Q1 2025 Opera Ltd Earnings Call
Speaker Change: [music]. Please standby your perm was about to begin.
Operator: Please stand by, your program is about to begin.
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Operator: Welcome to the Opera Ltd first quarter 2025 earnings call. At this time, all participants are in a listen only mode.
Speaker Change: Welcome to the Opera limited first quarter 2025 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.
Operator: 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 the star 1 on your telephone keypad. If you want to remove yourself from the queue, please press star 2.
Speaker Change: Ask a question during this period, you will need to press star one on your telephone keypad, if you want to remove yourself from the queue. Please press star two.
Operator: Please be advised that today's call is being recorded. Lastly, if you should need operator assistance, please press star zero.
Speaker Change: Please be advised that today's call is being recorded lastly, if you should need operator assistance. Please press star zero.
Matthew Wolfson: I would now like to turn the call over to your speaker today, Matt Wolfson, Head of Investor Relations. Thank you for joining us this morning. I am joined by our co-CEO Song Lin and our CFO Frode Jacobsen.
Speaker Change: I'd now like to turn the call over to your Speaker today, Matt Wilson head of Investor Relations. Please begin.
Speaker Change: Thank you for joining us this morning, I'm joined by our co CEO song Lin and our CFO <unk> Jacobsen before I hand over the call to song Lin I would like to remind you that some of the statements that we make today regarding our business operations and financial performance may be considered forward looking such statements are based.
Matthew Wolfson: Before I hand over the call to Song Lin, I would like to remind you that some of the statements that we make today regarding our business, operations, and financial performance may be considered forward-looking. Such statements are based on current expectations and assumptions that are subject to a number of risks and uncertainties. Actual results could differ materially. Please refer to the Safe Harbor Statement in our earnings press release, as well as our annual report, Form 20-F, including the risk factors. We undertake no obligation to update any forward-looking statements.
Speaker Change: On current expectations and assumptions that are subject to a number of risks and uncertainties.
Speaker Change: Actual results could differ materially.
Please refer to the Safe Harbor statement in our earnings press release as well as our annual report form 20-F, including the risk factors. We undertake no obligation to update any forward looking statements. During this call. We will present, both I F. R S and non <unk> financial measures.
Matthew Wolfson: During this call, we will present both IFRS and non-IFRS financial measures. A reconciliation of non-IFRS to IFRS measures is included in today's earnings press release, which is distributed and available to the public through our Investor Relations website located at investor.opera.com. Our comments will be on year-over-year comparisons unless we state otherwise.
Speaker Change: Reconciliation of non Ifr S to Ifr S. Measures is included in today's earnings press release, which is distributed and available to the public through our Investor Relations website located at Investor does offer a dot com.
Speaker Change: Our comments will be on year over year comparisons unless we state otherwise with that let me turn the call over to our co CEO song Lin who will cover our first quarter operational highlights and strategy and then further jacobson, who will discuss our financials and expectations going forward.
Lin Song: With that, let me turn the call over to our co-CEO, Song Lin, who will cover our first quarter operational highlights and strategy, and then Frode Jacobsen, who will discuss our financials and expectations going forward. So thanks, Matt. And thank you to everyone for joining us today. I'm excited to share our strong post-school results with you and to provide an update on our recent business activity. The accelerating business momentum we experienced in the second half of 2024 continued into the first quarter of 2025. In fact, our year-over-year revenue growth increased from 29% in the fourth quarter to 40% in the fourth quarter, well above the 28% to 31% growth we had previously guided for the period.
Speaker Change: <unk>.
Song Lin: Sure. Thanks, Matt and thank you to everyone for joining us today I'm excited to share our strong first quarter results with you and to provide an update on <unk>.
Speaker Change: Our recent business activity.
Speaker Change: Does he accelerated business momentum we experienced in the second half old so literally full hunting out into the first call of the nearly five.
Speaker Change: In fact, our year over year revenue growth increased from 10, 9% in the fourth column to 40% in the first quarter well above the 28% to 31% growth. We had previously guided for the periods.
Lin Song: This translates to revenue of $143 million a record for the fourth quarter. Once again, our outperformance relative to our previously issued guidance was primarily driven by advertising, and in particular, the e-commerce opportunities we are focusing on. In fact, advertising revenue growth was 3% in the first quarter, reaching $96 million and now representing two-thirds of our total revenue. Within this, eCommerce was the fastest growing vertical and over 100% analyzed growth, which in turn offset the underlying humanity pattern we expect to see from Q4 to Q1. Search revenue was $47 million in the quarter, growing 8% year over year.
Speaker Change: This translates to revenue of <unk> hundred 43 million a record for the first caller.
Speaker Change: Once again all.
Speaker Change: Outperformance relative to our previously issued guidance was primarily driven by advertising and in particular, all the equal mouse opportunities we're focusing on.
Speaker Change: In fact out.
Speaker Change: Advertising revenue growth was six 3% in the first caller, reaching 96 2 million and now representing two salt, although our total revenue.
Speaker Change: In this arm equal most was the fastest william vertical and over 100% annualized growth, which in turn offset the underlying seasonality pattern, we expect to see from Q4 to Q1.
Speaker Change: <unk> revenue was 47 million niccolo.
Speaker Change: 8% year over year.
Lin Song: The browser serves as the crucial access point for search, and we are pleased to see continued growth in search revenue. By leveraging AI, we can effectively identify high user intent, enabling us to optimize the clickstream. This optimization allows us to deliver the best possible experience for both end users and partners, fostering the simultaneous growth of search and advertising. Revenue outperformance leads to increased profitability, as demonstrated by adjusted EBITDA of $32 million, also well above the high end of our previously issued range. The corresponding margin was 23%, meaning that we were able to accelerate our top line growth without sacrificing the expected profit margin percentage.
Speaker Change: The browser solved at the crucial at this point for such and we're pleased to see continued growth in sell through revenue.
Speaker Change: By leveraging AI, we can effectively identify high user intent, enabling us to optimize the click stream.
Speaker Change: This organization allows us to deliver the best possible experience for both end users and partners bolstering the simultaneous growth of search and advertising.
Speaker Change: Revenue outperformance it leads to increased profitability as demonstrated by adjusted EBITDA of solid 2 million also well above the high end or about previously issued range <unk>.
Speaker Change: Bonding margin was at 23%, meaning that they were able to accelerate our topline growth without sacrificing the expected profit margin percentage.
Lin Song: Our user base continues to be relatively stable and 293 million MAUs. while remaining consistent with our ongoing strategy of focusing on those users with the highest value potential. As a result, our annualized output grew and then outstanding 44% year over year. After significant updates to both Opera 1 and GX during the fourth quarter, the product launches in the fourth quarter were improvements on the recent refresh, such as the addition of Blue Sky, Discord, and Slack support to the sidebar of Opera 1. Even more relevant, at the Mobile World Congress, Opera became the first major browser to present AI-agentic browsing through the browser operator.
Speaker Change: Our user base continues to be relatively stable and 293 million and may use while remaining consistent with our ongoing strategy of focusing on those that you lost what is the highest value potential.
Speaker Change: As a result, our annualized <unk> growth and then outstanding 44%, Yeah, although Yale.
Speaker Change: After significant updates to both ultra one and <unk> during the fourth column the product launches in the first column loss improvements.
