Opera Limited (OPRA) Q3 2018 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen. And welcome to Opera Limited Third Quarter 2018 Earnings Call. At this time, all participants are in a listen only mode. Later we’ll conduct the question-and-answer session and instructions will be given at that time [Operator Instructions]. I would now like to turn the call over to Aaron McParlan, Opera’s General Counsel. Aaron you may begin.

Thank you. Greetings, and welcome to Opera’s third quarter earnings call. Together with me today I have our CFO, Mr. Frode Jacobsen, and our Chief Operating Officer, Mr. Song Lin, who will cover our prepared remarks and answer any questions. Before we begin I refer you to our safe harbor statement in the company's earnings release which also applies to the conference call today as management will be make forward-looking statements. Our commentary today will also include non-IFRS financial measures. We believe that use of these 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. Reconciliations do not address the non-IFRS metrics for our reported results can be found in our press release that was issued today, a copy of which can be found on our investor relations Web site. It is now my pleasure to turn the conference over to our CFO, Mr. Frode Jacobsen.

Thank you, Aaron, and welcome to all from me as well. We have been looking forward to this call and the opportunity to give you an update on how the business is performing. I’ll begin with the financial highlights. We’re very pleased with the results, which exceeded our expectations. We achieved all-time highs on all key metrics and are raising our revenue guidance for the full year. During the quarter, we achieved strong user and top line growth, while maintaining healthy margins. Third quarter revenue was up 17.4% to $44.7 million, driven by 57% growth in advertising revenue and strong results in the new retail revenue stream that we will talk more about today. When looking at our year-over-year trajectory, just keep in mind that the third quarter of 2017 contain both other income associated with the divestment of certain intellectual property and related technology license deal, which resulted in a strong quarterly spike in revenue and profit that were not recurring in nature. We achieved in this quarter of 2018 an adjusted EBITDA of $16.5 million, representing 36.9% margin and an adjusted net income of $12.5 million or 28% margin. In the third quarter, our IPO and concurrent private placements took place. We issued a total of $29.87 million new shares and collected net proceeds after underwriter and other related costs of $167.2 million. Combined with our underlying positive cash flow, our September 30th cash balance increased to $217.6 million. Among our new shares, $19.87 million was issued in connection with the IPO and our underwriter's option to purchase additional shares; this correspondent to$ 9.93 million ADSs currently trading, given the ratio of two shares per ADS. Other shares remain subject to the six month lock up that expires after January 22, 2019. So at the end of Q3, we had a total share count of 220,119,343. Turning to our share repurchase program announced today. To-date we have continued executing on our strategy as planned and are achieving results ahead of expectations. The same strategy and traction lead to a very strong demand for our stock and our IPO even with a shorter track record. Yes, over the past few months, our share price has declined. As a result, our Board of Directors has concluded that a share repurchase program will provide attractive return on capital and has authorized repurchase of up to 1.5 million ADSs, which management will initiate on Monday. Before I hand it over to Song Ling, I'll provide an update on guidance. Following a strong third-quarter, we expect fourth-quarter revenue in the range of $48 million to $52 million or 29% growth year-over-year at the midpoint. Consequently, we are raising full year 2018 guidance to a range of $172 million to $176 million, up from our previous range of $170 million to $175 million. Looking ahead, we continue to be excited about the growth prospects of our business. Beyond the fourth quarter, we would constantly expect to sustain similar year-over-year growth rates as we are guiding today. We believe we are in the early stages of capturing the monetization potential of our business, with many levers available to us, most notably related to the traction we’re seeing in our ad monetization. Our healthy cash flow combined with scaling business allows us to continue to invest in growing the business. This will further strengthen our growth potential and serve as a foundation for our longer-term margin expansion at a target operating model of adjusted EBITDA in the 45% to 55% range. So with that, I hand it over to Song Lin to cover our operational highlights.

