Q1 2021 Opera Ltd Earnings Call
Ladies and gentlemen, this is the operator your conference is scheduled to begin momentarily until that time your line silicon be placed on music hold thank you for your patience.
[music].
Welcome to the Opera Ltd, first quarter 2021 earnings call.
At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.
To ask a question during this time.
You will need to press star one on your telephone.
If you need to remove yourself from the queue. Please press the pound key.
Please be advised that today's conference is being recorded.
If you need operator assistance, Please press star zero.
I would now like to turn the call over to your speaker today, Erik Neumann head of Investor Relations. Please begin.
Thanks for joining us today with me I have our co CEO song Lin.
Our CFO credit Jacobson.
Before I hand over the call. The song Lin I would like to remind everyone that in todays conference call. The company will be making statements about its future results and expectations, which constitute forward looking statements within the meaning of the private Securities Litigation Reform Act.
Such statements are based on current expectations and how we perceive the current economic environment, and we are inherently subject to economic competitive and other uncertainties and contingencies beyond the control of management you should be careful you should be cautioned that these statements are not guarantees of future performance you may refer to the safe Harbor.
The statement in the company's earning release, where those details our commentary today will also include non IR for <unk> financial measures.
Including adjusted EBITDA, which are different from our consolidated financial statements that are prepared and percentage based on I for us. We believe the use of our non IR for US financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends. These measures should not be considered in isolation.
What are they substitute for financial information prepared in accordance with IR for us.
We have also.
As did unaudited supplemental information on our Investor Relations website.
It includes historical financial results of opera and our invest the nanabhay.
With that let me turn it over to calls for our co CEO song Lin who will cover our operational highlights and strategy and then Friday will finish up with financial and update on our investment and most importantly, our expectations going forward.
Song Lin.
Sure. Thank you Darren and thanks to everyone for joining off the day.
So as you know from all announcements all the other small opera.
Opera had a very strong beginning to the heel mobile slant I'm pleased with our financial performance, but what I'm. Most excited the bulk is that validates our strategic approach to growth.
Our core business and our new initiatives and that the Altra team continues to execute every day.
So last call I highlighted that it was the strength of our core business, that's positioned us to not only outperform during a period of significant uncertainty, but he's also what gave us the ability and the confidence to invest in initiatives that.
Have the potential to drive substantial growth for opera in the years ahead, so what I'm, what I'm about to say well some for me, though no good way and the plan is to repeat for the pattern in the next few quarters to come.
For all core business continues to deliver exceptional results.
Two strong execution through the well naturally will give you more detail shortly but here are some highlights net.
There was strong links salts and advertising growing 8% year over year, all and even grow sequentially. This is me.
Seasonally strongest fourth quarter. This is a very strong indication of the strength, although coal business.
Adjusted EBITDA was better than expected.
As the revenue upside fell to the bottom line.
We have also been growing your losses by 12 for Sun and 14% year over year, respectively in Africa, and Europe, Ncis, all core regions of focus.
Second I'd like to comment that our initiatives are showing excellent momentum.
Without an European payments at <unk>.
So in February we have launched our in Brussel smacks European functionality each band for.
Providing cash back and the payment solutions for short pulse.
This is an area of huge potential for us.
It's no surprise that more and more consumers are looking to transact online and as the COVID-19 pandemic book missile to accelerate their strength across multiple categories in multiple markets.
We already have a good track record in this space true, Okay, and another bank and I'll dwell and we remain Super excited.
The European potential within opera.
So the all the adoption rates are encouraging.
With both new and used those transaction volumes and you'll be growing nicely.
I would say, it's still early stage, but the fact that we have a great user base constantly transacting in all but also already presents a massive opportunity for us to scale, you know very relevant space.
We will add new features and the roll out in more countries in Europe as the year progresses, such that defy easy in a good position to contribute meaningfully to our revenue.
And the next deal and beyond.
I would also like to talk about the gaming.
All in force in gaming adjusted beginning buckets, the opera Gx gaming, but also now has over 9 million monthly active users.