Speaker Change: These symptoms refresh such as the addition of Blue Sky discord and flexible to the sidebar I'll vote for one even more relevant and mobile World Congress Ultra became the first major Basel two presents.
Speaker Change: Indeed, you're browsing through the browser operator.
Lin Song: The browser operator marks the first step towards broadening the role of the browser to an application that is also agentic and can perform tasks for its users. While working on completing a task, browser operator lets the users see what's going on and any point in the process, as well as what steps it took to complete it. During this process, the user remains in full control and can take over or cancel the task at any given moment. The best part is that BrowseOperator works in the same environment as the user, the browser. And another event, just order this month's fourth live demo of Browser Operator, we showcased the Browser Operator's ability to make travel bookings and even order flowers to a particular hotel room in Lisbon.
Speaker Change: The browser opera Tor months, you'll false step towards broadening the roll ups ABRAZO tua application that is also a generic and then Ken a couple of <unk>.
Speaker Change: Asks voice he gives us.
Speaker Change: While walkout completing a task browser all trade sell lots of use us see what's going on in any point in the process as well as what steps it took to complete it.
Speaker Change: During this process the user remains in full control and they can take all ball or cancel the Pos and any given moment the desktop browser all create a walks in the same environment as they use all the browser.
Speaker Change: And another event just auto this mouse.
Speaker Change: Fossil live demo of Bras, all grateful we showcased the broth, although it is our ability to make travel bookings and even although flawless. So a particular hotel room in at least one <unk>.
Lin Song: Given a handful of parameters in English, the browser found a retailer with a website in Portuguese. Filled the shopping cart with specified flowers, along with all relevant delivery and payment information, with only the final checkout to be clicked by the user. We are just starting to see what is possible with an agentic browsing experience. We also brought our browser AI ARIA to Opera Mini. This makes ARIA available across our full suite of browsers for both mobile and desktop users. Now close to 300 million people can enjoy the benefits of ARIA, allowing even our most data conscious users to harness the power of AI in a data efficient manner.
Speaker Change: Given a handful parameter English the brown father retailer, whereas the websites impulse gifts.
Speaker Change: Field the shopping cart was specified the flawless along ways, all relevant delivery and payment level machine, whereas only the final checkout to be click biodiesel.
Speaker Change: We are just starting to see what is possible.
Speaker Change: And <unk> browsing experience.
Speaker Change: We're also brought our browser.
Speaker Change: To offer many this makes IRA available across our full suite of Brazos for both mobile and desktop use us.
Speaker Change: Now close to 300 million people can enjoy the benefits of Iris, allowing eval most data consciously gives us to harness the power of the AI Daytona efficient mono.
Lin Song: Tending to operate GX, the browser made for gamers. Our GX user base was 34 million, stable. This is the strong and release rate in the fourth quarter. Annual basis, we grew the GX user base by 14%, with the current analyzed output of $3.41, slightly down from the seasonal peak of 2.4. Engagement on GX remains high, with continued sequential growth in the number of GX games that are published, registered users, and the number of unique modes available to users. We also announced our first game for Roblox, Tails or Beak, which is a competition where up to 25 players have to race up a decimated and obstacle-filled wasteland in a high-stakes battle.
Speaker Change: Turning to opera Gx browser made full game at all.
Speaker Change: <unk> user base was solid 4 million stable. This is there was strong in the release already in the fourth quarter.
Speaker Change: Annual basis, we grew the gx user base by 14% laser current annualized <unk> of $3.41 slightly.
Speaker Change: Slightly down from the seasonal peak of Q4 engagement on Gx remains high with continued sequential growth in the number of <unk> games that are published we adjusted the users and the number of unique modes available to use us.
We also are non with false again, roadblocks health, which is a competition well up to 25 playoffs absolute racer, a designated and obstacles field wasteland.
Speaker Change: High Stakes about though.
Lin Song: During the first quarter, we also released the latest member of the Opera Brasso family, Opera L. This browser with mindfulness front and center has already received a warm welcome by the tech press with enthusiastic and in-depth coverage. And we are in the process of fine-tuning it ahead of increasing its marketing. Still, in its first two months alone, Opera AR has already been downloaded over half a million times. And we are seeing very encouraging usage. Consistent with our focus on the highest value results, Opera Air is targeting users in Western markets. It is still early days, but we like what we see.
Speaker Change: During the first quarter were also released the latest member of the opera browser family.
Speaker Change: Al.
Speaker Change: This Russell waste Mindfulness front and center has already received a warm welcome by the techs Chris.
Speaker Change: Ethic and in depth coverage and the way I in a process of fine tuning. It ahead of increasing its marketing still in its first two months alone Ultra al has already been downloaded.
Speaker Change: Half a million times in the way of asking very encouraging usage.
Speaker Change: Consistent with our focus on the highest value users.
Speaker Change: <unk> is targeting and there's also a lesser markets. It is still early days, but we like what we see.
Lin Song: To summarize, 2025 is off to an impressive start, scaling our business faster than we had thought possible just a few months ago. The fact that we achieved this in the face of a highly volatile macro backdrop says something about the appeal of our broadening browser portfolio and our monetization capabilities. And we'll certainly do our very best to keep it up.
Speaker Change: To summarize turning to device is off to an impressive stocks.
Speaker Change: Counting all business faster than we had sold a possible just a few months ago.
Speaker Change: <unk> achieved this in the face of a highly volatile volatile macro backdrop since I'm, saying about the appeal of our broadening browser policy, Lille and our monetization capabilities and will supplement and do our very best to keep it up.
Lin Song: Finally, since a lot of our conversation today might center on the volatility affecting the broader market, I thought to also mention that Opera is actually celebrating its shortest anniversary in 2025. and I've personally been part of the journey for nearly 23 of those years. We found ourselves in the midst of some other major disruptions over that time, including the emergency of the web itself, our own pioneering of making the internet available on mobile phones. The fall of the market of telecoms, the emergency of smartphones, and the globalization of Internet access, we've dealt with changing environments and competition from companies a thousand times bigger than ourselves.
Speaker Change: Finally, since a lot of conversation today might Santa Ana volatility affecting the broader market I thought you also mentioned that ultra is actually celebrating its <unk> anniversary in 2025.
Speaker Change: And I've personally been part of the G&A for Neil the 23 of those deals.
Speaker Change: <unk> found ourselves is a nice hold some other major disruptions, although that time, including the emergency of the web itself.
Speaker Change: Owen pioneering of making the internet available on mobile phones.
Speaker Change: Therefore of the market technicals.
Speaker Change: Emergency all the smartphones and the globalization of the Internet access.
Speaker Change: This deal at least changing environments and competition from companies that are solid and times bigger than ourselves.
Lin Song: All that to say that we have a strong track record of navigating a rapidly evolving landscape and finding ways to benefit from it and to contribute to innovation. So while today it's natural that we focus our ability to grow even faster than what we told you to expect last time, this will always be made possible by our internal focus on how we develop our products and platforms to set ourselves up for success in the long run.
Speaker Change: All you have to say that we have a strong track record of navigating a rapidly evolving landscape.
And finding ways to benefit from it and to contribute to innovation. So while today, it's natural that we would focus on our ability to grow even faster than what we told you to expect last time. This has always been made possible by our internal focus.
