API

Agora

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-$23.61 -86.24%
The Rule of 40
The Rule of 40 is used as a comparison metric for high growth SaaS companies that are not yet profitable.

The rule states that a company's revenue growth rate plus profitability margin should be equal to or greater than 40%.

Assumptions

  • Based on most recently available quarterly results

  • Operating Income used as measure for profitability margin

This is a single metric viewed in isolation. It makes for useful comparison but should not be solely relied upon when performing due diligence.

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Eric Pelnik's avatar
$278.9m follower assets
Earnings this week
📞Which calls are you most excited about?

Monday, August 9th
$API Agora
$APPF AppFolio
$ETH Ethan Allen Interiors
$GBDC Golub Capital
$COMP Compass
$CHGG Chegg
$ELY Callaway Golf
$TTD Trade Desk
$DOYU Douyu International
$TSN Tyson Foods
$WKHS Workhorse Group
$REAL The Real Real
$SQSP Squarespace
$MILE Metromile
$SDC Smile Direct Club
$AMC AMC Entertainment

Tuesday, August 10th
$MCFE McAfee
$DOCS Doximity
$U Unity Software
$PUBM PubMatic

Wednesday, August 11th
$APP Applovin
$BMBL Bumble
$OBLG Oblong
$HIMS Hims & Hers
$VRM Vroom
$MTTR Matterport
$MQ Marqeta
$NIO NIO
$OPEN Opendoor
$SONO Sonos
$WKME WalkMe
$WIX Wix.com

Thursday, August 12th
$ABNB Airbnb
$BIDU Baidu
$DIS Walt Disney
$DASH DoorDash
$FIGS Figs
$LZ LegalZoom.com
$ZIP Ziprecruiter
$LTCH Latch
$PLTR Palantir

Friday, August 13th
None of interest

Sources: Business Insider, Google Finance, Yahoo Finance
Eric Pelnik's avatar
$278.9m follower assets
Earnings this week
📞Which calls are you most excited about?

Monday, May 24th
$API Agora
$PLUG Plug Power

Tuesday, May 25th
$AZO AutoZone
$CBRL Cracker Barrel
$URBN Urban Outfitters
$INTU Intuit
$JWN Nordstrom
$ZS Zscaler

Wednesday, May 26th
$ANF Abercrombie & Fitch
$AEO American Eagle
$NVDA Nvidia
$DKS Dick's Sporting Goods
$ZUO Zuora
$SNOW Snowflake
$PSTG Pure Storage
$PDD Pinduoduo
$WSM Williams-Sonoma
$WDAY Workday
$OKTA Okta

Thursday, May 27th
$PLAN Anaplan
$ADSK Autodesk
$ULTA Ulta Beauty
$BBY Best Buy Co
$BOX Box
$DG Dollar General
$COST Costco Wholesale
$DOMO Domo
$DLTR Dollar Tree
$GPS Gap
$HPQ HP
$YEXT Yext
$CRM Salesforce
$VMW VMWare

Friday, May 28th
$BIG Big Lots

Sources: Business Insider, Google Finance, Yahoo Finance
$CRWD Looking for an overdue bullish move

$COST Hoping for a pullback to re-enter at a better cost basis

Bystander interest in several others 😊
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Eric Pelnik's avatar
$278.9m follower assets
Earnings this week
Which earnings are you most excited about?

Monday, February 22nd
$API Agora
$PANW Palo Alto Networks
$RCL Royal Caribbean Cruises
$ZI ZoomInfo

Tuesday, February 23rd
$VRSK Verisk Analytics
$CROX Crocs
$MCFE Mcafee
$HD Home Depot
$SQ Square
$PUBM PubMatic
$INTU Intuit
$SPT Sprout Social
$UPWK Upwork

Wednesday, February 24th
$BKNG Booking Holdings
$NVDA NVIDIA Corp
$CSPR Casper Sleep
$LOW Lowe's Companies
$ESTC Elastic
$TDOC Teladoc
$OSTK Overstock.com
$PSTG Pure Storage
$NTNX Nutanix
$JMIA Jumia

