Opera Ltd (OPRA) 2020 Q2 法說會逐字稿

Welcome to the Opera Limited Second Quarter Earnings Conference 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 go ahead.

Thank you, and thanks, everyone, for joining us. With me today, I have our CFO Frode Jacobsen; and Song Lin, who today, now holds the role of co-CEO of Opera.

Before I hand over the call to Frode, I would like to remind everyone that in the conference call today, 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 the current economic environment and are inherently subject to economic, competitive and other uncertainties and contingencies beyond the control of management. You should be cautioned that these statements are not a guarantee of future performance. You may refer to the safe harbor statements in the company's earnings release for 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. We believe that 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.

With that, let me now turn over the call to our CFO Frode Jacobsen.

Thanks, Derrick, and hello, everyone. We have a lot of exciting stuff to cover today; 2 big announcements, which I'll address first; and later, I'll cover our financial highlights and provide some color on how our business is recovering from COVID-19 and returning to growth.

Let's cover the first piece of news, namely the elevation of Song Lin from his role as Chief Operating Officer to his new role as co-CEO, stepping in alongside Yahui Zhou who remains both CEO and Chairman of Opera. This promotion formalizes the role Song Lin has been executing on for the past years, basically overseeing everything at Opera outside of the microlending business and highlights the trust that Yahui places in him and in the global Opera leadership team.

As context, Song Lin joined Opera in Norway 18 years ago and spent many years in key engineering roles. Later on, he was instrumental in our privatization and transition to new ownership and our strategy to accelerate our trajectory and leverage our user base to launch new businesses. As many of you have realized in live face-to-face discussions, Song Lin knows everything there is to know about Opera and the markets where we operate. He's a fast talker and a quick thinker with good intuition. And just like Yahui, he has a tremendous drive and urgency, and together, the 2 of them have shaped our company and our ambitions over the past years. On a personal level, he is also a fantastic guy to work with and I know I speak for all of our staff when I congratulate him on his expanded role.

Now to the second topic, the formation of Nanobank. As many of you know, we have been working towards massive fintech opportunities for several years. First, we incubated OPay, now Nigeria's largest mobile wallet company, both in transactions and value. It has become a leader in its space and again, doubled its transaction volumes over the past 6 months. We structured OPay as its own company from day 1 as we wanted to raise external capital to address the massive potential of building out such an offering across Africa without impacting Opera's strong balance sheet. OPay has raised $170 million to date, and investor demand to take part in that journey has been very strong.

Separately, we have scaled our microlending offerings from practically nothing to a massive business in just over a year. It has continually exceeded our expectations with exponential growth and strong profitability. And it's a great example of how Opera utilizes its platform and significant user base as a competitive advantage. Last year, which was really the first year of operations, the business provided approximately 15 million loans, representing over $800 million in value and built a user base with tens of millions of registered users.

With that background, we are excited to be announcing Nanobank, which is the combination of Opera's microlending and the equivalent business of our closest partner in this space, Mobimagic, which works with us in India and has a large growing microlending business in Indonesia. When operating together, these businesses will form a significant power in the fintech space for emerging markets. By creating Nanobank, we are setting the stage for continued growth; consolidating profitability and cash generation; diversification on both the product side and in terms of geographies; and finally, we are providing this business with the flexibility to operate as its own company. The resulting Nanobank will be one of the biggest global fintech companies focused on emerging markets and a category leader.

Nanobank will single-mindedly focus on increasing its leading position in the emerging markets fintech space. Combined, the business will also benefit from shared technologies; data aggregation and central functions, such as risk management and credit scoring through user profiling and KYC efforts; shared operational know-how; and a more holistic view and adaptation to regulation. Further, Nanobank will have significant strategic flexibility for the future to come, such as taking in strategic investors or floating shares.

We are very proud of the business we have built over such a short time frame including an efficient organization with strong operations and well-managed business practices. For Opera and our shareholders, this transaction highlights the value we've created. It simplifies our investment story, provides us with additional flexibility, and it creates a corporate framework that best supports the business as it continues to scale as a category leader over the next several years.

