• Revenue: $143 million, a 40% year-over-year increase.
• Advertising Revenue: $96 million, 63% growth, representing two-thirds of total revenue.
• Search Revenue: $47 million, 8% year-over-year growth.
• Adjusted EBITDA: $32 million, with a margin of 23%.
• Marketing Spend: Reduced to $34 million from $41 million in Q4.
• Cash Compensation Cost: $18 million, up $1 million from Q4.
• Operating Cash Flow: $16 million, representing 49% of adjusted EBITDA.
• Free Cash Flow from Operations: $12 million, 37% of adjusted EBITDA.
• Guidance for 2025 Revenue: Raised to $567 million to $582 million, 20% annual growth at the midpoint.
• Guidance for 2025 Adjusted EBITDA: $135 million to $140 million, maintaining a 24% margin at the midpoint.
• Q2 2025 Revenue Guidance: $134 million to $138 million, 24% growth at the midpoint.
• Q2 2025 Adjusted EBITDA Guidance: $30 million to $32 million, 23% margin at the midpoint.

• Warning! GuruFocus has detected 3 Warning Sign with OPRA.

Release Date: April 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Opera Ltd (NASDAQ:OPRA) reported a strong year-over-year revenue growth of 40% in Q1 2025, surpassing their previous guidance.
• Advertising revenue grew by 63%, with e-commerce being the fastest-growing vertical, achieving over 100% annualized growth.
• The company achieved an adjusted EBITDA of $32 million, with a margin of 23%, indicating strong profitability.
• Opera Ltd (NASDAQ:OPRA) successfully launched new products, including Opera Air and enhancements to Opera One and GX, which have been well-received.
• The company raised its full-year revenue guidance to $567 million to $582 million, reflecting confidence in continued growth.

Negative Points

• Search revenue growth slowed to 8% year-over-year, down from previous double-digit growth rates.
• The overall user base showed signs of decline, with challenges in maintaining the 300 million MAUs mark.
• The strong US dollar provided a headwind, impacting growth by an estimated 5 to 6 percentage points.
• There is ongoing volatility in the macroeconomic environment, particularly affecting US e-commerce opportunities.
• Marketing expenses are expected to grow in the high-single digits year-over-year, potentially impacting margins.

Q & A Highlights

Q: The search growth during the quarter was 8%, a slowdown from previous growth rates. Is this due to a shift towards e-commerce advertising? How should we think about search for the full year? A: Lin Song, Co-CEO, explained that the industry is shifting towards intent-based targeting and advertisement. While search remains important, identifying user intent allows for more targeted advertising, contributing to overall advertising growth. Despite the slowdown, search still shows nice growth, and they remain optimistic about its future potential.

Q: The ARPU for GX declined sequentially. Is this due to seasonality, or are there other factors at play? A: Lin Song noted that Q1 is typically a low season for GX. Additionally, with AI and high intent targeting, there are more options for ad placement, which may not always be counted as GX revenue. Overall, this benefits Opera as a company.

Q: How has the strong US dollar impacted your financials, particularly in the GX segment? A: Frode Jacobsen, CFO, stated that the strong US dollar has been a headwind, with growth estimated to be 5-6 percentage points higher on a constant currency basis. The impact is muted sequentially, but it remains a headwind for now.

Q: Regarding e-commerce growth, does it offset typical seasonality, and will it become seasonal once it matures? A: Frode Jacobsen confirmed that the strong growth in e-commerce offset typical seasonality. Lin Song added that while seasonality is expected, the e-commerce market is vast, and Opera's share is still small, indicating significant growth potential.

Q: With the overall user base slightly declining, is there a concern about reaching a lower level of MAUs? A: Frode Jacobsen explained that the focus is on engagement and revenue-driving metrics rather than MAU count. The decline is mainly in emerging markets, while efforts are focused on high ARPU potential users, leading to increased revenue.

Q: How do US antitrust actions affecting Big Tech impact Opera's business? A: Lin Song noted that while they can't comment on specific litigation, the shift towards high intent clickstreams benefits Opera. The increased focus on browsers and competition is positive for Opera, providing growth opportunities.

Q: Can you provide more details on the e-commerce opportunity, particularly in terms of vertical and geographic exposure? A: Frode Jacobsen highlighted that e-commerce is growing rapidly, becoming a significant part of advertising revenue. The US opportunity is still largely untapped, and the diversification of the partner base is a positive trend for future growth.

Q: What are the levers needed to develop the e-commerce opportunity in the US? A: Lin Song emphasized the focus on performance-based advertising, which is attractive to advertisers seeking high user intent. The strategy involves working with scalable partners and leveraging global opportunities beyond the US.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.