Opera Limited (OPRA) 24 Aug 232023 Q2 Earnings call transcript

Welcome to the Opera Limited Second Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's call is being recorded. [Operator Instructions]

to Wolfson, call Head like speaker to now Matt today, of would turn over the your I Investor Relations. ahead. go Please

Thanks us. joining for

Lin; As our Jacobsen. with have and Song usual, Frode our me CFO, I Co-CEO, today

Litigation statements I the future to everyone Act. the results which like Reform company and Before I be Private making call forward-looking the remind the expectations, to that call Song, within hand statements of would conference will in Securities the today, meaning over about constitute its

Such environment subject and uncertainties current competitive statements control current we how expectations other the are based and on of perceive the management. and and to economic contingencies beyond inherently are economic,

statements You of not guarantees should these future be cautioned are that performance.

company's for may earnings release the refer in You to details. Safe Harbor the statement

financial believe that and are of the from ongoing adjusted include today which EBITDA, commentary in trends. use We different prepared non-IFRS operating statements for measures also an will evaluating results IFRS. our that Our financial and on additional measures, including tool consolidated provides investors use to financial based non-IFRS presented are

be in should not IFRS. substitute in accordance considered information measures isolation with a or for These financial as prepared

posted website. Opera results historic quarterly our Investor on Relations We financial also have unaudited of

the will our We will and strategy discuss over Opera, call who along turn going operational call there that, to Frode live and With Lin, highlights during our quarter and Song cover in at will call our forward. be expectations so highlights from me then the let the posting Co-CEO, Investor please follow second the financials and future.

us you thank and Sure. Thanks, Matt, joining for today. everyone

issued announce exceeded both to guidance for pleased another very revenue very profitability. previously which are and strong our we quarter, So

guidance of to happy start year today. the we XXXX to able a half are great raise off our first The to be and is

reaches our top This revenue of over $XX.X line growth. previous consecutive of XX% tenth increase XX% million, was the quarter an quarter Second year. over

XX% a $XX.X was EBITDA margin. Adjusted million,

value. and successes on upon Western our the in quarter the with second communicated previous markets growth greatest focusing strategy The builds the on for potential

who story, So following nothing of Opera been new. to you the those is have this

Annualized ARPU compared an quarter. was and to to first $X.XX in second of up increase XX% XX% the last quarter, relative year the

we base towards mix base user higher users was ARPU with total user of user relatively markets, in representing stable, our base. continued users, our While shift the total XX% western

XX% our Advertising advertising. revenue of revenue and quarter, second representing markets. by grew the continued Search the to business in driven top year growth compared growth benefit extension continues of XX% in in O&O our XX% revenue last to user underlying audience Western from total on grew

our Opera has With a to track ahead record giving and users bringing long new technology history browsers. of come the that systems operating our of user-friendly of direct access innovating browsers with its AI for browsers, and to partnerships. our we and most our advantage have products, as expanded platforms, Internet's existing program taking the news as of existing new solutions gaming own in-demand well

partnered has our To make the some close already best first get ChatGPT the yielded impressive sure our and and available. OpenAI, with We maker solutions collaboration technologies of results. users

board drawing for and our AI upcoming and to reshaping the current UX and UI decided the redesign and experience go the platform improve the to desktop have user to prepare features. flagship We back browser, both

and embed rich browser for managed adapts users' all Opera leave powerful to With One, room create to a our current more. needs, considerable the we feature designed to that technologies dynamically AI

and both a AI-enhanced Opera the This One for about positive feedback future tech met web and from browser platform users was excited high-quality media. with overwhelmingly browsing. are redesigned We of

