Otello Corporation ASA

Earnings Release • Aug 12, 2015

Opera Software ASA

• Quarterly report
• Second quarter 2015

About Opera Software

Opera enables more than 350 million internet consumers worldwide to connect with the content and services that matter most to them. Opera also helps publishers monetize their content through advertising and advertisers reach the audiences that build value for their businesses, capitalizing on a global consumer audience reach that exceeds 1 billion.

www.opera.com

Financial Highlights 2Q15

	Financial metric	2Q15 (\$m)	2Q14 (\$m)
Revenue	Total revenue	146.2	100.6
Profitability	Adj. EBITDA*	29.5	27.0

• Revenue and Adjusted EBITDA at low end of guidance
• Strong revenue growth from Mobile Advertising (3rd party publishers)
• Solid revenue growth in Consumer (O&O) on constant currency basis
• Record Operating Cashflow

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

Financial review

• Quarterly report
• Second quarter 2015

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.

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. Opera Software 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 Opera Software 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.

Financial Highlights 2Q15

	Financial metric	2Q15 (\$m)	2Q14 (\$m)
Revenue	Total revenue	146.2	100.6
Profitability	Adj. EBITDA*	29.5	27.0
	Operating Cash Flow	31.0	4.7
Cash generation	Free Cash Flow**	25.6	-3.1

Excluding the impact of year-over-year changes in foreign exchange rates, revenue would have increased by 55% (to approximately \$156m)

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

** Operating Cash Flow less capital expenditures and capitalized R&D costs

2Q15 Actuals versus Guidance

	2Q15 Actuals(\$m)	2Q15 Midpoint Guidance* (\$m)
Total revenue	146.2	150.0
Adj. EBITDA**	29.5	31.5

*Provided at 1Q15 Presentation (May 13th, 2015) **Adj EBITDA, excluding stock-based compensation expenses and one-time costs

2Q15 Financial Review

\$m	2Q15	2Q14	Q on Q
Revenue	146.2	100.6	45%
Publisher and revenue share cost -	52.2	23.4	123%
Payroll and related expenses -	38.8	33.0	18%
Stock-based compensation expenses -	2.1	2.1	-1%
Depreciation and amortization -	12.2	6.9	77%
Other operating expenses -	25.7	17.2	50%
Total expenses** =	131.1	82.6	59%
Adjusted EBITDA*	29.5	27.0	9%
EBIT**	15.2	18.0
Net Income	-1.3	9.5
EPS (USD)	-0.009	0.071
Non - IFRS Net Income	12.6	15.5
Non – IFRS EPS (USD)	0.086	0.117

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

** Excludes one-time costs

Financial Highlights: 2Q14 – 2Q15

Consumer (Owned and Operated Properties)

Tech Licensing

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

Revenue: Customer Type 2Q15

Revenue within guidance range, lower end overall

Customer Type	2Q15 (\$m)	Change vs 2Q14	Comments
Mobile Advertising - 3rd Party Publishers*	92.9	+83%	Low end of expectations
Consumer (Owned and Operated Properties)	31.4	-2%	In line with expectations
Tech Licensing	21.9	+24%	In line with expectations

*2Q15 vs. 2Q14 pro forma revenue growth of 6% (pro forma includes AdColony for 2Q14)

Mobile Advertising - 3rd Party Publishers

Customer Type	2Q15 (\$m)	Vs 2Q14 (\$m)*	% Growth	Comments
Instant Play Performance	38	+8	+27%	Solid growth
Instant Play Brand	15	+9	+136%	Strong growth
Non-Instant Play Performance	4	-7	-58%	Weak
Non-Instant Play Brand	36	-4	-11%	Weak
Total Mobile Advertising - 3rd Party Publishers	93	+6	6%	Lower than expectations

Revenue: Mobile Advertising - 3rd Party Publishers

Mobile Advertising - 3rd Party Publishers revenue at low end of expectations

Revenue growth was driven primarily by increased Instant Play revenue from premium and performance advertisers and "app-install" driven spend from primarily the mobile gaming sector.

Ran campaigns for many of the top revenue grossing app developers in the world

Revenue came in below expectations mainly due in particular to softness in the non-Instant play video advertising market

\$m Mobile Advertising - 3rd Party Publishers

Top 5 Brand Verticals 2Q15
1. CPG / FMCG
2. Travel
3. Finance
4. Automotive
5. Technology/Consumer Electronics

Mobile Advertising - 3rd Party Publishers

Video Accounted for 58% of total Mobile Advertising (3rd PP) in 2Q15

Video vs non-Video (\$m)

