Opera Ltd. (OPRA) Q4 2020 Earnings Call Transcript

Opera Ltd. (NASDAQ: OPRA) Q4 2020 earnings call dated Feb. 25, 2021

Corporate Participants:

Derrick Nueman — Head of Investor Relations

Lin Song — Co-Chief Executive Officer

Frode Jacobsen — Chief Financial Officer

Analysts:

Mark Argento — Lake Street Capital Markets — Analyst

Vicky Wei — Citi — Analyst

Sarah Simon — Berenberg — Analyst

Unidentified Participant — — Analyst

Presentation:

Operator

Welcome to Opera Limited Fourth Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. (Operator Instructions).

I would now like to turn the call over to your speaker today, Derrick Nueman, Head of Investor Relations, please begin.

Derrick Nueman — Head of Investor Relations

Thanks to everyone for joining us today. With me today on the call I have our Co-CEO, Song Lin; and our CFO, Frode Jacobsen. Before I hand over the call to Song Lin, I would like to remind everyone that in the conference call today, the company will be making statements about its future results and expectations, which constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Such statements are based on current expectations and how we perceive the current economic environment and are inherently subject to economic, competitive and other uncertainties, and contingencies beyond the control of management. You should be cautioned that these statements are not guarantees of future performance. You may refer to the Safe Harbor statement in the Company’s earnings release for more details.

Our commentary today will also include non-IFRS financial measures, including adjusted EBITDA, which are different from our consolidated financial statements that are prepared and presented on IFRS. We believe that the use of our non-IFRS financial measures provides an additional tool for investors to evaluate ongoing operating results and trends. These measures should not be considered in isolation or as a substitute for financial information prepared in accordance with IFRS. We have also posted unaudited supplemental information on our Investor Relations website that includes historical financial results for Opera, which reflects microlending and retail as discontinued operation. We’ve also included pro forma results for Nanobank, which we own 42% of.

With that, let me turn over the call to our Co-CEO, Song Lin. He’ll cover our operational highlights and strategy and then our CFO, Frode Jacobsen will finish up with financial an update on our investments and our expectations going forward. With that let me turn it over to Song.

Lin Song — Co-Chief Executive Officer

Sure. Thank you — thank you, Derrick. So like focus on to say that, thank you everyone for joining us today. This is Song Lin. 2020 has presented unexpected challenges for many people and business alike, despite all of that, I’m pleased to report that this pandemic [ph] challenges, the fourth quarter substantially exceeded our expectations for Opera with accelerating year-over-year revenue growth rates and strong margins in our core business. We are really excited as a company about the road ahead and the (inaudible). So number one, our core business, both the Opera Browser and Opera News have demonstrated not just resilience but strengths.

This means we are now operating with more users and then greater scale in our key markets, seeing greater use of engagement and that increasing ability to monetize. So, this along with the recovery from COVID-19 impacts led to accelerating revenue growth and even stronger trajectory than we expected, as Opera enters 2021. And the second, the strengths of our core business puts Opera in a position to not only benefit from our ability to create value through these core products, but to leverage that strengths by investing where we see clear opportunities for growth. We have multiple growth initiatives in rapidly expanding categories with high potential including gaming, payments and bills in developed markets and each of which benefits from our existing market position and each of which represents significant upside.

So in combination, the scale and the performance of our core business combined with our new initiatives makes this an exciting time for Opera. We believe that we can and we will we grow to be a much larger business as this growth strategies play out over the next few years. But, before I talk about our future, I also want to offer some highlights of our performance. So for the last year, we have added 29 million monthly active users into our base in 2020. We have also reached 79 million average monthly PC users in the fourth column, it’s up 17% year-over-year which compared to about 10% of growth in the third quarter. This was driven by our Opera GX browser which exceeded 7 million use off in December. It’s up 350% year-over-year and we continue to see elevated growth rate starts this year.

Opera news monetization has also reached an inflection point. It has grown more than 150% year-over-year and 60% compared with the third quarter. Our mobile users have also achieved record revenue, while at the same time continuing the expansion of the user base is expeditiously for our most of the basket [ph] browsers, Opera for Android and Opera Touch, it is up 18% and 51% respectively. We also recently launched Hype, it’s an in-browser messaging feature in Opera Mini and this is an example of features we are launching to follow increase engagement in key African markets.

