioned in previous earnings calls, our revenue growth in this quarter was negatively impacted by the new regulation on K-12 academic tutoring sector in China. Our revenues from this sector were approximately $1 million in the second quarter of 2022 compared to $12 million from the same period last year.

2022年第二季度總收入為4100萬美元，同比下降3.2%，環比增長6.2%。正如我們在之前的財報電話會議中提到的，我們本季度的收入增長受到中國 K-12 學術輔導行業新法規的負面影響。 2022 年第二季度，我們在該行業的收入約為 100 萬美元，而去年同期為 1200 萬美元。

On the other hand, our growth momentum in other geographies and sectors remained solid in this quarter. In particular, revenues from U.S. and in international markets grew 63.2% year-over-year and 13.4% quarter-over-quarter to $18.6 million in Q2, representing 45.4% of our total revenues. Our trailing 12 months constant currency dollar-based net expansion rate is 95%, excluding Easemob. Specifically, expansion rate was about 130% for the U.S. and international business, which remains strong and healthy; and approximately 80% for the China business, which was negatively impacted by the K-12 sector.

另一方面，本季度我們在其他地區和行業的增長勢頭依然強勁。特別是，來自美國和國際市場的收入在第二季度同比增長 63.2%，環比增長 13.4%，達到 1860 萬美元，占我們總收入的 45.4%。我們過去 12 個月的固定貨幣美元淨擴張率為 95%，不包括 Easemob。具體而言，美國和國際業務的擴張率約為 130%，保持強勁和健康；約 80% 用於中國業務，該業務受到 K-12 行業的負面影響。

Moving on to cost expenses. For my following comments, I will focus on non-GAAP results, which excludes share-based compensation expenses, acquisition-related expenses, amortization expenses of acquired intangible assets and income tax related to acquired intangible assets.

繼續成本支出。對於我的以下評論，我將重點關注非公認會計原則的結果，其中不包括股權補償費用、收購相關費用、收購無形資產的攤銷費用和與收購無形資產相關的所得稅。

Non-GAAP gross margin for the quarter was 65.8%, which was 4.3% higher than Q2 last year, mainly driven by technical and infrastructural optimizations. Non-GAAP R&D expenses were $27 million in Q2, up 30% year-over-year as we continue to hire talented employees and strengthen our R&D team. Non-GAAP R&D expenses were 66% of total revenues in the quarter compared to 49.2% in Q2 last year.

本季度非美國通用會計準則毛利率為 65.8%，比去年第二季度高 4.3%，主要受技術和基礎設施優化的推動。第二季度非美國通用會計準則研發費用為 2700 萬美元，同比增長 30%，因為我們繼續聘用有才華的員工並加強我們的研發團隊。本季度非美國通用會計準則研發費用佔總收入的 66%，而去年第二季度為 49.2%。

Non-GAAP sales and marketing expenses were $10.9 million in Q2, up 16.8% year-over-year, mainly attributable to team expansion and increased advertising and event expenses as we continue to step up our go-to-market efforts globally. Sales and marketing expenses represented 26.6% of total revenues in the quarter compared to 22.1% in Q2 last year.

第二季度非 GAAP 銷售和營銷費用為 1090 萬美元，同比增長 16.8%，主要是由於團隊擴張以及隨著我們繼續加大全球市場進入力度而增加的廣告和活動費用。銷售和營銷費用佔本季度總收入的 26.6%，而去年第二季度為 22.1%。

Non-GAAP G&A expenses were $7 million in Q2, up 23.1% year-over-year, mainly due to team expansion and expected credit loss provisions. G&A expenses represented 17% of total revenues in the quarter compared to 13.3% in Q2 last year.

第二季度非美國通用會計準則 G&A 費用為 700 萬美元，同比增長 23.1%，主要是由於團隊擴張和預期信用損失準備金。 G&A 費用佔本季度總收入的 17%，而去年第二季度為 13.3%。

Non-GAAP operating loss was $17.8 million, translating to a 43.4% non-GAAP operating loss margin for the quarter compared to operating loss margin of 22.3% in Q2 last year. Exchange loss was $5.3 million in Q2, mainly due to U.S. dollar appreciation and an increase in the balance of RMB-denominated cash and short-term investments held by our subsidiaries in Hong Kong, with functional currency in U.S. dollar. The anticipation of funding RMB to subsidiaries in Mainland China. In addition, U.S. dollar appreciation adversely affected our revenue in China by approximately 4%.

