Opera Limited

Thank you for joining us. As usual, I have with me today our co-CEO, Song Lin, and our CFO, Berta Jacobson. In addition, our Executive Vice President of Browsers, Christian Calandra, has joined us to shed more light on our segmented approach to the browser market and how we think about the GX browser and gaming opportunity in front of us. 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 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 cautioned that these statements are not guarantees of future performance. You may refer to the safe harbor statement in the company's earnings release 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 or presented based on IFRS. We believe that the use 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've also posted unordered 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 our co-CEO, Song Lin, who will cover our operational highlights and strategy, followed by Christian, and finally, Frodo will discuss our financials and expectations going forward. Song?

Sure. Thank you, Matt. This is Songlin, and thank you everyone for joining us today. Again, I'm very pleased to share our strong poll results with you. Like many businesses, we are affected by a more challenging economic environment, including a war in Europe, FX volatility, and advertisers being more cautious given the pressures on consumer spending. But Opera is still a relatively poor player in a huge market with a lot of room to grow. Staying focused on our core growth strategy has proven to be very effective and our performance demonstrates this again. So our results for the quarter were ahead of even the high end of guidance ranges. Our record revenue was a function of healthy growth in both our browsers and Opera News, and our ad tech audience extension delivering an additional avenue for Opera to monetize our advertiser relationships and performance insights. In terms of adjusted EBITDA, our record revenue combined with lower-than-expected marketing spend has allowed us to deliver a margin of 21%, which is five full points higher than the 16% and report of our guidance range. For some time, we have talked about how we focus on improving the quality and the value of our user base, investing in products and markets that allow us to monetize at a higher rates. Comparing with our current database to where we stood in the second quarter of 2019, where the COVID hit and when the world was relatively more stable, we have increased our European users by over 30% and our users in the Americas by nearly 70%. Africa has been stable, too slightly growing, while we have reduced about a solo user base in Asia mainly from South Asia, as we aim for higher ARPU users and greater returns on investments. So while our user base has decreased in size as a result, our financial performance makes the rationale for growing audience in Europe and the Americas clear. Because over the same period, our annualized ARPU from browsers and entrepreneurs has grown over 80%, leading to over 70% growth in revenue from our user base. And that's before considering our epic audience extension. If you look at Opera's search and advertising revenue overall, our combined revenue growth over these last three years has been 105% and 27% . A key part of our strategy And we've talked about this before in the context of what drives our product roadmap in segmentation. Identifying how Opera can meet a specific set of needs for specific audiences that generic general market browsers by their very nature cannot. This strategy also means that our products can and do successfully compete, whether we are talking about browsers optimized for bandwidth constraints, developing market, mobile users, or PC gamers in Europe and US. So Chris, you will talk about how we translate this segmentation into opportunity shortly. Our strategy also has positive ripple effects on monetization. Think about advertising, for example, on our custom gaming browser, Opera GX. We know that we have highly engaged audiences. We know our audience has a particular set of interests. And we can reach that audience with precision. And we can also measure the results without having to rely on cookies or unique user ID. It is an inherent, efficient structure that advertisers appreciate. Our users appreciate it, too, because we are showing them advertising that they find highly relevant and in some cases would actually seek out. For example, a trailer for an upcoming video game. Further, because our advertising is contextual advertising, we do not necessarily need to collect as much personal data from our users, which respects their strong desire for privacy. Finally, our offer as offering gives our performance advertisers access to a greater audience. This audience extension lets buyers acquire not just our own and operated sites, but personal inventories with strong performance characteristics. From a profitability perspective, since there are no sales or marketing expenses associated with it, even at a relatively limited scale, we are already seeing nearly the same EBITDA margin as the rest of our business. So Opera is still in the early stages of executing against our long-term advertising strategy, but this quarter, advertising revenues continue to grow and representing 55% of our overall revenue and 49% year-over-year growth compared to the same quarter of 2021. All in all, our products and initiatives continue to show great momentum. And we think Zebra also has now been more relevant than it is today. We are driving possible growth in a robust consumer internet business that has an exceptional track record of weathering the broader market challenges that trump today. While the public market has been slow to give us credit for our growth in revenue and profitability, For those listening today, I know I speak for everyone at Opera. I want to say thank you for your belief in our continued success. We work hard every day to seize our opportunities and continue the strong growth of Opera. So with that, I will hand the call over to Christian, who is the VP of Microsoft, the core product producer of our company. We wanted to take the opportunity to share some further reflections on how we approach the competitive landscape, and in particular, some of the sort of the opportunities we see around the GX Browser for GANOS. So here, I'll hand over to Christian.

