Opera Limited

Welcome to the Opera Limited second quarter 2026 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 star 2. Please be advised that today's call is being recorded. Lastly, if you should need 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, Erica, and thank you everyone for joining us this morning. I'm joined by our CEO, Song Lin, and our CFO, Frode Jacobsen. 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 that are subject to a number of risks and uncertainties. Actual results could differ materially as a result of various factors, including those set forth in today's earnings press release and in our most recent annual report on Form 20F filed with the SEC. We undertake no obligation to update any forward-looking statement. During this call, we will present both IFRS and non-IFRS financial measures. A reconciliation of IFRS to non-IFRS measures is included in today's earnings press release. The earnings press release and an accompanying investor presentation are available on our investor relations website at investor.opera.com. Our comments will be on the year-over-year comparisons unless we state otherwise. With that, let me turn the call over to our CEO, Song Lin, who will cover our second quarter operational highlights and strategy, and then to Frode Jacobsen, who will discuss the details of our financials and expectations for the third quarter and full year. Song?

Thank you, and good morning, everyone. We have been looking forward to sharing today's report with you. Our second quarter results really are fun. that being an independent, well-established and innovative browser provider with a user base of nearly 300 million people and a significant advertising reach is a very attractive position to hold in a rapidly evolving and expanding ecosystem. Instead of placing bets on which AI services or infrastructure plays well-believing in the future, We cultivate our position as a tech enabler and platform that facilitates choice for the end user and access to a vast user base for our partners. In this landscape, the browser is becoming more valuable as AI changes how people search work and act online and Opera is already translating that shift into greater engagement and monetization. By continuing to give the most demanding users new reasons to switch from the operating system default browser and by expanding the functionality of our advertising platform, we broaden our partner ecosystem and grow monetization opportunities every month, adding to the foundation of our long-term trajectory as well. Both revenue and adjusted EBITDA exceeded the top of our guidance range. with growth fueled by acceleration of revenue growth from 23% year-over-year in Q1 to 25% year-over-year in Q2. The strength was broad-based. Advertising revenue grew 27% to $115 million, while primary revenue grew 21% to $62 million. With that, Second quarter revenue exceeded $178 million and surpassed the seasonal Q4 peak of quarter oil than what we've seen in most prior years. Adjusted EBITDA was also a quarterly record at $42.4 million, representing a margin of 24% and growing at 32% year over year. And importantly, our confidence in this elevated trajectory allows us to raise four-year guidance beyond the Q2 overperformance, which Frode will get back to. Advertising growth was again led by e-commerce in particular. As we look ahead, our roadmap includes additional high-intensity formats, including AI-supported price comparisons designed to help shoppers evaluate the products while helping merchants reach users closer to a purchase decision. Our in-house platform already helps to match our users with the best deals across 100 merchants with over 100 million products. Within travel, another high potential vertical for us, we work with the top online travel agencies and have started initial campaigns beyond Opera's own user base. Our partners continue to expand their work with us because our performance-based campaigns deliver memorable outcomes. As a combined platform for first and third party inventory, we are able to inform and allocate campaigns with a solid understanding of the relevant audiences. In fact, our total addressable audience, when taking into account the millions of users that access our company platform through OEM wide-label solutions and the broader SDK ratio of Opera Apps, has now reached beyond 700 million, up from the 500 million were announced just six months ago. This scale and growth reinforces our position among the largest online platforms. Our private revenue, representing the monetization of our users' proactive intent, continue to grow ahead of the underlying search market benchmarks, as we benefit from natively integrating key partners as a part of the browser interface. This revenue category directly captures the traffic monetization potential or the increased engagement in our browsers with native AI functionalities benefiting both time spent and the browser's ability to connect the right partners with our users and the right time. This is also true as it relates to the evolution of our search partnerships, where the secular tailwind from longer and more complex user journeys continues to build. Search is evolving from short keywords to questions and increasingly to conversations. We combine this with rapid product innovation, driving both user appreciation and increased usage of our browsers, all of which results in more engagement within the address bar and Omnibox with more opportunities to connect high-intensity users with relevant results. Look at the ARPU-driven Western markets. As mentioned before, we see that the users who engage with AI within our browsers spend