Yes, thank you Frode. Hello everyone. So first, I’d like to appreciate your participation and the interest in following our company. I will start by talking a bit about our users, so I’ll start with Opera news, our AI based company platform. So again, we are quite pleased to share a very strong Q3 in terms of user growth. We grow to an average of $121.4 million MAU, Opera News platform, in Q3. This is more than $20 million up from the last quarter average. Within this, we have also reached about $17.4 million MAU on the dedicated Opera News app, which is another increase of nearly $10 million from the last quarter average. Overall, we are very excited about the continued strong user growth on Opera News and we hope you feel the same. Beyond Opera News, we’re also very pleased with the overall growth of our smart phone user base,, where we’ve reached $195.4 million average MAU in the quarter, which is up over $14 million in aggregate. Also, on the PC, side we’ve reached $58.4 million MAU, which is up $1.3 million in the quarter. I would also like to comment that we are now starting to see a convergences, where it really allow ourselves in this quarter to focus more on feature and the design rich mobile products as we’ve done on the PC platform. And now this year we’re seeing all the signs that our statistical positioning of our Opera differentiated PC offering in the west maybe complemented with a new pick up of also mobile user base there. We never really have that. So with this is in context, I think as you should have in mind so when you read about or perhaps even better try our new and award winning Opera Touch browser, which we just launched on Android or iOS. I think that you’ll like how instantly the search portal when you’re opening us Opera Touch. For myself I have become a loyal user of it and I hope after the trial you’ll feel the same. So as a conclusion, I think Q3 demonstrates our ability to benefit from our existing scale and the strong product portfolio. We continue to believe that our position to secure a dominant account in the platform with Opera News, in particular in Africa and the emerging markets is really cementing a highly attractive strategic positioning. As you all know, the market is only going to get bigger and probably faster than any other global regions. So to us, this is really a greenfifeld opportunity, which is too attractive to pass. Also, I would like to weigh this context discuss about our $30 million investments into StarMaker, which we also announced. So as also mentioned partly in our roadshow where some of you have participated for us, we really view music as a strategic vertical that drives a lot of engagement and time spent. And this is within the category of entertainment and conference. Not everyone wants to create music, but most people enjoy consuming it. People may not realize but in emerging markets, it actually can be even more prominent. For instance, in Africa, people would actually be more motivated to create and consume music whenever network conditions and handset allow it then perhaps creating and sharing something text based. So finally, the other important point is that the social networking aspect of such a platform is also super important. So for us, instead of spending time to build this from scratch, trying to secure sufficient copyrights from other music companies and really expanding the entertainment aspect of all programs, we feel it was a relatively easy decision for us to try to secure strategic alliances in the music field by taking a stake in a successful and probably more importantly faster growing company that already existed in our portfolio. So within a short timeframe, StarMaker has become the number one singing app in India and top two across Indonesia and the Middle East. And it's really much more than just the singing app. It has the continuous feed flow and very attractive party room functionality. And again, I think I would recommend you to try it on your android phone and you will also get a better sense of it and I hope you are equally excited. Finally, I would also like to point out that music within a news stream is a very proven model, perhaps first in China and now it's -- and all its stage of expanding into the global theme. And for us, it's super important to be part of it. We ourselves believe strongly that Opera and StarMaker have many opportunities for mutually beneficial corporation. And of course, the cash we have invested into the business will be able to support this investment into growth. We believe we can assess if we want to exercise our option and take a controlling stake or remain a holder of preferred shares with guarantees and rights above other shareholders. So we strongly believe this will be very valuable in the long run. And also, I would like to mention that I our past communication, we have almost down plate some of our potential to be on conference, namely in anticipation of mobile payments. So that’s why in this quarterly release, we have also provided just a bit more color and the metrics that hopefully will start building an appreciation of some only building blocks of what we are staging for the future. For instance our associate, OPay, which is actually of the few licensed and live mobile money platforms in Nigeria. Within Q3 just one quarter, it has reached the daily transaction volume of more than 200K and now during October, it has reached 700K per day daily. As you can see, the potential there is huge, both in terms of transaction and also in potentially attractive other payment service system port. And on top of it, we have also penetrating into other related fields. For instance, in many countries we have launched prepaid mobile air time and data, which effectively has the same functionality of the currency in many of the countries where we focus on. And this points that initiatives are not focusing on immediate profit short-term, but more in line with the scale and building a much more consist able payments as you would see in normal e-commerce business models. And we feel this can show as a good base for future expansions. Just to conclude, I would just note that while I did spend time by providing a broader view of what we are doing, one thing has to be very clear. For now, our number one focus remains to be the leading platform for AI-based content distribution, may it be articles, may it be video or beyond. On top of this, we were expanding to verticals in areas where we are strong. So again, we are a company with very high ambitions. And with this, I will hand it back over to Frode for the final details of our earning result.

