Opera reports 23% year-over-year revenue growth in Q3, exceeding guidance as AI-driven initiatives strengthen competitive position and future outlook.

OPERATOR - (00:00:26)

Sam, please stand by. We're about to begin. Good day everyone and welcome to the Opera Ltd. Third 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 need operator assistance, please press 0. I would now like to turn the call over to your speaker today. Matt Wolfson, Head of Investor Relations. You may begin.

Matt Wolfson - Head of Investor Relations - (00:01:52)

Thank you for joining us this morning. I am joined by our 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 press release as well as our annual report form 20F. 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 a year over year comparison unless otherwise stated. With that, let me turn the call over to our CEO Song Lin who will cover our third quarter operational highlights and strategy, and then Freda Jacobsen will discuss our financials and expectations for the remainder of the year. Song?

Song Lin - Chief Executive Officer - (00:03:09)

Sure. Thank you Matt and everyone else for joining us today. These are certainly exciting times for OPERA and for our industry. And while it's only been two months, Since our last release, it already feels like ages ago. The product opportunities around AI that we have been advocating and preparing for over the past years are coming to fruition, and I could not be more pleased about our strategic position in this rapidly evolving landscape. And while this is playing out, we. Combine our strategic positioning for the future. With a healthy business that continues to scale faster than we have expected. I will start with some of the Big industry things that have happened since we last spoke. First, the remedy's case between the US DOJ and Google came to a conclusion in which it became clear that Google can continue to compete for us traffic in the same way as other players in the broader and rapidly evolving content discovery landscape. While anything else would have been quite surprising, it was good to get clarity on that. Second, the broader recognition of the web browser's strategic importance continues to increase, even if the opportunities for Opera might not be fully appreciated. Yet, household AI names are investing heavily to expand their reach and knowledge about the fuller context of end users, with the browser being the focal point of attention. Opera's advantage in this situation is our agnostic approach to the underlying large language models that powers our browsers. We believe in an increasingly broad landscape of AI services that assist users across a multitude of areas, from information gathering to making purchasing decisions to producing content and performing tasks. We believe that these services all come together in the browsing experience, in particular on computers where most of us are spending an increasing amount of time as more products and tools are becoming web based. And crucially, we don't believe that people will install one browser for each use case or each AI services. The browser needs to work across all platforms and its approach to assist the user has to be powered by the right tool for each job. That is where Opera Neon comes in as an early stage window into how we see the future of browsers. Opera's browsers are not AI professional windows, nor are they tools to lock users into a specific large language model. Rather, we offer the most sophisticated alternatives. Targeted to a growing segment of users that care about the functionality of their browser. This includes hardware integrated services, manage tabs and workspaces, optimize memory and battery utilization. Not to mention the design and visual customizations. We differ from others in that our specialization is the browser itself, and we use that skill set to create the Best possible AI experiences. We know that people are different and the one size fits all system does not work for everyone. Our flagship browser, Opera One, is carefully tailored for people who want to have the richest possible browsing experience. While Opera GX and Opera GX both rethink what browsers should be for their core audiences, all the Opera browsers ship with a free and advanced LLM agnostic AI solution. Opera One was the first of our. Three browsers to receive the new chat functionality. Opera Neon complements this way. It's been tailored for the most advanced and demanding users out there, those who want to participate in shaping the future of web browsing and believe AI agents will be a core part of their experience when doing so. Those of you who have experienced the. Early release of the Opera Neon browser. Have seen how we believe AI can integrate into the existing workflow in a. Way that people are already used to. Working as opposed to existing within a. Terminal like process remotely operated in a silver farm. As we evaluate our strategic position, we take pride in the exceptional quality of our products and the rapid expansion of partnership opportunities. Such partnerships, along with the efforts of multiple niche players in terms of promoting browser choice, significantly increase public awareness that alternatives exist in an environment where more users are actively considering switching browsers. We are well positioned and eager to. Compete for the most discerning and demanding. Users, offering them innovation, reliability and a truly differentiated browsing experience, and while running at full speed. To seize these opportunities, we are proud to have an already healthy financial profile of growth, profitability and ability to turn capital to our shareholders. The third quarter experienced year over year revenue growth of 23%, as always, all organic and compared to guidance of 18 to 21% growth. Our $152 million of revenue in the third quarter was a new record and for the first time our annualized ARPU crossed $2 per user, growing 28% year