Q4 2019 Earnings Call
Ladies and gentlemen, thank you for standing by welcome to the offer a limited fourth quarter 2019 earnings conference call.
This time, all participants' lines are in listen only mode.
The speakers presentation, there will be a question and answer session to ask questions and especially to press star one telephone.
If you acquire any further sisters, Please press star zero.
And the conference over to speak today, Derrick Nueman head of Investor Relations thinking. Please go ahead Sir.
Great. Thank you good morning, everyone with me today I have for Jackups, and our CFO and our CLL Donlin.
Before I hand over the call the fraud.
I would like to remind everyone that in today's conference call.
The company will be making statements about future results, an expectation, which constitute forward looking statements within the meaning of the private Securities Litigation Reform Act.
Statements are based on current expectations and the current economic environment and are inherently subject to economic competitive and other uncertainties and contingencies beyond the control up management.
You should be cautioned that these statements are not guarantees of future performance you may refer to the safe Harbor statement in the company's earnings release for details. Our commentary today will also include non I apparatus financial measures, including EBITDA and adjusted net income which are different from a consolidated financial statements.
That are prepared and presented based on IRS.
We believe the use of these non IRS financial measures provide an additional tools for investors to use in evaluating ongoing operating results and trends. These measures should not be considered an isolation or as a substitute for financial information prepared in accordance with IRS.
Reconciliations between <unk> and non IRS metrics for our reported results can be found in our press release that was issued earlier today, a copy of which can be found on our investor relations website with that I will now turn it over product, thanks, Derek and Hello, everyone.
Similar to the last several quarters, we are very pleased with our strong fourth quarter results our growth rates continued to accelerate.
And we're continuing to execute on our strategy to leverage our strong brand and large user base of more than 350 million monthly active users to grow new opportunities well beyond the browser.
These efforts, including these significant investments we've made in our business led to year over year revenue growth of 158% in the fourth quarter.
With 129.6 million of revenue in that quarter, we significantly exceeded the top end up our guidance range.
We also beat the top end no for adjusted EBITDA guidance and achieved an increase adjusted EBITDA margin of 16%.
Before we get a getting into specific details on our initiatives and financials I want to take a step back and provide some highlights on the meaningful progress we made in 2019.
First our year over year revenue growth accelerated materially 2019 revenues came in 94% higher than 2018 compared to a prior annual growth rate of 34%.
Second our highly profitable browser business continued its steady growth trajectory and we demonstrated its potential to address even more segments like the gx browser forgave nurse, which shows record engagement levels.
Third Upper news has become the leading news service in Africa, and we are continuing to drive increases in user engagement with a deepening our constant strategy like the offer news hub for local content creators.
Fourth highlights, it's how we scaled our fintech business from near nothing to an annualized run rate of $290 million in Q4, with a 30% contribution margin.
Just highlight is how we launched several new initiatives, including our AD network opera ads and the old list classified this platform.
We also laid the groundwork for new opportunities, but then real estate and other high value verticals and a European Fintech business all of which we believe have the potential to drive multiyear.
And finally, we maintain solid profitability, even while investing aggressively in future growth opportunities.
Before I hand, the call over to some then to cover our operational highlights and growth strategy I would like to say few words about our press corporate governance.
At Opera, we are focused on building a business that deliver strong shareholder returns.
The best way to accomplish this is to drive long term profitable and sustainable growth through successful products that are appreciated by our users.
We invest heavily in our products both current ones and initiatives we are developing for launch.
And we feel great about the opportunities ahead of us.
As part of this we also want to make sure that all our investors are represented in our governance structure and that we always adhere to our governance policies.
As many of you are aware there has been published speculation around our business.
As we stated on our IR website. These speculations were false and misleading.
I have noticed tire to feed such discussions or legitimise, such reports by entering into detail to public arguments.
Instead, we remain focused on what we are building at the upper.
We believe the most effective rebuttal, it's continued execution and growth, which is also what we again achieved this past quarter and what we are guiding for 2020.
At this point I would like to clarify a few specifics our lending apps have been reviewed and approved by Google and our life on Google play.
Both our smartphone and PC user basis have grown substantially over the past years.
We haven't made sound investments that have been validated and year end revalued by external third parties.
We have rational and mutually beneficial relationships with all our partners.
