Slide 1: Opera Software: Second quarter 2010
Opera Software: Second quarter 2010
Slide 2: Agenda
Agenda 1. Highlights Lars Boilesen, CEO 2. Financial review Erik Harrell, CFO/COO 3. Operations review Lars Boilesen, CEO 4. Q&A
Slide 3: 2Q10 Financial highlights
2Q10 Financial highlights Financial metric 2Q10 2Q09 Status report (MNOK) (MNOK) Revenue Total revenue 168.9 172.4 Profitability EBITDA* 38.2 36.4 EBIT 28.8 29.4 Cash generation Operating Cash 62.3 -29.2 Flow Free Cash Flow** 54.9 -34.9 • Revenue in line with expectations; cost lower than expected •
Slide 4: Highlights (1Q10 – 3Q10TD)
Highlights (1Q10 – 3Q10TD) Operators • Volume growth with tier-one operators such as AT&T, Vodafone, MTS, Telkomsel: Total of 5.2 million Opera Mini users in July • Key wins: Telenor & Verizon • Strong deal flow and ramp up, Nextel, Telkomsel, MTS, Megafon, TIM, Smart, Tigo, Tele2 – all recently or
Slide 5: Financial review
Financial review
Slide 6: A note from our lawyers
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 u
Slide 7: 2Q10 Financial highlights
2Q10 Financial highlights Financial Metric 2Q10 2Q09 Status report (MNOK) (MNOK) Revenue Total Revenue 168.9 172.4 Profitability EBITDA* 38.2 36.4 EBIT 28.8 29.4 Cash Operating Cash 62.3 -29.2 Generation Flow Free Cash Flow** 54.9 -34.9 *Non-IFRS EBITDA excludes stock option costs ** Operating Cash
Slide 8: 2Q10 Financial review
2Q10 Financial review MNOK 2Q2010 2Q2009 Q on Q 1H 2010* 1H 2009 1H vs 1H Desktop + 59.1 44.8 32% 111.1 91.8 21% Internet Devices + 109.9 127.7 -14% 209.2 243.6 -14% Total revenue = 168.9 172.4 -2% 320.3 335.4 -4% Payroll and related 95.2 99.7 -4% 195.5 200.9 -3% expenses - Stock option costs - 3.9
Slide 9: Financial highlights: 1Q07-2Q10
Financial highlights: 1Q07-2Q10 Operating revenues (NOK Million) EBITDA* (Non-IFRS) (NOK Million) Desktop Internet Devices EBITDA* 200 45 180 40 160 35 140 30 25 120 20 100 15 80 10 60 5 40 0 20 -5 0 -10 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q210 07 07 07 0
Slide 10: Revenue growth drivers
Revenue growth drivers Active users with operators Desktop users Opera Mini user base and ARPU Agreements with Connected TV vendors
Slide 11: Revenue: Customer Type (2Q10)
Revenue: Customer Type (2Q10) • Operator revenue came generally in line with expectations • Desktop revenue slightly above expectations • Device revenue slightly below expectations • Mobile OEM revenue came generally in line with expectations 100% 180 90% 160 80% 140 70% 120 60% Other Other 100 Desk
Slide 12: Revenue: Operators (2Q10)
Revenue: Operators (2Q10) • Operator revenue generally in line with expectations • 368% Operator Opera Mini user growth June 2010 vs. June 2009 • User growth driven by Motricity (AT&T), Vodafone and Telkomsel, in particular • Strong growth in license revenue MNOK Operator Revenue 6,000,000 Monthly S
Slide 13: Revenue: Device OEMs (2Q10)
Revenue: Device OEMs (2Q10) • Device OEM revenue slightly lower than expected • Revenue driven primarily from the gaming console, connected TV and IPTV segments • License revenue: 65%+ of revenue MNOK Device OEM Revenue 40 35 30 25 20 15 10 5 0 4Q09 1Q10 2Q10
