Opera Software First quarter 2007
A note from our lawyers 2 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 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 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 1Q07 presentation only. The presentation is not an offer to sell, or the solicitation of an offer to buy, any securities.
BREAKING NEWS Portugal s leading telecom operator, TMN, selects Opera Mini for major mobile Web push
Highlights 4 1Q 2007 highlights Business Shipments of Opera Mobile: 10.5 million in 1Q 29 new mobile phones include the Opera Mobile browser pre-installed 45 new mobile phones announced YTD 60 new mobile phones when Opera Mini pre-installs are included Notable contract signatures ARCHOS for next-generation portable media devices Motorola for Connected Home products HTC to power upcoming Windows Mobile devices Palm Inc. Consumer Revenue from desktop increased 142% over 1Q06 5.2 billion cumulative page views and 15 million cumulative users of Opera Mini Total page views in 1Q07 up 48% vs. 4Q06 Opera selected Yahoo! to power the default search field on Opera Mini My Opera registered users grew 146% compared to 1Q06
Highlights 5 1Q 2007 highlights Revenue highlights 1Q revenue: MNOK 65.4, up 37% vs. 1Q06 Record quarter Desktop revenue MNOK 14.8, up 142% vs. 1Q06 Internet Devices revenue MNOK 50.6, up 21% Revenue 37% EBITDA highlights 1Q EBITDA*: MNOK -5.8 vs. MNOK 1.2 in 1Q06 * Non-IFRS EBITDA excludes stock option cost
Financial Review
1Q07 financial review 7 Income statement NOK Million Q1 2007 Q1 2006 Q on Q Desktop + 14 839 6 120 142% Internet Devices + 50 557 41 717 21% Total revenue = 65 397 47 837 37% Payroll and related expenses - 53 453 33 093 62% Stock option costs - 1 594 8 430-81% Depreciation and amortization - 1 581 806 96% Other operating expenses - 17 749 12 717 40% Total expenses = 74 378 55 046 35% EBIT (8 981) (7 209) -25% Net profit (8 000) (4 684) -71% EPS (NOK) (0,07) (0,04) -66%
1Q07 financial review 8 Key financial figures Operating revenues (NOK Million) EBITDA* (Non-IFRS) (NOK Million) * Non-IFRS EBITDA excludes stock option cost
1Q07 financial review 9 OPEX development OPEX (NOK Million) OPEX comments 1Q07 vs 4Q06 Payroll Stock Options Depreciation Other OPEX Non recurring costs 90 000 80 000 70 000 60 000 50 000 40 000 30 000 20 000 Payroll cost up 11% Increase in headcount of 3.5%, mainly sales Normal yearly wage increases Stock option costs down 23% Reflecting a lower share price Also includes partial impact of new stock options program Depreciation cost up 13% Result of investments in our offices world wide and Opera Mini infrastructure Other OPEX down 12% Tight control on travel and other indirect costs No Non-recurring costs in 1Q07 10 000 0 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007
1Q07 financial review 10 EBITDA development 1Q 2006 / 1Q 2007 Comments on EBITDA development YoY* 15 Revenues up MNOK 17.6 10 Desktop + MNOK 8.7 Internet Devices + MNOK 8.8 Payroll and related expenses up MNOK 20.4 5 Sales and Marketing globally Engineering Overall headcount up 37% vs. 1Q06 Stock option cost down MNOK 6.8 0-5 EBITDA Q1 2006 Revenues Payroll and related Stock option costs Other EBITDA Q1 2007 Lower social security cost due to lower share price Other expenses up MNOK 5.0 Higher indirect costs associated with higher headcount and international expansion -10-15 * Year over Year, Q1 2006 vs Q1 2007
1Q07 financial review 11 Strong capital structure Balance Sheet Balance Sheet Q1 07 Q4 06 600 500 400 300 200 Cash and cash equivalents Current assets Deferred Taxes 11 684 9 730 Goodwill 3 143 3 143 Fixed Assets, Net 24 023 20 754 Accounts Receivable 69 327 55 172 Accrued, but Unbilled Revenue 32 145 43 636 Other Current Assets 3 951 5 424 Cash and cash equivalents 423 869 424 498 100 0 600 31.03.06 30.12.06 31.03.07 Fixed assets Total Assets 568 141 562 358 Accounts Payable 2 210 6 748 Social security, VAT 9 476 11 314 Deferred revenue 33 762 22 495 Other short-term liabilities 28 783 22 018 500 400 Total Equity Total Liabilities 74 231 62 575 300 200 100 0 31.03.2006 30.12.2006 31.03.2007 Total Liabilities Common stock 2 349 2 339 Additional paid-in-capital 444 679 444 116 Retained earnings 46 883 53 328 Total Equity 493 911 499 783 Total Liabilities and Equity 568 141 562 358
