Ladies and gentlemen, thank you for standing by, and welcome to Agora's second quarter 2020 financial results. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. If you ask questions during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Fionna Chen. Thank you. Please go ahead.
Thank you, operator. Good evening, and good morning, everyone. My name is Fionna Chen. I am the investor relations director at Agora. Thank you for joining Agora second quarter 2020 earnings conference call. Joining me today are Tony Zhao, our founder, chairman, and CEO, and Jingbo, our CFO. Our earnings results press release and a slide deck can be found on our IR website at ir.agora.io. Reconciliations between our GAAP and non-GAAP results can be found in our earnings press release. During this call, we will make forward-looking statements about our future financial performance and other future events and trends, including guidance. These statements are only predictions that are based on what we believe today, and actual results may differ materially. These forward-looking statements are subject to risks, uncertainties, assumptions, and other factors that could affect our financial results and the performance of our business.
Which we discuss in detail in our filings with SEC, including today's earnings press release and the risk factors and other information contained in the final prospectus relating to our initial public offering. Agora assumes no obligation to update any forward-looking statements we may make on today's call. With that, let me turn it over to Tony.
Thank you, Fionna. First, I'd like to thank you and welcome all of you for joining us today for our first earnings announcement as a public company. Before walking through our Q2 performance and highlights, please let me spend a few moments describing our business. As more aspects of our lives are moving online, there is tremendous demand for real-time video engagement. Historically, user would need to install a dedicated app to use video engagement, such as Skype, FaceTime, or Zoom. However, in more and more cases, users are looking for contextual real-time video engagement that is directly embedded in the application they are already using, whether that is for education, dating or game purpose, enabling richer context and more seamless and immersive user experience with no need to switching between apps. This is exactly what we do.
The Agora platform provides developers simple, flexible, and powerful Application Programming Interfaces or APIs to embed real-time video engagement experience into any application. Ultimately, our mission is to make real-time engagement ubiquitous, allowing everyone to interact with anyone in an app at any time and anywhere. The key components of our platform are our Software-Defined Real-Time Network, or SDRTN, and our Software Development Kit, or SDK. On top of the SDRTN and the SDK, we offer developers products such as real-time video, real-time voice, real-time messaging, real-time recording, and many other use case-specific products. All these products can be accessed through simple APIs and are fully programmable. Our technology makes developers work more efficient and effective, helping them bringing new apps to market and deliver a better end-user experience, resulting in stickier user relationships.
Traditionally, it takes a team of multiple developers several months to build real-time video engagement functionalities with high upfront infrastructure costs and without a guarantee on quality and compatibility. With Agora APIs, you just need one or two developers. For most cases, only one week of coding and testing, no server to be deployed or infrastructure to be built. You get global coverage with stable quality and wide array of functionalities and broad compatibility cross-platform. This is why tens of thousands of developers around the globe have chosen Agora. We are focused on building developer community enthusiasm and innovation. We designed our platform so that it's easy to adopt and enables self-serve, ensuring a flexible, no-touch experience for developers. We offer 10,000 free minutes per app per month so that developers can experiment with our platform.
We have a transparent pay-as-you-go pricing model so that we can grow with our developers as they grow and scale their offerings. For large customers, we deploy our own engineers to help them integrate it and customize our products, creating differentiated user experience for them. As you can see, this business model is very efficient and scalable and has allowed us to deliver very strong financial result this quarter. Now let me tell you about our Q2 performance and a few key business highlights. I'm pleased to report that we delivered revenue of $34 million for the second quarter, an increase of 128% year-over-year. This was driven by significant usage growth across geographies and verticals, as the demand for real-time video and voice engagement increased significantly in light of the COVID-19.