significantly more time in the browser and even conduct many more searches versus comparable users who are not yet engaged in AI, all of which directly contributes to ARPU growth. As an overall result, We see that query revenue is growing at 1.4 times the pace in Western markets. This is the global average, up 29% year-over-year, as opposed to 21% globally. It's a point worth making that Opera is already monetizing AI-driven query activity today, not simply describing a future opportunity. In the second quarter, Google announced a new commercialization of its AI mode. Widening the base is for our query revenue stream. We also expanded our AI strategy by announcing Browser Connector for leading AI services, including Anthropis Cloud and OpenAI ShareGPT. Browser Connector enables users to securely connect these AI services to their open browser, elevating those services to become agentic by understanding the live browsing context and interacting with the browser on the user's behalf. This represents a shift from closed single vendor AI experiences toward an open ecosystem where users can choose the AI services that best meet their needs while repenting the browser as the central interface. We are fully committed to SaaS interoperability as the best basis for growth of new AI platforms and services allowing the users to have a deeply intuitive experience without juggling multiple browsers and enabling new platforms to access the users in a native way without having to drive both adoption of the platform and the dedicated and perhaps narrow browser experience on top. This open approach aligns with Opera's position as an independent browser vendor and appeals to our most technologically sophisticated user base, many of whom value flexibility and avoid the dependency on a single AI provider. As AI assistants become increasingly capable, the browser is well-positioned to serve as a trusted context and execution layer, connecting users with multiple AI services and we expect adoption of such integrations to eventually be commonplace for all users. Opera also introduced the Opera Browser CLI, an auto-sourced command line interface that enables developers and AI enthusiasts to integrate the browser directly into AI-driven workflows. By allowing AI coding agents and automation tools to interact with the live browser, Opera Browser CLI extends The browser's role beyond traditional browsing and reinforces Opera's strategy of making the browser programmable infrastructure for the next generation of AI applications. Going into our user base, Opera has 188 million monthly active users in the portal. Our Western user base grew 4% year over year to 61 million with both desktop and mobile platforms contributing. Mobile was particularly strong, growing 8% year-over-year across the Western markets, while the low-up official home base continues to phase out. This continued the mixed shift towards higher-value users, helped increase the analyzed output by 25% to $2.46. Opera GX reached 37 million monthly active users, adding almost 2 million users during the quarter. Both desktop and mobile grew. with a larger absolute contribution coming from desktop. Customerships with games like Forsaken rewards players with in-game items like free skins and game boosts, which resonates with our target audience. Our momentum is especially visible in some of the world's most competitive mobile markets. Over the past year, combined Android and iOS MAUs grew 66% in the United Kingdom and 40% in the United States. Across Europe, Opera 1 for iOS grew 42%, demonstrating our potential to broaden our smartphone base, which is still about 90% Android. Users continue to choose Opera for differentiated features, including our free no-log VPN, intuitive tab management, and building browser AI. Our iOS user base Gross shows how even a highly restrictive ecosystem has materialized and an opportunity for us to grow both users and overall output. Our browser reach and brand trust also enables us to scale new services. MiniPay, our self-custodial stablecoin wallet, solves the problem of access to international currency for users in emerging markets, removing complicities for the end user and making P2P transfers and Web3 access very easy. Given our ability to rapidly scale, we are also able to work closely with key partners such as Zillow and Tether to drive adoption of these services. Minipay's growth continued in the second quarter with 3 million new wallet activations and 88 million transactions since our last update, bringing the totals to 18 million wallets and 518 million transactions. MiniPay now reaches more than 66 countries and includes more than 57 live mini apps and is rapidly expanding its capabilities. In June, we launched a card in collaboration with Visa that bridges the gap between stablecoin holding and daily spending. The card is now available across the EU and is being gradually introduced in supporting markets in Africa, not in America and Asia. Stable coin access has different use cases in different economies, but as a global yet locally integrated network, we remove friction from international money transfers while both parties are unbanked and all users can travel globally like true locals in markets where mobile payment options are expanding. All of this strengthen our conviction that MiniPay can make stablecoins useful for everyday savings, transfers, and spending. It is still early, but the product's scale, utility, and ecosystem participation continue to progress rapidly. With that, I would like to turn the call over to Frode Jacobsen, our CFO, to discuss our financial results, guidance, and capital allocation in greater detail. Frode?

