Agora (API) AI Stock Analysis

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Agora

(NASDAQ:API)

54Neutral

Agora's stock score reflects ongoing financial difficulties, with declining revenues and negative cash flow impacting its financial health. However, achieving profitability and strategic growth initiatives in AI provide a positive outlook. Technical indicators are mixed, and the valuation remains unattractive due to a negative P/E ratio. The earnings call provided optimism, particularly in achieving GAAP profitability and a strong cash position.

Positive Factors

Earnings

Agora Inc. reported a revenue increase of 9% quarter-over-quarter in 4Q24, in line with company’s guidance.

Profitability

Agora Inc. achieved a net profit of US$0.2 million in 4Q24, with a net profit margin of 0.5% compared to -7.2% in 4Q23.

Technology Advancement

Agora released a Conversational AI SDK for OpenAI, which can integrate with OpenAI’s new Realtime API to enable natural voice interaction with AI.

Negative Factors

Profitability Challenges

The company's profitability improvement is expected to take time due to limited room for operating expense reduction.

Stock Rating

The stock rating for Agora is reiterated as Neutral, indicating cautious optimism but not strong enough for a buy recommendation.

Agora (API) vs. S&P 500 (SPY)

Market Cap

$194.36M

Dividend YieldN/A

Average Volume (3M)804.96K

Price to Earnings (P/E)―

Beta (1Y)2.10

Revenue Growth-5.85%

EPS Growth47.08%

CountryUS

Employees790

SectorTechnology

Sector Strength46

IndustrySoftware - Application

Share Statistics

EPS (TTM)-0.46

Shares Outstanding74,465,760

10 Day Avg. Volume1,206,109

30 Day Avg. Volume804,958

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)3.02

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$7.10

Price Target Upside172.03% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering1

Agora Business Overview & Revenue Model

Company DescriptionAgora is a leading provider of real-time engagement APIs, enabling developers to incorporate voice, video, and live interactive streaming into their applications. Operating in the technology and telecommunications sectors, Agora focuses on delivering scalable, high-quality communication solutions for a wide range of industries including gaming, social media, education, and healthcare. The company's core products include voice calling, video calling, and live streaming APIs that are designed to optimize user experience and enhance connectivity.

How the Company Makes MoneyAgora makes money through a usage-based pricing model, where customers pay based on the minutes of voice and video engagement facilitated by Agora's APIs. This model allows for scalable pricing tailored to the needs of different businesses, from startups to large enterprises. Key revenue streams include licensing fees for API usage and potential subscription models for ongoing access to premium features. Additionally, Agora may form partnerships with tech companies and app developers to integrate their services, which can drive significant revenue through increased API usage. Factors contributing to its earnings include the growing demand for real-time communication solutions, the proliferation of digital platforms requiring interactive features, and the company's ability to provide reliable, low-latency connectivity across various devices and networks.

Agora Financial Statement Overview

Summary

Agora faces significant financial challenges, with declining revenues and persistent losses on the income statement. The balance sheet shows strong equity but poor profitability metrics, and the cash flow remains strained with negative free cash flow and operating cash flow. Improvements are necessary in revenue growth and operational efficiency.

Income Statement

Neutral

Agora's income statement reveals significant challenges. The company has experienced declining revenue over the past few years, notably a decrease from $160.67 million in 2022 to $133.26 million in 2024, representing a negative growth trajectory. Additionally, gross profit margins have remained fairly stable but low, and net income has consistently been negative, indicating ongoing losses. The EBIT and EBITDA margins are also negative, underscoring operational inefficiencies and high expenses relative to revenue.

Balance Sheet

Neutral

Agora's balance sheet shows a relatively strong equity position with a debt-to-equity ratio remaining low due to minimal debt. However, the return on equity is negative, reflecting the company's inability to generate profit from shareholders' investments. The equity ratio is high, indicating stability and a strong capital structure, but the persistent net losses are concerning for future equity valuation.

Cash Flow

Neutral

The cash flow statement indicates significant challenges, primarily with negative free cash flow and operating cash flow over successive years. While there was a notable improvement in free cash flow from 2022 to 2023, it remains negative. The operating cash flow to net income ratio suggests that operating activities are not generating sufficient cash to support the company’s financial needs, which might affect liquidity.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
133.26M	141.54M	160.67M	167.98M	133.56M
	Gross Profit
85.45M	89.47M	99.42M	104.01M	86.36M
	EBIT
-53.31M	-87.32M	-103.82M	-80.69M	-5.19M
	EBITDA
-45.77M	-78.27M	-104.08M	-61.63M	-731.00K
	Net Income Common Stockholders
-42.73M	-87.22M	-120.62M	-72.69M	-3.11M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
269.66M	216.65M	427.71M	755.30M	635.44M
	Total Assets
699.65M	674.60M	800.72M	945.00M	692.90M
	Total Debt
50.14M	15.20M	2.27M	7.41M	0.00
	Net Debt
23.06M	-21.69M	-43.40M	-278.26M	-111.22M
	Total Liabilities
126.99M	69.85M	72.45M	78.74M	36.44M
	Stockholders Equity
572.66M	604.75M	728.26M	866.26M	656.46M
Cash Flow		Free Cash Flow
-51.92M	-30.46M	-254.25M	-32.47M	-6.31M
	Operating Cash Flow
-14.13M	-13.61M	-44.38M	-20.00M	6.56M
	Investing Cash Flow
-38.05M	56.64M	-151.06M	-57.69M	-535.05M
	Financing Cash Flow
45.99M	-52.37M	-42.15M	251.94M	533.64M

