Good day and thank you for standing by. Welcome to Agora, Inc.'s First Quarter 2024 Financial Results Conference Call. Please be advised that today's conference is being recorded. The company's earnings results, press release, earnings presentations, SEC filing 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 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, which the company discussed in detail in its filing 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 under 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.

Thanks, operator, and welcome everyone to our earnings call. I'll first review our operating results in the past quarter. Agora's revenues were $15.8 million in the first quarter, up 3% quarter-over-quarter. This is a great result considering the macroeconomic challenges under the high interest rate environment and is mainly driven by usage growth from emerging use cases such as live shopping. As of the end of this quarter, Agora had over 1,700 active customers, up 16% compared to 1 year ago. Shengwang revenues were RMB 122.6 million in the first quarter, down 16% year-over-year, mainly due to a challenging macroeconomic and regulatory environment as well as the disposal of the customer engagement cloud business in the first quarter of 2023. As of the end of this quarter, Shengwang had over 3,800 active customers, down 2% compared to 1 year ago. Now, moving on to our business, product, and technology updates for this quarter. Despite a challenging operating environment, we continued to focus on enhancing the fundamental performance of our products. In both markets, we released new versions of our SDKs that set new standards for stability and performance, demonstrating our strong commitment to creating long-term value for our customers. Let's first talk about Agora. We recently launched our Adaptive Video Optimization technology that can deliver exceptional live video quality and enhance the overall user experience. It leverages our 10 years of real-world experience and expertise accumulated through hundreds of billions of minutes of video usage. This advanced technology utilizes various machine learning algorithms to dynamically adjust parameters and optimize performance at every step along the video processing pipeline. From the moment that video is captured to its final rendering and display on the viewers' screen, our technology continues to adapt to changing network conditions and device capabilities. Our Adaptive Video Optimization technology empowers our customers to differentiate their live video applications in three key areas: optimized image quality, unmatched video fluency, and ultra-low latency. For example, Kumu, a social live streaming application, recently adopted our Adaptive Video Optimization technology. Users now experience smooth, high-quality video without freezing, even on older devices and with slow Internet connections. Since implementing our Adaptive Video Optimization technology, Kumu has seen a 30% increase in session length and overall user engagement. This quarter, we also made concrete progress in engaging with Twilio customers as Twilio's programmable video product continued its sunset process. Additionally, we saw increased traffic to our website and developer community, reflecting our growing market share among developers. I believe this will help us reach a broader spectrum of developers and customers going forward. Last week, OpenAI launched GPT-4o, a true end-to-end multimodal ChatGPT that can directly reason across audio, video, and text in real time. It confirms our early prediction that generative AI models will soon gain the capability to interact with human users directly in voice or video format. We anticipate a paradigm shift in the interaction between human and AI models, which will inspire the next generation of killer applications. As this shift will lead to a substantial increase in the amount of voice and video feed transmitted globally in real time, the importance of a low latency and highly reliable transmission network will be higher than ever. This will position us uniquely to become the critical infrastructure in the AI-first future of human-computer interaction. Next, let's turn to Shengwang. We are thrilled to announce the launch of our new solution for live sports broadcasting. This summer, major sports events such as the European Football Championship and the Paris Olympic Games will attract billions of viewers globally. Our cloud-native solution is designed to provide customers an alternative to traditional satellite and studio-based broadcasting. Compared to traditional solutions that rely on satellite and private lines, our solution uses our global network and in-house algorithms to significantly reduce latency and enhance image quality. Apart from the technical advantage, our solution also offers cost savings and greater operating flexibility for our customers. Traditionally, hosts and commentators had to be in the same studio room or in the sports arena to cover a game. This approach incurs significant costs and also limits the number of commentators that can work simultaneously, resulting in viewers often having to listen to the same commentators. However, with our cloud broadcasting solution, hosts and commentators can now be anywhere with an Internet connection. Our technology ensures that the video and audio feeds of co-commentators in the same channel are highly synchronized with the sporting events broadcasting. As a result, many athletes, experts, and celebrities can create their channels to cover the same game, allowing end users to choose their preferred commentators to enjoy the game. Shengwang has partnered with leading sports broadcasting platforms in China to bring end users an elevated viewing experience for the upcoming European Football Championship and Paris Olympic Games this summer. I believe this new experience will trigger a major transformation in sports broadcasting and our powerful, flexible, and cost-effective solution will become widely adopted by additional platforms to power many other live sporting events throughout the year. In 2024, we'll continue to host our ChaoYinSu Program, which strives to facilitate start-ups to explore and build innovative RTE applications. Over the past years, we have collaborated with renowned venture capital funds, ecosystem partners, and industry leaders to bring one-stop support to start-ups. This year, we have brought in Moonshot AI, a prominent player in foundation generative AI models, to accelerate the development of applications that harness the power of RTE and generative AI. Participating start-ups will have access to Moonshot's latest functionalities and our full portfolio of product offerings to bring their ideas to life. We are excited to see what these innovative start-ups will create. The start-ups with the most compelling and groundbreaking applications will be showcased at our upcoming RTE conference in October. Before concluding my prepared remarks, I want to thank both the Agora and Shengwang teams for their hard work and commitment during this challenging period. Let's stay focused on strengthening our technology leadership and increasing market share, while also moving towards sustained profitability in 2024. With that, let me turn things over to Jingbo, who will review our financial results.