And finally, thanks to our increasing scale and engagement out of the (inaudible) not only returned to Opera, but have increased their spend with us. So the combined search and advertising revenue growth accelerated to be 14% year-over-year from about 1% last quarter. So looking ahead, we expect that our new initiatives, which both complement and benefit from our core processing business will contribute significantly to user engagement, search and advertising growth and SaaS revenue.

So let’s talk about those initiatives and also where we are. I will start with our European payments efforts. We just announced the launch of the Dify, it’s a new digital wallet that will fully integrate into our browser. So every day millions of people shop online and make payments using Opera browsers. And the first use case for Dify will focus on online shopping providing cash back to benefit from more than 300 merchants that are already part of our program. This has significant potential for Opera. So first, it will attract the many users we’re now looking for better shopping experience with integrated payments and with the ability to discounts through getting cash back. Second and more broadly this well further deepen our penetration of e-commerce, which we have done throughout 2020. Opera can accelerate partnerships with an increasing number of merchants by offering an even more seamless transaction level into the browsing experience and use Dify as a tenant of choice. So Dify is now live in Spain and next steps will be to quickly expand to additional European markets and as the year progresses, launch additional payment solutions and services such as (inaudible) further building out the ecosystem around our browser and Dify wallet. So it’s a very exciting.

And gaming, we also talked about is another area where we are very excited about. The online gaming market itself is huge and growing. So the recent market research suggests that the year 2020, the global gaming market generated revenues almost 10 times global box office revenues. Our Opera GX browser is the world’s first browser built specifically for gamer and we are encouraged by our all efficacy sales. So the Opera GX user base has grown tremendously to be above 7million MAUs in December and is meaningfully contributing to our core business growth demonstrated by the fact that every 1 million MAU on Opera GX now delivers more than $2.5 million annual revenue already and we continue to invest in gaming, so in January, we acquired YoYo Games, it’s a long-standing gaming engine well liked by the gaming communities and independent game developers. So we believe the combination of fast growing GX provide to games and the well recognized GMS gaining engine ways develop our focus will allow us to build out a comprehensive gaming ecosystem and the community accelerating our monetization potential. We would like to point a game changer. So this is still fresh, but expect more details in the next few months.

And finally, and perhaps most important in terms of the revenue growth potential for this year, it’s Opera News. So, as you all know that Opera News has been a huge success in emerging markets, especially Africa. We have over 200 million users in Africa and other emerging markets and the revenue is becoming substantial with healthy growth margin as a direct result of all our investment in users and the market share. So at the end of the last year, we began efforts to replicate the success we’ve had in more developed markets. The early results have been promising with just over 1 million MAU on external apps and is already the most downloaded news app in several markets with very good user engagement and the monetization that position us to scale further. So we’re glad that our trial and substantial experience around the AI, around algorithm and data will allow us to create a competitive edge in developed markets as well. We are now well positioned for scale. Well, there will be meaningful after on the marketing costs and our user acquisition. We will broaden our ecosystem in developed markets with a large and profitable content business and with major potential impact on our revenue growth this year.

So allow me to wrap up. Our core business is getting stronger with accelerating revenue growth and increasing profitability. We are using these strengths to build a different ecosystem, position our browser user base through e-commerce and payments, building a gaming universe, a run off the GX and bringing news to developed markets. So we are growing business in markets that are themselves growing, leveraging the scale and success of our core business with investments that will draw new users to Opera, while increasing engagement with customers. We’ve already have created meaningful upside for our company and hopefully our shareholders. So before I hand the call over to Frode, I want to say that how excited we are about the year and even more about the years ahead. We see the potential to materially accelerate our growth rates this year with clear implications for our value.

So with that I will turn over to Forde to continue. Hi Forde.

