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Opera Limited misses on earnings expectations. Reported EPS is $0.17 EPS, expectations were $0.27.

Operator: Welcome to the Opera Limited Second Quarter 2025 Earnings Call. [Operator Instructions] Please be advised that today’s call is being recorded. [Operator Instructions] I would now like to turn the call over to your speaker today, Matt Wolfson, Head of Investor Relations. Please begin.

Matthew Wolfson: Thank you for joining us. This morning, I am joined by our co-CEO, Song Lin; and our CFO, Frode Jacobsen. 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 on Form 20-F, including the risk factors. We undertake no obligation to update any forward-looking statements. 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 earnings press release, which is distributed and available to the public through our Investor Relations website located at investor.opera.com. Our comments will be on year-over-year comparisons unless we state otherwise. And with that, let me turn the call over to our co-CEO, Song Lin, who will cover our second quarter operational highlights and strategy; and then Frode Jacobsen, who will discuss our financials and expectations going forward. Song?

Lin Song: Thank you, Matt, and everyone else for joining us today. We have been looking forward to sharing our second quarter results with you and also update you on our latest thinking and priorities in this very exciting business landscape. I am going to start with the financials. The second quarter experienced year-over-year revenue growth of 30% compared to guidance of 22% to 26% and well ahead of 17% growth in the second quarter of last year. This marks our 17th straight quarter as a Rule of 40 company, entirely fueled by organic revenue growth and healthy margins, leading to cash flows that fund both innovation and our recurring dividends. Advertising revenue grew 44% year-over-year to $93 million. E-commerce remains the fastest-growing vertical within Advertising, continuing to grow over 100% year-over-year despite the ongoing volatility due to tariff uncertainty.

While the growth support from e- commerce in our revenue mix has resulted in the vertical now representing nearly half of total Advertising revenue, we still believe we are under-indexing with ample headroom for continued expansion as we move into the retail heavy back half of the year. We are also very pleased to see Search revenue returning to double-digit growth, up 11% year-over-year to $50 million in the quarter. The sequential growth of 6% was also twice as high as it was in Q2 last year, benefiting from the continued mix shift of our user base towards higher ARPU regions. We also see a broader trend with a new focus on high user intent traffic powered by AI leading to monetization opportunities arising not only during actual search, but also around pre and post search, providing ample opportunities for those in a position to detect and create value.

This allows us to deepen cooperation in the space with a wider range of partners from traditional search providers to e-commerce, travel and gaming verticals, foremost in the U.S., though increasingly also a global trend with exciting new opportunities ahead. This strong revenue performance led to adjusted EBITDA of $32 million, just above the high end of our previously issued guidance and once again demonstrating that we can outperform our revenue expectations while hitting our profit targets. With that, I will move to product and our strategic opportunities. We are at the dawn of a new era in compute and surrounded by AI companies competing for users to their models. Beyond being a huge source of traffic, we believe that the browser will emerge as the operating system for these AI services.

Today, the majority of AI agents run as cloud-hosted web pages. That is clearly inferior to the potential of a browser native architecture, which elevates an agent’s capabilities by allowing local native operations to run side-by-side with and sometimes indistinguishable from regular human operations. This is key for an AI agent to be truly and consistently helpful, enabling faster execution, richer contextual understanding and broader functional extensibility and also better solution for information privilege. The browser AI agent can have access to all the information accessible by the user, whether it’s local files, communication platforms or premium subscription content with greater control of privacy and security and more efficient use of computing resources.

In this context, we are so excited about what we are building for public release during the fall, the AI browser, Opera neon. Neon will combine major AI use cases into a single user interface with the native functionality of the Opera browser that is already appreciated for productivity. Opera Neon is built to be the gateway to AI, web applications and automation converge. The value creation opportunity is huge. For example, there are over 1 billion knowledge workers worldwide who rely on the browser as their primary workspace. These same workers on average, juggle [ 9 ] productivity apps a day and a far greater number of web tabs, all in all losing 40 minutes to context switching every day. This creates an opportunity for an Agentic AI collaborator as a natural evolution of how people work based on existing user habits and muscle memory.

