Hey, we're here with Frode Jacobsen, the CFO of Opera. You've been in the seat for quite a while now, I think since 2016. Would love to kinda hear you give sort of, an overview of how you the business, how you think about it for, for those less familiar.
Sure. Opera is a Norwegian consumer internet company. We make browsers, so we make, you know, an alternative to Chrome, Safari, Edge, whatever comes with your computer or phone. We have been around for 30 years, close to 300 million users. It's quite at scale. Revenue-wise, about $600 million, growing a bit more than 20% year- over- year and have been for a very long time. Positive EBITDA around 23%, good cash conversion, and we pay dividend, which I know isn't so common for sort of tech growth.
Mm-hmm.
Stocks.
Great. That's very helpful. I guess just you've got a number of products, the two largest, Opera One and Opera GX. Can you kinda just talk about those and what are sort of the users and the main use case?
Yeah. I think what all our browsers have in common is that they are quite distinctively different from system defaults. So they have to be different enough that for somebody who knows enough that they know that they can take another browser, there's some reason to switch. So we, we don't go for the 90% market share play, but we go for the play that, you know, if you're in that, in that segment, then you will find Opera as an attractive browser. So Opera One is, is the browser that's maybe a bit for the tech-savvy, a bit geek, but also a bit design-oriented. And Opera GX is our browser made for gamers.
Mm-hmm.
So like that kinda high-end, you know, neon lights or neon, or LED-lit keyboards and gaming chairs and all of that. And then Opera GX, both with the style and functionality, is a good fit for that.
Right. Yeah. And the engagement with, at least on the GX side, is like pretty high, right?
Yeah. It's our highest-order product.
Mm-hmm.
It has the best retention, the very positive user reviews, etc. and it's the only browser made for gamers too. Because, again, it goes to this, if your browser comes with an operating system, you kinda have to cater to the oldest and the youngest and most and least tech-aware people.
Mm-hmm.
When you have sort of a competitive play, an independent play, we don't have to do that. So then we can afford to be very focused on a segment. But still, there's like hundreds of millions of gamers, and since everybody who uses it loves it, we're still investing a lot in raising awareness and getting more people to.
Mm-hmm.
To know of its existence.
Right. Okay. That is very helpful. I guess, just moving to some, some of the financial metrics, you've seen really strong advertising growth. Can you just kinda dig in a little bit on, on the drivers there and kinda what's, you know, how fast is the growth and, and what's kinda been driving that?
Yeah. I mean, we just first to explain that we typically divide our revenue into two parts, one we call search and the other one advertising. So search is maybe a bit narrow name, especially now, you know, the way we think about it, but it's about when the user is, you know, looking for something and we send it to, for example, Google, and get a revenue share in exchange. And then on the advertising side, that is where we more actively promote partners to the users.
Mm-hmm.
So on that front, it's we've had very many levers to pull. So we've been able to scale very rapidly. And at the start of last year or just before, we started an initiative around e-commerce. We saw that we were under-indexing on that, and we had gotten to a scale big enough in countries like the U.S., Europe, etc., that we could drive meaningful amounts of traffic to partners.
Mm-hmm.
With that initiative, you know, it was first in the since mid-last year. It's been more than 100% year- over- year growth.
Right. And how big would you say that is now, economic piece?
I think we're still under-indexing revenue mix-wise.
Mm-hmm.
We have a 3%-4% market share in these regions.
Mm-hmm.
I mean, if it's a $100 billion offer to, you know, market, then, we definitely think there's a lot of plenty of like more headroom that we're starting to calculate like this is, you know, another X% now.
Right. Right. I see. And maybe could you talk about some of the partners you kinda have currently on the e-commerce side?
Yeah. It's a pretty big.
I mean, we do. It's a big space, but we typically focus on the biggest players, the regional and global.
Mm-hmm.
Leaders, so for example, from the U.S., Amazon is a good example.
Mm-hmm.
We got like Temu and Shein and those that are very global also. And then you have more regional players in both Europe and Asia as well.
Mm-hmm.
So we focus on a shorter list because everything we do is on a performance basis. We have access to first-party very good data from the browser side.
Right.
We're able to, so we essentially create a targeting approach for each partner. As we've been scaling, what's typically happening is that each partner can open up new geographies to us.
Mm-hmm.
So we do well in one, and then we can expand.
Right.
That's been driving our growth.
Mm-hmm.
Got it. That's very helpful. And on, I guess, the data piece, you're able to use that data to then help target users off platform. Is that correct?
Right.
