Earnings Call Transcript - API Q1 2021

Operator, Operator

Good day and thank you for standing by. Welcome to Agora Incorporated First Quarter 2021 Financial Results. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Ms. Fionna Chen. Thank you. Please go ahead.

Fionna Chen, Investor Relations Director

Thank you, operator. Good evening, and good morning, everyone. My name is Fionna Chen. I’m the Investor Relations Director at Agora. Thank you for joining Agora's first quarter 2021 earnings conference call. Joining me today are Tony Zhao, Founder, Chairman, and CEO; and Jingbo Wang, CFO. Our earnings results, press release, and a slide deck can be found on our IR website at investor.agora.io. Reconciliations between our GAAP and the non-GAAP results can be found in our earnings press release. During this call, we will make forward-looking statements about our future financial performance and other future events and trends, including guidance. These statements are only projections that are based on what we believe today, and actual results may differ materially. These forward-looking statements are subject to risks, uncertainties, assumptions, and other factors that could affect our financial results and the performance of our business. We will discuss some in detail in our filings with the SEC, including today’s earnings press release, and the risk factors and other information contained in the final prospectus relating to our initial public offering. Agora assumes no obligation to update any forward-looking statements we may make on today's call. With that, let me turn it over to Tony. Tony, please?

Tony Zhao, Founder, Chairman, and CEO

Thanks, Fionna, and welcome, everyone, to our earnings call. I would like to start by saying that our hearts and thoughts are with the people in India and other parts of the world dealing with the current pandemic. Some of our own Agora team members and their families were affected. But together, we will help each other through this difficult period. The world has changed. Everyone is looking for a way to stay connected to their loved ones. So our real-time engagement platform, Agora, is committed to making this meaningful human connection possible. With that said, let's talk about Agora's performance for Q1 2021. We had another quarter of strong growth in Q1 2021. As developers and innovators around the world continue to create new immersive engagement experiences with our real-time voice, video, chat, and streaming products, transforming all industries. In this quarter, the amount of real-time voice and video engagements powered by Agora exceeded 50 billion minutes per month for the first time. As we watch the bloom of innovative new use cases built with Agora over the past year, it is clear that the world is evolving from a consumer economy and knowledge economy towards a greater economy, where people make a living by sharing their skills, hobbies, and interests online. These creators include foreign language teachers, yoga instructors, tour guides, chefs, DJs, musicians, and many more. Increasingly, these creators are leveraging the Internet and the power of Agora’s real-time engagement network to enable those experiences and engage with their audience. For example, we recently partnered with a virtual tour platform in Europe to enable tour guides to serve customers from thousands of miles away. Here, tourists can join the live-streamed tour, where local guides introduce the destination and share their sites and culture according to tourists’ interests through real-time interactions. All of this happens right in the tourists' living room. Another example is an education platform based in San Francisco that enables artists to teach other creative skills such as how to DJ through VR. We believe these examples are just the beginning of the greater economy. We will continue to invest in efforts to reduce the friction for more and more creators to engage with their audience. On the enterprise side, real-time engagement has evolved far beyond video conferencing. With so many aspects of business forced online to avoid total shutdown, the speed of digital transformation for the enterprise has accelerated. For example, house closings and