Opera Ltd (OPRA) 2021 Q1 法說會逐字稿

Welcome to the Opera Limited First Quarter 2021 Earnings Call. (Operator Instructions)

Please be advised that today's conference is being recorded. (Operator Instructions)

I would now like to turn the call over to your speaker today, Derrick Nueman, Head of Investor Relations. Please begin.

Thanks for joining us today. With me, I have our Co-CEO, Song Lin; and our CFO, Frode Jacobsen. Before I hand over the call to Song Lin, I would like to remind everyone that in today's conference call, the company will be making statements about its future results and expectations which constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Such statements are based on current expectations and how we perceive the current economic environment, and we are inherently subject to economic, competitive and other uncertainties and contingencies beyond the control of management. You should be careful -- you should be cautioned that these statements are not guarantees of future performance. You may refer to the safe harbor statement in the company's earnings release for those details.

Our commentary today will also include non-IFRS financial measures, including adjusted EBITDA, which are different from our consolidated financial statements that are prepared and presented based on IFRS. And we believe the use of our 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.

We have also posted unaudited supplemental information on our Investor Relations website that includes historical financial results of Opera and our investee, Nanobank.

With that, let me turn over the call to our Co-CEO, Song Lin, who will cover our operational highlights and strategy. And then Frode will finish up with financials and update on our investments and, most importantly, our expectations going forward.

Song Lin?

Sure. Thank you, Derrick, and thank you, everyone, for joining us today.

So as you know from our announcement earlier this month, Opera had a very strong beginning to the year. Obviously, I'm pleased with our financial performance. But what I'm most excited about is that it validates our strategic approach to growth. Both our core business and our new initiatives and that the Opera team continues to execute every day.

So last quarter, I highlighted that it was the strength of our core business that positioned us to not only outperform during a period of significant uncertainty, but it's also what gives us the ability and the confidence to invest in initiatives that have the potential to drive substantial growth for Opera in the years ahead. So what I'm about to say will sound familiar in a good way, and the plan is to repeat the pattern in the next few quarters to come.

First, our core business continues to deliver exceptional results thanks to strong execution. Frode will naturally give you more detail shortly, but here are some highlights. Revenue was strong with search and advertising growing 38% year-over-year and even grow sequentially. This is the seasonally strongest fourth quarter. This is a very strong indication of the strength of our core business. Adjusted EBITDA was better than expected as the revenue upside fell to the bottom line. We have also been growing users by 12% and 14% year-over-year, respectively, in Africa and Europe and CIS, our core regions of focus.

Second, I would like to comment that our initiatives are showing excellent momentum. I'll start with our European payment platform, Dify. So in February, we have launched our browser smart shopping functionality in Spain, providing cash back and payment solutions for shoppers. This is an area of huge potential for us. It's no surprise that more and more consumers are looking to transact online, and the COVID-19 pandemic certainly sought to accelerate these trends across multiple categories in multiple markets.

We already have a good track record in this space through OPay and Nanobank elsewhere. And we remain super excited about the European potential within Opera. So the online adoption rates are encouraging, with both new users transaction volumes and GMV growing nicely. I would say it's still early stage, but the fact that we have a great user base constantly transacting in our browser already presents a massive opportunity for us to scale in a very relevant space.

We will add new features and roll out in more countries in Europe as the year progresses such that Dify is in a good position to contribute meaningfully to our revenue in the next year and beyond.

I would also like to talk about gaming. Our efforts in gaming are just the beginning, but the Opera GX gaming browser now has over 9 million monthly active users. One of the things that set our ambitions in gaming apart is that we really have a holistic view of the gaming ecosystem and are innovating on multiple fronts. We will continue to add gaming features to Opera GX so that the browser complements the gaming experience, allowing us to continue to grow the gaming user base.

And at the same time, we are also building out our GameMaker Studio platform so that game development becomes accessible to an increasingly broad community and driving engagement. We believe that in the same way that easy-to-use applications and tools will allow anyone to design and launch a website or record a musical video, the same accessible design tools will mean that more people will be able to design, play and share their games with the world, which will in turn attract more gaming players into our ecosystem and the form a full circle.