One of the things that that's all ambitious and gave me a puck is that the way really have a holistic view over the gaming ecosystem.
And I know they team a market of France.
We will continue to add gaming officials to opera Gx.
So that also complements the gaming experience, allowing us to continue to grow the gaming user base.
And at the same time, we are also building alcohol getting make us do with the platform.
So that game development becomes accessible to an increasingly broad community and driving engagement.
We believe that in the same way that easy to use applications and tools will allow anyone to design and launch a website called the musical B deal. The same accessible design tools, well mean that most people won't be able to design play and share their games ways of work.
What's your well income attract more gaming playoffs into our ecosystem and the formal proposal.
These are obviously our force the steps cobalt the building all on gaming platform.
Or even a potential gaming metals.
We are thoughtfully ambitious.
And with such a massive market, we will continue to innovate and expand in this space.
And last bucket for significant impact opera news.
As we laid out last call.
The C series on Opera news.
For the natural conclusion that we have the potential to expand its geographical footprint to develop the original study with several markets in Europe and the United States.
Only results continue to be positive and we have now achieved.
For a million and they use in those markets in just a few months' time.
<unk> also been feasible from corresponding Google play rankings in all those countries that you can see.
While still evolving our product and go to market strategies. We believe we have developed a simple no house that has not proven to be able to drill and rapid growth both for yourself, but also for strong revenue growth trajectory reflected by the fact that news.
The revenue growth overall 260 per cent yellow book yield and silicon for some sequentially in Q1.
Where do we expect the strong revenue growth strength to continue in the policy can come again pouring all bullish view, although revenue growth potential.
So as we look for the year ahead.
I remain confident that the strength, we see you know core business will continue.
The history of the Basel.
And what it can be is still being written.
I very strongly believe that opera well continue to play an outsized role in writing this history.
There is significant room for not adjusted gross but innovation, but also that have features that are optimized for the ways in which people will use them.
Whether it's shopping gaming looking for news or simply trying to manage your digital life, whereas our central privacy and security.
We cherish that people always expect more in dental.
Because they are in life all opportunity.
So all Crosby brussel ease for fault by well over 300 million users worldwide.
And as we continue to push for work with all your initiatives in payments gaming and news based on our core strength.
Don't bring the same yourself off approach and spirit all the innovation.
Succeeding with any one of these initiatives represent a massive value creation opportunity on that day, but of course, you know ambitious style antibodies confidence from these initial phases.
Naturally I mean for success across all three.
As we think about the possibilities we have in front of us when I excited about our core business.
And has the potential for all initiatives and as our guidance indicates we see a very exciting for you Rick or accelerated the growth ahead of us. So what does this all green two for them to come up with the details.
Thanks, and then.
The continued acceleration of our products both in terms of engagement and resulting monetization resulted in a first quarter that exceeded our already high expectations.
I'll recap the highlights and then provide our refresh on guidance.
Revenue for the first quarter was 51 6 million.
This compares to $40 2 million of revenue in the year ago quarter, and also grew sequentially compared to last quarter. Despite seasonal headwinds specifically in the quarter search was 26.7 million accelerating to 36 per cent year over year growth compared to 13.
<unk> per cent last quarter.
This was driven by our record PC users and monetization games.
Advertising was $23 4 million accelerating to 40 per cent year over year compared to 16% last quarter. This.
This was driven by strong monetization from opera news and our mobile browsers.
Finally tech and other revenue was $1 2 million year over year. This revenue category has been reduced by $2 4 million, although with almost no impact to profits as the decline relates primarily to low margin professional services to all day.
Our operating expenses adjusted EBITA were 47 million I.
As expected we saw significant increases in marketing spend as well as some growth in personnel expenses due to our efforts to expand opera news into western markets and around defy and gave me.
Adjusted EBITDA was $4 6 million in the quarter. This was better than expected with the over performance largely following the upside from our core search advertising revenue streams, and some marketing and personnel expenses shifted to the second quarter.