Frode Jacobsen — Chief Financial Officer

Thanks Song Lin. The fourth quarter was very strong exceeding our expectations and placing out on an elevated growth trajectory for 2021 and beyond. Let me cover some highlights of the quarter and then provide some details on our growth plans. Revenue for the fourth quarter was $50.4 million. This compares to $42.4 million of revenue in the prior quarter or a sequential growth of 19%. Specifically in the quarter, search was $25.7 million, up 13% year-over-year and 21% sequentially. This was driven by our record desktop users and recovering monetization. Advertising was $23.3 million, up 16% year-over-year and 23% sequentially. This was driven by accelerating monetization from Opera News and by strong mobile browser monetization.

Finally, tech and another revenue was $1.5 million. Year-over-year this revenue category has been reduced by $4.5 million, although with almost no impact to profits as the decline relates primarily to low margin professional services to OPay. Our operating expenses were $46.4 million, up 19% sequentially, primarily explained by increased marketing spend and a write-down of receivables related to Powerbets, which was a small joint venture that we dissolved in Q4.

Adjusted EBITDA was $14.3 million in the quarter. This represented a 28% adjusted EBITDA margin highlighting the strong profitability of our core search and advertising business. Other items of note include other income of $3.9 million related to a cash refund of VAT that had been recognized this other expenses over the past years. $5.2 million share of profit from Nanobank and $8 million increase in the book value of our preference shares in StarMaker and OPay, and $5.9 million realized finance gains on public securities held as part of our treasury function. All items included, net income was $25.4 million.

Our operating cash flow was positive at $17.5 million for the quarter, where the biggest driver was our underlying profitability. Net of other items including $8.2 million of share buybacks, total cash and marketable securities ended the quarter at $134.2 million, up $14.5 million from the prior quarter. In terms of our share buyback program, we repurchased a total of $5.89 million ADSs in 2020 for a total spend of $49 million, averaging $8.32 per ADS.

Then moving to our investments. As we have discussed our investments represent significant upside potential for Opera shareholders and in Q4, we saw a continuation of the positive trends we outlined last quarter. As a reminder, Opera holds 42% of Nanobank, 13.1% of OPay and 19.35% of StarMaker. Beginning with Nanobank, it continues to recover from COVID-19 impact. Indonesia and Mexico are outperforming, while other geographies have been slower to recover. Further Nanobank is in the process of launching in several new markets and we’ll provide more details as those markets begin to scale.

For the quarter, Nanobank posted revenue of $46 million, up 32% compared to the third quarter and disbursed 3.2 million loans representing $239 million in total value. Adjusted EBITDA was $13.8 million representing a 30% margin and post-tax profits were $12.3 million. We continue to believe Nanobank will scale meaningfully in 2021 as its markets fully recover and it launches in new geographies and add products. We expect this to be more evident towards the middle to later part of the year.

Our two other significant investments OPay and StarMaker continued to experience strong growth in the fourth quarter. In December OPay processed a gross transaction value of USD2 billion on its platform compared to $1.4 billion in October, or a 43% increase in just over two months. Further OPay’s revenue is increasing quite rapidly, while the company is able to achieve profits right around breakeven despite the growth. We expect this growth to continue as OPay continues to scale in Nigeria and expands to an additional country in Africa. StarMaker continues to scale rapidly. The company exited 2020 with an annual revenue run rates in excess of $130 million, which was more than 3 times the comparable exiting run rates of 2019. Starmaker also achieved double-digit net income margins for the year and daily active users, more than doubled year-over-year.

Now moving to our forward-looking commentary, repeating what Song Lin said earlier, our core business exited 2020 with strong momentum. This has made us more confident in near-term growth and we expect our core business growth rates to increase in 2021 compared to this past quarter. This is being driven by a combination of strong PC user growth Opera News monetization reaching an inflection point and strong mobile revenue trends. We expect our core business to contribute significantly more in adjusted EBITDA in 2021 versus 2020. However, we plan to take all of our underlying adjusted EBITDA growth and reinvest it into our new initiatives that Song Lin discussed, to seize the opportunity, to accelerate our long-term trajectory.

We believe the ROI on those investments will enable us to achieve growth rates well in excess of a 20% to 30% level and accelerate our path towards becoming multiples of our current size. We have confidence in this strategy from the consistent strength demonstrated by our core business and our demonstrated ability to scale new initiatives, such as Opera News or the fintech businesses that we’ve established as independent companies.

