Agora Inc (API) 2020 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to Agora Inc.'s. Second Quarter 2020 Financial Results. (Operator Instructions) Please be advised that today's conference is being recorded.

And I would now like to hand the conference over to your first speaker today, Fionna Chen. Thank you. Please go ahead.

Thank you, operator. Good evening, and good morning, everyone. My name is Fionna Chen. I am the Investor Relations Director at Agora. Thank you for joining Agora Second Quarter 2020 Earnings Conference Call. Joining me today are Tony Zhao, our Founder, Chairman and CEO; and Jingbo, our CFO.

Our earnings results press release and a slide deck can be found on our IR website at ir.agora.io.

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

During this call, we will make forward-looking statements about our future financial performance and other future events and trends, including guidance. 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 assumes no obligation to update any forward-looking statements we may make on today's call.

With that, let me turn it over to Tony.

Thank you, Fionna. First, I'd like to thank you and welcome all of you for joining us today for our first earnings announcement as a public company. Before walking through our Q2 performance and highlights, please let me spend a few moments describing our business.

As more aspects of our lives are moving online, there is tremendous demand for real-time video engagement. Historically, users would need to install a dedicated app to use video engagement, such as Skype, FaceTime or Zoom. However, in more and more cases, users are looking for contextual real-time video engagement that is directly embedded in the applications they are already using, whether that is for education, dating or game purpose, enabling richer context and more seamlessly -- more seamless and immersive user experience with no need to switching between apps. This is exactly what we do. The Agora platform provides developers simple, flexible and powerful application programming interfaces, or API to embed real-time video engagement experience into any application. Ultimately, our mission is to make real-time engagement ubiquitous, allowing everyone to interact with anyone in an app anytime and anywhere.

The key components of our platform are our software-defined real-time network, or SD-RTN, and our software development kit, or SDK. On top of the SD-RTN and SDK, we offer developers products such as real-time video, real-time voice, real-time messaging, real-time recording and many other user -- many other use case-specific products. All these products can be accessed through simple APIs and are fully programmable.

Our technology makes developers' work more efficient and effective, helping them bringing new apps to market and deliver a better end-user experience, resulting in stickier user relationships. Traditionally, it takes a team of multiple developers several months to build real-time video engagement functionalities with high upfront infrastructure costs and without a guarantee on quality and compatibility. With Agora APIs, you just need 1 or 2 developers. For most cases, only 1 week of coding and testing, no server to be deployed or infrastructure to be built, and you get global coverage with stable quality and wide range of functionalities and broad compatibility across platform.

This is why tens of thousands of developers around the globe have chosen Agora. We are focused on building developer community enthusiasm and innovation. We designed our platform so that it's easy to adopt and enables self-serve, ensuring a flexible, low-touch experience for developers. We offer more than -- we offer 10,000 free minutes per app per month so that developers can experiment with our platform. We have a transparent pay-as-you-go pricing model so that we can grow with our developers as they grow and scale their offerings.

For large customers, we deploy our own engineers to help them integrate and customize our products, creating differentiated user experience for them. As you can see, this business model is very efficient and scalable and has allowed us to deliver very strong financial results this quarter.

Now let me tell you about our Q2 performance and a few key business highlights. I'm pleased to report that we delivered revenue of $34 million for the second quarter, an increase of 128% year-over-year. This was driven by significant usage growth across geographies and verticals, as demand for real-time video and voice engagement increased significantly in light of the COVID-19. And overall, we are proud to see our platform was used by developers around the world to help people collaborate, learn, play, have fun or just stay connected across business during these challenging times.

In addition to tremendous revenue growth, our high-efficient business model contributed to positive GAAP net income, operating cash flow and free cash flow. Our active customers reached nearly 1,500 at the end of second quarter, up 86% year-over-year, and our constant currency dollar-based net expansion rate was 183% for the trailing 12-month period. In this quarter, our platform continued to attract developers with more than 30,000 new apps registered on our platform, bringing cumulative registrations to more than 210,000.

Working with our developers around the world, we have seen many innovative and promising use case emerge -- emerging across various verticals. For example, we recently announced our partnership with Scener, a watch party platform that enables anyone to connect and interact or video chat while working streaming content together. Users can host either public or private coworking sessions or watch party, where content is synchronized with base participants. With real-time video chat powered by Agora, Scener has seen 100x growth since March because of the novel shared experience that it creates to bring people together in the same virtual theater at the comfort of their own home.

