Opera Limited (OPRA) Q2 2020 Earnings Report, Transcript and Summary

Welcome to the Opera Limited Second Quarter Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers presentation there will be a question-and-answer session. [Operator Instructions]. Please be advised that today’s conference is being recorded. [Operator Instructions]. I would now like to turn the call over to your speaker today, Derrick Nueman, Head of Investor Relations. Please go ahead.

Thank you and thanks everyone for joining us. With me today, I have our CFO, Frode Jacobsen; and Song Lin who today now holds the role of Co-CEO of Opera. Before I hand over the call to Frode, I would like to remind everyone that in the conference call today, the company will be making statements about its future results and expectations, which constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Such statements are based on current expectations and the current economic environment, and are inherently subject to economic, competitive and other uncertainties and contingencies beyond the control of management. You should be cautioned that these statements are not a guarantee of future performance. You may refer to the Safe Harbor Statement in the company’s earnings release for 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 that the use of our non-IFRS financial measures provide 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. With that, let me now turn over the call to our CFO, Frode Jacobsen.

Thanks, Derrick and hello everyone. We have a lot of exciting stuff to cover today, two big announcements which I'll address first and later I'll cover our financial highlights and provide some color on how our business is recovering from COVID-19 and returning to growth. Let's cover the first piece of news, namely the elevation of Song Lin from his role as Chief Operating Officer to his new role as Co-CEO stepping in alongside Yahui Zhou, who remains both CEO and Chairman of Opera. This promotion formalize a strong role Song Lin has been executing on for the past years, basically overseeing everything at Opera outside of the microlending business and highlights the trust that Yahui places in him and in the global Opera leadership team. As context, Song Lin joined Opera in Norway 18 years ago and spent many years in key engineering roles. Later on, he was instrumental in our privatization and transition to new ownership and our strategy to accelerate our trajectory and leverage our user base to launch new businesses. As many of you have realized in live face to face discussions, Song Lin knows everything there is to know about Opera and the markets where we Operate. He is a fast talker and a quick thinker with good intuition. And just like Yahui he has a tremendous drive and urgency and together the two of them have shaped our company and our ambitions over the past years. On a personal level, he is also a fantastic guy to work with, and I know I speak for all of our staff when I congratulate him on his expanded role. Now to the second topic, the formation of Nanobank. As many of you know, we have been working towards massive fintech opportunities for several years. First, we incubated OPay, now Nigeria's largest mobile wallet company both in transactions and value. It has become a leader in its space and again doubled its transaction volumes over the past six months. We structured OPay as its own company from day one as we wanted to raise external capital to address the massive potential of filling out such an offering across Africa without impacting Opera’s strong balance sheet. OPay has raised $170 million to date and investor demand to take part in that journey has been very strong. Separately, we have scaled our microlending offerings from practically nothing to a massive business in just over a year. It has continually exceeded our expectations with exponential growth and strong profitability. And it's a great example of how Opera utilizes its platform and significant user base as a competitive advantage. Last year, which was really the first year of Operations, the business provided approximately 15 million loans representing over $800 million in value and built a user base with tens of millions of registered users. With that background, we are excited to be announcing Nanobank, which is the combination of Opera’s microlending business and the equivalent business of our closest partner in this space, MobiMagic, which works with us in India and has a large growing microlending business in Indonesia. When Operating together these businesses will form a significant power in the fintech space for emerging markets. By creating Nanobank, we are setting the stage for continued growth, consolidating profitability and cash generation, diversification on both the product side and in terms of geographies, and finally we are providing this business with the flexibility to Operate as its own company. The resulting Nanobank will be one of the biggest global fintech companies focused on emerging markets and a category leader. Nanobank will single mindedly focus on increasing its leading position in the emerging markets fintech space. Combined, the business will also benefit from shared technologies, data aggregation, and central functions such as risk management and credit scoring through user profiling and KYC efforts, shared Operational knowhow and a more holistic view and adaptation to regulation. Further, Nanobank will have significant strategic flexibility for the future to come, such as taking in strategic investors or floating shares. We are very proud of the business we have built over such a short time frame, including an efficient organization with strong Operations and well managed business practices. For Opera and our shareholders, this transaction highlights the value we've created, it simplifies our investment story, provides us with additional flexibility, and it creates a corporate framework that best supports the business as it continues to scale as a category leader over the next several years. Now let's get into the details on Mobimagic, the combined companies, and the transaction. Mobimagic launched microlending Operations in mid-2018 with a goal to be