Slide 1: Opera Software Quarterly Report Second Quarter 2014
OPERA SOFTWARE QUARTERLY REPORT SECOND QUARTER 2014
Slide 2: About Opera Software
About Opera Software Opera Software crafts products and services that connect 350 million people to the internet. More than 130 operators around the world choose to work with us to give their customers the best web experience. Our mobile advertising platform enables publishers to monetize their cont
Slide 3: 2Q 2014 Financial Highlights
2Q 2014 Financial Highlights Financial metric 2Q14 (MUSD) 2Q13 (MUSD) Revenue Total revenue 100.6 73.1 Profitability Adj. EBITDA* 27.0 21.7 • Revenue growth of 38% • Record revenue and profit • Strong revenue growth from Opera Mediaworks *Non-IFRS EBITDA excludes stock-based compensation expenses, e
Slide 4: Financial review
Financial review Erik Carson Harrell CFO / CSO, Opera Software
Slide 5: A note from our lawyers: Disclaimer
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 un
Slide 6: Financial Highlights 2Q14
Financial Highlights 2Q14 Financial metric 2Q14 (MUSD) 2Q13 (MUSD) Revenue Total revenue 100.6 73.1 Profitability Adj. EBITDA* 27.0 21.7 Operating Cash Flow 4.7 11.1 Cash generation Free Cash Flow** 0.1 10.1 *Non-IFRS EBITDA excludes stock-based compensation expenses, extraordinary/one-time costs an
Slide 7: 2Q14 Actuals versus Guidance
2Q14 Actuals versus Guidance 2Q 2014 Actuals 2Q 2014 Midpoint Guidance* Revenue MUSD 100.6 MUSD 97.0 Adj EBITDA** MUSD 27.0 MUSD 25.5 *Provided at 1Q14 Presentation (April 30th, 2014) ** Non-IFRS EBITDA excludes stock-based compensation expenses, extraordinary/one-time costs and acquisition related
Slide 8: 2Q14 Financial Review
2Q14 Financial Review MUSD 2Q14 2Q13 Q on Q Revenue 100.6 73.1 38% Cost of Goods sold- 23.4 13.7 71% Payroll and related expenses - 33.0 25.3 30% Stock-based compensation expenses- 2.1 1.0 108% Depreciation and amortization - 6.9 5.5 25% Other operating expenses - 17.2 12.5 38% Total expenses = 82.6
Slide 9: Financial Highlights: 2Q13 – 2Q14
Financial Highlights: 2Q13 – 2Q14 Revenue (MUSD) Adjusted EBITDA* (MUSD) $ 105 $ 28 $ 100 $ 95 $ 26 $ 90 $ 24 $ 85 $ 80 $ 22 $ 75 $ 20 $ 70 $ 18 $ 65 $ 60 $ 16 $ 55 $ 14 $ 50 $ 45 $ 12 $ 40 $ 10 $ 35 $ 30 $8 $ 25 $6 $ 20 $ 15 $4 $ 10 $2 $5 $0 $0 2Q13 3Q13 4Q13 1Q14 2Q14 2Q13 3Q13 4Q13 1Q14 2Q14 * No
Slide 10: Opera helps partners reach its massive mobile audience
Opera helps partners reach its massive mobile audience Opera Powers the Mobile Internet and App Economy 1 BILLION USERS Opera websites 270+ and applications million 800+ Opera Publisher users million Partner Members users Websites/Applications Search, operators and developers Advertisers Media Optim
Slide 11: Revenue: Customer Type 2Q14
Revenue: Customer Type 2Q14 Overall revenue above expectations Customer Type Operators In line with expectations Mobile Consumers – Opera Owned and Operated Properties In line with expectations Mobile Publishers & Advertisers – Opera Publisher Partner Members Above expectations Desktop Consumers In
Slide 12: Revenue: Operators 2Q14
Revenue: Operators 2Q14 Operator revenue in line with expectations Cloud based Operator Data/License revenue up 11% to MUSD 16.5 Key license revenue components: Opera Mini Operator co-brands, Rocket Optimizer and Opera Max Overall revenue growth: Up 12% versus 2Q13, driven by Cloud based Operator Da
Slide 13: Revenue: Mobile Consumers – Opera Owned and Operated Properties 2Q14
Revenue: Mobile Consumers – Opera Owned and Operated Properties 2Q14 Mobile Consumer revenue in line with expectations Revenue driven primarily by mobile advertising offset by less licensing revenue 270.8M users by end of 2Q14, up 8% compared to end of 2Q13 31.4b ad requests from owned & operated pr
Slide 14: Revenue: Mobile Publishers & Advertisers 2Q14
Revenue: Mobile Publishers & Advertisers – Opera Publisher Partner Members 2Q14 Mobile Publisher & Advertiser revenue above expectations Revenue growth driven by both premium advertisers, including Google, Home Depot, Kellogg's, McDonald's, Microsoft, Samsung, Toyota, Walmart and Wells Fargo, as wel
