Slide 1: 1Q 2018 Otello Corporation ASA
1Q 2018 OTELLO CORPORATION ASA
Slide 2: Agenda
Agenda • Executive Summary (CEO, Lars Boilesen) • Operational Review (CEO, Lars Boilesen) • Financial Review (CFO, Petter Lade) • AdColony (COO, AdColony, Sekip Can Gokalp) • Bemobi (CEO, Bemobi, Pedro Ripper) • Closing Comments (CEO, Lars Boilesen) 2
Slide 3: Executive Summary
Executive Summary 3
Slide 4: Quarterly highlights
Quarterly highlights Financial metric (USD million) 1Q18 1Q17 Total revenue 71.4 105.9 Adj. EBITDA* 0.7 0.8 • Revenue down due to AdColony, partly offset by growth in Bemobi • Profit (Adj. EBITDA) flat vs 1Q17 with lower revenue offset by lower expenses and strong gross margins • Big tax win in Braz
Slide 5: Operational Review
Operational Review 5
Slide 6: AdColony – Turnaround continues
AdColony – Turnaround continues • Revenue • Performance business stabilizing • Brand business profitable in the quarter • Gross margins up last 2 quarters driven by Brand business • Cost • OPEX reduced by 40%, 1Q18 indicates $90m in annual run-rate • Headcount reduced from 700+ to below 400 • Ramp d
Slide 7: AdColony – Turnaround continues
AdColony – Turnaround continues • Alignment secured through incentive programs • Of the 7 million Otello options & RSU’s granted to AdColony employees, a total of 6.6 million have been terminated • AdColony employees should not benefit from value creation outside AdColony • We have created an equity
Slide 8: AdColony – Turnaround continues
AdColony – Turnaround continues • Organization • Old management team replaced • Internal talent promoted • Strategy starting to pay of • Tech team is now delivering customer focused products • Key KPI’s are improving, eCPM, Install rates and Gross margins • China growth very strong (already #3 bigge
Slide 9: Bemobi – Solid revenue growth
Bemobi – Solid revenue growth Making premium apps available to emerging markets Revenue (USD 1Q 2018 1Q 2017 Comments million) LATAM 10.9 10.7 Mature market, growth despite negatively impacted by FX (BRL vs USD) International 3.5 1.9 Strong growth of Apps Club with healthy diversification of channel
Slide 10: Bemobi – Subscriber growth driving revenue and scale
Bemobi – Subscriber growth driving revenue and scale Number of subscribers (million) 5,5 • Strong growth in both LATAM and 4,7 International subscribers 3,1 • Revenue growth to lag subscriber 18,6 growth as Bemobi ramps up 13,9 15,6 13,1 monetization of new users 8,3 2014 2015 2016 2017 1Q 2018 Lati
Slide 11: Bemobi – The new agreement
Bemobi – The new agreement • Conversions of pending 2018 and 2019 earnouts for Earnout Participants (“EP’s”) into a cash payment and right to ownership of Bemobi Holding of 11.2% • Secures alignment of Otello and the EPs today and also beyond the original earn- out period • Pave the road for an even
Slide 12: Opera TV (Vewd)
Opera TV (Vewd) • Have offer to sell Otello’s 27-28.5% ownership • Legal dispute with majority shareholder and holding company • Granted expedited trial in UK, expect to be concluded by August 20 12
Slide 13: Financial Review
Financial Review 13
Slide 14: 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 15: Otello Corporation 1Q18
Otello Corporation 1Q18 (USD million) 1Q 2018 1Q 2017 % change Revenue 71.4 105.9 -33 % Revenue down due to AdColony, Publisher and revenue share cost (40.8) (62.2) -34 % partly offset by Bemobi Payroll and related expenses (15.3) (27.3) -44 % Stock-based compensation expenses 1.6 (2.7) -161 % Depre
Slide 16: Otello Corporation 1Q18
Otello Corporation 1Q18 Revenue (USD million) 108,0 OPEX (USD million) 106,1 105,6 42,9 41,9 99,2 37,0 34,2 29,8 71,4 • Revenue down in 1Q18 vs 1Q17 due to AdColony, growth in Bemobi 1Q17 2Q17 3Q17 4Q17 1Q18 1Q17 2Q17 3Q17 4Q17 1Q18 • OPEX down YoY due to cost cuts in AdColony and Skyfire, Adj. EBIT
