Opera Limited (OPRA) Q4 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

Opera Limited demonstrated robust financial performance with record high revenue growth and strong EBITDA, exceeding guidance. The company's strategic focus on AI-powered products and significant growth in e-commerce and ad revenue are promising. The raised revenue and EBITDA guidance for 2025 further boost confidence. Despite some management vagueness in the Q&A, the overall outlook is positive, particularly with the MiniPay and Opera GX growth. Given the company's small market cap, these factors suggest a strong positive stock price movement, likely over 8% in the next two weeks.

Key Financial Performance

Advertising Revenue $19 million sequential increase from Q3, resulting in 25% year-over-year growth. Growth attributed to scaling of e-commerce and performance-based campaigns.

User Intent Query Revenue 16% year-over-year growth, driven by healthy search revenue growth and over 200% growth in non-search query revenue. Contributed over $5 million in Q4.

Q4 Revenue Growth 22% year-over-year growth, 8% higher than midpoint of guidance. Annual revenue growth for 2025 was 28%, up from 21% in 2024.

EBITDA $42 million in Q4, 23.6% margin, 7% higher than midpoint of guidance. Annual adjusted EBITDA for 2025 was $143 million, 23.2% margin.

ARPU (Average Revenue Per User) 26% growth to $2.49 in Q4, driven by user gains in key target markets.

Opera Ads More than doubled growth pace in 2025 compared to 2024. Processed 12 million ad queries per second, doubled from the previous year. Average spend per top 50 advertisers grew by 56%.

MiniPay Wallet 13 million activated wallets, up from 10 million in Q3. Transactions increased from 290 million to 390 million.

Operating Cash Flow $40 million in Q4, 96% of adjusted EBITDA. Full-year operating cash flow was $118 million, 83% of adjusted EBITDA.

Free Cash Flow $35 million in Q4, $98 million for the year, 84% and 69% of adjusted EBITDA respectively.

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Operating Highlights

Opera Air and Opera Neon: Launched two new browsers, Opera Air and subscription-based Opera Neon, with Neon becoming widely available in December. Neon targets AI-demanding power users and serves as a testing ground for new AI features.

Opera One R3: Revamped flagship browser with enhanced tab management, split screen views, native integration of email and calendar, and advanced AI assistant Opera AI. Opera AI offers 20% faster engine and contextual responses for better browsing experience.

Opera GX: Browser for gamers reached 34 million MAUs in Q4, a 5% sequential increase. It remains the highest ARPU product and saw record user activations during the League of Legends World Championships.

MiniPay: Stablecoin wallet with over 13 million activated wallets, up from 10 million in Q3. Expanded support for USDT and Tether Gold, and introduced MiniPay card for better functionality and FX rates.

Advertising Revenue: Achieved a $19 million sequential increase in Q4, resulting in 25% YoY growth. Worked with over 300 advertisers, including 4 of the 5 largest e-commerce platforms.

Query Revenue: Monetization of user intent query revenue grew 16% YoY, with non-search query revenue growing over 200% YoY. Contributed over $5 million in Q4.

Opera Ads: Doubled growth pace in 2025 compared to 2024. Processed 12 million ad queries per second and expanded reach to over 0.5 billion MAUs.

MiniPay Expansion: Focused on making MiniPay a global platform, building on its success in Africa.

Revenue Growth: Q4 revenue grew 22% YoY, with annual revenue growth of 28% in 2025, up from 21% in 2024.

EBITDA: Came in 7% higher than midpoint guidance, maintaining a healthy margin and solid cash flow.

ARPU: Grew by 26% to $2.49 in Q4, driven by gains in key target markets.

Cost Management: Maintained stable EBITDA margin despite scaling Opera Ads, which has a different gross margin profile.

AI Integration: Focused on creating advanced browsers with AI capabilities, such as Opera AI, to enhance user experience and maintain privacy.

Independent Browser Positioning: Positioned as an independent browser to attract partnerships with AI companies and differentiate from competitors.

Share Buyback Program: Launched a $300 million buyback program, representing over 25% of market cap, to return value to shareholders.

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Risk or Challenges

Market Conditions: The company faces competitive pressures from well-capitalized competitors, particularly in key target markets where it aims to grow its user base and ARPU.

Regulatory Hurdles: The EU Digital Markets Act has created a more level playing field for iOS, which could impact the company's competitive positioning in Europe.

Economic Uncertainties: The company is exposed to currency fluctuations, as evidenced by increased costs due to a weaker U.S. dollar.

Strategic Execution Risks: The company is investing heavily in new products like Opera Neon and MiniPay, which may not achieve mainstream adoption or expected returns.

Supply Chain Disruptions: Not explicitly mentioned in the transcript.

Advertising Revenue Dependence: The company’s financial performance is heavily reliant on advertising revenue, which could be impacted by changes in advertiser spending or market conditions.

AI Integration Challenges: The company’s strategy to integrate AI into its browsers and monetize intent-based traffic is ambitious and may face technical or market adoption challenges.

Shareholder Returns: The company’s significant share buyback program could strain financial resources if not managed carefully, especially in the context of ongoing investments.

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Guidance & Outlook

Revenue Guidance for Q1 2026: The company guides Q1 revenue of $169 million to $172 million, representing 18% to 21% growth year-over-year.