Slide 15: Revenue: Desktop Consumers 2Q14
Revenue: Desktop Consumers 2Q14 Desktop revenue in line with expectations Solid ARPU with lower search revenue offset by higher advertising and licensing revenue Desktop users at 51 million, down 2% versus 2Q13 Overall revenue growth: 23% versus 2Q13 Monthly Desktop users* (last month of quarter) De
Slide 16: Revenue: Device OEMs 2Q14
Revenue: Device OEMs 2Q14 Device OEM revenue in line with expectations Revenue driven by Connected TV customers License revenue: ~65% of revenue Overall revenue growth: 74% versus 2Q13 MUSD Device OEM revenue* $8 $7 $6 $5 $4 7 $3 5 $2 4 3 3 $1 $0 2Q13 3Q13 4Q13 1Q14 2Q14 * Unaudited
Slide 17: OPEX Development (MUSD)
OPEX Development (MUSD) Cost line 2Q14 vs. 2Q13 Comments Payroll 30% Higher headcount One-time extraordinary cost Cost of Goods Sold 71% Driven by 83% growth in Mobile Cost of goods sold Publisher and Advertiser revenue Other OPEX Depreciation COGS or Publisher Cost related to Stock-based compensati
Slide 18: Cash Flow 2Q14 (MUSD)
Cash Flow 2Q14 (MUSD) $ 30 $ 20 $ 10 $0 -$ 10 -$ 20 -$ 30
Slide 19: 3Q14 Guidance
3Q14 Guidance Metric 3Q14 Guidance Revenue* MUSD 135-142 Adj EBITDA*** MUSD 31-34 * Assumes currency remainder of 3Q14 (NOK 6.2 /USD, USD 1.35 /EUR) ** Non-IFRS EBITDA excludes stock-based compensation expenses, extraordinary/one-time costs and acquisition related costs.
Slide 20: 3Q14 Guidance Overview
3Q14 Guidance Overview Vs. 2Q14* Comments Revenue Operators Down Solid cloud based license/data revenue Mobile Consumers Up Solid smartphone user growth and solid ARPU Mobile Publishers & Up Strong growth with addition of AdColony as of July 25th Advertisers Desktop Down Stable user trend and solid
Slide 21: 2014 Guidance
2014 Guidance Metric 2014 Guidance (prior***) 2014 Guidance (new) Revenue* MUSD 435-460 MUSD 480-500 Adj EBITDA** MUSD 110-120 MUSD 117-124 * Assumes currency remainder of 2014 (NOK 6.2 /USD, USD 1.35 /EUR) ** Non-IFRS EBITDA excludes stock-based compensation expenses, extraordinary/one-time costs a
Slide 22: Operational update
Operational update Lars Boilesen CEO, Opera Software
Slide 23: 1 billion mobile user reach
1 billion mobile user reach • Combining our technologies and inventories to reach the world’s largest mobile audience • 270 million users: Opera browser inventory, owned websites and applications • 800+ million users: Opera Mediaworks publisher websites and applications • Strategic search deals, ope
Slide 24: Q2: We're very pleased with this quarter
Q2: We’re very pleased with this quarter Highlights from our three business units: Signed new strategic deal with Microsoft Consumer products Launched new Opera Mini for iOS Extended partnership agreement with Telenor Operators Continued strong growth of more than 110 million users Aquisition of AdC
Slide 25: Consumer Products
CONSUMER PRODUCTS QUARTERLY REPORT SECOND QUARTER 2014
Slide 26: Strategic licensing agreement signed with Microsoft
Strategic licensing agreement signed with Microsoft • Opera Mini becomes the default browser for Microsoft’s feature and Asha phones portfolio • The current Xpress user base will be encouraged to upgrade to Opera Mini • All new phones will come with Opera Mini pre-installed as the default browser
Slide 27: We just reached million Android users
WE JUST REACHED 100 MILLION ANDROID USERS
Slide 28: Million iOS users
4 Million iOS users 30% growth year over year
Slide 29: New long-term deal signed with Micromax
New long-term deal signed with Micromax • Micromax is the largest handset manufacturer in India and the 10th biggest globally • New deal will pre-install Opera Mini on all of its Android devices • Currently pre-installed on 50 Android devices where users increased 3 times over the last 6 months • Th
Slide 30: Opera comes by default on Huawei smartphones and tablets in Russia