And finally, we believe all of these initiatives have strong risk reward profiles and the ability to drive outsized long-term profitable growth. Now getting into our 2021 guidance, we are taking a conservative approach not including anywhere near the full potential from new initiatives, while making sure potential investment is reflected. We believe that this will provide us flexibility to execute on our growth plans and provide investors with baseline expectations that we will hopefully be able to outperform as the year progresses. We expect 2021 revenue of $220 million to $240 million, representing 39% growth at the midpoint, up from our former indication of 25% growth or $200 million.

And we expect adjusted EBITDA of $10 million to $30 million. In Q1, we expect revenue of $47 million to $48 million, representing 18% year-over-year growth at the midpoint, roughly at 15% points increase versus the growth rate of the fourth quarter. This will be driven by search and advertising revenue growth combined, exceeding 25%, partially offset by a $2 million to $3 million year-over-year decline in other non-user-driven revenue. Adjusted EBITDA is expected to be around breakeven in this first quarter as we invest aggressively in our new initiatives.

To wrap up, we are very excited about 2021 and our ability to build something big. We will be investing in our future and believe we’ve got a great set up ranging from a core business that is very profitable with solid growth to a set of strategic investments in businesses that offer multiple incremental revenue and cash flow opportunities. We look forward to keeping you updated. Thanks. We’ll now take questions.

Questions and Answers:

Operator

Thank you. (Operator Instructions). We’ll take our first question from Mark Argento with Lake Street Capital Markets.

Mark Argento — Lake Street Capital Markets — Analyst

Hey, good morning guys and congrats on a strong quarter. Just had a handful of questions. Particular — on the advertising side, it looks like business has bounced back nicely there, talk a little bit about what are some of the properties where you’re monetizing the highest in terms of advertising, is it through the browser in particular or some of the new products? Maybe just touch on kind of where you’re seeing that strength in advertising coming from? Thanks

Lin Song — Co-Chief Executive Officer

Yeah, it’s Song Lin, I guess maybe I’ll just comment a bit on the general line and then Frobe can probably comment a bit on the numbers. So I think high level as we also mentioned in our Q4 results, that you know, obviously we see a very strong growth on the news, which is highlighted by the fact that news alone grows around 50% year-over-year and the 60% compared to the solid quarter, so obviously that’s very strong and above — even above the average growth of ads, right. So, but on top of that, we do also have quite strong growth on the browser as well. But yes, I think news has been instrumental and we see that trend will continue that move into the new year. So maybe Frode can also complement.

Frode Jacobsen — Chief Financial Officer

Yeah, I would say, overall we benefit from a normalization in terms of demand post COVID impacts earlier in the year giving return to year-over-year growth now. For the fourth quarter relative to the third quarter, approximately half of our advertising growth was driven by the upper news app and the other half driven by the browser side.

Mark Argento — Lake Street Capital Markets — Analyst

Great. It’s helpful. And then in terms of — in terms of the Opera Mini browser, I know that business has picked up, that product has really proliferated nicely. Are you able to generate ad revenues out of the Mini browser as well and what is the — what’s the anticipation in terms of scaling that out into other markets?

Lin Song — Co-Chief Executive Officer

Yeah. So maybe I’ll just comment here. So I’ve said that, so first clarifying that, of course, Opera Mini is actually the major ones, the browser side generating good ad revenues. It’s still because Opera Mini is the emerging markets offering, so it is intrinsically quite big in emerging markets, like Africa. So it is already, very — virtual engagement and a big chunk of the ads revenue. If we set aside news, then Opera Mini itself is actually is one of the major ads generation opportunity. So I think the next actually opportunity — is actually Opera full enjoys, it is a bit more high-end one, which will also now have been working really well in more developed markets like Europe and the US and I think, hopefully within this year 2021, you will be able to see a very strong ads monetization potential for Opera for Android and also Opera Touch this year in more developed markets.

Derrick Nueman — Head of Investor Relations

And Mark, this is Derrick, I mean, I would — going back to Opera Mini, just as a reminder for everyone on the call, we have a 100 million users on Opera Mini and our focus there is creating more and more features and functionality that drive more engagement. And you know, you’ve seen over the last 12 months, we’ve dropped a bunch of new features there and our focus is going to be to try to make the browser better and better. Obviously, the same thing with Opera for Android and Opera Touch is on (inaudible).