非美國通用會計準則營業虧損為 1780 萬美元，相當於該季度非美國通用會計準則營業虧損率為 43.4%，而去年第二季度的營業虧損率為 22.3%。第二季度匯兌損失為 530 萬美元，主要是由於美元升值以及我們在香港的子公司持有的以美元計價的人民幣現金和短期投資餘額增加，功能貨幣為美元。預期向中國大陸的子公司提供人民幣資金。此外，美元升值對我們在中國的收入產生了約 4% 的不利影響。

Now turning to the update on land use right purchase. As we announced on June 28, we entered into an agreement to acquire the land use right for approximately 42,000 square meters of land in the Riverside area of Yangpu District, Shanghai through a joint venture with 2 independent third-parties. We hold a 46% equity interest in the joint venture. The aggregate consideration for acquiring the land use right is approximately RMB 2.5 billion and we had fully paid our share of consideration in July. We plan to build a new headquarters on our premises.

現在轉向土地使用權購買的更新。正如我們在 6 月 28 日宣布的那樣，我們通過與 2 個獨立第三方的合資企業簽訂了一項協議，以收購上海市楊浦區濱江地區約 42,000 平方米土地的土地使用權。我們持有合資公司46%的股權。收購土地使用權的總對價約為人民幣 25 億元，我們已於 7 月全額支付了應得的對價。我們計劃在我們的場地上建立一個新的總部。

Turning to cash flow. Operating cash flow was negative $23.8 million in Q2 compared to negative $8.3 million last year. Free cash flow was negative $24.2 million compared to negative $11.5 million last year.

轉向現金流。第二季度經營現金流為負 2380 萬美元，而去年為負 830 萬美元。自由現金流為負 2420 萬美元，而去年為負 1150 萬美元。

Moving on to the balance sheet. We ended Q2 with $641 million in cash, cash equivalents and total investments compared to $718 million at the end of Q1. Net cash outflow in the quarter was mainly due to free cash flow of negative $24.2 million; deposit paid for land use right purchase of $34.2 million; cash paid for long-term investment of $4.2 million; and share repurchase of $12.2 million. By the end of Q2, we repurchased approximately 9.7 million of our Class A ordinary shares, equivalent to approximately 2.4 million ADS for approximately $19.8 million, representing 10% of our $200 million share repurchase program.

轉到資產負債表。我們在第二季度末的現金、現金等價物和總投資為 6.41 億美元，而第一季度末為 7.18 億美元。本季度的淨現金流出主要是由於自由現金流為負 2420 萬美元；為購買土地使用權支付的押金3420萬美元；為長期投資支付的現金 420 萬美元；以及 1220 萬美元的股票回購。到第二季度末，我們以約 1980 萬美元的價格回購了約 970 萬股 A 類普通股，相當於約 240 萬股美國存託憑證，占我們 2 億美元股票回購計劃的 10%。

Now turning to guidance. COVID-19 is still an unprecedented variable to our business model where historical experience may not apply. Our guidance on full year revenues reflects various assumptions that are subject to change based on uncertainties and related to the impact of the COVID-19 pandemic. With that, for the full year 2022, we maintain our previous guidance. The total revenues for the full year are expected to be in the range of $176 million to $178 million.

現在轉向指導。對於我們的商業模式而言，COVID-19 仍然是一個前所未有的變量，歷史經驗可能並不適用。我們對全年收入的指導反映了各種假設，這些假設可能會因不確定性而發生變化，並且與 COVID-19 大流行的影響有關。因此，對於 2022 年全年，我們維持之前的指導。全年總收入預計在 1.76 億美元至 1.78 億美元之間。

In closing, we are proud of our execution in the quarter under very challenging macroeconomic environment. Thank you to the entire Agora team for your hard work and everyone attending the call today. Hope you are all healthy and safe. Let's open it up for questions.

最後，我們為在極具挑戰性的宏觀經濟環境下本季度的執行感到自豪。感謝整個 Agora 團隊的辛勤工作以及今天參加電話會議的所有人。希望你們都健康平安。讓我們打開它來提問。

(Operator Instructions) Our first question comes from the line of Yang Liu from Morgan Stanley.

