Otello Corporation ASA

Earnings Release • Aug 31, 2016

2Q 2016

• Executive Summary

• Financials
• Advertising
• Consumer
• Closing

Financial Highlights 2Q16

Financial metric	2Q16 (\$m)	2Q15 (\$m)	2Q16 Guidance
Total revenue	162.9	146.2	166-174
Adj. EBITDA*	20.3	29.5	20-24

• Revenue just below range primarily due to timing of Mobile Advertising performance campaigns
• Adj. EBITDA in range due to solid margin and cost control
• YoY profitability down primarely due to fall in Tech licensing revenue

Consumer Transaction

What we are selling What we are keeping		Price	Timing
-Consumer Business	-Opera Mediaworks -Opera TV -Bemobi -Surfeasy & Skyfire	\$575m	Closing expected end September
Milestones		Status
Signed SPA		July 17
Received first escrow payment (\$100m)		July 18
Kunlun shareholder approval		August 3
Completion of certain reorganisation steps		August 8
Amended terms for the transaction		August 15
Received second escrow payment (\$200m)		August 16/18
Regulatory approval (CFIUS)		Ongoing
Closing and payment of final \$275m 4		Payment due at closing or on September 30, whichever is first

Agenda

• Executive Summary

• Financials

• Advertising

• Consumer
• Closing

A note from our lawyers 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 mate rially 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 m arkets, market acceptance of new products and services and such other factors that may be relevant from time to time. Although we bel ieve that the expectations and assumptions reflected in the statements are reasonable, we cannot guarantee future results, lev els 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 connec ted 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 t o 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 const itute 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 State s 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 financia l 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 Austra lia.

Financial Highlights 2Q16

Financial metric	2Q16 (\$m)	2Q15 (\$m)	2Q16 Guidance
Total revenue	162.9	146.2	166-174
Adj. EBITDA*	20.3	29.5	20-24
OCF	7.3 (18.8 YTD)	31.0 (14.5 YTD)

2Q16 Financial Review

\$m	2Q16	2Q15	Y on Y
Revenue	162.9	146.2	11%
Publisher and revenue share cost -	75.8	52.2	45%
Payroll and related expenses -	40.7	38.8	5%
Stock-based compensation expenses -	2.5	2.1	18%
Depreciation and amortization -	16.0	12.2	31%
Other operating expenses -	26.1	25.7	2%
Total expenses** =	161.0	131.1	23%
Adjusted EBITDA*	20.3	29.5	-31%
EBIT**	1.8	15.2
Net Income	(5.3)	(1.3)
EPS (USD)	(0.037)	(0.009)
Non - IFRS Net Income	4.8	12.6
Non – IFRS EPS (USD)	0.033	0.086

*Adj EBITDA excludes stock-based compensation expenses and one-time costs ** Excludes one-time costs ⁸

Financial Highlights: 2Q15 – 2Q16

Revenue (\$m) Adjusted EBITDA* (\$m)

Revenue: Customer Type 2Q16

Customer Type	2Q16 (\$m)	Change vs 2Q15	Comments
Mobile Advertising - 3rd Party Publishers	114.4	+23%	Slightly below expectations
Consumer (Owned and Operated Properties)	37.7	+20%	In line with expectations
Tech Licensing	10.7	-51%	In line with expectations

Mobile Advertising - 3rd Party Publishers

Brand Performance

Revenue: Consumer - Owned and Operated Properties

Customer Type	2Q16 (\$m)	2Q15 (\$m)	% Growth	Comments
Mobile Browser	8.6	9.4	-9%	Revenue transition, impacted by prior period adjustments
Apps and Games*	11.7	1.1	1 164%	Bemobi + strong organic revenues
Performance and Privacy Apps	1.2	0.7	71%	SurfEasy + new organic revenues
Operator Co-brand Solutions	2.4	8.1	-70%	Expected decline
Desktop Browser	13.8	12.0	15%	Strong ARPU driven by search
Total Consumer (O&O)	37.7	31.4	20%	Solid growth

Tech Licensing

Connected TV Other Licensing

• Other Tech Licensing volatile with limited predictability

• Connected TV revenue stable and predictable

OPEX Development (\$m)

Cost line	2Q16 vs. 2Q15*	Comments
Payroll	5%	Headcount up 4%
Publisher and revenue share cost	45%	Driven by growth in Mobile Advertising - 3rd Party Publishers and \$4.3 million related to Revenue Share Cost from Consumers (Owned and Operated Properties).
Other OPEX	2%	Marketing and hosting expenses key drivers
Depreciation & Amortization	31%	Higher investments in Opera server infrastructure and depreciation on intangible assets related to acquisitions.
Stock-based compensation expenses	18%	Grant of new RSU's
Total Expenses*	23%

