q106 presentation - opera software

Opera - Simply The Best Internet Experience

Opera SoftwareFirst quarter 2006

The best Internet experience on any device


Highlights: 1Q 2006

Financial

� Revenues increased 71% in Q1 06 to MNOK 47.8 mm compared to MNOK 28 in Q1 05

� Excluding stock option costs, non-IFRS EBIT was MNOK 1.2 in Q1 06 compared to MNOK -4.4 in Q105

� EBIT was MNOK -7.2 in Q1 06 after stock option costs, compared to MNOK -5.6 in Q1 05

Opera Mobile

� 7.7 million mobile units were shipped with the Opera browser in 1Q06, compared to 3.4 million units in 1Q05, an increase of 126%

� Announced Opera on 8 new phones since the last quarterly report, bringing the YTD totals to 14

Opera Mini

� More than 3,000,000 users since launch, more than 140% more users compared to the last quarterly report (1,400,000 users)

� T-Mobile became the first operator to pre-install the customized version of Opera Mini, as part of its web ’n’ walk offering� So far T-Mobile has announced 11 phones with Opera Mini


Highlights: 1Q 2006

Opera Devices

� Announced that Nintendo Wii, Nintendo’s next generation game console, will use the

Opera browser

� Announced that Nintendo DS will use the Opera browser

� Signed first contract with a net TV provider

� Signed first contract with a VoIP screen phone provider

Opera Desktop

� Opera 9.0 Beta released, with new advanced features and capabilities

General

� Raised NOK 211.2 million in cash through a direct share issue

� Opened offices in China and Korea and announced plans to open an office in India


Income statement: 1Q 2006


Revenue summary: 1Q 2006 vs. 1Q 2005

Opera Mobile

� Higher license/royalty revenue driven by

Opera’s OEM and operator customers

� Strong industry growth in smartphone and

high end feature phone segments

Opera Devices

� Higher revenue as adoption of web

browsers accelerates on non-mobile phone

devices

Opera Desktop

� Fall in revenue as Opera transitions its

revenue model from a license and

advertising based one to one largely driven

by search revenue

Revenue Overview: 1Q06 vs. 1Q05

0

10,000

20,000

30,000

40,000

50,000

60,000

Q1 05 Q1 06N

OK

100

0s

Desktop Internet Devices Total Revenues


Income statement: Historical viewpoint

-10000

0

10000

20000

30000

40000

50000

60000

Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06

NO

K ('

000)

Total Revenues Non-IFRS EBIT Total Expenses

-50

-25

0

25

50

75

100

125

150

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Total Revenues EBIT Total Expenses

Note: Annual Financial Information includes effect of stock option costs

*

*: Excluding cost of options


Stock option costs: An explanation of IFRS 2

Two components:

1. Fair value of options on grant date

� Estimated based on the Black-Scholes option pricing model

� Fair value of the options is amortized over the life of the options

2. Payroll taxes, as calculated based on the ”intri nsic value” of options over the vesting period

� Based on the difference between the market value of the stock [based on the closing price on

the last day of the quarter] and the exercise prices of the options

� An accrual is created to estimate the payroll taxes that Opera must pay when the various

options are exercised, adjusted for vesting schedules and employee attrition


33,476238,804

-8,068

444,485

1,303,8991,233,052

3,561,085

798,000

-500,000

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

5,000,000

Q1 Q2 Q3 Q4

2004 : MNOK 0.7 2005: MNOK 6.9

Costs related to option program per quarter (NOK) FY2004-2005


Stock option costs: FY 2006 estimates*

7,128,500300,000790,0002,645,000925,0002,468,500Total

nov. 09

506,250100,000115,000291,25000jun. 09

147,5000110,00037,50000nov. 08

628,750100,000115,000413,75000jun. 08

660,0000110,00087,500462,5000nov. 07

2,299,000100,000115,000863,75001,220,250jun. 07

660,0000110,00087,500462,5000nov. 06

2,227,0000115,000863,75001,248,250jun. 06

TotalStrike 34,90Strike 14,30-21,30Strike 10,00**Strike 7,20Strike 2,50Expiry date

Q106: Breakdown of Option Cost at NOK 27.60

-6,000,000

-4,000,000

-2,000,000

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

NO

K

Fair Value (Black-Scholes) Payroll taxes Total

Fair Value (Black-Scholes)

