Agora Inc (API) 2023 Q2 法說會逐字稿

Good day, and thank you for standing by. Welcome to Agora Inc. Second Quarter 2023 Financial Results Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded. The company's earnings results press release, earnings presentation, SEC filings, and a replay of today's call can be found on its IR website at investor.agora.io.

美好的一天，感謝您的支持。歡迎參加 Agora Inc. 2023 年第二季度財務業績電話會議。 （操作員指示）請注意，今天的會議正在錄製中。該公司的盈利結果新聞稿、盈利演示、美國證券交易委員會 (SEC) 文件以及今天電話會議的重播可在其投資者關係網站 Investor.agora.io 上找到。

Joining me today are Tony Zhao, Founder, Chairman, and CEO; Jingbo Wang, the company's CFO. Reconciliations between the company's GAAP and non-GAAP results can be found in its earnings press release. During this call, the company will make forward-looking statements about its future financial performance and other future events and trends. These statements are only predictions that are based on what the company believes today and actual results may differ materially.

今天加入我的是創始人、董事長兼首席執行官托尼·趙 (Tony Zhao)；王靜波，該公司首席財務官。該公司的 GAAP 和非 GAAP 業績之間的調節可以在其收益新聞稿中找到。在本次電話會議中，該公司將對其未來財務業績以及其他未來事件和趨勢做出前瞻性陳述。這些陳述只是基於公司目前認為的預測，實際結果可能存在重大差異。

These forward-looking statements are subject to risk and certainties assumptions and other factors that could affect the company's financial results and the performance of its business, and which the company discussed in detail in its filing with the SEC, including today's earnings press release and the risk factors and other information contained in the final prospectus relating to its initial public offering. Agora Inc. [remains] no obligation to update any forward-looking statements the company may make on today's call.

這些前瞻性陳述受到風險和確定性假設以及可能影響公司財務業績和業務表現的其他因素的影響，公司在向 SEC 提交的文件中詳細討論了這些因素，包括今天的收益新聞稿和最終招股說明書中包含的與其首次公開募股相關的風險因素和其他信息。 Agora Inc. [仍然]沒有義務更新該公司在今天的電話會議上可能做出的任何前瞻性聲明。

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

那麼，讓我把它交給托尼。嗨，托尼。

Hi. Thanks operator, and welcome everyone to our earnings call. Our revenue for the second quarter was $15.3 million for Agora, down 5.6% year-on-year, mainly due to a challenging global macro environment and tightening financial conditions of certain customers. Our revenue was RMB 131.5 million for Shengwang, down 11.7% year-on-year if excluding revenue from the disposed customer engagement cloud business and K-12 academic tutoring sector, mainly due to a slowing economy and fast-evolving regulation in certain downstream verticals. As of the end of this quarter, we have 1,560 active customers for Agora and close to 4,000 for Shengwang, an increase of 24% and 5%, respectively compared to 1 year ago.

你好。感謝運營商，並歡迎大家參加我們的財報電話會議。 Agora 第二季度收入為 1530 萬美元，同比下降 5.6%，主要是由於全球宏觀環境充滿挑戰以及某些客戶的財務狀況趨緊。聲望的收入為人民幣1.315 億元，如果剔除已出售的客戶互動雲業務和K-12 學術輔導業務的收入，同比下降11.7%，這主要是由於經濟放緩和某些下游垂直行業的快速發展的監管所致。截至本季度末，聲網活躍客戶數量為 1,560 名，聲網活躍客戶數量接近 4,000 名，較一年前分別增長 24% 和 5%。

Now moving on to our business product and technology update for the quarter. First, starting with Agora. We recently announced our partnership with ActiveFence, a leading global provider of AI-driven content detection and moderation service. ActiveFence solution keep end users safe from the widest spectrum of online harms, unwanted content, and the malicious behavior including adult content, bullying and harassment, child abuse, hate speech, illegal goods, violence and more.

