Slide 1: Opera Software Third quarter report 2014
OPERA SOFTWARE Quarterly report Third quarter report 2014
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 and more than 130 mobile operators to deliver the very best possible internet experience to their subscriber base. Opera also helps publishers monet
Slide 3: 3Q 2014 Financial Highlights
3Q 2014 Financial Highlights Financial metric 3Q14 ($m) 3Q13 ($m) Revenue Total revenue 138.8 75.5 Profitability Adj. EBITDA* 33.9 22.5 • Revenue growth of 84% • Record revenue and profit • Strong revenue growth from Mobile Publishers and Advertisers and Mobile Consumers *Non-IFRS EBITDA excludes st
Slide 4: Financial Review
FINANCIAL REVIEW Erik Carson Harrell CFO / CSO, Opera Software
Slide 5: 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 6: Financial Highlights 3Q14
Financial Highlights 3Q14 Financial metric 3Q14 ($m) 3Q13 ($m) Revenue Total revenue 138.8 75.5 Profitability Adj. EBITDA* 33.9 22.5 Operating Cash Flow 18.2 20.1 Cash generation Free Cash Flow** 15.4 15.8 *Non-IFRS EBITDA excludes stock-based compensation expenses, extraordinary/one-time costs and
Slide 7: 3Q14 Actuals versus Guidance
3Q14 Actuals versus Guidance 3Q 2014 Actuals 3Q 2014 Midpoint Guidance* Revenue $138.8m $138.5m Adj EBITDA** $33.9m $32.5m *Provided at 2Q14 Presentation (August 21st, 2014) ** Non-IFRS EBITDA excludes stock-based compensation expenses, extraordinary/one-time costs and acquisition related costs.
Slide 8: 3Q14 Financial Review
3Q14 Financial Review $m 3Q14 3Q13 Q on Q Revenue 138.8 75.5 84% Cost of Goods sold- 43.9 14.9 194% Payroll and related expenses - 39.1 25.9 51% Stock-based compensation expenses- 4.5 1.0 330% Depreciation and amortization - 10.0 5.8 71% Other operating expenses - 21.9 12.1 80% Total expenses = 119.
Slide 9: Financial Highlights: 3Q13 – 3Q14
Financial Highlights: 3Q13 – 3Q14 Revenue ($m) Adjusted EBITDA* ($m) $ 140 $ 35 $ 120 $ 30 $ 100 $ 25 $ 80 $ 20 $ 60 $ 15 $ 40 $ 10 $ 20 $5 $0 $0 3Q13 4Q13 1Q14 2Q14 3Q14 3Q13 4Q13 1Q14 2Q14 3Q14 * Non-IFRS EBITDA excludes stock-based compensation expenses, extraordinary/one-time costs and acquisiti
Slide 10: 1+ billion mobile audience reach
1+ billion mobile audience reach We empower the mobile internet economy Opera websites and applications 270+ 800+ Mobile publishers million user million user and advertisers audience audience Search, operators and developers Advertisers Media optimization capabilities
Slide 11: Revenue: Customer Type 3Q14
Revenue: Customer Type 3Q14 Overall revenue in line with expectations Customer Type Mobile Consumers – Opera Owned and Operated Properties In line with expectations Operators In line with expectations Mobile Publishers & Advertisers – Opera Publisher Partner Members In line with expectations Desktop
Slide 12: Revenue: Mobile Consumers
Revenue: Mobile Consumers Opera Owned and Operated Properties 3Q14 Mobile Consumer revenue in line with expectations Revenue driven primarily by mobile advertising and licensing revenue 271M users by end of 3Q14, up 4% compared to end of 3Q13 41.2b ad requests from owned & operated properties in 3Q1
Slide 13: Revenue: Operators 3Q14
Revenue: Operators 3Q14 Operator revenue in line with expectations Cloud based Operator Data/License flat versus 3Q13 at $16m Key license revenue components: Opera Mini Operator co-brands and Rocket Optimizer Overall revenue growth: Down 1% versus 3Q13 52% Operator active user growth September 2014
Slide 14: Revenue: Mobile Publishers & Advertisers
Revenue: Mobile Publishers & Advertisers Opera Publisher Partner Members 3Q14 Mobile Publisher & Advertiser revenue in line with expectations Revenue growth driven by both premium advertisers, including CVS, Comcast, JPMorgan Chase, Nestlé, Nissan, Starbucks, T-Mobile and Walmart, as well as perform
Slide 15: Revenue: Desktop Consumers 3Q14
Revenue: Desktop Consumers 3Q14 Desktop revenue in line with expectations Solid ARPU with lower search revenue offset by higher partnership driven revenue Desktop users at 51 million, flat versus 3Q13 Overall revenue growth: Flat versus 3Q13 Monthly Desktop users* (last month of quarter) Desktop rev
