opera software: second quarter 2012
TRANSCRIPT
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Opera Software: Second quarter 2012
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• Revenue growth of 32% (37% FX adjusted)
• Record revenue and strong profitability
• Strong revenue growth from Mobile Consumers, Mobile Publishers &
Advertisers coupled with solid growth from Desktop and Devices OEMs
*Non-IFRS EBITDA excludes stock option costs
**Excluding one-off extraordinary costs of MUSD 4.3 in 2Q12
Financial metric 2Q12
(MUSD)
2Q11
(MUSD)
Revenue Total revenue 52.1 39.4
Profitability Adj. EBITDA*/**
EBIT**
14.5
11.0
10.2
8.1
2Q 2012 Financial highlights
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Operators
• Strong growth in operator Opera Mini users: 39.8 million in June 2012,
vs. 16.2m in June 2011, up 145%
• Strong operator platform for continued growth • Growth from existing customers like Telkomsel, AT&T, MTN, Telenor and
MTS
• New operator agreements announced in the quarter include VimpelCom
(Russia), America Movil (Mexico) and Airtel (India)
Mobile/Devices
• 200m users of Opera mobile browser products in June 2012
• Continue to build leading position in the TV/set-top box segment
End users
• 275 million+ people using Opera browsers every month
• Mobile Consumer revenue up 168%+ in 2Q12 vs. 2Q11
• Mobile Publishers & Advertisers revenue up 450+% in 2Q12 vs. 2Q11
• Launched Opera Mini 7 with Smart Page and Opera 12 for Desktop
Highlights Highlights
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Financial review
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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 unknown risks, uncertainties and other factors which may cause our actual results,
performance or achievements to be materially different from any future results, performances or achievements
expressed or implied by the forward-looking statements.
Forward-looking statements may in some cases be identified by terminology such as “may”, “will”, “could”, “should”,
“expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue”, the negative of such terms
or other comparable terminology. These forward looking statements are only predictions. Actual events or results may
differ materially, and a number of factors may cause our actual results to differ materially from any such statement. Such
factors include i.a. general market conditions, demand for our services, the continued attractiveness of our technology,
unpredictable changes in regulations affecting our markets, market acceptance of new products and services and such
other factors that may be relevant from time to time. Although we believe that the expectations and assumptions
reflected in the statements are reasonable, we cannot guarantee future results, levels of activity, performance or
achievement.
Opera Software ASA makes no representation or warranty (express or implied) as to the correctness or completeness of
the presentation, and neither Opera Software ASA nor any of its subsidiaries, directors or employees assumes any
liability connected to the presentation and the statements made herein. Except as required by law, we undertake no
obligation to update publicly any forward-looking statements for any reason after the date of this presentation to conform
these statements to actual results or to changes in our expectations. You are advised, however, to consult any further
public disclosures made by us, such as filings made with the Oslo Stock Exchange or press releases.
This presentation is for information purposes in connection with the Opera Software ASA 2Q12 presentation only. This
presentation is not an offer or invitation to sell or issue securities for sale in the United States, and does not constitute
any solicitation for any offer to purchase or subscribe any securities. Securities may not be sold in the United States
unless they are registered or are exempt from registration. Opera Software ASA does not intend to register any
securities in the United States or to conduct a public offering in the United States. Any public offering of securities to be
made in the United States would be made by means of a prospectus that will contain detailed information about Opera
Software ASA and its management, as well as financial statements. Copies of this presentation should not be distributed
in or sent into any jurisdiction where such distribution may be unlawful. The information in this presentation does not
constitute an offer of securities for sale in Canada, Japan or Australia.
