Opera Limited (OPRA) Q2 2024 Earnings Report, Transcript and Summary

Good day and welcome to the Opera Limited Second Quarter 2024 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. [Opera tor Instructions] I would now like to turn the call over to your speaker today, Matt Wolfson, Head of Investor Relations. Please begin.

Thank you for joining us. This morning, I am joined by our co-CEO, Song Lin, and our CFO, Frode Jacobsen. Before I hand over the call to Song Lin, I would like to remind you that some of the statements that we make today regarding our business, Operations, and financial performance may be considered forward-looking. Such statements are based on current expectations and assumptions that are subject to a number of risks and uncertainties. Actual results could differ materially. Please refer to the Safe Harbor Statement in our earnings release and our Form 20-F including the risk factors. We undertake no obligation to update any forward-looking statement. During this call, we will present both IFRS and non-IFRS financial measures. A reconciliation of non-IFRS to IFRS measures is included in today's earnings press release, which is distributed and available to the public through our investor relations website located at investor.opera.com. Our comments will be on year-over-year comparisons unless we state otherwise. With that, let me turn the conference call over to our co-CEO, Song Lin, who will cover our second quarter Operational highlights and strategy. And then Frode Jacobsen will discuss our financials and expectations going forward. Song?

Thank you, Matt. And thanks to everyone joining us today for a business update and more color on our second quarter. Our second quarter results were ahead of all expectations coming in above the high end of both our revenue and adjusted EBITDA ranges. It is the continued momentum of our products and targeted user adoption that translates to growing and broadened revenue streams and strong financial results. In the second quarter, revenue was $110 million, growing [at] (ph) 17% year-over-year. Adjusted EBITDA was $27 million translating to a margin of 24% and particular strength this is our guidance of $22 million to $25 million. In addition to the revenue over performance, our profitability benefited from [event title] (ph) focus on the most monetizable users as the portal progressed when it comes to our marketing spend. As a result, we grew ARPU 25% year-over-year, now an annualized $1.46 average across our products and geographies. Advertising revenue was $65 million in the quarter growing 20% year-over-year in a similar fashion as prior quarters. Our advertising revenue continues to benefit from the same underlying drivers of high-ARPU user growth and expanding monetization opportunities. In particular, as our [Western and gaming users] (ph) represent an increasingly attractive audience for monetization partners. Our ability to drive targeted and high purchase-intent traffic from our users directly to an expanding partnership base has proven to be scalable. We are taking advantage of our first-party signals and our well-developed ad tech platform within Opera Ads, while creating value to both partners and end users. We still consider ourselves to be in the early stages in taking advantage of these opportunities, especially as our AI offerings broaden and we increase the number of direct interactions between the browser itself and the end user. Search revenue was $45 million in the quarter, up 15% year-over-year and also in-line with our trajectory from prior quarters. We are proud to grow our most mature revenue stream and this [pace] (ph) as it directly demonstrates our ability to attract and retain highly engaged and monetizable users. We remain enthusiastic about the future of our search-based revenue streams as well. There is certainly increased public focus on ensuring competition among search engines. Being an independent browser provider, we appreciate the broader recognition of the value and importance of the search position provided by a browser. And we are very excited to work with key players to capture and further expand the potential of the massive amount of traffic that we can drive from our user base. Last quarter we also commented about the positive initial impact of the Digital Markets Act or DMA which addresses many of the ways that the browser market is not always a level playing field. As separately disclosed, we take an active role in these processes and this summer we pointed out where we believe the DMA's gatekeeper designation principles have been applied too narrowly. The DMA momentum carried over into the second quarter where we saw significant strength in new user adoption of both Opera for Android and Opera for iOS throughout the EU, as well as an increase in the number of smartphone users in the region who have made our mobile browsers the default. Beyond regulatory matters, technology and services evolve as well. Recently there has been a lot of focus around search and content platforms being redefined. To a great extent we see how AI underpins the ability of such services to give the end user a better experience, whether it's from answering questions directly or elevating the quality of promoted content. We are enthusiastic about this trend as we believe it puts a greater emphasis on content providers to deliver