Thank you, Tony. Hello, everyone. Let me start by first reviewing financial results for the first quarter of 2024 and then I will discuss the outlook for the second quarter. Total revenues were $33 million in the first quarter, a decrease of 8.4% quarter-over-quarter and a decrease of 9.4% year-over-year. Agora revenues were $15.8 million in the first quarter, an increase of 3.3% quarter-over-quarter and an increase of 4.6% year-over-year. The increase was primarily due to the expansion and usage growth in certain verticals such as live shopping as well as business resilience in the U.S. market and other developed markets. Shengwang revenues were RMB 122.6 million in the first quarter, a decrease of 17% quarter-over-quarter and a decrease of 16% year-over-year. The quarter-over-quarter decrease was primarily due to seasonality since Q4 is generally the high season for digital transformation projects and Q1 is generally the low season for social and education customers who tend to have lower usage during the Lunar New Year. The year-over-year decrease was primarily due to slowing demand from Internet customers due to regulation and general economic conditions. The dollar-based net retention rate is 92% for Agora and 78% 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 exclude share-based compensation expenses, acquisition-related expenses, financing-related expenses, amortization expenses of acquired intangible assets, income tax related to acquired intangible assets, depreciation of property and equipment, and amortization of land use right. The adjusted gross margin for the first quarter was 63.2%, which was 3.9% lower than Q1 last year and 2% lower than Q4 last year. The decrease was mainly due to a change in product mix and lower utilization rate of infrastructure in Q1. Our adjusted R&D expenses decreased 13.6% year-over-year to $14.6 million in Q1. Adjusted R&D expenses represented 44.2% of total revenues in the first quarter compared to 46.3% in Q1 last year. Adjusted sales and marketing expenses were $6.3 million in Q1, decreased 25% year-over-year. Sales and marketing expenses represented 19.2% of total revenue in the quarter compared to 23% in Q1 last year. Adjusted G&A expenses were $6.5 million in Q1, slightly increased 6.6% year-over-year, primarily due to the increase in expected credit loss. G&A expenses represented 19.6% of total revenue in the quarter compared to 16.8% in Q1 last year. Adjusted EBITDA was negative $6.1 million, translating to an 18.4% adjusted EBITDA loss margin for the quarter compared to 17.7% in Q1 last year. The non-GAAP net loss was $4.8 million in Q1, translating to a 14.5% net loss margin in the first quarter, significantly lower than the net loss margin of 25.1% in Q1 last year. Now turning to cash flow. Operating cash flow was negative $6.5 million in Q1, compared to negative $8.9 million last year. Free cash flow was negative $7.1 million compared to negative $9.1 million last year. Moving on to balance sheet. We ended Q1 with $380.8 million in cash, cash equivalents, bank deposits, and financial products issued by banks, or $4.13 per ADS. The net cash inflow in the quarter was mainly due to deposits received in relation to the disposal of a small portion of land for the headquarter project of $19.3 million, which was offset in part by free cash flow of $7.1 million and share repurchase of $3.4 million. Now turning to guidance. For the second quarter of 2024, we currently expect total revenues to be between $34 million and $36 million. This forecast reflects our current and preliminary views on the market and operational conditions, which are subject to change. In closing, we'll continue to focus on enhancing our technology, increasing our market share, and moving toward sustained profitability in 2024. Thank you to both the Agora and Shengwang teams for your hard work and contribution during this challenging period. Thank you everyone for attending the call today. Let's open up for questions.