（操作員說明）我們的第一個問題來自摩根士丹利的 Yang Liu。

I have 2 questions here. The first one is, can management update us in terms of the overseas market demand for RTE, especially the demand from start-ups? Because on the positive side, we see a good pickup in terms of the new customer this week -- this quarter, but on the negative side, we also, from time to time, here that the overall overseas funding environment is getting tougher and a lot of start-ups cannot lose equity or risk funding in the market. So could you please update us in terms of what Agora is seeing on the demand?

我這裡有 2 個問題。第一個是，管理層能否就海外市場對 RTE 的需求，特別是初創企業的需求向我們提供最新信息？因為從積極的一面來看，我們看到本週新客戶的好轉——本季度，但從消極的一面來看，我們也時不時地看到整體海外融資環境變得更加艱難，許多初創企業不能在市場上失去股權或風險資金。那麼，您能否就 Agora 的需求向我們更新一下？

And the second question is the gross margin. Because we see a very good pickup in gross margin this quarter, what should be the outlook in the second half of this year? Do you think this is a structural or sustainable trend? Or is it helped by some one-off benefits?

第二個問題是毛利率。因為我們看到本季度毛利率的回升非常好，今年下半年的前景應該如何？您認為這是結構性趨勢還是可持續趨勢？還是有一些一次性福利的幫助？

I'll take the business trend on our customers' fund raising, et cetera. Overall, we do hear some start-ups talking about fund raising getting harder and the valuation is much lower now, but we don't have a strong impression of difficulties from our customer base. We have a very diverse customer base, from large to very smaller ones. In some individual cases, we see things like customers slow down their own hiring, delayed rollout of new products or features or become more sensitive infrastructure costs, et cetera. I believe this is normal, given the challenging market environment we are in today.

我將了解我們客戶籌資等方面的商業趨勢。總體而言，我們確實聽到一些初創公司談論籌資變得越來越難，而且現在估值要低得多，但我們對客戶群的困難沒有強烈的印象。我們有一個非常多樣化的客戶群，從大到小。在某些個別情況下，我們看到客戶放慢自己的招聘速度、延遲推出新產品或功能或變得更加敏感的基礎設施成本等等。鑑於我們今天所處的充滿挑戰的市場環境，我認為這是正常的。

In terms of impact to our own business, despite the challenge I mentioned just now, we see that overall trend of adoption of real-time engagement technology by developers and users remain strong, especially for the global market. This is why we still achieved a strong revenue growth in Q2 in the U.S. and international markets, with revenue up 63% year-over-year. We will continue to monitor the situation closely and see how it pays off.

在對我們自身業務的影響方面，儘管我剛才提到了挑戰，但我們看到開發人員和用戶採用實時參與技術的總體趨勢仍然強勁，尤其是在全球市場。這就是為什麼我們在第二季度仍然在美國和國際市場實現了強勁的收入增長，收入同比增長 63%。我們將繼續密切關注情況，看看效果如何。

Okay. I'll take the second question on GP margin. So in the past 6 quarters, since beginning of 2021, our back-end engineering team has really worked very, very hard to optimize infrastructure costs and improve our architectural design so that the same task consumes less server and bandwidth resources. This has resulted in a very significant reduction in our COGS per minute of video or voice call delivered. And this is why despite them have annual decreases in average selling prices of about 10% to 15%, which is normal for cloud services like ours, we were still able to improve our GP margin -- non-GAAP GP margin from 58% in Q1 last year to 65% in Q2 this year, which is more than 7% improvement. So I guess that's the most important reason.

好的。我將回答關於 GP 保證金的第二個問題。因此，在過去的 6 個季度中，自 2021 年初以來，我們的後端工程團隊確實非常非常努力地優化基礎設施成本並改進我們的架構設計，以便相同的任務消耗更少的服務器和帶寬資源。這導致我們每分鐘發送的視頻或語音呼叫的 COGS 顯著降低。這就是為什麼儘管它們的平均售價每年下降約 10% 到 15%，這對於像我們這樣的雲服務來說是正常的，但我們仍然能夠提高我們的 GP 利潤率——非 GAAP GP 利潤率從 58%去年 Q1 到今年 Q2 的 65%，提高了 7% 以上。所以我想這是最重要的原因。

There was also a small one-off factor in this quarter. Easemob has a small private cloud business, which has lower GP margin. This quarter, many of their private cloud projects are delayed due to the COVID situation in China. And this actually had a positive impact on the GP margin because the revenues were delayed. Looking forward, further COGS optimization will be harder and new products such as the integrated CDN will have lower GP margin. So we do not expect GP margin to increase significantly in the near future. It will likely fluctuate from quarter-to-quarter in the second half.