1Q07 financial review 12 Update on Opera s FY 2007 priorities Priorities Focus and invest in consumer area YTD status report Desktop revenue up 142% YoY 1Q07 Opera Mini page views up 48% vs. 4Q06 April 07 up 12% vs. March 07 My Opera users up 146% YoY Accelerate momentum among mobile phone operators Increase position with top mobile OEMs globally Building on the momentum among consumer electronics OEMs 22 new phones from KDDI (Opera Mobile) 13 new phones from PTC/era (Opera Mini) New tier 1 operator: tmn Key OEM additions HTC Palm ASUS New phones with key customers: Motorola (7), Sony Ericsson (4) Key developments Motorola Connected Home group New devices from ARCHOS New Devices announcements (5) Tranzas TRZ-8300. Kocom KHN-U881, Iwatsu Visual IP Phone, Tilgin Mood 300 and 400
Operations Update
14 Opera s vision Opera s vision is to provide the best Internet experience on any device
15 Opera delivers cross-platform innovation Desktop computers Laptops Gaming consoles TVs Set top boxes Mobile phones Personal communicators Portable media players PDAs In-flight entertainment systems Web tablets IP screen phones
Working with global leaders 16
Opera powers convergence
18 There is only one Web The services that win on the ordinary Web also win on the mobile Web The cost of teaching people to do something new is too high WAP was a mistake, let's not do it again Most mobile phones and other devices will ultimately have full Web browsers; browsing drives higher ARPU and improves customer retention
The browser is the glue 19
20 Three screens boundaries blurring making calls watching movies watching films browsing Web browsing web making calls 1998 2007
The Opera-powered day 21
Operations Update Business area
23 The unique differentiators Superior user experience Opera is the smallest full-featured browser Lower HW, power requirements Performs well on low-resource devices Opera is the fastest full-featured browser Limited bandwidth Significantly faster than competitors in a number of tests Core code is ported to all major platforms Opera 9 core is used by millions daily Qte Qtopia Qt Smart phone S60 UIQ Windows CE/Mobile Symbian OS QnX Linux Gogi Pocket PC Unix Solaris Free BSD Windows Platform Independent kernel Brew Motorola P2K Nintendo DS WII ltron Java J2ME (Mini) Media Highway Mac
24 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
25 Opera value proposition: Business area Target Customer/Market Consumer Electronic Device OEMs Key value proposition of full Web browsers and Opera 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
26 Opera Mobile: 1Q highlights Number of phone models with Opera pre-installed Shipments of phones with Opera pre-installed 40 37 12 Millions 35 30 29 10 25 24 8 20 6 15 13 10 4 6 5 2 0 2003 2004 2005 2006 2007 Q1 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 Q1/07 Total shipments of Opera Mobile rose 36% in 1Q07 vs. 1Q06 29 new mobile phones that include the Opera Mobile browser were announced in 1Q07 45 new mobile phones announced YTD 15 new mobile phones with Opera Mini pre-installed were announced in 1Q07 Total of 60 Opera pre-installs including Opera Mobile and Opera Mini YTD
27 Opera Mobile: 45 new phones so far in 2007 Accton VM3228T ASUS ASUS V1210 Casio Casio W51CA Casio W52 CA Casio W53CA E28 R2821 Hitachi Hitachi W51H Hitachi W52H HTC HTC Ameo (T-Mobile) HTC U1000 (Dopod) HTC Advantage KDDI MEDIA SKIN Kyocera Kyocera W51K Kyocera W44K II Longcheer Gionee S500 Motorola Motorola V1100 Motorola A1200e MOTO Q9 MOTORIZR Z8 MOTOROKR Z6 MOTORAZR2 V8 MOTORAZR2 V9 Panasonic Panasonic W51P Panasonic W52P Samsung Samsung SPH-8100 Sanyo Sanyo W51SA Sanyo W52SA Sanyo W53SA Sharp emobile EM-ONE Sharp W51SH Sharp W52SH Simcom S955T Sony Ericsson Sony Ericsson P1 Sony Ericsson W51S Sony Ericsson W52S Sony Ericsson W53S Toshiba Toshiba G500 Toshiba G900 Toshiba W51T Toshiba W52T Toshiba W53T Toshiba W54T Willcom WX320K Wistron D-link ZTE E700
28 Opera starts shipping on HTC devices The Opera Mobile browser serves as a differentatior on HTC s devices HTC is the leading manufacturer of Windows Mobile cell phones and PDAs. More than 70% of all Windows Mobile phones are made by HTC HTC currently has 4,904 employees worldwide with 1,245 of them involved in research and development HTC U1000 (Dopod) HTC Advantage HTC Ameo (T-Mobile)
29 New Opera partner: Palm Inc. Palm is a leader in mobile computing Palm has licensed Opera 9 to enable the full Internet
30 This just in: TMN selects Opera TMN- Telecomunicações Móveis Nacionais, S.A. is the mobile communications unit of Portugal Telecom (PT), the national incumbent TMN has selected Opera Mini for a major consumer push on the mobile Web
31 KDDI continues its growth in Japan KDDI had 27,099,400 subscribers in its au network in April 2007, up from 22,213,400 in the same month last year Opera continues to power KDDI s 3G handsets (au) 40 models shipped so far with Opera Mobile In latest models, Opera s browser sports tabbed browsing and Flash support
