Slide 1: 4Q 2019 Otello Corporation ASA
4Q 2019 OTELLO CORPORATION ASA
Slide 2: 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 3: 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) 3
Slide 4: Executive Summary
Executive Summary 4
Slide 5: Quarterly highlights
Quarterly highlights Financial metric 4Q19 3Q19 4Q18 (USD million) Revenue 70.0 63.1 66.9 Adj. EBITDA* 8.0 6.0 5.5 • Record quarter for Bemobi on revenue and Adj. EBITDA • AdColony revenue above expectations (guidance) and highest Adj. EBITDA since 4Q16 • Reached all 3 financial targets for 2019 • B
Slide 6: Operational Review
Operational Review 6
Slide 7: AdColony – Turnaround is complete
AdColony – Turnaround is complete • Revenue • Back to YoY growth, first time since 3Q16 • Very strong Brand and programmatic revenue, while Performance is still volatile • Cost • OPEX reduced by over 50% last 2 years, now at sustainable level from where we can scale revenue 7
Slide 8: AdColony – 2020
AdColony – 2020 • Expecting 10% revenue growth in 2020 vs 2019 • Programmatic revenue with strong start to 2020 • Expecting significant Adj. EBITDA growth in 2020 vs 2019 • Brand is where we invest and the strong Brand demand is cannibalizing some Performance revenue as they pay more for same invent
Slide 9: AdColony Global Brand Business
AdColony Global Brand Business 9
Slide 10: Results: Brand Advertising
Results: Brand Advertising Revenue Source Q4 2019 Y-O-Y Growth Brand (incl. IO and PMP) $21.7M + 9% + 28% Brand Performance $9.1M Programmatic $11.6M + 42% Open Marketplace TOTAL $42.4M + 20% • 20% year-over-year revenue growth from Q4 2018 to Q4 2019 • First time that Brand has posted year-over-yea
Slide 11: Programmatic continues driving growth
Programmatic continues driving growth • $17.1M (+51% YoY) of the $42.4M run in Q4 ’19 were delivered programmatically via PMP or Open Exchange (40% of overall revenue) • As the business shifts to programmatic-first, it allows us to grow revenue while increasing efficiency and lower operating costs •
Slide 12: Key reasons for growth and market share gain in 4Q19
Key reasons for growth and market share gain in 4Q19 Supply / Demand Alignment • Data Science Models optimized QPS between Exchange and DSPs • Launch of banner display on AdColony SDK Transparency & Measurability • Launch of Open Measurement SDK • Joined Advertising ID Consortium integrating Liveram
Slide 13: EMEA & LATAM Brand
EMEA & LATAM Brand Revenue 2018 vs 2019 Q4 2019 Sales Breakdown by Product $14,0 5% $11,8 $12,0 $10,0 $9,2 $8,1 $7,6 $8,0 $5,7 $5,4 48% $6,0 $5,1 $4,5 $4,0 47% $2,0 $0,0 Q1 Q2 Q3 Q4 2018 2019 Instant Play LinkedIn Spotify • 28% revenue increase from Q4 2018, the increase is coming equally from all 3
Slide 14: 2020 Focus Areas
2020 Focus Areas EMEA & LATAM Instant Play • We will keep investing on the programmatic side, as we believe this is the best way to scale in terms of revenue in the future. Also, we started to focus on creativity as well for programmatic, so we will be giving both scale and solid creative solutions
Slide 15: APAC
APAC • 10% YOY growth in revenue Q4 2018 to Q4 2019 • Gross margins at 51% • Automated programmatic delivery already over 50% of revenue • Regional expansion of the brand business a priority for 2019 through 2020 • Momentum building on newly launched brand business in Japan and New Zealand • Busines
Slide 16: AdColony Wins “Best Ad Network - Mobile” from Adweek
AdColony Wins “Best Ad Network - Mobile” from Adweek • AdColony voted Mobile Ad Network of the year • Won ahead of Google and Unity • 15,000+ votes by industry peers • Boost for our employees and should help boost sales in 2020
Slide 17: AdColony Global Performance & Publishing
AdColony Global Performance & Publishing 17