notarizations that used to require in-person meetings can now be performed by services that use Agora's RTE platform to provide verification and enablement services to legal and financial providers. With a powerful combination of AR and real-time video, our partner, Wipro, developed a solution that enables real-time expert consultation for a wide range of enterprise customers from medicine to manufacturing, who have seen the benefit of RTE-driven digital transformation. Enterprises will continue to innovate and leverage the RTE platform to increase productivity and customer engagement. Another example of RTE innovation is XR, or extended reality. Just two weeks ago, we announced our partnership with HTC at VIVECON. When they announced their latest VR headset for enterprise, the HTC and Agora partnership will enable not just real-time interactions between VR devices, but also XR live streaming, which allows users to share in the same immersive experience on any device without the requirement of a VR headset, making the VR experience more accessible, productive, and enjoyable for all participants. We feel strongly that XR, coupled with real-time engagement, will drive the next generation of workplace collaboration. In particular, I'm excited about the potential of XR live streaming because it enables seamless connection between the real world and the metaverse, or virtual world, and between different metaverses, all through the power of the Agora network. On the product side, we recently released Agora SDK 3.4, which is packed with many important technical enhancements, especially on video fluency. By video fluency, we mean a stable frame rate, low jitter, and solid audio/video sync that must be in place for the interaction to be as natural and disruption-free as live in-person conversation. In the past, most people believed one could either have good fluency with multiple seconds of latency, or sub-second latency with poor fluency, but not good fluency and sub-second latency at the same time. This is because sub-second latency means the playback buffer is extremely small, making the playback more prone to jitter. Through our end-to-end engineering improvements and adaptive transmission strategies, I'm extremely proud to say that we are now able to achieve sub-second latency while maintaining the same fluency compared to traditional long-latency content delivery technology, such as CDN. This is an important milestone because it removes the need for our customers to make trade-offs between interactivity and video quality. Recently, this technology enabled a major customer to deliver a live lecture with excellent video quality to thousands of students while keeping the ability to interact with each other at any time. Here, I invite developers around the world to try our latest SDK to see for yourself. In addition to the core voice and video APIs, we have added chat and whiteboard APIs to our platform through the acquisition of Easemob and Netless. We have now completed the post-acquisition integration for the China market, and the integration effort for the U.S. and other markets is well underway. I am looking forward to supercharging Agora’s global developer community with our combined offerings. To foster more innovation on a global platform, we launched the Agora startup program this year to empower global startups. With exclusive back-end support and benefits like free minutes and dual access to VCs and accelerators, the program gained tremendous traction in the fourth quarter with 96 accelerators, incubators, and investment partners globally. I would like to invite all founders with big ideas to join the program and let us help you pursue your dream. Lastly, I would like to take the opportunity to thank our customers and our developer community for their innovation and passion to help people stay connected. I also want to say thank you to all the Agorans for their hard work and dedication to our customers’ success. The first quarter was a great start to the year, and I'm very excited about all the opportunities in front of us as we continue to help build the future of real-time engagement. Now let me turn things over to Jingbo, who will reveal our financial results.

