Welcome to the Opera Limited Fourth Quarter and Full Year 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator 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, Matt Wolfson, Head of Investor Relations. Please begin.

Thanks for joining us today. With me today, 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 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 how we perceive 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 guarantees 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 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 of our investee Nanobank. We will be live tweeting highlights from the call at @InvestorOpera. So, please follow along there during the call and in the future. With that, let me turn the conference call over to our co-CEO, Song Lin, who will cover our operational highlights and strategy and then Frode will finish up with financials and our expectations going forward.

Sure. Thank you, Matt. And thank you everyone for joining us today. This is Song Lin. We are excited to report that the fourth quarter of 2021 coming ahead of expectations, closing out a record 2021 for Opera. The investments we have made to develop new products and expand into new geographies rewarded us with accelerating revenue growth and strengthened opposition in higher after markets. Even more encouragingly, as we look ahead to 2022 and beyond, we have every expectation that we will continue to grow, driven by continued innovations in our core offering and the tailwind provided by the long term secular trend as we move towards an increasingly digital future. So before digging deeper, I would like to offer a few key financial highlights from our fourth quarter. First revenue was $72.6 million, exceeding the top end of our revenue guidance for the quarter. This was up 45% year-over-year and was built by both search and advertising revenue categories. Second, adjusted EBITDA also exceeded the high end of our guidance and $16.1 million or 22% margin. Our margins expanded even more than expected, following the accumulated topline impact overall investments to scale during 2021 and Oslo ARPU has increased 62% year-over-year to $0.83 on an annualized basis, reflecting our growth in higher value markets, and focus high value segments. Further, we’ll offer more detail on our financial results shortly. But as our financial performance makes clear that being the world’s best independent browser company is a good business. And the strategic value of Opera’s position has never been greater. One way look at the direction, the internet is heading the step changes in scale and complexity, as more people need greater portions of the lives online the requirement for a browser that integrates the tools and features people…

Thanks Song Lin. Revenue for the fourth quarter was a record of $72.6 million up 45% year-over-year, and up 9% versus the prior quarter. Specifically, in the quarter search was $34.8 million growing 35% year-over-year. This was driven by monetization gains for both PC and mobile browsers. Advertising was $36.7 million growing 69% year-over-year. This was driven by strong monetization from Opera News and our ad tech platform and our mobile browsers. In total our full year 2021 revenues exceeded $250 million versus $165 million in 2020. Our focus on improving the value of our user base continues to drive strong results and as revenue and ARPU grow, our EBITDA margins continue to expand on a materially higher revenue base. In the fourth quarter, each of our users on average generated a record $0.83 on an annualized basis up 11% sequentially, and up 62% compared to the fourth quarter of 2020. We believe that our focus on innovation to create value for those that want more than the default browser will continue to benefit us as we look ahead. We continue to make headway in new and desirable markets compared to the fourth quarter of 2020 use for growth was the strongest in the Americas this time led by Latin America up 35% and North America up 22% while we continue to focus investments in emerging markets, more specifically towards users that are monetizable. Consequently, we saw revenue growth across all regions. What this means is that we’re doing a great job of improving the value of every user we have. And that’s something we intend to remain focused on. In terms of gross margin, the three cost items that scale with revenue, our tech and platform fees, compute costs and inventory costs. Combined, they add up to $5.5 million,…

Thank you. [Operator Instructions] We’ll take our first question from Lance Vitanza with Cowen. Your line is open.

Hi, thanks, guys. Can you hear me? Congratulations on just a tremendous quarter. I have a few questions if you allow. I want to start with the revenue guide for 2022, 20% to 24%, revenue growth forecast could you break that down perhaps into audience growth versus monetization or revenue per unit of audience so to speak and specifically, I guess, on the monetization game is any of that you expect is any of that gain occurring within a given geography or is it really more just the shift of users to more profitable markets or is it both?

Lance would you mind repeating the opening of the second question?

Sure. On the monetization gain, I’m assuming that at least part of your growth forecast comes from more revenues per user. And if that’s the case, I’m wondering if that more revenues per user is occurring within a given geography or is it just a function of the fact that you are seeing your user base shift to more profitable markets?

Understood. Thanks, thanks Lance. I’ll begin with the second. So when we look at the fourth quarter, the growth that we had compared to the prior quarter was about half and half driven by the shift into geo mix towards more western markets, and underlying ARPU improvements within all markets. So on a like for like basis, so it was mixed. And then as it relates to guidance, I think it’s always hard to predict that at the very detailed level. But I think the trend that we saw in Q4 is a pretty good starting point in terms of expectations, how we look ahead, and that’s how we sort of touch on the combination of successful growth in Western markets, our newer products, such as opera GX, for example, combined with the underlying ARPU growth that we see in all markets.

And I guess just send that the first part of my question was as you think about the guidance the revenue growth, do you expect that a decent portion of that will also come from just expanding the audience or is it mostly going to be just on the monetization side?