Net of DNA share based expenses and other items net income was zero point $6 million for the quarter.
Our operating cash flow was positive at $7 3 million supporting an overall increase in our total cash and marketable securities of $9 1 million versus the prior quarter to a total of $143 3 million.
Then moving to our investments that continued their positive trends in Q1, and breakfast sent significant upside potential for our for our shareholders. As a reminder, our investments our nano bank with opera holding 42 per cent as well as opaque at 13.1 per cent and star make.
Her at 19 point 35 per cent.
Beginning with that a bank for the quarter Nano bank posted revenue of $50 3 million up about 10 per cent compared to the fourth quarter and disbursed loans, representing 235 million in total value.
Adjusted EBITDA was $5 5 million, representing an 11% margin and post tax profits were for $3 million.
We continue to believe and I know bank will scale meaningfully in 2021 as it launches in new geographies and ads products, both of which are in testing phases, and as India starts to recover from COVID-19 impacts.
As noted in our prior call. We expect this to be more evident towards the middle to later part of the year.
Our two other significant investments overpaying star maker continue to scale.
Oh paced total payments volume continues to grow and have increased from December 2020 levels of $2 billion driven by new initiatives one of the most exciting innovations. It's the opaque card a debit card that is tied to the old paywall with balance supporting offline use cases.
The old pay wallets aimed at increasing frequency of use.
Star maker continues to scale rapidly with an annual revenue run rate of almost $180 million in the first quarter.
Three five times compared to the year ago period.
Now moving to our forward looking commentary.
Our core business continues to perform and grow ahead of expectations and this is increasing our confidence in our near term and full year outlook.
Further we continue to believe that taking most of our underlying adjusted EBITDA growth and reinvesting it into our new initiatives. It's the right thing to do.
We believe the ROI on those investments will enable us to achieve growth rates well in excess of a 20 to 30 per cent level and accelerate our path towards becoming multiples of our current price.
Translating our momentum into a refreshed 2021 guidance, we continue to take a conservative approach not including anywhere near the full potential for new initiatives, while making sure potential investment is reflected.
With that said based on the performance of our core business, we are raising our revenue guidance, while maintaining our adjusted EBITDA guidance to provide flexibility to drive further growth.
We now expect <unk> 2021 revenue of $230 million to $245 million, representing 44 per cent year over year growth at the midpoint up from our prior midpoint guidance of 39% gross.
Our expectation for adjusted EBITDA remains at $10 million to $30 million for the year.
In Q2, we expect revenue of 55 to 57 million, representing 74% year over year growth at the midpoint.
The second quarter revenue growth acceleration is fueled by strong continued results from a per score search and advertising business, but comparisons to Q2 2000 Twenty's should of course also bear in mind, the significant COVID-19 impacts to search and advertising revenue in the year ago quarter.
However, tech licensing and other revenue become far more comparable on a year over year basis than in recent quarters as revenue from professional services work.
Largely phased out by Q2 2020.
Adjusted EBITDA is expected around breakeven in the second quarter as we continue to invest aggressively in our new initiatives.
Overall, and then some Q1 was another strong quarter and a very healthy start to 'twenty to 'twenty one.
It's great to see the momentum in the business and how the acceleration of our growth trajectory, it's benefiting both our near and long term trajectory and we look forward to keeping you posted.
Thanks, I think we can now take questions.
Yeah.
Thank you.
To ask a question. Please press star one on your telephone keypad to withdraw your question press the pound key.
Do ask that you. Please pickup your handset to allow optimal sound quality.
One moment for your first question.
Yeah.
Your first question comes from the line of Lance Vitanza with Cowen.
Hi, guys. Thanks for taking the questions congratulations on the quarter.
And I guess I would start with.
Well, thanks for posting the supplemental financial information that I found it very helpful. Could you talk about the impact of COVID-19 in the year ago quarter in <unk> 'twenty versus <unk> versus <unk>.
