Slide 1: Opera Software: Fourth quarter 2011
Opera Software: Fourth quarter 2011
Slide 2: 4Q 2011 Financial highlights
4Q 2011 Financial highlights Financial metric 4Q11 4Q10 Status report (MNOK) (MNOK) Revenue Total revenue 253.1 193.6 Profitability Adj. EBITDA*/** 82.9 45.4 EBIT** 67.6 34.6 • Record revenue and profitability • Strong revenue growth from Mobile Consumers, Publishers & Advertisers, Desktop and Devic
Slide 3: Highlights
Highlights Highlights Operators • Strong growth in operator Opera Mini users: 26.7 million in December 2011, vs. 10.6m in December 2010, up 152% • Strong operator platform for continued growth • Growth from existing customers like Telkomsel, AT&T, MTN, Telenor and MTS • Vodafone and MTN continue rol
Slide 4: Financial review
Financial review
Slide 5: A note from our lawyers
A note from our lawyers DISCLAIMER: This presentation contains, and is i.a. based on, forward-looking statements regarding Opera Software ASA and its subsidiaries. These statements are based on various assumptions made by Opera Software ASA, which are beyond its control and which involve known and u
Slide 6: Financial Highlights
Financial Highlights 3Q 2011 Financial highlights Financial metric 4Q11 4Q10 Status report (MNOK) (MNOK) Revenue Total revenue 253.1 193.6 Profitability Adj. EBITDA*/** 82.9 45.4 EBIT** 67.6 34.6 Cash generation Operating Cash 104.4 25.5 Flow Free Cash Flow*** 96.7 11.6 *Non-IFRS EBITDA excludes sto
Slide 7: 4Q11 Actuals versus Guidance
4Q11 Actuals versus Guidance 4Q 2011 Actuals 4Q 2011 Midpoint 4Q 2011 Actuals at Guidance Guidance FX Rates (November 15)* (November 15)* Revenue MNOK 253.1 MNOK 241 MNOK 248 EBIT** MNOK 67.6 MNOK 60 MNOK 65 *Provided at 3Q11 Presentation ** Excluding one-off extraordinary costs of MNOK 3.8 in 4Q11
Slide 8: 4Q11 Financial review
4Q11 Financial review MNOK 4Q2011* 4Q2010* Q on Q 2011* 2010* 2011 vs. 2010 Desktop + 87.5 70.9 23% 302.1 242.3 25% Internet Devices + 165.6 122.7 35% 595.3 450.0 32% Total revenue = 253.1 193.6 31% 897.4 692.2 30% Payroll and related 109.9 104.9 5% 428.3 394.9 8% expenses - Stock option costs - 4.2
Slide 9: Financial highlights: 1Q07-4Q11
Financial highlights: 1Q07-4Q11 Operating revenues (NOK Million) Adjusted EBITDA* (NOK Million) Desktop Internet Devices EBITDA* 260 90 240 80 220 70 200 180 60 160 50 140 40 120 100 30 80 20 60 10 40 20 0 0 -10 Q210 Q310 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
Slide 10: Revenue growth drivers
Revenue growth drivers Operators: Users and Usage Desktop: Users and Usage Mobile Consumers and Publishers & Advertisers: Users and Usage Device OEMs: ConnectedTVs
Slide 11: Revenue: Customer type (4Q11)
Revenue: Customer type (4Q11) Overall revenue better than expected Customer Type Operator Lower than expected due to lower NRE revenue Desktop Better than expected on strong local affiliate and search revenue Device OEM As expected vs. guidance Mobile OEM As expected vs. guidance Mobile Consumers, P
Slide 12: Revenue: Operators (4Q11)
Revenue: Operators (4Q11) Operator Revenue lower than expected on lower NRE revenue 152% Operator Opera Mini user growth December 2011 vs. December 2010 User growth driven by Telkomsel, AT&T, MTN, Telenor and MTS in particular Opera Mini licence revenue up 41% to MNOK 50, with ARPU as expected Overa