Opera is uniquely positioned for this, both in terms of competence and scale. We have been pioneering browser innovation for the past 30 years, and we operate at a scale far greater than most web-based AI platforms with our nearly 300 million users. We will make AI widely accessible, naturally integrated and with immediate productivity benefits for our users. Automation and task intelligence will be built right into the routines that already exist. We can’t wait to show you. Moving on from AI, I wanted to give you an update on Opera GX, the browser made for gamers. The GX user base was 33 million MAUs in the second quarter, up 11% year-over-year and with an annualized ARPU of $3.47. Opera GX released an update during the quarter, providing users with a pack of enhanced tab management capabilities and improved multitasking features.

The update allows for side-by-side tab viewing, easy tracing of recently visited pages and the function to organize related tabs into collectible groups. We are also in the process of soft launching Opera GX in South Korea with Japan to follow shortly, leveraging our partnership with League of Legends as the preferred browser. There’s a lot going on with our flagship browsers as well, both for computers and for phones. Though in the interest of time, I will dive deeper into those on our Q3 call later in the year since that will coincide with the upcoming rollout of the third edition of Opera One with even more new exciting features. In terms of our overall user base and economics, our strategy of focusing our products and marketing on the highest value segments is unchanged, resulting in solid 5% ARPU growth to an annualized level of $1.97 with 289 million MAUs in the quarter.

I will wrap up with the final topic, stablecoins. We view the stablecoin market as one of the most exciting aspects within the fintech space. Through the use of non-custodial wallets, Opera created a stablecoin-based wallet called MiniPay. MiniPay allows people to hold, send and receive funds instantly using just a phone number. MiniPay already works with over 40 different currencies in 53 countries and allow its users to seamlessly convert local cash into a stablecoin-backed wallet using their preferred method; card, Apple Pay, mobile money or bank transfer and to switch back just as easily. A person located in Europe or the U.S. can then easily send funds or even make an instant payment of groceries and checkout thousands of miles away. MiniPay also introduced the notion of pockets, which allows for switching between stablecoins with just one click.

With several real-world applications already, MiniPay has the potential to improve the lives of millions of people globally. By simplifying the experience, we removed some major barriers for people to take advantage of this technology. As a result, MiniPay has reached 9 million activated wallets and exceeded 250 million transactions and is now among the fastest-growing non-custodial wallets globally. In addition, we are seeing the development of third-party apps within MiniPay, further differentiating the app and creating a positive feedback loop to fuel additional growth. While our near-term priority is scale building, we already generated MiniPay revenue from integrations that ensure native support for ecosystem partners. MiniPay was already launched within our lightweight Opera Mini browser on Android phones and is now also available as a stand-alone app on both Android and iOS, providing an even richer feature set and sets the stage for transacting across continents without expensive remittance fees.

We have observed positive regulatory developments in the stablecoin space, most recently the GENIUS Act in the United States and believe we can capture additional growth as this space continues to mature. All in all, we find ourselves in the privileged position of both being able to rapidly scale revenue opportunities while also being well situated to capitalize on 2 transformative and highly strategic technologies, AI and the adoption of stablecoins as a way to drive financial inclusion. We will stay very close to capture these opportunities, and we look forward to keeping you posted on these developments. Frode will now dive into the details behind our financial results before providing our updated guidance for the remainder of 2025. Frode?

Frode Fleten Jacobsen: Thanks, Tom. First of all, we are very pleased to yet again deliver on high expectations and exceed both our own guidance as well as Street expectations. Revenue growth was 30% year-over-year, well ahead of our already strong guidance of 22% to 26% growth. Looking at the first half as a whole, we grew revenue 35% year-over-year, which is more than double the year-over-year growth in the first half of 2024. Over the past year, our Advertising revenue has scaled to new levels. Preparing for and then seizing e-commerce opportunities, we saw major growth acceleration in the second half of last year, followed by an unprecedented sequential growth from the seasonal peak of Q4 into Q1 2025. And with Q2, we saw the expansion of global opportunities, largely offsetting the impact of tariff-related headwinds in U.S. e-commerce.

