Earnings Release • Oct 30, 2014
Earnings Release
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Quarterly report Third quarter report 2014
Opera enables more than 350 million internet consumers worldwide to connect with the content and services that matter most to them and more than 130 mobile operators to deliver the very best possible internet experience to their subscriber base. 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 800 million.
www.opera.com
| Financial metric | 3Q14 (\$m) | 3Q13 (\$m) | |
|---|---|---|---|
| Revenue | Total revenue | 138.8 | 75.5 |
| Profitability | Adj. EBITDA* | 33.9 | 22.5 |
*Non-IFRS EBITDA excludes stock-based compensation expenses, extraordinary/one-time costs and acquisition related costs.
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 metric | 3Q14 (\$m) | 3Q13 (\$m) | |
|---|---|---|---|
| Revenue | Total revenue | 138.8 | 75.5 |
| Profitability | Adj. EBITDA* | 33.9 | 22.5 |
| Cash generation | Operating Cash Flow | 18.2 | 20.1 |
| Free Cash Flow** | 15.4 | 15.8 |
*Non-IFRS EBITDA excludes stock-based compensation expenses, extraordinary/one-time costs and acquisition related costs.
** Operating Cash Flow less capital expenditures
| 3Q 2014 Actuals | 3Q 2014 Midpoint Guidance* | |
|---|---|---|
| Revenue | \$138.8m | \$138.5m |
| Adj EBITDA** | \$33.9m | \$32.5m |
*Provided at 2Q14 Presentation (August 21st, 2014)
** Non-IFRS EBITDA excludes stock-based compensation expenses, extraordinary/one-time costs and acquisition related costs.
| \$m | 3Q14 | 3Q13 | Q on Q |
|---|---|---|---|
| Revenue | 138.8 | 75.5 | 84% |
| Cost of Goods sold- | 43.9 | 14.9 | 194% |
| Payroll and related expenses - | 39.1 | 25.9 | 51% |
| Stock-based compensation expenses- | 4.5 | 1.0 | 330% |
| Depreciation and amortization - | 10.0 | 5.8 | 71% |
| Other operating expenses - | 21.9 | 12.1 | 80% |
| Total expenses = | 119.3 | 59.9 | 99% |
| Adjusted EBITDA* | 33.9 | 22.5 | |
| EBIT | 19.5 | 15.6 | |
| Net Income | -11.7 | 1.3 | |
| EPS (USD) | -0.082 | 0.011 | |
| Non- IFRS Net Income |
20.4 | 14.0 | |
| Non- IFRS EPS (USD) |
0.143 | 0.114 |
* Non-IFRS EBITDA excludes stock-based compensation expenses, extraordinary/one-time costs and acquisition related costs
* Non-IFRS EBITDA excludes stock-based compensation expenses, extraordinary/one-time costs and acquisition related costs.
1+ billion mobile audience reach We empower the mobile internet economy
Advertisers
Media optimization capabilities
Overall revenue in line with expectations
| Customer Type | |
|---|---|
| Mobile Consumers – Opera Owned and Operated Properties |
In line with expectations |
| Operators | In line with expectations |
| Mobile Publishers & Advertisers – Opera Publisher Partner Members |
In line with expectations |
| Desktop Consumers | In line with expectations |
| Device OEMs | In line with expectations |
Revenue driven primarily by mobile advertising and licensing revenue
271M users by end of 3Q14, up 4% compared to end of 3Q13
41.2b ad requests from owned & operated properties in 3Q14, up 92% versus 3Q13. Opera users of the Smartpage and Discover page increased to 65 million users by the end of 3Q14, up 35% versus 3Q13. Downloads from the Opera Mobile Store in 3Q14 reached 171 million, up 18% compared to 3Q13
Revenue growth: 68% versus 3Q13
Cloud based Operator Data/License flat versus 3Q13 at \$16m Key license revenue components: Opera Mini Operator co-brands and Rocket Optimizer
Overall revenue growth: Down 1% versus 3Q13
52% Operator active user growth September 2014 vs. September 2013
User growth driven by Airtel, MTN, Telenor, Vimpelcom and Vodafone in particular
* Unaudited
** Operator Opera Mini users and Operator Horizon users
Revenue growth driven by both premium advertisers, including CVS, Comcast, JPMorgan Chase, Nestlé, Nissan, Starbucks, T-Mobile and Walmart, as well as performance advertisers such as Glu, King.com, Spotify and SuperCell
AdMarvel platform managed 187.5b ad impressions (including O&O) in 3Q14, up 9% vs. 3Q13
17,500+ websites and applications enabled in 3Q14, up from 14,000+ in 3Q13 and total reach of 800m+ (excluding O&O) in 3Q14 up from 400m+ in 3Q13
Revenue growth: 193% versus 3Q13***
** Includes Opera´s O&O ad impressions
*** Contribution from AdColony of around \$36m in 3Q14
Solid ARPU with lower search revenue offset by higher partnership driven revenue
Desktop users at 51 million, flat versus 3Q13
Overall revenue growth: Flat versus 3Q13
* Unaudited.