true value and less [leakage] (ph) of our user monetization to low-value publishers. The browser sits in a perfect spot as being the vehicle of how end users connect with those AI-elevated services, a powerful position to be in. We believe these changes are beneficial to our users, as well as our high-quality monetization partners and ultimately to Opera. Now turning a bit to the always high activity level within Opera. Our success has always been driven by innovation and speed providing our users with unique products and improved experiences and stayed ahead of competition. Last year we launched Opera One, our fully redesigned flagship browser, and in early Q2 we were proud to announce that Opera One received the prestigious iF Design Awards 2024. We [thought they lead] (ph) with visuals and functionality, but to win user hearts, our browsers must also look beautiful and provide elegant flows. The next major upgrade of Opera One referred to as R2 is now available for public testing and will roll-out later this year. If you give it a try, you will see how we have improved, how people listen to music from popular services while browsing, as well as continue to advance our browser AI area. With the R2 release, we continue to build on the modular design to build the Opera One and have a new split-screen mode that allows users to multitask more easily between two open tabs. Finally, R2 introduces a new type of scene support where users can customize their browser with a set of high-quality dynamic scenes that provide the immersive experiences, further differentiating the visual appearance of our browsers. Last week we also launched Opera One for iOS, prioritized as a direct consequence of the increased opportunity to compete on the platform. Compared with Safari, our browser users can engage directly with the Aria browser AI. They can experience browsing in proper full screen and benefit from all our other integrated services, like building free VPN and ad blocking. With that, our product lineup for users with the greatest monetization potential is more complete and you will see us putting increased marketing dollars behind this lineup in the months ahead to continue raising awareness of Opera, as an alternative to the iOS default browser. Now shifting focus to Opera GX, our highly successful gaming browser. In April, Opera GX debated the official Cyberpunk 2077 browser mode created in collaboration with game developer CD PROJEKT RED. The mode allowed deep customization of the Opera GX browser with branded elements from the popular game. In total, there are over 7,500 different modes available for Opera GX. In June, we launched the browser from Vought, and official collaboration Browser Experience with the hit TV series The Boys, alongside the premiere of Season 4. While seasonality works against our product in the summertime, Opera GX added another 500k users in the quarter to pass 30 million MAUs, achieving a year-over-year user growth of 27% combined with a year-over-year ARPU growth of 14% now and $3.55 on an annualized basis. As the AI capabilities improve, the online journey of our consumer can be made both more productive and more informed. Having these tools built directly into the browser, instead of a website or a browser extension, makes the experience all the more seamless. The current landscape reminds me of how search has evolved since 1990 and before Opera pioneered the integration between search and browser over 20 years ago from having to use the web page of search engine to search natively in the browser URL bar. So now the ability to gather information, making informed decisions, and both process and create content with the help of AI allows users to be even more productive. In the case of our AI assistant Aria, this is a fully integrated experience that exists naturally alongside the user's existing habits. Our role in this ecosystem is not to really make the individual tools available, but rather integrating both the back and the front end to give our users choice and elevated use cases, whether through Aria or other services. Aria itself evolves at a rapid pace. And this quarter [along removed] (ph) multiple AI features from beta staging of feature drop program and into our flagship browsers, including command line prompts, page context awareness, as well as voice and image generation capabilities. We are also offering an integrated and simplified way for users to download and use large language models locally on their computers currently available in R2. It's a fantastic feeling to have always access to the power of AI assistance regardless of internet connection and with the certainty that your data does not leave your computer. As you can see, we are keeping busy. We might be a small company compared to our competition, but I think we are also the perfect size to innovate and seize opportunities. While we have more than tripled our revenue since our 2018 IPO, we have maintained an ever-present startup mindset, three of the bureaucracy of large organizations, combined with the scaled business, well-solid financials, allow us to invest in exciting products and healthy continued growth. With strength building throughout the year, we are excited to embark on the second half of 2024 and what comes next. With that, I will turn it over to Frode to dive deeper into the Q2 numbers and our guidance.