The expectation versus what you saw as we moved throughout last year in other words, we know obviously there was a bigger impact in the second quarter of 2020, but was there much of an impact in the first quarter. It doesn't necessarily look like given that <unk> 'twenty revenues were actually up over <unk> 19, but perhaps.
Ex COVID-19 they would've been up more I'm, just how should we be thinking about that.
Nah I highlighted fix for the question.
In terms of what's our continued operations with the browser and used for the other products that we've been discussing today, we didn't really see much of the COVID-19 impact in the first quarter last year.
It affected nano bank's business for sure.
And in terms of in terms of the assessments on Collectability et cetera at the end of the quarter, but it was really towards the very end of March are not.
And what's affecting the quarter as a whole much for strategy for Tae sik.
Great. Thanks for this growth is really on it it's not just the recovery. This is growth over that period, where where you were already pretty strong and growing sales.
Okay. So the guidance seems to reflect if I'm hearing you right only the strength in the core business, but really not much contribution for the growth initiatives.
We know that Youre plowing a lot of money into these growth initiatives.
Could you talk about and I heard the comments that you made for just a minute ago without getting to a size that is a multiple of the size of the company today, but could you talk a little bit about what how should we think about the medium to longer term potential of these growth initiatives per se right, because we know the core biz.
There's also growth just trying to figure out how we should be modeling what some of these other new initiatives could ultimately contribute.
Sure. So if if I begin with the total the overall picture I mean.
For us.
All of these three main areas that we are investing in two per cent substantial upside to our two value creation for all for both in terms of creating a.
A much used constant business in western markets and the broader gaming eco system that we are working on as well as the Europeans are payments products and services around it. So we think all of them, we consider massive opportunities, but I think over the past quarterly.
The calls we've had we've we've been clear that we don't really bake much of it into our guidance for 2021.
We tend to be very conservative on that and look internally, mostly at what run rate are we scaled to sort of exit the year with <unk> and the impact it can have on 2022.
So I would point to 20 to 22 is the first year of really seeing material impact of these new initiatives.
Okay, and then maybe just starting with <unk>.
And what I would say.
You start looking at.
The revenue growth of the core which as you know historically been 20 per cent Boston and then you start layering in.
Some success here you start coming up with very good revenue growth rates.
Second comment I'd make on these investments as you know today, where were investing money, because they're very new but as they scale and get bigger the incremental margins on these businesses are really good. So the idea is longer term youre going to end up throwing off more cash flow than what you would have done otherwise.
Assuming they're successful.
Thank you if I could just squeeze in one more question about the Jv's and.
I guess, maybe this is a multi part question but.
Okay I'm wondering.
There was perhaps a seasonal impact there and I may be misinterpreting the release, but and.
And forgive me if I missed the comment on your prepared remarks, but it looks like growth, okay, perhaps slowed in the first quarter.
Given that you didn't call out exactly what the growth was but perhaps that's just due to the fourth quarter being seasonally strong for a payments related business, but I'm wondering if you could elaborate on that and then with respect to starting to occur where it's growing at a multiple I'm. Just wondering if you could talk about what's driving the growth there in other words are your lawn.
New markets is this big new marketing campaign or are there other things that are sort of fueling that I think it was $3 five ex growth that you called out in the release.
Sure.
Oh Derik go ahead.
Atlanta was going to stay on it okay.
You know they did it more total payment volume in March than December so, they're continuing to grow.
I think we're being a little more cautious on what we can opine, allowing the team over at El pay to sort of give those details out.
Because I know, they're trying to drive a higher profile for for themselves as they think about the future for.
Do you want it next year.
Yeah, Yeah. So maybe I'll also comment would be hell, rather just don't even for all pay right. So I guess actually whatever you say is more true that I don't think he.
He was asking are growing tremendously.
The TPB are growing but even more importantly, that's on some other other aspects of their business like it isn't always the app use all of a sudden a few other other actually growing a lot many times, which is they'll focus for now and I wish you could also talk about zelle, you know you shouldn't call them. Other line. So I think actually reality is.
Because they were just they just don't listen all of them and they are now.