Thanks, Song. We remain very pleased with how our strategy and business performance converts to healthy financials, having exceeded our guidance ranges in both quarters of 2026 to date. As Song Lin pointed out, being an independent partner-oriented and tech-first browser in the evolving AI landscape is a great position that we will continue to cultivate. And yet again, we are able to lift our full year guidance, reflecting both the cue to overperformance and our trajectory as we enter the second half of the year. Opera's growth is all organic and comes with healthy profitability. We invest in our growth through rapid and continuous product development, creative and engaging marketing, and by acquiring the third-party inventories As we scale our ads business. Those who have followed us over time know that we balance this carefully to ensure a strong growth trajectory while also driving profits and cash generation that we return to our shareholders through our recurring dividend and share buybacks. Last quarter, I talked about how our 10-year average annual revenue growth stands at 21%. And in fact, if you zoom in to the post-COVID period and look at the CAGR across the last four full years, the average annual revenue growth has been 23%, and profit metrics have grown even faster. At EPS level, our share buybacks have amplified that trend, with average annual adjusted EPS growth of 33%, which excludes valuation gains from our stake in OPE, that we eliminate from our adjusted metrics. Zooming back into our Q2 results, revenue grew 25% to 178.1 million. Overall expenses came in according to expectations, resulting in adjusted EBITDA growth of 32% to 42.4 million, or a margin of 24%. In terms of cost categories, Cost of revenue items combined came in at 38% of revenue, exactly as previously indicated. Marketing spend came in at 36.2 million, representing a sequential decline of 6% relative to Q1, with continued discipline. Cash-based compensation was 23.1 million, which included accelerated annual bonus accruals following the strong underlying performance in the quarter. The sum of all the smaller OPEX items pre-adjusted EBITDA came in at 8.9 million and was overall flat versus Q1. Below the EBITDA line, we achieved adjusted net income of 30 million or 27% growth year over year, and adjusted diluted EPS was 33 cents, representing 25% growth. Operating cash flow was 22 million in the quarter, with free cash flow from operations of 17 million. Year to date, we have converted 76% of adjusted EBITDA to operating cash flow and 62% of adjusted EBITDA to free cash flow from operations. Both ratios nearly the same as in the first half of 2025. While we continue to expect fluctuations in cash conversion between quarters, the year to date ratios will stabilize and likely tick up in the second half of the year as they also did in 2025. In terms of capital allocation, our low capex business model allows us to return significant value to our shareholders through our recurring dividend and share buyback program. In fact, since 2020 and including our recent July dividend, we have returned $577 million to our shareholders of which 320 million through dividends and 256 million spent to buy back a total of 37.2 million shares of Opera with an average cost per share of $6.88 and representing 31% of shares outstanding at the start of 2020. Our July semi-annual dividend of 40 cents per share or $35.6 million total represented an annualized yield of 3.9% on the record dates. During Q2, we repurchased 636,000 shares for a total spend of 11.1 million, pro-rata distributed between public buybacks and repurchases from our majority shareholder at the same price per share, which was $17.44. This corresponded to 0.7% of shares outstanding at the start of the quarter, and reduce the total number of shares outstanding as of 30th of June to 88.9 million. You'll see 14.2 million of buyback spend in our Q2 cash flow, which includes 4.1 million of Q1 repurchases that settled in Q2 and excludes 1 million of Q2 purchases that will settle in Q3. Now turning to guidance. As we revise our full year ranges, we combine the Q2 beat on both revenue and adjusted EBITDA with additional upside in the second half of the year, in line with how we also raised guidance at this time last year. So while we build in a more normalized Q4 spike than the extraordinary year-end growth spikes we saw in 2024, and ultimately also in 2025, we also reflect our most recent momentum. For the full year, we guide revenue of 734 to 742 million or 20% growth at the midpoint, adding 2 to 5 million in addition to the Q2 overperformance. We guide adjusted EBITDA of 172 to 175 million, representing a 24% margin on the elevated revenue midpoints. For the third quarter, we guide revenue of 181 to 183 million, or 19 to 20% growth. We guide adjusted EBITDA of 41 to 43 million, representing a 23% margin at the midpoints. In terms of costs, We then implicitly guide to a full year OPEC space, pre-adjusted EBITDA of 565 million at the midpoints, of which 140 million in Q3. At the new midpoint, we expect cost of revenue items combined to represent about 39% of revenue for the year, and the quarterly percentages ticking up with seasonality in advertising. Marketing cost is expected to remain relatively stable around the Q2 level, resulting in mid-single-digit annual growth and representing about 20% of full-year revenue. Cash-based compensation expense is expected to modestly reduce relative to Q2 with annual growth in the low double digits and representing about 12% of full-year revenue. The sum of all other OpEx items pre-adjusted EBITDA is expected to remain stable at about 5% of revenues. In sum, cash-based compensation and marketing will then decline from representing 36% of revenue last year to representing about 32% of revenue this year. supported by economies of scale and the inflow of revenue from APRA ads that carries cost of revenue but limited incremental OPEX. This enables us to guide to an increase in adjusted EBITDA margin relative to 2025 of 25 to 40 basis points. Taken together, we are very pleased with the second quarter and our momentum and opportunity as we enter the second half of the year. We have continued returning capital to our shareholders while investing in the product and commercial opportunities that can fuel Opera's growth well into the future. With that, I'll turn the call back over to the operator for your questions.