Thanks, Sunglin. Since this is my first earnings call, I'll introduce myself by saying my background is software engineering and product management. and I have spent the past 15 plus years as part of the Opera team. I lead our browser products overall with the main hub being Wroclaw, Poland, a university town and a great hub for talent, as well as in a couple of locations in Sweden and most recently Scotland. When we make our browsers, we don't mimic or imitate the big brainstorm system defaults like Chrome and Safari as some of our competitors have. You can see what has happened to them. They lost significant market share, specifically among high-value users in desirable geographies. And we have taken more than our fair share of that drop, which we are naturally pleased with. The whole premise of being an alternative browser is to represent a real alternative. As Songbin has said, Opera is the browser of choice for people who want to choose their browsers. So we do our best to be different. We lead with innovation and functionality of selling points, which works quite well actually. That means promoting our technological advantages and features such as privacy and data-saving capabilities or any other productivity features that we've got. And we continue to do our best so people who care enough to try an alternative browser will choose Opera. A couple of years ago, we decided to take it to the next level and accelerate our growth. by identifying attractive segments and then making browsers that really work for those people, such as GX for Gamers. It's been a fantastic success and has enabled us to drive nearly 50% revenue growth from a major browser market over the past three years to compare to the same normalized base that Songlin just referenced. Our core product remains our flagship browser, but through clever architecture and tech work, we've been able to turn our tech base into building blocks that enable us to create, and even more importantly, to operate our specialized browsers in a very lean and efficient way. To summarize, we have a flagship browser packed with innovation that you can't find elsewhere, with solid user engagement, retention, and on top, we developed a way to use it in a very cost-effective way as a foundation for any segment browser we would like to launch, like we did with Opera GX. In terms of what's ahead for Opera, I'd highlight two areas of focus. First, the creation of new versions of our browsers has only just begun with GX and our crypto browsers. We are already exploring other additional sub-segments of users and we think our efforts there will get noticed and drive additional adoption, in particular in Western markets. We will announce these new segments and products in the future. And the second area, our existing gaming initiatives. Opera GX continues to exceed our expectations. We now have 14.5 million desktop users, 2.5 million mobile users, resulting in a year-over-year user growth of 78% for all of GX. Our gaming users also represent our highest ARPU users, with ARPU of $2.89, more than three times our company average. So that product alone is now at the run rate of 50 million revenue per year, milestone we are very proud of as i indicated earlier we continue to improve our ability to monetize this highly specialized highly engaged audience we have started enabling more start page inventory in gx like we have in our flagship browser basically increasing advertising and other non-search revenue in our gaming browser we're also working on engagement in gx corner which we eventually plan to monetize We're offering innovative new features for our users, superior customization options, and are developing a set of offerings that will allow advertisers to better connect with our gaming audience. Just to stress, the GX audience is highly engaged and an extremely valuable one. These are not trivial, occasional gamers. These are hardcore gamers who play games a few hours a day, buy gaming hardware, buy virtual currencies, who show up almost every day. We see it quickly becoming one of the biggest gamer audiences online, and this very active user base enables us to integrate with other segment players to create an even larger gaming ecosystem. But we also know that gaming is not the only highly engaged online audience, and we continue to invest in identifying new segments and developing products for those segments. To sum it up, it's really exciting times for us. We're very happy to drive Opera forward, and I'm excited about our plans here. We'll continue to build great products, capture high-value users, and drive revenue growth. I'll hand over to Frodo now, and then I'm around for the Q&A at the end in case anyone wants to double-click on any of these topics. Frodo?