Slide 1: 2Q 2016
2Q 2016
Slide 2: Agenda
Agenda • Executive Summary • Financials • Advertising • Consumer • Closing 2
Slide 3: Financial Highlights 2Q16
Financial Highlights 2Q16 Financial metric 2Q16 ($m) 2Q15 ($m) 2Q16 Guidance Total revenue 162.9 146.2 166-174 Adj. EBITDA* 20.3 29.5 20-24 • Revenue just below range primarily due to timing of Mobile Advertising performance campaigns • Adj. EBITDA in range due to solid margin and cost control • YoY
Slide 4: Consumer Transaction
Consumer Transaction What we are selling What we are keeping Price Timing -Opera Mediaworks -Opera TV Closing expected -Consumer Business $575m -Bemobi end September -Surfeasy & Skyfire Milestones Status Signed SPA July 17 Received first escrow payment ($100m) July 18 Kunlun shareholder approval Aug
Slide 5: Agenda
Agenda • Executive Summary • Financials • Advertising • Consumer • Closing 5
Slide 6: A note from our lawyers: Disclaimer
A note from our lawyers Disclaimer This presentation contains, and is i.a. based on, forward -looking statements regarding Opera Software ASA and its subsidiaries. These statements are based on various assumptions made by Opera Software ASA, which are beyond its control and which involve known and u
Slide 7: Financial Highlights 2Q16
Financial Highlights 2Q16 Financial metric 2Q16 ($m) 2Q15 ($m) 2Q16 Guidance Total revenue 162.9 146.2 166-174 Adj. EBITDA* 20.3 29.5 20-24 OCF 7.3 (18.8 YTD) 31.0 (14.5 YTD) *Adj EBITDA, excluding stock-based compensation expenses and one-time costs 7
Slide 8: 2Q16 Financial Review
2Q16 Financial Review $m 2Q16 2Q15 Y on Y Revenue 162.9 146.2 11% Publisher and revenue share cost - 75.8 52.2 45% Payroll and related expenses - 40.7 38.8 5% Stock-based compensation expenses - 2.5 2.1 18% Depreciation and amortization - 16.0 12.2 31% Other operating expenses - 26.1 25.7 2% Total e
Slide 9: Financial Highlights: 2Q15 – 2Q16
Financial Highlights: 2Q15 – 2Q16 Revenue ($m) Adjusted EBITDA* ($m) $ 200 $ 35 $ 180 $ 30 Mobile Advertising $ 160 - 3rd Party $ 140 Publishers $ 25 $ 120 145 $ 20 117 114 $ 100 93 96 33 Consumer (Owned $ 15 29 $ 80 and Operated 27 $ 60 Properties) $ 10 20 18 $ 40 31 37 $5 37 36 38 $ 20 22 16 Tech
Slide 10: Revenue: Customer Type 2Q16
Revenue: Customer Type 2Q16 Customer Type 2Q16 ($m) Change vs 2Q15 Comments Mobile Advertising - 3rd Party Slightly below 114.4 +23% Publishers expectations Consumer (Owned and In line with 37.7 +20% Operated Properties) expectations In line with Tech Licensing 10.7 -51% expectations 10
Slide 11: Mobile Advertising - 3rd Party Publishers
Mobile Advertising - 3rd Party Publishers $ 160 100% 90% $ 140 80% 47% 46% 45% $ 120 50% 70% 57% $ 100 87 60% $ 80 80 50% 77 54 55 40% $ 60 30% 53% 54% 55% $ 40 50% 20% 43% 58 $ 20 39 41 38 38 10% $0 0% 2Q15 3Q15 4Q15 1Q16 2Q16 2Q15 3Q15 4Q15 1Q16 2Q16 non-Video Video Brand Performance 11
Slide 12: Revenue: Consumer - Owned and Operated Properties
Revenue: Consumer - Owned and Operated Properties Customer Type 2Q16 ($m) 2Q15 ($m) % Growth Comments Revenue transition, Mobile Browser 8.6 9.4 -9% impacted by prior period adjustments Bemobi + strong Apps and Games* 11.7 1.1 1 164% organic revenues Performance and Privacy SurfEasy + new 1.2 0.7 71
Slide 13: Tech Licensing
Tech Licensing Connected TV Other Licensing $ 25 $ 20 • Other Tech Licensing $ 15 15 volatile with limited 8 predictability $ 10 3 3 4 $5 7 8 8 7 • Connected TV revenue 7 stable and predictable $0 2Q15 3Q15 4Q15 1Q16 2Q16 13
Slide 14: OPEX Development ($m)
OPEX Development ($m) $ 200 One-time cost 2Q16 vs. Cost line Comments 2Q15* $ 180 Publisher and Payroll 5% Headcount up 4% $ 160 revenue share $ 140 cost Driven by growth in Mobile 91 Publisher and Advertising - 3rd Party Publishers 75 Other OPEX 76 revenue share 45% and $4.3 million related to Reve
Slide 15: Unchanged overall outlook for 2016
Unchanged overall outlook for 2016 Metric 2016 Outlook Opera Revenue* $690 - 740m Adj. EBITDA** $100 - 125m OMW + TV + Metric 2016 Outlook Apps & Revenue* $570 - 605m Games Adj. EBITDA** $75 - 90m * Assumes FX rates as of August 30th 2016 15 **Adj EBITDA, excluding stock-based compensation expenses
Slide 16: Agenda
Agenda • Executive Summary • Financials • Advertising • Consumer • Closing 16
Slide 17: Executive Summary – Q2 2016
