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Opera - Simply The Best Internet Experience
Opera SoftwareFirst quarter 2006
The best Internet experience on any device
Opera - Simply The Best Internet Experience
Highlights: 1Q 2006
Financial
� Revenues increased 71% in Q1 06 to MNOK 47.8 mm compared to MNOK 28 in Q1 05
� Excluding stock option costs, non-IFRS EBIT was MNOK 1.2 in Q1 06 compared to MNOK -4.4 in Q105
� EBIT was MNOK -7.2 in Q1 06 after stock option costs, compared to MNOK -5.6 in Q1 05
Opera Mobile
� 7.7 million mobile units were shipped with the Opera browser in 1Q06, compared to 3.4 million units in 1Q05, an increase of 126%
� Announced Opera on 8 new phones since the last quarterly report, bringing the YTD totals to 14
Opera Mini
� More than 3,000,000 users since launch, more than 140% more users compared to the last quarterly report (1,400,000 users)
� T-Mobile became the first operator to pre-install the customized version of Opera Mini, as part of its web ’n’ walk offering� So far T-Mobile has announced 11 phones with Opera Mini
Opera - Simply The Best Internet Experience
Highlights: 1Q 2006
Opera Devices
� Announced that Nintendo Wii, Nintendo’s next generation game console, will use the
Opera browser
� Announced that Nintendo DS will use the Opera browser
� Signed first contract with a net TV provider
� Signed first contract with a VoIP screen phone provider
Opera Desktop
� Opera 9.0 Beta released, with new advanced features and capabilities
General
� Raised NOK 211.2 million in cash through a direct share issue
� Opened offices in China and Korea and announced plans to open an office in India
Opera - Simply The Best Internet Experience
Income statement: 1Q 2006
Opera - Simply The Best Internet Experience
Revenue summary: 1Q 2006 vs. 1Q 2005
Opera Mobile
� Higher license/royalty revenue driven by
Opera’s OEM and operator customers
� Strong industry growth in smartphone and
high end feature phone segments
Opera Devices
� Higher revenue as adoption of web
browsers accelerates on non-mobile phone
devices
Opera Desktop
� Fall in revenue as Opera transitions its
revenue model from a license and
advertising based one to one largely driven
by search revenue
Revenue Overview: 1Q06 vs. 1Q05
0
10,000
20,000
30,000
40,000
50,000
60,000
Q1 05 Q1 06N
OK
100
0s
Desktop Internet Devices Total Revenues
Opera - Simply The Best Internet Experience
Income statement: Historical viewpoint
-10000
0
10000
20000
30000
40000
50000
60000
Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06
NO
K ('
000)
Total Revenues Non-IFRS EBIT Total Expenses
-50
-25
0
25
50
75
100
125
150
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Total Revenues EBIT Total Expenses
Note: Annual Financial Information includes effect of stock option costs
*
*: Excluding cost of options
Opera - Simply The Best Internet Experience
Stock option costs: An explanation of IFRS 2
Two components:
1. Fair value of options on grant date
� Estimated based on the Black-Scholes option pricing model
� Fair value of the options is amortized over the life of the options
2. Payroll taxes, as calculated based on the ”intri nsic value” of options over the vesting period
� Based on the difference between the market value of the stock [based on the closing price on
the last day of the quarter] and the exercise prices of the options
� An accrual is created to estimate the payroll taxes that Opera must pay when the various
options are exercised, adjusted for vesting schedules and employee attrition
Opera - Simply The Best Internet Experience
33,476238,804
-8,068
444,485
1,303,8991,233,052
3,561,085
798,000
-500,000
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,000
Q1 Q2 Q3 Q4
2004 : MNOK 0.7 2005: MNOK 6.9
Costs related to option program per quarter (NOK) FY2004-2005
Opera - Simply The Best Internet Experience
Stock option costs: FY 2006 estimates*
7,128,500300,000790,0002,645,000925,0002,468,500Total
nov. 09
506,250100,000115,000291,25000jun. 09
147,5000110,00037,50000nov. 08
628,750100,000115,000413,75000jun. 08
660,0000110,00087,500462,5000nov. 07
2,299,000100,000115,000863,75001,220,250jun. 07
660,0000110,00087,500462,5000nov. 06
2,227,0000115,000863,75001,248,250jun. 06
TotalStrike 34,90Strike 14,30-21,30Strike 10,00**Strike 7,20Strike 2,50Expiry date
Q106: Breakdown of Option Cost at NOK 27.60
-6,000,000
-4,000,000
-2,000,000
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
NO
K
Fair Value (Black-Scholes) Payroll taxes Total
Fair Value (Black-Scholes)
1,193,700 1,094,582 1,012,013 912,765
Payroll taxes 7,236,566 -3,712,276 813,833 773,371
Total 8,430,266 -2,617,694 1,825,846 1,686,136
Q106 Q206 Q306 Q406
Q106: Breakdown of Option Cost at NOK 32.30
-6,000,000-4,000,000-2,000,000
02,000,0004,000,0006,000,0008,000,000