Thank you. As a reminder, to ask a question, please press star 1 on your telephone keypad. To withdraw your question, press star 2. When posing your question, we ask that you please pick up your handset for optimal sound quality. We'll take our first question from Naveed Khan with B Reilly Securities. Please go ahead. Your line is open.

Great. Thank you. Thank you so much. I have a couple of questions. So maybe just on this audience, the number you gave, you said you have a reach of more than 700 million, which is up from 500 million plus that you had six months ago. Did you sign any new partners to drive this kind of reach? Can you maybe talk about that a little bit? And then on a related question, related sort of note, you know, the hundred or so advertisers that you have with hundred million or so listings, item listings, how does that compare with the last quarter in the year-ago period. And then maybe finally on OPEI, can you give us any sense of timing on when that might happen in terms of going public? Is it this year, next year? Just give us some thoughts there. Thank you.

Yeah, so it's only how I think I've tried also the first two questions, and Frode can also address a bit on OPEI for whatever he can comment about. Yeah, so for the reach, yes, yes. We have actually expanded quite a lot of new partners in the field on the back of actually our strengths of Opera Ads and also with the fact that with the help of AI and algorithm, we were able to bring a lot of demand and also make it much easier for our partners to work with us because we can also help them monetize. So I would almost say, like the broader new partnerships that we see coming, actually many of them are very encouraging because they are, like many of them are very new AI services that, you know, they see a benefit of combined with our strengths. You know, with those, it could be in the field of AI generated videos, it could be in the field of AI social and many others. And it's actually a, and Hans Lund on both sides. They are very happy, but it also allows us to reach other titles which are very keen on those audiences. So I think that we're actually very pleased and it's almost ahead of what we project. So reasonably happy about it. But again, it's still in early stage, right? Because I think our goal is just to reach a billion, hopefully, ASAP. And then we should be the top tier players in the field. And that's our goal. And then and also maybe also to briefly comment a bit about your question about how much and how many products. So just to be specific, that's actually a particular design to power our AI services, right? So almost better if you imagine that as a way to show that with the help of AI for whatever previously may be only available if you do it from a search, now those are also available that we can directly pop up under the context. and it's also very relevant because it's directly combining relevant context with a particular product with the right price and with the right information which is actually the only possible way with the help of AI and it's rather new so I would say it's almost no it's not really a comparison in the past because in the past we are not really doing this because of many limitations but now with AI we can that with AI is actually possible for us to under the context of whatever user is browsing or solving to try to give him as accurate information as possible. So view this as the future approach where we try to give you the relevant information and hopefully also be able to commercialize it in the right approach and in connection with many of our partners. So it's actually, it's still all the days, but it's a very important initiative from our side. So yeah, as a summary, I think both of the two questions are actually relevant with our fast growths AI. So the first one is actually we're able to work actually added many interesting partners on the AI field, which has a very good positive loop on both sides. And the second one actually allows us to provide AI-relevant commercial contents, e-commerce contents in the right context and pay the potential monetization base in the future. So quite excited. And with that, I think Frode can also help address the last question.