Slide 14: Revenue: Mobile OEMs (2Q10)
Revenue: Mobile OEMs (2Q10) • Mobile OEM revenue fell as expected compared to 1Q10 due to lower NREs • License revenue now accounts for 60% of Mobile OEM revenue compared to 25% in 1Q10 MNOK Mobile OEM revenue 30 25 20 15 10 5 0 4Q09 1Q10 2Q10 Opera Mobile shipments in 2Q10 from Mobile OEMs was 2.4m
Slide 15: Revenue Type: Internet Devices (2Q10)
Revenue Type: Internet Devices (2Q10) • NRE revenue as expected • M&S revenue as expected • Opera Mini revenue generally as expected, due to strong increase in license revenue and higher NREs from one major customer preparing for launch Revenue type 4Q09 (MNOK) 1Q10 (MNOK) 2Q10 (MNOK) NRE 28 34 29 M
Slide 16: Revenue: Desktop (2Q10)
Revenue: Desktop (2Q10) • Desktop revenue slightly higher than expected • Desktop user growth as expected, in seasonally weaker quarter compared to 1Q • Slightly higher content partnership revenue than expected Monthly Desktop users Desktop Revenue (last month of quarter) (MNOK) 60 70 50 60 50 40 40
Slide 17: Revenue: Opera-branded Opera Mini (2Q10)
Revenue: Opera-branded Opera Mini (2Q10) 70,000,000 Monthly users 60,000,000 • Growth continues 50,000,000 • High focus on converting users 40,000,000 to Operator branded or Co- 30,000,000 branded revenue generating users 20,000,000 • Increasing ARPU on 100% Opera- 10,000,000 branded users a high pr
Slide 18: Key user metrics FY2010 - YTD
Key user metrics FY2010 - YTD January April July Metric 2010 2010 2010 Operator Opera 2.1* Million 3.5* Million 5.2* Million Mini users Opera- branded Opera 50** Million 59** Million 62** Million Mini users Desktop 48 Million 52 Million 47 Million *Operator branded + Opera/Operator co-branded agreem
Slide 19: Cost management priorities
Cost management priorities Budget discipline • Reduced cost growth Constrained headcount • Reduced cost growth Project prioritization • Higher margin on projects Resource allocation • Higher margin on projects based on ROI Continuous optimization • Reduced cost per user of hosting facilities
Slide 20: OPEX development
OPEX development OPEX (NOK Million) One time extraordinary cost Cost line 2Q10 vs. Comments Other OPEX 2Q09 Depreciation Payroll -4% • Lower headcount (3%) Stock Options vs. 2Q09 •Positive FX effect Payroll Stock 1% • Lower than expected 180 options 160 Depreciation 74% • Investments in primarily Op
Slide 21: EBITDA development
EBITDA* development 2Q 2009 / 2Q 2010 (NOK Million) 50 45 40 35 30 25 20 15 10 5 0 EBITDA Internet Desktop Currency Total costs Currency EBITDA Q2 2009 Devices Revenue impact impact Q2 2010 revenue revenue costs *Non-IFRS EBITDA excludes stock option costs
Slide 22: Strong capital structure
Strong capital structure Balance-sheet highlights: Metric 2Q10 (MNOK 2Q09 (MNOK) Cash 528 587 Interest-bearing debt 0 0 NWC* -87 -13 Equity 617 657 * NWC is defined as Total current assets excluding cash and cash equivalents and minus Total current liabilities excluding provisions.
