Opera Ltd (OPRA) September 2026 Conference Transcript

Well, I think in the interest of time, maybe we should kick it off. I know everyone's still making their way across rooms, but it's great to welcome the team from Opera. Frodo, thanks so much for being part of the conference.

Thanks for having us.

So let's just kickstart by taking a step back. For those who don't know the company as well, maybe you can walk through a little bit of the Opera story and bring us up to date on what some of the key initiatives and priorities are for the company.

So Opera is the biggest independent browser that people can choose. The way we get users to use our browser as opposed to whatever standard browser would come with a phone or a computer is to make a product that's tailored to the most demanding users. So it's more feature-rich, it has more functionality. AI opportunities is a big part of that, but that's something we've done for 30 years. And by attracting those users stay they are also the users with the highest output potential And so we generate revenue by driving traffic to partners It's either it's query that the user is looking for something and we can send it to Search or another partner that has what they are looking for or it's advertising revenue Where we show ads natively in the browser or we buy third-party inventory and use her data advantage to show ads there so over the past 10 years when song and I have been CEO and CFO we're proud that we we are our Kager is 21% so we had a long run from just over 100 million revenue to a bit over 700 million this year and then our priorities just continued growth What we see is that the bigger we get, the more partnership opportunities open up because the traffic we can drive is more and more meaningful. So, of course, the next big milestone is to hit the billion dollars of revenue, which isn't necessarily so far out. We're approaching it, and because of this fact that as we scale, we grow faster, then the path from there to more of those billions is almost easier than going from $100 million to $700 million. Okay.

Well, maybe let's pause there. You've been at the forefront of a lot of AI getting put in front of consumers, especially around the browser experience. What have you learned so far about the way in which consumers want to interact with AI specifically around the browser?

I think it's maybe the most exciting time for a company like Opera because of this maybe revolution is a too big word but it's such a productivity lifter right it's such useful tools and the it's happening in the context that the I mean the browser was already getting more and more time spent no people spend more time because you have tools that become essentially web-based whether it's you know your presentations and spreadsheets or calendar or email or instant messaging and then i think ai it started out a bit like search like a web page or a dedicated app on your phone and then the and that's great you know and we all probably use it for for stuff but the big opportunity and and what is still happening now is the integration of AI at the browser level because then you lift it from existing on a website to existing at the same level as the user so where you're logged into your stuff you know you can have the AI both be context aware and you also then have the agentic opportunity which is still I would say very early days and more enthusiast driven than mainstream but probably a year from now when we talk again that that has gotten increasingly able to do complex things on behalf of the user even though we can already save you a bunch of time in terms of like populating your calendar and summarizing messaging and and stuff like that so I think our strategy in that context is to be the best orchestration layer for whatever AI tool the user wants to use so we were very early in 2023 we we built around you know an ai assistant into the product and we we allowed offline like local llm and so on not as a competitor to the platforms because we don't compete in that space we but we see them more as just potential partners and services that we should make our browser the best place for the user to experience that so we do that through like plugins or backend integration so that we allow the browser to be controlled by whatever AI tool that the user prefers.

Okay. So there's a couple of things I want to pull on there. But with the launch of Neon, which was almost a year ago, what has been the feedback you've gotten from customers on Neo broadly as a product?

It's kind of like our R&D product. So what What Opera Neon is, it's the full Opera browser, but with agentic capabilities built in. So you have to pay for a subscription, because the compute is to cover the computing cost. But then you have a native agentic experience where you can have the browser perform tasks for you. And through that, the main objective with that is not Neon in itself. it's how you know those users use the feedback button actively and playback and the team we are learning from that and This is our this is where we test on the most enthusiastic and sophisticated users ahead of bringing Functions into our free products like upper one and upper GX We charge on neon because it's our own compute costs to cover that, whereas in the free products we will, for example, let the user plug in, as I mentioned before, like their existing subscription. I think offline models, it's something we have supported for a long time, but it surprisingly gets little attention, even though most people have computers that can run it. So we think that's a huge opportunity for the browser to essentially have local, both for privacy, but also for avoiding the need to pay for your compute costs. You just pay electricity, essentially. So that's how we think about Neon, and then we use it, and you've seen over the last months, the various updates and integrations that we support as we try to bring it into the free version and a cost-efficient sort of good monetization way.

Can you just talk, you talked a little bit about the theme of interoperability, openness, the ability for the user to bring product and connectivity into your platform. Talk a little bit about what that means in terms of enabling utility and usage around your products over time.

We think it's definitely the future of how people will use the web and how they will use all the services that they're connected to. Not all AI, not all agentic, but that it will become increasingly common to rely on AI for more than just fact-searching or data processing as we do now. So we want to have that integrated. So our logic to this is we want to be thought of as, oh, that's the best browser for my AI tools. If somebody offers a plug-in, we want to support it. If they want to do an MCP connection, we want to support it so that people can access as much as possible natively. So we build the upper browser so that they can be used by humans, and that's what they mainly are, but they can also be used by AI agents and controlled in collaboration with the user.

