First quarter

Opera Software
First q
quarter 2009
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,
performances or achievements expressed or implied by the forward-looking
forward looking statements.
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”
p
or “continue”,, the negative
g
of such terms or other comparable
p
terminology.
gy
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
di t
directors
or employees
l
assumes any liliability
bilit resulting
lti ffrom use. E
Exceptt as required
i db
by llaw, 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,
s ch as filings made with
such
ith the OSE or press releases.
releases
This presentation is for information purposes in connection with the Opera Software ASA 1Q09
presentation only. The presentation is not an offer to sell, or the solicitation of an offer to buy, any
securities.
securities
2
3
Agenda
1. Highlights
Erik Harrell,
Harrell CFO/COO
2. Financial review
Erik Harrell, CFO/COO
3. Operational update
Jon S. von Tetzchner, CEO
4. Q&A
4
Operational highlights: 1Q09 + YTD 2009
Priority
Areas
Overview
Operators
Vodafone announced a global agreement with Opera covering Opera Mini, Opera
Turbo and Opera Widgets
SK Telecom, the leading operator in Korea, selected Opera Mini
O
Opera
introduced
i
d
dO
Opera T
Turbo
b
Mobile
63 new phones with Opera pre-installed, including 7 new phones with Opera Mobile
and 56 with Opera Mini
Opera Mobile shipments pre-installed
pre installed in 1Q09: 7.0 million
HTC introduced Opera Mobile on 3 new Windows Mobile handsets
Devices
Ford announced Opera as a key component of its “Ford Solutions” mobile office –
providing Web connectivity from the dashboard in trucks and vans
O
l t d by
b ZyXEL
Z XEL Communications
C
i ti
ffor it
t t boxes
b
Opera
selected
its new liline off set-top
Desktop
Opera Mini
(consumer)
Desktop users grew by 13% in 1Q vs. 4Q08 (up 64% from 1Q08)
23.4
23
4 million monthly users of Opera Mini in April 2009 (up over 140% vs April 2008),
2008)
which generated over 8.7 billion viewed pages (up over 249% vs April 2008) and 151M
MB of data traffic
Opera signed a deal with ASUS to deliver the Opera desktop browser preinstalled on
the Eee Top PC
PC, an all
all-in-one
in one touchscreen computer
5
1Q09 financial review
2009 financial highlights
Priorities
1Q status report
Revenue
MNOK 163.0 (+59% vs 1Q08)
EBITDA*
MNOK 31.3 (MNOK 15.6 in 1Q08)
Operating Cash
Flow
MNOK 59.7 (MNOK 34.4 in 1Q08)
* Non-IFRS EBITDA excludes stock option cost
6
Financial Review
7
1Q09 financial review
MNOK
1Q 2009
1Q 2008
Q on Q
Desktop +
47.0
23.1
103%
Internet Devices +
116.0
79.6
46%
Total revenue =
163.0
102.7
59%
Payroll and related expenses -
101.2
66.0
53%
Stock option costs -
3.7
4.0
-8%
Depreciation and amortization -
2.7
2.0
40%
Other operating expenses -
30.5
21.1
44%
Total expenses =
138.1
93.1
EBIT
24.9
9.6
Net Income
16.7
7.8
EPS (NOK)
0.14
0.07
48%
8
1Q09 financial review
K fi
Key
financial
i l figures
fi
Operating revenues (NOK Million)
EBITDA* (Non-IFRS) (NOK Million)
180
35
160
36
163
157
31
140
25
120
26
125
21
113
100
103
15
16
93
80
12 12
82
75
60
61
48 48
40
65
10
52 53
30 28
22 23 25
5
-2
40 38
20
7
5
-5
3 -2 -1
-1
-3
2
3
-5
-6
-12
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
04 04 04 04 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 08 09
-15
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
04 04 04 04 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 08 09
* Non-IFRS EBITDA excludes stock option costs
1Q09 financial review
Revenues: 1Q09
Area
Comments: Revenues (vs
(vs. 1Q08)
Business
Operators: Strong growth in Opera Mini license revenue, driven by
operator active user growth and new operator agreements
Mobile and Device OEMs: Large increase in revenue from existing and
new customers
Consumer
Opera Desktop: User growth up 64% since 1Q08
Strong growth in Opera Mini revenue streams vs 1Q08, with Opera Mini
users up 157% since 1Q08
9
10
1Q09 financial review
OPEX development
d
l
t
OPEX (NOK Million)
Payroll
160
Stock Options
Depreciation
Other OPEX
OPEX comments 1Q09 vs 1Q08
Non recurring costs
•
Total operating expenses up 48%
Expect total operating
expenses/employee to be
comparable to 1Q for remainder
of FY2009
•
140
120
100
•
Payroll cost up 53%
Headcount growth worldwide
of 34% since 1Q08
80
•
60
•
Stock option costs down 8%
40
•
Depreciation cost up 40%
Result of investments in
worldwide and Opera Mini
infrastructure
•
20
0
•
Other OPEX up 44%
11
1Q09 financial review
EBITDA d
development
l
t
1Q 2008 / 1Q 2009 (NOK Million)
80,0
Comments on EBITDA development YoY*
70,0
Revenues up MNOK 60.3
60,0