And finally, no one had opera, including our chairman has received any payment or direct benefit from our acquisitions or investments.
We are in a region headquartered company audited by KPMG, Norway. There was also significant review over every major transaction from our board, including our audit Committee, which consists solely of independent directors.
With that let me turn it over to song to speak about the operational progress we've made.
Hi, Thanks crude oil and hi, everyone. You know I was just Coleman that we had a very good Susanna Nike.
Yeah. It says yeah, and I would just like to say that you know they could not have reached this point resulted to help many people and ultra.
I'm truly excited to welcome result, strong team across the globe.
In Norway, Sweden, Poland, China, India, Nigeria, Kenya, South Africa quarter, Diva, Egypt, Ireland, UK, and you know last but not least Estonia to drive unfold execution.
Now I'll get into the business.
We have shown exists across multiple areas.
And the walk with Dol has built the foundation for strong and sustainable Mattio growth and margin expansion.
Also business has continued to grow nicely very stable market.
Well, it's all about 300 million monthly active users.
Making us loved the biggest global internet platforms.
It's an attractive and the growing business that generates significant cash flow.
And I would just also to Coleman that from a strategic a point of view is a key component of our ability to launch and scale new business.
This has to be evident raised the success, we've seen in Neal dumped into it.
He is still only result from only.
And hopefully well again be the cases as my style European Fintech Elfa insulin different.
So on knowledge is come into a bit more details.
Our PC user well up 11% year over year will use the fourth quarter.
Driven by a product innovation and ultra being selected by many users as an alternative to people dialysis.
Additionally, I'll give you specific gx Russell continues to perform a Bobby expectations was very strong engagement and the reviews.
Well recently also extended the product to our mcaleese.
And also will be increasing our efforts to drive a wellness silicon scale this product.
On the mobile relative late increasing our emphasis on Africa.
I'll now disposition data management.
Has made us while the most the popular brands so on that confidence.
And now we have expanded this offering but recently launching dental plans in Nigeria.
All powertrain technology around dates all have allowed us to possible. This medium tentacles, such as MTN and Alto took a lot ultra specific pocketed dental plan to consumers.
Only results has been very promising lists and increased in belting activity and use those purchasing more data plans from those carriers.
So following the strong results.
No teamed up with more offer told you the region and we'll continue to innovate in Belgium and content consumption in the region and build up all strong position, though.
I want to talk about Ultra news.
That would have been so a 21% year over year rose to a user base that exceeds 160 million monthly active users.
And also not citizens wells for the dedicated open new data over the same period.
As we spoke about last quarter and this skilled level.
Our number one focus is to driving increased engagement and well standing steadily increasing use of monetization.
So our engagement, we are making significant progress.
The average daily time spend and average.
They the optical cliffs, which increased the by plentiful person and put it doesn't respectively.
Over you.
The photo.
Oprah Neal's hop launch in September in Nigeria.
Which allows local create hosts to create exclusive content fall platform using all sutil tools.
This has shown tangible engagement the results.
Mitch.
These increases in optical clique by 60% redeem times, but 40%.
And uptimes spend about put it wasn't far though so were very pleased about <unk>, they'll and will expand ultra new top two four additional African countries beyond Nigeria. This deal and we believe that you combination of often hilltop and other at both well be able to allow us to Dr. Paul.
In quizzes engagements.
And moving to monetization, we have real revenue on Oprah news app by almost by more than 20%.
Quarter over quarter, a which is a beacon Chris So looking fault, we expect the combination of ammonia engagement improved stocking Neil AD format and increased outlawed well continue to drive revenue growth from a news apps in pundits one to.
Loan Tom will also benefited from the online advertising ecosystem willing and broadening after today as well as all efforts around only which will help small and medium enterprises will not businesses.
You know, but that being said well also moving ahead aggressively with all classified offerings oldies.
Instead of focusing only on advertising for all these.
Our focus on facilitating the underlying transactions, which actually represent significant mckeel revenue opportunities and well provide meaningful benefits fall utilizing everyday life.
I will use real estate as an example, which Nigeria is really a rental markets.
We have created a marketplace well, both landlords and rentals well benefit from say transparent place to transact.
We have initially build our operations will now goes well 3 million pocketed climbs besides making its while about biggest potential cities in Africa.
