Agora (NASDAQ: API) is a hyper-growth software company with a unique corporate structure. It maintains dual headquarters in Shanghai, China and Santa Clara, California.

The company provides software developers highly customizable application programming interfaces (APIs) to embed real-time video into their applications easily. One of the more popular use cases for Agora’s platform has been retail streaming. Brands have utilized the technology to stream live product demonstrations with interactive features like text and video chat. The company appears to be providing the right technology at the right time as many retailers have been forced to close their physical stores and rely on internet sales. In the company’s most recent quarter, revenue grew 128% and active customers grew 85%.

Agora debuted on the U.S. stock market on June 30th, 2020 with a lot of excitement. The company’s share price jumped 145% to $49.19 on its first day of trading and remain above $48 as of this writing. Although Agora is a high-growth software company that falls right into my circle of competence, I currently do not own shares because I want to better understand the company’s corporate structure.

The company was founded by Bin (Tony) Zhao in Silicon Valley in 2013. Prior to founding Agora, Mr. Zhao served as director of Nasdaq listed YY, Inc and most notably, as a senior engineer at WebEx Communications from 1997 – 2004. Agora’s main executive offices are located in China which is where most of its revenue comes from through large customers like ByteDance, TAL, Huya, and others. More than 38% of the company’s revenue came from its top 10 customers in 2019.

With revenue highly concentrated in its top 10 customers, a single decision from one of their larger customers could have a significant impact on Agora’s financial situation. Their customers could be influenced by changing industry trends, government regulation, technological innovation, or various other factors. One of the challenges with owning companies that derive most of their revenue internationally is that as a U.S. investor, I’m not nearly as familiar with their international customers or how business trends differ in various countries which makes it difficult to pick up on these various factors.

In the “Risk Factors” section on the company’s Form F-1 filed in June 2020, management listed specific risks investors should consider.

“The popularity of particular use cases and end-users’ use of specific applications, as well as the development of new use cases and applications, depend on many factors beyond our control, and a decline in end-users’ use of social, education, entertainment, and gaming applications that integrate our products could harm our business, operating results, and financial condition.”

“Changes in political conditions and changes in the state of China-U.S. relations are difficult to predict and could adversely affect our business, operating results and financial condition. In addition, because of our extensive operations in the Chinese market, any deterioration in political or trade relations might cause a public perception in the United States or elsewhere that might cause our products to become less attractive.”

Agora clearly has a product that’s addressing important customer needs. The company’s revenue growth is very impressive which makes Agora very interesting as a potential investment. However, because of the company’s complicated dual-headquarter structure and reliance on international customers that I’m not familiar with, Agora remains in my “study” pile as I continue to learn more about the company’s growth opportunities and potential risks.

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