Opera Limited (OPRA) Q3 2025 Earnings Call Transcript

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Overview

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%.

Key Financial Performance

Revenue $152 million in Q3 2025, a 23% year-over-year increase. Reasons: organic growth and scaling new revenue partnerships.

Annualized ARPU $2.13, a 28% year-over-year increase. Reasons: improved monetization strategies.

Adjusted EBITDA $36.3 million in Q3 2025, a new quarterly record. Reasons: revenue outperformance and cost management.

Adjusted EBITDA Margin 24%, marking the 18th straight quarter as a Rule of 40 company. Reasons: revenue growth and operational efficiency.

Query Revenue $55.6 million in Q3 2025, a 17% year-over-year increase. Reasons: growth in search and other query monetization.

Advertising Revenue $95.9 million in Q3 2025, a 27% year-over-year increase. Reasons: e-commerce growth and new advertising opportunities.

Opera GX Users 33 million users, a 3% year-over-year increase. Reasons: enhanced features and AI capabilities.

Opera GX ARPU $3.69 annualized, a new record. Reasons: exclusive in-browser gaming deals and advanced features.

MiniPay Wallets 10.5 million wallets, up from 9 million in the last report. Reasons: increased adoption and multiple use cases.

MiniPay Transactions 310 million transactions, up from 250 million in the last report. Reasons: growing user base and transaction volume.

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Operating Highlights

Opera Neon: Launched as a premium subscription-based browser with native AI assistant functionality. It operates locally in the browser, ensuring privacy and efficiency. It is tailored for advanced users and integrates AI into workflows seamlessly.

Opera One: Flagship browser tailored for a rich browsing experience, featuring advanced LLM-agnostic AI solutions.

Opera GX: Browser for gamers with 33 million users, up 3% year-over-year. Features include exclusive in-browser gaming deals, smart home integration, and advanced AI capabilities.

MiniPay: Noncustodial wallet with over 10.5 million wallets and 310 million transactions. Supports use cases like remittances, local payments, and freelancer payments in USD.

Market Positioning: Opera is leveraging its agnostic approach to large language models and partnerships to compete for discerning users. It is recognized for innovation and reliability in the browser market.

Revenue Growth: Achieved 23% year-over-year revenue growth in Q3 2025, with $152 million in revenue. Annualized ARPU crossed $2 per user, growing 28% year-over-year to $2.13.

Financial Performance: Q3 2025 revenue reached $152 million, a new record. Adjusted EBITDA was $36.3 million, with a margin of 24%. Updated 2025 revenue guidance exceeds $600 million, representing 25% growth.

Cost Management: Cost of revenue items stabilized at 34.6% of revenue. Marketing costs focused on high ARPU users, and cash compensation costs increased due to bonus provisions and currency fluctuations.

AI Integration: Opera is focusing on integrating AI into its browsers, with products like Opera Neon showcasing task-based AI systems. The company emphasizes privacy and efficiency in AI adoption.

Partnerships: Expanding partnerships to promote browser choice and increase public awareness of alternatives. Partnerships are driving revenue and user engagement.

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Risk or Challenges

Market Conditions: The company faces competitive pressures in the AI-powered browsing space, with household AI names investing heavily to expand their reach and knowledge about end users. This could challenge Opera's ability to maintain its strategic position.

Regulatory Hurdles: The conclusion of the U.S. DOJ and Google remedies phase clarified competition rules, but any future regulatory changes could impact Opera's operations.

Economic Uncertainties: The weakening of the U.S. dollar relative to other currencies represents a headwind, potentially affecting financial performance.

Strategic Execution Risks: Opera's ambitious plans to integrate AI into its browsers, including the launch of Opera Neon, require significant innovation and execution. Failure to deliver on these plans could impact its competitive edge.

Supply Chain Disruptions: Not explicitly mentioned in the transcript.

Operational Challenges: Scaling new revenue partnerships and expanding browser classic revenue require continuous operational efficiency and innovation. Any misstep could hinder growth.

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Guidance & Outlook

Revenue Guidance: For 2025, Opera Limited has raised its revenue guidance to $600 million to $603 million, representing 25% growth over 2024. This reflects an acceleration of annual revenue growth from 20% in 2023, 21% in 2024, to 25% in 2025.

Adjusted EBITDA Guidance: The company has updated its adjusted EBITDA guidance to $138 million to $141 million for 2025, with a margin of 23% at the midpoint. This reflects a stable trend of quarterly revenue growth and economies of scale.

Q4 2025 Revenue and EBITDA Guidance: Opera expects Q4 2025 revenue of $162 million to $165 million, representing 11% to 13% growth. Adjusted EBITDA for Q4 is guided at $37.5 million to $40.5 million, with a 24% margin at the midpoint.

Cost of Revenue and Operational Expenses: For 2025, cost of revenue items are expected to stabilize at about 35% of revenue. Marketing costs are projected to grow at high single digits, while compensation costs will increase just over 10%. Other operational expenses are expected to remain stable compared to 2024.

