Otello Corporation ASA

Earnings Release • Feb 11, 2014

4Q 2013 Financial Highlights

	Financial metric	4Q13 (MUSD)	4Q12 (MUSD)
Revenue	Total revenue	89.6	60.7
Profitability	Adj. EBITDA*	24.0	16.8
	EBIT**	16.8	13.2

• Revenue growth of 48%
• Record revenue and profit
• Strong revenue growth from Mobile Operators, Mobile Consumers and Mobile Publishers & Advertisers

*Non-IFRS EBITDA excludes stock-based compensation expenses, extraordinary/one-time costs and acquisition costs.

** Excludes one-time extraordinary costs

Financial review Erik Harrell, CFO/CSO

Financial Highlights 4Q13

	Financial metric	4Q13 (MUSD)	4Q12 (MUSD)
Revenue	Total revenue	89.6	60.7
	Adj. EBITDA*	24.0	16.8
Profitability	EBIT**	16.8	13.2
	Operating Cash Flow	14.9	16.0
Cash generation	Free Cash Flow***	12.6	10.2

*Non-IFRS EBITDA excludes stock-based compensation expenses, extraordinary/one-time costs and acquisition costs.

** Excludes one-time extraordniary costs

*** Operating Cash Flow less capital expenditures

4Q13 Actuals versus Guidance

	4Q 2013 Actuals	4Q 2013 Midpoint Guidance*
Revenue	MUSD 89.6	MUSD 85.5
Adj EBITDA**	MUSD 24.0	MUSD 23.0
EBIT***	MUSD 16.8	MUSD 17.5

*Provided at 3Q13 Presentation (October 25th, 2013)

** Non-IFRS EBITDA excludes stock-based compensation expenses, extraordinary/one-time costs and acquisition costs.

*** Excludes one-time extraordinary costs

4Q13 Financial Review

MUSD	4Q13*	4Q12	Q on Q
Revenue	89.6	60.7	48%
Cost of Goods sold-	20.7	9.3	123%
Payroll and related expenses -	29.5	24.4	21%
Stock-based compensation expenses-	1.0	0.9	11%
Depreciation and amortization -	6.3	2.8	124%
Other operating expenses -	15.3	10.2	50%
Total expenses =	72.8	47.5	53%
EBIT*	16.8	13.2	28%
Extraordinary acquisition related adjustments	29.7	0.4
Net Income	49.3	2.8
EPS (USD)	0.385	0.023
Non- IFRS Net Income	24.1	13.7
Non- IFRS EPS (USD)	0.188	0.115

* Excludes one-time extraordinary costs

Financial Highlights: 4Q12 – 4Q13

Revenue (MUSD)

Adjusted EBITDA* (MUSD)

* Non-IFRS EBITDA excludes stock-based compensation expenses, extraordinary/one-time costs and acquisition costs.

Opera helps partners reach its massive mobile audience

Opera Powers the Mobile Internet and App Economy

Revenue Growth Drivers

Operators

Users and Usage and explosion of video traffic

Mobile Consumers Users and Usage and smartphone growth

Mobile Publishers & Advertisers

Mobile Advertising Spend from Premium Brands and Performance Advertisers

Desktop Users and Usage

Revenue: Customer Type 4Q13

Overall revenue above expectations

Customer Type
Operators	In line with expectations
Mobile Consumers – Opera Owned and Operated Properties	In line with expectations
Mobile Publishers & Advertisers – Opera Publisher Partner Members	Above expectations
Desktop Consumers	In line with expectations
Device OEMs	In line with expectations

Operators

Advertisers Desktop

Device OEMs

Mobile Consumers

Mobile Publishers &

MUSD

Revenue: Operators 4Q13

Operator revenue in line with expectations

Cloud based Operator Data/License revenue up 55% to MUSD 15.5, driven primarily by Opera Mini Operator license revenue from user growth and revenue from Skyfire

Overall revenue growth: Up 57% versus 4Q12, driven by Cloud based Operator Data/License revenue growth

95% Operator active user growth December 2013 vs. December 2012

User growth driven by Airtel, MTN, Telenor, Vimpelcom and Vodafone in particular

MUSD Operator Revenue total*

Operator Cloud Users (Million)**

* Unaudited

** Operator Opera Mini users and Operator Horizon users

Revenue: Mobile Consumers – Opera Owned and Operated Properties 4Q13

Mobile Consumer revenue in line with expectations

Revenue growth driven primarily by license revenue and mobile advertising

270M users by end of 4Q13, up 50M compared to end of 4Q12

27.8b ad requests from owned & operated properties in 4Q13, up 102% versus 4Q12. Application downloads from OMS of 161 million in 4Q13, up 147% compared to 4Q12. Opera users of the Smartpage and Discover page increased to 55 million users by the end of 4Q13, up from 48 Million in 3Q13.