one of the largest fintech providers in Southeast Asia. Its initial market was Indonesia. Then Mobimagic supported our launch and scale in India as our technology and business partner, leading to results well in excess of our most optimistic forecasts. In 2019 Mobimagic generated 106 million of revenue for a highly profitable business that had $48 million in pre-tax profits. Mobimagic shared a similar growth curve to our first microlending efforts as Indonesia scaled throughout 2019 and as they participated in the exponential growth we saw in India. In the same period, Opera generated 128 million in fintech revenue and a pretax profit of approximately $19 million in this business area. The combined Opera and Mobimagic businesses pro forma results when adjusting for our transactions between the companies generated revenues of approximately 209 million and a pretax profit of approximately 68 million in 2019, as well as provided almost 20 million loans with an aggregate value well over $1 billion. To provide some additional context on the scale and rapid growth of this business, prior to the significant impact from COVID-19, the combined businesses generated a combined $120 million in revenue in the first quarter of 2020 alone, on 10 million loans disbursed with a total value of 686 million. This compares to a combined revenue of 22 million on less than 100 million in loans dispersed in the first quarter of 2019. Further, Nanobank as a whole generated profits in the first half 2020, despite significant extraordinary credit loss provisions related to COVID-19. On that point, the recovery from COVID-19 is well underway. The Nanobank businesses have been increasing loans provided in all key markets India, Indonesia and Kenya since the end of June. Loans disbursed were 44 million in July compared to 28 million in June. This ramp has continued into August, most notably in Indonesia that is already nearing pre-COVID levels. While higher credit standards have been employed in the near term to ensure profitable loans, Nanobank expects to continue to rescale volumes as it gains additional confidence. While it still remains difficult to predict when this business will return to early Q1 levels, it is clear that Nanobank is on that path. Looking ahead, we have massive growth expectations for Nanobank to grow far beyond pre-COVID-19 levels. First, India is a huge market and today Nanobank has only interacted with roughly 3% of the population or 18% of the unbanked. Second, Nanobank has just begun geographical expansion. Today, we can also announce the launch of another major market prepared in collaboration between Opera and MobiMagic, namely Mexico, which has a substantial unbanked population. And as we look ahead, we expect Nanobank will launch in several new countries to further increase its total addressable market. Finally, Nanobank will continue to develop and deploy fintech offerings beyond microlending. This includes marketplace offers, buy now pay later products, mobile payments, and debit cards some of which are now live and others that will be launched over the next year. Over time, we really believe that the potential to broaden the offering is substantial building Nanobank’s large registered base of 50 million plus users and enabling increased recurring engagements with our products. The transaction itself and Opera’s interests in particular have been overseen and closely reviewed by our Press Audit Committee of Independent Directors as Mobimagic was controlled by our CEO. Further Opera engaged an independent professional third party to value the respective Nanobank contributions and to help determine the ownership split. The factors that determine the agreed ownership split where the forecasted cash flows, multiples of most relevant public companies, and provided working capital such as cash and loan book of each party. The cash that was part of Opera’s microlending business as consolidated by Opera in our June 30th balance sheet was 31 million and our loan book was 14 million. As part of our contribution to Nanobank, the net cash in the business and the loan book will also transition to Nanobank. This resulted in an agreed ownership split of 42% Opera, 58% Mobimagic in this otherwise non-cash transaction. So looping back to the combined pro forma [ph] results, if Nanobank had been affected Jan 1, 2019 Opera’s 42% share of pre-tax profits would have been approximately 28 million in 2019, compared to the approximate 19 million that our standalone business generated. From a reporting standpoint, we plan to be transparent and discuss the performance of Nanobank in our quarterly results, as it will be a key factor in our overall sum of the parts valuation. We expect to provide details such as revenue, profits, and key operating metrics on a quarterly basis and we will make it easy to see what our revenue and adjusted EBITDA would be when including our 42% fair share of Nanobank revenue and adjusted EBITDA. In terms of IFRS reporting, Opera’s share of the Nanobank results will be reflected in the share of net income of associates and joint ventures lined in our income statement. Additionally, Opera will report a sizable one time gain as a result of this transaction currently estimated at over $100 million. This follows the recognition of our initial Nanobank ownership at fair value, representing a step up versus the book values of Opera’s contributed business. Further, we will conduct a PPA on the difference between fair and book value of Nanobank as a whole and Opera will recognize amortization costs as appropriate over the coming years as it relates to excess values allocated to intangible assets such as technology, customer relationships, and licenses. To sum up, we are really excited about Nanobank and expect it will demonstrate a highly attractive trajectory going forward as it continues to scale and expand into new geographies and products with the potential to be multiples bigger and generate hundreds of millions in profits. This, along with Opera’s other growth initiatives which Song Lin will speak about our key elements and our effort to drive strong returns for Opera’s full cover and future results and recent trends.