Speaker Change: <unk> developed our products and platforms to set ourselves up for success in the long run.
Frode Jacobsen: With that, let me hand the call over to Frode for additional details. Thanks, Tom. Staying on the topic of rapid scaling, with revenue coming in nearly 10 million above the high end of our guidance range, we are certainly off to a solid start of the year with a 40% year-over-year growth rate in the quarter. That is 11 percentage points above both Q4 and the midpoint of guidance for Q1 and says something about the underlying commercial success of opera as we enter a new period where an important geography like the US is held back by greater uncertainty among many advertisers.
Speaker Change: With that let me hand, the call over to Florida for additional details.
Speaker Change: Thanks, Tom.
Speaker Change: On the topic of rapid scaling with revenue coming in nearly $10 million above the high end of our guidance range. We are certainly off to a solid start of the year with a 40% year over year growth rate in the quarter.
Speaker Change: That is 11 percentage points above both Q4 and the midpoint of guidance for Q1 and says something about the underlying commercial success as we enter a new period. We are an important geography like the U S is held back by greater uncertainty among many.
Speaker Change: Advertisers.
Frode Jacobsen: Over our nearly seven years as a public company, we've scaled to become several times bigger versus where we started. And we've been careful to guide with caution, even though the underlying trend has consistently been a very positive one. While in retrospect we could have been less conservative in terms of reflecting how headwinds could affect the first quarter, it is certainly rewarding that we are now able to raise guidance further, even if we believe that these headwinds might be more pronounced in the quarters to come. The underlying success of opera and our diverse geographic footprint both provide natural edges.
Speaker Change: Over our nearly seven years as a public company with scale to become several times bigger versus where we started.
Speaker Change: And we've been careful to guide with caution even though the underlying trend has consistently been a very positive one.
Speaker Change: While in retrospect, we could have been less conservative in terms of reflecting how headwinds could affect the first quarter. It is certainly rewarding that we are now able to raise guidance further even if we believe that these headwinds might be more pronounced in the quarters to come.
Speaker Change: The underlying success of opera and our diverse geographic footprint, both provide natural hedges.
Frode Jacobsen: Beyond revenue, we are also very pleased that our adjusted EBITDA came in at the highest margin percentage indicated in guidance, adding more than $2 million on top of the high end of our EBITDA guidance range. In terms of costs, we saw cost of revenue items scale in line with the advertising revenue over performance. Apart from that, our Opyx items, pre-adjusted EBITDA, landed in accordance with our prior directional commentary. This included lowering our marketing spend to $34 million from $41 million in the fourth quarter, which was elevated due to multiple product launches. As in recent periods, we have focused our marketing spend on those users with the highest ARPU returns.
Speaker Change: Beyond revenue. We are also very pleased that our adjusted EBITDA came in at the highest margin percentage indicated and guidance, adding more than $2 million on top of the high end of our EBITDA guidance range.
Speaker Change: In terms of costs, we saw cost of revenue items scale in line with the advertising revenue over performance.
Speaker Change: From that our Opex items pre adjusted EBITA landed in accordance with our prior directional commentary.
Speaker Change: This included lowering our marketing spend to 34 million from $41 million in the fourth quarter, which was elevated due to multiple product launches.
Speaker Change: As in recent periods, we have focused our marketing spend on those users with the highest returns.
Frode Jacobsen: Our cash compensation cost was $18 million, up about $1 million versus the Q4 level, and more similar to the recent average quarterly cost level, as expected. Other OPEX items combined were $8 million, up about half a million versus the Q4 level, and also as expected. Year over year, all of these cost categories increased in dollars but reduced as percentage of revenue as we benefit from economies of scale. Our operating cash flow was $16 million in the quarter, representing 49% of adjusted EBITDA. Free cash flow from operations came in at $12 million, or 37% of adjusted EBITDA.
Speaker Change: Our cash compensation cost was $18 million up about $1 million versus the Q4 level and more similar to the recent average quarterly cost level as expected.
Speaker Change: Other opex items combined were $8 million up about half a million dollars versus the Q4 level and also as expected year over year. All of these categories increased in dollars, but reduced as a percentage of revenue as we benefit from economies of scale.
Speaker Change: Our operating cash flow was $16 million in the quarter, representing 49% of adjusted EBITDA free cash flow from operations came in at $12 million or 37% of adjusted EBITDA.
Frode Jacobsen: As in prior years, we continue to expect fluctuations in cash conversion on a quarterly basis, which will stabilize as the year progresses towards the full-year value. For example, in this particular quarter, the fact that revenue remained unusually strong as we exited the peak shopping season of Q4 also meant that our accounts receivable did not contract as they did in Q1 last year. and the reduction in marketing costs drove a reduction in quarter-end payable. But of course, such effects benefit cash flow in future quarters, and so for the year as a whole, it's neutral.
Speaker Change: As in prior years, we continue to expect fluctuations in cash conversion on a quarterly basis, which will stabilize as the year progresses towards the full year Maui for example in this particular quarter. The fact that revenue remained unusually strong as we exited the peak shopping season of Q4.
Speaker Change: <unk> also meant that our accounts receivable did not contracted as they did in Q1 last year and a reduction in marketing costs drove a reduction in quarter and payables, but of course, such effects benefit cash flow in future quarters, and so for the year as a whole it's neutral.
Frode Jacobsen: To conclude, Q1 marks our 16th consecutive quarter as a rule of 40 companies, and yet another quarter of meeting or exceeding our guidance. We are proud to combine solid growth with healthy profitability and have now entered our third year as a recurring dividend-paying company, which lets our shareholders directly benefit from our cash generation through a proper and meaningful yield. Since January 2023, we have distributed $2.40 of dividends per share with the next record date scheduled for July.
Speaker Change: To conclude Q1 marks our 16th consecutive quarter, that's a rule of 40 company and yet another quarter of meeting or exceeding our guidance. We are proud to combine solid growth with healthy profitability and have now entered our third year.
Speaker Change: That's a recurring dividend paying company, which lifts our shareholders directly benefit from our cash generation through a proper and meaningful yield.
Speaker Change: Since January 2023, we have distributed $2 40 of dividends per share with the next record date scheduled for July.
Frode Jacobsen: Now, turning to guidance. Given political tensions and unresolved trade disputes, we expect to remain in a volatile period for the foreseeable future. But as a lean and fast-moving company, with the ability to navigate growth pockets, we will do our best to play it to our strengths. Apart from having guided cautiously as the year commenced, there are a couple other reasons why we have some natural cushions from the current volatility as it relates to e-commerce and the US. First, while e-commerce is our fastest growing vertical, we still consider the U.S. e-commerce opportunity to be mostly ahead of us.
Speaker Change: Now turning to guidance.
Speaker Change: Given political tensions and unresolved trade disputes, we expect to remain in a volatile period for the foreseeable future.
Speaker Change: But as a lean and fast moving company with the ability to navigate growth pockets, we will do our best to play to our strengths.
Speaker Change: Apart from having guided cautiously as the year comments there are a couple of other reasons why we have some natural cushions from the current volatility as it relates to e-commerce in the U S.
Speaker Change: First while e-commerce is our fastest growing vertical we still consider the U S e-commerce opportunity to be mostly ahead of us.