| Device OEM revenue in line with expectations |
|---|
| Revenue driven by Connected TV customers |
| License revenue: ~80% of revenue |
| Overall revenue growth: 17% versus 3Q13 |
* Unaudited
One-time extraordinary cost Cost of goods sold
Other OPEX
Depreciation
Stock-based compensation expenses
Payroll
| Cost line | 3Q14 vs. 3Q13 | Comments |
|---|---|---|
| Payroll | 51% | Higher headcount |
| Cost of Goods Sold |
194% | Driven by 193% growth in Mobile Publisher and Advertiser revenue COGS or Publisher Cost related to Mobile Publisher & Advertiser business |
| Other OPEX |
80% | Hosting costs, marketing and travel expenses key drivers |
| Depreciation & Amortization |
71% | Higher investments in Opera Mini server infrastructure and depreciation on intangible assets related to acquisitions |
| Stock-based compensation expenses |
330% | Stock based compensation costs include a full quarter of costs related to Opera´s new restricted stock unit (RSU) plan |
| Metric | 4Q14 Guidance |
|---|---|
| Revenue* | \$159-169m |
| Adj EBITDA*** | \$36-40m |
* Assumes currency remainder of 4Q14 (NOK 6.5 /USD, USD 1.3 /EUR)
** Non-IFRS EBITDA excludes stock-based compensation expenses, extraordinary/one-time costs and acquisition related costs.
| Vs. 3Q14* | Comments | ||
|---|---|---|---|
| Revenue | Operators | Down | Solid cloud based license/data revenue |
| Mobile Consumers | Up | Smartphone user growth and growing ARPU |
|
| Mobile Publishers & Advertisers |
Up | Strong growth in a seasonally strong quarter and with a full quarter with revenue from AdColony |
|
| Desktop | Flat | Stable user trend and ARPU | |
| Device OEMs | Down | Solid revenue by Connected TV customers |
|
| Expenses | Payroll | Up | Growing headcount in MP&A business |
| Cost of goods sold | Up | Reflecting Mobile Publisher & Advertiser revenue trend |
|
| Stock-based compensation |
Flat | Stable trend with cost of RSU program leveling out |
|
| Depreciation | Up | Continued investments in cloud based server hosting infrastructure and acquistion related depreciation |
|
| Other Opex | Up | Attributed primarily to growth in Mobile Publisher & Advertiser business |
Assumes currency remainder of 4Q14 (NOK 6.5USD, USD 1.3/EUR)
| Metric | 2014 Guidance (prior***) | 2014 Guidance (new) |
|---|---|---|
| Revenue* | \$480-500m | \$485-495m |
| Adj EBITDA** | \$117-124m | \$120-124m |
* Assumes currency remainder of 2014 (NOK 6.5 /USD, USD 1.3 /EUR)
** Non-IFRS EBITDA excludes stock-based compensation expenses, extraordinary/one-time costs and acquisition related costs.