In terms of OPEI and the question around an IPO, we continue to expect that OPEI will ultimately go public. We are very impressed with what OPEI has achieved and at OPPO we're also proud to have been part of its founding. As a shareholder, we will welcome an IPO. It will lead to an immediate transparency as to the value of our funding stake in the company, but I can't really comment on timing. This will be more up to the OPE team to judge. Great.

Thank you, Song. Thank you, Len. Thank you, Frode.

Thank you. And we'll take our next question from... and the line of Eric Sheridan with Goldman Sachs. Please go ahead.

Hey guys, this is Alex on for Eric. Thanks for taking our question. Appreciate it. I wanted to dig into the strengths you saw in the quarter of mobile MAUs in US and Europe. Can you talk about some of the key catalysts that have driven this growth recently? Is it just Broader adoption of Chrome and Safari alternatives post the regulatory environment. Are there any active investments you're making in the regions to drive this growth? And any differences in AI adoption and consumer behavior within AI that you're seeing across the two regions would be helpful. Thanks.

Yeah, so I think I'll comment a bit on it. So yeah, so in general, I think it's a bit of both, right? So, you know, Europe is actually because of the field of actions, you know, of opening up. We do, we always see from even last year, we see a trend that users become aware, especially on iOS, that there are alternative browsers. And we, in a way, keeps a nice growing trajectory. And this actually has been further helped by the advance of AI as, again, right, AI becoming much more visible. to everybody that there is alternatives even on the operating system like iOS that you can choose as a browser player, right? So that we definitely see a very, very nice growth trajectory as reported both in Europe, but also see the same trend happening in US. So very, very exciting about it. And we, yeah, so like we have this hope on how that will continue to grow further. And then and then on talk where you think that it's, I would also say that it's also the trends that we see that it's a self-reinforcing loop that we also feel very encouraging that user come to the platform, come to Opera browser instead of system default browser, usually on those systems, on mobile, typical iOS, because of AI. But then what we also see is that the moment they use AI, they actually spend much longer time and even in traditional search and also they have much more engagement. which do not come from AI, but from some other regular cases. So this actually overall created almost a positive feedback loop that they come to Opera for the AI and the more they use it, the more they actually engage with it, which actually makes this Very encouraging. So I think that's also why we will probably likely continue to double down this by providing a better product for the end user and hopefully also will nicely see a growth trajectory on those platforms.

That's helpful. Thanks, guys.

Thank you. And we'll take our next question from Ron Josie with Citi. Please go ahead.

Great, thanks for taking the question. Song, you mentioned earlier just about greater engagement from users who engage with AI versus those who don't. I wanted to hear a little bit more from you on just the adoption, what tools those users are using within the browser, the insights of users who have adopted those tools, meaning who are they versus those that have not, and specifically, are they Western users? And just more insights on the plan to drive greater adoption of the AI tools, given the Yes, sure. I think I'll try to get some answers there. So, so

