Good day and thank you for standing by. Welcome to the Agora Inc.'s First Quarter 2025 Financial Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. The company's earnings results, press release, earnings presentation, 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; and Jingbo Wang, the company's CFO. 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 what the company believes 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 the performance of its business and which the company discussed in detail in its filings with the SEC, including today's earnings press release and the risk factors and 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 make on today's call. With that, let me turn it over to Tony. Please go ahead Tony.

Thanks operator, and welcome everyone to our earnings call. I'll first review our operating results from the past quarter. I'm very happy to report our second consecutive quarter of GAAP profitability in Q1, driven by double digit revenue growth year-over-year on a comparable basis and disciplined cost management. This is a great achievement, and I want to thank Agora and Shenwang teams for their efforts and dedication. Total revenue in Q1 were $33.3 million up 12% year-over-year, excluding revenues from certain end of sales, low margin products with healthy business expansion and net retention rate recovery from both Agora and Shenwang site. Our GAAP net profit for the quarter, though still -- still at a modest base, more than doubled from the previous quarter. As you know, Q1 typically marked our seasonal low point with fewer calendar days and reduced online activity during the New Year holiday period. Considering the seasonal trend and our current business momentum, we're confident that we will maintain GAAP profitability for the remainder of the year. At the end of Q1, we had more than 1800 active customers for Agora and close to 2000 for Shenwang excluding [indiscernible], both representing an increase of 5% compared to one year ago. Now, let's turn to our business product and the technology updates for the quarter. In March, we announced the general availability of our conversational AI engine in China enabling developers to create interactive voice experience with any large language model. This product has been refined based on extensive customer feedback during the private and public beta phase. Today, this product is still in the public beta stage for the U.S. and the global markets, and it already delivers industry leading performance on latency, noise suppression, interruption handling, and network resilience. Our conversational AI engine unlocks innovation…

Thank you, Tony. Hello, everyone. Let me start by first reviewing financial results for the first quarter of 2025. And then I will discuss outlook for the second quarter. Total revenues for the first quarter reached $33.3 million exceeding the high end of our guidance range. On a year-over-year basis and excluding revenues from certain end of sale low margin products, revenue growth accelerated to 12.1%, up from 3.6% in Q4 last year. This demonstrates a clear pickup in our business momentum. Agora revenues reached 18.6 million in Q1, growing 17.7% year-over-year and 6.9% sequentially. This sustained performance reflects our successful market expansion and growing adoption, particularly in high potential verticals, such as live shopping and entertainment, where usage continues to grow. Shengwang revenues reached RMB 105.5 million in Q1, excluding certain end of sale low margin products. Shengwang revenues grew 6.7% year-over-year and declined 13.7% sequentially. The year-over-year growth reflects continued business expansion and adoption in key verticals such as entertainment and IoT. While the sequential decline is mainly due to normal seasonality with Q4 historically seeing peak demand for digital transformation projects and Q1 experiencing software activity from social and education customers due to holidays. Dollar-based net retention rate is 96% for Agora and 85% for Shengwang, both improved from previous quarters. Moving on to cost expenses. Gross margin for the first quarter was 68%. If we exclude gross profit from certain end of sale products, gross margin of continuing business increased 0.6% year-over-year and 1.4% quarter-over-quarter. As we mentioned in previous earnings cost, we restructured and reduced our global workforce in November 2024. As a result, operating expenses decreased 6.1 million from $32.6 million in Q2 2024 as a baseline and reached 26.5 million in the first quarter. R&D expenses were $14 million in Q1 equals 22.7%…

Hi management. Thanks Tony and Jingbo for the introduction, for the results. Firstly, congrats on the strong results in 1Q and the solid guidance, and I have two questions here. Number one is about the AI demand and the language model is getting more powerful, we see more human-machine interaction. What are the key areas you see more AI application, I think you mentioned like convenient toys and some edge AI devices as well. So, what could be the future growth drivers in the area of AI, that's number one. Number two -- for number two question is, regarding the breakdown for China and the overseas business and how do we see the demand trend in future, by volume or -- and by the ASP trend?

I'll talk about AI. First of all, AI agent has been the biggest topic among tech communities this year. However, we will focus on the conversational AI side, which is more directly related to our business. What we see is several key use cases that are mostly active. First is education use cases, especially around language learning and practice side, as I just mentioned in the script, in my opening remark. And also IoT side, especially lot of effort trying to build conversational toys that can really talk to like kids or users with meaningful content, and also there's clear demand around kind of call center services where there's outbound calling for marketing or other purpose, and also customer service in call center use cases. Those are the most clear verticals or use cases in our recent engagement with our developers.

Thank you, Tony. I'll talk about the demand trend. So in the U.S. and global market, as you can see, growth rate has -- is now in this quarter about 18%, so close to 20% already. So, we are seeing growing adoption amount, actually not just our customers, more important, we are seeing growing adoption among consumers who are likely to [indiscernible] shopping and entertainment apps, especially in North America and Europe, these apps we have seen, become really dominant in China for some time, but now we are finally seeing them gaining traction in North America and Europe as well. So, that's one of the most important growth driver in this quarter for us. And secondly, for Asian customers, we are finally seeing some demand recovery, even including India, for both education and entertainment use cases. So overall, in U.S. global market, we see pretty solid demand and we think there's still a lot of potential for further penetration. And also in terms of the pricing, with the exception of certain Asian markets, overall, the pricing has been quite stable in more developed markets. So in China, also growth rate hasn't come to the level we see in U.S. and global markets, but as you can see, for the Shengwang business in Q1 year-over-year, it also delivered 6.7% year-over-year growth. So overall, the demand is recovering, so on several fronts, the social entertainment front we see that regulation is more stable now. So, there's less regulatory impact as we saw last year and the year before. Education demand is also recovering in quite healthy manner, and IoT and digital transformation, we have been seeing pretty strong demand in the past two years. Pricing wise, although still, it's a very competitive market compared to last year and the year before, pricing pressure is also more moderate in this year. So overall it looks more -- it all looks more positive than in previous years.