Frode Jacobsen: In other words, we have less exposure than many others and believe that there is plenty of opportunity to scale this further in a more normalized environment. Second, almost all of our advertising revenue is performance-based as opposed to brand advertising. That means that the payment from the advertiser is tied to measurable results which we believe makes the business more resilient. Taken together, we believe we are in a pretty good relative position for whatever comes next. For 2025 as a whole, we now raise revenue guidance to $567 to $582 million or 20% annual growth at the mid-point.
Speaker Change: The words, we have less exposure than many others and believe that there is plenty of opportunity to scale. This further in a more normalized environment.
Second almost all of our advertising revenue is performance based as opposed to brand advertising.
Speaker Change: That means that the payment from the advertiser is tied to measurable results, which we believe makes the business more resilient.
Speaker Change: Taken together, we believe we are in a pretty good pretty good relative position for whatever comes next.
Speaker Change: For 'twenty to 'twenty five as a whole we now raised revenue guidance to 567 million to $582 million or 20% annual growth at the midpoint up from $555 million to $570 million.
Frode Jacobsen: up from 555 to 570 ml. That means we are already adding three incremental percentage points of full year growth with the former high end of guidance now representing the lower part of our revised rate. Similar to before. We have based our guidance on sequential modeling with the raised estimates capturing the Q1 overperformance as well as a modest incremental uplift in what we had previously assumed for each remaining quarter of the year. As before, this results in a relatively stable trend of quarterly revenue growth measured on a two-year CAGR, which captures the scale we have built in recent quarters, while also evening out our forward-looking growth program.
That means we are already adding three incremental percentage points of full year growth with the former high end of guidance now representing the lower part of our revised range.
Speaker Change: Similar to before.
Speaker Change: We have based our guidance on sequential modeling with the race estimates capturing the Q1 over performance as well as a modest incremental uplift than what we had previously assumed for each remaining quarter of the year.
Speaker Change: That's before this results in a relatively stable trend of quarterly revenue growth measure on a two year CAGR, which captures the scale. We have built in recent quarters. While also evening out our forward looking growth profile.
Frode Jacobsen: In terms of adjusted EBITDA, we now guide $135 million to $140 million for the year as a whole, continuing to represent a 24% margin at the midpoints, but raised to reflect the incremental revenue. Cost-wise, we then implicitly guide to a full European space, pre-adjusted EBITDA, of 437 million at the midpoints, with a further amplification of the trends that we discussed last year. Our baseline expectation remains that the margin headwind from growth in cost of revenue items will be offset by margin tailwinds from economies of scale in the remainder of our cost base, leading to a stable EBITDA margin on top of a rapidly scaling revenue base.
Speaker Change: In terms of adjusted EBITDA, We now guide of $135 million to $140 million for the year as a whole continuing to represent a 24% margin at the mid points, but rates to reflect the incremental revenue.
Speaker Change: Cost wise, we then implicitly guide to a full year Opex states pre adjusted EBITDA of $437 million at the mid points with a further amplification of the trends that we discussed lists.
Speaker Change: Our baseline expectation remains that the margin headwind from growth and cost of revenue items will be offset by margin tailwind from economies of scale and the remainder of our cost base, leading to a stable EBITDA margin on top of a rapidly scaling revenue base.
Frode Jacobsen: We now expect cost of revenue items combined will reach 32 to 33% of revenue in 2025, scaling with our overperformance. We expect that marketing costs will grow at the year-over-year percentage in the high single digits with a relatively stable level from Q1 to Q2 before ticking up somewhat higher in the second half of the year. We expect both cash compensation and all other OPEX items, pre-adjusted EBITDA combined, to grow at year-over-year percentage rates in the mid-to-high single-digit For more information visit www.opex.com In other words, marketing, compensation, and the sum of the other small ROPEX items are all expected to continue to decline as a percentage of revenue in 2025.
Speaker Change: We now expect cost of revenue items combined will reach 32% to 33% of revenue in 2025 scaling with our over performance. We expect the marketing cost will grow at the year over year percentage in the high single digits with a relatively stable level from Q1.
Speaker Change: Into Q2 before taking up somewhat higher in the second half of the year.
We expect both cash compensation and all other opex items pre adjusted EBITA combined to grow it year over year percentage rates in the mid to high single digits in other words marketing compensation and some of the other smaller opex items are all expected to continue.
Speaker Change: To decline as a percentage of revenue in 2025.
Frode Jacobsen: In line with all this, we guide Q2 revenue of $134 to $138 million, representing 24% growth at the midpoints, and Q2 adjusted EBITDA of $30 to $32 million, or a 23% margin at the midpoints. This represents the list versus previous Q2 estimates as part of our formal full year guide. while also including a buffer for volatility from e-commerce advertisers targeting U.S. consumers. Within the implied quarterly OPEC space of 105 million at the midpoints, we expect that cost of revenue items as percentage of revenue will be in the low 30s in the quarter, just below our full year expectations.
Speaker Change: In line with all of this we guide Q2 revenue of $134 million to $138 million, representing 24% growth at the midpoint in Q2, adjusted EBITDA of $30 million to $32 million or a 23% margin at the mid points.
Speaker Change: This represents a lift versus previous Q2 estimates as part of our formal full year guidance.
Speaker Change: While also including a buffer for volatility from ecommerce advertisers targeting U S consumers.
Speaker Change: Within the implied quarterly Opex space of $105 million at the mid points, we expect that the cost of revenue items as a percentage of revenue will be in the low thirties and the quarter just below our full year expectations, we expect marketing cost in the mid to low $30 million range, and thereby relatively stable versus the <unk>.
Frode Jacobsen: We expect marketing costs in the mid to low $30 million range, and thereby relatively stable versus the first quarter. And we expect cash compensation costs to increase about $1 to $2 million versus the Q1 level, inclusive of annual salary adjustments and potentially a weaker U.S. dollars relative to the main currencies of our salary. All other Opyx items pre-adjusted EBITDA are expected to remain quite stable and totality.
Speaker Change: First quarter, and we expect cash compensation cost to increase about $1 million to $2 million versus the Q1 level.
Speaker Change: Inclusive of annual salary adjustments and potentially a weaker U S dollars relative to the main currencies of our salary expense.
Speaker Change: All other opex items pre adjusted EBITDA are expected to remain quite stable in totality.
Frode Jacobsen: All in all, we are very pleased with the continued success of our business and how we are taking advantage of opportunities to scale faster, even in the face of macro challenges that for now might delay some of our growth potential.
Speaker Change: All in all we are very pleased with the continued success of our business and how we are taking advantage of opportunities to scale faster even in the face of macro challenges that for now might delay some of our growth potential.
Operator: 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 1 on your telephone keypad. To withdraw your question, press star 2. When posing your question, we ask that you please pick up your handset for optimal sound quality.
Speaker Change: With that I'll turn the call back to the operator for questions.
Speaker Change: Thank you as a reminder to ask a question. Please press star one on your telephone keypad to withdraw your question Press Star Kim when posing your question. We ask that you. Please pickup your handset for optimal sound quality.
Naved Khan: We'll take our first question from Naved Khan with B. Reilly Securities. Please go ahead. Great. Thank you so much, and congrats on the quarter and the raceguards. I just have a couple of questions.