Mark Argento — Lake Street Capital Markets — Analyst

Alright, and then in terms of the, you think you guys are pushing all the chips back in terms of the reinvestment this year, what is the, I know Song you talked through a few of the different areas, where you’re going to spend, but maybe you could highlight out of the top water, two places that you’re really focused on on getting the right to reinvest in that capital back in?

Lin Song — Co-Chief Executive Officer

Yeah. So, just be a bit high-level right and then Frode probably the below line, just to chime in on the numbers, but I would just say that, you know, in terms of the major growth area, which will have direct impact on the numbers even for this year 2021, I would say that the probably Opera News, because that’s a very material product and it’s very good potentials, we see how it’s performing in African markets and we have as also mentioned that we have actually launched that already in some of the key new markets, which you can also see and it’s performing really well. So for us, to be honest it is almost a very simple decision that if you have a product with very high user engagement, very high user retention and a very good market, then, of course, there is no reason why we should not plan to invest to make sure it grows properly to be a very, yeah, a product with scale. So I would say that probably constitutes the by far majority of our investment in terms of money, while the other two directions, while gaming itself is already very profitable and also more Dify more like aiming at a bigger scale, but slightly long-term.

Frode Jacobsen — Chief Financial Officer

Yeah, let me chime in. A brief note at the end, of course, very pleased that we’re able to guide about 40% revenue growth at the midpoint and vast majority of that growth is coming from our core businesses as Song explains with Opera News and the potential that we see to scale that, but also the browser business is doing– doing really well. And I would say that the amount of investment really depends on how successful we are and the better we do, the more we will invest to seize that opportunity and that is what we have provided for in our ranges today.

Mark Argento — Lake Street Capital Markets — Analyst

And then just last one from me, it looks like some of your minority investments including Nanobank are really get performing at a high level. Is there any talk or thoughts, in terms of linking for liquidity for any of those assets either in an IPO or an outright sale of the stakes. Just wanted to better understand your long-term thinking around not majority assets?

Frode Jacobsen — Chief Financial Officer

Sure. I mean we are — we are very rational, when it comes to that and focusing on how we maximize the value for our brand and our shareholders. So — but we don’t have anything specific to announce, for now, just very pleased that all of these businesses are performing really well.

Derrick Nueman — Head of Investor Relations

And Mark, this is Derrick, Mark, I would add on our investments, obviously we’re not running those businesses, but the individual management teams of each business are really excited during 2021 and they think they can generate strong growth rate. So that’s a good thing as far as we’re concerned in terms of our optionality.

Mark Argento — Lake Street Capital Markets — Analyst

Just one follow-up there, any of those three assets taken in any capital or are there have been any valuation marks on any of those recently?

Derrick Nueman — Head of Investor Relations

No, not externally. Obviously, we took a gain on those investments from fair value of this quarter.

Mark Argento — Lake Street Capital Markets — Analyst

Great, thanks guys. Congrats again on a good quarter.

Operator

Our next question comes from the line of Vicky Wei with Citi.

Vicky Wei — Citi — Analyst

Good morning. Management. Thanks for taking my questions and congratulations on the strong results. This is Vicky Wei on behalf of Alicia Yap. So my first question is our Opera gaming. So I want to ask, what is the strategic target for Opera gaming in 2021 and management comment on the competition landscape of the online games in your business regions? Thank you.

Lin Song — Co-Chief Executive Officer

Yeah. So it’s Song Lin. Maybe I will just — just comment a bit. So just to comment of course is it’s new for us as we just announced the acquisition in January, but however, I would say that we have already demonstrated the strength of Opera on gaming by the GX — by the Opera GX, which are — gaming, you have 7 million monthly active users just a little bit more than one year, you have above 300% year-over-year, that’s of course tremendous and as also quoted that this is already becoming quite profitable. So as a highlight, right, so you probably know that was adding of the GNS gaming engine, it will be the first time in that we have a community, which both have plenty of gamers, fast growing very quickly over year, where also gaining engine that we’re linking — like again make our communities, like the people who are creating games, so linking both player and creating a game together.

