Earnings Call: Q1 2021

Apr 27, 2021

Earnings release

Thanks for joining us today. With me, I have our Co CEO, Song Lin and our CFO, Frode Jacobsen. Before I hand over the call to Song Lin, I would like to remind everyone that in today's conference call, the company will be making statements about its future results and expectations which constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act. Such statements are based on current expectations and how we perceive the current economic environment, and we are inherently subject to economics, competitive and other uncertainties and contingencies beyond the control of management. You should be careful You should be cautioned that these statements are not guarantees of future performance. You may refer to the Safe Harbor statement in the company's earnings release for the details. Our commentary today will also include non IFRS financial measures, including adjusted EBITDA, which are different from our consolidated financial statements that are prepared and presented based on IFRS. We believe the use of our non IFRS financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends. These measures should not be considered in isolation or as a substitute for financial information prepared in accordance with IFRS. We have also posted unaudited supplemental information on our Investor Relations website that includes historical financial results of Opera and our investee, Nanobank. With that, let me turn over the call to our Co CEO, Song Lin, who will cover our operational highlights and strategy. And then Frode will finish up with financials and update on our investments and most importantly, our expectations going forward. Song Lin? Sure. Thank you, Derek, And thank you, everyone, for joining us today. So as you know from our announcement earlier this month, Opearl had a very strong beginning to the year. Obviously, I'm pleased with our financial performance, but what I'm most excited about is that it validates our strategic approach to growth, both our core business and our new initiatives and that the Opera team continues to execute every day. So last call, I highlighted that it was the strength of our core business that positioned us to not only outperform During a period of significant uncertainty, but is also what give us the ability and the confidence to invest in initiatives that have the potential to drive substantial growth for Ofra in the years ahead. So what I'm about to say will sound familiar in a good way and the plan is to repeat the pattern in the next few quarters to come. 1st, our core business continues to deliver exceptional results, Thanks to strong execution. Frode will naturally give you more details shortly, but here are some highlights. Revenue was strong with search and advertising growing 7% year over year and even grow sequentially This is the seasonally strongest Q4. This is a very strong indication of the strength of our core business. Adjusted EBITDA was better than expected as the revenue upside fell to the bottom line. We have also been growing users by 12% 14% year over year, respectively, in Africa and the Europe and CIS, all core regions of focus. 2nd, I would like to comment that initiatives are showing excellent momentum. I'll start with our European payment effort, DeFi. So in February, we have launched our in browser Smart Shopping functionality in Spain, providing cashback and payment solutions for ShowPost. This is an area of huge potential for us. It's no surprise that more and more consumers are looking to transact online and the COVID-nineteen pandemic Softly sold to accelerate this trend across multiple categories in multiple markets. We already have a good track record in this space through OPay and NanoBank LUL and we remain super excited about the European potential within Opera. So the adoption rates are encouraging With both new users, transaction volumes and GMV growing nicely, I would say it's still early stage The fact that we have a great user base constantly transacting in our browser already presents a massive opportunity For us to scale very relevant, we will add new features and roll out in more countries in Europe As the year progresses such that BeFi is in a position to contribute meaningfully to our revenue in the next year and beyond. I would also like to talk about gaming. Our efforts in gaming At just the beginning, BaaS Ultra GX gaming browser now has over 9,000,000 monthly active users. One of the things that sets our ambitions in gaming apart is that we really have a holistic view All the gaming ecosystem and are innovating on multiple fronts. We will continue to add gaming features to Opera GX, So that the browser complements the gaming experience, allowing us to continue to grow the gaming user base. At the same time, we are also building out our game maker studio platform, so that game development becomes accessible to an increasingly broad community and driving engagement. We believe That in the same way that easy to use applications and tools will allow anyone to design and launch a website For record music or video, the same accessible design tools well mean that more people will be able to design, play and share their games with The World, which will in turn attract more gaming players into our ecosystem and the form of 4th circle. These are obviously our first steps towards building our own gaming platform or even a potential