We have been positively assured by the resilience of our newly scaled Advertising revenue streams, in an otherwise volatile macro picture. We also saw Search revenue return to double-digit growth as expected, which adds to our ability today to significantly raise our growth expectations for the year. On the cost side, Q2 OpEx came in according to our prior directional commentary across marketing, compensation and the other smaller items combined, while cost of revenue scaled with the revenue overperformance and came in at the same percentage of revenue as in Q1. This means that we were able to grow faster than expected and strengthen our overall business trajectory going into the second half of the year while still exceeding the high end of our adjusted EBITDA guidance.

Our operating cash flow was $33 million in the quarter, representing 103% of adjusted EBITDA with the cash flow headwinds of Q1 representing tailwinds in Q2. Free cash flow from operations came in at $29 million or 91% of adjusted EBITDA. As always, we continue to expect fluctuations in cash conversion on a quarterly basis with the year-to-date conversion stabilizing as the year progresses. Adjusted diluted EPS was $0.26 in the quarter. We present adjusted net income and adjusted diluted EPS to provide a consistent view on the underlying business performance, excluding accounting impacts from investments such as OPay and share-based compensation expenses, which is quite volatile in the P&L due to timing of grants, while the number of actual equity instruments vested each year has been fairly stable.

This cost adjustment also eliminates the accounting impact of equity grants made by our majority shareholder, consisting of options in that shareholder itself and not causing dilution for Opera’s other shareholders. The resulting adjusted diluted EPS, thereby becomes a less volatile metric tied to the underlying profitability of our operations. As Song mentioned, the second quarter was our 17th consecutive quarter as a Rule of 40 company with revenue and adjusted EBITDA once again meeting or exceeding our previously issued guidance. We are incredibly happy to continue to execute at these levels of revenue growth matched by healthy profits, allowing us to continue to return cash to shareholders through our recurring dividend program. Since January 2023, we have distributed $2.80 of dividends per share.

And during the 3 years prior to that, we bought back 30% of our outstanding stock as another way of driving value for our shareholders. Now turning to guidance. For 2025 as a whole, we now guide revenue of $585 million to $597 million or 22% to 24% growth over 2024. This is the second time we refresh 2025 guidance and the second time we add 3 percentage points to the annual growth rate. Our guidance implies a continued acceleration of our full year revenue growth from 20% in 2023, 21% in 2024 and now 23% at the midpoint for 2025, while continuing to reflect appropriate caution for potential headwinds. Similar to before, given the hockey stick growth of the second half of 2024, we have based our guidance on sequential modeling. The raised estimates capture the Q2 overperformance and the increased confidence in our path for the second half.

As before, this results in a relatively stable trend of quarterly revenue growth measured on a 2-year CAGR, which captures the scale we have built in recent quarters while also evening out our forward-looking growth profile. In terms of adjusted EBITDA, we lifted the bottom end of the range for now, guiding $136 million to $140 million for the year as a whole or a margin of 23.4% at the midpoint. This reflects a continued expectation for margin expansion in the second half of the year, but also the weakened U.S. dollar relative to other currencies eats up about 1/3 of the benefit by affecting our cost base. The conversion of international currencies to USD results in a percentage cost increase, most notably for compensation costs, which increases by about $1 million per quarter in U.S. dollars compared to the rates from when we last gave guidance.