You've obviously seen a lot of growth in the mobile part of Western markets over the last 9, 12 plus months. Talk to a little bit about what the catalyst was to see the types of growth you've seen, especially in Western markets.

It ties into our broader strategy of we focus on the highest potential user bases. So that can be geographic, like Western markets. It can be gamers. We make a version of our browser that's tailored for them. And within mobile, iOS has kind of been a missing piece. So what's happened over the last couple of years is that iPhones have opened up, that you can have another browser default. It doesn't have to be Safari. Prior to that, you couldn't compete. Any link, anybody would click in an email or anything would always open Safari. So even if they wanted to use Opera, it would be a constant uphill battle even for the user. So I think that The fact that the user is now free to set another browser as default means we can compete on that platform It's still I mean if we went from essentially like a hundred percent Android smartphone base To you know iOS has become maybe 10% of the total now But that's high ARPU mobile users with a very nice growth curve. And then broadly speaking, we have been growing our Western market. I mean, Western market is not the goal in itself, but it's a good indicator of, okay, we managed to grow high ARPU users. We grow in the right regions. We grow the right profile, et cetera.

Okay, understood. When you think about your revenue base, maybe start with query revenues and how you think about them evolving from more traditional Google search and how you think about where search as a product from an evolutionary standpoint is going and what that means for monetization longer term.

Yeah, I mean, the revenue is driven by the user looking for something. And so historically, whenever they started to type in, I mean, Opera came up with the whole idea of what if a person can just type in the URL bar and then we send them to you, Google. What do you think about that, right? But that is definitely broadening, both because, I mean, Google is a key partner for us, and they have expanded their monetization of their AI modes, Gemini, etc., which benefits us through our partnership, but also because our own AI backend can sort of, oh, the user is looking for this. And then if we work with an e-commerce player, for example, in that space, so we can show the product directly and send it intent directly to the retailer.

Okay, understood. Other verticals have become a key component to growth. Talk a little bit about the opportunities that sit in areas like commerce, travel, things that can rise as a percentage of the mix of the business in the years ahead.

Commerce has been a great success, even though we're probably still under-indexing. but over the last few years we always knew that we were kind of under indexing on it because e-commerce it's done in the browser for the most part right and it was less than 20 percent of our advertising revenue so the unlock was it's this whole thing about scale enables growth so we got big enough in in europe in the u.s that major e-commerce players thought okay now we can start bring meaningful traffic right so we saw one example where let's say our market share on the browser side is about 5% but an e-commerce partner got 10% of their traffic from us so they say okay this is meaningful so then we can integrate the API's we can pull the products the price the description the picture etc and we can show that so over the past two and a half years e-commerce has grown from like 40 million dollars a year to in q2 it was close it was over well over 200 million dollars run rate 6x over two and a half years and and I mean still 240 million dollars if we have five percent market share there there's billions of headroom we think in terms of opportunity we do this in the browser but we also we also use the relationships and our targeting to reach people also outside the browser because the browser can't really be an advertising has to be more native and elegant and we do those things but then you can reach users on websites or in other apps when you think that they are looking for something and drive high conversion traffic to and oh and then maybe in terms of like other verticals like travel and others are there other areas where you're pointing investors to that could be potentially big growth opportunities similar to what commerce turned out to be it's exactly the same I think travel is maybe two three percent for advertising mix but it's the browser that people do research and book their tickets and book their hotels etc so so we think that's another big opportunity and it's just about allocating the the people and the time to sort of build build it up okay um talk to us a little bit about mini pay and some of the success you've had there and how it fits into the broader strategy of the company especially when it ties back to monetization potential over the longer term yeah so mini pay is a it's a blockchain uh stable coin wallet so we made it for emerging markets It's a technology platform, but it's made so that it's super easy for everyone to To create an account there and essentially move money into stable currencies like the USD Which is in itself quite compelling if you live in an emerging market with a volatile currency, etc That you you have that right And it's grown quickly we partner up with relevant companies that focus on these regions and bringing them into that ecosystem, like Tether is a key partner for us. And the way we monetize it now is via those partners. Essentially integration and promotion of players in the ecosystem. It's still, I mean, it's about $20 million a year that we generate on it but we've always had it profitable or in terms of commercial opportunity that you said i think over time it can move into essentially generating revenue on transactions but we're not doing that now because for now it's just about building scale and and expanding the pool of services like more adoption of what we have remittance is a big opportunity people have family members in other countries. There are some angles also for even people outside emerging markets. Like if you travel, you can use Minipay to pay the bus fare in a foreign country. You know, like all the mobile-based payments, we can integrate them so that you can pay like a local.