And I would almost say that in terms of that, it’s probably easier to compare that with the likes of maybe Beam or Roblox. The only difference of course is that we are targeting it a slightly niche segments, which is independent gaming developer and also a particular niche of the market. So, yeah, so I would say, but the high level, there are a lot of potentials that we feel that the combining them together, building up on community or we obviously the one-stop shop could be very relevant. But, yeah so we’re very excited about it. However, just to comment that, because this is just a cloud in January with way to fresh that we probably just announced. You’ll see new products coming out and also for new press release that we are going have. But, however, we are very excited about the opportunities.

Vicky Wei — Citi — Analyst

Thank you. And for the competition please?

Lin Song — Co-Chief Executive Officer

Yeah, so as I said, what I briefly mentioned that, I would say if you — if you look at the level globally has the trends of both playoff and gaming creators, then you are really look at the likes of Beam, of course, the biggest one or even the the likes of Roblox, which is a solid building community for both players and creators. And I think those two are probably more similar as what do we are having. Remember that we are more — for now that we have our desktop, then more PC than mobile. So I would say those two are probably are more similarity, but of course not all very huge companies. So I think it’s more like how we can grow faster, make our step into the game.

Vicky Wei — Citi — Analyst

I see. Thank you very much. Very clear.

Operator

Your next question is from Sarah Simon with Berenberg.

Sarah Simon — Berenberg — Analyst

Yes, good morning. I apologize if these are stupid questions, but it’s the first time I’ve listened to an Opera call. But, I’ve got three. So the first one is, with regard to monetizing the browser, do you think that you will benefit form the removal of cookies by other browsers, notably chrome obviously next year and whether you’ve seen that already with other browsers dropping the cookie thing? And I guess related to that, do you feel any pressure to remove support for third-party cookies yourself? And then the other question would be OPay. Did I hear you say that you did process $2 billion of payments and I think that was just in a month, right. So, who are your main competitors for OPay and am I right in thinking to just really Nigeria for that at the moment? Thanks.

Lin Song — Co-Chief Executive Officer

Yeah, I think — it’s Song Lin. Thanks for the question. It’s very, very good question actually. So maybe I’ll just starting by answering OPay because that’s I remember last. So for OPay, I would like just to clarify of course that invested the company, so they of course know their own business better than us, but as an investor maybe the comment would just be that, yes you are right that they are making to $2 billion transactions volumes a month, very huge. And yes, you are also right that for now they are primarily operating in Nigeria, that’s where they have their license. They do have plan to expand into other regions in Africa, but it just well off of them to announce that. Yeah. But for now — and this will take of Q4 last year, the all these transaction volumes are recorded in Nigeria. Yeah. So like, through our best knowledge, they are the number one in the market in terms of payments in Nigeria with that volume and have a have a major size of the market share to count. So that’s a comment.

For OPay, you’ve very good question about cookies and also remove (inaudible) cookie, I guess my, my — our high level commentary that, as you know, we worked very close there from Google and and some of the major players in other areas. So I would almost say that we have weekly meeting with them to thinking up. So, yeah — so I think the high level comment will just be that we’re closely monitoring this. We are following all the major practice in the ecosystem and we want to just to be part of that same ecosystem moving forward. I guess that’s the best answer probably for now.

Derrick Nueman — Head of Investor Relations

And, Sarah. I mean just at a high level comment. We are a Norwegian browser company and a comment that I would make is Norway has very strict data laws, so a lot of the privacy stuff within our browser, we’ve been practicing for a long time and when it comes to our browser revenue, it’s really search revenue and it’s advertising revenue, but it’s done through affiliate deals. So for example, if we have bookmark and if you book and travel through booking. So obviously we are less impacted because of that versus other folks. I mean obviously there is still lot to be seen and we’ll see how it rolls out and see where the impacts happen or don’t happened, but I think given where today the majority of our revenue is coming from, I think we feel pretty confident we’re in a good place.

Sarah Simon — Berenberg — Analyst

Okay. And can I just ask of OPay, how — how do you distribute it? So — what’s your marketing strategy, how come it’s so big? Who are your distribution partners?