I think, first of all, at least internally, we have also done some states. As a browser, I think we are lucky that we are in a position to be able to have false information of what users behave in those environments. So I think one thing we can definitely confirm is that the use of AI is definitely moving forward at a fast pace. So both, I would say, in terms of using the popular service, like the big play-offs that we usually see, you know, both from Google Gemini, but also from Antwerp again, also for HNZPT. Most of them actually use it by visiting the web as is common. And we can definitely see that, you know, both of the users grows largely in the last quarter and both year over year, but also very visible in quarter over quarter. So that's definitely something which we can confirm. But then maybe I'll also comment a bit in a broader level. So there are also some very interesting other trends that we see during the Q2. So number one is that we also clearly see a pattern that On top of using those big online service players, we also see an interesting trend that we saw an increased use of many open source services. That is out there. So that is very visible. And we believe that for the combination of user behaviors, we believe that there seems to be a sense that users now become into very much like, let's say if Per Wetterdal said they want to use one chat or whatever as the whole of their use of AI, now it seems that the behavior of becoming, they use chat for something, they use even different chats for different things. Imagine one maybe for company work, the other maybe for private work. But then we also see that they now also started to use many other, let's say alternative open source models as the potential tools in whatever context. So that is actually, I think, quite interesting that we see in Q2. We believe that's partly just because it's an illustration of diversification. That's probably a function of more and more of many of the agentic functionality or whatever are better solved by some open source ones, either before the post, because those are typically much cheaper and token price is becoming much more but potentially I think also because of some of the agenting framework whatever are better supported by open source you know maybe also you know by intention that we think many of those guys do not want all their work or whatever access to be available of one big single big AR player or maybe in the field that those guys will take their take the share or whatever. So that's one thing which we see quite interesting there. I would also say that the other thing which we see on the browser end is also that there seems to be also now more and more opening of both online mode, but also local models, which also become very interesting. So, so, so, you know, like, you know, we'll use the big, you know, frontier models for, you know, the really top of note stuff. But we also see that many of them actually prefer to use local models in many other ways, like voice input and a few others. And again, primarily, probably both for the concept of privacy, but also for potentially token price considerations, because local model doesn't cost anything, it just costs electricity. on your laptop, and this is even more obvious when it comes to the latest Mac machines and a few others, which are all well-supported outlaws. So by and large, we think these are actually quite relevant and interesting, and that's actually partly why we define our strategy, because we think both of them are very positive to OPERA, Number one, being an independent player, we are a very natural place to serve all of those big, frontier models, allow people to access it, which we see people already happening. But we are also very not biased towards any other open source models, among others. And we are also one of the access artists in the browser which do support the local models, which are hosted on local machines in combination with other technologies. So we think all of those are very interesting. Thank you.

Thank you. And we'll take our next question from Jim Callahan with Piper Sandler. Please go ahead.

Hi. Thanks for taking the question. I guess starting with GX users with strong uptake, I think you added as many users Q over Q as you did in all 2025. Any further commentary on kind of what drove the strength this quarter and maybe like the sustainability of that going forward?

Yes, I think I was still trying to answer. So, yeah, no, I think we are very excited to see the, you know, fasting growth of GX in Q2, quite pleased about it. Yeah, so I think fundamentally it's a combination of things that, you know, well, I think we definitely see that GX results are very cautious and the continued integration of the latest services that we have been providing have been able to resonate with our end users, which we are very excited. But I think there's also the fact that we're also now starting to work with more and more games and game developers by providing a more better integrated gaming ecosystem. For instance, a typical case would be that now if you are a GX user, you would be able to participate in many interesting Roblox games, for instance. Well, you can have game booths and also daily rewards among others. So we basically see that GX is almost becoming more and better integrated into the gaming ecosystem. And that definitely helps both for the access of those games, which provide hopefully a future monetization opportunity, but also bring more users to GX, which we are very pleased about. So I would say it's a combination of both. So both more integration of AI, which actually is very helpful and very mindful to the end users, but also by we are maybe better embedded into the gaming world and gaming partners. which helps expand the user growth. And then super quickly, you also mentioned about the sustainability. So we think the model is definitely very sustainable. The only thing we're mindful is just that, of course, during the summertime, yeah, like it's summer and holiday is always a low season for GX, just to say. So we are right now in July and August will always be low season. So just a reminder, that's a physical limitation because wherever people are not in front, not at home and, you know, summer home and not in front of a, of the computers. There's the limited stuff we can do about it.