Thursday, February 25th
$ADT ADT Inc
$PLAN Anaplan
$ABNB Airbnb
$ADSK Autodesk
$BBY Best Buy Co
$BYND Beyond Meat
$NKLA Nikola Corporation
$CVNA Carvana
$KDP Keurig Dr Pepper
$DPZ Domino's Pizza
$ETSY Etsy
$ZS Zscaler
$WDAY Workday
$CRM Salesforce.com
$VMW VMware
$MRNA Moderna
$PLUG Plug Power

Friday, February 26th
$LAMR Lamar Advertising
$DKNG Draftkings

Sources: Business Insider, Google Finance, and Yahoo Finance
Edge networks $FSLY $NET $ZS $API
⭐️ Great (8/2/2020) post from muji @hhhypergrowth on edge networks, h/t to Chris Perruna @cperruna for retweeting 👉 https://hhhypergrowth.com/what-are-edge-networks/

📍Mostly about $NET and $FSLY
with some mention of $AKAM $ZS $API $TWLO #AWS

🐘 written in august, so no idea about current views on particular companies

👩‍💻 highly recommend reading if you want to better understand cloud architecture/last mile logistics

👇 just my notes and NOT my area of expertise, so please anyone correct me where I am wrong and add to discussion!

—————

global edge networks
  • “We must start thinking about these companies, along with Zscaler and Agora, as global edge networks -- regardless of what route they took (cybersecurity VPN replacement or a CDN caching content) to get to this point.”

edge computing critical to security
  • “edge computing greatly enhances the amount of computational logic that can be utilized, anywhere across the edge network. One possibility with edge compute controlling the networking between edges is in greatly enhancing cybersecurity features.” (my emphasis)

edge networks will help companies save $$$ and deal w loads of data
  • “...result in huge savings on the compute & storage costs of the core data systems, as well as the bandwidth into them.”

why CDNs can’t do it, and relevance to security
  • “CDNs are incredibly powerful way to distribute content from your origin servers out to your users. However, they were not built for collecting data from end points and passing it back” (my emphasis)

TAM TAM TAM
  • “This trend of sending endpoint data inward is snowballing. Gartner wrote in 2018 that only 10% of data is generated outside of data centers, and they expected that to rise to 75% by 2025 with the trends.
  • “...the distributed analytics that this enables is something that could benefit ANY industry with heavy endpoint traffic (app economy, API economy, IoT, etc).”

and a reference to $TWLO ;)
  • “Customers will be making products with these building blocks, equivalent to what Twilio has done for communications – as well as the edge networks themselves.”

about Zscaler specifically (he was not that interested, I am) - which he calls a “a specialty edge network”
  • “Zscaler is using their Secure Web Gateway and Zero Trust protection capabilities across their edge network & cloud platform to protect the traffic of enterprise users.”
  • “They protect outgoing traffic from endpoints to external servers (ZIA, their Secure Web Gateway) and incoming traffic from endpoints to origin servers (ZPA, their Zero Trust secure access method).”
  • “...once you go Zscaler and Zero Trust, you don’t go back to the old network appliance ways.”

And this
  • “But unfortunately, they are hampered by poor marketing, a top-down sales process that involves a major overhaul of the corporate network, and a difficult to implement architecture requiring system integrators.”

my thoughts on 👆— although let’s be clear he knows waaaayy more about this than me 😂
  • Poor marketing - may have changed a bit, also Jay is understated, letting the market come to them. So could be unrelated to staying power
  • Top-down sales process - I think I understand this part and it’s true, needing to convince people to switch, given what’s involved, used to be hard. Jay going one-on-one w execs not scalable. Although per recent calls the pitch has gotten easier. And the market is coming to them.
  • Difficult to implement architecture - I can’t speak to that

*trying to post from mobile, let’s see if it works, may need to edit formatting
Nandu Anilal's avatar
$153.5m follower assets
$API up 120% in a month // what could go wrong
Agora has now become my largest position so I wanted to outline how I'm thinking about holding the stock. For context, Agora had a lackluster initial 6 months of trading (relative to other high-growth names), but it appears the time has come for $API, whose stock has doubled in the past month.

At this point, I think the bull case has been brought to light especially with the buzz that Clubhouse is using Agora to power its social audio product. I remain bullish on the company, but here is what would have to happen for me to consider trimming my position:
---
1/ market seems too early for video streaming in US -> The majority of the revenue today has been coming from China, which is largely ahead of the curve in certain livestreaming use cases. In the US, Clubhouse is a major win on the audio side, but I think the larger opportunity is in video-streaming so I would like to see more validation that we are at an inflection point in the US. What will be the clubhouse type of customer in newer use cases like EdTech or live commerce? Both those categories have been hot in the startup world, so I would look to see them land a notable new logo there. Outside of social audio, which are the markets that will catapult their US presence?

