Slide 1: 3Q 2016
3Q 2016
Slide 2: Agenda
Agenda • Executive Summary • Financials • Operations • Mobile Advertising • Closing 2
Slide 3: Financial Highlights 3Q16 (Continued Operations)
Financial Highlights 3Q16 (Continued Operations) Financial metric 3Q16 ($m) 3Q15 ($m) Total revenue 141.8 113.4 Adj. EBITDA* 14.2 13.1 • Consumer deal closed for $575 million Enterprise Value • Solid revenue growth from Mobile Advertising and very strong quarter for Bemobi 3
Slide 4: Consumer Transaction closed
Consumer Transaction closed August 2016 August 2015 February July 2016 October May 2015 November 2016 2016 2016 Amendment Announced Offer for Indicative to keep Strategic NOK 71 offer Consumer CFIUS Interest Skyfire & Deal closes review for Opera $600 million approval SurfEasy 4
Slide 5: Consumer Transaction closed
Consumer Transaction closed • $575 million Enterprise value transaction • 5+ times 2016 estimated revenue • 20+ times 2016 estimated Adj. EBITDA • Creates very strong financial backbone for remaining Opera • Enables deleveraging of balance sheet • Enables substantial dividends and share repurchases
Slide 6: Where we are now
Where we are now Opera ASA Opera OMW Bemobi SurfEasy Skyfire TV Focus • Organic revenue growth • Increase margins • Cost control Drive shareholder value • Unique & relevant products • Scalable businesses 1
Slide 7: Agenda
Agenda • Executive Summary • Financials • Operations • Mobile Advertising • Closing 7
Slide 8: Disclaimer
A note from our lawyers Disclaimer This presentation contains, and is i.a. based on, forward-looking statements regarding Opera Software ASA and its subsidiaries. These statements are based on various assumptions made by Opera Software ASA, which are beyond its control and which involve known and un
Slide 9: Financial Highlights 3Q16
Financial Highlights 3Q16 Financial metric (Continued 3Q16 ($m) 3Q15 ($m) operations) Total revenue 141.8 113.4 Adj. EBITDA* 14.2 13.1 EBIT (3.6) (1.3) *Adj EBIT/EBITDA, excluding stock-based compensation expenses and one-time costs 9
Slide 10: Revenue: Customer Type 3Q16
Revenue: Customer Type 3Q16 Customer Type 3Q16 ($m) Change vs 3Q15 Comments In line with Mobile Advertising 122.1 +26% expectations In line with Apps & Games 13.7 +81% expectations In line with Opera TV 5.8 -30% expectations In line with Performance & Privacy 2.2 +62% expectations 10
Slide 11: Financial Highlights: 3Q15 – 3Q16
Financial Highlights: 3Q15 – 3Q16 Revenue ($m) Adjusted EBITDA* ($m) Mobile Advertising Apps & Games $ 30 Opera TV Performance & Privacy $ 180 $ 25 $ 160 8 9 $ 140 6 $ 20 7 7 14 $ 120 10 12 8 $ 15 $ 100 8 27 $ 80 145 $ 10 $ 60 117 114 122 97 13 14 14 $ 40 12 $5 $ 20 $0 $0 3Q15 4Q15 1Q16 2Q16 3Q16 3Q
Slide 12: Balance sheet
Balance sheet Components Size Continued + Discontinued operations ($190 million) net cash position 3Q16 Estimated net proceed from Consumer $560 million transaction Continued operations net cash position $350 million post transaction 12
Slide 13: Earn-out overview
Earn-out overview Limited cash impact 13
Slide 14: Use of proceeds
Use of proceeds Type Size Timing Repay debt $185 million November Dividend ~$275 million (15 NOK pr share) December Share buyback Up to 10% of shares outstanding Now - 2017 AGM Neutral net Cash position excluding earnouts 14
Slide 15: New reporting structure - Segments
New reporting structure - Segments Line item Components Mobile Advertising Global brand & performance advertising Apps & Games Bemobi Opera TV Connected TV business Performance & Privacy SurfEasy and Rocket Optimizer (Skyfire) Corporate CEO/Board of Directors, corporate finance and accounting, legal
Slide 16: 3Q16 Segment P&L
3Q16 Segment P&L Segment ($ Mobile Apps & Opera TV Performanc Corporate Total* million) Advertisin Games e & Privacy g Revenue 122.1 13.7 5.8 2.2 0.0 141.8 Gross Profit 45.2 8.8 5.8 2.0 0.0 61.8 Adj. EBITDA 8.4 6.4 2.3 (2.1) (0.9) 14.2 EBITDA 4.3 6.4 2.3 (2.3) (0.9) 8.0 Normalized** 2.8 6.1 1.6 (2.6
Slide 17: OPEX Development ($m)
OPEX Development ($m) $ 160 One-time cost Cost line 3Q16 vs. 3Q15* $ 140 Publisher and revenue share Payroll 3% $ 120 cost 80 $ 100 Other OPEX Publisher and revenue 36% share cost 59 $ 80 Depreciation Other OPEX 39% $ 60 19 Depreciation & 14 8% $ 40 Amortization 12 Stock-based 11 1 3 compensation St