over year to an annualized level of $2.13. Our revenue outperformance leads to adjusted EBITDA of $36.3 million, also above the high end of our previously issued guidance and. Also setting a new quarterly record. This translates to an adjusted EBITDA margin of 24%, expanding versus the first half of the year as expected and marking our 18th straight quarter as a rule of 40 company as through the well detail shortly, the Q3 results and trajectory. With which we enter Q4 allow us. To raise our revenue guidance well beyond. The Q3 over performance. Our updated midpoint estimate now exceeds 600 million. Million and represents 25% growth for the year as a whole. Taking a step back, our 2025 guidance has reached nearly four times the revenue we had in 2018, the year we went public, and our CAGR over these seven years is 21%, another feat to be proud of. Our company was recognized by Fortune magazine. This month which named Opera in its. 2025 list of the 100 fastest growing. Companies based on growth in revenue, profits and stock returns. I wanted to spend the next few minutes on the launch of Opera Neon and what it tells you about how we see the future of AI powered browsing. Currently, Neon is a premium subscription based browser that showcases our ambition to transform web browsing. Opera Neon implements native AI assistant functionality that can step in at any point in time as you browse, as you. Are logged into your services in the. Browser, Neon acts locally on your behalf and supports you with everything from deep research to mundane task such as filling out forms, comparing products across sites and. Acting as your personal assistant. With that efficiency befitting a browser veteran, the key innovation is architectural Instead of adding chatbots to existing browsers like some of our competitors, Opera built a task based system where AI agents operate directly in your authenticated browser session. This overcomes the limitation of cloud based AI tools and standalone apps. They cannot access your logged in accounts or interact with real websites. Neon can because it runs locally in your browser where you have already been authenticated. Benefiting from our task architecture, Neon is also able to define the right context for a given task without the need to access or upload the entire set of open tabs or your browsing history to a platform in the cloud. This is putting privacy first and represents another competitive benefit of Opera's architecture. We are also tackling the complexity that hinders broader AI adoption. With so many AI services and models, users struggle to choose the right to us as an independent player. We are introducing a new interface where opernir guides users to the right group of agents for any task. And while we are at the topic of agents, one of our own agents operate. Deep Research is already scoring better than the deep research capabilities of those AI force platforms, as we showed in a press release last week. It shows the benefit of combining the strength of different large language models as we do not invest in the already crowded LLM landscape. Alterneer is a product tailored for the most advanced and AI forward users, but our mission is to expand these innovations in our mainstream products such as OperaOne and Opera GX. As we evolve our monetization of AI opportunities and our industry partnerships, we will be able to facilitate an increasingly advanced experience for our total user base. That's a future that we are really excited about and you'll see us acting rapidly on those fronts as well. While I wanted to mostly focus today on how we see the AI opportunity. There are also other highlights worth mentioning. Last time we updated you on how far along we've come with minipay. Since we last spoke two months ago, minipay has grown the number of non custodial wallets to over 10.5 million, up from 9 million during our last report. While the number of transactions has increased to almost 310 million from 250 million as of this morning, we are building minipay with multiple use cases in mind, building upon the power of stablecoins. It can allow immigrants working abroad to quickly and cheaply send money home. It allows a traveler who does not. Have access to local payment. Rails pay like local and can even facilitate payments to global freelancers in USD. We are a deep believer in how new technology can be used to facilitate transformation and have an exciting pipeline of partnerships and product features that we plan to launch in this space. Finally, I'm going to briefly touch on. Opera GX, the browser for gamers. We ended the quarter with 33 million users, up 3% year over year and with a new app record of $3.69 on an annualized basis. Opera GX has recently expanded its offering with exclusive in browser gaming deals and introduced advanced features like smart home integration designed for tech enthusiasts seeking seamlessly device control. The browser also continues to enhance its AI capabilities by deploying faster, more powerful. Models, further improving performance and user experience for the gaming community. Lastly, GX modes allow users to personalize their browser even further, including animated cursors for a highly customized and immersive experience. We are also excited about our continued sponsorship of the League of Legends World Championships currently underway. To conclude, I am incredibly excited about our ability to innovate and take our browser offering to the next level. And at the same time, while it. Always feel like the future can't come. Fast enough, we also take pride in running a healthy business with solid revenue growth and profitability that directly benefits our shareholders. Through our recurring dividend program, Oprah shows that it's possible to combine growth and strategic potential weighs healthy financials and meaningful return of capital to shareholders along the way. With that, I will now turn the call over to Frode to go into.