So we are presenting both property or not and helping cosmos finding rentals late we have concluded all foster transactions in late.
Southern 19, and our NOL propelling to scale rapidly.
We estimate that segment well. They initially focused the annual rental market opportunity for Oprah is approximately a billion dollars in size. So this can be called my substantial business plus.
So having said that I'll Neil Tom goal is to be the markedly at all by the year ends and the oil pricing power has scale into disciplined.
On on top of it will also falls off other most dose.
That represent Lotto button it just such a huge cost this year.
On the other new effort, which I'm very excited about is are you working fintech initiative around payments and open banking.
We believe this represents an opportunity to build on all European base, all roughly 50 million is off to offer attractive new products.
Interestingly, we know now comprise the biggest sentiment about European base, which is really important as this segment is highly satisfied.
Current financial offerings.
So we are optimistic that it'll be receptive to the compelling product we have plans.
I'll Foster step on this and was the acquisition of luck index fell out of pocket assist last month, which will ultimately.
Probably press release, so pockets this specializes in providing more than Duncan technologists and beyond technology.
This also provides us with a strong team.
We will launch related payments and banking products in one market later this year and then we'll all drug in countries in Europe.
We will actually look for two or provide updates as weight executive this the initiatives.
Finally, I also want to talk briefly about all seen type business in southeast Asia and Africa.
This business has been highly sophisticated blas scaled in trying to analyze the revenue run rate of almost 290 million revenue by the end of 2019.
Just as important.
Our products well receive that consumers as evidenced by all Google play absolute returns and a lot animal ultra Tony users.
And I'll ask again popularity with millions of ask if he is also looking sort of religious wallets.
Also evolving this often to provide lucky place all falls by not Pele tall and other payment products, but also in cooperation with local banks and past enough.
As you have been seen we are moving very fast in this area.
And have high confidence.
A bit it had to continue to evolve and provides the most the popular local fintech and payment products.
Emerging markets.
So now just to sum up it's a very exciting time and Oprah.
In this cost deal, we almost doubled revenue launched several new businesses and the invested heavily in several more while still achieving good profitability.
Waiting so different too well be more excitement and I look forward to update you on they'll progresses.
So with that let me hand, it back to further.
Thanks.
Let me go into details about the fourth quarter and provide updated guidance before we open up the call for questions.
To repeat the overall opera delivered record fourth quarter revenue of 129.6 million up 158% year over year.
This significantly exceeded our expectations, primarily due to strength and micro lending.
Search revenue represented 17% of total or 22.6 million. This was up 7% year over year and represents a quite normalized growth level.
Advertising revenue represented 16% of total or 20.2 million up 27% year over year.
The growth was driven by direct AD sales, including I'll, probably had an offer news where are we continue to see strong potential but was also partially offset by using our inventory to promote our other products.
Fintech revenue represented 55% of total or 71.9 million.
This increased 18% from the third quarter and has continued to exceed our internal expectations driven by both strong loan growth and increased value hurdle.
India, and Kenya remain our two most importance life markets.
Retail revenue represented 7% of total or 9.3 million.
This was slightly higher than typical lifted by how supporting opaque and their launch of a phone retail business. We expect to see similar levels in Q1 before returning to being quite stable at historical levels.
The technology licensing and other revenue category represented 4% off the total or 5.5 million largely driven by temporary support to our Investee OPAY, which will face out during this current first quarter of 2020.
Total operating expenses were 116.9 million in the fourth quarter and I'll go through the main components.
Compensation expenses were 22.6 million up versus the prior quarter. The increase was driven mainly by the growth in our Fintech business, but also from old list and I'll Pratt's in Nigeria smallest out for news across Africa.
Marketing and distribution expense was 17.5 million down slightly compared to the third quarter as we focus browser and news customer acquisition efforts on our most proven ROI area.
Typically we focused on Africa in Europe, and less on South Asia.
Cost of revenue was 32.7 million.
9.4 million office related to retail revenue.
18.9 million related to micro lending, which includes transaction and communication platform expenses as well as third party credit scoring data in a risk control costs and total amounting to 26% of micro lending revenue.
Finally, 1 million related to browse her news and 3.3 million related to tech licensing and other revenue.
Credit loss expense was 27.6 million of which 27.4 million related to provisions and micro lending.