Hey guys, thank you Frode. So, I'm glad to be named as Co-CEO and I view it as not myself but really a realization of what the overall Opera team has accomplished over the past few years, growing revenues, users, and to growing multiple new businesses so thank you guys. It's an exciting 18-year journey. I look forward to taking on this new role and continuing the strong momentum together with the proud Opera team. So at this time I will talk about some recent trends and developments. Our user trends for Q2 with historical high user base become our key role [ph]. Our user base in the Q2 was a record 363 million monthly active users an increase of 12 million users compared to Q1. This was driven by growth in Africa and Europe our key regions of focus. Our base has further growth in July and an all time high of 329 [ph] million monthly active users in this time of COVID [ph]. We are very pleased to doing that. And to further break it down Opera News has achieved an important milestone in May of 200 million monthly active users and averaged 205 million users in Q2, it is up 26% year-over-year. We are of the thought that Opera News has become a critical information hub during the COVID-19 outreach. On the other angle our [Technical Difficulty] 15% year-over-year to a record of 75 million in Q2. This was driven by both the strength, let's say, in Europe with our PC offering which is becoming ever more relevant when people spend more time from the home base. And also globally from Opera GX North South venues [ph] also which has reached 4 million monthly active users recently and more than doubled year-to-date. On the mobile we are also see strong results in Africa due to our product relevance and also our increasing technical relationships. We are very happy to announce the corporations with leading technological [indiscernible] and also recently Safari.com [ph] [Technical Difficulty] in several countries in Africa. These partnerships have provided for strong future user growth. Our focus is to continue our growth trajectory and [Technical Difficulty] 12 million mobile browser users versus June so very excited. Now also getting to [Technical Difficulty] clear recovery trend from the low point in April, with each month showing improved year-over-year trends. So overall we continue to be bullish on our long-term monetization rates to offline to online transition accelerating signaled by continued growth of OList with 60 million monthly active users compared to a little over 4 million at the start of the year. We are also very excited about our launch of Opera For Business in partnership with Google, which we just announced last week. It will be topic based to enhance monetization inter-raging and even though short term monetization has been slowed by COVID-19, the digital advertising ecosystem in Africa represents a very attractive long-term growth. Let me also lean a bit on Opera News for instance. That product has grown revenues 65% year-over-year despite of the monetization impact of COVID, it has actually reached -- in Google’s problematic inventory [ph] worldwide. There are of course still many review related inefficiencies for problematic [ph] inventory in Africa simply because it has not reached enough attention from global players but what we are working on is solving this problem every day with all our partners, because given all scale and also the quality of that product, we believe demonetization potential can be huge. And finally, we are also extremely excited about our new European think tank [ph] initiative, which we think has the potential to be very big and also accelerate our growth in 2021 and beyond. We have some real competitive advantages with more than 50 million addressable users in the region that make online transactions and purchases through our browsers, which in fact is the point of sale [Technical Difficulty] would have. That give us a huge potential to kick up innovative financial services. We have been testing our digital wallet for some major new market and have already acquired – users. Initially, our offerings will be monetized through by not a little product, which will generate revenue through transaction commissions and credit fees. This product while having similarities with [indiscernible] such a plan will have to pay -- unique as it will focus on the users versus the margins. So essentially a user should be able to make purchases with any merchants like they would normally do, with the browser and then retrospectively decide how to pay for them. So we expect to formally launch later this year and also to take additional steps in the near term for our offering. We have built up a great think tank business in emerging markets in the last two years and now as a company deeply rooted and headquartered in Europe, we've also recently added strength from our PocoSys acquisition and recently Fjord Bank we are very excited about the potential and also opportunities that we see in Europe. This will be the focus of the team for next few months and we really look forward to updating you as we scale this new business. So just to conclude, Opera has a lot going for us. First, we are growing and have record high users. Second, we are diligently focused on increasing monetization. And third, we have exciting new initiatives that leverage our existing skill assets and will drive additional revenue and earnings growth in the years to come. So with that, let me hand back the talk to Frode [Technical Difficulty] of our Q2 financial results in detail.