Frode Jacobsen - (00:17:27)

The financials in more detail. Thanks Han. We are very pleased to report that the momentum in our business continues to outperform even our most recent expectations. Our third quarter hit a new milestone by exceeding $150 million of quarterly revenue, coming in at 151.9 million and we also reached our highest ever adjusted EBITDA at 36.3 million. Both came in above the high end of our guidance ranges and both come as a result of scaling new revenue partnerships while also expanding browser classic revenue such as search. This quarter we introduced a slight change in our revenue categories by reporting on total query based revenue, which largely consists of the old revenue category search, but also includes revenue generated by other user prompts where we see increasing opportunities to monetize as we scale our business. For example, if the user has a dialogue with our AI assistant Aria and follows a paid recommended link or starts typing a search query in the URL bar and elects to follow an Opera recommended partner listing from the drop down menu. As a result, the new query revenue category includes the total of our potential ways to monetize a user's intent for online discovery. Advertising revenue in comparison is more lean back on the part of the user where we serve ads and promote partners that we think the user will be interested in but without the user explicitly querying it. Our quarterly revenue Query revenue was 55.6 million, which represented a year over year increase of 17%. The old search category was the predominant component at 52.4 million which represented 13% year over year growth and accelerated further versus the prior quarters as well as the other query monetization that amounted to 3.2 million and tripled versus the year ago period which has now been carved out of the advertising revenue category. Advertising revenue net of the query monetization as previously described grew 27% year over year to 95.9 million. By the former definition, advertising revenue would have grown 29% year over year to 99.1 million. Once again, E Commerce was the primary driver of our advertising revenue growth, now representing about half of our advertising revenue and setting us up well for new records in the holiday season. Q3 costs came in According to our previous directional commentary, cost of revenue items combined reduced slightly as percentage of revenue versus the first half of the year and amounted to 34.6% of revenue which was within the indicated 34 to 35% range. With the strong underlying performance, we allowed marketing to expand from 34 million in Q2 to 36 million in Q3 with a continued focus on the highest ARPU potential users though remaining in the mid $30 million range as indicated. Similarly, we recorded cash compensation cost at the higher end of the indication, predominantly as a result of increased provisions for annual bonuses in light of our trajectory, but also reflecting the weakening of the US dollar versus our main salary currencies taken together with the sum of all other OPEX items pre adjusted EBITDA showing a slight sequential decline and the revenue over performance, we were still able to exceed our range for adjusted EBITDA. Our operating cash flow was 28 million in the quarter representing 78% of adjusted EBITDA. Free cash flow from operations came in at 21 million or 59% of adjusted ETC EBITDA. As always, we expect continued fluctuations in cash conversion on a quarterly basis due to impacts of seasonality and operational variations. Overall, we maintain a solid financial position with cash at 119 million, no financial debt and underlying cash generation well in excess of our dividend payments. Adjusted diluted EPS was $0.30 in the quarter, representing a relatively stable margin at increased scale. Now turning to guidance for 2025 as a whole, our trajectory and the resilience that it has shown allows us to significantly raise our expectations for the year. Continuing the trend from prior quarters, we now guide revenue of 600 to 603 million or 25% growth over 2024. This updated range starts above the prior high end of guidance as we add an additional 2 percentage points of expected full year growth. Our guidance implied a further acceleration of annual revenue growth from 20% to 2023, 21% in 2024 and now 25% at the midpoint for 2025. Similar to before, given the hockey stick growth of the second half of 2024 and Q4 in particular, we have based our guidance on sequential modeling. The raised estimates capture the Q3 over performance and adds a further incremental expectation to our Q4 guidance resulting in a continued increase in our sequential growth rate 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 the growth profile. In terms of adjusted EBITDA, we lift the range to become 138 to 141 million for the year as a whole or a margin of 23% at the midpoints. This reflects a continued expectation that the percentage margin in the second half of the year will stay about 1.5 percentage points above the margin in the first half even as a weakened US dollar relative to other currencies continues to represent a headwind. Apart from such fluctuations, we see cost of revenue items stabilizing as a percentage of revenue and economies of scale continue to benefit us as an underlying trend. Trustwise, we then implicitly guide to a full year OPEX base pre adjusted EBITDA of 461 million at the midpoint for the year we expect the cost of revenue items combined to come in at about 35% of revenue following the continued growth of Opera ads. 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 high single digits from 2024 to 2025. Compensation costs which will increase just over 10% and the sum of all other OPEX items pre adjusted EBITDA will likely remain quite stable at the 2024 level. In line with this, we guide Q4 revenue of 162 to 165 million representing 11 to 13% growth or a 2 year CAGR of 20% at the midpoint and Q4 adjusted EBITDA of 37.5 to 40.5 million or a 24% margin at the midpoints. Within the implied quarterly OPEX base of 125 million at the midpoints, we expect that cost of revenue items as percentage of revenue will be similar to the third quarter at about 35%. We expect marketing costs to increase by 2 to 3 million relative to the third quarter and we expect cash compensation costs to remain quite stable. The sum of all other OPEX items pre adjusted EBITDA are expected to tick up such that the second half of the year as a whole becomes comparable to the first half as a whole. All in all, we find ourselves in a great position as we enter the seasonally strongest fourth quarter and we are excited both about our commercial opportunities as well as the broader strategic picture. With that, I'll turn the call back to the operator for questions.

