Opera Limited Price & Performance (OPRA)

Thank you for joining us. This morning, I am joined by our Co CEO, Zhong Lin and our CFO, Frode Jacobson. Before I hand over the call to Song Lin, I would like to remind you that some of the statements that we make today regarding our business, operations and financial performance may be considered forward looking. Such statements are based on current expectations and assumptions that are subject to a number of risks and uncertainties. Actual results could differ materially. Please refer to the Safe Harbor statement in our earnings press release as well as our annual report including the risk factors we undertake no obligation to update any forward looking statement. During this call, we will present both IFRS and non IFRS financial measures. A reconciliation of non IFRS to IFRS measures is included in today's press release which is distributed and available to the public through our Investor Relations website located at investor.opera.com Opera. Our comments will be on year over year comparisons unless we state otherwise. With that, let me turn the call over to our Co CEO, Song Lin, who will cover fourth quarter operational highlights and strategy, and then further Jacobson, who will discuss our financials and expectations going forward.

Sure. Thank you, Matt, and thanks to everyone joining us today We have certainly been looking forward to giving you a business update and sharing our fourth quarter results.

In terms of business and revenue momentum, it's fair to say that the e commerce opportunities we have been focusing on have driven an acceleration well beyond our expectations and guidance, combined with a great follow-up line up user growth in high ARPU regions and our ability to operate as fast independent player, in an ecosystem with accelerating innovation this totality makes us even more excited about the opportunities ahead for Opera. Our year over year revenue growth went from 17% in the first half of twenty twenty four to 20% in the third quarter. We have guided 21% growth in the fourth quarter and ended up beating our own guidance by 800 basis points coming in and 29% year over year give us comfort to guide for continuation of this elevated growth trajectory. Into the staff of 2025. Adjusted EBITDA also came in above the high end of our guidance range and sold at $3,000,000 or a 23% margin.

Advertising revenue was $93,000,000 in the quarter, growing 38% year over year and accelerating further from the 26% growth rate we saw in the third quarter. As in revenue performance, was led in particular by e commerce opportunities raising Opera Ads. Search revenue was $52,000,000 in the quarter, up 17% year over year and also accelerating more than expected this is the so called 13% gross rate.

As you know, our strategy is to focus on growth efforts around the highest ARPU potential users which continues to drive healthy revenue from Bosec and advertising partners. In fact, during the fourth quarter, we were able to grow users in Western markets a proxy for high value users by 3,500,000. North America and Europe now represents almost 19% of our Opera. S. Up from 16% a year ago. Our annualized ARPU grew Year over year, to $1.09 $8 another record and the highest ARPU growth in two years. Our mobile browsers for Android and iOS had a tremendous 2024 with the most pronounced growth in the EU with the introduction of the DMA and the choice screen for iOS users total iOS user growth was over 50% in 2024 and we more than doubled our number of euros in the EU. We are coming from a small iOS base, but as discussed in recent quarters, the EU is driving an agenda of more open competition within both iOS [indiscernible] and we are certainly working hard to give those incumbents a fair challenge. During the fourth quarter, we released the latest versions of Bose OfferJF and Opera One. New product releases [indiscernible] The most obvious is to offer our users the latest features and design elements investing in our position as their preferred browser among sales competition.

New releases also generate exciting media and the influence of coverage which benefits the inflow of new users and partnerships And finally, at each iteration, we get one notch better and new user stickiness and new releases include our latest lessons around the user journeys and optimize the unbodie experience to make it as easy as possible for new users [indiscernible] of your life, The Opera one Opera launch brought a revamped look dynamic scenes downscapes as well as split screen and enhanced tab management features Making it the best and most available Opera browser to date, Opera One also received many of the AI features [indiscernible] within the Fishems job program throughout 2024, The AI Future Drops program continued evolving in our developer browser version with the introduction of a unique Opera feature [indiscernible] On the mobile browser side, both Opera for iOS and Android [indiscernible] understanding capabilities, We continue to pioneer new innovative AI features We are very excited about [indiscernible] and believe there is a smart way how this may be best implemented allowing AI to perform tasks for the users on the web with efficiency As one of the most tech rooted browser companies, we are positioned to differentiate in this space so stay tuned for exciting announcements to come.

