Opera(OPRA) - 2023 Q3 - Quarterly Report

Opera Q2 2023 Earnings Release Financial & Business Highlights Opera reported its 10th consecutive quarter of over 20% revenue growth, exceeding guidance and launching its new AI-integrated browser, Opera One Q2 2023 Financial Performance The company's revenue grew 21% YoY to $94.1 million, with net income reaching $13.5 million and adjusted EBITDA margin expanding to 21.7% - The second quarter of 2023 was Opera's 10th consecutive quarter of revenue growth exceeding 20%, with both revenue and profits surpassing expectations[1][4] Q2 & H1 2023 Financial Highlights (in thousands, except per share data) | Metric | Q2 2023 | Q2 2022 | YoY Change | H1 2023 | H1 2022 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $94,134 | $77,834 | 21% | $181,185 | $149,417 | 21% | | Net Income (Loss) | $13,537 | $(5,836) | NM | $29,015 | $(15,271) | NM | | Adjusted EBITDA | $20,466 | $16,569 | 24% | $42,204 | $23,918 | 76% | | Diluted EPS (ADS) | $0.15 | $(0.05) | NM | $0.32 | $(0.13) | NM | | Free Cash Flow | $13,216 | $(3,974) | NM | $36,533 | $7,536 | 385% | Business & Operational Highlights Key operational achievements include 25% growth in advertising revenue, a 25% increase in annualized ARPU, and the launch of the AI chatbot 'Aria' - Key strategic and product developments in Q2 2023 include the launch of the new flagship browser Opera One, the introduction of the integrated AI chatbot 'Aria', and the announcement of a recurring semi-annual dividend of $0.40 per ADS[1][5][8] - The company's cash position increased by $13 million during the quarter to $98 million, and it holds a combined $196 million in assets held for sale and receivables, including its 9.5% stake in OPay[8] Q2 2023 Key Operational Metrics | Metric | Value | YoY/QoQ Change | Note | | :--- | :--- | :--- | :--- | | Advertising Revenue | $53.8M | +25% YoY | Constitutes 57% of total revenue | | Search Revenue | $38.9M | +15% YoY | Driven by focus on high-value users | | Annualized ARPU | $1.17 | +25% YoY | - | | Monthly Active Users (MAUs) | 316 million | Down slightly QoQ | Strategy focuses on higher monetizing users | | Opera GX MAUs | 23.7 million | +9% QoQ | Across PC and mobile | Business Outlook Opera raised its full-year 2023 guidance for revenue and adjusted EBITDA following strong second-quarter performance Updated Full Year 2023 Guidance | Metric | New Guidance | Previous Guidance | | :--- | :--- | :--- | | Revenue | $380M - $390M | $373M - $390M | | Adjusted EBITDA | $80M - $84M | $77M - $83M | Third Quarter 2023 Guidance | Metric | Guidance | YoY Growth (Midpoint) | | :--- | :--- | :--- | | Revenue | $97M - $100M | 15% | | Adjusted EBITDA | $18.5M - $20.5M | - | Detailed Financial Results (Q2 2023) Revenue increased 21% YoY to $94.1 million, driven by advertising and search growth, resulting in a net income of $13.5 million - The company reported a net income of $13.5 million (14% margin) and basic EPS of $0.15 per ADS, compared to a net loss of $5.8 million and a loss of $0.05 per ADS in Q2 2022[17] Q2 2023 Revenue and Expense Breakdown (YoY Comparison) | Item | Q2 2023 ($M) | YoY Change | Note | | :--- | :--- | :--- | :--- | | Total Revenue | 94.1 | +21% | - | | Advertising Revenue | 53.8 | +25% | - | | Search Revenue | 38.9 | +15% | - | | Total Operating Expenses | 81.7 | +22% | - | | Personnel Expenses | 21.4 | +12% | Includes $4.6M share-based remuneration | | Marketing & Distribution | 27.0 | +7% | - | | Operating Profit | 12.5 | +12% | 13% margin | | Adjusted EBITDA | 20.5 | +24% | 22% margin | Consolidated Financial Statements (Unaudited) Consolidated Statement of Operations The statement details revenue and expenses, showing a net income of $13.5 million for Q2 2023, a significant turnaround from the prior year's loss Consolidated Statement of Operations Summary (in thousands) | Line Item | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | | :--- | :--- | :--- | | Revenue | $94,134 | $77,834 | | Total operating expenses | $(81,650) | $(66,664) | | Operating profit | $12,535 | $11,240 | | Net finance