Okay. I want to come back to gaming. You mentioned the gaming browser, GX, earlier. Talk to us a little bit about the opportunities and the challenges of scaling in a vertical and aligning a product with a particular end-use case of a vertical for consumers and where some of the potential still lies for growth in gaming broadly.

Yeah, it was a new thing for us. It's been six years or so now since we really launched it, but the idea was, okay, there is this. So the Opera One, the main flagship browser, is sort of going for anyone who has the interest to change their browser into something more rich than a standard browser. Then we thought, okay, it's the same core technology, so it's a relatively easy job on top to create a version of the browser that's tailored for a specific segments such as for gamers and we chose that because you know it's a it's a very engaged audience you you would think and it proved out to be correct that they they spend more money online than the average non-gamer would do spend more time even if you look at it globally maybe particularly if you if you if you look in non-western markets like the gamer is relatively more affluent than the non-gamer, for example. So we made that product with 37 million MAUs in the most recent quarter, so it's continued to grow, but in a pool of like many hundred million gamers. So then we have a product that's tailored to them and feature-rich, and so our focus there is just to continue to raise awareness that this product exists, because it's our highest RPA product and great retention, great engagement, all of that.

Do you see any other verticals that could have browser-specific products that might be tailored to an industry vertical or an end-user experience that might mirror the success you've had with gaming?

I think gaming probably will stand out for the foreseeable future as like the major segment. Neon is another example, right? A product for an AI enthusiast. We have a browser for sort of mindfulness and like calm pure distractions so of that but these are small products yeah um we we we had a crypto browser uh five six years ago again just like native integrating data feeds and all of that but um they are relatively lightweight engineering tasks to create but I wouldn't expect anything our focus right now is on the commonality in terms of the AI tools that is what we see as the big opportunity

and then so we'd rather focus our effort on that as opposed to spreading out on verticals understood you guys pretty consistently continue to improve margins still invest in growth initiatives and grow the top line. Talk to us a little bit about the overall philosophy of balancing growth investments with margin trajectory in the business. Then maybe I've got a couple of specific cost-related questions, but just the broader philosophy you guys try to execute against.

Priority one is building scale as fast as we can because that is good for our opportunity. But we want to do that with healthy profitability. So we've had relatively stable EBITDA margin over the years, like 23%, 24%, and then we converted last year 69% of that to free cash flow. We can pay it out as dividend and buybacks because we're a very asset-light company. But so we've essentially kind of thought, okay, let's operate about this profitability and then grow as fast as we can while doing that. So then every year and every quarter we see, okay, with this, how much money can we spend on marketing our products faster and where's the best ROI on that? Or investing growing new verticals on the advertising side, right? Because once you start off with something new and want to scale it, typically I lower margins in the beginning and then you're training essentially, you're targeting, and then they expand over time. so within the overall picture that's how we optimize and I would say sometimes I get asked about gross margin too but it becomes quite meaningless because we have one part of the business that's the monetization within the browser that has marketing costs and a higher team costs and opex but but no cost of revenue almost and then you have another part of the business which is very opex light but has cost of revenue which is when we buy inventory from other

places.

So the profitability of these two meet at the EBITDA level is where they are comparable, and that's what we guide, or how we guide our decisions.

One of the topics so far across day one of the conferences has been the rising cost of compute and inference and areas where companies want to be more AI-front focused, but there's a shift from maximizing expense to sort of optimizing expense how do you think about the input cost tied to wanting to build and scale ai initiatives inside the company against the supply demand imbalance for compute today i mean there since we are not an llm platform we sort of have the luxury to avoid that so you know when we bring the ai functionality into the browser if you have an existing account

with you know right the cloud or a chat GPT you can log into that we're happy to let that control the browser so long as we have a lot of people using the upper browser as their preferred and interface then we are happy and then of course the compute happens within the users existing we want to make it super easy to use local LLMs as I mentioned before also zero compute cost so of course there There is some, but I think in the last quarter, our hosting costs, which covers all of this and more, increased by one and a half million year over year, and then the revenue was up 35 million. So it's at a very low level, and it's probably equally affected by just general cost of equipment because of the AI demand. Yeah.

Okay. When you go to other cost items like customer acquisition and marketing, how do we think about the payback period you're getting on marketing dollars? And probably one of the more consistent questions I get from investors, which is you're just a little bit spoiled for your own successes, you know, why not invest more money in marketing and growth because they consistently seem to, you know, produce better growth numbers than people think. Why not invest more as opposed to the level you're doing today? Just walk us through a little bit of the thought process on the return you're getting from marketing and why that's the right amount of spend or the right level.

