Agora, an API Developer, Files for $100 Million IPO
With operations both in China and the U.S., Agora may be more successful in its IPO runup than smaller Chinese firms seeking a listing in New York.
Agora Inc., an API developer with offices in China and California, seeks an initial public offering of up to $100 million in New York.
The company calls its technology "Real-Time Engagement Platform-as-a-Service, or RTE-PaaS." Agora SDK provides software modules for developers to embed real-time engagement capabilities into an application. These may include "video and audio capturing, rendering, pre- and post-processing, encoding and decoding, packet loss compensation, as well as first- and last-mile transmission," the company said in its preliminary prospectus filed with the U.S. SEC on Friday.
Agora employs a freemium business model. It offers 10,000 free minutes per month to a user and charges after that time runs out. As of March 31, the company served 1,176 active customers, which it calls users that generate more than $100 of revenues during the preceding 12 months, it said.
For the first quarter of 2020, Agora reported its revenues increased 165.7% year-over-year to $35.6 million. It generated net income of $3 million in contrast to a net loss of $700,000 a year ago.
For 2019, Agora posted revenues of $64.4 million, up 47.6% from 2018, on losses of $6.2 million.
Agora had $151.7 million in cash and cash equivalents as of March 31, according to the report.
Among its partners are Loop Team, Wordpress, and Human Soft Holding.
It competes with Tencent (HKEX: 0700) in China and Vonage's TokBox (Nasdaq: VG) and Twilio Inc. (NYSE: TWLO) in the United States.
Commenting on the Covid-19 impact, Agora said the pandemic has "severely disrupted our business and operations." Specifically, the company said the Covid-19 has hindered its purchase of "bandwidth, co-location space, servers and equipment on equally cost-efficient terms," among other things.
Agora said it intends to use the proceeds of its IPO for "research and development, marketing and branding, investment in technology infrastructure as well as for working capital and other general corporate purposes."
The company has applied to list its ADSs on the Nasdaq Global Select Market under the symbol "API." The exact terms of the offering are yet to be determined.
Agora also warned about the risk of delisting from the stock exchange due to the lack of PCAOB inspections on Chinese firms, which would become mandatory under the new bill currently evaluated by U.S. Congress.
With headquarters in both Santa Clara, Calif., and Shanghai, Agora may get more interest from U.S. investors as a business with local operations. The hostility toward Asian listings was less apparent in three recent IPOs for Kingsoft Cloud (Nasdaq: KC), Dada Nexus (Nasdaq: DADA), and Legend Biotech (Nasdaq: LEGN). The three ADS companies are backed by China's giants, and the most successful of the three – Legend Biotech – also conducts operations in the United States and is partnered with a subsidiary of U.S. pharma giant Johnson & Johnson (NYSE: JNJ).
Agora's IPO is secured by Morgan Stanley & Co. LLC and BofA Securities Inc.