Thanks, Song Lin. Okay. Let me now turn back to discussing our third quarter financial results in a bit more detail. As I mentioned, Opera had record revenue in the quarter, reaching $44.7 million. Search revenue represented 43% of total revenue or $19.1 million, which was up 12.3% year-over-year. This mainly followed increases in the average revenue achieved per search query. We maintain search revenue at a strong level even in the context of foreign exchange headwinds, which is easiest to see on the sequential search revenue. Advertising revenue reached 39% of total or $17.6 million in the quarter which was 56.8% up year-over-year. This strong growth was supported by several factors, including our initiation of direct campaigns on the Opera News inventory in the browser but also from the revenue share deals with e-commerce partners and various services that we control and monetize ourselves. The technology licensing and other category represented 11% of total revenue or $5.1 million, a 48% decline year-over-year. As stated before, this revenue category is more volatile and lumpy in nature than the others. And we saw an exceptionally strong third quarter of 2017 in terms of licensing. Finally, retail revenues represented 6% of total revenue, or $2.9 million in this first quarter of material activity. Our total operating expenses amounted to $32.8 million in the third quarter, which was unchanged versus the third quarter total of 2017. I'll now focus on the five largest categories, representing 86% of the total operating expenses. Compensation expenses were $9.4 million, down 24.7% year-on-year. This mainly consisted of cash-based compensation, which was $8.6 million or down 4.7%, which was mainly due to the extraordinary costs in the 2017 period, following the divestment of certain intellectual IP and the related themes. The other part equity-based compensation was $0.8 million in the quarter compared to $3.4 million in the third quarter of 2017. This decline was driven by a reduction in accruals related to Social Security cost of our RSUs, as well as the elevated 2017 expense given that being the first year of a new employee RSU program. Marketing and distribution cost was $7.7 million, slightly down 2.4% year-over-year. We continue to maintain a very active market presence that is also reflected in our user growth. In the third quarter, we benefited from the ramping up of the OEM channel for Opera News, which delivered a greater share of our new users coming from paid campaigns. Payouts to publishers and monetization partners were $5.5 million substantially higher than the $0.4 million in the third quarter of 2017. This category is growing at the monetization Opera user base of all with both content and service partnerships supporting the growth, as well as the introduction of retail revenue in the current quarter that does not initially generate a positive margin. Hosting was $2.5 million, 3.2% down year-over-year and continuing the trend of cost reduction in this area. Finally, depreciation and amortization was $3.1 million, a 38.8% decline versus last year, following expirations of depreciation schedules on equipment. So as a result, we achieved $11.8 million of operating profit, representing 26.5% operating margin. Our net income was $9.7 million with this quarter alone, delivering 160% of the net income we had for the full year of 2017. Our adjusted EBITDA, which excludes RSU cost and expense IPO related costs, was $16.5 million, representing 36.9% margin. Our adjusted EBITDA net income excludes the same RSU cost and expense ITO related costs, as well as the amortization cost associated with the step up in value of acquired intangible assets. For us that relates to one thing only, which is the amortization of acquired technology and customer relationships from the privatization of Opera in 2016, amounting to about $1.3 million per quarter. Finally, we reduced these adjustments with the impact to our income taxes associated with those expenses, such that we present a fair and balanced adjustment. In the quarter, our adjusted net income was $12.5 million, representing 28% margin. So to summarize, we are again very pleased with the solid quarter. We look forward to keeping you updated on our progress as we continue to execute on our plans and ambitions. So with that, I'll turn it back over to the operator to take questions.

