With over 4 billion internet users globally, of which Gen Z accounts for 2.5 billion, and approximately 1.8 billion PC gamers, Opera GX aims to position itself at the intersection of these demographics. The total addressable market (TAM) is estimated at 0.4 billion users (0.5 billion including China).

Opera has main three browsers:

  • Opera One: Launched in 2013, it is available on all devices. Known for its user-friendly interface, it was the first browser to feature an integrated Crypto Wallet in 2018 and added integrated VPN solutions in 2019.
  • Opera GX: Launched in May 2021, it’s the world’s first mobile browser for gamers. It features custom navigation with the Fast Action Button (FAB), using vibration and haptic feedback. Users can sync their mobile and PC experiences through the Flow feature, sharing walkthroughs, tutorials, and character builds between devices. The GX corner on GX Mobile’s home screen offers the latest gaming news, deals, and a game release calendar.
  • Opera Mini: First launched in 2006, it provides a faster browsing experience on nearly any Android smartphone or feature phone. In 2022, it averaged 152 million users worldwide, with over 98 million MAUs on Android alone. According to Statcounter, it is one of the most widely used mobile browsers in emerging markets in 2022.

The company continues to innovate with its Web3-centric Opera Crypto Browser, launched in 2022. By introducing this browser early, Opera aims to position itself ahead of the curve in the adoption of such services.

In 2019, Opera made a significant entry into the gaming market with Opera GX, a browser tailored for gamers. To further its development, the company acquired GameMaker Studio, a low-code environment for game development. In September 2021, Opera launched GX.games, a portal for games developed with GameMaker Studio. Opera GX reached over 30 million users in Q1 2024 (+1,100% growth over four years from 2.4M in Q1 2020). The browser features ARIA integration, Opera’s AI assistant, which helps users find information instantly.

Opera currently has nearly 304 million MAUs among gamers, equating to about 8% of global internet users. Its mobile browser user base reached 224 million average MAUs while it continued to reduce acquisition spend in South Asia, a low ARPU region, while reallocating its resources to growing its users in high ARPU markets such as North America and Western Europe.

Notably, 74% of new users come from organic traffic, 12% from paid sources, and 14% from OEMs. Opera engages in strategic partnerships and integrations with major companies like Google, Amazon, YouTube, Meta, and Netflix where revenue sources are divided into 42% from search (+14% YoY) and 58% (+21% YoY) from advertisements.

Opera also monetizes through pre-installed apps, offering visibility to enterprises and securing substantial revenue streams where it earns from revenue share or tenancy fees.

Opera's revenues increased from $165 million in 2020 to nearly $400 million in 2023, with analysts projecting around $600 million by 2026. EBITDA and EBIT rose from $25 million to $93 million and from $3 million to $63 million, respectively, between 2020 and 2023. The COVID-19 pandemic positively impacted the company, with increased usage of its browsers, particularly among gamers. Operating margin grew to 15.85% in 2023 and is expected to reach 20% by 2026, with net margin following a similar trajectory. The company’s ROE and ROA improved significantly from 0.54% and 0.51% in 2020 to 7% and 6.37% in 2023. Analysts expect an ROE of 12.3% by 2026 and an ROA of 9.2% by 2025.

Opera saw its ARPU increased from $0.41 in Q1 2020 to $1.43 in Q2 2024, a 248% rise. The share of Western market users grew from 8% in Q1 2019 to 17% in Q1 2024, a 64% increase over four years.

It faces several risks that could impact its business performance such as the the cyclical nature of the advertisement market that can affect the company’s income stream. The group relies heavily on search deals (42% of sales), particularly with Google and therefore lack of revenue diversification recently announced collaborating with Google Cloud to power its browser AI with Gemini Models.

Opera has substantial growth potential in the coming years, with the development of artificial intelligence as a possible future growth driver. Although not yet a major player in the gaming world, it aims to increase its presence. The launch of various browsers tailored to different uses, coupled with strategic partnerships, positions the company well for user base expansion and sustained growth. With a P/E ratio of 7.11x for the fiscal year 2023, there appears to be a gap between the company’s development plans and market perception, presenting a potentially interesting investment opportunity?