Slide 1: 4Q 2018 Otello Corporation ASA
4Q 2018 OTELLO CORPORATION ASA
Slide 2: Agenda
Agenda • Executive Summary (CEO, Lars Boilesen) • Operational Review (CEO, Lars Boilesen) • Financial Review (CFO, Petter Lade) • Q&A (CEO, Lars Boilesen & CFO, Petter Lade) 2
Slide 3: Executive Summary
Executive Summary 3
Slide 4: Quarterly highlights
Quarterly highlights Financial metric 4Q18 4Q17 3Q18 (USD million) Total revenue 66.9 99.2 64.9 Adj. EBITDA* 5.5 2.9 1.4 • Revenue up both in AdColony and Bemobi versus 3Q18 • Adj. EBITDA up 2X from 4Q17 and up 4x from 3Q18 due to focus on cost and strong margins in AdColony and strong performance f
Slide 5: Operational Review
Operational Review 5
Slide 6: AdColony – Turnaround continues
AdColony – Turnaround continues • Revenue • Performance business still experiencing volatile revenue, but gross margins stabilized at higher level • Brand business with growth in 4Q18 vs 3Q18 and particular strength in EMEA • Cost • OPEX reduced by over 50% last 2 years, target of $70m annual run-ra
Slide 7: AdColony – Status
AdColony – Status • Gross margin trends positive for both Brand and Performance • Tech and product organization merged, positive impact on delivery speed • Support functions strategy in Istanbul paying off with lower cost and more productivity • Current cost base enables an Adj. EBITDA break-even @
Slide 8: AdColony Global Brand Business
AdColony Global Brand Business 8
Slide 9: Results: Brand Advertising
Results: Brand Advertising Revenue Source Q4 2018 Q4 2018 Mix % $20M Brand (incl. IO and PMP) 56% (up from $15.7 in Q3) Brand Performance $7.1M 20% (down from $7.8 in Q3) Programmatic $8.2M 24% Open Marketplace (up from $7.8 in Q3) TOTAL $35.4M (up from $31.3 in Q3) • Total Brand revenue increased 1
Slide 10: Continued Focus On Quality Is Fueling Programmatic
Continued Focus On Quality Is Fueling Programmatic • Programmatic revenue will continue to be the Brand organization’s primary focus and catalyst for growth • Programmatic Open Exchange Marketplace grew another 5+% globally quarter-over-quarter due to continued Tech and Engineering work, and a conti
Slide 11: What We’re Working On
What We’re Working On • Continued improvements and maturation of our programmatic tools and offerings • 1st Price auction (standardized auction dynamics) • Multi Creative Object Support (more formats = more revenue) • Supply – Demand Alignment Optimizations (better matching) • International Endpoint
Slide 12: AdColony Global Performance
AdColony Global Performance 12
Slide 13: Results: Performance Advertising
Results: Performance Advertising Summary: Q4 2018 Performance Revenues = USD 17.7 million (-16% vs. Q3’18) Performance Revenues & Gross margin (USD million) $26,6 $25,2 $21,2 $17,7 16% $7,6 $5,1 $4,3 $4,1 4% 1Q18 2Q18 3Q18 4Q18 • First quarter post restructuring, stability in gross margin revenue an
Slide 14: Gross Margins on Performance Business in Q4
Gross Margins on Performance Business in Q4 Focus on profitability Gross Margin (%) • Gross margins have rebounded to 29,8% healthy levels, significantly higher 24,9% 26,3% 26,1% than Q2/Q3 20,6% 20,7% 18,4% 16,1% • November was hit with exceptional, 12,6% one off impact from legacy deals – underlyi
Slide 15: Key Highlights
Key Highlights New Ad Units for Performance, Combating Fraud & Operational Efficiency 1. Launch of new creative ad unit with better user experience and direct integration of App store kits • Rovio, Playrix, Supercell, Kabam - growth in spends on biggest gaming accounts • Improved yields for our publ
Slide 16: Action Plan for 2019
Action Plan for 2019 Execution Plan for revenue stability and growth in 2019 1. Creativity and Innovation in Performance 2. Invest in Sales and Business Development to drive new business 3. Tool set to drive Supply side optimization to grow impression volume 4. Better utilization of data to improve
Slide 17: Opera TV (Vewd)
Opera TV (Vewd) • As previously communicated, there is an ongoing legal dispute with majority shareholder (MFC) • Favorable verdict granted on liability, not appealed by MFC • MFC ordered by the Court to pay a substantial portion of Otello’s legal costs to date, all cash received • Otello has now re
Slide 18: Bemobi
Bemobi 18
Slide 19: Bemobi Solid Revenue and Adj. EBITDA growth ex FX