That was an independent company and we just could fall into that for them.
And also the excellent resolved itself is that a way for them too much about it and all of them Oh My goodness I think that's actually the way that they are actually doing very well you kill luncheon day.
Thank you for clarifying that I appreciate that.
<unk>.
Your next question comes from the line of Mark Argento with Lake Street capital.
Strong revenue product just wanted to drill down a little bit on the success you're having.
Opera News, maybe you talk about kind of where you've been making investments in.
Yeah.
Conversion in terms of modernization.
Yeah.
Yeah. So okay. So I'll try to give the foster hate that answer they're going to come up with non both I guess, so you know high level I guess the comedy just that now we are already been very successful in Africa. So as also commented in the quarterly release that you know for this year all essentially.
One for instance, we haven't been focusing on expanding into aftermarket.
You know, which which hasn't been doing really good I think as I've commented would just be that way.
We will have growing very nicely in home loans.
Oh Wow, just super happy to see that we are able to you know based on all possible no household growth do I have to mobilize to per market because each of those market are very different like you know Joe man He's ready for the U S. But we're able to actually localize it and then be able to provide a very good day you know.
You know solely at the numbers and the convulsion or attention. So all the for Missouri My fashion, a very good but maybe what's mentioned in that well also on pulp I'm very happy about the monetization because even though we saw a bit of drag between pulse to grow your line and then monetization, but perhaps to be called the law of possibly spell is we are able to actually almost of the growth that you lost.
In line with the growth of monetization. So that I would say is the extra point that I would quality, which is more positive which actually also the reason why we think about doing Belo did that all day and even all the audio guidance and also possibly why we also utilize all guidance for that.
Yes.
Great.
The key precursor to revenue as the downloads of the App.
Or what.
Guys actually stimulate.
Okay.
Yes Brendan.
To drive people to download the app in various regions or what what are you doing specifically day to get that.
To grow from a user perspective.
Yeah. So I think yeah. So I think from end user point of view I think it is aggressive our performance marketing, but I think the key is just that.
Based on the Knoll house, the other way have accumulated in the past the Neal we're able to do the performance marketing growth, marking a very efficient way and and I think that's number one number two is that the retention is really good because it's very tightly connected to that if you say I have been very pool.
115, we lost market share retention down let's call. It no no way you can growth it doesn't matter how much money you spend so I would say, it's a combination of all of them very effective for performance marketing, but then tied tightly a hand to hand once we have any philosophy.
Very high retention of what goes into those mailed them actually I wanted to lots of people will ask something.
Great.
I would call a supplement maybe I could supplement it's of course, a product launching in a new geography goes through a free a few stages. We are now in the initial stages of launch where we of course, we use marketing and we used a performance marketing and then talked about to build a presence and then over time as well.
We've seen on our other initiatives. Some product then you move over to the organic part of it playing a bigger and bigger role in and I can assure you that the investments. We are making are carefully assessed on on a day to day basis are monitoring the impacts and and and.
For the return that we're generating on on that investment.
Yeah.
Great and then just a quick follow up on the AD.
Back in AD revenues could you talk about some of the end markets that you are seeing them come back I know you had some decent exposure to travel is that an area that you're seeing.
I'll come back on the various markets the operating.
I think a high level on the advertising drivers, we see a couple of things. So that of course, we benefit for more for more use for growth on products, but it is the per use for monetization, but that is driving the revenue growth for most.
Within that there are there are a few components.
We are experiencing strong demand for our inventory and the traffic that we can drive there are certain partners that are scaling scaling faster than other than others typically online related businesses.
And we're also seeing the impact of a J.
Graphic mix.
The changes when Europe is growing very well for example that that drives the average monetization per user or <unk>.
Great very helpful. Thanks, guys.
Sure My next.
Your next question comes from the line from Elisa GAAP with Citigroup.
Hi, thank.
Thank you good evening.
Thanks for taking my questions congratulations on restaurants that have been stopped.
I have two questions.
First I think your guidance you mentioned the second quarter.