Another example is a co-listening service launched by a leading online music entertainment platform. After creating a public or private virtual room, the host become a DJ and chose -- and choose what music to play on top of the original HD soundtrack streaming to all members in the virtual room, overlays a real-time voice engagement layer powered by Agora. It brings users an intimate experience of listening to music and share their thoughts together with friends without any compromising -- without any compromise on music quality.

Online exam on test proctoring also emerged in this quarter as a promising use case. Here, candidates are monitored online during the test duration through a real-time video connection and access screen of the candidate, both powered by our technology. This kind of online proctoring and remote invigilation is expanding at a fast pace in both education and corporate training.

Those are just 3 out of hundreds contractual real-time engagement use cases that are possible to achieve without -- that are impossible to achieve without Agora platform. I'm also excited to announce that we are in the process of launching the first-ever experience level agreement, or XRA, in real-time engagement. Without industry standard or benchmarks of service quality, customers used to be operating in the dark, not knowing how good or bad the quality of service are. A lot of times have to guess the experience of their end users, and their overall results being impacted by the experience.

While our XRA covers metrics such as successful log-on rate, data rate and latency that focus on not only service availability, but also on end-user experience. Now with XRA, the key metrics associated within, we can provide transparency on service quality down to every minute in every engagement session. We will also provide future platform usage credit to our customers if they fail to deliver the level of XRA quality we have guaranteed.

The XRA will help our developers better serve their end-users, understand what quality they are experiencing and also further differentiate our products from the competition. We believe it will be a must have for any real-time engagement API provider going forward.

Finally, I'd like to thank our 600-plus Agorans around the globe for their exceptional performance in our first quarter as a public company, and thank you to our developers and partners for their unwavering trust in us. We will continue to create value for our developers and customers through innovation. And together, I believe we will one day make real-time engagement ubiquitous.

Now let me turn the things over to Jingbo.

Thank you, Tony. Hello, everyone. I hope you are all safe and well. Let me start by first reviewing financial results for Q2, and then I will discuss our outlook for the full year.

Total revenues grew 128% year-over-year to $33.9 million in the second quarter of 2020. This was due to both organic growth and the spiking usage caused by COVID-19. On a sequential basis compared to the first quarter, we continue to see usage at heightened levels with strong commercial growth in the U.S. and the rest of the world, as social distancing and travel restrictions remain in place.

On the other hand, China gradually came back to normal, which led to lower usage compared to the peak levels we saw in February and March, but still much higher than pre-COVID industry levels. We believe this is because COVID has changed people's long-term behavior towards video engagement. For this reason, we see the increased usage during this quarter as a promising indicator of a long-term growth opportunity and not just a blip on this radar.

For trailing 12 months, constant currency dollar-based net expansion rate was 183%, again, partially due to COVID-19. As the situation stabilizes, hopefully, we expect our expansion rate will likely come back to levels similar to what we saw in 2018 and 2019.

Now turning to cost, expense and margin. The significant increase in demand and a disciplined investment approach drove net income profitability from both GAAP and non-GAAP perspectives. For my following comments, I will focus on non-GAAP results, which exclude share-based compensation expense.

Non-GAAP gross margin for the second quarter was 66.6%, which was 2.8% lower than Q2 last year, primarily due to our international expansion provisions with higher infrastructure costs, such as South Asia and South America. Because we currently use one standard pricing for all regions, our gross margin in these areas with higher cost is significantly lower than our overall gross margin. Going forward, we plan to address this issue by further optimizing our cost in these areas and gradually shifting toward region-specific pricing.

Non-GAAP R&D expense were $10.5 million in Q2, up 114% year-over-year, as we continue to build our R&D team. R&D expense represented 31.1% of total revenues in the quarter, slightly lower than 33% in Q2 last year. Looking forward, we will continue to focus on our investment on R&D to drive product innovation and strengthen our technology leadership.

Non-GAAP sales and marketing expenses were $5.5 million in Q2, up 22% year-over-year, mainly attributable to team expansion and increased advertising expenses. Sales and marketing expenses represented 16.2% of total revenues in the quarter compared to 30.4% in Q2 last year. The significant 14% drop in percentage clearly demonstrates the efficiency and scalability of our developer-centric go-to-market model.

Non-GAAP G&A expenses were $2.6 million in Q2, up 1.8% year-over-year, mainly due to team expansion and professional service fees related to the IPO. G&A expenses represented 7.6% of total revenues in the quarter compared to 8.3% in Q2 last year. Non-GAAP operating income was $4.7 million, translating to a 13.9% non-GAAP operating margin in first quarter. This compares to a net loss margin of 2.2% in Q2 last year.

