Otello Corporation ASA

Quarterly Report • Aug 20, 2020

2Q 2020 OTELLO CORPORATION ASA

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, 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.

Otello Corporation ASA makes no representation or warranty (express or implied) as to the correctness or completeness of the presentation, and neither Otello Corporation 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 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. Otello Corporation 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 Otello Corporation 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.

Agenda

• Executive Summary (CEO, Lars Boilesen)
• Operational Review (CEO, Lars Boilesen)
• Financial Review (CFO, Petter Lade)
• Q&A (CEO, Lars Boilesen & CFO, Petter Lade)

Executive Summary

Quarterly highlights

Financial metric (USD million)	2Q20	2Q19
Revenue	54.0	56.2
Adj. EBITDA*	3.5	3.9
Operating Cash Flow	3.0	(2.8)

• AdColony slightly above and Bemobi slightly below guidance for the quarter
• Adj. EBITDA improved and turned positive for AdColony while Bemobi faced more Covid -19 impact and FX headwind in 2Q20
• Strong Operating cash flow of USD 3.0 million

*For further information regarding Adjusted EBITDA and other alternative performance measures used by Otello, see Note 9 of the interim financial statements

Operational Review

AdColony

• Revenue

• Revenue growth YoY and QoQ, despite Covid 19 impact
  • Performance revenue stable last 3 quarters
  • Continued growth for our Brand business
• Programmatic revenue growth of over 100% in 2Q20 vs 2Q19
  • Now 40% of Brand revenue

• Cost

• Merging demand side of Brand and Performance in 2Q20
• Expanding Istanbul service hub
• Cost savings of around USD 1 million per quarter

AdColony – 2020 & Covid-19 impact

• Expecting 10% revenue growth in 2020 vs 2019, some risk due to Covid-19, but positive trend from May
• Stable Performance revenue and continued growth in our Brand business
• Positive trend throughout 2Q20 and into 3Q20, but still significant pent-up demand due to Covid-19
• Cost savings executed in 2Q20, now free cashflow breakeven with \$50 million in quarterly revenue ⁸

Supply/Publishing

AdColony a leader for in-app ad inventory for mobile games

say their mobile usage outside of work has gone up significantly

play mobile games multiple times per day

are playing new games on their smartphones

More available inventory for our Brand and Performance advertisers

Advertisers want a Fraud Free, Brand Safe, Transparent marketplace

We can deliver that with our users on our SDK

Source– AdColony market research

Why gaming inventory works

of marketers are actively taking action to protect their brands from unsuitable content – Gaming is always brand-safe

of marketers say that the Coronavirus is changing the types of content they are comfortable advertising alongside

of marketers would be concerned if their ad appeared near COVID-focused content online

Source: IAS, Coronavirus Ad Adjacency Marketer Study, March 2020

Global Brand Business

Business Diversity is AdColony's strength

• AdColony is one of the few in-app SDK companies to have a successful Brand sales team, as well as a Performance/Gaming app-install team
• Direct IO business traditional orders, high-touch
• Brand Performance app install for Fortune 500 brands and non-gaming developers
• Programmatic marketplace that allows buyers to access AdColony inventory programmatically
• As brands were forced to shift their strategies, and inventory demand changed, AdColony took advantage of new but different opportunities. For example:
  • 1. Restaurants (QSRs) shifted all advertising away from their brick-and-mortar stores to their apps as they had to shut down physical locations. AdColony regained dollars we lost Direct and Programmatically with app install campaigns
  • 1. As Brands paused and cancelled high-end, high-touch Direct buys in favor of more affordable but scalable audience buys, we were able to regain our lost direct dollars programmatically
  • 1. As dollars overall spent by large brands decreased industry-wide in Q2, more impressions came available for Performance buyers which enabled our direct and programmatic performance demand to bridge the gap via increased impressions until Brand demand returned later in 2Q20

Results: Brand Advertising

• Third consecutive quarter of doubledigit growth
• Direct Brand deals (IO) were impacted most by industry-wide campaign freezes and cancellations due to COVID-19
• Programmatic rebounded in April, rest of Brand grew from May onwards

Revenue Source	2Q 2020	YoY Growth
Programmatic Open Marketplace	\$11.9MM	+ 133%
Brand (incl. IO and PMP)	\$13.4MM	- 13%
Brand Performance	\$4.6MM	- 19%
TOTAL	\$30MM	+ 14%