Thank you Tony and Jingbo.

Our next question comes from the line of [indiscernible] from CICC. Please ask your question [indiscernible]

Hi, this is [indiscernible] from CICC and thank you for taking my questions. So, my first question is regarding your overseas e-commerce business. So, in the past we have seen the live shopping and the interactive features becoming increasingly popular in e-commerce, especially in the emerging market. So, could you please provide more details on your current actions and the strategy enabling overseas e-commerce platforms or the application. And my second question focuses on the AI landscape. So, could you elaborate on any issues that you have observed in the downstream demand for AI power real-time interaction capabilities?

So, on live commerce use case, we are deep diving into the use case and continue maximizing the penetration into the space. There's clear demand and we see a lot of value creation potentials for us to deliver to our customers and we are continuing to gain new customers while the existing customer volume is stably growing. One side of the effort is trying to improve the video quality, which will give shoppers, online shopping participants better experience in live shopping use case. A lot of the customers are actually were local live shopping platforms, so there's literally almost no impact by the recent tariff -- tariff war. About AI. Now, again, we will continue to focus on conversational AI, which is really directly related to our business. The recent interest in building conversational AI agent is very clear, and a lot of our customers who -- in the POC stage, of their development, is getting close to product launch. Now, the key for our growth in terms of service volume or eventually the value created for the customer base is really depending on a product that has already found a product market fit. And the key to that is all those customers product actually did a lot of deep dive into the vertical use case and leverage and build a good product by finding out enough know-how in that vertical use case, so that the customer experience is smooth and compelling enough. And that process is why a lot of the customers have been working with us for a while, but still, before it can really achieve a product market fit, it will take some time.

Do you have any follow-up questions [indiscernible]?

No, that's it. Thank you for those comprehensive answers. That was really helpful.

[Operator Instructions] Our next question comes from the line of [indiscernible] from Nomura. Please go ahead [Bing] [ph].

Thank you Tony and Jingbo for giving me the opportunity to ask questions. I have two. First is also about AI. So, how do we think about the timing for the massive adoption of the conversational AI as we think that -- currently, there are still some pricing premium, right, compared to the non-AI applications. So, when do we see this tipping points for the massive adoptions. And I think a second question is about the competition landscape in China and how do we think about the pricing trends for the overall business and the impact on the gross margins?

All right, on the tipping point, I mean, I actually talked about a few use cases or verticals that's most active in our work with customers and developers. I want to point out further that even within each and every of those use cases, it's not one -- one category of product, like, let's say for customer use case. Each type of our call center service, for actually a different industry, have different know-hows. And so that the product market fit will happen gradually for each industry's specific, call center use cases. So, we will achieve product market fit one by one down the road, really depends on how those product, like I said finding out all the necessary know-hows. So to build up a smooth user experience. And the tipping point really relies on the maturity of product-market fit of those specific use case. Once it's matured and having a market fit, the volume for that specific product will grow significantly and it will naturally expand to all similar product providers in the same sector or in the same use case, which will again grow our volume, so that's the thing. However, I do want to mention that the maturity of such product is not decided by us. It's really decided by each individual vertical use cases for their industry know-how and product designs, or even launching approach will decide whether the product is going to be successful or not. And whether the product market fit is reached or still need more work. So that's the thing, I cannot really give a specific timing for how those products will mature and start to grow exponentially. However, what I want to say is it's not going to be one product, and it's not going to be even 10 or 20 products. It's going to be hundreds of different products and gradually reaching the tipping point. That's my view.

Okay, I'll take the question on the competitive landscape. So, I think you mentioned China. Yes, China has been a very competitive market. In fact, all the major cloud providers have, at some point competed in this market and really, really hard, but now only one still remaining really. The others are just like staying here, but with no meaningful market. So that shows how competitive the market is. But I think in the past few years it is clear and is a consolidation. Now, there have been less and less players, but they really just 3 and as conversational AI become more and more important, we believe the competition will not be just like full-time communication. It will be time communication plus conversational AI, and we have invested heavily on this new area, we cannot say the same for our competitors. So, hopefully that will give us stronger competitive position in the future. And in terms of margin, yes, the competition is more fierce in China, and margin is slightly lower in China compared to the global and U.S. markets. But for us, we, first of all, we focus on, we tend to focus on the higher value use cases, which tend to have higher margins, and secondly, we continue to do a lot of technical optimization on the cost end, and that's why we have been able to maintain a relatively stable gross margin as you have seen in our earnings. So that will continue to be our strategy going forward.

Thank you Tony and thank you Jingbo.

[Operator Instructions] Right, there are no further questions. Thank you everybody for attending the company's call today. As a reminder, the recording and the earnings release will be available on the company's website at investor.agora.io. And if there are any questions, please feel free to email the company. And so with that, we conclude the program today. You may now disconnect your lines.

Thank you. Bye-bye.

Thank you.