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Edited Transcript of OPRA.OQ earnings conference call or presentation 22-Aug-19 12:00pm GMT

Q2 2019 Opera Ltd Earnings Call

Sep 9, 2019 (Thomson StreetEvents) -- Edited Transcript of Opera Ltd earnings conference call or presentation Thursday, August 22, 2019 at 12:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Derrick L. Nueman

Opera Limited - VP of IR

* Frode Fleten Jacobsen

Opera Limited - CFO

* Lin Song

Opera Limited - COO

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Conference Call Participants

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* Lee T. Krowl

B. Riley FBR, Inc., Research Division - Associate Analyst

* Liping Zhao

China International Capital Corporation Limited, Research Division - Analyst

* Thomas Steven Champion

Cowen Securities LLC, Research Division - Former VP

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Presentation

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Operator [1]

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Good day, everyone, and welcome to Opera's Second Quarter 2019 Earnings Call. (Operator Instructions) As a reminder, this conference call is being recorded.

I will now hand it over to Mr. Derrick Nueman, Opera's Head of Investor Relations to open the call.

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Derrick L. Nueman, Opera Limited - VP of IR [2]

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Thank you, and welcome to Opera's Second Quarter 2019 Earnings Call. Today -- with me today are CFO, Frode Jacobsen; and our COO, Song Lin.

Before we begin, I refer you to safe harbor statement in the company's earnings release, which also is applied to this conference call today as management will make forward-looking statements. Our commentary today will also include non-IFRS financial measures. We believe that the use of these non-IFRS financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends. These measures should not be considered in isolation or as a substitute for financial information prepared in accordance with IFRS. Reconciliations between IFRS and non-IFRS metrics for our reported results can be found in our press release that was issued today, a copy of which can be found on our Investor Relations website.

With that, let me turn over the call to Frode.

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Frode Fleten Jacobsen, Opera Limited - CFO [3]

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Thanks, Derrick, and good morning, afternoon and evening, everyone. We are excited to share our results and talk about our progress. We delivered a record quarter progressing across both our new initiatives and browser offerings. Our growth is accelerating as we have invested more in our business. We are becoming even stronger in Africa and other emerging markets across multiple dimensions, including our browsers, our Opera News, content platform and our fintech offerings. And we continue to launch new strategic initiatives, which will be additional levers of future growth.

Let's start with our second quarter results, which demonstrates our continued execution and accelerated growth. Revenue growth accelerated to 55% year-over-year compared to 30% last quarter and exceeded the top end of our guidance range. Our user base continued to expand with smartphone users up 24% year-over-year and Opera News users up 61% year-over-year.

We are aggressively investing in product developments, new initiatives and marketing, while still achieving adjusted EBITDA within our guidance range. And finally, these strong results and the accelerated momentum in our business have enabled us to meaningfully raise our full year guidance.

Before getting into more detail on the quarter and the enormous opportunities in front of us, let me quickly recap the 4 components of our growth strategy. First, we are focused on the continued growth in our browser users and news platform, specifically driving more smartphone and PC users and increasing engagements. We achieved this through investing in product innovation and marketing and through distribution and partnerships. This is important, both in terms of the direct value that we derive from our users, but also the scale of these user bases is a real advantage in terms of our ability to successfully launch new revenue streams.

Second, we are focusing on increasing monetization. Opera Ads, the new platform that allows advertisers to buy our inventory direct, has had a good start. And more broadly, we continue to believe we have a large opportunity to increase revenue per user, in particular, for advertising.

Third, we are leveraging the Opera brand and user base to drive opportunities in adjacent markets. The original example here is, of course, Opera News, which has rapidly become a leading service in the content platform space in our key markets. Beyond that, the success of our microlending business is another great example of how we can build on our presence.

Finally, we have invested in businesses supported by favorable underlying trends where Opera can make a difference. OPay, the ever-expanding ecosystem of mobile money, payments, ridesharing and food delivery in Nigeria, is a great example.