Slide 18: Results: Performance Advertising
Results: Performance Advertising Summary: Q4 2019 Performance Revenues = US$12.8 mn Performance Revenues $20,0 Q4 Revenue Trend $15,0 1Q19 19% 2Q19 • Direct cannibalization with Brand / $10,0 3Q19 Exchange, high value brand / exchange 4Q19 absorbed significant share of supply $5,0 • One-off platform
Slide 19: Underlying KPIs are healthy, AdColony Platform is Growing
Underlying KPIs are healthy, AdColony Platform is Growing +5.5% Impressions +4.8% Uniques * Q4 vs. Q3’ 2019 19
Slide 20: Great Momentum continues with AdColony SDK
Great Momentum continues with AdColony SDK Over 150+ New Publishers Onboarded in Q4 Stack Ball 3D Hunter Assassin Jetpack Jump #31 Action #5 Action #11 Sports 5.5M DAU 19.9M DAU 1M DAU Happy Color – Color by Number Rescue Cut CodyCross #9 Board #2 Strategy #2 Word 5.2M DAU 3.7M DAU 4.6M DAU Draw it
Slide 21: Platform Highlights
Platform Highlights 1. Launch of new SDK 4.X – almost 50% of impression volume is now with latest SDK 2. Advanced Bidding investments are paying off. Header bidding continues to grow with publishers, with 16% revenue contribution 3. Stable Gross margins - New Core models that resulted in stable marg
Slide 22: Priorities for 2020
Priorities for 2020 1. New business momentum and supply growth - Do more of what’s working 2. Capitalize on display opportunity with new SDK=> Incremental revenue 3. Demand diversity and growth – Reorganizing Business Development team to build stronger & high value demand 4. Investing in dedicated ‘
Slide 23: Bemobi
Bemobi 23
Slide 24: Bemobi’s two pillars for sustainable profitable growth
Bemobi’s two pillars for sustainable profitable growth in emerging markets makes us unique Illustration of growth in number of subscribers APPSCLUB SERVICES Compelling subscription services with best of Growth comes from combining multiple breed apps & games priced for each emerging ADDRESSABLE USER
Slide 25: Bemobi’s key subscription service offerings
Bemobi’s key subscription service offerings SUBSCRIPTION SERVICES 1 APPSCLUB FAMILY 2 STANDALONE 3 VOICE & FINANCIAL SERVICES SUBSCRIPTION APPS Bundles of top apps & games in a low Distribution of standalone subscription Market-leading on Voice price point subscription model apps Messaging provider
Slide 26: Bemobi’s distribution channels
Bemobi’s distribution channels DISTRIBUTION CHANNELS 1 MOBILE CARRIERS PROMOTIONS 2 PAID ONLINE CAMPAIGNS 3 CO-OWNED CHANNELS WITH MOBILE CARRIERS When a deal is signed, the mobile Partnering with leading apps and web Bemobi’s turnkey platform for mobile carrier commits to doing marketing properties
Slide 27: Co-owned digital channels with mobile carriers
Co-owned digital channels with mobile carriers NO CREDIT NO DATA WEB PORTAL NO CREDIT VOICE PORTAL • Live channel platform in 18 Carriers • Live channel platform in 4 Carriers (4 LATAM + 14 INTL) (4 Brazil) 27
Slide 28: Record Revenue & Adj. EBITDA
Record Revenue & Adj. EBITDA ∆ (%) Bemobi 4Q19 4Q18 Y-o-Y Revenue (USD M) 14,9 13,6 9% EBITDA (USD M) 6,7 5,9 13% ∆ (%) Bemobi - Ex-FX Rate 4Q19 4Q18 Y-o-Y Revenue (USD M) 15,7 13,6 15% EBITDA (USD M) 7,1 5,9 21% FX Rate impact YoY (4Q19 vs. 4Q18) • INTL basket: + 1.0% • LATAM BRL: - 8.1% 28
Slide 29: Bemobi – Growing subscriber base driving revenue and scale
Bemobi – Growing subscriber base driving revenue and scale 35,0 4,0% • Total # subscribers up 8 million vs 4Q18 34,6 30,0 3,6% • LATAM up 4.4 million due to Voice 25,0 26,7 3,0% (IVR) and financial services Bemobi Subscribers (M) 3,2% 20,0 subscribers 20,3 2,0% 15,0 17,0 • International up 3.5 milli
Slide 30: Bemobi - Overall channel mix improving