Slide 17: AdColony
AdColony Revenue USD million) OPEX USD million) • Turn-around mostly complete Brand - for Brand as we have ramped 36,5 7 10 Programmatic 34,8 9 11 9 6 11 down non-core and non- 29,9 Brand - 28,7 5 29 Performance profitable products and markets 38 34 5 22,3 37 9 Brand - Managed 17 IO • Turn-around co
Slide 18: Bemobi
Bemobi Revenue (USD million) OPEX USD million) 14,3 • 14,1 Record revenue 5,2 5,1 13,9 3,9 • LATAM revenue negatively 3,3 3,1 impacted by weaker BRL vs 12,6 12,3 USD in 1Q18 • Strong International revenue 1Q17 2Q17 3Q17 4Q17 1Q18 1Q17 2Q17 3Q17 4Q17 1Q18 growth Adj. EBITDA (USD million) Gross Margin
Slide 19: Cash position
Cash position Cash flow (USD million) (2,6) (3,6) (1,6) 1,6 • Operating CF: negative USD 2.6 million, impacted by restructuring expenses • CAPEX & Capitalized R&D: USD 3.6 80 million 86 • CF from financing: USD 1.5 million in share repurchases • Cash end of quarter: USD 80 million, down USD 6 millio
Slide 20: Financial position – Strong net cash position
Financial position – Strong net cash position Financial Position Balance sheet 80 80 Other assets 134.2 Cash 79.9 Equity 77.6 478.0 Accounts 0 receivables 322.8 Goodwill Other liabilities 80.5 -56 56.0 Earn-out liabilities Gross Cash Gross Debt Net Cash Earnout liabilities 20
Slide 21: Financial position – View post BeMobi deal
Financial position – View post BeMobi deal (USD million) • No debt • No earn-outs • $100m RCF 3-year facility (11,8) 143 signed (5,6) 80 (10) 10 43 • *Overview does not take into account any transactions or cash from operations Cash, 31.03.2018 Earnout Bemobi Earnout Mobilike Cash payment to Cash pa
Slide 22: Outlook – 2018 (unchanged)
Outlook – 2018 (unchanged) Company Goal 2018 AdColony Profitable* Bemobi Higher Revenue and Profit* vs 2017 Skyfire Profitable* *Adj. EBITDA 22
Slide 23: AdColony
AdColony Sekip Gokalp – COO 23
Slide 24: Results: Brand Advertising
Results: Brand Advertising Summary: Q1 2018 Brand Revenues = $30.1M (-35% vs. Q1’17) Q1 2018 Mix Revenue Source Q1 2018 % Brand and Exchange Brand (incl. IO and PMP) $16.7 55.5% Brand Performance $8.6 28.5% Programmatic – Open Marketplace $4.8 16% TOTAL $30.1 100% • Following significant organizatio
Slide 25: Programmatic YoY progress tracker Q1'18
Programmatic YoY progress tracker Q1’18 YoY Revenue Source Q1 2017 Q1 2018 Notes Growth PMP Revenue PMP revenue growth rate is the key indicator of 71% progress for the shift in our brand segment. # of active PMP buyers Indicator of PMP retention rates. Increase in 63 80 27% number and diversity her
Slide 26: Results: Performance Advertising
Results: Performance Advertising Summary: Q1 2018 Performance Revenues = $26.6M (-43% vs. Q1’17) Weekly Performance Revenues $10,33 $9,40 $8,87 $8,25 $M USD jan.18 feb.18 mar.18 apr.18 • We continue to see increased competition with differentiated methods to access supply as the market matures furth
Slide 27: APAC: Strong Execution driving Growth Momentum
APAC: Strong Execution driving Growth Momentum • China – Open for business in domestic China, promising start with 22 publishers and advertisers signed up and active on platform. Strong local team in place to drive growth in China • #OneTeam initiative to re-energize supply, added 13 new tier 1 publ
Slide 28: Product efforts were heavily focused on GDPR in Q1
Product efforts were heavily focused on GDPR in Q1 AdColony is fully GDPR compliant due to company-wide focus and amazing efforts • The European Union’s General Data Protection Regulation (“GDPR”), which focuses on data protection and privacy for EEA data subjects, went into effect on May 25, 2018.