Now let me dive into how we continue to build on our strong position in Africa and several emerging Asian countries. We continue to be confident that there are significant untapped opportunities in front of us, and we are seeing tremendous progress in our strategic initiatives, including Opera News reaching over 160 million MAUs, successfully launching our Opera Ads platform which supported the acceleration in year-over-year advertising revenue growth to 18% versus 9% in Q1, an annualized fintech revenue run rate exceeding $45 million with this being the second quarter operating our microlending business driven by continued growth in Kenya and India which went live during Q2 and is scaling much faster than expected.

OPay, becoming the largest provider of mobile wallets, motorbike rideshare and food delivery services in Nigeria, now processing $7 million worth of daily transactions and carrying out 100,000 motorbike rides per day. This led to OPay raising $50 million of external funding, which included Opera maintaining an ownership stake just below 20%. We are pleased with the success of OPay and how it demonstrates our ability to launch new services in emerging markets that scale very rapidly.

We are also announcing a new initiative today, OList. OList is a classifieds product that we soft-launched in Nigeria this month. We have great ambitions for this. And while still early, we made great progress. Within a month of launch, we already have 50,000 authorized advertisers that are live with 0.5 million listings on our site. While we focus on building up a good service and traffic at this point and not yet on generating revenue, this expands to total addressable market for Opera Ads to small and medium enterprises and leads users to engage more frequently with Opera products.

This progress has positioned us closer to an inflection point, where revenue contribution from our newer initiatives will soon represent the majority of our overall revenue. In fact, the combination of Opera News, fintech, retail and other new revenue streams have already grown to represent just under half of overall revenue compared to only 15% a year ago. We expect this to grow as we further monetize Opera News as microlending continues to expand our classifieds product scale and we use our strong market position to launch new products. At the same time, our browser business also continues to scale.

PC browser MAUs grew 14% year-over-year, and smartphone browser users grew 9%. While not growing at the same pace as our newer offerings, our continued browser growth does highlight the positive impact from our efforts around continued product innovation, marketing and our focus on particular segments or markets where we believe we can increase our browser's reach and engagement.

With that, I will turn it over to Song Lin to cover operational highlights and then I'll come back and talk in more detail about the quarter and give color on our updated guidance.

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Lin Song, Opera Limited - COO [4]

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Sure, Frode. Hi, everyone. We are very pleased with our Q2 results. We continue to grow users, utilize our scale to launch the new products and further expand our market opportunities.

I'll start with Opera News. It continues to scale and, this quarter, we have exceeded 160 million monthly active users, up 61% versus the year ago quarter. As important, users of our stand-alone news app has increased over 3.5x year-over-year to 37 million.

We are now the only news app that is portable across all major markets of Africa, and we are the most preferred news app in key markets, including Nigeria and Kenya with more than 78% brand awareness. We have also become the most downloaded app in the news category in India, highlighting our expansion since the start of the year. Beyond that, since Otalo actually identified Opera News as the most downloaded news app globally in the second quarter, after a couple of quarters of actively launching in new countries and languages, we believe we are now at the stage to further strengthen our presence in key markets, providing even more local and related news contents and city levels.

As we look forward, we think the combination of continued product innovation, recent OEM distribution agreements, marketing efforts provide us with an opportunity to meaningfully increase our local coverage, relevance and further engagement over the next several quarters.

As we also scale Opera News, monetization becomes increasingly important. Last quarter, we spoke about the launch of Opera Ads and its potential to drive multiples of current advertising revenue on Opera News. I'm happy to report that while still early, we have made a lot of progress and more than doubling advertising revenue on our news app from Q1 to Q2.

Our initial efforts in Opera Ads have focused on larger advertisers who can naturally take advantage of our significant user base and scale. The next logical phase is reaching to small and medium enterprises who, for the most part, have no means to advertise online at this point. This is a significant untapped opportunity.

For instance, the largest verticals for those SMEs are focused around used cars, real estate, secondhand goods and jobs. To take advantage of this opportunity, we have launched OList in Nigeria, a classified offering. This product will provide users with a streamlined platform to find access to those verticals and will admittedly increase engagements as our users interact with this offering through our browsers, news app as well as stand-alone app.

