Opera Reports Both Revenue and Adjusted EBITDA Above Guidance in its First Quarter 2023 Results

Ninth consecutive quarter of 20+% revenue growth, exceeding the high end of previously issued guidance on both revenue and adjusted EBITDA

Q1 revenue grew 22% year-over-year, with an adjusted EBITDA margin of 25%

Opera introduced its first generative AI features directly into the browser

Company raises the midpoint of revenue guidance and adjusted EBITDA expectations for 2023

OSLO, Norway, April 27, 2023 /PRNewswire/ -- Opera Limited (NASDAQ: OPRA), one of the world's major browser developers and a leading internet consumer brand, announced its unaudited financial results for the quarter ended March 31, 2023.

First Quarter 2023 Financial Highlights

"The year is off to a strong start. We continue to build upon our successes in both search and advertising with revenue exceeding our guidance. This revenue outperformance coupled with less than anticipated marketing spend led to even greater than expected profitability," said co-CEO Lin Song.

"I am thrilled with the early integration of generative AI services into the Opera browsers including an AI assistant to make our users' browsing more efficient. Initially, AI is a retention and engagement tool, as we are already seeing significant interest by the early adopters who have begun to take advantage of these features and we find ourselves in an excellent position to build out new use cases across AI services as an independent and trusted player in the ecosystem," continued Mr. Song.

"Over time, I anticipate this increased engagement will lead to additional monetization opportunities. It is so exciting to see the increased interest in the browser space from the tech ecosystem, press and investors. People are finally waking up to what we have long said, the browser is not a commodity product," finished Mr. Song.

First Quarter and Recent Business Highlights

• Advertising revenue grew 26% year-over-year, and now constitutes 56% of total revenue. This revenue category was primarily driven by Opera Ads which continues to outperform expectations.
• Search revenue grew 18% year-over-year. The growth in search revenue is primarily driven by our continued focus on users with the highest monetization potential in developed markets.
• Opera had 319 million monthly active users (MAUs) in the quarter, down versus the seasonally strong fourth quarter following reduced marketing spend in lower monetizing markets.
• In the first quarter of 2023, each user on average generated $1.08 of revenue on an annualized basis, an increase of 30% versus the first quarter of 2022.
• The Opera GX gaming browser had over 21.7 million monthly active users across PC and mobile in the first quarter of 2023, up 7% from 20.3 million in the fourth quarter of 2022.
• Opera announced a collaboration with OpenAI and launched the first browser with integrated generative AI services.
• During the first quarter, Opera repurchased 370,162 ADSs in the open market at an average price of $6.66 per ADS, for a total spend of $2.5 million, leaving $30.2 million or 60% of our existing buyback authorization remaining. The total number of ADS equivalents outstanding as of March 31, 2023 was 89,842,247.
• In January 2023, Opera announced a special dividend of $0.80 per ADS or $71 million in aggregate, which was distributed in February 2023.
• At the end of the first quarter, our cash position was $85 million, up $25 million relative to our pro-forma cash position of $60 million at the quarter start (net of dividend and settlement of marketable securities sales). In addition to our cash balance, we have a combined $220 million of assets held for sale and receivables on our balance sheet, reflecting our 9.5% stake in OPay and receivables from the sale of Star X in 2022. In total, we believe this puts us in a strong position with significant financial flexibility.

Business Outlook

"I am very pleased with the opening trajectory of 2023 and while it is only two months since we last spoke, we are cautiously raising the lower-end of our revenue guidance and both ends of our adjusted EBITDA guidance following our overperformance in the first quarter," said Frode Jacobsen, CFO.

"Combining our current business momentum and our focus on product innovations that have the potential to further drive user engagement and monetization places us in a healthy position for the remainder of the year," concluded Mr. Jacobsen.

For the full year of 2023, Opera is raising the low end of its previously issued guidance of revenue to be $373 million to $390 million. We guide adjusted EBITDA to now be between $77 million and $83 million, or a 21% margin at the midpoints.

For the second quarter of 2023, Opera expects revenue of $92 million to $94 million, representing 19% year-over-year growth at the midpoint. Adjusted EBITDA is expected to be between $18 million and $20 million, representing a 20% margin at the midpoint.

First Quarter 2023 Financial Results

All comparisons in this section are relative to the first quarter of 2022 unless otherwise stated.

Revenue increased by 22% to $87.1 million.

• Advertising revenue increased by 26% to $48.5 million, benefiting from the audience extension supported by our Opera Ads platform in addition to the growth in our PC footprint in Western markets, particularly in North America.
• Search revenue increased by 18% to $37.8 million, mainly driven by the growth of our PC footprint in Western markets.
• Technology licensing and other revenue was $0.7 million.

Operating expenses increased by 4% to $73.2 million.

• Combined technology and platform fees, content cost and cost of inventory sold were $16.9 million, or 19% of revenue.
• Personnel expenses, including share-based remuneration, were $20.1 million. This expense consists of cash-based compensation expense of $15.5 million, a 7% increase year-over-year, and share-based remuneration expense of $4.5 million following grants made during the quarter.
• Marketing and distribution expenses were $24.4 million, a decrease of 29%.
• Depreciation and amortization expenses were $3.4 million, a 6% decrease.
• All other operating expenses were $8.5 million, a 4% increase.

