Opera Software

Opera Software
Second quarter 2007
A note from our lawyers
This presentation contains and is, i.a., based on forward-looking statements. These statements
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,
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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 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. 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
directors or employees assumes any liability resulting from use. 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 OSE or press releases.
This presentation is for information purposes in connection with the Opera Software ASA 2Q07
presentation only. The presentation is not an offer to sell, or the solicitation of an offer to buy, any
securities.
2
Agenda
1. Highlights
Erik Harrell, CFO/COO
2. Financial review
Erik Harrell, CFO/COO
3. Operational update Business, Consumer
Jon S. von Tetzchner, CEO
4. Q&A
4
2Q 2007 highlights
Business
Shipments of Opera Mobile: 8.8 million in 2Q
23 new mobile phones include the Opera Mobile browser pre-installed
52 new mobile phones announced YTD
27 new mobile phones, including Opera Mini announced YTD
Notable contract signatures
TMN, Vodafone D2, Westell, Palm, Willcom, Tilgin
Consumer
Revenue from desktop increased 165% over 2Q06
Opera Mini: 7.8 billion cumulative page views and 19.9 million
cumulative users*
Trial version of Opera Mini 4 introduced, with groundbreaking
overview mode
My Opera registered users grew 112% compared to 2Q06
Commercial agreement signed with Onet.pl, a leading portal in Poland,
covering PC and mobile platforms
Speed Dial(TM) feature enables new opportunities in regional markets
* As of July 31, 2007
5
Revenue 2Q 2007 vs 2Q 2006
2Q 2007 highlights
Millions
Revenue highlights
80
70
44%
60
2Q revenue: MNOK 75.3, up 44% vs. 2Q06
50
40
Record quarter
30
Desktop revenue MNOK 15.6, up 165%
vs. 2Q06
20
10
Internet Devices revenue MNOK 59.7,
up 29% vs 2Q06
2Q EBITDA*: MNOK 7.4 vs. MNOK 2.5 in 2Q06
2Q 2006
2Q 2007
Revenue 1H 2007 vs 1H 2006
160
Millions
EBITDA highlights
0
41%
140
120
100
80
60
40
20
* Non-IFRS EBITDA excludes stock option cost
0
1H 2006
1H 2007
Financial Review
7
2Q07 financial review
Income statement
NOK Million
Q2 2007
Q2 2006
Q on Q
Desktop +
15.6
5.9
165%
Internet Devices +
59.7
45.3
29%
Total revenue =
75.3
52.2
44%
Payroll and related expenses -
49.3
31.7
55%
Stock option costs -
3.4
(0.7)
nm
Depreciation and amortization -
1.5
1.0
49%
Other operating expenses -
18.6
18.1
3%
Total expenses =
72.8
50.0
46%
EBIT
2.5
2.2
14%
Net Income
2.2
1.4
58%
EPS (NOK)
0.02
0.01
57%
8
2Q07 financial review
Key financial figures
Operating revenues (NOK Million)
EBITDA* (Non-IFRS) (NOK Million)
80
15
75
70
65
60
10
10
61
50
52 53
7
5
5
48 48
40
40
3
0
38
-2 -1
-2
2
-1
3
-3
30
30
20
22 23
25
28
-5
-5
-10
-6
-12
10
-15
0
Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q107 Q2 07
Q1
04
Q2
04
Q3
04
Q4
04
Q1
05
Q2
05
Q3
05
Q4
05
Q1
06
* Non-IFRS EBITDA excludes stock option cost
Q2
06
Q3
06
Q4
06
Q1
07
Q2
07
9
2Q07 financial review
OPEX development
OPEX comments 2Q07 vs 1Q07
OPEX (NOK Million)
Payroll
Stock Options
Depreciation
