Core Insights - Opera Limited (NASDAQ: OPRA) experienced a significant stock drop despite reporting good earnings, indicating potential market misinterpretation or external factors affecting investor sentiment [1]. Company Analysis - The company focuses on sectors such as AI, fintech, finance, and technology, which are critical for long-term growth and investment opportunities [1]. - Opera Limited is actively analyzed for its business model, earnings performance, and competitive positioning within the market [1]. Market Context - The stock market's reaction to Opera Limited's earnings report suggests a disconnect between financial performance and stock valuation, highlighting the importance of understanding market dynamics [1].

Core Insights - Opera Limited reported $142.96 million in revenue for the quarter ended June 2025, marking a year-over-year increase of 30.3% [1] - The earnings per share (EPS) for the same period was $0.26, compared to $0.22 a year ago [1] - The reported revenue exceeded the Zacks Consensus Estimate of $137.81 million by 3.74%, while the EPS fell short of the consensus estimate of $0.27 by 3.7% [1] Revenue Breakdown - Revenue from Search was $44.55 million, below the estimated $47.97 million [4] - Revenue from Advertising was $64.63 million, significantly lower than the estimated $88.66 million [4] - Revenue from Technology licensing and other sources was $0.56 million, exceeding the estimated $0.1 million [4] Stock Performance - Over the past month, shares of Opera Limited have returned -4.1%, contrasting with the Zacks S&P 500 composite's +2.5% change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - The company reported a year-over-year revenue growth of 30%, exceeding the guidance of 22% to 26% and significantly higher than the 17% growth in the same quarter last year [5][17] - Adjusted EBITDA reached $32,000,000, surpassing the high end of previously issued guidance [7] - Operating cash flow was $33,000,000, representing 103% of adjusted EBITDA [19] - Free cash flow from operations was $29,000,000, or 91% of adjusted EBITDA [20] - Adjusted diluted EPS was $0.26 for the quarter [20] Business Line Data and Key Metrics Changes - Advertising revenue grew 44% year-over-year to $93,000,000, with e-commerce being the fastest-growing vertical, increasing over 100% year-over-year [6] - Search revenue returned to double-digit growth, up 11% year-over-year to $50,000,000 [6] - The user base for Opera GX reached 33,000,000 MAUs, an 11% increase year-over-year [12] Market Data and Key Metrics Changes - The company noted strong growth in the Western market, particularly in Europe, which contributed to user acquisition [35] - The e-commerce vertical is expected to continue growing, although comparisons will become more challenging in the second half of the year [71] Company Strategy and Development Direction - The company is focusing on AI integration within its browser, positioning itself as a key player in the emerging AI landscape [9][10] - Opera Neon, an AI browser, is set to be released, combining major AI use cases into a single user interface [10][11] - The company is also expanding its presence in the gaming sector with Opera GX and plans to soft launch in South Korea and Japan [12][63] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of advertising revenue despite macroeconomic volatility [18] - The company anticipates continued growth in search revenue and is optimistic about the broader search landscape evolving with AI [57] - Management acknowledged tariff-related headwinds but noted that global growth has offset these challenges [60][61] Other Important Information - The company has distributed $2.8 in dividends per share since January 2023 and has repurchased 30% of its outstanding stock in the previous three years [21] - MiniPay, a stablecoin wallet, has reached 9,000,000 activated wallets and exceeded 250 million transactions, indicating strong growth potential in the fintech space [15][50] Q&A Session Summary Question: What drove the sequential growth in the Western market user base? - Management indicated that seasonality and marketing strategies played a role, with expectations for more growth in Q3 and Q4 [33] Question: How should we think about the pricing and cost structure of Opera Neon? - Management stated that product marketing is the primary focus, with a combination of advertisement sponsorship and subscription models anticipated for monetization [44] Question: How does MiniPay monetize engagement? - MiniPay is generating revenue through ecosystem partnerships and integrations, leveraging its nature as a fintech product [50] Question: What are the expectations for search revenue growth? - Management expects search revenue to continue performing well, driven by changes in the broader search landscape and user engagement [57] Question: What is the outlook on tariff-related headwinds? - Management noted that while tariffs have created challenges, there is potential for recovery and growth as conditions stabilize [61] Question: How significant is the opportunity in launching Opera GX in South Korea and Japan? - Management sees strong potential in these markets, particularly due to partnerships with popular games like League of Legends [63]

