After a Booming Growth amid COVID-19, Agora.io Returns to Normal in 2Q 2020
Agora.io released its second quarter financials, a 5% fall back on the quarterly revenue compared with the first quarter. The Sino-American tension is yet to cast its full shadow.
The real-time-engagement (RTE) company Agora.io (API:NASDAQ) announced its second-quarter earnings on August 17. For the three-month period, the company reported a revenue of USD 33.9 million, with year-over-year growth of 128%; free cash flow increased to USD 3.63 million and the cash and cash equivalent reached a new height of USD 641 million.
Agora.io has experienced a booming season in the first quarter of the year when the pandemic started to sweep over the world. The COVID-19 changed the way people work and hence yielded a strong growth driver for remote working environment builder companies: Zoom, Slack, G Suite and so on experienced a sharp user growth. Agora.io, as an RTE solution provider, benefited from the remote workstyle as the online communication behavior becoming a norm.
The pandemic has severely exacerbated the global economic development and companies have been affected and shut down during the period. Though the first-quarter revenue in 2020 nearly doubled the Agora.io’s earning in the fourth quarter in 2019 from USD 19.1 million to USD 35.6 million, the slowdown and even backsliding in the economic environment were inevitably reflected in the company’s second-quarter earnings.
The first-quarter revenue was boosted by the pandemic and the second quarter cooled down and brought the company back to the normal growth curve. In the second quarter, the constant currency dollar-based expansion rated increased from 166% for the TTM ended March 2020 to 183% for the TTM ended June 2020, performing beyond the industry average of 100% and proving a solid customer success strategy.
Agora.io went public in June this year with an IPO price of USD 50.50 and the share price started to experience a roller coaster ride during the Sino-American tension, especially during the time when the ‘Cold War’ extended from embassy shut-downs to the widened ‘China Tech Attack.’ The company was asked during the hearing whether if the tension between the two countries influenced its business, Agora responded as being not aware of any impacts at the moment. However, things may go out of their control if the situation changes.
The Sino-American tension has expanded to involve many Chinese tech companies, including ByteDance (parent company of TikTok), Huawei, Tencent (00700:HK) as well as those earlier black-listed companies like the AI unicorns Megvii and SenseTime. While ByteDance was forced to launch M&A talks with Microsoft, Oracle and other potential TikTok buyers, Huawei has faced a semiconductor supply chain shortage and even a breakdown as its major suppliers like TSMC bore the geopolitical pressure.