income (expense) | $2,150 | $(13,334) | | Profit (loss) before income taxes | $14,684 | $(2,094) | | Net income (loss) | $13,537 | $(5,836) | Consolidated Statement of Financial Position As of June 30, 2023, total assets were $908.5 million, with cash increasing to $98.2 million and total equity standing at $816.5 million Key Balance Sheet Items (in thousands) | Account | As of June 30, 2023 | As of Dec 31, 2022 | | :--- | :--- | :--- | | Total Assets | $908,543 | $964,686 | | Cash and cash equivalents | $98,155 | $52,414 | | Assets held for sale | $163,462 | $86,100 | | Total Liabilities | $92,050 | $76,472 | | Total Equity | $816,493 | $888,213 | Consolidated Statement of Cash Flows The company generated $41.2 million in net cash from operations in H1 2023, leading to a $46.7 million increase in cash and cash equivalents Cash Flow Summary (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash flow from operating activities | $41,244 | $15,088 | | Net cash flow from investing activities | $22,194 | $34,441 | | Net cash flow from financing activities | $(16,711) | $(12,192) | | Net change in cash and cash equivalents | $46,728 | $37,338 | | Cash and cash equivalents at end of period | $98,155 | $139,400 | Consolidated Statement of Changes in Equity Total equity decreased to $816.5 million, primarily due to $107.2 million in dividend payments offsetting the $29.0 million net income - For the six months ended June 30, 2023, the change in total equity was primarily driven by net income of $29.0 million, offset by dividend payments of $107.2 million and treasury share acquisitions of $2.5 million[38] Supplemental Financial Information This section details revenue sources, with advertising up 25% and search up 15%, and breaks down personnel expenses including share-based remuneration - Share-based remuneration expense in Q2 2023 was $4.6 million, including $2.1 million related to options granted by Kunlun, Opera's ultimate parent, which do not cause dilution for its shareholders[43] Revenue Breakdown (in thousands) | Revenue Source | Q2 2023 | Q2 2022 | YoY Change | | :--- | :--- | :--- | :--- | | Advertising | $53,828 | $43,085 | +25% | | Search | $38,856 | $33,734 | +15% | | Technology licensing and other | $1,450 | $1,016 | +43% | | Total Revenue | $94,134 | $77,834 | +21% | Non-IFRS Financial Measures & Reconciliations The company provides reconciliations for non-IFRS measures like Adjusted EBITDA ($20.5 million) and Free Cash Flow ($13.2 million) for Q2 2023 - The company defines Adjusted EBITDA as net income excluding items such as taxes, net finance income/expense, depreciation & amortization, and share-based remuneration[25] - Free cash flow is defined as net cash from operating activities less purchases of fixed/intangible assets and payment of lease liabilities[26] Reconciliation of Net Income to Adjusted EBITDA (Q2 2023, in thousands) | Description | Amount | | :--- | :--- | | Net income | $13,537 | | Income tax expense | $1,148 | | Net finance expense (income) | $(2,150) | | Depreciation and amortization | $3,356 | | Share-based remuneration | $4,626 | | Other adjustments | $(51) | | Adjusted EBITDA | $20,466 | Reconciliation to Free Cash Flow from Operations (Q2 2023, in thousands) | Description | Amount | | :--- | :--- | | Net cash flow from operating activities | $15,517 | | Purchase of equipment | $(219) | | Development expenditure | $(1,048) | | Payment of lease liabilities | $(1,034) | | Free cash flow from operations | $13,216 | Other Information This section includes conference call details, a Safe Harbor statement on forward-looking information, and a corporate overview - The company hosted a conference call on August 24, 2023, to discuss the financial results[21] - The press release includes a "Safe Harbor" statement under the U.S. Private Securities Litigation Reform Act of 1995, cautioning that forward-looking statements are subject to risks and uncertainties[27] - Opera is a web innovator headquartered in Oslo, Norway, known for its portfolio of browsers and apps serving hundreds of millions of users[28]