Good day, ladies and gentlemen. And welcome to Opera Limited Third Quarter 2018 Earnings Call. At this time, all participants are in a listen only mode. Later we’ll conduct the question-and-answer session and instructions will be given at that time [Operator Instructions]. I would now like to turn the call over to Aaron McParlan, Opera’s General Counsel. Aaron you may begin.

Thank you. Greetings, and welcome to Opera’s third quarter earnings call. Together with me today I have our CFO, Mr. Frode Jacobsen, and our Chief Operating Officer, Mr. Song Lin, who will cover our prepared remarks and answer any questions. Before we begin I refer you to our safe harbor statement in the company's earnings release which also applies to the conference call today as management will be make forward-looking statements. Our commentary today will also include non-IFRS financial measures. We believe that use of these non-IFRS financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends. These measures should not be considered in isolation or as a substitute for financial information prepared in accordance with IFRS. Reconciliations do not address the non-IFRS metrics for our reported results can be found in our press release that was issued today, a copy of which can be found on our investor relations Web site. It is now my pleasure to turn the conference over to our CFO, Mr. Frode Jacobsen.

Thank you, Aaron, and welcome to all from me as well. We have been looking forward to this call and the opportunity to give you an update on how the business is performing. I’ll begin with the financial highlights. We’re very pleased with the results, which exceeded our expectations. We achieved all-time highs on all key metrics and are raising our revenue guidance for the full year. During the quarter, we achieved strong user and top line growth, while maintaining healthy margins. Third quarter revenue was up 17.4% to $44.7 million, driven by 57% growth in advertising revenue and strong results in the new retail revenue stream that we will talk more about today. When looking at our year-over-year trajectory, just keep in mind that the third quarter of 2017 contain both other income associated with the divestment of certain intellectual property and related technology license deal, which resulted in a strong quarterly spike in revenue and profit that were not recurring in nature. We achieved in this quarter of 2018 an adjusted EBITDA of $16.5 million, representing 36.9% margin and an adjusted net income of $12.5 million or 28% margin. In the third quarter, our IPO and concurrent private placements took place. We issued a total of $29.87 million new shares and collected net proceeds after underwriter and other related costs of $167.2 million. Combined with our underlying positive cash flow, our September 30th cash balance increased to $217.6 million. Among our new shares, $19.87 million was issued in connection with the IPO and our underwriter's option to purchase additional shares; this correspondent to$ 9.93 million ADSs currently trading, given the ratio of two shares per ADS. Other shares remain subject to the six month lock up that expires after January 22, 2019. So at the end of Q3,…

Yes, thank you Frode. Hello everyone. So first, I’d like to appreciate your participation and the interest in following our company. I will start by talking a bit about our users, so I’ll start with Opera news, our AI based company platform. So again, we are quite pleased to share a very strong Q3 in terms of user growth. We grow to an average of $121.4 million MAU, Opera News platform, in Q3. This is more than $20 million up from the last quarter average. Within this, we have also reached about $17.4 million MAU on the dedicated Opera News app, which is another increase of nearly $10 million from the last quarter average. Overall, we are very excited about the continued strong user growth on Opera News and we hope you feel the same. Beyond Opera News, we’re also very pleased with the overall growth of our smart phone user base,, where we’ve reached $195.4 million average MAU in the quarter, which is up over $14 million in aggregate. Also, on the PC, side we’ve reached $58.4 million MAU, which is up $1.3 million in the quarter. I would also like to comment that we are now starting to see a convergences, where it really allow ourselves in this quarter to focus more on feature and the design rich mobile products as we’ve done on the PC platform. And now this year we’re seeing all the signs that our statistical positioning of our Opera differentiated PC offering in the west maybe complemented with a new pick up of also mobile user base there. We never really have that. So with this is in context, I think as you should have in mind so when you read about or perhaps even better try our new and award winning Opera Touch…

Thanks, Song Lin. Okay. Let me now turn back to discussing our third quarter financial results in a bit more detail. As I mentioned, Opera had record revenue in the quarter, reaching $44.7 million. Search revenue represented 43% of total revenue or $19.1 million, which was up 12.3% year-over-year. This mainly followed increases in the average revenue achieved per search query. We maintain search revenue at a strong level even in the context of foreign exchange headwinds, which is easiest to see on the sequential search revenue. Advertising revenue reached 39% of total or $17.6 million in the quarter which was 56.8% up year-over-year. This strong growth was supported by several factors, including our initiation of direct campaigns on the Opera News inventory in the browser but also from the revenue share deals with e-commerce partners and various services that we control and monetize ourselves. The technology licensing and other category represented 11% of total revenue or $5.1 million, a 48% decline year-over-year. As stated before, this revenue category is more volatile and lumpy in nature than the others. And we saw an exceptionally strong third quarter of 2017 in terms of licensing. Finally, retail revenues represented 6% of total revenue, or $2.9 million in this first quarter of material activity. Our total operating expenses amounted to $32.8 million in the third quarter, which was unchanged versus the third quarter total of 2017. I'll now focus on the five largest categories, representing 86% of the total operating expenses. Compensation expenses were $9.4 million, down 24.7% year-on-year. This mainly consisted of cash-based compensation, which was $8.6 million or down 4.7%, which was mainly due to the extraordinary costs in the 2017 period, following the divestment of certain intellectual IP and the related themes. The other part equity-based compensation was $0.8 million…