Desktop + MNOK 23.8
Internet Devices + MNOK 36.5
50,0
Payroll and related expenses up
MNOK 35.2
40,0

30,0


20,0
10,0
Engineering
Sales and Marketing globally
Overall headcount up 34% vs.
1Q08
Other expenses up MNOK 9.3
EB
BITDA Q1 2009
9
Otherr
Stoc
ck option costs
s
Payro
oll and related
d
Revenues
s
EB
BITDA Q1 2008
8
0,0
* Year over Year
Year, 1Q 2009 vs 1Q 2008
12
1Q09 financial review
St
Strong
capital
it l structure
t
t
Balance sheet (MNOK)
Balance sheet highlights
g g
900
800
700
600
500
400
300
200
100
0
Cash and cash
equivalents
q
Metric
1Q09
1Q08
Cash
MNOK 628
MNOK 487
NWC*
MNOK -57
MNOK 10
Equity
MNOK 630
MNOK 535
Current assets
Fixed assets
31.03.2008
31.12.2008
31.03.2009
* NWC is defined as Total current assets excluding cash and cash
equivalents
i l t minus
i
T
Total
t l currentt liabilities
li biliti
Total Equity
y
640
620
600
580
560
540
520
500
31.03.2008
31.12.2008
31.03.2009
13
1Q09 financial review
Strong cash flow
Cash Flow highlights
g g
Mil lions
70
1Q09
1Q08
Operating
cash flow
MNOK 60
MNOK 34
Investments
MNOK -8
MNOK -5
Financing
MNOK 13*
MNOK -10**
Cash balance
MNOK 628
MNOK 487
60
50
40
30
20
* Proceeds from exercise of stock options
10
** Opera Software bought back 733 000 own shares totaling 10.1 MNOK in
1Q08
0
1Q08
1Q09
Operating cash flow 1Q09 vs 1Q08
1Q09 financial review
Operational focus FY2009
Grow revenues across customer segments
Be mindful of macroeconomic environment
Invest and increase headcount, while being vigilant on costs
Focus on operating cash flow
Note: This does NOT constitute financial guidance
*Excludes stock option costs
14
1Q09 financial review
15
Key strategies to achieve goals: Revenues
Business area
Consumer area
Focus on top mobile operators and
OEMs
Aggressively grow Opera Desktop and
Opera Mini users in top ten target
geographic markets
Grow operator-branded Opera Mini
active users and win new operators for
widgets solution
Leverage Opera Link and increase value
proposition through new features
Focus on top
p consumer electronics
OEMs
Monetize rapidly
p yg
growing
g Opera
p
Mini
user base
Hire enough top quality sales,
marketing and engineering people and
increase productivity to drive growth
Increase third-party distribution channel
share of Opera Mini users
Note: This does NOT constitute financial guidance
16
1Q09 financial review
Key strategies to achieve goals: Profits
Business area
Consumer area
Focus on top customers and
opportunities
Prioritize most strategic features and
functions
Continous alignment of engineering
planning
p
g relative to p
projected
j
demand
Optimize headcount growth and priorities
Continue to:
• build and sell more standardized
products and SDKs
• build easily customizable products for
operators
Constantly monitor efficiency of Opera
Mini hosting operation
Note: This does NOT constitute financial guidance
Operations Update
18
Opera’s vision
Opera’s
O
’ vision
i i iis to provide
id the
h b
best
Internet experience on any device
19
This is Opera Software
The world’s leading Web browser
developer company: 710+ employees in
more than ten countries
Unmatched footprint across PCs, mobile
phones and other connected devices
p
Leading customers: T-Mobile, Vodafone,
Nokia, SKT, KDDI, Ford, Sony Ericsson,
Motorola, Samsung, Sony and Nintendo +
others
End-user movement:

23+ million unique monthly users of
Opera Mini in April 2009

Opera Mobile shipped on 130+
million phones

More than 150+ million downloads of
Opera products from Opera.com in
last 12 months

~40 million use Opera for PCs

Millions surf Opera on Nintendo DSi
and other connected devices
20
Th vision
The
i i has
h become
b
reality
lit
21
Opera’s unique
ability to deliver a
world-class,
ld l
crossplatform browser
Technical
 One core – multiple platforms
 Support of quickly evolving standards
 Cutting edge innovation
Organizational
 Experienced, global organization
 Management experience in handling highly complex technical projects
 Large Quality Assurance team
Beyond the features
 The importance of time to market
p
, with Widgets,
g , services and server-enabled solutions
 A connected experience,
22
There is only one Web
Devices, platforms and networks: they come in all shapes
and sizes. Only one thing unifies them: The Web
Why only One Web will prevail
People want to access the same
services regardless of device
The cost of teaching people to do
something
thi new iis ttoo hi
high
h
Most connected devices will have
f ll Web bro
full
browsers–
sers good for users,
sers
operators and manufacturers
The browser is now a platform for
Web 2.0 applications and services
Empowers the next generation of
user-driven content
24
The unique
Th
i
diff
differentiator:
ti t
One
O browser
b
core for any platform powers One Web
Pocket
PC
Smart
phone
Windows
Motorola
P2K
ltron
Samsung
SHP
Windows
CE/Mobile
S60
Media
Highway
PlatformPl
tf
independent
core
Symbian
OS
UIQ
Mac
QnX
Java
J2ME
(Mini)
Unix
Qte
Qt
Free
BSD
Linux
Solaris
Qtopia
BREW
Nintendo
Gogi
Wii
DS
25
Proprietary mobile operating systems will
drive the Web as the application platform
90% of mobile handsets ship with
proprietary mobile operating system
1 billion
In 2007
2007, approximately 1
1.1
handsets shipped with a proprietary
OS while just 100 million shipped with
p OS
an open
Examples of leading, proprietary OSs:
S40 (Nokia), EMP (Sony Ericsson),
SHP (Samsung), P2K (Motorola)
Source: Strategy Analytics, Yankee Group, Opera estimates
Applications will increasingly drive
phone sales, so widgets will be
adopted by the high volume,
properietary
i t
OS feature
f t
phone
h
market
k t
26
The Opera
Opera-powered
powered day
Breakfast:
Opera
p
on
laptop
Bus:
Opera
p
Mobile
Work:
Opera
p
on
laptop
Boring
meeting:
g
Opera Mini
Airport
lounge:
g
Opera on
Archos PMP
Recreation:
Opera
p
on
Wii
27
Web as a platform gains momentum
OEMs and operators are looking to
leverage the Web as a platform for
mobile applications, user interfaces
and services
OEMs and operators are looking for
an open
p developer
p environment they
y
can offer across phones
Users are looking for an easy way to
access personalized and current
content on their connected devices
T-Mobile, KDDI and other
operators are using
i
Widgets to make content
easily available on the
mobile screen
28
Widgets embodify the platform promise
Real people get:
Instant access to personalized content
One experience across devices
Web developers get:
Wide distribution
Tools to enable cross-platform testing
Operators
get:
p
g
One platform for content management and
distribution
Full brand control
Manufacturers get:
Software design flexibility on constrained devices
such as mobile phones
29
Opera Turbo: Why it’s hot
Real people: A fast, attractive Web experience at a lower cost