Slide 23: Cash flow 2Q10 (MNOK)
Cash flow 2Q10 (MNOK) 70 60 50 40 30 20 10 0
Slide 24: Financial high-level summary: 2Q10
Financial high-level summary: 2Q10 • Revenues: Generally in line with expectations • Expenses: Much better than expected • Solid cost control across the board • Reaping better savings than expected from the 1Q10 cost reduction program • Hosting costs, in particular, continuing to be better than expe
Slide 25: Financial high-level summary: 3Q10
Financial high-level summary: 3Q10* • Revenues: Expectations vs. 2Q10 (constant currency)* • Flat to slight revenue growth from operators - very solid increase in license revenue offset by decline in NRE/M&S revenue • Slight decrease in desktop revenue as we move into seasonally weak 3Q • Solid reve
Slide 26: 3Q 2010 Guidance
3Q 2010 Guidance Metric 3Q 2010 Revenue* MNOK 175-180 Expenses** MNOK 142-147 *Assumes currency remainder of 2010 (NOK 6.2 /USD, NOK 8.0/EUR) ** Includes payroll, other OPEX, stock option costs and depreciation
Slide 27: 2010 Updated guidance
2010 Updated guidance Metric 2010*** (Earlier) 2010 (Updated) Revenue* MNOK 675-725 MNOK 680-690 Expenses** MNOK 635-645 MNOK 585-595 *Assumes currency remainder of 2010 (NOK 6.2 /USD, NOK 8.0/EUR) ** Includes payroll, other OPEX, stock option costs and depreciation, expenses exclude extraordinary r
Slide 28: Operations update
Operations update
Slide 29: Opera's road to growth in 2010
Opera’s road to growth in 2010
Slide 30: Our fast-moving industry
Our fast-moving industry - Opera’s strategic position Trend: Mobile data grows quickly in popularity • Opera Mini is the world’s most popular mobile browser Trend: Content is becoming available everywhere, on every platform and every device • Opera enables this trend - a reference company within the
Slide 31: Our fast-moving industry
Our fast-moving industry - Opera’s strategic position Trend: Open Internet browsers vs. native applications on mobile • Opera: Native applications are tied to single platforms. Opera’s web technology enables cross-platform distribution. HTML5 is growing. Trend: Operators introducing tiered pricing a
Slide 32: Status report: Traction with global operators
Status report: Traction with global operators Opera users from operators 6,000,000 Monthly subscribers 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Jun/13 Jul/13 Aug/13 Sep/13 Oct/13 Nov/13 Dec/13 Jan/14 Feb/14 Mar/14 Apr/14 May/14 Jun/14 Jul/14
Slide 33: This just in (August 25)
This just in (August 25): • Opera signs Global Frame Agreement with Telenor Group • The agreement covers a co- branded version of Opera Mini, targeted at Telenor’s business units worldwide • Telenor is one of the world’s leading operators with 181 million subscribers
Slide 34: Opera works with Verizon Wireless
Opera works with Verizon Wireless • According to the agreement, Opera's widget platform will be preinstalled on select handsets • Verizon Wireless will also launch a branded version of Opera Mini on select handsets • Verizon Wireless serves more than 91 million customers across the United States
Slide 35: Status with key operators
Status with key operators • Multiple launches, user growth • Handsets launched, campaigns running • Launched • Four devices shipping with Opera • Russia: Continuous growth • India: Expect to sign
Slide 36: Status with key operators
Status with key operators • Russia: Launched in August • Continuous growth • Signed. Launched in 2Q • Phillipines: Launched in 2Q • Indonesia: Signed in 2Q
Slide 37: Status with key operators
Status with key operators • National deal signed and launched • Colombia: Launched • Guatemala: Launched • Honduras: Launched • India: Launched
Slide 38: Vodafone status update
Vodafone status update • Opera Mini 5 and Widgets launched in South Africa, Kenya, Egypt, Turkey, Romania, Czech Republic, Tanzania, India, UK • In total: Opera Mini launched in 16 markets. 10+ markets will be launched during Q3-Q4 • Strong user growth in Q2, partly due to growth in India and Egypt
Slide 39: Vodafone launch schedule – Opera Mini
Vodafone launch schedule – Opera Mini 5 Q1-10 Q2-10 Q3-Q4-10 ZA QT TZ Emerging markets DRC TR LE IN KE EG GH IE PT GR ES Developed markets NL HU UK DE MT RO CZ
Slide 40: Example from a recently launched campaign in Turkey
Example from a recently launched campaign in Turkey
Slide 41: Opera Mini operator co-branded launches
Opera Mini operator co-branded launches Q1-10 Q2-10 Q3-10 Signed operators EG and CN RU IN Middle East Priority target markets ID ZA TR UA Mexico and BR Latam US PH and SE Asia
Slide 42: Reality check: Large OEMs target the entire value chain
Reality check: Large OEMs target the entire value chain … Applications Products OS Apple Google Nokia Microsoft … leaving operators to deliver the pipe only
Slide 43: WAC and Opera: a perfect match
WAC and Opera: a perfect match • WAC is an alliance of Opera differentiators: operators committed to building an open applications • Experience from similar initiatives platform (JIL) • WAC drives open, • Proven track record standardized technologies • Scalable offering across platforms and operator
Slide 44: Mobile manufacturers: Opera and ZTE
Mobile manufacturers: Opera and ZTE • Opera signs agreement with China-based ZTE • ZTE will preinstall Opera Mini in its low-end phones and distribute it outside China
Slide 45: Mobile manufacturers: Opera and MediaTek
Mobile manufacturers: Opera and MediaTek • Taiwan-based MediaTek is the world’s second largest supplier of mobile phones, closely behind Nokia • 2Q update: In addition to Opera Mini, MediaTek will also ship Opera Mobile 10 - on a feature phone platform
Slide 46: Mobile manufacturers: Opera and Huawei
Mobile manufacturers: Opera and Huawei • Huawei selects Opera Mobile 10 • 2Q update: Opera has shipped on 12 handsets from Huawei
Slide 47: NII Holdings selects Opera Mini to power new Nextel browser
NII Holdings selects Opera Mini to power new Nextel browser in Latin America • Opera Mini 5 preinstalled on new Motorola handset, based on Android • The touchscreen Motorola i1 to be launched in Argentina, Brazil and Mexico.
