China's Agora more than doubles in value after $350m US IPO

The company sold 17.5 million American Depository Shares (ADS) for $20 apiece, according to a filing, exceeding the indicative price range of $16-18. It opened at $45 on June 26 and reached as high as $55.70 before closing at $50.34 to give the company a market capitalization of $4.1 billion.

Zhao owns 21% of the company and holds 83% of the voting power because of the dual-class share structure. Morningside Ventures is the largest external shareholder with 12.1%, followed by SIG China on 9.8%, Coatue Management on 9.4%, and Shunwei Capital on 7.8%. GGV Capital has 1.8%.

Founded in 2014 and headquartered in Shanghai and Santa Clara, California, Agora's product offering is built on a software development kit and a software-defined real-time network. The former enables users to embed into applications video and audio capturing, rendering, processing, encoding and decoding, and transmission. The latter is a virtual network that sits on top of the public internet and runs on more than 200 data centers globally. It handles data transmission between devices using Agora software.

The company claims to be the global leader by market share in real-time engagement platform-as-a-service (RTE-PaaS). RTE-PaaS addresses use cases within communications PaaS, content delivery networks, and collaboration applications. IDC projects these markets will be worth $17.2 billion, $13 billion, and $17.7 billion, respectively, by 2023. This compares to $3.3 billion, $5.9 billion, and $9.7 billion in 2018.

Agora employs a freemium model, offering 10,000 free minutes of real-time engagement per month per account, to encourage adoption. Once the allotted free minutes are exhausted, customers are charged based on usage. In March, Agora powered more than 40 billion minutes of engagement for users in more than 100 countries through 10,000 applications. These applications encompass social networking, education, entertainment, gaming, e-commerce, financial services, and healthcare.

As of March, there were 1,176 active customers, defined as those generating more than $100 in revenue over the preceding 12 months. The company posted $64.4 million in total revenue in 2019, up from $43.7 million the previous year. Over the same period, it swung from a net income of $400,000 to a net loss of $6.2 million.

Agora claims to be capital efficient, having raised only $170.4 million in equity capital since inception and currently holding $151.7 million on its balance sheet. Morningside provided $5 million in Series A funding in 2015 and was joined by SIG, GGV, Shunwei and IDG Capital in a $20 million Series B later the same year. An extension of $30 million closed in 2017. Coatue led a $70 million Series C round in 2018. The prospectus indicates that a Series C extension of $50 million closed in February.

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• Topics
• Greater China
• Technology
• IPO
• China
• TMT
• Morningside Technologies
• Shunwei Capital Partners
• GGV Capital
• SIG
• Coatue Management