Opera Limited achieves 30% year-over-year revenue growth and launches AI-driven browser, raising 2025 guidance amid strong advertising and e-commerce performance.

OPERATOR - (00:00:20)

To all locations on hold. We do appreciate your patience and please continue to stand by. We will begin shortly. Please stand by. Your program is about to begin. If you need assistance during your conference Today, please press star zero. Welcome to the Opera Limited second quarter 2025 earnings call. @ this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this period, you will need to press star1 on your telephone keypad. If you want to remove yourself from the queue, please press star 2. Please be advised that today's call is being recorded. Lastly, if you should require operator assistance, please press 0. I would now like to turn the call over to your speaker today. Matt Wolfson, Head of Investor Relations. Please begin.

Matt Wolfson - Head of Investor Relations - (00:02:22)

Thank you for joining us this morning. I am joined by our co CEO Song Lin and our CFO Frodo 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 press release as well as our annual report form 20-F including the risk factors. We undertake no obligation to update any forward looking statements. 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. And with that let me turn the call over to our co CEO Song Lin who will cover our second quarter operational highlights and strategy and then Frodo Jacobson who will discuss our financials and expectations going forward. Song.

Song Lin - Co-CEO - (00:03:37)

Thank you Matt and everyone else for joining us today. We have been looking forward to sharing our second quarter results with you and also update you on our latest thinking and priorities in this very exciting business landscape. I am going to start with the financials the second quarter experienced year over year revenue growth of 30% compared to items of 22 to 26% and well ahead of 17% growth in the second quarter of last year. This marks our 17th straight quarter as Rule of 40 company entirely fueled by organic revenue growth and healthy margins leading to cash flows that fund both innovation and our recurring dividends. Advertising revenue grew 44% year over year to 93 million. Ecommerce remains the fastest growing vertical within advertising, continuing to grow over 100% year over year despite the ongoing volatility due to tariff uncertainty. While the growth support from E Commerce in our revenue mix has resulted in the vertical now representing nearly half of total advertising revenue, we still believe we are under indexing with ample headroom for continued expansion as we move into the retail heavy backup of the year. We are also very pleased to see search revenue returning to double digit growth up 11% year over year to 50 million in the quarter. The sequential growth of 60% was also twice as high as it was in Q2 last year, benefiting from the continued mix shift of our user base towards higher up regions. We also see a broader trend with a new focus on high user intent traffic powered by AI leading to monetization opportunities arising not only during actual search but also around pre and post search, providing ample opportunities for those in a position to detect and create value. This allows us to deepen cooperation in a space with a wider range of partners from traditional search providers to E commerce, travel and gaming verticals, foremost in the US though increasingly also a global trend with exciting new opportunities ahead. This strong revenue performance leads to adjusted EBITDA of 42 million, just above the high end of our previously issued guidance and once again demonstrating that we can outperform our revenue expectations while hitting our profit targets. With that, I'll move to product and our strategic opportunities we are at the dawn of a new era in compute and surrounded by AI companies competing for users to their models. Beyond being a huge source of traffic, we believe that the browser will emerge as the operating system for these AI services. Today, the majority of AI agents run as cloud hosted web pages. That is clearly inferior to the potential of a browser native architecture which elevates an agent's capabilities by allowing local native operations to run side by side with and sometimes indistinguishable from regular human operations. This is key for an AI agent to be truly and consistently helpful, enabling faster execution, richer contextual understanding and the broader functional extensibility, and also better solution for information privilege. The browser AI agent can have access to all the information accessible by the user, whether it's local files, communication platforms or premium subscription content. With greater control of privacy and security and more efficient use of computing resources. In this context, we are so excited about what we are building for public release during the fall. The AI browser Opera Neon will combine major AI use cases into a