Revenue growth: 141% versus 4Q12

Revenue: Mobile Publishers & Advertisers – Opera Publisher Partner Members 4Q13

Mobile Publisher & Advertiser revenue above expectations

Revenue growth driven by both premium advertisers, including Amazon, AMEX, BMW, Google, Home Depot, Lloyds Samsung and Walmart, and performance advertisers such as King.com and Netspend

AdMarvel platform managed 180B ad impressions in 4Q13, up 29% vs. 4Q12

14,000+ websites and applications enabled in 4Q13, up from 12,000+ in 4Q12 and total reach of 425m+ in 4Q13 up from 140m+ in 4Q12

Revenue growth: 120% versus 4Q12

AdMarvel managed ad impressions (Billion)**

** Includes Opera´s O&O ad impressions

Revenue: Desktop Consumer 4Q13

Desktop revenue in line with expectations

Solid ARPU with lower search revenue, partly offset by higher content and advertising revenue

Desktop users at 51 million, down 7% versus 4Q12

Monthly Desktop users* (last month of quarter)

Overall revenue growth: -7% versus 4Q12

Desktop revenue* (MUSD)

* Unaudited.

Revenue: Device OEM 4Q13

Device OEM revenue in line with expectations
Revenue driven by Connected TV customers
License revenue: ~80% of revenue
Overall revenue growth: Down 62% versus 4Q12

MUSD Device OEM revenue*

* Unaudited

OPEX Development

• One-time extraordinary cost
• Cost of goods sold
• Other OPEX
• Depreciation
• Stock-based compensation expenses

Cost line	4Q13 vs. 4Q12	Comments
Payroll	21%	Higher headcount
Cost of Goods Sold	123%	Driven by 110% growth in Mobile Publisher and Advertiser revenue
		COGS or Publisher Cost related to Mobile Publisher & Advertiser business
Other OPEX	50%	Hosting costs, marketing and travel expenses key drivers
Depreciation & Amortization	124%	Higher investments in Opera Mini server infrastructure and depreciation on intangible assets related to acquisitions
Stock-based compensation expenses	11%	Higher strike price for granted options
One-time extraordinary cost	NA	Opera recorded restructuring charges of MUSD 1.1 related to a strategic cost reduction that will better align costs with revenues and legal fees related to business combinations.
Total Expenses*	53%

*Excludes one-time extraordiary cost

Cash Flow 4Q13 (MUSD)

2013 review

Metric	2012	2013	2013 vs. 2012
Revenue	MUSD 216	MUSD 300.1	39%
Adj EBITDA*	MUSD 63.6	MUSD 86.6	36%
Operating Cash Flow	MUSD 37.6	MUSD 49.5	32%

* Non-IFRS EBITDA excludes stock-based compensation expenses, extraordinary/one-time costs and acquisition costs.

1Q14 Guidance

Metric	1Q14 Guidance
Revenue*	MUSD 85-88
Adj EBITDA***	MUSD 21-23

* Assumes currency remainder of 1Q14 (NOK 6.2 /USD, USD 1.35 /EUR)

** Non-IFRS EBITDA excludes stock-based compensation expenses, extraordinary/one-time costs and acquisition costs.

1Q14 Guidance Overview

		Vs. 4Q13*	Comments
Revenue	Operators	Flat/Up	Solid cloud based license/data revenue
	Mobile Consumers	Up	Solid user growth and solid ARPU
	Mobile Publishers & Advertisers	Down	Seasonally weaker quarter
	Desktop	Flat	Stable user trend and solid ARPU
	Device OEMs	Up	Driven by Connected TV customers
Expenses	Payroll	Up	Growing headcount in MP&A business
	Cost of goods sold	Down	Reflecting Mobile Publisher & Advertiser revenue trend
	Stock-based compensation	Flat	General trend
	Depreciation	Up	Continued investments in cloud based server hosting infrastructure
	Other Opex	Flat/Up	Growing headcount in MP&A business

2014 Guidance

Metric	2014 Guidance
Revenue*	MUSD 390-410
Adj EBITDA**	MUSD 108-116

* Assumes currency remainder of 2014 (NOK 6.2 /USD, USD 1.35 /EUR)

** Non-IFRS EBITDA excludes stock-based compensation expenses, extraordinary/one-time costs and acquisition costs.

2014 Outlook

	2013 Actual	2014 Outlook
Operators	\$62.1mm	Up, driven by Operator co-brands and Rocket Optimizer
Mobile Consumers – Opera Owned and Operated Properties	\$37.9mm	Up, driven by growth in mobile advertising revenue on O&O properties
Mobile Publishers & Advertisers – Opera Publisher Partner Members Assumes currency remainder of 2014 (NOK 6.1 /USD, USD 1.3 /EUR) * Earnings before interest and taxes, excluding extraordinary/one-time costs and acquisition costs.	\$119.1mm	Up, driven by growth from brand and performance advertisers
Desktop Consumers	\$60.9mm	Flat, driven user trend, search, content and advertising revenue
Device OEMs	\$18.3mm	Flat, driven by Connected TV customers