At Agora, we are proud to see our platform was used by developers around the world to help people collaborate, learn, play, have fun, or just stay connected across distance during these challenging times. In addition to tremendous revenue growth, our highly efficient business model contributed to positive GAAP net income, operating cash flow, and free cash flow. Our active customers reached nearly 1,500 at end of second quarter, up 86% year-over-year, and our constant currency dollar-based net expansion rate was 183% for the trailing 12-month period. In this quarter, our platform continued to attract developers with more than 30,000 new apps registered on our platform, bringing cumulative registrations to more than 210,000. Working with our developers around the world, we have seen many innovative and promising use cases emerging across various verticals.
For example, we recently announced our partnership with Scener, a watch party platform that enables anyone to connect and interact over video chat while watching streaming content together. User can host either public or private co-watching sessions or watch party where content is synchronized with participants. With real-time video chat powered by Agora, Scener has seen 100 times growth since March because of the novel shared experience that it creates to bring people together in the same virtual theater at the comfort of their own home. Another example is the co-listening service launched by a leading online music entertainment platform. After creating a public or private virtual room, the host become a DJ and choose what music to play. On top of the original HD soundtrack streaming to all members in the virtual room overlays a real-time voice engagement layer powered by Agora.
It brings user the intimate experience of listening to music and share their thoughts together with friends without any compromise on music quality. Online exam on test proctoring also emerged in this quarter as a promising use case. Here, candidates are monitored online during the test duration through a real-time video connection and access the screen of the candidate, both powered by our technology. This kind of online proctoring and remote invigilation is expanding at a fast pace in both education and corporate training. Those are just three out of hundreds of contextual real-time engagement use cases that are possible to achieve without Agora platform. I'm also excited to announce that we are in the process of launching the first ever Experience Level Agreement, or XLA, in real-time engagement.
Without industry standard or benchmarks of service quality, customers used to be operating in the dark, not knowing how good or bad the quality of service are. A lot of times had to guess the experience of their end users and their overall business result being impacted by the experience. While our XLA covers metrics such as successful log-on rate, data rate, and latency that focus on not only service availability, but also on end-user experience. Now with XLA, the key metrics associated within, we can provide transparency on service quality down to every minute in every engagement session. We will also provide future platform usage credit to our customers if we fail to deliver the level of XLA quality we have guaranteed. The XLA will help our developers better serve their end user, understand the quality they are experiencing, and also further differentiate our products from the competition.
We believe it will be a must-have for any real-time engagement API provider going forward. Finally, I'd like to thank our 600+ Agorans around the globe for their exceptional performance in our first quarter as a public company. Thank you to our developers and partners for their unwavering trust in us. We will continue to create value for our developers and customers through innovation. Together, I believe we will one day make real-time engagement ubiquitous. Now, let me turn things over to Jingbo.
Thank you, Tony. Hello, everyone. I hope you are all safe and well. Let me start by first reviewing financial results for Q2, and then I will discuss our outlook for the full year. Total revenues grew 128% year-over-year to $33.9 million in the second quarter of 2020. This was due to both organic growth and the spike in usage caused by COVID-19. On a sequential basis, compared to the first quarter, we continue to see usage at heightened levels with strong sequential growth in the U.S., and the rest of the world as social distancing and travel restrictions remain in place. On the other hand, China gradually came back to normal, which led to lower usage compared to the peak levels we saw in February and March, but still much higher than the pre-COVID usage levels.
We believe this is because COVID-19 has changed people's long-term behavior towards video engagement. For this reason, we see the increased usage during this quarter as a promising indicator of a long-term growth opportunity and not just a blip on the radar. Our trailing 12 months constant currency dollar-based net expansion rate was 183%, again, partially due to COVID-19. As the situation stabilizes, hopefully, we expect our expansion rate will likely come back to levels similar to what we saw in 2018 and 2019. Turning to cost, expense, and margin. This significant increase in demand and the disciplined investment approach drove net income profitability from both GAAP and non-GAAP perspectives. For my following comments, I will focus on non-GAAP results, which exclude share-based compensation expense.
