Q1 2024 Opera Ltd Earnings Call
Okay.
Speaker Change: Welcome to the Opera limited first quarter 'twenty 'twenty four 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 period you will need to press star one on your telephone keypad.
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I'd now like to turn the call over to your Speaker today, Matt Wilson head of Investor Relations. Please go ahead.
Thank you for joining us as usual I have with me today are CEO song Lin CFO Proto Jacobson before I hand, the call over to song I would like to remind everyone that the conference call today, 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 bargains and are inherently subject to economic competitive and other uncertainties and contingencies beyond the control management you should be cautioned that these statements are not guarantees of future performance.
The Safe Harbor statement in the company's earnings release for details.
Our commentary today will also include non ifr exponential measures, including adjusted EBITDA through different Mark consolidated financial statements that are prepared and presented based on I FRS.
Speaker Change: Believe that the use of our non <unk> 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 or as a substitute for financial information prepared in accordance with IRS. We've also posted an unaudited quarterly historic financial results of <unk>.
Alright, and our Investor Relations website with that let me turn the conference call over to our co CEO song Lin who will cover our first quarter operational highlights and strategy and then sort of Jacobs and will discuss our financials and expectations going forward. So.
So since Matt and thanks to everyone joining us this morning to reveal all false Colo results.
Turning to Nepal is already off to a strong start.
With revenue of $102 million, driven once again by well down your gross payout, let's close the discipline resulted in 25 million of adjusted EBITDA, representing a margin of 24%.
Both revenue and EBITDA exceeded the fourth quarter guidance, that's what we outlined on our last quarterly call.
Oh, you know growth strategy remains focused.
Quality over quantity.
Speaker Change: We continue to see growth of those you know, let's go market Gx noodles and other high that it was also globally.
Offset by declines no monetization mobile you lost in emerging markets.
Annualized <unk> was $1 40 person.
Hello.
It's up 24% year over year.
This was primarily driven by the growth of and get those high off the market as.
As well as continued growth all both of Gx broadly lids.
<unk> consistently attracts highland monetize the ball you launched a.
Across markets.
Speaker Change: In the fourth column, such revenue was 43 million up 14%.
This category has consistently grown in the mid teens and the Pascal than Bravo such market.
Enabled by our continued focus on growing the highest about it would be those.
During the call we will exercise its option to extend our current approach revenue partnership.
The value of this relationship to both parties.
In the first call out advertising revenue was 59 million.
21% year over year, and 58% of total revenue.
Advertising revenue continues to benefit from both our owned and operated many how browsers.
Well, that's all opera ads business.
There is a clear trend.
That's the digital advertising industry has.
Putting more focus.
I use all intend to events.
Beat the shopping journey.
Speaker Change: Sure.
Speaker Change: All the payments activity No association wage travel booking.
B remember also we are best positioned to capture these interactions.
Giving yourselves health choices and suggestions and the right moment.
This could be in the form of a product recommendation.
Relevant patent Inc.
Excellent.
Aided by AI to help put everything into perspective.
As a result.
Speaker Change: Advertising revenue raising the Basel.
Terrorists your fastest year over year growth since the second the follow up I'll turn it into one one advertising revenue was still rebounding post because the onset of the Covid pandemic.
That's a very direct example of all phone calls.
Speaker Change: High value.
Translating into financial results.
And that independent but also we are known for our continuous innovation and bringing exciting new features to our vessels.
Ultra one, which we launched last deal was a great services right.
Vaccines, but also AI avia.
In addition, it came this beautiful UI design, whether it is the tap islands innovation, all stocked H animations benefiting from a robust NDA, enabling complex graphical operations.
Two did you have to dig out from background the processes.
Let's see how such details and our strong but also brand drive adoption.
When you consider our new Blossom, we are more and more open coffee, though.
And children.
Later, we remain encouraged.
All the results.
We recently implemented digital market F in the EU.
The DNA required Apple.
The show will be also choice into islands in the region.
We quantified for the choice screen.
Speaker Change: The new countries.
Post implementation lethal 63% increase in new I will answer your dogs in the EU from February to March.
You'll still from a small base and with lots of work remaining to Florida to seize the opportunity.
We are very excited about this would give that look months and well increase I'll I'll ask investments now that the playing field is more level.
Speaker Change: Other key regions potentially also opening up.
We are starting from a modus debates Vod tradeoffs platform and limitations.
Maybe I'll ask you believe that the growth potential is substantial.