Brand vs. Performance

Revenue: Consumer - Owned and Operated Properties

Consumer- Owned and Operated Properties revenue in line with expectations

Customer Type	2Q15 (\$m)	Vs 2Q14 (\$m)*	% Growth	Comments
Mobile Browser	9.4	+2.9	+45%	Strong
Apps and Games	1.1	+0.6	+128%	Strong
Performance and Privacy Apps	0.7	+0.7	N/A	st 1 full quarter of SurfEasy
Operator Co-brand Solutions	8.1	-3.8	-32%	As expected
Desktop Browser	12.0	-1.1	-8%	Solid ex FX
Total Consumer (O&O)	31.4	-0.6	-2%
Total Consumer (O&O)*	38.0	+6.0	+19%	Solid growth

*Constant currency vs 2Q14

Revenue: Tech Licensing

Tech Licensing revenue in line with expectations

Revenue (\$m)

OPEX Development (\$m)

Publisher and revenue share cost

One-time cost

Cost line	2Q15 vs. 2Q14	Comments
Payroll	18%	Higher headcount
Publisher and revenue share cost	123%	Driven by 83% growth in Mobile Advertising - 3rd Party Publishers Publisher and revenue share cost related primarily to Mobile Advertising - 3 rd Party Publishers
Other OPEX	50%	Marketing and hosting expenses key drivers
Depreciation & Amortization*	77%	Higher investments in Opera Mini server infrastructure and depreciation on intangible assets related to acquisitions.
Stock-based compensation expenses	-1%

*Excludes one time cost

3Q15 Guidance

Metric	3Q15 Guidance
Revenue*	\$148 - 153m
Adj. EBITDA**	\$26 - 28m

* Assumes FX rates as of August 11th 2015

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

3Q15 Guidance Overview

		Vs. 2Q15*	Comments (Outlook)
Revenue	Mobile Advertising - 3rd Party Publishers	Up	Solid growth from both Brand and Performance businesses
	Consumer (Owned and Operated Properties)	Up	Solid search and mobile advertising revenue growth. Includes approximately 7 weeks of Bemobi revenue
	Tech Licensing	Down	Solid TV revenue offset by lower other Tech Licensing revenue
Expenses	Payroll	Flat/Up	Limited headcount growth in Advertising business
	Publisher and revenue share cost	Up	Reflecting Mobile Advertising (3rd PP) revenue trend
	Stock-based compensation	Flat/Up	Stable trend with cost of RSU program leveling out, partly dependent on shareprice
	Depreciation (excluding impairment expenses)	Up	Investments in cloud based server hosting infrastructure and acquisition related depreciation
	Other Opex	Flat	Relatively comparable to 2Q in aggregate

* Assumes FX rates as of August 11th 2015

4Q15 Revenue Overview

		Vs. 3Q15*	Comments (Outlook)
Revenue	Mobile Advertising - 3rd Party Publishers	Up	Strong growth from both Brand and Performance business in a seasonally strong quarter
	Consumer (Owned and Operated Properties)	Up	Solid desktop search revenue growth and strong mobile advertising and search revenue from smartphone user growth and new mobile browser product launches
	Tech Licensing	Flat/Up	Solid TV revenue and uptick in other Licensing vs 3Q15

2015 Guidance

	Old***	Updated 2015
Metric	2015 Guidance	Guidance*
Revenue	\$630-650m	\$600-618m
Adj. EBITDA**	\$130-140m	\$108-118m

* Assumes FX rates as of August 11th 2015

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

***Guidance given at 1Q15 presentation May 13th 2015

Updated 2015 Revenue Guidance*

Consumer Mobile Advertsing

Consumer Mobile Advertsing

Updated 2015 Adj. EBITDA Guidance*

* Based on midpoint guidance

Consumer Operational Update

Quarterly report 2Q 2015

Our Consumer Product Portfolio

Game/Apps & Content Discovery

Browsers Privacy & Performance

Browser Products

145M Monthly Active Android users

Strong growth in O&O monetization

Strengthened partnership with Google

Strong pipeline for Opera Mini product development

• Full browsing, full fidelity mode in September
• Brand new compression technology in Q4
• In-product notifications for social (Facebook) in Q2-Q3
• More personalization of content and browsing in Q3-Q4

Opera Mini product features improving monetization

• Better search experience
• More speed dials and adapted to small & large phone types
• More valuable ad formats, including video being added
• In-product notifications to promote other Opera Apps

Desktop browser on track for year target

• 55 million users in July
• Strong focus on distribution in 2H
• Stronger Monetization

Performance & Privacy

New Max Popular with Users

• Google Play Rating up from 4.1 to 4.3
• Max User Retention up by 2X

2H Max Roadmap Highlights

Opera Max's Data Savings tech will support:

• HTTPS Video Savings
• Music streaming Savings
• Background data blocking

Max: Tighter integration with world leading OEMs

Cross Promo user flow from Mini to Max

Step 1 Step 2 Step 3 Step 4

Apps & Games

Recent Acquisition of Brazilian Based Bemobi

Bemobi`s Apps Club

• Android focused app subscription service
• Native Client
• Top premium paid apps
• Curated regionally aware catalog
• Proprietary app wrapping technology
• enables app usage for active subscribers
• Effective monetization of premium apps in emerging markets
• Strong customers and operations in Latin America

How Bemobi complements our current offering

		Opera	Bemobi
	Marketing Expertise
	Operator Expertise
	Direct Marketing
	User Experience
	Web Based for feature phones
	Client Based for Smartphones
	Monetization
	Ad Based
	Subscription based
Other
	Global operator agreements
	Expertise I billing integrations

Apps and Games Moving forward

• Take the Android Apps Club proposition worldwide
• Use Opera's operator relationships to accelerate the deployment of the Apps Club
• Launch new games in the Opera Games Network where Opera controls monetization (ads and subscriptions)
• Invest in distribution (direct and OEM) for Opera Games Network and Apps Club

● Continue to improve the publisher catalogue of apps

The Opera Eco-system

	Browser and Content Apps
Browser	App Store	News / Discover	Bemobi Apps Club	Project 1	Project 2	…
Performance and Privacy Apps
Opera Max	Web Pass	App Pass	SurfEasy / Privacy	Project 1	… Project 2	…

Tech Licensing

Strong Revenue quarter for Rocket Optimizer

● Expansion order from Tier1 US Operator

● Building strong global pipeline with Huawei and Ericsson, first deal awarded

● Agreement signed with Nokia Networks for reselling Rocket Optimizer platform

Strong Opera TV SDK shipment in quarter

Existing customers ramp up shipments to millions of users

Summary

• Strong User growth
• Strengthening O&O monetization
• Good User feedback for Max, ready for global roll out
• Acquisition of Bemobi to strengthen our apps and games business
• Ready to leverage large Opera Mini user base to cross promotion Max/Apps and Games

Making Mobile Ads Matter.

Trends are Evolving But the Future is Bright

While we are providing lower guidance, we are well positioned for long term success

Sales Execution: In Q2, organization amid transformation towards Video

• Weaker than expected performance in banner and simple rich-media
• Trend: growing shift of dollars to programmatic lower pricing & margins
• Growth slower than expected in banner and simple rich-media

Trend: Counter balanced by shift to video – higher pricing & margins

• Market shift towards richer, high engagement ad units
• Brands are becoming more attribution focused

Opera Mediaworks is well positioned for the future

• Delivering strongly differentiated value to publishers and advertisers
• Strategic investments and organization transformation towards Video and Instant-PlayTM
• Strong SDK footprint and direct publisher relationships
• Strong relationships with agencies and advertisers
• Global footprint with presence in all major media markets

Largest Independent Mobile Ad Platform

With more reach, revenues and profits than any platform competitor

1.1B

Global Unique Consumers Reached Every Month

19,000 90% 100M+

Mobile Sites and Applications (e.g. Pandora, CBS, CNET)

of the Ad Age Top 100 Working with OMW

installs to app economy w/quality & scale only 2nd to Facebook

83% YOY Growth in Revenue

Opera Mediaworks' Revenue Growth

110% YOY Growth in Platform Reach

Global Expansion: Turkey with Mobilike acquisition in Q2, new ASIA markets

Highest Quality Publisher Growth

New publisher relationships solidified in Q2 gives Opera Mediaworks more access and reach in the most popular apps worldwide

New Advertisers: Brands Continue to Shift to Mobile

Opera Mediaworks' sales organizations across the globe have helped secure new advertisers in Q2. Here are some examples.

Key Wins by Region

USA

• Continue to secure multi-million deals with brands (e.g. Verizon, Hasbro) and agencies
• Major growth in CPG, Travel and Financial Services verticals

LATAM

• Big CPI opportunities with Video from Trivago, LetGo, Movile
• Major regional campaigns from new brands, Netflix, and Unilever

Europe

• Major deals with Samsung, Nike, Turkcell, Ford, Tom Tom
• UK Trading deal signed with Aegis
• Video grows to 30%
• Short form video fund success
• Developing a DMP for Turkcell

Africa

• 64% increase in revenue from Q1
• Instant-Play Video launched in May with 5 deals signed within first 2 months.
• Group M leads spend with Johnnie Walker, Jeep and Unilever
• Strong growth in Opera Mini (8m to 9.5m ) - key publisher in African market

APAC

• 72% growth in campaigns launched, 39 new accounts
• Momentum in UA business in Korea / China – Over \$1 mn+ in Q2
• Big wins in eCommerce with Askme, Lazada, Bukalapak (35% of revenue)

Spotlight on APAC

Opera Mediaworks APAC investment is yielding impressive results in only one quarter, having grown revenues by 72% over the previous quarter, adding 39 new accounts (122 campaigns), including 4 million dollar accounts. Opened 2 new markets - Malaysia & Australia. Strengthened team in Korea, Singapore, India and Indonesia

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2015 Strategic Initiatives

2015 Strategic Initiatives

VIDEO

Revenue Shift Towards Video Continues

Ad format mix shift favors video and video is the key driver of revenue growth.