Apart from such fluctuations, economies of scale continue to benefit us as an underlying trend. Cost-wise, we then implicitly guide to a full year OpEx base pre-adjusted EBITDA of $453 million at the midpoint. For the year as a whole, we expect the cost of revenue items combined to come in at 34% to 35% of revenue following the continued growth of Opera Ads. Other cost items grow at a lower pace than our revenue and thereby reduce as a percentage of revenue relative to 2024. This includes marketing costs, which we expect to grow at mid- to high single digits; compensation costs, which will increase about 10%; and the sum of all other OpEx items, pre-adjusted EBITDA will likely increase at a low single-digit percentage. In line with this, we guide Q3 revenue of $146 million to $149 million, representing 20% growth at the midpoint and Q2 adjusted EBITDA of $34 million to $36 million or a 24% margin at the midpoint.

Within the implied quarterly OpEx base of $112.5 million at the midpoint, we expect that cost of revenue items as a percentage of revenue will be 34% to 35% in the quarter. We expect marketing costs in the mid-$30 million range and thereby relatively stable versus the prior quarters this year. And we expect cash compensation costs to increase about $1 million to $2 million versus the Q2 level, including the effects of the weaker U.S. dollar relative to the main currencies of our salary expense. The sum of all other OpEx items, pre-adjusted EBITDA are expected to tick up slightly. Giving guidance in these periods that combine such rapid revenue growth in an environment with great changes, both on the macroeconomic stage as well as the technological one has proven to be difficult, though we believe caution has served us well.

After all, the guidances that later turn out to be conservative were well beyond expectations at the time they were given. And yet again, I believe we have guided something that we should all feel proud and pleased to achieve while recognizing that volatility goes both ways, and we, of course, hope to continue giving those positive surprises. With that, I’ll turn the call back to the operator for questions.

Operator: [Operator Instructions] We’ll take our first question from Naved Khan with B. Riley Securities.

Naved Ahmad Khan: Two questions from me, please. One on the Western market user base, the sequential growth was quite strong, I think the strongest we’ve seen in some time. And on the flip side, GX users didn’t really grow. So is this a reflection of how you spend your marketing spend? Just trying to understand the dynamics there in terms of what drove the strength in Western market users versus GX? And the second question I have is just around Neon. Can you just maybe share some thoughts on how should we think about the pricing of the product and also the cost side of things as you would probably have to pay for the compute for it?

Lin Song: Yes. So it’s Song Lin. I think I’ll just quickly cover that, right? So maybe super high level, I would just say that I think there is a bit seasonality around it, just to call out, right, because, of course, naturally, GX users are mostly younger audiences and also gamers, young gamers and Gen Zs or whatever. So they are, of course, affected more always like we saw this all the time that they are affected more by the summer holidays. So there is a bit of seasonality factors involved. And yes, hopefully, it will be more changed during the Q3 and Q4. So I think that will be more visible. And then just to also say that, of course, internally, we don’t really operate on a basis of more like — I would almost say that the growth of the [indiscernible], of course, is more like a summary of indicative trends, right?

But internally, of course, we’re always organized by ROIs and where we see the biggest potential and where we see the product has been received a lot. And maybe I’ll just call out that, yes, so like we see that we have very good growth in Europe, for instance, for Q2, which is very excited, which is actually also good proof that by having more of those AIs, actually it would also be helpful to us just because then — especially the Western markets are more exposed to be aware that there is actually a choice of browser, right? So not only default, but there will be multiple choices. And that in turn can actually help driven adoptions. So we actually see that where AI is hottest is actually where it’s almost become easier for us to acquire users.

Yes, as a simple way to put it.

Operator: We’ll take our next question from Eric Sheridan with Goldman Sachs.

Eric James Sheridan: Maybe a 2-parter on Neon. With the announcement in the release and getting closer to a public launch there. I wanted to go a little bit deeper first, big picture on how you think the browser environment is going to change more broadly. This clearly is a first step towards a direction of sort of AI generation in browsers and how you think about the multiyear pathway for the browser landscape generally changing and how you align the platform for those changes? And then the second piece would just be in terms of launching something like this in the public, how should we think about the investments needed either on the marketing side or on the infrastructure side? I know Naved asked about sort of the cost of compute tied to it, but just trying to understand a little bit of sort of fixed versus variable investments behind this over a longer duration period of time.