Speaker Change: Again this reflects a general jumped.
That people have shown an interest to move away from the Darling system depot to blossom.
To differentiate the products that are paying off for particular audience and needs.
We believe that this trend will continue.
And even accelerate.
Turning to our gaming browser opera Gx.
We have spoken about it repeatedly.
But I think it's a good example.
Renting something truly differentiate it to market.
And you're going to love it.
In less than five years.
Opera Gx has reached $29 $5 million was up six 1%. This is the fourth quarter alone.
In addition to health systems, they growing our user base.
Monetization of the Gx user base continues to grow.
Reaching $3.49.
First of all up 10% compared to a year ago, you don't as each geography footprint expands we know lift from buckets.
<unk> remains our highest monetizing but also both in developed and emerging markets well the original differences even monetization is Michigan all other golfers.
One of the most well come communications easy Gx modes.
Which allows us to customize almost all aspects of the vessel.
These moats that a wide spectrum and a very creative.
Again your franchises can provide the jazz notes.
I can go to the just announced.
So she was shut off on the 277, a very popular game loyal fan base.
But also argue those actively create modes for example, the background music can react in real time through the actions and meets all BD loss, while using a browser based on about keystrokes will move off of the mouse.
The options are.
That's nice.
You can also upload they'll note to the store and the ship.
Hello goodness.
Since the introduction of a multi year ago, Oh about six months haven't been created and shelf biologicals.
Most have been installed over them.
150 million types.
He is a great testimony of.
This functionality is appreciated by the gamer audience and as a potential related to differentiation in the Bronco space.
H E reality is still largely untapped.
I'm going to end on the continuation.
The evolution of our embrace of AI.
We continue to rollout new generic ebay I T shirts right.
Speaker Change: The ultra but also.
Speaker Change: No false niccolo.
Our AI, it's T shirts dropped project.
Let your gifts you love all of our ultra one developer built axis to our latest AI explorations.
They dropped meal teach us as often as every few weeks.
Speaker Change: Making us one of their fastest move us in the space.
One highlight each.
If I remember in support of long ago simply a different local language model that ends.
From approximately 50 feminists ultra models.
Not natively supported to be downloaded and can run locally on like you lost one can pillar within the browser.
And in terms of deep last week, we added support for the latest three model just one day after its release.
This marks the fourth time local language models can be easily accessed and managed from a major but also through a building official.
The local AI models.
A complementary addition to ultra olive garden as all this.
Wage upended lives, our new fully green energy called AI classical Iceland.
Iceland.
We announced in February and is now fully operational.
It is indeed, an interesting time for Gaza.
Our massive user base and brand innovation.
Speaker Change: Well, that's about all the changes happening around us.
And cannot wait to a school deposits.
So now let me turn the call over to them to discuss the financials and guidance for the second of Colo and Finjan before in more detail.
So for them.
Speaker Change: Thank you song.
'twenty 'twenty four is off to a solid start with Q1 exceeding the guidance ranges, we set just two months ago.
Revenue grew 17% year over year nicely ahead of the 15% mid points gross we had guided.
Net of continued FX headwinds, we saw an even stronger underlying constant currency revenue growth of 23% or six percentage points higher.
Advertising remains our strongest growth driver, though search has also been performing ahead of the underlying market growth clearly showing the benefit of our RFP user folks.
In terms of costs marketing costs came in slightly below expectations.
Did the other Opex category.
Salary cost came in as expected, while an investment in scaling new advertising revenue streams, and our browsers drove up cost of revenue for the quarter.
In total we managed costs to stay on budget, resulting in the revenue over performance translating to adjusted EBITA over performance as well.
Tax cost of $4 $6 million was 19% of adjusted EBITDA, which was somewhat elevated mainly due to our tax assets, which reduced in USD value when local currencies weakened.
Our cash generation was particularly strong in the quarter with operating cash flow, reaching as much as 31 million or 125% of adjusted EBITDA.
This quarter, we made an all cash investment to establish our new AI data center, representing an unusual amount of capex for us while we were still able to generate free cash flow from operations of $8 million or <unk>, 33% of adjusted EBITDA.
Cash generation fluctuates more than EBITA from one quarter to the next and as the year progresses, our year to date cash conversion rates will stabilize similar to what we saw last year.
We paid our semi annual dividend in January 40 cents per <unk> or a 35 million total of the total $25 million was offset against our star ex receivable and $10 million was paid in cash.