We really believe that we are uniquely positioned with our large user base, brand strength, technical resources as well as our local partnership with OPay. Initially, our focus will be to bring those SMEs onto our platform to gain scale, while in the long term, we believe in the huge potential of those verticals in local markets as monetization opportunity yields most trafficking as part of Opera Ads as well as the value of the transactions themselves.

As Frode also highlighted, we are making significant progress with our microlending business. This quarter, we have underwrote about 1.8 million loans, up 138% versus last quarter and grow revenue to $45 million annualized run rate. In addition to the India launch in the second quarter, we have now just launched also in Nigeria.

As Frode also mentioned, OPay is also scaling very well with this ORide and all food services, becoming a local phenomenon in Nigeria where those services are launched. We believe the success we've achieved with OKash to date as well as being the incubator of OPay will open additional growth opportunities within fintech. Further, the ecosystem is jointly beneficial.

OKash in Nigeria is leveraging the OPay wallet to transfer funds to and from its users. On the broader side, similar to last quarter, we have continued to drive growth. PC MAUs, being a mature market, has increased 14% year-over-year to 65 million and smartphone browser MAUs have increased 9% year-over-year over already large user base to 190 million.

Our browser efforts continue to focus on providing a differentiated product. For instance, our high-end browser, Opera for Android, is our fastest-growing mobile browser indicating a transition to our user base on more sophisticated mobile handsets. In addition, in June, we launched the Opera GX browser, the first-ever gaming browser. Early results and the positive product reviews are very encouraging. More importantly, users of this browser are much more engaged with 70% search for user, plus, and also 30% plus PCs for user overall average. We will continue to focus on other ways to innovate and differentiate our browsers.

As we have discussed, we are in a very strong position with a number of exciting opportunities. With the track record that is more proven by the quarter, we are confident that our new initiatives will soon represent the majority of our revenue and that they become local phenomenon over just a short period after launch. We are bolder than ever and are positioned to roll out new offers fast, given our significant reach and scale. And I believe, while Opera's key strengths is indeed our agility. To repeat what I said last quarter, we think this is just the beginning. There is a tremendous opportunity to build up upon our leadership position in Africa, the emerging Asian markets and in Europe and we are moving faster than ever.

So with that, let me hand it back to Frode.

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Frode Fleten Jacobsen, Opera Limited - CFO [5]

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Thank you, Song. Let me now talk about the second quarter and our updated guidance and then we'll open up the call for questions.

Opera delivered record revenue, up 55% versus the year ago quarter, reaching $61.7 million. This was a meaningful acceleration compared to a 30% year-over-year revenue growth rate in Q1.

Search revenue represented 35% of the total or $21.4 million, up 8% year-over-year. That said, as communicated over the past year, while we expect search to continue to grow, given the growth in fintech, advertising and new initiatives, we expect it to become a smaller share of our revenue over time.

Advertising revenue increased to 26% of the total or $16.2 million, up 18% year-over-year. The acceleration in growth rates was driven by direct ad sales, such as Opera Ads and our increased user base.

Fintech revenue represented 19% of the total or $11.6 million. This increased significantly from the first quarter as Kenya continued to scale really well and as our launch in India has significantly exceeded expectations.

Additionally, it's worth highlighting that during this second quarter of operating experience, we've adjusted our revenue recognition of fintech to reflect updated estimates, taking a more conservative view of late fees and penalties. Our second quarter results are inclusive of this change and our Q1 revenue, as represented in our year-to-date figures, saw an adjustment of $1.4 million.

Retail revenue represented 12% of total or $7.6 million, up slightly versus last quarter. And finally, the technology, licensing and other revenue category represented 8% of the total or $4.9 million.

Total operating expenses were $64.5 million in the second quarter and I'll go through the main components. Compensation expenses were $15.6 million, up $4.5 million or 40% versus the prior quarter. This was primarily driven by increases in cash-based compensation due to increases in staff, both planned and opportunistic, relating to our growth initiatives, including Opera News, microlending and other nascent efforts as well as support to our indices.