Now let's get into the details on Mobimagic, the combined companies and the transaction. Mobimagic launched microlending operations in mid-2018 with the goal to be one of the largest fintech providers in Southeast Asia. Its initial market was Indonesia. Then Mobimagic supported our launch and scale in India as our technology and business partner, leading to results well in excess of our most optimistic forecast. In 2019, Mobimagic generated $106 million of revenue for a highly profitable business that had $48 million in pretax profits. Mobimagic shared a similar growth curve to Opera's microlending efforts as Indonesia scaled throughout 2019 and as they participated in the exponential growth we saw in India.

In the same period, Opera generated $128 million in fintech revenue and a pretax profit of approximately $19 million in this business area. The combined Opera and Mobimagic businesses' pro forma results, when adjusting for transactions between the companies, generated revenues of approximately $209 million and a pretax profit of approximately $68 million in 2019 as well as provided almost 20 million loans with an aggregate value, well over $1 billion.

To provide some additional context on the scale and rapid growth of this business, prior to the significant impact from COVID-19, the combined businesses generated a combined $120 million in revenue in the first quarter of 2020 alone, on 10 million loans disbursed with a total value of $686 million. This compares to a combined revenue of $22 million on less than $100 million in loans disbursed in the first quarter of 2019. Further, Nanobank as a whole generated profits in the first half 2020 despite significant extraordinary credit loss provisions related to COVID-19.

On that point, the recovery from COVID-19 is well underway. The Nanobank businesses have been increasing loans provided in all key markets: India; Indonesia; and Kenya, since the end of June. Loans disbursed were $44 million in July compared to $28 million in June. This ramp has continued into August, most notably in Indonesia that is already nearing pre-COVID levels. While higher credit standards have been employed in the near term to ensure profitable loans, Nanobank expects to continue to rescale volumes as it gains additional confidence. While it still remains difficult to predict when this business will return to early Q1 levels, it is clear that Nanobank is on that path.

Looking ahead, we have massive growth expectations for Nanobank to grow far beyond pre-COVID-19 levels. First, India is a huge market and to date, Nanobank has only interacted with roughly 3% of the population or 18% of the unbanked.

Second, Nanobank has just begun geographical expansion. Today, we can also announce the launch of another major market prepared in collaboration between Opera and Mobimagic, namely Mexico, which has a substantial unbanked population. And as we look ahead, we expect Nanobank will launch several new countries to further increase its total addressable market.

Finally, Nanobank will continue to develop and deploy fintech offerings beyond microlending. This includes marketplace offers; buy now, pay later products; mobile payment and debit cards, some of which are now live and others that will be launched over the next year. Over time, we really believe that the potential to broaden the offering is substantial, building Nanobank's large registered base of 50 million plus users and enabling increased recurring engagement with our products.

The transaction itself and Opera's interests, in particular, have been overseen and closely reviewed by Opera's Audit Committee of independent Directors, as Mobimagic was controlled by our CEO. Further, Opera engaged an independent professional third-party to value the respective Nanobank contributions and to help determine the ownership split.

The factors that determine the agreed ownership split were the forecasted cash flows, multiples of most relevant public companies and provided working capital, such as cash and loan book of each party. The cash that was part of Opera's microlending business as consolidated by Opera in our June 30 balance sheet was $31 million, and our loan book was $14 million. As part of our contribution to Nanobank, the net cash in the business and the loan book will also transition to Nanobank. This resulted in an agreed ownership split of 42% Opera, 58% Mobimagic in this otherwise noncash transaction.

So looping back to the combined pro forma results. If Nanobank had been effective January 1, 2019, Opera's 42% share of pretax profits would have been approximately $28 million in 2019, compared to the approximate $19 million that our stand-alone business generated. From a reporting standpoint, we plan to be transparent and discuss the performance of Nanobank in our quarterly results as it will be a key factor in our overall sum of the parts valuation. We expect to provide details, such as revenue, profits and key operating metrics on a quarterly basis, and we will make it easy to see what our revenue and adjusted EBITDA would be when including our 42% fair share of Nanobank revenue and adjusted EBITDA.

