Update 1Q14 02 May 2014 Share Price: NOK 77 ( ) Results date 21 August 2014 Target Price: NOK 95

OPERA BUY Update 1Q14 02 May 2014 Results date 21 August 2014 Share Price: NOK 77 (02.05.2014) Target Price: NOK 95 Positioned for the strong grow...
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OPERA

BUY

Update 1Q14 02 May 2014 Results date 21 August 2014

Share Price: NOK 77 (02.05.2014) Target Price: NOK 95

Positioned for the strong growth in mobile Internet Share data

02.05.2014

Sector

IT - Software

Reuters/Bloomberg

OPERA.OL/NO

Risk rating

High

Outstanding shares

132.5

Market cap (USDm)

1,616

Net interest bearing debt (USDm)

-83

Enterprise value (USDm)

1,533

Free float

85 %

Average volume

427,595

High/low 52w (NOK)

95/ 37

Weight OSEBX

1.08 %

Rel. Perf 3/6/12

-18/ -2/ 76

Abs. Perf. 3/6/12

-10/ 7/ 97

Share price versus OSEBX 200 % 180 % 160 % 140 % 120 % 100 % 80 % 60 % 40 %

Opera’s 1Q14 figures and 2Q14 guidance were in line with expectations. Also the company reiterated its 2014 outlook supporting our estimates. Pre-tax profit came in however lower due to a one-off contingent consideration. Revenue from mobile advertising was the main positive deviation (USD 32m versus our estimate of USD 29m) and we have raised estimates accordingly. We are fundamentally positive to the share as Opera is well positioned for the strong growth in mobile internet. We thus reiterate our BUY recommendation and target price of NOK 95. The businesses within Mobile internet are developing strongly. Opera announced contract wins with Vodafone India and Telkomsel in Indonesia for Web Pass. The largest revenue potential in this segment is the video optimization offering to operators (Skyfire) in our view. Multiple trials are still ongoing according to management. Trials for its peers have also been delayed and we are still confident of Skyfire’s cloud technology. Also, according to our industry sources the coming spring (and fall) are the main contract quarters. A reason for the delayment is according to Core changes in the market. Market leader Citrix acquired Bytemobile last year and number 2 and 3 in the market merged at the beginning of this year. Opera will also use this compression technology on consumer products moving forward.

20 % 0%

OSEBX

Its mobile ad segment Mediaworks is expanding its reach in rich media advertising and Germany specifically with the acquisition of Apprupt. Opera has been building up its advertising business for some time now. We expect further acquisitions in this space supported by an interview with CEO of Opera Mediaworks after the 1Q14 report “Opera Mediaworks will continue to look for acquisition opportunities in the coming year.”

OPERA NO Equity

Estimate changes ESTIMATE CHANGES

Revenues EBITDA EBIT PTP EPS rep

2014E Curr.

408 115 95 88 0.5

2015E

Prev.

403 114 96 96 0.5

Curr.

2016E

Prev.

538 169 153 158 0.9

521 165 149 155 0.8

Curr.

679 233 217 226 1.2

Change %

Prev.

2014E

654 1% 224 1% 208 -1 % 217 -8 % 1.2 -10 %

2015E 2016E

3% 2% 2% 2% 2%

1% 1% 1% 1% 1%

Valuation: Our target price is based on a DCF model supported by a SOTP metrics. The Opera share trades at historical multiples (below at ’14 multiples). Key figures (USDm)

2014E

2015E

2016E

2017E

4Q13

1Q14

217

300

408

538

679

805

90

87

EBITDA

61

82

115

169

233

275

23

23

EBIT Net Income

51 17

62 60

95 62

153 114

217 162

259 194

17 49

15 3

Revenues

EPS adjusted

2013

0.29

0.44

0.52

0.86

1.23

1.46

0.22

0.07

Revenue growth

36 %

38 %

36 %

32 %

26 %

19 %

46 %

40 %

EBITDA adj margin EBIT margin

30 % 24 %

29 % 21 %

29 % 23 %

33 % 28 %

35 % 32 %

35 % 32 %

50 % 19 %

44 % 17 %

EV/Sales

Prepared by analyst: Henriette Trondsen Fondsfinans AS TEL: +47 23 11 30 45 [email protected]

