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.

各位好，感謝您稍候。歡迎參加 Agora Inc. 2023 年第二季財務業績電話會議。（接線員指示）請注意，今天的會議將被錄音。公司的財報新聞稿、財報簡報、向 SEC 提交的文件，以及今日電話會議的重播，均可於其投資人關係網站 investor.agora.io 查閱。

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.

今天與我一同出席的有創辦人、董事長兼執行長趙斌（Tony Zhao），以及公司財務長王京波（Jingbo Wang）。公司 GAAP 與非 GAAP 結果之間的調節表可在其財報新聞稿中找到。在本次電話會議中，公司將就未來財務表現以及其他未來事件與趨勢發表前瞻性陳述。這些陳述僅為基於公司目前所相信之情況所作的預測，實際結果可能會有重大差異。

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.

這些前瞻性陳述受風險與不確定性、假設及其他可能影響公司財務結果與業務表現之因素所影響；公司已在向 SEC 提交的文件中進行詳細討論，包括今日的財報新聞稿，以及與首次公開發行相關之最終招股說明書中所載的風險因素與其他資訊。Agora Inc. [remains] 無義務更新公司在今日電話會議中可能作出的任何前瞻性陳述。

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

接下來，讓我把時間交給 Tony。Tony，你好。

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.

大家好。感謝接線員，也歡迎各位參加我們的財報電話會議。第二季 Agora 營收為 1,530 萬美元，年減 5.6%，主要由於全球總體經濟環境具挑戰性，以及部分客戶的金融條件趨緊。聲網營收為人民幣 1.315 億元，若排除已處置的客戶互動雲業務以及 K-12 學科類校外培訓領域的營收，則年減 11.7%，主要由於經濟放緩以及部分下游垂直領域監管快速演變。截至本季末，Agora 活躍客戶數為 1,560 家，聲網接近 4,000 家，分別較一年前增加 24% 與 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.

接下來是本季的業務、產品與技術更新。首先從 Agora 開始。我們近期宣布與 ActiveFence 建立合作夥伴關係；ActiveFence 是全球領先的 AI 驅動內容偵測與審核服務供應商。ActiveFence 的解決方案可協助終端使用者免於最廣泛的線上危害、不受歡迎的內容與惡意行為，包括成人內容、霸凌與騷擾、兒童虐待、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，對即時互動（real time engagement）應用而言，內容審核尤其重要，因為內容是在即時生成並被即時消費。透過我們的 Extensions Marketplace，ActiveFence 的內容審核工具讓開發者能在不大幅改變開發流程的情況下，輕鬆為其應用加入即時音訊與視訊內容審核功能。藉由即時偵測並移除各類不良危害內容，Agora 與 ActiveFence 可協助客戶更好地應對新興的線上安全與複雜挑戰，同時在更安全、更值得信賴的環境中提升終端使用者互動。

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.

在使用情境方面，過去幾季我們看到即時互動的採用與使用量增加，尤其來自垂直社交網路或以興趣社群為主的應用。在典型情境中，創作者、專家或特定領域的意見領袖（influencers），例如冥想、瑜伽、占星、宗教、運動或創意藝術等，會透過視訊通話或互動式直播與其粉絲群互動。一個很好的例子是 Astrotalk，這是一個知名的線上占星平台，業務遍及 60 多個國家，擁有超過 5,000 名占星師的網路。

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.

透過運用 Agora 的技術，Astrotalk 推出一項創新使用情境：讓客戶與占星師之間的視訊通話可同時向多位潛在客戶進行直播。其目標是打造一個平台，展示占星師為客戶提供即時預測。當客戶看到其他人正在與占星師對談時，會更傾向與同一位占星師互動。因此，在推出此功能後，Astrotalk 的活躍場次（active sessions）出現顯著的三倍成長。

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.

接下來談聲網。過去一季，我們升級了高清視訊通話與直播解決方案。以往，客戶需要分別整合我們的視訊產品功能與第三方擴充套件，例如針對自有編解碼器的視訊增強、超解析度、美顏及其他視訊特效。此外，為了在視訊品質、延遲、流暢度、功能性與裝置相容性之間取得平衡並提供良好的終端使用者體驗，往往需要花費大量時間為客戶的獨特使用情境尋找最合適的架構與規格。

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.

