Agora, Inc. (NASDAQ: API) saw its stock plummet 5.03% in Tuesday's trading session, despite reporting its third consecutive quarter of GAAP profitability. The real-time engagement platform provider's tepid revenue growth and conservative outlook for the third quarter appear to have disappointed investors.

For the second quarter of 2025, Agora reported total revenues of $34.259 million, a mere 0.1% increase year-over-year. While the company's core Agora segment showed promising growth of 16.7%, reaching $18.2 million, this was largely offset by a 12.4% decline in the Shengwang segment. The company did manage to post a net income of $1.462 million, or $0.01 per ADS, marking a significant improvement in profitability.

However, Agora's outlook for the third quarter, projecting revenues between $34 million and $36 million, suggests continued sluggish growth. This conservative guidance, coupled with a dollar-based net retention rate of 97%, indicates challenges in expanding revenue from existing customers. Despite positive developments such as the launch of an upgraded Conversational AI Engine and improved cash flow metrics, the market seems to be focusing on the company's struggle to accelerate top-line growth, leading to the sharp stock decline.