現在繼續我們本季度的業務產品和技術更新。首先，從 Agora 開始。我們最近宣布與 ActiveFence 建立合作夥伴關係，ActiveFence 是全球領先的人工智能驅動內容檢測和審核服務提供商。 ActiveFence 解決方案可確保最終用戶免受最廣泛的在線傷害、不需要的內容和惡意行為，包括成人內容、欺凌和騷擾、虐待兒童、仇恨言論、非法商品、暴力等。

We believe content moderation is a particularly important for real time engagement applications, given that content is generated and consumed in real time. Through our Extensions Marketplace, ActiveFence's content moderation tools allow developers to easily add live audio and video content moderation functionalities to their applications without significant change to their development processes. By detecting and removing all kinds of unwanted harms in real time, Agora and ActiveFence can help customers better handle emerging online safety and complex challenge while boosting end user engagement in a safer and more trusted environment.

我們認為，鑑於內容是實時生成和消費的，內容審核對於實時參與應用程序尤其重要。通過我們的擴展市場，ActiveFence 的內容審核工具使開發人員能夠輕鬆地將實時音頻和視頻內容審核功能添加到他們的應用程序中，而無需對其開發流程進行重大更改。通過實時檢測和消除各種不必要的危害，Agora 和 ActiveFence 可以幫助客戶更好地應對新興的在線安全和復雜的挑戰，同時提高最終用戶在更安全、更值得信賴的環境中的參與度。

On the use case side, over the past few quarters, we have seen an increase in real time engagement adoption, and usage from vertical social networks or applications for interest-based communities. In typical use cases, creators, experts or influencers in a specialized area such as meditation, yoga, astrology, religion, sports or creative arts, engage with their fan base through video calls or interactive live streaming sessions. A good example is Astrotalk, a prominent online astrology platform operating in over 60 countries with a network of over 5,000 astrologers.

在用例方面，在過去的幾個季度中，我們看到實時參與的採用以及垂直社交網絡或基於興趣的社區應用程序的使用有所增加。在典型的用例中，冥想、瑜伽、占星學、宗教、體育或創意藝術等專業領域的創作者、專家或影響者通過視頻通話或互動直播會話與粉絲群互動。一個很好的例子是 Astrotalk，這是一個著名的在線占星平台，在 60 多個國家/地區運營，擁有超過 5,000 名占星師的網絡。

By leveraging Agora's technology, Astrotalk introduced an innovative use case that enables video calls between clients and astrologers to be broadcasted simultaneously to multiple potential customers. The objective was to create a platform that would show astrologers providing live predictions to clients. When clients observe others talking with astrologer, they are more inclined to engage with the same astrologer. As a result, Astrotalk has experienced remarkable threefold growth in active sessions following the launch of this feature.

通過利用 Agora 的技術，Astrotalk 推出了一種創新用例，使客戶和占星師之間的視頻通話能夠同時向多個潛在客戶廣播。目標是創建一個平台，向占星家展示向客戶提供實時預測。當客戶觀察其他人與占星師交談時，他們更傾向於與同一位占星師交談。因此，在推出此功能後，Astrotalk 的活躍會話數顯著增長了三倍。

Moving on to Shengwang. In the past quarter, we upgraded our solution for high definition video calling and live streaming. Previously, customer had to separately integrate our video-based product features and third-party extensions such as video enhancement for proprietary codecs, super resolution, beautification and other video effects. And it often took substantial time to find the most suitable architecture and specifications for the customer's unique use case in order to deliver a balanced end user experience considering video quality, latency, fluency, functionality and device compatibility.

繼續前往聖王。在過去的季度中，我們升級了高清視頻通話和直播的解決方案。此前，客戶必須單獨集成我們基於視頻的產品功能和第三方擴展，例如專有編解碼器的視頻增強、超分辨率、美化和其他視頻效果。通常需要花費大量時間來找到最適合客戶獨特用例的架構和規格，以便在考慮視頻質量、延遲、流暢性、功能和設備兼容性的情況下提供平衡的最終用戶體驗。

With our new use case oriented solutions, customers can now easily access best practices tailored to their specific use cases such as single host live streaming, host PK, host-audience interaction, multiple hosts live streaming and live shopping. Customers not only experience a shorter development time, but also benefit from an enhanced user experience. This ultimately leads to improved end user retention and better monetization opportunities for our customers.