Financial Performance & Guidance - Opera achieved 17 consecutive quarters of Rule of 40 performance, driven by organic growth[11] - The company's 2025 revenue guidance is $591 million, representing a 23% growth[14] - The 2025 adjusted EBITDA guidance is $138 million, with a 23% margin[20, 21] - Q3 2025 revenue guidance is $148 million, representing 20% growth[89] - Since 2020, Opera has returned approximately $477 million to shareholders[16, 17, 98] User Base & Monetization - Opera has approximately 289 million average monthly active users (MAUs) in Q2 2025[12, 13] - Western markets account for 58 million MAUs[13] - ARPU has grown 3.1x over the last 4 years[18, 19] - Advertising accounts for 65% of revenue in Q2 2025, with 44% year-over-year growth[66, 69] - Search accounts for 35% of revenue in Q2 2025, with 11% year-over-year growth[66, 73] Opera GX - Opera GX has 33 million users[45] - Opera GX users represent 8% penetration of web users[52]

Core Insights - Opera Limited reported a 30% year-over-year revenue growth to $143.0 million, exceeding guidance [1][8] - Adjusted EBITDA reached $32.1 million, representing a 22% margin, also surpassing expectations [1][13] - The company raised its full-year revenue guidance to $585 – 597 million with a 23% adjusted EBITDA margin at the midpoints [1][21] Financial Performance - Revenue for the second quarter of 2025 was $143.0 million, a 30% increase from $109.7 million in the same quarter of 2024 [4][8] - Net income decreased by 19% to $15.7 million, with a net income margin of 11% compared to 18% in Q2 2024 [4][13] - Adjusted net income increased by 14% to $23.7 million, with an adjusted net income margin of 17% [4][13] - Adjusted EBITDA rose by 21% to $32.1 million, with a margin of 22% [4][13] Revenue Breakdown - Advertising revenue grew by 44% year-over-year to $92.9 million, accounting for 65% of total revenue [12] - Search revenue increased by 11% year-over-year to $49.6 million, representing 35% of total revenue [12] - The annualized average revenue per user (ARPU) was $1.97, a 35% increase compared to Q2 2024 [12] Operating Expenses - Operating expenses increased by 40% to $124.9 million [9] - Share-based compensation expenses surged by 354% to $8.8 million due to the granting of approximately 1.9 million share-equivalent RSUs [12] - Personnel expenses, excluding share-based compensation, rose by 5% to $18.7 million [12] Cash Flow and Dividends - Net cash flow from operating activities was $33.1 million, representing 103% of adjusted EBITDA [12][14] - Free cash flow from operations was $29.1 million, or 91% of adjusted EBITDA [14] - A dividend of $0.40 per share was announced and paid in July [12] Business Outlook - The company anticipates continued growth in AI-powered intent-based advertising, particularly in e-commerce [2] - Opera expects to maintain momentum in search revenue, contributing to the raised guidance for the year [17]

Financial Performance - Opera Limited is expected to report second-quarter earnings of 26 cents per share, a decrease from 44 cents per share in the same period last year [1] - The company projects quarterly revenue of $137.44 million, up from $109.73 million a year earlier [1][2] Analyst Ratings - Goldman Sachs analyst Eric Sheridan maintained a Buy rating but reduced the price target from $26 to $22.5 [8] - Piper Sandler analyst James Callahan initiated coverage with an Overweight rating and a price target of $25 [8] - TD Cowen analyst Lance Vitanza maintained a Buy rating and increased the price target from $25 to $28 [8] - B. Riley Securities analyst Lee Krowl reiterated a Buy rating and raised the price target from $24 to $25 [8] Stock Performance - Opera shares increased by 6% to close at $16.32 [3]