Opera GXL popular gaming browser also received its first major facelift since its launch in 2019 with a new design language and then expanded loading universe The Q4 user base grew to 33,900,000 MAUs up two minutes versus Q3 and up 22% versus Q4 last year. Analyzed ARPU came in at $3.58 quite stable on a per user basis as we continue to expand our user base into new regions, The GF communicator continues to grow as well In 2024, we saw a 36% increase in the number of games available on our Gx.games site with time spent up 50% and the number of Gx dot me accounts up 80% to over 10,000,000. Earlier this month, we introduced our latest PC browser, Opera L, which is the first browser built around the concept or [indiscernible] While it's shown its text platform with Opera One, this built for browser is designed to make its users feel better, be more focused and even more productive The browser integrates mindfulness tools such as breathing exercise, meditation and stretches, as well as sunscapes [indiscernible] We have already seen this browser receive greater acclaim by the tech press.

Opera Ads had an incredibly strong fourth quarter driven by our intent based audience monetization offering where we leverage our vast amount of interest and intent signals to connect the business with end users. Browser usage is a lean forward experience where high Internet activities can be monetized not only via search and our stock page inventory but also across partner inventories that is provisioned in our audience extension platform. The combination of both study signals and expanded inventory creates a very scalable channel for performance advertisers especially within the e commerce and the travel verticals where we experienced great success in the quarter. Thanks to our investments in proprietary AI algorithms, expanding our own data center, we have developed portals built AI models that help offer ads identify interest and user intent For performance advertisers, it is important to rate the user at the right time in the right context. This is exactly what our algorithm has been trained to do. Coupled with our advanced dimension bidding technology, and high performance global infrastructure, we are able to deliver superior ROAS meaning return on ad spend for advertising partners across both owned and operated as well as partner inventories. Based on data center investments earlier this year, we captured the benefit of the extended shortage in Q4 that spanned well beyond the Black Friday peak with many local and regional sales events throughout the whole season.

Our rapid growth in Western markets is also creating a flywheel effect to the audience platform offering helping us to further elevate our efforts in acquiring higher users in an ROI positive manner. To summarize, we are very pleased about the high activity level across our company and how we also draw strength and seize new opportunities by being leaner and fast stocks. As we enter 2025, our baseline is very healthy and our ambition level is high. We have shown what we can do and it's still early on so many fronts. With that, I will hand it over to Frodo. Thank you, Tom.

The fourth quarter really crowned the year as a whole. With a substantial payoff to our strategy both in terms of our focus for product development and user growth. As well as on the monetization and partnership side. Our 29% year over year growth was 12 points higher than the growth rate at the start of 2024 and well ahead of what we had guided for the fourth quarter As we scale, we unlock new opportunities and partnerships that can create these outsized trajectory moves for an agile company like Opera Opera. As you started to see in the third quarter also, when that happens, we double down to seize it. The strong over performance versus guidance was predominantly fueled by the 38% annual growth of advertising revenue Though it's worth highlighting search as well, that ended the year at an also impressive 17% annual growth rate. In isolation, our rapid quarterly scaling of advertising revenue including on third party inventory comes with a margin percentage headwind though of course a dollar wise [indiscernible] [indiscernible] Still, we achieved a quarterly adjusted EBITDA margin per percentage in line with our guidance. And with that, the dollar amount of EBITDA exceeded the high end of our guidance range.

In terms of costs, we raised our marketing spend to $41,000,000 on the back of our new Opera Opera GX and iOS releases, in line with expectations. After working to ramp our marketing activities throughout the year, we were pleased to find sufficient opportunities to scale at attractive ROI in the seasonally important fourth quarter. [indiscernible] Cost of revenue items came in at $48,000,000 or 33% of revenue scaling with the revenue over performance. Compensation costs reduced a bit more than expected versus the prior quarter to $17,000,000 and all other OpEx items before adjusted EBITDA also reduced slightly to $7,000,000 With these results, Q4 marks our fifteenth consecutive quarter as a rule of 40 company and yet another quarter of meeting or exceeding our guidance. Taken together with our material step up in scale over the past years, with the revenue run rate now exceeding the $500,000,000 mark as well as healthy profitability and cash flow generation, we believe that Opera benefits from increasing interest and awareness also within the investor community. [indiscernible] we can compare actuals for the year to our initial guidance. At the start of 2024, we guided for After a year of successful execution, we saw revenue growth accelerate to 21% for the year and our EBITDA margin expand from 23.6% in 2023 to twenty four percent twenty twenty four.