借助我們面向用例的新解決方案，客戶現在可以輕鬆獲取針對其特定用例量身定制的最佳實踐，例如單主播直播、主播PK、主播互動、多主播直播和直播購物。客戶不僅可以體驗到更短的開發時間，還可以從增強的用戶體驗中受益。這最終會提高最終用戶的保留率，並為我們的客戶帶來更好的盈利機會。

For example, a dating platform recently adopt our comprehensive solution to upgrade their one-on-one and live streaming video from standard definition to high definition. In addition to the increase in video resolution, our solution also improved video quality in environment with poor or uneven lighting, provided video noise suppression, perceptual video coding and beautification. As a result of the high definition upgrade, the average user duration increased by more than 10%. Meanwhile, hosting matchmakers and the dating platform itself also generated higher tips and the revenue.

例如，某交友平台最近採用了我們的綜合解決方案，將其一對一和直播視頻從標清升級為高清。除了提高視頻分辨率外，我們的解決方案還提高了光線較差或不均勻環境下的視頻質量，提供視頻噪聲抑制、感知視頻編碼和美化。由於高清升級，平均用戶時長增加了10%以上。與此同時，接待媒人和交友平臺本身也產生了更高的小費和收入。

In early July, Shengwang was chosen as 1 of the 26 leading companies to showcase AI innovations at the 2023 World Artificial Intelligence Conference. Shengwang then demonstrated its AI-powered noise suppression capabilities based on deep learning algorithms, which can effectively remove more than 100 types of unwanted background noises and echoes, ensuring a disruption-free and more immersive experience for end users.

7月初，聲網被選為在2023年世界人工智能大會上展示人工智能創新的26家領先企業之一。隨後聲望展示了基於深度學習算法的人工智能噪聲抑制能力，可有效消除100多種不需要的背景噪聲和迴聲，確保為最終用戶提供無干擾、更身臨其境的體驗。

Our AI noise suppression has been widely used by our customers across verticals such as telehealth, remote collaboration, social and gaming. For example, our voice social platform realized a 5% increase in average session length after integrating our AI noise suppression in their application.

我們的人工智能噪聲抑制已被遠程醫療、遠程協作、社交和遊戲等垂直領域的客戶廣泛使用。例如，我們的語音社交平台在將我們的人工智能噪聲抑制集成到其應用程序中後，平均會話長度增加了 5%。

Before concluding my prepared remarks, I would like to invite all of you to our upcoming RTE conferences. On Agora site, the RTE program this year will consist of 3 events. We will launch with RTE Live Shopping, a month long webinar series focused exclusively on this rapidly evolving space. Regional events for RTE India and RTE APAC will take place on October 5th. RTE India will be a fully virtual event highlighting how RTE technology is facilitating the evolution of new communities within Faith Tech, Astrology, Social, Media & Entertainment, Live Shopping and Gaming. RTE APAC programs will be hosted in Korean and Indonesia languages, featuring key leaders and discussions around Metaverse, education and live shopping. We are excited to continue growing our global RTE community and foster the spirit of innovation through our conferences.

在結束我準備好的發言之前，我想邀請大家參加我們即將舉行的 RTE 會議。在 Agora 網站上，今年的 RTE 活動將包括 3 項活動。我們將推出 RTE Live Shopping，這是一個為期一個月的網絡研討會系列，專門關注這個快速發展的領域。 RTE India 和 RTE APAC 的區域活動將於 10 月 5 日舉行。 RTE India 將是一場完全虛擬的活動，重點展示 RTE 技術如何促進 Faith Tech、占星術、社交、媒體和娛樂、現場購物和遊戲領域新社區的發展。 RTE APAC 項目將以韓語和印度尼西亞語舉辦，主要領導人將出席並圍繞元宇宙、教育和直播購物進行討論。我們很高興能夠繼續發展我們的全球 RTE 社區，並通過我們的會議培養創新精神。

On Shengwang side, the conference will be held in Beijing from October 24th to 25th. This year's conference will center around how the future of RTE will be shaped by generative artificial intelligence and high definition immersive environment -- immersive experiences. Together with industry leading expert and practitioners, we will explore and envision the possibility and advancement that this technology will bring to RTE.

