Slide 1: Quarterly Report Third Quarter 2015
OPERA QUARTERLY REPORT THIRD QUARTER 2015
Slide 2: About Opera Software
ABOUT OPERA SOFTWARE Opera enables more than 350 million internet consumers worldwide to connect with the content and services that matter most to them. Opera also helps publishers monetize their content through advertising and advertisers reach the audiences that build value for their businesses, c
Slide 3: Financial Highlights 3Q15
Financial Highlights 3Q15 Financial 3Q15 ($m) 3Q14 ($m) metric Revenue Total revenue 149.4 138.8 Profitability Adj. EBITDA* 27.5 33.9 • Revenue and Adjusted EBITDA in line with guidance • Strong Operating Cashflow *Adj EBITDA, excluding stock-based compensation expenses and one-time costs
Slide 4: 3Q15 Actuals versus Guidance
3Q15 Actuals versus Guidance 3Q15 Midpoint 3Q15 Actuals($m) Guidance* ($m) Total 149.4 150.5 revenue Adj. 27.5 27.0 EBITDA** Excluding the adverse impact of changes in foreign exchange rates post our 2Q15 report, revenue would have been above $150m in 3Q15 *Provided at 2Q15 Presentation (August 12th
Slide 5: Financial Review
FINANCIAL REVIEW QUARTERLY REPORT THIRD QUARTER 2015
Slide 6: A note from our lawyers: Disclaimer
A note from our lawyers Disclaimer This presentation contains, and is i.a. based on, forward-looking statements regarding Opera Software ASA and its subsidiaries. These statements are based on various assumptions made by Opera Software ASA, which are beyond its control and which involve known and un
Slide 7: Financial Highlights 3Q15
Financial Highlights 3Q15 Financial metric 3Q15 ($m) 3Q14 ($m) Revenue Total revenue 149.4 138.8 Profitability Adj. EBITDA* 27.5 33.9 Operating Cash Flow 20.1 18.2 Cash generation Free Cash Flow** 15.4 12.9 Excluding the impact of year-over-year changes in foreign exchange rates, revenue would have
Slide 8: 3Q15 Financial Review
3Q15 Financial Review $m 3Q15 3Q14 Q on Q Revenue 149.4 138.8 8% Publisher and revenue share cost - 58.8 43.9 34% Payroll and related expenses - 37.7 39.1 -4% Stock-based compensation expenses - 0.8 4.5 -81% Depreciation and amortization - 15.7 10.0 57% Other operating expenses - 25.4 21.9 16% Total
Slide 9: Financial Highlights: 3Q14 – 3Q15
Financial Highlights: 3Q14 – 3Q15 Revenue ($m) Adjusted EBITDA* ($m) $ 35 $ 150 Mobile Advertising $ 30 - 3rd Party Publishers $ 25 $ 100 103 93 96 87 $ 20 83 Consumer (Owned 34 34 $ 15 29 and Operated 27 $ 50 Properties) $ 10 30 31 18 36 26 37 $5 16 22 18 22 16 Tech Licensing $0 $0 3Q14 4Q14 1Q15 2
Slide 10: Revenue: Customer Type 3Q15
Revenue: Customer Type 3Q15 Revenue within guidance range Customer Change vs 3Q15 ($m) Comments Type 3Q14 Mobile Advertising - In line with 96.2 +11% 3rd Party Publishers* expectations Consumer (Owned In line with and Operated 37.1 +4% expectations Properties) In line with Tech Licensing 16.1 Flat e
Slide 11: Mobile Advertising - 3rd Party Publishers
Mobile Advertising - 3rd Party Publishers Customer Type 3Q15 ($m) Vs 3Q14 ($m)* % Growth Comments Solid trend, 3Q14 Instant Play Performance 40 +0 +1% very strong Instant Play Brand 13 +5 +63% Strong growth Non-Instant Play 11 -8 -39% Weak Performance Non-Instant Play Brand 31 -1 -3% Stable Total Mo
Slide 12: Mobile Advertising - 3rd Party Publishers: 3Q14 vs 3Q15
Mobile Advertising - 3rd Party Publishers Much broader revenue distribution in 3Q15 vs 3Q14 3Q14 ($m) 3Q15 ($m) Top 2 customers All other customers Top 2 customers All other customers $ 9,6 $18,7 $68,2 $ 86,6 Revenue up 27% from all other customers
Slide 13: Revenue: Mobile Advertising - 3rd Party Publishers
Revenue: Mobile Advertising - 3rd Party Publishers Mobile Advertising - 3rd Party Publishers revenue in line with expectations Revenue growth was driven primarily by increased AdColony Instant Play revenue from premium and performance advertisers and “app- install” driven spend from primarily the mo
Slide 14: Mobile Advertising - 3rd Party Publishers: Video
Mobile Advertising - 3rd Party Publishers Video Accounted for 57% of total Mobile Advertising (3rd PP) in 3Q15 Video vs non-Video ($m) Brand vs. Performance $ 120 100% $ 100 80% 47% 45% 48% 49% 54% $ 80 52 40 55 60% 54 $ 60 48 40% $ 40 53% 55% 52% 51% 47 51 20% 46% $ 20 35 39 41 $0 0% 3Q14 4Q14 1Q15