Agora Technical Analysis

Technical Analysis Sentiment

Negative

Last Price2.61

Price Trends

50DMA

4.90

Negative

100DMA

4.88

Negative

200DMA

3.79

Negative

Market Momentum

MACD

-0.62

Positive

RSI

22.97

Positive

STOCH

10.60

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For API, the sentiment is Negative. The current price of 2.61 is below the 20-day moving average (MA) of 3.67, below the 50-day MA of 4.90, and below the 200-day MA of 3.79, indicating a bearish trend. The MACD of -0.62 indicates Positive momentum. The RSI at 22.97 is Positive, neither overbought nor oversold. The STOCH value of 10.60 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for API.

Agora Risk Analysis

Agora disclosed 86 risk factors in its most recent earnings report. Agora reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Agora Peers Comparison

Overall Rating

UnderperformOutperform

Sector (58)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SSTI	68 Neutral	$201.01M	―	-12.48%	―	10.05%	-213.69%
MKTW	64 Neutral	$217.03M	3.72	-10.56%	6.01%	-8.81%	208.55%
IMMR	60 Neutral	$231.63M	2.74	35.11%	2.33%	3828.94%	129.01%
Sector *	58 Neutral	$11.04B	9.83	-6.56%	3.16%	7.59%	-10.43%
API	54 Neutral	$194.36M	―	-7.26%	―	-5.85%	47.08%
APPS	54 Neutral	$327.62M	―	-101.69%	―	-15.51%	-54.09%
EGHT	50 Neutral	$208.08M	―	-40.78%	―	-2.23%	19.48%

* Technology Sector Average

Performance Comparison

API

Agora

2.61

0.16

6.53%

EGHT

8X8

1.58

-0.62

-28.18%

IMMR

Immersion

7.07

0.16

2.32%

APPS

Digital Turbine

3.12

1.26

67.74%

SSTI

SoundThinking Inc

15.87

2.43

18.08%

MKTW

MarketWise

13.31

-15.69

-54.10%

Agora Earnings Call Summary

Earnings Call Date: Feb 24, 2025 | % Change Since: -53.39% | Next Earnings Date: May 26, 2025

Earnings Call Sentiment Positive

The earnings call presents a generally positive outlook for Agora, with significant achievements such as reaching GAAP profitability, strong revenue growth in core areas, and the launch of an innovative AI product. However, challenges remain, particularly in maintaining revenue growth for Xiong Wang amidst regulatory and economic pressures. Despite these challenges, the company's strong cash position and strategic initiatives in AI and share repurchases suggest a positive trajectory.

Highlights

GAAP Profitability Achieved

Agora achieved GAAP profitability for the first time in several years, marking a significant milestone for the company.

Revenue Growth

Total revenue in the fourth quarter was $34.5 million, up 4% year over year and 9.1% quarter over quarter, driven by new use cases such as live shopping and entertainment.

Growth in Core Revenues

Core revenues were $17.4 million in Q4, an increase of 10.8% quarter over quarter and 13.7% year over year.

Launch of Conversational AI Engine

Agora launched a new Conversational AI engine, which allows developers to create interactive voice experiences with AI models, potentially accelerating AI adoption across industries.

Strong Cash Position

Agora ended Q4 with $363.8 million in cash, cash equivalents, bank deposits, and financial products issued by banks.

Share Repurchase Program Extension

The board authorized a 12-month extension of the share repurchase program, reflecting confidence in the company's long-term growth potential.

Lowlights

Decreased Revenue from Xiong Wang

Xiong Wang revenue decreased 5.4% year over year, primarily due to slowing demand from social and entertainment verticals due to regulation and general economic conditions.

Slight Decrease in Gross Margin

The gross margin slightly decreased by 0.1% quarter over quarter and 0.8% year over year, after excluding certain end-of-sale products.

Limited Growth Forecast

The revenue guidance for Q1 2025 is between $31 million and $33 million, reflecting only a moderate increase from the previous year when excluding certain low-margin products.

Company Guidance

During the Agora, Inc. Fourth Quarter and Fiscal Year 2024 Financial Results Conference Call, the company provided guidance for the first quarter of 2025, projecting total revenues between $31 million and $33 million, compared to $29.7 million in the first quarter of 2024. This expectation excludes revenues from certain end-of-sale low-margin products. Agora aims to maintain sustained profitability throughout 2025, driven by strategic initiatives, operational efficiency, and opportunities in the generative AI market. The company achieved GAAP profitability in the fourth quarter of 2024 with a total revenue of $34.5 million, marking a 9.1% increase quarter over quarter and 3.6% year over year, excluding revenues from certain low-margin products. Agora's core revenues for the fourth quarter were $17.4 million, reflecting a 10.8% increase quarter over quarter and a 13.7% increase year over year. Gross margin for the quarter stood at 66.6%, with operating expenses at $28.5 million, down from $32.6 million in Q2 2024. Net income was $0.2 million, achieving a 0.5% net income margin. The company also extended its share repurchase program through February 2026, underscoring confidence in long-term growth potential.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.