Thank you [Operator Instructions]. And our first question comes from Huijuan Chen with Citigroup. Your line is open.

Firstly, could you just help us understand the growth in our mobile MAU of Opera Browser and the standalone Opera news app in the key markets? And also as to the adverting revenue for MAU in some of these key markets. How has that been trending sequentially in third quarter? And what's the driver behind the advertising revenue per MAU growth in third quarter, in particular related to the news feed advertising? And then I have some follow-up questions.

I think me and Frode will try to split the question. I think I will try to address the questions around the user growth, both for the browser and also for the news app. And Frode can probably comment a bit on the revenue and ARPU part of it a bit high level. So I think I would just add a bit color there. I think it's very relevant question. So I will start with the news app since it is mostly important initiative. So I think our news as you already see on the quarterly results, I think about we are very pleased with the faster growth of the user base. And on top our estimation is that for now our forecast remains in a key vertical markets like Africa, which is I think is still most important. We have actually seen very high engagements and very high intentions, which actually give us some, I would say, a lot of encouragement of how bigger we can further grow in those regions. But of course is also reminder that we just have to be focused and we have to be concentrating and then just take the markets, because the whole market is still big. I will give you some example for instance in Nigeria, I just take a look since you actually asked the question last time. I take a look in Nigeria. The average time spent within for the browser is $38 million last time in June. But in October, we have already been more than 40 minutes, which is almost 6%, 7%, up quarter-to-quarter. And this is actually not considering we’ve beginning to launch much more video content now from November on, which we think will have even bigger impact. The other thing I also want to mention is that, for instance, in Nigeria we have also just launched local news, which is now covering more than 25 cities and states in Nigeria alone, covering more than 90% of the population. So I read this as an example just to say there’s a lot of this we can do even in a single market, and it’s super important for us to focused. So I guess this is more like high level to answer your question of how do we see the user growth on Opera News. I think we’re very happy about it. But we also remain to be very focused in our key markets, which is Africa and also we’re starting to other related markets. I will also touch at some high level base on the Opera mobile user base since you also asked that. So as I also commented in the earlier calls that mobile user with very good growth trend quarter-to-quarter. But even more important is that now actually we see that previously our mobile user base and our desktop user base are quite separated. So we have the good user base in Europe for desktop but then we have almost completely different user concentration on mobile in emerging markets. I think what’s been happening in this quarter, which we are very pleased about is that I think it’s the first time that we’ve seen more and more users also up taking they are mobile users in Europe, which we’re actually very excited about. This is partly because of the newer product launch we have on Opera Touch, which is now both available in iOS and in Android. But also we have released Opera for android, which is now also very popular which is in Europe and has a very high uptake. So I think that the other guidance I would just like to point out in our directions, especially on the mobile browser field. So I think those are two high levels that I would like to mention but then for revenue and ARPU, I’ll turn that over to Frode and he can comment a bit more.

So without going into country specifics, I would say that overall our user driven monetization is performing extremely, extremely well led by this near 57% year-over-year growth in advertising. And also keep in mind in the third quarter of 2017 we had already begun monetizing the Opera News traffic. And so I think partly also what's about is to exceed our expectations for the third quarter was we have so many opportunities ahead of us that we are starting to pick from, in terms of how we can improve our monetization ability. And so in the quarter, in the reports we mentioned, for example, that now we have initiated to use direct sales campaigns on the Opera News inventory, which is positive. And another one, which is an example of one that is ahead of us, would be the initiation of monetization of the standalone Opera News client, which is not yet begun. On a per user level, I would say that if I take a look at the total. On the PC user base, our ARPU is quite stable but attractive. And of course, this is a user base business grown by 18% in the past year. So I think we maintain an ARPU in that context it’s quite good with also in light of the currency headwinds that I can cover in a bit more detail if there is interest. On the smart phone side, I think the trend also on a per user basis is very positive, which is very obviously true on a rough pool, but it is also true on a net level after you consider our payments to publishers and monetization partners.