Operating profit was $14.0 million, a 16% margin, compared to an operating profit of $1.3 million in the first quarter of 2022.

Net finance gain was $4.8 million, benefitting from realized gains within our former portfolio of marketable securities.

Income tax expense was $3.3 million, elevated due to foreign currency impacts on net deferred tax liabilities.

Net income was $15.5 million, an 18% margin. This compared to a net loss of $9.4 million in the first quarter of 2022.

Net income per ADS was $0.17 in the quarter. In the quarter, the weighted average number of shares outstanding was 181.3 million, corresponding to 90.6 million diluted ADSs.

Adjusted EBITDA was $21.7 million, representing a 25% margin, compared to adjusted EBITDA of $7.3 million in the first quarter of 2022.

Free cash flow from operations was $23.3 million, compared to $11.5 million in the first quarter of 2022.

We have posted Opera's unaudited financial results by quarter since 2019 at https://investor.opera.com.

Conference Call

Opera's management will host a conference call to discuss the first quarter 2023 financial results on Thursday, April 27th at 8:00 am Eastern Time (EDT). Listeners may access the call by dialing the following numbers:

United States: +1 800-895-3361
China: +10-800-714-1507 or +10-800-140-1382
Hong Kong: +80-090-1494
Norway: +47 80-01-3780
United Kingdom: +44 0-808-101-1183
International: +1 785-424-1062
Confirmation Code: OPRAQ123

A live webcast of the conference call will be posted at https://investor.opera.com.

We will be tweeting highlights from our prepared remarks. Please follow along on Twitter @InvestorOpera.

Non-IFRS Financial Measures

We collect and analyze operating and financial data to evaluate the health of our business and assess our performance. In addition to revenue, net income (loss), operating profit (loss), and other financial measures under IFRS, we use adjusted EBITDA and free cash flow from operations, which are described below, to evaluate our business. We use these non-IFRS financial measures for financial and operational decision-making and as means to evaluate period-to-period comparisons. While these non-IFRS financial measures should not be considered substitutes for, or superior to, the financial information prepared and presented in accordance with IFRS, we believe that these measures provide meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of recurring core business operating results.

We believe these non-IFRS financial measures are useful to investors both because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and because they are used by our institutional investors and the analyst community to help them analyze the health of our business. Accordingly, we believe that these non-IFRS financial measures provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management team and board of directors. Our calculation of these non-IFRS financial measures may differ from similarly-titled non-IFRS measures, if any, reported by our peers.

We define adjusted EBITDA as net income (loss) excluding (i) profit (loss) from discontinued operations, (ii) income tax (expense) benefit, (iii) net finance income (expense), (iv) share of net income (loss) of equity-accounted investees, (v) impairment of equity-accounted investees, (vi) fair value gain (loss) on investments, (vii) depreciation and amortization, (viii) impairment of non-financial assets, (ix) share-based remuneration, (x) credit loss expense related to divested joint venture, (xi) non-recurring expenses, and (xii) other operating income.

We define free cash flow from operations as net cash flows from (used in) operating activities less (i) purchases of fixed and intangible assets, (ii) development expenditure and (iii) payment of lease liabilities.

Safe Harbor Statement

This press release contains statements of a forward-looking nature. These statements, including statements relating to the Company's future financial and operating results, are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as "will," "may," "expect," "believe," "anticipate," "intend," "aim," "estimate," "intend," "seek," "plan," "potential," "continue," "ongoing," "target," "guidance," "is/are likely to," "future" and similar statements. Among other things, management's quotations and the Business outlook section contain forward-looking statements. The Company may also make forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the "SEC"), in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the Company and the industry in which it operates. Potential risks and uncertainties include, but are not limited to, those relating to: the duration and development of the conflict in Ukraine and related economic sanctions, as well as resulting changes in consumer behaviors; the outcome of regulatory processes or litigation; the Company and its goals and strategies; expected development and launch, and market acceptance, of products and services; Company's expectations regarding demand for and market acceptance of its brands, platforms and services; Company's expectations regarding growth in its user base, user retention and level of engagement; Company's ability to attract, retain and monetize users; Company's ability to continue to develop new technologies, products and services and/or upgrade its existing technologies, products and services; quarterly variations in Company's operating results caused by factors beyond its control; and global macroeconomic conditions and their potential impact in the markets in which the Company has business. All information provided in this press release is as of the date hereof and is based on assumptions that the Company believes to be reasonable as of this date, and it undertakes no obligation to update any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that its expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results. Further information regarding risks and uncertainties faced by Opera is included in the Company's filings with the SEC, including its annual reports on Form 20-F.

About Opera

Opera is a global web innovator. Opera's browsers, gaming, Web3 and news products are the trusted choice of hundreds of millions of users worldwide. Opera is headquartered in Oslo, Norway and listed on the Nasdaq Global Select Market under the ticker symbol "OPRA". Download the Opera browser from www.opera.com.

Learn more about Opera at https://investor.opera.com or on Twitter @InvestorOpera.

View original content to download multimedia:https://www.prnewswire.com/news-releases/opera-reports-both-revenue-and-adjusted-ebitda-above-guidance-in-its-first-quarter-2023-results-301809499.html

SOURCE Opera Limited