Thank you, Song. Now, four months further into the year versus our last earnings call, it's fair to say that 2024 is shaping up to be another really nice year for Opera. We are growing ahead of expectations with internal excitement across the board on the topics Song Lin covered and more to come. Our financial results once again exceeded expectations, even the top of our ranges. In fact, over our six-year history as a public company, we've never missed our revenue guidance and only missed our EBITDA guidance once when the COVID pandemic hit in the first quarter of 2020. That does say something about our healthy and organic growth and its relatively predictable nature, even if we like to bake in some caution for potential headwinds here and there. We've also been a rule of 40 company for 13 sequential quarters now, that is every quarter after the first year of COVID. And as you see from our guidance, we aim to remain in that category going forward as well. Our overall revenue growth was 17% and our adjusted EBITDA margin was 24%, both in-line with recent quarters. As Song commented, I would highlight the e-commerce opportunities already seized and their further potential as a key building block in our continued ARPU building, naturally on top of healthy user-based dynamics. As in recent quarters, FX continues to represent a headwind in particular, as it relates to emerging markets. And our year-over-year growth would have been 8 percentage points higher or 25% on a constant currency basis. In terms of cost, we had guided for a sequential increase in marketing cost, yet in the end maintained the spend level from Q1. That led adjusted EBITDA to overperform even beyond the incremental revenue. Other than that, costs largely came in according to expectations. Compensation costs increased sequentially as expected, predominantly due to annual salary adjustments but also with hires and increased bonus provisions. Cost of revenue items came in at 25.2% of revenue, which was within the expected range. And all other OpEx pre-adjusted EBITDA came in at $8.6 million, also in-line with expectations. Tax cost of $2.8 million was 11% of adjusted EBITDA. In the prior quarter, our tax cost was elevated due to FX impacts on our tax assets. Year-to-date, tax cost as percentage of adjusted EBITDA is 14% and in-line with a more normalized level. Our operating cash flow was $17.4 million in the quarter, representing 65% of adjusted EBITDA. Free cash flow from operations was $13.5 million, or 51% of adjusted EBITDA. This year, annual bonuses were paid in Q2 as opposed to in the first quarter of 2023, representing a quarter-specific headwind. Looking at the first half of 2024 as a whole, our conversion from adjusted EBITDA to operating cash flows stands at 94%. The year-to-date conversion from adjusted EBITDA to free cash flow from operations stands at 42%. However, it would be 79% if netting out the special [$19 million] (ph) investment we made in establishing a proprietary AI cluster in Iceland. As commented earlier, we expect these ratios to stabilize as the year progresses. Towards the end of the quarter, we announced our regular semi-annual dividend of $0.40 per ADS or $35.4 million in total value. Payment was made in early July consisting of $27.6 million in cash and $7.8 million offset against the remainder of our receivable related to the sale of Star X in 2022, meaning that this receivable is now fully settled. Going forward, dividend payments will be entirely cash-based and fully funded by our growing cash generation. Then, turning to guidance. Following a strong first half of the year that demonstrated the resilience in our growth model, we have added to our comfort on our full-year trajectory and are pleased to raise our guidance today. We now guide full-year revenue of $461 million to $467 million up from our prior guidance of $454 million to $465 million and translating to 17% year-over-year growth at the midpoint. Our trajectory allows us to raise guidance beyond the Q2 overperformance and also narrow the range to reflect a solidified outlook for the second half. We are seeing particular strength in the e-commerce vertical and we are cautiously optimistic that such benefits may be even more pronounced during the holiday season in the final months of the year. We raised adjusted EBITDA guidance to $110 million to $113 million for the year, up from our prior guidance of $106 million to $110 million, and representing a 24% margin at the midpoint. While Q2 in isolation could indicate an even stronger range for the year, we guide for a more backloaded marketing spend profile than earlier assumed to ensure we are in position to seize growth opportunities on the back of our new iOS offering and the upcoming releases of Opera One and Opera GX. In sum, our updated revenue guidance range now begins above the former midpoint, and our updated adjusted EBITDA guidance range now begins at the former high-end. While we do guide for the trend to be modest, we are also very pleased to indicate increases in the year-over-year growth rate from quarter-to-quarter in the second half of the year. For the third quarter, we guide revenue of $119 million to $121 million, or 17% year-over-year growth at the midpoint. We guide adjusted EBITDA of $27 million to $28.5 million or a 23% margin at the midpoints. That equates to OpEx pre-adjusted EBITDA of $92 million at the midpoints, in which the sequential increase of $9 million is predominantly driven by incremental provisions for marketing spent. We also add just over a percentage point of cost of revenue in items relative to revenue and expect compensation costs to modestly tick upwards in dollar amounts, though decrease as a percentage of revenue. The total of other OpEx items pre-adjusted EBITDA is expected to trend down versus the second quarter both in dollars and naturally then relative to revenue. Our cost expectations for the year as a whole remain in-line with our prior directional commentary with marketing cost and cost of revenue ticking up a bit, as percentage of revenue relative to 2023, while compensation costs and other OpEx items tick-down, largely offsetting one another but implying 40 basis points of continued margin expansion at the midpoints combined with stronger than expected revenue growth. So all in all, we are entering the second half with great momentum and look forward to keeping you posted. With that, I'll turn the call back to the operator for questions.