Adjusted EBITDA was $5.7 million in Q2 with a 16.9% margin compared to a 0.7% margin in Q2 last year.

Turning to cash flow. Our operating cash flow was positive $7.5 million in Q2, up from negative $4.9 million last year. Free cash flow was positive $3.6 million in Q2, up from negative $6.6 million last year.

Moving on to balance sheet. We ended Q2 with $641 million in cash and cash equivalents, up from $152 million at the end of Q1. The increase was primarily due to the net proceeds from our IPO and the concurrent private placement as well as a positive free cash flow.

Now turning to guidance. COVID-19 is still an unprecedented variable for our business model, where historical experience may not apply. Our guidance on full year revenue reflects a number of assumptions that are subject to change based on uncertainties related to the impact of the COVID-19 pandemic. With that, for the full year of 2020, we expect revenue to be in the range of $125 million to $130 million, which would represent approximately 94% to 102% year-over-year growth.

In closing, we executed well in Q2, and we are proud of how our team dedicated themselves to supporting our developers and customers around the word. Thank you to the entire Agora team and everyone. Please stay healthy and safe.

Operator, let's open up for questions.

(Operator Instructions) The first question we have is from the line of Emerson Chan from Bank of America.

Management, I have 3 questions. The first question is about the COVID impact. I just want to get a rough sense of how much COVID still contributes to the growth in Q2. And what kinds of monthly traffic trend we have been seeing as we move from May, June to July? And secondly, how should we look at our long-term growth in post-COVID environment? In the second half of this year, we expect revenue to grow at a 54% to 67% year-on-year, which I think there should be limited COVID impact in China. So do we expect this growth rate to sustain in the next few years?

And for my last question, which is about the overseas expansion, especially in the U.S. I'm just curious on how we view this opportunity now given the current political environment? In terms of our full year guidance, how much overseas revenue growth we embedded in our guidance? Do we assume any impact from the potential restructuring in the U.S. and current political environment?

Thank you, Emerson. I will take the first 2 questions, and maybe Tony can talk about the third one. So as I said, in China, COVID really -- the situation really eased in -- toward end of April, mid-May. And after that, I will say, the temporary spike in usage caused by COVID was really impacted outside China. However, same -- remain pretty much the same in Q2 compared to, say, March. And therefore, actually, we see demand remain at heightened levels and actually a strong growth still from new apps use cases and the increasing usage from users.

So it's a mix of 2 different situations. And it's very hard to quantify exactly how much additional usage was caused by COVID-19. But I would say, it's probably not more than 20% that was really caused by the COVID-19 situation.

And in terms of the environment, I guess, the environment in June, July and early August, for now so far, it's pretty healthy. And I would say, environment today is, to a large extent, free from the impact of COVID-19. So we would expect for the end of Q3 -- for the quarter of Q4, results shouldn't have too much impact from COVID-19. Of course, that's assuming the situation continues to stabilize and without any further worsening in situation such as the -- what people call second wave. So that's the first question.

And for the second question, we do see that running into the heart of the COVID-19, we will see demand spike significantly. And after things stabilizes, demand will -- some of the demand will go back. However, as situation in China has clearly shown, even after COVID-19, the demand will not go back to pre-COVID levels. And again, that's because people have really changed their attitudes towards using video engagement across distance, instead of having to do everything face-to-face. And developers and businesses also come to -- have come to appreciate the efficiency and the convenience of the video engagement. And that's why we see many more use cases and you'll see users stick around with new -- [to the how] video engagement, and that will persist now. So we do see very strong long-term prospect.

And in terms of revenue growth, we do see that long-term demand is definitely there. However, what we cannot control is the emergence and expansion -- I'm sorry, emergence and maturity of use cases. That's subject to the developers to eventually see and realize long-term potential. What we can do is provide them the best tools possible. And that's really our focus.

All right. For the third question on -- since the beginning, we want to build a global product and serve global developers and customers. And that has been our commitment from the -- from almost day 1 of the company.

Now we already have customers around the world, not just in U.S. or China. We will continue to focus serving global developers and customers. And the trend we are seeing is developers and customers are also becoming even more distributed and diversified. Many of them now have workers with their team across geographies and serve users also around the globe. It's hard to say where -- many of those where they are really based. So we will continue to provide better service to customers and deliver in any region around the globe. And we continue to be in -- markets other than China and the U.S. will contribute a significant portion of revenue in longer term.