Thanks Song Lin. Given the extraordinary nature of the second quarter I'm going to keep our comments short as the results aren't reflective of our business and focus on key highlights and trends. Additionally, I would advise you to look at our press release for more detailed information. Revenue for the second quarter was 55.4 million. Of this search was 17.6 million, down 18% year-over-year. Trends improved each month of the quarter. PC has recovered quicker, whereas the mobile recovery is taking a little longer based on exposure to emerging markets. However, both platforms are on the way to recovery, and in July search revenue had regained half of the year-over-year decline observed in Q2. Advertising was 12.7 million, down 22% year-over-year. Advertising revenue also improved each month of the quarter and we benefited from strong e-commerce partners and sports leagues returning. In July advertising revenue had regained two thirds of the year-over-year decline observed in Q2 and was back to year-over-year growth when excluding the travel vertical. Fintech revenue was 11.8 million and as discussed, loan volumes began ramping in late June. Finally, combined retail and tech revenues were 13.3 million. As a reminder, we expect combined retail and tech revenues to be between 5 million and 6 million next quarter, though that reduction is not expected to affect profits. Our operating expenses were 59.4 million, down considerably from the first quarter due to two primary factors. One, discipline around variable costs and two, lower credit losses in microlending due to the smaller revenue base and stronger than expected collections on loans that were open at the end of Q1. As a result, adjusted EBITDA was positive at $2.9 million in the quarter. Net income was 17.1 million, benefiting from finance income from marketable securities, the performance of our investees, and other income from our divestment of a Nigerian subsidiary. Our operating cash flow was positive at 7 million for the quarter, where the biggest components were microloan collections adding to our cash and cash outflow related to costs of prior periods with greater fintech volume. The reason our total cash and marketable securities still fell by 55 million in the quarter was that we repaid 48 million of loans, largely in market credit facilities and repurchased $13 million of our own shares. Everything else more or less nets out. In terms of our share buyback program, at the end of Q2 we had repurchased 2.47 million ADS’ year-to-date for a total spend of 18.5 million. Including repurchases in this quarter, we have repurchased 3.46 million and yesses for a total spend of 28 million, averaging 808 per ADS and leaving 22 million of additional repurchases under our announced 50 million buyback program. Now, looking forward, the good news is that the year-over-year trends in our business have improved each month since bottoming in April. While we are hesitant to give specific revenue guidance for the third quarter due to continued uncertainty around COVID-19, we think it's helpful to share several directional data points. First, combined search and advertising were down 8% year-over-year in July, recovering from the 19% year-over-year decline that we saw for Q2. And we've seen further improvement in August month to date. We expect the sequential revenue increase from Q2 to Q3 in our combined search and advertising business to materially exceed the 6% increase we had in the same period last year as our business continues to recover and use her metrics to remain strong. Further, we expect to see a similar benefit from Q3 to Q4. Second, as discussed earlier, retail and tech revenue will be roughly 5 million to 6 million combined. This will be almost an $8 million headwind on third quarter revenue versus this past quarter, but will not impact profitability as both businesses are low margin. So three, our new initiatives, OList and European Fintech, will start to generate revenue in second half this year, though we expect the contribution to be small and our focus here is to prepare for significant contribution to our growth as we look into 2021 and beyond. Finally, we are expecting a meaningful improvement in EBITDA margin in the third quarter, primarily topline driven given the high margin of search and advertising revenue. To wrap up our core search and advertising business is recovering from COVID-19 and we believe is positioned to return to its historical growth rates in 2021. Our new initiatives are progressing well and we expect them to support further acceleration of our growth rates next year. Finally, we believe our investments in OPay, Starmaker, and now Nanobank will drive value creation for Opera shareholders as these businesses continue to execute. We are very excited about the future and returning to our strong growth trajectory. With that, I think we can now move to questions.