Slide 13: Revenue: Mobile Consumers and Publishers & Advertisers (4Q11)
Revenue: Mobile Consumers and Publishers & Advertisers (4Q11) Mobile Consumer and Publisher & Advertiser revenue better than expected on solid AdMarvel and Consumer Mobile revenue Revenue growth driven by AdMarvel, mobile search and the Opera Mobile Store vs. 4Q10 AdMarvel managed 72B ad impressions
Slide 14: Revenue: Device OEMs (4Q11)
Revenue: Device OEMs (4Q11) Device OEM revenue as expected on strong license revenue Revenue driven by Connected TV customers License revenue: 80%+ of revenue Overall revenue growth: 46% versus 4Q10, with strong growth in license revenue MNOK Device OEM revenue* NRE + M&S Licenses 60 50 9 40 30 5 6
Slide 15: Revenue: Mobile OEMs (4Q11)
Revenue: Mobile OEMs (4Q11) Mobile OEM revenue in line with expectations License revenue: 50+% of revenue Overall revenue growth: up 10% versus 4Q10 MNOK Mobile OEM revenue* NRE + M&S Licenses 30 25 20 8 15 7 10 7 6 15 13 12 5 6 7 0 * Unaudited 4Q10 1Q11 2Q11 3Q11 4Q11
Slide 16: Revenue type: Internet Devices (4Q11)
Revenue type: Internet Devices (4Q11) Revenue type Comment NRE Down as expected vs. 4Q10 and 3Q11 M&S Down as expected vs. 4Q10 and 3Q11 Total Opera Mini Opera Mini revenue up as expected vs. 4Q10 and 3Q11, with growth in license revenue from Operators and Consumer Mobile revenue Revenue 4Q10 1Q11 2
Slide 17: Revenue: Desktop (4Q11)
Revenue: Desktop (4Q11) Desktop revenue better than expected on strong local affiliate and search revenue Desktop user growth 12% versus end of 4Q10 Strong ARPU due to strong local affiliate and search revenue Overall revenue growth: 23% versus 4Q10 Monthly Desktop users* Desktop revenue* (MNOK) (la
Slide 18: Revenue: Opera-branded Opera Mini (4Q11)
Revenue: Opera-branded Opera Mini (4Q11) 160 000 000 150 000 000 Monthly users • Growth continuing 140 000 000 • High focus areas re: 130 000 000 increasing ARPU: 120 000 000 110 000 000 • Conversion to co- branded operator 100 000 000 users 90 000 000 80 000 000 • Search 70 000 000 • Advertising 60
Slide 19: Key user metrics FY2010 – 2012YTD
Key user metrics FY2010 – 2012YTD January April July October January April July October January Metric 2010 2010 2010 2010 2011 2011 2011 2011 2012 Operator Opera 2.1* 3.5* 5.2* 7.5* 11.5* 15.0* 16.8* 21.5* 29.4* Mini Million Million Million Million Million Million Million Million Million users Oper
Slide 20: OPEX development
OPEX development OPEX (NOK Million) Cost line 4Q11 vs. Comments One time extraordinary cost 4Q10 Other OPEX Payroll 5% •Higher compensation expense per employee and overall Depreciation headcount growth. Stock Options Stock options -3% •Fewer outstanding options Payroll •Investments in Opera Mini De
Slide 21: Adjusted EBITDA development
Adjusted EBITDA* development 4Q 2010 / 4Q 2011 (NOK Million) 120 100 80 60 40 20 0 EBITDA Internet Desktop Currency Total costs Currency EBITDA Q4 2010 Devices Revenue impact impact Q4 2011 revenue revenue costs *Non-IFRS Adjusted EBITDA excludes stock option costs and one-time costs.
Slide 22: Strong capital structure
Strong capital structure Balance sheet highlights: Metric 4Q11 (MNOK) 4Q10 (MNOK) Cash 498 507 Interest-bearing debt 0 0 NWC* -37 -50 Equity 699 622 * NWC is defined as total current assets excluding cash and cash equivalents minus total current liabilities excluding provisions.
