OSLO, Norway, Aug. 23, 2018 (GLOBE NEWSWIRE) -- Opera Limited (Nasdaq: OPRA) (“Opera”), one of the world’s leading browser providers and an influential player in the field of integrated AI-driven digital content discovery and recommendation platforms, today announced its unaudited consolidated financial results for the second quarter ended June 30, 2018.

Second quarter 2018 financial highlights

-- Operating revenue was $39.8 million, an increase of 50.3% year-over-year. -- Net income was $7.4 million, representing a net margin of 18.6%, compared to a net loss of $2.6 million during the second quarter of 2017, which represented a negative 9.6% margin. -- Adjusted EBITDA(1) was $16.2 million, representing an adjusted EBITDA margin of 40.6%, compared to $4.3 million during the second quarter of 2017, which represented a 16.0% margin. -- Adjusted net income(1) was $10.8 million, representing an adjusted net margin of 27.1%, compared to $1.1 million during the second quarter of 2017, which represented a 4.0% margin.

(1) Please see the separate section “About non-IFRS financial measures” for details on adjusted EBITDA and adjusted net income.

Second quarter 2018 user base highlights

-- Opera News average monthly active users (“MAUs”) in the quarter was 101.0 million (+307.3% year-over-year), of which users on the standalone Opera News app that was launched in January 2018 reached 7.9 million average MAUs in the quarter, with 11.2 million active users in June 2018. -- Total smartphone users reached 182.2 million in the quarter (+13.4% year-over-year). -- Total PC users reached 57.1 million in the quarter (+25.2% year-over-year).

Mr. Yahui Zhou, Opera’s Chairman and CEO, stated, “We are excited to present our first quarterly report after becoming a listed company, with records within both revenue and profitability. The IPO process was also very rewarding in that it allowed us to meet so many investors who share our vision – and ambition – for this great company. We continue to execute on our strategy to grow our AI-driven content recommendation platform in Africa and emerging Asia. We are very pleased that Opera News exceeded 100 million MAUs in the second quarter, marking an important milestone in our development of AI-based content services. Further, the standalone Opera News app that we launched earlier this year reached an average MAU of 7.9 million in the quarter – with 11.2 million active users in June. This is a solid foundation for further growth, and demonstrates our commitment and capability to grow and take our AI-based content services to the next level.”

Mr. Lin Song, Opera’s COO, highlighted, “The tremendous growth of Opera News, both as a service in our browsers and as a standalone app, paired with our market presence, publisher partnerships and monetization capabilities, represents an excellent platform for us to continue building a strong and defendable position in the content space in our core markets, and will allow us to further strengthen our monetization potential going forward. We also continue to drive and maintain a healthy PC and smartphone browser user base, fueled by continuous innovation in this space, as well. For instance, in the second quarter we launched Opera Touch, a companion mobile browser for our PC users, which enables seamless transitions between devices. This novel browser later won a Red Dot Award for communication design. Again, this showcases our dedication to lead and attract users by feature-rich browser products and to stay at the forefront of innovation.”

Mr. Frode Jacobsen, Opera’s CFO, said, “We achieved strong results in the second quarter, with over 50% revenue growth year-over-year, and record recurring profitability across all relevant metrics. While we continue to prioritize Opera News user growth and product development, we also achieved robust user-driven revenue growth both in advertising and search revenue, up 63.1% and 26.2% year-over-year, respectively. We remain confident that our strategy and operations will continue delivering on an attractive financial trajectory.”

Second quarter 2018 consolidated financial results

Operating revenue was $39.8 million, a 50.3% increase year-over-year.

