Opera(US:OPRA)2024-04-25 18:33Financial Data and Key Metrics - Q1 2024 revenue was $102 million, exceeding guidance, with a 17% YoY growth and 23% constant currency growth [33][40] - Adjusted EBITDA reached $25 million, representing a 24% margin, also exceeding guidance [33][40] - Advertising revenue grew 21% YoY to $59 million, accounting for 58% of total revenue [29] - Search revenue increased 14% YoY to $43 million, driven by high-value users [29] - Annualized ARPU was $1.34 in Q4, up 24% YoY, driven by high ARPU markets and Opera GX growth [58] Business Line Data and Key Metrics - Opera GX reached 29.5 million users, up 6.1% QoQ, with ARPU of $3.49 in Q1, up 10% YoY [61] - Opera GX remains the highest monetizing browser across both developed and emerging markets [61] - Opera One, the AI-focused browser, continues to innovate with features like local AI models and GX Mods, which have been installed over 150 million times [37][62][39] - Advertising revenue within the browser experienced the fastest YoY growth since Q2 2021 [59] Market Data and Key Metrics - In the EU, new iOS users increased by 63% from February to March following the implementation of the Digital Markets Act (DMA) [60] - The company sees a significant opportunity in the US market, where Apple holds 70% of the performance smartphone market [73] - Western markets (Europe and North America) represent 17% of the total user base but account for the majority of marketing spend and revenue growth [51] Company Strategy and Industry Competition - The company focuses on high-value users and quality over quantity, with a strategy to grow in high ARPU markets and Opera GX [58] - The DMA in the EU has leveled the playing field, allowing the company to increase iOS investments and explore similar opportunities in other markets [60][73] - The company continues to innovate with AI features, including local AI models and Aria, its AI cloud service powered by green energy in Iceland [39][64] - Opera GX is expanding its monetization beyond search, with a focus on advertising revenue drivers [53] Management Commentary on Operating Environment and Future Outlook - Management is optimistic about the DMA's impact and sees potential for similar frameworks in other markets, including the US [48][73] - The company expects marketing spend to increase by $1-2 million per quarter, with a focus on Western markets and high-value populations [18] - Management is excited about the growth potential in iOS and the broader AI-driven browser market [10][39][64] Other Important Information - The company paid a semi-annual dividend of $0.40 per ADS, totaling $35 million, with $25 million offset against the Star X receivable [42] - The fair value of the company's 9.4% stake in OPay was adjusted to $253 million, resulting in a Q4 valuation gain of $90 million [43] - The company issued updated revenue guidance for 2024, raising the midpoint to 16% growth, with Q2 revenue expected to be $107-109 million [44][45] Q&A Session Summary Question: Opportunity in the EU under DMA - The company sees a significant opportunity in the EU, with a 63% increase in new iOS users post-DMA implementation [60][72] - Management expects to increase iOS investments and sees potential for similar frameworks in other markets, including the US [73][85] Question: Google Renewal and Buyback - The early renewal of the Google partnership reflects the value of the relationship and joint potential [8] - The company has fully consumed its $50 million buyback plan and will monitor opportunities for future buybacks [78] Question: Opera GX Monetization and Growth - Opera GX's ARPU growth is strong, with a 10% YoY increase in Q1, despite geographic expansion into non-Western markets [61][88] - The company is expanding GX's monetization beyond search, focusing on advertising revenue drivers [53] Question: Marketing Spend and Ad Auctions - Q1 marketing spend was 2% below Q4 levels, with expectations of incremental spend throughout the year [18] - The company focuses on influencer marketing and high user intent events, which are less affected by competitive ad auctions [107][108] Question: DMA Implementation and User Retention - The company has seen a significant increase in default browser settings among new iOS users in the EU, which positively impacts user engagement and retention [111] Question: AI Features and Local Models - The company is proud of its AI innovations, including local AI models like Llama 3, which enhance user experience without additional costs [23][25] - AI features are expected to attract high-value users and improve monetization opportunities [118]