These are obviously our first steps towards building our own gaming platform or even a potential gaming network. We are totally ambitious. And with such a massive market, we will continue to innovate and expand in this space.

And last but of significant impact, Opera News. As we laid out last quarter, the continued success of Opera News led to the natural conclusion that we have potential to expand its geographical footprint to developed regions, starting with several markets in Europe and the United States. Online results continue to be positive, and we have now achieved several million MAUs in those markets in just a few months' time, as also been visible from corresponding Google Play rankings in all those countries that you can see.

While still evolving our product and go-to-market strategies, we believe we have developed a set of know-hows that has now proven to be able to driven rapid growth both for users but also for strong revenue growth trajectory, reflected by the fact that News revenue grew over 260% year-over-year and 30% sequentially in Q1. We do expect the strong revenue growth trend to continue in the quarters to come, again, powering our bullish view of our revenue growth potential.

So as we look to the year ahead, we remain confident that the strength we see in our core business will continue. The history of the browser and what it can be is still being written. I very strongly believe that Opera will continue to play an outsized role in writing this history. There is significant room for not just growth but innovation, browsers that have features that are optimized for the ways in which people will use them, whether it's shopping, gaming, looking for news or simply trying to manage your digital life with a sense of privacy and security will cherish that people always expect more and better because therein lies our opportunity.

So Opera, the browser is preferred by well over 300 million users worldwide. And as we continue to push forward with our initiatives in payments, gaming and news based on our core strengths, we will bring the same user-first approach and spirit of innovation. Succeeding with any one of these initiatives represents a massive value creation opportunity already. But of course, in our ambitious style and with confidence from these initial phases, we are naturally aiming for success across all 3.

As we think about the possibilities we have in front of us, we are excited about our core business and the potential for all our initiatives. And as our guidance indicates, we see a very exciting period of accelerated growth ahead of us.

So with this, I'll bring to Frode to come up with details.

Thanks, Song Lin. The continued acceleration of our products both in terms of engagement and resulting monetization resulted in a first quarter that exceeded our already-high expectations. I'll recap the highlights and then provide our refresh on guidance.

Revenue for the first quarter was $51.6 million. This compares to $40.2 million of revenue in the year ago quarter and also grew sequentially compared to last quarter despite seasonal headwinds. Specifically in the quarter, search was $26.7 million, accelerating to 36% year-over-year growth compared to 13% last quarter. This was driven by our record PC users and monetization gains. Advertising was $23.4 million, accelerating to 40% year-over-year compared to 16% last quarter. This was driven by strong monetization from Opera News and our mobile browsers. Finally, tech and other revenue was $1.2 million. Year-over-year, this revenue category has been reduced by $2.4 million, although with almost no impact to profit as the decline relates primarily to low-margin professional services to OPay.

Our operating expenses pre adjusted EBITDA were $47 million. As expected, we saw significant increases in marketing spend as well as some growth in personnel expenses due to our efforts to expand Opera News into Western markets and around Dify and gaming.

Adjusted EBITDA was $4.6 million in the quarter. This was better than expected with the overperformance largely following the upside from our core search and advertising revenue streams and some marketing and personnel expenses shifted to the second quarter. Net of D&A, share-based expenses and other items, net income was $0.6 million for the quarter.

Our operating cash flow was positive at $7.3 million, supporting an overall increase in our total cash and marketable securities of $9.1 million versus the prior quarter to a total of $143.3 million.

Then moving to our investments that continued their positive trends in Q1 and represent significant upside potential for Opera shareholders. As a reminder, our investments are Nanobank, with Opera holding 42% as well as OPay at 13.1% and StarMaker at 19.35%.

Beginning with Nanobank. For the quarter, Nanobank posted revenue of $50.3 million, up about 10% compared to the fourth quarter and dispersed loans representing $235 million in total value. Adjusted EBITDA was $5.5 million, representing an 11% margin, and post-tax profits were $4.3 million. We continue to believe Nanobank will scale meaningfully in 2021 as it launches in new geographies and adds products, both of which are in testing phases. And as India starts to recover from COVID-19 impact. As noted in our prior call, we expect this to be more evident towards the middle to later part of the year.