Jingbo Wang, CFO

Thank you, Tony. Hello, everyone. Let me start by reviewing the financial results for Q1 and then I will discuss our outlook for the full year. Total revenues were $40.2 million in the first quarter of 2021, representing a 13% year-over-year increase and a 21% quarter-over-quarter increase. The number of active customers reached more than 2,300 excluding Easemob, up 98% year-over-year. The revenue growth was driven by the continued adoption of our technology by developers and the emergence and growth of new use cases. We reached more than 300,000 registered app accounts at the end of March, excluding Easemob, adding about 11,000 per month in the quarter. We also saw significant usage growth from use cases such as interactive lecture halls and audio live casts during the quarter. Additionally, Easemob contributed approximately $1 million to our top line. As mentioned in our last earnings call, in order to help investors better understand organic growth, excluding the impact from one-off events such as the complete lockdown in China in the first half of 2020 due to COVID-19, we calculated adjusted total revenues. Compared to adjusted total revenues in Q1 last year, our revenue grew 81% year-over-year in this quarter. Our trailing 12 months constant currency dollar-based net expansion rate is 131%, excluding Easemob. If we use adjusted total revenues, the expansion rate would be 146%. Moving on to costs and expenses, from my following comments, I will focus on non-GAAP results, which exclude share-based compensation expense, acquisition-related expenses, amortization expense of acquired intangible assets, and income tax related to acquiring intangible assets. Please note that a significant portion of the consideration paid or payable to the management team and employees of Easemob and Netless is accounted for as acquisition-related expense in our income statement on the U.S. GAAP. Now, GAAP gross margin for the first quarter was 38.4%, which was 10.7% lower than Q1 last year and 2.1% lower than Q4 last year. This was mainly due to the strong growth in new international markets where we are expanding, and infrastructure costs are high. This year, we continue to expand our capacity around the world in anticipation of future growth driven by the accelerated digital transformation worldwide, which led to higher depreciation of 4.7% of revenue in this quarter compared to 2.1% in Q1 last year. Non-GAAP R&D expenses were $17.4 million in Q1, up 65% year-over-year, as we continue to hire talented employees and strengthen our R&D team. Non-GAAP R&D expense was 43.3% of total revenue in the quarter compared to 29.7% in Q1 last year. Our strategy focuses on long-term growth opportunities and innovation instead of maximizing short-term profitability. We intend to continue to invest significant resources in R&D capabilities in order to further strengthen our technology leadership and provide a more diverse portfolio to developers around the world. Non-GAAP sales and marketing expenses were $7.5 million in Q1, up 38% year-over-year, mainly attributable to team expansion and increased advertising and event expenses. Marketing expenses represented 18.6% of total revenues in the quarter compared to 15.3% in Q1 last year. Non-GAAP G&A expenses were $4.5 million in Q1, up 67.7% year-over-year, mainly due to team expansion and professional service fees. G&A expenses represented 11.1% of total revenue in the quarter compared to 7.6% in Q1 last year. Non-GAAP operating loss was $5.6 million, translating to a 13.9% non-GAAP operating loss margin in the first quarter compared to an operating loss margin of 14.4% in Q4 last year and an operating income margin of 16.6% in Q1 last year. Turning to cash flow, our operating cash flow was negative $0.7 million in Q1 compared to negative $0.9 million last year. Free cash flow was negative $8 million compared to negative $3.4 million last year. The net cash outflow in the quarter was mainly due to capital expenditure as we continue to scale our network and the consideration paid for the Netless acquisition. Moving on to the balance sheet, we ended Q1 with $877 million in cash, cash equivalents, and short-term investments compared to $635 million at the end of last year. The increase was primarily due to the proceeds from a $250 million private placement of ordinary shares. Now turning to guidance, COVID-19 is still an unprecedented variable for our business model, where historical experience may not apply. Our guidance for full revenues reflects a number of assumptions that are subject to change based on uncertainties related to the impact of the COVID-19 pandemic. For the full year 2021, we maintain our previous guidance, with total revenues expected to be in the range of $178 million to $182 million. In closing, we delivered a very strong first quarter of the year. Thank you to the entire Agora team, our developers, customers, and investors, and be healthy and safe. Let's open it up for questions.

Operator, Operator

Our first question comes from the line of Yang Liu from Morgan Stanley. Please ask your question.

Yang Liu, Analyst

Thank you for the opportunity. I have three questions here. The first is on the education regulation. We noticed that there are a lot of noises in the market, that some of your customers could be subject to new regulations on their customer acquisition or their content, etc. Based on your ongoing discussion with your customers, what should be the expected impact from these regulation changes? And also what is revenue from this sector in the past quarter? The second question is how should we look at the gross margin? In the recent quarter, it was 58%. What should be the outlook for the full year and what will drive the potential stabilization and turnaround of the gross margin? And the third question is towards the intensifying competition from public cloud and other smaller players? What is the recent competitive dynamic in the market? Thank you.

Tony Zhao, Founder, Chairman, and CEO

Yes, I'll take the first question. I think it's very hard to talk about the impact from the regulations at this point. The government is still drafting more details of the new regulations and consulting with various stakeholders in the education industry. It is unclear what the final regulation will look like and at what pace the government will enforce the new rules. Meanwhile, besides those regulations being discussed, I think the government has made clear that they are trying to promote the so-called free classroom initiative, which is leaning towards leveraging more online classroom services to help improve the overall education services. Therefore, we think no matter how regulatory changes would happen, the overall public and private sector use cases for online education should continue to grow. If we think in the long-term, I can also offer a few more perspectives. I think, one, the overall education system based on merit and exams is unlikely to change, which means the demand for off-school tutoring is hard to diminish. And the shift from offline to online is likely to continue given the convenience and cost advantage of online. Then the shift from one-way broadcasting to interactive class is likely to accelerate, given the better experience and the learning outcome of interactive classes. As to who will organize and provide the actual tutoring service, whether it's education companies or public schools or even individual teachers, I think this will depend on the new regulation. For us, we will just continue to focus on the things that will not change, which is more and more and better experiences with online classroom solutions. And we will be dedicated to trying to provide the best of such online classroom solutions for all education providers.