(Operator Instructions) The first (sic) [second] question we have is from the line of Yang Liu from Morgan Stanley.

Three questions from my side. The first one, could management update us in terms of the demand dynamics from different verticals? I remember that online education is one of the biggest contributors before the IPO. How about the revenue contribution in the second quarter? And how about the growth in emerging use cases like enterprise communication and telemedicine, et cetera?

The second question is the gross margin outlook. We are happy to see that the company is expanding to new regions. But the high infrastructure cost, there is a kind of concern. What should we look at the forecast in the long-term gross margin given the dynamics of entering new market and also streamlining costs there?

And the third question is could management update us in terms of the technology performance versus major competitors in different markets, especially given actually Agora launched the first industry standard. Do you expect that competitors will be able to catch up in terms of the technology performance?

Thank you. So I will take the first 2 questions. First of all, on demand dynamics, in fact, the contribution on education in Q2 was lower compared to Q1. And the reason was that in China, where we generate a majority of revenue from the education sector at the moment, Q1 was really kind of the peak of the usage level because all the schools were closed and a lot of the education providers had to move all their classes online and that caused significant increase in demand. And towards end of April and May, gradually schools reopened across the country with a few exceptions and then some of -- most demand actually fell back. And that's why in the short term, Q2 compared to Q1, in the short term, demand from education actually decreased. However, looking forward, we continue to believe that education is the most promising vertical, both because the online education sector is growing very rapidly, not just in China, but across the globe.

And secondly, the provisions on public school education are also incorporating more and more video features for distance learning. That's part of their overall offering. So we see -- we continue to see strong demand for our performance. Previously, we're mainly focused on small class, one. And now we see that more and more large classes are also moving -- are also starting to adopt IT technology powered by us instead of the traditional one-way streaming technology.

And in terms of emerging use cases, we continue to see many experiments. Actually, one Tony mentioned earlier in his remarks, like co-listening, co-watching, like exam proctoring, obviously, as we mentioned in the past communication and also health care. These currently contribute to a small portion of total revenue, but we see the strong growth there. So if we take a longer-term view, we do think it will contribute to a great -- greater proportion of our revenue.

So the second question on gross margin outlook. We saw in Q2, again, partially due to COVID-19 that a lot more use cases, a lot more apps from countries such as -- regions in South America, South Asia, Eastern Europe or even Africa. And the situation in these areas is infrastructure cost, bandwidth, co-location space and usage is actually more expensive. On the other hand, you -- price is the same, and that caused depressed margin in these areas. Previously, the revenue contribution from these areas were much smaller. So the impact was less too. And we also saw that there was much more international or cross-region engagement activities on the telephone, which obviously would involve higher infrastructure cost. But again, we charge the same price for any engagement. And that's, again, partially due to COVID. So as I said, we will try our best to reduce our cost in those areas and will start experimenting with regional pricing so that we can mitigate the issue. However, with that said, in the near term, in the immediate next 1, 2 quarters, maybe we're continuing to be under pressure in terms of gross margin. In the longer term, we do believe, as we scale, we will enjoy from better economy of scale. And hopefully, the margin will come back to a more normal level as we have seen in the past.

All right. For the technology performance leadership, I think I mentioned a few things, including on the [backbone], we also keep rolling out our improved audio and video quality releases. But one thing, I specifically mentioned, is XRA where it's an industry-first experience level agreement, which guarantees the experience level we provide through our RTE APIs, which is not really like in the past. It's only a guarantee of your availability. But I'd rather give you a sense and the level of guarantee of how good those audio and video experience are. It's like adding a dashboard for a car. Initially before, in the past, it's almost like every customer is driving a car without dashboard. But now we're adding the dashboard for the first time for the whole industry. And we are also working on additional new building blocks to help developers to easy -- to more easily create real-time engagement sessions or use cases. So for that, I think that's something -- like the experience level agreement, it's something really focused on helping our customers and developers better use the technologies to create their user experience or use cases. It would be something that in the future, every provider for such APIs has to provide. I believe that's going to be the trend.

For -- to that topic, I'd also like to invite you to join us at our RTE 2020 Conference for more product announcement and real-time engagement news. This is an annual conference hosted by Agora in San Francisco and Beijing. This year, it will be a global virtual event starting on October 13 to 14, for U.S. and European -- for Europe -- for U.S. and Europe time zone. And then October 22 to 24 for Asia time zone. Registrations will be open very soon.