聲網方面，會議將於10月24日至25日在北京舉行。今年的會議將圍繞生成式人工智能和高清沉浸式環境（沉浸式體驗）如何塑造 RTE 的未來展開。我們將與行業領先的專家和從業者一起，探索和展望這項技術將為RTE帶來的可能性和進步。

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

那麼，讓我把事情交給景波，他將透露我們的財務業績。

Thank you, Tony. Hello, everyone. Let me start by first reviewing financial results for the second quarter, and then I will discuss outlook for the third quarter of 2023. Total revenues were $34 million in the second quarter of 2023, a decrease of 16.9% compared with the same quarter last year and a decrease of 6.6% quarter-over-quarter.

謝謝你，托尼。大家好。首先讓我回顧第二季度的財務業績，然後討論 2023 年第三季度的展望。 2023 年第二季度總收入為 3400 萬美元，比去年同期下降 16.9%環比下降 6.6%。

Agora revenues were $15.3 million in the second quarter of 2023, a decrease of 5.6% year-over-year and an increase of 1.3% quarter-over-quarter. The year-over-year decrease was primarily due to reduced usage of our products and customers increased pricing sensitivity due to challenging macroeconomic environment starting from the second half of last year. The quarter-over-quarter increase was primarily due to usage growth and emergence of use cases such as vertical social networks, as Tony just mentioned.

2023 年第二季度 Agora 營收為 1530 萬美元，同比下降 5.6%，環比增長 1.3%。同比下降主要是由於我們的產品使用量減少以及客戶因去年下半年開始充滿挑戰的宏觀經濟環境而提高了定價敏感性。正如托尼剛才提到的，季度環比增長主要是由於使用量的增長和垂直社交網絡等用例的出現。

Shengwang revenues were RMB 131.5 million during the second quarter of 2023, a decrease of 19.8% year-over-year and a decrease of 9.9% quarter-over-quarter. If excluding revenues from the disposed CEC business and K-12 academic tutoring sector, Shengwang revenue decreased 11.7% year-over-year and 8.8% quarter-over-quarter, which was primarily due to slowing general economic conditions and fast evolving regulations in certain downstream markets. Dollar-based net retention rate for Agora is 108%. Dollar-based net retention rate for Shengwang is 91%, excluding revenues from the K-12 academic tutoring sector.

聲網2023年第二季度營收為人民幣1.315億元，同比下降19.8%，環比下降9.9%。如果剔除已出售的 CEC 業務和 K-12 學術輔導業務的收入，聲網收入同比下降 11.7%，環比下降 8.8%，這主要是由於總體經濟狀況放緩以及某些國家/地區的法規快速變化。下游市場。 Agora 以美元計算的淨留存率為 108%。按美元計算，聲網的淨保留率為 91%，不包括 K-12 學術輔導部門的收入。

Moving on to cost and expenses. For my following comments, I will talk some non-GAAP adjusted financial measures, which exclude share-based compensation expenses, acquisition-related expenses, amortization expenses of acquired intangible assets, income tax related to acquired intangible assets, impairment of goodwill, depreciation of property and equipment and amortization of land use right. Adjusted gross margin for second quarter was 67.2%, which was 2.6% lower than Q2 2022, mainly due to a change in product mix and was flat compared to Q1 2023.

繼續討論成本和費用。在我的以下評論中，我將討論一些非公認會計準則調整後的財務指標，其中不包括股權激勵費用、收購相關費用、收購無形資產的攤銷費用、與收購無形資產相關的所得稅、商譽減值、資產折舊財產和設備以及土地使用權的攤銷。第二季度調整後毛利率為67.2%，較2022年第二季度下降2.6%，主要是由於產品結構變化，與2023年第一季度持平。

As mentioned in previous earnings calls, we restructured and reduced our global workforce in Q4 2022, and we have continued to implement effective expense controls. As a result, adjusted R&D expenses were $16.6 million in Q2, decreased 37.4% year-over-year. Adjusted R&D expenses represented 48.8% of total revenues in the quarter compared to 64.8% in Q2 last year. Adjusted sales and marketing expenses were $7.1 million in Q2, decreased 34% year-over-year. Sales and marketing expenses represented 20.9% of total revenue in the quarter compared to 26.3% in Q2 last year.