Thank you. [Operator Instructions]. Our first question comes from the line of Lee Krowl of B. Riley FBR. Q – Lee Krowl: Great, thanks for taking my questions and congrats on the promotion to Co-CEO. I wanted to start out on the search and advertising business, you kind of consolidated the trends of those business into down 8% year-over-year. Could you maybe break out the trends specifically by search and advertising quarter-to-date? And then I guess the other breakout I was curious on is just by the subsectors which have returned to kind of normalized levels and which are lagging? Thanks.

Yes, sure. Thanks for the question. So yeah, as mentioned in Q2 search was down 18% year-over-year and advertising 21%. And in July we saw that search had regained half and was down 9% year-over-year. Advertising even more so was down 6% year-over-year and as I mentioned, excluding travel it was back to growth year-over-year in July.

And this is Derrick, the other comment that we made is that, month-to-date in August we're seeing better trends than July. Q – Lee Krowl: Got it, okay. And then on the Nanobank transaction, you guys provided a lot of detail that was helpful. I just kind of wanted to dig in on the question of why now, you know, the business has reached some decent scale, a lot of velocity, but obviously a brief pause with the pandemic, why does it make sense to do this transaction today versus waiting for it to build further scale within Opera? Thanks.

Sure, I mean this is something that we have considered for some time. We've seen fantastic operational performance in both Opera and Mobimagic. We think this is good timing to consolidate now and prepare for the reacceleration of the business and do everything we can so that that business is set up to be a true leader, as a global scale for emerging markets. We see operational benefits as mentioned. We also see structural flexibility over time. Q – Lee Krowl: Got it. Thank you for taking my questions.

Our next question comes from the line of Lance Vitanza of Cowen.

Hi guys, thanks for taking the questions and glad to hear things are improving. Let me actually ask you a couple of questions on Nanobank. I guess the first is how easy or difficult do you expect the integration with Mobimagic and the formation of JV to be, are there risks there that, you know, putting the two companies together causes you to miss some of the opportunities in the marketplace over the next, say, three to six months?

Sure, Frode here again, I'll answer that question. I would say at the starting point operationally the businesses have different core markets. Where it overlaps we already work together. So that would actually simplify things being apart, having it as part of one joint group. Think we've also seen that in Mexico, which we are really excited about. That market we have prepared together and we are about to really start scaling that now. I think in terms of building a corporate function, that is an area where Opera will remain quite involved, very similar to how we supported OPay in its early days until we have sort of the corporate consolidating function well in place.