Bemobi Solid Revenue and Adj. EBITDA growth ex FX ∆ (%) Bemobi 4Q18 4Q17 Y-o-Y Revenue (USD M) 13,6 14,1 -3% EBITDA (USD M) 5,9 5,3 10% ∆ (%) Bemobi - Ex-FX Rate 4Q18 4Q17 Y-o-Y Revenue (USD M) 15,7 14,1 11% EBITDA (USD M) 6,9 5,3 29% FX Rate impact YoY (4Q18 vs. 4Q17) • INTL basket: - 7.9% • LATAM
Slide 20: Bemobi – Subscriber growth driving revenue and scale
Bemobi – Subscriber growth driving revenue and scale 30,0 4,0% • 31% YoY subscriber growth 25,0 3,6% 26,7 3,0% • Overall service penetration on served addressable market grew from 0.9% to Bemobi Subscribers (M) 20,0 3,2% 20,3 20,3 15,0 17,0 2,0% 1.2%. 10,0 13,1 • 61 operators live 1,0% • 21 operator
Slide 21: Bemobi - Overal channel mix improving
Bemobi - Overal channel mix improving Co-owned Channels International markets continue subscriber growth NDNC • 10 portals live in Bemobi outside of CHANNEL FROM TO Comments Latam: • Idea India (POC) Opera Mini 26% 20% less dependency on one player • Vodafone India • Telenor Pakistan NCND Portals 10
Slide 22: Bemobi
Bemobi • Bemobi continues to have strong underlying growth in revenue and profit • Bemobi met a limited number of international investors during 4Q18 for the purpose of considering whether an IPO or demerger of Bemobi could represent realistic and value enhancing opportunities • Feedback from invest
Slide 23: Financial Review
Financial Review 23
Slide 24: Disclaimer
Disclaimer This presentation contains, and is i.a. based on, forward-looking statements regarding Otello Corporation ASA and its subsidiaries. These statements are based on various assumptions made by Otello Corporation ASA, which are beyond its control and which involve known and unknown risks, unc
Slide 25: Otello Corporation 4Q18
Otello Corporation 4Q18 (USD million) 4Q 2018 4Q 2017 3Q 2018 Revenue 66.9 99.2 64.9 Revenue down due to AdColony Publisher and revenue share cost (39.1 (59.3) (38.4) vs. 4Q17, revenue growth in both Payroll and related expenses (12.7) (19.3) (14.0) Stock-based compensation expenses (1.1) (1.5) (0.2
Slide 26: Impairment testing
Impairment testing Apps & Impairment loss AdColony Bemobi Games (legacy) Goodwill 76,4 - 3,6 Other intangible assets 11,6 - - Capitalized R&D 1,7 - - Total 89,7 - 3,6 • Impairment in AdColony due to: • Overall business size reduced • Discontinued customer relationships and products • Carrying value
Slide 27: Otello Corporation 4Q18
Otello Corporation 4Q18 Revenue (USD million) OPEX (USD million) 37,0 99,2 29,8 28,0 25,1 72,2 71,4 66,9 22,3 64,9 • Revenue in 4Q18 vs 3Q18 up in both AdColony and Bemobi • OPEX significantly down both 4Q17 1Q18 2Q18 3Q18 4Q18 4Q17 1Q18 2Q18 3Q18 4Q18 vs 3Q18 and 4Q17 due to cost cuts in AdColony A
Slide 28: AdColony
AdColony Revenue USD million) OPEX USD million) 85 11 Brand - 5 Programmatic • Brand business stable and 57 58 29,9 7 52 53 profitable 5 Brand - 37 9 7 8 8 Performance 22,3 21,3 8 7 • Performance revenue still 19,3 17 19 Brand - Managed 17,3 16 20 IO volatile, but strong margin 32 27 25 Performance
Slide 29: Bemobi – Strong Adj. EBITDA growth
Bemobi – Strong Adj. EBITDA growth Revenue (USD million) OPEX USD million) 15,7 4,0 • 4Q18 YoY results impacted 5,2 5,1 by FX (BRL vs USD) 4,6 14,3 14,1 13,7 13,6 12,4 3,4 2,9 • Solid gross margins and EBITDA growth across all 4Q17 1Q18 2Q18 3Q18 4Q18 4Q17 1Q18 2Q18 3Q18 4Q18 key regions Adj. EBITDA
Slide 30: Cash flow
Cash flow Cash flow (USD million) 3.1 (2.5) (1.5) (1.8) • Operating CF: USD 3.1 million • CAPEX & Capitalized R&D: USD (2.5) million • CF from Financing: USD (1.5) million in 30.2 27.5 share repurchases • FX impact on cash position: USD (1.8) million • Cash end of quarter: USD 27.5 million Cash, Beg
Slide 31: Financial position – Net cash position with no debt and no earn-outs
Financial position – Net cash position with no debt and no earn-outs Financial Position (USD million) Balance sheet (USD million) 27,5 27,5 Other assets 128,5 Cash 27,5 Accounts 364 Equity 67,1 receivables Goodwill 232,4 Other liabilities 0 0 91,5 Gross Cash Gross Debt Net Cash Net earn-out liabilit
Slide 32: Outlook AdColony
Outlook AdColony 1Q19* 2019 Revenue: Down due to seasonality, but less Adj. EBITDA: Positive pronounced vs. recent years Gross Margins: Flat/Up, continue positive trend Opex: Flat, continued cost focus * Vs 4Q18 32
Slide 33: Outlook Bemobi
Outlook Bemobi 1Q19 2019 1Q19 impacted by platform migration of major Revenue: Growth vs. 2018 customer and platform fee in Brazil Continued underlying growth in LATAM and Adj. EBITDA: Growth vs. 2018 International business 33
Slide 34: Q&A
Q&A 34