本季度還有一個小的一次性因素。 Easemob 的私有云業務規模較小，GP 利潤率較低。本季度，由於中國的新冠疫情，他們的許多私有云項目都被推遲了。由於收入延遲，這實際上對 GP 利潤率產生了積極影響。展望未來，COGS 的進一步優化將更加困難，集成 CDN 等新產品的 GP 利潤率將更低。因此，我們預計 GP 利潤率在不久的將來不會顯著增加。下半年可能會出現季度波動。

Just one very quick follow-up here. Could you please update us in terms of the gross margin in China and in global market? Are they quite still now? Or is there still a gap between these 2 markets?

這裡只是一個非常快速的跟進。您能否介紹一下中國和全球市場的毛利率？他們現在還安靜嗎？還是這兩個市場之間還有差距？

Yes. So latest number we see, there is no gap between -- 6 quarters ago, GP margin in U.S. and international market was quite a bit lower, and now the 2 are at parity. There's no difference between the 2 markets. Thank you.

是的。所以我們看到的最新數據，在 6 個季度前，美國和國際市場的 GP 利潤率相當低，現在兩者之間沒有差距。兩個市場沒有區別。謝謝你。

Our next question comes from the line of Bing Duan from Nomura.

我們的下一個問題來自野村的 Bing Duan。

So I have 2 questions. One is about the trend of the operating expense. Can you give us more colors on the second half, especially about the R&D and the sales and marketing expense, the expense ratio as compared to the first half?

所以我有2個問題。一是關於營業費用的趨勢。下半年能否給我們更多的顏色，特別是研發和營銷費用，費用率與上半年相比？

And the second question is about a follow-up on the overseas market growth. Can you give us some more color about the revenue or volume breakdown by applications or by the vertical segments? And do we see any of the negative impact as more people are getting back to work?

第二個問題是關於海外市場增長的後續問題。您能否為我們提供更多有關按應用程序或垂直細分市場劃分的收入或數量細分的信息？隨著越來越多的人重返工作崗位，我們是否看到任何負面影響？

Okay. So the first question on expenses. You're right, as you can see in the financial statements, the fastest-growing segment of our expenses is R&D. We have always invested a lot, very heavily R&D in the past and will continue to do so in the future because, ultimately, this is where is the foundation of our competitor business. But on the other hand, we acknowledge the challenging macroeconomic environment in the U.S., in China, and the other markets as well. So we do intend to become more focused when it comes to R&D. For example, product-wise, we will focus on products where we see strong demand, such as sub-second live streaming, as Tony mentioned in his opening remarks, or where we have a strong advantage such as special audio. And we'll really focus our resources on these kind of promising products.

好的。所以第一個關於費用的問題。沒錯，正如您在財務報表中看到的那樣，我們支出中增長最快的部分是研發。過去，我們一直在研發方面投入大量資金，並將在未來繼續這樣做，因為歸根結底，這是我們競爭對手業務的基礎。但另一方面，我們也承認美國、中國和其他市場的宏觀經濟環境充滿挑戰。因此，我們確實打算在研發方面更加專注。例如，在產品方面，我們將專注於我們認為需求旺盛的產品，例如托尼在開幕詞中提到的亞秒級直播，或者我們擁有強大優勢的產品，例如特殊音頻。我們將真正將資源集中在這些有前途的產品上。

And customer-wise, we will focus on large customers and the smaller group of really innovative customers who can help us drive our road map and be the future of real-time engagement. And in terms of the organization, we will streamline our internal processes and bring our engineers closer to our customers. So all in all, all these initiatives will improve our R&D efficiency. And hopefully, as our revenue scale, we will see that percentage drop in the second half.

在客戶方面，我們將專注於大客戶和一小部分真正創新的客戶，他們可以幫助我們推動我們的路線圖並成為實時參與的未來。在組織方面，我們將簡化我們的內部流程，讓我們的工程師更接近我們的客戶。所以總而言之，所有這些舉措都將提高我們的研發效率。希望隨著我們的收入規模，我們將看到下半年的百分比下降。

In terms of sales and marketing, the increase in sales and marketing expenses were mainly due to our expansion in U.S. and international markets. In China, actually, [that part of the transition] was mostly flat. We think that sales and marketing expenses overall will continue to increase in dollar terms, but the pace will slow down and, as our revenue scales, which also drops as a percentage of revenue.