OPERATOR - (00:27:13)

Thank you. As a reminder to ask a question, please press Star one on your telephone keypad. To withdraw your question press 1. When posing your question, we ask that you please pick up your handset for optimal sound quality. We'll take our first question from Navig Khan with B. Riley Securities. Please go ahead.

Navig Khan - Equity Analyst - (00:27:36)

Great. Thank you. Thank you very much. A couple of questions from me, maybe just on starting with Neon in around a month since you took it out. Of the closed beta and opened it. Just curious about the traction you might. Have seen with it in terms of. People who have signed on and how is the wait list for the product and how quickly you're moving through it and also maybe just talk also about the go to market strategy for Neon both in terms of paid media and. Unpaid media and how do you plan to sort of drive awareness for the product. The other question I had is around E Commerce, curious about how do you see the growth in this line of business kind of sort of evolved going forward not just necessarily in Q4, but actually more in 2026. How should we think about that? Thank you.

Song Lin - Chief Executive Officer - (00:28:31)

Yeah, so it's Song Lin. I think I'll just first answer the Neon question and then further can council comment a bit on the E Commerce one. So yeah so for Neil has also mentioned a bit on the scripts. Very excited about the launch more at this point. Of course it's still imitation based because I think our philosophy that in the beginning is very important to have a group of founders that we want them to be, you know, closely working with us on potential Features also you know, the direction of the products, what they need among others. So we are very excited to form this very close group that, that that we can work with for the next months to come and I think there. Will be also key base for for. The future NEOM programs. So I think that's also why by intention that we make this premium invitation. Based product at this point. But you're also right that I think within the next 12 months we will also open up to the broader public and also receive even more interesting advices and also product developments. So I think that's in general how we see Neon and maybe also super quickly that I saw you also asking questions about go to market and then. A few other things. So I guess for us it's a bit slightly different I guess from some of the competitions that of course we are I think more like at least in the browser field. Opera is a household brand name. We have a relatively big already audience and then we have a very mature way of marketing. So I think for us probably we think slightly less about a particular way of go to marketing but instead of thinking of how we can engage or our existing user base and how we can find out some of the audience. Which will feed them more with Neon. And how we can also position Neon together with other free offerings. So I think that's for now how we think about it. But overall I think Neon has been extremely well received. We saw many media coverage, we saw. More than 1,000 articles and it keeps coming. And even under the surprise that even though we are still under limitation we saw a very good coverage. I think just today I also saw some other media publishing very favorable announcement of when they tried Neon. The operator is by far the most efficient and the task architecture they also appreciate. So overall quite excited about the launch but I think this is still very early stage. We will excite it even more. How can we take it further?

Frode Jacobsen - (00:31:00)

And now I can chime in on the E commerce part of the question. I think we of course find ourselves in a very nice situation where the E commerce revenue streams have scaled extremely rapidly now over the past 18 months. Still approximately doubling at a year over year basis this far into growth spur. The nice thing I would say is that I believe we are still under indexing in terms of E commerce as part of the advertising online advertising markets overall and perhaps for the browser in particular which is so well suited to promote E commerce partners.

Navig Khan - Equity Analyst - (00:31:47)

Thank you guys.

OPERATOR - (00:31:50)

We'll take our next question from Ron Jose with Citi. Please go ahead.

Ron Jose - Equity Analyst - (00:31:55)

Great, thanks for Taking the question, maybe a quick follow up to Naveed. And as it relates to the Neon. Browser and adoption trends, I think Song you mentioned on the call, it's tailored for the most advanced users. Just in this first wave. Just talk to us a little bit more about the behaviors that you've seen from these users. Anything stood out? What you've learned here as you go to general market or call it open it up to beyond just the invite list and then on commerce specifically and not as much on the E commerce side, but just I wanted to get your thoughts on agentic commerce just as checkout mechanisms change as mini pay becomes a bigger part of the business, but help us understand how you're thinking about agent E commerce going forward. Thank you.