透過我們新的以使用情境為導向的解決方案，客戶現在可以輕鬆取得針對其特定情境量身打造的最佳實務，例如單主播直播、主播 PK、主播與觀眾互動、多主播直播以及直播電商。客戶不僅能縮短開發時間，也能受益於更佳的使用者體驗，最終提升終端使用者留存，並為客戶帶來更好的變現機會。

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，某交友平台近期採用我們的整體解決方案，將其一對一與直播視訊從標清升級至高清。除了提升視訊解析度外，我們的解決方案也改善了在光線不足或不均勻環境下的畫質，並提供視訊降噪、感知式視訊編碼（perceptual video coding）與美顏功能。由於高清升級，平均使用時長提升超過 10%。同時，主持配對的媒人以及該交友平台本身也獲得更高的小費與營收。

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，聲網獲選為 2023 世界人工智慧大會（World Artificial Intelligence Conference）展示 AI 創新的 26 家領軍企業之一。聲網隨後展示了基於深度學習演算法的 AI 降噪能力，可有效去除 100 多種不需要的背景噪音與回音，確保終端使用者獲得更不受干擾且更具沉浸感的體驗。

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 AI 降噪已被跨多個垂直領域的客戶廣泛採用，例如遠距醫療、遠端協作、社交與遊戲等。舉例而言，某語音社交平台在其應用中整合我們的 AI 降噪後，平均單次會話時長提升了 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，我想邀請各位參加我們即將舉辦的 RTE 大會。在 Agora 方面，今年的 RTE 計畫將包含 3 場活動。我們將以 RTE Live Shopping 作為開場，這是一個為期一個月、專注於此快速演進領域的網路研討會系列。RTE India 與 RTE APAC 的區域活動將於 10 月 5 日舉行。RTE India 將為全線上活動，重點展示 RTE 技術如何促進 Faith Tech、占星、社交、媒體與娛樂、直播電商與遊戲等領域中新社群的演進。RTE APAC 的活動將以韓語與印尼語進行，邀請關鍵領袖並圍繞元宇宙、教育與直播電商展開討論。我們很高興能持續壯大全球 RTE 社群，並透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.

在聲網方面，大會將於10月24日至25日在北京舉行。今年的大會將聚焦於生成式人工智慧與高畫質沉浸式環境——沉浸式體驗——將如何塑造 RTE 的未來。我們將與業界領先的專家與實務人士一同探索並展望這項技術將為 RTE 帶來的可能性與進展。

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

接下來，我把時間交給京波，他將公布我們的財務業績。

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，Tony。各位好。我先回顧2023年第二季的財務結果，接著我將討論2023年第三季的展望。2023年第二季總營收為3,400萬美元，較去年同期下降16.9%，較上一季下降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 Agora 營收為1,530萬美元，較去年同期下降5.6%，較上一季成長1.3%。同比下降主要由於自去年下半年以來宏觀經濟環境充滿挑戰，客戶對價格更為敏感，並降低了對我們產品的使用量。環比成長主要來自使用量成長，以及如 Tony 剛才提到的垂直社交網路等使用情境的出現。

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.

2023年第二季聲網營收為人民幣1.315億元，較去年同期下降19.8%，較上一季下降9.9%。若剔除已處置的 CEC 業務及 K-12 學科類校外培訓行業的營收，聲網營收同比下降11.7%，環比下降8.8%，主要由於整體經濟狀況放緩，以及部分下游市場監管快速演變。Agora 的以美元計價淨留存率為108%。聲網的以美元計價淨留存率為91%（剔除 K-12 學科類校外培訓行業的營收）。

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.

接下來談成本與費用。以下評論中，我將使用部分非 GAAP 調整後財務指標，該等指標剔除股份支付費用、併購相關費用、收購無形資產攤銷費用、與收購無形資產相關的所得稅、商譽減值、固定資產折舊以及土地使用權攤銷。第二季調整後毛利率為67.2%，較2022年第二季低2.6個百分點，主要由於產品組合變化；與2023年第一季相比則持平。

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.