32 PTC/era: the leading operator in Poland Polska Telefonia Cyfrowa (operator of the Era network) is the leading Polish mobile operator with more than 12 million subscribers PTC/era is the subsidiary of T-Mobile It offers the fastest wireless Internet access solution, called blueconnect, powered by Opera Mini So far, PTC/era has shipped 14 mass market handsets with Opera Mini
33 Opera Mini: 15 new phones so far in 2007 LG LG KU250 LG KE970 LG KU311 Motorola Motorola K1 Sagem My411x Samsung Samsung E900 Samsung SGH-E250 Samsung SGH-D900 Nokia Nokia 6085 Nokia 5500 Nokia 3110 Nokia 7373 Nokia 6131 Nokia 5300 Nokia 6230i
34 Growth continues in Opera for Devices Full version of Opera for Nintendo launched (in 2Q) Motorola, Inc. expands relationship with Opera by licensing Opera s SDK for use in Connected Home products In South Korea, Kocom will use Opera for its Wall Pad Opera selected for Tranzas TRZ- 8300 set-top box. Initial deployment in Japan, followed by Europe through Echovision Ltd. in Greece Iwatsu selects the Opera browser for new Visual IP video phone Kocom KHN-U881 Wall Pad Tranzas TRZ-8300
35 This just in: Tilgin selects Opera for Mood 300 and 400 set-top boxes Tilgin is headquartered in Sweden, with several international sales offices. More than 30 operators offer their IP-based services based on solutions from Tilgin
36 ARCHOS goes next-generation with Opera ARCHOS selects Opera for upcoming, next-generation line of devices Founded in 1988, ARCHOS is a global consumer electronics manufacturer and leader in portable digital entertainment solutions. Revenues of 124M in 2006 ARCHOS is a strong contender in the portable media player market. Recent distribution deals reached with retailers Circuit City and Best Buy Number of shipped devices so far with Opera: 2
37 Wii demo Nintendo's Internet Channel, developed by Opera Software, is so simple even your computer-phobic, "Wii Sports"-loving grandma can use it. Lou Kesten, Associated Press
Operations Update Consumer area
39 Opera for Desktop: 1Q highlights Further increase in usage drives record revenues Third consecutive quarter of growth Revenue growth of 142% compared to 1Q06 Opera Desktop Revenue (MNOK) 16 14 12 10 8 6 4 2 0 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 *1Q07 desktop revenue includes a one-off license transaction with one customer
40 Speed Dial Opera introduces Opera 9.2 with groundbreaking Speed Dial capability This allows users to visit their favorite sites with one click Opens commercialization opportunities with content providers such as Yahoo!
41 Opera Mini: 1Q highlights In 1Q, Opera Mini celebrated its first year of existence and its position as the first mass market mobile browser Cumulative Opera Mini Users and Page Views Millions 16 14 6 000 5 000 Millions Cumulative pages downloaded since launch: 5.2 billion Cumulative number of users*: 15 million 12 10 8 6 4 2 4 000 3 000 2 000 1 000 0 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR Cumulative users Numbers as of 30. April 2007 0 Page views * Number of users who have downloaded and used Opera Mini Note: Opera Mini statistics as of April 30, 2007
Growth in Opera Mini traffic continues 42 Opera Mini monthly page views 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 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR
43 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 My Opera is the glue The hub of Opera s cross-platform proposition My Opera is a default bookmark on the Wii
44 My Opera the facts Size of My Opera Community quadruples in 2.5 years: currently more than 820 000* members 1 500 sign-ups per day 116 000 blogs 3.1 million photos stored 1.75 million forum posts 1.9 million unique weekly visitors, making it Norway s third most popular site, ahead of sites such as Startsiden.no, Finn.no, Dagbladet.no No other browser has this kind of a community. No other browser is made by a company as dedicated as Opera Software. I would just like to thank everyone at Opera Software for everything they do for us. This just goes to show you that Opera is the greatest browser on the planet Dustin Wilsons blog * As of May 2007
My Opera statistics 45 Cumulative registered users 800 000 700 000 600 000 500 000 DEC JAN FEB MAR APR
46 Summary of FY 2007 priorities Focus and invest in the consumer area Accelerate momentum among mobile phone operators Increase position with top mobile OEMs globally Build on the momentum among consumer electronics OEMs Begin to capitalize on unique cross-platform position and offering content related services to Opera users, leveraging the fact that Opera s browsers run on a wide and disparate array of device types and form factors.
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