-- Search revenue was $19.8 million, a 26.2% increase year-over-year. The increase was primarily due to an increase in our average revenue per qualified search following improved monetization by our search partners and the PC user base growth in high-ARPU markets such as Europe and the United States, directly affecting the monetary value of our revenue share. This trend was amplified by our collaboration with search partners to enhance the mobile search experience for many of our users by enabling richer landing pages that also featured more high-end advertisements. -- Advertising revenue was $13.7 million, a 63.1% increase year-over-year. The substantial lift followed the introduction of the Opera News service in our mobile browsers. This opened up a new advertising inventory that we began monetizing in the second half of 2017, ultimately resulting in rapid revenue growth on industry-standard mobile ad units. Further, price factors such as growth in high-ARPU markets such as Europe and the United States for the PC user base and closer collaboration with our e-commerce partners to improve conversion rates represented favorable factors towards our overall growth in advertising revenue. -- Technology licensing and other revenue was $6.3 million, a 163.1% increase year-over-year. This revenue category is volatile in nature, as it largely follows the timing of underlying support and licensing agreements.

Operating expenses totaled $29.4 million, a 1.2% increase year-over-year. Operating expenses represented 73.7% of operating revenue in the second quarter 2018, compared to 109.6% in the second quarter 2017.

-- Payouts to publishers and monetization partners were $1.4 million, compared to $0.1 million in the second quarter 2017. This category is growing as the monetization of our user base evolves, with both content and service partnerships supporting the growth. -- Personnel expenses were $9.4 million, a 16.1% decline year-over-year. This consisted of cash-based compensation expense of $9.1 million, a 9.6% increase year-over-year, and share-based remuneration expense of $0.2 million, a 92.2% decrease from $2.8 million in the second quarter 2017. The decline in share-based remuneration was mainly due to a correction of accrued social security cost, leading to a $1.3 million reduction of social security accruals in the quarter, and the fact that share-based remuneration expense was elevated in 2017 because it was the first year of a new employee Restricted Share Unit program. -- Depreciation and amortization expenses were $3.4 million, a 6.3% decrease year-over-year. The decline is largely explained by equipment in use that is fully depreciated. -- Other operating expenses were $15.2 million, a 10.4% increase year-over-year. The increase was primarily due to increased marketing and distribution expenses, totaling $7.8 million in the quarter, which were 19.6% higher than the second quarter 2017, and an increase in the cost of audit, legal and other advisory services during our IPO preparations, totaling $2.6 million in the quarter, which was 242.8% higher than the second quarter 2017. The other expenses in the category, including hosting, office and rent, software license fees, travel and other totaled $4.8 million and was 26.6% down versus the second quarter 2017, mainly driven by a reduction of our hosting costs. -- Restructuring cost was zero, compared with $0.4 million in the second quarter 2017.

Operating profit reached $10.5 million in the quarter, representing an operating margin of 26.3%, compared to a $2.5 million operating loss in the second quarter 2017.

Income tax expense was $2.5 million in the quarter, compared to $0.7 million in the second quarter 2017. Our effective tax rate was 25.5% in the second quarter 2018, due to non-taxable losses from associates and joint ventures, and the recognized equity cost of our RSU program.

Net income was $7.4 million in the quarter, representing a net margin of 18.6%, compared to a net loss of $2.6 million in the second quarter of 2017, which represented a negative 9.6% margin.

Adjusted EBITDA was $16.2 million in the second quarter 2018, representing a 40.6% adjusted EBITDA margin and a 280.5% increase year-over-year. In the second quarter of 2017, adjusted EBITDA was $4.3 million, representing a 16.0% margin. Adjusted EBITDA excludes share-based remuneration, restructuring charges, and as of the second quarter 2018, expensed IPO-related costs for audit, legal and other advisory services.

Adjusted net income was $10.8 million in the second quarter 2018, representing a 27.1% adjusted net margin. In the second quarter of 2017, adjusted net income was $1.1 million, representing a 4.0% margin. Adjusted net income excludes share-based remuneration, amortization of intangible assets related to acquisitions (all of which relate to the Opera privatization in 2016), and as of the second quarter 2018, expensed IPO related costs. Adjusted net income further includes reversals of the income tax benefits related to the foregoing three adjustments.