Marketing and distribution expenses increased to $21.1 million, up as expected both sequentially and year-over-year. This was in line with the quarterly guidance on our last call relating to our overall strategic choice to invest in accelerating growth.

Cost of revenue was $10.1 million compared to $1.4 million in the second quarter of 2018. As in recent quarters, this cost is primarily a result of our retail activities, which represented $7.7 million of the total. Microlending represented $1.8 million, while browser and news represented $0.6 million.

Credit loss expense was $5.8 million, mainly related to microlending, which represented $5.4 million of the total. This cost has increased as microlending has scaled materially over the 2 quarters that we have had this business.

The sum of all other operating expenses, including depreciation and amortization, was $7.7 million, increasing a slight 2.4% in the aggregate year-over-year. As a result, we saw an operating loss of $2.8 million. Net income was $3.4 million, including a noncash gain from the increased OPay valuation.

And adjusted EBITDA was $3.1 million, representing a 5% margin. Margins were impacted by our increased investment, both in product development and marketing and distribution aimed at accelerating our growth and taking advantage of the opportunities we have both in Africa and emerging Asia and in other targeted browser markets. Adjusted net income was $5.9 million, representing a 10% margin.

Finally, on the balance sheet, it's worth highlighting our increase in loans to customers, that has been driven by the success of our microlending business, now at $22 million net of credit loss provisions versus $10 million at the end of the first quarter. This increase impacts our cash position and our operating cash flow. We expect that the strong growth in our microlending business will continue to utilize cash in the short term, though will also benefit from increases in profitability as a result.

With that, let me turn to our Q3 guidance and 2019 outlook. To summarize, we see a lot of potential for our business to continue to scale. To support this acceleration, it remains our plan to continue strategically investing in our growth. This means maintaining our course on products investments and marketing that we began earlier this year and in some cases using our revenue upside to fund additional initiatives that will benefit both long-term revenue growth and profitability.

We are seeing early positive returns on our investments, including our accelerating year-over-year revenue growth for advertising and search, the impressive growth we are seeing in microlending and continued strong growth across both news and browser users. As a result, we are meaningfully raising our 2019 revenue expectations. Our increased range is $270 million to $290 million, representing year-over-year growth of 57% to 68%. This compares to our prior range of $230 million to $240 million. The elevated guidance reflects both the strong momentum from our Q2 results and the trends in the business thus far in Q3, including our strong trajectory in microlending, further monetization gains and continued user growth. This guidance does not include contributions from newer initiatives, such as OList, and we are predominantly factoring in current run rates and seasonality into these estimates.

We expect adjusted EBITDA between $35 million to $45 million for the year, representing a $5 million increase to the bottom end of the range. This is inclusive of the marketing investment we discussed last quarter aimed at accelerating long-term revenue and adjusted EBITDA growth as well as additional spend towards our product teams and microlending efforts as well as new initiatives that we believe will further benefit growth in 2020.

Turning to the third quarter. We expect revenue in the range of $75 million to $85 million, a 75% to 99% growth rate year-over-year. Our strong guidance reflects our continued fintech growth, which we already observed in July and partially August as well as continued positive momentum, in particular, related to our advertising revenue. We expect Q3 adjusted EBITDA to be in the range of $8 million to $12 million.

To summarize, we are very pleased with our results, consistent execution and increased full year revenue guidance. We have strong teams in place and have created an agile and innovative culture with a demonstrated ability to launch and scale new products and revenue streams rapidly. Our results to date give us comfort that our investments are accelerating our growth, and we are excited about our trajectory.

As we look to 2020 and beyond, we are well positioned to maintain strong revenue growth and drive significant net income and adjusted EBITDA margin expansion as our model continues to scale. As always, we look forward to keeping you updated on our progress as we continue to execute on our strategy.

With that, I will turn the call back to the operator to take questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Lee Krowl with B. Riley FBR.

