This article first appeared on GuruFocus .
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Total Revenue:$40.4 million, up 18% year over year.
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GAAP Net Income:$2.2 million, up 50% year over year.
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Net Income Margin:5.4%.
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Gross Profit:$25.7 million, up 12.5% year over year.
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Gross Margin:63.7%, compared to 66.8% in the same period last year.
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Dollar-Based Net Retention Rate:104%, compared to 94% in the second quarter of 2025.
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R&D Expenses:$15.4 million, up 10.2% year over year.
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Sales and Marketing Expenses:$6.4 million, down 1.5% year over year.
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General and Administrative Expenses:$5.5 million, down 9.5% year over year.
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GAAP Operating Loss:$1.0 million, compared to a loss of $3.1 million in the same period last year.
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Operating Cash Flow:Negative $2.1 million, compared to negative $0.4 million in the second quarter of 2025.
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Cash and Investments:$361.7 million in cash equivalents, bank deposits, and financial products issued by banks.
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Share Repurchase:Repurchased approximately 1 million ADS for approximately $2.7 million during the quarter.
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Third Quarter 2026 Revenue Guidance:Expected between $41 million and $42 million, representing year-over-year growth of 15.8% to 18.6%.
Release Date: August 14, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Total revenue reached $40.4 million, up 18% year-over-year, marking the third consecutive quarter of accelerating growth.
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GAAP net profit increased 50% year-over-year to $2.2 million, with a net income margin of 5.4%.
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Dollar-based net retention rate improved to 104% from 94% in the prior year, indicating stronger customer retention and expansion.
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Conversational AI products are gaining traction, with voice AI agents matching or surpassing human performance in tasks like outbound marketing and surveys, leading to cost savings for customers.
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The company repurchased approximately 1 million ADSs for $2.7 million in Q2, and has returned about $160 million to shareholders, demonstrating a commitment to capital returns.
Negative Points
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Gross margin declined to 63.7% from 66.8% year-over-year, primarily due to the product mix shift toward subscale Conversational AI products.
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Operating cash flow was negative $2.1 million in Q2, compared to negative $0.4 million in the prior year, indicating weaker cash generation.
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The company still recorded a GAAP operating loss of $1 million, though improved from a $3.1 million loss last year.
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Conversational AI revenue contribution is still small, with a target of only 5% of revenue by the end of 2026, and gross margins for these products remain low due to subscale operations.
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The company faces intense competition in the Conversational AI market from players like Twilio, which could pressure market share and pricing.
Q & A Highlights
Q: How is the demand trend in overseas and domestic markets, and what are the key sectors driving growth? What are the other potential scenarios that could drive meaningful Conversational AI demand growth, and what will be the revenue contribution from Conversational AI by end of the year and the gross margin trend? A: Jingbo Wang (CFO) noted that on the RTE side, demand in China from social, entertainment, and education customers continues to recover, while in the US and international markets, demand from live shopping, financial services, and gaming use cases remains healthy. Tony Zhao (CEO) highlighted that in call centers, voice AI agents are matching or even surpassing human reps in certain tasks, marking the beginning of a long transition. Jingbo Wang added that call centers represent a collection of many use cases, from easy ones like outbound marketing and surveys to harder ones, creating a multi-year runway. The company is also expanding into companionship devices, with customer robots entering new markets like Japan. They are still targeting 5% revenue contribution from Conversational AI by the end of the year.
Q: Could you please update on Conversational AI revenue progress and its projected contribution to full-year revenue? What is the conversion cycle for AI use cases, and how would you view the trend for AI revenue in the coming quarters? A: Jingbo Wang (CFO) explained that it takes several months for a use case to ramp from proof of concept to scale deployment. The company is targeting 5% revenue contribution by the end of the year, meaning the full-year 2026 contribution will be smaller. However, given the strong pipeline on hand, which is expected to grow, there is significant room for growth next year, and the company remains optimistic about the market outlook.
Q: Have you given a long-term guidance (3-5 years) for the AI penetration rate of total revenue and gross margin? A: Tony Zhao (CEO) outlined that the call center market will split into three segments: simple tasks handled by NLP-based technology, the hardest tasks handled by humans, and everything in between handled by voice AI agents, which will be a significant portion of the market. Jingbo Wang (CFO) added that with nearly 20 million call center workers globally, even a small share of that market would be transformational. Regarding gross margin, the current low margin is due to subscale operations and a focus on experience over cost optimization. Once scale increases, they expect gross margin to be similar to, if not higher than, the RTE business.
Q: Regarding the announcement to purchase an additional $20 million of shares, how much have you purchased to date, and what valuation do you believe reflects Agora's intrinsic value? Have you considered taking the company private or returning additional capital through a special dividend or accelerated buyback? A: Jingbo Wang (CFO) clarified that Tony Zhao has not started the $20 million repurchase due to blackout and legal restrictions, but will begin once cleared. The company has returned about $160 million to shareholders through buybacks, which is substantial relative to its market cap. They have not considered a special dividend at present. Tony Zhao (CEO) added that he does not plan to take the company private, preferring to stay in communication with the capital market and focus on business operations and technical advancement to create value for customers, shareholders, and employees.
Q: What is the latest competitive landscape in the overseas market against major competitors? A: Tony Zhao (CEO) explained that Conversational AI has several technology layers, including the agent layer, model layer, and infrastructure layer. Different players attack from different angles; for example, Twilio leverages its strength in telecom APIs. Agora focuses on voice models, audio pre-processing and post-processing, low-latency cloud infrastructure, and the agent layer to deliver the best call experience. The company's extensive experience in audio processing, such as handling noise, echoes, and packet loss, gives it a competitive advantage in improving the Conversational AI experience.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
