Slide 1: 4Q 2016
4Q 2016
Slide 2: Agenda
Agenda • Executive Summary • Financials • Operations • Mobile Advertising • Closing 2
Slide 3: Financial Highlights 4Q16 (Continued Operations)
Financial Highlights 4Q16 (Continued Operations) Financial metric 4Q16 ($m) 4Q15 ($m) Total revenue 143.9 155.6 Adj. EBITDA* 17.6 21.7 • Consumer and TV deal both closed in the quarter for combined gross proceeds of $655 million • Cash returned to shareholders through dividend and share buybacks • C
Slide 4: Consumer + TV Transactions closed
Consumer + TV Transactions closed • $655 million Total Gross proceeds • $185 million repayment of debt ($100 million remaining) • $260 million dividend (15 nok per share) • $7 million of shares bought back (1.4m shares) • $120m net cash position end of 2016 4
Slide 5: Where we are now
Where we are now Opera ASA adColony Bemobi SurfEasy Skyfire Focus • Revenue growth • Increase margins • Cost control Drive shareholder value • Unique & relevant products • Scalable businesses 5
Slide 6: Agenda
Agenda • Executive Summary • Financials • Operations • Mobile Advertising • Closing 6
Slide 7: A note from our lawyers: Disclaimer
A note from our lawyers Disclaimer This presentation contains, and is i.a. based on, forward-looking statements regarding Opera Software ASA and its subsidiaries. These statements are based on various assumptions made by Opera Software ASA, which are beyond its control and which involve known and un
Slide 8: Financial Highlights 4Q16
Financial Highlights 4Q16 Financial metric (Continued 4Q16 ($m) 4Q15 ($m) Guidance*** operations) Total revenue 143.9 155.6 <$147.2 Adj. EBITDA* 17.6 21.7 <$13.5 Normalized EBIT** 9.2 17.9 EBIT (17.4) 4.8 OCF 9.9 21.4 *Adj EBIT/EBITDA, excluding stock-based compensation expenses and one-time costs *
Slide 9: Revenue: Segments 4Q16
Revenue: Segments 4Q16 Segment 4Q16 ($m) Change vs 4Q15 Comments In line with Mobile Advertising 128.3 -12% expectations In line with Apps & Games 12.8 +45% expectations In line with Performance & Privacy 3.2 +124% expectations 9
Slide 10: Financial Highlights: 4Q15 – 4Q16
Financial Highlights: 4Q15 – 4Q16 Revenue ($m) Adjusted EBITDA* ($m) $ 25 Mobile Advertising Apps & Games Performance & Privacy $ 180 $ 20 $ 160 1 9 $ 140 3 2 13 2 2 14 $ 15 $ 120 10 12 $ 100 22 $ 10 $ 80 18 145 $ 60 122 128 117 114 12 $ 40 $5 10 10 $ 20 $0 $0 4Q15 1Q16 2Q16 3Q16 4Q16 4Q15 1Q16 2Q16
Slide 11: 4Q16 Segment P&L
4Q16 Segment P&L Segment ($ Mobile Apps & Performance Corporate Total* million) Advertising Games & Privacy Revenue 128.3 12.8 3.2 0 143.9 Gross Profit 48.7 8.4 3.0 0 60.2 Adj. EBITDA 14.0 6.4 (0.8) (2.0) 17.6 EBITDA 11.8 6.3 (0.7) (4.5) 12.9 Normalized** 7.1 5.9 (0.8) (3.1) 9.2 EBIT EBIT (13.8) 0.4
Slide 12: Cash position
Cash position Gross cash 30.09.2016 $95m Operating Cash Flow Continued Operations $10m Operating Cash Flow Discontinued Operations -$28m Gross proceeds from transactions $655m Adjustments, transaction fees, insurance -$14m Balance sheet adjustments (net cash on balance sheet) -$22m Earn out payments
Slide 13: Earn-out overview
Earn-out overview Limited cash impact 13
Slide 14: Impairment charges
Impairment charges Impairment (Numbers in $ million) loss Goodwill in the non-US part of the Mobile Advertising segmen' 14.5 Intangible assets in the non-US part of the Mobile Advertising segment 1.4 Goodwill in the Apps & Games segment (non-Bemobi) 3.1 Total 19.0 14
Slide 15: OPEX Development ($m)
OPEX Development ($m) $ 180 One-time cost Cost line 4Q16 vs. 4Q15* $ 160 Publisher and $ 140 revenue share Payroll -2% cost $ 120 Other OPEX Publisher and revenue 91 -8% $ 100 84 share cost $ 80 Depreciation Other OPEX 0% $ 60 Depreciation & 14 14 6% Amortization $ 40 Stock-based 12 13 compensation
Slide 16: 2016 Review
2016 Review Segment ($ Mobile Apps & Performance Corporate Total* million) Advertising Games & Privacy Revenue 484.2 48.2 9.2 0 536.7 Gross Profit 185.8 31.6 8.3 0 225.6 Adj. EBITDA 40.4 22.5 (7.2) (6.5) 49.1 EBITDA 28.3 22.0 (7.7) (13.0) 29.7 Normalized** 23.3 18.9 (9.0) (7.6) 25.5 EBIT EBIT (16.4)
Slide 17: 2017 Outlook