如先前財報電話會議所述，我們於2022年第四季重組並縮減全球員工規模，並持續落實有效的費用管控。因此，第二季調整後研發費用為1,660萬美元，同比下降37.4%。本季調整後研發費用占總營收48.8%，而去年第二季為64.8%。第二季調整後銷售與行銷費用為710萬美元，同比下降34%。本季銷售與行銷費用占總營收20.9%，而去年第二季為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.

第二季調整後一般及行政（G&A）費用為620萬美元，同比下降9.5%。本季 G&A 費用占總營收18.2%，而去年第二季為16.6%。調整後 EBITDA 為負660萬美元，對應第四季調整後 EBITDA 虧損率19.5%，顯著低於去年第二季37.4%的調整後 EBITDA 虧損率。第二季投資損失為190萬美元，主要由於對部分私營公司的投資損失490萬美元，部分被股權投資公允價值變動收益300萬美元所抵銷。

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.

第二季非 GAAP 淨虧損為660萬美元，對應第四季非 GAAP 淨虧損率為1,940萬美元（原文如此）[19.4%]，相比之下，去年第二季淨虧損率為50.8%，今年第一季為25.1%。本季損益表中的一次性項目為商譽減值。於第二季，我們完成了對 Easemob（環信）營運的整合，此後我們僅識別出一個報告單元。

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.

考量到全球宏觀經濟環境嚴峻及部分行業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，並確認與收購 Easemob（環信）相關的商譽全額減值，金額為3,190萬美元。截至第二季末，資產負債表上已無商譽餘額。

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.

接下來看現金流。第二季經營活動現金流為負530萬美元，去年同期為負2,380萬美元。自由現金流為淨流入560萬美元，去年同期為負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.

接著看資產負債表。第二季末，我們持有的現金、現金等價物、銀行存款及銀行發行的理財產品合計為3.916億美元。本季淨現金流出主要由自由現金流為負530萬美元以及股份回購2,100萬美元所致。自董事會於2022年2月批准股份回購計畫起，截至2023年6月30日，我們已透過股份回購向股東返還約8,200萬美元，展現董事會維護股東價值的承諾以及對公司長期前景的信心。

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，公司約有9,750萬份 ADS 在外流通，較股份回購計畫啟動前（2022年1月31日）在外流通的 ADS 減少約1,490萬份，或在外流通總股數減少13%。截至目前，我們已完成2億美元股份回購計畫的41%，該計畫將於2024年2月底到期；我們擬持續向股東進行具實質意義的資本回饋。

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.

接下來是業績指引。對於2023年第三季，我們目前預期總營收介於3,450萬美元至3,650萬美元之間。此預測反映我們目前對市場與營運狀況的初步看法，未來可能有所變動。最後，我們對全球即時互動技術市場的長期前景充滿信心，並已為短期的不確定性與挑戰做好充分準備。

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 Agora 與聲網團隊的辛勤付出，也感謝投資人對我們的信任。也謝謝各位今天參加本次電話會議。

Operator, let's open it up for questions.

接線員，請開放提問。

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

（接線員指示）我們的第一個問題來自摩根士丹利的劉洋。

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?

我是摩根士丹利劉洋的代表 Lydia。我們的問題想請教管理層：能否回顧一下你們對需求復甦情況的觀察，包括國內與海外市場，以及你們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.

好的。就市場而言——我會把它分為美國及國際市場，以及中國市場。對於美國及國際市場，我們確實看到來自一些垂直領域相當健康的需求，例如電商、聚焦特定興趣族群的垂直社交網路；如剛才提到的，教育與 IoT 目前表現也相當不錯。另一方面，新興市場以及一些在疫情期間較受歡迎的使用情境（例如線上活動）相對較弱。在中國方面，來自數位轉型領域的需求更具韌性，例如金融機構、大型企業；同時我們也看到來自職業培訓、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.

而在社交娛樂領域，儘管中國的監管環境相當具挑戰性，我們仍看到客戶端有令人期待的成長；對於在中國也有營運 App 的客戶，我們看到那裡的需求成長相當健康。除了區域面的情況，我也想補充產品面的觀察。在產品方面，我們看到許多客戶需求——以 AI 為基礎的功能，例如內容審核、即時轉錄；同時對於基於高畫質（HD）視訊產品也有相當健康的需求。就全年展望而言，我們審慎樂觀地認為，今年剩餘時間整體需求將逐步改善，動能來自我剛提到的新產品；同時也會受到中國及其他新興市場持續的總體經濟挑戰所抵銷。

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

（接線員指示）下一個問題來自美銀證券的莊皓。

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?

