Otello Corporation ASA

Investor Presentation • Nov 13, 2019

3Q 2019 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)	3Q19	2Q19	3Q18
Revenue	63.1	56.2	64.9
Adj. EBITDA*	6.0	3.9	1.4

• Revenue in AdColony and Bemobi both up ~ 10% vs 2Q19
• All time high Adj. EBITDA for Bemobi and AdColony turned positive in the quarter
• On track to deliver on our FY 2019 targets

Operational Review

AdColony – Turnaround starting to show results

• Revenue

• Brand (2/3rd of revenue) had very strong 3Q19, up over 20% vs 2Q19
• Performance is still volatile (1/3rd of revenue), down 2% in 3Q19 vs 2Q19

• Cost

• OPEX reduced by over 50% last 2 years, now @ \$60m annual run-rate
• Cost savings on ad delivery (programmatic) enables us to invest in our sales force and our Istanbul office while keeping overall cost flat

AdColony – Status

• Expecting ~10% revenue growth in 4Q19 vs 3Q19
• Programmatic revenue with strong start to 4Q19
• Expecting Adj. EBITDA growth in 4Q19 and positive Adj. EBITDA for FY2019
• Brand is where we invest and the strong Brand demand is canibalizing some Performance revenue as they pay more for same inventory

AdColony

Global Brand Business

Results: Brand Advertising

Revenue Source	Q3 2019	Q2 to Q3 growth
Brand (incl. IO and PMP)	\$16.8M	+ 8%
Brand Performance	\$7.4M	+ 30%
Programmatic Open Marketplace	\$7.9M	+ 55%
TOTAL	\$32.2M	+ 22%

• 22% revenue growth from 2Q19 to 3Q19
• Programmatic open marketplace revenue with accelerated and very scalable growth

Successful Shift to Programmatic Continues

• Programmatic open marketplace now scaling, strong start to 4Q19
• Focus on fewer and bigger partners, with revenue per customer up over 2x in 3Q19 vs 2Q19
  • Deeper partnerships
  • Lower cost of serving
• Infrastructure, product and tech ready to support significantly higher revenue in 2020

	Total Live DSPs	Overall Revenue	Median Revenue
Q2 2019	110	\$5.1M	\$46k
Q3 2019	76	\$7.9M	\$104k

Key reasons for growth and marketshare gain in 3Q19

Supply / Demand Alignment

• Better optimization of both supply and demand =>Right ad at right place
• More ad formats (Interstitial Display) => More products to sell

Transparency & Measurability

• sellers.json and SupplyChain enabling indentification of buyer and sellers => Benfits AdColony as we have our own direct inventory •Team up with fraud partners like GeoEdge & Pixalate => Attracts big and
• high end advertisers

Organization

• Expanding our salesfore in US, EMEA and APAC

EMEA & LATAM

Overview

• 49% revenue growth from Q3 2018
• Instant Play Programmatic Revenue increased more than 200% compared to Q318

APAC

• 12% YOY growth in revenue Q3 2018 to Q3 2019
  • Gross margins above 50%
  • Automated programmatic delivery already over 50% of revenue
• Regional expansion of the brand business a priority for 2019 through 2020
  • Launched brand business in Japan, New Zealand and Myanmar
• New business momentum strong with multiple client wins to set up a strong next 12 months
  • Tokyo Olympics 2020 major focus for Asia Pacific advertisers

AdColony Wins "Best Ad Network - Mobile" from Adweek

• AdColony voted Mobile Ad Network of the year
• Won ahead of Google and Unity
• 15,000+ votes by industry peers
• Boost for our employees and should help boost sales in 4Q19

AdColony

Global Performance Business

Results: Performance Advertising

Summary: Q3 2019 Performance Revenues = US\$15.9 million

Gross Margin (%)

• Competitive market, revenue stabilizing
• Gross margin softer in 3Q due to new business publishing and supply deals

New Business Publishing – Big wins with AdColony SDK Chartbusters - 42 apps in Top 100

New Business publishing now contributing over 10% to Performance business (was <5% in 1Q19) => Important long term revenue driver

Priorities and Action Plan

• Drive adoption of SDK4.0 with all publishers to open up 'Display' as new revenue source in 2020 => Incremental revenue
• Advanced bidding => Incremental revenue
• Continued push on new business to drive continuous growth in publisher base and top apps – build on success in Q3 => Additional supply
• New IR (Install Rate) & ROAS (Return On Ad Spend) models in partnership with Deep Sense team to deliver better outcomes to our advertisers => Better IR and ROAS will give us bigger portion of the spend from the advertisers

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.

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

APPS & GAMES SUBSCRIPTION SERVICES

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

Integrate people and mobile content through technology and subscription-based models

Bemobi's distribution channels

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
• Magazine inserts and TV spots

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

• NCND portals and interactive voice response

3

Record Revenue & Adj. EBITDA

Record Revenue & Adj. EBITDA
			D (%)
Bemobi	3Q19	3Q18	Y-o-Y
Revenue (USD M)	14,8	12,4	19%
EBITDA (USD M)	6,2	5,2	19%
			D (%)
Bemobi - Ex-FX Rate	3Q19	3Q18	Y-o-Y

Bemobi - Ex-FX Rate	3Q19	3Q18	Y-o-Y
Revenue (USD M)	14,9	12,4	21%
EBITDA (USD M)	6,2	5,2	20%

FX Rate impact YoY (3Q19 vs. 3Q18)

