Opera Limited

Please stand by. Your program is about to begin. If you need assistance, please press star zero for an operator. Welcome to the Opera Limited first quarter 2022 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this period, you will need to press the star one on your touchtone phone. If you want to remove yourself from the queue, please press the pound key. Please be advised that today's call is being recorded. Lastly, if you should need any operator assistance, please press star zero. I would now like to turn the call over to your speaker today, Matt Wolfson, Head of Investor Relations. Please go ahead.

Thank you for joining us. With me today, I have our co-CEO, Song Lin, and our CFO, Frodo Jacobson. Before I hand over the call to Song Lin, I would like to remind everyone that in the conference call today, the company will be making statements about its future results and expectations, which constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Such statements are based on current expectations and how we perceive the current economic environment and are inherently subject to economic, competitive, and other uncertainties and contingencies beyond the control of management. You should be cautious that these statements are not guarantees of future performance. You may refer to the safe harbor statement in the company's earnings results for details. Our commentary today will also include non-IFRS financial measures, including adjusted EBITDA, which are different from our consolidated financial statements that are prepared and presented based on IFRS. We believe that the use of non-IFRS of our non-IFRS financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends. These measures should not be considered in isolation or as a substitute for financial information prepared in accordance with IFRS. We have also posted unaudited quarterly historical financial results of Opera on our investor relations website. We'll be live tweeting highlights from the call at Investor Opera, so please follow along there during the call and in the future. With that, Let me turn the conference call over to co-CEO Song Lin, who will cover our operational highlights and strategy, and then Frodo, who will discuss our financials and expectations going forward.

Thanks, Matt. Thank you, everyone, for joining us today. We are excited to report another strong quarter that comes in above our expectations, both in terms of revenue and adjusted EBITDA, with the momentum and scale we have achieved during 2021 continuing to pay off. Our revenue growth of 39% was supported by a 20% growth in social revenue largely fueled by strength in Western markets and the acceleration of advertising revenue growth to 64% year over year. now representing 54% of total revenue. Our advertising revenue benefits from the same underlying trends as such, though it is magnified as Opera News monetized only through advertising, and additionally, we can leverage third-party inventory as we serve our advertisers through the Opera Ads ad tech platform. We continue our strategy, all focusing on users in high ARPU markets and those users which we believe are most engaged, providing us with ample monetization opportunities. As a result of this strategy, ARPU grows 54% year over year on an annualized basis, which greatly offset the 9% reduction in our overall user base as we selectively run our marketing initiatives. Our user base in the US, the rest of the Americas, and in Europe continued the growth trajectory from 2021, while key products like GX and Oprenuse have been very successful. And we saw revenue growth across every region, except for more impacted Eastern Europe. We see our strong results as a clear validation of our focus on developing and delivering differentiated products that appeal to valuable users in every geography. The combination of both a Western and an emerging market user base represents a pretty compelling mix. We are able to generate immediate and meaningful incremental revenue on newer products while benefiting from the underlying growth of online services in emerging markets. So in this context, I'm confident that Opera's core product offering will have increasing strategic value. While we can't see the future, one thing we are certain of is that our digital future will be defined by increasing user personalization. Opera's DNA as an independent browsing company has always been in differentiating ourselves through technology innovation. We have serially developed and launched products and services that meet the needs of specific use cases and specific user segments. Whether that's integrated communications, commerce, gaming, news, or privacy and security, Opera has a history of objective success in building the browsers of choice for people who actively chose their browsers. The trend is stronger and more clear than ever. One example is gaming. Not long ago, we launched our GX Browser, specifically designed for gamers. As of this quarter, we have over 2 million mobile and 14 million PC users, a sequential increase of roughly 15% and almost double from a year ago. The approval for GX is higher than for any other product and $2.7 on an analyzed basis. And beyond the GX Browser, Our game maker studio now has over 500,000 developers, and GX Games has over 1 million monthly active users. And while Apple for GX is more than three times the Apple for Opera as a whole, its revenue mix contains only a fraction of advertising relative to search when compared to our other browsers. Later this year, we will begin to introduce tailored advertising in GX as well as other economic models to empower both game developers and game model-like. While we are cautious on the near-term financial impact, we expect it to ramp over the course of the year. This is a common thread amongst all of our products. We identify a use case with clear value, we launch and scale it, and then we tap into both existing and new monetization structures. As we look ahead, there are clear applications for our model, also as it relates to multiple aspects of Web3 trends. Opera News continues to grow in higher monetization regions, and we are particularly pleased with how the product is now also taking a meaningful foothold in Brazil. In terms of vertical focused domains based on the same core technology, food board remains the most popular, but over the past 12 months, We have also introduced other protocols, such as cricket and basketball, as well as generic news and sports sites. So in total, these services have more than 10 million users. We are using that same AI-driven news engine to begin aggregating news related to gaming in our GX Browser, as well as our plans to introduce a section for relevant content in our Web3 Browser as the one-stop shop for news, market data, and trend analysis. These are examples of the constant improvements we introduce to ensure that our users have the best experiences in addition to enhanced search features, integrated personalized speed dials, and our new VPN Pro feature as security and privacy are becoming crucial concerns in online interactions. And while our Web3 browser is being rolled out in developer version, we are starting to bring Web3 into all of our products, starting with multi-chain wallet tech stack across both mobile and desktop browsers. Please stay tuned for updates here. We are also ensuring that we have the right tools to maximize our ability to monetize our audiences, and in particular, continue to improve our advertising tech stack. Earlier I noted that our advertising revenues continue to grow as a percent of overall revenue and with the improvements we continue to make in our ad tech business to leverage our advertiser demand on non-native inventory combined with the increasing audiences we are building in higher value markets. That's a trend we expect to continue. So all in all, we are intently focused on our core businesses given the opportunities we see ahead. Since we last spoke during our fourth quarter results, we have also sold our equity stakes in both NanoBank and StarMaker. The decision to monetize those financial investments was a desire to remain laser focused on our core business and the opportunities we are seeing in front of us. Recently, we were presented with opportunities to take sales and working gains for shareholders on illiquid assets in a volatile market, and so we chose to act. Our sales portfolio well detailed the results, but the resulting cash payments to Opera over the next two years will offer us significant operational flexibility. So again, our products, and initiatives continue to show great momentum, and we think that the browser has never been more relevant than it is today. We have a very exciting time ahead of us at Opera, and with that, let me turn to Frida.