Opera could be set to rise
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Opera, the Norwegian software company that is well known for its browsers, went public in July of 2019. On its first day of trading, Opera's stock went up 19.5%. The company has a desktop browser as well as a couple of mobile browsers with a news service.
While it does own many online browsers and a news service, you might be wondering, "how does this company make money?" Well, according to Romain Dillet, Opera makes money in three ways: a payments from a search engine company to be the default search engine of their browsers, advertising, and licensing deals.
And for those that are looking for a company to compare Opera to, look into brands like Mozilla Firebox, Google Chrome, Internet Explorer, Safari, etc.
Opera's revenue sources
Opera primarily makes money in three ways. A way the company makes money is by having search engines pay the company money to be the default search engine on their browser. Also, Opera makes money from phone companies that pre-install Opera browsers onto their phones as a part of the licensing deals. For advertising, companies pay Opera to be a part of the browser's "speed dial" group. Also, Opera has other sources of revenue, but they aren't as significant as the big three.
Though some investors have expressed concerns that the company's strong dependence on Google and Yandex for revenue puts them in a vulnerable position and that the browser market is highly competitive, since browsers have not only became mainstream but used constantly by billions around the world, Opera has been able to carve its niche in the industry and the fundamentals Opera has are really attractive.
The Opportunity
Opera has a large exposure to many of the developing nations. Many of those nations are experiencing an increase in internet access. That also means that competition wouldn't be as fierce as in the developed nations.
The Fundamentals
Annual revenue has grown 100% year over year! To top it off, the company is profitable! At least Opera isn't one of those startups that have impressive growth rates with no profits. Also, with millions of people around the world active on Opera's browsers, there are more than a hundred million people that use Opera News. Since Opera has a financial technologies subsidiary that specializes in micro loans, around a billion USD of loans have been made as well.
Also, though Opera News has been relatively new, its growth has exploded. From 25 million users in Q2 of 2017 to 169 million users in Q3 of 2019, that's impressive growth.
Furthermore, the Opera News app has became the most downloaded news app worldwide in Q2 of 2019.
Opera, the Norwegian software company that is well known for its browsers, went public in July of 2019. On its first day of trading, Opera's stock went up 19.5%. The company has a desktop browser as well as a couple of mobile browsers with a news service.
While it does own many online browsers and a news service, you might be wondering, "how does this company make money?" Well, according to Romain Dillet, Opera makes money in three ways: a payments from a search engine company to be the default search engine of their browsers, advertising, and licensing deals.
And for those that are looking for a company to compare Opera to, look into brands like Mozilla Firebox, Google Chrome, Internet Explorer, Safari, etc.
Opera's revenue sources
Opera primarily makes money in three ways. A way the company makes money is by having search engines pay the company money to be the default search engine on their browser. Also, Opera makes money from phone companies that pre-install Opera browsers onto their phones as a part of the licensing deals. For advertising, companies pay Opera to be a part of the browser's "speed dial" group. Also, Opera has other sources of revenue, but they aren't as significant as the big three.
Though some investors have expressed concerns that the company's strong dependence on Google and Yandex for revenue puts them in a vulnerable position and that the browser market is highly competitive, since browsers have not only became mainstream but used constantly by billions around the world, Opera has been able to carve its niche in the industry and the fundamentals Opera has are really attractive.
The Opportunity
Opera has a large exposure to many of the developing nations. Many of those nations are experiencing an increase in internet access. That also means that competition wouldn't be as fierce as in the developed nations.
Opera's Investor Presentation (December 2019)
Furthermore, while Opera has been experiencing high growth rates now, they can sustain and even increase the rate of growth in the future.
Opera's Investor Presentation (December 2019)
While Opera may be a Norwegian company, it has been allocating a lot of capital in capturing the big opportunity in developing nations. Opera will benefit from a lot as developing nations transition into developed nations.
The Fundamentals
In Opera's investor presentation in December 2019, Opera has shown investors impressive data.
Opera's Investor Presentation (December 2019)
Annual revenue has grown 100% year over year! To top it off, the company is profitable! At least Opera isn't one of those startups that have impressive growth rates with no profits. Also, with millions of people around the world active on Opera's browsers, there are more than a hundred million people that use Opera News. Since Opera has a financial technologies subsidiary that specializes in micro loans, around a billion USD of loans have been made as well.