我有兩個問題。第一個是關於毛利率趨勢：能否提供未來兩個季度以及明年的毛利率展望？第二個問題是，公司對 AI 產品的規劃是什麼？以及未來對公司營收的貢獻會如何？

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?

關於毛利率，如各位所見，按季來看基本持平，目前處於不算很健康的水準。因此，我們預期在持續優化成本結構的同時，今年剩餘時間毛利率將維持相對穩定。至於明年，現在可能還言之過早，但我們的計畫當然是盡力維持穩定且健康的毛利率水準。

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 相關的產品與進展，其實我們的高畫質視訊（HD）計畫是一項運用 AI 能力大幅提升視訊效能的產品。我們相信我們是第一家能把行動端即時視訊做到真正 HD 水準的公司；第一個成熟的行動端 1080P 即時視訊解決方案就是基於這個 HD 計畫。此外，我們的第三方擴展（如我在開場致詞提到的 ActiveFence）也在運用 AI 技術來審核即時內容與活動；我們的另一項產品——即時轉錄——同樣也在運用 AI。

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.

另外，從更大的趨勢來看，AIGC 的發展非常令人鼓舞。我們堅信生成式 AI 將拓展 RTE 的邊界並顯著提升終端使用者體驗，但它不會在短期內成為營收的主要貢獻來源，因為語音與視訊的多模態能力對所有主要大模型而言仍處於早期階段。我們一直與客戶密切合作，針對某些垂直使用情境導入 AIGC，例如 AI 驅動的遊戲玩家，以及即時語音互動的 AI 公司。我們預期在未來幾個月發布產品上線公告。此外，AIGC 也將是我們 10 月即將舉辦的 RTE 大會的主要議題之一；我們也會在本次大會上展示 AIGC 的最新 Demo。歡迎各位參與，以便進行更深入、更詳細的討論。

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

（接線員指示）下一個問題來自中信的（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?

我這邊其實有兩個問題。第一個是，公司對獲利的指引是否有任何變化？以及今年內是否還會有更多相關的優化？

Can you repeat your second question?

可以請你重複一下第二個問題嗎？

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

以及今年內是否還會針對（聽不清）的資源做更多相關優化？

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.

我來回答這些問題。儘管近期面臨總體經濟與監管方面的挑戰，我們仍致力於在今年第四季達成 non-GAAP 淨利損益兩平的目標。也就是在今年第四季達到 non-GAAP 淨利水準的損益兩平。如各位在過去幾個季度所見，我們已有效將營運費用降低約 30%。因此我們相信，目前以合適的團隊規模運作，效率已相當高。第三季我們的重點將是推動營收成長，而不是進一步削減人力成本；但隨著營收回升，我們也會逐步做一些小幅的增量節省。我們認為，在年底前達成 non-GAAP 淨利損益兩平仍有很大機會。

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，國內與國際的競爭環境是否有明顯變化？這是我最後一個問題。

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.

好的。整體競爭格局沒有太大變化。在中國，競爭格局與上一季相同。但在美國及國際市場，我們看到來自區域型新創公司的競爭略有增加。我認為這對產業整體而言是好事，因為客戶有更多選擇，也有更多想法推動產業向前。大家一起將打造更具活力的市場，並加速 RTE 技術的整體採用。

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.

不過，近期的總體環境挑戰也會影響這些競爭者。尤其是市場中的小型業者，我們也看到有些公司已經退出市場。整體而言，競爭格局大致仍相同。就技術效能與功能完整性而言，我們仍是這個領域的明確領導者。只要聚焦得當並有效執行，我認為我們在這段具挑戰性的期間很有機會提升市占率。

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.

我這邊顯示提問佇列中沒有更多問題。本次問答環節到此結束。感謝各位今天參加公司的電話會議。提醒各位，財報新聞稿中的錄音將會在公司網站 investor.agora.io 提供。如有任何問題，歡迎隨時以電子郵件聯繫公司。謝謝。