Okay, and then sticking with this, so you obviously you talked about the disparate profitability, right. So Opera generating more than half of the revenue, but at a relatively low margin versus Mobimagic generating less than half of the revenue but at a pretty impressive margin. How do you explain that margin differential, is that sustainable, what are the structural elements that go into that, and I guess, I know you mentioned all of the factors but at the end of the day is that margin differential really why Opera winds up with only 42% of the equity in the JV despite contributing the majority of the revenue?

Yes, so I would say on profitability first of all there will always be country by country differences. So, how profitable each market will be and Mobimagic has set up a very attractive business in Indonesia both in terms of growth and profitability. Second reason why their profitability is good is that they have been able to leverage their technology developed for Indonesia as they have supported Opera which has made it -- made the company profitable as you referred to.

So I think --

And so to cover the second part of the question, so when we've looked at the relative valuations, we have looked at cash flows over a long time period, and we have looked at multiples both on revenue level to sort of determine the right split. On that one as I mentioned, we engaged an independent professional party to help us confirm the appropriateness of the...

And Lance this is Derrick. We're not expecting any structural changes in terms of Mobimagic's business, meaning their tech platform will be the same in Indonesia and we'll continue to do what it's doing. So there's nothing that's one time this year.

Thank you, that was really -- that was a big part of the question. And then I guess just, I think you went through this on the prepared remarks, but just to make sure I have it right, so there was roughly 31 million. If I take your June 30 cash and marketable securities of about 160 and then I back out the 31 million or so that you are shipping into the joint venture essentially. So on a pro forma basis you've got about 130 million of cash and marketable securities, is that accurate?

Correct.

Okay, and then just any -- will there be any debt at the JV, I would imagine, nothing on balance sheet but could you know anything about the debt structure there and then also and I apologize, I'm not familiar with the Mobimagic shareholder base, I know that there's a relationship there between your other Co-CEO and Chairman but could you remind me his percentage ownership in Mobimagic and how that whether that's direct or indirect through one of those other investment vehicles?

Sure, so to answer the first question, no, there won't be any external debt in the Nanobank balance sheet so that will be clear. On ownership that is correct, that our CEO is the majority shareholder in Mobimagic.

Okay, thank you very much, guys. Appreciate the help.

Sure. Thank you.

Our next question comes from line of John Godin of Lake Street.

Hey guys, thank you for taking my question, congrats. First on the Nanobank, can you talk in a little bit more detail about how you think this expands the TAM both from a geographic and scalability standpoint as well as from a new product standpoint? And then number two, can you walk me through kind of the strategy for customer acquisition, especially for some of these markets where Opera hasn’t had a significant presence through any other products previously? Thank you.

Sure, I can go first. So we believe that a consolidated company working across different geographies makes the operation solid, makes it easier to expand to new geographies. It also supports a broader product diversification to essentially have a company that has centralized tech, that it can apply in different geographies. So we believe that the combination of Opera and Mobimagic into Nanobank is very supportive for its continued growth.

Yes, this is Derrick, I would add you look at the existing markets, I guess the new markets of Indonesia and Mexico, they're two of the top unbanked markets. Obviously they're smaller than India, but bigger in size than Kenya. So there is bigger opportunity. I mean, I think Mexico has the opportunity to be very similar to Indonesia in terms of scale. There's some other markets that Nanobank is looking at and which again would fall into large unbanked populations. And, they want to a) make sure everything with this deal goes right, b) get Mexico continuing to scale and India scale back up. But in the next 6 to 12 months would not be shocked to see a couple of big more markets. The other thing that I think we spoke a little about last quarter or the quarter before was the expanded products. So they're working on that. There's multiple different products. Remember, when you look at Nanobank, there were 50 million registered users. And when you look at the loans the companies provided, they're not giving a lot of users. So they're really focused on how do they get the most out of that registered user base and go from there. I think your final question was around how do they acquire users in different countries?

Yeah, just the customer acquisition strategy in countries where Opera hasn't previously had a big presence?

