Opera Ltd. Q3 FY2024 earnings call

• Product lineup is strong with continued traction among high-ARPU users, and monetization efforts are paying off.
• E-commerce and travel categories led advertising revenue growth. E-commerce benefited from PC browser monetization and Opera Ads platform expansion. Travel saw growth due to more high-value users and increasing vacation costs.
• iOS user inflow was up 33% year-over-year in Q3, with a 66% increase in EU from August to September. Launched Opera One R2 for computers with enhanced AI integration and productivity features. Opera GX had 1.8 million net users, MAUs at 31.9 million (+22% YOY), and annualized ARPU at $3.68 (+12% YOY).
• Focus on high-ARPU Western markets, with ARPU growth in Western markets outpacing overall ARPU growth. Marketing spend directed towards higher-value users.

In the third quarter, revenue was $123 million, growing 20% year-over-year. Advertising revenue was $77 million, up 26% year-over-year, with e-commerce and travel categories driving growth. Search revenue was $46 million, up 13% year-over-year. Annualized ARPU reached a new record of $1.66, growing 27% year-over-year. Adjusted EBITDA was $31 million, representing a 25% margin. Advertising revenue contributed approximately 62.6% of total revenue ($77M / $123M), and search revenue contributed approximately 37.4% ($46M / $123M).

• Q4 revenue guided to $135 million to $138 million, representing 21% year-over-year growth at midpoint.
• Adjusted EBITDA for Q4 guided to $30 million to $32 million, 23% margin at midpoint.
• Full-year revenue guidance revised to $470 million to $473 million, 19% growth at midpoint. Full-year adjusted EBITDA guidance revised to $112 million to $114 million, 24% margin at midpoint.
• Increased marketing spend in Q4 for new browser launches (Opera One R2) and upcoming GX launch, leveraging strong profitability to seize growth opportunities.

• Highly dynamic and competitive environment which could impact performance.
• Forward-looking statements subject to risks and uncertainties, actual results may differ.
• Seasonality could impact search revenue, as seen in July and August.

Q: On e-commerce ad revenue growth and size potential.

A: E-commerce advertising revenue stream is growing faster than advertising overall, and it's material though still in early days, with potential to be a significant revenue stream over time.

Q: On cash flow and OPay stake.

A: Cash was strong due to working capital reduction of over $4 million from Q2 to Q3. OPay valuation remains unchanged, with plans to divest the stake either via offer while private or post-IPO.

Q: On AI opportunity and subscription products.

A: Focus on making AI accessible to everyone rather than purely subscription-based, prioritizing user engagement, and working on cloud hosting to maximize user interaction.

Q: On iOS Europe user metrics.

A: iOS user inflow in EU was up 66% from August to September, with Q4 growth expected, and new releases on iOS planned to leverage desktop-mobile user overlap.

Q: On Aria feedback and next year growth.

A: Aria usage has seen major upticks, focus on core products (Opera One, GX) with marketing spend for new releases to drive growth in the next year