In terms of IFRS reporting, Opera's share of the Nanobank results will be reflected in the share of net income of associates and joint ventures line in our income statement. Additionally, Opera will report a sizable onetime gain as a result of this transaction, currently estimated at over $100 million. This follows the recognition of our initial Nanobank ownership at fair value, representing a step-up versus the book values of Opera's contributed business. Further, we will conduct a PPA on the difference between fair and book value of Nanobank as a whole, and Opera will recognize amortization costs as appropriate over the coming years as it relates to excess values allocated to intangible assets such as technology, customer relationships and licenses.

To sum up, we are really excited about Nanobank and expect it will demonstrate a highly attractive trajectory going forward as it continues to scale and expand into new geographies and products, with a potential to be multiples bigger and generate hundreds of millions in profits. This, along with Opera's other growth initiatives, which Song Lin will speak about, are key elements in our effort to drive strong returns for Opera shareholders. Let me hand it over to Song before covering Q2 results and recent trends.

Guys, thank you, Frode. So glad to be named as co-CEO, and I view it as not myself but really, a realization of what the overall Opera team has accomplished, over the past few years, growing revenues, users and scaling multiple new businesses. So thank you, guys. It's an exciting 18-year journey. I look forward to taking on this new role and continuing the strong momentum together with the proud Opera team.

Now, I'll talk about some recent trends and developments. We all know very unusual times for the Q2, yet historical high user growth become our keyword. Our user base in Q2 was a record 363 million monthly active users, an increase of 12 million users compared to Q1. This was driven by growth in Africa and Europe, our key regions of focus. Our base had further growth in July, reaching an all-time high of 379 million monthly active users despite summer seasonality. So we are very pleased about that.

And if we further break it down, Opera News has achieved an important milestone in May of around 200 million monthly active users and averaged 205 million users in Q2. It's up 26% year-over-year. We are also proud that Opera News has become a critical information hub during the COVID-19 outbreak.

On the other angle, our browser users also continue to grow. Our PC users have grown 15% year-over-year to a record of 75 million in Q2. This was driven by both the strength we've seen in Europe with our PC offering, which is becoming ever more relevant when people spend more time from their home base; and also globally from Opera GX, the world's first gaming browser, which has reached 4 million monthly active results recently and more than doubled year-to-date.

On the mobile, we are also seeing strong results in Africa due to our product relevance and also our increasing telco relationships. We are very happy to announce the cooperations with leading telcos in the region, namely MTN and also recently, Safaricom to launch relevant data services in several countries in Africa. These partnerships have provided a new base for strong future user growth. Our focus is to continue our growth trajectory and in July, we have added a further 12 million mobile browser users versus June, so very excited here.

Now also getting to monetization, we are seeing a clear recovery trend from the low point in April, with each month showing improved year-over-year trends. Further, we continue to be bullish on our long-term monetization with the off-line to online transition accelerating, signaled by continued growth of OList with its 6 million monthly active results compared to a little over 4 million at the start of the year. We are also very excited about our launch of Opera for Business in partnership with Google, which we just announced last week. It will be a perfect base to enhance monetization in the region and even though short-term monetization has been slowed by COVID-19, the digital advertising ecosystem in Africa represents very attractive long-term growth.

Let me also zoom in a bit on Opera News, for instance. That product has grown revenues 65% year-over-year in spite of the monetization impact of COVID. It has actually reached top 5 in Google's programmatic inventory worldwide. There are, of course, still many region-related inefficiencies for programmatic inventory in Africa, simply because it has not reached enough attention from global players, but what we are working on is solving those problem every day with all our partners because given our scale and also the quality of that product, we believe the monetization potential can be huge.