That over performance versus initial guidance resulted in $23,000,000 of incremental revenue for the year of which we converted $7,000,000 or 32% to incremental adjusted EBITDA. [indiscernible] Our operating cash flow was $21,700,000 in the quarter representing 66% of adjusted EBITDA which was ahead of what we had expected following the unusual On a full year basis, we converted 91% of adjusted EBITDA to operating cash flow compared to our most recent expectation that we've come in at about the level from 2023, which was 88%. Free cash flow from operations came in at 61% of adjusted in our AI cluster in Iceland. [indiscernible] And finally, more of a housekeeping note, as of early December, the ratio between Opera's shares and our publicly traded ADSs has become one to one, which we achieved by merging two and two underlying shares. While it had no economic impact to any shareholder, it simplifies the structure and aligns amounts on a per share Opera ADS basis in this report and going forward. With that, I'll turn to guidance, most specifically for the first quarter, but will also provide an initial perspective on 2025 On the revenue side, we are excited to see the major step up we drove in Q4 continue into the first quarter.

That is advertising at a new scale for Opera, fueled by Opera Ads on both our own and third party inventories. Within this, e commerce continues to be the vertical that explains the bulk of the realized revenue growth acceleration and near term potential. All in all, we are guiding to a continued 29% year over year revenue growth in Q1 at the midpoint with a range of $130,000,000 to $133,000,000 As you see from the guidance range, the growth rate might even tick up a bit from Q4. With the confidence of nearly twothree of the quarter already behind us, that certainly represents a great start to the New Year. We guide Q1 adjusted EBITDA to be in the range of $28,000,000 to $30,000,000 or a 22% margin at the midpoints. In line with the elevated growth rate, Q1 is expected to over index on ad tech growth and consequently we allow for cost of revenue items as percentage of revenue to come in around the Q4 level. We expect marketing costs in the mid to low $30,000,000 range and we expect cash compensation costs to increase about $1,000,000 versus the Q4 level to be more similar to the recent average quarterly cost level.

Other OpEx items combined are also expected to tick up slightly versus Q4. Beyond Q1, moves like this would really compound if directly translated to guidance for the full year. Our initial 2025 guidance certainly reflects a higher than anticipated growth rate multiplied by a higher than anticipated 2024 revenue.

At the same time, and as you know from prior years, we prefer to leave room in our guidance so that we could revise upwards as trends mature [indiscernible] As a result, we indicate €555,000,000 to $570,000,000 revenue for the year. A 17% year over year growth rate and adjusted EBITDA of $132,000,000 to $138,000,000 or a 24% adjusted EBITDA margin at the midpoint. I'll underline the initial nature of the full year guidance as we are in the midst of a period with rapid scaling and with limited historical reference points. To set a reasonable opening expectation for the year, we have modeled a more normalized sequential growth from Q1 to the later quarters of twenty twenty five. That results in a relatively stable trend of quarterly revenue growth measured by a two year which captures the scale we have built in recent quarters while also evening out our forward looking growth profile. In terms of cost and margin assumptions for the year, I'll share some directional perspectives. Our baseline expectation for 2025 is that the margin headwind from growth in cost of revenue items will be offset by a margin tailwind from economies of scale in the remainder of our cost We expect that cost of revenue items combined will reach about 30% of revenue in 2025 up from twenty seven point six percent twenty twenty four.

We expect that marketing costs will grow at a year over year percentage in the low teens with dollar amounts increasing quarter to quarter from the Q1 starting point. In a stepwise fashion, and in a way that supports continued healthy ROI on this bent. We expect both cash compensation and all other OpEx items pre adjusted EBITDA combined to grow at year over year percentage rates in the mid to high single digits.

In other words, marketing compensation, and the sum of the other smaller OpEx items are all expected to continue declining as percentage of revenue in 2025. [indiscernible] In conclusion, that's a wrap on yet another year that came in well ahead of expectations across financial KPIs, such as revenue, profitability and cash generation. We are excited about the speed with which we enter 2025 and look forward to giving you more color on how the year and outlook evolves with our Q1 release With that, I'll turn the call back to the operator for questions.