A quick follow-up here is in relation with the escalating China-U.S. tension. Given Agora is running 2 headquarters in Silicon Valley and Shanghai and have high exposure in both China and the U.S. markets, how does this kind of geopolitical tension impact the business, [particularly] given some of the customers already got banned in the U.S.?

So U.S. revenue contributions so far for us is high single-digit percentage. We're not presently aware of any impact or potential impact to our business. But we don't want to speculate on where things will go. We will use worry -- we will be more careful and watch closely to how things will go. As always, to us, I think as always, change is the only certainty as we participate in the future. Today, the work is perhaps in the fate of change, which some of us may find uncertainly. Perhaps some of those changes are similarly beyond our control. And we don't want to focus on things we cannot control. Rather, we want to instead focus on the things we can work on. In any case, we want to reiterate our unwavering commitment to our global developers and customers, including those in the U.S. We are fully prepared and we'll meet our challenge, wherever they may be and whatever it may take. And we will always be open and transparent to our most important assets, our people, our developers and our customers.

(Operator Instructions) The next one we have is from the line of Rich Valera from Needham.

A couple of questions from me. First, you saw really strong quarter-over-quarter gains in new active customers on the platform in Q2. And I'm wondering what you attribute that to. If there was any new or different marketing or new business development activities that may have driven that? Or do you think perhaps COVID was a catalyst? But presumably, those customers are new and didn't really contribute to revenue, but will contribute to future periods. So just wanted to see if you can give any color on those strong new customer additions.

Sure. So for us, it's really a conversion cycle. Initially, we need to have developer registration. So [these purchased on the platform it carries per minute, they try to] extend. And then as the use case is validated, it will start to scale. And then gradually they become customers and revenue start to increase. So we increased in number of active customers in Q2, which we define as customers who contributed to company $100 of revenue in past 4 months.

Actually, a precursor to that was a rapid increase in developer registration. As you can see, we added more than 20,000 registration apps in Q1 and again, more than 30,000 in Q2. I guess that's probably one indicator you can look at in term of the source behind the customer growth.

That makes sense. And then you'd identified 2 10%-plus customers in the first quarter. I think one was a social media platform. One was an e-learning customer. Did you have any 10% customers in the second quarter?

The answer is no. Both of them are still our customers, and each of them contributed about 9% of revenue in Q2, down from 14% and 10% in Q1. And as we disclosed before, the 14% customer in Q1 was education customer. And a big part of their business was the off-line physical classrooms. And that's why in Q1, they will still have classes online was our help. And in Q2, actually, some of that demand faded. But still, they remain as a very significant customer of ours.

Understood. And then just one more, if I could. Your new sort of quality and experience measuring platform, I think you call it XRA, can you tell us where you are in the rollout of that? Has it been out there [are you talking] to your customers at this point? And what feedback have you gotten on it if it has been out in the field at this point?

Yes. I would say, it's in the process of launching such an agreement with our customers. Again, it's experience level agreement. Basically, it's not guaranteed reliability of our servers or APIs rather a guarantee the latency of real-time audio or video or the trigger of the real-time audio/video, those kind of things. And by looking at those measurement, you would be able to know, no matter it's 1 million minutes running a day on our platform or 10 million minutes a day running on our platform, you will know how many minutes is in premium quality. How many minutes out of the total volume is non-premium quality, which is a good transparency to our customers view or understanding of the service -- real-time engagement service they are running on. Clearly, they would be running those services for their education purpose or social purpose. By be able to those numbers and get to know how good it is or how good -- how bad it is, they can have a sense of how their social education customers' satisfaction would be. That's what we learned from our early sign-ups or agreement signing with our customers so far. It's -- I think we received a tremendous welcome for that rollout.

And maybe I can further point out that this kind of product or service, it's not really for our interest. It's more rather in consider of benefit to our customers and developers. It actually give us a higher standard to met -- to meet in the future. We have to deliver the experience level so that we will be able to satisfy the agreement we have with them. And we also put in real commitment by agreeing if we are not meeting the level, we will complement them with additional credits in the future. So this is a very serious commitment to our customers.

(Operator Instructions) The next one we have is from [May Lee] from US Tiger Securities.

So one question for Tony, another one for Jingbo. First for Tony, can you just give us a preview of your product road map establishing in R&D in the future? For example, what kind of new products or futures are you going to introduce in the next 1 year or 2?