AI Aria new free, their event kind allows aware Aria for offered getting generative Opera with browsing first as product for queries the of answered. new or while Opera all and web, One was codes browser of the insurance service, generating entirely collaborate text a browsers to or browsing a beginning well-connected marks users. include Aria of our AI users AI to current

is ChatGPT infrastructure, on Aria component to connected based OpenAI own technology. Opera's is which

the In component The models such is to services is adding addition, It infrastructure Aria in integrating easily to also and further users expand Aria further our key scalable. connect allows enhanced future from live capabilities to such by additional monetization. direct web. for by well multiple powered by as AI as the capabilities results relevant partners

It allowing well also available a search with to be and browsers increased time by page total to iOS a they on our lift the as is the Aria AI-powered clearly are users Android and and hit position. views as spent as mobile evidenced users, in goal. for browsing has enjoy enjoying experience in proven queries

to Opera the vendor on of looking technological Aria forward AI solutions the to bringing immediate projects bar platforms to major high strive all be first edge various to set as is be developing the continues horizon, our we cutting but more innovation.

during Opera mobile, to an the quarter on quarter X% increase GX with to greater western to million faster its an another given $X.XX, of annualized XXXX. base, compared on the continues second sequentially side. than grow PC PC ARPU of XX exposure of grows X% user Monetization up the

with to attractive has a very engaged addition gamers, demographic, Z. GX In predominantly being Gen

their services and we experience the the look their directly With of connects Opera use. feel gamers GX, they setups them from broader to themselves to others those matches enabled in way and differentiate Internet have a both

extends online an of we experience. the part generation, expression that key world a and to one this individualism native as GX and from For a physical provide digital

year. and will addition features their our users. call, GX thousands in advantage showcases year take in far this with ability react to appreciate pace more time to have some to technologies and with our school experiences and AI and even in unique homework new Opera of So this of our GX The rapidly the modes added of of coming wallpapers think innovation of evolving help the live browsing to we to so users we offer

with to As out Aria we coming the being leading GX this to as the move browser for and growth through features continuing year, its rolled AI continue new expect the more demanding gamers. you remainder browsers, and skills of can

let that, me call over to With turn the Frode.

our details and within for turn on Song. another some you, returns to quarter numbers Thank strong Opera. I'll additional capital then yet

underlying Our benefited headwinds. from spite QX solid both revenues growth search in of FX of advertising revenue and

As our a million in guidance at came result, the growth. end above high XX% $XX.X we of year-over-year or just

ARPU XX% our On base Western XX%. benefit an user FX-neutral base. total basis, examples our growth continues year-over-year our shift have We in volatility observe advertisers our trajectory towards user picture, been do even but current would of users represent only to amongst macroeconomic about underlying of still higher as users mix the

from just of guidance or our at cost top also end line in expenses items. cost $XX.X a In to slight XX% revenue according above the margin. Overall, performance, with million EBITDA with of our to in our revenue adjusted came marketing shift expectations came categories

which We cash generated tax operations, cash flow million from was $X.X and from prepayments. million. flow CapEx operating flow lease $XX.X net is $XX.X million of Free cash our payments of items the in quarter, subtracts which operating

During in was the with the program. The The to in dividend per a quarter, first record payment date dividend ADS payments $X.XX June annual July. is for $X.XX be launched recurring we paid semi-annually.

to the dividend amounted quarter. program ADS $XX our shares the which million repurchase any to sale Our cash was first Star Of in receivable against paid million We recurring under offset million our in in did of from buyback was X. holders total. and $XX not $XX

As in as opportunistic returns. on of focus as previously our buybacks avenue be an conducted main will manner communicated, capital we further dividends

healthy Finally, balance with cash our of remains very no million and sheet $XX corporate debt.

to which present our of offset X been it value, from is presented our million reduce of totals $XX has Star the will expense In the continue first dividends fully dividend which consumed. cash sale receivable net of addition, until and

for total, of as adds sheet cash to that value We million, X.X% In $XXX balance to at our $XXX in sale. in value continue position. to OPay million stake addition up our presented held

XXXX the and our Now third updated the for turning guidance quarter. to year full

trajectory, our again raising our yet on both we continued guidance strong the year adjusted EBITDA. revenue for Given and are

we XX% year growth the $XXX $XXX last Opera midpoint. outlook up our base reflect $XXX and core $XXX trajectory but full net and million to our macroeconomic million to ranges a million, guide On positive revenue used. in picture, range impulse products million, the at continue We of the given and our to to corresponds caution of broader now revenue, results user to from which

For our annual to representing be million $XX to XX% EBITDA, million $XX from guidance up lift range at we million, million, adjusted the $XX margin to a $XX midpoint.