Final $8 million of our star ex receivable will be cleared as part of our next recurring dividend payments, which we continue to expect for July same as last year.
We remain committed to our dividend program viewing it as the best way to return cash to shareholders without impacting our free float or trading volumes having.
Having said that as we've also demonstrated several times in the past, we continuously monitor for opportunities to generate rois for our shareholders through buybacks when conditions favor of that.
Yesterday, we issued our 20th for 'twenty to 'twenty, three and I just want to highlight the one estimate update as part of the annual report relating to the fair value of our 9.4% ownership stake in <unk>.
We ultimately set the year end 2023 evaluation to $253 million as opposed to $269 million initially estimated which led to an updated Q4 valuation gain of $90 million as opposed to a gain of $106 million.
And estimates of an unrealized gain and you'll see that the ownership stake is carried at the new value on our balance sheets, but it had no impact on our revenue cash or other operating metrics.
In keeping with our well established tradition to guide cautiously.
We translate the over performance of Q1 to a $4 million lift off the low end of our full year revenue guidance, while leaving the high end assets.
Our new revenue guidance becomes $4 54 to $4 $65 million, which results in the midpoint, increasing from 15% to 16% full year growth.
In terms of adjusted EBITDA, our guided range was already quite narrow at $106 million to $110 million and we retain its based on the same logic. This maintains a 24% adjusted EBITDA margin expectation for the year as a whole.
Overall, it's only two months have passed since we issued our original guidance for the year, we preferred to progress further into the year before we fully extrapolate our trajectory.
For the second quarter, we guide revenue of $107 million to $109 million or 14% to 16% year over year growth.
We guide to adjusted EBITDA of 22% to $25 million or a 22% margin at the mid points.
That translates to Opex adjusted EBITDA of $84 5 million at the midpoint, which includes a steady increase in marketing spend annual salary adjustments effective in April and adding just over a percentage point of cost of revenue items relative to revenue.
Other opex items are expected at about the quarterly average of 2023.
Our cost expectations for the year as a whole remain in line with our prior directional commentary with marketing costs and cost of revenue ticking a bit up as a percentage of revenue while compensation costs and other opex items ticking down overall offsetting one.
Another.
All in all we are off to a solid start of 2024 and excited to continue executing on our strategy well.
We will also participate at a number of upcoming investor conferences in May which gives masonite a chance to meet up with many of you in person soon as well.
With that I'll turn the call back to the operator for questions.
Thank you as a reminder to ask a question. Please press star one on your telephone keypad to withdraw your question from the queue. You May press the pound when posing your question. We ask that you. Please pick up your handset for optimal sound quality.
Thank you our first question will come.
Come from Lance Vitanza with TD Cowen Your line is now open.
Thanks, Thanks, everyone and congratulations on the quarter guys.
A lot to go through here, but maybe we could start with the DMA in Europe.
Find this very exciting and you mentioned a 63% increase in new iOS users just from February to March now I understand it's off of a very small base, but could you talk a little more about the opportunity. There just you know how many iOS users are there in Europe and what's your credit.
Copper is penetration like today, where do we think that could realistically go over let's say three to five years or whatever you think the right timeframe is in and then also what are the odds that we see a similar kind of DMA framework. You. You did talk I think songs you talked about you do you see other markets potentially.
Racing this kind of a framework you know what are your thoughts there in terms of the U S. At some point thanks.
Yeah. So yeah. So it's only how I think I just with the economy.
Speaker Change: It's a big topic right. So I think.
Number one in general without very excited to see the trend.
Because I think you know.
Speaker Change: Europe of course is a key market and there's almost immediately.
Many of those I would say.
There are two methods to make sure that you know that.
A bit more fail playing ground.
So I think we're happy that our European and you had been taking this approach and even more happy that it proves to everyone that they are easy because many times, we saw that some actions taken by governments nothing happens and in that case, I think Apple BD comply with you I'm very happy about them as well and.
We go through quite satisfactory I would say probably more than many people saw it right. So so so I think that's very encouraging and.
Speaker Change: And also typically cold than that like we also see a general trend that those change also happening in other markets.
Yes, I mean I'm no expert on this by I guess, we all know that's just last few weeks I think the Doj also.
The case against Apple well, it's all of a similar nature allowed in the U S. So and then and then some of the things that I can say so we just saw that.
I think he's a good good.
Good shelf that.
He is also a problem of Apple point of view I guess, if they're already a great openness op market.
