Recently, Voice Network Agora released its performance report for the third quarter of 2023. The financial report shows that in the third quarter, Agora's total revenue was about $35 million, a year-on-year decrease of 14.6% from $41 million in the same period last year.
In terms of profits, during the reporting period, the net loss attributable to the company's shareholders was 22.513 million US dollars, compared to approximately 27.699 million US dollars in the same period last year, a year-on-year decrease of 18.72%; The non GAAP net loss for this quarter was $15.6 million, a year-on-year decrease of 11.36%.
In the first three quarters, the total revenue of SoundNet was 106 million US dollars, compared to approximately 121 million US dollars in the same period last year, a year-on-year decrease of 12.49%; The net loss attributable to the company's shareholders was 84.608 million US dollars, compared to approximately 85.321 million US dollars in the same period last year, a decrease of 0.84% year-on-year.
Active customer growth, difficult to boost revenue
According to the financial report, as of September 30, 2023, the number of active customers of SoundNet was 4034, a year-on-year increase of 6.3%, while Agora had 1664 active customers, a year-on-year increase of 26.2%. However, from the financial report period data, it seems that the growth of active customers mentioned above did not directly affect the current revenue.
From the perspective of revenue composition, in the third quarter, SoundNet, which focuses on the Chinese market business, achieved a revenue of about 19.7 million US dollars (141 million yuan), a month on month increase of 7% and a year-on-year decrease of about 14.6%; Agora, which focuses on the non Chinese market, achieved a total revenue of 15.3 million US dollars, unchanged on a month on month basis and a year-on-year decrease of 8.9%.
Regarding revenue changes, Agora of SoundNet stated in its financial report that the decline in revenue for the SoundNet business unit was mainly due to macroeconomic slowdown, rapid evolution of certain downstream market regulations, and the sale of CEC business in the first quarter of 2023; The change in Agora's business revenue is mainly due to some customers in emerging markets reducing usage and pricing due to their tight financing conditions.
In the third quarter, the revenue cost of SoundNet was $12.6 million, a decrease of 24.3% from $16.6 million in the same period last year. The operating expenses were $36.9 million, a decrease of 33.7% from $55.6 million in the same period last year. Among them, sales and marketing expenses were 7.8 million US dollars, a decrease of 46.7% from 14.6 million US dollars in the same period last year; General and administrative expenses were $9.1 million, a decrease of 19.4% from $11.3 million in the same period last year; The R&D expenses were $20 million, a decrease of 32.7% from the same period last year's $29.8 million.
However, despite the significant contraction in expenses during the period, the profit performance of SoundNet is still unsatisfactory. The gross profit for the third quarter of 2023 was $22.4 million, a decrease of 7.9% from the same period last year of $24.3 million. The gross profit margin for the third quarter of 2023 was 64.0%, an increase of 4.6% compared to the same period last year at 59.4%. In terms of net profit, losses are still ongoing, with a net loss of $22.5 million in the third quarter of 2023, compared to $27.7 million in the same period last year.
In terms of cash, as of September 30, 2023, the total amount of cash, cash equivalents, bank deposits, and financial products issued by banks was $373 million. The net cash used for operating activities in this quarter was $3 million, compared to $8.8 million in the third quarter of 2022. The free cash flow for the quarter was -3.2 million US dollars, compared to -9.9 million US dollars in the third quarter of 2022.
SoundNet expects total revenue in the fourth quarter of 2023 to be between $35.5 million and $37.5 million, while the company's revenue in the fourth quarter of 2022 is $40.12 million. By comparison, it can be seen that SoundNet's revenue in the fourth quarter of this year will decline by 6.5% to 11.5% year-on-year.
Personnel changes in the board of directors and continuous repurchase of shares
In the financial report, Shengwang announced the personnel changes of the company's board of directors. TuckLyeKoh, a director of the company, voluntarily resigned from his position as a director due to personal reasons, effective immediately. Public information shows that TuckLyeKoh has been serving as a director of SoundNet since May 2018, and he co founded Shunwei Capital in 2011.
At present, SoundNet has appointed Zhong Sheng, the company's Chief Technology Officer and Chief Scientist, to replace TuckLyeKoh as the company's director. Zhong Sheng has been the Chief Scientist of the company since January 2018 and the Chief Technology Officer of the company since September 2022. Before joining SoundNet, Zhong Sheng served as the General Manager of Hisense Chip, Senior Chief Scientist of Broadcom, and Vice President of Huaya Microelectronics Technology, with over 100 technology invention patents.
In addition, the financial report also released the latest progress on the repurchase of shares in Shengwang. During the three months ending September 30, 2023, the company repurchased approximately 17 million Class A common shares (equivalent to approximately 4.3 million American Depositary Receipts) under its stock repurchase program for approximately $12.3 million, accounting for 6% of its $200 million stock repurchase program.
As of September 30, 2023, the company has repurchased approximately 99.7 million Class A common shares (equivalent to approximately 24.9 million American Depositary Receipts) under its stock repurchase plan for approximately $94.3 million, accounting for 47% of its $200 million stock repurchase plan.
As of September 30, 2023, the company has issued 377 million shares of common stock (equivalent to approximately 94.3 million American Depositary Receipts), a decrease of 72.8 million shares of common stock (equivalent to approximately 18.2 million American Depositary Receipts) compared to January 31, 2022, prior to the start of the stock repurchase program. The current stock repurchase plan will expire at the end of February 2024.
On the stock price, as of November 22, Shengwang closed down 8.77% at $2.81 per share.
For this period's performance, the founder of Shengwang Chairman and CEO Zhao Bin stated: In a challenging business environment, we have achieved continuous revenue growth by focusing on key customers and core product improvements. Continuous cost control enables us to further reduce adjusted EBITDA losses and operational cash outflows to the lowest level in over two years. Looking ahead, generative artificial intelligence will enrich many real-time engagement use cases today and inspire new use cases in the coming years. We have a unique advantage "Allowing human users and artificial intelligence models to interact beyond text through video and audio will change various use cases, such as AI companions, social games for AI players, and AI mentors for language learning."