Our 2 other significant investments, OPay and StarMaker, continued to scale. OPay's total payment volume continues to grow and have increased from December 2020 levels of $2 billion driven by new initiatives. One of the most exciting innovations is the OPay card, a debit card that is tied to the OPay wallet balance supporting off-line use cases of the OPay wallet aimed at increasing frequency of use.

StarMaker continues to scale rapidly with an annual revenue run rate of almost $180 million in the first quarter, up 3.5x compared to the year ago period.

Now moving to our forward looking commentary. Our core business continues to perform and grow ahead of expectations. And this is increasing our confidence in our near-term and full year outlook. Further, we continue to believe that taking most of our underlying adjusted EBITDA growth and reinvesting it into our new initiatives is the right thing to do. We believe the ROI on those investments will enable us to achieve growth rates well in excess of a 20% to 30% level and accelerate our path towards becoming multiples of our current site.

Translating our momentum into a refreshed 2021 guidance, we continue to take a conservative approach not including anywhere near the full potential from new initiatives while making sure potential investment is reflected.

With that said, based on the performance of our core business, we are raising our revenue guidance while maintaining our adjusted EBITDA guidance to provide flexibility to drive further growth. We now expect 2021 revenue of $230 million to $245 million, representing 44% year-over-year growth at the midpoint, up from our prior midpoint guidance of 39% growth. Our expectation for adjusted EBITDA remains at $10 million to $30 million for the year.

In Q2, we expect revenue of $55 million to $57 million, representing 74% year-over-year growth at the midpoint. The second quarter revenue growth acceleration is fueled by strong continued results from Opera's core search and advertising business, but comparisons to Q2 2020 should, of course, also bear in mind the significant COVID-19 impact to search and advertising revenue in the year ago quarter. However, tech licensing and other revenue become far more comparable on a year-over-year basis than in recent quarters as revenue from professional services work was largely phased out by Q2 2020.

Adjusted EBITDA is expected around breakeven in the second quarter as we continue to invest aggressively in our new initiatives.

Overall and in sum, Q1 was another strong quarter and a very healthy start to 2021. It's great to see the momentum in the business and how the acceleration of our growth trajectory is benefiting both our near and long-term trajectory. And we look forward to keeping you posted.

Thanks. I think we can now take questions.

(Operator Instructions)

Your first question comes from the line of Lance Vitanza with Cowen.

Congratulations on the quarter. And I guess, why don't we start with -- well, thanks for posting the supplemental financial information. I found it very helpful. Could you talk about the impact of COVID in the year ago quarter, in 1Q '20 versus the -- versus what you saw as we move throughout last year? In other words, we know, obviously, there's a bigger impact in the second quarter of 2020. But was there much of an impact in the first quarter? It doesn't necessarily look like it given that 1Q '20 revenues were actually up over 1Q '19, but perhaps ex COVID, they would have been up more. I'm just -- how should we be thinking about that?

Yes. Lance, thanks for the questions. In terms of what's our continued operations with the browser, news and the other products that we've been discussing today, we didn't really see much of a COVID impact in the first quarter last year. It affected Nanobank's business for sure in terms of the assessments on collectability, et cetera, at the end of the quarter. But it was really towards sort of the very end of March, not affecting the quarter as a whole, much for search and advertising. Yes.

Great. So this growth is really on a -- it's not just a recovery bounce, this is growth over a period where you were already pretty strong and growing. So -- okay.

So the guidance seems to reflect, if I'm hearing you right, only the strength in the core business but really not much contribution from the growth initiatives, yet we know that you're plowing a lot of money into these growth initiatives. So could you talk about -- and I heard the comments that you made, Frode, just a minute ago about getting to a size that is a multiple of the size of the company today. But could you talk a little bit about how should we think about the medium to longer-term potential of these growth initiatives per se, right? Because we know the core business is also growing, I'm just trying to figure out how we should be modeling what some of these other new initiatives could ultimately contribute.

Sure. So if I begin with the total -- the overall picture, I mean, for us, all of these 3 main areas that we are investing into represent substantial upside to value creation for Opera, both in terms of creating a much used content business in Western market, in the broader gaming ecosystem that we are working on as well as the European payments products and services around Dify. So we think all of them we consider massive opportunities.