Right.
You didn't get that they have a whole can be that's right. It's more.
Natural also for them to open worldwide with you that one.
I can make a real difference because the only thing to give you. Your cost is if all of the data even though it's already very good Scott.
And then I think in terms of opportunity where I'd like I think we all know that on the mobile space.
Speaker Change: I think Apple has got a much like especially when you think about the section to be let's say performance in smartphones.
Which I think is also okay. So without Doj had been using.
I think Apple almost has 70% of the total market right, which means.
While the high end smartphones.
And because over the paired off limitations.
This is almost nonexistent for and now the breath of playoffs with somebody because Apple don't almost allow it and we don't allow adults N G. Right. So so we feel that now this almost Goldman annual ground. That's you know presumably it's ended at the end of those performed on smartphones in the U S and I would say, maybe 50, 60% <unk>.
<unk>.
Well have chance to be accessed by us and by alcohol gossip and I'll switch can be it can be very interesting playground, and we have been able to show that our Android whatever these ratably.
We're able to take care of strong marquee shelf.
And we have I hope that they can also be replicated in Minneapolis right. So someone like well now we are you know.
Utah, Utah base salaries, I'll ask without minions.
Millions of yourself and.
Speaker Change: But that will of course comparable with all told me you updates, which we announced with a 300 million that skill.
Skills.
A bigger growth potentials, so I think even though now even though we see major Welsh.
Anything likely many older today's ahead, which can can have meaningful impact on our revenue as you know you ought to come. So so I think that's more like a general appearance and wildlife excited by that of course is even interested to see how this develops in the next few months to come.
And you did mentioned that there would be an increase understandably I would hope there would be an increase in your I O S investment spend and I just wanted to check with you a floater is that that presumably that was already kind of anticipated and so as we think about the guidance that you had sort of talked about for the budgeting and the <unk>.
Speaker Change: Getting spend over the course over the balance of the year I should say.
There's no there's no incremental upside to the guidance.
In terms of marketing spend.
We we already reflect our western markets Europe, North America, and that is where we spend the majority of our marketing spend correlates with the revenue and where our revenue growth is really coming from as well.
So even though it still represents only 17% of our total user base.
Speaker Change: That is where we continue to investing in.
Speaker Change: And as part of this strategy that we've been following for the past years.
Okay, and then just on the Gx browser you'd called out some dilution in the monetization.
As <unk> expands in non western markets I imagine that's actually a good thing despite that but I'm wondering if you were to control for the geography do you have a sense for what the year on year growth in monetization might have otherwise been I think it was 10% overall, but you know kind of market by market so to speak.
Or emerging.
Emerging market versus.
We typically don't go into that level of detail, but overall I think for the company as a whole I think we'd see a and ARPA growth at about twice that so I think that's a good indication.
And it just you know again just.
Directionally is the growth kind of comparable in each market or is it are you seeing monetization growth now.
Greater or lesser than one marketer or we're together.
Right.
I think we see a across the regions that we are doing well on monetization and growth in projects in particular, I think we continue to advance on.
On greater AD revenue drivers as it has historically been very search driven and isolation and still not let's say caught up to our other products in terms of mix between advertising and search, but we are progressing on that.
Okay last question for me with Iceland, we talked about the economics are quite a bit back in February I think it was at and it seems like the pace of incremental Capex investments, it's pretty well contained but then we saw meta announced another big increase and its capex budget and so I'm. Just wondering you know what are the what are the chances.
That we start to see these big data center investments pop up more frequently.
Quarter to quarter year to year et cetera.
I don't think I would expect that any cash flow surprises there because because even if we didnt wanted to expand it over time that there is significant lead time on that.
Okay. Thanks, I'll get back in queue.
Thank you. Our next question will come from Mark Argento with Lake Street. Your line is now open.
Hey, good morning, guys, congrats on a nice quarter.
Just a couple of quick ones here.
To read into the more accelerated timetable on the Google renewal I know you guys had mentioned that.
They had a trigger that.
Just wanted to touch on what's outstanding right now on the buyback.
Speaker Change: Okay.
Photo here I can begin a in terms of the buyback we have fully consumed our most recent 50 million buyback plan. So so I think now it's a bit what Watson C. As we have historically always done and I'm sticking with the tradition has been when we announce something and.
Speaker Change: Then we execute pretty quickly thereafter.