gaming metaverse. We are totally ambitious. And with such a massive market, we will continue to innovate and expand in this space. And last but of significant impact, Opera News. As we laid out last quarter, The continued success of Opera News led to the natural conclusion that we had potential to expand its geographical footprint to develop the regions, starting with several markets in Europe and the United States. Online results continue to be positive and we have now achieved several million MAUs in those markets in just a few months' time has also been visible from corresponding Google Play rankings in all those countries that you can see. While still evolving our product and go to market strategies, we believe we have developed a set of know hows That has now proven to be able to drive rapid growth both for new deals, but also for strong revenue growth trajectory, reflected by the fact that news revenue grew over 2 60% year over year and 30% sequentially in Q1. We do expect the strong revenue growth strength to continue in the quarters to come, again powering our bullish view of our revenue growth potential. So as we look to the year ahead, We remain confident that the strength we see in our core business will continue. The history of the browser And what it can be is still being written. I very strongly believe that Opera We'll continue to play an outsized role in writing this history. There is significant room For not just growth, but innovation, browsers that have features that are optimized for the ways in which people will use them, Whether it's shopping, gaming, looking for news or simply trying to manage your digital life with a sense of privacy and security, We cherish that people always expect more and better because therein lies our opportunity. So Opera Z Browser is preferred by well over 300,000,000 users worldwide. And as we continue to push forward With our initiatives in payments, gaming and news based on our core strength, we will bring the same universal approach and Spirit of Innovation. Succeeding with any one of these initiatives represents a massive value creation Opportunity already, but of course, in our ambitious style and with confidence from these initial phases, We are naturally aiming for success across all three. As we think about the possibilities we have in front of us, We are excited about our core business and the Z potential for all our initiatives. And as our guidance indicates, We see a very exciting period of accelerated growth ahead of us. So with this, I'll bring to Frode to come up with details. Thanks, Wendell. The continued acceleration of our product, both in terms of engagement and resulting monetization, resulted in a first Quarter that exceeded our already high expectations. I'll recap the highlights and then provide our refresh on guidance. Revenue for the Q1 was $51,600,000 This compares to $40,200,000 of revenue in the year ago quarter and also grew sequentially compared to last quarter despite seasonal headwinds. Specifically in the quarter, Search was $26,700,000 accelerating to 36% year over year growth compared to 13% last quarter. This was driven by our record PC users and monetization gain. Advertising was $23,400,000 accelerating to 40% year over year compared to 16% last quarter. This was driven by strong monetization from Opera News and our mobile browsers. Finally, tech and other revenue was $1,200,000 Year over year, this revenue category has been reduced by 2,400,000 Although with almost no impact to profit as the decline relates primarily to low margin professional services to Allstate. Our operating expenses pre adjusted EBITDA were $47,000,000 As expected, we saw significant increases in marketing spend as well as some growth in personnel expenses due to our efforts to expand Opera News into Western markets and around DeFi and Gaming. Adjusted EBITDA was $4,600,000 in the quarter. This was better than expected with the over performance largely following the upside from our core search advertising revenue stream. And as some marketing and personnel expenses shifted to the Q2. Net of D and A, share based expenses and other items, net income was $600,000 for the quarter. Our operating cash flow was positive at $7,300,000 supporting an overall increase in our total cash And marketable securities of $9,100,000 versus the prior quarter to a total of 143,300,000 Then moving to our investments that continued their positive trends in Q1 and represent Significant upside potential for Opera shareholders. As a reminder, our investments are NanoBank with Opera holding 42% as well as OPay at 13.1% and Star Maker at 19.35%. Beginning with NanoBank. For the quarter, NanoBank posted revenue of $50,300,000 up about 10% compared to the 4th quarter and disbursed loans representing $235,000,000 in total value. Adjusted EBITDA was $5,500,000 representing an 11% margin and post tax profits were $4,300,000 We continue to believe Nanobank scale meaningfully in 2021 as it launches in new geographies and adds products, both of which are in testing phases. And as India starts to recover from COVID-nineteen impact. As noted in our prior call, we expect this to be more evident towards the middle to later part of the year. Our 2 other significant investments, OPAY and StarMaker, continue to scale. OPay's total payment volume continues to grow and have increased from December 2020 levels of $2,000,000,000 driven by