Thank you. [Operator Instructions] We'll take our first question from Naved Khan with B. Riley Securities. Please go ahead.

Yeah, great. Thank you. A couple of questions from me. Maybe one for Song. So Song, you said that maybe, you think that maybe the gatekeeper definition has been applied too narrowly, maybe can you just give us a thoughts on how you think you know a regulator should kind of think about applying it and where do you expect to or where do you want to see it go in terms of implementation and maybe the second question is for Frode. So just on your commentary on this trend you're seeing in e-commerce, maybe just talk about what are the underlying drivers that are kind of contributing to this trend. Thank you.

Sure. I'll comment a bit about that. So yeah, I think that, more like I think that's in relation to the DMA, right? So more like I think DMA has been helpful demonstrated to independent players like us, right? Where we've got a lot of experience particularly the iOS platforms. But I think, you know, of course there are some other platforms which is also relevant. And for instance, I think in this particular case, including Windows among others, which also sort of more like a gatekeeper definitions. And then for now it applies to Windows, but it doesn't really apply to some other default browser like Microsoft Edge, which we think is also, by actually – by the definition, it actually should apply among others. So I think in general our comment is just more like, we are actually working very closely with the [EU on this] (ph) as a European company. And we also have given opinions and ideas of how moving forward, this is especially seen that the audio distribution has actually been very helpful to independent players like us to be able to grow. So we feel that there's definitely opportunity for more [action sale] (ph). So I think that's what we're trying to report to you. And yeah, so more or like I think there are some separate press release which we have issued around the matter. And we'll just continue to work closely with EU and with all the related parties to see how we can build on stress and how we can have better opportunities not only in iOS, which I think is great, but also in broader platforms. Yeah, so I think the general trend is -- in general quite positive, and we think there are similar things which are happening around the world, not only in EU, which definitely are going to be positive to an independent player like us.

Naved, I'll chime in on the second part of the question on the trend within e-commerce. So I would say we have built a sizable user base in high value markets and that allows us to create new partnerships where we can drive meaningful traffic and using our insights we then have the ability to drive traffic with high purchase intent. So e-commerce has become our biggest vertical and our vertical that is growing the fastest.

Okay, that's helpful. Maybe a quick follow-up if I may. If I just look at the Western market user base kind of flattest sequentially, wondering if there is seasonality there or if there's more marketing dollars you could have spent or something getting pushed from Q2 into Q3, maybe help us understand that. Thank you.