Speaker Change: In terms of the Google renewal. It was of course, a nice nice gesture of them to renew at this early in the air and if they had the whole ear and at least from my point of view I think it's just a nice recognition off of the joined the potentials that we also have with Google.
That's helpful. And then just quickly back on the browser and it sounds like just continues to perform well.
In North America.
You get in terms of any uptake on the mobile side or on the desktop side.
Specially with more AI product or more AI technology rolling out how.
How do you see the non gx browser as potential growth driver for you.
Yes, yes, it's only hard just called them right. So.
Yeah, I think yeah, I think as we also commented a bit that possible.
Possible of course of Hawaii is the primarily AI focused.
And also when they are launching their latest.
These are the oldest it's always an awful lot and then I'll put them on the vertical build so I think it's a good I think Molly is almost becoming a walled garden, leading major blood cells, which have little bit backwards and all this access to all of our technologies, which will have no problem. So, yes, I think especially among key opinion leaders sentiment out of us.
That's has already been established and definitely helpful.
Gross.
So I'll start and then even more at the moment.
To that point you are I S.
Now while the major themselves would have been broadcasting E basketball.
To support AI, that's no that's what I would say so.
I think all of those will provide yeah, we'll do that as a good ultimately gets watched them grow and especially if you can also touch on the island, but limited because as you know that's I believe about the Imation, becoming.
Speaker Change: Really a high figure.
And then he is also typically quite a conscious about the features that we can provide that especially around the AI. So I think it's a very disciplined growth and even for <unk>. It doesn't.
Not to mention that <unk> also has a mobile versions and.
It is also doing very well.
And that is also super happy that now we'll open the opposite means they can do more.
Yeah quite quite positive about the trends in general.
Great. That's helpful. Thanks, guys. Good luck the rest of world.
Thank you. Our next question will come from Eric Sheridan with Goldman Sachs. Your line is now open.
Hi, This is Alex on for Eric Thanks for taking the question just a quick one on marketing spend there's been a lot of discussion broadly around the industry on elevated AD prices in developed markets and sort of competitive at auctions, obviously, that's where you are.
Our focus on adding users can you talk a little bit about what youre seeing in the in the market and that auctions, which are digital AD channels are working well for you how is ROE as trended in recent months that that'd be really helpful. Thank you.
Yes, it's Tony here.
A little bit, but maybe coming also from the grounds as well so so I would say a high level.
You bet.
Competitive market I think it is also partly why we actually have I'll.
Exactly.
I think the way that it gets because.
If you look at if you are more like a traditional ads by all well we typically by default. Your ads are you typically buy their native apps.
Now of course, you are picking to indicate when you always safety all of the competitions right that the that we're not so much you can do and I think for us it's a bit different death as a bouncer essentially desktop wells away from the spot important don't really rely on those.
It just because the will never be able to compete in that way. So waiting for some phone calls of Baltimore, arguing for themselves that will.
Speaker Change: Work with all of these lessor and.
Speaker Change: Okay. So so I think it will.
Speaker Change: Absolutely.
Speaker Change: We're able to acquire.
Speaker Change: I think the way and maybe not so much affected or impacted as much.
Speaker Change: By those.
Speaker Change: I guess the movements in the pure agile marketing spend the space.
Speaker Change: So I think maybe that's the biggest the depreciations.
Speaker Change: It was almost a monetization point of view I, just want to call them that.
Speaker Change: We actually see an interesting trend like that.
Speaker Change: And just the pure buying from whatever it was almost not.
Speaker Change: Yeah.
Speaker Change: Oh, perfect and the time you won't take actions right. So when you go out.
Speaker Change: Webpage, when it's ready.
Speaker Change: I'm, saying, we want something to be show up.
Speaker Change: So that's actually an interesting trend, which we're spending.
Speaker Change: You don't have so much on market anybody definitely had the benefit of Papa advertisement, which was able to talk about bath now I'm starting to see all these a lot of other guys are approaching us for potential cooperation and we are working with some of those jobs are how to make sure. We can pop up at the right moment, there was a high use of intense.
Speaker Change: Very good contact for Belgium, because that would also of course the way we have a good knowledge of what you're doing and what time and so what kind of lymphoma, basically kind of them, giving them. So I think that's actually one of the interesting trends that I've been just follow ups on that.
Speaker Change: Does that the patent space, which is definitely something that changing a lot they're excited about it.
Speaker Change: So yes, so two things I just hadn't called.
Speaker Change: Talking about the center.