And finally, we are also extremely excited about our new European Fintech initiative, which we think has the potential to be very big and also accelerate our growth in 2021 and beyond. We have some real competitive advantages with more than 50 million addressable users in the region that makes online transactions and purchases through our browsers, which in fact, is the point of sale, something few competitors would have. That gives us a huge potential to kick start innovative financial services. We have been testing our digital wallet in our first major EU market, Spain and have already acquired our first users. Initially, our offerings will be monetized through a buy now, pay later product, which will generate revenue through transaction commissions and credit fees. This product, while having similarities with current buy now, pay later -- BNPL players such as Klarna or Afterpay, will be unique as it will focus on the users versus the merchant. So essentially, a user should be able to make purchases with any merchant like they would normally do in a browser and then retrospectively decide how to pay for them.

So we expect to formally launch later this year and also to take additional steps in the near-term to further build our offering. We have built up a great fintech business in emerging markets in the last 2 years. And now as a company deeply rooted and headquartered in Europe with also recent added strength from our Pocosys acquisition and recently Fjord Bank, we are very excited about the potential and also opportunity that we see in Europe. This will be the focus of the team for the next few months, and we really look forward to updating you as we scale this new business.

So just to conclude, Opera has a lot going for us. First, we are growing and have record high users; second, we are diligently focused on increasing monetization; and third, we have exciting new initiatives that leverage our existing at-scale assets and will drive additional revenue and earnings growth in the years to come.

So with that, let me hand back the talk to Frode, who will talk about our Q2 financials results in detail.

Thanks, Song Lin. Given the extraordinary nature of the second quarter, I'm going to keep our comments short as the results aren't reflective of our business and focus on key highlights and trends. Additionally, I would advise you to look at our press release for more detailed information.

Revenue for the second quarter was $55.4 million. Of this, search was $17.6 million, down 18% year-over-year. Trends improved each month of the quarter. PC has recovered quicker, whereas the mobile recovery is taking a little longer based on exposure to emerging markets. However, both platforms are on the way to recovery and in July, search revenue had regained half of the year-over-year decline observed in Q2.

Advertising was $12.7 million, down 22% year-over-year. Advertising revenue also improved each month of the quarter, and we benefited from strong e-commerce partners and sports leagues returning. In July, advertising revenue had regained 2/3 of the year-over-year decline observed in Q2 and was back to year-over-year growth when excluding the travel vertical. Fintech revenue was $11.8 million, and as discussed, loan volumes began ramping in late June.

Finally, combined retail and tech revenues were $13.3 million. As a reminder, we expect combined retail and tech revenues to be between $5 million and $6 million next quarter, though debt reduction is not expected to affect profits.

Our operating expenses were $59.4 million, down considerably from the first quarter due to 2 primary factors: one, discipline around variable costs; and two, lower credit losses in microlending due to the smaller revenue base and stronger-than-expected collections on loans that were open at the end of Q1. As a result, adjusted EBITDA was positive at $2.9 million in the quarter.

Net income was $17.1 million, benefiting from finance income from marketable securities, the performance of our investees and other income from our divestment of a Nigerian subsidiary. Our operating cash flow was positive at $7 million for the quarter, where the biggest components were micro loan collections adding to our cash and cash outflow related to costs of prior periods with greater fintech volume. The reason our total cash and marketable securities still fell by $55 million in the quarter was that we repaid $48 million of loans, largely in market credit facilities and repurchased $13 million of our own shares. Everything else more or less nets out.

In terms of our share buyback program, at the end of Q2, we had repurchased 2.47 million ADSs year-to-date for a total spend of $18.5 million. Including repurchases in this quarter, we have repurchased 3.46 million ADSs for a total spend of $28 million, averaging $8.08 per ADS and leaving $22 million of additional repurchases under our announced $50 million buyback program.

Now looking forward, the good news is that the year-over-year trends in our business have improved each month since bottoming in April. While we are hesitant to give specific revenue guidance for the third quarter due to continued uncertainty around COVID-19, we think it's helpful to share several directional data points.