In quarters terms of prior still commentary from stands. cost our expectations,

for We year. the and to a levels expect revenue low XXs. revenue, million items of the in percentage the around in marketing Cost second in costs below current to be will a remain bit $XXX likely build relative resulting half higher in

at in OpEx year whole. other expense to just compensation adjusted for XXXX EBITDA million remains is relative $XX still Cash to to as increase expected come all expected items before above a the modestly and

revenue the guide For $XX the we million, at which midpoint. to $XXX million is third to XX% quarter, growth

adjusted to our We million EBITDA very strategy. guide successful, and with pleased our the to we've to been translating margin obviously we lineup, growth conclude, a product XX% maps $XX.X never and to midpoint. are at Overall, $XX.X more road and million,

We growth stock shareholders directly past flows benefits and of that healthy through dividend. year healthy are margins our and our earlier recently how recurring this also with most buybacks proud initiation dividend a major to special a and combine with profit cash and

the it and is periods the near as for macro serve better of a While company engage users. volatility, with Internet technologies, to of Opera exciting of developments emergence with of and new new certainly it's a period to midterm also most one ways

fire look do we'll keeping the all on progresses year to So forward our best cylinders as you posted. and to

over turn questions. So the I'll call for to and for back that's it the me, operator

Street. Thank first take you. with our Argento from Lake [Operator Instructions] Mark question We'll

Your line is open.

nice Good quarter. and morning, guys,

ARPU guys going sustainable West? wanted little Is like kind of increase of about markets. expectations do about your looks to forward. growth and here -- up for think a drill in kind overall strategy do Western to bit the bit ARPU growth the more the how down your of exposure your little to you what a terms exposure strategically that trying quarter Just kind to you trend? It on you of it a get was continue in to What

I begin Hey, can in guidance. Mark. of terms our Thanks.

is of GX We in growth and products. growth. the trend PC, We continue across and in see our ARPU actually mobile to happening build momentum Western there markets our

story, on we development. but indeed still just an think success is So for newer relative I It's it's And have PC classic under-indexing browsers. which addition, important to in advertising a that's our GX, in driver its us.

do So there. headroom see we

getting that and kind guess, Great. of product embedded your decent And and of mainstream I the goal, you relaunch those the trends Any terms of of the seeing? Are set? One adoption, What's that some to AI, the browser for tools. browser opportunity some you're in tools. Opera of then the utilization AI or

It's Yeah. try I'll Song to answer. Lin.

quite -- early stage, what mean, encouraging are we we yeah, it. for have who So mentioned, I it's more I is very users as like think, see, been but it still the among using

there like whole We what have be is behavior about interesting there that to know user and discussions are we because are going very seen whatever. the the or to actually impact industry

of before and search early spent numbers right? the bring a a more very at natural to in what of spend time lifting because users more you actually And course the from see browser can group course it that AI introduce at So And and for this guys that, makes for because discover a among information. enables informations. stages they computer engagement in it's help same even natural is is are to even user us users, relevant it AI with all even gateway, all think more as nice user are more the way upward to and we like interact and more turnings others, because the exposure of browser time day, the sense queries actually So we it. are on afterwards, if the to least that and very actually end both have allow AI of turn we very of the

