Good day, and thank you for standing by. Welcome to Agora, Inc. Third 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 presentations, SEC filings and a replay of today's call can be found on its IR website at investor.agora.io. 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 the company's belief today, and actual results may differ materially. These forward-looking statements are subject to risks uncertainties, assumptions and other factors that could affect the company's financial results and its performance of its business, and which the company has discussed in details in its filings and SEC, including today's earnings press release and the risk factors of 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 take on today's call. With that, let me turn it over to Tony. Hi, Tony.

Thanks, operator, and welcome, everyone, to our earnings call. In the third quarter, our revenue was $15.3 million for Agora, flat compared to last quarter at RMB 141 million for Shengwang, an increase of 7.4% quarter-over-quarter. As of the end of this quarter, we have more than 1,600 active customers for Agora and more than 4,000 for Shengwang, an increase of 26% and 6%, respectively, compared to 1 year ago. Now moving on to our business, product and technology updates for the quarter. Let's start with Agora. We recently announced the general availability of video-based solution to power live shopping experiences. In recent years, live shopping has disrupted and transformed the entire e-commerce market in China. We believe that the U.S. and other developed market will soon catch up and embrace live shopping as the next big trend. According to McKenzie, live shopping could account for 20% of our e-commerce sales by 2026 and the U.S. live shopping market is estimated to be worth $35 billion by 2024. We're also proud to mention that Agora was highlighted as a leading lender in Gartner's recent market guide for live commerce in retail. With Agora, brands, marketplace and platforms can now seize the live shopping opportunity with ease. For example, we recently helped CommentSold, the leading fashion live shopping platform for retailers to introduce a new functionality that allows sellers to invite external participants into their shows simply by sending them a link or QR code. Sellers can easily and professionally host, celebrate -- can easily add professional host, celebrities, influencers or VIP customers to join their live shopping session video to provide more engaging content and boost conversion. This quarter, we also partnered with the Sandbox, a leading decentralized gaming virtual world to promote real-time engagement and social interactions within the…

Thank you, Tony. Hello, everyone. Let me start by first reviewing financial results for the third quarter, and then I will discuss the outlook for the fourth quarter of 2023. Total revenues were $35 million in the third quarter of 2023, an increase of 2.9% quarter-over-quarter and a decrease of 14.6% year-over-year. Agora revenues were $15.3 million in the third quarter, flat compared to last quarter and decreased 8.9% year-over-year. The year-over-year decrease was primarily due to reduced usage and increased pricing sensitivity from customers in emerging markets due to challenging macroeconomic environment and tightening financing conditions, starting from the second half of last year. So on revenues, we're RMB 141.2 million in the third quarter, an increase of 7.4% quarter-over-quarter and a decrease of 9.2% year-over-year, excluding revenues from the disposed CIC business. The quarter-over-quarter increase was primarily due to an increase in revenues from digital transformation customers or large enterprises. This is an area where we have seen strong revenue growth in the past 2 years. Going forward, we believe digital transformation market will become an increasingly important revenue and profit contributor for the Shengwang business. The year-over-year decrease was primarily due to slowing general economic conditions and fast evolving regulations in certain downstream markets. Dollar-based net retention rate is 98% for Agora and 89% for Shengwang, excluding revenues from discontinued business. Moving on to cost and expenses. For my following comments, I will focus on non-GAAP adjusted financial measures, which excludes share-based compensation expenses, acquisition-related expenses, financing-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 the third quarter was 66.9%, 3.3% higher than Q3 2022, mainly due to the change in product mix…

[Operator Instructions] First is from Tom Tang from Morgan Stanley.

I have questions. This is Tom from Morgan Stanley. So I have 2 questions. So first 1 is regarding the 2024 outlook for -- and would like to have a breakdown between Agora and Shengwang business? And the second question is regarding the competitive landscape in both China and overseas.

Sure. The status for both Shengwang and Agora for our growth side, I think the growth of global market overall, I'm optimistic about demand in midterm to long term. I think one big factor is the pandemic actually really changed consumer behaviors. Before the pandemic, the only scenario where people use real-time audio-video is basically web conferencing. The U.S. market, people are not that get used or familiar with all other use cases like co-working, experience, et cetera. Now after pandemic, although in some of the use cases, the volume decreased, but consumers are more adapt to all type of real-time engagement activities online, such as shopping with live conversations and relating with live sessions online, or co-working or watch party. I think the overall, those consumer behavior change can help us to see a lot of growth in both use cases and volume. Meanwhile, the macro environment is still challenging, but it is for all companies operating in this market. As a matter of fact, we actually see some small competitors start to run into financial difficulties. For 2024, our goal is to stabilize our existing business and grow into new regions and new use cases. In China market, a lot of macro and regulatory headwinds, as you probably already know, but usage of our platform continue to grow. Our market share in new adoptions also increased nearly 20% this year. And our digital transformation business serving large enterprise also grew more than 50% this year. For 2024, we expect our digital transformation business to continue to grow, and our goal for the Internet business is to further gain market share. And on the question about the demand and the pricing for Agora's market, our number of customers continue to grow at about 25%, as I mentioned earlier. Also, we see some more use cases start to emerge into growth mode such as live shopping. And I also mentioned the consumer behavior change actually give us hope that there will be more growth potential in both use cases and volume. Overall, the challenging environment is still there. And those in the near term still impact the operation, but a lot of potentials in the medium- to long-term time frame. Pricing-wise, more pressure in emerging markets but price has been healthy and stable in developed market. In China, overall, demand stable -- demand is stable from Internet customers, with some bright spots such as online karaoke and premium broadcasting streaming products. We see strong demand from digital transformation side, as I mentioned. Pricing in Internet sector generally dropped about 10% each year, but our gross margin remains healthy. Pricing in digital transformation is also more attractive in this market.

Next, we have Daley Li from BofA Securities.

I have got one question about the AI. You mentioned there's more application scenarios for the AI like AI assistant, AI tutor et cetera. And when do you think the AI can really have more meaningful revenue contribution of our business or in which application do you think which have -- could have much potential to drive our business growth in the future?

Yes, you're right. As I also talked about, there are many potentials in all sorts of use cases like AI companions, AI game players, et cetera. However, as I also mentioned, we rolled out this AIGC RTE SDK module in the last few months. We do have optimistic view of those potentials, just in a very basic concept, there's going to be much more real-time audio/video traffic among not just humans but between human and AI models. That's for long-term future. However, the development is still undergoing. I think there's a lot of since the need to figure out for large language model to be able to really act as a human-like personas like the AI companion or player in certain games. That's where we work hard with a lot of our customers and partners together to try to bring it to real life, and I don't want to overestimate in near term of such growth. This is really like in the stage that we and our customers and partners trying to validate and break through into each and every use case in the next few quarters.

[Operator Instructions] There are no further questions. Thank you, everybody, for attending this company's call today. As a reminder, the recording in the earnings release will be available on the company's website at investor.agora.io. And if there's any questions, please feel free to e-mail the company. Thank you, and have a great day.

Thank you.