Yeah.
Yes.
Yes. Okay. I guess you mentioned Temu and Shein. This is like a big sort of debate in digital advertising broadly. They were spending a lot. They pulled back spend. It seems like they could be, you know, spending again. Do you work with both of those, or is that like sort of like a focus, this sort of China reseller?
Yeah. We work with both of those, but we don't have so much focus on the U.S. tariff situation because we can't affect it.
Right.
But when we saw that in the beginning of the year, obviously, how many international retailers were pulling back from the U.S. market. But then we've been working with them to grow their presence in other markets.
Mm-hmm.
So we still had a Q2, which was sort of the quarter of perhaps the strongest impact with, I think, 40% year- over- year advertising growth. It was growing even in the U.S. It was just that the growth rate was lower than.
Mm-hmm.
In other markets.
Yeah.
Yeah.
Got it. I see. Okay. I guess moving to search, roughly a third of revenue, pretty high margin. Can you just kinda talk about the growth drivers of that business? I think historically you've generally outgrown actually Google's own search.
Yeah. I mean, it's a revenue share. So our revenue on the search item is a function of our user base and their activity level.
Mm-hmm.
So we have typically grown faster than the overall, let's say, Google search revenue. And that goes back to our focus over the last five years or so to scale the user base among the highest output potential user bases.
Mm-hmm.
So that includes gaming that we talked about, which is sort of a global thing. We see that people who are like high-end gamers, no matter if they're even if they live in a market that's not like typically a developed country, they're more affluent than the rest of the population.
Right.
but it's also about geography, focusing on Western markets. So I think we've 2-2.5x or something that user base over the past five-ish.
Mm-hmm.
Years now, I think the most recent number was 58 million users in Western markets. As our user base, you know, grows in these markets, then, you know, I guess that's the beauty of being small, that you're not constrained by market growth. We've essentially been taking share, right?
Mm-hmm.
Because the number of population and internet connectivity has been relatively stable.
Yeah.
But yeah, we've done well in that. And that of course it benefits both search and advertising, but it's almost easier to spot within search because there's like a market benchmark.
Mm-hmm.
Yeah.
Got it. That is helpful. Sort of to that point on search, we received a big outcome recently from the remedies to the Google antitrust case. Can you sort of talk about that, what sort of the impact could be to Opera?
Yeah. I mean, that case, you know, it was about ensuring healthy competition in the search space, and the part of it that was, you could say, relevant to Opera was whether or not Google would be allowed to pay revenue shares to traffic sources.
Mm-hmm.
Like Opera as a browser, and of course, all the attention was on the Google-Apple relationship, and so that was last week that the ruling came out on the remedies, and that was explicitly not limiting that, which would have been a bit surprising if somehow Google would not be allowed to pay for traffic, but all their competitors would be. So it was maybe not so surprising, but I think it was like it, you know, even though it was only relevant to the U.S. portion of our search traffic, it was something that was kinda just nice to.
Mm-hmm.
Get out of the way for people.
Yeah.
Yeah.
Right, and I guess the one change would be previously the contract would be like three years plus one with Google. Now it will be renewed every year.
Yes.
Okay.
But, I mean, we did that again earlier this year.
Right.
Did a one-year extension. So that's more or less. I think our current work with Google is more or less following exactly the items that.
Mm-hmm.
That the judge asked.
Mm-hmm.
And just for context, we're entering the 25th consecutive year of being in that partnership.
Mm-hmm.
So it's a very long-standing one. Maybe we get more attention than you'd think, you know, because we are, of course, you know, smaller than the other, you know, system browsers at least. But, we've worked with Google since the beginning of Chromium. I think we're the only company that shared any of the committees that developed that, which is the rendering language of how to show websites, etc.
Mm-hmm.
So there's a technical part of it. And there's also the part that we are a, you know, pretty fast-moving, a bit bold. Even though it's 30 years old, so we're probably about the same ages as companies.
Mm-hmm.
They just got a bit bigger. But, so I think we're always very interested to try new things and experiment together. And I think that's also what's kept the partnership so close.
Mm-hmm.
Over these years.
Mm-hmm. Okay. Great. That is helpful. I guess following up on GX, few big things in gaming right now. We've seen kind of a big surge in Roblox usage. And I guess next year we have the release of Grand Theft Auto. Can you kinda talk about how, like, those sort of events could impact engagement on GX?
I think anything that draws an audience to a platform that's relevant for the gaming browser we're very interested in.
Mm-hmm.