正如之前的財報電話會議中提到的，我們在 2022 年第四季度重組並減少了全球員工隊伍，並繼續實施有效的費用控制。因此，第二季度調整後的研發費用為 1660 萬美元，同比下降 37.4%。調整後的研發費用佔本季度總收入的 48.8%，而去年第二季度為 64.8%。第二季度調整後的銷售和營銷費用為 710 萬美元，同比下降 34%。銷售和營銷費用佔本季度總收入的 20.9%，而去年第二季度為 26.3%。

Adjusted G&A expenses were $6.2 million in Q2, decreased 9.5% year-over-year. G&A expenses represented 18.2% of total revenue in the quarter compared to 16.6% in Q2 last year. Adjusted EBITDA was negative $6.6 million, translating to a 19.5% adjusted EBITDA loss margin fourth quarter, significantly lower than the adjusted EBITDA loss margin of 37.4% in Q2 last year. Investment loss was $1.9 million in Q2, primarily due to loss on investments in certain private companies of $4.9 million, which was offset in part by the fair value change in equity investments of $3 million.

第二季度調整後的一般管理費用為 620 萬美元，同比下降 9.5%。 G&A 費用佔本季度總收入的 18.2%，而去年第二季度為 16.6%。調整後 EBITDA 為負 660 萬美元，即第四季度調整後 EBITDA 虧損率為 19.5%，顯著低於去年第二季度 37.4% 調整後 EBITDA 虧損率。第二季度投資損失為 190 萬美元，主要是由於對某些私營公司的投資損失 490 萬美元，該損失被股權投資公允價值變動 300 萬美元部分抵消。

Non-GAAP net loss was $6.6 million in Q2, translating to a $19.4 million (sic) [19.4%] non-GAAP net loss margin in fourth quarter compared to a net loss margin of 50.8% in Q2 last year and 25.1% in Q1 this year. While extraordinary P&L items in this quarter is the impairment of goodwill. In Q2, we completed the integration of Easemob's operation, after which we only identified one reporting unit.

第二季度非GAAP 淨虧損為660 萬美元，相當於第四季度非GAAP 淨虧損率為1,940 萬美元（原文如此）[19.4%]，而去年第二季度的淨虧損率為50.8%，第一季度的淨虧損率為25.1%今年。而本季度的非經常性損益項目是商譽減值。第二季度，我們完成了Easemob運營的整合，之後我們只確定了一個報告單位。

Considering the natural impact on market demand as a result of the challenging global macroeconomic environment and regulatory changes in certain sectors, we performed quantitative impairment tests on goodwill and recognize the full impairment of goodwill in relation to the Easemob acquisition, which is $31.9 million. As of the end of Q2, there was no goodwill outstanding on balance sheet.

考慮到全球宏觀經濟環境的挑戰以及某些行業的監管變化對市場需求的自然影響，我們對商譽進行了量化減值測試，並確認了與Easemob 收購相關的商譽全額減值，金額為3190 萬美元。截至二季度末，資產負債表上不存在未償還商譽。

Now turning to cash flow. Operating cash flow was negative $5.3 million in Q2 compared to a negative $23.8 million last year. Free cash flow was net $5.6 million compared to negative $24.2 million last year.

現在轉向現金流。第二季度運營現金流為負 530 萬美元，而去年為負 2380 萬美元。自由現金流為淨 560 萬美元，而去年為負 2,420 萬美元。

Moving on to balance sheet. We ended Q2 with $391.6 million in cash, cash equivalents, bank deposits and financial products issued by banks. Net cash outflow in the quarter was mainly due to free cash flow of negative $5.3 million and share repurchase of $21 million. Since the Board approved our share repurchase program in February, 2022 and as of June 30, 2023, we have returned approximately $82 million to shareholders to share repurchases, demonstrating the Board's commitment to safeguarding shareholder value and its confidence in the long-term prospect of the company.