Speaker Change: We will take our first question from David Kang with B Riley Securities. Please go ahead.
David Kang: Great. Thank you so much and congrats on the quarter and the raised guidance I just have a couple of questions.
Naved Khan: Maybe one is just on the surge growth during the quarter. You know, the 8% slowdown from the sort of, you know, teens growth rate that we had been seeing, is that because you're able to funnel some of this into e-commerce advertising and this is a net result of that, what's the right way to think about surge for the full year?
Speaker Change: Maybe one just on the <unk>.
Speaker Change: On the search growth during the quarter.
David Kang:
David Kang: Is the 8% of the slowdown from the sort of in the teens.
David Kang: Teens rotated we had been seeing.
David Kang: Is that because you're able to.
David Kang: I know some of this entry into e-commerce advertising.
David Kang: This is a natural vendor that what's that.
Correct way to think about search for the full year and the second question I have is on Gx our pool.
Naved Khan: And the second question I have is on GX. Our pool declines sequentially. I get it, there is seasonality, but it also seems like it is below the levels in the quarter before that. How much of a factor is the macro and the XR pool? Thank you.
David Kang: Declines sequentially I get it is seasonality, but it also seems like.
David Kang: It is below the levels in the quarter before that.
David Kang: How much of a factor is that as a macro in the next cycle. Thank you.
Lin Song: Yeah, so it's only hell.
Tony: Yes, so it's Tony I think that's just try to answer both.
Lin Song: I think I'll just try to answer both of the questions. So I think for SOG, I think basically you are right that, you know, basically what we see is that overall, the whole industry is actually shifting towards a more, I would say, intent-based targeting and advertisement. And we just want to grasp that opportunity. So like, even though, of course, SOG is always a very, very important part of the browser revenue, the moment we can identify user intent, we have possibility of bringing other form of, let's say, advertisements with the clickstream. So I would say this partly explains why there's some more like, that's partly why actually you saw so fast world advertisements overall.
Tony: Most of the questions. So I think for solid I think basically you are right that.
Tony: Basically what we see there.
Tony: Overall, the whole industry is actually shifting towards a more I would say intent based.
Tony: And advertisement and we just want to grasp that opportunity set.
Like even though of course <unk> is always a very very important part of the browser revenue.
Tony: The moment, because they can identify user intent.
Tony: We have the possibility at all bringing us all adult formula that's advertisements ladies that extreme.
Tony: So I would say this partly explains why does sound more like that's probably why assay is social fossil well the advertisements overall.
Lin Song: And then, you know, even though SOG is a bit of a double digit, it's still a nice world that we're happy with. Yeah, so like, I think basically the overall trend is a bit what we're describing. But then, of course, in the coming quarters, I think we're still actually see there will be a very strong growth of SOG moving forward. It's just that we will always be optimistic to see that there's a chance. It makes more sense ROI-wise, let's say. And also from a user point of view, to let them exposed to even more ads in different form, you know, format shapes, we will be very happy to do it.
Tony: And then.
Tony: Even though such is.
Tony: The double digit is still a nice well said about happy with.
Yeah, so like like I think basically available trends, let me describe in but then of course in the coming quarters. I think we're still ask they see there will be a very strong growth. So so much.
Tony: Moving for a while and just adds a little always be optimistic to see that is that Charles it does it make more sense ally was let's say.
Tony: And also any other kind of deal to let them exposed to capable ads in different ball.
Tony: They will give very happy to do it.
Lin Song: So and as overall macro, that's probably benefit us much more than anything else. So there is on that.
Tony: So and as all of the macro that's probably benefited us.
Tony: Much more than anything else.
Lin Song: And then I think for GX, it's a bit similar that first of all, I think GX is a business analytics because QI is also a bit harder to see the models. So there is that. And then I guess there is also a matter of now we actually also with the help of AI, with the help of this high intent advertisement or whatever, we actually have many more options where we show those ads. It can potentially be in GX, but then there might also be some other place to show those ads with the same effect. And then, of course, as far as those are not shown in GX, we don't really count them as GX revenue.
Tony: And then.
Tony: I think for <unk> is to be similar all of that first of all I think <unk> be seasonality because.
Tony: <unk> is also a better holiday season.
Tony: So there is that and then I guess there is also a macro.
Tony: Now we actually also way to help with AI was helpful. How you intend to advertisement we actually have many more options well they show that it can potentially be judged by the MTR might also be some other place to show that when does that mean.
Tony: And then of course that fire because I'm not shut in GFS, we don't really come down at <unk> revenue.
Lin Song: So that's the other part of it, mechanics. But I would say overall, it's actually benefiting for Opera as a company for totality.
Tony: That'll Palo Verde.
Tony: But I would say overall is actually benefiting from Oprah as a company.
Tony: Full capacity.
Lin Song: Yeah, I think that's the short answer of those two questions.
Tony: Yes, I think thats the short answer those two questions.
Frode Jacobsen: And on GAX, I forgot to ask about currency, if currency played a role because the dollar is pretty strong in Q1. How should I think about that? U.S. dollar continues to be or provide a headwind in terms of constant currency, so our growth would have been, we estimate, five to six percentage points higher on constant currency. We see on a sequential basis the impact is quite muted, so of course in the quarters ahead that might turn to a positive tailwind, but for now it's still been a headwind.
Tony: <unk>.
Tony: On <unk> X I forgot to ask about currency.
Tony: Currency played a role because of $1 pretty strong Q1 so.
Speaker Change: How should we think about that.
Tony: Yes.
Tony: U S dollar continues to.
Tony: Provide a headwind in terms of constant currency, so our growth would have been.
Tony: We estimate five to six percentage points higher on constant currency, we see on a sequential basis.
Tony: Impact is quite muted.
Tony: So of course in the quarters ahead.
Tony: <unk> turned to a positive tailwind, but for now it's still been a headwind.
Naved Khan: Thanks so much. Thank you.
Tony: Thanks, so much.
Speaker Change: Thank you we'll take our next question from Lance Vitanza from TD Cowen. Please go ahead.
Lance Vitanza: We'll take our next question from Lance Vitanza from TD Cowen. Please go ahead. Thanks, guys. Congratulations on the strong quarter. A few questions here. The first, on the e-commerce growth, you mentioned that it offset the typical seasonality. I assume that's just because it's growing so quickly, right?
Speaker Change: Thanks, guys. Congratulations on the strong quarter a few questions here the first.
Speaker Change: On the E Commerce growth you mentioned that.
Speaker Change: It offset the typical seasonality I assume that's just because it's growing so quickly right I mean, what I'm getting at is that once the E. Commerce business reaches maturity so to speak I assume that it too would be seasonal or do you think we should expect a return to the typical seasonality that we've seen at opera.
Lance Vitanza: I mean, what I'm getting at is that once the e-commerce business reaches maturity, so to speak, I assume that it too would be seasonal, or do you think we should expect a return to the typical seasonality that we've seen at Opera in the first quarter of next year?
Speaker Change: In the first quarter of next year.
Frode Jacobsen: Hey Lance, you were right. It's Tony Hale. Okay, I'll just complete so you can take over. That is what we meant. It's the underlying growth of the e-commerce opportunity has been so strong that we didn't see a seasonality factor that we would normally expect.