Net income per ADS was $0.078 in the quarter, and $0.075 on a diluted basis. Adjusted net income per ADS was $0.113 in the quarter, and $0.110 on a diluted basis. Each ADS represents two shares in Opera Limited.

Business outlook

Opera expects that 2018 full-year revenue will amount to $170-175 million, representing a growth of 32-36% versus full-year 2017. This translates to a total expected revenue of $91-96 million for the second half of 2018, with both sequential and year-over-year revenue growth in each of the third and fourth quarters likely to be driven by the search and advertising revenue categories.

About non-IFRS financial measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with IFRS, we use adjusted EBITDA and adjusted net income, both non-IFRS financial measures, to understand and evaluate our core operating performance. These non-IFRS financial measures, which may differ from similarly titled measures used by other companies, are presented to enhance investors’ overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with IFRS.

We define adjusted EBITDA as net income (loss) excluding income tax expense (benefit), total net financial loss (income), share of net loss (income) of associates and joint ventures, restructuring costs, depreciation and amortization, share-based remuneration and expensed costs related to our recent initial public offering, less other income.

We define adjusted net income as net income excluding share-based remuneration, amortization cost related to acquired intangible assets, and expensed costs related to our recent initial public offering.

We believe that adjusted EBITDA and adjusted net income provide useful information to investors and others in understanding and evaluating our operating results. These non-IFRS financial measures adjust for the impact of items that we do not consider indicative of the operational performance of our business. While we believe that these non-IFRS financial measures are useful in evaluating our business, this information should be considered as supplemental in nature and is not meant as a substitute for the related financial information prepared and presented in accordance with IFRS.

Safe harbor statement

This press release contains statements of a forward-looking nature. These statements, including statements relating to Opera’s future financial and operating results, are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as “will,” “expects,” “believes,” “anticipates,” “intends,” “estimates” and similar statements. Among other things, management’s quotations and the Business outlook section contain forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about Opera and the industry. Potential risks and uncertainties include, but are not limited to, those relating to its goals and strategies; its expected development and launch, and market acceptance, of its products and services; its expectations regarding demand for and market acceptance of our brand, platforms and services; our expectations regarding growth in our user base and level of engagement; its ability to attract, retain and monetize users; its ability to continue to develop new technologies and/or upgrade our existing technologies and quarterly variations in its operating results caused by factors beyond its control and global macroeconomic conditions and its potential impact in the markets it has businesses. All information provided in this press release is as of the date hereof, and Opera undertakes no obligation to update any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although Opera believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that its expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results. Further information regarding risks and uncertainties faced by Opera is included in Opera’s filings with the U.S. Securities and Exchange Commission, including its registration statement on Form F-1 filed in connection with its initial public offering.

Conference call

Opera’s management team will host a conference call at 7:30 AM U.S. Eastern Time (1:30 PM Central European Time, 7:30 PM Beijing/Hong Kong time) on Friday, August 24, 2018.

The dial-in details for the live conference call are:

China: 400 120 8590 Hong Kong: +852 3018 4588 Norway: +47 2350 0296 UK: +44 (0)330 336 9411 USA: +1 929-477-0448 Confirmation Code: 2382884

The recorded conference call will be available on the Investor Relations section of Opera’s website at https://investor.opera.com

About Opera

Founded in 1995 in Norway, Opera is one of the world’s leading browser providers and an influential player in the field of integrated AI-driven digital content discovery and recommendation platforms.