Yeah, I can understand that. Q2 includes the beginning of summer, but I think more importantly, I would say we have continued our strategy. We have even applied it tighter than before. So when we look at our marketing spend year-over-year, we, and relative to Q1, we have actually reduced the number of users that have come in through our marketing activities but at an increased cost. And that is -- what is driving the year-over-year 8% growth in marketing and sort of the flat trend from Q1. So we are focusing on the very most valuable and ARPU driving users that we can. And I think that is also a factor in looking at the total user base. As mentioned, we are building in more marketing cost. In the second half, we have a product lineup that is essentially tailored for Western and high value users. And that is what we focus on in the second half of the year.

Super helpful. Thank you guys.

Thank you. Our next question will come from Eric Sheridan with Goldman Sachs. Please go ahead.

Thanks so much for taking the questions. Maybe first building on Naved's question on the EU but widening out a little bit. You know, when you see this level of shift in the competitive and the regulatory landscapes, how should we be thinking about this informing a, almost reprioritization of product or marketing over a longer period of time and how your priorities might be shifting or changing given what you're seeing in the external landscape and some opportunities opening up. And second, in terms of the Aria assistant, curious any feedback on behavior, adoption, things you've learned from the way users have embraced AI in the early days? Thanks so much.

Sure, I'll comment a bit on it, right? So I think I agree that I think it's -- maybe I'll just comment that I think that perhaps the bigger shifting, so, there's definitely regulatory shiftings, which actually in general tends to be forcing a more opening up over the platforms, maybe iOS, or maybe Windows, or maybe others, which is definitely beneficial. So that's of course indirectly what we are doing now to invest more heavily in those platforms. It's just simply because previously some of those platforms like iOS is too difficult, right, for [some part] (ph), but now it's actually opening up. But I think maybe perhaps a bit more beyond that is that, also we have [initial of AI] (ph), there's whole paradigm shifting that, like previously -- because just remember that previously most of those high-intent user action dollars are concentrated on, you know, half of it are perhaps on search, half of it are on something else. It's very isolated. But now because of AI, I think more and more players starting to see that, those high intent user events, you know, can be -- like, can be more [broad spread] (ph) in many other positions -- if we're position in the right way. Like if you design the product in the right way, for instance, it can be pre-search, it can be post-search, like through the nation e-commerce, like all of the areas where actually you utilize AI actively to be able to give you those very valid recommendations using AI. It's very natural. And then we are very happy that advertisers and the whole industry actually also looking at it and saying that, oh, that's actually very valuable. We're willing to work with Opera on this, among others, right? So I think, to some extent, that potentially opens up even more than regulatory matters. So to us, I think for Opera, our priority is just being positioned on our product to be able to take those advantages because in the end of the day, more like we are a relatively small player yet, but the potential is huge. Like compare with our market share, you know, for instance, we have a few percent of market share with the browser, but then if you look at some bigger player like Google -- like it's $2 trillion company, even 1% of it is $20 billion, right? We're only like $1 billion. So we feel that there's at least 10 times, 20 times potentials we can do if we capture these shifting paradigms, which is our focus. But we are very happy that -- that's in-line with some regulatory matters as well. There seems to be, we want to move to the same direction that, perhaps they want this thing to be more diversified into more independent companies like us. And I think that's what we feel a bit appreciative. Yeah, so around those. And then I think to your second question, which is a bit related, right? So I think in general, AI, you know, it seems on the public out there, like it seems to be piled down a little bit because there's no GPT-5 yet, whatever. But then the way we see it is that actually the application of AI has actually moving almost into day-to-day stuff, more commonly than people perhaps thought. Like again, as an example, many of those monetization features -- we are actually already using AI to be able to help assist, to be able to identify, to give you the right recommendations. And even though some people may not even be aware, that's actually based on Gen AI. So I think we saw this, I think, a bit across the industry that even though maybe there are some [breakdowns] (ph) or whatever in the consumer field, the application of this is actually more penetrating and have more impact on active day-to-day stuff and all the way up to the revenue. So I think that's what we see and that's what we're quite excited about.

Thank you.

Thank you. Our next question will come from Lance Vitanza with TD Cowen. Please go ahead.