And I have another question on our investment in StarMaker. Could you help us understand, if there is any synergy between StarMaker of our existing business, if any? And then could you share more color on the competitive landscape of the music streaming if this is India? And also, how should we think about the capability of this business and the potential impact out here?

I think again what me and Frode will try to split is that maybe I will answer a bit about potential synergies that you see on product and then Forde can probably comment a bit about any impact on the investment on P&L. So I think yes, I do think there is a very strong synergy between music video based app and Opera. As I also mentioned earlier that if you’re seeing from China's base say from Toutiao for instance and TikTok, you actually see it's now quite obvious that the good combination of both news apps but also with video but also music content with also social networking functionalities is very essential. So to me I think it's already a proven model and it's why in China we'll be able to see that. But more importantly, the same model has also moved to overseas markets. So to me, I think it's almost those all of questions that Opera has to be there. The only choice if we do it from scratch ourselves, maybe spend a few years to address and tens of millions of money, or do we try to get then all its stake in a company and where potentially we could also be able to control later. So for us, I think that’s relatively easy question and to be more specifically right. So even though of course for now we have not really walked with each other before the investment but afterwards, I think that I potentially see that there could be a lot of cross promotions even specific verticals integration of content from the music video into the news apps and also a lot more cross promotions, partly also because we have a quite a big overlapping of regions. They are particularly big in India, Indonesia, even now moving to North Africa. And we’re also quite a bit in those emerging markets. So to me we really feel very excited about it and we feel there could be lot of synergies in the next few months to come. And hopefully, we will be able to share those results in a follow up quarterly reports, the same way we have shared results on OPay and wallet. Maybe some also high level about the comparative landscape so again, I think music is pretty big and the broad category. So there are many types of music services. I think in particular for this StarMaker, they are really concentrating on both a singing app, which means it's not just playing background music you actually are very engaged in singing very beautiful songs, which I'm also very impressed. I don’t know if that’s impossible that for all those people in all those markets that we are able to sing so well on their mobile phone. And I'm very impressed. But even more, they are also moving into a news -- not a news feed but music constant feed from us, which is similar as what you see in even Opera News. So I think actually StarMaker is one of the few people, which really started to doing this in those regions. So I would say they actually have only started. But overall without mentioning names, I think it's fair to say that if we're concentrating on specifically music singing apps, I think they are -- but for now they are the number one in India and I think they are probably popular too across Indonesia, Middle East even though they have just launched a few months there. So I think we are very optimistic about their growth potentials and about how fast they can further grow in this area. So with this outlook, I'll turn over to Frode about any potential investment profit or gains.

Accounting wise, it's quite simple. We recognized our ownership of shares valued at $30 million and at each reporting, we are required to assess that we believe that value has come up or down and then recognize the impact of that. But other than that no recurring and optimistic P&L impact of the investments.

And another question is on OPay. You said some exciting figures on the transaction volume of OPay since the quarter and also up to October. Could you help us understand the geography of that growth coming from? And in monetization model that transaction volume and how should we be thinking about the market share of OPay in the key markets?

Again I'll just try to cover high level and Fredo will help me just add anything on top. So yes, I think OPay as a payment of business, it is very -- per country specific. The only reason is just because for anything with the payments is usually very heavily resonated. You need very specific license so you really have to launch it per market basis. So the number which I reported earlier is specifically in the biggest country in Africa, Nigeria, which is also the biggest market, which we are very excited about in terms of population. So all the numbers we have motioned is only in Nigeria. We have a full mobile money license. And as mentioned, we are able to grow already 700 to 800k per day in October timeframe. In terms of business model, it's quite simple. So when we proceeds in those transactions means we are taking money from users, deposit into our mobile wallet and when they help them also pay it out, which have your fee which is a transaction fee. And then we'll take the margin there. So it's very straightforward. But I guess I would like to mention just that same as other payment business or e-commerce business and this point even though we do take margins, we are profitable in terms of gross profitable. Our priority is probably not to take as much as transaction as possible. So for us, I think it's super important for us to almost establish our sales as the number one player in that field and dominant -- dominate the payment market. So I think if it does any gross profit we probably want to spend that in how to expanding our user base and build-up our transaction volumes. So for us that will be most important -- because this is also -- e-commerce is -- like payment is a field I would say does know ceiling. You can really go as higher as it gets and that is all we assume the bigger value for us in the long run, so that's where our focus is. And in terms of -- so I think in terms of competitive landscape and also where we are in the market, I would say we are just started, we are in the beginning stage, but we already grow very fast. I mean, I don’t want to do some too aggressive forward-looking statements. But I think our goal would be just to be the number one in that area ASAP in Nigeria. And I think it's possible for us to do that in a relatively short time frame.