Opera's Investor Presentation (December 2019)
Also, though Opera News has been relatively new, its growth has exploded. From 25 million users in Q2 of 2017 to 169 million users in Q3 of 2019, that's impressive growth.
Furthermore, the Opera News app has became the most downloaded news app worldwide in Q2 of 2019.
Opera's Investor Presentation (December 2019)
The impressive start to Opera News has given the impression that Opera does have a great brand. Even if there are plenty of news services out there that have operated before Opera News, despite the late start, Opera has proven that its services are appealing to customers.
Now, many are wondering whether growth for the company's news services can be sustainable. Well, Opera has been doing well in an emerging nation, Nigeria.
Opera's Investor Presentation (December 2019)
When comparing Opera to the competition, Opera has drastically outperformed the competition. As Nigeria continues its growth along with the increase in internet access for many in the country, Opera News should see growth continue. Plus, while Nigeria, one of Africa's most advanced nations, prefers Opera over the competition, imagine the growth Opera News can have in other African nations as internet access increases in the continent. Now that's a rosy outlook on Opera News but the performance of Opera News in Nigeria provides a great sample of the performance Opera News will experience in other nations that are trying to grow.
Furthermore, Opera does have a fintech element in its portfolio. OKash, a fintech subsidiary of Opera that specializes in micro-lending, has made around $1 billion USD in micro loans to businesses in emerging nations.
Opera's Investor Presentation (December 2019)
With the rise in fintech, many sectors of society that once were forgotten are now being sought after with solutions to their problems. For the many that are unbanked, many fintech startups like Ant Financial and Square are looking forward to providing financial services to them.
It's interesting to see Opera get into the micro-lending space. While internet access is rising in Africa, providing micro-lending services to man Africans will not only help with the rise in consumerism in Africa but even increase the amount of capital available to Africans looking to start their own business. Plus, they already have a digital wallet service called OPay wallet.
Opera's Investor Presentation (December 2019)
Having OKash as a digital platform cuts back on many costs associated with being in financial services. Also, with a presence on mobile, OKash will be really accessible to many people.
Interestingly, Opera's OKash has facial recognition as the digital signature. While many transactions around the world (both developed and developing) have customers verify transactions with signatures, OKash has facial recognition to verify transactions, making transactions safer.
Opera's Investor Presentation (December 2019)
While I haven't dug deep into Opera's patents, I don't know if Opera has a patent on facial recognition for digital payments. If they do and are able to capitalize it on it in many ways, that would be an incredible asset for the company.
When looking at the slide and the management comments on the expansion of OKash, the company, has been receiving positive feedback from their customers. They've been able to grow in Kenya, grow a lot faster in India, and have been able to add it as a new product offering in Nigeria along with OPay wallet.
Interestingly, they've been able to achieve massive growth with the micro-loans. Providing micro-loans in places that have less access to capital has been a big boon for the company. Note that Opera is financing all of the loans.
And, this is not all of Opera
Opera's Investor Presentation (December 2019)
While we see Opera's three major sources of revenue along with Opera News and OKash, we also see OList, OFood, and ORide (OPay was mentioned earlier). That means that Opera also has its own "eBay" and "Uber" as well as its own "DoorDash" which I find to be amazing.
While ride hailing services and food delivery services have struggled to make profits, if Opera can manage to show growth for OFood and ORide, it can possibly spin-off or even sell those ventures for a nice profit.
OList, a complementary product offering, can be a boon to Opera as the middle class in many of the developing nations increases. With an increase in disposable income for many, OList would be something many would use as they are able to buy and sell items.
And most importantly
The company does show positive net income, which shows that the company is profitable.
Opera's Investor Presentation (December 2019)
Instead of having to bet only on growth, investors can safety bet that the company is profitable.
Conclusion
Overall, Opera has shown to not only be a tech company of high growth and profitability but of a company that has a lot more growth ahead of itself. Expanding into African and other developing nations as internet access is rising, Opera will be bigger in the future.
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