Unchanged overall outlook for 2016

Metric	2016 Outlook
Revenue*	\$690 - 740m
Adj. EBITDA**	\$100 - 125m

OMW + TV +	Metric	2016 Outlook
Apps &	Revenue*	\$570 - 605m
Games	Adj. EBITDA**	\$75 - 90m

* Assumes FX rates as of August 30th 2016

Opera

**Adj EBITDA, excluding stock-based compensation expenses and one-time costs

Agenda

• Executive Summary
• Financials
• Advertising
• Consumer
• Closing

Executive Summary – Q2 2016

• For 1H 2016, Opera Mediaworks delivered \$232M in Revenues (+32% vs. 1H'15) and we continue perform in line with our annual operating plan
• In Q2, we delivered \$114.4M in Revenues (+23% growth vs Q2'15)
• Sales were \$2m lower than last quarter, but Q1 was above plan due to strong, above plan post-holiday spending in January
• Q2 highlights include:
• Record Q2 for both Brand and Performance Revenue businesses
• SDK footprint growth
• Record number of creative awards and nominations across all regions
• Completed development of new products: programmatic, compass, new 3.0 SDK
• One Platform initiative active development; unifies platform in 2017

Q2 2016 Growth Drivers

Key Drivers	Growth	Details
PERFORMANCE	33%	• Largest Q2 to-date, with growth driven by: • Continued international expansion • Demand for differentiated in-app Instant-Play™ video • Growth of key performance advertiser accounts
BRAND	15%	• Instant-Play™ video a standout, growing 40% YoY • Continued investment in Brand Performance campaigns • Campaign creativity & innovation are driving dollars & garnering global recognition

Largest ad SDK footprint in mobile after Google

Ahead of Twitter (MoPub), Facebook, AOL (Millennial) & InMobi

Source: MixRank, Q2 2016 SDK penetration within Top 1000 apps per MixRank rankings

30.9% YOY Growth – Platform Reach

20

Highest Quality Publisher Growth

New publisher relationships in Q2 drove access & reach in the most popular, mobile-first apps worldwide.

113%+ YOY Growth in \$1MM+ Publishers

Creating meaningful value for the mobile publisher ecosystem

Publishers w/ \$1MM+ Earnings Run Rate

22

Revenue Shift Towards Video Continues

YOY Share of OMW Revenue, Video vs. Non-Video (Actuals)

86% YOY Growth in Programmatic Sales

Adoption of automated buying continues across regions

Performance Advertising

Largest Q2 ever for global Performance advertising business (+33% vs Q2'15)

• International growth: EMEA and APAC expansion drove +111% and +135% growth respectively vs. Q2'15
• Key accounts: Grew number of performance advertisers by +67% vs. Q2'15 with continued growth in overall campaign IO size as well
• Video: Doubled number of Instant-Play™ performance impressions; grew number of Instant-Play™ app installs & total engagements
• Brand Performance: Brands becoming more attribution focused, look to us for return on ad spend through performance campaigns
• Programmatic: Further expanded Performance business by adding Programmatic demand

Brand Advertising

Key Brand Highlights

• Average deal size: Deal sizes increasing, especially for video campaigns, as we are seeing larger budgets from key customers.
• Top verticals: CPG, Entertainment, Restaurants, Retail & Finance
• Key global wins:
• EMEA Samsung, Bose, eBay, Turkish Airlines. Signed LinkedIn & FourSquare partnerships.
• APAC J&J, Pepsi, P&G, Samsung India, Cadburys
• Americas Verizon, Google, Unilever, Coca Cola, P&G
• Programmatic momentum: 86% growth in programmatic sales YoY. Live with growing number of DSPs & strong interest in in-app Instant-Play™ video inventory
• Creative recognition: 15 global industry award nominations across regions for highimpact brand creative & results

Innovation & Outcomes

Case Study: Hilton 360° Video

An Immersive 360 Experience

• HD Mobile Video & Dynamic End Card
• 360° Tilt to View
• End card linked to reservations site

Real Results

"The theme of the campaign is Our Stage. Your Story…these virtual reality moments are what drive travelers to book their dream vacation, right then and there."