Lin Song — Co-Chief Executive Officer

Yeah, so, yeah, it’s Song Lin, and again like it’s almost should be answered by OPay guys, but since I’m looking at all Nigeria all the time my commentary would just be that, OPay is actually, it’s been, I think it’s acts a bit different than then you know, whatever in developed markets. So how it works through that is actually a model well, because in Nigeria that there is a lack of infrastructure and there’s no banks, no branches and this is. So actually OPay works by creating a huge network by distributor 300,000 of them. There might be will actually, but for my number,. they have more than 300,000 distributors you know — give them as a separate bank branch almost across Nigeria, so, well, whenever people want to do some transaction, they just go to those agents and then you can do what you like, like get money out, get money in, transfer money, buy, pay electricity, pay whatever. So I think that’s actually the starting point that they actually solved the major issue of the infrastructure that they’re facilitating transaction of cash into electronic money and vis-a-vis and also even money transfer among other things.

So I think that’s what we are doing. And on (inaudible) that because they have that huge infrastructural, they provide all the other services like, then you can of course natural to pay electricity or transfer money in the same way as I love to do — as you want it. So, yeah, but I think my that’s so big is actually pf the infrastructure that they are providing. So which is huge. Not only just the e-commerce or some others, which are bit on the (inaudible).

Derrick Nueman — Head of Investor Relations

Yeah, Sarah, just to clarify, so there is the online wallet users, which generate a certain transaction volume and then they generate transaction volume through point of sale, through the Song said that just the beginning of the call.

Lin Song — Co-Chief Executive Officer

Yeah, so the strength in order to managing from offline to online.

Derrick Nueman — Head of Investor Relations

The other thing I’ll say is I think — I think in the near term, there’ll probably be a little more public with some of the things we’re doing and talk a little more. So we’ll let them do that, but we’re really pleased with what they’re doing and the growth has been phenomenal.

Sarah Simon — Berenberg — Analyst

Yeah. Okay, that’s super helpful. Thank you very much.

Lin Song — Co-Chief Executive Officer

Thank you.

Operator

(Operator Instructions) Our next question comes from (inaudible) from CICC.

Unidentified Participant — — Analyst

Okay, thanks management for taking my questions. And this is (inaudible) from CICC Research and congratulations on the strong fourth quarter results. So my first question is regarding our full year 2021 guidance. So I just wonder if it has incorporate the revenue contribution from our new initiatives such as the newly acquired gaming company? And my second question is regarding our near to mid-term business strategy, so just wonder going forward what will be the primary focus in terms of like building a ecosystem or doing investments in the next few years? Thanks.

Frode Jacobsen — Chief Financial Officer

Hi, Frode here. Maybe I can begin. So relative to our growth in 2021 and as Song Lin discussed, this is predominantly driven by our existing products, our existing core, Opera News, most importantly and geographic expansion and monetization efforts that we are doing around up for news and our browsers. We have been very cautious to build in much upside from new initiatives, such as gaming and European Fintech in 2021. We include all the cost that we expect to have, but those two, I would say financially speaking, I would expect to be more material next year rather than this year. So in terms of near-term strategy comment from you is really set these new businesses up for success and for ramp and then operational focus around our core and how we can expand that. I don’t know Song, if you have anything to add.

Unidentified Participant — — Analyst

Thanks.

Lin Song — Co-Chief Executive Officer

Yeah, no, it’s just exactly as I was saying through that. Yeah, I think it’s just — we see great opportunity to grow our core business, both for browser and the news, while incubating gaming and can take the initiatives.

Unidentified Participant — — Analyst

Okay, thank you.

Derrick Nueman — Head of Investor Relations

Alright.

Operator

At this time there are no additional questions. I would like to hand the call back over to Song Lin for additional closing remarks.

Lin Song — Co-Chief Executive Officer

Yeah, sure. So like you know, alright. That’s all for today. We’ve ended 2020 really strongly and 2021 is really off to a good start. And our core business continue to do really well and as discussed our new opportunities have a (inaudible) promise. So we look forward to keeping you updated along the way. And again, thanks for all the support that has been given in the past few years and have a good rest of day, everyone, thank you.

Operator

Thank you, this concludes today’s conference. You may now disconnect.