This article first appeared on GuruFocus.

Total Revenue: $35.4 million, up 12% year-over-year.

GAAP Net Profit: $2.7 million with a net margin of 7.8%.

Gross Margin: 66%, a slight decrease of 0.7% year-over-year.

R&D Expenses: $13.8 million, decreased 52.8% year-over-year.

Sales and Marketing Expenses: $6.5 million, decreased 5.6% year-over-year.

G&A Expenses: $5 million, decreased 48.4% year-over-year.

Operating Cash Flow: $0.7 million, compared to negative $4.6 million last year.

Cash and Equivalents: $374.3 million at the end of Q3.

Share Repurchase: $4.8 million spent, repurchasing 5.2 million ordinary shares.

Q4 Revenue Guidance: Expected between $37 million and $38 million, representing 7.2% to 10.1% year-over-year growth.

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Release Date: November 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Agora Inc (NASDAQ:API) reported its fourth consecutive quarter of GAAP profitability, with a net profit of $2.7 million and a net margin of 7.8%.

Total revenue for Q3 2025 reached $35.4 million, marking a 12% year-over-year increase.

The company is experiencing strong growth in its core real-time engagement business, with significant investments in conversational AI.

Agora Inc (NASDAQ:API) launched its conversational AI engine 2.0, integrating advanced audio processing technologies to enhance user interaction.

The company has expanded its global infrastructure to ensure consistent performance across key regions, supporting high concurrency and varying network conditions.

Gross margin for Q3 2025 decreased slightly by 0.7% year-over-year and 0.8% sequentially.

R&D expenses, although reduced by 52.8% year-over-year, still represent a significant portion of total revenues at 39.1%.

The company faces challenges in scaling conversational AI solutions due to technical complexities and reliability issues.

Despite growth, the dollar-based net retention rate for some business segments remains below optimal levels, with one segment at 90%.

Agora Inc (NASDAQ:API) has a net cash outflow due to share repurchases, which could impact liquidity if not balanced with strategic growth investments.

Q: Can you share about the key trends in both domestic and international markets for the coming quarters, and what are the key downstream sectors driving demand growth? A: (Bin Zhao, CEO) In China, demand recovery continues with growth in social entertainment, education, IoT, and digital transformation sectors. Internationally, live commerce is growing rapidly, with other verticals also showing growth. The overall growth rate is slightly faster internationally than in China.

Q: Could you provide an update on the development of AI applications and key scenarios that could drive meaningful revenue in the near term? A: (Bin Zhao, CEO) We focus on conversational AI, which involves real-time human-AI voice interaction. Key use cases include call centers, education, and companionship toys. We expect conversational AI to become a meaningful revenue contributor by the end of next year.

Q: What is the profitability outlook for the fourth quarter of this year and for 2026? A: (Jingbo Wang, CFO) We expect to achieve GAAP operating profit in Q4, with GAAP net profit growing from Q3 levels. For 2026, our target is to achieve GAAP operating profit for the full year, with expected year-over-year net income improvement over 2025.

Q: What drove the solid performance in Q3, with revenue slightly above the midpoint of the guidance range? A: (Jingbo Wang, CFO) Strong demand from U.S. and international markets, particularly in live commerce, social, and fintech sectors, contributed to the performance. In China, growth was driven by social apps, education apps, and rapid growth in the IoT sector.

Q: How is the adoption trend for AI companionship toys, and when should we expect these use cases to start contributing to financial results? A: (Bin Zhao, CEO) AI companionship toys show strong momentum, with customers like [inaudible] seeing impressive sales and usage. We expect more manufacturers to integrate our solutions and come to market in the next few months.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.