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Lee T. Krowl, B. Riley FBR, Inc., Research Division - Associate Analyst [2]

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Congrats on very solid quarter and outlook. Just wanted to start off on Opera News. You guys kind of talked about some localization efforts that you guys are putting in place. I wanted to kind of clarify if that implies that you're trying to expand to additional markets? Or if it's kind of a transition to focus on just expanding the markets you have to some of the city initiatives you kind of mentioned in your prepared remarks?

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Lin Song, Opera Limited - COO [3]

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Yes. Also, this is Song Lin. I think I will try to answer that question. So yes, I think we have actually approached or expanded to most of the markets in Africa, for instance, with Opera News in the first half of the year. And as also mentioned, we have also been expanding really extensively into South Asia, Southeast Asia and that actually drive us to be the most downloaded news app in Q2. So we're quite pleased about that. And then the specific comments that I had with regarding to local news is then more to how to build up -- like build up on that expansion, that we want to go deeper to be able to be more even more relevant and even more local. Give you an example is that, Nigeria, for instance, is our biggest market in Africa. We have already big team in Lagos, but then we are not really satisfied about it. I think the next step will be to approach all those other cities, some of them are even very big like Kano and a few others. And we want to make sure that we are relevant in those major cities, have buildup almost the ecosystem of our -- of the editorial people, some are affiliates, how to make sure that we provide the best content most relevant to the local guys. So I would say, to answer your question, we have been very aggressively expanding to all the different kind of markets. But then in the second half of the year, I would say we want to also double down the key countries and then go to the city level and make sure that we are very well engaged and be locally even more relevant in those markets, so I think that's our plan.

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Lee T. Krowl, B. Riley FBR, Inc., Research Division - Associate Analyst [4]

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Got it. That makes sense. And then, I guess, implied in your press release, you said user base growth well beyond current levels. Does that imply expanding beyond kind of the Africa, Southeast Asia regions? Or is that just specifically in those regions and just continuing to expand the user base in current markets?

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Lin Song, Opera Limited - COO [5]

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Yes. I think when it comes to Opera News, I would say that in Opera News for now, we'll maintain our key focus in Africa and also South Asia, Southeast Asia. I don't think -- I think in second half, our plan is to go deeper in those markets and then to like see a good potential for us to grow in those markets in comparison to try to go to even new more markets.

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Lee T. Krowl, B. Riley FBR, Inc., Research Division - Associate Analyst [6]

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Got it. And then you guys obviously called out last quarter and the quarter before the incremental marketing investments in 2019. You guys kind of also signaled that there was perhaps additional investments not specifically related to marketing. Maybe could you guys kind of quantify the additional investments you guys intend to make versus the prior kind of call-out on Q2's call?

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Frode Fleten Jacobsen, Opera Limited - CFO [7]

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Sure. Lee, Frode here. So I would say we -- when it comes to this year of sort of starting this program of acceleration, there's sort of the single most important aspect of it in terms of sort of financial implications has been the investment in additional marketing and distribution of our products, and we expect that to sort of remain the same. However, I think what we have seen is with sort of the trajectory on some of these initiatives and newer products. Opera News, we have just discussed. Microlending is another. That sort of led us to allocate and build up teams perhaps faster than we have thought. Opera Ads is an example of that, launched about 3 months ago. OList is another and then we have some other initiatives that we haven't yet announced. So I think this, you see most clearly in -- when you look at our compensation costs, of course, you have an effect of that. And -- but what we are seeing is that within the guidance that we gave for the year, we're able to sort of carry that investment and sort of plant more and more seeds for future growth.

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Lee T. Krowl, B. Riley FBR, Inc., Research Division - Associate Analyst [8]

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Got it. That makes sense. Speaking on Opera Ads. I know it was kind of initially limited to 1 or 2 launch markets. Talk about the penetration of additional geography for Opera Ads. And then, I guess, you guys kind of talked about the mix of advertisers, maybe how that evolves over time, particularly as it relates to OList?