And secondly, for Jingbo. As your sales and marketing expense ratio improved a lot in the quarter, I believe your [direct driven] go-to-market motion is very efficient. But given the huge amount of opportunities going forward, how do you think about the balance between investments for the future and productivity improvement?

Yes. We -- as I mentioned a little bit just now, we have quite a few products in -- under development on our road map, where one of the things I mentioned was real-time engagement APIs. It's going to provide additional support other than just real-time audio and video. And we'll accelerate or help our developers and customers more efficiently create new use cases. This is something we are going to roll out in the next quarter or so.

And as I mentioned, the XRA, the experience level agreement is another major offering or major commitment we start to roll out to our customers in regions. And there are more exciting news that will be announced in our RTE 2020 conference, which is annual conference. It's also the largest one in the industry. You are welcome to join that event to know more around those announcements.

So on the sales and marketing spend. Yes, it's true that the sales and marketing spend as percentage of revenue dropped significantly in this year compared with the -- compared to last year. And I think that's largely due to a developer-focused go-to-market model for developer community and enthusiasm.

What we have been saying is that this is not a salesperson business model. So what that means is we can't really just drive sales simply by hiring more salesperson. This is a product that requires deep integration and require the trust from developers. And that's why it's always more important, more efficient to go where the developers are. And so far, we have been doing that through marketing, through conferences and through all the online forums and developer hubs where we have pretty strong presence, and -- so it's the word-of-mouth of developers who have used our service. So it's hard work and it's pretty long-term work. And that's why in this year, when revenue increased, the sales and marketing expense simply cannot catch up, and that's why we enjoyed very strong operating leverage and our margin improved significantly.

So looking to the future, I totally understand what you mean, how to balance the investment with profitability in the footprint. I guess the point is now that we don't invest for the future. We certainly do. But the question is how can we invest more efficiently? We think, again, we'll do a lot of new things to further strengthen our developer community and developer engagement efforts, but that will not be in the form of simply hiring more salespeople. And again, what that also means is, we don't expect sales and marketing expense will grow at the same speed as revenue.

Thank you. We don't have any further questions at this time. (Operator Instructions) And the next question we have is from the line of [Kevin Shaw] from BlackRock.

Congrats on the great quarter. So I have 2 questions. So first of all is how do we think about our customers such as the -- for example, the education clients or the short video client, did they do their own RTE solutions internally? Do we think that self-development can be a threat going forward?

And my second question is how do we think about industry level competition? What is the overall market share? And what is the pricing comparison versus others?

All right. So for the customers who's trying to build their own in-house solution, I think it's the thing we've been dealing with from the beginning of this company or this business. Actually, initially, because there's no so-called third-party professional provider on this, we have to convert one by one from in-house technology to our platform. And we've been successful with midsized, smaller size or some of those verticals, we're very successfully migrating almost all of them. But still, there will be several or some of those larger ones, they do tend to want to at least try to build something on their own, for the reason of maybe thinking they could be something as good or it could be more customized to their needs, which we would consider that as normal practice we'll be running to day-to-day. But from our view, I think our focus is trying to really become the professional third-party provider, which can show the strength on quality side, on continued use of APIs, on capability and global coverage, all that. And in fact, the XRA agreement, as I mentioned just now, is something I never see any in-house developers really have, which we think as a professional provider can further strengthen our strength showing our value to those customers. But it will be a trend that we continue to manage to increase our competitive advantage over those practices, and we have the belief that eventually, a third-party professional provider will be more efficient and more effective and more professional in doing so.

And other question is around competition. I think, again, this is a saying that in the industry from, I think, 3 years after we established and it's been growing, especially when the market becomes bigger and bigger. But overall, I think because the industry is quite early, maybe everyone in this industry, the understanding towards value proposition and the direction of the industry goals might not be the same. Like again, I will refer back to XRA. This is something we are the first one to roll out in the whole industry, which shows our understanding and our commitment to our developers' and customers' needs. While other companies does not really rolling out this offering, I don't think we are really competing on that direction. So we will look more into our customer demand and needs. And the truth is we actually see a lot of additional demand that we haven't yet fully satisfied, which is an area we are going to continue to focus on.

Again, we don't have any further questions at this time. (Operator Instructions) We don't have any further questions at this time. I'll now hand the conference back to today's presenters. Please continue.

All right. Thank you for joining our conference call, and welcome to -- again participate in our future events and join our RTE 2020 online events.

Thank you. Good bye.

Ladies and gentlemen, this does conclude our conference for today. Thank you all for participating. You may now disconnect.