Slide 15: Revenue: Consumer - Owned and Operated Properties
Revenue: Consumer - Owned and Operated Properties Consumer- Owned and Operated Properties revenue in line with expectations Customer Type 3Q15 ($m) Vs 3Q14 ($m) % Growth Comments Mobile Browser 9.8 8.4 +18% Strong Strong performance Apps and Games* 7.4 0.4 +1813% from Bemobi Performance and Privacy
Slide 16: Revenue: Tech Licensing
Revenue: Tech Licensing Tech Licensing revenue in line with expectations Revenue ($m) $25 $20 $15 $10 22 21 16 18 16 $5 $0 3Q14 4Q14 1Q15 2Q15 3Q15
Slide 17: Cost
COST QUARTERLY REPORT THIRD QUARTER 2015
Slide 18: OPEX Development ($m)
OPEX Development ($m) $ 160 One-time cost 3Q15 vs. Cost line Comments 3Q14 $ 140 2 1 Higher headcount, offset by lower Publisher and Payroll -4% 4 bonuses and FX tailwind $ 120 revenue share cost Driven by growth in Mobile 54 59 Advertising - 3rd Party Publishers 52 Publisher and $ 100 44 46 Other O
Slide 19: Outlook
OUTLOOK QUARTERLY REPORT THIRD QUARTER 2015
Slide 20: 4Q15 Guidance
4Q15 Guidance Metric 4Q15 Guidance Revenue* $168 - 178m Adj. EBITDA** $29 - 33m * Assumes FX rates as of November 10th 2015 **Adj EBITDA, excluding stock-based compensation expenses and one-time costs
Slide 21: 4Q15 Guidance Overview
4Q15 Guidance Overview Vs. 3Q15* Comments (Outlook) Strong growth from both Brand and Performance Mobile Advertising - 3rd Party Revenue Publishers Up businesses Consumer (Owned and Solid search and mobile advertising revenue growth. Up Operated Properties) Includes a full quarter of Bemobi revenue
Slide 22: Context for 4Q15 – Mobile Advertising – 3rd PP
Context for 4Q15 – Mobile Advertising – 3rd PP Daily media sales trending, US Brand pipeline and sales force US Brand – Q4/15 Pipeline Growth US Brand - Active Sellers by Month Millions 30 29 $45 $39 28 27 $40 $37 26 $35 26 25 $35 24 24 $31 24 23 23 $30 $29 $27 22 21 $25 20 20 $22 19 20 $20 $18 $17
Slide 23: 2015 Guidance
2015 Guidance Old*** Updated 2015 Metric 2015 Guidance Guidance* Revenue $600-618m $590-600m Adj. EBITDA** $108-118m $104-108m * Assumes FX rates as of November 10th 2015 **Adj EBITDA, excluding stock-based compensation expenses and one-time costs ***Guidance given at 2Q15 presentation August 12th 2
Slide 24: Bridging 2015 Midpoint Guidance
Bridging 2015 Midpoint Guidance $620 Item Revenue* Adj. $615 EBITDA* $610 3Q15 Performance -$1m $605 $600 FX Impact 4Q15 -$2m $595 Revenue recognition of -$4m -$6m $590 Japanese license deal $585 Lower Tech Licensing -$2m $580 revenue Delay in advertising -$5m -$1m execution (International) Total -$
Slide 25: Operational Update
OPERATIONAL UPDATE - Browser Products - Performance & Privacy - Apps & Games
Slide 26: Browser Products
BROWSER PRODUCTS Opera
Slide 27: Android: 142M MAU in end of 3Q
Android: 142M MAU in end of 3Q Strong October with 144M MAUs 160 142 140 +23% 116 120 YoY 100 Millions 80 60 +26M 40 users 20 YoY - Q3-14 Q3-15
Slide 28: Opera Mini
Product Updates Opera Mini ▪ New Turbo Technology ▪ Improved Download Manager ▪ Improved Tab Switcher
Slide 29: Opera Mini Monetization Roadmap
Opera Mini Monetization Roadmap ▪ Better search experience ▪ More speed dials and adapted to small & large phone types ▪ More valuable ad formats, including video being added
Slide 30: Opera for Android
Product Updates Opera for Android ▪ Installable web apps give app-like look-and-feel to web sites ▪ Integrated Video compression ▪ Enjoying strong growth
Slide 31: Opera for Android pre-installed on Parrot's system for Porsche
Opera for Android will be pre-installed on Parrot's Rear Seat Entertainment system for Porsche
Slide 32: Desktop 56M MAU in Q3
Desktop 56M MAU in Q3 60 56 51 50 +10% 40 YoY Millions 30 20 +5M 10 users - YoY Q3-14 Q3-15
Slide 33: Performance & Privacy
PERFORMANCE & PRIVACY Opera
Slide 34: Opera Max
Product Updates Opera Max ▪ Video Compression ▪ Audio Compression ▪ Most advanced Media Optimization Cloud technology in the market
Slide 35: Why is Max important?