And lastly, so outside of search high-tech and payment businesses, could management share with us the latest developments on crypto currency businesses, if anything?

So yes, in Q3, we actually -- we does the auto launch of crypto wallets. I think here the results were also value prepositions. We have also walked with many partners, deflecting like potentials. Also in our key regions like Africa we are very well received and we are actually asked even by many, I would say, government people locally to see if crypto can be used in the payment business for in instance in conjunction. However, I think I would also like to say that this is a bit still in early stage. It takes a lot of time for those major initiatives. So I don't have anything extra to share at this stage except to what's already being released in our product.

Thank you. Our following question comes from [Chow Wing Hoi] with CICC. Your line is now open.

This is [indiscernible] from CICC. Congratulations on the strong results, and thanks Huijuan for covering more of my questions. So I have some follow-ups on our OPay business and StarMaker. So about StarMaker when we will be StarMaker starting to contribute in the the P&L level, making profits? And on OPay, I just want to know are there going to be more marketing expenses relative to promote OPay in our key areas, like Nigeria. And I have some follow-ups.

Maybe I can begin, so this is Forde here. In terms of StarMaker's P&L and profit contribution. So at our current ownership share, we do not recognize any percentage of the StarMaker results as recurring item on our P&L. So we have mentioned that we do have an option to increase our ownership share to 51% and thereby to take control of the company, which is an option that we can execute during the second half of 2020. So in terms of today's framework of agreements that is the point in time where that could be an item in our P&L. For OPay and promotional activities, I think Song Lin you can maybe describe a little bit more of the business impact of how. It's growing quite limited. Keep in mind it is a separate company that Opera is a shareholder in, and we recognize our percentage of the OPay financial results as an contribution from an associate in our P&L.

So I think I can add a bit color. So, yes, I mean as Frode said, I think for OPay, I believe we’re actually well with a very few companies, which are able to grow very fast in this space and spending a lot of money, at least on the business itself. I mean, obviously, OPay as a company they probably need to have some R&D on that. But at least for the model itself is actually already profitable and that’s what we are very pleased about. And so you have also asked about our strategy of whether we have expanding that to other markets. So I would say just that yes we definitely are planning to expand into other key Africa markets. The only thing just to add for payments is it’s actually very localized, you have that local license, you have the very build out very strong local team and you have to -- it’s also very high cities even in Nigeria alone. So it’s also a matter of priority and focus. So I would say in the very short time frame, we’re probably still concentrating on Nigeria, because it's just such a high [indiscernible] for us grow there, but at the same time we’re very actively looking for opportunities in all the other, particularly African regions and planning there. But we’ll share more information when we feel it’s a bit more material in that space.

My next question about our ad load. What’s our ad load currently in both operating out in browser and for our standalone applications, and also what's our target?

I can comment a bit and Frode can also add anything on top. So I think in Q3 at least for ad loads, it’s still only available on the browser. We have not really started to add that into the news standalone client. It’s just -- as we discussed before, it’s a matter of focus and we want to grow user base there on the standalone clients. So that’s why we’ve not enabled it. For the browser, I would say, again it’s probably hard to say the exact ad load, it’s just because different companies use different way to narrow it. I would say we are still at very early stage, so let’s say maybe 20%, 30% of the ad load, which we are actively pursuing in the browser space. But again, it’s more like estimation there’s also various regions to regions. For standalone news app, we’ve already started to have some very initial monetization now in end of October, start of November. We see that that’s as a very good potential, so it’s already having solid validation. But I would say on standalone news client so far the primary goal is still to grow the user base, because we think that’s the most important. And apps that I think we’ll spend a bit more time on how we can further add the app load. So that’s a bit more high level I would say. But again, just also reflecting what Frode commenting earlier that we are quite pleased that even though we’ve just started in a very early stage of ad monetization, we are able to demonstrate quite a strong growth in apps, which we are happy about, we’re also I think quite clear what we need to do. For instance increase app loads, have better targeting, improve -- welcoming more ad SDK partners this and that. So we have a pretty clear roadmap of how that can be done. It's just a matter of execution and the matter of balancing of our user growth. So that’s some of the high levels, which I’m trying to describe.