course, also going interesting as would that what a So to that a is of tool is it's is course, for we begin a we are users where use One major the clearly Opera it especially very more because can And are differentiating PC, very is, the is instance, Open mega and of also the positive. way and preinstalled a on play because which see actually other getting new people browser One with say, factor, that get trend now a to there positive that major, between differentiation browser part to actually that I to people very more the Opera AI. good saw it also difference

very still positive early again, a those playing stage. factor. are it's So all But

develops make this even how see we we'll are iterations and think we faster. of I will AI sure more to So probably moving the of the roll just out

for more helpful. just of then Frode. question kind housekeeping That's And one

In netting first dividend, but you recurring Or the you maybe going dividend, terms first dividend that a walk dividend? instituting of the just that. $X.XX a against receivable, it guys forward, is the the installment, are then full guys are us through $X.XX

Yes.

Star the X $XX was dividend. before think I this about million receivable

X in the shareholder as and why Just a Star also biggest sold X, to is we Star is which in mechanism. offsetting our the reminder, that use we stake Kunlun, Opera

So it million. dividend would shareholder, that pre-IPO the their first of as a $XX have been part

reduced receivable issuance. we'll about And continue per see -- the quarter. to at see $XX dividend that Star the X so end $X.XX And the at to million of

see $XX it So in about consumed. been until a reduction million you'll that has

mid-XXXX. about into us last will it So

that kind business asset, marks? more what When you then sheet Any any additional and is on That's guys helpful. thoughts All stake sale, carry know on available do that what it. new classification. valuation Got as importantly, worth? with it is about I for of think And I that just stake think, last long-term? balance you -- you do the a that right. And

Yes.

March, For it. with comfortable look in another felt the In we I first the we set valuation 'XX. general, we year-end had that believe, at for half, back

to and a company the proceeding. But not strategic rush operations. its really per think there role doing longer play interested in also sell no a is it's buyer, in I an OPay we well is for it se. if We're

a in founding I of the role as the days important more our was company. member early think

So terms be just the it right then happy price. sell at own in our would simplification to of

All guys. Appreciate right. Thanks, it.

our will next take with we Lance Cowen. And question Vitanza from TD

open. Your line is

I markets, fueling back we've the is transition in on that Thanks. think seen. growth guess have much the Thanks, obviously guys, and first of nice the quarter. Western idea is how headroom this questions. the I two you have which you rapid into

markets, the the users the base in million of in So it the reported if I just do math looks like user $XXX release. million about you Western right, XX you've got XX% press that

out Western about population by an that works I million of divide estimated rough just the markets. So to penetration total numbers that if X% $XX the

be do goal XX% rate that over to a think So but Opera, thinking or the I'm imagine, I or an How do mass its that, think that wondering could penetration we that, isn't time? real you channel where go brand, too over to double there Thanks. should opportunity could conservative? is that mean I to longer this term? go be where aggressive is about too conceivably we

Yeah.

add, Lin. Song also a Frode comment it's yeah, I'll So, bit and can right.

if no, very positive company of we big agree growing a they user very It's think are world, we of that right? we know, just more wherever other a have both many XX%, base, are even it's at MAU we I have way, high been also Western stage there very even So first are that we right? for you that is as feel brands. feel in high like, to are think like that for and feel instance, are So, markets, in think Opera have with so such only still even which of early like though lot so I we is fact users still game user we that biggest they So has penetration, right users. you're ARPU are base, So you right? GX, always many in still a of always I have of really functioning ARPU. are not huge which the like course us But a right it's total more actually European any in a one all, I the you it

We So One also for it's only sophisticated a very it's about tailored And a stage. very it. it's we very in by instance, think for the products beginning And like again, base. excited stage. early user for Opera a also are powered again, very AI like

to especially I for still comment, course potential. have and both right? both. users course, which of are grow. also also a potentials, the other have market. huge we even lots lot just of of very a know, the categorized they Western we we you I lot have say say have that of market, market of by, but the evolving, that, for let's are know, That with a, if be would area guess uplift aware in of a is not room also grow you So amount for yes, I also, of still room mix to potential is think, And Western in AI, So We still of are nice those a

also early and users it. stage, that position are we the market a capture emerging in still are of mature, very those can right good we also but when We very part