single user interface with the native functionality of an Opera browser that is already appreciated for productivity. Opera is built to be the gateway to AI where web applications and automation converge. The value creation opportunity is huge. For example, There are over 1 billion knowledge workers worldwide who rely on the browser as their primary workspace. These same workers on average juggle nine productivity apps a day and a far greater number of web tabs, all in all losing 40 minutes to context switching every day. This creates an opportunity for an agentic AI collaborator as a natural evolution of how people work based on existing user habits and muscle memory. Opera is uniquely positioned for this both in terms of competence and scale. We have been pioneering browser innovation for the past 30 years and we operate at a scale far greater than most web based AI platforms. With our nearly 300 million users, we will make AI widely accessible, naturally integrated and with immediate productivity benefits for our users. Automation and task intelligence will be built right into the routines that already exist. We can't wait to show you Moving on from AI, I wanted to give you an update on Opera gx, the browser made for gamers. The GX user base was 33 million MAUs in the second quarter, up 11% year over year and with an annualized output of $3.47. Opera GX released an update during the call out, providing users with a pack of enhanced 10 tab management capabilities and improved multitasking features. The update allows for side by side tab viewing, easy tracing of recently visited pages, and the function to organize related tabs into collapsible groups. We are also in the process of soft launching Opera GX in South Korea, wait Japan to follow shortly, leveraging our partnership with League of Legends as the preferred browser. There's more going on with our flagship browsers as well, both for computers and for phones, though in the interest of time I'll dive deeper into Those on our Q3 call later in the year since that will coincide with up and coming rollout of the third edition of Opera 1 with even more new exciting features. In terms of our overall user base and economics, our strategy of focusing our products and marketing on the highest value segments is unchanged resulting in solid 5% after growth to an annualized level of $1.97. With 289 million MAUs in the quarter, I will wrap up with the final topic. Stablecoins we view the stablecoin market as one of the most exciting aspects within the fintech space. Through the use of non trust audio wallets, Opera created a stablecoin based wallet called minipay. Minipay allows people to hold, send and receive funds instantly using just a phone number. Minipay already works with over 40 different currencies in 53 countries and allow its users to seamlessly convert local cash into a stablecoin backed wallet using their preferred Method Card, Apple Pay, Mobile Money or Bank Transfer and to switch back just as easily. A person located in Europe or the US can then easily send funds or even make an instant payment of groceries and the checkout thousands of miles away. Minipay also introduces the notion of pockets which allows for switching between stablecoins with just one click. With several real world applications already, minipay has the potential to improve the lives of millions of people globally. By simplifying the experience, we removed some major barriers for people to take advantage of this technology. As a result, Minipay has reached 9 million activated wallets and exceeded 250 million transactions and is now among the fastest growing non custodial wallets globally. In addition, we are seeing the development of third party apps within minipay, further differentiating the app and creating a positive feedback loop to fuel additional growth. While our near term priority is skill building, we already generated minipay revenue from integrations that ensure native support for ecosystem partners. Miniplay was originally launched within our lightweight Opera mini browser on Android phones and is now also available as a standalone app on both Android and iOS, providing an even richer feature set and sets the stage for transacting across continents without expensive remittance fees. We have observed positive regulatory developments in in the stablecoin space, most recently the Genius act in the United States, and believe we can capture additional growth as this space continues to mature. All in all, we find ourselves in the privileged position of both being able to rapidly scale revenue opportunities while also being well situated to capitalize on two transformative and and highly strategic technologies, AI and the adoption of stablecoins as a way to drive financial inclusion. We will stay very close to capture these opportunities and we look forward to keeping you posted on these developments. FRUDO will now dive into the details behind our financial results before providing our updated guidance for the remainder of 2025.

