Otello Corporation Asa · OSL:OTEC
Otello Corporation Asa — Q1 2019 Earnings Presentation
32 slides from Otello Corporation Asa's earnings presentation, 2019
Slide 1: 1Q 2019 Otello Corporation ASA
1Q 2019 OTELLO CORPORATION ASA
Slide 2: Agenda
Agenda • Executive Summary (CEO, Lars Boilesen) • Operational Review (CEO, Lars Boilesen) • Financial Review (CFO, Petter Lade) • Q&A (CEO, Lars Boilesen & CFO, Petter Lade) 2
Slide 3: Executive Summary
Executive Summary 3
Slide 4: Quarterly highlights
Quarterly highlights Financial metric (USD 1Q19 1Q18 million) Total revenue 51.5 71.4 Adj. EBITDA* 1.4 0.7 • Revenue impacted by one-time event in both AdColony and Bemobi in 1Q19 • Focus on costs and solid margins secure positive Adj. EBITDA in 1Q19 *For further information regarding Adjusted EBITD
Slide 5: Operational Review
Operational Review 5
Slide 6: AdColony – Turnaround continues
AdColony – Turnaround continues • Revenue • Performance business still experiencing volatile revenue, but positive gross margin trend • Brand business with expected seasonal decline in 1Q vs 4Q • Tech issues with programmatic delivery late in the quarter reduced revenue • Cost • OPEX reduced by over
Slide 7: AdColony – Status
AdColony – Status • Gross margin trends positive for both Brand and Performance • Support functions strategy in Istanbul paying off with lower cost and more productivity • Lowered break even (Adj. EBITDA) revenue point to $45m (was $50m) in quarterly revenue @ 35% gross margin • Expecting ~10% reven
Slide 8: AdColony Global Brand Business
AdColony Global Brand Business 8
Slide 9: Results: Brand Advertising
Results: Brand Advertising Revenue Source Q1 2019 Q1 2019 Mix % Brand (incl. IO and PMP) $11.7M 55% 25% Brand Performance $5.3M Programmatic $4.2M 20% Open Marketplace TOTAL $21.2M • Total Brand revenue decreased 40% from Q4 ‘18 to Q1 ’19 • This is normal seasonality on the Brand side of the industr
Slide 10: Continued Focus On Quality Is Fueling Programmatic
Continued Focus On Quality Is Fueling Programmatic • Q1 groundwork for future growth made in our North America programmatic PMP business • 27 Unique customers were running PMP’s with us in Q1 2018 • 41 Unique customers were running PMP’s with us in Q1 2019 (+52%) • In Q1 2018, 80% of our PMP spend w
Slide 11: What We’re Working On
What We’re Working On • Continued improvements and maturation of our programmatic tools and offerings • 1st Price auction (standardized auction dynamics) • Multi Creative Object Support (more formats = more revenue) • Supply – Demand Alignment Optimizations (better matching) • International Endpoint
Slide 12: AdColony Global Performance
AdColony Global Performance 12
Slide 13: Results: Performance Advertising
Results: Performance Advertising Summary: Q1 2019 Performance Revenues = USD 16.9 million (-4.5% vs. Q4’18) Performance Revenues & Gross margin (USD million) $17,7 $16,9 4.5% 7.3% $4,1 $4,4 4Q18 1Q19 • Revenue stability in Q1 despite significant increase in competition • Gross margin revenue trend t
Slide 14: Gross Margins on Performance Business
Gross Margins on Performance Business Gross Margin (%) 26,2% 23,3% • Greater focus on profitability and 20,1% 20,8% health of underlying business – Gross margin higher than Q2/Q3 of last year • Performance margins expected to be stable in the 26-28% range going forward 2Q18 3Q18 4Q18 1Q19 14
Slide 15: Key Highlights
Key Highlights Revenue stability, creativity in performance and improvements in CoreTM 1. Stability in key accounts on performance, green shoots in others • Double digit growth in Playrix, Kama, Nord Current and Machine Zone 2. New improved interactive and engaging ad units brings our creative offer
Slide 16: Bemobi
Bemobi 16
Slide 17: Bemobi Revenue and Adj. EBITDA growth ex FX
Bemobi Revenue and Adj. EBITDA growth ex FX D (%) Bemobi 1Q19 1Q18 Y-o-Y Revenue (USD M) 12,8 14,3 -11% EBITDA (USD M) 5,0 5,4 -7% D (%) Bemobi - Ex-FX Rate 1Q19 1Q18 Y-o-Y Revenue (USD M) 14,5 14,3 2% EBITDA (USD M) 5,8 5,4 7% FX Rate impact YoY (1Q19 vs. 1Q18) • INTL basket: - 8.3% • LATAM BRL: -
Slide 18: Bemobi – Subscriber growth driving revenue and scale