在銷售和營銷方面，銷售和營銷費用的增加主要是由於我們在美國和國際市場的擴張。實際上，在中國，[過渡的那部分]基本上是平的。我們認為，以美元計算，整體銷售和營銷費用將繼續增加，但速度將放緩，並且隨著我們收入的擴大，佔收入的百分比也會下降。

I want to add another point on the G&A expenses. So in the past 3 to 4 quarters, our G&A expenses was negatively affected but we expected credit loss from customers in the K-12 sector in China. And now with that behind us, we expect G&A to also drop in dollar terms in the coming quarters. So that's on expenses.

我想在 G&A 費用上再補充一點。因此，在過去的 3 到 4 個季度，我們的 G&A 費用受到了負面影響，但我們預計中國 K-12 行業的客戶會出現信用損失。現在，隨著我們的到來，我們預計 G&A 在未來幾個季度也會以美元計算下降。所以這是費用。

In terms of the -- internally, U.S. and international market, I think overall, we see growth from many different geographies and verticals. Strong as well. I'll highlight a few stronger ones in this quarter. We saw very strong growth from the Middle East, Southeast Asia and North America. And in terms of vertical, education, media, e-commerce and social, generated the majority of the incremental usage platform.

就內部、美國和國際市場而言，我認為總體而言，我們看到了許多不同地區和垂直領域的增長。也很強。我將在本季度重點介紹一些更強的。我們看到中東、東南亞和北美的增長非常強勁。而在垂直方面，教育、媒體、電子商務和社交，產生了大部分增量使用平台。

And you mentioned the kind of back-to-work situation. It's true that the back-to-work trend has impacted use cases such as remote collaboration and virtual events, virtual exhibitions, that kind of use case. But in use cases like education and e-commerce, actually will continue to see very strong demand, and we are particularly excited about opportunities in media and e-commerce because these are the verticals where, historically, they were underpenetrated by those types of engagement technology, but we certainly have a lot of room for adoption in the future.

你提到了那種重返工作崗位的情況。確實，重返工作崗位的趨勢已經影響了遠程協作和虛擬活動、虛擬展覽等用例。但在教育和電子商務等用例中，實際上將繼續看到非常強勁的需求，我們對媒體和電子商務的機會特別興奮，因為這些垂直領域在歷史上並未被這些類型的參與所滲透技術，但我們在未來肯定有很大的採用空間。

Like Tony mentioned, our sub-second low-latency live streaming product, it only got started to be adopted in the sports live streaming space. So now people are using this technology to forecast live sports games. And we believe there's a huge potential for growth in the future. So overall, we don't think it's driven by 2 particular use cases. We see very strong adoption across many different regions and use cases.

就像 Tony 提到的，我們的亞秒級低延遲直播產品，它才開始在體育直播領域被採用。所以現在人們正在使用這項技術來預測現場體育比賽。我們相信未來有巨大的增長潛力。所以總的來說，我們認為它不是由 2 個特定用例驅動的。我們看到許多不同地區和用例的採用率非常高。

(Operator Instructions) Our next question comes from the line of Allen Li from JPMorgan.

（操作員說明）我們的下一個問題來自摩根大通的 Allen Li。

My question is on competition. So we know that some large platforms have shifted their focus from revenue growth to profitability, so just wondering if this is also the case for private competitors. And could you give us an update on the competitive landscape and also the pricing trend in the mass market?

我的問題是關於競爭的。所以我們知道一些大型平台已經將重點從收入增長轉向盈利，所以想知道私人競爭對手是否也是如此。您能否向我們介紹一下競爭格局以及大眾市場的定價趨勢？

We don't see much change compared to last quarter's competition landscape. As you mentioned, the large cloud providers, as we heard also, they reduced their investment in our field actually, maybe partially, due to their effort to shift the focus to more profitability instead of just revenue growth. On private sector, I think there are similar trends where companies all kind of look more on profitability instead of just the growth. But overall, there's no huge change compared to last quarter.