Frodo Jacobsen - Chief Financial Officer - (00:14:27)

Frodo thanks Tom. First of all, we are very pleased to yet again deliver on high expectations and exceed both our own guidance as well as street expectations. Revenue growth was 30% year over year, well ahead of our already Strong guidance of 22 to 26% growth. Looking at the first half as a whole, we grew revenue 35% year over year, which is more than double the year over year growth in the first half of 2024 over the past year our advertising revenue has scaled to new levels, preparing for and then seizing E Commerce opportunities. We saw major growth acceleration in the second half of last year followed by an unprecedented sequential growth from the seasonal peak of Q4 into Q1 2025 and with Q2 we saw the expansion of global opportunities, largely offsetting the impact of tariff related headwinds in U.S. e commerce. We have been positively assured by the resilience of our newly scaled advertising revenue streams in an otherwise volatile macro picture. We also saw search revenue return to double digit growth as expected, which adds to our ability today to significantly raise our growth expectations for the year. On the cost side, Q2 OpEx came in according to our prior directional commentary across marketing compensation and the other smaller items combined, while cost of revenue scaled with the revenue over performance and came in at the same percentage of revenue as in Q1. This means that we were able to grow faster than expected and strengthen our overall business trajectory going into the second half of the year while still exceeding the high end of our adjusted EBITDA guidance. Our operating cash flow was 33 million in the quarter representing 103% of adjusted EBITDA. With the cash flow headwinds of Q1 representing tailwinds in Q2. Free cash flow from operations came in at 29 million or 91% of adjusted EBITDA. As always, we continue to expect fluctuations in cash conversion on a quarterly basis with the year to date conversion stabilizing as the year progresses. Adjusted diluted EPS was 26 cents in the quarter. We present adjusted net income and adjusted diluted EPS to provide a consistent view on the underlying business performance excluding accounting impacts from investments such as OPAY and share based compensation expenses which is quite volatile in the P and L due to timing of grants. While the number of actual equity instruments vested each year has been fairly stable, this cost adjustment also eliminates the accounting impact of equity grants made by our majority shareholder consisting of options in that shareholder itself and not causing dilution for Opera's other shareholders. The resulting adjusted diluted EPS thereby becomes a less volatile metric tied to the underlying profitability of our operations. As Song mentioned, the second quarter was our 17th consecutive quarter. As a rule of 40 company with revenue and adjusted EBITDA once again meeting or exceeding our previously issued guidance. We are incredibly happy to continue to execute at these levels of revenue growth matched by healthy profits, allowing us to continue to return cash to shareholders through our recurring dividend program. Since January 2023 we have distributed $2.80 of dividends per share and during the three years prior to that, we bought back 30% of our outstanding stock as another way of driving value for our shareholders. Now turning to guidance for 2025 as a whole, we now guide revenue of 585 to 597 million or 22 to 24% growth over 2024. This is the second time we refresh 2025 guidance and the second time we add 3 percentage points to the annual growth rate. Our guidance implies a continued acceleration of our full year revenue growth from 20% in 2023, 21% in 2024 and now 23% at the midpoint for 2025 while continuing to reflect appropriate caution for potential headwinds similar to before. Given the hockey stick growth of the second half of 2024, we have based our guidance on sequential modeling. The raised estimates capture the Q2 over performance and the increased confidence in our path for the second half. As before, this results in a relatively stable trend of quarterly revenue growth measured on a two year CAGR which captures the scale we have built in recent quarters while also evening out our forward looking growth profile. In terms of adjusted ebitda, we lift the bottom end of the rSonge for now guiding 136 to 140 million for the year as a whole and or a margin of 23.4% at the midpoints. This reflects a continued expectation for margin expansion in the second half of the year, but also that a weakened US dollar relative to other currencies eats up about a third of the benefit by affecting our cost base. The conversion of international currencies to USD results in in a percentage cost increase, most notably for compensation costs which increases by about a million per quarter in US dollars compared to the rates from when we last gave guidance. Apart from such fluctuations, economies of scale continue to benefit us as an underlying trend cost wise. We then implicitly guide to a full year OPEX pace pre adjusted EBITDA of 453 million at the midpoints for the year as a whole, we expect the cost of revenue items combined to come in at 34 to 35% of revenue. Following the continued growth of APRA adds, other cost items grow at a lower pace than our revenue and thereby reduce as a percentage of revenue relative to 2024. This includes marketing costs which we expect to grow at mid to high single digits, compensation costs which will increase about 10% and the sum of all other OPEX items pre adjusted EBITDA will likely increase at a low single digit percentage. In line with this we guide Q3 revenue of 146 to 149 million representing 20% growth at the midpoint and Q2 adjusted EBITDA of 34 to 36 million or a 24% margin at the midpoints within the implied quarterly OPEX base of 112.5 million at the midpoints, we expect that cost of revenue items as percentage of revenue will be 34 to 35% in the quarter. We expect marketing costs in the mid 30 million dollar rSonge and thereby relatively stable versus the prior quarters this year and we expect cash compensation cost to increase about 1 to 2 million versus the Q2 level, including the effects of a weaker US dollar relative to the main currencies of our salary expense. The sum of all other OPEX items pre adjusted EBITDA are expected to tick up slightly. Giving guidance in these periods that combine such rapid revenue growth in an environment with great chSonges both on the macroeconomic stage as well as the technological one, has proven to be difficult, though we believe caution has served us well. Well after all, the guidances that later turned out to be conservative were well beyond expectations at the time they were given. And yet again I believe we have guided something that we should all feel proud and pleased to achieve while recognizing that volatility goes both ways. And we of course hope to continue giving those positive surprises. With that, I'll turn the call back to the operator for questions.

