Otello Corporation ASA

Earnings Release • May 11, 2016

1Q 2016

• Executive Summary

• Financials
• Advertising
• Browser
• Closing

Financial Highlights 1Q16

Financial metric	1Q16 (\$m)	1Q15 (\$m)	1Q16 Guidance
Total revenue	163.5	126.8	152-160
Adj. EBITDA*	17.9	18.2	14-18

• Adjusted EBITDA at high end and Revenue above high end of guidance
• Strong Mobile Advertising Revenue trend continues

2016 Priorities

• Consumer • Mobile Advertising

• Continued growth
• Strategic new products
• One platform

• O&O focus

• Focus on ARPU through advertising and partnerships

• Product enhancements

• Tech Licensing

• Continued solid traction in TV business
• Less focus on B2B sales beyond Connected TV

Agenda

• Executive Summary

• Financials

• Advertising

• Browser

• 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 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.

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 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.

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Financial Highlights 1Q16

Financial metric	1Q16 (\$m)	1Q15 (\$m)	1Q16 Guidance
Total revenue	163.5	126.8	152-160
Adj. EBITDA*	17.9	18.2	14-18
OCF	11.5	-16.6

1Q16 Financial Review

\$m	1Q16	1Q15	Q on Q
Revenue	163.5	126.8	29%
Publisher and revenue share cost -	74.6	46.1	62%
Payroll and related expenses -	42.3	37.7	12%
Stock-based compensation expenses -	2.7	2.9	-7%
Depreciation and amortization -	15.5	11.0	41%
Other operating expenses -	28.6	24.8	15%
Total expenses** =	163.8	122.4	34%
Adjusted EBITDA*	17.9	18.2
EBIT**	-0.3	4.4
Net Income	-17.1	-26.2
EPS (USD)	-0.117	-0.184
Non - IFRS Net Income	6.4	10.9
Non – IFRS EPS (USD)	0.043	0.077

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

Financial Highlights: 1Q15 – 1Q16

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

Revenue: Customer Type 1Q16

Customer Type	1Q16 (\$m)	Change vs 1Q15	Comments
Mobile Advertising - 3rd Party Publishers	117.1	+41%	Slightly above expectations
Consumer (Owned and Operated Properties)	36.3	+42%	In line with expectations
Tech Licensing	10.1	-44%	In line with expectations

Mobile Advertising - 3rd Party Publishers

Revenue: Consumer - Owned and Operated Properties

Customer Type	1Q16 (\$m)	1Q15 (\$m)	% Growth	Comments
Mobile Browser	8.8	6.7	32%	Strong search and speed-dial growth
Apps and Games*	10.0	0.6	1 698%	Bemobi + tripling of organic revenues
Performance and Privacy Apps	1.7	0.2	825%	SurfEasy + new organic revenues
Operator Co-brand Solutions	3.2	7.7	-58%	Expected decline
Desktop Browser	12.6	10.4	21%	Strong ex FX, driven by search
Total Consumer (O&O)	36.3	25.5	42%	Strong growth
FX-adjusted Consumer**	39.3	25.5	54%	Very strong growth

* Revenue from Bemobi was \$8.2 million in 1Q16 **Constant currency vs 1Q15

Tech Licensing

Connected TV Other Licensing

• Other Tech Licensing volatile with limited predictability
• Connected TV revenue stable and predictable

OPEX Development (\$m)

Cost line	1Q16 vs. 1Q15*	Comments
Payroll	12%	Headcount up 9%
Publisher and revenue share cost	62%	Driven by growth in Mobile Advertising - 3rd Party Publishers and \$3.9 million related to Revenue Share Cost from Consumers (Owned and Operated Properties).
Other OPEX	15%	Marketing and hosting expenses key drivers
Depreciation & Amortization	41%	Higher investments in Opera server infrastructure and depreciation on intangible assets related to acquisitions.
Stock-based compensation expenses	-7%	Lower performance assumptions for RSU's
Total Expenses*	34%