Tony: Youre right its Tony here.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Please go ahead, Peter can take over.
Speaker Change: And that is what we meant that the underlying growth of the E. Commerce opportunity has been so strong that we didn't see a seasonality factor that we would normally expect so I will hand, it over to you.
Lin Song: Song, I'll hand it over to you. uh no no I think I think what Frode described is right right so I think of all of course revenue always have to the humanity it should be the case uh but then of course whenever we saw some aspects which are growing very fast and then that that is almost a happy issue that it should grow almost out of the humanity and I think the only thing maybe I'll emphasize is that of course uh the total e-commerce market is such a huge market right so like you know we're talking about a billion dollar market and even if we grow to be a billion dollar in revenue well only one percent of it so so so I would almost say that yes you should always assume to the nativity as always um the growth potential are so huge for the company like us especially on the grounds of e-commerce um so I think we're coming to focus on it and hopefully we can maintain a quite aggressive growth speed in the next quarters to come.
Speaker Change: No no I think I think the Watford that despite these rights. So I think although of course revenue always have seasonality it should be the case.
Speaker Change: That will of course.
Speaker Change: We have always we sold some aspects which are growing very fast.
Speaker Change: That is almost happy issue that.
Speaker Change: To build almost out of seasonality I think the only thing maybe I'll emphasize is that of course.
Speaker Change: Total equal amongst the market is such a huge market right. So like.
Speaker Change: About 100 billion dollar market.
Speaker Change: We're all in to be a billion dollar revenue well into one another.
Speaker Change: So so so I would almost say that yes.
Speaker Change: Yes, you should always assume that to the amount of data as always.
Speaker Change: Gross finish off so huge for the company like US is Sebastian underground BELBUCA mouse.
Speaker Change: So I think it will come into force and hopefully we can maintain that.
Speaker Change: Slide aggressive speed in the next quarter.
Lance Vitanza: Got it, thanks.
Speaker Change: Got it thanks and then.
Lance Vitanza: And then the overall user base, it's drifting a little bit lower. It feels like it's getting harder to round up to 300 million MAUs. I'm just wondering, is there any cause for concern there? If not now, perhaps in the future, is there a level of total MAUs at which you don't want to be below?
Speaker Change: The overall user base, just drifting a little bit lower it feels like it's getting harder to round up to $300 million may use and I'm. Just wondering is there any cause for concern there if not now perhaps in the future is there a level of total meus at which you don't want to be below.
Speaker Change: Yes.
Frode Jacobsen: Lanta, I can begin. The thing is there's not a single person in the company that is measured on the MAU count itself, because what's important is the byproduct, by day, etc., engagement and stuff that actually drives the revenue. So I think similar to past quarters, what the movements we are seeing is typically emerging markets, mobile users that are churning faster and then we are focusing our marketing spend and growth initiatives on the user base that has the highest ARPU potential. Even though that comes with the trade-off of fewer users coming in, but driving a lot higher revenue, and this is what you see in our ARPU too, that it's up so much, 45% or so, in the past year.
Speaker Change: Alright.
Speaker Change: I can begin.
Speaker Change: Sure.
Speaker Change: The thing is there's not a single person in the company that is measured on the MMA you'd count itself because what's important is the byproduct by day et cetera engagement and stuff that actually drives the revenue. So I think similar to past quarters whats. The movements. We are seeing is typically.
Speaker Change: Emerging market mobile users that are churning faster and then we are focusing our marketing spend and growth initiatives on the user base and is the highest our food potential.
Speaker Change: Even though that that comes with the tradeoff of fewer users coming in but driving it a lot higher revenue and this is why when you see an RFP to rise and it's it's up so much or 45% or so.
Speaker Change: In the past year.
Lance Vitanza: Okay, and then just one last one for me, switching gears a little bit, but there's been a lot of news flow recently around U.S. antitrust actions affecting Alphabet and the rest of big tech.
Speaker Change: Okay, and then just one last one for me.
Speaker Change: Switching gears, a little bit, but there's been a lot of news flow recently around U S antitrust actions affecting alphabet and the rest of Big Tech could you talk for a few minutes about how you see the broader ecosystem.
Lin Song: Could you talk for a few minutes about how you see the broader ecosystem evolving and what that could mean for Opera's businesses, both on the browser side and also in ad tech? Yeah, it's only hell. Yes, I could. So, I'll just comment, right? So, we can't really comment on particular litigation, I guess. But I would just say that, overall, I think we have been seeing really, like, even without this litigation, we saw that there is some major shiftings of, you know, how advertisers do business. That, you know, they focus on this, you know, high intent click streams, which previously is only available, I guess, on certain products like such.
Speaker Change: And what that could mean for operating businesses, both on the browser side and also in AD Tech.
Speaker Change: Yes, yes, it's only hill, yes, yes, so I'll just call them right. So it was kind of really comment on particular litigation I guess.
Speaker Change: I'd just say that.
Speaker Change: Overall.
Speaker Change: We have been seeing really likely even without litigation we saw that the bill is a major shift in all.
Speaker Change: How advertisers do business there.
Speaker Change: They are focused on basically the high intent exchange, which gave us that is only available.
Speaker Change: Yes.
Speaker Change: Southern product like <unk>, but now laser help of AI, it's much more widely available. So why does even though topic. So I would almost say that my view I'll deal with that.
Lin Song: But now, with the help of AI, it's much more widely available, right? So, why is it even a topic? So, I would almost say that my view, our view is that, you know, of course, that's really benefiting to Opera as a company, the trend. Because, of course, as I mentioned earlier, browser is becoming more and more the topic, even from all those, you know, litigation or whatever. There's a lot of talks about browser, right? Like, it is, it is hotter than ever. We've never, we've never seen. It's almost back to the old days where, like, it's the beginning of the internet that everybody's talking about it.
Speaker Change: That's really benefiting too are proud of the company the trend because of course as I mentioned not all but also to become in random politic, even from all those litigation a lot of all but a lot of talks about browser right. Like it is it is a hotel that have I'll, let neville.
Speaker Change: Scene.
Speaker Change: It's almost a basketball days well like it's at the beginning of the Internet that everybody's talking about it.
Lin Song: So, to us as a browser company, of course, that's as good as it gets for the attention and focus. So, I think we are also very visible to innovate, both in terms of browser, but also in terms of how it can be monetized based on user intent and click stream and relevant items, right? So, that in isolation is a very positive trend. I guess those, you know, legislations is almost reflecting part of it. And then, you know, like also the various cases or whatever, they, of course, asking for opening up for competition or whatever, you know, right or wrong in general.
Speaker Change: So to us at the browser and company <unk>, that's as good as it gets.
Speaker Change: She and her focus so.
Speaker Change: I think <unk> also de <unk> and <unk>.
Speaker Change: Both in terms of the browser, but also in terms of how it can be monetize the based on the user intent and extreme in the relevant items right. So so Daphne alkylation unit, the very positive trends I guess those are related.
Speaker Change: On the exploration is almost.
Speaker Change: Reflecting palo there and then also the <unk>.
Speaker Change: <unk> has a lot of all the old cost asking for opening.
Speaker Change: A combination of a lot of all.