Kyle Zvacek, Global Account Director, OMD

Awards

Q2 2016 Global Award Wins & Nominations

4 Wins in Creativity, Use of Technology & Effectiveness

Nominated for Best Use of Technology, Most Innovative Use of Mobile & Best Use of Video & Rich Media

Nominated for Partner of the Year Nominated for 6 Campaigns

Q2 2016 Takeaways

On track for company's first \$500M+ year

• Core focus areas for 2016
• Growth Performance, Video, Programmatic
• New products 2 of 3 launched w/new SDK on track to launch in September
• One Platform Unifying our technology platform for greater scale & efficiency
• New products that deliver true "brand experiences" continue to drive differentiation
• Our ability to combine creativity powered by technological innovation that can't be done elsewhere continues to drive advertiser interest & industry recognition
• Platform is expanding
• Our SDK penetration is a competitive advantage and provides us with strong data signals and the ability to deliver high quality brand experiences in the most popular apps in the world.

Agenda

• Executive Summary
• Financials
• Advertising
• Consumer
• Closing

Consumer Overview

MOBILE BROWSER

Execution areas

Android: 142M MAU end of 2Q16

Opera Mini Native: strong growth year to date with improved retention rates

January 2016 July 2016

New Home page

• Focus on driving engagement and increasing the time spent on the browser
• Content cards that enable localization of content per market
• Launched local content cards in India with Hungama (Bollywood) and Sportkeeda (cricket)
• New markets to be launched in Q3 and Q4 2016

Building on native advertising

• Focus on developing native advertising ad formats to monetize higher engagement times in the browser
• Multiple ad providers (Mediaworks, Facebook, Google) will set the ground for scalable ad monetization

DESKTOP BROWSER

Desktop 55M MAU in 2Q16

Desktop Revenue

Busy quarter with lots of releases and innovations coming to the desktop browser

Native Adblocker

Video popout

Battery Saving

OPERA HAS RETAKEN POSITION AS INNOVATION LEADER

Opera, the first major browser with native adblock

Opera saves more battery than Edge and Chrome

"Opera is setting the trend and brings a killer feature while other browsers like Firefox & Chrome are still sleeping"

PERFORMANCE & PRIVACY

Opera Max

C R O S S I N G 3 0 , 0 0 0 , 0 0 0 U S E R S I N A U G U S T 2 4 0 % G R O W T H I N Q 2 S E C O N D B I G G E S T A P P I N O P E R A

Launching Ads in September

Rocket Optimizer

• New WIN with operator in the UK, second win in UK this year
• New Win with operator in Egypt
• Rocket platform went live in Ooredoo Kuwait

Optimization of encrypted Videos is getting strong market traction

• Rocket Has a market leading support for optimization of encrypted videos, YouTube, Netflix and others
• Proven in trials and live deployments
• Many Tenders/RFPs ongoing

• Deal with tier 1 US operator targeted to close in q3

• Opera VPN for Android launched Aug 23 with over 100k downloads in first 48 hours

• 4M Opera VPN user registrations since launch across all platforms
• SurfEasy owned and operated paying base grew 14% in Q2 and 16% during the first half of Q3.

"I just deleted half of my iPhone app- you should too… I erased four VPN apps, but kept a fifth, SurfEasy VPN"

Walt Mossberg

APPS AND GAMES

One year after Bemobi's acquisition, globalization of Opera's AppsClub is at full speed

• 2.3 million paying AppsClub subscribers
• \$9.5 million in 2Q16 Revenue (total Bemobi)
• New launches during Q216
• Tata DoCoMo India
• MTS Belarus
• Hutchison Indonesia
• MTS Ukraine
• Banglalink Bangladesh
• Vinaphone Vietnam

Success in Brazil => Now Global Footprint

• Apps Club service:

• 38 Carriers
• 20 of the largest emerging countries

• 3Q16 outlook

• New launches planned with leading mobile carriers
• Significant improvement in most operational metrics (subscriber acquisition and monetization) across regions

TV AND TECH LICENSING

Opera TV announced renewal of agreement with leading customer

54

A T T H E F O R E F R O N T

• This agreement extends on the established 4 year old strategic partnership
• Vestel, is the largest TV manufacturer in Europe, already shipping millions of TVs each year with Opera TV
• Opera TV will continue to supply its latest range of products which include the Opera SDK, TV Store and HbbTV solutions

Opera TV Snap 3.0 launched

Empowering content providers and broadcasters to reach new audiences

55

• Opera TV Snap maintains its position as the industry's quickest way to launch an attractive OTT service
• Expanding to include support for more online video platforms (JWPlayer, Ooyala and Zype)
• Designed to meet the complex needs of broadcasters to combine; live broadcast, ondemand content and full episodic content in one single app with multi-tier navigation

Agenda

• Executive Summary
• Financials
• Advertising
• Consumer
• Closing