Hi, thanks guys and congratulations on another strong quarter. Just to start to stick with the AI theme, I'm wondering about, and thank you for all of the detail on what you're doing, where you're focused, and how that's creating value for your publishing partners and your advertising customers, as well as your user base, but I'm wondering about the impact these initiatives and the work that you're doing, the impact that might have on your cost structure. Are you finding it more expensive to operate either in absolute dollar terms or as a percent of revenue? And to be clear, I'm really trying to focus here on OpEx if we can leave the AI cluster in Iceland out of it for now.

Hey Lance, I can answer. Go ahead Song.

Okay, so yeah, I think I'll chime in both and then Frode can also add a bit, right? So like I think I asked him to say that I think that's also what way we have been very careful about because of course you saw so many other companies like, you know, the Magnificent 7 or whatever they spent [$200,000] (ph) right, they try to invest in architecture or whatever. So I think for us we have been quite clear in the start. I think we don't want to really make tools. It's just very hard for us to compete in those basic fundamental model -- language model level. Because we, like there's no point for us, as a still relatively small company to try and reinvent the [wheel] (ph). So I think we have been very smart in choosing a path where, you know, like majority of the course is actually on training the basic models, making sure it works, right. So while the extra deductive part of it is not that costly, if you have the right infrastructure. So, I think our focus is that we don't really do the most heavy lifting in terms of, training the basic models, which is just cost way too much. But then we focus on how to work with partners and even open source models which doesn't cost anything and hosted in a very costly effective way and that's our authentic infrastructure, as it comes into play by allowing deducting which is cost a lot less than if you want to train it, and then provide that as a very valuable user to the users. And then also when we are after providing it to the users we are optimizing how we can make you know monetizable contributions. So for instance recommendation of [way this] (ph) perhaps is a product that you want to try. This perhaps is a context of what you might be interested in on particular search links upon. Well, of course, in the end, we actually get paid. So, I think so far we have been quite disciplined on those and the result has been good. That is very limited impact on the OpEx and the revenue upside is already demonstrated in our numbers. I think we are part of the same trend. There will probably be more usage in the second half and then so when the usage is picking up even more especially when you cannot come up more or whatever but I think – net-net is definitely [BLA] (ph) positive for us.

Great, thanks. That's really helpful. And then actually turning to Iceland and I remembered that it was a $19 million investment but I kind of lost track of exactly when that went live and I'm just wondering if you could talk about to the extent that -- that's up and running and been up and running have you seen that specific investment sort of, generating returns for you, so to speak? Is that helping facilitate the work that you have called out that you're doing in AI?

Yeah, so, yes, yes. So, yeah, yeah. So, as [indiscernible], we’re quite proud of that. It's still a small company, but it's ranked, I think by June, it's ranked as the 88th most powerful supercomputer, which -- top of the 100 in the world – [we’re most] (ph) top 100 company in the world, so quite proud that we actually have that computing power built up. So yes, it's been operational since Q2, roughly. And then, yeah, so we have been using it, as mentioned, on various fine-tuning tasks, not to train the basic models. We don't do that, but we use it as a very efficiently in the fine-tuning and we're actually using it also hosting various open source models where we actually call it the cloud hosting you know solutions, for those that then open source language models and provide it to the end users. So we're still working on that. I think it's still a bit out of stage just because we haven't operated on it for a few months. But I think by second half of this year, we will see probably even bigger impact of it. And yes, I think it has already been able to generate revenues by all calculations, [probably] (ph) positive. So I think that seems a very good investment, but then yeah, I think we have actually big hold on this to generate even further growth in the second half and also into next year.

Great. And then if I could just get one more question in regarding any expected impact on search revenue from the Google antitrust ruling. I mean, I'm guessing the earliest that you could see any impact would be 2026 or maybe even 2027, but should investors be girding for some kind of eventual step function down in search revenue? Is that sort of out on the horizon someday?