OPERATOR - (00:24:27)

Thank you. As a reminder to ask a question, please press Star one on your telephone keypad. To withdraw your question, press Star two. When posing your question, we ask that you please pick up your handset for optimal sound quality. We'll take our first question from Naved Khan with B. Riley Securities. Please go ahead.

Naved Khan - Equity Analyst at B. Riley Securities - (00:24:50)

Great. Thank you very much. Two questions from me please. One. On the western market user base, the sequential growth was quite strong. I think one of the strongest we've seen in some time. And on the flip side GX users didn't really grow. So is this a reflection of how you spend your marketing spend? Understanding the dynamics there in terms of what drove the strength investor market users versus gx and the second question I have is just around neon. Can you just maybe share some thoughts on how should we think about the pricing of the product and also the. Cost side of things as you would. Probably have to pay for the compute for it.

Tony Hill - (00:25:37)

Thank you. Yeah, so it's Tony Hill. I think I'll just quickly comment. right. So maybe super high level. I would just say that I think there is a bit seasonality around it just to call out. right. Because of course naturally gx, you love the mostly younger audiences and also gamers, young gamers and Gen Z or whatever. So they are of course affected more always like we saw this all the time that they are affected more by the summer of this. So there is a bit of seasonality factors involved and yeah hopefully states will be more. More changed during the Q3 and Q4. So I think that will be more visible. And then just also say that of course internally we don't really operate on a basis of more like I would almost say that the growth of Western the base of course is more like summary of indicative trends. Right. But internally of course we're always organized by allies and where we see the biggest potential then where we see the product has been received a lot and maybe I'll just call out that. Yeah, so like we see that you know, have very good growth in Europe for instance for Q2, which is very excited which is actually also good proof that you know, by having more of those AIs actually it also be helpful to us. It's just because then especially you know, in the western market are more exposed to be aware that there is actually a choice of browser. Right. So like not only default but well be mindful choices and that in turn actually have help driven adoptions. So we actually see that where AI is autistic, where it's almost becoming easier for us to acquire users. Yeah. As a simple way to put it.

OPERATOR - (00:27:30)

We'll take our next question from Eric Sheridan with Goldman Sachs. Please go ahead.

Eric Sheridan - (00:27:35)

Thanks for taking the question. Maybe a two parter on Neon with the announcement in the release and getting closer to a public launch there. I wanted to go a little bit deeper first big picture on how you think the browser environment is going to change more broadly. This clearly is the first step towards a direction of AI generation in browsers and how you think about the multi year pathway for the browser landscape generally changing and how you align the platform for those changes. And then the second piece would just be in terms of launching something like this in the public. How should we think about the investments needed either on the marketing side or on the infrastructure side. I know Naveed asked about sort of the cost of compute tied to it, but just trying to understand a little bit of sort of fixed versus variable investments behind this over a longer duration period of time. Thanks so much.