I don't have much to add on top of that. I thought to just underline that last point that we made there that as you think about modeling this ad load, it's of course important. But then there are some the other factors that are -- those multiplied by items with ECPM optimization being extremely important and an area where we see a lot of opportunity versus we are today under that I consider both of optimizing on the demand sources, but also making on a per impression basis serving the right ad. And of course, there are additional formats with higher value, so I think those are key. And of course all of this is happening in very -- we believe in the context of very favorable underlying macro drivers.

I also want to ask about -- may I have the breakdown Opera news -- Opera business by geography. How much is from U.S., from Europe and how much is from Africa. It could be by revenue or by number of users, anything that would help?

Again, I think for revenue, I just leave it Frode. In terms of user base, it's different per product. So I will try to address it separately. For our desktop users, I don’t have latest numbers just right in front of us, because we typically don’t track by different regions. But I would say I think the ratio is still that I think close to 70% will be from Europe and U.S., I think, and adding U.S. probably more than it. And the other percentages are primarily from some other parts of the world. So that’s with desktop. I think for mobile, especially our mobile browser users for now, I would say probably 40% -- a bit more than 40% to 50% coming from Asia, especially if you look at smart phone and then close to 30% to 40% from Africa and the rest from other parts of the world. But I think the percentage in Africa is growing very fast, it's just because we do have lot of users in Africa. It's just with -- many of them are still on the feature phone base but once they move to smartphone they all move to Opera. So I think in the long run the ratio of Africa will probably grow in terms of percentages. And as I also commented that we also have a quite a bit attractions those days even for mobile browsers in Europe but then of course, because the apps with number, they are still relatively small in the short term, it's probably not going to change the major percentage just because our users base in Africa and Asia are so big. So that’s what I think user base and the revenue contribution will be a bit different. In terms of news app for now our major concentration is still in Africa. So Africa still have the higher percentages. The rest will be from India, Indonesia and etcetera. So that’s a good high level. But I will let Frode covering also the revenue part if any.

I don't have that much to add. Of course the PC user base being very Europe dominated and western dominated provides revenue for that region. So I think in terms of any single region, I would say western markets be in the 40% range and then 70% of our revenue is coming from Africa and Asia, roughly speaking.

So my last question about our direct sales. What's the contribution of revenue or direct sales?

I actually don’t have that as of all on my mind. I think the only comment I would say that it actually grow very fast in terms of advertisement it's just because where we are big like Africa with I know that we're actually much better in monetization than by some normal channels and normal apps here for instance. So it's fast growing but I actually don’t have it all on my mind about the actual percentages.

It's almost like the topic of a much broader discussion, because there is always opportunity cost as well. So I think when we look at direct sales, we also look at in the context of that resulting in better ECPMs also for the traffic that we send to networks, because you essentially broaden your demand pool, you reduce the risk of over serving a single ad and so on and so on. So there are benefits. I think broadly speaking over the past months and also into the future, we will continue to benefit from broadening our demand pool and having the ability to leverage direct sales, which we have a long track record of doing, think about those speed outs that call them, the traffic partners we have, all those contracts and being able to leverage that also on industry standard ad units, we think is very attractive.

Thank you very much. I'm showing no further questions, at this time. I would now like to turn the call back to the speakers for any closing remarks.

Okay. I think at this point, we just like to say thank you all for joining us today. And we wish a good rest of the day.

Thank you guys. Thanks for participating.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone have a great day.