Onetime rival to Internet Explorer, mid-1990s web browser Opera returns to public markets

By: | Published: July 28, 2018 5:11 PM

Web browser Opera Ltd. which dates back to the mid-1990s, when PCs ran Windows 95, and Steve Jobs led Next Computer Inc., has returned to the public markets.

According to its prospectus, the company plans to use the money for research and development into artificial intelligence software for use with its content-discovery services, as well as for marketing, partnerships, and acquisitions.

Web browser Opera Ltd. which dates back to the mid-1990s, when PCs ran Windows 95, and Steve Jobs led Next Computer Inc., has returned to the public markets.

Opera debuted on the Nasdaq Global Select Market Friday after selling as much as $115 million in stock. Shares climbed as much as 30 percent in the first hours of trading in New York, hitting $15.62. The IPO price of $12 was already at the top of the marketed range. They recently traded at $13.16, valuing the company at about $1.4 billion.

“We’ve got a good underlying strategy that we’ve developed as a private company,” Opera Chief Financial Officer Frode Jacobsen said. “We’ve been executing on that now for nearly two years and we’re very pleased with the results today.”

According to its prospectus, the company plans to use the money for research and development into artificial intelligence software for use with its content-discovery services, as well as for marketing, partnerships, and acquisitions.

Created by two engineers at Norway’s Telenor ASA, Jon von Tetzchner and Geir Ivarsoy, the first major version of the browser for Microsoft Corp.’s Windows was Opera 2.1, released in 1997. Netscape Navigator — the predecessor of Mozilla’s Firefox — was the victor in the first battle of the browsers, with Microsoft’s Internet Explorer biding its time before becoming so dominant a decade later that it prompted regulatory intervention.

Opera developed a cult following that helped cement its place as the world’s third-most popular web browser at the time. Von Tetzchner’s refusal to take the company public during the infamous dot-com boom also helped Opera survive the subsequent crash.

Today, Opera generates more than half of its revenue from partnerships with Alphabet Inc.’s Google and Moscow-based Yandex NV, and cites a reliance on a small number of companies for a majority of its income as a significant risk factor in its prospectus. In the three months ended March 31, Opera recorded net income of $6.6 million on revenue of $39.4 million, up about 55 percent from a year earlier.

Jacobsen described the partnership with Google as “mutually beneficial.”

“We’ve worked with Google for over a decade,” he said. “We periodically renew our contract with them. Last time was in late-2017 and that was a three-year extension, where Google has an option to extend for a fourth year as well.”

The IPO marks a return to public life. Despite von Tetzchner’s reticence, the company listed on the Oslo Stock Exchange in 2004, raising around $20 million. Two years later, it released Opera Mini, a mobile browser that let customers access websites over the limited cellular data networks that existed at the time.

But as the next “browser war” raged between Internet Explorer, Firefox and a nascent Google Chrome, Opera’s future changed course. Ivarsoy died in 2006, and von Tetzchner departed in 2011 after disagreements with investors about the direction of the business.

“Initially they just wanted to sell the company,” von Tetzchner said. “That was the focus of the investors. They always believed that they could get a better return that way.”

A $1 billion buyout of the entire business by a consortium of Chinese investors was planned for 2016, but the deal lacked government approval and never went through. The company instead agreed to sell just its web-browser business — now called Opera Ltd. — for $575 million, which is listing on the Nasdaq Friday.

The remainder of the original business re-branded as Otello Corporation ASA in 2017 and remains a publicly traded company in Oslo.

In 2018, Opera’s desktop and mobile browsers had 3.5 percent of the global market, according to data compiled by StatCounter, compared with about 59 percent for market leader Chrome.

AI and other software that powers content discovery are helping to drive user engagement and retention, Jacobsen said. “We have almost a quarter of our employees working on Opera News and the AI platform,” he added. “We’re investing a lot in that and it has really good traction.”

China International Capital Corporation Hong Kong Securities Ltd. and Citigroup Inc. acted as joint book-runners in Opera’s Nasdaq debut.

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