與上一季度的競爭格局相比，我們沒有看到太大變化。正如您所提到的，大型雲提供商，正如我們所聽到的那樣，他們實際上減少了對我們領域的投資，也許部分是因為他們努力將重點轉移到更多的盈利能力上，而不僅僅是收入增長。在私營部門，我認為有類似的趨勢，公司都更多地關注盈利能力，而不僅僅是增長。但總體而言，與上一季度相比沒有太大變化。

(Operator Instructions) We have a follow-up question from the line of Yang Liu from Morgan Stanley.

（操作員說明）我們有一個來自摩根士丹利的 Yang Liu 的後續問題。

Just one very quick follow-up in terms of FX. I think management mentioned that the China part of the business have a few percentage of the FX negative impact in second quarter. And currently, given the sustained strong U.S. dollar, do you think this kind of a trend or this kind of impact will continue in the second half? And also in terms of the full year guidance, management remains unchanged, but does it mean that actually, the company need to deliver a little bit more than expected to reach the number given the FX headwind?

就外匯而言，只是一個非常快速的後續行動。我認為管理層提到，中國部分業務在第二季度受到外匯負面影響的一小部分。而目前，在美元持續走強的情況下，您認為這種趨勢或這種影響會在下半年持續嗎？而且就全年指導而言，管理層保持不變，但這是否意味著實際上，鑑於外匯逆風，公司需要交付比預期多一點的數字？

Yes. So for Q2, if the U.S. dollar-RMB exchange rate state where it was at the end of Q1, we would have a major nearly $1 million more in revenue, that's impact for Q2. So when we give that full year guidance, we're assuming a constant FX exchange rate at where it was at the end of Q2. So we are not factoring in any further appreciation of U.S. dollar. And you're right, to deliver the same guided revenue, we need to work harder. The full year impact, if it stays where it is now, it will be close to $5 million. So that means we need to make $5 million more.

是的。因此，對於第二季度，如果美元兌人民幣匯率處於第一季度末的水平，我們的收入將增加近 100 萬美元，這對第二季度產生了影響。因此，當我們給出全年指導時，我們假設外匯匯率保持在第二季度末的水平。因此，我們沒有考慮美元的進一步升值。你說得對，要提供相同的指導收入，我們需要更加努力。全年的影響，如果保持現在的水平，將接近 500 萬美元。所以這意味著我們需要再賺500萬美元。

Our next question comes from the line of Boris Van from Bernstein.

我們的下一個問題來自 Bernstein 的 Boris Van。

This is Boris Van from Bernstein. I have 2 questions I would love to ask. The first is regarding, I think, the gross margin performance, I think it's very positive to hear about the reengineering and the cost opportunity. Just wanted to check, is this a one-off? Or is this something that can be continued to gain in terms of further efficiencies on an ongoing basis?

這是來自伯恩斯坦的鮑里斯·範。我有 2 個問題很想問。首先是關於毛利率表現，我認為聽到關於再造和成本機會的消息是非常積極的。只是想查一下，這是一次性的嗎？或者這是否可以在持續的基礎上進一步提高效率？

And the second question I had was broadly in the same vein around R&D. I would like to hear a little bit more about how do you think about R&D and your investments in R&D going forward? Because it seems like you have a lot of good use cases. But does this mean that R&D continues to grow or when should we start getting efficiencies in R&D over time?

我的第二個問題與研發大致相同。我想听聽更多關於您如何看待研發以及您在研發方面的投資的更多信息？因為看起來你有很多很好的用例。但這是否意味著研發會繼續增長，或者隨著時間的推移，我們應該何時開始提高研發效率？

Okay. The first question on GP margin, as I explained, the improvements in 2021 was mostly due to the engineering effort to -- also a procurement effort, but mostly engineering effort to optimize the technical design so that to do the same thing.

好的。正如我所解釋的，關於 GP 利潤率的第一個問題是，2021 年的改進主要是由於工程方面的努力——也是採購方面的努力，但主要是優化技術設計的工程努力，以便做同樣的事情。

We need less server or bandwidth resources a [bit more]. We'll continue to optimize the design. But there is this diminishing return of the optimizations. So it will get harder. It's not like Internet always gain the same amount of improvement over time, so it will get harder. And that's why we're don't -- we're not guiding kind of a higher GP margin. And in addition, as I mentioned before, our strategy is really to keep a healthy GP margin instead of trying to maximize GP margin whenever we can. So that we can keep enough competitive pressure, our competitors as well. So that's on GP margin.