Yes, so it's a very good question. So like I think maybe I just say that like again, I think Google probably in a better position to answer some of those things, but I took it like this. So first of all, my feeling just been that I think like in general, high level or like maybe from a high level sense, right? So, in the end of the day, I don't think we care if -- it's [start -- whatever revenue] (ph). We care that we get paid. And high level principle, I think that as far as that everybody seems to be more and more consider that this is the browser traffic, the default position in the browser is very relevant, very important. More important actually than most people thought, then I believe we should have a chance to be paid more, right? I don't know what that quote, but we should be paid more. I think that's a general principle. And as I mentioned also a bit earlier that, I think actually the bigger picture, as I agree with you, the particular case with Google probably drags on for some time. But I think what way as a company focus on is actually the bigger paradigm shifting, which is, I mean, this is like the whole thing is changing beyond search, right? Because now all the advertisers are talking about pre-search, post-search, high-intent events, retail media, so everything of those are actually based on browser. So I think we're actually more motivated to keep tuning our product, keep innovating, keep designing our product to capture those, not only search but also even beyond search and post-search as for totality with the help of AI. That's actually what we see a major increase of the e-commerce revenue as Frode has commented. We actually already see a major increase in Q2 and we'll definitely see more increase in Q3 and even providing Q4 which is the hottest season in the year, right? So that's very fascinating to see. So essentially you can consider this almost as previously, many of those things go to search by, like naturally everybody do it. But now, such a find that actually they even want to directly go to us and then, try to engage directly, which well of course positive. So we work with other partners on those things. So I think those are things really exciting. And then so in the next half of the year, why we are to come you're probably seeing more activities around this field on top of search anyway. And this actually might have bigger impacts for totality. So that's what we think of it at this point.

Great. Thanks, guys. Appreciate the answers.

Thank you. Our next question will come from Mark Argento with Lake Street. Please go ahead.

Good morning, guys. Just a couple quick ones. One, in terms of the Opera GX browser, I mean, it's just amazing how that continues to grow. I think it was up over, it was a 27% in the quarter. Could you talk a little bit about that 30 million monthly active users. How many are kind of Western versus non-Western markets? And kind of how do you see that, the long-term opportunity there play out because it just continues to grow kind of beyond our expectations.

Frode, do you want to comment about it?

Yeah, I can do that. In terms of the user base mix, GX is actually quite evenly split between Western and non-Western, but with a substantially better monetization, while in both categories, and also a narrower gap between non-Western and Western monetization. Still Western is far more better monetized than the non-Western, but the non-Western user base are relatively more affluent or at least monetizable than what we see in general in the markets. So that, I would say that is an exposure to Western markets that is somewhat ahead of our Opera One flagship and well ahead naturally of our user base, as a whole where 17% of our users are Western.

That's helpful. And if you guys sat back and done any work in terms of trying to size that market, I mean is it multiples the size of what it is today for you guys or how should we be thinking about the [logger can] (ph) opportunity there?

Yeah, I mean, for now we remain very enthusiastic about that product. It's still has a lot of headroom, we believe. We have a slide in our corporate presentation that tries to indicate a little bit how we see the market, but we don't have any very defined ultimate and end-state ambition. Right now, we just want to continue to cultivate the growth model.

Yeah, maybe I'll just add to be there, right? So like, if you look at the combination of, a bit younger audience and then with game-off, that overlap is probably not talking about, the total addressable market is probably like been people. And then even if we just have a percent of it, you know, size of percent of it, now we're actually the only browser there which addresses the market. We feel that the total market addressable is probably [$200 million or $300 million -- $200 million] (ph). I think there's at least 10 times potential that we can reach for this audience and especially when they are growing and they speak with us and then a more younger audience just coming in, right? So I think, yes, so in short, I think the growth potential that we can address, so like again, we are very enthusiastic in all of actions around it, just to bigger campaigns, ambitions, are centered around those.

That's helpful. And then just one quick follow up on the DMA discussion. Can you just walk us through the actual mechanics? Some obviously you guys continue to benefit from that too. But does the user get prompted once a quarter, once a year, or just on the initial, firing up of the device, and just try to better understand how long or the benefit, could persist for you guys in terms of seeing some incremental users come from that new law -- that new rule.