Thank you. We will take our first question from Eric Sheridan with Goldman Sachs. Your line is open. Thank you so much for taking the question. Building on the remarks and thank you again for all the detail you guys always give. You talked a little bit about the rise of AgenTek AI and obviously we've seen a lot of big beginnings of innovation around deep research. Can you talk a little bit based on the investment Yes. So it's Tony Hill. I guess I will try to take this. It's I understand it's a very deep question. So there are many things which we can elaborate. But I'll try to also be slightly brave there. So I think there are several trends. So first of all, of course, there's two levels in. So from end digital level, Way as a browser, I think it's, of course, super interesting. And like there are so many things can be done. I guess our position would be that as a browser, we are perhaps less concerned about which particular end of the big language models we are using, but more how browser can design the best way to allow user to interact and also perhaps allow the let's say the potential agent to fully using the browser architecture to do things much more efficient So So for instance, we saw some of the demos out there for potentially using the browser agent to help you buy stuff.

But the problem, of course, is that the current implementation, which has been demoed, are all based on a picture based frame by you send out the picture to the cloud to analyze and then to return some move of cost Opera whatever So the benefit of those of course it has, it's more like it's really not browser, but more like system and solution which you can use in any interface. But the problem, of course, is that it's not really usable at this point because it's too heavy, way too heavy and not really efficient and not really accurate. While of course as a browser, you have access to all the web elements, right? Like for instance, you can really access all the web elements in Adobe. That we don't really have to go to accomplish on graphical models. So that's why we believe that as a browser vendor, there is a chance for us to make this maybe 10 times more efficient and make it actually relevant for the end user to allow the agents to make many real tasks in a browser for real way. So I as also mentioned a bit on the script, we have some upcoming PR release that and demos.

And could be of interest. So I think just stay tuned for that. And then maybe I'll just also super quickly click on from other aspect, right? So I think AI is really or AI with agents are really have deeply penetrated into every aspect of that life, right? So on top of that end, you don't see inter apps Of course, it's also equally important how company can incorporate that into all the aspects of workflows. From, of course, we are developing company, So from how they actually coding, how we can make our developers maybe even more efficient. To the fact that how we can use them to create app creatives for instance, so our ad platform can be so much more efficient efficient, how to do proper categorization of user intent for instance. To make sure that the more accurate ads has been sent to the users more relevant way. So I would almost say that, that is what we also see make a big difference. On the background and probably helpful to our growth even beyond our guidance. As was indicated in our Q4. Even though maybe not directly visible from an energy point of view.

So I think all those aspects are becoming relevant and it's very interesting to see how this develops.

Thank you.

Our next question will come from Naved Khan with B. Riley Securities. Your line is open.

Congrats on the on the good execution here. I would couple of questions. One, Surprised by the strength in search This is a relatively older business, but surprised by the pickup and wondering if what kind of drove this trend and the growth that we can maybe assume for it into 2025, your Q1 guidance kind of implies that there's probably not going to be a whole lot of slowdown in search. And maybe on a related topic, just talk about the Google renewal. The second question I had is, is around the ad tech business.

It's growing really strongly And I'm wondering if it's what are the biggest drivers? Is it addition of more advertisers or is it expansion of the program into more regions? Thank you. [indiscernible] Sure, maybe you should begin.

I think we commented last quarter that we expected it to come back up from the search 15%, I believe, search growth rate. So I think as you say, it is a more mature revenue stream and 15% growth. And search, I think, is a very strong result for the year. It's certainly within advertising that we have the more degrees of freedom in a sense. So as we look ahead, I would at least start with with the growth for the year as a whole and then sort of project it from there. Terms of the Google renewal, we're now in the year of extension that Google elected to exercise early. In 2024, which I think was was a positive signal. That they shared with us back in April Opera. I think we expect that during the second half of this year, we'll extend the partnership as we typically do every three to four years.

I'll hand it over to you, San.

For Adtech. [indiscernible] for Epic. So I guess maybe to answer your pressing, right? So I would almost say it's it's probably not as important than the original because we have already present before the quarter. Before call is also key regions. But rather, I would say, deepening Z Wave relationships, especially around e commerce. As we also have commented a bit in the scripts and press release that of course Q4 are traditionally a very strong drop in season. So some of them are expected, but I guess even a bit beyond our expectation is the actual execution and the hardware able to fulfill performance. So maybe I'll just comment that the also the key aspect is that the most of our advertisers are not performance base. So when you want to get paid, it's a good performance. But the good part of it is that, of course, if there is a good performance, there is almost then we can get a lot of budget, right? So I think what happened is just that I think we have the execution well also with the help of a few others that we actually are giving more budget than we previously estimated and that's actually resulting exceeding largely exceeding we have been anticipated even internally for Q4 and looks like we will be able to continue that trend into Q1 as well.