North America Brand

• North America Brand finished 2Q20 up 24.5% vs last year
• AdColony's position as one of the few ad inventory supply owners for mobile games & apps helped Marketplace dollars surge, even as brands & agencies cut budgets and spend early in Q2
• Strong collaboration between commercial, strategy, marketing, and products teams equaled success

\$15,5 \$4,7 \$5,7 \$5,1 \$19,3 \$2,8 \$4,6 \$11,9 \$0,0 \$5,0 \$10,0 \$15,0 \$20,0 \$25,0 Overall North America Brand Brand Performance Marketplace Revenue 2019 vs 2020 (Millions USD) 2019 2020

EMEA & LATAM Brand APAC Brand

• Though major EMEA & LATAM markets saw budget cuts in-line with the global industry and other regions, overall there was a +7% revenue increase to USD 8.7 miilion from 2Q19.
• APAC Brand down 7% vs 2Q19 as the region was hit hard by Covid-19

Programmatic Results

Why is AdColony Winning on Programmatic

• Constant focus on maintaining a Fraud Free, Brand Safe, Transparent marketplace
• Ongoing optimizations and strategic technical integrations to increase Supply-Demand Alignment
• Mobile Gaming increased in the absence of sports, original primetime programming — Brand marketers followed the eyeballs (Right)
• Back to back quarters of 100%+ YoY growth

Revenue Source	2Q 2020	YoY Growth
Programmatic Open Marketplace	\$11.9MM	+ 133%

Global Publishing & Performance Business

Results: Performance Advertising

2 0

3Q19 4Q19 1Q20 2Q20

Q2 Revenue Trend

• Relatively flat revenue trend QoQ after several quarters of decrease
• Growth in key categories
  • Reward / Scratcher
  • Social Casino
  • Hyper-casual
• Enabling future growth by adding new customers
  • USD 1.1MM from new Advertisers
  • USD 2.8MM from new Publishers

Performance business stabilizing

1. Data science team in Poland improving our core algorithms => Driving better decisions

2. Growth team established in Turkey => Building for long-term success with new publishers and advertisers

3. Campaign management centered in Turkey => Driving down cost

Bemobi

Bemobi's two pillars for sustainable profitable growth in emerging markets makes us unique

ADDRESSABLE USERS OF SERVICE

APPSCLUB SERVICES

Compelling subscription services with best of breed apps & games priced for each emerging market. Once services are live with mobile carriers, it increases Bemobi's addressable market

DISTRIBUTION CHANNELS

A unique mix of distribution channels are needed to promote services to the addressable market at a sustainable low cost of acquisition given the APRU and LTV of this market segment

REACH OF DISTRIBUTION CHANNELS

Bemobi's key subscription service offerings

Bundles of top apps & games in a low price point subscription model

Bridging the gap in emerging countries for monetizing digital subscription services

Bemobi's distribution channels

MOBILE CARRIERS PROMOTIONS 1

When a deal is signed, the mobile carrier commits to doing marketing and promotion of the new service

• SMS/MMS/RCS/ messages campaigns
• App Push Notifications
• Billing insert campaigns
• Store promotions and bundles

DISTRIBUTION CHANNELS

PAID ONLINE CAMPAIGNS 2

Partnering with leading apps and web properties in emerging markets to promote Bemobi's service offering.

• Revenue share based (e.g. Opera Mini)

• Paid per acquisition - CPA

Control increases

CO-OWNED CHANNELS WITH MOBILE CARRIERS

Bemobi's turnkey platform for mobile carriers captures users browsing and voice sessions when they are out of credit/data to promote its services

• Magazine inserts and TV spots • NCND portals and interactive voice response

3

Revenue & Adj. EBITDA

• Negative impact from FX and Covid-19
• Outperformed our peers during Covid-19

Revenue in BRL (rolling LTM)

BRL Revenue

1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20

• LATAM BRL: - 37.1%

∆ (%) Bemobi 2Q20 2Q19 Y-o-Y Revenue (USD M) 10,7 13,9 -23% EBITDA (USD M) 4,0 6,0 -34%

			∆ (%)
Bemobi - Ex-FX Rate	2Q20	2Q19	Y-o-Y
Revenue (USD M)	13,5	13,9	-3%
EBITDA (USD M)	5,3	6,0	-12%