Tony Hill - (00:28:29)

Sure. So I guess I also take the chance to also cover the question which I have not answered in the first one. So about Neon and also in general landscape. Right. So I guess first of all just to call out that it's of course the olive range. And I would say at this point our focus primarily is actually on product marketing side of things. Right. Because more like maybe I'll just first spoke about how we think of product and also the growth of browse or whatever. Right. So a few points high level. I think that with AI it's already been proven that, you know, web interface via traditional apps, I guess have now been also being recognized as almost the preferred platform where people want access information. And this is especially obvious with AI, right? Because I guess, you know, at least, you know, it shows that, you know, the web, traditional web instead of locked in apps are still the best way for AI to be able to operate and to access information freely. So that is that, you know, very good news for browser in general. So that is of course very strong affirmatives if we compare to some audio narratives a few years back where somebody's still talking about always only app or whatever. So I think with AI that's actually a big help that everybody now see very clearly that web and browser is probably the future. And then I guess I also comment that as also you probably also see the trend lately also by those AI players, all of them are also talking about how important browser could be. So I think our view is about the same, right? That when web become so important there will always be, I would say two ways of access information, right? So one way is, well, traditional they use our access information which is by you run a web page service provided by the AI provider, like you run ChatGPT or whatever on a web page. However, I think it's also been very clear that when we see things go deeper, it's more and more likely that you need a native solution rather than just because there will be so many informations. And as also AI goes on, I think number one it will be inseparable part of your everyday operation. So I think once you try it, never be go back, you will always every day use AI. But then the second question comes that when you are using AI, it's unlikely that you will have to rely on a purely cloud based solution just because AI have to access everything right on your computer. Also they have access on your premium content, on your subscription, on your email and all those I think will be very hard to capture if only can access more from cloud as it is now, Right. So I think the trend seems to be very clear. And also all the AI companies also recognize that there will be a significant portion of it that AI has to be located natively on your Applications like on your PC, on your whatever and everybody now see that browser is probably one of the best mediums. It's just by design. Because by design a web page cannot access so many information. It has to be locally while browser is local. So it's a natural linking between web environment and also local environment. So that's the trend we see and I think that's exactly why we are spending doing a lot of research on Neon is just because. Because we feel that we are actually in a better position to do this. I also saw some comments that many other companies commenting about. They also think it's relevant but of course maybe people don't realize that we are probably one of the few ones which has the scale and the capacity to do it. Even you look at some other player hot ones planning to want to take over Chrome and they have only 20, 30 million MAUs in total. Well, we already have existing almost 300 million MAUs which have been running for many, many years. So I think we're in a very good sport to actually make that happening and that's what we are focusing on and I think that's also part of what we believe will be the future. And then just a few lines. Right. So I think in the future the economics and business models, I would almost say that I think there will always be some will be free because we believe that we can power the advertisements as what we're doing now, whether it's through partners or whether it's through some other more like search engine or other different partners. I think we are in a very good spot to actually monetize again I think we do a better job than most of some of the startups. But then I think if you want to have some deeper experience. I also think it's already proven that people are willing to pay subscription money for it for some extensive usages and I think it's also fair that we follow the same model. So yeah, so I believe there will always be a combination that it will be use case sponsored by advertisement and then it will also be a subscription model for whoever to enjoy a deeper assurance purely because that's already been proven and people are ready to spend money on it. I hope this helps.

Eric Sheridan - (00:33:34)

Great, thank you.

OPERATOR - (00:33:39)

We'll go next to Lance Vitanza with TD Cowan. Please go ahead.

Lance Vitanza - (00:33:43)

Hi, thanks guys and congrats on the quarter. I have two questions if I could. The first is on the stablecoin, the mini pay, the 9 million activated wallets. That's great. How do you monetize the engagement is this just about encouraging user growth and retention or is there another angle here? Is there any way to connect the dots between minipay user growth and I don't know, sustained ad revenue growth for example.