Great. Thank you.

Thank you. Our next question will come from Lance Bottinja with TD Cowen.

Your line is open.

Hi. Thanks guys for taking the questions. I've got a couple if I could. The first on the iOS penetration in Europe. It's great that you're seeing so much progress there, but is it still sort of fair to think that you're penetrating EU is still rather de minimis and closer to zero than to 1%. Is that right? I mean that's not a bad thing in my mind, but I'm just trying to get sense for where you are today. [indiscernible] okay, so it's only now again. Yes, I think it's fair to say, I don't know about like Europe and Lava at all, but I think I guess at this point, not across everyone, except Apple because of the policy, right, because of limitation whatever, everyone are still very unfavorable status in iOS, which means everybody has also lot of room to grow. And we also see that to be fair, we see that with every iOS update, Apple has been trying to comply some of the aspect of the requirement from EU, for instance. Which leads to higher penetration of the other browsers And I guess our hope would just be that way well below capture most of the benefits But you are right that it's super, super obvious that it does many, many times potential we can grow and we believe that's well happening.

So that's what we're working on. Okay, great. And then I wanted to ask you about [indiscernible] some anecdotes that the downloads of Opera browsers on the Apple App Store have spiked here in the first half of the first quarter.

I'm wondering if you can comment on that or Or is that or was that spike taking place in Europe? [indiscernible] first of all, there are good spikes in Europe for sure. But as I would say almost a silo effect, that I think the key is the user awareness that of course when most people are aware that there are Actually, third party browser Opera, if available, in iOS, right, because of, I guess, some of the things happening in Europe, [indiscernible] downloading and iOS penetration in The U. S, which of course is very positive and also give us boost. So I think Europe, for sure. U. S, yes, we also see that.

If I could just get one last one in. Back on the sort of the search versus advertising revenue split. When I had launched coverage, it was sort like 60% search, 40% advertising. And I just gotten used to thinking of it as having reversed to forty, sixty. And now at least in the fourth quarter, it was 35% search 65% advertising, if I'm doing the math right. So the question is, is that trend likely to continue in 2025? I mean, do you see could we get to thirty seventy for the year or maybe as a run rate by the end of the year? And really I'm just trying to think about how we should model the two revenue line items in the context of your consolidated revenue guidance. And put another way, maybe I'll a question this way, the ad revenue grew twice as fast as search in the fourth quarter. Do you think that that ratio holds throughout 2025? Or should we expect a more of a mean reversion for both of those two growth rates Hi, Helane. It's Frode here. [indiscernible] I wouldn't forecast Search as a revenue stream of somewhat less [indiscernible] look at how we grew for 2024 as a whole and sort of and then do classic forward looking projections.

Then I would say that the variance in the forecast is more likely coming going to be due to advertising revenue growth. And we certainly expect that the growth rate of advertising will stay higher than the growth rate of search also next year. You're right. Search used to be the bigger revenue component and our we're down to 36% in the fourth quarter still 39% for 2024 as a whole. Is keeping that in mind, down a couple of percentage points from the prior year. And sort of by the diverging growth rates, expect that trend to continue.

Thanks guys.

Thank you. Our next question will come from Mark Argento with Lake Street.

Your line is open.

Hi, guys. Good morning. Congrats on some strong results. I just wanted to drill down a little bit more on advertising just given the significant outperformance. [indiscernible] you said you should we're going to see continued growth at elevated levels in Q1, maybe taper down to the year just given a lot of larger numbers. But could you maybe help us think about the seasonality of that business I know, obviously, the e commerce piece of that, which is obviously has plenty of seasonality is a bigger piece. But just help us maybe understand that incremental revenue a little bit, the contribution maybe concentration levels, anything you can kind of help us better understand how that might look as it rolls into the model through the year?

Yes, Mark, thanks. I'll I'll comment on that. Of course, we put behind us a year of tremendous growth and very positive incremental growth versus expectation from one quarter to the next as the year has progressed. As I mentioned in my prepared remarks, as we define the initial guidance level for 2025. We tried to take a more normalized sequential move from where we see Q1, where we expect Q1 to come in and throughout the remaining quarters. So then it's sort of nicer step ups from Q1 to Q2 and then onwards to and then bigger increases from Q2 to Q3 and Q3 to Q4. So I'd say the bigger sequential moves will take place in the second half of the year, most likely.