Operators: Increase data revenue and margin
Manufacturers: Product differentiation, reduced burden on hardware
and operating system
Operations Update
Business area
31
Why operators
choose Opera
Mini
Increase ARPU through
frequent data usage
Attract new customers
Improve customer
retention and reduce
churn
Maintain a sustainable
competitive advantage
32
SK Telecom selects Opera Mini
SK Telecom is the largest operator
in South Korea
50.5% market share as of 2008
Number of subscribers in Q109
climbed by 4% year-on-year to reach
23.35 million
SK Telecom will deploy a
Mini
customized version of Opera
p
33
The giants lead the innovation race
Vodafone selects broad
range of Opera products to
di W
drive
Web
b and
d content
t t
innovation across mobile
platforms
T-Mobile set to launch
web’n’walk 4.0 to the
consumer market,
featuring Opera Widgets
and back-end service
34
The dynamic duo:
Opera Mobile and Opera Mini
Number of phone models with Opera pre-installed
Opera’s presence keeps growing on
an ever larger list of mobile phone
models
250
200
New models with Opera Mobile
in 1Q: 7
150
New models with Opera Mini in
1Q: 56
141
100
59
T t l new models
Total
d l iin 2009 tto d
date:
t 63
35
50
63
0
6
13
2003
2004
24
2005
56
56
37
7
2006
Opera Mobile
2007
Opera Mini
2008
2009 YTD
Number of mobile phones shipped
with the Opera Mobile browser: 7.0
million in 1Q09.
35
Operators and Opera Mini
Operator-branded (10):
Cell One (Namibia)
Debitel (Germany)
O2 (Slovakia & Germany)
PTC/era (Poland)
SK Telecom (new)
Swisscom (Switzerland)
T-Mobile International
Tata Teleservices (India)
TMN (Portugal)
Vodafone Group
Opera-branded (18):
GrameenPhone (Bangladesh)
HT Telecom (Europe)
mobilkom (Austria)
Mobitel (Sri Lanka)
Movistar (Mexico)
Movistar (Colombia)
MTN Uganda
Omnitel (Lithuania)
Optimus (Portugal)
Pannon (Hungary)
Sprint (USA) (new)
Talkline (Germany)
TDC (Denmark)
Telenor (Serbia)
Telenor (Pakistan)
(
)
TIM Brazil (new)
TIM Hellas (Greece)
Virgin Mobile (USA) (new)
36
Opera Mobile: 7 new models to date in 2009
HTC
HTC Touch 3G
HTC Touch Diamond2
HTC Touch Pro2
Garmin-ASUS
Garmin
ASUS
nüvifone M20
Motorola
MOTOSURF A3100
Samsung
Samsung Mondi
XDA (O2)
XDA Ignito
I it
37
KDDI and Opera Mobile: fresh off the press (2Q09)
Toshiba Biblio and
Toshiba T002 with
Opera Mobile, running
on the BREW operating
system
"We are now getting close to having collaborated with Opera
on nearly 100 of our mobile phones. Early on, we knew that
in order to appeal to the mature Japanese mobile market, we
would have to continually innovate our offering.
offering Opera has
proven to be just the tool we needed, meeting our
subscribers' ever-growing expectations of what the Web on
a mobile phone should be.“
Kazuhiko Masuda General Manager, Consumer Service &
Prod ct Planning Division,
Product
Di ision Consumer
Cons mer Service
Ser ice & Product
Prod ct Sector.
Sector
KDDI.
38
Opera Mini: 56 new models to date in 2009
Haier
Haier CG100
Huawei
Huawei 736
Huawei 835
Huawei C2900i
H
Huawei
i C5100
Huawei C5588
Kyocera
Kyocera K325
Kyocera K612
Kyocera KX5
Kyocera M1000
LG
LG AD6335
LG GT360
LG KP500
Micromax
Micromax GC700
Micromax X555
Motorola
Motorola E8
Motorola K1M
Motorola V3C
Nokia
Nokia 2865
Nokia 3155
N ki 5800
Nokia
Nokia 6155
Nokia 6255
Nokia 6265
Nokia 6275
Nokia 6303
Nokia N79
Sony Ericsson
Sony Ericsson C903
Sony Ericsson S312
S
Sony
Ericsson
Ei
W205
Sony Ericsson W508
Sony Ericsson W705
Sony Ericsson W705