So in terms of how we manage it, it's very data-driven. We measure the ROI on every campaign. And within a few days, we have a very good prediction of what will be the ROI of any campaign, any channel, any product combination in any country. Just because you see the profile of the inflow and you can quickly sort of project the activity level and the revenue generation when you have, like, billions of clicks, or big numbers. What we – we're in the – there are several reasons why we focus on the most demanding and high ARPA users, but that is also where we see the highest ROI on marketing spend so you know with the same dollar amount you you get far fewer you pay in marketing you you get fewer eyeballs and new users in countries like the US or Germany or UK etc then if we went to emerging markets but still even though the number of users is less the revenue generation is higher and the ROI is better in terms of But in terms of the should we spend more or less, that's just a choice. So I think we have been relatively stable over the years, and this is our compromise. We also want to grow as fast as possible, but we want to show healthy profitability along the way. And so this is about the profit level that we will allow ourselves and then grow as fast as possible within that.

Okay. With that as a backdrop of how you invest in the business, talk to us a little bit about capital allocation. You guys have paid dividends. You've bought back stock. You've obviously invested in growth initiatives inside the business, especially around user growth. Talk a little bit about the balance of capital allocation, how you think through as a management team allocating capital and where relative returns are at any given moment in time.

Sure. I mean, when we talked about the cost, the one thing I didn't talk about was the investment in product. But that one we don't tailor based on. So whatever ideas we have, then we invest what we need in the product. And then the residual is more growth, marketing, vertical kind of decision. We're quite proud, actually, to be a company that's both growing fast and returning cash to shareholders. We highlight in our investor materials, but it's worth mentioning that since 2020, we have returned over $500 million, which for a company of 1.6-ish billion market cap is a substantial amount. So half of it on buybacks, and for about $250 million, we bought back 30% of our company over the years. So it's been attractive ROI, I think. And the other half is dividends. Right now, we have both the recurring dividend that we pay out twice per year, and then we have a $300 million buyback authorization. I think in 2026, if you assume similar cash conversion as we had last year, are essentially what we paid out to date and the run rate of where we are on the buyback and all of that, even the run rate means that we are paying back the entire free cash flow generation to our shareholders. And then, of course, on top of that, we have a strong balance sheet. So we can always step up. But we do that because it's an asset-light, capital-light, working capital-light business.

How do you think about M&A within that broader construct, whether it's decisions to build or buy to either scale or tactical capabilities? How do you think about that as a potential lever for the business longer term?

I mean, we have done a few transactions, but they've typically been to acquire a specific team or a specific platform, etc. We never really acquired revenue. The one time we got a small company that had $2 million, $3 million of revenue, we made the product free. But it can be a nice addition. We're always open to it. But to date, the entire growth that we have generated has been organic.

Got it. So in the last few minutes we have left, if we talk about the company over the next 12 to 24 months, try to bring it all together for us. What are the key strategic priorities that you and some are the most focused on executing against?

Because that's where you see the scope for either the most growth the most return profile? commercially it's the billion dollar milestone you know used to be the 200 million 500 million and now it is a billion and it's not just for the milestone itself it's because we see how getting to scale supports the partnership opportunities of the company and you know that will have the company is 30 years old so it took like 30 plus years to get to a billion but then hopefully you can count on on one hand like the number of years it takes to go from one to two you know well based on our trajectory and what that comes with so I think that's financially speaking and commercial really related opportunity that not in the next year but you know we speak again in one year it will be even more tangible right because it will be closer and I think on the product side is just the awareness around up well we want opera to be known as the best orchestration layer for AI services that is we're already I think the the best browser for people who actually care about the browser we've seen how you know you you have two two narrow browsers that that work great maybe with an ai integration but it's mediocre and everything else that doesn't work so has to be a great browser but then we use our advantage that we are independent that we are not the direct competitor to any platform as an advantage for us to to make the user experiences as good as possible and and be known be known for that because we see that the users we bring in that care about this and use these tools are the most engaged and the highest revenue generating users that we can bring in And we also think it just will keep elevating sort of the strategic assets that is the Opera browser being known for that.

And last one before I lose you, you know, when you meet with investors, what do you think the theme around the company's operations that's the least understood by investors?

Whether it's a growth opportunity or a return opportunity in your collection of businesses, what do you think is the least understood? at least in terms of the broader markets we have realized that we better spend a decent amount of time on our earnings calls to just explain our positioning yeah if if somebody thinks like who will win will it be chat gpt or gemini or opera maybe not that european company no no no it's not that it's it's we want we want to work with all of them like we're not competing with these platforms so I think making sure that people understand exactly what we are what we are working on and why it is working and why we are internally so excited it's like the number one job because everybody is thinking you know who will win the ARS and and and it doesn't matter so much to us right so Because I'm confident that there will be many tools, and so long as we can make them work great in our browser, then that's good for the user, and that becomes good for us. That's probably number one.

Well, why don't we leave it there? Please join me in thanking Opera for being part of the conference.