A note from our lawyers
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3Q 2011 Financial highlights
*Non-IFRS EBITDA excludes stock option costs
**Excluding one-off extraordinary costs of MUSD 4.3 in 2Q12
*** Operating Cash Flow less capital expenditures
Financial metric 2Q12
(MUSD)
2Q11
(MUSD)
Revenue Total revenue 52.1 39.4
Profitability Adj. EBITDA*/**
EBIT**
14.5
11.0
10.2
8.1
Cash generation Operating Cash
Flow
Free Cash Flow***
4.6
1.1
6.5
3.4
Financial Highlights
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2Q 2012 Actuals 2Q 2012 Midpoint
Guidance
(May 4)*
Revenue MUSD 52.1 MUSD 51.5
EBIT** MUSD 11.0 MUSD 10.5
*Provided at 1Q12 Presentation
** Excluding one-off extraordinary costs of MUSD 4.3 in 2Q12
2Q12 Actuals versus Guidance
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* Excludes extraordinary one-time costs
MUSD 2Q12* 2Q11 Q on Q
Revenue 52.1 39.4 32%
Cost of Goods sold- 6.2 0.8 676%
Payroll and related expenses - 23.1 20.5 13%
Stock option costs - 1.1 0.8 42%
Depreciation and amortization - 2.5 1.4 84%
Other operating expenses - 8.2 7.9 4%
Total expenses = 41.1 31.3 31%
EBIT 11.0 8.1 35%
Net Income 4.1 5.1
EPS (USD) 0.03 0.04
2Q12 Financial review
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Revenue (MUSD)
* Non-IFRS EBITDA excludes stock option costs and extraordinary one-time costs
Adjusted EBITDA* (MUSD)
0
5
10
15
20
25
30
35
40
45
50
55
2Q11 3Q11 4Q11 1Q12 2Q12
Revenue
Financial highlights: 2Q11-2Q12
0 1 2 3 4 5 6 7 8 9
10 11 12 13 14 15 16
2Q11 3Q11 4Q11 1Q12 2Q12
Adjusted EBITDA*
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Operators: Users and Usage
Mobile Consumers: Users and Usage
Desktop: Users and Usage
Device OEMs: ConnectedTVs
Mobile Publishers & Advertisers: Mobile Advertising Spend from Premium Brands
Revenue growth drivers
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Overall Mobile Monetization Strategy
Opera Properties Non-Opera Properties
Ad mediation, serving, campaign management
Opera
Payment
Exchange
+
Analytics
Search, opcos and developers
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Revenue: Customer type (2Q12)
Overall revenue as expected
2 4 2 2 1
14 12 10 10 10
6 6 9 8 7
13 13 15 17 16
1 2 2 3 3 2 3 4
7 13
0
5
10
15
20
25
30
35
40
45
50
55
2Q11 3Q11 4Q11 1Q12 2Q12
Other
Mobile Publishers & Advertisers
Mobile Consumers
Desktop
Device OEMs
Operators
Mobile OEMs
MUSD
Customer Type
Operators Lower than expected
Mobile Consumers (Opera owned and
operated properties)
As expected vs. guidance
Mobile OEMs As expected vs. guidance
Desktop Consumers As expected vs. guidance
Device OEMs As expected vs. guidance
Mobile Publishers & Advertisers (Non
Opera owned and operated properties)
Better than expected vs. guidance
0 %
20 %
40 %
60 %
80 %
100 %
2Q11 3Q11 4Q11 1Q12 2Q12
Other
Mobile Publishers & Advertisers
Mobile Consumers
Desktop
Device OEMs
Operators
Mobile OEMs
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Revenue: Operators (2Q12)
10 9 9 10 9
3 2
1 1 1
0,0
2,0
4,0
6,0
8,0
10,0
12,0
14,0
16,0
2Q11 3Q11 4Q11 1Q12 2Q12
MUSD Operator Revenue total*
NRE + M&S Licenses
* Unaudited
Operator Revenue lower than expected
145% Operator Opera Mini user growth June 2012 vs. June 2011
User growth driven by MTN, MTS, Telenor, Telkomsel, and Vodafone in particular
Opera Mini licence revenue up 3% to MUSD 9.2
Overall revenue growth: Down 24% versus 2Q11, with solid Opera Mini user and license
growth offset by lower customized Opera Mobile license and NRE revenue
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Revenue: Mobile Consumers (Opera owned
and operated properties) - 2Q12
* Unaudited
Mobile Consumer revenue as expected