Guidance, it seems to be more allude that true such recovery.
But I assume to AD revenue was also also cooling vary about but on the sequential basis. If you can't keep for some color in terms of what is such a a bouncing back on the sequential basis for the App.
And then.
Understand.
Your full year guidance.
Despite raising them to the new guidance range, but you also mentioned very very little revenue from the new initial tier.
If you can give us some colors in terms of the time.
If we were to assume between day gaming and our European seeing tap what gaming no revenue will be coming more and more medium term versus.
Sunday that margin.
So any color you can help us frame in terms of the timing of that revenue.
And on more let's say by the time day the reach of Sunshine.
Some contribution.
Well the free Pat it's actually a bigger proportion or the gaming the country appeal I think I put a question. Thank you.
Thanks for that so so.
First talking about the second quarter guidance are the starting point in that the Q1 revenue achieved in both search and advertising we are very pleased with both.
The day, you know for 36% to 40 per cent year over year growth into a very solid results in the quarter and if our expectations. When we look into the next quarter and on a sequential basis comparing to Q1, I would definitely point to advertising being the expected the biggest driver of.
The increase we are guiding from Q1 to Q2 this year.
In terms of the full year and the new initiatives. So as stated we have been very cautious and baking in.
Baking into high expectations off for new initiatives this year.
To the question of what will impact our results for.
And what we are.
Cautiously considering as we set our guidance for the year I would point to the advertising revenue effect in particular around the.
Western markets scaling up opera news.
This sort of an immediate impact of building a user base in the U S and European markets that that that probably will be the first one to materially.
Benefit for our financial statements and something that we should be seeing also in 2021.
And I mean, just follow up in conceptually, I mean, where sustained past, which ones will come more in line.
And then which ones.
That's interesting Shen Zhong Dot com.
Yeah.
So.
I think I'll try not to go into sort of ex the specifics of exactly estimates that we have for the year.
I think for now I would tell you that with Kohl's, we have been very cautious as we set our guidance for the year.
In gaming revenues of course consist.
Already have been present in our financials from the success of the upfront Gx browser and that continues to scale very well and we're broadening that with an ecosystem the game studio et cetera.
We have discussed before.
And on the Fintech side of things for me our own Buddy.
You know being the browser off a very very big number of transactions carry the outs are.
From our user base and that is something that we have already launched and started just have been too but with the initial focus being on building that service and preparing that service for scale, rather than focusing on let's say the revenue contribution or the near term margin, but as we can.
Drive from that.
Okay.
Felicia This is Derek if you consider gaming to include the Gx browser.
That's driving a ton of value for us today, I think we said last quarter that every.
Millions are worth about $2 $7 million.
So you can see our trajectory of adding.
Hum.
Plus that may use a quarter and you can see that contribution.
And.
On the Fintech stuff you know were in Spain, with our smart shopping product is song Lin said you know our hope is to be in a couple of more markets over the course of the year and depending on when those hit and how quickly Spain scales, what will really dictate what contribution we see this year.
Mhm.
Okay helpful. And then just one last.
Quick follow up I think you mentioned sales.
Marketing.
Some of the spending that you previously plan are in place.
Sneak into the second quarter. So just wondering if you can share what wash their region.
Yeah. Thank you.
And then maybe the word slipped this.
Super accurate it's.
It's it's more a question of if we look at.
For the air as a whole and we look at the investments and the scaling that we want to achieve at any point in time, we gave the guidance based on our best expectations for what will happen over the coming three months period and the euro for whole.
And solid.
We ended up spending slightly less on.
On the marketing and distribution in Q1 than we had originally thought.
I see okay, all right and thank you so much.
Sure.
Your next question comes from the line of Sarah Simon with Aaron Berg.
Yeah, Hi, I have a couple of questions first one can you give us some idea with something like well whichever productivity like what the Delta is in terms of monetization of our user in let's say Europe fastest.
Asia or India for Africa for example, because I'm guessing that's quite significant.