Revenue Guidance for Full Year 2026: The company guides full-year revenue of $720 million to $735 million, translating into growth of 17% to 20%.

Adjusted EBITDA Guidance for Q1 2026: The company guides adjusted EBITDA of $38 million to $40 million, a 22.9% margin at the midpoint.

Adjusted EBITDA Guidance for Full Year 2026: The company guides adjusted EBITDA of $167 million to $172 million, a 23.3% margin at the midpoint.

Cost of Revenue Expectation for 2026: Cost of revenue items combined are expected to represent about 38% of revenue for the year, starting somewhat below and ticking up as the year progresses.

Marketing Cost Growth for 2026: Full-year marketing cost is expected to grow by about 10% from the 2025 level with a relatively even distribution of the annual spend between the quarters.

Other Operational Expenses Growth for 2026: All other OpEx items pre-adjusted EBITDA are expected to grow by about 15% for the year as a whole, starting just below the Q4 level and increasing quite linearly through the year.

Opera Ads Margin Expansion: Opera Ads in isolation is expected to continue its margin expansion in 2026.

Share Buyback Program: The company has launched a $300 million share buyback program, representing over 25% of its market cap as of the announcement date.

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Shareholder Return Plan

Share Buyback Program: Opera Limited announced a major share buyback program with a $300 million authorization. This program exceeds all prior buybacks combined and represents over 25% of the company's market capitalization as of the announcement. The buyback will be paced and structured based on market conditions, and shares will be repurchased from both the public market and the majority shareholder at the same pace, ensuring the free float percentage remains unchanged.

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Key Q&A

Q:What is the ability to continue gaining Western users despite greater competition?

A:The company is happy with the user performance in Q4, particularly with the growth in smartphone and desktop users, including Western users. Growth is attributed to attractive desktop offerings, mobile browsers (especially iOS browsers after the European Market Act), and AI-powered browser experiences. The company is cautiously optimistic about continued growth in the new year.

Q:What is the traction within e-commerce and its positioning going forward?

A:E-commerce is the company's biggest category, growing faster than 25% year-over-year and contributing to an overall yearly growth of 28%. The e-commerce market is estimated to be $100 billion, with potential growth opportunities of $5 billion to $10 billion. AI advancements are enabling new revenue opportunities in user intent and advertisements, which are expected to power growth in the coming years.

Q:What are the engagement and monetization updates for Neon?

A:Neon was launched in mid-December and is positioned as a community hub for AI power users. It includes advanced orchestration features and task management tools. Monetization is expected through subscription revenue streams, though it is still early to see significant financial impact.

Q:What is the sustainability of gross margin trends and steady-state gross margins?

A:The company expects good growth potential across the business in 2026. The Opera Ads platform is expected to grow slightly faster than the totality, with a slight increase in cost of revenue. The platform generates healthy EBITDA contributions, allowing for an increase in EBITDA margin expectations for 2026.

Q:What are the plans for growing Neon adoption and strategic investments in payments?

A:The company is balancing features between Neon (a paid product) and Opera AI (free product) to grow users and generate advertisement revenue. Neon targets power users with advanced tools, while Opera AI serves a wider audience. For payments, the focus is on building a platform play globally, leveraging Web3 and Stablecoin technology, and partnering with companies like Tether to expand reach.

Q:What is the growth and performance of Opera GX in different regions?

A:Opera GX has high ARPU users across regions, with the U.S. being the biggest market. Growth is also seen in LatAm and East Asian markets like Korea and Japan, supported by partnerships with companies like Riot Games.

Q:What are the updates on OPay and potential IPO timing?

A:OPay has hired experienced public executives, indicating a potential IPO as the next step. However, no specific timing or expectations have been confirmed.

Q:What is the monetization path for MiniPay and its relation to Stripe's potential acquisition of PayPal?

A:MiniPay's priority is to build scale and a user base, focusing on emerging markets with low barriers to entry. Monetization comes from integrating partners into the product. The company did not directly relate MiniPay to Stripe's potential acquisition of PayPal, as they are different platform assets.

Q:What is non-search query revenue and its potential for growth?

A:Non-search query revenue exceeded $5 million in Q4, up from $3 million in Q3. It involves addressing user intent through direct references to partners, either via URLs or AI tests. The company sees significant growth potential as users increasingly adopt Opera AI in browsers.

Q:Review of Unclear Management Responses

A:Management avoided providing specific details on the timing of OPay's IPO and did not directly address the relation between MiniPay and Stripe's potential acquisition of PayPal. Additionally, while discussing Neon, management used vague language about balancing features and did not provide concrete plans for growing adoption.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

OPRA Transcript

Opera Limited (OPRA) Q4 2025 Earnings Call Transcript

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The earnings call reveals strong financial metrics with a 22-24% revenue growth guidance and increased EBITDA margins, indicating operational efficiency. Product development is promising, especially with the upcoming Opera Neon and MiniPay's growth. The Q&A highlights positive sentiment towards Neon and e-commerce, although some uncertainty remains about specific timelines for OPay's IPO and MiniPay's partnerships. The increased guidance and new product launches suggest a positive outlook, with the market cap indicating moderate volatility. Overall, the sentiment is positive, suggesting a stock price increase of 2% to 8%.

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