Non-GAAP gross margin for the second quarter was 66.6%, which was 2.8% lower than Q2 last year, primarily due to our international expansion to regions with higher infrastructure costs, such as South Asia and South America. Because we currently use one standard pricing for all regions, our gross margin in these areas with higher cost is significantly lower than our overall gross margin. Going forward, we plan to address this issue by further optimizing our cost in these areas and gradually shifting toward region-specific pricing. Non-GAAP R&D expense were $10.5 million in Q2, up 114% year-over-year as we continue to build our R&D team. R&D expense represented 31.1% of total revenues in the quarter, slightly lower than 33% in Q2 last year. Looking forward, we will continue to focus on our investment on R&D to drive product innovation and strengthen our technology leadership.
Non-GAAP sales and marketing expenses were $5.5 million in Q2, up 22% year-over-year, mainly attributable to team expansion and increased advertising expenses. Sales and marketing expenses represented 16.2% of total revenues in the quarter compared to 30.4% in Q2 last year. This significant 14% drop in percentage clearly demonstrates the efficiency and scalability of a developer-centric go-to-market model. Non-GAAP G&A expenses were $2.6 million in Q2, up 108% year-over-year, mainly due to team expansion and professional services related to the IPO. G&A expenses represented 7.6% of total revenues in the quarter compared to 8.3% in Q2 last year. Non-GAAP operating income was $4.7 million, translating to a 13.9% non-GAAP operating margin this quarter as compared to a net loss margin of 2.2% in Q2 last year. Adjusted EBITDA was $5.7 million in Q2, with a 16.9% margin compared to a 0.7% margin in Q2 last year.
Turning to cash flow. Our operating cash flow was + $7.5 million in Q2, up from negative $4.9 million last year. Free cash flow was + $3.6 million in Q2, up from - $6.6 million last year. Moving on to balance sheet. We ended Q2 with $641 million in cash and cash equivalents, up from $152 million at the end of Q1. The increase was primarily due to the net proceeds from our IPO and the concurrent private placement, as well as our positive free cash flow. Now, turning to guidance. COVID-19 is still an unprecedented variable to our business model, where historical experience may not apply. Our guidance on full-year revenue reflects a number of assumptions that are subject to change based on uncertainties related to the impact of the COVID-19 pandemic.
With that, for the full year of 2020, we expect revenue to be in the range of $125 million-$130 million, which would represent approximately 94%-102% year-over-year growth. In closing, we executed well in Q2, and we are proud of how our team dedicated themselves to supporting our developers and customers around the world. Thank you to the entire Agora team and everyone, please stay healthy and safe. Operator, let's open up for questions.
Ladies and gentlemen, if you wish to ask question, you may press star on your telephone. The first question we have is from the line of Emerson Chan from Bank of America. Your line is now open.
Hi. Thank you management. I have three questions. The first question is about the COVID-19 impact. I just want to get a rough sense of how much COVID-19 still contribute to the growth in Q2, and what kinds of monthly traffic trend we have been seeing as we move from May, June to July. Secondly, how should we look at our long-term growth in post-COVID-19 environment? In the second half of this year, we expect revenue to grow at a 54% to 67% year-on-year, which I think there should be limited COVID-19 impact in China. Do we expect this growth rate to sustain in the next few years? For my last question, which is about the overseas expansion, especially in the U.S., I'm just curious on how we view this opportunity now given the current political environment.
In terms of our full year guidance, how much overseas revenue growth we embedded in our guidance? Do we assume any impact from the potential restriction in the U.S., and current political environment? Thank you.
Thank you, Emerson. I will take the first two questions and maybe Tony can talk about the third one. As I said, in China, COVID-19 situation really eased in towards end of April, mid-May. After that, I would say the temporary spike in usage caused by COVID-19 was really passed. Outside China, however, things remain pretty much the same in Q2 compared to, say, March. Therefore, actually, we see demand remain at heightened levels and actually the strong growth are still from new apps, new use cases and increasing usage from users. It's a mix of two different situations, and it's very hard to quantify exactly how much additional usage was caused by COVID-19. I would say, in any case, I would say it's probably not more than 20% that was really caused by the COVID-19 situation.
