Opera Ltd. (NASDAQ: OPRA) may be an unfamiliar company for most web users. The computer and technology sector company provides a multi-platform web browser called Opera. It is gaining ground with impressive features like built-in ad blocking, artificial intelligence (AI) integration, battery-saving features, a virtual private network (VPN) and anti-cookie tracking technology in over 40 languages. Aria is its artificial intelligence (AI) powered assistant that combines ChatGPT with current information.
As incumbent web browsers from Alphabet Inc. (NASDAQ: GOOGL), Google Chrome and Microsoft Co. (NASDAQ: MSFT) Edge get more intrusive and websites continue to bombard consumers with ads, alternatives become more attractive.
Just as consumers are willing to pay a premium for ad-free streaming, consumers are also willing to use a browser that will provide privacy and ad-free browsing, as evidenced by Opera's growing revenues and profits.
The end of the personal computer
The personal computer is no longer personal in a connected world driven by cloud applications and annoying monetization tactics. There are rarely any content or news sites that don't bombard you these days with cookies, pop-up ads and unwanted videos, hoping you mis-click them. Hackers are constantly trying to find exploits in current browsers. Using an alternative browser that shuns such tactics can be fresh air. Opera thrives on this, exemplified by its motto, "Ditch the Default."
The Opera ecosystem
Opera claims to be more secure, less intrusive, less distracting and better performing. Opera has built out a complete digital ecosystem of services ranging from MiniPay for peer-to-peer funds transfers, cashback rebates, GameMaker for game development, VPN Pro, Apex Football for live scores and commentary, Opera News for personalize news and Loomi to watch movies and videos. Its ad blocker enables up to 90% faster page loads, preventing pop-up ads and cookies.
Opera has three browsers. The One is its flagship browser, available for Android, iOS, PC and Mac. Its GX browser is tweaked for gaming. Opera Mini is tailored to emerging markets for Android and feature phones. Get AI-powered insights on MarketBeat.
Cutting edge ad-blocker
The ad blocker is extremely effective. It can be tested side by side using an incumbent browser versus Opera to visit the same sites to see the difference. The Opera browser will tell you in real-time how many ads and trackers were blocked on a page when clicking the "privacy tab," which can be eye-opening. For example, Opera blocked 79 ads and 20 trackers on a video game review page on a popular gaming site.
Righteous growth
On October 26, 2023, Opera released its third-quarter 2023 results for September 2023. The company reported an earnings-per-share (EPS) profit of 18 cents versus consensus analyst estimates for a profit of 17 cents, a penny beat. Net income rose to $16.8 million, up from $9.4 million in the year-ago period. Revenues climbed 20.3% year-over-year (YOY) to $102.64 million, beating analyst estimates of $99.7 million.
User metrics
Opera has 311 million monthly active users (MAUs), or 8% of global internet users. It has 77 million PC MAUs. It has 234 million mobile MAUs. Advertising revenues grew 24% YOY, constituting 59% of revenues. Search revenues rose 15% YOY. Annualized average revenue per user (ARPU) grew 24% to $1.31. The Opera GX gaming browser saw a 10% increase in MAUs to 26.1 million.
Upside guidance
Opera raised Q4 2023 revenue guidance to $110 million to $113 million versus $106.97 million consensus analyst estimates. Full-year 2023 revenue guidance was raised from $394 million to $397 million with adjusted EBITDA between $88 million and $90 million or 23% margin at midpoints, up from $80 million to $84 million.
CEO comments
Opera CEO Lin Song discussed its ad revenue growth: "Opera Ads empowers partners to achieve key performance indicators such as extended reach, product or the expectations, widespread brand revolution and a favorable return of accident."
He continued, "So, as a result, Opera Ads caters to the world's largest advertisers, DSPs, agencies, and infamous partners across the globe. To give you sales of its reach, we now handle a volume of 3.8 million at request at peak times, making us among the biggest players in terms of audience reach."
Analyst buy ratings
On December 13, 2023, Goldman Sachs initiated coverage of Opera with a Buy rating and a $16.50 price target. On December 14, 2023, B. Riley Securities resumed its Buy rating with a $20 price target. Analyst Naved Khan commented, "The recent rollout of GenAI features lays the groundwork, in our opinion, for greater monetization through increased usage and engagement. With OPRA trading at ~10x 2024E EV/adjusted EBITDA, we find the risk/reward profile attractive." Check out the sector heatmap on MarketBeat.
Opera analyst ratings and price targets are at MarketBeat. Find Opera peers and competitor stocks on the MarketBeat stock screener.
Daily rectangle trading range
The daily candlestick chart for OPRA illustrates a rectangle pattern. The upper horizontal trendline is $13.69, while the lower horizontal trendline is $10.46. The daily 200-period moving average overlaps with the upper trendline at $13.66. The daily market structure low (MSL) was triggered at $11.09 as the daily relative strength index (RSI) climbed towards the 70-band. Pullback support levels are $12.49, $11.41, $10.46 and $9.61.