Speaker Change: Right or wrong in general that overall trend is positive in class I would say that.
Lin Song: That overall trend is positive for us, I would say, that, you know, there are big opening up and we are still as an agile company. We are coming from a small place. It means we have many, many times growth potential and we are very positive about the direction.
Speaker Change: They are all being opening up Nols.
Speaker Change: We are still as agile company coming.
Speaker Change: Coming from a small small place it means that we have many many times the growth potential in them that allow very positive about the directions.
Operator: Thank you, gentlemen.
Speaker Change: Thank you gentlemen.
Eric Sheridan: Thank you and our next question will be from Eric Sheridan with Goldman Sachs. Please go ahead. Thanks so much for taking the question. I want to go a little bit deeper into the e-commerce opportunity. Can you give us a little bit of color of either the vertical exposure or the geographic exposure of your e-commerce advertisers today? How to think about the diversification of that mix looking out over the next 12 to 18 months? And when you talk to these advertisers and there's elements of them winding out the array of advertising we do as a platform, how do you think about some of the gaining factors that you're trying to solve for with them to increase their overall budget exposure?
Speaker Change: Thank you and our next question will be from Eric Sheridan with Goldman Sachs. Please go ahead.
Speaker Change: Thanks, So much for taking the question I wanted to go a little bit deeper into the E. Commerce opportunity could you give us a little bit of color of either the vertical exposure or the geographic exposure of your E. Commerce advertisers today, how do you think about the diversification of that mix looking out over the next 12 months to 18 months and when you talk to these.
Speaker Change: <unk> theres elements of them widening out the array of advertising, we view as a platform. How do you think about some of the gating factors that you are trying to solve for with them.
Speaker Change: To increase their overall budget exposure. Thank you.
Frode Jacobsen: Hi Eric, I can begin to describe the e-commercial opportunity. So as Song mentioned, I think on the call, it's growing very quickly. It continues to grow at over 100% year-over-year rates, meaning that it's becoming a sizable part of our advertising revenue and approaching search in terms of financial importance. It's a globally distributed opportunity still, as we talked about on this call. In particular, we think the U.S. opportunity, a lot of it is still ahead of us. And it's also what we like in general about the growth of advertising is the increased diversification of the partner.
Eric: Eric I can I can begin.
Speaker Change: To describe the e-commerce opportunities.
Tom: Tom You mentioned I think on the call.
Tom: It's growing very quickly as continues to grow at over 100% year over year rates, meaning that it's becoming a sizable part of our advertising revenue.
Speaker Change: In approaching search in terms of financial importance is a very it's a globally distributed.
Speaker Change: The opportunity is still as we talked about on this call in particular, we think the U S opportunity is it a lot of it is still ahead of us.
Speaker Change: And it's also will be like in general about the growth of advertising is of the increased diversification of the partner base. So I think these are positive directions for.
Eric Sheridan: So I think these are positive directions for the revenue mix, as we also looked at. Great, thank you.
Speaker Change: For the revenue mix as the.
Speaker Change: We also look at it.
Speaker Change: Great. Thank you.
Mark Argento: Thank you and we'll go next to Mark Argentino from Lake Street. Thanks. Good morning.
Speaker Change: Thank you and we'll go next to.
Speaker Change: Mark Argentino from Lake Street.
Yeah. Thanks, good morning, maybe.
Mark Argento: Yeah, maybe we take another stab at that e-commerce question in terms of Better understanding kind of the levers there, you know, you said in particular the US opportunity is still fairly nascent To actually start to develop that opportunity more, do you have to attract specific, you know, platforms, in particular, special, in particular, retailers or e-commerce retailers? You know, what are the, you know, what are the levers you need to see that growth start to happen in the U.S.? Yeah, it's only him, right? So, yeah, so I guess, first just to comment that it's still holidays for us this year.
Speaker Change: Ill take another stab at that ecommerce question in terms of.
Speaker Change: Better understanding kind of levers there you said in particular in the U S opportunity is still fairly nascent.
Speaker Change: Okay to actually start to develop that opportunity do you have to attract specific platforms in.
Speaker Change: In particular special in particular retailers, our ecommerce retailers.
Speaker Change: What are the.
Speaker Change: What are the levers you need to see that growth start to happen in the U S.
Speaker Change: Yes, yes, it's only he'll raj. So so yes, so I guess first ethical months that it's still early days plus this year.
Lin Song: I think for us, our strength is really on, you know, performance, as I mentioned. So, which means any advertiser which, you know, focuses more on performance, focuses more on incrementality, typically we are actually a very good partner to work with. And again, very similar as those advertisers which previously probably invested more in, I would say, either brand or, you know, some search advertising. Then I think, you know, if you want to catch a similar amount of high user intent, I think we normally see we actually excel in those areas. So that's very good. And as mentioned, like the whole e-commerce market is huge, the US is big.
Speaker Change: I think for us all.
Speaker Change: Our strength is really on <unk>.
Speaker Change: <unk> as you mentioned, so which means and advertise all wage.
Speaker Change: Focusing more on performance.
Speaker Change: Focus more ink.
Speaker Change: Incremental typically we're actually a very good partner workspace.
Speaker Change: And again very similar as well as Adam has all which previously they probably invest more in either brand.
Speaker Change: Some search advertising then I think.
Speaker Change: If you want to catch the similar amount of hygiene in terms I think the way normally see we actually excel in those areas.
Speaker Change: So that's very good.
And as I mentioned like the whole lot e-commerce market is huge and use it big.
Lin Song: You know, despite of some volatility, I think there is still major potential than where I just scratched the surface of it. So, I think those are all the areas which we focus on. And maybe I'll just mention that, of course, we, at this stage, you know, we choose to work with perhaps not long tail, but, you know, focus on all the bigger players, just because those are typically the ones that have scale and have an impact. While, you know, later on, the long tail retailers will probably follow along.
Speaker Change: Despite all of a sudden volatility I think value scale major potential that we're just scratching the surface of cells. So I think those are all their resonates with all of that.
Speaker Change: Maybe I'll just mention that of course way and they stage.
Speaker Change: We choose the walkways, perhaps not in the hotel, but I'll pull that out with a big old playoffs. It just because those that could be one of the ones have scale and having intact.
Speaker Change: Wow.
Speaker Change: Along with the long tail retail lots of improvements all along so.
Lin Song: So, that's in general our strategy.
Speaker Change: So that's in general strategy, but I would just also say that.
Lin Song: But I would just also say that, just want to mention that Opera, of course, many people don't realize we are, you know, from Norway. We are from a country where there's only, you know, five million people. So, like, we don't really have a domestic market to start with. We're always trying to find opportunity globally in a global market. So, while, yes, we're growing very fast in the US, we also see big growth opportunity. You know, in Asia, for instance, we grow very fast in Southeast Asia. We grow fast in Japan. We grow fast, hopefully, in Korea.
Just want to mention that the ultra of course, many people don't realize.
Speaker Change: From Norway, who asked around the country, where there was only 5 million people.
Speaker Change: So like.
Speaker Change: We don't really have a domestic market to sideways, we're always trying to find opportunities globally and global market.
Speaker Change: So while yes, why im going very fast the U S. We also see a big growth opportunity in Asia placements can grow very fast in southeast Asia, and Japan with robust hopefully in Korea.