So our both keep the we users, product I provide always angles quite why is to think that's because still be I from think more this the our all and one also focus key basis. end and would number on that are optimistic get evolving in and

a for couple cash were for we $XX may. one if million. of at came a And you our, The Thank Great. next then other bit that questions, $XX in little think, that. million on the looking which better position, I than is I

you mentioned And repurchases. so I'm no wondering, there I share were just know,

delta. that was of part So the

we worth cash favorably added we there still calling share that's of in couple any Anything items think still expecting quarter? was were maybe out? the the in sort a repurchases to that I other position quarter. -- onetime your But of there

straightforward. of I another. the offsetting cash in the increase Those and will AP QX We No, quarter AR very the the QX same. be one flow taxpaying actually was and would of say quarters. are sort

adjusted in QX. and flow there conversion is best cash meaning that EBITDA component from tax QX to a So there's in the actually

dividend it that issued expectations. was in payable in think July. our in June Keep the followed internal was I mind that So

included $XX June the that million on So XXth. is still cash in

noncash Okay. Share-based that quite what it wasn't dilution on seen in minute? not say Can to quite majority Thank obligation sure includes and press it they expand shareholders. had you an goes for I'm follow. mentioned In something Opera's that shareholder one I you. that And grants I majority the even by has represents I sure the remuneration that Opera's meant. expense these made shareholders. I've release, on couldn't no represent before. connection Opera's do other that with it that question. made a Opera not comp by though grants that upon for

do I'll that. sure, Yes,

dilution the Opera grants than XX% those Opera has at lead implication grants shareholders. biggest any consolidate has members. as some and that. Kunlun with issued Opera's to are has fair to for So our reflect which exercised, But Kunlun, according even no holding they will that it not shareholder become present IFRS, vest grants no of for more staff value in though Opera of supposed in the are they practical we the awarded Opera us. to and expense to least employees, we to Once

me, Okay. looking Interesting. it. at if And last question I'm for then

guidance just the really was XX% EBITDA for the little the that revenue the around at in growth checks figure bit, Didn't million. you out, that out, $XX XX% the And at scaling. to but midpoint, so I'm million. report then is third Is EBITDA a 'XX third EBITDA So not trying the $XX growth, think quarter $XX right? I of million to quarter

to sort guy about be there So onetime backing year-on-year of was we the that EBITDA we some of think need was of in sort the our out math me, remind 'XX XQ comp? there good numbers when something,

the marketing is our biggest the look thing at how expenses. around year I spend And and factor key dollars. communication is think throughout when the changes that our to we

for full we would communicated how most have that the market our half simply and out that the the maintained it the spend evolves half, be the take of to GX of One it on total launch Opera on lessons would of we potential in sort relative So always that marketing. we increase first and second or of expectation having in because sort and and scaling before our our learning and out

quite that, relative what guided opposite our mean, to I are almost say the for would increasing the meaningfully QX after EBITDA we strong expectations I the before. had we year So adjusted

best feel in the actually we a So just about very get return marketing think year when conscious spend the about decision good the we we and when on spend. we It's that it.

little our we is almost positive a want note we more add also first almost maybe in guidance that course we more as the the even will ahead of more like revenue that a Yeah, right, bit legroom, base can end profit of course performing same building feel it's we of well day like more half user are yield in have Frode the and that in of because future. up the that if of

end the what of of that's think I it's guidance. room. be from how able this of our long to reflective our if will actually what's the to us you and know, benefit you run. have that's in in then actually how So But we always, that profile nice baked we day, But course, the assess in

put Understood. a to sort anything feel of any you then Yes. of just longer-term EBITDA this, are on the you the would seeing targets that And under make are sort pressure? margin point I final that guess

is about that this and operate progressing on. we think of feel I comfortable we the according to sort level well expectations No,

Perfect.

guys. Thanks, Okay.