Slide 23: Cash flow 4Q11 (MNOK)
Cash flow 4Q11 (MNOK) 120 100 80 60 40 20 0
Slide 24: FY11 Key KPIs
FY11 Key KPIs Metric 2011 2010 Change % Revenue (MNOK) 897.4 692.2 30% Expenses**** 681.6 588.6 16% EBIT (MNOK)**** 215.8 103.6 108% Adjusted EBITDA (MNOK)**** 268.1 144.1 86% Adjusted EBITDA Margin** 29.9% 20.8% 44% Operating Cash Flow (MNOK) 214.8 75.9 183% Free Cash Flow (MNOK) 155.6 43.7 356% Op
Slide 25: 1Q12 Guidance
1Q12 Guidance Metric 1Q 2012 Guidance Revenue* MUSD 45-47 EBIT** MUSD 10.5-11.5 * Assumes currency remainder of 2012 (NOK 5.8 /USD, USD 1.3 /EUR) **Earnings before interest and taxes, exclude extraordinary/one-time costs and acquisition costs.
Slide 26: 1Q12 Guidance
1Q12 Guidance Vs. 4Q11 Comments Revenue* Operators Up Opera Mini active user and revenue growth Desktop Flat Seasonally weaker 1Q Device OEMs Down Coming off strong 4Q11 Mobile OEMs Down General trend Mobile Consumers Up Underlying growth and new acquisitions, overall and Publishers & seasonally wea
Slide 27: FY2012 Outlook
FY2012 Outlook Metric 2012 Guidance 2013 Aspirations**** Revenue* MUSD 200-215 MUSD 245-290 EBIT** MUSD 48-53 Implied Adj MUSD 60-66 MUSD 76-102 EBITDA*** Implied Adj 30%-31% 31%-35% EBITDA %*** *Assumes currency remainder of 2012 (NOK 5.8 /USD, USD 1.3 /EUR) **Earnings before interest and taxes, ex
Slide 28: FY2012 Outlook - Revenues
FY2012 Outlook - Revenues Customer Area* 2011 2011** 2012 Comments MNOK MUSD (e)*** Operators 266 $46 Up Primarily due to Opera Mini Opco user growth (partially offset by decline in customized Opera Mobile revenue) Desktop 302 $52 Up Primarily due to user growth Device OEM 155 $27 Flat-Up Strong FY2
Slide 29: FY2012 Outlook - Expenses
FY2012 Outlook - Expenses 2011 2011* Comments - 2012 MNOK MUSD Payroll 428.3 $74 Up, primarily due to new hires, annual pay increase (effective beginning of 2Q12) and acquisitions of Mobile Theory and 4th Screen (45 people) Stock option 17.6 $3 Up, due to issuance of new options costs Depreciation 3
Slide 30: Why Opera Mobile Marketplace is Strategic
Summary of Acquisitions: Attractive Market Why Opera Mobile Opportunity Marketplace and Fully Aligned withisStrategy Strategic • Mobile advertising is an extremely high growth market • Particularly attractive in the United States and Western Europe • USA: $2.6 billion total market in 2012, up from $
Slide 31: Mobile Advertising is exploding
Revenue in $ Billions 30 25 19% Mobile 22,5 Advertising 15 29% is exploding 63% 7,5 3,3 1,6 0 Global Mobile Advertising Revenue Forecast – Gartner December 2011
Slide 32: Overall Mobile Monetization Strategy
Overall Mobile Monetization Strategy Opera Traffic Non-Opera traffic Search, opcos and other third parties Ad mediation, serving, campaign Opera management Payment Platform + Opera Mobile Store Analytics
Slide 33: Acquisitions enable Opera to become an end to end service provider
Acquistions enable Opera to become an end to end service provider for the value chain Mobile Internet, SMS, MMS, Video, Apps Media Serving platform Brand Ad network Publishers Consumer agency (Exchange) Demand side Supply side • Ad aggregation from multiple ad servers • Optimization based on campaig
Slide 34: Overview of Acquisitions
Overview Why Operaof Acquisitions Mobile Marketplace is Strategic • North America and ”premium” • United Kingdom and ”premium” focus focus – strong base to expand into Continental Europe • Strong management team, with deep experience in the industry • Strong team, with deep experience in the industr
Slide 35: Overview of Acquisition Terms
Overview of Acquisition Terms: Financed through Why Opera Mobile Marketplace Current Cash Balances is Strategic Term Conditions Upfront $5mm Escrow $13 mm, paid out in 2013 and 2014 (minimum financial performance) Earn-Out $0-32 mm, based on aggressive 2012 and 2013 financial targets (Sales and EBIT
Slide 36: Overview of Acquisition Terms