But I think over the past quarterly calls we've had, we've been clear that we don't really take much of it into our guidance for 2021. We tend to be very conservative on that and look internally mostly at what run rate are we scaled to sort of exit the year with and the impact it can have on 2022. So I would point to 2022 as the first year of really seeing material impact of these new initiatives.

Okay. And then maybe just on the JVs, Lance, what I would say is as you start looking at the revenue growth of the core, which has historically been 20% plus, and then you start layering in some success here, you start coming up with very good revenue growth rates.

The second comment I'd make on these investments is, today, we're investing money because they're very new. But as they scale and get bigger, the incremental margins on these businesses are really good. So the idea is, longer term, you're going to end up throwing off more cash flow than what you would have done otherwise, assuming they're successful.

If I could just squeeze in one more question about the JVs, and maybe this is a multipart question. But on OPay, I'm wondering if there was perhaps a seasonal impact there. And I may be misinterpreting the release but -- and forgive me if I missed a comment on your prepared remarks, but it looks like growth at OPay perhaps slowed in the first quarter given that you didn't call out exactly what that growth was. But perhaps that's just due to the fourth quarter being seasonally strong for a payments-related business. But I'm wondering if you could elaborate on that.

And then with respect to StarMaker, where it's growing at a multiple, I'm just wondering if you could talk about what's driving the growth there. In other words, are you launching new markets? Is this a big new marketing campaign? Or are there other things that are sort of fueling that? I think it was 3.5x growth that you called out in the release.

Sure. I can -- yes, Derrick, go ahead.

No. Lance, I was going to say on OPay, they did more total payment volume in March than December, so they're continuing to grow. I think we're being a little more cautious on what we say on OPay and allowing the team over to OPay to sort of give those details out because I know they're trying to drive a higher profile for themselves as they think about the future.

Frode, do you want to say something there?

Yes. So maybe I'll also comment a bit here, right? It's only for OPay, right? So I guess, actually what Derrick is saying is more true that OPay is actually growing tremendously. TBD are growing. But even more importantly, there are some of the other aspects of their business like the app users and a few others are actually growing a lot many times, which is their purpose for now, which Frode also talk about issuing card among others, right? So I think actually, reality is because we are just -- we just own 20% -- less than 20% of them, and they are now -- they are always an independent company, we just prefer to -- for themselves to actually announce the excellent results itself instead of we talk too much about it in our own remarks. I think that's actually the reason. But they are actually doing very well in Q1.

Your next question comes from the line of Mark Argento with Lake Street Capital.

Song Lin and Frode, I just wanted to drill down a little bit on the success you're having with Opera News. Maybe talk about kind of where you've been making the investments and been seeing the uptick in conversion in terms of monetization.

Yes. So -- okay. So this is Song Lin. I'll try to give the first hit, and then Frode can come up with numbers, I guess. So high level, I guess the comment is just that we have already been very successful in Africa. So as also commented in the quarterly release that for this year, especially Q1, for instance, we have been focusing on expanding into Western market, which has been doing really good. I think the comment would just be that we have growing very nicely in terms of users. We're just very happy to see that we are able to -- based on our past know-how, so of course, we have to localize per market because each of those markets are very different, like German is very different than U.S. But we are able to actually localize it and then be able to provide a very good solid numbers and conversion retention, so all the performance remarks are actually very good.

But maybe worth mentioning is that we are also on top of very happy about the monetization because, typically, we saw a bit drag between use and monetization. But perhaps because of our past experience, we are able to actually almost grow the users in line with the growth of monetization. So that, I would say, is the extra point that I would call, which is more positive, which is actually also is the reason why we -- I think we're doing better -- a bit better than our other guidance and also partly why we also rise our guidance for that.

Great. And is it kind of the key precursor of revenue? Is it downloads of the app? Or what -- how do you guys actually stimulate uptake? Are you spending money to drive people to download the app in various regions? Or what are you kind of doing specifically to get that business to grow from a user perspective?

Yes. So I think -- yes, so I think from an end user point of view, I think it is aggressive performance marketing. But I think the key is just that based on the know-hows that we have accumulated in the past year, we are able to do the performance marketing growth marketing in a very efficient way. And I think that's number one.

