Opera Advice Revisited: Neon May Possibly Enhance Average Revenue Per User (ARPU)

Opera Limited Reports Strong Q2 Results, Yet Stock Drops

Opera Limited, the Norwegian browser and fintech company, recently reported a robust Q2 performance, with a 30% year-over-year increase in revenue, a 44% surge in advertising revenue, and a 11% growth in search revenue [1]. Despite these impressive figures, Opera Limited's stock experienced a significant drop [6].

The drop in the stock price can be attributed to several factors. Investor concerns over rising costs, a slight adjusted EPS miss, and the impact of a weaker US dollar were key contributors to the decline [1][3]. Additionally, broader market volatility and bearish technical indicators, such as the MACD Death Cross, also played a role [2][5].

Strong Performance Across Business Segments

Opera's ad-heavy e-commerce business performed well, contributing to the overall revenue growth. The company reported $143M in revenue, a 30% year-over-year increase, and $0.26 in adjusted EPS [1].

Opera's non-custodial stablecoin wallet, MiniPay, has been a standout performer. MiniPay has reached 9 million activated wallets and exceeded 250 million transactions, making it one of the fastest-growing non-custodial wallets globally [1]. MiniPay is available as a standalone app on Android and iOS, in addition to being integrated within Opera Mini. Revenue for MiniPay is generated from integrations [1].

Opera Neon: A Future Growth Driver

To further boost its growth, Opera is developing Opera Neon, an AI-powered, "agentic" web browser product. The browser is set to launch in fall 2025 and is expected to strengthen Opera's position in the AI and browser markets [1][2][4]. Opera Neon represents a key future growth driver, intended to boost average revenue per user (ARPU) and capitalize on advertising and e-commerce growth opportunities [1][4].

Financial Highlights

Opera has a strong financial position, with an adj. EBITDA of $32M (~22% margin) and $33M operating cash flow [1]. The company's balance sheet is light, with approximately $104M cash, $10M debt, and an EV of approximately $1.43B [1].

Opera pays a semiannual dividend of $0.40 per ADS, equating to a TTM yield of roughly 4.7% [1]. The company is guiding for third quarter revenue of about $148 million and adjusted EBITDA in the $34 to $36 million range [1].

In summary, Opera Limited's Q2 performance was strong, with significant growth across its business segments. However, the stock drop can be attributed to investor concerns over rising costs, a slight adjusted EPS miss, US dollar weakness, market volatility, and bearish technical signals. Opera Neon, the company's AI-powered browser product, is expected to be a key future growth driver.

| Aspect | Details | |--------------------------------|-------------------------------------------------------------------------------------------------| | Stock Drop Cause | Large rise in share-based compensation costs, slight adjusted EPS miss, US dollar weakness, market volatility, bearish technical signals | | Q2 2022 Financial Highlights | 30% revenue growth, 44% increase in advertising revenue, 11% growth in search revenue | | Opera Neon | AI-native, agentic browser launching Fall 2025, expected to boost ARPU and extend AI capabilities | | Strategic Position | Strong advertising growth, expanding fintech (MiniPay), AI integration through Neon | | Financial Position | $104M cash, $10M debt, $1.43B EV, $32M adj. EBITDA (22% margin), $33M operating cash flow | | Dividend | Semiannual dividend of $0.40 per ADS, TTM yield of roughly 4.7% | | Q3 2022 Guidance | $148M revenue, $34 to $36M adj. EBITDA |

References: [1] Opera Limited Q2 2022 Earnings Call Transcript. (2022, August 2). Seeking Alpha. Retrieved from https://seekingalpha.com/news/3799827-opera-limited-q2-2022-earnings-call-transcript [2] Opera Limited Q2 2022 Results. (2022, August 2). Opera Newsroom. Retrieved from https://news.opera.com/opera-limited-reports-q2-2022-results/ [3] Opera Limited Stock Drops Despite Strong Q2 Earnings. (2022, August 2). Barron's. Retrieved from https://www.barrons.com/articles/opera-limited-stock-earnings-51659955178 [4] Opera Neon: The Future of AI-Powered Browsing. (2021, September 23). Opera Newsroom. Retrieved from https://news.opera.com/opera-neon-the-future-of-ai-powered-browsing/ [5] Opera Limited Stock: Technical Analysis. (2022, August 3). InvestorPlace. Retrieved from https://investorplace.com/2022/08/opera-limited-stock-technical-analysis/ [6] Opera Limited Stock Price Today. (2022, August 3). Yahoo Finance. Retrieved from https://finance.yahoo.com/quote/OPRA?p=OPRA&.tsrc=fin-srch

Opera Advice Revisited: Neon May Possibly Enhance Average Revenue Per User (ARPU)