Opera(OPRA) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q2 2024 was $110 million, representing a 17% year-over-year growth [4] - Adjusted EBITDA was$ 27 million, translating to a margin of 24%, exceeding guidance of $22 million to$ 25 million [4][18] - Average Revenue Per User (ARPU) grew by 25% year-over-year, now at an annualized $1.46 across products and geographies [4] Business Line Data and Key Metrics Changes - Advertising revenue reached$ 65 million, growing 20% year-over-year, driven by high-ARPU user growth and expanding monetization opportunities [4][5] - Search revenue was $45 million, up 15% year-over-year, indicating strong retention of engaged users [5] - Opera GX, the gaming browser, added 500,000 users in the quarter, achieving 30 million Monthly Active Users (MAUs) with a year-over-year growth of 27% [13] Market Data and Key Metrics Changes - Significant user adoption growth in the EU, particularly for Opera on Android and iOS, attributed to the Digital Markets Act (DMA) [7] - The company noted a flat sequential user base in Western markets, indicating potential seasonality or marketing spend adjustments [31] Company Strategy and Development Direction - The company is focusing on e-commerce opportunities as a key growth driver, with a strong emphasis on high-value user acquisition [18][22] - Continued investment in AI capabilities is expected to enhance user experience and monetization potential [14][15] - The launch of Opera One and Opera GX is aimed at increasing market share and user engagement, particularly in the gaming sector [10][12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth trajectory for the second half of 2024, raising full-year revenue guidance to$ 461 million to $467 million [22] - The company is cautiously optimistic about the holiday season, anticipating increased e-commerce activity [22] - Management highlighted the importance of regulatory changes, such as the DMA, in creating opportunities for independent players like Opera [28][29] Other Important Information - The company announced a semi-annual dividend of$ 0.40 per ADS, totaling $35.4 million [21] - Operating cash flow was$ 17.4 million, representing 65% of adjusted EBITDA, with free cash flow from operations at $13.5 million [20] Q&A Session Summary Question: Thoughts on the DMA and its implementation - Management believes the DMA has been beneficial for independent players and is working closely with the EU to ensure broader application of gatekeeper definitions [26][28] Question: Drivers of e-commerce trends - The company has built a sizable user base in high-value markets, allowing for new partnerships that drive meaningful traffic with high purchase intent [30] Question: User base trends in Western markets - Management noted a flat trend in Western markets due to a focus on high-value users and increased marketing costs [31] Question: Impact of regulatory shifts on product prioritization - Management sees regulatory shifts as beneficial, allowing for more investment in platforms like iOS and Windows [33][34] Question: Feedback on the Aria assistant and AI adoption - The application of AI is becoming more integrated into daily user experiences, positively impacting monetization [37][38] Question: Cost structure impact from AI initiatives - The company has been disciplined in managing operational costs related to AI, focusing on cost-effective solutions [41][44] Question: Returns from the AI cluster investment in Iceland - The AI cluster has been operational since Q2 and is being used for fine-tuning tasks, with positive revenue generation expected [46][47] Question: Expected impact of Google antitrust ruling on search revenue - Management believes that the focus should be on broader monetization opportunities beyond search, with a positive outlook for e-commerce revenue [48][49] Question: Growth potential of Opera GX - The user base of Opera GX is evenly split between Western and non-Western markets, with significant monetization potential in both [52] Question: Future opportunities in Latin America - Latin America is identified as a fast-growing market, with high hopes for user and advertising monetization growth [59]