Agora, Inc. (API) shares plummeted 6.30% in pre-market trading on Wednesday, despite the company reporting its second consecutive quarter of GAAP profitability. The significant drop comes as investors appear unimpressed with the modest 0.8% revenue increase in the first quarter of 2025.

While Agora achieved double-digit revenue growth year-over-year when excluding certain end-of-sale products, the overall revenue performance seems to have fallen short of market expectations. The company's disciplined cost management and solid cash position, which allowed for investments in promising areas like conversational AI, were not enough to offset concerns about top-line growth.

Adding to the downward pressure, Agora's financial outlook for the second quarter of 2025 may have disappointed investors. The company projects total revenues between $33 million and $35 million, compared to $30.9 million in the same quarter last year (excluding revenues from certain end-of-sale low-margin products). This guidance, while showing growth, might not be as robust as shareholders had hoped, contributing to the pre-market sell-off.