Revenue growth driven primarily by mobile search and Opera Mobile Store vs. 2Q11
Revenue growth: 168% versus 2Q11
1 2
2
3 3
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
2Q11 3Q11 4Q11 1Q12 2Q12
MUSD Mobile Consumers (Opera owned and operated properties)*
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Revenue: Mobile OEMs (2Q12)
* Unaudited
Mobile OEM revenue in line with expectations
License revenue: 45+% of revenue
Overall revenue growth: down 40% versus 2Q11
1
3
1 1 1
1
1
1
1 1
-
1,0
2,0
3,0
4,0
5,0
2Q11 3Q11 4Q11 1Q12 2Q12
MUSD Mobile OEM revenue*
NRE + M&S Licenses
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Revenue: Desktop Consumers (2Q12)
55 54 57 60 55
0
10
20
30
40
50
60
2Q11 3Q11 4Q11 1Q12 2Q12
Monthly Desktop users* (last month of quarter)
13 13 15
17 16
0
2
4
6
8
10
12
14
16
18
2Q11 3Q11 4Q11 1Q12 2Q12
Desktop revenue* (MUSD)
*Unaudited. User figures are in millions
Desktop revenue in line with expectations
Strong ARPU due to strong local affiliate and search revenue
Desktop users flat versus end of 2Q11
Overall revenue growth: 22% versus 2Q11
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Revenue: Device OEMs (2Q12)
* Unaudited
Device OEM revenue as expected
Revenue driven by Connected TV customers
License revenue: 60%+ of revenue
Overall revenue growth: 16% versus 2Q11
5 5
7 6
4
1 1
2
2 3
0,0 1,0 2,0 3,0 4,0 5,0 6,0 7,0 8,0 9,0
10,0
2Q11 3Q11 4Q11 1Q12 2Q12
MUSD Device OEM revenue*
NRE + M&S Licenses
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Brand Ad
agency Ad network
Ad Serving
Ad Mediation
Campaign Mgt Publishers Consumer
Mobile Internet, SMS,
MMS, Video, Apps
Demand side Supply side
Update on Mobile Ad Network Strategy
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Revenue: Mobile Publishers & Advertisers (Non
Opera owned and operated properties) - 2Q12
* Unaudited
Mobile Publisher & Advertiser revenue better than expected versus
guidance
Revenue growth driven primarily by premium advertisers and publishers
AdMarvel managed 102B ad impressions in 2Q12, up 92% vs. 2Q11
Revenue growth: 450+% versus 2Q11
2 3 4
7
13
0
2
4
6
8
10
12
14
16
2Q11 3Q11 4Q11 1Q12 2Q12
MUSD Mobile Publishers & Advertisers (Non Opera owned and operated properties) *
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OPEX development
OPEX (NOK Million)
0 5
10 15 20 25 30 35 40 45 50
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
One time extraordinary cost
Cost of goods sold
Other OPEX
Depreciation
Stock Options
Payroll
Cost line 2Q12 vs.
2Q11
Comments
Payroll 13% •Higher compensation expense per
employee and overall headcount
growth.
Cost of Goods
Sold
676% •Driven by 450%+ growth in Mobile
Publisher and Advertiser revenue
•COGS or Publisher Cost related to
Mobile Publisher & Advertiser
business
Other OPEX 4% •Higher server hosting, travel and
marketing costs.
•Hosting costs* key driver (total of
MUSD 3.4 in 2Q12 versus MUSD
2.0 in 2Q11)
Depreciation &
Amortization
84% •Investments in Opera Mini server
infrastructure
•Implementation of shorter
depreciation period for servers,
effective 3Q11
Stock options 42% •Higher average strike price on
options issued at the end of 2Q12
compared to 2Q11
One time
extraordinary
costs
N/A •Primarily related to change of
headquarter and severance
agreements
Total Expenses** 31% • Generally good cost control *Unaudited. Also includes relevant depreciation.
**Excludes one time extraordinary costs
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Cash flow 2Q12 (MUSD)
-6
-4
-2
0
2
4
6
8
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3Q12 Guidance
* Assumes currency remainder of 2012 (NOK 5.9 /USD, USD 1.25 /EUR)