It is worth highlighting that as expected we saw a material decrease in nonperforming loans with losses, representing 5.5% of amount landed down over 200 basis points from the prior quarter.
This was supported by a higher percentage of loans to returning users, which tends to have materially lower default rates.
The sum of all other operating expenses, including depreciation and amortization was 16.5 million, mainly driven by increased cost as a result of the growing fintech operations and establishing our new revenue streams in Africa.
As a result, we saw an operating profit of 12.7 million.
Our net income was 22 million. This included noncash gains from old pay Enstar maker following year and fair value assessments conducted by professional third party.
Adjusted EBITDA was 20.2 million, representing a 16% margin.
Margins increased from last quarter as we continue to see benefits from our revenue scaling despite continued aggressive investments and our long term growth.
On the balance sheet, we ended the quarter with 181.6 million in cash and marketable securities as well as 52.9 million deposited in an escrow account, which we exclude from reported cash.
This adds up to a total of 234.5 million and that figure is comparable to 216 million we reported after Q3.
In other words, we had an effective increase of 18.5 million compared to the third quarter.
Some items worth highlighting there.
First on the restricted cash in escrow.
We have placed cash in escrow to guarantee for loan book loan funding within India.
As of year, and 29 team 52.9 million of cash was on such accounts and so if this balance sheet date, we have recognized it S and other receivable and no cash our Q4 operating cash flow is thereby also affected by the same amount.
Second we received 10.8 million in October from our underwriters exercise of their over allotment option related to our September share issuance.
Third we benefited from a reduction in working capital primarily from marketing expenses, we had prepaid.
And lastly, I'd like to point out that this quarter, our micro lending growth was actually self funded with net payments from customers exceeding the loan book growth.
Finally, we also announced a 50 million dollar buyback program in January as we believe that our stock started trading at levels that that did not affect your in much past or continued success and as such were presented a compelling ROI opportunities for our shareholders.
<unk>.
We plan to purchase stock and an opportunistic and ROI oriented manner to the extent our results aren't being rewarded to the benefits of our investors.
With that let me turn through our full year 2020 outlook and Q1 guidance.
Beginning with revenue, we are expecting 532 560 million in revenue and Twentytwenty.
This represents 63% revenue growth over 29 team at the midpoint.
A couple of factors worth highlighting.
Our Fintech business continues to perform well and we expect continued strong growth in revenue with a substantial uplift over 2019.
Sequential growth rates will naturally moderates versus our past trajectory given our already large scale.
Our estimates have also largely discounted the impact of new markets and expanded product offerings, it's difficult to forecast this potential.
Search revenue is expected to grow at mid single digits since when it's funny, depending on our search partners underlying monetization trajectory with some upside tied to our initiatives to grow this revenue stream faster.
Advertising growth this expected above the levels achieved in 2019 benefiting from increased monetization on upper news and building out.
Pat.
Retail and technology revenue are expected to combined decreased by approximately $20 million versus 29 team as a reminder, neither of these revenue lines contributes meaningfully to our adjusted EBIT da.
And finally for new initiatives, such as oldest and European Fintech. We are building in about $10 million of revenue to our 2020 expectations predominantly in the second half of the year.
Further we believe these businesses will exit 2020 with potential to contribute meaningfully to 2021 growth.
With that said for the first quarter, we expect revenue in the range of 123 to 133 million, representing a year over year growth rates between 147% to 167%.
Our strong revenue guidance reflects continued fintech growth as well as continued positive momentum around our advertising efforts offset by a $4 million sequential decrease in tech and other revenues and the typical Q1 seasonality in search and advertising with a similar.
Our sequential impact.
Now moving to adjusted EBITDA, We expect full year 2020, adjusted EBITDA to be 70 to 80 million, an increase of 54% to 76% versus 29 team.
This view incorporates several items.
Increased cost of revenue, mostly driven by growth in Microlending and our constant strategy around upper news hub.
Increased credit losses, and compensation costs than existing businesses, largely a consequence of our growth and micro lending.
Slightly higher absolute marketing and distribution costs, but lower as a percentage of revenue versus 29 team.
General growth and other cost categories. Following the continued scaling and expansion of our business.