轉向資產負債表。第二季度末，我們擁有 3.916 億美元的現金、現金等價物、銀行存款和銀行發行的金融產品。該季度淨現金流出主要是由於自由現金流為負 530 萬美元和 2100 萬美元的股票回購。自董事會於2022年2月批准我們的股票回購計劃以來，截至2023年6月30日，我們已向股東返還約8,200萬美元用於股票回購，這體現了董事會對維護股東價值的承諾以及對公司長期前景的信心。公司。

As of June 30, 2023, the company had approximately 97.5 million ADS outstanding, reflecting a reduction of approximately 14.9 million ADS or 13% reduction of total shares outstanding from January 31, 2022 before the share repurchase program started. So far, we have completed 41% of $200 million share repurchase program, which will expire at the end of February, 2024, and we intend to continue to undertake its meaningful capital return to our shareholders.

截至2023年6月30日，該公司流通在外的美國存託股約為9750萬股，反映出自股票回購計劃開始前的2022年1月31日起，流通股總數減少了約1490萬股美國存託股，即減少了13%。到目前為止，我們已經完成了 2 億美元的股票回購計劃中的 41%，該計劃將於 2024 年 2 月底到期，我們打算繼續為股東帶來有意義的資本回報。

Now turning to guidance. For the third quarter of 2023, we currently expect total revenues to be between USD 34.5 million to USD 36.5 million. This forecast reflects our current and preliminary views on the market and operational conditions, which are subject to change. In closing, we are confident about the long-term prospects of the global market for real-time engagement technology, and we are well-prepared for near-term uncertainties and challenges.

現在轉向指導。我們目前預計 2023 年第三季度的總收入將在 3450 萬美元至 3650 萬美元之間。該預測反映了我們對市場和運營狀況的當前和初步看法，這些看法可能會發生變化。最後，我們對全球實時參與技術市場的長期前景充滿信心，並為近期的不確定性和挑戰做好了充分準備。

Thank you to both Agora and Shengwang teams for their hard work and our investors for a trust. Thank you, everyone, for attending the call today.

感謝聲網和聲網團隊的辛勤付出，感謝投資人的信任。謝謝大家今天參加電話會議。

Operator, let's open it up for questions.

接線員，讓我們打開提問吧。

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

（操作員指令）我們的第一個問題來自摩根士丹利的Yang Liu。

This is Lydia representing Yang Liu from Morgan Stanley. So our question is for management, can you review your observation of the demand recovery situation, both in domestic and overseas market and as well as your outlook for the second half of this year?

我是摩根士丹利代表楊柳的莉迪亞。那麼我們的問題是問管理層，您能否回顧一下您對國內外市場需求復蘇情況的觀察以及對今年下半年的展望？

Sure. In terms of the market -- I would divide this into the U.S. international market and China market. So for the U.S. and international market, we do see pretty healthy demand from verticals such as e-commerce, vertical social networks focused on certain interest groups, like just mentioned, education and IoT are sectors that doing pretty well at the moment. On the other hand, emerging markets and certain use cases that were popular given the pandemic, such as online events are relatively weaker. On the China side, demand from digital transformation sector is more resilient, such as financial institutions, large enterprises and also we see healthy demand from professional training, academic education.

當然。從市場來看，我會分為美國國際市場和中國市場。因此，對於美國和國際市場，我們確實看到電子商務、專注於某些利益群體的垂直社交網絡等垂直行業的需求相當健康，就像剛才提到的，教育和物聯網是目前表現良好的行業。另一方面，新興市場和某些在疫情期間流行的用例（例如在線活動）相對較弱。在中國方面，數字化轉型行業的需求更具彈性，例如金融機構、大型企業，我們也看到專業培訓、學術教育的健康需求。

And within the social entertainment sectors, despite the pretty challenging regulatory environment in China, we see promising growth from customers, operating apps also in China, we see pretty healthy demand growth there. And on top of the regional situation, I'd also like to comment on the product side. On the product side, we see a lot of customer demand -- AI-based features such as content moderation, real time transcription and also pretty healthy demand for base on high definition video products. So in terms of full year outlook, we are cautiously optimistic that demand will gradually improve overall during the remainder of the year, driven by like these new products I just mentioned, and at the same time, offset by ongoing macro challenges, both in China and also in other emerging markets.