First, combined search and advertising were down 8% year-over-year in July, recovering from the 19% year-over-year decline we saw for Q2. And we have seen further improvement in August month-to-date. We expect the sequential revenue increase from Q2 to Q3 in our combined search and advertising business to materially exceed the 6% increase we had in the same period last year, as our business continues to recover and user metrics remain strong. Further, we expect to see a similar benefit from Q3 to Q4.

Second, as discussed earlier, retail and tech revenue will be roughly $5 million to $6 million combined. This will be almost an $8 million headwind on third quarter revenue versus this past quarter, but will not impact profitability as both businesses are low margin.

Three, our new initiatives, OList and European Fintech will start to generate revenue in second half this year, though we expect the contribution to be small. And our focus here is to prepare for significant contribution to our growth as we look into 2021 and beyond. Finally, we are expecting a meaningful improvement in EBITDA margin in the third quarter, primarily topline driven, given the high margin of search and advertising revenue.

To wrap up, our core search and advertising business is recovering from COVID-19, and we believe is positioned to return to its historical growth rates in 2021. Our new initiatives are progressing well. And we expect them to support further acceleration of our growth rates next year.

Finally, we believe our investments in OPay, StarMaker and now Nanobank will drive value creation for Opera's shareholders as these businesses continue to execute. We are very excited about the future and returning to our strong growth trajectory.

With that, I think we can now move to questions.

(Operator Instructions) Our first question comes from the line of Lee Krowl of B. Riley FBR.

Congrats, Song, on the promotion to co-CEO. I wanted to start out on the search and advertising business. You kind of consolidated the trends of those business into down 8% year-over-year. Could you maybe break out the trends specifically by search and advertising quarter-to-date? And then I guess the other breakout I was curious on is just by the subsectors, which have returned to kind of normalized levels and which are lagging.

Yes, sure. Thanks for the question. So yes, as mentioned, in Q2, search was down 18% year-over-year and advertising, 21%. In July, we saw that search had regained half and was down 9% year-over-year. Advertising even more so, was down 6% year-over-year. And as I mentioned, excluding travel, it was back to growth year-over-year in July.

This is Derrick. The other comment that we made is that month-to-date in August, we're seeing better trends than July.

Got it. Okay. And then on the Nanobank transaction, you guys provided a lot of detail, that was helpful. I just kind of wanted to dig in on the question of why now. The business has reached some decent scale, a lot of velocity, but obviously, a brief pause with the pandemic. Why does it make sense to do this transaction today versus waiting for it to build further scale within Opera?

Sure. I mean this is something that we have considered for some time. We've seen fantastic operational performance in both Opera and Mobimagic. We think this is good timing to consolidate now and prepare for the reacceleration of the business and do everything we can, so that, that business is set up to be a true leader at a global scale for emerging markets. We see operational benefits. As mentioned, we also see structural flexibility over time.

Our next question comes from the line of Lance Vitanza of Cowen.

Glad to hear things are improving. Let me actually ask you a couple of questions on Nanobank. I guess the first is, how easy or difficult do you expect the integration with Mobimagic and the formation of the JV to be? And are there risks there that putting the 2 companies together causes you to miss some of the opportunities in the marketplace over the next, say, 3 to 6 months?

Sure. Frode here, again, I'll answer that question. I would say, at the starting point, operationally, the businesses have different core markets. Where it overlaps, we already worked together. So that would actually simplify things, being part -- having it as part of one joint group. I think we've also seen that in Mexico, which we are really excited about, that market we have prepared together, and we are about to really start scaling that now. I think in terms of building a corporate function, that is an area where Opera will remain quite involved, very similar to how we supported OPay in its early days until we have sort of the corporate consolidating function well in place.

Okay. And then sticking with this. So obviously, you talked about the disparate profitability, right? So Opera generating more than half of the revenue, but at a relatively low margin versus Mobimagic generating less than half of the revenue but at a pretty impressive margin. How do you explain that margin differential? Is that sustainable? What are the structural elements that go into that? And I guess, I know you mentioned all of the factors. But at the end of the day, is that margin differential really why Opera winds up with only 42% of the equity in the JV despite contributing the majority of the revenue?

