Opera Reports Record Second Quarter 2022 Results
Opera Limited (NASDAQ: OPRA), one of the world's largest internet consumer brands with hundreds of millions of users worldwide, today announced its unaudited consolidated financial results for the second quarter ended June 30, 2022.
"Despite a difficult macroeconomic backdrop, we delivered record revenue and continue to grow average revenue per user through a combination of product and high-value market initiatives" said Co-CEO Lin Song.
"We are mindful that the current economic environment remains uncertain, impacted by both macroeconomic pressures and geopolitical tensions. Still, we see a lot of room for continued growth, and we combine prudence with a continued strong focus on our growth strategy," continued Mr. Song.
Second Quarter and Recent Business Highlights
Core search and advertising revenue grew 31% year-over-year, driven by the strong ARPU trend of our browser and news user base, as well as leveraging our strong advertiser demand beyond our own inventory through our Opera Ads platform.
Opera's average monthly active user base was 327 million MAUs in the quarter; with a continued directional shift towards higher ARPU markets. User growth was the strongest in the Americas, this time led by North America up 31% and South America up 4.1%, while we continue to focus investments in emerging markets more specifically towards users that we believe will be monetizable.
In the second quarter, each user on average generated a record $0.94 of revenue on an annualized basis, up 46% compared to the second quarter of 2021.
The Opera GX gaming browser had over 17 million monthly active users across PC and mobile in the second quarter, with the underlying growth being partially offset by seasonality. Annualized ARPU of the GX browser is more than three times higher than the corporate average.
At the end of the second quarter our cash and marketable securities were $187 million. Combined with $173 million of receivables from the sale of Nanobank and Star X, this adds to a total of $360 million. We also continue to hold our 6.44% equity stake in OPay as an asset held for sale.
During the quarter, the company repurchased 1.26 million ADSs at an average price of $5.30, for a total spend of $6.7 million, leaving $39 million or nearly 80% of our existing buyback authorization remaining.
"Our core business continues to generate revenue at levels greater than anticipated, at the same time we are moderating certain of our expenses, resulting in higher than expected EBITDA margins," said CFO Frode Jacobsen. "Despite macroeconomic uncertainties, Opera is performing exceptionally well, and we feel confident in increasing our guidance for the year."
For the full year of 2022, Opera expects revenue of $313 million to $319 million, an increase from $300 million to $310 million, representing 26% year-over-year growth at the midpoint, and adjusted EBITDA to be between $53 million and $60 million, up from $50 million to $60 million or an 18% margin at the midpoint, versus 12% for 2021.
For the third quarter of 2022, Opera expects revenue of $81 million to $83 million, representing 23% year-over-year growth at the midpoint. Adjusted EBITDA is expected to be between $14 million and $17 million, representing a 19% margin at the midpoint.
During the quarter, we collected the first installment of $28.4 million from the sale of our stake in Star X, with the remaining two installments due in 2023 and 2024.
In connection with the sale of our stake in Nanobank, we and the buyer have agreed to make certain modifications to the sales agreement. The purchase price will be paid in 16 quarterly installments with the final installment due in Q2 2026, offset by a 3% added interest on delayed funds relative to the original 8 installments, resulting in total consideration increasing from $127.1 million to $131.7 million. The first installment was $8.5 million, and the remaining quarterly installments will consequently be $8.2 million each. The buyer also agreed to pledge the sold shares to Opera as collateral to the remaining unpaid installments. The modified agreement also specifies how a future sale or merger of all outstanding shares of Nanobank would be treated, in the event it would happen during the payment period. If in such case the valuation ascribed to Nanobank is lower than the valuation adopted in our sale, the remaining installments will be adjusted to reflect the revised valuation. Further, if such future acquirer of Nanobank is a company in which Opera or its parent company is already an investor, and the acquirer purchases Nanobank with its own shares as consideration, the remaining installments due to Opera would also be immediately settled in the form of such shares as opposed to continued cash payments.
Opera has collected the first installment in full, of which $4.5 million was received within the second quarter and the remainder in July. The next installments are due in December and every third month thereafter.
Second Quarter 2022 Consolidated Financial Results
All comparisons in this section are relative to the second quarter of 2021 unless otherwise stated.
Revenue increased 29% to $77.8 million.
Search revenue increased by 13% to $33.7 million driven in particular by the growth of our PC footprint in western markets.
Advertising revenue increased by 49% to $43.1 million, benefitting also from monetization growth within Opera News and our audience extension supported by the Opera Ads platform.
Technology licensing and other revenue was $1.0 million.
Operating expenses decreased by 2% to $66.7 million.
Combined technology and platform fees, content cost and cost of inventory sold was $11.8 million, or 15% of revenue. Our audience extension carries inventory cost, but insignificant incremental expenses otherwise.
Personnel expenses, including share-based remuneration, were $19.1 million, a 3% increase. This expense consists of cash-based compensation expense of $17.6 million, a 6% increase year-over-year, and share-based remuneration expense of $1.5 million.
Marketing and distribution expenses were $25.3 million, a decrease of 28% year-over-year, or 26% sequentially versus the prior quarter and reflecting a prudent response to macroeconomic conditions.
Depreciation and amortization expenses were $3.4 million, a 33% decrease year-over-year but relatively stable versus the prior quarter.
All other operating expenses were $7.0 million, a 5% increase.
Operating profit was $11.2 million compared to an operating loss of $7.9 million in the second quarter of 2021.
Other items in the quarter include a finance expense of $15.3 million associated with value fluctuations on our marketable securities.
Income tax expense was $3.7 million in the quarter, somewhat elevated due to FX impacts on net deferred tax liabilities.
Net loss was $5.8 million. This compared to a net income of $44.3 million in the second quarter of 2021. Net income in the second quarter of 2021 was positively impacted by the recognition of gains from the partial sale of our equity stake in OPay.
Net loss per ADS was $0.03 in the quarter. Each ADS represents two shares in Opera Limited. In the quarter, the weighted average number of shares outstanding was 229.5 million, corresponding to 114.8 million ADSs.
Adjusted EBITDA was $16.6 million, representing a 21% margin, compared to an adjusted EBITDA loss of $1.0 million in the second quarter of 2021. Adjusted EBITDA excludes share-based remuneration and non-recurring expenses, as well as other income and discontinued operations.
Adjusted net loss was $3.4 million in the quarter, compared to adjusted net income of $49.1 million in the second quarter of 2021. Adjusted net income (loss) excludes share-based remuneration, non-recurring expenses, discontinued operations and amortization of intangible assets related to acquisitions.
Adjusted net loss per ADS was $0.03 in the quarter.
We have posted Opera's unaudited financial historical results by quarter since 2019 at https://investor.opera.com.