new initiatives. One of the most exciting innovations is the OPAY card, a debit card that is tied to the OPAY wallet balance, supporting offline use cases of the Opay wallet aimed at increasing frequency of use. StarMaker continues to scale rapidly with an annual revenue run rate of almost $180,000,000 in the first quarter, up 3.5 times compared to the year ago period. Now moving to our forward looking commentary. Our core business continues to perform and grow ahead of expectations, and this is increasing our confidence in our near term and full year outlook. Further, we continue to believe that taking most of our underlying adjusted EBITDA growth And reinvesting it into our new initiatives is the right thing to do. We believe the ROI on those investments will enable us to achieve growth rates well in excess of a 20% to 30% level and accelerate our path towards becoming multiples of our current sites. Translating our momentum into a refreshed 2021 guidance, we continue to take a conservative approach, not including anywhere near the full potential from new initiatives, while making sure potential investment is reflected. With that said, based on the performance of our core business, we are raising our revenue guidance while maintaining our adjusted EBITDA guidance to provide flexibility to drive further growth. We now expect 2021 revenue of $230,000,000 to 245,000,000 representing 44% year over year growth at the midpoint, up from our prior midpoint guidance of 39% growth. Our expectation for adjusted EBITDA remains at $10,000,000 to $30,000,000 for the year. In Q2, we expect revenue of $55,000,000 to $57,000,000 representing 74% year over year growth at the midpoint. The 2nd quarter revenue growth acceleration is fueled by strong continued results from Opera's core search and advertising business. But comparisons to Q2 2020 should, of course, also bear in mind the significant COVID-nineteen impact to search and advertising revenue in the year ago quarter. However, tech licensing and other revenue become far more comparable on a year over year basis in recent quarters as revenue from professional services work was largely phased out by Q2 2020. Adjusted EBITDA is expected around breakeven in the second quarter as we continue to invest aggressively in our new initiatives. Overall and in sum, Q1 was another strong quarter and a very healthy start to 2021. It's great to see the momentum in the business and how the acceleration of our growth trajectory is benefiting both our near and long term trajectory, And we look forward to keeping you posted. Thanks. I think we can now take questions. Thank Jacobsen. Jacobsen. Your first question comes from the line of Lance Vitanza with Cowen. Hi, guys. Thanks for taking the questions. Congratulations on the quarter. And I guess, why don't we start with well, thanks for posting the supplemental financial information. I found it very helpful. Could you talk about the impact of COVID in the year ago quarter in 1Q 2020 versus the expectation versus what you saw as we move throughout last year. In other words, we know obviously there's a bigger impact in the Q2 of 2020, but was there much of an impact in the Q1? It doesn't necessarily look like it given that 1Q 2020 revenues were actually up over 1Q 2019, but Perhaps ex COVID, they would have been up more. I'm just how should we be thinking about that? Hi, Lance. Thanks for the question. In terms of what's our continued operations with the browser news and the other products that we've been discussing today, we didn't really see much of the COVID impact in the Q1 Last year, it affected Nanobank's business for sure, in terms of the assessments on collectability, etcetera, at the end of the quarter. But it was really towards sort of the very end of March, not affecting the quarter as a whole Much for a service and advertising. Great. Thanks. So this growth is really on a it's not just a recovery balance. This is Growth over a period where you were already pretty strong and growing. So, okay. So then the guidance seems to reflect, if I'm hearing you right, only the Strength in the core business, but really not much contribution from the growth initiatives. Yet, we know that you're plowing a lot of money into these growth initiatives. So Could you talk about and I heard the comments that you made Frode just a minute ago about getting to a size that is a multiple of The size of the company today, but could you talk a little bit about how should we think about the medium to longer term potential Of these growth initiatives per se, right, because we know the core business is also growing. I'm just trying to figure out how we should be modeling what some of these Other new initiatives could ultimately contribute? Sure. So if I begin with the total the overall picture, I mean, For us, all of these three main areas that we are investing into represent substantial upside to Valley Creation for Opera, both in terms of creating a much used content business in Western markets, and the broader gaming ecosystem that we are working on as well as the European Payments, products and services around DeFi. So we think all of them we consider massive opportunities, but I think over the past Quarterly calls we've had, we've been clear that we don't really bake much of it into our guidance for 20 21. We tend to be very conservative on that and look internally mostly at what run rate are we