Number two is that retention is really good because it's very tightly connected that if you say have a very poor R1 or R50 or R30. their retention then, of course, now way you can grow. It doesn't matter how much money you spend. So I would say it's a combination of very effective performance marketing but then tightly hand-to-hand with the ability for us to have a very high retention of those users, measured by, say, R1 or R50 or R30.

And maybe I could supplement. It's, of course, a product launching in a new geography goes through a few stages. We are now in the initial stages of launch, where we -- of course, we use marketing and we use performance marketing, as Song Lin talked about, to build a presence. And then over time, as we've seen on our other initiatives and products, then you move over to the organic part of it playing a bigger role. And I can assure you that the investments that we are making are carefully assessed on a daily basis monitoring the impact and sort of return that we are generating on that investment.

Great. And then just a quick follow-up on the ad -- the bounce back in ad revenues. Can you talk about some of the end markets that you're seeing come back? I know you had some decent exposure to travel. Is that an area that you've seen come back in the various markets you operate in?

I think high level on the advertising drivers, we see a couple of things. So of course, we benefit from more user growth on products. But it is the per-user monetization that is driving the revenue growth the most. Within that, there are a few components. We are experiencing strong demand for our inventory and the traffic that we can drive. There are certain partners that are scaling faster than others, typically online-related businesses. And we're also seeing the impact of a geographic mix changes. When Europe is growing very well, for example, that drives the average monetization per user.

Your next question comes from the line from Alicia Yap with Citigroup.

Congratulations on the strong set of results. I have 2 questions. First, I think in your guidance, you mentioned, the second quarter, the strong guidance seems to be more alluded to the search recovering, but I assume the ad revenue is also growing very well. But on the sequential basis, if you can give us some color in terms of whether search are bouncing better on the sequential basis versus the apps.

And then I understand you mentioned your full year guidance despite raising to the new guidance range, but you also mentioned very, very little revenue that baked in from the new initiatives. But just if you can give us some colors in terms of the timing. If we were to assume between the gaming and the European fintech, would gaming revenue will be coming more near term and more medium-term versus fintech is a little bit more longer term than the gaming? So any color you can help us frame in terms of the timing of the revenue that come in?

And on the more -- let's say, by the time they reach a certain decent contribution, will the fintech is actually a bigger proportion or the gaming will contribute a bigger proportion?

Thanks, Alicia. So first, talking about the second quarter guidance, the starting point and the Q1 revenue achieved in both search and advertising, we are very pleased with both, both the 36% to 40% year-over-year growth into a very solid result in the quarter, ahead of our expectations. When we look into the next quarter and on a sequential basis comparing to Q1, I would definitely point to advertising being the expected biggest driver of the increase we are guiding from Q1 to Q2 this year.

In terms of the full year and the new initiatives, so as stated, we have been very cautious in baking in too high expectations of our new initiatives this year. So to the question of what will impact our results first and what we are cautiously considering as we set our guidance for the year, I would point to the advertising revenue effect in particular around the Western markets scaling up Opera News as that is sort of an immediate impact of building a user base in the U.S. And European markets, that probably will be the first one to materially benefit our financial statements and something that we should be seeing also in 2021.

And any -- just follow-up in terms of gaming versus fintech, which one will come more near term and then which one will be a bigger contribution longer term?

So I think I'll try not to go into sort of the specific of exactly estimates that we have for the year. I think for now, I would say that with both, we have been very cautious as we set our guidance for the year. In gaming revenues, of course, consist already have been present in our financials from the success of the Opera GX browser. And that continues to scale very well. And we're broadening that with an ecosystem, the game studio, et cetera, that we have discussed before.

And on the fintech side of things, we are already being the browser of a very, very big number of transactions carried out from our user base. And that is something that we have already launched and started to step into but with the initial focus being on building that service and preparing that service for scale rather than focusing on, let's say, the revenue contribution or the near-term margin that we can drive from that.

Alicia, this is Derrick. If you consider gaming to include the GX browser, that's driving a ton of value for us today. I think we said last quarter that every 1 million MAUs are worth of about $2.7 million. So you can see our trajectory of adding 1 million plus MAUs a quarter, and you can see that contribution.