Why is Max important? ▪ Max allows us to stay in touch with our users across any app or browser. ▪ Max creates a platform for rich audience analytics, targeted recommendations and contextual cross promotion of apps & services. ▪ Strong Global Relevance
Slide 36: Cross Promo user flow from Mini to Max
Cross Promo user flow from Mini to Max
Slide 37: Max plus Samsung
Max plus Samsung Tight integration onto the Operating System #1 Sales record for first month for Samsung India
Slide 38: Max OEM Partners: 14
Max OEM Partners: 14 oD \obustar f ly @Prestigio PSnMsuNGed ie Tecna OPPO GWisromex EVERCOSS ‘SYMPHONY O Opera
Slide 39: 3 Million Monthly Active Users
3 MILLION MONTHLY ACTIVE USERS
Slide 40: SurfEasy Product Update
Surf Easy Product Update Deal with Intersections Inc SurfEasy extension for Desktop browser Best ranked VPN Opera branded VPN to be launched
Slide 41: Apps & Games
APPS & GAMES Opera
Slide 42: Android dominated the smartphone world
Android dominated the smartphone world During the next two years, 1.4 billion Android devices will be shipped. Source: iSupply Statista 2014
Slide 43: Emerging Markets: Monetization Gaps
Emerging Markets: Monetization Gaps Despite the download leadership no emerging markets appears within the top 10 countries in revenues for apps.
Slide 44: Featurephone users migrating to smartphones and the app value chain
As featurephone users migrate to Smartphones, mobile carriers are being disintermediated from the new App value chain Featurephone Mobile Walled Smartphone App Stores Garden (Operator Deck) 50% 70% 0% 30% 50% 0%
Slide 45: Our Opportunity To Innovate
Our Opportunity To Innovate Android Billing Publisher Alternative Growth Issues Montetization Model
Slide 46: Bemobi Apps Club - The Netflix for Apps
Bemobi Apps Club- The Netflix for Apps Free Paid Subscription Paid Ad based “Unlimited usage” Transactional Music Video Apps
Slide 47: The Apps Club
The Apps Club • Top premium paid apps, complete without ads 15 • ★★★★ stars and above apps and games only DAYS FREE • No need for credit card • More value for the money - over $2000 of paid apps for only ~$1-2/ month • No need for a data plan to download new apps • 15 day period of free trial • Comp
Slide 48: Initial momentum
Initial momentum ▪ Live in Latin America ▪ Excellent publisher feedback and monetization
Slide 49: Our Eco-System
Our Eco-System Monetization channels User fees / 3rd Party Advertising Partners subscriptions Distribution Browser and Content Apps News / Bemobi Browsers App Store Project 1 Project 2 Discover Apps Club … Performance and Privacy Apps Opera Max Web Pass App Pass Surfeasy Project 1 Project 2 …
Slide 50: An extensive portfolio will help accelerate our growth curve
An extensive portfolio will help us accelerate our growth curve even more Distribution drivers • Cross-promotion: Using the browser to promote new apps • Organic downloads: Driven by our strong brand • OEM distribution Users • Operator distribution • Paid online distribution Time • Partnerships with
Slide 51: Our Google Play Position
Our Google Play Position ▪ Top 25 ranked Google Play publisher ▪ High ranking in core markets ▪ All apps rated 4.3 with ‘Top Developer Badge’
Slide 52: Tech Licensing
TECH LICENSING Opera
Slide 53: Rocket Optimizer
Rocket Optimizer ▪ Selected by Tier 1 Operator Group in EMEA ▪ First country targeted to go live in Q1 2016 ▪ 3 additional countries to go live during 2016
Slide 54: Opera Device SDK: Strategic deals extension
Opera Device SDK: Strategic deals extension for multi-million units
Slide 55: Opera Mediaworks Q3 2015
OPERA MEDIAWORKS Q3 2015 Opera
Slide 56: Executive Summary
Executive Summary ▪ Focus was on overcoming execution issues ▪ July & August was soft but strong finish in September ▪ Great momentum and pipeline into Q4 ▪ AdColony Performance, and APAC delivered better than plan ▪ Publisher (Supply) and US Brand were on plan ▪ EMEA and LATAM facing headwinds due