In terms of the run rate, I guess, the run rate in June, July and early August up to now is pretty healthy. I would say the run rate today is to a large extent free from impact of COVID-19. We would expect for the end of Q3 for the full quarter of Q4, the results shouldn't have too much impact from COVID-19. Of course, that's assuming the situation continues to stabilize and without any further worsening the situation, such as the, what people call second wave. That's the first question. In terms of the second question, we do see that, running into the height of COVID-19, we would see demand spike significantly. After things stabilizes, some of the demand will fall back.
However, as the situation in China has clearly shown, even after COVID-19, the demand will not fall back to pre-COVID levels. Again, that's because people have really changed their attitudes towards using video engagement across distance instead of having to do everything face to face. Developers and businesses also have come to appreciate the efficiency and the convenience of video engagement. That's why we continue to see many more use cases, and we will see users stick around with the new tool they have, video engagement, and that will persist in our view. We do see very strong long-term prospect. In term of revenue growth, we do see that long-term demand is definitely there. However, what we cannot control is the emergence and maturity of use cases. That's up to the developers to eventually build and realize all the long-term potential.
What we can do is provide them with the best tools possible, and that's really our focus.
All right. For the third question, since the beginning, we want to build a global product and serve global developers and customers. That has been our commitment from almost day one of the company. Now we already have customers around the world, not just in U.S., or China. We will continue to focus on serving global developers and customers. The trend we are seeing is developers and customers are also becoming even more distributed and diversified. Many of them now have a more distributed team across geographies and serve users also around the globe. It's hard to say where many of those were, they are really based. We will continue to provide better service to customers and developers in any region around the globe. We continue to believe that markets other than China and the U.S., will contribute a significant portion of revenue in longer term.
Thank you.
Thank you.
Once again, ladies and gentlemen, you may press star one if you wish to ask questions. The first question we have is from the line of Yang Liu from Morgan Stanley. Your line is now open.
Thanks for the opportunity to ask questions. three questions from my side. The first one, management update us in term of the demand dynamics from different verticals. I remember that online education is one of the biggest contributor before the IPO. How about the revenue contribution in the second quarter, and how about the growth in emerging use cases like enterprise communication and telemedicine, et cetera? The second question is the gross margin outlook. We are happy to see that the company is expanding to new regions, but the high infrastructure cost there is kind of a concern. What should we look at, or forecast in the long-term gross margin, given the dynamics of entering new market and also streamlining cost there?
The third question is management update us in terms of the technology performance versus the major competitors in different markets, especially given that Agora launched the first industry standard. Do you expect that competitors will be able to catch up in terms of the technology performance? Thank you.
Thank you. I will take the first two questions. First of all, on demand dynamics. In fact, the contribution on education in Q2 was lower compared to Q1. The reason was that, in China, where we generate the majority of revenue from the education sector at the moment, Q1 was really the peak of the usage level because all the schools were closed and a lot of the education providers had to move all their classes online. That caused a significant increase in demand. Towards the end of April and May, gradually, schools reopened across the country, with a few exceptions. Some of those demand naturally fell back. That's why in Q2 compared to Q1, in the short term, demand for education actually decreased.
Looking forward, we continue to believe that education is the most promising vertical both because the online education sector is growing very rapidly, not just in China, but across the globe. Secondly, the traditional public school education are also incorporating more and more video features for distance learning as part of their overall offering. We continue to see strong demand from all class formats. Previously, we mainly focused on small class 1, and now we see that more and more large classes are also starting to adopt the RTE technology powered by us, instead of the traditional one-way streaming technology.