And on the fintech stuff, we're in game with our smart shopping product, as Song Lin said. And our hope is to be in a couple more markets over the course of the year. And depending on when those hit and how quickly Spain scales will really dictate what contribution we see this year.

I see. Okay. Helpful. And then just one last quick follow-up. I think you mentioned your sales and marketing, some of the spending that you previously planned in first quarter has split into the second quarter. So just wondering if you can share what was the reasons that it split? Yes.

Yes. Maybe the word split is not super accurate. It's more a question of we look at the year as a whole, and we look at the investments and the scaling that we want to achieve. At any point in time, we give guidance based on our best expectations for what will happen over the coming 3 months period and the year as a whole. And we ended up spending slightly less on marketing and distribution in Q1 than we had originally thought.

Your next question comes from the line of Sarah Simon with Berenberg.

I have a couple of questions. First one, can you give us an idea with something like -- well, whichever product you'd like, what the delta is in terms of monetization of user in, let's say, Europe versus Asia or India or Africa, for example? Because I'm guessing that's quite significant, and therefore, as you expand News into Europe and the U.S., it might lag, but it's clearly going to be much more significant in terms of the pickup in revenue than the pickup in MAUs. So that was the first question.

Second one, can you just remind us, how do you sell your advertising? Is this done -- is this programmatic or is it direct? That was the second.

And then the third was you know that you obviously restated your numbers because you discontinued stuff in Q3 last year. Can you remind us what the growth was on the new reporting format in Q1 2020 and Q2 2020?

Yes. So it's Song Lin here. I guess, Frode, maybe I'll just answer the first two, and then you can comment on the last -- number one.

Sure.

Yes. So yes, more like just a quick comment that I hear all the question of the monetization. I would almost say, I guess, it's up between European, U.S. user vs the African user, right? So -- or like Asia, right? High-level commentary that if we compare, say, a user in Africa with a user in the U.S., it's roughly, I would say, 10x. And European user is actually slightly less than U.S. Depends on which country you are is actually quite different. Some of the 60% of U.S. to be 80% or even equal depends on different countries, that is quite a loss. But yes, so in general, if we use U.S. as a benchmark, I would say, 10x compared with, say, Africa will be a good comparison and above family Asia.

And when it comes to ad selling, so we have to use all of the ways that you're talking about in different regions. So I think we are -- we do have the direct sales team typically in country like Africa, where we do rely more on direct sales team. While in some another country, like in U.S. and Europe, we do have more programmatic, I would say. It's actually very good you called that. And we see that actually grow very fast compared with some other regions.

And on top, of course, we also have a ad SDK approach. We will simply just embed ad SDK just monetized from basically SDK ofr Google SDK. So we have both of -- those are 3 available.

Yes. So -- and then Frode, I'll just hand it over to you for the -- yes, the number correcting .

Yes. Yes, sure, sure. So in Q1 2019, we had $38 million in revenue. And in Q1 2020, we had $40.2 million revenue, which was about 6% up. Would have been a couple of percent more if COVID hadn't affected the end of the quarter, but that the most comparable period. Q2 2020 had a year-over-year decline as that was the quarter most affected by COVID for us.

Sorry, Q2 was down?

Q2 year -- so Q2 2020 was down 24% versus Q2 2019, naturally driven by the COVID impact that we saw in that quarter.

Your next question comes from the line of Lenny Brecken with Brecken Capital Advisors.

I have 2 questions. One, can you talk about the deployment of the cash hoard that you have on your balance sheet and what the Board is thinking about maybe doing with it?

And the second is the new initiatives, I assume, are acting as a drag on earnings in 2021. And I assume that's going to lessen in 2022, which is probably the core of the story and why all the analysts are trying to ask these various questions in understanding that. So can you help us quantify the drag on the new initiatives on earnings this year versus next?

Yes. Frode here. I can start. So starting with the cash on our balance sheet, I think we are not planning to use it for dividends. As we have stated in the past, we keep it to maximize our strategic flexibility both in terms of having the -- having that support for any operational opportunities that we come across. Of course, now even with these heavy investments that we are running in 2021, we are essentially also generating the cash that we are using for that. But it gives us that opportunity.