In terms of the customer concentration or relationship concentration, are you guys selling e commerce relationships, are you selling those direct or how concentrated are those revenue streams?

I'll let Song comment on the details of the business. At a broad level, of course, the broad topic is with the growth of advertising, which has many, many more players in the ecosystem. Our customer concentration is also declining. Or being more diversified.

Yes. So yes, I can't add a bit there, right? So guess so first answer is saying, of course, the concentration definitely more than was than say search for sure. On the other hand, just comment that we typically directly work with each e commerce partners. Not really with so many agencies or even if it's agency that's on behalf of us really. So So I would say that is fine. We're not really dependent on one agency. I guess it's not an issue, but more like of course, the other stat is that we typically only want to work with the biggest e commerce players because that's where you have the massive impact of scale that could be relevant to us. Which also indicating that for particular regions, or countries, of course, there are limited number of top e commerce players. So we have some limitation there like our solution for now are definitely focused on the big ones which can give us the benefit of scale. So just to take that into mind. But overall, of course, it's still a lot more diversified than social and housing when used to have.

And then one just last quick follow-up is from a geographic perspective, is it mostly Western U. S, Europe, what's the key demos that you guys are focused on? [indiscernible] [indiscernible] [indiscernible] Okay. We see revenues in Western markets grow faster than our revenue growth overall. So that is North America and Western Europe. As the faster growing regions, representing well over half of our revenue, even though as we point out in our investor presentation, they represent 19% of the user base.

Which is up substantially, but still today a smaller footprint than our emerging market user base. So of course with that also lies a lot of our potential as we continue to invest in growing those regions. As the by far highest ARPU regions.

Great. Appreciate it guys. Thank you.

Thank you. And our next question will come from Alicia Yap with Citi. Your line is open. Thank you. Good evening, management. Congratulations on the strong set of results and also the guidance Thanks for taking my questions. I have couple of follow-up on the guidance and then I have a question for Fang. So first of all, I think management you just mentioned on the sequential basis, the second half, the sequential growth is stronger. But then if we look at your on the year over year basis of first quarter versus your full year, if we take the midpoint, is that suggesting the second half, the year over year will be slower than the first half. Part of it obviously is the base effect right? And then just kind of curious, why would the why wouldn't the reaccelerations of the growth that we saw in 4Q and imply 1Q to Hey, Alisa, I'll begin there. So you're right, of course, in your observation, I just want to point out that the fourth quarter in isolation lifted our full year revenue growth from 19% to 21%. So that added $10,000,000 to our base 2024 base looking at into next year.

So as we guide We don't want to bet that we're going to have a similar out sized move from Q3 to Q4 in 2025. We'd rather base our initial full year guidance on a more normalized move from one quarter to the next. And then of course, work very hard to bring more good news as the year progresses.

I see. Got you.

And then the EBITDA trend is actually a little bit reversed. Right, because you guided first Q is 22% and then the full year is 24%. So is that assuming we actually will be spending maybe quite a bit of, let's say, the marketing and all that, but then second half going to enjoy quite a bit of leverage.

I'll say it's almost keeping with our tradition because last year when we started out 2024, we guided our EBITDA margin to stay stable. With sort of these offsetting moves. And when we guide now for 2025, we do the same thing again. Of course, it's at a slightly higher level now than before. So I think we are seeing economies of of scale, as I walked through a bit on the call. In our cost base, but as we are generating this tremendous growth within Opera Ads that does come with cost of revenue. That in terms of like percentage margin is is an offsetting factor. To the economies of scale. So as we start the year, we say let's expect that the two effects will be of about equal magnitude in terms of percent But then, of course, driving more dollar EBITDA than otherwise.

And then we'll see we'll learn more as the year progresses.

I see. I see. Got you. Thank you. And then, so questions for Song. Just wondering if you can share what's your view of DeepSeq and will Opera also consider in R1 into your browser? And follow-up on that is that how are we or how should we be thinking about the longer term position of the search function within the browser? Do you think over time as user switching to AI chatbot to get their queries and all that. It will be a dilutive impact to the search function of the browser positioning? Thank you.