In terms of emerging use cases, we continue to see many experiments like the one Tony mentioned earlier in his remarks, like listening, co-watching, like exam proctoring and obviously, as you mentioned, enterprise communication and also healthcare. These cases currently still contribute to a small portion of our total revenue, but we see very strong growth there. If we take a longer-term view, we do think they will contribute to a greater portion of our revenue. The second question on gross margin outlook. We saw in Q2, again, partially due to COVID-19, that a lot more use cases, a lot more apps from countries such as regions in South America, South Asia, Eastern Europe, or even Africa. The situation in these areas is the infrastructure cost, bandwidth, co-location space, as I said, is actually more expensive.
On the other hand, the price remains the same, and that caused a depressed margin in these areas. Previously, the revenue contribution from these areas were much smaller, so the impact was less an issue. We also saw that there was much more international or cross-region engagement activities on the platform, which obviously would involve higher infrastructure cost. Again, we charge the same price for any engagement. That's again, partially due to COVID. As I said, we will try our best to reduce our cost in those areas, and we'll start experimenting with regional pricing so that we can ease this issue. However, with that said, in the near term, in the immediate next one to two quarters, the gross continues to be under pressure in terms of gross margin.
In the longer term, we do believe as we scale, we will enjoy some benefit from that scale, and hopefully, the margin will come back to a more normal level as we have seen in the past.
All right. For the technology performance leadership, I think I mentioned a few things, including on the background, we also keep rolling out improved audio and video quality releases. One thing I specifically mentioned is XLA, where is industry-first experience level agreement, which guarantees the experience level we provide through our RTE APIs, which is not really like in the past. It's only a guarantee of your availability. Rather, give you a sense and the level of guarantee of how good those audio and video experience are. It's like adding a dashboard for a car. Initially, before, in the past, it's almost like every customer is driving a car without dashboard. Now, we're adding the dashboard for the first time for the whole industry. We are also working on additional new building blocks to help developers to more easily create real-time engagement sessions or use cases.
For that, I think that's something like the Experience Level Agreement. It's something really focused on helping our customers and developers better use the technologies to create their user experience or use cases. It will be something that in the future, every provider for such APIs has to provide. I believe that's going to be the trend. To that topic, I also like to invite you to join us at our RTE2020 conference for more product announcement and real-time engagement news. This is an annual conference hosted by Agora in San Francisco and Beijing. This year, it will be a global virtual event starting on October 13-14 for U.S., and Europe time zone, and then October 22-24 for Asia time zone. Registrations will be open very soon.
Thank you. A quick follow-up here is related with the escalating China-U.S., tension. As you know, Agora is running two headquarters in Silicon Valley and Shanghai and have high exposure in both China and US market. How does this kind of geopolitical tension impact the business, particularly given some of the customers already got banned in the U.S.,? Thank you.
US revenue contributions so far for us, it's high single-digit percentage. We're not presently aware of any impact or potential impact to our business. We don't want to speculate on where things will go. We will be more careful and watch closely to how things will go. As always, to us, I think as always, change is the only certainty as we anticipate the future. Today, the world is perhaps in a state of change, which some of us may find unsettling. Perhaps some of those changes are seemingly beyond our control, and we don't want to focus on the things we cannot control. Rather, we want to instead focus on the things we can work on.
In any case, we want to reiterate our unwavering commitment to our global developers and customers, including those in the U.S.,. We are fully prepared and will meet all challenges, whatever they may be and whatever it may take. We will always be open and transparent to our most important assets, our people, our developers, and our customers.
Thank you.
Thank you. Once again, ladies and gentlemen, you may press star one if you wish to ask questions. The next one we have is from the line of Rich Valera from Needham. Your line is now open.
Thank you. Thanks for taking my questions. A couple questions from me. First, you saw really strong quarter-over-quarter gains in new active customers on the platform in Q2, and I'm wondering what you attribute that to, if there was any new or different marketing or new business development activities that may have driven that? Or do you think perhaps COVID-19 was a catalyst? Presumably, those customers are new and didn't really contribute to revenue, but would contribute to future periods. Just wanted to see if you could give any color on those strong new customer additions.