scaled to sort of exit the year with and the impact it can have on 2022. So I would point to 2022 as the 1st year of really Seeing material impact of these new initiatives. Okay. And then maybe just on the JVs. Go ahead. This is Drake. What I would say is, if you start looking at the revenue growth of the core, which has historically been in our 20% plus. And then you start layering in some success here. You start coming up with very good revenue growth rate. The second comment I'd make on these investments is today we're investing money because they're very new. But as they scale and get bigger, the incremental margins on these These are really good. So the idea is longer term, you're going to end up throwing off more cash flow than what you would have done otherwise, assuming they're successful. Thank you. If I could just squeeze in one more question about the JVs and Maybe this is a multipart question, but on OPay, I'm wondering if there was perhaps a seasonal impact there. And I may be misinterpreting the release, but and forgive me if I missed a comment on your prepared remarks, but it looks like growth at OPay perhaps slowed in the Q1, given that you didn't call out exactly what that growth was. But perhaps that's just due to the 4th quarter being seasonally strong for a payments related business, but I'm wondering if you could elaborate on that. And then with respect to StarMaker, where it's growing at a multiple. I'm just wondering if you could talk about what's driving the growth there. In other words, are you launching new markets? Is this a big new marketing campaign or are there other things that are sort of fueling that? I think it was 3.5x growth that you called out in the release. Sure. I can begin or Derek, go ahead. No. Lance, I was going to say on okay, They did more total payment volume in March than December. So they're continuing to grow. I think we're being a little more cautious on what we say on OP and allowing the team over to OP to sort of give those details out, because I know they're trying to drive a higher profile for themselves as they think about the future. Frode, you want to take a start here? Yes. So maybe I was a comment a bit, Hill, right? This is only for OPay, right? So I guess actually what Derek is saying is more true that Open is actually growing tremendously. TPV are growing, but even more importantly that some of the other aspects of their business like app users, a few others are actually growing a lot many times, which is their focus for now, which we also talk about their issuing card and my other, right. I think actually reality is, because they were just we just want to let 100% of them and they are now That was an independent company. We just prefer to for themselves to actually announce the excellent results themselves instead of way talk too much about it in our own I think that's actually the reason. So they are actually doing very well in Q1. Thank you for clarifying that. Actually, I appreciate that. Your next question comes from the line of Mark Argento with Lake Street Capital. Hey, Song Lin, it's Frode. Just wanted to drill down a little bit on the success you're having with Opera News. Maybe talk about kind of where you've been making the investments And I've been seeing the uptick in conversion in terms of monetization. Yes. So okay, so this is Solin. I'll try to give the first to Heath and then Frode can come up with numbers, I guess. So high level, I guess the comment is just that we are already being very successful in Africa. So I've also commented in the quarterly Relief that for this year, especially Q1, for instance, we have been focusing on expanding into Western markets, which has been doing really good. I think the comment would just be that, we have growing very nicely in terms of yield offs. Well, just super happy to see that we are able to based on our past know how, so of course, we have to localize the per market because each of those markets are very different like You know, Zhoumen is very different than U. S, but we are able to actually localize it and then be able to provide a very good Solid numbers and conversion and retention. So all the performance remarks are actually very good. But maybe what's mentioned is that we're also on top of very happy about The monetization, because typically we saw a bit of drag between Foster Gro user and net monetization, but perhaps because of our past experience, We are able to actually almost grow the unit also in line with the growth of monetization. So that I would say is the extra point that I would call, Which is more positive, which actually also the reason why we I think we're doing a bit better than even our audio guidance and also partially why we also rise our guidance Great. And is it kind of the key precursor to revenue? Is it downloads of the app How do you guys actually stimulate updates? Are you spending Money to drive people to download the app in various regions or what are you kind of doing specifically to get that business to grow a user perspective? Yes. So I think from end user point of view, I think it is aggressive Performance marketing, but I think the key is just that based on the know how that we have accumulated in the past year, We're able to do the performance marketing, gross marketing in a very efficient way. And I think that's number 1. Number 2 is that the retention is really good because It's very tightly