在社交娛樂領域，儘管中國的監管環境相當具有挑戰性，但我們看到客戶的增長充滿希望，在中國運營應用程序，我們看到那裡的需求增長相當健康。除了區域情況之外，我還想談談產品方面。在產品方面，我們看到很多客戶需求——基於人工智能的功能，如內容審核、實時轉錄，以及對基於高清視頻產品的相當健康的需求。因此，就全年前景而言，我們謹慎樂觀地認為，在我剛才提到的這些新產品的推動下，今年剩餘時間內整體需求將逐漸改善，同時被中國持續的宏觀挑戰所抵消以及其他新興市場。

(Operator Instructions) Our next question comes from the line of Harry Zhuang from Bank of America Securities.

（操作員指令）我們的下一個問題來自美國銀行證券的Harry Zhuang。

I have 2 questions. First one is regarding the margin trend. Can you give us some outlook of the gross margins in the next 2 quarters and also about the next year? And the second question is what is the plan for the AI products and the future revenue contribution for the company?

我有 2 個問題。第一個是關於保證金趨勢。您能否給我們一些對未來兩個季度以及明年毛利率的展望？第二個問題是AI產品的規劃以及未來對公司的收入貢獻是什麼？

On the gross margin, as you can see, sequentially, is basically flat, and it's currently at not a pretty healthy level. So we do expect gross margin to remain relatively stable for the remainder of the year as we continue to optimize our cost structure. As for next year, it's probably still early to say, but our plans certainly to try to maintain a stable and healthy gross margin levels?

正如您所看到的，毛利率基本上持平，目前處於不太健康的水平。因此，隨著我們繼續優化成本結構，我們預計今年剩餘時間毛利率將保持相對穩定。至於明年，可能還為時尚早，但我們的計劃肯定會盡力保持穩定健康的毛利率水平？

As to the AI-related document and prop, actually, our high definition video initiative is a product that leverages AI capabilities to greatly improve video performance. We believe we are the first ones that are able to provide mobile real-time video to the level of true HD state, the first mature mobile 1080P real-time video solution is based on this HD initiative. Also our third-party expansions, like what I mentioned in opening remarks, ActiveFence are also leveraging AI technology to moderate real-time content and activities or like one of our other products, real-time transcription is also leveraging AI.

至於AI相關的文檔和道具，其實我們的高清視頻倡議是一個利用AI能力大幅提升視頻性能的產品。我們相信我們是第一個能夠提供真正高清狀態的移動實時視頻的公司，第一個成熟的移動1080P實時視頻解決方案就是基於這個高清倡議。此外，我們的第三方擴展，就像我在開場白中提到的那樣，ActiveFence 也利用人工智能技術來調節實時內容和活動，或者像我們的其他產品之一一樣，實時轉錄也利用人工智能。

Also, as a much bigger trend, the AIGC development is very encouraging. We firmly believe generative AI will expand the boundaries of RTE and significantly enhanced end user experience, but it won't be a short-term revenue contributor as a voice and video multi-model capabilities are still at their early stage for all major large models. We have been working closely with customers on certain vertical use cases leveraging AIGC, such as AI-powered game players and real-time voice-based AI companies. We expect to make product launch announcement in the coming months. In addition, AIGC will also be one of the main topic of our upcoming RTE conference in October. We will also have the latest demo showcase during this conference on AIGC. Please join us for a deeper and more detailed discussion.

此外，作為一個更大的趨勢，AIGC 的發展非常令人鼓舞。我們堅信生成式人工智能將擴展 RTE 的邊界並顯著增強最終用戶體驗，但它不會成為短期收入貢獻者，因為所有主要大型模型的語音和視頻多模型功能仍處於早期階段。我們一直在利用 AIGC 就某些垂直用例與客戶密切合作，例如人工智能驅動的遊戲玩家和基於實時語音的人工智能公司。我們預計將在未來幾個月內發布產品發佈公告。此外，AIGC也將是我們即將於10月召開的RTE會議的主要議題之一。本次會議期間我們還將在 AIGC 上展示最新的演示。請加入我們進行更深入、更詳細的討論。

(Operator Instructions) Our next question comes from the line of (inaudible) Wong from Citic.