Lin Song: Sure. So like I guess I also take the chance to also come on the question which I have not answered in the first one, so about Neon and also in general landscape, right? So I guess, first of all, just to call out that it’s, of course, the early stage. And I would say, at this point, our focus primarily is actually on like product market fit side of things, right? Because more like — but maybe I’ll just first talk about how we think of product and also the growth of browser or whatever, right? So a few points, high level, I think that with AI, it’s already been proven that web interface via traditional apps, I guess, has now been also been recognized as almost the preferred platform where people want to access information.

And this is especially obvious with AI, right? Because I guess at least it shows that the web, traditional web instead of locking apps are still the best way for AI to be able to operate and to access information freely. So that is very good news for browser in general. So that is of course very strong alternatives. If we compare with some earlier narratives a few years back where somebody is still talking about, it’s only app or whatever. So I think with AI, that’s actually a big help that everybody now see very clearly that web and browser is probably the future. And then I guess I’ll also comment that as also you probably also see the trend lately, both — also by those AI players, right? All of them are also talking about how important browser could be.

So I think our view is about the same, right, that like when web becomes so important, there will always be, I would say, 2 ways of access information, right? So one way is where traditionally user access information, which is by — you run a web page service provided by the AI provider, like you run ChatGPT or whatever, on a web page. However, I think it’s also been very clear that when we see things go deeper, it’s more and more likely that you need a native solution really just because there will be so many information. And as also AI goes on, I think number one, it will be an unseparable part of your everyday operation, right? So like I think once you try it, you will — there will never be go back. You always every day use AI. But then the second question comes that when you are using AI, it’s unlikely that you will have to rely on a purely cloud-based solution just because AI has to access everything, right, on your computers, they have access on your premium content on your subscription, on your e-mail.

And all those, I think, will be very hard to capture if only can access from cloud as it is now, right? So I think the trend seems to be very clear. And also all the AI companies also recognize that there will be a significant portion of it that AI has to be located natively on your applications like on your PC, on your whatever and everybody now see that browser is probably one of the best mediums, just by design. Because by design, a web page cannot access so many information. You have to be locally while browser is local. So it’s a natural linking between — yes, between a web environment and also local environment. So that’s the trend we see. And I think that’s exactly why we are spending — we’re doing a lot of research on Neon just because we feel that we are actually in a better position to do this.

I also saw some comments that many other companies commenting about they also think it’s relevant. But of course, maybe people don’t realize that we are probably one of the few ones which has the scale and the capacity to do it, right? Even if you look at some other players, hot ones claiming to want to take over Chrome and they have only like 20 million, 30 million MAUs in total, right? Where we already have the existing almost 300 million MAUs, which have been running for many, many years. So I think we are in a very good spot to actually make that happening, and that’s what we are focusing on. And I think that’s also part of what we believe will be the future. And then just a few lines, right? So I think in the future, the economics and business models, I would almost say that I think there will always be — some will be free because we can — we believe that we can power the advertisement as what we’re doing now, whether it’s through partners or whether it’s through some other more like [indiscernible] or other different partners, I think we are in a very good spot to actually monetize.

Again, I think we do a better job than most some of the start-ups. But then I think if you want to have some deeper experience, I also think it’s already proven that people are willing to pay subscription money for it for some extensive usages, and I think it’s also fair that we follow the same model. So yes, so I believe it will always be a combination that it will be use case sponsored by advertisement. And then it will also be a subscription model for whoever want to enjoy a deeper experience purely because that’s already been proven and people are ready to spend money on it. I hope this helps.

Operator: We’ll go next to Lance Vitanza with TD Cowen.