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Lin Song, Opera Limited - COO [9]

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Yes. Sure. So I think I can briefly comment on that. This is Song Lin. So yes, I would say like this, so for Opera Ads itself, actually in the later half of Q2 and even now, we have indeed actually penetrated into other markets as well. For instance, we have already very good clients, which are using us in India, Indonesia, which is also our key market on Opera News. So I think that is good. However, I would also say that we are also trying to double down on some of the key markets to go up -- to go even deeper. And for those, like the SME initiatives, I would say at this point is more focused on specific markets here in Nigeria, for instance. So I think the rationale is just that we find tremendous good opportunities of those SMEs out there, which they have no means to properly outline advertisement due to different challenges that they are facing and itself is also a huge market potentials that we see that there is no way why we don't grasp. Here, we have -- just to give you a sense that in Nigeria alone, the SME is probably maximize 20 million of them by some government estates and then they almost occupy half of the GDP of total Nigeria, right? So we feel that it's really just the tremendous untapped opportunity. If you look at all of those different sectors like cars, real estate, it's really very exciting areas which we feel that has a great potential and we want to be part of it. So for those, I think we need to go to deeper in the local markets and that will be very country specific. While Opera Ads itself on top is more like -- is now becoming global initiative. I hope that's making sense.

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Lee T. Krowl, B. Riley FBR, Inc., Research Division - Associate Analyst [10]

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Yes, yes, that makes a lot of sense. That's some good color. And then just my last line of questioning on OKash. Just kind of your thoughts or updated learnings on kind of the credit loss expense. Obviously, as you grow the new markets, there is a learning curve, but I guess, maybe talk about how you guys have been able to optimize the delinquencies and late payments maybe in Kenya? And how you can kind of leverage that in new markets?

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Frode Fleten Jacobsen, Opera Limited - CFO [11]

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Sure. So I will say if you look at our losses as a percent of revenue as one metric, that did increase from Q1 to Q2. I think it is -- that business is scaling so fast, Q1 was sort of nearly 4x what the business was in Q4 before Opera took it over. And then, again, now in Q2, we have more than doubled it one more time. So there is definitely an aspect of learning here as we go. And as we see -- as we did now with India this quarter, opportunities to sort of launch and get a good start in new and, of course, massive market.

So I think we do expect -- as we learn more, we do expect some fluctuation in this number as we sort of mature in this, hoping that sort of Q2 is on the high end of what we'll see in the following quarters. But for now, it's so early and it's growing so fast that it's something that we are also sort of -- we are learning sort of every week.

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Lee T. Krowl, B. Riley FBR, Inc., Research Division - Associate Analyst [12]

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Got it. And then obviously markets like India are fairly significant. What are the expectation for additional markets in the second half for OKash?

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Frode Fleten Jacobsen, Opera Limited - CFO [13]

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So I would say for 2019, our expectation is that our 2 current markets will be the ones that will be most important. We are also live in Nigeria, but you could say that the back and the ability to transfer money to and from customers is less readily available there compared to, for example, Kenya where we went first with Safaricom M-Pesa and other local partners in India. The interesting thing, of course, is that OPay is scaling so tremendously in Nigeria. So with that, we have a partner that is very close.

But when we look at 2019, I think Kenya continues to do very well and sort of just the scale of the Indian market is, of course, enormous, like compared to Kenya, you have more than 20x the population. And so we are getting started there, and we are very excited about that.

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Operator [14]

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Our next question comes from Liping Zhao with CICC.

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Liping Zhao, China International Capital Corporation Limited, Research Division - Analyst [15]

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So my first question is related to OList. Can management share the operating metrics of OList so far? So for example, the MAUs of OList and number of paying business users, et cetera?

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Lin Song, Opera Limited - COO [16]

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Yes. So this is Song Lin. I think I'll just briefly comment in that. We actually just launched it in August, so we don't even have it for a month available. It's very -- it's at its very early stage. I think we commented a bit on -- actually reported that just a few weeks -- 2 or 3 weeks after we launched it. We have already have a big sum of advertisers, and we will have almost 0.5 million at these teams with 50,000 advertisers on board. I think to be honest, at this point, because it's only 2 or 3 weeks after our launching, it's more an indication of our strength in the local market and how fast we can grow there instead of reflecting the actual potentials. Like, high level, I guess, I was just commenting that we see this as a tremendous big opportunity. There's a very big untapped market, and we are very confident that within the next few months, we'll fast grow it and then hopefully we can bring you more information in our next calls.