我們需要更少的服務器或帶寬資源[多一點]。我們將繼續優化設計。但是優化的回報是遞減的。所以會越來越難。互聯網並不總是隨著時間的推移獲得相同數量的改進，所以它會變得更加困難。這就是為什麼我們沒有——我們沒有指導更高的 GP 利潤率。此外，正如我之前提到的，我們的策略實際上是保持健康的 GP 利潤率，而不是盡可能地嘗試最大化 GP 利潤率。這樣我們才能保持足夠的競爭壓力，我們的競爭對手也是如此。所以這是在GP保證金上。

In terms of R&D, it's true, we are both investing for today and investing for the future. As we expand globally, we see more use cases, we see more regions, more different macro environment, so we need to invest to really optimize the performance there. But we also made a lot of investments for the future. And we expand our R&D team so much almost (inaudible) times in the past 2 years. [This is easier] -- a lot of inefficiencies. So looking forward, as I said, right, we'll be more focused and we'll really work hard to remove some of the efficiencies. So in simple terms, we do not expect R&D to continue to drive as we expand our operation globally.

在研發方面，的確，我們既為今天投資，也為未來投資。隨著我們在全球範圍內的擴張，我們看到了更多的用例，我們看到了更多的地區，更多不同的宏觀環境，因此我們需要投資以真正優化那裡的性能。但我們也為未來做了很多投資。在過去的 2 年裡，我們幾乎（聽不清）倍地擴展了我們的研發團隊。 [這更容易] - 很多低效率。所以展望未來，正如我所說，對，我們將更加專注，我們將真正努力消除一些效率。因此，簡單來說，隨著我們在全球範圍內擴展業務，我們預計研發不會繼續推動。

And there should be actually a very strong operating leverage because a lot of the technology, a lot of the products we build, can be leveraged across different use cases and across geographies. When we do the education solution, we build in China, when we go to Eastern Europe or when we go to South Asia, actually we use essentially the same product with very, very little modification. So actually, we're seeing in the end, there will be a lot of R&D leverage. So again, we do not expect R&D Q2 (inaudible).

實際上應該有一個非常強大的運營槓桿，因為很多技術，我們構建的很多產品，可以跨不同的用例和跨地域使用。當我們做教育解決方案時，我們在中國建造，當我們去東歐或去南亞時，實際上我們使用的是基本相同的產品，幾乎沒有修改。所以實際上，我們最終會看到，會有很多研發槓桿。再說一次，我們預計不會在第二季度進行研發（聽不清）。

That's very, very, very positive. If any, would you be in a position to maybe guide us on how are you thinking about the sort of the long-term steady-state R&D and maybe sales and marketing?

這是非常非常非常積極的。如果有的話，您是否可以指導我們您如何考慮長期穩態研發以及銷售和營銷？

We've always guided that for this business, we see that the long-term R&D would be somewhere around 30% of revenue, which is high compared to most SaaS or PaaS business because we see really a very sophisticated technology, that's why we think we will maintain this relatively high level of R&D for even longer. And sales and marketing, on the other hand, should be lower given all the advantage we gained through R&D. So we think that will stay at around 20% in the long run, but that's not for the long-term steady state, if not this year or next year.

我們一直認為，對於這項業務，我們認為長期研發將佔收入的 30% 左右，這與大多數 SaaS 或 PaaS 業務相比是很高的，因為我們看到了非常複雜的技術，這就是為什麼我們認為我們將在更長時間內保持這種相對較高的研發水平。另一方面，鑑於我們通過研發獲得的所有優勢，銷售和營銷應該更低。所以我們認為從長遠來看，這將保持在 20% 左右，但這不是長期穩定的狀態，如果不是今年或明年的話。

(Operator Instructions) There are no further questions. I'll now turn the call back to the management team for closing remarks.

（操作員說明）沒有其他問題。我現在將電話轉回給管理團隊以結束髮言。

Thank you, operator, and thank you, everybody, for attending our call today. As a reminder, the recording in the earnings release will be available on our website, investor.agora.io. And if there are any questions, please feel free to e-mail us. Thank you.

謝謝接線員，謝謝大家今天參加我們的電話會議。提醒一下，收益發布中的錄音將在我們的網站investor.agora.io上提供。如果有任何問題，請隨時給我們發電子郵件。謝謝你。

Thank you.

謝謝你。

Thank you.

謝謝你。

Bye-bye.

再見。

Right. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

正確的。謝謝你。今天的電話會議到此結束。感謝您的參與。您現在可以斷開連接。