Core Insights - The Zacks Internet - Content industry is facing challenges due to adverse macroeconomic conditions affecting ad spending, which is the primary revenue source for industry participants [1] - Despite these challenges, there is solid demand for digital offerings, particularly in video content and cloud-based applications, aided by the proliferation of AI and Generative AI [1] - Companies like Yelp and Opera Limited are expanding their presence in social media, display, connected TV, and search, contributing to top-line growth [1] Industry Description - The Zacks Internet - Content industry includes providers of video encoding platforms, personal services, Internet content, staffing, publishing, and online travel companies [2] - Advertising remains a major revenue source, prompting companies to enhance their digital presence and expand across various platforms [2] - The industry is experiencing rapid changes in consumer behavior and ongoing digitalization, with significant players located in the U.S., Israel, the U.K., Germany, Russia, and China [2] Trends Shaping the Industry - There is a growing demand for digital offerings, driven by technological advancements and the introduction of new products and services [3] - The proliferation of smart devices and increased automation in application development are positive indicators for industry growth [3] Industry Prospects - Marketing efforts are being intensified to boost website traffic, with advertising and subscriptions as key revenue sources [4] - The industry is sensitive to consumer spending trends, particularly during holiday seasons, but faces headwinds from macroeconomic challenges, persistent inflation, and higher interest rates [4] Regulatory Environment - Increased regulatory pressure is impacting industry participants, especially in China and the EU, with regulations affecting direct advertising and data protection [5] - The implementation of the Digital Markets Act in the EU aims to curb the market power of large online platforms, adding to the challenges faced by Internet content providers [5] Industry Ranking and Performance - The Zacks Internet - Content industry ranks 194, placing it in the bottom 21% of over 250 Zacks industries, indicating dull near-term prospects [6][7] - The industry's earnings outlook is negative, with a 2.8% decline in the Zacks Consensus Estimate for 2025 earnings since November 30, 2024 [8] Market Performance - The industry has underperformed compared to the broader Zacks Computer and Technology sector and the S&P 500, returning 6.1% over the past year versus 18.1% and 25.3% respectively [10] Current Valuation - The industry is currently trading at a trailing 12-month price-to-sales ratio of 6.49X, higher than the S&P 500's 5.62X but lower than the sector's 8.31X [13] Notable Companies - **Yelp**: Benefiting from higher ad spending and improved customer retention, but shares have declined 20.9% year-to-date [16][17] - **Opera Limited**: Experiencing an 8% year-over-year increase in search revenues, with a stable user base of 293 million, but shares have dropped 17.1% year-to-date [19][20]

Core Viewpoint - Opera Limited is set to release its second quarter 2025 financial results on August 19, 2025, before the market opens, indicating a focus on transparency and investor communication [1]. Financial Results Announcement - The financial results will be available on Opera's investor relations website, emphasizing the company's commitment to providing accessible information to stakeholders [1]. - A conference call to discuss the financial results will take place on the same day at 8:00 a.m. ET, allowing for direct engagement with management [2]. Company Overview - Opera is a user-centric software company that aims to enhance internet browsing experiences across various devices, with a significant user base utilizing its web browsers for their unique and secure features [2]. - Founded in 1995 and headquartered in Oslo, Norway, Opera is publicly traded on the Nasdaq stock exchange under the ticker symbol "OPRA," highlighting its established presence in the market [2].

Core Viewpoint - Opera has filed a complaint with Brazil's antitrust agency CADE, accusing Microsoft of anti-competitive practices in promoting its Edge browser, which has negatively impacted Opera's market position as the third most popular PC browser in Brazil [1][3]. Group 1: Allegations Against Microsoft - Opera claims that Microsoft has employed various "manipulative design strategies" to persuade Windows users to adopt Edge, effectively blocking competition by pre-installing Edge and creating barriers for users to download other browsers [3][8]. - Specific tactics include forcing Edge to open links from Microsoft applications like Outlook and Teams, regardless of user settings for default browsers, and promoting Edge prominently in Bing search results while downplaying Chrome's download link [8][10]. Group 2: Impact on Opera - The competitive landscape has shifted since Microsoft transitioned Edge to the Chromium engine, diminishing Opera's performance advantage, which previously allowed it to attract a loyal user base due to its speed and unique features [6][12]. - Microsoft's strategies have limited Opera's visibility and accessibility, making it increasingly difficult for the browser to reach potential users, thereby exacerbating its challenges in a market dominated by larger players like Chrome and Edge [12][14].

Core Insights - Opera is launching Opera Neon, the first AI agentic browser, aimed at transforming web browsing from a passive experience to a proactive one that completes tasks for users [1][3][6] - The need for this innovation stems from the inefficiency of current browsing methods, where knowledge workers switch between apps over 1,000 times a day, and consumers spend significant time on multi-step tasks [3][4] - Opera believes that agentic browsing could automate up to 30% of work hours, potentially creating billions in value [3][4] Company Overview - Opera is a user-centric software company founded in 1995 and headquartered in Oslo, Norway, listed on the Nasdaq under the ticker symbol OPRA [8] - The company has been integrating AI into its flagship browser since 2023, with features like the Aria browser AI already in use by millions [6][8] Product Features - Opera Neon will autonomously navigate and execute tasks across various platforms, such as Jira, Slack, and Google Docs, effectively reducing manual work [5][6] - The browser is designed to understand user goals and execute actions reliably, marking a significant evolution in human-computer interaction [4][7]