Slide 57: Executional & Industry dynamics
Executional & Industry dynamics ▪ Brand sales transition – team restructure resulted in a slower than anticipated start to 2015 brand sales; despite this transition we recognized and have overcome execution issues ▪ Slow growth for video programmatic - technology & infrastructure in place but 3rd pa
Slide 58: 11% YOY Growth in Revenue
11% YOY Growth in Revenue Opera Mediaworks Revenue Growth $98,0 $96,0 $94,0 $92,0 $90,0 $88,0 $86,0 $84,0 $82,0 $80,0 Q3 2014 Q3 2015
Slide 59: 47% YOY Growth in Platform Reach
47% YOY Growth in Platform Reach Opera Mediaworks Platform Reach (MAUs, Millions) 1 200 000 000 1.12B 1 000 000 000 800 000 000 770M 600 000 000 400 000 000 200 000 000 0 Q3 2014 Q3 2015
Slide 60: 17% growth in Publishers and Impressions under Management
17% growth in Publishers and 17% Impressions under Management Billions Ad Impressions under Apps & Sites 240 22 000 Management 220 20 000 200 18 000 180 16 000 160 14 000 140 12 000 120 10 000 100 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15
Slide 61: New brands spend on mobile in Q3
New brands spend on mobile in Q3
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Slide 63: Revenue by Geography
Revenue by Geography International Revenues LATAM have grown to 38 % in APAC 5% 8% Q3’15 EMEA 25% NA 62%
Slide 64: Performance is now 49% of the business
Performance is now 49% of the business Performance 47% 45% 48% 49% 54% Brand 53% 55% 52% 51% 46% Q3'14 Q4'14 Q1'15 Q2'15 Q3'15
Slide 65: Highest Quality Publisher Growth
Highest Quality Publisher Growth New publisher relationships solidified in Q3 gives Opera Mediaworks more access and reach in the most popular apps worldwide
Slide 66: Programmatic as a % of SSP Impressions continues to grow
Programmatic as a % of SSP (supply- side) Impressions continues to grow 35% 30% 25% 20% 15% 10% 5% 0% Q1'15 Q2'15 Q3'15
Slide 67: Native Video Fund comScore Results
Native Video Fund comScore Results comScore findings show OMW’s creative best practices for native mobile video yields superior results.
Slide 68: Revenue shift towards video continues
Revenue shift towards video continues Ad format mix shift favors video and video is the key driver of revenue growth. Q3 2014 vs. Q3 2015 YOY Share of OMW Revenue, Video vs. Non-Video Non-Video Video 46% 57% 54% 43% Q3 2014 Q3 2015
Slide 69: Looking to the Future
Looking to the Future ▪ Brand: Record pipeline – October was the highest month in our history ▪ Performance: Achieving record revenue days ▪ Blend of Brand & Performance = strong monetization for publishers ▪ Our programmatic business is scaling and our programmatic Video offering is expected to fol
Slide 70: A New & Important Partnership
A New & Important Partnership ▪ In Q3, we entered into a new agreement with AT&T ▪ Working with AT&T on a cross-screen addressable advertising trial that would expand addressable advertising to additional devices ▪ Largest addressable TV audience in the US ▪ Intersection of 12M homes and 285M mobile
Slide 71: AT&T Perspective
AT&T Perspective “AT&T AdWorks’ ability to deliver household specific TV advertising based on interests and demographics to a rapidly growing base of more than 12 million households, combined with Opera Mediaworks’ mobile advertising, will be a game-changer for advertisers and consumers” Rick Welday
Slide 72: Conclusions
Conclusions ▪ We have overcome our execution issues ▪ We have scaled our international businesses – now 38% of revenue ▪ We successfully diversified our business across brand and performance ▪ Our programmatic offerings are scaling ▪ Q4 will be our best quarter ever
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