Lin Song: We also have very good growth in Latin and in many other countries. So, I think to us, we just view that this is a big opportunity, a major macro trend that we can take advantage on, and we'll focus on it, both inside the US, but also globally.
Speaker Change: They all have good growth in Latam and EMEA in other countries. So I think to US. We just feel that this is the big all the kind of major macro trend.
Speaker Change: The weekend take care of the Banca John and we'll focus on it while both of these are U S. But also globally.
Lin Song: So it's safe to say the environment and a kind of more tepid or slowing environment that we're in right now in the US, is that almost more favorable for you guys? And as much as the opportunity to drive more wallet share, focus more on performance in the US market, or is it something that people are taking a wait and see approach here near Yeah, so I would almost say that I think typically in those kind of volatility environments, you probably saw those brand, typically brand advertisers, or those, let's say, more brand-focused platforms probably suffer most, because those are the ones which are typically a bit more easy to get out, I would say.
So is it safe to say in the environment and that kind of more choppy slowing environment that we're in right now in the U S is that almost more favorable for you guys and as much as the opportunity to drive more wallet share.
Speaker Change: More on performance in the U S market.
Speaker Change: Or something that.
Speaker Change: People are taking a wait and see approach here near term.
Speaker Change: Yes, so I would almost say that I think typically in those kind of low volatility environment, you probably saw the brand, particularly brand advertisers.
Speaker Change: Let's say more branded bulb platforms, probably suffer most.
Speaker Change: Those are the ones, which are typically a bit more.
Speaker Change: Is it to get out I would say, while I think you are right that we see that volatility environment, because they only get paid when Adam has a has the fullness.
Lin Song: While I think you are right that we see that in a volatility environment, because we only get paid when advertisers have performance. So in such I would say they almost prefer to work with us, because it's more like you only pay us when you have performance, so you don't worry about it. At least that's what we saw in Q1, that's such a high growth, and hopefully that will enable us to continue the growth in the call of stock market. Great. Thanks, guys. Thank you.
Speaker Change: Archie environment, I would say they almost pay for the work with us because it isn't like you only pay off so you have a wellness. So you don't worry about it.
Speaker Change: At least that's what do they saw in Q1, that's what drives such a high growth and hopefully that will enable us to continue the growth and our goal is to come.
Speaker Change: Great. Thanks, guys.
Operator: And as a reminder, if you'd like to ask a question, it is C star and one on your question telephone.
Speaker Change: Thank you and as a reminder, if you'd like to ask a question. It is star one on your question telephone we will go next to Jim Callaghan with Piper Sandler. Please go ahead. Your line is open.
Jim Callahan: We'll go next to Jim Callahan with Piper Sandler. Please go ahead. Your line is open. Hi, thanks for taking the question in search. I think in the past, you've called out a benefit from choice screens in Europe. Is there any any sort of trends to note there? Sure, so yes, I would say yes, yes.
Jim Callaghan: Hi, Thanks for taking the question.
Jim Callaghan: In search I think in the past you've called out a benefit from choice screens in Europe is there any any sort of trends to note there.
Jim Callaghan: Okay.
Jim Callaghan: Sure. So, yes, I would say, yes, yes.
Lin Song: I don't think we actually published particular European surgical growth or whatever, but yes, I think the answer is very true that if you look at, if you really dive down into our performance, wherever we actually have choice, we have much, much bigger growth than what the average growth is. The only thing, as I mentioned, is that of course, there's also some double effect that we were also able to take advantage to turn some of the source revenue into advertisement revenue, which doesn't really show up in the States properly. But yes, you're 100% right. That choice screen has a major help on us on the source revenue, and we hope that will continue.
Jim Callaghan: I don't think <unk> published particular.
Jim Callaghan: European such a growth of one of all but yes, I think the answer is very true that.
Jim Callaghan: If you look at if you really dive down into our performance.
Jim Callaghan: We're able actually to have choices and we asked that much must be the wells than net average royalties.
Jim Callaghan: The only thing as I mentioned it at all.
Jim Callaghan: There is also some double effect that we will also able to take advantage at the time.
Jim Callaghan: Some of the salt revenue into advertisement revenue, which doesn't really show up in the states properly.
Jim Callaghan: But yes, you're 100% rights that choice screen has a major help unless unless what you have now and we hope that will come to you.
Frode Jacobsen: Got it. Okay, that's helpful.
Speaker Change: Got it Okay. That's helpful. And then second kind of similar vein on the marketing expense talking to sort of like high single digit growth year over year is there any sort of.
Frode Jacobsen: And then second, kind of similar vein on the marketing expense, talking to sort of like high single digit growth year over year. Is there any sort of like channel allocation changes this year? Anything that's working well that's worth kind of calling out or talking to? I would say when we look from the change from the prior Q4 into Q1, we had a spike in Q4 with the bigger releases of both Opera 1 and Opera GX, and then I think the sequential change was primarily around the sort of online campaigns promoting the apps through sort of click-based campaigns, whereas the broader brand building initiatives, working with content makers, influencers, etc., those things are more stable.
Speaker Change: Like channel allocation changes this year.
Speaker Change: That's working well that that's worth.
Speaker Change: Kind of calling out are talking to.
Speaker Change: Okay.
Speaker Change: I'd say as we when we look from the change from the prior Q4 into Q1.
Speaker Change: We had a spike in Q4 with the bigger releases of both up for one on upper Gx and then I think the sequential change was primarily around the sort of online.
Speaker Change: Campaigns promoting the haps through through some quick finish campaign, whereas the broader brand building initiatives working with constant makers influencers et cetera.
Speaker Change: These things are more stable.
Frode Jacobsen: Quarter to quarter. And as I guided, as we look ahead, we expect Q2 will be relatively similar before we pick up a bit quarter by quarter in the second half. Okay, great. Thank you.
Speaker Change: Quarter to quarter and as I guided as we look ahead, we expect Q2 will be relatively similar before we we pick up a bit quarter by quarter in the second half of the year.
Speaker Change: Okay, great. Thank you.
Operator: At this time, we have no further questions.
Song Lin: Thank you at this time, we have no further questions I would like to turn it back over to Mr song Lin for any additional or closing remarks.
Lin Song: I'd like to turn it back over to Mr. Song Lin for any additional or closing remarks. Sure. So thank you all for joining us today. Q1 really showed the potential of our continued growth acceleration and we will focus our attention on the best opportunities for the times ahead.
Song Lin: Sure so.
Speaker Change: Thank you all for joining us today.
Song Lin: <unk> really showed the potential of our continued growth acceleration.
Song Lin: And we will focus our attention on the best opportunities opportunities for the times ahead.
Lin Song: Have a good rest of the day and we look forward to reconnecting on our Q2 results.
Song Lin: Good for the rest of the day and we look forward to reconnecting.
Song Lin: Q2 results.
Song Lin: Yeah.
Operator: We'd like to thank everybody for joining us on today's call. Please feel free to disconnect your line at any Please Subscribe to my Channel and the Council of
Speaker Change: We'd like to thank everybody for joining us on today's call. Please feel free to disconnect. Your line at any time.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Uh-huh.
Speaker Change: [music].
Speaker Change: Hum.
Speaker Change: Mhm.
Speaker Change: [music].