Opera (OPRA, Financial) shares surged significantly today, gaining 10.08% by market close. This movement was largely due to the company's impressive third-quarter earnings report, which exceeded analyst expectations and set a new 52-week high. Opera's price increased to $18.57, reflecting the positive investor sentiment.
In Q3 2024, Opera reported a revenue increase of 20% year-over-year, reaching $123 million. The adjusted earnings per diluted American depositary share (ADS) rose from $0.19 to $0.26, marking a 37% increase. The annualized average revenue per user (ARPU) was $1.66, compared to $1.33 in the same period last year. Analysts had expected earnings of $0.20 per ADS and $120 million in revenue. Besides, Opera's management provided a Q4 revenue guidance that slightly exceeded current analyst predictions.
Opera's growth was significantly bolstered by strong advertisement sales and strategic demographic adjustments. The gaming-oriented Opera GX browser saw a 22% increase in monthly users, while the flagship Opera One R2 browser attracted a smaller but more profitable user base. The company is now concentrating its marketing efforts on developed markets and high-end smartphone browsers, allowing a controlled decline in the less profitable feature-phone browser user base in emerging markets.
From a financial standpoint, Opera (OPRA, Financial) exhibits strong fundamentals. The company's Price-to-Earnings (PE) ratio is 9.57, suggesting its stock is reasonably valued compared to its earnings. Furthermore, the Gross Margin stands at 75.31%, demonstrating its profitability within the industry. However, it's worth noting the company's GF Value rating is "Modestly Overvalued" with a GF Value of $15.27, indicating potential overvaluation according to GuruFocus. More details on Opera's GF Value.
Despite some cautionary signs such as a high dividend payout ratio of 0.85, which may not be sustainable, Opera maintains strong financial strength, evidenced by a solid Altman Z-score of 12.26, categorizing it as a safe investment in terms of financial stability. With a market capitalization of $1.64 billion, Opera's positioning within the interactive media industry denotes a promising growth trajectory, backed by its strategic pivots and robust earnings performance.