We typically don’t break our guidance into the very specific buckets. So I think we tend to be a bit cautious on user expectations. But of course, we have products that are scaling well in Western markets. We do expect that to continue. At the same time when you look at the totality and how we focus in emerging markets on the most revenue generating segments for now, I just feel the guidance based on the net quite stable.

Fair enough. And then my next question is on the EBITDA margin performance which is stronger than we’d expected and we like the guidance. It looks like you’re expecting a essentially 50% incremental EBITDA margin right at the midpoint of your guidance we’re looking at basically 50 million to 60 million of incremental revenues and 25 million to 30 million incremental EBITDA. So a 50% incremental EBITDA margin, is that mostly the benefit of scaling on the marketing and distribution expense? And how should we think about modeling that line in particular going forward for the next year, or maybe even if you can even beyond that?

So overall, the business has, as we also discussed, when we discuss our effective gross margin that that’s well into the 90s a very model that is benefits greatly from scale. That’s what we have been investing and accelerating 2021. Why Q4 came in ahead of expectations and why we’ve felt confident as we’ve spoken, over the past few quarters, we expect to continue to see normalization in our profitability. So when you look at our balance sheet, you say, but we increase the revenue at the midpoints by just over $50 million and then you can see we built in about $25 million of additional costs. It’s mainly related to marketing, but also teams spend, and to some extent, cost of revenue as the advertising revenue category becomes bigger, whereas the other ones are more stable in nature.

And my last question is with respect to Nanobank. I’m sorry to hear that things are not being resolved more quickly in India, but pleased to hear that the rest of Nanobank seems to be performing well. Can you give me some, any more additional information on the scope of the non-India operations? I don’t know what the consolidated revenue picture looks like for Nanobank. But any update there with respect to total revenue performance at Nanobank in the quarter would be really helpful. And then I guess there’s a related question. Is there any, is the worst case scenario that we simply don’t do business in India and India is effectively a zero? Or is there a scenario where for some reason India becomes a negative where you actually have to pay money to settle with regulators and it becomes and it detracts from the value of the other assets? Thank you.

Yes, so to begin with the first part of the question that the revenue growth of Nanobank is driven for the two bigger countries are Indonesia and Mexico. But we have all countries doing great. They are just at different stages of maturity essentially. For the second part of the question, I think what I should say is that we essentially put it to zero book value now. We wanted to make sure to well we believe it’s appropriate we cannot reliably forecast cash flows and then we should not keep the value on our balance sheet to that we cannot properly back up. As I mentioned, does not mean that the team is giving up on in there it’s quite the contrary, it’s high activity to facilitate an eventual re-launch. In terms of liabilities we are an investor Nanobank itself operates in India through a subsidiary. But I’m not the corporate lawyer. So I’ll be a little bit careful to speculate. But as far as I see it, we put it to zero. And like I couldn’t put it lower than that.

Your next question comes from Mark Argento with Lake Street. Your line is open.

Excuse me. Good morning, guys. A lot of my questions have been answered. But I wanted to see, I know you guys earlier in the quarter talked about launching a crypto product. I wanted to see if you’ve been getting any traction there. And do you see an opportunity to launch additional crypto or crypto related Bitcoin products? A – Song Lin: Yes. I can probably just give some color. Yes, we also talked a bit in this group, about the launching of all of our Europe product, which are available on the website, but it’s on desktop and mobile. So no, I would say, great organization that we have been seen in the industry. It’s probably one of the most well, bigger launches that Opera has ever made. Especially that now it’s [Indiscernible] So high level I would say on Yes, even though super early stage where even quite early access machines, and many of them are also, which show a lot of good acceptance from the community which probably give us even more confidence that’s the right thing to do. And I think to us probably, at this stage, probably more important is to show our stance that as a browser company, and probably also the one of the biggest sole party, independent ones we feel that we are from billable or web 2.0 decentralization, and we feel that it’s the right place to be. So yes, even though we have not really colored too much about it in terms of revenue analysis, we feel that it’s the right time to talk about it and hopefully in the coming of this full year, you will be able to see us pull a lot more around the topics and what we can do.

Great. So just pivoting back to the Nanobank in India, can you just refresh us a little bit as to what the issues are there? And you had mentioned kind of a re-launch. What’s the probability or what needs to happen to get that business re-launched in India?

Yes I’ll recap a bit. So at least seen from our perspective, there are some minister of finance process to look into what seemed to be most focused on platform fee. So Nano develops their platform centrally and uses it across its markets. It’s a key component of the value offering. It’s what enables them to scale quickly while at the same time keeping loan losses under control. That product is licensed from its central operations to the various operating countries. And it was that fee payable from the subsidiary in India that I think triggered that review. As of now, I don’t think any formal accusations have been made. But their funds are frozen. So they cannot operate.

Got it. All right. Thanks, guys. Appreciate it.

We’ll take the next question from Alicia Yap with Citigroup. Your line is open.