In the past, we've also, in a couple of instances, launched share buyback programs, where we have felt -- when we have felt that has been in the best interest of our shareholders. And we always look at M&A opportunities. So historically, they have been relatively limited size and then focus more on the organic growth thereafter.

In terms of the new initiatives and the drag on the profitability in the year, that is correct. We started the year by saying that the -- essentially, the -- we would take all the additional EBITDA generation, including from the scaling of our business, and invest that in additional -- in driving these growth initiatives. But I think you only have to look back to like Q4 2020, we had a 28% EBITDA margin still having investments in teams, et cetera, at that stage but giving at least an indication of sort of the margin picture of that business when we are not as aggressively as now scaling these initiatives.

And then I think it's sort of the more successfully these businesses scale and confidence that we have in the ROI being positive, of course, that will continue to support our thesis for this year. It's a little bit early for me now to sort of say exactly how the details towards the end of the year and the beginning of the following will look in terms of margin picture, but we are seeing this as an opportunity to establish those businesses and create a strong foothold in them. And then as we talked about earlier in the Q&A session, then it's moving over to more existing in-market products, and they could sort of a more, let's say, stable P&L profile and margin accretion also from those.

Well, just one follow-up. So I mean, I guess, as an investor, I'm sort of wondering how a 40% growth company can trade at 3to 4x roughly forward sales,when many companies growing less than that or trading at twice that valuation. From the management's perspective, how do you see the value of the company being unlocked? Is it the new initiatives when you finally gain leverage? Or is there something else that you think is going to be the driver?

Yes. I think we are -- what we can focus on is, of course, driving the business in the best way we can and being clear about our strategy for sort of how we are moving towards the scale and how we see sort of the potential and initiatives that can drive us to become multiple size of what we are today, which is what we are very focused on.

We also try to shed light and relevant information on the investments that we hold as we think they represent significant value upside to our shareholders. And of course, in being able to document that value over time and being able to actually see a transaction or sort of that market validation of those, I think, can be very helpful.

Your last question comes from the line of Lance Vitanza with Cowen.

I just was hoping to follow-up, I'd ask you before we kind of get cut off about StarMaker. And the question is the growth that you called out in the release is obviously fabulous. I think it was 3.5x. And I'm just wondering what's going on there. Is that new markets? Is that a big new marketing campaign or something else? What is it? How do you explain that kind of growth?

Yes. Sorry, we missed that part of your question before. Unfortunately, the answer is a little bit the same as OPay that it is its own company. It is sort of communicating its own results a bit on its own, and we try to stay within that. But as you mentioned, it's a tremendous growth year-over-year. It's nearly 50% sequential growth versus the fourth quarter. It remains a profitable company, all of the net income line, and it's doing very well. But I'll be a little bit careful to try to give additional KPIs that the company has in itself prepared to communicate.

But Song, is there any other color that you think we could share on the StarMaker?

Yes. So I mean I think I would just say that StarMaker is a very typical case. Well, it has been growing very fast from last year to this year, right? So then, of course, naturally, if you compare with the Q1 last year to Q1 this year, it is, of course, going to be huge, reason just because it keeps growing from Q1, Q2, Q3, Q4 all through 2020 and continue that trending in Q1 2021, right? So -- yes. So it's actually a true reflective of how fast it growth all across the whole of last year, and that's accumulated result that you are seeing. I mean it's almost, I would say, the equivalent of what you see in Opera News, right? Like News, we also said is 260% year-over-year, and we're probably -- hopefully, we'll see more in Q2, right? So it's actually a very similar trajectory that if you have something new and have a faster-growing pace quarter-over-quarter, that's what you see.

That concludes our Q&A session. I will now turn the call over to Song Lin for any additional or closing remarks.

Okay. Sure. So I think guys, we -- I think we have a great quarter. Our core business are doing well, while our new initiatives are scaling, really allowing us to predict a bullish future. And I think I just want to say that all of these, of course, are, of course, indispensable from the shareholders out there that are trust us and support us. So I just want to say that we appreciate your support, as always, we will do our best. And hopefully, we can continue and will continue to execute here and there. And hopefully, we'll all have great results to come. So like again, thanks for attending, and have a nice day.

This concludes today's conference call. You may now disconnect.