Slide 18: Outlook for 2016
Outlook for 2016 2016 Outlook (ex Baseline Baseline 2016 Surfeasy + Updated 2016 Metric SurfEasy & update Outlook Skyfire impact Outlook Skyfire $563 - $570 - Revenue* $570 - 605m ($7-14m) $7 - 9m 591m 600m Adj. $75 - 90m ($6-12m) $69 - 78m $(9) – (8)m $60 - 70m EBITDA** Baseline update • Corporate
Slide 19: Investor Day March 2017
Investor Day March 2017 19
Slide 20: Agenda
Agenda • Executive Summary • Financials • Operations • Mobile Advertising • Closing 20
Slide 21: Executive Summary – Core Opera
Executive Summary – Core Opera Key Drivers Size 3Q16 Trend Overall strategy Continued growth, MOBILE $122.1m Grow ing cost efficiency ADVERTISING opportunities Continued Strong APPS & GAMES $13.7m Grow ing growth Sustainable OPERA TV $5.8m Flat Profitability PERFORMANCE Restructure for $2.2m Flat &
Slide 22: Mobile Advertising
Mobile Advertising Revenue Growth 3Q Highlights Focus Areas • Record revenue quarter for both Brand and Performance businesses • Cost efficiency opportunities • SDK footprint growth of 112% vs. 26% • Focus on One Platform deployment, Q3’15 automation and data science to drive • Completed development
Slide 23: Mobile Advertising
Mobile Advertising 2016 2017 • 12 different companies, all • 1 Company acquired • 1 Company culture, earn- • 12 different management outs ending teams and cultures • 1 Platform incentiviced by their own • Employees linked to OMW earn-outs revenue and profit as well • 5 Different platforms as Opera s
Slide 24: Apps & Games
Apps & Games Revenue Growth 3Q Highlights Focus Areas • Very strong revenue growth • International growth (just ~10% of 81% • Adj. EBITDA margin of 45%+ revenue today is outside Latam) • 6 Operator launces in 3Q16 • Leverage Operator relationships 24
Slide 25: 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 • 13.6M subscribers in Latam and 3.1 M AppsClub subscribers in RoW (25% QoQ growth) • $13.7 million in 3Q16 Revenue (total Apps & Games) • New launches during 3Q16 • Globe – Philippines • Smart – Philippines • Gr
Slide 26: Success in Brazil => Now Global Footprint
Success in Brazil => Now Global Footprint • Apps Club service: • 43 Carriers, covering 21 emerging countries • 4Q16 outlook • New Apps Club launches planned with leading mobile carriers in India and Russia expecting to reach close to 100% country coverage • Improvement in most operational metrics (s
Slide 27: Opera TV
Opera TV Revenue Growth 3Q Highlights Focus Areas • Secured deals to deliver ATH quarter • Cement global leadership ( 2 8 %) in 4Q16 • Continued investment in products • ~40% Adj. EBITDA margin 27
Slide 28: Connected TV Certification Program Launched
Connected TV Certification Program Launched The Program Program to address alignment across multi- ecosystem, multi-silicon, multi-industry challenges Launch expected to accelerate core revenue driver- Opera TV SDK in 2017 Targeting tens of millions of Opera TV-powered devices tol solve key challeng
Slide 29: Major milestone: Over 1000 applications and video services now available in Opera TV Store
Major milestone: Over 1000 applications and video services now available in Opera TV Store Leading the way Opera TV is truly enabling the transformation of content consumption in the living room Over 1000 application deployed across 15 leading Connected TV device partners targeting millions of homes
Slide 30: Performance & Privacy
Performance & Privacy Revenue Growth 3Q Highlights Focus Areas • SurfEasy continues profitable growth • Surfeasy to continue growth • Simplifing Skyfire portfolio • Substantial cost cuts for Skyfire 62% • Building Rocket Optimizer pipeline for • Expecting a profitable 2017 for 2017 Performance & Pri
Slide 31: Increased market traction for the Rocket platform
Increased market traction for the Rocket platform Encrypted video optimization deployed live with several operators in various regions, and delivering a huge value for their subscribers. Additional customers trials on-going. Cloud transformation is happening now. Several RFP/RFQ on-going with a robu
Slide 32: SurfEasy