Tony Hill - (00:34:13)

Yeah, so it's only hill I think I also try to cover this and I further can also supplement with also other information. Right. So like again like we are trying to be conservative in calling out you know, those new initiatives we have launched. For the record, you know we have been actually incubating minipay for a few years and very happy that we are now, you know, see that expanding and also now it's right to market. So like again internally we are very excited, quietly excited I would say to see the growth of it, to see the you know, very good for the market fit in many places. And we also see that the wider adoption of stablecoin across industry which of course is very necessary for anything to succeed in a fintech world. Right. So now I think we're starting to see that many of the stars are starting to align and that's why we are also getting very excited and then maybe just you know, super quickly on monetization. Right. So I actually feel that again minipay is one of the few products that you know it's a good combination of both, very good product market fit but actually it also comes with monetization. I think nature just that it's you know it's very close to, it's. It is a product which are very close to mommy I would say for the nature of fintech. So for now like it's already actually generating you know, sensible from us even though of course for now that's not the short term purpose, our purpose of course but like yeah, but standalone is actually already proven I would say for monetization. So for now I would say the pure monetization model will be for us to work with ecosystem partners to integrate that, you know, all those functionalities like we are including all those stablecoins into minipay and we get a card right for whatever they earn, you know, based on some strategic investment agreements. So like again maybe just echo back to say that I think this is the minipay is a very good example where you know the nature of the product it comes almost with monetization potentials without having to go through say advertisements or without having to go to you know, search or other means it just because stablecoin itself, this industry are rather profitable. I guess it also proven by some of the recent listings by so called and also there are Some mishapstabs like payroll and a few others. So I think it's also why we are very excited because as far as you have enough user base and as far as you have lot of users, there are actually a very natural opportunity for you to get revenue out of it. So I would almost maybe compare this with search. Right. So like why search is very good for the browser in the audit date all the 10 years is because when people are using search they don't really see that as advertisement.

Lance Vitanza - (00:37:00)

Right.

Tony Hill - (00:37:00)

They see that important functionality, but of course along the way also making money. So I would almost say that the mini pay is of a bit similar nature, that you don't have to see some ugly ads popping up or whatever. You can just use it and by the nature of it, there is a chance for us to monetize. That's great.

Lance Vitanza - (00:37:19)

And actually that sort of ties into my next question which was on search revenue and the rebound there. And Froda, I think you mentioned that it was expected and maybe I lost track of why you were expecting it to rebound, but I'm just wondering what drove that. I tend to think of search revenue as a function of number of searches. Did search volume rise on a per user basis or is this simply a change in revenue per search that's perhaps driven by the shift in users to higher value markets?

Frodo Jacobsen - Chief Financial Officer - (00:37:52)

Yes. When we last reported we already saw the trends are picking up. We were in the single digits year over year growth last quarter and then we saw we were getting back towards the double digits. And I think we expect surge to continue to do well for the remainder of the year. And that's reflected in our guidance. But I don't think I should go into the detailed breakdown of how we model or predict it.

Lance Vitanza - (00:38:21)

Okay, well how about at least can you discuss whether you think it's a new trend line or was it more of sort of a. How durable do you see this resurgence potentially being?

Frodo Jacobsen - Chief Financial Officer - (00:38:35)

I think that the broader search landscape is changing rapidly. Right. With the theme of a lot of this call as well with various kinds of new information processing and gathering services. I think that is very, very interesting as a browser. Right. Being able to send traffic to partners, but also being able to natively integrate those types of solutions in the product that we talk about with Neon. So as a broader concept, I think we are very enthusiastic about this. It might be a bit narrow almost to call it search. Right. Because it's almost like information discovery and how the browser becomes increasingly relevant in that space.

Lance Vitanza - (00:39:25)

Fair enough. Thank you very much.

OPERATOR - (00:39:31)

We'll go next to Jim Callahan with Piper Sandler. Please go ahead.