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Liping Zhao, China International Capital Corporation Limited, Research Division - Analyst [17]

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Okay. So this is only launched in Nigeria for now, right? Are we planning to go out to other countries in Africa or even other continent?

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Lin Song, Opera Limited - COO [18]

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I think Africa will obviously be our key focus for this initiative. I would say Nigeria is probably by far the most important at this point. But yes, we do also see the relevance of this in some of other key African markets. So we'll probably most likely be there, but for now, I think we'll try to grow it in Nigeria, the biggest market at this point.

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Liping Zhao, China International Capital Corporation Limited, Research Division - Analyst [19]

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Okay. My second question is about the sales and marketing expenses. As Frode mentioned before that the sales and marketing expenses has increased due to the user acquisition. So what's the trend in the second half? Are we expecting for the similar level as Q2?

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Frode Fleten Jacobsen, Opera Limited - CFO [20]

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So we don't want to give very specific guidance down to the cost component, simply to maintain sort of a little bit of the flexibility to optimize as we go. Our marketing and distribution activity is obviously monitored very closely on a frequent basis by both the relevant teams, ourselves here on this call and our CEO, Mr. Yahui Zhou. So we have given a range previously, sort of implied up to the $70 million, $80 million range that we may go to this year and so that is still the -- what we are operating under as a potential range.

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Liping Zhao, China International Capital Corporation Limited, Research Division - Analyst [21]

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Okay. My last question is about the personnel expenses. So we also see an increase on that. My question is how many full-time employees are there with the company now?

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Frode Fleten Jacobsen, Opera Limited - CFO [22]

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It's a bit of a long story. So we have added substantial number of employees in the company. So in the, let's say, 20% to 30% range probably versus where we were at the end of 2018. At the same time, we are also scaling very rapidly with, let's say, local teams, in-market teams, call centers, collection agents and so on and so on. These are not our employees. They are more hired through agencies and that has become -- they have already far outgrown, let's say, the employees of the company.

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Derrick L. Nueman, Opera Limited - VP of IR [23]

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And Brenda, this is Derrick. To add to Frode's comment, these people are focused on our growth initiatives. So they're focused on things like Opera News, on OKash, OList and some of the things that we'll talk about over the next 6 to 12 months. So they're really focused, by and large, on things that will contribute to revenue that aren't being seen today.

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Operator [24]

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Our next question comes from Hillman Chan with Citi.

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Unidentified Analyst, [25]

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This is [Joanne Ding] from Citi and I'm asking questions on behalf of Hillman Chan. So my first question is about Crypto Wallet. So how's the usage and the penetration of Crypto Wallet on the browser use -- for the browser users, please? And how shall we think about Crypto to Opera in the very long term and will we be doing more features for Crypto?

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Lin Song, Opera Limited - COO [26]

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Okay, sure. So -- yes, this is Song Lin. I think I'll try to comment on that. So yes, we actually don't have numbers in hand that we disclose at this point about the usage of Crypto Wallet. As I said that it's -- what we position this at this point is more like a very product-differentiated offering with a focus on high-end Opera for Android browsers and also our PC browser with the most targeted user base in Europe. So we find that it has very good receivables. We have also both in our existing user base because we find those are very good match between our user base and some of those users, which are a bit more on the -- they try to -- they want to use the differentiated product offerings. And then I think it's also -- we are also very welcome within the blockchain communities, and so we're able to launch with quite a few partners. But high level, I would just say that since it is a very pure product offerings, we are not really thinking about other things at this point. We will just grow it and work with the partners to do more integrations to build up gradually our ecosystem, so just to make sure that users can use it in a very good and smooth way, and we think this will continue for the next few months to come. So I think high level, just to sum it back, is that what we see on that is more like product-differentiating offerings and also ecosystem play where we're trying to work with the partners to allow easy access of those facilities. So that's what we see at this point.

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Operator [27]

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And our next question comes from Tom Champion with Cowen.