Bemobi - Overal channel mix improving Co-owned Channels International markets continue subscriber growth 4Q18 vs. 4Q19 (from 6.2M to 9.7M) NDNC CHANNEL FROM TO Comments • 13 portals live in Bemobi outside of Latam: Bemobi1 (co- 27% 28% Subscriber base growth from this • Idea India • Grameenphone Ban
Slide 31: Bemobi
Bemobi • New voice based channels and omnichannel platform getting traction in Brazil and about to begin international rollout • Bemobi co-owned channel growth in international markets consistent with strategy (i.e. 34% of total new users) • Service diversification into new verticals beyond the Apps
Slide 32: Bemobi IPO
Bemobi IPO • We are still aiming to carry out a separate listing of Bemobi • Brexit made 2H19 listing impossible in UK • Considering other exchanges • Additional investor meetings have been conducted in 2H19/1Q20 • Earn-out capped at $18.6m and extended agreement through 2020 32
Slide 33: 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 34: Financial Review
Financial Review 34
Slide 35: Otello Corporation 4Q19
Otello Corporation 4Q19 (USD million) 4Q 2019 4Q 2018 Revenue up 5% vs 4Q18, Revenue 70.0 66.9 growth in AdColony and Bemobi Publisher and revenue share cost (40.2) (39.1) Payroll and related expenses Stock-based compensation expenses (13.6) (0.7) (12.7) (1.1) Overall OPEX stable Depreciation and am
Slide 36: Otello Corporation 4Q19
Otello Corporation 4Q19 Revenue (USD million) OPEX (USD million) 22,3 70,0 66,9 63,1 56,2 51,5 21,2 • Rrevenue growth vs 3Q19 & 21,0 4Q18 for both AdColony and 20,5 20,5 Bemobi 4Q18 1Q19 2Q19 3Q19 4Q19 4Q18 1Q19 2Q19 3Q19 4Q19 • OPEX slightly down vs 4Q18 Adj. EBITDA (USD million) and virtually flat
Slide 37: AdColony
AdColony Revenue USD million) OPEX (USD million) 53 55 48 8 12 Brand - • Revenue above expectations in 17,3 42 8 Programmatic 7 38 4Q19, fueled by Brand and 5 9 4 7 Brand - 5 6 Performance Programmatic 20 12 15 17 22 Brand - Managed 15,9 • Performance business still 15,8 IO 15,7 15,6 18 17 16 16 Per
Slide 38: Bemobi
Bemobi Revenue (USD million) OPEX (USD million) 15,7 4,4 • Reported revenue up 9% 4,1 4,1 YoY, would have been 15% 14,9 14,8 3,6 13,9 13,6 3,4 3,3 12,8 with neutral FX rates • Record gross margins due 4Q18 1Q19 2Q19 3Q19 4Q19 4Q18 1Q19 2Q19 3Q19 4Q19 to favorable channel and Gross Margin % Adj. EBIT
Slide 39: Cash flow
Cash flow • Operating cash flow: USD 2.7 million • Positively impacted by strong Adj. EBITDA and Cash flow (USD million) negatively impacted by build-up of working capital due to revenue growth in AdColony and Bemobi 2.7 (4.7) • Accounts receivables in AdColony and Bemobi up $9m in the quarter (1.2)
Slide 40: Financial position
Financial position Financial Position (USD million) Balance sheet (USD million) Other assets 28,3 114,1 Cash 28,3 Accounts 339,1 8,3 80,9 Equity receivables Goodwill 230,7 -20 114,8 Liabilities Gross Cash Gross Debt Net Cash 40
Slide 41: 2020 Outlook AdColony
2020 Outlook AdColony 2020 Revenue 2019 2019 Gross Revenue Type Revenue margins Outlook* Brand - $28.9m 30% Programmatic Brand - Managed $65.6m 45% IO Performance $61.8m 24% Brand - $27.6m 38% Performance Total AdColony $183.9m 34% *Vs 2019 41
Slide 42: Outlook AdColony
Outlook AdColony 1Q20* 2020** Revenue: Up ~10% Revenue: Up ~10% Gross margin: Flat Gross margin: Flat OPEX: Flat OPEX: Flat *Vs 1Q19 **Vs 2019 42
Slide 43: 2020 Outlook Bemobi
2020 Outlook Bemobi Revenue drivers Gross margin drivers OPEX drivers Subscriber growth IVR & Voice (due to low COGS) International rollout Additional services like IVR and Channel mix (NDNC) Building services portfolio Financial 43
Slide 44: Outlook Bemobi
Outlook Bemobi 1Q20* 2020** Revenue: Up ~ 10% Revenue: Up ~ 10% Adj. EBITDA: Up ~ 10% Adj. EBITDA: Up ~ 10% *Vs 1Q19 (local currency) **Vs 2019 (local currency) 44
Slide 45: Q&A
Q&A 45