Slide 48: India: a fast-growing market for Opera
India: a fast-growing market for Opera • A long list of operators, content vendors and telecom service providers ship Opera Mini • In the past 6 months, 31 Indian The image part with relationship ID rId6 was not found in the file. handsets were launched with preinstalled Opera Mini • Total handsets
Slide 49: Opera Mobile: 8 new models in 2Q
Opera Mobile: 8 new models in 2Q Asus KDDI ASUS M10 Sharp SH005 Sharp SH006 CASIO CA005 Sony Ericsson BARONE HIY02 Toshiba E08T HTC O2 HTC Touch 3G O2 XDA Ignito HTC Mini Kyocera Sony Ericsson SA002 SO003 SO004 Sharp SH006 Toshiba SH008 TS004 Kyocera SA002 Red: 2Q 2010 Black: 1Q 2010
Slide 50: Opera Mini: 34 new models in 2Q
Opera Mini: 34 new models in 2Q Alcatel LG Mobile (cndt) Pantech Spice Alcatel ICE3 LG GT350 Pantech EI33S Spice S 700 Pantech C790 Spice S-1200 Alcatel OT-808 LG GX500 Pantech IM-U590S Spice S7000 LG A310 Pantech P7000 Spice S-930 G-Fone LG C320 Pantech P7040 G-Fone 571 Pantech P2000 Videocon G-Fon
Slide 51: Connected TV: a growing market
Connected TV: a growing market Opera’s customers:
Slide 52: 2Q: Sharp Corporation selects Opera
2Q: Sharp Corporation selects Opera • Opera will deliver the Opera Devices SDK (Software Development Kit) to Sharp • The agreement between Opera Software and the customer includes license, maintenance and development fees.
Slide 53: 2Q10: Browsing the Web with Opera on Acer
2Q10: Browsing the Web with Opera on Acer LumiRead • Acer, the world’s second- largest PC vendor, has selected Opera Devices SDK to bring the full Web to its new LumiRead. • The Acer LumiRead uses Opera to deliver web content directly to its 6- inch, E Ink screen.
Slide 54: 120+ million people use Opera
120+ million people use Opera Opera Desktop Opera Mini 50 million 60 million
Slide 55: Fast, faster … Opera
Fast, faster … Opera • Opera’s new speed marvel, Opera 10.60 • GeoLocation • HTML 5 support • WebM (video) support • Search suggestions • Custom thumbnails for tabs • Visual improvements
Slide 56: Opera builds further momentum on desktop
Opera builds further momentum on desktop 70 Opera Desktop Revenue (MNOK) • Continued revenue 60 growth • 59 MNOK: increase of 50 32% compared to 2Q09 • Continued user growth 40 • 49 million Opera 30 Desktop users: increase of 19% compared to 2Q09 20 10 0 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06
Slide 57: Key strategic objectives
Opera’s road to growth in 2010 Key strategic objectives 1. Build volume with existing tier-one operator customers 2. Sign up additional operators and mobile manufacturers 3. Monetize the 60+ million mobile users 4. Strengthen leadership position in the growing connected TV/ devices market 5. Continu
Slide 58: Opera's vision is to provide the best Internet experience on any device
Opera’s vision is to provide the best Internet experience on any device.
Slide 59: Q&A
Q&A