Great. That makes sense. And then with a couple of quick ones on the search business, any comment on pricing versus impressions in terms of what's making up the revenue growth? And then I might have missed this, but any math we can do to back into the other query part of the business would be helpful. Thank you.

Yeah, this is Frode here. I can comment on the search side. So I think overall, we see search revenue being driven predominantly by the value per search. As I mentioned, we also, through engagement, have tendencies of increases in search per user, in particular on the smartphone side. But the general trend has been Better matching with early search results. Fewer queries needed per search, but then more than offset by better monetization on a per search query. I think the non-search part of query revenue has continued to grow over 200% year over year. It's still in the single million dollars, but an increasingly important part of our revenue potential.

Great. Thank you.

Thank you. As a reminder, if you would like to ask a question, it is C star and 1 on your touch tone telephone. We'll take our next question from Lance Ventanza with TD Cowen. Please go ahead.

Thanks, guys. I have two questions, please. The first is on the durability of growth and this valuation disconnect. At six and a half times next year's EBITDA, the stock still appears to imply skepticism around the durability of your growth trajectory. This despite the fact that, Frode, you pointed out, right, the 21% growth CAGR over the past 10 years. But what gives management confidence that the current level of growth can persist beyond the next few quarters? And what metrics should investors focus on to assess whether the growth is becoming more structural rather than cyclical?

That's a difficult question to answer. As Song talked a lot about, and I touched on too, I think the environment that we operate within has not been this exciting for a company like Opera for many years. So much is happening, so quick evolution around us. and the browser playing a bigger and bigger role in people's daily life. So I think that we are very excited about. We see that our ability to turn that engagement into monetization and revenue has been very strong over the many years and continues to be. and as we look ahead, we also in a way take comfort in the fact that while we are very pleased with our growth, we've talked about e-commerce and how quickly that scales, we've mentioned travel as an opportunity that we think we also under-index in, even if we are very pleased with the momentum in terms of the global market, We are still a very small player. And so what we see is that we still have the ability to navigate that opportunity space and sort of address opportunities, not just one by one, but as our capacity allows.

Great. And then on MiniPay... It's now reached 18 million wallets. It's in 60 countries. You've got several dozen mini apps and you recently launched a Visa card. At what point do you think the platform will have achieved sufficient scale so that you can begin prioritizing monetization alongside user growth? Are we still in the early innings of user acquisition or are we approaching an inflection point where The economic contribution could become more visible.

It's only how I try to comment a bit. First of all, I would say it's definitely still audit stage to be clear. I think basically we also learned it from our audit experience in OPEA and a few others that of course you almost have to be a bit more patient. with FinTech, especially with FinTech that we are doing, which is basically almost the infrastructure play, and then also the play to use technology to connect in the world almost, right? So I think those things do play a lot on very, very patient and careful growing of user base, but also connecting all the partners across all the different continents and regions or whatever, and interconnecting them with technology, because it's all about technology, which is what MiniPay is about, right? And So, so, so, and, and, and also it's also about, you know, building up all the partnerships, which, which we are very pleased that Visa, I guess, is a good example that we, we work with now to, to launch the Visa Cafe Plus different countries among others. So, so, so it's, it's, still only, but I think those are the nature of those kind of fintech services that needs a huge infrastructure to be able to scale, but I think we also take comfort on a few things. So number one, I think from day one, MiniPay is profitable, reasonably profitable. So I think itself has been proven that it has a sound business model and we've always been very disciplined. So that's number one, which we are very, you know, take comfort. And number two is, of course, that the trajectory of what, you know, happened in some other fintech investment we used to have also give us confidence that the moment this has scale and reaches network effect, it can happen relatively fast, right? Because, you know, it's all about, like, it has already had transaction volumes, it has already had GMVs, so it's all about at a certain time of the they turned on the right stream and started to monetize by transaction volumes and by potential take rate and a few others, which is rather standard in the fintech space. So I think that can happen very fast once we think that it actually has that volume and connections in the world. So overall, very positive. It's still very early stage, but we think there's a lot more potentials that we can see in the future.