Therefore, as you expand news into Europe, and the U S.
It might might lag, but it's clearly going to be much more significant in terms of the pickup.
And revenue starting to pick up in <unk>. So that was the first question second one can.
Can you just remind us how do you sell your advertising.
Is this programmatic or is it direct that what's the second and then the third was you know that you. Obviously, we stated your numbers could you just continued stuff in Q3 last year can you remind us what the great was on the new reporting for that in Q1 2020 in Q2 2020.
T.
Thanks.
Yeah. So it's Tony Hill, I guess still for that maybe I'll just answer the first two and then you can comment on the March number ones.
Sure.
Yeah. So yeah, just a quick comment that I hear the question of monetization.
I guess, it's also because like European U S. Exalt D is the African user right so like Asia.
High level comedy that equally compelling day of use all in Africa, where you said you, though you actually dropped play I'll say 10 times.
And European usually is actually slightly less non U S. A.
It depends on which country you are exactly quite different on some other jurisdiction for Sun.
All of the U S to be 80% or you call it depends on different country Jakafi the loss.
Yeah. So in general for use as a benchmark that I would say at 10 times and somehow always say Africa.
It would be a good comparison and oh about for emulation and when it comes to add selling so well have to use all of the weighted that youre talking about your different regions. So I think the way we do have direct sales team typically in countries like Africa, well they do rely on the line direct sales team, while some other pounds really liking it.
The U S and Europe would you have more programmatic I would say, it's actually very good you called that and we see that actually grow very fast salvage model wages and on top of course, we also have the avnet, we can't approach for all of sudden piglets.
Bed out there you can just monetized from basically SDK Ogunlesi K. So we'll have both of those are three.
Three available.
Okay.
Yeah, So and then for 1000 kind of I'll go to you for the.
Yeah.
Correct Yeah.
Yeah sure sure. So in Q1 2019, we had 38 million revenue in Q1, we had 42.
2 million revenue, which was about 6% up would have been a couple of percent more.
If COVID-19 hadn't affected they end up the quarter, but that's the most comparable period Q2 2020 at our year over year decline this quarter most affected.
By COVID-19 for.
Yes.
Sorry, Keith.
Q2 year over so Q2, 2020 was down 24% versus Q2 2019.
Net revenue bye bye bye the COVID-19 impact that we saw.
In that quarter.
Okay. Thank you very much.
Sure.
Your next question comes from the line of Lenny Bracken with Bracken capital Advisors.
Hey, Thanks, guys for the call to questions.
One can you talk about the deployment of the cash hoard that you have on your balance sheet and what the board is thinking about maybe doing with it and the second is.
The new initiatives I assume are are acting as a drag on earnings in 2021.
And I assume that's going to lessen in 2022, which is probably the core of the story and why all the analysts are trying to ask the various questions and understanding that so can you help us quantify the drag.
On the new initiatives on earnings this year versus next.
Yeah, Hi photo here I can start so starting with the cash on our balance sheet. I think we are not planning to use it for for dividends as we have stated in the past, we keep it to maximize our strategic flexibility.
Both in terms of Oh.
Having the having that support for any operational opportunities that we come across of course now even with these heavy investments that we are running in 2021. We are essentially also are generating the cash that we are using for that.
But it gives us that opportunity in the past. We are also in a couple of instances launched share buyback programs, where we have felt than we have felt that the other spend in the best interest of our shareholders and and we always look at.
M&A opportunities, though historically they have been relatively amendments advice and then focus more on the organic.
Growth thereafter.
In terms of the new initiatives and to drag on the profitability.
In the year that that is correct because we started the year by saying that the essentially the we would take all the additional EBITDA generation, including from the scaling up for our business and invest that in an additional.
In addition, Hawaii.
Driving this gross initiatives.
But I think you only have to look back to like Q4. It went that's when people you had at 28% EBIT margin still having investments in teams et cetera at that stage, but.
Giving at least an indication of sort of the margin picture off net business.
When when we are not as aggressive, but yes now scaling these initiatives.