（操作員指示）我們的下一個問題來自中信銀行的（聽不清）Wong。

Actually 2 questions from my side. And the first one is that, has there been any change in the company's guidance on the profit? And will there be any more related optimization within the year?

實際上我這邊有兩個問題。第一個是，公司的利潤指引有變化嗎？年內還會有更多相關優化嗎？

Can you repeat your second question?

你能重複一下你的第二個問題嗎？

And will there be any more related optimizations about the (inaudible) resource within the year?

年內是否會有更多有關（聽不清）資源的相關優化？

I'll take those questions. So despite the recent macroeconomic challenges and regulatory challenges, we remain committed to our goal of achieving non-GAAP net income breakeven in Q4 this year. So against the non-GAAP net income level per year in Q4 this year. So as you can see in the past few quarters, we have effectively reduced operating expenses by roughly 30%. So we believe we are now operating at a quite efficient level with the right team size. So our focus in Q3 is really to drive revenue growth rather to further cutting headcount cost but as we see revenue recover, and we make incremental small incremental savings. We think we still have a good chance of achieving our non-GAAP net income breakeven towards the end of the year.

我會回答這些問題。因此，儘管最近面臨宏觀經濟挑戰和監管挑戰，我們仍然致力於實現今年第四季度實現非公認會計準則淨利潤盈虧平衡的目標。因此，對照今年第四季度的非公認會計原則每年淨利潤水平。正如您所看到的，在過去幾個季度中，我們有效地將運營費用減少了大約 30%。因此，我們相信我們現在的運營水平相當高效，團隊規模也合適。因此，我們第三季度的重點實際上是推動收入增長，而不是進一步削減員工成本，但當我們看到收入復甦時，我們會逐步節省開支。我們認為，我們仍有很大機會在年底前實現非公認會計原則淨利潤盈虧平衡。

And my second one is that has there been a noticeable change in the domestic and international competitive environment? That's my last one.

第二個問題是，國內外的競爭環境有沒有發生明顯的變化？這是我的最後一張。

Sure. There hasn't been much change in overall competitive landscape. In China, competitive landscape remains the same as previous quarter. But in the U.S. and international markets, we see slightly increasing competition from regional start-ups. I think this is a good thing overall for the industry, with more choices for customers and more ideas to drive industry forward. Together, we will create a more vibrant market and accelerated adoption of RTE technology in general.

當然。整體競爭格局沒有太大變化。在中國，競爭格局與上季度相同。但在美國和國際市場，我們看到來自地區初創企業的競爭略有加劇。我認為這對整個行業來說是一件好事，為客戶提供了更多的選擇，也為推動行業向前發展提供了更多的想法。我們將共同創造一個更加充滿活力的市場，並加速 RTE 技術的普遍採用。

The recent macro environment challenge, however, will also impact those competitors. And especially for smaller players in the market, we also saw some companies went out of business. Overall, competitive landscape remains largely the same. We're still the clear leader in this space in terms of technological performance and completeness of features. With the right focus and execution, I think we are well-positioned to gain market share during the challenging period.

然而，最近的宏觀環境挑戰也將影響這些競爭對手。特別是對於市場上規模較小的參與者，我們還看到一些公司倒閉。總體而言，競爭格局基本保持不變。就技術性能和功能完整性而言，我們仍然是該領域明顯的領導者。憑藉正確的重點和執行力，我認為我們有能力在充滿挑戰的時期獲得市場份額。

I'm showing no further questions in the queue. This concludes our Q&A. Thank you, everybody, for attending the company's call today. As a reminder, the recorded in the earnings release will be available on the company's website at investor.agora.io. And if there are any questions, please feel free to e-mail the company. Thank you.

我在隊列中沒有顯示任何其他問題。我們的問答到此結束。謝謝大家今天參加公司的電話會議。提醒一下，收益發布中記錄的內容將在公司網站 Investor.agora.io 上提供。如果有任何疑問，請隨時給公司發送電子郵件。謝謝。