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Thomas Steven Champion, Cowen Securities LLC, Research Division - Former VP [28]

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Frode, I'm wondering if you could expand a little bit on the success of microlending in Kenya? And what are the factors that are driving the really strong growth there? And maybe how is India similar as a market? I think you mentioned maybe it was not expanding as rapidly in Nigeria, but it is in Kenya and India. What are the factors driving that growth?

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Frode Fleten Jacobsen, Opera Limited - CFO [29]

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Sure. Thanks, Tom. So to begin with Kenya, I think it's the sum of the assets that Opera brings to the table that has allowed that business to propel as fast as it has done. So of course, there is brand resemblance with the brand, and we are able to sort of promote this product -- promote that app through both our browser and Opera News offering. We are also sort of an established player in the market. We've been around for a long time. So you could say there is an aspect of a -- sort of a trusted brand behind it, which I think plays to our favor. And I would think that the sum of this is what's enabled us to scale quickly.

Actually, the second thing to mention is that we having -- Africa having been so important to us for so long, I think we are doing a pretty impressive job at sort of the local presence and scaling that needs to be done and taking that up quickly. Within the span of a few months, we were live with sort of hundreds of the necessary, let's say, call center agents, et cetera, on the ground in the market, combined with a very strong tech offering driven centrally at Opera. So we're pleased with that.

I think the second part of the question may have been the part on Nigeria. I think my meaning was a bit more -- Kenya is already scaled very big and is growing very nicely. There is very good and sort of broad adoption infrastructure in the market. We see the same in India, as we have launched sort of the trends. We will look at it down to sort of daily and weekly and monthly trends, very rapid acceleration. We are very excited about Nigeria being sort of the most populated, our biggest country in Africa, et cetera. So my comment was more -- if I was going to pick sort of the absolute dollar values that I expected to be the biggest this year, it would be those 2. Nigeria is important to us. That is why that became the third country that we launched. We have sort of a evolving target list where we look at other opportunities, making sure we have licenses in place and so on. But at the same time, we learn as we go and we adapt according to that. But so far very, very pleased with the results of that business.

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Thomas Steven Champion, Cowen Securities LLC, Research Division - Former VP [30]

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Okay. That's helpful. If I could maybe just sneak one more in. The roughly $12 million in fintech revenue, is that all attributable to microlending? Or what else goes into the fintech effort? And then how are you going to evolve the sources of funding for the microlending business over time? It sounds like you're mostly using cash on the balance sheet at this point, but can you talk about how that maybe will evolve longer term?

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Frode Fleten Jacobsen, Opera Limited - CFO [31]

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Sure. Sure. So yes, for now, within the sort of the business area of fintech, microlending is the sole revenue contributor, so it's all tied to that. When it comes to funding the loan book, essentially the -- what we are looking at is the return on capital that we get from deploying our own cash. We find the returns to be attractive and we have sort of -- I think as we have scaled, we have sort of tested this, these loans have relatively short durations, typically a couple of weeks on average, never more than 30 days and so the capital is recycled relatively quickly. But yes, as also commented in my prepared remarks is, as we are in this growth phase, that does sort of lock up some capital. We are in the fortunate position that we have the capital to do that and having grown to where we are now in a comfortable way, but I think that is something that we will have to see as the business hopefully continues to grow.

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Derrick L. Nueman, Opera Limited - VP of IR [32]

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And Tom, this is Derrick. To your first question, today it's all microlending, but I think there are going to be opportunities based on the success we've seen with OKash, OPay and then just how many users we have of our news app and browser. So I think there could be some things we're thinking about that drive additional revenues in fintech and from a marketing and distribution perspective are pretty cheap.

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Operator [33]

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And I'm currently showing no further questions at this time. I will turn the call back over to Frode for closing remarks.

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Frode Fleten Jacobsen, Opera Limited - CFO [34]

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Okay. From our end, thank you very much for participating in today's call with us. We hope you have a good rest of today.

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Operator [35]

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Ladies and gentlemen, this concludes today's conference. Thanks for joining. And everyone, have a wonderful day.