1,193,700 1,094,582 1,012,013 912,765

Payroll taxes 7,236,566 -3,712,276 813,833 773,371

Total 8,430,266 -2,617,694 1,825,846 1,686,136

Q106 Q206 Q306 Q406

Q106: Breakdown of Option Cost at NOK 32.30

-6,000,000-4,000,000-2,000,000

02,000,0004,000,0006,000,0008,000,000

10,000,000

NO

K

Fair Value (Black-Scholes) Payroll taxes Total

Fair Value (Black-Scholes)

1,193,700 1,094,582 1,012,013 912,765

Payroll taxes 7,236,566 1,773,631 1,022,801 966,184

Total 8,430,266 2,868,213 2,034,814 1,878,949

Q106 Q206 Q306 Q406


Balance sheet: 1Q 2006

3 1433 143Goodwill

325 505547 704Total liabilities & equity

35 55555 214Short-term liabilities

57 90466 660Retained earnings

232 046425 830Paid in capital

Liabilities & equity

325 506547 704Total assets

218 526442 531Cash and cash equivalents

93 34985 646Other current assets

9 25113 181Tangible assets

1 2373 203Deferred taxes

Assets

31.12. 200531.03. 2006(Figures in TNOK)

BALANCE SHEET


Financial outlook: FY 2006

Revenue: Continued positive revenue outlook

� Mobile continues to be the major revenue driver

� Devices/Home Media is Opera’s fastest growing business unit

Operating expenses (excluding stock option costs): Expected to grow at a somewhat

lower rate versus 2005

� Continued investment in engineering and customer delivery

� Continued investment in sales & marketing, in particular around Opera Mini and new

foreign offices (Japan and USA, in particular)


Opera for Mobile


Opera has solutions for the entire mobile value cha in

Opera Mobile browser� Full Web browser for OEM integration

Opera Platform� Device independent platform for mobile Web applications

Opera Mini� Light weight Web browser

Opera Platform Opera Mobile Browser Opera Mini


Opera for Mobile: 1Q 2006 highlights

Full browser

� 7.7 million phones pre-installed with Opera in

Q106

� up 126% from Q105

� 8 new phones announced since Q406 Results

� Total announced phones year to date: 14

� KDDI announced 7 new phones since Q406

� Total announced phones year to date: 10

� Total number of announced phones since

Q42004: 16

Mobile Phone Units Shipped with Opera

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

Q3/02

Q4/02

Q1/03

Q2/03

Q3/03

Q4/03

Q1/04

Q2/04

Q3/04

Q4/04

Q1/05

Q2/05

Q3/05

Q4/05

Q1/06

Uni

ts

0

2 000 000

4 000 000

6 000 000

8 000 000

10 000 000

12 000 000

14 000 000

16 000 000

18 000 000

2002 2003 2004 2005


Announced mobile phones YTD: 14 (goal = 48 for 200 6)

Psion Revo

Nokia 9210

2000-2002 2003 2004

Sharp Zaurus

Sharp Zaurus

Sony Ericsson P800

Motorola A920

Sony Ericsson P900

Nokia 6600

Nokia 7700

Sendo X

Kyocera PS 900

BenQ P30

Nokia 9500

Nokia 7610

Motorola A1000

Sony Ericsson P910

Motorola A780

Nokia 9300

Nokia 7710

Casio W21CA

Nokia 6620*

Sharp SL-6000

2005

Motorola A1010

Motorola M1000

ZTE e3

Casio W21CA II

Motorola E680i

Casio W31CA

Toshiba W31T

Nokia 6680

Nokia 6681

Nokia 6682

Hitachi W32H

Motorola E895

T-Mobile SDA II

Nokia N90

Nokia N70

Kyocera AH-K3002V

Kyocera WX 310K

Kyocera WX 300K

Nokia 6630**

Sony Ericsson P990

Toshiba W32T*: Only in Cingular’s network**: Only in T-mobile’s network

Nokia 9300i

Sharp W-ZERO3

Motorola A1200

2006

Motorola ROCKR

Sony Ericsson W41S

Casio W41CA

Hitachi W41H

Sony Ericsson M600

Sony Ericsson W950Sony Ericsson W950

Sanyo E02SA

Sanyo W33SA II

Sony Ericsson W42S

Casio W42CA

Toshiba W43T

Hitachi W42H

Toshiba W44T

Sony Ericsson M608c


Opera for Mobile: 1Q 2006 highlights (cont’d)

