• Revenue Growth: 29% year over year in Q4 2024, exceeding guidance by 800 basis points.
• Adjusted EBITDA: $3 million or a 23% margin, above the high end of guidance range.
• Advertising Revenue: $93 million, growing 38% year over year.
• Search Revenue: $52 million, up 17% year over year.
• Marketing Spend: $41 million in Q4 2024.
• Cost of Revenue: $48 million or 33% of revenue.
• Compensation Costs: Reduced to $17 million.
• Operating Cash Flow: $21.7 million in Q4, representing 66% of adjusted EBITDA.
• Free Cash Flow: 61% of adjusted EBITDA on a full-year basis.
• Q1 2025 Revenue Guidance: $130 million to $133 million, 29% year over year growth at midpoint.
• Q1 2025 Adjusted EBITDA Guidance: $28 million to $30 million or a 22% margin at midpoint.
• 2025 Full Year Revenue Guidance: $555 million to $570 million, 17% year over year growth.
• 2025 Full Year Adjusted EBITDA Guidance: $132 million to $138 million or a 24% margin at midpoint.

• Warning! GuruFocus has detected 4 Warning Sign with OPRA.

Release Date: February 27, 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 significant year-over-year revenue growth of 29% in Q4 2024, surpassing their guidance by 800 basis points.
• Advertising revenue grew by 38% year-over-year, driven by strong performance in e-commerce opportunities.
• The company achieved a record high annual average revenue per user (ARPU) growth of 3% year-over-year to $1.98.
• Opera GX, the gaming browser, saw a 22% increase in its user base year-over-year, reaching 33.9 million monthly active users.
• Opera Ltd (NASDAQ:OPRA) successfully launched new products like Opera R2 and Opera One, which include innovative AI features and have been well-received by the tech community.

Negative Points

• Despite strong growth, the rapid scaling of advertising revenue comes with a margin percentage headwind, impacting overall profitability.
• The company faces challenges in iOS penetration, with current market share still relatively low compared to potential.
• Opera Ltd (NASDAQ:OPRA) anticipates a more normalized sequential growth in 2025, suggesting potential deceleration in growth rates compared to the exceptional Q4 2024 performance.
• The cost of revenue items is expected to increase to about 30% of revenue in 2025, up from 27.6% in 2024, indicating rising operational costs.
• There is a potential risk of over-reliance on e-commerce and travel verticals for advertising revenue, which could be impacted by market fluctuations.

Q & A Highlights

Q: Can you discuss the impact of AI investments on Opera's product and platform evolution? A: Matthew L Wolfson, Vice President and Head of Investor Relations, explained that Opera is focused on leveraging AI to enhance browser efficiency and user interaction. The company aims to make browser operations more efficient than competitors by utilizing web elements directly, rather than relying on heavy, inefficient systems. Opera is also integrating AI into various workflows to improve developer efficiency and ad targeting, which has contributed to growth beyond expectations.

Q: What drove the unexpected strength in search revenue, and what are the expectations for 2025? A: Frode Jacobsen, Chief Financial Officer, noted that search revenue grew by 15% in 2024, which is strong for a mature revenue stream. The company expects this growth to continue, supported by a positive renewal with Google. The ad tech business is also expanding, driven by deepening relationships in e-commerce and performance-based advertising.

Q: How is Opera's penetration in the iOS market, particularly in Europe and the US? A: Matthew L Wolfson stated that while Opera's iOS penetration is still low, there is significant growth potential. The company has seen spikes in downloads in both Europe and the US, driven by increased user awareness and regulatory changes in Europe that promote browser competition.

Q: How should we model the revenue split between search and advertising for 2025? A: Frode Jacobsen indicated that advertising revenue is expected to grow faster than search revenue, continuing the trend of advertising becoming a larger portion of total revenue. The company anticipates that advertising will remain the primary growth driver, with search providing a stable revenue stream.

Q: Can you elaborate on the seasonality and concentration of the advertising business? A: Frode Jacobsen explained that advertising growth has been strong, particularly in e-commerce, which is seasonal. The company works directly with major e-commerce players, which provides scale but also limits the number of partners. Revenue from Western markets is growing faster than overall revenue, highlighting the potential in these regions.

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