Oslo, Norway has seen Opera (OPRA) navigating a period of resurgence over the past year, with a recent regulatory push providing a potential boost for the company. Despite showing consistent growth in operating income, Opera still faces elevated risks due to concentrated revenue streams and an opaque shareholder base, leading to a relatively low valuation multiple. Investors may be overlooking the company’s projected dividend yield and the associated risks.

In the full year earnings report for FY23, Opera reported strong figures, exceeding consensus expectations for adjusted EBITDA and demonstrating revenue growth. The company’s strategic initiatives have contributed to revenue growth, particularly in the advertising segment through their Ads Product Platform. Opera’s continued product launches and features have bolstered its browser products, with a focus on expanding market share and user base.

The company’s efforts to expand into higher-margin Western markets have shown promise, but Opera’s share in the browser market has faced challenges from larger competitors. Despite positive earnings beats, Opera’s valuation multiples remain compressed, partly due to its reliance on revenue-sharing agreements with Google for search.

Looking ahead, Opera aims to reduce its dependence on search revenue, focusing on expanding its ads business and monetizing new features like the AI chatbot, Aria. However, concerns linger regarding the concentration of control among the company’s shareholders, posing potential conflicts of interest. Valuing Opera based on growth projections, the company faces pressure to sustain its momentum and justify its valuation multiple.

As Opera prepares to report its Q1 FY24 earnings, attention will be on its ads business performance, expansion in Western markets, monetization strategies for Aria, and dividend outlook. The company’s projections for adjusted EBITDA and revenue growth in FY24 will be closely monitored. With risks and uncertainties in play, Opera’s performance in Q1 FY24 will be pivotal in determining its trajectory moving forward.

In conclusion, Opera’s proactive approach to leveraging AI technologies has yielded positive results, but risks persist. A strong showing in Q1 FY24 will be crucial for Opera to potentially raise its outlook for the year. As of now, a Hold rating seems prudent, considering the company’s current position and the need for sustained outperformance.