Bemobi – Subscriber growth driving revenue and scale 30,0 4,0% • 8% YoY subscriber growth 25,0 26,7 • Overall service penetration on served 3,6% 26,0 24,1 3,0% addressable market stable at 1.1%. Bemobi Subscribers (M) 20,0 3,2% 20,3 • 64 operators live 15,0 17,0 2,0% • 21 operators in Latam • 9 oper
Slide 19: Bemobi - Overall channel mix improving
Bemobi - Overal channel mix improving Co-owned Channels International markets continue subscriber growth 1Q18 vs. 1Q19 NDNC • 10 portals live in Bemobi outside of CHANNEL FROM TO Comments Latam: • Idea India NCND Portals 13% 32% Strategic: predictable and no • Vodafone India incremental cost • Telen
Slide 20: Bemobi
Bemobi • 1Q19 revenue negatively impacted by platform migration of major customer and platform fee in Brazil • Bemobi distribution channel becoming more strategic for new services and new partners • Plan to offer several new services beyond the Apps club in 2019 • Expecting ~10% revenue growth in 2Q
Slide 21: Opera TV (Vewd)
Opera TV (Vewd) • As previously communicated, there is an ongoing legal dispute with majority shareholder (MFC) • Favorable verdict granted on liability, not appealed by MFC • MFC ordered by the Court to pay a substantial portion of Otello’s legal costs to date, all cash received • Otello has now re
Slide 22: Financial Review
Financial Review 22
Slide 23: Disclaimer
Disclaimer This presentation contains, and is i.a. based on, forward-looking statements regarding Otello Corporation ASA and its subsidiaries. These statements are based on various assumptions made by Otello Corporation ASA, which are beyond its control and which involve known and unknown risks, unc
Slide 24: Otello Corporation 1Q19
Otello Corporation 1Q19 (USD million) 1Q 2019 1Q 2018 Revenue and cost down in Revenue 51.5 71.4 tandem Publisher and revenue share cost (29.6) (40.8) Payroll and related expenses (12.5) (15.3) Stock-based compensation expenses (1.1) 1.6 Adjusted EBITDA stable vs. Depreciation and amortization expen
Slide 25: Otello Corporation 1Q19
Otello Corporation 1Q19 Revenue (USD million) 72,2 OPEX (USD million) 71,4 29,8 66,9 64,9 28,0 25,1 51,5 22,3 20,5 • Revenue in 1Q19 impacted by one-off events in AdColony and Bemobi 1Q18 2Q18 3Q18 4Q18 1Q19 1Q18 2Q18 3Q18 4Q18 1Q19 • OPEX significantly down both vs 1Q18 and 4Q18 due to cost Adj. EB
Slide 26: AdColony
AdColony Revenue USD million) OPEX USD million) 57 58 Brand - 5 7 52 53 • Brand seasonal trend from 4Q 22,3 Programmatic 21,3 9 7 8 8 to 1Q as expected 19,3 7 38 Brand - 8 17,3 Performance 15,6 17 19 4 16 20 5 Brand - Managed • Brand programmatic revenue 12 IO impacted by tech issues 27 25 Performan
Slide 27: Bemobi – Impacted by one-time events and FX
Bemobi – Impacted by one-time events and FX Revenue (USD million) OPEX (USD million) 14,5 • 1Q19 YoY results impacted 14,3 5,1 3,8 13,7 13,6 4,6 by FX (BRL vs USD) 12,8 12,4 3,4 3,3 2,9 • 1Q19 revenue negatively impacted by platform 1Q18 2Q18 3Q18 4Q18 1Q19 1Q18 2Q18 3Q18 4Q18 1Q19 migration of majo
Slide 28: Cash flow
Cash flow Cash flow (USD million) • Operating CF: USD (1.8) million 2.7 (1.3) (1.8) (0.5) • Net cashflow from Investment Activities USD 2.7 million • Proceeds from Symantec (sale of SurfEasy) of USD 5.6 million • CAPEX & Capitalized R&D: USD (3.0) million 27.5 • CF from Financing: USD (1.3) million
Slide 29: Financial position – Net cash position with no debt and no earn-outs
Financial position – Net cash position with no debt and no earn-outs Financial Position (USD million) Balance sheet (USD million) 26,6 26,6 Other assets 130 Cash 26,6 Accounts 355,2 Equity 56,9 receivables Goodwill 231,9 90,2 Liabilities 0 0 Gross Cash Gross Debt Net Cash Net earn-out liabilities 29
Slide 30: Outlook AdColony
Outlook AdColony 2Q19* 2019 (unchanged) Revenue: Up ~10% versus 1Q19 Adj. EBITDA: Positive Gross Margins: Flat/Up, positive mix versus 1Q19 Opex: Flat, continued cost focus * Vs 1Q19 30
Slide 31: Outlook Bemobi
Outlook Bemobi 2Q19 2019 (unchanged) Revenue up ~10% from 1Q19 Revenue: Growth vs. 2018 Adding more channels and services in LATAM and International Adj. EBITDA: Growth vs. 2018 31
Slide 32: Q&A
Q&A 32