Song Lin - Chief Executive Officer - (00:32:40)

It's Song Lin, so I think I'll cover a bit. There's also some very interesting discussions in the market there. So first of all, just talk about Nio. I think for now actually it's really well to get all those user feedbacks. So I think as also mentioned about audio that I think for now our strategy is really we are not really super eager to get so many users because we do have massive amount of users using us anyway, but more important to us to form a close community and hear their feedback on Neon and in particular agentic browsings. So yes, we have received very good feedback. For instance, one thing I would say stood out is that it's also in relation to what you also call out later about agentic ecommerce that. I think. For now everybody feel that it is definitely the future that imagine the future that you don't really have to spend too much time on browsing but simply ask an agent to browse for you to buy books on Amazon, to buy shoes, among others. So it is definitely working as of now. That's actually one of the major use cases that we saw happening on Neon, that people actually use it to buy a lot of interesting contents e commerce wise. And for us, I would say what I think we stand out and what we also be proud of is the efficiency because there are some other agency solutions out there you can try yourself, which is rather slow and sluggish. But even more important on the back end is that I think many of them have to rely on visual models which are very costly, that they almost cost 10 times more tokens or whatever and also being slower. Right. So I think what we have been extremely happy about and also what our focus is is that how can we use capability of a browser because in the end of the day browser have access to all the layout doom trees in a technical sense and how we can even use text to be extremely efficient to analyze all those elements and to move forward. So I think that's so far what. We have been probably received the most. Praise is that we are able to execute those tasks very efficient, faster than others. And also people may not realize also that because of the task architecture we are able to do this like we're able to execute multiple tasks as well. Right. Which is a better architecture than many others. So this is what really building products. And users are appreciative. Even though sometimes maybe some users feel that sometimes we can of course by design be slightly more aggressive. Partly just because we want those advanced users to experience what the agent can be doing. Right. But this is actually in connection with your other question that I think our view is just that for now Agentic is definitely the future, everybody see it. But it's still not as efficient as a real human being. Right. Because it takes too long to do any transactions. However, we believe that within a shorter time frame, maybe a few months time, hopefully less than one year that they are waste the work like us and others. There is possibility to make sure that in certain tasks that agent will perform better in the browser other than the humanity be more efficient. And that will be the point where we will see more and more of those I would say agent in E commerce coming along and I think also touch base on the cost part of it that at least for the architecture that we are using, it's actually very cost efficient without need to quote in the exact numbers. I think for now what we see that the cost of the AgentIQ browsing due to E Commerce is actually very reasonable compared to the amount of the money that people will spend. And even if you compare to the commissions compared to whatever we can earn as an advertiser, it still leaves a big margin for us to be able to use agentic E commerce to help move this forward. So this is actually something which we also spend a lot of time on and is very important for us. And I think in some cases we are maybe 10 times more efficient than our competitions, which we are quite proud. And I think this is also a major base of potential agentic E Commerce in the future. That being said, there are some other considerations that we're also closely following up. I think reason just because we are not only agentic browser company, we're also advertising company, as you see, that will grow very nicely of E Commerce. So there are certain concerns, I would say from e commerce players that maybe some of them do not only want to just be a pipe, right. That they do want to also have a better exposure of the goods and e commerce even in the agentic browsing scenario. So I think that's also something maybe we are a bit differentiating from others that we also take this into consideration that we also make sure that our partners do not end up as a pipe, but rather that they also end up as an interesting destination that that not only agent but all the audience can also have a chance to see and browse through all the different groups and perhaps have more selections. So yeah, so I think this can be too long discussions along the way, but it's definitely very interesting to see how this evolves.

Ron Jose - Equity Analyst - (00:37:40)

Thank you Tom. Fascinating.

OPERATOR - (00:37:44)

We'll hear next from Eric Sheridan with Goldman Sachs. Please go ahead.

Eric Sheridan - Equity Analyst - (00:37:48)

Thanks so much for taking the question. Maybe if I could squeeze in to. We continue to hear a fair bit around the overall macro environment and how. It might be impacting digital advertising. We'd love to get your sense across your array of advertisers how you would characterize the current demand environment and how. You'Re thinking about that environment sort of. Evolving in the forward forecast. That would be one and then two. Coming back to mini pay, can you. Talk a little bit about how you. See that building in terms of scale as we look out to 2026 and beyond and how you think that will. Tie into the broader services layer of your offering in terms of driving overall ecosystem strength? Thanks so much. Sure.