**Earnings before interest and taxes, exclude extraordinary/one-time costs and acquisition costs.
Metric 3Q 2012 Guidance
Revenue* MUSD 56-58
EBIT** MUSD 11.5-12.5
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3Q12 Guidance
* Assumes currency remainder of 2012 (NOK 5.9 /USD, USD 1.25/EUR)
Vs. 2Q12 Comments
Revenue* Operators Up Opera Mini user growth from existing and new
agreements
Mobile Consumers Up Opera Mini user growth, search revenue and Opera
Mobile Store
Mobile OEMs Down General trend
Desktop Flat-Up Stable user trend and solid ARPU
Device OEMs Down Coming off solid 2Q12
Mobile Publishers &
Advertisers
Up
Driven by premium advertisers and publishers
Expenses Payroll Flat-Up Increase in headcount offset by ”vacation effect”
Cost of goods sold Up Growth in Mobile Publisher and Advertiser business
Stock option costs Up Due to issuance of new options
Depreciation Up Continued investments in Opera Mini server hosting
infrastructure
Other Opex Up Primarily due to server hosting, travel and marketing
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FY2012 Outlook
*Assumes currency remainder of 2012 (NOK 5.9 /USD, USD 1.25 /EUR)
**Earnings before interest and taxes, exclude extraordinary/one-time costs and acquisition costs.
***Prior guidance refers to 4Q11 and 1Q12 presentations
Metric 2012 Guidance (prior***) 2012 Guidance (new)
Revenue* MUSD 200-215 MUSD 214-219
EBIT** MUSD 48-53 MUSD 45-48
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Operational Update
Q2-2012
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New agreement Google
Worldwide agreement:
Desktop
Mobile
Tablet
Smartpage
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Yandex agreement extended
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Opera Mini 7.0.1 Android
Opera 11.63 for Mac App Store
Beta launch of Opera 12
Opera product launches 2Q 2012
Final release of Opera 12
April June May
Opera Mini 7.0.2 for Android
Opera Mini 6.5.2 for S60
Opera Mobile 12.0.2 for Android and S60
Opera 12 Beta for Mac, Windows and Linux
Opera 11.64 Final
Opera Mini 7.0.3 Android
Opera Mobile 12.0.3 Android
Opera Mini 7.0.2 for iOS
Opera Mini 7 for feature phones Smart Page for Opera Mini
Opera 12 Final for Mac,
Windows and Linux
Last version of Opera 11
App-Tribute for advertisers & publishers
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Operators
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Continued strong growth: Nearly 40 million Operator Opera Mini users
0
5
10
15
20
25
30
35
40
Operator- & Co-Branded Opera Mini Active Users (million)
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New operator wins: Airtel, VimpelCom, América
Móvil group deals, 600M+ subscribers
240M subscribers,
20 countries 240M subscribers,
18 countries
200M subscribers,
18 countries
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Re-signed strategic existing customers
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Airtel India and Bangladesh launch Opera
Mini with integrated marketing campaigns
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MTN Nigeria follows up TV campaign with below-the-line activations
• Quiz competition with social media sharing
• Win Samsung Galaxy Pocket phones
• BTL campaign (SMS, social media, website)
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Tecno partnering with MTN and running TV
ads in Africa promoting Opera phones
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Etisalat Nigeria launches attractive Opera Mini data bundles
• 24h Opera Mini data bundles
(social and sports)
• Low price of 50 NGN (0.32
USD)
• Promoted through SMS, social
media, website, press releases
and radio
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SingTel Opera Mini launch campaign
targeting prepaid segment
Press clippings
Sim card inserts SingTel Brochures
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0
20 000 000
40 000 000
60 000 000
80 000 000
100 000 000
120 000 000
140 000 000
160 000 000
180 000 000
200 000 000
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Unique users
Opera mobile browser user growth continues
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0
5 000 000
10 000 000
15 000 000
20 000 000
25 000 000
Opera growth on Android
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Smartphone growth will enable better monetization of mobile search
Significant part of our user
growth is on
smartphones (from 25% in 2Q-11 to 67% 2Q-12)
2Q-11 2Q-12
25%
67%
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Well-positioned for growth in Google Play
with both Opera Mini and Opera Mobile .
