I'm pleased to report our sixth consecutive quarter of GAAP profitability alongside another quarter of strong top-line growth. Total revenue for the first quarter of 2026 reached $37.7 million, up 13.5% year-over-year. In March, we officially launched Agent Studio, a visual no-code environment that enables developers and enterprises to rapidly build, test, and deploy voice AI agents at scale. At the same time, many enterprises still struggle to deploy voice AI in production environments.

First, an environment that allows enterprise to design, test, and deploy AI agent in minutes rather than weeks or months. This solution addresses growing enterprise demand around content, data sovereignty, and intelligent workflow automation, and has been well received in industries including finance, government, and healthcare. Since the official launch of our Conversational AI Engine product last year, usage has demonstrated remarkable momentum with over 150% sequential growth every single quarter. Instead, they are asking how to deploy it at scale with reliability, low latency, and seamless integration.

We now compare quarterly revenue from the same cohort of paying customers year-over-year to calculate DBAR. This change aligns DBAR more closely with our quarterly revenue growth rate, making it easier for investors to compare the two. Total revenue for the first quarter reached $37.7 million, representing 13.5% year-over-year growth. Those results exceeded the high end of our guidance range of $36 million-$37 million, and reflected continued expansion and usage growth of our real-time engagement services in sectors such as U.S.

What went well
  • Reported a sixth consecutive quarter of GAAP profitability with net income of $1.1 million (a 2.9% margin), more than double the level of Q1 2025.
  • Total revenue reached $37.7 million, up 13.5% year-over-year and above the high end of guidance, with growth accelerating versus prior quarters.
  • Dollar-based net expansion improved to 99% (from 95% a year earlier) under a refined DBAR methodology now aligned with quarterly revenue growth.
  • Broadened the conversational-AI product suite: launched Agent Studio (a visual no-code environment), inbound and outbound conversational agents, and the Intelligent Meeting Engine for finance, government and healthcare; conversational-AI Engine usage has grown more than 150% sequentially every quarter.
  • Strengthened the ecosystem with integrations of Google's Gemini and xAI's Grok, recognition as a Google recommended partner, and a strategic partnership with NetEase Smart Enterprise; disciplined spending and roughly $13.1 million of buybacks (78.1% of the $200 million program now used) continued.
What went wrong
  • Gross margin fell to 63.4% from 68% a year earlier, dragged by the subscale conversational-AI product mix.
  • Operating cash flow dropped to $5.7 million from $17.6 million, largely because interest received fell to $4.3 million from $17.8 million.
  • Dollar-based net expansion, at 99%, remained just below 100%, indicating slight net contraction in the paying-customer cohort.
  • Conversational AI revenue contribution stayed small, targeted only to approach a ~5% run-rate by the end of 2026, so full-year 2026 contribution will be below that.

Guidance Changes

MetricPeriodCurrent guidance
Total revenueQ2 2026$39M-$40M (13.7%-16.6% YoY growth)
GAAP operating profitH2 2026Goal: achieve GAAP operating profit in the second half of 2026
Conversational AI revenueEnd of 2026Target ~5% revenue/ARR contribution
GAAP net incomeFull-year 2026Expected significantly higher than 2025

Performance Breakdown

MetricYoYNote
Total revenue +13.5% Accelerating RTE expansion in US live shopping, social/entertainment and financial services plus growing AI-related usage
GAAP net income more than doubled to $1.1M Revenue growth and improved operating leverage/cost discipline
Gross margin 63.4% vs 68% Product-mix shift as subscale conversational-AI products grow
Operating cash flow $5.7M vs $17.6M Much lower interest received ($4.3M versus $17.8M)
R&D expense +2.9% Continued investment in conversational-AI products

Earnings Call Themes & Trends

TopicPrevious mentionCurrent periodTrend
Conversational AI productizationDevice Kit shown at CESAgent Studio no-code launch, inbound and outbound agents, and the Intelligent Meeting Engine targeting finance, government and healthcare—
Ecosystem partnershipsModel integrationsGoogle Gemini and xAI Grok integrated, Google names Agora a recommended partner, and a strategic partnership signed with NetEase Smart Enterprise—
Disclosure approachSeparate Agora and Shengwang metricsSimplified: no longer breaks out Agora versus Shengwang revenue or customers, and DBAR methodology refined—
China market consolidationCompetitive pressure abatingA private competitor bought back its VC investors to focus on profitability and a large public-cloud competitor cut RTE staff, consolidation that should aid growth—

Q&A Summary

Without a regional revenue breakdown, what are the growth trends in overseas versus China and the verticals behind them?
Both China and US/international grew rapidly, with the US slightly faster; China RTE recovery continued across social, entertainment and education, while US/international strength came from live shopping, financial services and gaming, with a healthy new-customer pipeline.
What are the primary conversational-AI application scenarios now, and what revenue scale by year-end?
Call center and IoT (companionship devices such as Zuzu, which earns recurring monthly subscription revenue) are the biggest near-term contributors; usage has grown more than 150% sequentially each quarter since the March 2025 launch, targeting roughly 5% revenue contribution toward the summer and year-end.
What is the 2026 operating-profit target and breakeven timeline?
Operating and net income are expected to grow sequentially every quarter from Q1 to Q4; full-year GAAP net income should be significantly higher than 2025, with a goal of GAAP operating profit in the second half of 2026.
Update on overseas e-commerce/live shopping and its 2026 revenue potential.
Video-based live shopping is still new in developed markets; the marquee event drove strong new-user acquisition and stickiness, Agora won another fast-growing e-commerce customer from a competitor, and several other players are planning similar events, a vertical with lots of room to grow.
How should we think about the NetEase Smart Enterprise partnership's impact on Shengwang's 2026 growth?
It combines NetEase's AI and content-moderation expertise with Agora's RTE infrastructure across education, customer service, entertainment and enterprise collaboration, and also reflects further China market consolidation that should gradually aid revenue growth.
Is the domestic competitive landscape improving into pricing power, and what is the core (ex-conversational-AI) gross-margin trend?
The China market is consolidating as players stop chasing scale, which should help both revenue and margins; excluding conversational AI, core RTE gross margin stayed relatively stable, so the year-over-year blended decline is due to conversational AI's initial negative margin.
How are conversational-AI unit economics trending, and what if AI progress disappoints versus the Q4-2026 operating-margin target?
It is early: the negative gross margin now reflects many unpaid POCs and heavy experimentation cost; margins should turn positive and healthy as customers scale, ultimately matching or exceeding core RTE margins, and even if AI comes in below expectations the planned investment will not jeopardize the second-half-2026 operating-profitability goal.

More on Agora, Inc.

Reported 2026-05-27 · figures from the Agora, Inc. Q1 2026 earnings call.

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