Thank you [Operator Instructions]. And our first question comes from Huijuan Chen with Citigroup. Your line is open.

Firstly, could you just help us understand the growth in our mobile MAU of Opera Browser and the standalone Opera news app in the key markets? And also as to the adverting revenue for MAU in some of these key markets. How has that been trending sequentially in third quarter? And what's the driver behind the advertising revenue per MAU growth in third quarter, in particular related to the news feed advertising? And then I have some follow-up questions.

I think me and Frode will try to split the question. I think I will try to address the questions around the user growth, both for the browser and also for the news app. And Frode can probably comment a bit on the revenue and ARPU part of it a bit high level. So I think I would just add a bit color there. I think it's very relevant question. So I will start with the news app since it is mostly important initiative. So I think our news as you already see on the quarterly results, I think about we are very pleased with the faster growth of the user base. And on top our estimation is that for now our forecast remains in a key vertical markets like Africa, which is I think is still most important. We have actually seen very high engagements and very high intentions, which actually give us some, I would say, a lot of encouragement of how bigger we can further grow in those regions. But of course is also reminder that we just have to be focused and we have to be concentrating and then just take the markets, because the whole market is still big. I will give you some example for instance in Nigeria, I just take a look since you actually asked the question last time. I take a look in Nigeria. The average time spent within for the browser is $38 million last time in June. But in October, we have already been more than 40 minutes, which is almost 6%, 7%, up quarter-to-quarter. And this is actually not considering we’ve beginning to launch much more video content now from November on, which we think will have even bigger impact. The other thing I also want to mention…

So without going into country specifics, I would say that overall our user driven monetization is performing extremely, extremely well led by this near 57% year-over-year growth in advertising. And also keep in mind in the third quarter of 2017 we had already begun monetizing the Opera News traffic. And so I think partly also what's about is to exceed our expectations for the third quarter was we have so many opportunities ahead of us that we are starting to pick from, in terms of how we can improve our monetization ability. And so in the quarter, in the reports we mentioned, for example, that now we have initiated to use direct sales campaigns on the Opera News inventory, which is positive. And another one, which is an example of one that is ahead of us, would be the initiation of monetization of the standalone Opera News client, which is not yet begun. On a per user level, I would say that if I take a look at the total. On the PC user base, our ARPU is quite stable but attractive. And of course, this is a user base business grown by 18% in the past year. So I think we maintain an ARPU in that context it’s quite good with also in light of the currency headwinds that I can cover in a bit more detail if there is interest. On the smart phone side, I think the trend also on a per user basis is very positive, which is very obviously true on a rough pool, but it is also true on a net level after you consider our payments to publishers and monetization partners.

And I have another question on our investment in StarMaker. Could you help us understand, if there is any synergy between StarMaker of our existing business, if any? And then could you share more color on the competitive landscape of the music streaming if this is India? And also, how should we think about the capability of this business and the potential impact out here?

I think again what me and Frode will try to split is that maybe I will answer a bit about potential synergies that you see on product and then Forde can probably comment a bit about any impact on the investment on P&L. So I think yes, I do think there is a very strong synergy between music video based app and Opera. As I also mentioned earlier that if you’re seeing from China's base say from Toutiao for instance and TikTok, you actually see it's now quite obvious that the good combination of both news apps but also with video but also music content with also social networking functionalities is very essential. So to me I think it's already a proven model and it's why in China we'll be able to see that. But more importantly, the same model has also moved to overseas markets. So to me, I think it's almost those all of questions that Opera has to be there. The only choice if we do it from scratch ourselves, maybe spend a few years to address and tens of millions of money, or do we try to get then all its stake in a company and where potentially we could also be able to control later. So for us, I think that’s relatively easy question and to be more specifically right. So even though of course for now we have not really walked with each other before the investment but afterwards, I think that I potentially see that there could be a lot of cross promotions even specific verticals integration of content from the music video into the news apps and also a lot more cross promotions, partly also because we have a quite a big overlapping of regions. They are particularly big in India, Indonesia,…

Accounting wise, it's quite simple. We recognized our ownership of shares valued at $30 million and at each reporting, we are required to assess that we believe that value has come up or down and then recognize the impact of that. But other than that no recurring and optimistic P&L impact of the investments.