Jingbo Wang, CFO

And just to add, in Q1, the education sector contributed to about 35% of total revenue.

Yang Liu, Analyst

The margin?

Jingbo Wang, CFO

Okay, the second question. On the gross margin, there are a few factors at play here. On the one hand, we are continuing to optimize our incoming costs and our technology architecture. On the other hand, our global expansion and things like initiatives such as the startup program will incur additional costs. So on balance, we expect gross margin to remain relatively stable in the coming quarters. With that said, I want to highlight that we believe we are still in the early days of real-time engagement technology. Use cases, geographies, and our cost structure are all changing very rapidly, which means gross margin will fluctuate from quarter to quarter. At this stage, we are more focused on expanding our scale and use cases. We think that as long as we keep innovating and delivering high-quality products, there's no reason to worry about our margin in the long term.

Tony Zhao, Founder, Chairman, and CEO

And the third question is about intensifying competition from public clouds and other small players. We think the competition with public clouds and start-ups has been happening for many years. I think, in very early days, like four or five years ago, when some of those giant public cloud companies started to offer similar products or APIs and trying to compete with us, the competition is naturally going to strengthen as the market grows or the industry grows. The condition we are seeing in the market today is not really out of the ordinary; it's just a natural development of the growing market. And for us, as the industry progresses and conditions grow, we will just continue to stay focused on the needs from developers and customers and create value for them. We will also focus on product and technology innovations to provide better and professional offerings to all developers and our customer base. As I mentioned in my opening remarks, our interactive live streaming product can now achieve sub-second latency with video fluency the same as long latency technologies, such as CDN. This kind of breakthrough is innovation that helps us with competition, and we will continue to roll out more products like this.

Yang Liu, Analyst

Thank you. May I - just to follow-up in terms of global revenue contribution, we know this will be a little negative for gross margin, but definitely, it's a huge market opportunity for Agora. Could you please update us in terms of the revenue contribution from the global market outside China? Thank you.

Jingbo Wang, CFO

In Q1, revenue contribution from the U.S. and other international markets was about 27% to 28% of total revenues.

Yang Liu, Analyst

Thank you.

Operator, Operator

Our next question comes from the line of Emerson Chan from BofA Securities. Please ask your question.

Emerson Chan, Analyst

Hi. Thank you, management. I have three questions. My first question is a follow-up on the regulation on the education market. Given the unclear regulatory outlook, I wonder what assumptions on the record impact we built into our full year's revenue guidance? And also, there's a narrative that regulation on education will favor those market leaders. I just want to understand what will be the impact to us if customers are getting bigger or in case the market is consolidating? Will they be more incentivized to do it in-house or look for a cheaper alternative? This is my first question. My second question is related to R&D investment, given our R&D costs increased quite a bit in Q1. Could management give us more color on the trend of R&D spending relative to revenue in this year? And what areas of R&D we were investing? Also, when do we expect these investments to translate into growth in the future? My last question is how we can increase our customer stickiness given I noticed that we have more than 2,300 active customers now. We also provide some start-up programs to encourage our LTE adoption. But our platform technology leadership, what value or features we are providing that can increase the stickiness of our customer? I just wonder if there's anything that our competitors are unable to offer, so that our customers will stay with our platform? Thank you.

Jingbo Wang, CFO

Sure, in terms of the assumption under the guidance, I would say for the education sector, we are assuming a modest tightening in regulation. We have revised our revenue growth rate downward accordingly. We are not seeing a very drastic change in the entire industry. So on the customer consolidation point.