*** Prior guidance refers to update done 21st August in connection with 2Q14 announcement
Lars Boilesen CEO, Opera Software
Consumer products Monetization capabilities now arriving in our products Renewed contract with a major TV manufacturer
Operators Opera Web Pass platform getting momentum Good progress on OEM strategy
Mobile Publishers & Advertisers AdColony acquisition completed Strong revenue growth in the quarter
Quarterly report Third quarter report 2014
| 0000 16:53 $\blacksquare$ <menu Data Savings Done</menu |
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| 11:18 AM 00000 unsplash.imgix.net Savings Enab Opera Turbo |
Opera Turbo Off Opera Mini Surf the full web efficiently using Opera Turbo data savings technology. Normally the preferred mode for speed and savings. |
16:40 earch or enter address Speed Dial Discover Google Search Gmail Sports $\overline{z}$ , $\overline{z}$ Bookmarks |
| 61% Data saved 93.9 MB / 153.4 7 videos optimiz |
Reset Data Savings | |
| Add to Share TÜ. |
Video Boost 7 videos have been optimized |
Will represent 66% of global mobile data traffic by 2017 Our goal is to minimize video buffering without any quality loss A unique value proposition for users to choose Opera
Established presence on a new and growing mobile platform
More Android users can now extend their mobile data plan as Opera Max rolls out in 24 countries in Latin America.
www.opera.com/max
Opera Max was launched with Samsung in South Africa at their spectacular Galaxy Note 4 Launch in Cape Town.
Opera Max will be preloaded on Samsung phones in Africa in 2015.
MediaTek's upcoming 64-bit smartphone processors will come with Opera Max built-in.
By embedding Opera Max into the chipset, consumers don't need to download it from the Google Play Store.
Opera Mini debuts on Samsung Gear S Browse the web from your wrist
Stable user and revenue trends with high retention rate New features and improvements are well received among users
Up 54% versus the end of Q3 2013
Long term agreement signed to ship Opera Device SDK, TV Store and TV Browser for all Sony Connected TV devices
Opera Mediaworks ad technology now implemented in Opera TV
Opera TV staying ahead of the game with 3 rd edition of Chromium/Blink web engine
Quarterly report Third quarter report 2014
Enabling easy internet access around the world with our partners:
The old way. 16 steps plus.
Acquire new subscribers with sponsored mobile internet
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Launch of co-branded Opera Mini browser with Telenor will help bring internet to the masses in Myanmar.
Advanced stage with leading infrastructure OEM for integration of Rocket in a combined platform offering.
Rocket Optimizer now live in two major operator networks.
Several tier-1 operators signed up for live network trial in Q4.
Strong pipeline growth in Asia.
Audio Optimization introduced in Q3. Successful proof of concept carried out with leading 4G operator.
Launched subscription-based model with XL, one of the largest operators in Indonesia
More than 300,000 applications available
Third quarter report 2014
AD AGF GLOBAL ADVERTISERS
SITES AND APPI ICATIONS
Publishers include...
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United States India Indonesia Mexico Russian Federation United Kingdom Brazil South Africa Canada Italy Australia Nigeria Argentina Bangladesh Japan Ukraine Vietnam Saudi Arabia France Spain
The highest quality in mobile video:
AdColony Instant-Play™ HD-video delivered The CW's The Flash ad Campaign averaged overall engagement rate of nearly 40% The Flash was The CW's best show debut in 5 years
AdColony Instant-PlayTM HD-video U.S. national campaign promoting the launch of Disney Infinity Highly interactive ad unit that drove high engagement
National campaign promoting Lufthansa travel
The ad unit allows users to picture of themselves, "selfies" in various travel destinations using their smartphone and gives them the chance to capture and share this preview on their social networks
Campaign has been well received within the industry, among press and users
1.77MM+ completed video ad views
10.8K+ hours of video ads watched
3.03% overall engagement rate - 48% higher than industry benchmarks
9.95 seconds spent on end card
- End card increased time spent & engagement with Reebok by up to 1.6x (compared to standard video)
Quarterly report Third quarter report 2014
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