Opera Limited

Please stand by, your program is about to begin. If you need assistance during the conference today, please press star zero. Welcome to the Opera Limited First Quarter 2024 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 would like 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 go ahead.

Thank you for joining us. As usual, I have with me today our co-CEO, Song Lin, and CFO, Frodo Jacobson. Before I hand the call over to Song, I'd 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 cautioned that these statements are not guarantees of future performance. 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 have also posted an 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 first quarter operational highlights and strategy, and then Frodo Jacobson will discuss our financials and expectations going forward. Song?

Song, thanks, Matt. and thanks to everyone joining us this morning to review our first quarter results. 2024 is already off to a strong start with revenue of $102 million driven once again by organic growth paired with cost discipline resulting in $25 million of adjusted EBITDA representing a margin of 24%. Both revenue and EBITDA exceeded the first quarter guidance that we outlined on our last quarterly call. Our user growth strategy remains focused on quality over quantity. We continue to see growth of users in Western markets, GX users, and other high value users globally, offset by declines in low monetization mobile users in emerging markets. Annualized APU was $1.34 in the first quarter. It's an up of 24% year-over-year. This was primarily driven by the growth of users in high APU markets, as well as continued growth of Opera GX broadly, which consistently attracts highly monetizable users across markets. In the first quarter, search revenue was $43 million. up 14%. This category has consistently grown in the mid-teens and faster than the broader search market, enabled by continued focus on growing the highest value users. During the quarter, Google exercised its option only to extend our current search revenue partnership, a sign of the value of this relationship to both parties. In the first quarter, advertising revenue was 59 million, growing 21% year-over-year and representing 58% of total revenue. Advertising revenue continues to benefit from both our owned and operated, meaning our browsers, as well as our opera ads business. There is a clear trend that the digital advertising industry has put more focus on high user intent events, be it the shopping journey of a user or the payment activity in association with a travel booking. Being a browser, we are best positioned to capture these interactions, giving users help choices and suggestions at the right moments. This could be in the form of a product recommendation or a relevant page link with context, aided by AI to help put everything into perspective. As a result, advertising revenue within the browser experienced the fastest year-over-year growth since the second quarter of 2021, when advertising revenue was still rebounding post the onset of the COVID pandemic. That's a very direct example of our focus of high-value users translating into financial results. As an independent browser, we are known for our continuous innovation and bringing exciting new features to our browsers. Opera 1, which we launched last year, was a great success with the introduction of our browser AI, Agria. In addition, it came with built-for-UI design, whether it is a tap island innovation or stock page animations, benefiting from a robust engine, enabling complex graphical operations in the UI layout to be separated out from background processes, ensuring the most elegant browsing experience possible. Let's see how such features and our strong browser brand drive adoption. When users consider a new browser, they are more and more often considered and chosen. They remain encouraged by all the results of the recently implemented digital market apps in the EU. The DMA requires Apple to show a browser choice screen to iOS users in the region and will qualify for the choice screen in every EU country. Post-implementation, we saw a 63% increase in new iOS users in the EU from February to March, though still from a small base and with lots of work remaining ahead to flourish the opportunity. We are very excited about this development and will increase our iOS investments now that the playing field is more level. with other key regions potentially also opening up. We are starting from a modest base due to previous platform limitations, leading us to believe that the growth potential is substantial. Again, this reflects a general trend that people show an interest to move away from the boring system default browser to differentiated products that are tailored for particular audience and needs. We believe that this trend will continue and even accelerate. Turning to our gaming browser, Opera GX. We have spoken about it repeatedly, but I think it's a good example of bringing something truly differentiated to market and users loving it. In less than five years, Opera GX has reached 29.5 million euros, up 6.1% versus the first quarter alone. In addition to consistently growing our user base, monetization of the GX user base continues to grow, reaching $3.49 in the first quarter, up 10%. compared to a year ago, even as its geographic footprint expands in non-Western markets. GX remains our highest monetizing browser, both in developed and emerging markets, while the regional differences in monetization is less than our other browsers. One of the most welcomed new features is GX modes, which allows users to customize almost all aspects of the browser. These modes span a wide spectrum and are very creative. 3A gaming franchises can provide GX modes like those we just announced in association with Cyberpunk 2077, a very popular game with a loyal fanbase. But also, our users actively create modes. For example, the background music can react in real time to the actions and moods of users while using the browser based on the keystrokes or mood of the mouse. The options are limitless. Users can also upload their modes to the GX store and share it with fellow gamers. Since the introduction of modes a year ago, over 6,000 modes have been created and shared by our users, and our modes have been installed over 150 million times. That is a great testimony of how this functionality is appreciated by the gamer audience and the potential related to differentiation in the browser space, which in reality is still largely untapped. I'm going to end on the continuation evolution of our embrace of AI. we continue to roll out new generative AI features within the Opera browser. In the first quarter, we announced our AI Features Broke project, which gives users of our Opera 1 developer build access to our latest AI explorations. We broke new features as often and every few weeks, making us one of the fastest movers in the space. One highlight is the experimental support of 150 different local large language model variants from approximately 50 families of models, which are now natively supported to be downloaded and can run locally on Europe's own computer within the browser. And in terms of speed, last week we added support for the latest LLAMA3 model just one day after its release. This step marks the first time local live language models can be easily accessed and managed from a major browser to a building feature. The local AI models are a complementary addition to Opera's own ARIA AI service, which utilize our new fully green energy powered AI cluster in Iceland that were announced in February and is now fully operational. It is indeed an interesting time for Browser with a massive user base and a brand for innovation. We are fascinated about all the changes happening around us and cannot wait to explore the path ahead. So now, let me turn it over to Frida to discuss the financials and guidance for the second quarter and 2024 in more detail. So, Frida.