Tony Zhao, Founder, Chairman, and CEO

Right, on that part, I think in a period of time, customer consolidation in education might more or less change the composition of our education customer base. But it will be dynamic, because there will be continued innovations, and there will be also continued changes in our environment, as you all are aware. As to the impact of consolidation, I think our current education customer base includes already quite a few established large education companies. Therefore, we don't think there will be too much impact in there. I can also further elaborate, of course, around just in general competition with the DIY or in-house solutions. First, I think this question almost applies to all parts of SaaS providers. They all might face a situation that their customers, when they grow bigger, try to build something on their own. For us, my view is that the real-time engagement platform as a service is still a very young service, it still has a long way to evolve. The quality of the experience will get better, costs will get cheaper, new features will be added every year, and even the form and format of the product still should improve or be defined in the next few years. So it will get harder and harder to build something to see in-house with the same quality, cost, and completeness of those offers. No matter how big you are, if you can't build it better or cheaper, why would you still build it? In the end, I think it's about the boundary of companies, each company should have a clear core competency. For example, education companies should focus on education, not hardcore technologies like real-time engagement, which will be used widely outside of education itself. As time goes on, every company needs to stay focused to make their competition part in their own sector better. So, I think this will be a natural outcome.

Jingbo Wang, CFO

The second question on R&D, first of all, I would advise investors to really look at the non-GAAP R&D number, because the GAAP number includes one-off expenses such as acquisition-related expense. The escalation composition of the acquisition consideration paid to the teams of Easemob and Netless was classified as R&D expense in the income statement. So in terms of the non-GAAP R&D expense, it was 43% of revenues in this quarter. We actually expect this to remain around the 40% level as well this year, as we continue to invest very heavily in R&D. So right now we have close to 1,000 employees excluding Easemob, which has about 200. Out of that total employee base of 1,200, about two-thirds are R&D employees, and they are working on a lot of things. I can roughly divide these things into three categories. The first one is quality improvements. On the front end are the SDKs and the end-user software side, right video/audio compression. How to minimize the video size while keeping high fidelity, how to lower CPU usage, how to reduce the size of the SDK, and how to become more compatible with thousands of new devices coming out every year, these are the things the front-end team is working on. The second category would be new products, things like technical classrooms and content moderation for video as you have two examples of the new products we released recently. And also what Tony talked about in his opening remarks are these new products. The third category will be supporting new use cases, when the new use cases often require new features to be developed, new demos, new templates, and deep optimization of all the technical details with developers and customers. So yes, that’s a third direction. All these things, as you can see, they don't translate one-on-one to revenue for our overall, but they enhance our competitiveness and they see the overall breadth and depth of the platform. So there will be a gradual revenue impact. And as we scale and use cases proliferate, we do expect, eventually, R&D expenses will come down as a percentage through revenue. But we do not expect that to change significantly during the course of this year as we are still in the phase of investment.

Tony Zhao, Founder, Chairman, and CEO

Okay, I think there's a question around the stickiness, right.

Jingbo Wang, CFO

Yes.

Tony Zhao, Founder, Chairman, and CEO

So on how we increase the stickiness of customers, I think as you can see, we're just keep rolling out new technologies and features with a bigger product portfolio, and also more professional services, as a result of keeping focused on creating value for developers. In addition to that, there are also a few things we always try to do at Agora. I could start the relationship early. Developers need our help the most when they are very small. This is why we have a large developer evangelist team in place and they recently launched the startup program. We offer technical support, industry best practices, new RTE use cases, free minutes, or even financial advisors; this kind of comprehensive engagement helps us build trust with our developers. For larger customers, we often work closely with them to deeply integrate our software with their app to create a best-in-class end-user experience. We also co-explore or co-develop solutions for new use cases, such as the recent lecture hall use cases. If such efforts are successful, it will both deepen our relationship and drive usage. Lastly, we also try to create value for all kinds of customers. Many customers don't see Agora as just a technology provider but a partner that can help make their business more successful.

Operator, Operator

Our next question comes from the line of Vincent Yu from Needham and Company. Please ask your question.

Vincent Yu, Analyst

Thank you, and thanks to management for taking my question, and congrats on the strong quarter. I have two questions. The first one is about the progress of incorporating the Easemob services into our product offering? How is the initial response from customers, and should we still think about the annual run rate to be around 10 million? And the second question is about the new business expansions, are we looking for a new acquisition target in 2021 for other business like the expansion areas? If so, which areas are we looking to enhance our capabilities? Thank you.