Speaker Change: That's helpful. Thank you.
Speaker Change: Thank you once again, if you would like to ask a question that is star one again.
Speaker Change: Again that is star one if you would like to join the queue.
Speaker Change: Our next question comes from <unk> Khan with B Riley Securities. Your line is now open.
Speaker Change: Yeah.
Khan: Hi, Thanks, a lot so maybe just on the on.
Khan: On the Dms invitation on the trends you saw.
Khan: Maybe.
Khan: If you can provide some color on the.
Khan: The existing base, if you were able to retain that.
Khan: And then.
Khan: Where are you seeing in terms of <unk> you.
Khan: Usage. After people are kind of upset all private declined which was previously maybe not being a default struck about back little bit.
Khan: Yes, it's Tony here I think that the spread they commented that.
Speaker Change: Yeah. So I don't think we have to disclose things a place you love all I'll ask yourself well, it's no it's not.
Khan: Relevant if you need it.
Khan: On your range. So it's a big buyback would also comment about how that the total of course as I said still small.
Khan: And even death life with you so I'll fix it up at the moment because I'm doing it off then there are also a major thing.
Khan: Yeah.
Khan: The active user base, which while they're happy about.
Khan: And then I think.
Khan: What we see is that yeah. So and you are right in the sense that allow you got to get the deep water Gulf. So I'll start first of all we do see a significant increase all the depot.
Khan: That's a very common like most other platforms they saw.
Khan: A big propulsion punching all about you've upset about that default.
Khan: Possible.
Khan: So the ratio is a pile, which relative are happier because yes that has a direct impact on public Apis or because they simply such more and they have a chance to expose more so so although not very positive.
Khan: And I think the only thing to get that with you of course.
Khan: At the beginning because knowledge on the EU and its also been Frac and then the other big companies in many countries.
Khan: So we feel that way.
Speaker Change: Pardon me I'll go up as we head into <unk>.
Khan: And some even bigger markets like the U S, which are all highly anticipated so let's see how it goes it develops and you indicated the largest company of the world.
Khan: Yes.
Khan: It's exactly the right trend across the move was awful lot too.
Speaker Change: Okay, and then maybe a quick follow up for <unk>.
Khan: Jay.
Speaker Change: Maybe you can just talk about the opportunities you're seeing for marketing spend.
Speaker Change: It came in a little bit.
Jay: Later than the first quarter, how should we kind of think about that.
Jay: Going out and do you see do you see some new channels you can deploy.
Jay: And orders into.
Jay: So we we had expected Q1 marketing spend to be very similar to Q4. It came in 2% below so I think it was quite an expectation.
Jay: And for the rest of the year, we continue to expect like $1 million to $2 million of incremental spend quarter by quarter. So keep ticking up.
Jay: Your progress I think in terms of the channel mix, we expect to continue what we do today.
Jay: Which is to to work with Influencers and to turn keep turning more of the spend into western markets and other high value.
Jay: Population sedan in particular for for opera Gx and its global growth.
Speaker Change: Understood and then for opera Gx, specifically maybe.
Speaker Change: Is.
Speaker Change: The growth Youre seeing in some of these new emerging markets.
Speaker Change: Is that primarily word of mouth or how much of that advertising and how does the.
Speaker Change: The monetization there kind of <unk>.
Speaker Change: Change overtime do you think that it's early days and it might actually improve.
Speaker Change: Become a bigger presence in a certain gyro or does that just gave.
Speaker Change: Give us some thoughts there.
Speaker Change: Sure.
Speaker Change: I mean in terms of the in terms of word of mouth and distribution mix, we do benefit from a strong brand.
Speaker Change: Once we have started to build presence. So that's we also show a chart on it and in our Investor presentation illustrates the size of the organic inflow of users, but it does require investment to start building a presence in the example of Gx race awareness of that product. So we do really well.
Speaker Change: We definitely do that and I think the second part of your question was around monetization opportunities.
Speaker Change: In in process.
Speaker Change: Off of our expanding the monetization of our projects I think the Q4 to Q1 RFP was was almost flat to down a couple of percentage points something like that which is very strong given the seasonally strong fourth quarter.
Speaker Change: On the product does benefit that the users it detracts outside western markets are relatively more affluent than the average user in those regions, but let's say if if RFP was constant and it continues to grow international is that of course would be a headwind but.
Speaker Change: Fortunately, we've been able to grow the underlying or through faster than than the let's say the geo mix impact.