Hi, good evening, and good morning management. Thanks for taking my questions. And also, congrats on the solid results. My first question related to the user growth. So it does look like your strategy of shifting focus to the higher ARPU markets, like America has worked out. Just wondering how much more late room that can we anticipate that we can further grow and for the panel trade in the America markets in terms of user, new user growth, for this year? And then second question I have is in light of these geographic makes any meaningful change of the advertising category mix that we are gaining from the new attic demands from these higher ARPU, America’s market. So any new industry verticals that we are in the early stage of penetrating that we could further attract the aperture from especially for like the issue or next couple years? Thanks.

Yes. Maybe I’ll try to answer that. Yes, first of all, I would say that we’re definitely going to see very good growth opportunity in Western markets, especially in the U.S. and also in Europe, or in South America, Brazil, and Argentina and those countries. That yes like, we feel that we’re quite early stage, consider the size of the market, consider we are still relatively small in size, we feel that there’s a lot of lot of room for us to grow compared to the margin marketplace in Africa, we are already won the almost the market leader there well, of course, the Western market, is still long-long way to go. And then we feel that huge win that will continue the growth. So we feel that, yes the growth exploration will only be accelerated on that. And then you ask about the potential vertical. For instance, we saw that traveling, definitely coming back from what we saw, both in Q4 and also in Q1 this year. Yes, what we saw that the very good growth back and hopefully ways also the lifting up of many COVID restrictions in Western markets. We will see a lot more growth still. So very excited about it. So finally we can execute what we have already planned almost the pre-COVID which is great. And then on top, I would say, yes I mean, very good growth, cash back and related products. So very excited about it. And then finally, of course, gaming is growing very nicely to get all the gaming product. And yes, we just see that that trend will continue. So yes, so as a summary, we feel that traveling gaming, and e-commerce will probably be very strong verticals that will help us to continue to grow on the amounts to come.

I see. Great, thank you. If I just one last follow up on the margin questions. Just kind of like looking at your 4Q which your EBITDA came in at 22%. But for your 1Q guidance, and your full year guidance, it just looks like percentage of margin, it does look lower than 4Q. So 4Q because we understand a little bit right on the end, the revenue came in better. So it’s kind of getting leverage that appears on 4Q. But then we can’t budget that in so that our full year margin now is about 18%. But I guess from the spending, wanted to get some color is it more towards first half that we will still spend a bit more aggressive so that we will write on the momentum to grow this user in this new market? And then maybe tail off a little bit into the second half in terms of spending? So any colors in terms of the trends that we should be expecting?

We tend to lower margins in the first quarter if you look back to. So in this particular context, for seasonality we expect revenues to come in slightly below Q4 which is the norm. And I think the only time in history that did not happen was Q1 2021. On top of that, we built in about $6 million of expert costs. Some of this is compensation, but we also think that marketing will be a bit higher in Q1 than it was in Q4. So that’s how it builds up. As you mentioned, we believe in a good margin expansion for the year as a whole but we typically start off below the annual average margin in the beginning of the year.

I see. Okay, great, helpful. Thank you.

[Operator Instructions] We’ll take our next question from Zaudan Zeng with CICC. Your line is open.

Good morning management, and thanks for taking the questions. So I got two questions here regarding Opera strategy for Metaverse and browser products respectively. So first of all, Opera has accomplished several notable milestones to venture into Metaverse. So how do we plan to further embraces fields and what do we think of our monetization potential? So secondly, in terms of browser products, Opera GX has been proved to be a very successful launch. So do we see any opportunity to enter into a more verticals except for gaming? Thank you.

So I’m not sure if I catch all of it. You voice is a bit mixed but I’ll try. So just a comment that, if I hear you correctly, you are asking about monetization opportunity for the Metaverse. So I would say yes, right. So I think you also mentioned GX. So I would say of course, that GX itself, we don’t really see it as a browser instead of more like lifestyle thing that you don’t spend time on it, they use it to know what gaming do is to champion to buy the intuitive chatting, functionalities. And of course, way the incorporating way our gaming engine, made by game maker, they are not also be able to play games into it, for instance. So overall, I would say even though we have not really started any monetization seriously in that space just because of the high user engagements in the GX platform, we are already reported that the GX has already now have the highest ARPU about all the Opera products. And it’s already quite profitable already. So we have published that scripts for the annualized ARPU and then you can just imagine, by results you could also really to come up to big numbers of revenues. So I think moving forward for this year, we will try to speak with the trend strategy that will put the focus on, since it is very profitable, we will start focusing on providing more interesting functionalities within our core data GX Metaverse allow them to play more games and then there will be more interesting, fun creations allow also, more creators to also be able to create games for their platform. So those are about the priority, but of course yes when we expect that when more user actually spend…

Okay got it. Thank you.

We have no further questions in queue at this time. I would like to turn the call back over to Song Lin for any closing remarks.

Sure, excellent. So I would say for all of you thank you again, for joining us today. As you have all, we believe Opera is well positioned to continue to grow and are very excited about our core business and our initiatives. Finally, we are also excited about the potential that Web 3.0 has for Opera. The history of the browser is only just the beginning and we appreciate your time, and we look forward to speaking with you again.

This does conclude today’s program. Thank you for your participation. You may disconnect at any time.