Opera Limited

Stand by, your program is about to begin. Welcome to the Opera Limited Second Quarter 2023 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 1 on your telephone keypad. If you want to remove yourself from the queue, press the pound key. Please be advised that today's call is being recorded. Lastly, if you should need 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.

Thanks for joining us. As usual, I have with me today our co-CEO, Song Lin, and our CFO, Rhoda Jacobson. Before I hand the call over to Song, 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 and presented based on IFRS. We believe that the use of 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 historic financial results of Opera on our investor relations website. We will be live posting 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 call over to our co-CEO, Song Lin, who will cover our second quarter operational highlights and strategy, and then further we'll discuss our financials and expectations going forward.

Sure. Thanks, Matt, and thank you, everyone, for joining us today. So we are very pleased to announce another very strong call, which exceeded our previous issue guidance for both revenue and profitability. The first half of the year is off to a great start and we are happy to be able to raise our 2023 guidance today. Second quarter revenue reaches 94.1 million and increase over 21% over the previous year. This was our 10th consecutive quarter of over 20% top line growth. Adjusted EBITDA was 20.5 million 22% margin. The second column builds upon our previous successes and communicated strategy on focusing on growth in the Western markets with the potential for the greatest value. So to those of you who have been following the Opera story, this is nothing new. Annualized output was $1.17 in the second column, an increase of 25%. compared to last year, and up 80% relative to the first quarter. While our total user base was relatively stable, we continued our user base mix shift towards higher Apple users, with users in Western markets representing 15% of the total user base. Advertising revenue grew 25% compared to last year, representing 57% of total revenue and continues to benefit from the underlying growth in our audience extension business on top of our O&O advertising. Such revenue grows 15% in the second quarter, driven by continued user growth in Western markets. Opera has a track record of innovating ahead of the browsers. that come with operating systems and bringing new user-friendly technology to its browsers. With our long history of giving users direct access to the Internet's most in-demand platforms, we have expanded our existing AI program for our browsers, news, and gaming products, taking advantage of our own solutions as well as new and existing partnerships. To make sure our users get the best technologies and solutions available, we first partnered with OpenAI, maker of the chat GPT, and our close collaboration has already yielded some impressive results. We decided to go back to the drawing board and redesign our flagship desktop browser, reshaping the UX and UI to both improve the user experience and prepare the platform for current and upcoming AI features. With Opera 1, we managed to create a powerful feature-rich browser that dynamically adapts to our users' needs. Designed to embed all the current AI technologies and leave considerable room for more, we are excited about Opera 1 as a high-quality platform for the future of AI-enhanced web browsing. This redesigned browser was met with overwhelmingly positive feedback from both users and tech media. Opera 1 was the first of our browsers to include our browser AI, ARIA, as a well-connected and current event-aware generative AI service. Also, the entire report tree, ARIA, marks the beginning of a new kind of browsing experience for Opera users. ARIA allows users to collaborate with AI while browsing the web, generating text or codes, or getting their product queries answered. ARIA is based on Opera's own Composer infrastructure, which is connected to OpenAI's GPT technology. In addition, ARIA is further enhanced by additional capabilities, such as adding live results from the web. The component infrastructure is also easily scalable. It allows ARIA to connect to multiple AI models and, in the future, will expand by integrating further capabilities, such as directing users to relevant services powered by our key partners for monetization. ARIA is also available in our mobile browsers for Android and iOS, allowing users to enjoy AI-powered browsing on the go. It has proven to be a hit with users, and they are clearly enjoying the experience, as evidenced by a lift in total time spent, as well as increased search queries and page views per session. Opera is looking forward to developing more cutting-edge AI solutions, faster bringing ARIA to all our major platforms with Opera GX on the immediate horizon, But the bar continues to be set high as we strive to be in the vanguard of technological innovation. Opera GX continues to grow its user base up another 9% sequentially to $24 million during the quarter, with an analyzed output of $3.10, an increase of 7% compared to the second quarter of 2022. Monetization grows faster on PC than mobile, given greater waste exposure on the PC side. In addition to being engaged gamers, GX has a very attractive demographic, predominantly Gen Z. With Opera GX, we have enabled those gamers to differentiate themselves from others in a way their internet experience matches both the look and feel of their broader set-ups. and connect them directly to the services they use. For an online native generation, this individualism extends from the physical world to a digital world. And we provide the GX as a key part of that expression and experience. So in this corner, we have added even more features to our GX with thousands of new modes and live wallpapers. And we think some of our users will appreciate the addition of AI to GX in time to help with their homework in the coming school year. The pace of innovation so far this year showcases our ability to react and take advantage of rapidly evolving technologies and offer unique browsing experiences to our users. As we move through the remainder of the year, you can expect this to continue with ARIA coming to more browsers, new AI features, and skills being rolled out, and GX continuing its growth as the leading browser for demanding gamers. With that, let me turn the call over to Frida.