Opera Mini
• In top 10 free apps for 30+ markets
• Good positions in fast moving
markets (IN, RU, BR, ID, UK)
Opera Mobile
• In top 5 free apps in Russia/CIS
and Central Europe
• Good positions in mature markets
(DE, UK, CZ, FI, NO, DK, PT, IT)
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Mobile OEMs
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New contracts: • 3 new contracts in India
New handsets:
• Global: 5 handsets from 2
manufacturers
• India: 8 handsets from 5
manufacturers
• Africa: 6 handsets from 1
manufacturer
Coming soon... • >3 Tablets, >5 Android phones
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Tecno launched Opera Mini phone for
African markets
Tecno launched Opera Mini phone for
African markets
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TV & Devices
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Smart TVs • TCL
• HiSense
STBs • Altech UEC
• Huawei
• Dune HD
• Topfield
• Marusys
Automotive • TomTom (for Renault)
• Johnson Controls (for Mazda)
Wins in
Q2
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68 apps published
106 contracts signed
25 apps in QA
Opera TV Store Status
Launched
with tier 1
Strong
pipeline
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Desktop
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Revenue up 3M$ vs 2Q-2011
13
16
0
2
4
6
8
10
12
14
16
18
2Q11 2Q12
Desktop revenue (MUSD)
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Traffic and revenue from desktop online
transactions continues the growth
• Further growth in revenues from
existing tier one content partners
• Yandex, Booking.com, Amazon, eBay,
Schibsted CM
• Leveraging user base with tailored
partner solutions
• Mail.ru, Rambler, Facebook, eBay
• Continue to partner with leading
regional affiliate networks gaining
global coverage
• Continue to serve localized content
for new countries
• Pakistan, Vietnam, Philippines, Nigeria Desktop Startpage
reaching millions of users
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Opera Mini 7 with Smart Page launched
- Launched for J2ME, Symbian and
Blackberry
- Android version to be available in
September 2012
- Key features include: Advertising
enabled, Facebook and Twitter
integration, personalized based on
users history.
- Close to 20 million users have the
Smart Page with the number to
jump to over 30 million when we
launch Android in September.
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Monetization strategy for Smart Page
- 35 million Smart Page views per day
generating over 80 million ad
impressions (all plugged into AdMarvel)
- First flow of ad campaigns sold in
Russia, India and Brazil. Expected fast
growth when Android launches.
- Scaling the local partnerships by
setting up reseller ad networks and
working with current sales team.
- Key property to drive traffic to partners
and current high paying gaming
partners.
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Opera Mobile Store statistics Opera Mobile Store growth
Sept 2011 June 2012 Growth
# of Apps 38.000 64.500 +70%
# of Developers 6.300 8.500 +35%
# of Downloads 11 million 38 million +245%
# of Visitis 21 million 36 million +71%
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Successful
launch of pay-
per-download
Revenue from
PPD grew by
350+% from Q1
to Q2
1,00
4,69
-
1,00
2,00
3,00
4,00
5,00
1Q12 2Q12
PPD Revenue Index
Top PPD campaigns:
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Top brands are available in the store
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Advertising
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Ad impression grew 18% from Q1 to Q2
And 92% YoY
Strong
performance
53 56 72
86 102
0
20
40
60
80
100
120
2Q11 3Q11 4Q11 1Q12 2Q12
Ad impressions - Bn In 2011 more than $200
million in advertising
spend was managed
by the Admarvel
platform.
In 2012 we’re on track
to do more than $400
million
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1,00
1,94
-
0,50
1,00
1,50
2,00
2,50
1Q12 2Q12
Mobile Advertising Revenue Index
Mobile Advertising Revenue grew 94% from Q1 to Q2. Technical migration completed.
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Mobile Theory
Notable Advertising
Campaigns run for
brand advertisers in
the US
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Panoramic
technology
Infiniti
For Infiniti we produced a highly rich, interactive HTML5
ad unit to showcase the JX series. This offered the user
the opportunity to look around the inside of the car using
all axis, panoramic navigation. This was controlled by a
finger swipe on the screen for instant, smooth movement.
This user was then able to explore various other features
of the Infiniti JX being showcased though in ad video or
further on screen interaction.
This ad unit encouraged users to explore and play with
the Infiniti JX. We saw an average dwell time of 21
seconds.
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Dynamic
Feeds eBay
By integrating with eBay through an
API feed we were able to
dynamically pull in the latest deals
that were being offered on the
auction site. The user was able to
swipe through all the latest deal in ad
and then click to go through to site
and purchase. eBay therefore had
complete control of what products
were being shown at any given time.
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Q&A