SurfEasy VPN update • SurfEasy Owned and Operated paying subscriber base grew 16% during Q3 • Partner products grew 118% in Q3. Strong growth expected to continue through 2017. 32
Slide 33: Agenda
Agenda • Executive Summary • Financials • Operations • Mobile Advertising • Closing 33
Slide 34: Opera Mediaworks: Growth + R&D
Opera Mediaworks: Growth + R&D • 2016 has been a year of balancing growth with our long term vision to align all our acquisitions under one strategy, one aligned leadership team & one platform • Growth via Acquisition --------- Organic growth • 12 businesses w/opportunistic goals --------- Unified
Slide 35: Summary of Results – Q3 2016
Summary of Results – Q3 2016 • For first 9 months of the year, Opera Mediaworks delivered $352.5M in Revenues (+30% vs. 9 mos YTD 2015). • 30% organic growth vs. only +9% organic growth for 1st 9 months of 2015. • In Q3, we delivered $120.7M* in Revenues (+26% growth vs Q3’15) • Q3 highlights includ
Slide 36: Solid growth in both Performance & Brand segments
Solid growth in both Performance & Brand segments Key Drivers Growth Details • Continued international expansion, with EMEA & APAC driving growth PERFORMANCE 27% • Demand for differentiated in-app Instant-Play™ video • Growth of key performance advertiser accounts • Fewer new entrants into top 25 to
Slide 37: Largest ad SDK footprint in mobile after Google
Largest ad SDK footprint in mobile after Google Ahead of Twitter (MoPub), Facebook, AOL (Millennial) & InMobi 1265 1200 900 849 594 600 416 368 326 324 319 313 300 268 197 200 209 212 171 158 155 165 158 158 124 110 47 0 14 3 17 0 7 7 0 AdMob/ Opera MoPub/ FAN/ InMobi Vungle AOL/Millennial Apple Yum
Slide 38: 32.7% YOY Growth – Platform Reach
32.7% YOY Growth – Platform Reach Global Reach (in Millions) 1600 1.46B 1.1B 1400 1200 1000 800 Q3 2015 Q3 2016 38
Slide 39: Highest Quality Publisher Growth
Highest Quality Publisher Growth New publisher relationships in Q3 drove access & reach in the most popular, mobile-first apps worldwide. Musical.ly ooVoo Songflip Clean Master Vidme Plarium NexonM Jelly Button Games Plain Vanilla Games Nix Hydra Games 39
Slide 40: Revenue Shift Towards Video
Revenue Shift Towards Video YOY Share of OMW Revenue, Video vs. Non-Video (Actuals) Revenue 150 (Millions) 100 $47.7MM Non-Video $41.0MM 50 $73.0MM Video $55.2MM (61%) (57%) 0 Q3 2015 Q3 2016 *excludes Mobilike & AdQuota 40
Slide 41: 112% YOY Growth in Programmatic Sales
112% YOY Growth in Programmatic Sales Adoption of automated buying continues across regions Q3 2015 Q3 2016 41
Slide 42: Performance Advertising
Performance Advertising Key Performance Highlights Solid quarter for global performance advertising business (+27% vs Q3’15) • App Install Market: North America continues to be a highly competitive market, while we continue to grow and expand our EMEA and APAC business and generate strong grow rates
Slide 43: AdColony = #1 Independent Mobile Advertising Partner
AdColony = #1 Independent Mobile Advertising Partner TUNE Rankings of over 1000 advertising partners — Q3 2016 #1 Google #2 AdColony #3 AppLovin #4 Twitter #5 IronSource #6 Vungle #7 InMobi #8 Chartboost #9 AppLift #10 AdAction Interactive Source: TUNE, Top 25 global advertising partners of 2016 43
Slide 44: Highlight: Brand Performance
Highlight: Brand Performance Top brands driving performance-focused campaigns 44
Slide 45: Brand Performance Case Studies
Brand Performance Case Studies 45
Slide 46: Brand Advertising
Brand Advertising Key Brand Highlights • Average deal size: Deal sizes increased y-o-y, especially for video campaigns. Uptick in video spend from media & entertainment companies like Disney, Amazon, Netflix for feature releases & Fall launches • Top verticals (US): CPG, FMCG (Fast Moving Consumer G
Slide 47: Q3 2016 Takeaways
Q3 2016 Takeaways Organic Growth + New SDK & Apollo R&D to drive yield in 2017 and beyond • Our role in the ecosystem continues to grow in a highly competitive marketplace dominated by Facebook and Google as evidenced by both our organic revenue growth, SDK growth and rankings as #1 independent adve
Slide 48: Agenda
Agenda • Executive Summary • Financials • Advertising • Consumer • Closing 48
Slide 49: Q&A
Q&A 49