Song Lin - Chief Executive Officer - (00:38:34)

So yeah, sure it's onlyhale so I think I'll also try to answer that. And then further we'll also chime in for many insights on the advertisement end as well. Right. So okay, so I would almost say that I think in the broader advertisement scape there are different changes in shapes and forms. Right. But I would almost say that at least in the end go well we see E Commerce, especially performance based E commerce, the fact that it is actually tightly related to whatever more like the actual purchasing for now, we definitely see from our end that it's still on the growing path. Simple fact. Just being that at least from what we can see, users are more and more buying with partners like us. They get very good recommendations. Since it's also performance based, there's less concern I guess from advertisers of, you know, is there enough brand richness or whatever. So I guess that's why for us at least we are growing more than 100% year over year and we see that trend definitely not slowing down but rather continuous and very excited about it. That also fits into well with agentic browsing scenario just because again it's performance based right at the moment, you know, it doesn't matter if you are a people or if you are an agent bought something. I guess some, you know, people are equally happy. So I think that is definitely positive. But more like on the other end though I do see that this is more like just a general feeling, right that there are of course lots of discussions around. Okay now if the agent are doing a lot of stuff, well, let's say traditional display, advertisement or well brand or whatever still makes sense and how is the best way to nail that? Because potentially it's not real people but actually agents who are doing that. I think that also posed some of the threats to some of the E commerce players as we commented earlier that for them of course it's very scary if they end up at the end of the pipe, right? If they end up as only as a good delivery storage house or whatever while all the others are taken by the other AI players if someone just directly use AI to direct a purchase or whatever. Right. So we'll see those things. So but that being said, I would say that actually put browser into a very good position because unlike at least some particular AI chat clients, we are browser at least to make sure that all the web pages and all the goods are shown up in front of people and even in front of agents for that sake so that there are enough exposures of those things which can be immersive as well. So I would almost say that at least we saw potentially at least the benefiting factor for the browser players. While I would imagine that for some of the pure chat based E commerce solutions that might actually cause an issue for some of the ads players. So that's how I see it. But again we can have longer discussions along the way and then super quick for mini pay. Yeah, I think indeed our feeling being that of course stablecoin is definitely going, it's definitely staying and it's growing strong and also it actually helps facilitate large pilot payments, even fit into agentic scenarios just because it's very naturally fit into agentic scenarios where we're all like everything can be combined. So we do have that as part of consideration. You know, for us I think maybe the only comment would just say that I think we will hopefully land some bigger partnership discussions and bigger cooperation with industrial players in stablecoin fields in certain areas in the markets to drive both adoption, but also hopefully to have even wider Use cases like we commented about the local payments, better integration with local payments but also potential integration with E Commerce and a few others. So yeah, so that is definitely coming and we will. Yeah. Hopefully there will be quite a lot of announcement in the next few weeks. And months to come.

OPERATOR - (00:42:44)

We'll hear next from Mark Argento with Lake Street. Please go ahead.

Mark Argento - Equity Analyst - (00:42:50)

Good morning guys. A couple of quick ones. Just turning back to advertising the E Commerce opportunity. It's not still 100% clear to me what kind of the gaining factors are. There in terms of the growth. Obviously looks like the business is growing, you know, extremely rapidly. But is it, you know, is it working with more, you know, E commerce, you know, partner? Like what? I guess what are the mechanics there to better, you know, or to see additional growth or ultimately better understand that long term opportunity?

Frode Jacobsen - (00:43:23)

Yeah, Frodo here I can start. I think we try to focus on the leading, leading players by region and develop deep partnerships with them and that allows us to really do a good job on targeting. All our revenue is performance based. So there we certainly share the interest on doing well. And then I think just to tie it a little bit to Eric's question before of course the year started out quite volatile in the macro wise picture and also around the E Commerce and then I think that we reflected by being quite cautious in our guidance as we progressed. And then I think the nice thing that we are reporting on today as well is that we are seeing the resilience in what we are building. We are sort of seeing a stabilization around us and we're able to grow well in our key regions, Western markets driving our growth.

Mark Argento - Equity Analyst - (00:44:22)

That's helpful. So when you say working with partners, are those in particular E Commerce the bigger E commerce players or is it brands specifically or both?

Frode Jacobsen - (00:44:37)

It's the big players by region. So within the us, within Europe and Asia.

Mark Argento - Equity Analyst - (00:44:45)

When you say players, I'm assuming you're talking about E commerce vendors, the Amazons of the world or the Walmarts or those types of guys. Got it. That's helpful. And then in terms of more just kind of a couple housekeeping things. Any update on opay? I was digging around opay. It's been a little while. Hadn't realized that company hasn't really done any capital raising or really not a whole lot of activity at least in the capital markets or the private capital market since 2021. Still plans there in terms of an IPO. Is 2026 going to be the year? Any thoughts on that?