The first question comes from the line of Yang Liu from Morgan Stanley.

Two questions here. The first one is on your customer base. We saw a sequential decline in the first quarter this year, mainly for the Shengwang part. What is the reason for that? And is the customer churn behind us or will it be an ongoing process? Yes, that's the first question. The second one is on the outlook. The guidance implies some quarter-on-quarter improvement and year-on-year stabilization of the total revenue. What is the driver? Is it mainly helped by the Agora revenue, or are you expecting the Shengwang part can also recover in the second quarter?

Thank you. I’ll take those questions. So, on the customer part, as I said in Q1, Shengwang's revenue dropped both sequentially and year-over-year. The slight decrease in the number of customers was consistent with the decrease in revenue. Additionally, to provide some insight on the overall macro backdrop, the tougher regulatory environment and also the general macroeconomic environment in China mean that a lot of the smaller social and entertainment start-ups are operating in a much more difficult environment. Therefore, we see more churn due to customers running out of business rather than moving to our competitors. So we expect this to continue, but hopefully it should become more moderate in the coming quarters. That’s on the customer base. In terms of outlook, we actually expect both Shengwang and Agora to experience a sequential improvement in Q2 and specifically more on the Shengwang side. This is as I explained, Q1 is generally the low season for social and education customers, so we normally see a pickup in Q2. Also for digital transformation customers, Q1 is the low season due to the new year holiday, which means project execution will be much slower. Therefore, we will see improvements on both Shengwang and Agora in Q2.

Our next question comes from Daley Li from Bank of America Securities.

I have two questions. Firstly, regarding the AI, management mentioned there's more opportunities in this area. So could management give some more color on the AI, the incremental revenue possibility in the future? In which scenarios could we see more meaningful revenue in future from AI? My second question is about the expenses, the operating expenses. So we noticed like in Q1 this year there's some quarter-on-quarter increase for the operating expenses, especially like R&D. How do we see the trend in the following quarters for the operating expenses?

Okay. On the AI development, it's definitely very exciting. In previous earnings calls, we actually predicted that human users would be able to directly interact with AI models in voice and video formats. Initially, it was text-based, but we consider it will happen in voice. What happened was actually faster than we imagined. The launch of GPT-4o is ahead of our expectations, thanks to the rapid evolution and the global advances of generative AI models. With generated AI models’ multimodal capabilities, there will be another dimension added to real-time engagement activities. Real-time engagement activities will expand from human to human and human to machine or device, to also include human to generative AI models. The scope of real-time engagement will broaden as a result. In the long run, this will hugely increase the amount of real-time engagement activities and enrich people's lives. In the next few years, we will see many more use cases emerge and mature, such as AI-based interactive education, customer service, personal assistance, and social and gaming use cases. Voice and video conversations will become the new norm of interaction between human users and cloud agents powered by generative AI models. As a result, a massive amount of real-time voice and video will flow through the global Internet, with latency becoming a critical factor. When introducing GPT-4o, OpenAI mentioned it has an average response time of 320 milliseconds. However, when an overseas user interacts with the model, round trip transmission latency needs to be added on top of the model's response latency, and the experience could change from exceptional to unbearable. To deliver a low latency, highly reliable, and high-quality user experience, our technology is the right choice for foundation model AI companies and for companies building applications on top of generative AI models.

Thank you, Tony. So I’ll take the question on operating expenses. In our last earnings call, we already explained that the low operating expenses were due to our cost control measures. However, they were also below a normal level and due to the reversal of certain accrued expenses. We accrue year-end bonuses and performance bonuses every quarter. However, given the tough operating environment last year, the final operating results were below our internal budget. Thus, the actual realized year-end bonuses were lower than our earlier growth estimates. There was some reversal in Q4, which caused the Q4 quarterly operating expenses to be abnormally low, making the small sequential increase from Q4 to Q1 appear more noticeable. So looking forward this year, we are still very cautious about the overall operating environment. We will continue to manage our expenses very carefully, and we do not expect operating expenses, including R&D expenses, to increase sequentially from Q1 onward. If anything, we will try to control overall expenses.

There are no further questions. Thank you, everyone, for joining the company's call today. As a reminder, the call recording and the earnings release will be available on the company's website at investor.agora.io. If you have any questions, please feel free to email the company. Thank you. That concludes today's conference call. Thank you for your participation. You may now disconnect.