Sony Ericsson W715
Sonyy Ericsson W890
Sony Ericsson W995
Pantech
Pantech PA-711
Pantech PA-715S
P t h CDM8074
Pantech
UTStarcom
UTStarcom CDM 8964
UTStarcom PCS 1450V
Samsung
Samsung C3050V
Samsung M310
S
Samsung
S3500V
Samsung S7220
Samsung S7350
Samsung SCH-299
Samsung SCH-E159
Samsung SCH-F309
Samsung SCH-F519
Samsung SCH-F679
Samsung SCH-M569
Samsung
Sa
su g SC
SCH-S259
S 59
Samsung SCH-S379
Samsung SCH-W619
Samsung T459
39
Opera Devices: pushing boundaries of One Web
Two areas of use:
Full Internet browsing. Opera
Devices SDK used to develop a fullfledged browser for surfing
Application environment. Opera
Devices SDK powers a device with
menu system,
y
, user interface,,
Widgets and applications
40
Study: I want Internet on my TV
Nearly half of prospective TV buyers say
they want to buy an Internet-connected TV
Preferences:
 Video:
Vid
62%
 Weather: 59%
 Online games: 57%
Source: Net-Enabled Video: Early Adopters Only? (April 2009).
Conducted in December 2008. CEA Market Research
41
Mobile office: Opera brings full Web browsing to Ford
trucks and vans
Part of Ford Work Solutions technology package
Opera is available on the new 2009 Ford F-150 XL, STX, XLT trucks; F-Series Super
D t XL,
Duty
XL XLT and
d FX4 trucks
t k and
d allll 2009 E
E-Series
S i vans
42
KDDI au BOX
Sony VGF-CP1
Nintendo Wii
Nintendo DSi
Sony Bravia Video Internet link
ASUS Eee Top PC
Phillips Professional Flat TV
Archos 5 & 7
Telsey Waves
Iwatsu Precot IP Phones
Amino Set-top box
VCom NDVB-9000
Tilgin Mood 300 & 400
43
Operations
p
Update
p
Consumer area
The big
g picture:
p
Global Internet penetration
p
now at 20% - as indicator of market
opportunity
pp
y
Growth in Desktop Internet Users (Global, MM)
Source: Internet World Stats
Users embrace the mobile Web…
More users
Number of Opera Mini users in April 2008: 9.7 million
Number of Opera Mini users in April 2009: 23.4 million
Data traffic growth (April 2008 – April 2009)
+ 295% (to 151 million MB)
… to the benefit of operators
p
Customers of U.S. operators view more data-intensive pages than
subscribers in any other country
The average page viewed over U.S. operator networks is approx. 32KB
compressed (or 320KB uncompressed)
In Ukraine, operators enjoy the most active mobile Web users
Average pages viewed per month per user in Ukraine: 582
Source: State of the Mobile Web (April 2009). Opera Software. URL: www.opera.com/smw
47
Opera for Desktop: Revenue growth
Opera Desktop Revenue (MNOK)
50
Revenue growth of 103%
compared to 1Q08
User growth 64% compared to
1Q08
Reaping benefits of localization
strategy in terms of product
features marketing materials
features,
and commercial agreements
45
40
35
30
25
20
15
10
Higher
g
user g
growth than overall
Internet market in target
countries
5
0
48
O
Opera
Mini:
Mi i
Opera Mini monthly page views
10 000 000 000
23.4 million monthly
users
151 million MB of
data transferred
monthly
Value for operators
(at NOK 4 per MB):
NOK 7.2 billion per
year
9 000 000 000
8 000 000 000
7 000 000 000
6 000 000 000
5 000 000 000
4 000 000 000
3 000 000 000
2 000 000 000
1 000 000 000
Opera Mini now
generates data traffic
for 500 operators in
175 countries
175+
t i every
month
0
49
M Opera
My
O
– att th
the heart
h t off Opera’s
O
’ universe
i
Total members: 2 399 503
Monthly unique visitors: 10,740,603
Average daily sign-ups: 3014
Average daily page views: 1,448,347
(Numbers by May 24, 2009)
Thank you for listening