Executive Summary – Q2 2016 • For 1H 2016, Opera Mediaworks delivered $232M in Revenues (+32% vs. 1H’15) and we continue perform in line with our annual operating plan • In Q2, we delivered $114.4M in Revenues (+23% growth vs Q2’15) • Sales were $2m lower than last quarter, but Q1 was above plan due
Slide 18: Q2 2016 Growth Drivers
Q2 2016 Growth Drivers Key Drivers Growth Details • Largest Q2 to-date, with growth driven by: • Continued international expansion PERFORMANCE 33% • Demand for differentiated in-app Instant-Play™ video • Growth of key performance advertiser accounts • Instant-Play™ video a standout, growing 40% YoY
Slide 19: Largest ad SDK footprint in mobile after Google
Largest ad SDK footprint in mobile after Google Ahead of Twitter (MoPub), Facebook, AOL (Millennial) & InMobi 1200 1168 900 814 600 567 354 362 310 324 300 257 255 234 195 180 167 169 157 157 144 130 131 142 104 86 11 20 21 9 9 0 1 0 0 AdMob/ Opera MoPub/ LiveRail/FAN/ Millennial/ InMobi Apple Vungl
Slide 20: 30.9% YOY Growth – Platform Reach
30.9% YOY Growth – Platform Reach Global Reach (in Millions) 1600 1.44B 1.1B 1400 1200 1000 800 Q2 2015 Q2 2016 20
Slide 21: Highest Quality Publisher Growth
Highest Quality Publisher Growth New publisher relationships in Q2 drove access & reach in the most popular, mobile-first apps worldwide. 21
Slide 22: 113%+ YOY Growth in $1MM+ Publishers
113%+ YOY Growth in $1MM+ Publishers Creating meaningful value for the mobile publisher ecosystem Publishers w/ $1MM+ Earnings Run Rate Q2 2015 Q2 2016 22
Slide 23: Revenue Shift Towards Video Continues
Revenue Shift Towards Video Continues YOY Share of OMW Revenue, Video vs. Non-Video (Actuals) Revenue 150 (Millions) 100 $37.7MM Non-Video $39.1MM 50 $76.7MM Video $53.9MM (67%) (58%) 0 Q2 2015 Q2 2016 23
Slide 24: 86% YOY Growth in Programmatic Sales
86% YOY Growth in Programmatic Sales Adoption of automated buying continues across regions Q2 2015 Q2 2016 24
Slide 25: Performance Advertising
Performance Advertising Largest Q2 ever for global Performance advertising business (+33% vs Q2’15) • International growth: EMEA and APAC expansion drove +111% and +135% growth respectively vs. Q2’15 • Key accounts: Grew number of performance advertisers by +67% vs. Q2’15 with continued growth in ov
Slide 26: Brand Advertising
Brand Advertising Key Brand Highlights • Average deal size: Deal sizes increasing, especially for video campaigns, as we are seeing larger budgets from key customers. • Top verticals: CPG, Entertainment, Restaurants, Retail & Finance • Key global wins: • EMEA – Samsung, Bose, eBay, Turkish Airlines.
Slide 27: Innovation & Outcomes
Innovation & Outcomes Case Study: Hilton 360° Video An Immersive 360 Experience • HD Mobile Video & Dynamic End Card • 360° Tilt to View • End card linked to reservations site Real Results “The theme of the campaign is Our Stage. Your Story…these virtual reality moments are what drive travelers to b
Slide 28: Awards
Awards Q2 2016 Global Award Wins & Nominations APAC EMEA U.S. EMEA 4 Wins in Creativity, Use of Nominated for Best Use of Nominated for Partner of the Year Nominated for 6 Campaigns Technology & Effectiveness Technology, Most Innovative Use of Mobile & Best Use of Video & Rich Media 28
Slide 29: Q2 2016 Takeaways
Q2 2016 Takeaways On track for company’s first $500M+ year • Core focus areas for 2016 • Growth – Performance, Video, Programmatic • New products – 2 of 3 launched w/new SDK on track to launch in September • One Platform – Unifying our technology platform for greater scale & efficiency • New product
Slide 30: Agenda
Agenda • Executive Summary • Financials • Advertising • Consumer • Closing 30
Slide 31: Consumer Overview
Consumer Overview Mobile Desktop Privacy & Apps & Browser Browser Performance Games TV & Tech Licensing 31
Slide 32: Mobile Browser
MOBILE BROWSER 32
Slide 33: Execution areas
Execution areas AC Q U I S I T I O N / R E T E N T I O N E N G AG E M E N T T I M E S P E N T M O N E T I Z AT I O N C O N V E R S I O N O N O & O E N G I N E • Organic traffic • Product features • Home Page • Localization • Search, affiliates and advertising • OEM • User settings/data • Content Dis
Slide 34: Android: 142M MAU end of 2Q16
Android: 142M MAU end of 2Q16 160 139 142 140 120 +2% YoY 100 Millions 80 60 40 +3M 20 users 0 YoY Q2-15 Q2-16 34
Slide 35: Opera Mini Native: strong growth year to date with improved retention rates
Opera Mini Native: strong growth year to date with improved retention rates 48m MAUs 64m MAUs (up 33% ytd) DAU/MAU: 26% DAU/MAU: 29% January 2016 July 2016