Jingbo Wang, CFO

I'll take both questions. The initial response from developers and customers on the Easemob integration has been very positive. We are now able to pitch a new customer with a combined video voice and chat offering. We have also integrated Easemob chat APIs with our flexible classroom and platform product and several open-source projects. As Tony mentioned in the opening remarks, while the integration in the China market has been completed, we are working very hard with the Easemob team to make the chat product ready for the global market. We are working on things like English documentation, the API conversion, and also GDPR compliance. Currently, we plan to launch it globally as a core chat at the end of this year. In terms of the revenue run rate, yes, I think we can still use $10 million for now. So in terms of new acquisitions, we are certainly looking at opportunities. Obviously, while they may mature or not in the end, this is highly uncertain. To be more specific, I think we are looking for three segments: one, technology; we're looking for technologies that can help make our product better, for example, video audio codecs or video intelligence algorithms. Secondly, products that can complement our existing product portfolio, it can be either horizontal or vertical. And certainly, we're also interested in extending our presence that's complementary throughout.

Operator, Operator

Our next question comes from the line of Akida Arkin from China Securities. Please ask your question.

Unidentified Analyst, Analyst

Thank you for taking my question. I just have a question about the overseas business. So management just mentioned that the revenue contribution of overseas businesses is around 27% to 28%, correct me if I'm wrong. So I was wondering what is the revenue structure or contribution of different vertical sectors of non-China markets, such as education and social entertainment and so on? And also, I was wondering in the global market, what is the customer acquisition strategy? It would be helpful if you can share a bit more about the current ways of acquiring customers? And if there is any change in terms of self-service strategy in the global market? Thank you.

Jingbo Wang, CFO

Sure. Yes, the number is correct. In terms of our revenue in the U.S. market and rest of the world market, we see a more diverse set of use cases. We have seen very strong growth in many use cases that don't have a strong presence or strong use case implementation in China, things like watch parties. We have a customer call center right; we have free events, which are very big, also China customers like AEM; they are customers and partners. We have several large customers in this space. All these use cases are very, and of course, also the recent audio live cast use case. We have several large customers in that vertical already. So broadly speaking, it's still entertainment, social, education, plus enterprise, but the mix is a lot more diverse. In terms of the go-to-market model, right, we pretty much okay, first of all, we have been in the market for a very long time. So it's not that we recently expanded there and hired the team. The team has been there for a long time. Our go-to-market is really focused on both the grassroots developer community, a developer-driven sales motion, and also the proactive outbound marketing motion. We have a sales team of about 20 people, mostly focused on outbound. We also have a very strong developer-oriented sales and marketing team, our developer evangelists providing developer support. We have a very easy-to-use self-serve portal, so this model is quite well balanced.

Operator, Operator

Our next question comes from the line of Bing Duan from Nomura. Please ask your question.

Bing Duan, Analyst

Thank you management for taking my questions. I have two questions. The first is a follow-up question about the development of our large customers. Are we seeing, for example, our top five customers, which have already started or accelerated their in-house development of real-time engagement solutions, like online education and social media, etc. in the first quarter? And so what kind of solutions we have or value-added services we have to help retain and grow this kind of customer in the future? My second question is that, could you elaborate more on the extended reality opportunities or use cases like what kind of technology barriers in this kind of vertical? Are there any new or different solutions we need to provide? And how does management look at the future opportunities in this segment? Thank you.

Tony Zhao, Founder, Chairman, and CEO

All right, I think for the first question on further discussions with enhanced development for large customers. From the beginning of Agora, we've been in constant battle with in-house solutions. As you all know, initially, there was no such concept of third-party professional providers. So almost all our business are winning from in-house solutions or it's just something customers start to build on our platform. In the history of our business growth, we've been seeing customers who switched to enhance, as well as customers who, you know, again, switch back from in-house to us. In multiple cases, we saw customers who switch to in-house first, and they had to switch back again to us. But overall, I would say more and more customers start to realize the value of professional third-party providers. It’s not just about quality and cost, but also the fact that they can save time and focus on their core business. This has been reflected in our steady revenue growth, despite certain customers switching to in-house. As to how to retain large customers, I think the answer is always to build the best solution or a more professional solution for them. Showing them how big a qualitative difference we can make and how professional our product and service offering we can deliver, and how much of those differences lead to business success for them. In addition, we also offer to work with our large customers to co-develop or co-explore in our solutions on new use cases, such as the recent lecture hall use case. With such efforts, we can be successful together, deepening the relationship and driving usage, making the partnership not just about prompt service but also about innovation.