For investor inquiries, please contact investor-relations@opera.com

For media inquiries, please contact: press-team@opera.com

OPERA LIMITED UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Q2-2017 Q2-2018 YTD 2017 YTD 2018 [Numbers in US$ thousands, except per share amounts] (Unaudite (Unaudite (Unaudite (Unaudite d) d) d) d) -------- -------- -------- -------- Operating revenue and other income Operating revenue 26,491 39,828 51,966 79,274 Other income - - - - Operating expenses Payouts to publishers and monetization partners (108 ) (1,401 ) (212 ) (2,079 ) Personnel expenses including share-based remuneration (11,145 ) (9,356 ) (19,871 ) (20,466 ) Depreciation and amortization (3,605 ) (3,379 ) (7,406 ) (6,766 ) Other operating expenses (13,795 ) (15,224 ) (24,105 ) (29,718 ) Restructuring costs (370 ) - (2,111 ) - ------- ------- ------- ------- Total operating expenses (29,022 ) (29,359 ) (53,704 ) (59,029 ) ------- ------- ------- ------- Operating profit (2,531 ) 10,469 (1,738 ) 20,245 ------- ------- ------- ------- Income (loss) from associates and joint ventures Share of net income (loss) of associates and joint ventures (218 ) (615 ) (573 ) (1,624 ) Net financial income (expenses) Financial income 9 102 22 198 Financial expense (140 ) (43 ) (203 ) (77 ) Net foreign exchange gains (losses) 1,026 31 711 112 ------- ------- ------- ------- Total net financial income (loss) 895 91 531 233 ------- ------- ------- ------- Net income (loss) before income taxes (1,853 ) 9,945 (1,781 ) 18,854 ------- ------- ------- ------- Income tax (expense) benefit (697 ) (2,535 ) (938 ) (4,824 ) ------- ------- ------- ------- Net income (loss) (2,551 ) 7,411 (2,719 ) 14,030 ------- ------- ------- ------- Profit (loss) attributable to: Equity holders of the parent (2,551 ) 7,411 (2,719 ) 14,030 Non-controlling interests - - - - ------- ------- ------- ------- Total attributed (2,551 ) 7,411 (2,719 ) 14,030 ------- ------- ------- ------- Weighted average number of ordinary shares outstanding Basic, millions(1) 190.25 190.25 190.25 190.25 Diluted, millions(2) 190.25 196.62 190.25 195.98 Net income (loss) per ordinary share Basic, US$ (0.013 ) 0.039 (0.014 ) 0.074 Diluted, US$ (0.013 ) 0.038 (0.014 ) 0.072 Net income (loss) per ADS Basic, US$ (0.027 ) 0.078 (0.029 ) 0.147 Diluted, US$ (0.027 ) 0.075 (0.029 ) 0.143

(1 ) Assuming 200 million shares in Opera Limited were outstanding for all periods presented, less 9.75 million shares that were surrendered by two shareholders upon completion of the initial public offering. (2 ) Includes the net dilutive impact of employee equity awards.

OPERA LIMITED UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF TOTAL COMPREHENSIVE INCOME Q2-2017 Q2-2018 YTD 2017 YTD 2018 [Numbers in US$ thousands] (Unaudit (Unaudit (Unaudited) (Unaudit ed) ed) ed) ------- ------- ----------- ------- Net income (loss) (2,551 ) 7,411 (2,719 ) 14,030 ------- ------- ----------- ------- Other comprehensive income Exchange differences on translation of foreign operations 876 (1,500 ) 1,482 (1,096 ) Amounts to be reclassified from other comprehensive income to - (138 ) - (138 ) statement of operations ------ ------ ---------- ------ Other comprehensive income – items that may be reclassified to 876 (1,638 ) 1,482 (1,234 ) net income ------ ------ ---------- ------ Total comprehensive income (1,675 ) 5,773 (1,236 ) 12,796 ------ ------ ---------- ------ Total comprehensive income attributable to: Equity holders of the parent (1,675 ) 5,773 (1,236 ) 12,796 Non-controlling interests - - - - ------ ------ ---------- ------ Total attributed (1,675 ) 5,773 (1,236 ) 12,796 ------ ------ ---------- ------