I mean, like John this is Song Lin. Yeah, sorry for jumping, I guess I'm a bit jealous that Frode gets all the questions, so I just want to try to chime in. Yeah, so like and maybe also to comment right. So like to be related, maybe a bit repetitive that we actually feel that now is a great time to do this, like first of all microlending business is doing great, but of course it does have impact with COVID. But now of course the region has been recovering. So we actually feel that now it's a great time, partly because the demand is more than ever. Also because you talk about customer acquisition, because now obviously for well Opera is big, like India, Indonesia or even Mexico, where we are reasonably big. But then now it is also a fantastic time to actually acquire [indiscernible] because of course it is very cheap, because people are still recovering from COVID. So, it's a fantastic time for you to get user probably the cheapest of all possible. So we really feel that now is our chance actually to scale. Without being too exciting we feel that in those emerging markets that we really have the golden chance to actually be I would say, maybe I'll be too bold to say number one, right, so this is a short time frame. But then we need to concentrate, we need to have one thing to focus on that, streamline all the risk control, the QRC and all the processes. So I think that's -- now it's golden timing, maybe partly to answer your question, that now is also a completely perfect time to acquire those because, all those markets we talk about, South Asia, Southeast Asia or even Latin America it's the best time to acquire -- as it is very cost effective now, also in combination with Opera traffic.

It's super helpful. Thank you. Thank you Song. And second one also for you. Can you just talk a little bit in more detail about the trends you're seeing with the Opera News [ph] reduced hub, kind of the progress you're making there with the expansion into, I believe you are in six markets now, as well as how all this is trending and whether that's kind of ahead or in line with your expectations maybe at the beginning of the year? Thank you.

Yeah, so it's a bit sporadic, so I'm not sure if I have it, but I'll try to answer what I feel. So, high level -- as we also commented a bit on the press release Opera News are going really well on in Q2. It's a milestone that we have to pass 200 million and now the average is also past 205 million in the second quarter. So it's a good indication that we believe our strategy really works. And yes, you are right that buyers actually uses -- often use -- are able to establish a very strong presence by what was all the local content producers in all those key countries, Nigeria, Kenya, [indiscernible] and a few others. And that of course, is really part of the growth that we are seeing. And I just have to say that, of course, we are quite pleased of the role we have been playing during COVID time, because apparently that actually become go to place for people to actually check all those relevant news. So, of our comment that, you probably see that in your financial report, where we actually have reduced our marketing spend just because the organic growth of users are so big that we almost don't need to spend that much but then we still have 26 year-over-year growth that's what we are very pleased about it. And also, I'm not sure if I hear you clearly, but if you are talking about monetization, I also commented that despite of the COVID news, monetization in Q2 has almost grown by 65% [ph] compared with last year. So, obviously it's still a low point last year, but still 65% during COVID. I think, it is a very strong signal that we're doing well. And I have also commented that, if you look at how many app impressions we are serving globally, News is actually almost for the five ones you can look at problematic matter on Google. So, we are very proud. Like again, I guess the only issue with that is that generally Africa although they are still very low compared with what you see in, say, U.S. or Europe, but we just have confidence that when the companies recover and when that whole region become to grow, we will be in a very good position to grow further. So, we are quite pleased with what we're seeing in Africa.

Thank you, guys.

Our next question comes from the line of Alicia Yap of Citigroup.

Hi, greetings from the management. This is Vicky Wei on behalf of Alicia Yap, so I've got two questions. The first one is about advertising. So as the COVID-19 situation becomes better and we expect traffic and ads project gradually to normalize in the second quarter. So can you elaborate a bit more on the changes in July and August I mean, overall advertiser participant and for rest of the year and have you seen any cautiousness on that budget spending in line with geographic political tension and also by categories, let's say online travel, e-commerce, would you please explain more about how advertisers perform? Thank you.