And finally, approximately 30 million in spend toward new initiatives, such as oldest and European Fintech detracting from near term profits, but additive as we look beyond 2020.
We expect first quarter adjusted EBITDA to be in the range of 11 to 14 million, which represents slight growth versus last year.
To summarize we are very pleased with our strong results, our continued execution and our ability to yet again exceed expectations.
Our outlook for 2020 has this exceeding well over 500 million Dollarss and revenue and growing adjusted EBITDA rapidly while investing heavily in future growth.
We've come a long way in the last 18 months since our IPO when our revenue run rate was 160 million or about a third of what that will be in 2020.
We plan to continue moving as fast as we have done since then and look forward to this 500 million milestone that is now well within reach and more importantly, what comes after.
With that I will turn it back to the operator for questions.
And as a reminder to ask questions. Please press star one on your telephone to withdraw your question. Please press the pound key eastern why why composites acuity roster.
And our first question comes from the line of lead Crow with B. Riley of VR. Your line is now.
Great. Thanks for taking my question, guys and congrats on a really solid quarter and outlook.
[laughter] today, so I wanted to start out initially on the incremental $30 million and investments could you maybe just talk about the cadence of that $30 million. As you go through 2020 is it first half weighted or is it evenly distributed throughout the year.
I.
I would say, it's relatively even distributed throughout the year, but we'll have ramped slightly quarter to quarter and Lee. This is Derek it's really a function of headcount.
So a lot of the head count.
Yeah, we brought on board already but there'll be additional hires.
Got it and then on the lending business two questions, obviously the loss ratio improved significantly.
Is that a reset to a sustainable level or would you anticipate that are kind of moderates going forward and then tied to that could you maybe just talk about the timing of the launch of new market for that business.
Sure Yeah. So as we said on our Q3 call. We we we did see that Q4 was.
We're showing immaterial improvement there and it was quite expense was expected because our businesses had matured and more we had a bigger base of existing customers and we saw an increase in returning users.
As we look ahead I.
All else equal launching new markets will tilt the percentage a bit or losses, a bit off again.
Although I think given our scale at this moment, we won't see very big swings.
Got it.
And then.
Just lastly.
Obviously with shares pulling back significantly.
We're not getting credit for one of the initiatives you guys are put in place.
Would you guys anticipate to use that entire share repurchase program in short order or is this sort of a measured approach throughout the year.
I think at this point I'll, just say that we are looking at this is a very strong ROI opportunity and we will act so long as that remains the case.
Got it thank you for taking my questions guys.
Sure.
Thank you.
As a reminder size question you read the press Star 100 Touchtone telephone.
And our next question comes from the line of John Godyn with Lake Street. Your line is now.
Hey, guys. Thanks for taking my question and congrats again on a nice quarter.
First question is around operating news I guess could you give us some more color as to how you kind of balance growth of users with overall monetization fair.
And where you're really seeing success with kind of ramping up that monetization. Thank you.
Sure. So yes, certainly I think I just try to answer that I think Paul for news as well as it also bit mentioned daily that I think philosophy on some key principles Sonoma lined out lot, they're going to continue growing Africa I think level is showing that the way I read a really strong mill and then you know as mentioned we have also try the level levels <unk> acid long stopping hilltop, which is really.
Next is lost in Nigeria, and launch is going to extend to other markets. So.
So I think I'll, just say that we are relatively confident about I'll positioning Africa, but then that also gives us a great opportunity to monetize I would just say at least the in Africa, I think when I read it will position and which we can just to be more bolt ons monetize both out both in terms of you know new AD formats, Neil Neil no to that as as well as you know be called over the.
Please the use all time spent on those the since it is what they've been held on them and monetization. So I think thats hard to well really good I'll. Now then I think we will remain probably to be tactical.
Interest all settled at because I think we're just being consistent in saying that you know in other regions lifestyles Michel Southeast Asia way well you know last deal really nailed isn't that but I think I'll patties nail would just be that will you know what you. This as I'll idled content. If we can find good ROI will depend to do it but then if we see that you know for why.
However is on that particular market. If someone else is you know spending alimony throwing money away that that will not follow so starting high level you Simon I'll, just say that delay fall premiums will continue to be super strong after talking to us on normal on market very good position, both yellow rose less and monetization wise, while some out of market like Celsius philosophical issue, but just.