Frode Jacobsen - (00:45:29)

Yeah, I think updates on OPA company's doing really well, it's scaling rapidly and as you say it's been multiple years since their last real financing round and they're essentially than operating also a profitable business. So I think that's a very good basis. We're very pleased with the company's performance but for details I think I'll have to leave it to them to control what they share about their business. And when our strategy as a founding investor and no longer being operationally involved is that over time we will, we will monetize our stake in Ope and it's very natural for us to consider that in the context of the company becoming public. In terms of timeline for that, again, it's not our decision but we always think or we think that the company is doing well and is definitely moving in the right direction. Yeah, maybe I also just comment that. Yeah, maybe I'll just comment a bit that at least based on public information. Right. You probably see that Opay is doing. Extremely well in Nigeria. It's by far the dominant players by public information. You can also see that it is the, you know, very exciting to see that it is now the second most used DA use. You know this is very unusual for Fintech app. So of course very proud that you know, we are able to you know, incubate and support the company in the early stage. But like yeah, as for the saying the company is doing extremely well, is very dominating in the area. So of course as a shareholder very happy to see if it's and will be supportive if it's plans to also go on, you know, into further capital market related activities.

Mark Argento - Equity Analyst - (00:47:28)

Very excited. Great. I appreciate the additional color and hopefully you hear more on Opay here soon. Thanks guys.

OPERATOR - (00:47:40)

As a reminder ladies and gentlemen, if you would like to signal for a question, simply press Star one. We'll go next to Jim Callahan with Piper Sandler. Please go ahead.

Jim Callahan - Equity Analyst - (00:47:51)

Hi, thanks for taking the question and appreciate you breaking out this sort of other query revenue. Can you just talk about contractually how this revenue works and maybe just explain a little bit more about about it at a high level it shares the characteristics of search in that it's revenue share models where we drive traffic to partners, whether it's a search engine or another partner and collect revenue share based on what the partner is generating off that traffic. So I think the reason we wanted to group this and create the one category is it. It's a much better view of our revenue mix in terms of what we monetize as a direct result of the user looking for something as opposed to the more classic lean back, as I said, advertising monetization. That's helpful. Thank you. I mean, it seems the growth has been pretty impressive, I guess. How early would you say you are in monetizing that opportunity? I think a lot of our strategy evolves around creating opportunities for user to essentially have a dialogue with the browser, whether it's the agent or integrating with Aria, as well as broader opportunities. So we certainly think that both our key revenue streams, query and advertising, have great potential in terms of ability to scale as we keep executing on this.

Frode Jacobsen - (00:49:35)

Got it.

Jim Callahan - Equity Analyst - (00:49:35)

Thank you.

OPERATOR - (00:49:39)

We'll hear next from Lance Batanza with TD Cowan. Please go ahead.

Lance Batanza - Equity Analyst - (00:49:43)

Thanks guys. I have three if I can get them in. The first is back on Neon. Specifically, how should we think about competitive positioning there? ChatGPT has Atlas, perplexity has Comet. How does Neon stack up and how do you expect the market to evolve in terms of how many AI browsers can the market ultimately support, in your opinion?

Song Lin - Chief Executive Officer - (00:50:09)

Okay, so I will take this one again. Very interesting discussions. Okay, so I think our belief is be like this, right? I think we also commented a bit on the scripts that, you know, I think our strength fundamentally is that we are not a light map remote company. We are not really. We don't really see us. I don't think actually all these last see us also as competition. I think for us the, you know, biggest strength would be that we are horizontal instead of vertical. Right. So to us it's about, you know, how we can work with all of those guys both on the free browsers, but also NEON to provide the end user the best experience, for instance. Yeah, use different models for different scenarios. So I think that is always our best approach. And we believe that there will be so many cases that you simply would not want to be locked into one single large language model when they are doing browsers. So I think that's definitely our competitive advantage on this, that we are rather neutral in the same way that even nowadays when we are integrating the search. Right. We are not really buying into one playoffs. And I think Agentica even much, much more actually afraid of Locked in, I would say. So I think we're in a pretty good spot on that. But then in particular, right, I think there's also many difference. For instance, for us, we talk about, for Neon, for instance, if we focus on agentic browsing part, we focus a lot more efficiency because we feel that it's very, very important that the user can get results fast. It's very important that agent can achieve whatever needs to be done more efficient than a human being. And of course, you know, with affordable cost and the ability that we are able to utilize different large language model in different cases to facilitate that is a big help. And then I guess the other thing. Maybe I'll quickly comment is also again about privacy, right. That you know, fact that we have a task architecture, in fact that when locking into any single large language model helps because you know there will be users which don't want everything on their browser to be locked by a particular large language model. Because this is very like. It's very different when you chat something on it and everything goes browser was on it. And so that's why we actually designed in a very careful way that it's only a particular task, particular context. We will use the context to give you best advice. And even that we don't really upload all of those to a particular log identity model log to your personal account. So I think there are plenty of use cases. We believe that we are better solution in those scenarios. And those are a few simple examples. Right. And then just also to say that not only Neon, but also what we have on Opera 1 and Opera GX, the free version actually will be comparable to also those guys maybe accepting agentic browsers. Everything else I think will be comparable, even more efficient. And so all of those are actually important value propositions I think for Opera as a whole to facilitate the AI browsing.