Sure. For us, it's really a conversion cycle. Initially, we need to have a developer registration. They register on the platform, it can be three minutes, they start to experiment, once the use case is validated, it will start to scale. Gradually they become customer, revenue start to increase. The increase in number of active customers in Q2, which we define as customers who contributed more than $100 of revenue in past 12 months. Actually, a precursor to that was the rapid increase in developer registration. As you can see, we added more than 20,000 registration apps in Q1, again, more than 30,000 in Q2. I guess that's probably one indicator you can look at, or in term of it is the source behind the active customer growth.
That makes sense. You'd identified two 10%+ customers in the first quarter. I think one was a social media platform, one was an e-learning customer. Did you have any 10% customers in the second quarter?
The answer is no. Both of them still are customers. Each of them contributed about 9% of revenue in Q2, down from 14% and 10% in Q1. As we disclosed before, the 14% customer in Q1 was education customer, and a big part of their business was offline physical classrooms, and that's why in Q1 they moved all the classes online without help. In Q2, naturally, some of that demand faded, but still they remain as a very significant customer of ours.
Understood. Just one more, if I could. Your new sort of quality of experience measuring platform, I think you call it XLA, could you tell us where you are in the rollout of that? Has it been out there with customers at this point, and what feedback have you gotten on it, if it has been out in the field at this point?
Yes. As I said, it's in the process of launching such an agreement with our customers. Again, it's a Experience Level Agreement. Basically, it's not guarantee the availability of our servers or APIs, rather a guarantee the latency of real-time audio or video or the jitter of the real-time audio/video, those kind of things. By looking at those measurements, you would be able to know, no matter it's 1 million minutes you're running a day on our platform or 10 million minutes a day running our platform, you will know how many minutes it's in premium quality. How many minutes out of the total volume is non-premium quality, which is good transparency to our customers' view or understanding of the service, Real-Time Engagement service they are running on. Usually they would be running those services for their education purpose or social purpose.
By be able to those numbers and get to know how good it is or how bad it is, they can have a sense of how their social education customers' satisfaction would be. That's what we learn from our early sign-ups or agreement signing with our customers so far. I think we've received a tremendous welcome for that rollout. Maybe I can further point out that this kind of product or service is not really for our interest. It's rather in consideration of benefits to our customers and developers. It actually give us a higher standard to meet in the future. We have to deliver the experience level so that we will be able to satisfy the agreement we have with them.
We also put in real commitment by agreeing if we are not meeting the level, we will compensate them with additional credits in the future. This is a very serious commitment to our customers.
That's helpful, color. Thank you.
Thanks.
Thank you. Once again, ladies and gentlemen, you may press star one for questions. The next one we have is from Mei He from US Tiger Securities. Your line is now open.
Hi, thanks for taking my question. One question for Tony, another one for Jingbo . First, for Tony, could you please give us a preview of your product roadmap, especially in R&D in the future, for example, what kind of new products or features are you going to introduce in the next one year or two? Secondly, for Jingbo , your sales and marketing expense ratio improved a lot in the quarter. I believe your developer-driven go-to-market motion is very efficient. Given the huge market opportunities going forward, how do you think about the balance between investment for the future and profitability improvement? Thank you.
Yeah. As I mentioned a little bit just now, we have quite a few products under development on our roadmap, where one of the things I mentioned was real-time engagement APIs. It's going to provide additional support other than just real-time audio and video, and will accelerate or help our developers and customers more efficiently create new use cases. This is something we are going to roll out in the next quarter or so. As I mentioned, the XLA, the experience level agreement, is another major offering or major commitment we start to roll out to our customer in regions. There are more exciting news will be announced in our RTE2020 conference, which is annual conference. It's also the largest one in the industry. You are welcome to join that event to know more around those announcements.