connected that if you say have a very poor 1 or 15 or a 30 day retention, now of course, there's No way you can grow. It doesn't matter how much money you spend. So I would say it's a combination of very effective performance marketing, but then Tightly hand to hand ways we are pretty pleased to have a very high retention of those noodles. The mail advisory R1 or R15 were assorted. Great. And then just follow-up. And maybe I could supplement. It's of course a product launching in the new geography goes through A few stages, we are now in the initial stages of launch where we, of course, we use marketing and we used Performance marketing, as Sandeep talked about, to build a presence. And then over time, as we've seen on our other initiatives and products, then you move over to the organic Part of it playing a bigger role. And I can assure you that the investments that we are making are carefully assessed on a daily basis, monitoring the impacts and sort of return that we are generating on that investment. Great. And then just a quick follow-up on the add, the bounce back in ad revenues. Can you talk about some of the end markets that you're Seeing a comeback, I know you had some decent exposure to travel. Is that an area that you've seen come back in the various markets you operate in? I think high level on the advertising drivers, we see a couple of things. So Of course, we benefit from more user growth on products, but it is the per user monetization that is driving the revenue growth the most. Within that, there are a few components. We are experiencing a strong demand for our inventory and the traffic that we can drive. There are certain partners that are scaling faster than others, typically online related businesses. And we're also seeing the impact of geographic mix changes when Europe is growing very well. For example, that drives the average monetization per user auth. Great. Very helpful. Thanks guys. Your next question comes from the line From Alyssa Yap with Citigroup. Hi. Thank you. Good evening and good morning. Thanks for taking my questions. Congratulations on the strong set of results. I have two questions. First, I think in your guidance, you mentioned the second quarter, The strong guidance seems to be more alluded to the search recovering. But I assume the ad revenues are also growing very well. But on the sequential basis, if you can give us some color In terms of whether search are bouncing better on the sequential basis versus the app? And then Understand you mentioned your full year guidance despite raising to the new guidance range, But you also mentioned very, very little revenue that baked in from the new initiative. But just If you can give us some colors in terms of the timing. If we were to assume between the gaming and the European Fintech, With gaming revenue will be coming more near term and more medium term versus fintech is a little A bit more longer term than the gaming. So any color you can help us frame in terms of the timing of the revenue that come in? And On the more, let's say, by the time they reach a certain decent contribution, will The FinTech is actually a bigger proportions or the gaming will contribute a bigger proportion. Thank you. Thanks, Lisa. So first, talking about the Q2 guidance. The starting point and the Q1 Revenue achieved in both search and advertising, we are very pleased with both. Both did from 36% to 40 percent year over year growth into a very solid result in the quarter ahead of our expectations. When we look into the next quarter and on a sequential basis Comparing to Q1, I would definitely point to advertising being the expected biggest driver of The increase we are guiding from Q1 to Q2 this year. In terms of The full year and the new initiatives. So as stated, we have been very cautious in baking in too high expectations of our new initiatives this year. But to the question of what will impact our results First and what we are cautiously considering as we set our guidance for the year, I would point to the advertising revenue effect in particular around the Western markets scaling up Opera News as that is sort of an immediate impact of building a user base in the U. S. And European markets That probably will be the first one to materially benefit our financial statements and something That we should be seeing also in 2021. And any just follow-up in Suncat Gaming versus Ping PACT, which one will come More near term? And then which one will be a bigger contribution longer term? So I think we I'll try not to go into sort of the specific of Exactly estimates that we have for the year. I think for now, I would say that with both, we have been very cautious as we set our guidance for the year. Gaming revenues, of course, consist Already have been present in our financials from the success of the upper GX browser, and that continues Scale very well and we're broadening that with an ecosystem, the game studio, etcetera, that we have discussed before. And on the FinTech side of things, we are already being the browser of A very, very big number of transactions carried out from our user base. And that is something that we have already launched and started Step into, but with the initial focus being on building that service and preparing that service for scale Rather than focusing on, let's say, the revenue contribution or the near term margin that we can drive from that? Alicia, this is