Other OPEX
Non recurring costs
Payroll cost down 8%
90
Seasonal effect of vacation pay
Low headcount growth
Stock option costs up
80
70
New option program in place (predominantly
non-cash)
Depreciation cost down 4%
60
50
Result of careful investments in our offices world
wide and Opera Mini infrastructure
Other OPEX up 5%
40
Tight control on travel and other indirect costs
No non-recurring costs in 2Q07
30
20
10
0
Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007
10
2Q07 financial review
EBITDA development
2Q 2006 / 2Q 2007 (NOK Million)
Comments on EBITDA development YoY*
Revenues up MNOK 23.2
30,0
25,0
Desktop + MNOK 9.7
Internet Devices + MNOK 13.4
Payroll and related expenses up MNOK 17.6
20,0
15,0
Sales and Marketing globally
Engineering
Overall headcount up 23% vs. 2Q06
10,0
Other expenses up MNOK 0.5
5,0
EBITDA Q2 2007
Other
Stock option costs
Payroll and related
Revenues
EBITDA Q2 2006
0,0
* Year over Year, Q2 2006 vs Q2 2007
11
2Q07 financial review
Strong capital structure
Balance Sheet
700
600
Cash and cash
equivalents
500
400
300
Current assets
200
100
Fixed assets
BALANCE SHEET
Q2 2007
Q1 2007
Deferred Taxes
Goodwill
Fixed Assets, Net
Accounts Receivable
Accrued, but Unbilled Revenue
Other Current Assets
Cash and cash equivalents
12 321
3 143
23 709
50 685
28 221
3 552
463 117
11 684
3 143
24 023
69 327
32 145
3 951
423 869
Total Assets
584 748
568 141
Accounts Payable
Taxes payable
Social security, PIT and VAT
Deferred revenue
Other short-term liabilities
5 307
-241
15 002
31 823
25 123
2 272
-62
9 476
33 762
28 783
Total Liabilities
77 014
74 231
Common stock
Additional paid-in-Capital
Retained earnings
2 382
453 854
51 498
2 349
444 679
46 883
Total Equity
507 734
493 911
Total Liabilities and Equity
584 748
568 141
0
30.06.2006
31.12.2006
30.06.2007
Total Equity
520
500
480
460
440
420
400
30.06.2006
31.12.2006
30.06.2007
12
2Q07 financial review
Strong cash flow
CASH FLOW STATEMENT
Operating cash flow MNOK 31.9
Positive result
Positive working capital management
Investment activities MNOK 1.8
Tight control on investment activities
Financing activities MNOK 9.2
Proceeds from excercise of options
Operating cash flow MNOK
35
Q2 2007
Q1 2007
Cash flow from operating activities
Profit/loss before taxes
Taxes paid
Depreciation expense
Changes in accounts receivable **)
Changes in accounts payable
Changes in other liabilities, net
Share-based remuneration
Conversion discrepancy
3 711
-1 776
1 521
22 566
3 035
682
2 523
-381
-6 929
-3 050
1 581
-2 664
-4 276
14 652
1 969
-460
Net cash flow from operating activities
31 882
824
Cash flow from investment activities
Acquisition of tangible fixed assets
Acquisition of shares
Net cash flow from investment activities
-1 843
0
-1 843
-1 525
-500
-2 025
9 209
573
9 209
573
39 248
-628
463 117
423 869
30
Cash flow from financing activities
Proceeds from exercise of stock
warrants
25
20
options,
15
Net cash flow from financing activities
10
5
Net change in cash and cash equivalents
0
2006
-5
2007 YTD
Cash and cash equivalents
13
2Q07 financial review
Update on Opera’s FY 2007 operational priorities
Priorities
YTD status report
Focus and invest in consumer area