Sure. So I guess one way we have already DeepCIC into our models. So I think we made a announcement earlier last week, I believe, that we actually not only have deep checking cooperative, we actually has placed it in our local model support, which means in our developer versions can actually download the deep model themselves and run locally. On their machines. And the best obviously that of course it has for protect of Udo's privacy because we know that it will ever leave Udo's computer And this actually also works quite efficiently because DeepCara are actually very good at have a very small consumption of controller powers. This is how strong it was to be able to perform the tasks So you can try that, quite exciting. And then And then I guess for your question of what's your view on storage chatbot or whatever. So I guess to us, we believe that I think it's maybe less about chatbot, right? So I think in the end, social well becoming smarter, right, raising hands of AI and how you're going to interact with web page and with automation will also becoming smarter. So So I think this will evolve.

Search will becoming more more smarter and there will also be new ways of interaction. But for us, the most relevant is how to make sure all those happen in a browser context right? Because it doesn't matter which way. As we also demonstrated, the key is that we want to make sure that our user intent and the whole user engagement are actually happening inside the browser because as far as this is happening, then we we are confident that we would be able to find a way to monetize And we also see the similar trend that the advertiser, they are also focusing on where comes the highest user intent and who can capture it. And aside this is happening in our browser environment, we are very positive. So we're almost a bit neutral about where that happens purely on the search context or our smarter search context. Or in some other forms which are to be evolved.

Okay. All right. Thank you, Sung. Thank you, Faury. Thank you. Our next question will come from Jim Callahan with Piper Sandler. Your line is open.

Hi, thanks for taking my question. First is just a question on sort of the audience extension piece. So seeing really strong advertising growth in 4Q and we're also seeing a big uptick in Western market users.

I guess, is the audience extension revenue piece we're seeing today, is that a function of the users you acquired last quarter, two quarters ago, Or are you like is there a lag effect we should consider here? Or are you able to monetize those users on the audience extension piece right away.

Yes. So I guess I'll give you a try. Yes. So I guess, Hival, not necessarily. So I think, yes, there is a flywheel effect that [indiscernible] This will allow us to actually build out the models which would work also in the supply inventory, right? So it's always helpful, but I don't think it's [indiscernible] a lag effect per se and more like, let's say, accumulative effect [indiscernible] the better we can do and the better we can do, the more and then we can get better ad deals, which allow us to also performing even better. So it's more like applying well but slightly less about lagging, but more lagging accumulative. I don't know if that answers your question.

No, that does. That's very helpful. Thank you. And then kind of just curious on obviously you're seeing success with the marketing spend Can you just kind of talk about what was most successful in sort of driving some of the strong user growth?

Thank you. [indiscernible] [indiscernible] [indiscernible] You can talk about it. So I think throughout the year, we kept guiding for greater marketing spend in the following quarter than what we ended up doing, because we always we want to allow to spend marketing dollars, but we are quite restrictive until we see that the ROI is satisfactory. Then we dial up. So very pleasing to see that in the fourth quarter, we had good ROI. We scaled our marketing. It was on the back of very key product releases. Of course, that revenue impact is less pronounced in the fourth quarter itself. But it was and it's a good investment in where we are today and sort of trajectory leading into 2025. [indiscernible] but Sang, I can hand over to you more from an operational view as well, if you want to add something. [indiscernible] So I guess maybe I'll just add to that, of course. In the end of the day, it's still the product itself, right? So that's partly why that you see we have uptake of marketing spending It's just because we have launched the Opera one R2 and also we also have launched the GXX And that's also Opera of why we probably also got a little bit higher marketing spend in Q1.

This is the previous trend is because we launched Opera Air. So just want to double down that. Of course, it's not only a non game, but also matter of having the right product. Which we are rather confident about.

Great. Very helpful. Thank you.

Thank you.

And at this time, there are no further questions in the queue. So I would like to turn the call back over to Dong Lin for any additional or closing remarks.

Sure. So like again, thank you all for joining us today and following us It is exciting, perhaps the pivotal times how the broader Internet economy will evolve. We are very excited to be exactly where we are and your confidence that [indiscernible] working on well set us up for a healthy 2025 as baseline. And hopefully something even bigger as potential. So wish you a good rest of the day and look forward to reconnecting our Q1 results into the April Opera.

Thank you, ladies and gentlemen. This concludes today's presentation, and we appreciate your participation. You may disconnect at any time.