Why Opera Stock Sank This Week
Key Points
Opera's adjusted earnings met Wall Street's target in Q2, and sales came in above expectations.
Active users across the company's platforms saw no growth, but average revenue per user increased substantially.
Opera raised its full-year sales guidance.
Opera (NASDAQ: OPRA) stock moved lower this week following the release of the company's second-quarter report. The company's share price ended the week down 6.7% and had been off as much as 9.2% from where it stood at the end of the previous week's market close before seeing some recovery.
Opera published its Q2 report before the market opened on Wednesday and reported a sales beat in the quarter. While the company's non-GAAP (adjusted) earnings met the average Wall Street analyst estimate, some investors were betting on a beat and sold out of the stock in response.
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Opera's Q2 results weren't exciting enough for investors
Opera recorded adjusted earnings of $0.33 in the second quarter, which was in line with the profit called for by the average analyst estimate. Meanwhile, revenue increased 24.6% year over year to reach roughly $178.1 million and topped the average analyst forecast by $0.8 million. Adjusted earnings per share were up roughly 27% year over year.
Opera's average monthly active users (MAUs) held flat on a sequential basis at $288 million, but its second-quarter report wasn't bad by any stretch of the imagination. Advertising segment revenue increased 27% year over year, query revenue increased 21%, and average revenue per user (ARPU) increased roughly 25%.
What's next for Opera?
With its Q2 report, Opera announced that it now anticipates full-year sales to be between $734 million and $742 million -- up from its previous guidance for sales between $727 million and $740 million. Prior to the Q2 report, the average analyst estimate had targeted revenue of roughly $736.7 million.
Opera isn't finding much success growing its MAUs, but the company is doing a better job of monetizing engagement across its services. The software specialist may be able to score more wins by improving ARPU, but the company still needs to improve user acquisition in order to strengthen its long-term growth outlook.
Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.