Jim Callahan - (00:39:35)

Hi, thanks for taking the question everyone. Can you talk more about the tariff related headwinds you kind of called out in the quarter? Are, are these temporary or is this something we can see kind of like persisting through the rest of this year? Yeah, I can comment on that. I think it played out a bit as expected. So when we last reported it was late April and we were past the initial launch of tariffs and I think of course since then maybe there's been somewhat more stabilization in the broader picture. But it did translate into a real headwind and we are very proud to have been able to offset that with global growth essentially. So I think as we look ahead, I think we are starting to see some recovery now. But it definitely represents an upside potential for us to see a return to, to even higher activity levels as in pre tariff terrain. Got it. That's helpful. And then Opera GX launching in South. Korea and Japan I guess how should. We think about sort of like the size of that opportunity would be helpful.

Tony Hill - (00:40:58)

Yeah, it's Sony Hill so I can briefly comment. Right. So I would almost say that it's the early stage but I guess you know we have announced that we are League of Legends the preferred Brussels and of course as you know that naturally East Asia is actually one of the bigger, almost important places for those for those games. And as a result we actually see that there are some very interesting attractions that the GX are becoming to be liked by the Euler in those countries. So I think it's very natural for us to deepen down and I think the only thing is that of course those regions also require more localization because they are, they are all pictured on our own ways and we have not really prioritized this in the past, but now we see opportunities so we'll dive in. I think it's a bit too early to estimate the scale in monetary terms, but it's a very exciting market. And interestingly just to comment that partly though is also that we do already see quite strong growth, say ecomos potential in those regions based on our still regular base or limited user coverage on say generic browsers. So essentially I think that's an important factor that we are very excited about monetization potentials and I think that's also why we feel that it's the right move to further spreading the coverage of those key, I would say developed countries.

Jim Callahan - (00:42:20)

That's great. Thank you.

OPERATOR - (00:42:25)

And as a reminder, if you'd like to ask a question, you May do so by pressing Star one. We'll go next to Mark Argento with Lake Street. Please go ahead.

Mark Argento - (00:42:37)

Good morning guys. Just a few quick ones here on the E commerce business. Is that business. You know we start to comp, you know the comps get a little bit more difficult but how should we think about the seasonality in terms of kind of the revenue there? Obviously probably a little bit more weighted over time to the higher spend quarters. But just wanted to get your thoughts on how you see that playing out.

Frodo Jacobsen - Chief Financial Officer - (00:43:03)

In the different verticals. Yeah, sure Mark, I can comment a bit. So as a recap I think what we saw last year was that we went from a 17% year over year growth rate in the first half of the year into 20 and then 29% growth in the second half. So the comparables are definitely quite challenging in the second half of the year. Of course the underlying it is the shopping season so that is a tailwind for the second half of the year. At the same time we try to not bake in the same kind of home run in our second half expectations at this point in time but rather take a more cautious view. And that's why we look at the 2 year growth rate by quarter to guide something that's a bit more of an even growth profile. All in all that's helpful.

Mark Argento - (00:44:08)

And then in terms of various vertical obviously still mostly focused on work on you know, goods versus services at this point is there opportunity to expand into travel and some other areas, you know above and beyond just more of the kind of the traditional goods area.

Tony Hill - (00:44:36)

I can try to cover this. So yeah more like super, super high level just to comment that you know for now of course where we see the fastest growing is retail. So that's great. And it's also proven you know like the let's say the intent based advertisement with helper action works. And you know because I think also mentioned earlier that all our advertisements almost all our performance based very solid proof that it actually works. So and then I would almost say that we see very close the follow up traveling is definitely key, you know key sectors. We are traditionally already fairly big like browser is historically always a fairly big distribution partners for travels like booking.com for instance. So yes 100% that we see that it's a good combination of both browser but also AI. So that is definitely very interesting. And then I guess we also commented maybe a bit earlier that there are also some other verticals like Fintech for instance that could also be quite relevant because again it's also a Good combination of. You see lots of those existed on a browser environments, very natural. And also they also the one probably affected most by AI that there could also be maybe a better combination of things. So I would say all of the areas are good potentials for us to develop further and we are looking into those.