Bemobi – Subscriber growth driving revenue and scale

• Total # subscribers up 4.5 million vs 2Q19
  • YoY LATAM up 2.4 million including Voice (IVR) and financial services subscribers
  • YoY International up 2.2 million due to global rollout
  • Down 3.5 million from 1Q20 due mostly to involuntary churn related to non-paying customers
• Overall service penetration on served addressable market at about 1.4%
• 69 operators live
  • 21 operators in Latam
  • 10 operators in South Asia
  • 18 operators in South-East Asia
  • 12 operators in CIS
  • 8 operators in Africa

Bemobi - Overal channel mix improving

Co-owned Channels

NDNC

• 16 portals live in Bemobi outside of Latam:
  • Idea India
  • Vodafone India
  • Vodafone Ukraine
  • Telenor Pakistan
  • Jazz Pakistan
  • Tele2 Russia
  • Vodacom Tanzania
  • Grameenphone Bangladesh
• Banglalink Bangladesh
• Robi Bangladesh
• Ncell Nepal
• MTS Belarus
• Telenor Myanmar
• Smart Cambodia
• Indosat Indonesia • Rostelekom Russia
• 2-3 more planned for the next 2 quarters

New NC Voice Portal and Bemobi Loop

• New No-Credit Voice Portal now deployed and live in all main carriers in Brazil.
• Focus now to integrate these multiple channels in a single platform (i.e. Loop) and to accelerate international expansion of the new voice channels
• New No-Credit Voice Portal's in active discussions with International Carriers (although roll-out progress is impacted by COVID-19 and global lockdown as no traveling is possible)

International markets continue subscriber growth 2Q19 vs. 2Q20 (from 8.2M to 10.4M)

CHANNEL	FROM	TO	Comments
Bemobi1 (co owned)	37%	35%	Stable % contribution despite the significant growth in gross adds from the same period a year before. Strategic: scalable, predictable and with low incremental cost
Operator2	8%	4%	No incremental cost but less scalable and less predictable. Operator bundles and promotions have decreased due to focus from carriers in core data services during the COVID-19 lockdown period.
Paid3	55%	61%	CPA - Increase of acquisitions in South Asia and South Eastern Asia. Opera Mini - New improved contract was signed in November 2019 and this channel is expected to grow in the coming quarters.

1 – Bemobi = NCND Portals

2 – Operator = Operator Promo

3 – Paid = Digital Acquisition (CPA) or based on Revenue Share agreements (e.g. Opera Mini )

Bemobi

• New voice-based channels and omnichannel platform with good traction in Brazil and about to begin international rollout, however delayed by about two quarters
• New voice and financial services offers growing in Brazil and show potential for a international rollout in the future. Two new contracts with carriers in Brazil around voice and data microfinancing expected to be live by 4Q20 further validates the new offer
• Service diversification into new verticals beyond the Apps club also consistent with plan

Other topics: Bemobi IPO and COVID-19

• Otello and Bemobi are constantly assessing market conditions and are still aiming to carry out a separate listing of Bemobi as capital markets reopen
• Brazil still positioned as the best potential listing venue for Bemobi
• As indicated before, COVID 19 had a short-term negative impact in Bemobi due to lower mobile pre-paid balances as a direct result of more depressed economies, specifically in Brazil where COVID had one of the largest impacts
• Rebound: July was better than June and with a trend of improvement month after month indicating a much faster recovery than most industries as countries go back to work and as demand for our services are still strong

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 restored the proceedings in order to pursue alternative remedies, including (1) have the Court require MFC to buy Otello's shares (and loan note) at the higher of the current valuation of those shares and the price that the buyer was prepared to pay, and (2) if MFC is unable to purchase the shares at such price, require that all shares in the company be sold and Otello be paid the sum found to be due to it out of the proceeds of such sale
• Court case postponed due to Covid-19, now scheduled for first week of October 2020