Citigroup. question next our take We'll Instructions] from Alicia with Yap [Operator

open. Your is line

management Citigroup have Yap. Thanks questions. two of on is for taking asking Hi. Chiu from my behalf Alicia questions. Katrina I This

our would be to AI in from revenue to XX color on next to some coming incremental browser feature level what in provide embeded First, see management expect out could of Opera able XX months. we the opportunities

forward, if there you. any the our will to investments be additional we expect in that pressure related going any? AI some have how EBITDA expenses and Thank affecting incur will Second, trend as that are to

it's Lin. Yeah, sure. Song Yeah,

company tech is in and as very tech industry you also least know, yeah, almost very very as people AI point it $X it's an a observe like, is I that but both just to billion We So, what again, is So almost as that right? still web, just directly council But company, follow you again, time is up and question. for I forward high off feel see that so the it information general. at tech in a like the a think I to more, spend way that also stage, we know, from I'll the Any whole the that the, translates take think events a EBITDA. convenient then early think we more see. of And say, use we higher entry to whole more right? to, and have that access let's obvious allows ups?

So I guess it's and a function of just to because they can it. accurate get it's consume easier for information them start

So the been already evident that in current users we have. has that

very are We optimistic.

is begin can open factor, helps So right. also the particular. a that we already, that then one also factor mentioned, it in actually up you bit is And as Opera other

of we And third-party a company So always users. as towards party, course, is know, it. biggest because to especially the almost is saw an that like are product we trying in browsers to the of course, now free know, you third browser, entry. particular, to the which say in which one guess you browser strive we the the bit wide, to all someone industry just Opera differentiating is of the provide towards of would a for first But then native industrial our a I benefit the is AI differentiate second where more

making further is very very product. a attractive is we know, sure user marketing differentiating that very the that see that browser that we further see actually making and is acquisition has feel and and you effective already, So user in

than to actually for active helpful we're more user almost the very user It's in which or will with from it's new the is if channel, see engagement, more we like much between that channels. time the us, acquisition. than the the more almost they a normal for we that difference AI see right. from difference and instance, XXX, see one-time maybe come So talking coming actually about comparison, come user And maybe

and that, is also very So of Opera development of about helpful that is well optimistic quite course, One.

wanting make are time potential is that and integrating products those it, which benefiting a also the us cost quite on be think I factors gained are about lot to you're major a now and ones with also there But of more right factor from we positive related to because two it. spend it. So more for are there are also AI

again, like, still stage. it's early So very

think cost I yes factors there always we're So in association. that aware will be

For a in now, it's say to cost. comparison percent, especially still marketing very small

for positive very is very already in with monetization able think So the us. end day, it's because But course, partners to to still future, we some the the on it. associate why of with working that it's are I the be monetization net nice now of in potential of

bit for cost information on we what also of it. many embed that's think to interesting are which trying compensate we also and can, which I AI, potential information, already a of the interesting mentioned monetize of to links course, about many not to in outsource potentially already leads directly monetization good

us. standing works, we work think our but can like partners grow, of especially and But still early this just positive to I company what need -- again, model tune to further see to can create. to kind So now, stage, with how the it's are about opportunity we for how we

I it. you. appreciate helpful. Very Thank

time. closing Song to turn It Lin further will line any on no for back over I this remarks. the have program questions appears at we additional the or

Yes.

So like, support and up the I'll again, wrap with as said, all for that just you in Opera. thank interest it continued

to response the to how to appreciate and opportunities verticals also Opera and again future. broadly forward speaking early you and more GX We of the monetization. been in Opera your we with encouraged valuable look are users have One able and to more Aria and attract we by our come We what's very success scale and of and time the

participation. your program. for you today's Thank conclude does This

wonderful You may disconnect at any time and a day. have