2017 Outlook • AdColony • Apps & • Performance & Games Privacy • Revenue growth • Solid revenue • Revenue growth growth • Soft 1H, YoY growth from 3Q17 with • Next growth leg to • Adj. EBITDA impact from product come from around international breakeven as launches markets • Gross margins we invest f
Slide 18: Outlook for 2017
Outlook for 2017 Metric 2017 Outlook Revenue* $550 - 650m Adj. EBITDA** $50 - 70m * Assumes FX rates as of February 27th 2017 18 **Adj EBITDA, excluding stock-based compensation expenses and one-time costs
Slide 19: Capital Markets Day March 30th 2017 Oslo, Norway
Capital Markets Day March 30th 2017 Oslo, Norway Sign up: http://coxit.net/opera/ 19
Slide 20: Agenda
Agenda • Executive Summary • Financials • Operations • Mobile Advertising • Closing 20
Slide 21: Executive Summary – Core Opera
Executive Summary – Core Opera Segment Revenue 2016 2016 Adj. EBITDA 2017 strategy • Product MOBILE launches $484.2m $40.4m ADVERTISING • P r o ve scalability in 2H • Cement Latin American APPS & GAMES $48.2m $22.5m market • International growth • R e ve n u e g r o w t h PERFORMANCE $9.2m ($7.2m) a
Slide 22: Mobile Advertising
Mobile Advertising Revenue Growth 4Q Highlights Focus Areas • Market – Fewer global app launches (Performance); Brand advertising softness in Q4 • Integration/Apollo – Largely underestimated the time/costs of • New SDK (Aurora) and Core re-organization and tech integration work • Apollo 7-11 product
Slide 23: Mobile Advertising
Mobile Advertising 2016 2017 • 12 different companies, all • 1 Company (adColony) acquired • 1 Company culture, earn-outs • 12 different management ending teams and cultures • 1 Platform/SDK incentiviced by their own earn- • Employee compensation outs linked to adColony revenue • 5 Different platfor
Slide 24: Apps & Games
Apps & Games Revenue Growth 4Q Highlights Focus Areas • Very strong revenue growth • International growth (just ~12% of revenue today is outside Latam) 45% • Adj. EBITDA margin of 50% • Leverage Operator relationships • 6 Operator launces in 4Q16 24
Slide 25: One year after Bemobi’s acquisition, globalization of AppsClub is at full speed
One year after Bemobi’s acquisition, globalization of Opera’s AppsClub is at full speed • 13.9M subscribers in Latam and 3.1 M AppsClub subscribers in RoW (12% QoQ growth) • $12.8 million in 4Q16 Revenue (total Apps & Games) • New launches during 4Q16 • Reliance – India - Life – Belarus - Megafon –
Slide 26: Success in Brazil => Now Global Footprint
Success in Brazil => Now Global Footprint • 2017 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 (subscriber acquisition and monetization) across regions • NDNC Capti
Slide 27: Performance & Privacy
Performance & Privacy Revenue Growth 4Q Highlights Focus Areas • SurfEasy growth continues • Surfeasy to continue growth 124% • Simplifing Skyfire portfolio (Rocket), • Lean organization and single product $5m+ in annulized cost cuts in creates foundation for profitability executed in Skyfire organi
Slide 28: Growth in Rocket Platform Business
Growth in Rocket Platform Business What Rocket does: • Reduce bandwidth and Improves user experience by reducing start time and stall time • Cloud based technology, enables rapid deployment and scale in / scale out • Handle encrypted data and enforces Operator policies measures Current development:
Slide 29: SurfEasy
SurfEasy VPN update • SurfEasy Direct and Partners paying subscriber base grew 32% during Q4. • Strong growth came from both direct to consumer business as well as our partners platform which powers VPN’s for third party brands. • During Q4 we developed new products for one of our partners which we
Slide 30: Agenda
Agenda • Executive Summary • Financials • Operations • Mobile Advertising • Closing 30
Slide 31: AdColony
(/ ADCOLONY — a
Slide 32: Agenda
Agenda • Full Year 2016 Recap • Q4 2016 Results • 2017 Trending / Q1 Progress 32
Slide 33: Full Year 2016 Recap
Full Year 2016 Recap
Slide 34: Summary of Results – Full Year 2016