Opera comes by default on Huawei smartphones and tablets in Russia Smartphones and Tablets with Opera for Android pre-installed has been shipped to Russia and is now available in the market. These smartphone models are: Ascend G6, G730, Y600, Y530, and Y330
Slide 31: Opera for Computers
OPERA FOR COMPUTERS Completed migration to the Blink rendering engine Now available on all platforms: Mac, Windows and Linux Retention rate is higher than previous Opera products We had a strong revenue growth in the quarter
Slide 32: TV & Devices
TV & Devices Strong revenue in this quarter New deals signed with Swisscom and The Washington Post
Slide 33: Operators
OPERATORS QUARTERLY REPORT SECOND QUARTER 2014
Slide 34: Extended and expanded partnership with Telenor
Extended and expanded partnership with Telenor • Telenor Digital will license the entire Opera portfolio: • Opera Max • Co-branded Opera Mini web browser and • Opera Web Pass • Will be available for roll-out to Telenor subsidiaries globally
Slide 35: Rocket Optimizer, Opera Web Pass, Horizon, Opera Max
Rocket Optimizer Opera Web Pass Horizon Co-branded Opera Mini Opera Max
Slide 36: Extended and Expanded Partnerships Tier 1 Operators
Extended and Expanded Partnerships Tier 1 Operators
Slide 37: New deals signed this quarter
New deals signed this quarter • Opera and MTS Russia launch App Market store • Yan Entertainment News portal for Vinaphone Opera Mini users in Vietnam • Deal signed with Bangladesh’s second largest cellular operator – Banglalink for delivering a special co-branded mobile web browser to its more than
Slide 38: Good momentum for the Rocket Optimizer platform
Good momentum for the Rocket Optimizer platform • Increased focus on establishing partnership with leading infrastructure OEMs • 3 network trials now live • Strong pipeline with trials for Tier-1 carriers • Market entry in China with joint venture nHorizon
Slide 39: Opera Mediaworks
OPERA MEDIAWORKS QUARTERLY REPORT SECOND QUARTER 2014
Slide 40: Over 17,000 sites, 800 million consumers, 64 billion impressions
OVER 17,000 OVER 800 MILLION 64 BILLION Sites & Applications Global consumers reached Monthly ad impressions
Slide 41: Top Q2 Agencies & Advertisers
Top Q2 Agencies & Advertisers
Slide 42: Top Q2 Publishers
Top Q2 Publishers r BES Bloomberg —|ANTYFAIR MoTORTREND (IMDB) sky) VOGUE UE 4! © GO mem © UNIVISION Ott TEA ae NFL GJc_ PANDORA Bg THE WALL STREET JOURNAL. [WIE
Slide 43: Q2 Ad requests
Q2 Ad requests Top 20 countries United States — ~—:* a Indonesia a bad United Kingdom &™ United States . Russian Federation ® Asia Pacific us m Europe = ™ Americas (non-U.S.) Brazil BAfrica South Africa &@ Middle East ™ Oceania Australia Mexico 4.04%, Italy 580% 4 5 / Nigeria Saudi Arabia Vietnam Ba
Slide 44: Video is the fastest growing mobile advertising segment
Video is the fastest growing mobile advertising segment and is highly effective US mobile video ad spend 3.5 Ad effectiveness USD billions Compared to search, banner, 3.0 (% of exposed respondents) 3.0 rich media CAGR of 37% 2.5 2.3 General recall 2.0 CAGR: Brand recall 1.6 51% 1.5 1.0 Message recal
Slide 45: A Leading Player in the Mobile Video Space
A Leading Player in the Mobile Video Space Audience reach of more than 340 million consumers Market-leading Instant-Play HD video ads Full-screen HD TV-like experience Video ads shown “anywhere” – not only as part of video content Dynamic End Cards that drive post-viewing interaction with consumers
Slide 46: AdColony is an excellent strategic fit for Opera Mediaworks
AdColony is an excellent strategic fit for Opera Mediaworks Establishes Opera as the leader in mobile video advertising Industry Leader in Highly differentiated combined platform – leading the innovation curve Mobile Video Addresses huge demand for mobile video inventory from our brand advertisers A
Slide 47: Slide 47
Slide 48: Opera Mediaworks
OPERA MEDIAWORKS O
Slide 49: Opera Software
OPERA’ software