Guidance 2Q16

		Vs. 1Q16*	Comments (Outlook)
Revenue	Mobile Advertising - 3rd Party Publishers	Flat/Up	Seasonally stronger quarter for Brand Advertisers, offset by a more normalized performance advertising level after 1Q
	Consumer (Owned and Operated Properties)	Flat	Growth from Apps and Games offset by fall in Operator Co-brand Solutions
	Tech Licensing	Flat/Up	Solid TV revenue and stable other Tech Licensing revenue
Expenses	Payroll	Flat/Up	Relative stable overall headcount, annual compensation adjustments in Consumer/Tech
	Publisher and revenue share cost	Flat/Up	Reflecting Mobile Advertising (3rd PP) revenue trend
	Stock-based compensation	Flat/Up	Impacted by new RSU grants, dependent on share price and performance
	Depreciation	Flat	Investments in cloud based server hosting infrastructure offset by decline in acquisition related depreciation
	Other Opex	Flat	Stable

Guidance 2Q16

Metric	2Q16 Guidance
Revenue*	\$166 - 174m
Adj. EBITDA**	\$20 - 24m

Unchanged overall outlook for 2016

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

Agenda

• Executive Summary
• Financials
• Advertising
• Browser
• Closing

Executive Summary – Q1 2016

• Q1 2016 was slightly above expectations, delivering \$117.1M in Revenues and +41% growth vs. Q1'15
• Key drivers of growth in the quarter included:
• Brand: Instant-Play™ video grew 28% in Q1 '16 vs. Q1 '15 . Average deal sizes grew as our Brand business saw larger budgets from key customers. Brand agencies show continued investment in Performance as they become more attribution focused.
• Performance: Grew 57% overall vs. Q1 '15 with continued demand for app installs & performance advertising products. Growth was achieved in all regions (NA, EMEA, APAC, LATAM).
• Programmatic: Continued growth with 143% growth in Programmatic sales; budgets shifting from traditional IO based business.
• Platform continues to grow in monthly uniques, attributed to new publishers across all categories of content combined with international expansion in key strategic regions like APAC.
• Key take-away: In a highly competitive and rapidly changing ecosystem, Opera Mediaworks is growing faster than competition leveraging our unique assets including Instant Play Video, global Brand Sales organization, valuable SDK footprint and Programmatic infrastructure.

43% YOY Growth – Platform Reach

Largest ad SDK footprint in mobile after Google

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

Source: MixRank, Q1 2016, U.S.

Highest Quality Publisher Growth

New publisher relationships in Q1 drove access & reach in the most popular, mobile-first apps worldwide.

100%+ YOY Growth in \$1MM+ Publishers

Creating meaningful value for the mobile publisher ecosystem

Publishers w/ \$1MM+ Earnings Run Rate

Highlights: 41% YOY Growth - Revenue

Revenue (in Millions)

Revenue Shift Towards Video Continues

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

143% YOY Growth in Programmatic Sales

Adoption of automated buying continues across regions

Brand Advertising

Key brand highlights:

• Average deal size: Deal sizes are increasing as we are seeing larger budgets from key customers. Video saw 75% increase YoY in deal size, and display saw 18% increase YoY in deal size
• Top verticals: Q1 top advertiser verticals included CPG, Entertainment, Finance, Retail & Healthcare
• Million dollar run rate: 80% growth in the number of key customers that are on a million dollar run rate based on their Q1 '16 media investment with Opera Mediaworks
• Close rate: Overall deal close rate exceeded 50% in Q1 '16

Performance Advertising

• Performance advertising grew +57% in revenues in Q1 '16 vs. Q1'15 as we saw continued demand for app installs & performance advertising products.
• Mobile developer app install budgets continue to increase with a focus on high quality app installs, mobile video & working with fewer but larger platforms like Opera
• 15% growth in number of \$1MM+ deals signed in Q1 '16 vs. Q1 '15.
• Achieved Performance advertising revenue growth across all regions including NA, EMEA, APAC & LATAM driven by gaming, mobile-first & mobile-only customers
• Grew Q1 customer base by 78% and number of campaigns by 90% through a focus on machine learning, global processes & high-touch customer service

Brand Performance

Brand Performance growth from high quality brands

Key Wins by Region

USA

• Awarded "Best Mobile Video Campaign" at Mobile Excellence Awards
• Formed deal with Nielsen Catalina to target based on purchase behavior & track offline sales
• Signed several major agency trading deals, all of which showed YoY growth

