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Agora Posts Wider-Than-Expected Q1 Loss, Shares Drop 3.8%

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Agora, Inc. (API) reported a worse-than-feared loss in the first quarter. Total revenues, however, topped analysts’ expectations. Shares of the leading platform provider of real-time engagement APIs declined 3.8% in the extended trading session on Monday.

Agora incurred an adjusted loss of $0.14 per share in Q1, compared to the $0.01 loss per share estimated by analysts. The company reported a loss of $1.21 per share in the same quarter last year.

Total adjusted revenues generated in the quarter amounted to $40.2 million, higher than the consensus estimate of $36.7 million. Additionally, revenues jumped 13.1% year-over-year and reflected higher usage of video and voice products driven by the company’s expansion initiatives as well as reasonable growth witnessed in the interactive lecture hall and audio live cast. Active customers increased 97.6% year-over-year to 2324.

Gross margin declined 107 bps to 58.1% during the quarter mainly due to capacity expansion based on higher forecasted usage growth and international expansion in locations with greater infrastructure costs. (See Agora stock analysis on TipRanks)

Management reiterated its prior full-year guidance for 2021 and expects total revenues to range between $178 million and $182 million.

Agora’s CEO Tony Zhao commented, “In particular, we are excited to see early signs of the emergence of next-generation use cases such as extended reality and metaverse on the Agora platform, and we are committed to helping developers to bring about ground breaking innovations.”

On May 10, Macquarie analyst John Wang decreased the price target to $60 (48.6% upside potential) from $80 and maintained a Buy rating on the stock.

Wang said that while he prefers Agora’s growth prospects, he thinks that competitors like Tencent Cloud, Zego, Kingsoft Cloud, and Qiniu may pursue a more dominant role in the budding RTE market.

Overall, the stock has a Moderate Buy consensus rating based on 2 unanimous Buys. The average analyst price target of $65 implies 60.9% upside potential to current levels.

TipRanks data shows that financial blogger opinions are 100% Bullish on API, compared to a sector average of 69%.

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