On the sales marketing expense, it's true that the sales marketing expense as percentage of revenue dropped significantly this year compared to last year. I think that's largely due to a developer-focused go-to-market model, focused on building developer community and enthusiasm. What I mean is we can't really just drive sales simply by hiring more salesperson. This is a product that requires deep integration and requires the trust from developers. That's why it's always more important and more efficient to really go where the developers are. So far, we have been doing that through marketing, through our conferences, and through all the online forums, different developer hubs, where we have pretty strong presence and through the word of mouth of developers who have used our service.
It's hard work, and it's pretty long-term work. That's why this year when revenue increased, the sales marketing expense simply cannot catch up, and that's why we enjoyed very strong operating leverage and our margin improved significantly. Looking to the future, I totally understand what you mean by how to balance the investment with profitability in the short run. I guess the point is not that we don't want to invest for the future. We certainly do. The question is, how can we invest more efficiently? We think, again, we'll do a lot of new things to further strengthen our developer community and our developer engagement efforts, but that will not be in the form of simply hiring more salespeople. Again, what that also means is we don't expect sales marketing expense will grow at the same speed as revenue.
Great. Thank you.
Thank you.
Thank you. We don't have any further question at this time. Once again, ladies and gentlemen, if you wish to ask question, you may press star one on your telephone. Thank you. Again, ladies and gentlemen, you may press star one if you wish to ask question. The next question we have is from the line of [Kevin Sha from Blockblock]. Your line is now open.
Great. Thanks, management. Congrats on the great quarter. I have two questions. The first of all is how do we think about our customers, such as the, for example, the education client or the short video client, that they do their own RTE solutions internally? Do we think that self-development can be a threat going forward? My second question is how do we think about industry-level competition? What is the overall market share, and what is the pricing comparison versus others? Thank you.
All right. For the customers who's trying to build their own in-house solution, I think it's a thing we've been dealing with from the beginning of this company or this business. Initially, because there's no so-called third-party professional provider on this, we have to convert one by one from in-house technology to our platform. We've been successful with mid-size, smaller size, or some of those workers very successfully migrating almost all of them. Still, there will be several, or some of those larger ones, they do tend to want to at least try to build something on their own for the reason of maybe thinking they could build something as good or they could be more customized to their needs, which we would consider that as normal practice we run into day-to-day.
From our view, I think our focus is trying to really become the professional third-party provider, which can show the strengths on quality side, on completeness of APIs, on capability and global coverage, all that. In fact, the XLA agreement, as I mentioned just now, is something I never see any in-house developers really have, which we think as a professional provider can further strengthen our strengths on showing our value to those customers. It will be a trend that we continue to manage to increase our competitive advantage over those practices, and we have the belief that eventually, third-party professional provider will be more efficient and more effective and more professional in doing so. Another question is around competition.
I think, again, this is a thing that in the industry from I think three years after we established, and it's been growing, especially when the market becomes bigger and bigger. Overall, I think, because the industry is quite early, maybe everyone in this industry understanding towards the right proposition and the direction of the industry goals might not be the same. Again, I will refer back to XLA. This is something we are the first one to roll out in the whole industry, which shows our understanding and commitment to our developers' and customers' needs. While other companies does not really rolling out this offering, I don't think we are really competing on that direction.
We will look more into our customer demand and needs, and the truth is we actually see a lot of additional demand that we haven't yet fully satisfied, which is the area we are going to continue to focus on.
Great. Thank you. Really appreciate this.
Thanks.
Thank you. Again, we don't have any further question at this time. Again, ladies and gentlemen, if you wish to ask question, you may press star one on your telephone. Once again, it is star one for questions. Once again, ladies and gentlemen, you may press star one for questions. We don't have any further question at this time. I'll now hand the conference back to today's presenters. Please continue.
All right. Thank you for joining our conference call, welcome to again participate our future events and join our RTE2020 online events.
Thank you. Bye-bye.