You know, like we are the global sponsor of the League of Legends tournament, for example. We did something around not The Boys, but it was The Boys. I thought it was the junior version of it, so just because it's kinda a bit overlap in terms of the addressable, in terms of the market, so we had a GX browser, I guess.
Mm-hmm.
just a fun thing. But it's these things that draw eyeballs in the direction of gaming, and then it's an excellent opportunity for us to be there. There's typically no other alternative browser partner for them.
Mm-hmm.
Right? And so we use that as a way to raise awareness.
Mm-hmm. Okay. That, that is helpful. I guess AI is obviously a pretty big important topic here at the conference, and we'll definitely talk about Neon in a second, but just could you maybe explain how you've used AI in the products, in the browsers, even just up until this point?
Yeah. I mean, this is something we've been so, we are so excited about it, but for a good amount of time now because it's almost like it I mean, I think everyone here probably uses one or all of these new AI services, right? And we benefit from it. It's such a great tool, so it's almost like when going back to when search first started to be as good as it is now, but beyond that in terms of what you can create and productivity and all of that, so the first thing we did was to create an integrated AI service in the browser, like an overlay over the websites that you're on. You can check with Aria, its name, and ask questions about the content you're viewing, etc.
And you can use it to control the browser, group things, close various things based on what you wanna focus on. That's been good. That's gotten us a lot of attention. And when we see the people that come in and start using that, the same sort of pool of people, their profile changes to be more retained, higher engagement, etc.
Mm-hmm.
And then the big thing this fall is the native, like, true native AI browser that we're launching now, coming up now.
Mm-hmm.
that we call Opera Neon. I don't know if you wanna discuss that separately or.
Yeah. No. That's great.
To talk about it.
Yeah. Please. Please.
Because the AI is great as it is. Like the way we use it now is it's a website. So it's in one of those tabs in your browser, and that's where it exists. So I think the opportunity we have as a browser is not to compete with the LLMs that are already out there. You know, there's plenty of them, and they're all quite good, but to integrate that type of service natively in the browser so that it doesn't exist within a website, but it sort of exists above the tabs.
Mm-hmm.
As part of the browser itself. Because if you think the browser is, I mean, it's logged into your email. It's logged into your calendar, the newspaper subscriptions you have, and all the stuff you do online.
Mm-hmm.
The browser is aware of all of these things, and the browser can act across all of these tabs, help you initiate whatever research or planning or whatever you want. By having the AI, a native AI browser, you can do stuff like, you know, you're flying into this conference, and, you know, you ask it like, "Here's my schedule." You know, pull the email dialogue, summarize my interactions with the companies I'm meeting, do research on them, give them the latest news, send me a report, right?
Mm-hmm.
Or schedule meetings with your team, summarize, research, share it with person X. So I think it's great for productivity, and as a browser, it's also great for monetization because it's also an excellent tool to, "This is what I'm interested in," I don't know, running-wise. It's treadmill, but sometimes on asphalt, and you get shopping advice.
Mm-hmm.
And so of course, then it's, it opens up a whole new opportunity for us to send traffic to partners.
Mm-hmm.
With very high conversion rates, right? So that's why I mentioned that the labeling of revenue search is almost a bit too narrow because we're moving into an area where it's really about the user having an intent to do something.
Mm-hmm.
Going after it. And then whether it's addressed as a search result or as an AI dialogue with recommendations, it's almost indifferent, right?
Mm-hmm.
It's about monetizing that.
Right. And so in this, I guess in this case, like if I have my passwords across all my sites logged in, the agentic browser would be able to utilize that to like complete that, right?
Yeah. It's your computer. It's your browser. You are logged in. So of course, Wall Street Journal wouldn't allow ChatGPT or any others to just kinda scrape all their paid content.
Mm-hmm.
But you are allowed to read it.
Right.
Your agent is allowed to read it.
Mm-hmm.
Because it's just for you.
Yes.
Yeah.
Okay. That is helpful. I guess kind of on that point, there's a lot of software companies at the conference. There was some news recently about a software company acquiring sort of a competitive competitor browser. Can you talk about maybe like where you're similar or different to sort of that product and what kind of the implications could be for the space?
Yeah. Maybe first to comment on the interest. It's maybe not so surprising that we see stuff like that just because making a browser is, you can see it. If somebody comes out with a quick browser or something, it's not so easy.
Mm-hmm.
It has to be a quality product. It has to work the way people actually use them.
Mm-hmm.