EMEA

• Won 9 IAB Mixx Awards in Turkey & 1 Global GLOMO Award at Mobile World Congress
• Signed several major agency trading deals
• Ran Samsung Instant-Play™ video campaigns across UK, Germany, Denmark & Sweden

LATAM

• Launched programmatic offering with positive reception from ATDs
• Closed first 2 campaigns of more than \$100,000 (Halls & AT&T)
• Signed annual agreements with several LATAM agencies

APAC

• Awarded "APAC Marketing Technology Company of the Year" (Mumbrella 2016 Awards)
• Overall revenue grew more than 3X vs. Q1 '15
• Key Brand wins: Google, Celcom, Disney, Telkomsel

Cross-screen Addressable Advertising

AT&T AdWorks announces cross-screen addressable advertising trial results

• AT&T AdWorks and Opera Mediaworks connected Walmart, AT&T and other advertising trial participants with the same target consumers across TV and mobile
• Results from the first trials show significant positive results for cross-screen addressable advertising on TV and mobile.

Q1 2016 Takeaways

Focusing on the next generation of mobile marketing

• Continuing to capture growth

• We remain competitive in a rapidly changing media environment through differentiated products and capturing growth in Mobile Video, Performance & Programmatic
• Four core focus areas for 2016:
• Continued growth Performance, Video, APAC, Programmatic
• Strategic launches Biggest year of product innovation ever
• One Platform Unifying our technology platform for greater scale & efficiency
• O&O Work more closely with Opera Consumer Products to monetize global inventory for greater success

Agenda

• Executive Summary
• Financials
• Advertising
• Browser
• Closing

Browser Overview

MOBILE BROWSER

Execution areas

Opera Mobile – Product focus

Better speed features

• Video boost, better savings on wifi, ad block

More content

• New home page with better content recommendations
• Launching partner program in India and other top markets to include content from partners in the home page

Expanding monetization reach

• In addition to our own sales force deploying Facebook and Google native ads in the browsers to scale O&O revenues

DESKTOP BROWSER

Desktop 58M MAU in 1Q16

Desktop Revenue

Opera for desktop

• Increased focus on features with high end user demand
• First major browser to release integrated ad-blocker
• First major browser to release integrated VPN - Over 380k people used the VPN in the first week.

Test speed gain with Opera's integrated ad-blocker .

PERFORMANCE & PRIVACY

10.000.000 Max users in April

Strong traction from OEM partners

GREAT INTEREST FROM TOP GLOBAL ANDROID OEMS

Max 2.0 coming in 2Q

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• NEW ENGAGING FEATURES
• MORE INTERACTION
• INTRODUCING AD MONETIZATION

© 2015 Opera Software, Confidential

• Opera VPN for iOS launched May 9th with 100k downloads on launch day.
• SurfEasy built and powered VPN application for Tier 1 Antivirus Provider launching in May.
• Launched SurfEasy Ultra, a new high ARPU rate plan (up to \$11.99 monthly) targeting advanced desktop users with support for Torrents.

APPS AND GAMES

48

Opera Mobile Store + Bemobi/AppsClub

• 450 Million downloads in 1Q16

• 300,000+ applications

• \$10M+ Revenue

Success in Brazil => Now Global Launch

▪ New AppsClub launches during Q1:

TV AND TECH LICENSING

Strategic deals & renewal of contracts

SKYWORTH

• The 3rd largest TV manufacturer in China and 6th globally
• Strategic partnership to deliver a complete solutions both for Linux and Android based Smart TV

SAMSUNG

• Renewal of contract to deliver Opera TV Store for all Samsung Blu-ray players

52

Opera TV SDK – proven platform for premium OTT content

Paving the way to become THE platform for rendering of premium OTT content

53

Strong viewership growth for OTT Content

Smart TVs the preferred device choice

54

• Strong appetite for OTT video from consumers
• Continues strong growth for Smart TV penetration globally fueled by more content being available

Source: IHS Feb 2016

Agenda

• Executive Summary
• Financials
• Advertising
• Browser
• Closing