Yeah, so, you know, I think, okay, so the answer for this simple –iOS, for instance, is an ongoing process. I don't think that's finished. That's still between EU and Apple, for instance, that's still trying to walk around the room and DMA [indiscernible] what the best approach is for Apple to actually allow somebody's browsers to be actually functioning well and how should Apple open up. So it's not settled yet. It's still in discussions, but we are very active in that process. But I think the major contribution is actually our people's awareness that people feel that, oh, now actually everybody's saying, and even officially people are saying that, you should definitely try also alternative browsers. They're actually out there, it's actually possible. And it's been unlike maybe, unlike what Apple said in elsewhere that it's actually completely solid and even the EU are actually advocating, right? So I think those impacts in general have largely opened up awareness. And also on top of course there will be, we believe that there will be continuous actions to actually have also actual real impact on top of choice screen. There will be some other requirement to say that, hey, Apple, you should be able to allow browser to submit to the own engine, which is still not allowed at this point unless you submit some very strange contract which nobody does. So like all of this is going to happen. So I have to pose it around it. But as I mentioned, I think the sole user awareness of it and also the sponsoring of, you know, of relevant governments are actually helpful to how people feel that, okay, now we actually have a choice and I should definitely try it out. And that has been very helpful to our growth field.

Great. Thanks, guys. Good luck second half.

Thank you. Our next question will come from Alicia Yap with Citi. Please go ahead.

Hi. Good evening, management. Thanks for taking my questions. Congrats on the following result. Two questions. One is that I saw that Opera News always emerged as the number two app in Brazilian news ecosystem and just wonder how management think about the future business opportunity in LatAm and then with user metrics and advertising monetization opportunity. So do you think LatAm could actually attract relatively higher ARPU per user for your ad business compared to other emerging markets. The second question is that can you elaborate a little bit some of the new features of the GX browser and how do you think that will help and translate to future monetization upside? Thank you.

Sure. Yeah, I think actually LatAm is one of the fastest growing markets for us. I think GX is always very big in LatAm just because, say, Brazilian users, they love to play games. So they really embrace GX. But also, like our regular browser, our news app, or whatever, are also playing big in LatAm, especially Brazil. But also, we also see similar in Mexico and a few other countries in the region. So yes, we actually have high hope on the region. We actually have entity there established. We are building up teams and it will grow faster. So I'm relatively optimistic. I think it will be as influential as some of the other fast growing emerging markets that we see elsewhere. So quite excited. And then when it comes to GX, I think, we will actually have some major launches in the second half, like we will have the next generation of GX launching. It's already available in the [audio board] (ph) version, so you can try it. We've completely redesigned the whole UI, the whole user experience, of the modding and the customization function. So it's actually a major update in the second half, which we remain very excited. And on top, I think we have also been able to move forward on many services within GX, like GX Store, which provided the mode download has been super successful. So we are now actually working with some, hardware windows, some others to be able to run the store and provide you with all those, gaming gadgets and items which can be quite relevant and exciting. We have also, you know, have just gaming products which have also been now more and more popular and helpful, which that actually prompts us to work with all those big gaming studios like CD PROJEKT RED for the more than potential, we are now also have some other potential corporations. So I asked if more like we also have, working with some other [indiscernible] titles games to come. And I think you'll actually see a lot more announcement in the second half of this year, which will be very exciting projects.

Thank you.

Thank you. This does conclude our question-and-answer session. I would like to turn the call back to Song Lin for any additional or closing remarks.

Sure. I think on behalf of the management team, thank you all for joining us today. In the volatile times, we have been looking forward to coming out and confirming Opera same has continued the tracking and our continued excitement for the way ahead. We'll reconnect in just over two months with our Q3 release, and we'll work hard to bring you more good news there. Again, thank you all for your time, and have a good rest of your day.

This does conclude today's call. We thank you for your participation. You may disconnect at any time.