Opera Limited

Please stand by. Your program is about to begin. If you need assistance during your conference today, please press star zero. Welcome to the Opera Limited fourth quarter and full year 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 star 1 on your telephone keypad. 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 operator assistance, please press star 0. I would now like to turn the call over to your speaker today, Matt Wolfson, Head of Investor Relations. Please begin.

Thank you for joining us. As usual, I have with me today our co-CEO, Song Lin, and our CFO, Froda 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 hardly 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, and you may refer to the Safe Harbor Statement and 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 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 unaudited quarterly historic financial results of OPERA on our investor relations website. With that, let me turn the conference call over to our co-CEO, Song Lin, who will cover our fourth quarter operational highlights and strategy. And then Ferdinand Jacobson will discuss our financials and expectations going forward.

Sure. Thanks, Matt. And thank you to everyone joining us this morning to review our fourth quarter results. We are excited to report yet another great quarter. Revenue of $130 million driven by strong organic growth, payout with cost discipline resulting in $28 million of adjusted EBITDA, well above our expectations. For the full year, revenue was $397 million, and adjusted EBITDA was $94 million. The fourth quarter of 2023 built upon the strengths we saw throughout the year. This time last year, we guided revenue growth of 15% for 2023 as a whole, with a 20% EBITDA margin and submit points. Even after raising the lead point of revenue and EBITDA guidance every quarter, we were able to consistently beat those expectations, ending the year with revenue up 20% and then adjusted EBITDA margin of 24%. We are very pleased that we have been able to consistently deliver revenue outperformance while spending less than anticipated on marketing and accelerating our margin expansion. This also highlights our ability to consistently attract new users, primarily through organic channels. We did not waver from our strategy to focus on high-up users. As expected, we are starting to see signs that high-up user growth is offsetting low-up user churn, with a slight increase in our total user base during Q4. Annualized ARPU grew to a record high, 1.44% in the fourth quarter, up 22% year-over-year, and 10% sequentially. This was primarily driven by high-value users as well as Opera GX. 2024 will be more of the same, with the goal of continuing to grow these users both in Western markets as well as high-value users in general. Combining this focus on high-value users coupled with a stronger product portfolio and ongoing efforts to continually improve monetization puts us in a very exciting position. We are still a relatively small company with lots of potential remaining in the core browser business. During the quarter, Adapting Revenue was 68 million, growing 20% year-over-year. Advertising was strong for both our owned and operated inventory, as well as opera ads. We saw particular strengths in the retail vertical during the holiday period. Advertising now represents 60% of revenue. Stock revenue was 45 million in the quarter, up 15%, which we are also very proud of, given the maturity. of this revenue category. As we shift the mix of our user base towards higher monetization regions and user groups, we can generate such revenue growth well beyond the underlying market growth of such base monetization. Last quarter, I outlined three core growth drivers. Generative AI and the work we are doing with ARIA advertising opportunities, and finally, our gaming focus with Opera GX. I want to give you a brief update on each and how they shape our focus for 2024. For several years, we have used AI to help power our news and content products to deliver relevant and customized content for our users. In 2023, we stepped up those efforts specifically rolling out ARIA, our browser AI. ARIA has received great user feedback and provided another point of attention that supported our user growth in Western markets. Yet we need to be mindful that the whole industry is still in the early stage of its potential. Users can benefit more from AI assistance than what they might consider themselves. The muscle memory of routine is strong, and many integration points within the industry need to be rebuilt. As we embark on a new year, we continue to iterate and are very excited for this next chapter in the ARIA story. We want to integrate ARIA further into the browsing experience, assisting users to unlock more efficiency gains, whether it relates to the browsing of the web itself obtaining or processing information, or content creation. As a browser and as an independent ecosystem player, we also have a unique opportunity to help users navigate the broader AI space and simplify their experience. On top, we see potential to help less tech-savvy users take advantage of these technologies while enjoying heightened levels of privacy and data protection. In short, the opportunities are huge. Our rewards for helping our users benefit from ARIA is observable not only as part of user growth, but also within engagement and in indirect and direct monetization opportunities, from monetizable links in chat environments to intelligent recommendations based on the browsing context. As you may have seen, we have announced that we are pairing our product development with a significant investment in our AI infrastructure with the launch of a new data center in Iceland. This data center will be green, energy-powered, and takes advantage of the Icelandic climate to reduce cooling costs. And in general, we pride ourselves on our efficient hosting setup, typically and one-tenth of the cost of third-party providers. And we're excited to expand our in-house hosting to the AI space. AI is processing intensive, with energy and quality being key OPEX factors, but less sensitive to latency variations in milliseconds. As such, Iceland is a great location for our forced AI footprint, whereas our other data centers are typically located closer to our end users. Shift into advertising, which remains a top priority given the potential we see to continue strengthening our monetization. As a browser company, we can leverage the closed-loop environment of the browser to capture interest and context. While remaining mindful of user privacy, we are able to create value and utility for the user throughout their online journey. unlike many advertising platforms, which rely on third-party signals and cookies. For example, when shopping online, we do not need to rely on third-party cookies to tell us which offers to display to a user, but rather can do so organically at the right moment in the user's shopping experience, such as discount codes when viewing the card where intent is at its highest. With the growth of high-value users, we are becoming more an increasingly relevant party to even more potential advertisers, typically in the context of integrated functionality that both benefits our users and has the potential to drive sizable revenue for Opera, representing a significant opportunity as we look into 2024. Beyond our own inventory, Opera Ads has proven itself as a competitive player in the broader landscape, attracting advertisers based on our technical abilities to augment their targeting. We will continue investing in that platform in 2024, which we will see good opportunities from e-commerce, gaming, and other high-intent user interactions in a programmatic way, coupled with advances in AI and algorithms, which we persist in pursuing. And then in terms of our focus on games, OpenGX continues its healthy growth trajectory. Our GX user base was 27.8 million in the fall, adding 7% high-value users versus Q3 alone. On top of the user growth, annualized output increased to 3.51 cents during the quarter, up 6% versus Q3. The compounding of user and app growth has brought Opera GX to become a product with almost 100 million annualized revenue run rates demonstrating our ability to be relevant to a young and highly engaged user segment. In terms of footprint, Brazil now follows the US as the second largest market of GX. We continue to observe that GX users in emerging markets monetize significantly better than users on other browsers, where the gap between Western and other users has been narrow among PC gamers in particular. We feel great about the prospects of Opera GX in 2024 with continued user growth and further monetization opportunities within this attractive user base. Our ability to invest in the footprint of GX is also ever-expanding alongside the growth of the product's public. Beyond these three highlighted areas of opportunity, we also observe some exciting trends in the broader ecosystem One is the opening up of iOS for now in Europe, a result of a continued evolution of the regulatory environment in the EU and other parts of the world. Such regulatory measures to promote healthy competition is naturally a positive impulse to Opera and their independent player. Also, we are well positioned for the rebounding interest in fintech applications on Web3, where we continue to invest in technology. and build use cases. Both of these carry strategic importance to OPERA in the months and years to come. So now, let me turn the call over to Fruita to discuss the financials and technical guidance in more detail.