Derek. If you consider gaming to include the GX browser, that's driving a ton of value for us today. I think we last quarter that every 1,000,000 MAUs are worth about $2,700,000 So you can see our trajectory of adding $1,000,000 plus MAUs a quarter and you can see that contribution. And on the FinTech stuff, we're in Same with our smart shopping product as Song Lin said and our hope is to be in a couple more markets over the course of the year and depending on when those hit and how quickly Spain scales will really dictate what contribution we see this year. I see. Okay, helpful. And then just one last quick follow-up. I think you mentioned your sales and marketing, Some of the spending that you previously planned in Q1 has slipped into the Q2. So just wondering if you can share what was the reasons that it slipped? Yes. Thank you. Maybe the word slipped is not Super accurate. It's more a question of we look The year as a whole and we look at the investments and the scaling that we want to achieve. At any point in time, we give guidance based on our best expectations for what will happen over the coming 3 month period And the year as a whole. And so we ended up spending slightly less on marketing and distribution in Q1 than we had originally thought. I see. Okay. All right then. Thank you so much. Sure. Your next question comes from the line of Sarah Simon with Berenberg. Yes. Hi. I have a couple of questions. First one, can you give us an idea with something like Well, whichever product you'd like, what the delta is in terms of monetization Of a user in, let's say, Europe versus Asia or India or Africa, for example, because I'm guessing that's quite significant. And therefore, as you expand news into Europe and the U. S, it might lag, but it's clearly going to be Much more significant in terms of the pickup in revenue than the pickup in MAUs. So that was the first question. Second one, can you just remind us, how do you sell your advertising? Is this done Is this programmatic or is it direct? That was the second. And then the third was, you know that you obviously restated your numbers because you discontinued stuff In Q3 last year. Can you remind us what the growth was on the new reporting format in Q1 2020 and Q2 2020? Thanks. Yes. So it's Tony Ho. I guess, Frode, maybe I'll just answer the first few and then you can comment on the last number one. Sure. Yes. So, yes, more like just a quick comment that I hear the pressing of The monetization, I would almost say, I guess, it's up to between European, U. S. User versus the African user, right? So or like Asia user. High level comment is that if we compare, say, a user in Africa with a user in U. S, it's roughly, I would say, 10 times. And European user is actually slightly less than U. S, depends on which country you are, exactly quite different. Some of you, 60% Of U. S. To be 80% or even equal, depends on different countries, that requires a loss. But yes, so in general, if we use U. S. As a benchmark, then I would say 10 times Comparable Wave Day, Africa will be a good comparison and about family ratio. And when it comes to At Cai Lin, so we have to use all of the ways that you're talking about in different regions. So I think we do have direct sales team typically in country Africa, well, we do rely more on direct sales team, while in some other countries like in U. S. And Europe, we do have more Programmatic, I would say it's actually a very good new call that and we see that actually grow very fast compared with some other regions. And on top of course, we also have the ad Okay. Approach, we'll simply just embed out the SDK and just monetize from Facebook SDK or Google SDK. So we have both of those 3 available. Okay. Yes. So and then Frode, I'll hand it over to you for the yes, the number, correct, Tim? Yes. Yes, sure, sure. So in Q1 2019, we had $38,000,000 revenue and in Q1 twenty twenty, we had 40 $200,000 revenue, which was about 6% up. It would have been a couple percent more if COVID hadn't affected the end of the quarter, but that's the most comparable period. Q2 2020 had a year over year decline as that was the quarter Most affected by COVID for us. Sorry, Q2 was that? Q2 year over so Q2 2020 was down 24% versus Q2 2019, And that's really driven by the COVID impact that we saw in that quarter. Perfect. Okay. Thanks very much. Sure. Your next question comes from the line of Lenny Brecken with Brecken Capital Advisors. Hey, thanks guys for the call. I have two questions. 1, Can you talk about the deployment of the cash hoard that you have on your balance sheet and what the Board is thinking about maybe doing with it? And the second is, the new initiatives I assume are acting as a drag on earnings in 2021. And I assume that's going to lessen in 2022, which is probably The core of the story and why all the analysts are trying to ask these various questions in understanding that. So can you help us quantify the drag On the new initiatives on earnings this year versus next? Yes. Hi, Frode here. I can start. So starting with the cash on our balance sheet, I think we are not Planning to use it for dividends as we have stated in the past. We keep it to maximize our Strategic flexibility, both in terms of Having that support for any operational opportunities that we come across, of course, now even with these heavy investments That we are running in 2021, we are essentially also generating the cash