And another question is on OPay. You said some exciting figures on the transaction volume of OPay since the quarter and also up to October. Could you help us understand the geography of that growth coming from? And in monetization model that transaction volume and how should we be thinking about the market share of OPay in the key markets?

Again I'll just try to cover high level and Fredo will help me just add anything on top. So yes, I think OPay as a payment of business, it is very -- per country specific. The only reason is just because for anything with the payments is usually very heavily resonated. You need very specific license so you really have to launch it per market basis. So the number which I reported earlier is specifically in the biggest country in Africa, Nigeria, which is also the biggest market, which we are very excited about in terms of population. So all the numbers we have motioned is only in Nigeria. We have a full mobile money license. And as mentioned, we are able to grow already 700 to 800k per day in October timeframe. In terms of business model, it's quite simple. So when we proceeds in those transactions means we are taking money from users, deposit into our mobile wallet and when they help them also pay it out, which have your fee which is a transaction fee. And then we'll take the margin there. So it's very straightforward. But I guess I would like to mention just that same as other payment business or e-commerce business and this point even though we do take margins, we are profitable in terms of gross profitable. Our priority is probably not to take as much as transaction as possible. So for us, I think it's super important for us to almost establish our sales as the number one player in that field and dominant -- dominate the payment market. So I think if it does any gross profit we probably want to spend that in how to expanding our user base and build-up our transaction volumes. So for us that will be most important -- because this is also -- e-commerce is -- like payment is a field I would say does know ceiling. You can really go as higher as it gets and that is all we assume the bigger value for us in the long run, so that's where our focus is. And in terms of -- so I think in terms of competitive landscape and also where we are in the market, I would say we are just started, we are in the beginning stage, but we already grow very fast. I mean, I don’t want to do some too aggressive forward-looking statements. But I think our goal would be just to be the number one in that area ASAP in Nigeria. And I think it's possible for us to do that in a relatively short time frame.

And lastly, so outside of search high-tech and payment businesses, could management share with us the latest developments on crypto currency businesses, if anything?

So yes, in Q3, we actually -- we does the auto launch of crypto wallets. I think here the results were also value prepositions. We have also walked with many partners, deflecting like potentials. Also in our key regions like Africa we are very well received and we are actually asked even by many, I would say, government people locally to see if crypto can be used in the payment business for in instance in conjunction. However, I think I would also like to say that this is a bit still in early stage. It takes a lot of time for those major initiatives. So I don't have anything extra to share at this stage except to what's already being released in our product.

Thank you. Our following question comes from [Chow Wing Hoi] with CICC. Your line is now open.

This is [indiscernible] from CICC. Congratulations on the strong results, and thanks Huijuan for covering more of my questions. So I have some follow-ups on our OPay business and StarMaker. So about StarMaker when we will be StarMaker starting to contribute in the the P&L level, making profits? And on OPay, I just want to know are there going to be more marketing expenses relative to promote OPay in our key areas, like Nigeria. And I have some follow-ups.

Maybe I can begin, so this is Forde here. In terms of StarMaker's P&L and profit contribution. So at our current ownership share, we do not recognize any percentage of the StarMaker results as recurring item on our P&L. So we have mentioned that we do have an option to increase our ownership share to 51% and thereby to take control of the company, which is an option that we can execute during the second half of 2020. So in terms of today's framework of agreements that is the point in time where that could be an item in our P&L. For OPay and promotional activities, I think Song Lin you can maybe describe a little bit more of the business impact of how. It's growing quite limited. Keep in mind it is a separate company that Opera is a shareholder in, and we recognize our percentage of the OPay financial results as an contribution from an associate in our P&L.

So I think I can add a bit color. So, yes, I mean as Frode said, I think for OPay, I believe we’re actually well with a very few companies, which are able to grow very fast in this space and spending a lot of money, at least on the business itself. I mean, obviously, OPay as a company they probably need to have some R&D on that. But at least for the model itself is actually already profitable and that’s what we are very pleased about. And so you have also asked about our strategy of whether we have expanding that to other markets. So I would say just that yes we definitely are planning to expand into other key Africa markets. The only thing just to add for payments is it’s actually very localized, you have that local license, you have the very build out very strong local team and you have to -- it’s also very high cities even in Nigeria alone. So it’s also a matter of priority and focus. So I would say in the very short time frame, we’re probably still concentrating on Nigeria, because it's just such a high [indiscernible] for us grow there, but at the same time we’re very actively looking for opportunities in all the other, particularly African regions and planning there. But we’ll share more information when we feel it’s a bit more material in that space.

My next question about our ad load. What’s our ad load currently in both operating out in browser and for our standalone applications, and also what's our target?

