A chat led by tech big shots including Tesla CEO Elon Musk and Robinhood CEO Vlad Tenev on popular mobile voice social network Clubhouse has made people flock to the invite-only app. Like an unfiltered live podcast, Clubhouse allows users to create or jump into different "rooms" for real-time discussions on various topics including technology, entrepreneurship, culture, policy, etc.
Since the app has not yet been listed publicly, investors have set their sights on its technology services provider Agora, driving its stock price to new heights. The Nasdaq listed company closed at $98.72 on February 8, more than four times its issue price.
As a provider of back-end real-time communication services to Clubhouse, Agora, with offices in Shanghai, China and Santa Clara, CA in the United States, provides customers with customizable APIs that can embed real-time audio and even video functions into their applications. With the technical support provided by a "platform as a service (PaaS)" company like Agora, customers gain a boost from pre-developed technologies hence do not need to build their own products from absolute scratch.
Agora was founded in 2014 by Tony Wang and Tony Zhao. The latter worked at Webex, now a Cisco portfolio, and had already been an important executive at another Nasdaq-listed company, as the CTO of Chinese gamer-voice-chat-turned-livestreaming-giant Joyy. Both Webex and YY have their cores in reliable real-time audio (and video) communication technology, making Zhao one of the most highly regarded tech gurus in that aspect. With the rich experience, Zhao cofounded Agora, hoping to empower small and medium developers with the technology he's familiar with.
In the prospectus, Agora assumed that competition in the PaaS field will become increasingly fierce and list industry top dogs like Tencent and Twilio as competitors. Analysts believe that Twilio is more powerful in global influence and business resources. Therefore, in terms of international expansion, Agora will be likely to face pressure from Twilio in the future.
Compared with Twilio, Agora is a latecomer, but it's proliferating. Its financial report for the third quarter of 2020 showed that the company has 1,815 active customer accounts, an increase of 95.4% year-on-year, and brought in $30.8 million in revenue that quarter, up 80% year-on-year. Total revenue during Q32020 was $30.8 million, an increase of 80.8% from the $17.1 million in 2019. In an earnings call, the company said 80% of its revenue came from China.
During the same period, Twilio has more than 208,000 active customer accounts, a year-on-year increase of 21%, and total revenue reached $448 million, a year-on-year increase of 52%.
To better cope with potential competition, Agora is scaling its business scope by acquisition. Just recently, it announced a plan to acquire Easemob, a leading instant messaging (IM) and customer service cloud provider based in Beijing. Following the acquisition, the two parties will launch the market's most complete suite of real-time interactive APIs combining convincing video, audio and IM solution, according to Easemob CEO Ma Xiaoyu.
As China-US relations have become unprecedentedly jittery during Donald Trump's presidency, Agora, with a Chinese root, also hears some doubtful and sometimes even conspiratorial voices, especially when it comes to data security. Besides, in the S-1 filing to the Securities and Exchange Commission, the company pointed out that uncertainties related to China's internet industry regulation would bring risks to its operations.
When asked how to ease the concerns of American customers, an Agora spokesperson told PingWest, “Operating globally means that we must adhere to applicable law, regulation, industry practices, and standards in each region in which we conduct business."
"Agora is just a 'pass-over.' We don't store any end-user data," co-founder Tony Wang told the South China Morning Post, "And our clients will typically encrypt their user data."
At present, the company is a frontrunner in the PaaS sector in China, serving social media and live streaming platforms like Douyu, Momo, as well as education companies like New Oriental and TAL Education Group, as well as Zhao's previous employer YY. All of these important customers are US-listed.