Speaker Change: Understood.
Speaker Change: Thanks, guys.
Speaker Change: Sure.
Speaker Change: Yeah.
Speaker Change: Thank you. Our next question will come from Vicky Wei with Citi. Your line is now open.
Vicky Wei: Thanks for taking my question and congrats on the solid quarter I've got one question since that announcement.
Vicky Wei: Total 450 <unk>.
Vicky Wei: Then just on 15th families to offer one process in developing stream.
Vicky Wei: Continental Nekoosa shopper top five favorite models from that you see on your prior one.
Vicky Wei: In the case and how some of the usage of models.
Vicky Wei: On future financial close, although there's still more enhancement tools with limited one type of ship.
Vicky Wei: Okay.
Vicky Wei: Okay.
Vicky Wei: Yeah, Yeah, it's it's Tony here so yeah.
Tony: Perfect for months right. So so first of all I would say.
Tony: I think it's more like the number of I would say, it's fisheye, rather a reflection of way, but also many many ones like us many key opinion leaders in the industry feel well the AI heading to that.
Tony: It is always about via a combination of you have this very powerful not negligible dose right China hosted by the guys will go up in the eye and the likes.
Tony: But then also in combination I would say local models.
Tony: More like a you know well I think that the PDL example, glamour and others.
Tony: Well I think the way than just because we didn't just because you know there's all the use case that you want to get some help with very fast and then for privacy and other considerations you do not want this to be.
Tony: So digital cloud.
Tony: And also there are some cost transformation and some others. So so I think the only the mix. That's what's I'm very you know firsthand that actually still be taken by locally and that's all done.
Tony: And so what you will have to be done locally. So I think the basketball when I head into and with you that I'm quite happy on call. It almost a bit about the major wants to go to that policy I think really just because the way a lot of independent we don't have any more like but somehow the playoffs I understand there are some other considerations, but I did want from other cloud. So there's a lot of all for us <unk> just the tail walk.
Tony: You don't need right. So so I think that that's what's important blocks and then.
Tony: So I think the typical lines a lot of of course, it will always be they poke at all.
Tony: It's one of the most powerful lines from Facebook for metal and then you also have even Google had gamma right that what you would have gone down that then you know Microsoft has announced some some local models make laser weapons happy that that's put them into the right trends and also you do yes. We do all of these also tried mom, Australia, which is the latest model or just had so quite problems because it's only coming out.
Tony: Last week and now you can actually I tried that a hotel but also.
Tony: And usually it's a you know a very easy to get the deals that you don't have to go dig that up a lot of us. So I think that's the role we're playing in a wild card part of it.
Speaker Change: Yeah, so more like goes up.
Tony: It seems that we're happy to do it doesn't like I like.
Tony: Net and that's the way we are trying we're trying to do that in a very smart way, so mineral nor to bring out the heavy cost.
Tony: And it's almost in most of the upside just because.
Tony: Essentially that's it makes it all turned out more differentiated and hopefully the retention will be high and if they solve the use of longer than you would hope that they will speak to us longer. So I think he said when we situation because you can handle the day. It really comes from he is a CPU.
Tony: CPU and electricity he is on that book.
Tony: Which which I'm sure he'd be happy to take and it also doesn't bring additional cost to us. So I think all those are good.
Tony: <unk> is a good chance that way, we hope it to get to to remain the leading roles.
Speaker Change: Got it.
Tony: He was awesome.
Speaker Change: Thank you I can mainly time and I can maybe chime in from from the monetization points I think being able to take these types of AI features mainframe.
Speaker Change: That can attract to us exactly the type of user profile that we monetize the best right then and there we expect that these offline models will exist in combination with the online models like Oreo.
Speaker Change: Because of the the needs that require essentially updated information access to product access through other.
Speaker Change: <unk> thinks that won't be captured in an offline version so slightly different use cases.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Okay. So if there's no other questions.
Speaker Change: Oh did you say that you know thank you all for joining us today.
Speaker Change: I have been looking forward to share this quarter. The outfitted with you. It is certainly exciting times.
Speaker Change: And as you see we innovate and evolve quickly.
Speaker Change: The opportunities ahead.
Speaker Change: Most people talk about ads.
Speaker Change: As the year progresses, so stay tuned.
Speaker Change: And thank you for the time.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Thank you for your participation. This does conclude today's program you may disconnect at any time.
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Speaker Change: [music].