AI-Powered Browsing and Product Expansion: Opera plans to expand its AI innovations, such as those in Opera Neon, into mainstream products like Opera One and Opera GX. The company aims to monetize AI opportunities and industry partnerships to enhance user experiences and drive growth.

MiniPay Growth and Future Plans: MiniPay has grown to over 10.5 million noncustodial wallets and nearly 310 million transactions. Opera plans to launch new partnerships and product features to expand its use cases, including remittances, local payments, and freelancer payments.

Opera GX and Gaming Segment: Opera GX ended the quarter with 33 million users, up 3% year-over-year, and achieved a new ARPU record of $3.69. The company plans to enhance AI capabilities and introduce advanced features to improve user experience in the gaming community.

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Shareholder Return Plan

Recurring Dividend Program: Opera combines growth and strategic potential with healthy financials and meaningful return of capital to shareholders through its recurring dividend program.

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Key Q&A

Q:What traction has Neon seen since its launch, and what is the go-to-market strategy?

A:Neon is still in an invitation-based phase to form a close group of founders for feedback and product development. Within 1-2 months, it will open to the broader public. The go-to-market strategy focuses on leveraging the existing user base and positioning Neon alongside other offerings. Neon has received over 1,000 media articles and favorable reviews, with users appreciating its efficiency and architecture.

Q:How is the e-commerce business evolving, and what is the outlook for 2026?

A:E-commerce revenue has doubled year-over-year over the past 18 months. The company believes it is under-indexing in the online advertising market and sees significant growth potential, especially in performance-based e-commerce.

Q:What behaviors have been observed from Neon’s first wave of users, and what are the plans for agentic commerce?

A:Users have provided positive feedback, particularly on Neon’s efficiency and agentic browsing capabilities. Agentic commerce is seen as the future, with potential for agents to perform tasks more efficiently than humans within a year. The company is focused on cost efficiency and ensuring e-commerce partners have adequate exposure.

Q:How is the macro environment impacting digital advertising, and what is the outlook for MiniPay?

A:Performance-based e-commerce advertising is growing, with over 100% year-over-year growth. MiniPay is generating revenue and is expected to grow through partnerships and integration with local payments and e-commerce. Stablecoin adoption is seen as a key driver for MiniPay’s growth.

Q:What are the growth factors and challenges for the e-commerce advertising business?

A:The company focuses on deep partnerships with leading e-commerce players by region. Growth is driven by performance-based revenue models and targeting capabilities. The macro environment has stabilized, supporting growth in key regions like Western markets.

Q:What is the status of OPay, and are there plans for an IPO?

A:OPay is performing well, dominating in Nigeria with high daily active users. The company is profitable and may consider an IPO in the future, but no specific timeline has been disclosed.

Q:How does the company view its competitive positioning with Neon compared to other AI browsers?

A:The company sees its neutrality and ability to integrate multiple large language models as a competitive advantage. Neon focuses on efficiency, cost-effectiveness, and privacy, differentiating it from competitors like ChatGPT’s Atlas and Perplexity’s Comet.

Q:What is the plan for monetizing MiniPay, and how does it fit into the broader strategy?

A:MiniPay is already generating revenue through partnerships, but the focus is on reinvesting revenue into marketing and partnerships to drive adoption and integration with Web3 technologies.

Q:What is the outlook for Opera GX, and how does it fit into the company’s strategy?

A:Opera GX’s user base has plateaued at 33 million, partly due to users migrating to other Opera products like Neon. The company remains optimistic about GX’s growth potential, with plans for AI upgrades and regional expansion.

Q:How does the company monetize query revenue, and what is the growth potential?

A:Query revenue is based on a revenue share model with partners. The company sees significant growth potential by creating opportunities for users to interact with the browser and integrating features like Aria and agentic browsing.

Q:How does the company view the competitive landscape for AI browsers, and how many can the market support?

A:The company believes its neutral approach and focus on efficiency, privacy, and cost-effectiveness position it well. It sees room for multiple AI browsers in the market, with users valuing flexibility and choice.

Q:Review of Unclear Management Responses

A:Management avoided providing specific details on the timeline for OPay’s IPO and the exact cost structure of agentic browsing. Additionally, while they mentioned plans for MiniPay partnerships and regional expansion, they did not provide concrete timelines or specifics.

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Earnings Word Cloud

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

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The earnings call presents a positive sentiment overall. Record revenue and strong advertising growth are complemented by raised guidance, indicating confidence in future performance. The introduction of AI-driven products and strategic international expansion highlight growth potential. While some uncertainties exist, like tariff headwinds and unclear management responses, the overall financial health, shareholder returns, and strategic plans suggest a positive outlook, likely resulting in a 2% to 8% stock price increase over the next two weeks, especially given the small-cap nature of the company.

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