The tactical.
Yes. This is Derek I would add that songs question Africa, I think we're positioned very well for monetization given our scale.
And given our market share in those markets.
And so as we push up the AD loads and add a bunch of new AD formats, I think we feel pretty good about where we're going.
Awesome, Alright, and then second on Oh list can you talk with just a little bit about what do you guys have learned through kind of entering that market you know what the technology looks like and the monetization and then outside of real estate down. The road, you mentioned scale, I guess where else.
Thank you could be effective and monetizing throw us. Thank you.
Yes, so I think I'll just quickly also comment on that leaves only hill. So I think can you know I think the deep learning experience probably that is that is almost same as some idle possible that recall that we find out you know they still have two ways of doing things right. One is you can actually get revenue by accident advertisement, but then what is finality that typically in countries like Nigeria you know.
Hello, guys I'm not even very good luck, you can still down even to draw those the day I actually not even very good and that anyway. So we find out that the most effective is probably to do the transaction ourselves you know for instance, that's why we find all that is actually much much more well make a lot of sense for us to actually do you know lending to the to do that real estate transaction.
You know because you know just given the example, right. So you've got rental housing Gerald you know the agents. If you can be at higher 10% or even more so that is actually a highly lucrative ethanol to do it. So so I think I'll just take away is just that you know instead of just filled as human three onto our they'll switch that element in all the do it the best the is lost due to one.
Great Dean and end to went into that real estate market, which as we also commented that is very good veggie potentials.
We called than that it could easily be a billion been another market and you can make even more sense. So so I'm. So I I guess, that's the biggest take away and then I'm on top of it will also commented that some of those seem in all the going at this alike. It you know sick and cost control, which also very very lucrative for which we think can make little sense.
So yes, I mean, hopefully in I think good still you know what that means that left to add barrel and a stage. We just announced this in Q3 anyway.
So it's all going just to make sure that way remained well wait we get opposition to be the number one for now.
This year and wells have plans to expand throughout all other markets, maybe second half of this year and John This is Derek the.
Transaction revenue, we expect to get well, obviously grow as the year goes on.
And I think as you think about your model multiple years out the idea is it purchasing these transactions can be a many.
And bigger multiples on the AD market.
Because you participating in a much higher value transactions than if you were just taking away.
Awesome and last one for me just on the Fin Tech business you guys just kind of comment on <unk>.
Competitive landscape, there and really how do you guys are able to leverage you know your brands I'm sure other offerings and how that's been able to help you guys achieve scale. Thank you.
Sure. This is well to here. So I would say these are definitely competitive markets and a and essentially the products are priced based on the cost of capital and and sort of collection probability in the markets I think the benefit that are perhaps is that a threefold.
One we have as you mentioned, we have the brand and we also have the distribution power, allowing us to quickly ramped new products in the markets second we have a very strong AI team that allows us to make quite good predictions on the probability of repayment.
Third we have decades of experience in these markets. So we're quite good at getting feet on the ground and creating truly local businesses.
Precedent in those markets I think those those are our advantages in that space.
Awesome, Thanks, a lot everybody.
Sure. Thanks, John Thank you.
Thank you and our next question comes from the line of Hillman Chan with Citi. Your line is an open.
Hi, Tony hinge on Friday, and Derek Congrats on another strong quarter of salt.
First question is on the old list. This could you shed more on T. The go to strategy I would say given that Alan I classify it is a business that relies on lots of the organize traffic user traffic.
They merchant base and and the related network, if I can make it more refractive.
And then how should we think about I'll go to strategy and comes up suiting up the do you use a minus share emotion mindshare and new player that Phil.
And then my second question would be on the European impact this element and relative to the pockets Keith how enhancement.
Given that bought only small a banking I suppose operation model could you shed will again on the monetization.
Strategy and the go to strategy.
For the first my Cat that you also inherent Cindy.
Our press release and all that we tried to achieve with D.. So you appear that impact acquisition in the medium and longer term and how should we think about the see nichey.
The existing businesses if any thank you very much.
Shot show him and so this is a lean I think yeah. The.
Yeah, I think maybe I'll just fourth commenting on the on the oldest pop. So obviously, it's very good question. So I think one we have been landing only see that you're absolutely right in saying that you know for classified business is read it needs a lot of Traffics, you know because because you need a large amount of user base to drive those are almost.