Desktop revenue up 165% YoY
2Q07 Opera Mini monthly page views up 25% vs. 1Q07
My Opera users up 112% from 2Q06
Accelerate momentum among mobile
phone operators
12 new phones from KDDI (Opera Mobile)
7 new phones from Vodafone (Opera Mini)
New tier 1 operators: Vodafone D2, TMN, Optimus
Increase position with top mobile OEMs
globally
Existing customers launch handsets with Opera
Motorola (5)
Sony Ericsson (4)
Samsung (2)
New OEM addition: Palm
Building on the momentum among
consumer electronics OEMs
Key developments
Westell introduces Media Terminal with Opera
Tilgin introduces two set-top boxes with Opera
Partnership with Texas Instruments makes Opera available on
key platform
Nintendo
Final version of Nintendo Wii launched; Nintendo DS Browser
goes on sale in the United States
Operations Update
15
Opera’s vision
Opera’s vision is to provide the best
Internet experience on any device
Delivering One Web
People want to access the same services
regardless of device
The cost of teaching people to do something
new is too high
Most devices will have full Web browsers–
good for users, operators and manufacturers
The browser is now a platform for Web 2.0
applications and services
Empowers the next generation of user-driven
content
The world of Opera
18
Working with global leaders
19
The unique
differentiators
Windows
Pocket
PC
Smart
phone
Superior user experience
Core code is ported to all major
platforms
Opera 9 core is used by millions daily
Platform
Independent
kernel
UIQ
Mac
Performs well on low-resource
devices
Significantly faster than competitors
in a number of tests
Media
Highway
Symbian
OS
Lower HW, power requirements
Limited bandwidth
ltron
Windows
CE/Mobile
S60
Opera is the smallest full-featured
browser
Opera is the fastest full-featured
browser
Motorola
P2K
QnX
Java
J2ME
(Mini)
Unix
Qte
Qt
Free
BSD
Linux
Solaris
Qtopia
Brew
Nintendo
Gogi
WII
DS
20
The browser is the glue
21
Three screens – boundaries blurring
making calls
watching movies
watching films
browsing Web
browsing web
making calls
1998
2007
Operations Update
Business area
23
Opera value proposition: Business area
Target
Customer/Market
Mobile operators
Key value proposition of full Web browsers and Opera
Full Web browsing
Drives data traffic = higher ARPU*
Facilitates customer retention
Differentiates operator service offering from competition
Opera
Can power convergence through cross-platform and device capabilities
Offers access to the Internet on the widest range of mobile phones in the
market today (Opera Mobile and Opera Mini)
Mobile OEMs
Full Web browsing as a product differentiator
Enables mobile operators to achieve the business benefits of full web
browsing (as listed above)
Opera
Can offer Opera browsers on a wide range of platforms
Has proven delivery capabilities
* Average Revenue Per User
24
Opera value proposition: Business area
Target
Customer/Market
Key value proposition of full Web browsers and Opera
Consumer
Electronic Device
OEMs
Full Web browsing as a product differentiator
Helps OEMs meet and exceed customer expectations of browsing on
any Internet connected device
Provides significantly easier platform for OEMs to provide software
updates to customers