Slide 16: Revenue: Device OEMs 3Q14
Revenue: Device OEMs 3Q14 Device OEM revenue in line with expectations Revenue driven by Connected TV customers License revenue: ~80% of revenue Overall revenue growth: 17% versus 3Q13 $m Device OEM revenue* $9 $8 $7 $6 $5 $4 8 7 $3 5 $2 4 3 $1 $0 3Q13 4Q13 1Q14 2Q14 3Q14 * Unaudited
Slide 17: OPEX Development ($m)
OPEX Development ($m) One-time extraordinary cost Cost line 3Q14 vs. 3Q13 Comments Cost of goods sold Other OPEX Payroll 51% Higher headcount Depreciation Cost of Goods 194% Driven by 193% growth in Mobile Stock-based compensation expenses Sold Publisher and Advertiser revenue Payroll $ 140 COGS or
Slide 18: Cash Flow 3Q14 ($m)
Cash Flow 3Q14 ($m) $ 60 $ 40 $ 20 $0 -$ 20 -$ 40 -$ 60 -$ 80 -$ 100
Slide 19: 4Q14 Guidance
4Q14 Guidance Metric 4Q14 Guidance Revenue* $159-169m Adj EBITDA*** $36-40m * Assumes currency remainder of 4Q14 (NOK 6.5 /USD, USD 1.3 /EUR) ** Non-IFRS EBITDA excludes stock-based compensation expenses, extraordinary/one-time costs and acquisition related costs.
Slide 20: 4Q14 Guidance Overview
4Q14 Guidance Overview Vs. 3Q14* Comments Revenue Operators Down Solid cloud based license/data revenue Mobile Consumers Up Smartphone user growth and growing ARPU Mobile Publishers & Up Strong growth in a seasonally strong quarter and with a full Advertisers quarter with revenue from AdColony Deskt
Slide 21: 2014 Guidance
2014 Guidance Metric 2014 Guidance (prior***) 2014 Guidance (new) Revenue* $480-500m $485-495m Adj EBITDA** $117-124m $120-124m * Assumes currency remainder of 2014 (NOK 6.5 /USD, USD 1.3 /EUR) ** Non-IFRS EBITDA excludes stock-based compensation expenses, extraordinary/one-time costs and acquisitio
Slide 22: Slide 22
Slide 23: Operational Update
OPERATIONAL UPDATE Lars Boilesen CEO, Opera Software
Slide 24: Highlights from the third quarter 2014
Opera Software Highlights from the third quarter 2014 Consumer products Monetization capabilities now arriving in our products Renewed contract with a major TV manufacturer Operators Opera Web Pass platform getting momentum Good progress on OEM strategy Mobile Publishers & Advertisers AdColony acqui
Slide 25: Consumer Products
CONSUMER PRODUCTS Quarterly report Third quarter report 2014
Slide 26: Opera Mini
@® Opera Mini New Opera Mini for iOS with video boost
Slide 27: Why mobile video is important
Why mobile video is important Will represent 66% of global mobile data traffic by 2017 Our goal is to minimize video buffering without any quality loss A unique value proposition for users to choose Opera Source: http://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/white_pap
Slide 28: Opera Mini for Windows Phone
Opera Mini for Windows Phone Established presence on a new and growing mobile platform
Slide 29: Opera Max Getting momentum
Opera Max Getting momentum More Android users can now extend their mobile data plan as Opera Max rolls out in 24 countries in Latin America. www.opera.com/max
Slide 30: Opera Max Partnership with Samsung
Opera Max Partnership with Samsung Opera Max was launched with Samsung in South Africa at their spectacular Galaxy Note 4 Launch in Cape Town. Opera Max will be preloaded on Samsung phones in Africa in 2015. www.opera.com/max
Slide 31: Opera Max Contract signed with MediaTek
Opera Max Contract signed with MediaTek MediaTek’s upcoming 64-bit smartphone processors will come with Opera Max built-in. By embedding Opera Max into the chipset, consumers don’t need to download it from the Google Play Store. www.opera.com/max
Slide 32: Smallest Mini Ever
Smallest Mini Ever Opera Mini debuts on Samsung Gear S Browse the web from your wrist
Slide 33: Opera for computers
Opera for computers Stable user and revenue trends with high retention rate New features and improvements are well received among users
Slide 34: Reached 116 million Android users
Reached 116 million Android users Up 54% versus the end of Q3 2013 120,000,000 110,000,000 100,000,000 90,000,000 80,000,000 70,000,000 60,000,000
Slide 35: Top Android growth markets
Top Android growth markets Smartphone Sales In 2014 Will Be Driven By New Users In Emerging Markets 300 250 Millions Of Smartphones oO Source: Mediacells via The Guardian ™ Sales To New Smartphone Users In 2014 | smartphone Upgrades In 2014