Yes. So I would say on profitability, first of all, there will always be country-by-country differences in terms of how profitable each market will be. And Mobimagic has set up a very attractive business in Indonesia, both in terms of growth and profitability. Second reason why their profitability is good is that they've been able to leverage their technology developed for Indonesia as they have supported Opera in India, which has made the company profitable, as you referred to.

To cover the second part of the question. So when we've looked at the relative valuations, we have looked at cash flows over a long time period. And we have looked at multiples, both on revenue and process level to sort of determine the right split. On that one, as I mentioned, we engaged an independent professional party to help us confirm the appropriateness of this...

Lance, this is Derrick. We're not expecting any structural changes in terms of Mobimagic's business, meaning the tech platform will be the same in Indonesia. We'll continue to do what it's doing. So there's nothing that's onetime this year.

That was really -- that was a big part of the question. And then I guess, just -- and I think you went through this on the prepared remarks, but just to make sure I have it right. So there was roughly $31 million. If I take your June 30 cash and marketable securities of about $160 million and then I back out the $31 million or so that you are shipping into the joint venture essentially, so on a pro forma basis, you've got about $130 million of cash and marketable securities. Is that accurate?

Correct.

Okay. And then just any -- will there be any debt at the JV? I would imagine nothing on balance sheet, but could you -- anything about the debt structure there? And then also -- and I apologize, I'm not familiar with the Mobimagic shareholder base. I know that there's a relationship there between your other co-CEO and Chairman. But could you remind me his percentage ownership in Mobimagic? And how that -- whether that's direct or indirect through one of those other investment vehicles?

Sure. So to answer the first question, no, there won't be any external debt in the Nanobank balance sheet. So that will be clear. On ownership, it is correct that our CEO is the majority shareholder in Mobimagic.

Our next question comes from the line of John Godin of Lake Street.

Congrats, Song. First, on the Nanobank. Can you talk in a little bit more detail of how you think this expands the TAM, both from a geographic and scalability standpoint as well as from a new product standpoint? And then number two, can you walk me through kind of the strategy for customer acquisition, especially for some of these markets where Opera hasn't had a significant presence through any other products previously?

Sure. I'll -- I can go first. So we believe that a consolidated company working across different geographies makes the operation solid, makes it easier to expand to new geographies. It also supports a broader product diversification to essentially have a company that has centralized tech that it can apply in different geographies. So we believe that the combination of Opera and Mobimagic into Nanobank is very supportive for its continued growth.

Yes. This is Derrick. I would add when you look at the existing markets -- I guess, in the new markets of Indonesia and Mexico, they are 2 of the top unbanked markets. Obviously, they're smaller than India, but bigger in size than Kenya. So there are bigger opportunities. I mean I think Mexico has the opportunity to be very similar to Indonesia in terms of scale. There's some other markets that Nanobank is looking at and -- which again, would fall into large unbanked populations. And they want to, a, make sure everything with this deal goes right; b, get Mexico continuing to scale and India to scale back up. But in the next 6 to 12 months, we'd not be shocked to see a couple of big more markets. The other thing that I think we spoke a little about last quarter, the quarter before, was the expanded products. So they are working on that. There's multiple different products. Remember, when you look at Nanobank, there were 50 million registered users. And when you look at the loans the company has provided, they're not giving a lot of users. So they're really focused on how do they get the most out of that registered user base and go from there. I think your -- what was your final question? Was it around how do they acquire users in different countries?

Yes. Just the customer acquisition strategy in countries where Opera hasn't previously had a big presence.

Yes. India...

