2q15 presentation

7/26/2019 2Q15 Presentation

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Opera Software ASA Quarterly report

Second quarter 2015


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www.opera.com

About Opera SoftwareOpera enables more than 350 million internet consumers worldwide to connect with

and services that matter most to them. Opera also helps publishers monetize their

through advertising and advertisers reach the audiences that build value for their b

capitalizing on a global consumer audience reach that exceeds 1 billion.


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Financial Highlights 2Q15

Financial metric 2Q15 ($m) 2Q14 ($m)

Revenue Total revenue 146.2 100.6

Profitability Adj. EBITDA* 29.5 27.0

*Adj EBITDA, excluding stock-based compensation expenses and one-time costs

Revenue and Adjusted EBITDA at low end of guidance Strong revenue growth from Mobile Advertising (3rdparty publishers)

Solid revenue growth in Consumer (O&O) on constant currency basis

Record Operating Cashflow


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Financial review Quarterly report

Second quarter 2015


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A note from our lawyersDisclaimer

This presentation contains, and is i.a. based on, forward-looking statements regarding Opera Software ASA and its subsstatements are based on various assumptions made by Opera Software ASA, which are beyond its control and which invunknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be mfrom any future results, performances or achievements expressed or implied by the forward-looking statements.

Forward-looking statements may in some cases be identified by terminology such as may, will, could, should, eintend, anticipate, believe, estimate, predict, potentialor continue, the negative of such terms or other compaThese forward looking statements are only predictions. Actual events or results may differ materially, and a number of facactual results to differ materially from any such statement. Such factors include i.a. general market conditions, demand focontinued attractiveness of our technology, unpredictable changes in regulations affecting our markets, market acceptanand services and such other factors that may be relevant from time to time. Although we believe that the expectations anreflected in the statements are reasonable, we cannot guarantee future results, levels of activity, performance or achie

Opera Software ASA makes no representation or warranty (express or implied) as to the correctness or completeness ofand neither Opera Software ASA nor any of its subsidiaries, directors or employees assumes any liability connected to ththe statements made herein. Except as required by law, we undertake no obligation to update publicly any forward-lookinany reason after the date of this presentation to conform these statements to actual results or to changes in our expectat

advised, however, to consult any further public disclosures made by us, such as filings made with the Oslo Stock Exchanreleases.

This presentation is not an offer or invitation to sell or issue securities for sale in the United States, and does not constitufor any offer to purchase or subscribe any securities. Securities may not be sold in the United States unless they are regexempt from registration. Opera Software ASA does not intend to register any securities in the United States or to conducthe United States. Any public offering of securities to be made in the United States would be made by means of a prospedetailed information about Opera Software ASA and its management, as well as financial statements. Copies of this presbe distributed in or sent into any jurisdiction where such distribution may be unlawful. The information in this presentationan offer of securities for sale in Canada, Japan or Australia.


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Financial Highlights 2Q15

Financial metric 2Q15 ($m) 2Q14 ($m)

Revenue Total revenue 146.2 100.6

Profitability Adj. EBITDA* 29.5 27.0

Cash generationOperating Cash Flow

Free Cash Flow**

31.0

25.6

4.7

-3.1


** Operating Cash Flow less capital expenditures and capitalized R&D costs

Excluding the impact of year-over-year changes in foreign exchange rates, revenwould have increased by 55% (to approximately $156m)


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2Q15 Actuals($m)2Q15 MidpointGuidance* ($m)

Total revenue 146.2 150.0

Adj. EBITDA** 29.5 31.5

2Q15 Actuals versus Guidance

*Provided at 1Q15 Presentation (May 13th, 2015)

**Adj EBITDA, excluding stock-based compensation expenses and one-time costs


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2Q15 Financial Review

$m 2Q15 2Q14 Q on

Revenue 146.2 100.6 45%

Publisher and revenue share cost - 52.2 23.4 123%

Payroll and related expenses - 38.8 33.0 18%

Stock-based compensation expenses - 2.1 2.1 -1%

Depreciation and amortization - 12.2 6.9 77%

Other operating expenses - 25.7 17.2 50%

Total expenses** = 131.1 82.6 59%

Adjusted EBITDA* 29.5 27.0 9%EBIT** 15.2 18.0

Net Income -1.3 9.5

EPS (USD) -0.009 0.071

Non - IFRS Net Income 12.6 15.5

NonIFRS EPS (USD) 0.086 0.117

*Adj EBITDA, excluding stock-based compensation expenses and one-time costs** Excludes one-time costs


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Financial Highlights: 2Q142Q15

27

34 34

$ 0

$ 5

$ 10

$ 15

$ 20

$ 25

$ 30

$ 35

2Q14 3Q14 4Q14

Adjusted EBITDARevenue ($m)


18 16 22 18 22

32 36 30 2631

51

87103

83

93

$ 0

$ 20

$ 40

$ 60

$ 80

$ 100

$ 120

$ 140

$ 160

2Q14 3Q14 4Q14 1Q15 2Q15

Mobile Advertising - 3rd Party Publishers

Consumer (Owned and Operated Properties)