Full Web browsers enable OEMs to:
Offer services to end customers
Establish and maintain long-term relationships directly with end customers
Cross promote and sell other products and services to end customers
Opera has:
Proven delivery capabilities and organization, critical to meeting customer
launch deadlines
SDK products for Linux and Windows CE, enabling faster time to market
Tools for OEMs to customize browsers and user interface
25
Opera Mobile: 2Q highlights
Number of phone models with Opera pre-installed
60
Shipments of phones with Opera pre-Installed
12
Millions
52
50
10
40
37
8
30
6
24
4
20
13
10
2
6
0
0
2003
2004
2005
2006
2007 YTD
Total shipments of Opera Mobile rose 22% in 2Q07 vs. 2Q06
23 new mobile phones that include the Opera Mobile browser were announced
in 2Q07
52 new mobile phones announced YTD
12 new mobile phones with Opera Mini pre-installed were announced in 2Q07
Total of 79 Opera pre-installs including Opera Mobile and Opera Mini YTD
26
Opera Mobile: 52 new phones so far in 2007
Accton
VM3228T
ASUS
ASUS V1210
HTC
HTC Ameo (T-Mobile)
HTC U1000 (Dopod)
HTC Advantage
KDDI
MEDIA SKIN
Casio
Casio W51CA
Casio W52 CA
Casio W53CA
Kyocera
Kyocera W51K
Kyocera W44K II
E28
R2821
Longcheer
Gionee S500
Hitachi
Hitachi W51H
Hitachi W52H
Motorola
Motorola V1100
Motorola A1200e
MOTO Q9
MOTORIZR Z8
MOTOMING
MOTOROKR Z6
MOTORAZR2 V8
MOTORAZR2 V9
MOTOKRZR K3
MOTOKRZR maxx K3
Panasonic
Panasonic W51P
Panasonic W52P
Samsung
Samsung SPH-8100
Samsung SCH-M620
Samsung SPH-M6200
Sanyo
Sanyo W51SA
Sanyo W52SA
Sanyo W53SA
Sharp
Sharp W51SH
eMobile EM-ONE
Sharp W52SH
Toshiba
Toshiba G500
Toshiba G900
Toshiba W51T
Toshiba W52T
Toshiba W53T
Toshiba W54T
Willcom
WX320K
W-ZERO3 Advanced [es]
Wistron
D-link
ZTE
E700
Simcom
S955T
Sony Ericsson
Sony Ericsson W51S
Sony Ericsson P1
Sony Ericsson W52S
Sony Ericsson W53S
Sony Ericsson W960i
Black: 1Q
Red: 2Q-3Q
27
WILLCOM
On July 3, WILLCOM’s new
smartphone hit the streets and
subways of Japan
The W-ZERO3 Advanced [es]
features the Opera Mobile browser
This is the third handset to ship with
Opera from Willcom, a national
operator in Japan with 4,5 million
subscribers
Opera powers Motorola’s new mass
market handsets
“Surfing the Web on the RAZR V9
is a joy, thanks to the included
Opera Web browser”
Laptop Magazine, US
29
Opera Mini: 27 new phones so far in 2007
LG
LG KU250
LG KE970
LG KU311
Nokia
Nokia 6085
Nokia 5500
Nokia 3110
Nokia 7373
Nokia 6131
Nokia 5300
Nokia 6230i
Nokia 5070
Nokia E65
Nokia N70
Nokia N95
Sagem
My411x
P9521
Samsung
Samsung E900
Samsung SGH-E250
Samsung SGH-D900
Samsung U700
Samsung ZV60
Samsung D900i
Sony Ericsson
SE K550
SE W200i
Motorola
Motorola K1
Motorola V980
Motorola E2
Black: 1Q
Red: 2Q-3Q
30
The Web gets Handy in Germany
Vodafone D2 introduces the mobile Web
Vodafone D2 introduced its new "Handy 2.0
Mobile Internet" service, powered by Opera
and Bytemobile Inc.
Users access the real Internet using a
Vodafone-branded version of Opera Mini
With flat-rate EUR 9.95 per month, users can
surf all their favorite Web sites, read and send
e-mail, search on Google, view video clips,
shop online and more
Vodafone D2 serves more than 30 million
mobile customers.