Jingbo Wang, CFO

So in terms of the extended reality prospect, obviously, we feel very optimistic about the potential of these new developments seen in extended reality and virtual reality, augmented reality, all these new devices, new experiences. Our strategy is we want to help both the device manufacturers and software developers. As Tony mentioned in his opening remark right, we recently announced the partnership with HTC. As part of that partnership, our SDK will be pre-installed in all the HTC VIVE devices. It will become the default choice for any software developer to use real-time engagement capability on that device. As we continue to build more partnerships like that, we want to become the standard or the go-to solution for RTE technology on any VR or XR devices. And as to the use cases, we have a combination of first of all, we can enable different device users to connect to video or voice. Additionally, probably more importantly, we can allow them to live stream their experience with augmented reality and the virtual world to other people, whether it's other people sitting in front of the mobile phone or people in other metaverses. You can stream this to another virtual work and become a connector between the two metaverses. We see a lot of potential use cases like this; obviously, this is all still in the very early stage. We believe the imagination of developers far exceeds our current offerings.

Tony Zhao, Founder, Chairman, and CEO

Yes, I want to add a little bit to that, because I'm personally very excited about the potential of building such solutions and use cases. Although as Jingbo points out, the overall growth is going to be long-term, it’s not something that just happens overnight. Although we do see evidence that the growth or the improvements in those XR or VR experiences are accelerating in the past few quarters. The reason we are so much looking in this direction is because real-time engagement for any XR or VR experiences is super important to ensure the overall fluency of the experience. With that, I think Agora is going to be critical for enabling or ensuring such experiences to be immersive at any moment. You can also see such a statement from the press release of our partnership with different partners.

Bing Duan, Analyst

Thank you very much.

Operator, Operator

Our next question comes from the line of Chen Wang from Macquarie. Please ask your question.

Hua-Chen Wang, Analyst

Thanks for taking the questions and congratulations on the impressive results. Roughly three questions here so firstly, can management share some colors on the user acquisition which verticals are we getting more new customers? And do we have more have proportionally more clients in the U.S. and the rest of the world markets? And the second question is, your perspectives, you mentioned that your platform powers more than 40 billion minutes of real-time engagements last March; can management maybe update that number for us? And thirdly, what can we expect before Easemob revenue contributions in the following quarters? Thanks.

Jingbo Wang, CFO

Sure. So first of all, in terms of user acquisition, yes, as I mentioned in the opening remark, we added about 11,000 new apps registered on the platform per month in this quarter, and the majority came from the U.S. and rest of the world markets. In terms of verticals, we've got a lot of interest from the education sector, not just in China, but actually in the U.S. and rest of the world market as well, particularly on the new flexible classroom product. We also received numerous inquiries from several leading Internet companies about the audio live cast use case. The lecture hall use case, obviously, has huge revenue potential because it can transform the whole large-class experience. Additionally, we have seen a lot of interest from next-generation use cases like AR/VR and immersive gaming platforms. Other emerging use cases include virtual events and virtual offices. Just to name a few examples. So the second question on the minutes: we enable more than 50 billion minutes of video and voice engagement per month on average in Q1 this year. That compares to the 40 billion minute number in March last year. Please note that that 40 billion number happened during the total lockdown in China, and that number was more than doubled the number of minutes in December 2019. Therefore, if we compare the 50 billion in this quarter with December 2019, minutes almost tripled in the last 15 months. As for the last question about the Easemob revenue contributions, yes, we are still guiding a run rate of about 1 million per month.

Operator, Operator

There are no more questions at this time. I would now like to hand the conference back to today's presenter. Please continue.

Fionna Chen, Investor Relations Director

Thank you, operator. Thank you all for attending this call. If you have any further questions, please feel free to email us. We will also upload the remarks of this call on our IR website after the call. Thank you so much.

Tony Zhao, Founder, Chairman, and CEO

Thank you.

Jingbo Wang, CFO

Thank you.

Operator, Operator

This concludes today's conference call. Thank you for participating, you may now disconnect.