10,000,000
NO
K
Fair Value (Black-Scholes) Payroll taxes Total
Fair Value (Black-Scholes)
1,193,700 1,094,582 1,012,013 912,765
Payroll taxes 7,236,566 1,773,631 1,022,801 966,184
Total 8,430,266 2,868,213 2,034,814 1,878,949
Q106 Q206 Q306 Q406
Opera - Simply The Best Internet Experience
Balance sheet: 1Q 2006
3 1433 143Goodwill
325 505547 704Total liabilities & equity
35 55555 214Short-term liabilities
57 90466 660Retained earnings
232 046425 830Paid in capital
Liabilities & equity
325 506547 704Total assets
218 526442 531Cash and cash equivalents
93 34985 646Other current assets
9 25113 181Tangible assets
1 2373 203Deferred taxes
Assets
31.12. 200531.03. 2006(Figures in TNOK)
BALANCE SHEET
Opera - Simply The Best Internet Experience
Financial outlook: FY 2006
Revenue: Continued positive revenue outlook
� Mobile continues to be the major revenue driver
� Devices/Home Media is Opera’s fastest growing business unit
Operating expenses (excluding stock option costs): Expected to grow at a somewhat
lower rate versus 2005
� Continued investment in engineering and customer delivery
� Continued investment in sales & marketing, in particular around Opera Mini and new
foreign offices (Japan and USA, in particular)
Opera - Simply The Best Internet Experience
Opera for Mobile
Opera - Simply The Best Internet Experience
Opera has solutions for the entire mobile value cha in
Opera Mobile browser� Full Web browser for OEM integration
Opera Platform� Device independent platform for mobile Web applications
Opera Mini� Light weight Web browser
Opera Platform Opera Mobile Browser Opera Mini
Opera - Simply The Best Internet Experience
Opera for Mobile: 1Q 2006 highlights
Full browser
� 7.7 million phones pre-installed with Opera in
Q106
� up 126% from Q105
� 8 new phones announced since Q406 Results
� Total announced phones year to date: 14
� KDDI announced 7 new phones since Q406
� Total announced phones year to date: 10
� Total number of announced phones since
Q42004: 16
Mobile Phone Units Shipped with Opera
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
Q3/02
Q4/02
Q1/03
Q2/03
Q3/03
Q4/03
Q1/04
Q2/04
Q3/04
Q4/04
Q1/05
Q2/05
Q3/05
Q4/05
Q1/06
Uni
ts
0
2 000 000
4 000 000
6 000 000
8 000 000
10 000 000
12 000 000
14 000 000
16 000 000
18 000 000
2002 2003 2004 2005
Opera - Simply The Best Internet Experience
Announced mobile phones YTD: 14 (goal = 48 for 200 6)
Psion Revo
Nokia 9210
2000-2002 2003 2004
Sharp Zaurus
Sharp Zaurus
Sony Ericsson P800
Motorola A920
Sony Ericsson P900
Nokia 6600
Nokia 7700
Sendo X
Kyocera PS 900
BenQ P30
Nokia 9500
Nokia 7610
Motorola A1000
Sony Ericsson P910
Motorola A780
Nokia 9300
Nokia 7710
Casio W21CA
Nokia 6620*
Sharp SL-6000
2005
Motorola A1010
Motorola M1000
ZTE e3
Casio W21CA II
Motorola E680i
Casio W31CA
Toshiba W31T
Nokia 6680
Nokia 6681
Nokia 6682
Hitachi W32H
Motorola E895
T-Mobile SDA II
Nokia N90
Nokia N70
Kyocera AH-K3002V
Kyocera WX 310K
Kyocera WX 300K
Nokia 6630**
Sony Ericsson P990
Toshiba W32T*: Only in Cingular’s network**: Only in T-mobile’s network
Nokia 9300i
Sharp W-ZERO3
Motorola A1200
2006
Motorola ROCKR
Sony Ericsson W41S
Casio W41CA
Hitachi W41H
Sony Ericsson M600
Sony Ericsson W950Sony Ericsson W950
Sanyo E02SA
Sanyo W33SA II
Sony Ericsson W42S
Casio W42CA
Toshiba W43T
Hitachi W42H
Toshiba W44T
Sony Ericsson M608c
Opera - Simply The Best Internet Experience
Opera for Mobile: 1Q 2006 highlights (cont’d)
Opera Mini
� Free version
� More than 3 million users, up 140% from the last quarterly report (1.4 million)
� Customized version� T-Mobile becomes the first operator to launch
Mini as part of web ’n’ walk offering� Pipeline continues to build among operators
� Launched Opera 2.0. Key new features� Content download (MP3, images, video)� Customized skins� Multi-search� SMS purchase� Blackberry support (31 different models)
Opera Mini: Total Pages Downloaded
-
100,000,000
200,000,000
300,000,000
400,000,000
500,000,000
600,000,000
as of Feb 23, 2006 as of May 15, 2006
Opera - Simply The Best Internet Experience
Opera - Simply The Best Internet Experience
TMO UK customized Opera Mobile Symbian S60 (Nokia 6630, Nokia 6680 and N70)
ALL IN SAME PAGE! News, Shopping, Sport, etc. content
available from the browser home page via T-Mobile UK media
partners
T-Mobile’s selected search partner available from the browser home page
Value added content available from the browser home page
Opera - Simply The Best Internet Experience
CeBIT 2006 New Devices announced by T-Mobile Intern ational
Opera - Simply The Best Internet Experience
"T-Mobile underlines its commitment to bring web ‘n’ walk to the mass market by enabling an even broader device portfolio to surf the open internet via the Opera Mini browser.“
Ingo Schneider, Vice President Mobile Data, T-Mobile.