Slide 29: Real-Time Ad Serving & Adaptive Caching
Real-Time Ad Serving & Adaptive Caching In Q1 significant time was spent developing and completing the Real-Time Ad Serving (RTAS) and Adaptive Caching systems, which were tested in Q1 and are being launched at scale in Q2. Cache request Initial launches of Real-time ad High costs serving have decre
Slide 30: Drove further Stability with iOS SDK 3.3
Drove further Stability with iOS SDK 3.3 Teams released AdColony iOS SDK v3.3 early in Q1, focused on stability. • The iOS 3.3 SDK focused on stability improvements, bug fixes, and memory optimizations to ensure continued adoption and maintenance of the AdColony SDK. • Also included was an update to
Slide 31: Improving Performance Business KPIs with Data Science
Improving Performance Business KPIs with Data Science Updates by data science across Core™ and PIE systems drove initial KPI improvements Core™ Improvements Improving ROAS with PIE • Improvements continue on AdColony’s • In 1Q18, teams worked to ensure that Core™ yield optimization engine, with full
Slide 32: TAG Certification Completed
TAG Certification Completed Extensive work from 2017 and Q1 ended in Q2 when AdColony was awarded TAG certification, which will drive long-term brand business stability. • The Trustworthy Accountability Group (TAG) awarded AdColony with their Certified Against Fraud designation. • TAG certification
Slide 33: Recap: Continued focus on the turnaround is driving results in Brand
Recap: Continued focus on the turnaround is driving results in Brand, followed by strict commercial action plan in Performance • As we work through the turn around, we’ve seen proof in Q1 that our technology and supply is valuable to programmatic buyers in all markets • Continued to carefully manage
Slide 34: BeMobi
BeMobi Pedro Ripper – CEO 34
Slide 35: Bemobi – Subscriber growth and Revenue growth
Bemobi – Subscriber growth and Revenue growth Number of subscribers (million) Revenue ($million) 3,5 5,5 1,9 4,7 3,1 18,6 10,7 10,9 13,9 15,6 13,1 8,3 2014 2015 2016 2017 1Q 2018 1Q17 1Q18 Latin America (including Brazil) International Latin America (including Brazil) International 35
Slide 36: Bemobi – Customer status and growth
Bemobi – Customer status and growth Apps Club RoW Distribution (user base from Q1 2017 to Q1 2018) 60 operators live • Opera Mini 34%, down from 70% (less dependency on one channel) • 23 operators in Latam • NDNC channel has grown from 1% to 13% (strategic) • 13 operators in South Asia • Digital acq
Slide 37: Bemobi – CMD Recap
Bemobi – CMD Recap Growth strategy: compelling services + effective channels 37
Slide 38: Bemobi – CMD Recap
Bemobi – CMD Recap Penetration in RoW today is only 0.3% of addressable base
Slide 39: Bemobi – Upsides from the agreement
Bemobi – Upsides from the agreement • New potential synergies • More integrated teams and talents with less replication of roles • Integration of overlapping platforms (e.g. OPX, NCND, etc..) • Reallocation of talent and focus where the best growth opportunities are • Better alignment in investment
Slide 40: Closing Comments
Closing Comments 40
Slide 41: Summary
Summary Otello Corporation ASA ▪ OPEX reduced from ▪ International growth to ▪ Cost base reduced by 70% $150m down to $90m accelerate in 2018 ▪ Contracts signed secures (40% savings) ▪ Earn-out converted into future profitabilty ▪ Positive gross margin equity trends ▪ Completely changed management t