Operators choose Opera Mini
Full-scale commercial partners:
T-Mobile International
Vodafone D2
TMN (Portugal)
Telefónica Móviles de España (Spain and CALA)
PTC/era (Poland)
Distribution deals:
TIM Hellas (Greece)
Pannon (Hungary)
GrameenPhone (Bangladesh)
mobilkom (Austria)
Omnitel (Lithuania)
TDC (Denmark)
Talkline (Germany)
Optimus (Portugal)
MegaFon (Russia)
HT Telecom (Europe)
Meteor Communications Ltd. (Ireland)
Ten (France)
33
Growth continues in Opera for Devices
The Westell Media Terminal(TM), a
broadband smartphone, features the
Opera browser
Opera brings the Web to innovative
devices: Palm Foleo, the smartphone
companion to launch shortly
Final version of Opera for Nintendo Wii
introduced
Nintendo expects to sell 16,5
million Wiis in 2007
Westell Media Terminal(TM)
Operations Update
Consumer area
35
Opera for Desktop: 2Q highlights
Fourth consecutive quarter of
growth
Revenue growth of 165%
compared to 2Q06
Opera Desktop Revenue (MNOK)
16
14
12
Further increase in usage drives
record revenues
10
8
Innovative features such as Speed
Dial contribute to further growth in
usage
Continued marketing investment
in target markets
6
4
2
0
36
Onet.pl
Distribution and revenue share partnership with
the leading Internet brand in Poland: Onet.pl
As a result, Opera strengthens its awareness and
market penetration in a historically highly
successful market for the company’s products
Areas of collaboration include a Onet.pl search field
in Opera ’s Speed Dial, a mobile version of the
portal and local search services
37
Opera Mini: 2Q highlights
9 000
25
8 000
20
7 000
6 000
Opera introduced the trial (beta)
version Opera Mini 4
Page overview mode provides
users with additional
navigation option
15
5 000
4 000
10
3 000
2 000
5
1 000
0
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
JAN
FEB
MAR
APR
MAI
JUN
JUL
0
Cumulative users
Numbers as of 30. June 2007
* Number of users who have downloaded and used Opera Mini
Note: Opera Mini statistics as of July 31, 2007
Page views
Millions
Cumulative number of users*: 19.9
million
Cumulative Opera Mini Users and Page Views
Millions
Cumulative pages downloaded
since launch: 7.8 billion
38
KongZhong: China’s leading mobile
services company
Launch of "KongZhong Opera" browser for
Chinese mobile phone users
“KongZhong Opera“, based on Opera Mini, is
a free download that enables mobile phone
users to browse both traditional Internet sites
and WAP sites with their cell phone
Revenue share, marketing and distribution
KongZhong has a total user base of 50 million
Growth in Opera Mini traffic continues
Opera Mini monthly page views
1 000 000 000
900 000 000
800 000 000
700 000 000
600 000 000
500 000 000
400 000 000
300 000 000
200 000 000
100 000 000
0
39
40
Introducing the power of My Opera
Vision: A personal space on the Web,
regardless of device
Started as discussion forum and technical
support. Today it is our industry’s most
powerful online community
My Opera is a differentiator:
Increases the value of our software
products
Improves brand loyalty
Acts as platform for services such as
photo blogging via mobile browsers
My Opera is the glue:
The hub of Opera’s cross-platform
proposition
41
My Opera – the facts
My Opera Community closing
in on one million members:
June 30: 877,650
members
August 24: 973,500
members
Growth since 1Q: 19%
Growth since 2Q 2006: 112%
(414,962 members per June
30, 2006)
1 500 sign-ups per day
My Opera statistics
Cumulative registered users
1 000 000
900 000
800 000
700 000
600 000
500 000
42
Summary
44
2Q07 financial review
Update on Opera’s FY2007 financial goals
Metric
Goal 2007
Baseline
Revenue
Accelerated growth vs.
2006 vs. 2005
>39%
growth
41%
>1%
EBITDA*
1.2%
EBITDA*
Single digit
Note: This does NOT constitute financial guidance
*Non-IFRS EBITDA excludes stock option cost
1H performance
45
2Q07 financial review
Update on Opera’s FY2007 operational goals
Metric
Goal 2007
YTD performance
Opera Desktop
50% increase in users
~20% increase
Opera Devices
20 Devices announcements
6 announcements
Opera Mini B2C
30 million cumulative users
19.9 million
Opera Mini B2C
10 billion cumulative page views
7.8 billion
100 new phone announcements
Opera Mobile Opera
(Opera Mobile and Opera Mini)
Mini B2B
Opera Mobile Opera
50% increase in shipments with
Opera pre-installed vs. 2006
Mini B2B
Opera Community
Increase registred users by 100%
Note: This does NOT constitute financial guidance
79 announcements
29% 1H 2007 vs. 1H
2006
60% increase
Thank you for listening!