Browsers, like also The Browser Company that invests in innovative ways, like Opera has been doing, to use the web, is not easy to do. I think how we differ from the Browser Company is, I mean, obviously the scale. They don't pop up on StatCounter, so it's probably less than 0.1% market share. But I think they came out with a very advanced product for the most advanced users initially.
Mm-hmm.
It was loved, but it just wouldn't scale. I think they just recently went more mass, kinda moving in a direction of mass market and like better. So it's, I mean, it was a technology acquisition more than a user acquisition.
Mm-hmm.
I guess.
Yeah.
of a, yeah, more junior product, obviously.
Mm-hmm. Got it. Okay. Another pretty interesting product here, a little bit separate from the browser side, is MiniPay, which is your, I believe, your stablecoin wallet. Can you kind of talk about the growth you've seen, what some of the KPIs are, and then what monetization could look like for this?
Yeah. MiniPay is, yeah, stablecoin wallet. So essentially for emerging markets where we have a big, big user base in Africa.
Mm-hmm.
Also in emerging Asia. People can then hold value in dollar stablecoins, euro stablecoin, and of course remit across countries if you have family members abroad, etc. And then there's like a quickly growing ecosystem of services on top. We launched it through our browsers. It exists as a standalone app. It's at nine million wallets now. And 250 million transactions is the latest figure we went out with. So what I understand is that it is the fastest or amongst at least the very fastest growing non-custodial wallets.
Mm-hmm.
Out there, so it's attracted a lot of interest from the ecosystem to partner up, to be promoted, be supported, etc., and so we monetize it already a little bit, but not by the user, but just from people who want to be promoted and integrated.
Right. I see. Okay. Just for looking at OpEx, sort of excluding COGS, I think marketing spend is probably your largest expense. Can you sort of talk a little bit about the user acquisition strategy and what channels have kind of been working better versus others?
One raised brand awareness. So for that, we use content makers, you know, YouTubers, streamers, all kinds of influencers, and classic marketing. That has worked really well. And then on top, we work with classic sort of download campaigns, a bit on the OEM side, but that's mostly for mobile in emerging markets. So it's a relatively broad spectrum of activities. And then the beauty of this is that, you know, we're dealing in the millions and tens of millions of people coming in. And so we, within a few days, we can sort of see the profile of a cohort of new users and with good accuracy sort of predict their lifetime value with engagement, click, search, you know, like all the stuff that they do.
Mm-hmm.
We can very quickly, when we start the new campaign, a new partner establish the ROI and then adjust the spend to where we see the best performance.
Mm-hmm. Got it. That is helpful. So you've done a great job, beating sort of raising historically, and margins have looked pretty strong, I guess. How should we think about sort of the long-term growth kind of from here?
Yeah. I mean, we're in a space that is extremely exciting. We're okay, a little bit biased. But if you think about it yourself, like when you're on your computer, how much time you're actually spending in the browser? For most people, that time spent is going up, right?
Mm-hmm.
You're doing more stuff in the browser, more of your tools are essentially on the web, for sharing, collaboration, and everything. And then you have these new tools that enables you to scan the web faster, find sources faster, and just do your own research.
Mm-hmm.
Where maybe in the past you'd call some, somebody, right? So I think that is very exciting. We've never missed on our revenue guidance. One time we took an EBITDA provision when COVID hit.
Mm-hmm.
That was one quarter. And other than that, we'd never missed on our EBITDA guidance either. So we've sort of had the luxury of, well, I think we've made the right strategic decisions. We're also in a space that combines both growth with good profitability potential.
Mm-hmm.
Not just in some distant future, but like right now.
Yeah.
and so we try not to stretch it when we guide. We try to sort of, "Okay. Here's our guidance. It's better than you all thought.
Mm-hmm.
And if we make this, then we should all be happy." And then, you know, hopefully we can do a little bit better even, but.
Mm-hmm.
We're not gonna commit to it.
Mm-hmm.
But then typically that has happened.
Got it. And then just last, as we're kind of approaching time here, could you just talk about the sort of capital return strategy?
Yeah. I mean, for something like $1.7 billion market cap company, we've returned nearly $500 million since 2020 to our shareholders, so we are very active on that. We bought back 30% of the company over the past four years in buybacks, and we are a recurring dividend payer, which is sort of the other half of that $500 million.
Mm-hmm.
So we continue to pay a recurring dividend. That's our preferred way of returning capital to shareholders. But then, you know, I think we've shown historically that we can be opportunistic, across both.
Mm-hmm.
Yeah.
Great. Well, Frode, thank you for being here. Appreciate it.
Thank you.