API - Agora falls as China's online education regulation hits Q2 revenues

Agora ( API ) is trading ~4% lower as a new online education regulation in China negatively impacted the Chinese Real-Time Engagement Platform-as-a-Service (RTE-PaaS) provider's Q2 revenues.

The company's Q2 GAAP EPS was -$0.27 (vs. -$0.14 Y/Y) and revenue was $41M (vs. $42.3M Y/Y).

The revenues fell primarily due to the decreased usage in the K-12 academic tutoring sector in China. However, the fall was partially offset by the company's global business expansion and usage growth in other sectors and regions.

The K-12 academic tutoring segment generated revenues of $1M during the quarter, compared to $12M Y/Y.

Revenues from the U.S. and international markets grew 63.2% Y/Y to $18.6M, representing 45.4% of total revenues.

Interest income was $2.1M, flat Y/Y.

Net loss came in at $30.7M, compared to a net loss of $15.4M Y/Y.

Adjusted EBITDA was -$15.3M, down from -$7.3M in the year-ago period.

Gross margin was 64.9%, an increase of 3.8% from 61.1% in the same period last year.

Agora maintained its previous FY22 revenue outlook of between $176M and $178M (vs. consensus of $176.48M).

Despite the government crackdown that outlawed after-school tutoring services by privately owned for-profit companies, Agora's reiteration of its FY22 guidance means the company expects its revenue to grow sequentially from $79.6M in 1H to about $97M in 2H, according to Seeking Alpha Author Bamboo Works.

Agora has previously said that tutoring services in China once accounted for about a quarter of its revenue, and FY22 guidance indicates the company is making progress in filling the hole, the author said.

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