Thank you.

Thank you. And we'll take our next question from Jacob Steffen with Lake Street Capital Markets.

Yeah, thanks, guys. Maybe just to start out on kind of the browser connector economics. I guess to start, when a user resolves a query inside of Cloud, OpenAI, ChatGPT, whatever, through the actual connector versus your own environment. Do you monetize that session today? And is the monetization rate any different between LLMs, I guess? Yeah.

Okay, so I can try to answer that a bit, right? So I think they have a few benefits, both for the revenue and the others, right? So I think number one, as we also commented a bit, that number one important is, of course, to solve the end result, right? Because, you know, many of those say they like Opera, but they'd also like to use, you know, the AI of their choice, right? Maybe JGPD or maybe others. that from there, they can control it, right? That they can access the browser context and almost to visit the page and do a few things, right? So that's quite relevant. And we are happy, very happy to support that. And we think that's actually important functionality overall from being standalone independent browser providers, right? We are very happy to be that infrastructure. So that's number one. that, you know, it's very important to the end user. It does have the benefit economically for the sense that number one, it, of course, in those case, it doesn't cost Opera money because all the calculation and whatever, of course, based on the user subscription and from those cloud service. So there is no additional cost to it, except, you know, for providing that browser infrastructure, but there's no token cost among others, which is very effective. but also be aware that all those activities are still within Opera Browser, right? Everything. Like you can, you know, a typical scenario is that, you know, changeability, you can, in that interface, to ask a browser to go to a certain web page and to search and do whatever, right? And of course, all those are still happening inside the browser environment and subject to whatever commercial deals the browser would have with a particular Atmos. So that's why we are very happy to also see that as far as the whole infrastructure and environment remain inside the browser, we think that can still have future benefits. Well, it has both current and future benefits, and it's just part of the whole browser play as if it's in regular web pages. The only difference is just that in this case, it's not controlled by the end user, but controlled by the agent of choice or the AI of choice from the end user. or else are equal. So I think those from us to be fairly positive about it, both for most important for the ability to give you the choice, but also for the fact that, you know, as far as everything happened within the browser environment, we think there's plenty of opportunity for us to monetize.

Got it. And maybe just touching on kind of the advertising growth versus kind of the margin quality of that. You know, obviously advertising revenue is up 27%. Cost of inventory has kind of continued to climb here. I guess as opera ads, you know, expands beyond your own owned inventory, you know, should we expect kind of gross margin to continue to kind of structurally decline? Or how should we think about kind of that incremental EBITDA margins, I guess, from that revenue growth?

Yeah, Jacob, I can chime in on that. Even within Opera Ads, what we see also on third-party inventory is that our trend is an improving gross margin. So it's just about the mix between the different revenue types in our totality. In Q2, we had 38% cost of revenue, which is exactly what we expected. And we've guided it to tick off by about another percentage point or so for the year as a whole. but I would say we are able to do this while still increasing our adjusted EBITDA margin expectations because of economies of scale in the business as a whole and the fact that the Opera Ads platform has quite limited other OPEX from growing. So I think that's something that we always manage carefully. We focus mainly on adjusted EBITDA, on our cash flow, are net earnings as opposed to the gross margin percentage. But even within the gross margin percentage, I think you will see when you look at our history that from being quite insignificant in our P&L, it started to scale when we launched Opera Ads and that went through its initial growth phase and now you see a much more stable and softer trend.

Thank you. At this time, we have no further questions, so I'd like to turn it back over to Song Lin for any additional or closing remarks.

Sure. So, like again, I think I would just like to take the chance to thank everybody for joining us. For us, it's quite straightforward. Our focus for the second half is about execution. We need to continue to improve our products. We'd like to thank everybody for their participation on today's conference call. Please feel free to disconnect your line at any time.