Slide 36: cherry mobile
an @Le cherry mobile HCL SONY make.believe NOKIA TECNO Mobile INTCX Karbonr eB POSITIVO spice mobustar GiQNEE SMART PHONE ALCATEL onetouch. SYMPHONY new experience CeukKon rule the change EVERCOSS GO INTERNATIONAL, = LAWA @smartfren MEDIATEK
Slide 37: Sony renews contract with Opera
Sony renews contract with Opera Long term agreement signed to ship Opera Device SDK, TV Store and TV Browser for all Sony Connected TV devices
Slide 38: Monetization capabilities now arriving in our products
Monetization capabilities now arriving in our products Opera Mediaworks ad technology now implemented in Opera TV Opera TV staying ahead of the game with 3rd edition of Chromium/Blink web engine
Slide 39: Operators
OPERATORS Quarterly report Third quarter report 2014
Slide 40: Opera Web Pass getting momentum
Opera Web Pass getting momentum 35 MILLION Web passes sold since launch Enabling easy internet access around the world with our partners:
Slide 41: Connecting to the internet is still a barrier for many
Connecting to the internet is still a barrier for many The old way. 16 steps plus. The new way. 3 steps.
Slide 42: Opera Sponsored Web Pass
Opera Sponsored Web Pass Acquire new subscribers with sponsored mobile internet
Slide 43: Getting Myanmar online
Getting Myanmar online Connect the unconnected Launch of co-branded Opera Mini browser with Telenor will help bring internet to the masses in Myanmar.
Slide 44: Rocket Optimizer
Rocket Optimizer Advanced stage with leading infrastructure OEM for integration of Rocket in a combined platform offering. Rocket Optimizer now live in two major operator networks. Several tier-1 operators signed up for live network trial in Q4. Strong pipeline growth in Asia. Audio Optimization int
Slide 45: Opera Mobile Store
Opera Mobile Store Launched subscription-based model with XL, one of the largest operators in Indonesia More than 300,000 applications available
Slide 46: Mobile Publishers & Advertisers
MOBILE PUBLISHERS & ADVERTISERS Quarterly report Third quarter report 2014
Slide 47: Insights from Opera Mediaworks
Insights from Opera Mediaworks 90% of the top AD AGE GLOBAL ADVERTISERS Advertisers include... 3 o> sky NORDSTROM ' a oe Catt eb! E+ Mobiles (Cay) OVER 800M UNIQUE USERS OVER 17,500 SITES AND APPLICATIONS Publishers include... epicurious cphototuciét «PANDORA = CBS@®
Slide 48: Top countries
Top 20 countries United States India Indonesia Mexico Russian Federation United Kingdom Brazil South Africa Canada Italy Australia Nigeria Argentina Bangladesh = United States Japan Asia Pacific Ukraine = Europe Vietnam 10.90% = Americas (non-U.S.) Saudi Arabia @ Africa France = Middle East Spain =
Slide 49: The highest quality in mobile video: Instant-Play technology
The highest quality in mobile video: • Razor sharp quality • Instant-Play™ technology • Never buffers
Slide 50: Slide 50
Slide 51: Campaign example: The Flash
Campaign example The Flash AdColony Instant-Play™ HD-video delivered The CW’s The Flash ad Campaign averaged overall engagement rate of nearly 40% The Flash was The CW's best show debut in 5 years
Slide 52: Campaign example: Disney Infinity
Campaign example Disney Infinity AdColony Instant-PlayTM HD-video U.S. national campaign promoting the launch of Disney Infinity Highly interactive ad unit that drove high engagement
Slide 53: Lufthansa ad campaign
Lufthansa ad campaign National campaign promoting Lufthansa travel The ad unit allows users to picture of themselves, “selfies” in various travel destinations using their smartphone and gives them the chance to capture and share this preview on their social networks Campaign has been well received w
Slide 54: Brand Impact Engagement
BRAND IMPACT ENGAGEMENT New % overall engagement rate © 1.77MM+ completed video ad views S 8.08 ° oe al sngagerent ae [ZZZ224 conds spent on end card creased tit ant nt 10.8K+ hours of video ads watched
Slide 55: Mobile Video Drives Auto
Mobile Video Drives Auto
Slide 56: Slide 56
Slide 57: Opera Software
OPERA SOFTWARE Quarterly report Third quarter report 2014