Opera Limited’s OPRA shares have gained 27.3% in the past three months, outpacing the Zacks Computer & Technology sector’s return of 10.2% and the Zacks Internet - Content industry’s growth of 4.1%.

It has also outperformed its industry peers, including Yelp YELP, DHI Group DHX and Perion Network PERI.

Over the same time frame, shares of Yelp, DHI Group and Perion Network have gained 20.6%, 12.5% and 11.6%, respectively.

OPRA's strong stock price performance reflects its impressive third-quarter 2024 results. Revenues increased 20% year over year to $123.2 million, led by sustained user adoption and enhanced monetization efforts, especially in advertising and search revenues.

Advertising revenues grew 26% on a year-over-year basis to $76.8 million, led by strong monetization performance, continued expansion of the Opera Ads platform and high purchase-intent traffic directed to advertising partners.

Search revenues grew 13% to $46.3 million, driven by a strategic focus on users with high monetization potential.

Strong Portfolio Aids OPRA’s Prospects

The Opera GX gaming browser continues to be the company's fastest-growing product, adding more than 1.8 million net users in the quarter. The browser’s monthly active users (MAUs) grew 22% year over year to 31.9 million across PCs and mobile platforms.

Opera launched several new products and updates, such as Opera One for iOS and the Opera GX gaming browser, which contributed to the growth of its user base. It recently launched Opera One R2, the latest version of its AI-powered browser. It expects stronger growth on iOS in the fourth quarter as well.

Opera has been advancing its AI-based capabilities, such as Aria, its browser AI assistant. Aria's capabilities have been extended to provide deeper integrations with generative AI tools, improving productivity and user engagement.

Rising Spending to Hurt OPRA's Profitability

Opera stated that it will substantially increase marketing spending in the fourth quarter of 2024. The planned increase in marketing expenses is associated with the launch of Opera One R2 and other initiatives. This increase in marketing spending is expected to keep profitability under pressure.

In the third quarter, marketing and distribution costs increased 14% year over year to $32.5 million, indicating intensified promotional efforts to support key product launches like the Opera One R2 browser. The increased marketing spending is expected to reduce operating margins in the near term.

OPRA’s Earnings Estimates Revised Downward

For the fourth quarter of 2024, the Zacks Consensus Estimate for earnings is currently pegged at 21 cents per share. This figure has declined 22.2% over the past 60 days and indicates a steep year-over-year decline of 84.78%.

For 2024, the consensus mark for earnings is pegged at 79 cents per share, indicating 10.2% downward revision over the past 60 days. This also marks a significant year-over-year decline of 57.53% from 2023.

OPRA’s Zacks Rank

OPRA currently has a Zacks Rank #4 (Sell), which implies that investors should stay away from the stock for the time being.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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