Summary of Results – Full Year 2016 • Full year 2016 revenue: $484.2MM • Growth vs. FY 2015: +15.3% actual • Brand: +10.7% annual growth vs. full year 2015. Driven by strong 1st 9 months (+16.5%) but offset by soft Q4’16 (-8.1% vs. Q4’15) • Performance: +20.6% growth vs. full year 2015. Driven by st
Slide 35: Summary of Results – Full Year 2016
Summary of Results – Full Year 2016 • The EBITDA miss for the year, and Q4, was driven by two key factors: 1. Gross Margin - Decline from 43% to 38% Y-Y as the business shifted away from older business models (standard display, SSP) towards transparent, programmatic and longer term sustainable busin
Slide 36: Largest ad SDK footprint in Top 1000, 2nd only to Google
Largest ad SDK footprint in Top 1000, 2nd only to Google Continue to be ahead of key independents & platforms in the Top 1,000 in 2016; also +87% increase in apps actively using the AdColony SDK vs. 2015 1265 1200 900 849 594 600 416 368 326 324 319 313 300 268 197 200 209 212 171 158 155 165 158 15
Slide 37: 47.9% YOY Growth – Platform Reach
47.9% YOY Growth – Platform Reach Global Reach (in Millions) 1800 1.58B 1600 1400 1200 1.068B 1000 800 Q4 2015 Q4 2016 37
Slide 38: Annual Revenue Growth 2011-2016
Annual Revenue Growth 2011-2016 $500,0 113.95% CAGR $400,0 $300,0 $200,0 $100,0 $- 2011 2012 2013 2014 2015 2016 38
Slide 39: Industry Recognition
Industry Recognition Accolades for creativity + results 76 Awards for Mobile Creative in 2016 Consistently Top-Ranked For Performance Global recognition with world’s biggest brands #2 to Facebook in driving ROI & performance 39
Slide 40: 2016 Integration & Migration to One Platform
2016 Integration & Migration to One Platform • 2016 was a year of balancing growth with our long term vision to align all our acquisitions under one strategy, one aligned leadership team & one platform • While we achieved revenue growth across the company, including over $300M in Video revenues (Per
Slide 41: Q4 2016 Results
Q4 2016 Results
Slide 42: Q4 2016: Detailed results
Q4 2016: Detailed results • Q4 2016 revenue: $128.3MM (-12% vs. Q4’15) but grew +6% over Q3’16 • Performance generated $53.4M in revenues, down 16.5% vs. prior year • Fewer AAA global launches vs. 2015, with no new titles entering the top 10 of the App Store • Delays in Core™ v2 and LTV optimization
Slide 43: Performance Advertising
Performance Advertising Summary: Q4 2016 Performance revenues = $53.4M (-16.5% vs Q4’15) Highlights/Key Stats Q4 2016 Investments in AI (Core™), though activated late in quarter, reversed trend of declining install rates Growth in # of advertisers & campaigns • Performance advertisers +33% with grow
Slide 44: Brand Advertising
Brand Advertising Q4 2016 Brand revenues = $74.9M (-8% vs Q4’15) Highlights/Key Stats Q4 2016 2X+ growth in Programmatic, now on $50M+ annual run rate. U.S. Private Marketplace revenue now over $2M per quarter which represents +450% vs. Q4’15; Number of live deals +1,000% Brand Performance continues
Slide 45: 2017 Trending
2017 Trending
Slide 46: Core Improvements
Core™ Improvements Improvements to AI optimization engine/machine learning algorithms showed ~40% improvement in publisher eCPMs upon rollout & testing (ongoing) which started in Nov. 2016 Publisher eCPMs Q4’16 +40% eCPM eCPMs in USD 46
Slide 47: Next Generation SDK
Next Generation SDK Driving adoption of 3.0 SDK to enable next-generation ad formats (Vertical Video, Interactive Video, Playables, Next Gen Interstitials) 47
Slide 48: Apollo Launch Phases
Apollo Launch Phases “One Platform” Project Revenue-Generating Components Automation/Operational Efficiencies Apollo VII Apollo VIII Apollo IX Apollo X Apollo XI Core™-based bidding Competing for every Dynamic End Cards as All demand trafficking Single SDK for all for Performance impression, bidding
Slide 49: 2016 Takeaways
2016 Takeaways • We delivered another record revenue year - our 6th consecutive year of growth and today are among the largest independent advertising platforms in the world as measured by revenues & profitability • Our Advertising SDK Penetration in the top 1000 apps is 2nd only to Google worldwide
Slide 50: Agenda
Agenda • Executive Summary • Financials • Advertising • Consumer • Closing 50
Slide 51: Q&A
Q&A 51