You know use cases, so I would say I think labatt unique in that so number one we do have a very big online traffic you probably know that in Nigeria, I would say were probably while the variables do you play all which has had the massive traffic rage and even below that you know for all these data. So this isn't limited to absolute anything so you know any web page or even though.
T cell phone they can actually use all use all product. So so what do we have been seen the that were able to read to use the opera traffic to the extreme that Bozeman fishbowl smartphone. They can both axess all our traffic. This actually has a make a very significant impact in the last quarter overhaul that actually building out about traffic Bill So online.
Maybe I'll also be commenting that I think what's being a bit unique about assay that you know may not accompanies lot trying to do the same they can't do it online, but they don't know how to do it offline. So I think floss lets me very unique is that we have also on be showing that we can do vary due to drill either you offline that you know we're able to build a you know like a strong online.
He Cushing both the you know any Kennedy many areas most often meals and also for this case that actually that allow us to be able to actually facilitating the you know the agency transaction pod, which allow us to actually be part of that.
Transaction fee. So I think if was also out very well, but im optimistic about it and so just to add summary that well go to marketing strategy well able to use both saw online but also argued the opening opportunities and then maybe I'll just very quickly comment also on the European Fintech pot.
I think it's still probably a bit to all and sell shell I don't know how many that we can shine. This point, we also want to be prudent, but I would just say that you know we find Europe is a very interesting market is just because you know like obviously the market is very different than some other place you know typically we finally that in Europe you typically all those have this user base, which we also have.
You know this yamuna names. They you know they need a lot less that very happy with the current you know I'm like fintech landscape with traditional banking. So thats why I think all major focus would be around.
Around payments and also to some extend also around open banking, which is a new you'll be initiatives and around how to you know help them.
You know get access to more to more different payment options. So I would almost encourage maybe I think it'd be too audit philosophy, but I think it's Phil maybe for you to look at all goes out all good.
European.
Fintech initiative, which which might give you guidance about what we're off to.
Like again, I think yes, we can hopefully just slowed a bit more around the middle part of the deal although the exact plans.
Oh. Thank you sold in July and just to follow up on the Oh. This part you also shifted more given that you talk about the traffic light shaved about de.
Proportion of Musa traffic.
That we generate the organic sources from now on nine properties, that's why Bastos patient use Entropic acquisition.
And then on the out ahead and I think you touched on a good point about.
The offline says fashion, that's something we could be doing.
Much better than our competitors, who are leveraging ammonia at my decision, but just to.
Latin American more how labor or capital intensive, but the offline Sasha does this become is related to debt how much of that is.
Factories in now EBITDA guidance for 2020, just 40 ollie's offline fashion you caught up.
Thank you so yeah. So on stand I think it for the models have a bit more comments about I'll, just say that it's possible regarding your question of inorganic vs paid traffic I'll, just say that for now almost.
Biopharma Jody I would say probably more than 90% on organic in a way that they are coming from altered traffic. You know just because we have such a big user base value, Nigeria that we don't really have to spend a little bit folks trying to biomimetic.
So you obviously want to not Hudson is asking organic in that way.
That's number one number to you I think yes, it's a very good question that you know to be honest, if I think we have to be able to demonstrate even some other palo about business that we are able to leverage our huge.
You know offline team very cost efficient way, so maybe I'll just put it like this so we have now in Nigeria already hundreds of people walking Blas offline you know if not more and then by the cost of them. These probably only about let's say a few people.
As what do you see in Europe. So I think that's after the major differentiate apart avasso talks to maybe some other companies that you know were able to use a big big offline team very timely fashion, but I'm also very cost efficient. So so I would I would say that's gone after that would not be a major how will you know EBITDA cost about it will actually.
Help a boost our business in as a major depreciate.
And.
Helman, we tried to do for our guidance was fully weight.
<unk> expenses and be a little more conservative on revenue contribution.
And so the idea is that hopefully we can.
What we've done in past years and overachieve.
Okay.
Thank you.
Our next question comes along.
As you would see I see sheet and I'm just now.
Hi, Congrats congratulations on strong result, and thank you for taking my question.
I am actually it is definitely were impressed by how we manage to lower coupon rate and cranna.