Lance Batanza - Equity Analyst - (00:53:10)

Super helpful, thanks. So then the next one is on minipay, obviously tremendous growth there in the past couple months. Remind me, is there a plan to monetize that activity or is this just about capturing engagement and driving sort of. User growth in the browser?

Song Lin - Chief Executive Officer - (00:53:26)

Yeah. So just to say that minipay of course are already revenue generating. It is actually due to some of our partnerships. It is actually have sizable, sizable revenue has been generated. I think the only thing just that at this stage we probably would like to invest all those revenue back into marketing. Both for promoting mini, but also for, you know, work with our partners which we really think it's, you know, it's. Some of them are very industrial important to further facilitate penetration, I would say of stablecoin and web3 technology into many regions that we would like to penetrate. So like, you know, we talked about opa, we had that experience in the past which is super successful and we think maybe there's something similar we can replicate or even bigger opportunities. So I think that's how we see it.

Lance Batanza - Equity Analyst - (00:54:11)

And the last one for me on GX, the user base has kind of plateaued there at 33 million. Is that a pause or has the product kind of matured and we think out a year from now. Should we think that the GX user base, could it be notably higher at the end of next year or is this just, you know, 33 million is kind of where we stay and then in that case can we expect revenue will continue to grow in the face of potentially flat user base?

Song Lin - Chief Executive Officer - (00:54:45)

Yeah, so okay, I think I also took this first and then further can also follow up. Right. Okay. So first of all, I think for us of course as a company, we focus a bit more on revenues and a bit more potentials because I think facts just been added. As a broadsword company, you have such a big user base compared to many others that sometimes we have been more disciplined. We focus a bit more on the regions and the areas where we can earn more money. So that's one. And also just to say that of course we actually also see very nice growth Opera one because of AI. So that I guess some of the users, they might actually choose Opera one instead just because AI is so successful. And of course to us it doesn't really make a huge. We just want you to choose whatever they fit into. Whether to choose or provide or gx. We have no, no strong feelings. Right. And also some choose even more AL on Neon. So like GX is actually I would say one of the audience which are very AI saturated. So it's natural that some of them might also go to neo, which I. Think will also be extremely happy about. We have no issue on that. Right. So that being said, I think there's definitely still growth potentials for gx. There's many interesting regions that we are wanting to go into. There are many activities that we're also planning around near and product launches. Also with the AI upgrade, I think it will bring GX to be also as sophisticated and maybe as NIO analysis will be. So there's many interesting aspects ahead. So we are very excited. So I think we still remain very positive about gx.

Lance Batanza - Equity Analyst - (00:56:18)

Thank you very much. Oh and congrats on becoming CEO. I mean, long overdue but great to see that recognition.

Song Lin - Chief Executive Officer - (00:56:28)

Oh thanks. I appreciate it.

OPERATOR - (00:56:34)

And with no further questions in queue at this time, I'd like to turn the floor back over to Song Lin for any additional or closing comments.

Song Lin - Chief Executive Officer - (00:56:42)

Yep. So okay. So like guys, thank you everyone for joining us today. I think as you guys see that we're very excited. We have been looking forward to sharing. Those updates with you on the product launches that have been seeing, but it's also good to share all those financials. And as mentioned, we will keep you posted with both even more product updates and also hopefully even better financial releases as we continue our journey. Have a good day you all.

OPERATOR - (00:57:10)

Ladies and gentlemen, that will conclude today's event. Thank you for your participation. You may disconnect at this time and have a wonderful rest of your day. It.