Opera Limited

Welcome to the Opera Limited Third 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 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 zero. I would now like to turn the call over to your speaker today, Matt Wolfson, Head of Investor Relations. Please go ahead, sir.

Thank you for joining us. This morning, I'm joined by our co-CEO, Song Lin, and our CFO, Frodo Jacobson. Before I hand over the call to Song Lin, I would like to remind you that some of the statements that we make today regarding our business, operations, and financial performance may be considered forward-looking. Such statements are based on current expectations and assumptions. They're subject to a number of risks and uncertainties. Actual results could differ materially. Please refer to the safe harbor statement in our earnings press release in our Form 20F, including the risk factors. We undertake no obligation to update any forward-looking statements. During this call, we will present both IFRS and non-IFRS financial measures. Reconciliation of non-IFRS to IFRS measures is included in today's earnings press release, which is distributed and available to the public through our investor relations website located at investor.opera.com. Our comments will be on the year-over-year comparisons unless we state otherwise. With that, let me turn the conference call over to our co-CEO, Song Lin, who will cover our third quarter operational highlights and strategy, and then Frodo Jacobson, who will discuss our financials and expectations going forward. Song?

Sure. Thank you, Matt. And thanks to everyone joining us today for a business update and more color on our third quarter. As you can see from our financial results, we find ourselves in a great position. Our product line up has never been better and continues to gain traction among these high-up users, and our efforts to broaden monetization is paying off. As a result, in the short quarter, revenue was $123 million, growing 20% year over year. Rate represents an acceleration from the 17% growth rate experienced in the first half of the year. And once more, as you can tell from our updated guidance today, we think the growth rate may increase even further in the fourth quarter. Our annualized output grew 27% year-over-year to a new record of $1.66. The adjusted EBITDA was 31 million, representing a margin of 25%. We are very proud that both revenue and adjusted EBITDA exceeded the high end of our short quarter guidance ranges. In terms of the year as a whole, we had a material upwards adjustment of guidance after Q2, and now with Q3, we repeat that exercise. where the new range for revenue above the high end of the previously provided guidance range and the adjusted EBITDA guidance range also moves higher. Advertising revenue was 77 million in the quarter, growing 26% year-over-year, which represents the highest rate of growth since 2022. Revenue outperformance was led in particular by the e-commerce and travel categories. Our e-commerce initiative benefited, in particular, from our PC browser monetization, as well as our success in expanding our reach to new inventories through our Opera app platform. The proven results of Q3 also gives us greater confidence in our continued step-up of monetization during the technology-strung fourth quarter. Search revenue was 46 million in the column, up 13% year over year. This was a tad above our own expectations. We have seen somewhat impact in July and August due to seasonality, but we're also pleased to see September return to 15% annual growth. We remain cautiously optimistic that as an independent challenger in the browser space, We stand to benefit from increased search competition in key markets as we look ahead. I'd like to make a few comments on our user base also, which may not be directly visible as you look at our overall NAU figures. We continue to focus on the most valuable results globally, many of which are found in Western markets. Our overall Western market MPU count has been quite stable through the summer quarters. We keep directing our product development and marketing efforts towards the most active and valuable sub-segments, leading to increased engagement within the user base. A result of that is our Apple growth in Western markets growing significantly faster than Apple overall. This is also the main driver of our growth in marketing spend, higher value results, and higher average cost, as opposed to being a pure volume gain. Within the broader strength of the quarter, the top of trend was spending a mini-town. As previously mentioned, we are seeing great momentum in retail. The strengths we pulled out over the summer continued into the back-to-school season. With the combination of our owned and operated properties and the Opera Ads audience extension platform, we offer our advertising partners a level of performance that is increasingly appreciated. We already observed how this momentum is carrying over into the seasonally strongest fourth quarter with merchants positioning themselves for the shopping season. The other trend to go out is travel, which was also strong in the short quarter. We benefited from the combination of more high-value users with a higher propensity to spend on travel, combined with the cost of vacations continuing to increase. This higher volume and higher prices translates into enhanced revenues from this category. A range of people last spoke in late August we have introduced our refreshed Opera 1 for iOS browser. At the time, we were excited about the new features and how favorably it compared to the default. We can now report that the inflow of new iOS users was up 33% year-over-year during the short quarter, despite the new browsers only being available for less than half of the quarter. The growth was even more impressive in the EU, where the inflow of new users was up 66% from August to September. We believe there is a lot of opportunity on this platform to further innovate the product and grow the user base. Last week, we released Opera 1 R2, the newest version of our flagship browser for computers. We have made it even more powerful and even more beautiful. Our AI assistant area is further integrated into the browser, being accessible directly from a browser shortcut as a way to lift AI features out of a dedicated chat box and into the core of the browser experience. Our collective web browsing habits are strong and we believe that it is important to bring AI to the world the users are. As a browser, they play to our strengths, where our native AI ARIA can distill the context of a page, assist in shopping, or scan images. These features have matured in our developer version and are now live in our flagship version. Not to mention the fact that Opera users can now access ARIA without logging in with the profile. Next up for Opera 1, is the ability for ARA to manage open tabs, like close all tabs playing video, or organize open tabs into logical tab items. Tab productivity has always been a key feature of Opera, and Opera 1 R2 also comes with an innovative split-screen view. This enables greater multitasking productivity, something which we think could be as game-changing as our initial pioneering of tabs. And our 2023 introduction of Tab Islands with the first version of Opera One. The list goes on. We have also launched a concept called Tab Traces, which highlights your most recent tabs to quickly retrace your online journey and, of course, still support the slightly amusing tap emojis, which turns out a user favorite, as it really helps visualize what's what on an otherwise dense computer screen. As we also introduced an enhanced music player decoupled from the sidebar, along with detachable video, meaning that you can continue browsing while viewing videos or participating in a video conference. OpenGX, our incredible gaming browser, remains our fastest-growing browser, with over 1.8 million net new users in the portal to 31.9 million MAUs, a 22% increase compared to last year. We were also able to increase our annualized output to $3.68, a 12% increase year-over-year, rates GXR put in Western markets growing nearly twice as fast. We recently announced a new market year sponsorship with Riot for League of Legends World, the largest esports event in the world that has been running from late September to early November. To give you a sense of its popularity, the world tournament attracted over 50 million total viewers last year. and League of Legends is the second most streamed game on Twitch. During the tournament, OperaGX users can download exclusive mods and content drops, as well as physical items. In addition, OperaGX is to be featured prominently in the tournament. It is a good example of how we seek to expand the GX partnerships with content that resonates with gamers. Last quarter, we commented on the partnership with the TV show, The Boys. Today, I would invite all of the GX users to Venomize your browser with the Deadly Host mode in partnership with Venom, The Last Dance, the most recent instrument in that franchise, which was released last weekend. And be on the lookout for an Opera GX easter egg in the movie. But all that is only the beginning. The number of gamers is in the billions, and GX is a unique browser and ecosystem for this highly engaged segment. That's an opportunity that we will continue to cultivate, and within this current quarter, you will see us launch also the next generation of Opera GX. I will leave the details and excitement to the upcoming launch, but I will say that we will not only continue to offer more features that gamers love, but also take the experience beyond just one device to the next level. So stay tuned. All in all, we are moving ahead at full speed and with excitement about our opportunities. Now it's all hands-on deck for BBQ4, and I look forward to keeping you posted on our progress. With that, I'll turn it over to Trude to dive deeper into our short-hauled results and our guidance for the remainder of the year.