Song Lin here. Like, sorry for jumping in. I guess I'm a bit jealous that Frode get all the questions. So I just want to try to chime in. So like maybe also to comment a bit right. So like it's a bit related, maybe a bit repetitive is that we actually feel that now it's a great time to do this. First of all, microlending business is doing great. But then, of course, it does have impact with COVID. But now, of course, the region has been recovering. So we actually feel that now it's a great time, partly because the demand is more than ever. Also because you talk about customer acquisition, because now obviously, for where Opera is big, like India, Indonesia and even Mexico, we are reasonably big. But then now is also a fantastic time to actually acquire uses because the cost is very cheap because people are still recovering from COVID.

So it's a fantastic time for you to get users probably at the cheapest level possible. So we really feel that now is our chance actually to scale. Without being too exciting, we feel that in those emerging markets, we really have -- the golden chance (inaudible) should be, I would say -- maybe I'll be too bold to say number one, right, in a reasonably short time frame. But then we need to concentrate, we need to have one thing to focus on that, streamline all the risk control, the QIC and all the processes. So I think that's -- now it's golden timing. Maybe partly to answer your question that now is also completely perfect time to acquire users because in all those markets, we talk about South Asia, Southeast Asia or even Latin America. It's the best time to acquire users as it is very cost-effective now, also in combination with Opera traffic.

That's super helpful.

(inaudible)

Yes. And second one also for you. Can you just talk a little bit in more detail about the trends you're seeing with the Opera News hub and kind of the progress you're making there with the expansion into -- I believe, you're in 6 markets now? As well as how OList is trending and whether that's kind of ahead or in line with your expectations maybe at the beginning of the year?

Yes. So it's a bit sporadic. So I'm not sure if I hear you clearly, but I'll try to answer what I hear. So high level, as also commented a bit on the press release, Opera News are growing really well in Q2. It's a milestone that's actually past $200 million. And now the average is past $205 million in the second quarter. So it's a good indication that we believe our strategy really works.

And yes, you are right that by actually News -- Opera News hub, we are able to establish a very strong presence by work with all the local content producers in all those key countries, Nigeria, Kenya, Côte d'Ivoire and a few others. And that, of course, really powered the growth that we are seeing. And I just have to say that, of course, we are quite pleased of the role we have been playing in -- during COVID times because frankly, that actually become a good go-to place for people to react and share all those relevant news.

So often comment that you probably see that in our financial report, we actually have reduced our marketing spend just because the organic growth of users are so big, that we almost don't need to spend that much, but then we still have 26% year-over-year growth on that. So we are very pleased about it.

And also, I'm not sure if I heard you clearly, but if you are talking about monetization, I also commented a bit that despite of the COVID, News monetization in Q2 has almost -- grows by 65% compared with last year. So obviously, it's still a low point last year, but still 65% during COVID I think is a very strong signal that we're doing well. And I've also commented that -- if you look at how many app impressions we are showing globally, News is actually almost top 5 ones, if you look at programmatic 5 from Google. So we are very proud. Like again, I guess the only issue is that the eCPM in general, Africa of (inaudible) is still very low compared with what you see in, say, U.S. or Europe. But we just have confidence that when the COVID recover and when that our regions begun to grow, we will be in a very good position to grow further. So we're quite pleased with what we have been done with News in Africa.

Our next question comes from the line of Alicia Yap of Citigroup.

This is Vicky Wei on behalf of Alicia Yap. So I've got 2 questions. The first one is about advertising. So as the COVID-19 situation becomes better and we expect traffic and as project gradually to normalize in the second quarter. So can you elaborate a bit more on the trend you see in July and August, I mean overall advertiser budget sentiment and for rest of the year? And have you seen any cautiousness on ad budget spending in line with geographic political tension? And also by categories, let's say, online travel, e-commerce, would you please explain more about how advertisers performance?

Yes. For the -- like, I guess I can take it. This is Song Lin for high level and then Frode can probably comment a bit on the action on most, because again, it is because Frode have taken many questions. I'm helping out a little. So yes. So I would say, like what we have already been saying, that I would say, in July, August, we have already seen a great recovery, which we are optimistic about. If we try to segregate a bit, I would say, on the mobile, I think the ads revenue are growing nicely, almost back to where it is before. So like we are very hopeful that this trend will continue. Of course, we have to be cautious because there are some uncertainties. But high level, we see that and (inaudible), it's recovering, and it's very -- it's positive.