I can comment a bit and Frode can also add anything on top. So I think in Q3 at least for ad loads, it’s still only available on the browser. We have not really started to add that into the news standalone client. It’s just -- as we discussed before, it’s a matter of focus and we want to grow user base there on the standalone clients. So that’s why we’ve not enabled it. For the browser, I would say, again it’s probably hard to say the exact ad load, it’s just because different companies use different way to narrow it. I would say we are still at very early stage, so let’s say maybe 20%, 30% of the ad load, which we are actively pursuing in the browser space. But again, it’s more like estimation there’s also various regions to regions. For standalone news app, we’ve already started to have some very initial monetization now in end of October, start of November. We see that that’s as a very good potential, so it’s already having solid validation. But I would say on standalone news client so far the primary goal is still to grow the user base, because we think that’s the most important. And apps that I think we’ll spend a bit more time on how we can further add the app load. So that’s a bit more high level I would say. But again, just also reflecting what Frode commenting earlier that we are quite pleased that even though we’ve just started in a very early stage of ad monetization, we are able to demonstrate quite a strong growth in apps, which we are happy about, we’re also I think quite clear what we need to do. For instance increase app loads, have better targeting, improve -- welcoming more ad SDK partners this and that. So we have a pretty clear roadmap of how that can be done. It's just a matter of execution and the matter of balancing of our user growth. So that’s some of the high levels, which I’m trying to describe.

I don't have much to add on top of that. I thought to just underline that last point that we made there that as you think about modeling this ad load, it's of course important. But then there are some the other factors that are -- those multiplied by items with ECPM optimization being extremely important and an area where we see a lot of opportunity versus we are today under that I consider both of optimizing on the demand sources, but also making on a per impression basis serving the right ad. And of course, there are additional formats with higher value, so I think those are key. And of course all of this is happening in very -- we believe in the context of very favorable underlying macro drivers.

I also want to ask about -- may I have the breakdown Opera news -- Opera business by geography. How much is from U.S., from Europe and how much is from Africa. It could be by revenue or by number of users, anything that would help?

Again, I think for revenue, I just leave it Frode. In terms of user base, it's different per product. So I will try to address it separately. For our desktop users, I don’t have latest numbers just right in front of us, because we typically don’t track by different regions. But I would say I think the ratio is still that I think close to 70% will be from Europe and U.S., I think, and adding U.S. probably more than it. And the other percentages are primarily from some other parts of the world. So that’s with desktop. I think for mobile, especially our mobile browser users for now, I would say probably 40% -- a bit more than 40% to 50% coming from Asia, especially if you look at smart phone and then close to 30% to 40% from Africa and the rest from other parts of the world. But I think the percentage in Africa is growing very fast, it's just because we do have lot of users in Africa. It's just with -- many of them are still on the feature phone base but once they move to smartphone they all move to Opera. So I think in the long run the ratio of Africa will probably grow in terms of percentages. And as I also commented that we also have a quite a bit attractions those days even for mobile browsers in Europe but then of course, because the apps with number, they are still relatively small in the short term, it's probably not going to change the major percentage just because our users base in Africa and Asia are so big. So that’s what I think user base and the revenue contribution will be a bit different. In terms of news app for now our major concentration is still in Africa. So Africa still have the higher percentages. The rest will be from India, Indonesia and etcetera. So that’s a good high level. But I will let Frode covering also the revenue part if any.

I don't have that much to add. Of course the PC user base being very Europe dominated and western dominated provides revenue for that region. So I think in terms of any single region, I would say western markets be in the 40% range and then 70% of our revenue is coming from Africa and Asia, roughly speaking.

So my last question about our direct sales. What's the contribution of revenue or direct sales?

I actually don’t have that as of all on my mind. I think the only comment I would say that it actually grow very fast in terms of advertisement it's just because where we are big like Africa with I know that we're actually much better in monetization than by some normal channels and normal apps here for instance. So it's fast growing but I actually don’t have it all on my mind about the actual percentages.

It's almost like the topic of a much broader discussion, because there is always opportunity cost as well. So I think when we look at direct sales, we also look at in the context of that resulting in better ECPMs also for the traffic that we send to networks, because you essentially broaden your demand pool, you reduce the risk of over serving a single ad and so on and so on. So there are benefits. I think broadly speaking over the past months and also into the future, we will continue to benefit from broadening our demand pool and having the ability to leverage direct sales, which we have a long track record of doing, think about those speed outs that call them, the traffic partners we have, all those contracts and being able to leverage that also on industry standard ad units, we think is very attractive.

Thank you very much. I'm showing no further questions, at this time. I would now like to turn the call back to the speakers for any closing remarks.

Okay. I think at this point, we just like to say thank you all for joining us today. And we wish a good rest of the day.

Thank you guys. Thanks for participating.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone have a great day.