Tech Licensing


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Revenue: Customer Type 2Q15Revenue within guidance range, lower end overall

Customer Type 2Q15 ($m) Change vs2Q14 Commen

Mobile Advertising - 3rdParty Publishers*

92.9 +83%Low end ofexpectation

Consumer (Owned andOperated Properties)

31.4 -2%In line withexpectation

Tech Licensing 21.9 +24%In line withexpectation

*2Q15 vs. 2Q14 pro forma revenue growth of 6% (pro forma includes AdColony for 2Q14)


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CustomerType

2Q15 ($m) Vs 2Q14 ($m)* % Growth Comm

Instant PlayPerformance

38 +8 +27% Solid gr

Instant PlayBrand

15 +9 +136% Strong

Non-Instant Play

Performance

4 -7 -58% Weak

Non-Instant PlayBrand

36 -4 -11% Weak

Total MobileAdvertising - 3rdParty Publishers

93 +6 6% Lower t

*Pro forma includes AdColony for 2Q14


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Revenue: Mobile Advertising - 3rd Party PubMobile Advertising - 3rd Party Publishers revenue at low end of expectations

Revenue growth was driven primarily by increased Instant Play revenue from premium and performance advertisers and app -instafrom primarily the mobile gaming sector.

Ran campaigns for many of the top revenue grossing app developers in the world

Revenue came in below expectations mainly due in particular to softness in the non-Instant play video advertising market

$m Mobile Advertising - 3rd Party Publishers

51

87103

8393

$ 0

$ 20

$ 40

$ 60

$ 80

$ 100

$ 120

2Q14 3Q14 4Q14 1Q15 2Q15

Top 5 Brand Vertica

1. CPG / FMCG

2. Travel

3. Finance

4. Automotive

5. Technology/Consumer El


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Video vs non-Video ($m)

47 47 51

35 39

5

40

52

48

54

$ 0

$ 20

$ 40

$ 60

$ 80

$ 100

$ 120

2Q14 3Q14 4Q14 1Q15 2Q15

non-Video Video

79%

53% 55%

21%

47% 45%

0%

10%

20%

30%

40%50%

60%

70%

80%

90%

100%

2Q14 3Q14 4Q14

Brand Perform

Brand vs. Perfor

Video Accounted for 58% of total Mobile Advertising (3rdPP) in 2Q


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Revenue: Tech Licensing

1816

2218

$0

$5

$10

$15

$20

$25

2Q14 3Q14 4Q14 1Q15

Tech Licensing revenue in line with expectations

Revenue ($m)


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Outlook


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3Q15 Guidance Overview

Vs. 2Q15* Comments (Outlook)

RevenueMobile Advertising - 3rd PartyPublishers

UpSolid growth from both Brand and Pe


Up Solid search and mobile advertising rIncludes approximately 7 weeks of B

Tech Licensing DownSolid TV revenue offset by lower othe

revenue

Expenses Payroll Flat/Up Limited headcount growth in Advertis

Publisher and revenue share

cost

Up Reflecting Mobile Advertising (3rdPP

Stock-based compensation Flat/UpStable trend with cost of RSU progra

dependent on shareprice

Depreciation (excludingimpairment expenses)

UpInvestments in cloud based server ho

and acquisition related depreciation

Other Opex Flat Relatively comparable to 2Q in aggre

* Assumes FX rates as of August 11th

2015


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4Q15 Revenue Overview

Vs. 3Q15* Comments (Outlook)

RevenueMobile Advertising - 3rd PartyPublishers

Up

Strong growth from both Brand and Pe

business in a seasonally strong quarte


Up

Solid desktop search revenue growth

advertising and search revenue from s

growth and new mobile browser produ

Tech Licensing Flat/Up Solid TV revenue and uptick in other L

* Assumes FX rates as of August 11

th

2015


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2015 Guidance

* Assumes FX rates as of August 11 th2015

**Adj EBITDA, excluding stock-based compensation expenses and one-time costs

***Guidance given at 1Q15 presentation May 13 th 2015

Metric Old***2015 Guidance

Updated Guidanc

Revenue $630-650m $600-61

Adj.

EBITDA**$130-140m $108-11


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Gam


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Our Consumer Product Portfolio

Browsers Privacy &

GamConten


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Continue to sca

Cross promote o

Protect & improve

Retention

Cost effective mo

2H grow

145M Monthly Active Android users


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Strong growth in O&O monetization

9.4 M USD

6.5 M USD

+45%


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300 million mobile u


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Strong pipeline for Opera Mini product devel

Full browsing, full fidelity mode in Septem

Brand new compression technology in Q4

In-product notifications for social (Faceboo

More personalization of content and brows


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Opera Mini product features improving mone

Better search experience

More speed dials and adapted to small & large phone types

More valuable ad formats, including video being added

In-product notifications to promote other Opera Apps


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Performance & Privacy


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Opera Max launche

New Max Popular with Users


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New Max Popular with Users

Google Play Rating up from 4.1 to 4.3

Max User Retention up by 2X

2H Max Roadmap Highlights


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Opera Maxs Data Savings tech will support:

HTTPS Video Savings

Music streaming Savings

Background data blocking

2H Max Roadmap Highlights


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Apps & Games


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Bemobi`s Apps Club


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Android focused app subscription service

Native Client

Top premium paid apps

Curated regionally aware catalog

Proprietary app wrapping technology enables app usage for active subscribers

Effective monetization of premium apps in emerging markets

Strong customers and operations in Latin America

Bemobi s Apps Club


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The Opera Eco-system


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Advertising(Mediaworks)

PartnersUser fees /

subscriptions3rdparty

distribution

Monetization channels

Browser and Content Apps

Performance and Privacy Apps

Browser App Store

News /

Discover

Bemobi

Apps Club Project 1 Project 2

Opera Max Web Pass App PassSurfEasy /

PrivacyProject 1

The Opera Eco system

Project 2


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Tech Licensing


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Strong Opera TV SDK shipment in quart


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g p p q

Existing customers ramp up shipments to millions of

Summary


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Strong User growth

Strengthening O&O monetization

Good User feedback for Max, ready for global roll out

Acquisition of Bemobi to strengthen our apps and games business

Ready to leverage large Opera Mini user base to cross promotion Max

Games

y


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Making Mobile Ads Matter.

Trends are Evolving But the Future is BrightWhile we are providing lower guidance we are well positioned for long term success


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Sales Execution: In Q2, organization amid transformation towards Vid Weaker than expected performance in banner and simple rich-media

Trend: growing shift of dollars to programmaticlower pricing & mar Growth slower than expected in banner and simple rich-media

Trend: Counter balanced by shift to videohigher pricing & margins Market shift towards richer, high engagement ad units Brands are becoming more attribution focused

Opera Mediaworks is well positioned for the future Delivering strongly differentiated value to publishers and advertisers Strategic investments and organization transformation towards Video and In Strong SDK footprint and direct publisher relationships Strong relationships with agencies and advertisers Global footprint with presence in all major media markets

While we are providing lower guidance, we are well positioned for long term success

Largest Independent Mobile Ad PlatformWith more reach revenues and profits than any platform competitor


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Global Unique Consumers

Reached Every Month

of the Ad Age Top 100

Working with OMW

installs

1.1BMobile Sites and Applications

(e.g. Pandora, CBS, CNET)

19,000 90%

With more reach, revenues and profits than any platform competitor


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Highest Quality Publisher GrowthNew publisher relationships solidified in Q2 gives Opera Mediaworks more access an


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New publisher relationships solidified in Q2 gives Opera Mediaworks more access anin the most popular apps worldwide


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Spotlight on APACOpera Mediaworks APAC investment is yielding impressive results in only one quarter, havin


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p y g p y qrevenues by 72%over the previous quarter, adding 39 new accounts (122 campaigns), inclumillion dollar accounts. Opened 2 new markets - Malaysia & Australia. Strengthened team inSingapore, India and Indonesia

Q2 revenue growth over Q1

72%


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VIDEO

Revenue Shift Towards Video ContinuesAd format mix shift favors video and video is the key driver of revenue growth.


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91%

42%

9%

58%

Q2 2014 Q2 2015

Q2 2014 vs. Q2 2015 YOY Share of OMW Revenue, Video vs. Non-Video

Non-Video Video

Revenue Shift Towards Video Continues (Pro Forma)Even when including AdColony business during Q2 2014 (pre-acquisition), the data shoadvertising mix shift favoring video


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advertising mix shift favoring video.

54%

42%

46%

58%

Q2 2014 Q2 2015

Q2 2014 vs. Q2 2015 YOY Share of OMW Revenue, Video vs. Non-Video

Non-Video Video

Brands Increase Spending Towards VideoRevenue for Instant-PlayTMHD videonearly doubled from Q1 to Q2. Growth is drivenbrands in CPG Financial Services Tech and Entertainment


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brands in CPG, Financial Services, Tech and Entertainment.


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NATIVE


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Opera Software SynergiesAd monetization of owned & operated properties and services expands


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Strong demand for Operabrowserinventory in Asia and Africa

Opera Mini 10 has native rich-media and

video ads in launch screen and DiscoverFeed

GameInsidr BETA launch with ad SDK todeliver ad monetization to publishers

OG C


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PROGRAMMATIC

Leading with Programmatic: Quality + ScaleSeveral significant initiatives established Opera Mediaworks position in the programmaspace with a focus on quality, scale and differentiation


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space with afocus on quality, scale and differentiation

55% of all OMW ad requests areexposed to programmatic bidders

10% of all ads dollars came form aprogrammatic demand source

Strong demand for OMW managedinventory

Revenue from ppartners in Q2 ifrom May to Jun

Instant-Play Vidin Private Alpha


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Announcing Today: A Complete Marketing Automation PlatforApp DevelopersYvolver platform & team will become a part of Opera Mediaworks and the technology sbe integrated into the Opera Mediaworks SDK


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Delivering real-time player management &

live services including: Advanced loyalty marketing Monetization and marketing analytics A/B Testing Advanced segmentation In-app-purchase validation Digital and physical rewards

Dynamic UIs with seamless nativeintegration

be integrated into the Opera Mediaworks SDK


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2q15 presentation

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