Opera Mini

� Free version

� More than 3 million users, up 140% from the last quarterly report (1.4 million)

� Customized version� T-Mobile becomes the first operator to launch

Mini as part of web ’n’ walk offering� Pipeline continues to build among operators

� Launched Opera 2.0. Key new features� Content download (MP3, images, video)� Customized skins� Multi-search� SMS purchase� Blackberry support (31 different models)

Opera Mini: Total Pages Downloaded

-

100,000,000

200,000,000

300,000,000

400,000,000

500,000,000

600,000,000

as of Feb 23, 2006 as of May 15, 2006


TMO UK customized Opera Mobile Symbian S60 (Nokia 6630, Nokia 6680 and N70)

ALL IN SAME PAGE! News, Shopping, Sport, etc. content

available from the browser home page via T-Mobile UK media

partners

T-Mobile’s selected search partner available from the browser home page

Value added content available from the browser home page


CeBIT 2006 New Devices announced by T-Mobile Intern ational


"T-Mobile underlines its commitment to bring web ‘n’ walk to the mass market by enabling an even broader device portfolio to surf the open internet via the Opera Mini browser.“

Ingo Schneider, Vice President Mobile Data, T-Mobile.

Opera is currently deployed web’n’walk customized and localized versions at the following five T-Mobile International countries: Austria, Germany, Netherlands, Czech Republic, United Kingdom. Several countries to follow together with multiple new handsets.


- 1 -

Opera for Devices


Opera for Devices: 1Q 2006 highlights

� Announced Opera for Nintendo Wii and DS game consoles

� Signed first contract with a net TV provider

� Signed first contract with a VoIP screen phone provider

� Announced partnership with the world’s leader in device software optimization – Wind River

� Announced IPTV partnerships with Amino, Orca and Industria


Opera for Devices market position

The premium provider of full internet/web applicati ons and user interfaces

for non-mobile phone devices� Full web browsing and superior performance, rendering and navigation capabilities

� Execution platform for Web applications and user interfaces

� AJAX and Web services

� Ability to customize device look & feel, backed by a highly experienced professional

services organization

Expanding market position within the hottest device categories� Game consoles, set-top boxes, portable media players, VoIP screen phones, Web

tablets and net TVs

Opera is well positioned as browser adoption accele rates� From small early movers to also include large global players


Opera browsers are already in a broad array of devi ces and the device types continue to grow

Game Consoles

Set-top Boxes

Network TVs

IP Screen PhonesPortable Media Players

Web tablets


Nintendo Wii

Opera to be included in the revolutionary Wii game console

"For our Wii console launch in 2006, we required a browser that was fast and secure with support for the latest standards including AJAX. Opera proved perfect for our purposes and is an exceptional addition to both the Nintendo DS and the Wii console."

Genyo Takeda, senior managing director and general manager, Integrated Research & Development Division, Nintendo Co., Ltd.


Nintendo changing the rules with Opera contribution s

New user interactions models

- Wii controllers

- DS dual screen and touch screen

Integrating IP networking and the Web

More to be announced in the future


Nintendo Wii: Other Interesting Factoids

Launch expected Q4 2006

Comes on the heels of the very successful lanch of the Nintendo DS

� Has sold 16 million + units so far since being launched in November 2004

Key mission of Nintendo Wii is to broaden the marke t: turn non-gamers into gamers

� Completely new and revolutionary controller and interface design

� Broader array of games

� Almost instantaneous power-up of the console

� ”[Wii] can power up virtual console games and applications like our Opera web browser

saved to Flash ROM almost as fast as a telephone or television in just a few seconds.”

Satoru Iwata, President, Nintendo

Inflection point in the market: new game consoles are launched every 5 or so years


Opera for Desktop


� Continue to average 100,000 downloads/day since

“going free” in September 2005

� Opera 9 expected in launch in June

� Web-based Widgets, BitTorrent, Thumbnail

previews in tabs, site preferences

� Expanded marketing push

Opera Desktop

Monthly downloads


Summary: Well positioned for continued growth in 2 006

� Demand for Internet-connected mobile phones continues to rise at an attractive rate

� Opera Mini expected to accelerate growth of Web-enabled phones

� Attractive opportunities in the non-mobile phone connected devices market

� Focus on increasing desktop revenue

q106 presentation - opera software

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