2014 Guidance Puts Us On Track Towards 2015 Financial Aspirations

Metric	2012 Actual	2013 Actual	2014 Guidance	2015 Aspiration
Revenue*	MUSD 216	MUSD 300.1	MUSD 390-410	MUSD 500
Adj EBITDA**	MUSD 63.6	MUSD 86.6	MUSD 108-116	MUSD 150

* Assumes currency remainder of 2014 (NOK 6.2 /USD, USD 1.35 /EUR)

** Non-IFRS EBITDA excludes stock-based compensation expenses, extraordinary/one-time costs and acquisition costs.

Operational update Lars Boilesen, CEO

Fourth Quarter 2013

Q4: Best quarter ofthe year

Highlights from our business units:

Consumer products: Products launched on all platforms and good user growth

Operators: New product added to portfolio and new deals signed

Opera Mediaworks: Record revenue quarter and new acquisition in Latin America

Consumer products

270+ million active monthly mobile users

More than 82 milllion active monthly Opera Android

users

Migrating our user base to smartphones

Major part of our mobile users will be on Android or iOS this year

2012
2013
2014

Opera Max

Video compression enabled

Q1: US Final, Android Q1: EU Beta, Android

2013 was a turning-point year for Opera desktop

Major part of user base is now on the new product, high engagement among these users

User base improvement in Russia and CIS

New product cuts churn by more than 25%

2 nd generation data compression

Planned release 1st half of the year

TV & Devices

Opera TV Store lands on Samsung Blu-Ray players

Brings hundreds of TV apps to million of viewers

Available on:

• Samsung Blu-ray player Series 5
• Samsung Home Theater System Series 5
• As well as Samsung's Series 4 models

Opera TV Store shipping on millions of devices worldwide

Opera TV Snap growing inventory of internet media and TV-channels

Our operator offering one year ago

Rocket Optimizer

"By extending our strategic partnership with Opera we now have a strong toolkit to deliver an improved mobile internet experience to all our customers, using any device, any app, while browsing or streaming video and music."

Mikhail Gerchuk VimpelCom's Group Chief Commercial and Strategy Officer

Q4: Crossed the 100 million milestone for co-branded Opera Mini users

In 2014, we will extend the suite of co-branded services to further drive monetization:

Free internet to users who watch an ad Sponsorships for Opera Web Passes Speed Dial links for operator campaigns Subscriptions for unlimited access to mobile games Video savings to help users stay longer online Promotion of new products like Opera Max

Oi, we signed a new co-branded deal

The largest telecommunications telephone company in Brazil and the second largest in Latin America

Skyfire mobile optimization technology will be a key differentiatorin Opera browsers

Opera Max SAVINGS	š $\circ$
DAILY MONTHLY	CHARGE UP
THIS MONTH DECEMBER 2013
	15.5мв
$\begin{pmatrix} (\mathbf{r},\mathbf{r}) \ \mathbf{r} \end{pmatrix} \mathop{\mathrm{14.3ms}}_{\mathrm{data used}}$	data saved
BY USAGE	$\ddot{ }$
Chrome	5.2MB / 6.5ME
Google Play Store	2.9MB / 0.2MB 3
Vine	$2.7h$ $+ 5.81$
Instagram	886kg / 3115ap
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Mobile video is growing rapidly across operator networks. Smartphone's and 4G makes this trend grow even faster.

Operators need tools to manage traffic, analytics and reports to always give the user a good experience.

Increased interest from internet companies and mobile manufacturers to license video technology.

Improves our relevance and creates opportunities for significant revenue.

New Skyfire management led by Nitin Bhandari

Co-founded Skyfire in 2007

Expertise on video savings technology and mobile browser development

Will work closely to integrate Skyfire technology into Opera technology

Opera Mediaworks

Q4: Advertisers & Agencies customers

Ad requests – these are our top 10 countries

• 1. United States
• 1. India
• 1. United Kingdom
• 1. Indonesia

• Canada

• Russia

• Mexico

• France

• Germany

Expanding in Latin America

Expands presence in Latin America with offices in:

Argentina: Buenos Aires Mexico: Mexico City Costa Rica: San Jose Colombia: Bogotá Brazil: Sao Paulo

As well as the U.S. Hispanic market through Miami, Florida.

Why Mobile Advertising in Latin America?

Represents a market of over 600 million consumers that are rapidly adopting the mobile internet.

Reach hundreds of millions of global consumers, whose eyes will turn to the World Cup in 2014 and the Summer Olympics in 2016 – both in Brazil.

2 of the top of our 10 advertising markets (by country) are in Latin America (Brazil and Mexico)

Over 50 million of the 270 million mobile consumers that use Opera's mobile browsers are based in Latin America, with an exploding growth in ad impressions expected in 2014.