Opera is currently deployed web’n’walk customized and localized versions at the following five T-Mobile International countries: Austria, Germany, Netherlands, Czech Republic, United Kingdom. Several countries to follow together with multiple new handsets.
Opera - Simply The Best Internet Experience
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Opera for Devices
Opera - Simply The Best Internet Experience
Opera for Devices: 1Q 2006 highlights
� Announced Opera for Nintendo Wii and DS game consoles
� Signed first contract with a net TV provider
� Signed first contract with a VoIP screen phone provider
� Announced partnership with the world’s leader in device software optimization – Wind River
� Announced IPTV partnerships with Amino, Orca and Industria
Opera - Simply The Best Internet Experience
Opera for Devices market position
The premium provider of full internet/web applicati ons and user interfaces
for non-mobile phone devices� Full web browsing and superior performance, rendering and navigation capabilities
� Execution platform for Web applications and user interfaces
� AJAX and Web services
� Ability to customize device look & feel, backed by a highly experienced professional
services organization
Expanding market position within the hottest device categories� Game consoles, set-top boxes, portable media players, VoIP screen phones, Web
tablets and net TVs
Opera is well positioned as browser adoption accele rates� From small early movers to also include large global players
Opera - Simply The Best Internet Experience
Opera browsers are already in a broad array of devi ces and the device types continue to grow
Game Consoles
Set-top Boxes
Network TVs
IP Screen PhonesPortable Media Players
Web tablets
Opera - Simply The Best Internet Experience
Nintendo Wii
Opera to be included in the revolutionary Wii game console
"For our Wii console launch in 2006, we required a browser that was fast and secure with support for the latest standards including AJAX. Opera proved perfect for our purposes and is an exceptional addition to both the Nintendo DS and the Wii console."
Genyo Takeda, senior managing director and general manager, Integrated Research & Development Division, Nintendo Co., Ltd.
Opera - Simply The Best Internet Experience
Nintendo changing the rules with Opera contribution s
New user interactions models
- Wii controllers
- DS dual screen and touch screen
Integrating IP networking and the Web
More to be announced in the future
Opera - Simply The Best Internet Experience
Nintendo Wii: Other Interesting Factoids
Launch expected Q4 2006
Comes on the heels of the very successful lanch of the Nintendo DS
� Has sold 16 million + units so far since being launched in November 2004
Key mission of Nintendo Wii is to broaden the marke t: turn non-gamers into gamers
� Completely new and revolutionary controller and interface design
� Broader array of games
� Almost instantaneous power-up of the console
� ”[Wii] can power up virtual console games and applications like our Opera web browser
saved to Flash ROM almost as fast as a telephone or television in just a few seconds.”
Satoru Iwata, President, Nintendo
Inflection point in the market: new game consoles are launched every 5 or so years
Opera - Simply The Best Internet Experience
Opera for Desktop
Opera - Simply The Best Internet Experience
� Continue to average 100,000 downloads/day since
“going free” in September 2005
� Opera 9 expected in launch in June
� Web-based Widgets, BitTorrent, Thumbnail
previews in tabs, site preferences
� Expanded marketing push
Opera Desktop
Monthly downloads
Opera - Simply The Best Internet Experience
Summary: Well positioned for continued growth in 2 006
� Demand for Internet-connected mobile phones continues to rise at an attractive rate
� Opera Mini expected to accelerate growth of Web-enabled phones
� Attractive opportunities in the non-mobile phone connected devices market
� Focus on increasing desktop revenue