Opera Limited Boosts Guidance After Strong AI-Fueled Quarter

Opera Limited ((OPRA)) has held its Q1 earnings call. Read on for the main highlights of the call.

Opera Limited’s latest earnings call struck an upbeat tone as management balanced strong top-line outperformance with transparent discussion of rising costs. Revenue grew well ahead of guidance, profitability and cash generation remained robust, and user engagement climbed on the back of AI features, even as hosting and operating expenses edged higher and some new ventures remained early in their commercial journey.

Revenue Outperformance and Upgraded Growth Outlook

Opera posted Q1 revenue of $176 million, up 23% year over year and $4 million above the high end of its guidance range, underscoring solid execution and healthy demand across its platform. Management responded by lifting full-year revenue guidance to $727 million–$740 million, implying 18%–20% growth and signaling confidence in the sustainability of current momentum.

Profitability and Cash Conversion Remain Strong

Adjusted EBITDA reached $42 million in the quarter, translating into a 24% margin and confirming Opera’s ability to grow while maintaining healthy profitability. Operating cash flow matched adjusted EBITDA at $42 million, with free cash flow from operations at $35.5 million, representing an 85% conversion rate and reinforcing the company’s cash-generative profile.

Advertising and Search Queries Drive Top-Line Gains

Advertising revenue climbed to $117 million, up 24% year over year and now representing 67% of total sales, marking an all-time high contribution from ads. Query revenue reached $58 million, up 23% and comprising 33% of revenue, with pure search revenue expanding 14%, highlighting continued strength in user search activity and monetization.

User Growth and Rising ARPU Support Scale

Average monthly active users reached 288 million after Opera added 4 million users in the quarter, including 400,000 new Western users and about 1 million new Opera GX users globally. Annualized ARPU rose to $2.43, a 25% year-over-year increase that points to improving monetization per user and a healthier revenue mix as engagement deepens.

Product and AI Innovation Boost Engagement

The launch of Browser Connector, based on the MCP protocol, allows users to bring their own AI models into Opera One, GX, and Opera Neon, expanding customization and utility. Management noted that AI-engaged users in Western markets spend roughly an extra hour per day in the browser and perform about 50% more traditional searches, a key driver of ARPU growth and new monetization avenues.

MiniPay Scaling, but Business Model Still Developing

MiniPay has activated over 15 million wallets and processed more than 430 million transactions, giving Opera an at-scale foothold in digital payments within its ecosystem. The MiniPay-related ecosystem is generating around $20 million in revenue today, and Opera introduced a $1 million developer incentive program to spur mini app development, though management cautioned that the long-term economic impact remains uncertain.

Capital Returns and Shareholder-Friendly Policies

Opera continued its shareholder-return focus with a recurring annual dividend of $0.80, having paid $0.40, or $36 million, in January. The company also launched a $300 million share repurchase program and bought back 1.14 million shares in March for $17 million at $14.88 per share, reducing the share count to 89.55 million and signaling confidence in intrinsic value.

Long-Term Track Record of Growth and Profitability

Management highlighted that Opera has now delivered 20 consecutive quarters meeting the Rule of 40, a key metric for balancing growth and profitability in software and internet businesses. Over the past decade, revenue has compounded at a 21% annual growth rate, underscoring a long-term pattern of steady expansion rather than one-off spikes.

Rising Operating Expenses and Hosting Costs

Opera raised its full-year guidance for other operating expenses before adjusted EBITDA to just over 20% year-over-year growth, largely due to higher hosting costs and greater AI usage amid tight supply and pricing pressure. While these investments support AI-driven features and engagement, management acknowledged they will weigh on near-term operating leverage and require careful cost discipline.

Ad Mix Weighs on Gross Margins

The company noted that its Opera Ads business carries a structurally lower gross margin than its owned-and-operated revenue streams, reflecting the economics of an ad-led model. Cost of revenue stood at 36.8% of revenue in the quarter, down slightly from the prior quarter but expected to average around 38% for the full year, indicating mix-driven margin pressure even as scale improves.

Compensation and Marketing Spend Moderated but Elevated

Cash-based compensation is expected to rise just above 10% this year, and the marketing budget is projected to grow about 10% year over year, including Q2 levels similar to Q1’s $38.5 million spend. These costs are meaningful in the near term but are planned to decline as a share of revenue, with management targeting a combined compensation and marketing ratio falling from 36% to roughly 33% by 2026.

Cash Conversion Volatility Across Quarters

While cash generation was strong this quarter, management warned that cash conversion will fluctuate over time due to the timing of tax payments, bonuses, and working capital movements. Investors were encouraged to view free cash flow trends over a longer horizon, as underlying fundamentals remain solid even if quarterly conversion metrics show some lumpiness.

Guidance and Outlook Emphasize Continued Growth

Opera raised its full-year revenue outlook to $727 million–$740 million and lifted adjusted EBITDA guidance to $170 million–$174 million, implying an adjusted margin of about 23.4% at the midpoint and allowing just over 40% of incremental revenue to convert to EBITDA. For Q2, the company expects revenue of $176 million–$178 million and adjusted EBITDA of $40 million–$42 million, while forecasting full-year operating expenses of roughly $562 million and cost of revenue near 38% of sales, with a modest uplift in margin and cash conversion metrics broadly in line with recent history.

Opera’s earnings call painted a picture of a company successfully balancing rapid growth, rising engagement, and disciplined capital allocation against a backdrop of higher operating and hosting costs. With upgraded guidance, expanding AI-driven monetization, and a clear commitment to returning capital, Opera appears well positioned, though investors will be watching how cost pressures and early-stage initiatives like MiniPay evolve over the coming quarters.