Financial Review

Otello Corporation 2Q20

(USD million)	2Q 2020	2Q 2019	% Change
Revenue	54.0	56.2	-4%
Publisher and revenue share cost	(32.5)	(31.9)	2%
Payroll and related expenses	(9.6)	(12.1)	-21%
Stock-based compensation expenses	(0.6)	(1.0)	-42%
Depreciation and amortization expenses	(6.1)	(6.4)	-3%
Other operating expenses	(8.5)	(8.3)	2%
Total operating expenses	(57.2)	(59.2)	-4%
Adjusted EBITDA*	3.5	3.9	-11%
Operating profit (loss), (EBIT), excluding restructuring and impairment
expenses	(3.2)	(3.5)
Restructuring and impairment expenses	1.2	(0.6)
Operating profit (loss), (EBIT)	(2.0)	(4.2)
Net financial items	(9.9)	(2.5)
Provision for taxes	4.3	(0.3)
Profit (loss)	(7.6)	(7.0)

Revenue growth in AdColony offset by revenue decline in Bemobi

Total operating expenses down 4% due to lower payroll expenses

• Positive FX impact for Bemobi

• Headcount reduction and lower bonus payments in AdColony

Adj. EBITDA down 11% vs 2Q19

Reversal of restructuring charge of USD 1.4 million

Negative Net financial items due to weaker USD vs NOK

Otello Corporation 2Q20

Revenue (USD million)

OPEX (USD million)

Adj. EBITDA (USD million)

Revenue growth in AdColony offset by revenue decline in Bemobi

OPEX down 12% due to lower payroll expenses

• Positive FX impact for Bemobi
• Headcount reduction and lower bonus payments in AdColony

Adj. EBITDA down 11% vs 2Q19

AdColony

16 16 13 14 13 ^{15 17 22 14 14 6 7 9} 5 5 5 8 12 10 12 Revenue USD million) 42 48 55 43 43

2Q19 3Q19 4Q19 1Q20 2Q20

OPEX (USD million)

7	8	9	8	7
5,	5,	5,	5,	3,
1	1	1	1	1
2Q19	3Q19	4Q19	1Q20

Adj. EBITDA (USD million)

-1,0 0,8 3,1 -1,3 0,5 2Q19 3Q19 4Q19 1Q20 2Q20

• Revenue slightly above expectations in 2Q20, very strong Programmatic revenue
• Performance business stable last 3 quarters
• Cost down significantly in 2Q20
  • One-time effect of lower bonus payment and less travel/entertainment (USD 1 million)
  • Ongoing savings from lower headcount (USD 1 million)
• Annualized OPEX of USD 60 million
• Gross margins down somewhat due to greater mix of programmatic revenue
• Turned Adj. EBITDA loss last year into profit in 2Q20

Gross Margin %

Bemobi

Revenue (USD million)

• LATAM BRL: - 37.1%
• INTL basket: -3.9%

OPEX (USD million)

Adj. EBITDA (USD million)

• Significant negative Covid -19 impact in the quarter
• Revenue would have been down 3% YoY with neutral FX rates.
• Gross margin fluctuates based on channel/product mix and % International revenue. Some negative Covid -19 impact in 2Q20
• Reported Adj. EBITDA would have been down 12% with neutral FX rates

FX impact 2Q20 vs 2Q19 FX Rate impact YoY (2Q20 vs. 2Q19)

Cash flow

Cash flow (USD million)

	3.0	(2.9)	(1.3)	(0.3)
35.0					33.5
Cash, Beginning of Quarter	Cash Flow from Operating Activities	Cash Flow from Investment Activities	Cash Flow from Financing Activities	Effects of FX changes on cash and cash equivalents	Cash, End of Quarter

• Operating cash flow: USD 3.0 million

• Positively impacted by positive Adj. EBITDA and good cash collection
• Cash flow from Investment: USD (2.9) million
  • Capitalized R&D: USD (2.4) million
  • CAPEX: USD (0.4) million
• Cash flow from Financing: USD (1.3) million
  • Payment on RCF: USD (0.7) million
  • Lease liabilities: USD (0.6) million (IFRS 16)
• FX impact on cash position: USD (0.3) million
• Cash end of quarter: USD 33.5 million

Financial position

Financial Position (USD million)

38

Outlook AdColony

3Q20*

Revenue: Up 5-10% Gross margin: Flat/down OPEX: Down

2020**

Revenue: Up ~10% Gross margin: Flat/down OPEX: Flat/down

Outlook Bemobi

3Q20*

Revenue: Flat Adj. EBITDA: Flat

2020**

Revenue: Flat/up (~0-5%) Adj. EBITDA: Flat/up (~0-5%)

*Vs 3Q19 (local currency)