Slide 1: 2Q 2018 Otello Corporation ASA
2Q 2018 OTELLO CORPORATION ASA
Slide 2: Agenda
Agenda • Executive Summary & Operational Review (CEO, Lars Boilesen) • Financial Review (CFO, Petter Lade) • AdColony Performance (Vikas Gulati, EVP - Global Performance) • AdColony Brand/Exchange (Jude O'Connor - General Manager, Brand, North America) • Closing Comments (CEO, Lars Boilesen) 2
Slide 3: Executive Summary
Executive Summary 3
Slide 4: Quarterly highlights
Quarterly highlights Financial metric 2Q18 2Q17 1Q18 (USD million) Total revenue 72.2 108.4 71.4 Adj. EBITDA* 1.7 2.6 0.7 • Revenue down in AdColony versus 2Q17, but up versus 1Q18 • Bemobi revenue growth of 11% vs. 2Q17 despite significant negative FX impact • Profit (Adj. EBITDA) slightly down ver
Slide 5: Operational Review
Operational Review 5
Slide 6: AdColony – Turnaround continues
AdColony – Turnaround continues • Revenue • Performance business still struggling, but revenue stabilizing • Brand business up 10% versus 1Q18 and profitable in the quarter • Cost • OPEX reduced by over 40%, tracking ahead of $90m annual run-rate goal • Headcount reduced from 700+ to 350 • Primary s
Slide 7: AdColony – Organization
AdColony – Organization Lars - CEO Product Tech Brand Performance Finance HR -Rebecca -Andrzej -Jude & Volkan -Vikas -Thomas (Petter) -Tabitha (Petter) Builders Sellers Support • Streamlined organization which is now stable with low turnover • Reduced # managers & management levels such as COO, EVP
Slide 8: AdColony – Status
AdColony – Status • We are seeing revenue growth, but it will be slow improvement during the coming months • Significant cost savings have been completed, but we will continue to look for additional cost savings • Products rolling out, making us more competitive 8
Slide 9: Bemobi – Solid revenue growth
Bemobi – Solid revenue growth Revenue (USD 2Q 2018 2Q 2017 Comments million) LATAM 10.1 10.1 Fx impacted revenue negatively by $1.2m (BRL vs USD) International 3.6 2.2 Strong growth of Apps Club with healthy diversification of channels Revenue would have been a record $14.9m, up 20%+ without negativ
Slide 10: Bemobi – Subscriber growth driving revenue and scale
Bemobi – Subscriber growth driving revenue and scale Number of subscribers (million) • Strong growth in both LATAM and 5,1 International subscribers versus 4,7 2Q17 3,1 • Greater focus on quality of users with higher ARPU 18,1 13,1 13,9 15,6 • Revenue growth to lag subscriber 8,3 growth as Bemobi ra
Slide 11: Bemobi – Customer status and growth
Bemobi – Customer status and growth Apps Club 63 operators live RoW Distribution (Subscriber base from Q2 2017 to Q2 2018) • 23 operators in Latam • Opera Mini 29%, down from 65% (less dependency on one channel) • 13 operators in South Asia • NDNC channel has grown from 6% to 17% (strategic) • 14 op
Slide 12: Bemobi – Positive impact from new agreement
Bemobi – Positive impact from new agreement • Strong alignment and better use of global resources • Global workshops and one team with same goal • Replicating LATAM product portfolio and rolling it out to International markets • Conclusions of earn-out and underlying revenue growth of 20% open doors
Slide 13: 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, legal proceedings happened mid July • Awaiting verdict 13
Slide 14: Financial Review
Financial Review 14
Slide 15: 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 16: Otello Corporation 2Q18
Otello Corporation 2Q18 (USD million) 2Q 2018 2Q 2017 1Q 2018 Revenue 72.2 108.4 71.4 Revenue down due to AdColony, Publisher and revenue share cost (42.6) (64.0) (40.8) partly offset by Bemobi Payroll and related expenses (15.8) (24.8) (15.3) Stock-based compensation expenses (0.1) (2.1) 1.6 Deprec
Slide 17: Otello Corporation 2Q18
Otello Corporation 2Q18 Revenue (USD million) OPEX (USD million) 108,0 106,1 41,9 99,2 37,0 34,2 72,2 29,8 71,4 28,0 • Revenue down in 2Q18 vs 2Q17 due to AdColony, growth in Bemobi 2Q17 3Q17 4Q17 1Q18 2Q18 2Q17 3Q17 4Q17 1Q18 2Q18 • OPEX down YoY due to cost cuts in AdColony and Skyfire, Adj. EBITD
Slide 18: AdColony
AdColony Revenue USD million) OPEX USD million) 96 Brand - 10 90 85 Programmatic • 10% revenue growth in Brand 34,8 9 9 6 11 vs. 1Q18 29,9 Brand - 28,7 5 58 57 Performance 38 34 5 7 • 22,3 Performance business still 21,3 37 9 7 Brand - Managed 17 19 IO struggling and is lacking scale 40 41 32 Perfor
Slide 19: Bemobi
Bemobi • Revenue impacted negatively Revenue (USD million) OPEX USD million) $1.2m due to adverse FX 14,9 impact (BRL vs USD) 4,8 14,3 14,1 13,9 5,2 13,7 5,1 • 2Q18 revenue would have 12,3 4,6 been a record $14.9m with like 3,9 for like FX rates as 2Q17 3,1 • OPEX up vs 2Q17 but down sequentially du
Slide 20: Cash position
Cash position Cash flow (USD million) 0.3 (29.3) • Operating CF: USD 0.3 million (1.4) • Earn-out payments to BeMobi & Mobilike (2.9) of USD 26.4 million 80 • CAPEX & Capitalized R&D: USD 2.8 million 47 • CF from financing: USD 1.4 million in share repurchases • Cash end of quarter: USD 47 million C