Q2 2014 vs. Q2 2015 YOY Share of OMW Revenue, Video vs. Non-Video

Non-Video Video

Revenue Shift Towards Video Continues (Pro Forma)

Even when including AdColony business during Q2 2014 (pre-acquisition), the data shows an advertising mix shift favoring video.

Q2 2014 vs. Q2 2015 YOY Share of OMW Revenue, Video vs. Non-Video

Non-Video Video

Brands Increase Spending Towards Video

Revenue for Instant-PlayTM HD video nearly doubled from Q1 to Q2. Growth is driven by big brands in CPG, Financial Services, Tech and Entertainment.

Teaming with Disney to Help Drive Summer Box Office Success

A strategic partnership with Disney, partnering with the studio on Avenger's Age of Ultron (#1 box office opening weekend) & Inside-Out (#2 box office opening weekend) this summer.

• Avengers: Age of Ultron was #1 at the box office opening weekend & the 6 th highest grossing film of all time

• Opera House develops first to market Emotional Selfie creative. Facial recognition technology analyzes user's emotion in selfie and matches with the most appropriate emotion character.
• Engagement is 2x higher than benchmarks and Inside Out was #2 at the box office opening weekend.

NATIVE

Delivering Results for Mobile-First, Native Video Storytelling

Collaboration: Native Video Project results with comScore for industry-first study on effectiveness of mobile-first, purpose built video creative for native video environments.

Early results are extremely promising and validate our hypothesis that building video creative specifically for mobile, delivers results superior to re-purposed TV creative.

Brands that spend millions of ad dollars on traditional TV spots are leveraging Opera Mediaworks' native video advertising capabilities to extend reach & drive action.

Moreover, purpose built native mobile videos performed 2x better than non-mobile optimized videos & saw a 7x higher engagement rate than display.

Opera Software Synergies

Ad monetization of owned & operated properties and services expands

Opera Mini 10 has native rich-media and video ads in launch screen and "Discover Feed"

GameInsidr BETA launch with ad SDK to deliver ad monetization to publishers

Strong demand for Opera browser inventory in Asia and Africa

PROGRAMMATIC

Leading with Programmatic: Quality + Scale

Several significant initiatives established Opera Mediaworks' position in the programmatic space with a focus on quality, scale and differentiation

• 55% of all OMW ad requests are exposed to programmatic bidders
• 10% of all ads dollars came form a programmatic demand source

• Strong demand for OMW managed inventory

• Revenue from programmatic partners in Q2 increased by 6x from May to June

• Instant-Play Video Exchange live in Private Alpha

PERFORMANCE

The Top Global Platform for App Installs via Mobile Video

Opera Mediaworks continues to establish its lead as the leading mobile video platform for driving app installs in terms of quality and quantity.

Opera also saw quarter-over-quarter growth of 3x for campaigns worth \$5 million or more & new account growth of 30%.

MEASUREMENT

Moving Mobile Measurement Forward

Opera Mediaworks launched two new measurement partnerships in Q2.

MasterCard Advisors provides real-time transaction data and analysis. MasterCard Media 1) Measures the impact an ad campaign has on sales compared to an audience segment not exposed to the ad 2) provides insights to help advertisers understand their campaign's audience composition

Datalogix connects offline purchasing data to digital media to improve audience targeting and measure sales impact. Datalogix Buy-through rate studies measure the offline sales impact an ad campaign has on sales compared to an audience segment not exposed to the ad.

Optimistic for 2H 2015 & Beyond

• Realignment: Focused on overcoming challenges in slower growth segments
• Brand Advertising: Scaling small campaigns to larger IOs. Restructuring sales force towards mobile video
• Performance Advertising: Customers shifting title launches & spend to 2H
• International: Expanding investment in high growth markets
• Strategic partnerships: Several new partnerships forming to grow premium publishing platform for broader reach domestically and internationally

Announcing Today: A Complete Marketing Automation Platform for App Developers

Yvolver platform & team will become a part of Opera Mediaworks and the technology stack will be integrated into the Opera Mediaworks SDK

Delivering real-time player management & live services including:

• Advanced loyalty marketing
• Monetization and marketing analytics
• A/B Testing
• Advanced segmentation
• In-app-purchase validation
• Digital and physical rewards
• Dynamic UIs with seamless native integration

© 2013 Opera Software ASA. All rights © 2013 Opera Software ASA. All rights reserved.