Lance William Vitanza: Congrats on the quarter. I have 2 questions, if I could. The first is on the stablecoin, the MiniPay, the 9 million activated wallets, that’s great. How do you monetize the engagement? Is this just about encouraging user growth and retention? Or is there another angle here? Is there any way to connect the dots between MiniPay user growth and, I don’t know, sustained ad revenue growth, for example?

Lin Song: Yes. So it’s Song Lin. I think I also try to cover this, and then Frode can also supplement with also other information, right? So like again, like we are trying to be conservative in calling out those new initiatives. We have launched for the record, we have been actually incubating MiniPay for few years and very happy that we are now seeing that expanding and also now it’s the right moment, right? So like, again, internally, we are very excited, quietly excited, I would say, to see the growth of it, to see the very good for the market in many places. And we also see that the wide adoption of stablecoin across the industry, which, of course, is very necessary for anything to succeed in the fintech world, right? So now I think we’re starting to see that many of the stars are starting to align, and that’s why we are also getting very excited.

And then maybe just super quickly on monetization, right? So I actually feel that, again, MiniPay is one of the few products that — it’s a good combination of both very good product market, but actually, it also comes with monetization. I think the nature is just that it’s very close to — it is a product which are very close to money, I would say, for the nature of fintech. So for now, like it’s already actually generating sales for money from us, even though, of course, for now, that’s not the short-term purpose. Our purpose, of course — but like — yes — but the stand-alone is actually already approval, I would say, for monetization. So for now, I would say the pure monetization model will be to — for us to work with ecosystem partners to integrate that, all those functionalities like we are including all those stablecoins into MiniPay and we get a card, right, for whatever they earn based on some strategic investment agreement.

So like again, maybe just echo back to say that I think this is — MiniPay is a very good example where the nature of the product, it comes almost with monetization potentials without having to go through, say, advertisements or without having to go to Search or other means. It’s just because stablecoin itself, this industry are rather profitable, I guess, is also proven by some of the recent listings by Sogou and also there are some [indiscernible] and a few others. So I think it’s also why we are very excited because as far as you have enough user base and as far as you have to use it, there are actually a very natural opportunity for you to get revenue out of it. So I would almost maybe compare this with Search, right? So like why Search is very good for the browser in the [indiscernible] is because when people are using Search, they don’t really see that as advertisement, right?

They see that as an important functionality, but we, of course, along the way, also making money. So I would almost say that MiniPay is of a bit similar nature that you don’t have to see some apps popping up or whatever, you can just use it. And by the nature of it, there is a chance for us to monetize.

Lance William Vitanza: That’s great. And actually, that sort of ties into my next question, which was on Search revenue and the rebound there. And Frode, I think you mentioned that it was expected and maybe I lost track of why you were expecting it to rebound. But I’m just wondering what drove that? What I tend to think of Search revenue as a function of number of searches. So did Search volume rise on a per user basis? Or is this simply a change in revenue per search that’s perhaps driven by the shift in users to higher-value markets?

Frode Fleten Jacobsen: Yes. When we last reported, we already saw the trends were picking up. We were in the single digits year-over-year growth last quarter, and then we saw we are getting back towards the double digits. And I think we expect Search to continue to do well for the remainder of the year, and that’s reflected in our guidance. But I don’t think I should go into sort of the detailed breakdown of how we model or predict it.

Lance William Vitanza: Okay. Well, how about — at least, can you discuss whether you think it’s a new trend line? Or was it more of sort of — how durable do you see this resurgence potentially being?

Frode Fleten Jacobsen: I think that the broader search landscape is changing rapidly, right, with the theme of a lot of this call as well with various kinds of new information processing and gathering services. I think that is very, very interesting as a browser, right, being able to send traffic to partners, but also being able to natively integrate those types of solutions in the product that we talked about with Neon. So as a broader concept, I think we are very enthusiastic about this. It might be a bit narrow almost to call it search, right? Because it’s almost like information discovery and how the browser becomes increasingly relevant in that space.

Operator: We’ll go next to Jim Callahan with Piper Sandler.

