Otello Corporation ASA

Earnings Release • Dec 20, 2016

Opera trading update

Opera trading update

Reference is made to today's announcement on the sale of Opera TV. In parallel,

Opera is providing an updated commentary to the previously communicated

financial outlook for 2016.

When carving out Opera TV from the overall FY 2016 ranges given for revenue

($570-600 million) and Adj. EBITDA ($60-70 million), the ranges would have been

$540-570 million revenue and $45-55 million Adj. EBITDA. Opera now expects to

end FY 2016 just below these overall ranges for the continued operations.

The lowering of our expectations follows softer performance in our mobile

advertising business. As communicated at our 3Q16 presentation, the mobile

advertising business did not exit 3Q16 with the same tailwind as we saw last

year. This trend has continued in 4Q16. While below our expectations, the

business is expected to show an overall revenue growth in 2016 of around 15% vs.

Main reasons for the revenue shortfall:

-Lack of big and successful game launches

-Delay of internal product upgrades due to parallel focus on platform

consolidation

As a result, we expect to deliver revenue from our brand and performance revenue

which is 10-20% below 4Q15. The YTD strength we have seen in programmatic

revenue is continuing into 4Q16, and we expect this to be up more than 30%

compared to 4Q15. Overall, we expect Mobile Advertising revenue to be down

approximately 10% compared to 4Q15. As a reference, 4Q15 saw exceptionally

strong spend from certain key Brand and Performance advertisers, and Opera

believes that excluding this extraordinary Q415 spend, the revenue would have

been relatively flat in 4Q16 vs 4Q15. Overall gross margins are strong in the

quarter and expected to be flat to slightly up compared to 3Q16.

Based on the pipeline of game launches and our own product road map, we expect

the current trading conditions to continue into 1Q17, resulting in a relatively

soft first quarter when compared with 1Q16. However, when looking at 2017 as a

whole, we expect that the significant investments we are making in products, in

particular the SDK, a new Core update, artificial intelligence and data science

will yield solid revenue growth compared to 2016. Overall, we feel comfortable

with the mid to long term growth, profit and competitiveness of our mobile

advertising offering.

All of Opera's other businesses - Opera TV, Bemobi, Skyfire and SurfEasy - are

performing in line with our 4Q16 expectations.

Petter Lade, Investor Relations

Tel: +47 2369 2400