Slide 36: New Home page
New Home page • Focus on driving engagement and increasing the time spent on the browser • Content cards that enable localization of content per market • Launched local content cards in India with Hungama (Bollywood) and Sportkeeda (cricket) • New markets to be launched in Q3 and Q4 2016
Slide 37: Building on native advertising
Building on native advertising • Focus on developing native advertising ad formats to monetize higher engagement times in the browser • Multiple ad providers (Mediaworks, Facebook, Google) will set the ground for scalable ad monetization
Slide 38: Desktop Browser
DESKTOP BROWSER 38
Slide 39: Desktop 55M MAU in 2Q16
Desktop 55M MAU in 2Q16 60 55 53 50 +4% YoY 40 Millions 30 20 +2M 10 users YoY 0 Q2-15 Q2-16 39
Slide 40: Desktop Revenue
Desktop Revenue 14 $13.8 12 $12.0 10 +15% YoY Millions 8 6 4 +$1.8M 2 YoY 0 Q2-15 Q2-16 40
Slide 41: Busy quarter with lots of releases and innovations coming to the desktop browser
Busy quarter with lots of releases and innovations coming to the desktop browser 14 April 20 April 4 May 12 May 19 May 8 June
Slide 42: Native Adblocker Video popout Battery Saving
Native Adblocker Video popout Battery Saving 42
Slide 43: Opera has retaken position as innovation leader
OPERA HAS RETAKEN POSITION AS INNOVATION LEADER Opera, the first major browser with native adblock Opera saves more battery than Edge and Chrome “Opera is setting the trend and brings a killer feature while other browsers like Firefox & Chrome are still sleeping”
Slide 44: Performance & Privacy
PERFORMANCE & PRIVACY 44
Slide 45: Opera Max
Opera Max CROSSING 30,000,000 USERS IN AUGUST 240% GROWTH IN Q2 SECOND BIGGEST APP IN OPERA
Slide 46: Launching Ads in September
Launching Ads in September 4 © 2015 Opera Software, Confidential 6
Slide 47: Rocket Optimizer
Rocket Optimizer New WIN with operator in the UK, second win in UK this year New Win with operator in Egypt Rocket platform went live in Ooredoo Kuwait 47
Slide 48: Optimization of encrypted Videos is getting strong market traction
Optimization of encrypted Videos is getting strong market traction Rocket Has a market leading support for optimization of encrypted videos, YouTube, Netflix and others Proven in trials and live deployments Many Tenders/RFPs ongoing Deal with tier 1 US operator targeted to close in q3 48
Slide 49: SurfEasy
SurfEasy VPN update • Opera VPN for Android launched Aug 23 with over 100k downloads in first 48 hours • 4M Opera VPN user registrations since launch across all platforms • SurfEasy owned and operated paying base grew 14% in Q2 and 16% during the first half of Q3. “I just deleted half of my iPhone a
Slide 50: Apps and Games
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Slide 51: One year after Bemobi's acquisition, globalization of Opera's AppsClub is at full speed
One year after Bemobi’s acquisition, globalization of Opera’s AppsClub is at full speed • 2.3 million paying AppsClub subscribers • $9.5 million in 2Q16 Revenue (total Bemobi) • New launches during Q216 • Tata DoCoMo - India • MTS - Belarus • Hutchison - Indonesia • MTS - Ukraine • Banglalink - Bang
Slide 52: Success in Brazil => Now Global Footprint
Success in Brazil => Now Global Footprint • Apps Club service: • 38 Carriers • 20 of the largest emerging countries • 3Q16 outlook • New launches planned with leading mobile carriers • Significant improvement in most operational metrics (subscriber acquisition and monetization) across regions
Slide 53: TV and Tech Licensing
TV AND TECH LICENSING 53
Slide 54: Opera TV announced renewal of agreement with leading customer
Opera TV announced renewal of agreement with leading customer AT T H E F O R E F R O N T • This agreement extends on the established 4 year old strategic partnership • Vestel, is the largest TV manufacturer in Europe, already shipping millions of TVs each year with Opera TV • Opera TV will continue
Slide 55: Opera TV Snap 3.0 launched
Opera TV Snap 3.0 launched Empowering content providers and broadcasters to reach new audiences • Opera TV Snap maintains its position as the industry’s quickest way to launch an attractive OTT service • Expanding to include support for more online video platforms (JWPlayer, Ooyala and Zype) • Desig
Slide 56: Agenda
Agenda • Executive Summary • Financials • Advertising • Consumer • Closing 56
Slide 57: Q&A
Q&A 57