Okay and tech revenue, but how should we expect the credit was to be when the business turned to matures, we'll have have internal model for that.
I would say on the countries, where we are lies today I think this is a relatively decent.
Level in terms of mapping out the expectations, but slice variations.
Launching new businesses all else equal will.
Will drive losses up slightly.
But given the scale of our existing businesses today.
We don't expect major swings I would expect it to go up slightly and the first half was twentytwenty, but but not as high as the levels that we have had.
Had for in the past.
Okay, but in the in either mature area. He said.
Assuming that we didnt.
I will start to expand into new areas aim in immaterial errors hano can they be.
I mean, the credit loss as a positive to synta gravity.
Yeah, that's a little bit hard to say, but.
But I would say overall.
Whether in the mature countries. They will continue to go down from where where we were I don't want to promise that I think it's better than two more expected. It remained stable also keep in mind, we are broadening our fintech offering with additional services et cetera that are not just lending.
So which which by default.
Won't have that prepayment risk.
Okay. Thanks.
And then, especially the isn't on cash flow noticing we have.
A negative cash flow for upgrading tentwenty and excluding understanding that most recently because it seems that business, but how do we expect the cash flow in plenty plenty engine to turn cost him.
We don't really give cash flow guidance, but I think one important comment I made was that what we saw in Q4 was dead at its core the gross and Microlending will self funded so if you just look at the growth in the loan book and compared to revenue less loss provisions it actually funded.
So the growth of the loan book.
Then there is naturally opex et cetera that needs to be covered but we're definitely moving.
Towards the level aware.
Where where the cash flow is turning positive even with with the high growth rates as we have seen.
Sure and.
Another question is on users I mean.
I wonder how can be users are increasing really quick but for the fourth quarter on Q on Q, we see.
The numbers are kind of flight I, just trying to have more color on that and what are the result, though we're losing.
Users and whatever reason there are still growing really strong.
Yes. So like you. This is only in so maybe I'll just coleman's dads as we also Coleman did I think in Africa, let they've been growing very well also in Europe. While also growing very well that's very important for us as we said that in some other markets I think in particular, so I'll say show how do they show where just very tactical will you know.
Good. He was also when we see good opportunity, but if we see that for whatever reason on asphalt market allied becomes not to get enough well the north to invest it's just too just to grow that and maybe just the political Monday that.
You know the units were talking about of course on mostly the Liberals annuities off and we do also have a huge amount of you've all seen sell something they show for say a fintech of Italy. Yeah. You just say that little market are still very important boss, the which used to be tactical that will we think it making most sense, we'll do that but then.
Well like yes, if doesnt make sense allies, we won't do it though yes, I think in South Asia, we're focusing on gaining users. We know we can monetize and putting less focused on users where the monetization isn't there.
And I think that's really the points on was making.
Yes, I think the same strategy to be honest about going exactly. It also intended to continue that I think we need to be very tactical on you all key markets like Europe very few wells I'm happy to lever happy about it in other regions I think we'll just be a tactical.
Okay.
Thank you.
And our last question comes from the line of Lance Vitanza with Cowen and company. Your line is now.
Hi, Thanks for taking the question regarding the short seller I. Appreciate the rebuttal you included in the press release I've never heard of this particular short seller, but I've seen these drive by pieces before and they're typically successful in driving share price just long enough for the author of the report to cover their position at the expense or the right.
Leaders of the report. So my question is has this short seller made any attempt to engage with you and it's Joe had these efforts been fruitful.
Yeah. I mean this is Derek I would say, we did not speak with a short seller prior to them publishing their report.
Obviously as credits at our focus is just keep putting it was good results keep growing the business a Fred anything that Oh, there was a journalist that contacted us one or two days prior to that reports with similar questions. We answered all of those questions, but none of that was.
Reflected I think in the short reports.
But we haven't as Derek said, we haven't had any direct contact.
Interesting, okay, thanks, guys not surprising.
Mm.
Thank you.
This concludes today's question and answer session I would now like to turn the call back to management for closing remarks.
Alright. Thank you so yeah from our end, we would like to say thank you to everyone who has joined our earnings call. Today, we feel great about these results we feel great about the year, we're in and we're looking forward to keeping you posted.
Thanks, So I'm going to send out.
Just ladies.
Using gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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