OPERA LIMITED UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION As of As of December As of June June 30, 2017 31, 2017 30, 2018 [Numbers in US$ thousands] (Unaudite (Unaudite (Unaudite d) d) d) -------- -------- -------- ASSETS Non-current assets Furniture, fixtures and equipment 13,828 13,460 13,213 Intangible assets 123,200 118,620 117,161 Goodwill 421,578 421,578 421,578 Investments in associates and joint ventures 470 5,517 4,126 Other financial assets 1,765 1,857 2,660 Deferred tax assets 783 958 1,117 ------- ------- ------- Total non-current assets 561,623 561,989 559,855 ------- ------- ------- Current assets Trade receivables 30,001 31,072 37,526 Other receivables 6,012 7,865 7,075 Prepayments 4,117 2,166 3,041 Cash and cash equivalents 21,099 33,207 43,993 ------- ------- ------- Total current assets 61,228 74,311 91,636 ------- ------- ------- TOTAL ASSETS 622,851 636,300 651,491 ------- ------- ------- EQUITY AND LIABILITIES Equity Contributed equity 576,531 576,531 576,531 Retained earnings (accumulated deficit) (8,395 ) 5,366 21,683 Other components of equity 852 1,605 372 ------- ------- ------- Equity attributed to members 568,989 583,503 598,585 ------- ------- ------- Non-controlling interests ------- ------- ------- Total equity 568,989 583,503 598,585 ------- ------- ------- Non-current liabilities Financial lease liabilities and other loans 3,438 4,032 3,237 Deferred tax liabilities 15,292 11,828 14,519 Other liabilities 1,685 87 109 ------- ------- ------- Total non-current liabilities 20,415 15,947 17,865 ------- ------- ------- Current liabilities Trade and other payables 19,175 21,401 21,804 Deferred revenue 2,604 1,472 2,182 Financial lease liabilities and other loans 3,024 2,073 2,589 Income tax payable 1,394 3,709 2,363 Other liabilities 7,250 8,195 6,102 ------- ------- ------- Total current liabilities 33,447 36,850 35,041 ------- ------- ------- Total liabilities 53,862 52,797 52,906 ------- ------- ------- TOTAL EQUITY AND LIABILITIES 622,851 636,300 651,491 ------- ------- -------

OPERA LIMITED UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY Retained Other 2017 Contribut earnings compone ed nts of (accumul Total [Numbers in US$ thousands] equity ated equity equity deficit) ----------------------------------------- -------- ------- ------ -------- Balance as of January 1, 2017 576,531 (7,704 ) (630 ) 568,197 Net income (loss) for the period - (2,719 ) - (2,719 ) Other comprehensive income - - 1,482 1,482 Total comprehensive income for the period - (2,719 ) 1,482 (1,236 ) Share-based payment transactions - 2,028 - 2,028 Balance as of June 30, 2017 576,531 (8,395 ) 852 568,989

Other 2018 Contribut Retained componen ed ts of [Numbers in US$ thousands] equity earnings equity Total equity -------------------------------------------------------- -------- ------- ------- -------- Balance as of December 31, 2017 - as previously reported 576,531 5,366 1,605 583,503 Change in accounting principles - (629 ) - (629 ) Balance as of January 1, 2018 576,531 4,737 1,605 582,874 Net income for the period - 14,030 - 14,030 Other comprehensive income - - (1,234 ) (1,234 ) Total comprehensive income for the period - 14,030 (1,234 ) 12,796 Share-based payment transactions - 2,916 - 2,916 Balance as of June 30, 2018 576,531 21,683 372 598,585

General information

The financial information of Opera Limited ("the Company") and its subsidiaries (collectively, "the Group" or "Opera"), for the period ended June 30, 2018 was approved by the Company’s Board of Directors on August 23, 2018.

Opera Limited, with its office in George Town, Cayman Islands, is a limited liability company duly incorporated and validly existing under the laws of the Cayman Islands.