And then I think it's a it's sort of for the more successfully these businesses scale and confidence that we have and the ROI being positive of course that will continue to support our thesis for this year, it's a little bit early for me now to sort of say exactly how the details towards the end.
For the air and the beginning of the following will look in terms of margin picture, but because we are seeing this as an opportunity to establish those businesses.
And creates a strong foothold in them and then as we talked about earlier in the Q&A session and then it's moving over to more existing in market products and look for.
For more.
Let's say stable P&L profile and margin margin accretion also from those.
Well just one follow up so I mean, I guess as an investor I'm sort of wondering how a 40% growth growth company can trade at three to four times.
Roughly forward sales.
When many companies.
Growing less than that are trading at twice that valuation.
From the manager's perspective, how do you see the value of the company being unlocked.
Is it the new initiatives when you're finally getting leverage or is it something else.
You know that that you think is gonna be D day.
The driver.
Yes.
We are what we can focus on is of course, driving the business and the best way, we can and and being clear about our strategy for sort of.
Now we are moving towards the scale and how we see sort of the potential and initiatives that can drive us to become multiple size for what we are today.
You're supposed to be very focused on and we also are we also try to shed light and relevant information on the investments that we hold as we think they represent significant value upside to our shareholders.
And and of course.
And.
Being able to.
Being able to document that value over time, and being able to actually see a transaction or or sort of that market's validation of those I think can be very helpful.
Thank you.
Your last question comes from the line of Lance Vitanza with Cowen.
Hi, guys. Thanks for jumping back to me I, just was hoping to follow up I'd ask you for we kind of got cut off about start maker and the question is.
The growth that you called out in your releases, obviously Fabulous I think it was three and a half ex.
Just wondering what what's going on there is that new markets is that you know a big new marketing campaign or something else. What is it how do you explain that kind of growth. Thanks.
Yeah, Hi line, sorry, even with the department for your question before I. Unfortunately, the answer is little bit the same it's okay that it's its own company. It is sort of communicating its own for salt. So based on its own line and we tried to stay within that but as you mentioned, it's a tremendous growth year over year.
More of it's nearly 50% sequential growth versus the fourth quarter and it remains a profitable company.
All of them.
The net income line.
It's doing very well, but I'll be a little bit careful too.
Trying to get to to give additional kpis that the company hasn't itself prepared to communicate but songs for any other color that you think we could share yeah star maker, Yeah. So I mean, I think I would just say that so I'll make up a very typical case well. It has been growing very fast from last year. This year all right. So that of course naturally if.
You compare always take Q1 last year at two <unk> as they see the Gulf coast is going to be huge.
Isn't it just because it keeps growing from Q1 from Q1 Q2 Q3 Q for all through 'twenty 'twenty I'm comfortable that trending in Q1, 2021 right. So I yeah. So it's actually a true reflective of all the whole body to growth.
All across the whole of last deal and that's the accumulated results have you all seen I mean, it's almost I would say the equivalent of what you see opera news right. Neil as we also said is true on a 60% you know yellow book, and we're probably and hopefully well see more even in Q2 right. So it's actually a very similar trajectory that you could have something Neil N. All five for growing pace.
Called the overhaul, though that's why you see.
Fair enough thanks, guys.
Okay.
That concludes our Q&A session I will now turn the call over to song Lin.
For any additional or closing remarks.
Okay. Sure. So you know I think the guys way I think we have a great call. Our core business are doing well well you know all of the new initiatives are scaling.
Allowing asked you know predict a bullish future.
And I think that's on this day that all of these of course I hope caused indispensable from the share all of those all day, all that's our trust us and support us. So I just want to say that I. Appreciate your support as always we'll do our best and you know and hopefully we can continue and will continue to execute to get a bit and hopefully we'll all have a you know better.
Oh, great results to come so like again, thanks for attending and have a nice day.
This concludes today's conference call you may now disconnect.
Okay.
[music].
Okay.
Yes.
[music].
Okay.
[music].
Okay.
[music].