I guess I can take it. This is Song Lin for high level and Frode can probably comment on the action almost like a game because Frode I will take a minute. Lot of questions that I'm helping out there. So, yeah. So, I would say, like what already been saying that I would say in July or August, we have already seen a great recovery which we are optimistic about. If we tried to say we're going to do this, I would say on the mobile I think the ads revenue are growing nicely, almost back to where it is before. So, like we are very hopeful that this trend will continue. Of course, we have to be cautious because [indiscernible] but high level we see that and this is where I think it's recovering and it's very positive. On the desktop side, I would say and as Frode said has almost recovery into the only single digit drop compared with last year. And now hopefully that trend will continue so -- which is great. In terms of advertisement I would say, if you look at categories without traveling, which primarily remains is e-commerce and a few others, I would say those are already back to the last year level, maybe slightly higher. So, in terms of traveling, of course it's still being impacted. But we also see strong recoveries, a few times recoveries say from June to July. And then that trend also continues in August. So, it remains to be seen. We believe, of course, it will still be down compared with last year. But, the growth trend is very encouraging. So, I think that more could be a high level, but now Frode can also comment a bit on the details on numbers.

Yeah, I think we'll be quite careful in sort of laying out the trajectory of sort of the normalization and back to growth. Maybe the only thing I can add as a reminder is at the beginning of the year, we guided advertising to grow faster in 2020 than in 2019. Last year, it grew 18 and the start of the year, we were also well over 20% in year-over-year growth. Since then, of course, we have COVID, which has impacted monetization these days, but we also have more users than what we expected to have at this point in time. So, I believe the outlook is actually quite positive when it comes to advertising and search monetization.

Thank you. I have one follow up questions about the European Fintech business. So, we know that the company is taking a lot of initiatives. I want to ask management's opinion in the longer-term with, let's say in two to three years how do you see your market position and would you please share with us any long term and short-term plan? Thank you.

Yeah, this is Derrick, I mean, in terms of our market position, I think the idea is to continue doing what we've been doing, which is growing our users COVID aside, growing our monetization. And then using our platform to launch new products. So obviously we've been successful over the last couple of years with Opera New as well as the microlending. And I think, when you look at OList, when you look at the European Fintech and some other initiatives that are too early to talk about, our hope is that, we grow our search and advertising at historical -- better rate, and then we find new businesses to turbo charge growth. So that's sort of how we look at it.

Thank you.

Our next question comes from the Liping Zhao of CICC.

Hi management, thanks for taking my questions. I'm wondering whether you could provide updates on OList business such as in EU and our monetization method on the business and also growth strategy? Thank you.

Yeah, so yeah, this is Song Lin, I can just give a quick remark. So, yes, so obviously this is what we launched in Nigeria, it is a very good example of how we're trying to enable the local merchants to transit from the offline business to the online business. User wise we are having Q2 reach average about 6 million monthly active users compared with 4 million at the start of the year, which we are quite proud because that's the user base. That's a big user base compared to Nigeria. You know, monetization wise, I think it's also a very good example that the way we have just announced the initiative of offer for business to get over to Google. I think that's a very -- that should action our strategy that we will try to partner with all the bigger guys like Google and -- other players in the region to help those merchants and potentially end users to better monetize and also do better transitions. So, like, I guess you are welcome to actually go through our website or Opera for business and there will be more interesting updates. And we feel that we are optimistic about how that can power the transitioning into a digital space, which is ever more relevant in the current COVID situations because it's happened before you go ask to do it from -- online. So, I think what [indiscernible] we are there. Moving forward, I think our strategy would be the same, that we will try to build similar propositions in Africa and even potentially in other parts of the world, which is encouraging, because we think all of these are relevant to helping transition from offline to online.

Okay, thank you.

And that was our final question, I'd like to turn the floor back over to Song Lin for any additional or closing remarks.

So yes, as there are no further questions, I think I have to say that, guys, I'm very proud of how Opera has continued to [integrate] it among the uncertain times. The good news is that our user app monetization is bouncing back and we have very exciting new initiatives that could really turbo charge our growth and we are positioned to take advantage of the structural change from transition of offline to online. So like looking forward to take the great opportunity, together with all of you and thanks, everyone, for joining us today and have a good day.

Thank you, ladies and gentlemen, this does conclude today's conference call, you may now disconnect.