Overview of Acquisition Terms: Financed through Why Opera Mobile Marketplace Current Cash Balances is Strategic Term Conditions Upfront $5mm Escrow $2mm (paid out 3 months after closing), $1 mm (paid out in 2014) Earn-Out $0-6.5 mm, based on 2012 and 2013 financial performance (Sales and EBIT), with
Slide 37: Operational Update Q4-2011
Vbiil Operational Update Q4-2011
Slide 38: Operators
Operators
Slide 39: Continued strong growth: 29.4 million Operator Opera Mini users
Operator- & Co-Branded Opera Mini Active Users (million) 30 25 20 15 10 5 0 Continued strong growth: 29.4 million Operator Opera Mini users
Slide 40: High activity level with existing partners drives predictable growth
High activity level with existing partners drives predictable growth
Slide 41: New deals signed with big players
New deals signed with big players Significant opportunities in markets where Opera public user base is growing fast
Slide 42: Opera Mini growth continues
20 000 000 60 000 000 80 000 000 40 000 000 100 000 000 120 000 000 140 000 000 160 000 000 0 180 000 000 January April July October January April July October January April July October January Unique users April July October January April July Opera Mini growth continues October January April July
Slide 43: Opera growth on Android
Opera growth on Android 16 000 000 14 000 000 12 000 000 10 000 000 8 000 000 6 000 000 4 000 000 2 000 000 0
Slide 44: Currently rated high in Android Market in many regions
Currently rated high in Android Market in many regions, today #2 in India
Slide 45: Mobile OEMs
Mobile OEMs
Slide 46: Opera Mini is an essential application in the phone experience
Opera Mini is an essential application in the phone experience Engagement with OEMs at central and regional level is important for distribution
Slide 47: TV & Devices
TV & Devices
Slide 48: Opera TV Store presented and well received at CES 2012
Opera TV Store presented and well received at CES 2012
Slide 49: TV Store will be sold to existing and new customers
TV Store will be sold to existing and new customers
Slide 50: New contracts
New contracts 1. US STB OEM 2. Japanese In-car OEM 3. US Cable MSO 4. European TV OEM Good momentum with existing and new customers in TV & Devices
Slide 51: Desktop
Desktop
Slide 52: Continued growth in users and revenue from desktop
Desktop revenue (MNOK) 90 80 70 60 50 88 40 71 71 70 74 30 20 10 0 4Q10 1Q11 2Q11 3Q11 4Q11 Continued growth in users and revenue from desktop
Slide 53: Opera desktop 11.60 launched
Better HTML5 support Better HTML5 support New updated email client New updated email client Simplified bookmarking Simplified bookmarking Faster secure pages Faster secure pages Opera desktop 11.60 launched
Slide 54: Bringing on more global and local partners
Bringing on more global and local partners for service integration and distribution
Slide 55: Advertising
Advertising
Slide 56: Key publishers launched on the Opera Mobile Advertising Platform
Key publishers launced on the Opera Moblie Advertising Plaform Business is ramping up as market for mobile advertsing is maturing
Slide 57: 2011 in a nutshell
2011 in a nutshell 50+% User growth Achievements 67M New Opera Mini users 34 Operators 16M New Operator Mini users 10+ TV customers New Ad-business 6M New Desktop users Launched Mobile Store 10M New Mobile & Devices Launched TV Store users Position on Android 250M Users in total
Slide 58: Q4-2011 confirmed our #1 position in mobile globally
Q4-2011 confirmed our #1 position in mobile globally
Slide 59: More than 20% of our users are on smart phones
More than 20% of our users are on smart phones
Slide 60: Monetization areas
Monetization Advertising areas Mobile search Payment enablement 2012 New homepage Mobile Store Operator services
Slide 61: Advertising
Advertising
Slide 62: Strategy for Advertising