Mark Argento - (00:46:00)

Thank you. That's helpful. And then just pivoting quickly. It wasn't overly clear to me at least on the Neon product launch. Is that built on your guys tech stack? Are you guys using other LLMs? Maybe just refresh me and better understand kind of what is powering that new browser.

Tony Hill - (00:46:23)

Sure. So yeah, it's only hell, I also quickly cover that. Right. So yes, I think essentially we are using similar approaches as most others that we do rely on the big base models from those bigger AI companies. I don't think we have planned to spend billions of dollars to train the large language model because I think that's repetitive. And I guess the beauty of that is that because the market of big language models are so competitive that is almost a bit commoditized in some ways that actually allow us to be able to have a good relationship with almost all of them to actually be able to use the best language mode at any given time at any given scenario. So I would almost say that's an advantage of that. And also because of all the investment and the competitions we actually see that the cost have actually been lower down quite dramatically as there is still competition. We believe that will still be the case and I think that's actually a good time for players like us. And then on top of it, I think our contribution would mostly be on number one, how to give the relevant context and how to allow AI to operate in a browser net environment. I think that will be the best advantages that we would have and I think that will be a huge, huge win for us to nail it. And that's what we are focusing on.

Mark Argento - (00:47:41)

Last one for me. And touched on. A little bit earlier but Perplexity was out with their unsolicited offer to buy Chrome browser. Little surprise, you guys didn't get any, you know, get any play on that in terms of just kind of being in the mix. It sounds like Perplexity went and talked to you. And for the other browser players out there, you know, is that is there a strategic opportunity for you guys to work with other large branded guys above and beyond what you're doing right now? And how do you think about and if you could size it for us as well, how big is actually your browser installed Base right now because I don't think the market's, you know, value and the strategic value of that install base. Yeah.

Tony Hill - (00:48:32)

Okay, so I guess I'll comment a bit first and then I think there's a good moment. Well for them Matt can also comment a bit. Right, so. Okay, so I guess it's very interesting. I mean we of course follow this closely as you know that we're also, you know, we are more or less involved all those discussion as well, very familiar with the player there. So. Okay, so first of all, I would just say that yes, it's actually quite interesting to see. Right. Because of course we saw, you know, some of the players claiming that they are a better position. They are, you know, one of the few positions to, to be able to accommodate, you know, from should there be some jurisdictions. And I guess, you know, we of course are always a very good partner with Google for more than 20 years. But then I would just say that of course, I guess like we are probably, we are one of the biggest independent browser out there. We have been independent for the past, you know, 30 years, which we are celebrating this year for 30 years. And, and we are the innovator of browsers and we have a deep understanding of technology and more importantly we have of course 300 million MAUs and still growing. So I think everything is very strong pointing that we are in a very good position for all those discussions. So it's more like just interesting point out. Right. So like if we're actually talking about whoever is the biggest independent browser, I think our name should actually pop up very high there. I guess the only thing is just, you know, because being a European company has some, has some protocols, I guess that. So we are probably less frequently been discussed in those contexts. But again I think it's just our job to be visiting us more and we should also. And of course US has been our biggest market for the past many years and it's becoming more and more relevant and we should just, you know, work more on it. So I would almost say that's our feelings for now and otherwise I think it's hard for us to comment anything particular related to this case. Good cooperation with all the partners involved there.

Mark Argento - (00:50:35)

Great, thank you.

OPERATOR - (00:50:40)

It appears we have no further questions at this time. I will now turn the program back over to Song Lin for any additional or closing remarks.

Song Lin - Co-CEO - (00:50:50)

Sure. So like again, thank you to everyone for joining us today. We look forward to sharing this result outlook with you. And now we will turn to an extremely exciting second half of the year. We have many launches to come. We will work hard to see the opportunities that come with it and look forward to keeping you posted. Have a good day, all of you.

OPERATOR - (00:51:17)

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