Slide 21: Financial position – Strong net cash position
Financial position – Strong net cash position Financial Position (USD million) Balance sheet USD million 47 47 Other assets 141,9 Cash 46,7 Accounts 72,4 469,2 Equity receivables 0 Goodwill 313,2 -10 Other liabilities 94,8 10 Net earn-out liabilities Gross Cash Gross Debt Net Cash Net earn-out liabi
Slide 22: Outlook
Outlook AdColony BeMobi 3Q18 Revenue and Adj. EBITDA expected to be 2018 expected to show growth in revenue and relatively similar to 2Q18 Adj. EBITDA versus 2017 in local currency Aggressive pricing first half of 3Q18 temporarily lowers gross margin in 3Q18, mostly offset by FX volatility will impa
Slide 23: AdColony
AdColony Vikas Gulati EVP - Global Performance 23
Slide 24: Results: Performance Advertising
Results: Performance Advertising Summary: Q2 2018 Performance Revenues = $25.2Mn (-5% vs. Q1’18) Performance Revenues $39,6 $41,0 $31,9 $M USD $26,6 $25,2 -22% -17% -5% 2Q17 3Q17 4Q17 1Q18 2Q18 • Consolidation in gaming with dominance of fewer bigger publishers. Limited blockbuster mobile game launc
Slide 25: Underlying Trends Impacting Performance Business
Underlying Trends Impacting Performance Business Publisher Power Mediation Changing Buyer Dynamics New Formats Gaming publishers are Supply behind mediation Limited blockbuster launches Rise of Playables and native integrating multiple SDKs platforms using traditional from big studios. Small and com
Slide 26: Q2 Winners & Losers
Q2 Winners & Losers Growth in key accounts offset by decay in existing accounts Winners 1. Early positive signs with growth in key strategic accounts in Q2 Significant growth 2. 34 New publishers on the platform, wins with new publishers despite high competition opportunity in supply 3. Strategic Pa
Slide 27: Product Efforts Focused On Improving Business KPIs
Product Efforts Focused On Improving Business KPIs Improving impression rates, yields (eCPMs) for publishers & Core™ updates to improve install rates • Tighter alignment between product and commercial team to build product features that deliver superior performance for publishers and advertisers • I
Slide 28: Commercial Priorities - H2 2018
Commercial Priorities - H2 2018 Turnaround the performance business and set foundation to grow revenue again i. New Business as a growth engine • Reorganize business team to focus on new business on both demand & supply. Massive push with commercial team and new incentive plan to bring new publisher
Slide 29: The Big Picture – Mobile Video & Performance
The Big Picture – Mobile Video & Performance i. Mobile Video is fastest growing format in the industry today at 65% (IAB study) ii. Rewarded video is now widely accepted by developers and publishers, helps leverage advertising in the most non-intrusive way possible iii. AdColony’s unique position in
Slide 30: In Sum, Performance Business is in Transformation
In Sum, Performance Business is in Transformation Early positive signs in stability of revenue run rate on performance business • Rewarded video continues to be most valuable channel for performance marketers and app install segment • With a critical mass of publishers adopting the latest version of
Slide 31: Global Brand Business
Global Brand Business Jude O’Connor General Manager, US Brand 31
Slide 32: Results: Brand Advertising
Results: Brand Advertising Revenue Source Q2 2018 Q2 2018 Mix % $19.2 58% Brand (incl. IO and PMP) (up from $16.7 in Q1) (up from 55.5% in Q1) $7 21% Brand Performance (down from $8.6 in Q1) (down from 28.5% in Q1) Programmatic $7 21% Open Marketplace (up from 16% in Q1) (up from $4.8 in Q1) TOTAL $
Slide 33: The industry is recognizing the value of User-Initiated Video
The industry is recognizing the value of User-Initiated Video 33
Slide 34: Consumers prefer User-Initiated Video ads over all others
Consumers prefer User-Initiated Video ads over all others 34
Slide 35: Consumers prefer User-Initiated Video ads over all others
Consumers prefer User-Initiated Video ads over all others Consumer attitudes towards various video advertising formats Mobile App Reward 68% 32% Social Click-to-Play 52% 48% Positive Skippable Pre-Roll 51% 49% Negative Skippable Mobile Pop-Up 46% 54% Banner Click-to-Play 45% 55% Featured in Social A
Slide 36: The line between Brand and Performance is blurring
The line between Brand and Performance is blurring 36
Slide 37: User-Initiated Video delivers on Brand metrics that matter
User-Initiated Video delivers on Brand metrics that matter Human & Viewable Rate In-View Rate Authentic Viewable Rate Benchmarks Benchmarks: Benchmarks 97% 95% 95% Paul to add industry-level IAS & DV benchmarks 46% 46% 46% AdColony MOAT AdColony IAS AdColony DoubleVerify 37
Slide 38: Q&A
Q&A 38