James P. Callahan: Can you talk more about the tariff-related headwinds you kind of called out in the quarter? Are these temporary? Or is this something we can see kind of like persisting through the rest of this year?

Frode Fleten Jacobsen: Yes, I can comment on that. I think it played out a bit as expected. So when we last reported, it was late April, and we were past the initial launch of tariffs. And I think, of course, since then, maybe there’s been somewhat more stabilization in the broader picture. But it did translate into a real headwind, and we are very proud to have been able to offset that with global growth essentially. So I think as we look ahead, I think we are starting to see some recovery now, but it definitely represents an upside potential for us to see a return to even higher activity levels as in pre-tariff terrain.

James P. Callahan: Got it. That’s helpful. And then Opera GX launching in South Korea and Japan. I guess, how should we think about sort of like the size of that opportunity would be helpful?

Lin Song: Yes, it’s Song Lin. I can briefly comment, right? So I would almost say that it’s still early stage, but I guess we have announced that we are [indiscernible] the preferred browser. And of course, as you know, that naturally, East Asia is actually one of the bigger, almost important places for those games. And as a result, we actually see that there are some very interesting attractions that the GX are becoming to be liked by the users in those countries. So I think it’s very natural for us to deepen that. And I think the only thing is that, of course, those regions also require more localization because they are all [indiscernible], and we have not really prioritized this in the past, but now we see opportunities.

So we are diving in. I think it’s a bit too early to estimate the scale in market returns, but it’s a very exciting market. And interestingly, just to comment that partly though is also that we do already see quite strong growth on the e-commerce potential in those regions based on our still regular base or limited user coverage on the generic browsers. So essentially, I think the other important factor is that we are very excited about monetization potentials. And I think that’s also why we feel that it’s the right move to further spread the coverage of those key, I would say, developed countries.

Operator: [Operator Instructions] We’ll go next to Mark Argento with Lake Street.

Mark Nicholas Argento: Just a few quick ones here. On the e-commerce business, as that business will start to comp, the comps get a little bit more difficult. But how should we think about the seasonality in terms of kind of the revenue there? Obviously, probably a little bit more weighted over time to the higher spend quarters. But just wanted to get your thoughts on how you see that playing out in the different verticals?

Frode Fleten Jacobsen: Yes, sure, Mark, I can comment a bit. So as a recap, I think what we saw last year was that we went from a 17% year-over-year growth rate in the first half of the year into 20% and then 29% growth in the second half. So the comparables are definitely quite challenging in the second half of the year. Of course, the underlying — it is the shopping season. So that is a tailwind for the second half of the year. At the same time, we try to not bake in the same kind of home run in our second half expectations at this point in time, but rather take a more cautious view, and that’s why we look at the 2-year growth rate by quarter to guide something that’s a bit more of an even growth profile all in all.

Mark Nicholas Argento: Okay. That’s helpful. And then in terms of the various verticals, obviously is still mostly focused on more kind of product — or goods versus services at this point. Is there opportunity to expand into travel and some other areas above and beyond just more of the kind of the traditional goods area?

Lin Song: I can try to comment on this. So yes, more like super high level just to comment that — for now, of course, we see the fastest growing is retail. So that’s great. And it’s also proven that like the — let’s say, the intent-based advertisement actually works because — I think I also mentioned earlier that all our advertisers, almost all are performance based is a very solid proof that it actually works. So — and then I would also say that we see very close follow-up. Traveling is definitely key sectors. We are traditionally already fairly big, like browser is historically always a fairly big distribution partners for travelers like Booking.com, for instance. So yes, 100% that we see that it’s a good combination of both browser, but also AI.

So that is definitely very interesting. And then I guess we also commented maybe a bit earlier that there are also some other verticals like fintech, for instance, that could also be quite relevant because, again, it’s also a good combination of you see a lot of those executives on a browser environment, very natural. And also they are also the ones probably affected most by AI that there could also be maybe a better combination of things. So I would say all those areas are good potentials for us to develop further, and we are looking into those.