Opera is one of the world’s leading browser providers and an influential player in the field of integrated AI-driven digital content discovery and recommendation platforms.

Operating revenue by category [Numbers in US$ thousands] Q2-2017 Q2-2018 YTD 2017 YTD 2018 ---------------------------- ------- ------- -------- -------- Search 15,670 19,769 31,063 39,985 Advertising 8,410 13,718 15,618 26,634 Technology Licensing / Other 2,411 6,342 (1 ) 5,286 12,655 ------- ------- -------- -------- Total 26,491 39,828 51,966 79,274 ------- ------- -------- --------

(1 ) Includes US$1.5 million revenue from a perpetual license agreement with 360 Mobile Security, a related party.

Personnel expenses by type [Numbers in US$ thousands] Q2-2017 Q2-2018 YTD YTD 2017 2018 ----------------------------------------------------------------- ------- ------ ------- ------- Personnel expenses excluding share-based remuneration 8,338 9,138 17,064 17,799 Share-based remuneration, including related social security costs 2,807 218 2,807 2,667 ------ ----- ------ ------ Personnel expenses including share-based remuneration 11,145 9,356 19,871 20,466 ------ ----- ------ ------

Other operating expenses [Numbers in US$ thousands] Q2-2017 Q2-2018 YTD YTD 2017 2018 ---------------------------------------- ------- ------- ------- ------- Marketing and distribution 6,553 7,838 10,244 15,176 Hosting 3,576 2,561 6,867 5,178 Audit, legal and other advisory services 767 2,631 1,465 4,879 Software license fees 276 399 740 891 Rent and other office expense 1,033 1,214 1,871 2,336 Travel 447 510 919 1,030 Other 1,142 72 1,998 227 ------ ------ ------ ------ Total 13,795 15,224 24,105 29,717 ------ ------ ------ ------

Non-IFRS financial measures Q2-2017 Q2-2018 YTD-2017 YTD-2018 [Numbers in US$ thousands] (Unaudit (Unaudit (Unaudit (Unaudit ed) ed) ed) ed) Reconciliation of net income (loss) to adjusted EBITDA Net income (loss) (2,551 ) 7,411 (2,719 ) 14,030 Add: Income tax expense (benefit) 697 2,535 938 4,824 Add: Total net financial loss (income) (895 ) (91 ) (531 ) (233 ) Add: Share of net loss (income) of associates and joint ventures 218 615 573 1,624 Add: Restructuring costs 370 - 2,111 - Add: Depreciation and amortization 3,605 3,379 7,406 6,766 Add: Share-based remuneration 2,807 218 2,807 2,667 Add: Expensed IPO related costs - 2,110 - 2,110 Less: Other income - - - - ------ ------ ------ ------ Adjusted EBITDA 4,250 16,175 10,586 31,788 Reconciliation of net income (loss) to adjusted net income Net income (loss) (2,551 ) 7,411 (2,719 ) 14,030 Add: Share-based remuneration 2,807 218 2,807 2,667 Add: Amortization of acquired intangible assets 1,280 1,280 2,560 2,560 Add: Expensed IPO-related costs 2,110 - 2,110 Income tax adjustment(1) (484 ) (235 ) (815 ) (713 ) ------ ------ ------ ------ Adjusted net income 1,052 10,783 1,833 20,653 Weighted average number of ordinary shares outstanding for non-IFRS measures Basic, millions 190.25 190.25 190.25 190.25 Diluted, millions 192.21 196.62 191.23 195.98 Adjusted net income per ordinary share Basic, US$ 0.006 0.057 0.010 0.109 Diluted, US$ 0.005 0.055 0.010 0.105 Adjusted net income per ADS Basic, US$ 0.011 0.113 0.019 0.217 Diluted, US$ 0.011 0.110 0.019 0.211

Reversal of income tax benefit related to the social security cost component of share-based (1 ) remuneration, deferred taxes on the amortization of acquired intangible assets, and expensed IPO-related costs