Strategy for Advertising • Expand our position in the eco-system to also include demand side generation from advertising sales • Further improve targeting and performance for both Opera and 3rd party traffic • Enable advertisers to better target Opera Mini traffic via Opera Ad-exchange and Opera Aud
Slide 63: This will give us a strong position in US and Europe
This will give us a strong position in US and Europe To realize the strategy of expanding in the eco- system two acquisitions announced today
Slide 64: Now we play in a larger piece of the value chain
Now we play in a larger piece of the value chain Brands that want to Brands and expose themselves to Agencies consumers; agencies design and deploy for advertisers Mobile Ad Create a marketplace Networks where publishers and providers can sell inventory Provide mediation, Ad Platform analytics and t
Slide 65: Mobile Search
Mobile Search
Slide 66: Ramping up
Ramping up Activities for joint campaigns in emerging markets Opera is key to Google’s push in emerging markets Google promotes Opera Google is our main search partner for mobile
Slide 67: Partnership
Partnership for mobile was established in 2011 and looks promising moving forward Yandex is the main Search partner for CIS
Slide 68: Significant part of our user growth is now on Smartphone
Significant part of our user growth is now on Smartphone (from 9% in Q4-10 to 36% Q4-11) 36% 9% Q4-10 Q4-11 Smartphone growth will enable better monetization of mobile search
Slide 69: Payment enablement
Payment enablement
Slide 70: Strategy for Mobile payments
Strategy for Mobile payments • Billing has successfully been implemented in Opera Mini through Operator partnerships • Launch Opera Payment Exchange (OPX) in markets with significant public user base • OPX will further enhance the payment experience for our users and also enable simplified and trust
Slide 71: OPX will enable payments in proxy browsing environment
1. 2. 3. OPX will enable payments in proxy browsing environment
Slide 72: Homepage
Homepage
Slide 73: Strategy for New homepage
Strategy for New homepage • New homepage will be launched as part of Mini 7 during 1H2012 • This homepage will allow users to smart-up their feature phones and get easy access to favorite services • A separate homepage for Smartphone will be launched to fuel the evolution of open web/HTML5 based eco
Slide 74: Key Features
Key Features Better co-branding Social network aggregation Advertising/promotions Adapting to the users preferred sites Site suggestions
Slide 75: Mobile Store
Mobile Store
Slide 76: Strategy for Mobile store
Strategy for Mobile store • Opera Mobile Store is the 6th largest market place today and powered with the largest alternative Android catalogue • Monetization capabilities are in place for public users via Pay Per Download (PPD) and Payment Integration • Store is offered to Mobile Operators as a co-
Slide 77: Opera Mobile store downloads after launch
Launch: 01 Jan 2012 1600 Opera-Handster 25-des 26-des 1400 Old 27-des Partner 28-des 1200 29-des 30-des 31-des 1000 1-jan 2-jan 3-jan 800 4-jan 5-jan 600 6-jan 7-jan 8-jan 400 9-jan 10-jan 11-jan 200 12-jan 13-jan 0 14-jan 15-jan Opera Mobile store downloads after launch
Slide 78: Opera Mobile Store consumer reach
Opera Mobile Store consumer reach 25+ Million Monthly 4.5 120+ Million Page 45+ Pageviews Million Downloads App Store Visits Per Visit Views Per Month Per Month
Slide 79: Operator services
Operator services
Slide 80: Services will be offered to operators for participation in the revenue generation
Opera for Opera for Feature Phones Smart Phones Homepage Homepage Opera Mini Compression client Opera Mini/Mobile Opera Mobile Store Opera Audience Network Opera Mobile Ad Exchange Opera Payment Exchange Services will be offered to operators for participation in the revenue generation
Slide 81: Evolving into a browser services company
Evolving into a browser services company
Slide 82: Q&A
Q&A