Mark Nicholas Argento: Okay, that’s helpful. And then just pivoting quickly, it wasn’t overly clear to me at least on the Neon product launch, is that going to — is that built on your guys’ tech stack? Are you guys using other LLMs? Maybe just refresh me and better understand kind of what is powering that new browser?

Lin Song: Sure. So yes, it’s Song Lin. I’ll quickly cover that, right? So yes, I think essentially, we are using similar approaches as most others that we do rely on the big base models from those bigger AI companies. I don’t think we have plan to spend billions of dollars to train the large language model because I think that’s repetitive. And I guess the beauty of that is that because the market of big language models are so competitive, that it’s almost a bit commoditized in some ways that actually allow us to be able to have a good relationship with almost all of them to actually be able to use the best language model at any given time in any given scenario. So I would almost say that’s an advantage of that. And also because of all the investment and the competitions, we actually see that the costs have actually been lowered down quite dramatically.

As there is still competition, we believe that will still be the case. And I think that’s actually a good time for a player like us. And then on top of it, I think our contribution would mostly be on, number one, how to give the relevant context and how to allow AI to operate in a browser like environment. I think that will be the best advantage that we would have. And I think that will be a huge win for us to nail it, and that’s what we are focusing on.

Mark Nicholas Argento: Great. And last one for me. You touched on it a little bit earlier, but Perplexity was out with their unsolicited offer to buy Chrome browser. A little surprised you guys didn’t get any play on that in terms of just kind of being in the mix. It sounds like for Perplexity went and talked to all of the other browser players out there. Is there a strategic opportunity for you guys to work with other large branded guys above and beyond what you’re doing right now? And how do you think about — and if you could size it for us as well, how big is actually your browser installed base right now? Because I don’t think the market is valuing the strategic value of that installed base?

Lin Song: Yes. Okay. So I guess I will comment a bit first, and then I think it’s the moment to go through that and Matt can also comment a bit, right? So — okay, so I guess it’s very interesting. I mean we, of course, follow this closely as you know that well. So we are more or less involved in all those discussions, right? So we are very familiar with the player there. Okay — so first of all, I would just say that, yes, it’s actually quite interesting to see, right, because, of course, we saw some of the players claiming that they are in a better position. They are one of the few positions to be able to accommodate Chrome, should there be some jurisdictions? And I guess we, of course, are always a very good partner with Google for more than 20 years.

But then I would just say that, of course, I guess like we are probably — we are one of the biggest independent browser out there. We have been independent for the past 30 years, which we are celebrating this year for 30 years. And we are the innovator of browsers, and we have a deep understanding of technology. And more importantly, we have, of course, 300 million MAUs and still growing. So I think everything is very strong, pointing that we are in a very good position for all those discussions. So it’s more like just interesting point out, right? So like if we’re actually talking about whoever is the biggest independent browsers, I think our name should actually pop up very high there. I guess the only thing is just because being a European company has some pros and cons, I guess, that we are probably less frequently being discussed in those context.

But again, I think it’s just our job to be visiting U.S. more, and we should also — and of course, U.S. has been our biggest market for the past many years, and it’s becoming more and more relevant, and we should just work more on it. So I would almost say that’s — that’s our feelings for now. And otherwise, I think it’s hard for us to comment anything in particular related to this case, [Technical Difficulty] we have good cooperation with all the partners involved there.

Operator: It appears we have no further questions at this time. I will now turn the program back over to Song Lin for any additional or closing remarks.

Lin Song: Sure. So like again, thank you to everyone for joining us today. We look forward to sharing the results and outlook with you. And now we come to an extremely exciting second half of the year. We have many launches to come. We will work hard to seize the opportunities that come with it and look forward to keeping you posted. Have a good day, all of you.

Operator: This does conclude today’s program. Thank you for your participation. You may disconnect at any time.