• INTL basket: - 2.6%
• LATAM BRL: - 0.6%

Bemobi – Subscriber growth driving revenue and scale

• 17% YoY subscriber growth
• Overall service penetration on served addressable market grew to 1.2%
• 67 operators live
  • 21 operators in Latam
  • 10 operators in South Asia
  • 17 operators in South-East Asia
  • 12 operators in CIS
  • 7 operators in Africa
• Several new launches planned for 4Q19

Bemobi - Overal channel mix improving

Co-owned Channels

NDNC

• 13 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
• 2-4 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

International markets continue subscriber growth 3Q18 vs. 3Q19

CHANNEL	FROM	TO	Comments
Bemobi1 (co owned)	27%	34%	Growth due to launch of new portals in Q2. Strategic: scalable, predictable and with low incremental cost
Operator2	8%	7%	No incremental cost but less scalable and less predictable
Paid3	65%	59%	CPA - Increase of acquisitions in South Asia and South Eastern Asia Opera Mini - New improved contract being negotiated to be signed in November OVI/OMS - Feature phone traffic decreasing as expected

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 getting traction in Brazil and about to begin international rollout
• Bemobi co-owned channel growth in international markets consistent with strategy (i.e. 34% of total new users)
• Service diversification into new verticals beyond the Apps club also consistent with plan
• Continued revenue and profit growth expected in 4Q19 vs 3Q19

Bemobi IPO

• We are still aiming to list or spin out Bemobi.
• Brexit made 2H19 listing impossible in UK
• Considering other exchanges
• Additional investor meetings have been conducted in 2H19 and more are

planned towards the end of the year

Financial Review

Otello Corporation 3Q19

(USD million)	3Q 2019	2Q 2019	3Q 2018
Revenue	63.1	56.2	64.9
Publisher and revenue share cost	(35.9)	(31.9)	(38.4)
Payroll and related expenses	(12.8)	(12.1)	(14.0)
Stock-based compensation expenses	(1.0)	(1.0)	(0.2)
Depreciation and amortization expenses	(7.3)	(6.4)	(7.6)
Other operating expenses	(8.4)	(8.3)	(11.1)
Total operating expenses	(65.4)	(59.7)	(71.3)
Adjusted EBITDA*	6.0	3.9	1.4
Operating profit (loss), (EBIT), excluding restructuring and impairment
expenses	(2.3)	(3.5)	(6.4)
Restructuring and impairment expenses	(0.6)	(0.6)	(1.8)
Operating profit (loss), (EBIT)	(2.9)	(4.2)	(8.2)
Net financial items	10.0	(2.5)	(2.5)
Provision for taxes	(0.1)	(0.3)	(0.6)
Profit (loss)	7.0	(7.0)	(11.2)

Revenue down 3% vs 3Q18 and up 12% vs 2Q19

Overall OPEX down YoY and flat vs 2Q19

Record Adj. EBITDA for the year and up 4x vs 3Q18

IFRS 16 impacted Adj. EBITDA positively by USD 1.1 million in 3Q19

Positive Net financial items due to stronger USD vs NOK

Otello Corporation 3Q19

Revenue (USD million)

OPEX (USD million)

• Solid revenue growth vs 2Q19 for both AdColony and Bemobi
• OPEX significantly down vs 3Q18 and slightly up versus 2Q19 due to Bemobi
• Adj. EBITDA up both versus 3Q18 and 2Q19 and highest for over 2 years

AdColony

Revenue USD million)

3Q18 4Q18 1Q19 2Q19 3Q19

31

32

3Q18 4Q18 1Q19 2Q19 3Q19

19,3 17,3

3Q18 4Q18 1Q19 2Q19 3Q19

OPEX (USD million)

15,6

15,7

15,8

• Performance revenue levelling out
• Brand revenue up YoY and all 3 brand segments up from 2Q19 with particular strength in Programmatic
• Cost stable around annualized OPEX of \$60m
• Strong gross margin trend
• Adj. EBITDA ahead of last year and last quarter

Bemobi

65,7 67,8 65,0 69,3 70,0 62,5 65 67,5 70 72,5 3Q18 4Q18 1Q19 2Q19 3Q19 Gross Margin % 12,413,6 12,8 13,9 14,8 3Q18 4Q18 1Q19 2Q19 3Q19 Revenue (USD million) 14,9

OPEX (USD million)

• Both Revenues and Adj. EBITDA growing close to 20% YoY
• Very strong gross margins at 70%
• 3Q19 YoY results slightly impacted by FX (BRL vs USD)

Cash flow

Cash flow (USD million)

• Operating CF: USD (0.9) million, negatively impacted by building of working capital due to revenue growth in AdColony and Bemobi
  • Accounts receivables in AdColony US up USD 4 million
  • Accounts receivables in Bemobi International up USD 1.5 million
• Net cashflow from Investment Activities USD (2,7) million
  • Capitalized R&D: USD (2.6) million
  • CAPEX: USD (0.1)
• CF from Financing: USD 18.8 million
  • Proceeds from borrowings USD 20 million
  • Share repurchases USD (0.2) million
  • Lease liabilities USD (1,1) million (IFRS 16)
• FX impact on cash position: USD (0.6) million
• Cash end of quarter: USD 31.5 million

Financial position

Financial Position (USD million)

Balance sheet (USD million)

Outlook AdColony

4Q19*

Revenue: Up ~10%

Gross Margins: Flat

Opex: Flat, continued cost focus

Adj. EBITDA: Up

2019 (unchanged)

Adj. EBITDA: Positive

Outlook Bemobi

4Q19*

Revenue: Up

Adj. EBITDA: Up

2019 (unchanged)

Revenue: Growth vs. 2018

Adj. EBITDA: Growth vs. 2018

* Vs 3Q19