that we are using for that. But it gives us that opportunity. In the past, we've also, And a couple of instances launched share buyback programs where we have felt then we have felt that that has been in the best interest of our shareholders. And we always look at M and A opportunities. So historically, they have been of relatively limited size and then focus more on the organic growth thereafter. In terms of the new Tim, so the drag on the profitability in the year, that is correct. We started the year by saying that the Essentially, we would take all the additional EBITDA generation, including from the scaling of our business and invest That's an additional indeed driving these growth initiatives. But I think you only have to look back to like Q4 2020. We had a 28% EBITDA margin still Having investments in teams, etcetera, at that stage, but giving at least an indication of sort of the margin picture of that business when we are not as aggressively as now scaling these initiatives. And then I think it's the more Successfully, these businesses scale and confidence that we have in the ROI being positive, of course, that will continue to support our thesis For this year, it's a little bit early for me now to sort of say exactly how the details towards the end of the year and the beginning of Following, we'll look in terms of margin picture, but we are seeing this as an opportunity to establish those businesses and creates a strong foothold in them. And then as we talked about earlier in the Q and A session, then it's moving over to more Existing end market products and it could sort of be more, let's say, stable and L profile and margin accretion also from those. Well, just one follow-up. So I mean, I guess, as an investor, I'm sort of wondering how a 40% growth company can trade at 3 to 4 times, Roughly forward sales, when many companies Growing less than that or trading at twice that valuation. From the management's perspective, How do you see the value of the company being unlocked? Is it the new initiatives when you're finally getting leverage? Or is there something else That you think is going to be the driver? Yes. So I think we are what we can focus on is, of course, driving the business in the best way we can And being clear about our strategy for sort of how we are moving towards the scale and how we see sort of the potential and initiatives that can drive us to become multiple size of what we are today, which is what we are very focused on. We also try to shed light and relevant information on the investments that we hold As we think they represent significant value upside to our shareholders. And of course, In being able to document that value over time and being able to actually see A transaction or sort of that market validation of those, I think, can be very helpful. Thank you. Your last question comes from the line of Lance Vitanza with Cowen. Hi, guys. Thanks for jumping back to me. I just was hoping to follow-up. I'd ask you before we kind of got cut off about Star Baker. And the question is, The growth that you called out in the release is obviously fabulous. I think it was 3.5x. And I'm just wondering what's going on there. Is that New markets, is that a big new marketing campaign or something else? What is it? How do you explain that kind of growth? Thanks. Hi, Lance. Sorry, I missed that part of your question before. Unfortunately, the answer is a little bit the same as Opay that it is its own company. It is It is communicating its own results a bit on its own and we try to stay within that. But as you mentioned, it's a tremendous growth year over year. It's more it's nearly 50% sequential growth versus the 4th quarter. It remains a profitable company, All of them. The net income line and is doing very well. But I'll be a little bit careful Careful. To try to give additional PIs that the company has and to tell prepared to communicate. But Song, is there any other Do you think we could share on Star Maker? Yes. So I mean, I will just say that Star Maker is a very typical case. Well, it has been growing very fast from Last year to this year, right? So that, of course, naturally, if you compare with Q1 last year to Q1 this year, it is, of course, going to be huge. The reason is just because he's growing from Q1, Q2, Q3, Q4 all through 2020 and we feel that trending In Q1 2021, right. So yes, that's actually reflective of how fast it grows all over the last year, And that's a cumulative result that you are seeing. I mean, almost I would say the equivalent of what you see in Opera News, right? Like we also said, it's 260% Year over year and hopefully, we'll see more even in Q2, right? So it's actually very similar trajectory that if you have something new and a faster growing pace, That concludes our Q and A session. I will now turn the call over to Song Lin for any additional or closing remarks. Okay, sure. So I think guys, I think we have a great quarter. All business are doing well, while our new initiatives are scaling, really allowing us to predict a bullish future. I just want to say that all of these, of course, are, of course, in despair from the shareholders out there that trust us So I just want to say that appreciate your support as always. We will do our best. And hopefully, we can continue we'll continue to execute here and bid. And hopefully, we'll all have a better great results to come. So again, thanks for attending.