2/ clubhouse builds internally SOON -> Agora falls into the bucket of API companies that are "undifferentiated heavy lifting", but in the case of Clubhouse I'm not sure that's as true. The performance of their audio seems paramount to their end user experience, so I would understand the motivations to build this in-house. I think this is what separates Agora from Twilio and Stripe APIs in my head, which focus on a non-core business problem that makes more sense to "outsource". How long will Clubhouse stay on Agora?
first of all, GREAT title 🤣. second, great post. clubhouse seems busy, no idea if they are looking into this, but makes sense. Then again, if it’s working, it’s working. Why mess w it. But, if clubhouse is push to more audio-only, which it probably will be and for which there are many markets (like examples you gave above), then probably good things ahead for $API and why sell. I’m sure nothing could go wrong ;)
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Nandu Anilal's avatar
$153.5m follower assets
Agora +25% today
After a pretty shaky 6 months or so, Agora seems to be gaining momentum. This seemed like one of the most exciting winners of the year, playing on hot themes like voice/video, developer tools, usage-based pricing, etc. The one-line description is that $API provides developer tools to incorporate real-time voice and video into apps.

In particular, the company excels at 1:many use cases rather than 1:1 which is offered by myriad vendors including $TWLO. Think use cases like live shopping, edtech apps, social-audio, etc.

The stock is up 25% today and 78% the past month fueled by the large growth of one of it's customers, Clubhouse. A few tweets noted that Clubhouse was using the Agora SDK, meaning that it's social-audio was powered by Agora. And last night, the app was really on display as Elon Musk essentially maxed out the app's room capacity minutes before he even appeared. In my opinion, Clubhouse legitimizes Agora's product and highlights a potential shift towards more livestreaming use cases in America.

I'm still long Agora because I think we'll see more apps that are wrapped in live audio and video, but am continuing to ask myself two key questions:
  1. Do customers eventually build internally rather than buy Agora? And at what point does this happen? We saw the same concern with Twilio (ie $UBER was once 12% of their revenue and then left), but they have such a large customer base that it proved to be less problematic.
  2. Will Agora be able to make a presence in the US market? Especially where their brand is not as recognized as adjacent names like Zoom (which has an SDK) and Twilio.
I've used Agora as a developer -- easiest 1:many video api to implement. Very bullish.
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Nandu Anilal's avatar
$153.5m follower assets
Sinch 10x in 2 years
Sinch (STO: $SINCH) does not get the hype that it deserves, the stock has more than 10x'd in the past 2 years

I’m very bullish on this category of Communication Platforms as a Service, currently holding both $TWLO AND $API

I think Twilio is best positioned on the basis of a large product portfolio while Agora represents an opportunity to invest in a very high growth category around live-streaming use cases.

I want to spend more time looking at Sinch, the Swedish Twilio competitor which is now worth $8B. It recently sold a 10% stake to SoftBank to fund growth + M&A which could make for some exciting news.

Anyone do any digging here?
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Looks pretty interesting - love the space. They hovered around 30-35% organic growth in 2020 (per their reports).
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Nandu Anilal's avatar
$153.5m follower assets
Agora sending mixed signals
$API reported Q3 earnings, with a mix of good and bad news.

The good:
  • Revenue growing 81% YoY — good albeit slowing down from original covid-driven boost
  • Net expansion rate is a best-in-class 188% — the acceleration is a strong signal that their end customers are likely growing with Agora

The bad:
  • Gross margins dropped from 69% last quarter to 62.5% as a result of expanding to markets with higher infrastructure costs
  • Weak guidance on next quarter suggests that their post-covid growth may look less compelling

Still a believer here in the long-term value of real-time video infrastructure though it could be a slowdown in the next few quarters as growth post-covid will come down.
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ARK Invest was buying up shares a couple of weeks ago - that net expansion rate is wild...as a potential buyer of their shares I'm not too concerned with the drop in margin as I'd think that would revert over time.

I wonder over the next week or so, as more and more vaccine related news seems to come out, the market discounts $API further or if it's near a bottom?
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