On the desktop side, I would say, search is already -- as Frode said, has -- had the most recovery, into the only single-digit drop compared with last year. And then hopefully, that trend will continue so -- which is great.

In terms of advertisement, I would say, if you look at categories without traveling, which primarily remains is equal more than a few others, I would say, those are already back to the last year level, maybe slightly higher. So in terms of traveling, of course, it's still been impacted, but we also see strong recoveries, a few times, recoveries from June to July and then that trend also continues in August. So remain to be seen. We believe, of course, it will still be down compared with last year, but the growth trend is very encouraging. So I think that's more like it in high level. But Frode can also comment a bit on the details and numbers.

Yes, I think we'll be quite careful in sort of laying out the trajectory of sort of the normalization back to growth. Maybe the only thing I can add as a reminder is at the beginning of the year, we guided advertising to grow faster in 2020 than in 2019. Last year, it grew 18%. And start of the year, we were also well over 20% in year-over-year growth. Since then, of course, we have COVID, which has impacted monetization these days, but we also have more users than what we expected to have at this point in time. So I believe the outlook is actually quite positive when it comes to advertising and search monetization.

I have 1 follow-up question about the European Fintech business. So we know that the company is taking lots of initiatives. I want to ask management's opinion in the longer term with, let's say, in 2 to 3 years, how do you see your market position? And would you please share with us any long-term and short-term plan?

Yes, this is Derrick. I mean, in terms of our market position, I think the idea is continue doing what we've been doing, which is growing our users, COVID aside, growing our monetization and then using our platform to launch new products. So obviously, we've been successful over the last couple of years with Opera News as well as the microlending. And I think when you look at OList, when you look at the European Fintech and some other initiatives that are too early to talk about, our hope is, is that we grow our search and advertising at historical or better rates and then we find new businesses to turbocharge growth. So that's sort of how we look at it.

Our next question comes from the line of Liping Zhao of CICC.

I'm wondering whether you could provide updates on OList business, such as MAU and our monetization method on the business and also our like growth strategy.

So yes, Song Lin here. I can just give a quick remark. So yes, so all this is what we lost in material. It's a very good example of how we're trying to enable the local merchants to transit from off-line business to the online business. User-wise, we have in Q2 rates, average about 6 million monthly active users compared with 4 million in the start of the year, which we are quite proud because that's a user base -- that's a big user base, (inaudible) Nigeria.

Monetization-wise, I think it's also a very good example that we have just announced the initiative of Opera for Business together with Google. I think that's a very -- that's illustrated actually our strategy that we will try to partner with all the bigger guys like Google and particular other players in the region to help with merchants and potentially, end users, better monetize and also do the better transitions.

So like, I guess, you're welcome to actually go to our website, Opera for Business and there are a bit more interesting updates. And we feel that we are optimistic about how that can power the transitioning into digital app space, which is ever more relevant in the current COVID situations because it's top and top (inaudible) to do it from purely online. So I think what is [very proud], we are there.

Moving forward, I think our strategy will be the same, that we will try to build similar propositions in Africa and even potentially in other parts of the world, which is our core region because I think -- we think all of them are relevant to helping transition from off-line to online.

That was our final question. I'd like to turn the floor back over to Song Lin for any additional or closing remarks.

Sure. So yes -- so if there are no further questions, I think I have to say that, guys, I'm very proud of how Opera has continued to integrate it among the uncertain times. The good news is that our News hub app monetization is bouncing back. We have very exciting new initiatives that could really turbocharge our growth, and we are positioned to take advantage of the structure change from transitioning of off-line to online. So looking forward to take the great opportunity together with all of you. And thanks, everyone, for joining us today, and have a good day.

Thank you. Ladies and gentlemen, this does conclude today's conference call. You may now disconnect.