2012

6.9

4.8

3.8

2.8

2.3

1.9

EV/EBITDA adj EV/EBITDA

23.3 24.7

16.6 17.4

12.9 13.3

8.8 9.1

6.4 6.6

5.4 5.6

EV/EBIT

29.4

23.1

16.1

10.0

7.1

5.9

P/E

45.6

27.5

23.3

14.2

9.9

8.3

Source: Opera Software/ Fondsfinans Research

FONDSFINANS AS, HAAKON VII’S GATE 2, P.O. BOX 1782 VIKA, NO-0122 OSLO, TEL: +47 23 11 30 00, FAX: +47 23 11 30 03, [email protected] This report was prepared by an analyst engaged by Fondsfinans ASA, the Norwegian affiliate of Fondsfinans Inc., who is not registered as a research analyst with FINRA or subject to FINRA rules governing research. See page 7 of this report for Important Disclosure Information.

Q114 results overview Opera reported a solid report in line with expectations. On a group level, revenue increased by 40% y/y, in line with estimates. Pre-tax profit was however below estimates due to a one-off contingent consideration. Excluded this consideration, one-time costs and acquisition related cost (“Non-IFRS”) numbers were ahead of estimates. Deviation table 1Q14

1Q14E

Actual

1Q14E

Actual

Actual

Cons.

vs. Cons

FF

vs. FF

Revenues

87

86

1.0 %

86

1.2 %

EBITDA

23

22

4.1 %

22

4.5 %

26.4 %

25.7 %

0.8 p.p.

26.4 %

0 p.p.

15

16

-6.9 %

16

-6.3 %

EBITDA margin (%) EBIT EBIT margin (%)

17.2 %

18.7 %

-1.4 p.p.

18.6 %

-1.3 p.p.

Pre-tax profit

5

14

-62.3 %

13

-60.8 %

Net Income

3

9

-61.7 %

9

-62.2 %

0.019

0.07

-5.2 p.p.

0.07

-5.1 p.p.

EPS Non- IFRS Net Income Non- IFRS EPS

14

9

60.9 %

9

50.8 %

0.108

0.07

3.7 p.p.

0.07

3.6 p.p.

Source: Opera Software / Fondsfinans Research

Opera Mediaworks continue its strong growth Revenue growth in Opera Mediaworks was 73% y/y, somewhat above our estimate. Opera Mediaworks is expanding its reach in in Germany specifically with the acqusition of Apprupt. According to Adexchanger will Apprupt bring 22 million users and 250 existing customers in German speaking markets, including Austria and Switzerland. The company projects that the German ad market will be worth approx. $1.8 billion by 2017 according to Techchrunch. Apprupt was founded in 2008 and has more than 40 employees. Its customers include include major publishers such as News Corp. Apprupt is the eighth acquisition since 2010, including AdMarvel, Mobile Theory, 4th Screen Advertising, Handster and HUNT. We expect further acquisitions in this space supported by an interview with CEO of Mediaworks and Adexchanger after the 1Q14 presentation “Opera Mediaworks will continue to look for acquisition opportunities in the coming year.” Estimate change in global ad spending by 2016, compared with levels in 2013 (USDbn) Newspapers Magazines

Top contributors to adspend growth 2013-16 (USDbn) India

-3.4

Russia

-1.6

South Korea Cinema

Radio Outdoor

Desktop Internet Television Mobile Internet

0.8

Japan 2.7

UK Brazil

5.3

24.9

2352 2790

3183 3237 3422 3819

Argentina

6477

Indonesia

6704

31.1

China

31.6

USA

16423 24134

Source: Wall Street Journal (April 7 2014)/ Zenitoptimedia/ Fondsfinans Research

Page 2

2 May 2014

Fondsfinans Research

OPERA - Update 1Q14

Strong momentum for Opera Web Pass and ongoing trials for Skyfire Opera announced contract wins with Vodafone India and Telkomsel in Indonesia for Web Pass. With Webpass, operators can offer users personalized data packages with timebased or content-based mobile data packages. We see the video optimization business (Skyfire Rocket Optimizer) as the largest revenue potential within the operator segment. Delivering a quality on video gets harder for operators as users demand more. In addition, content providers also push a the highest quality possible for the network. Further contract wins for Skyfire are potential triggers for the remainder of 2014. Skyfire has currently contracts with Telenor, Verizon and a large “unnamed internet company”. We estimate that a Tier 1 operator generate USD 5m- 10m in annual revenue. Our favorite top pick for Skyfire’s next contract is Vimpelcom. Multiple trials are ongoing according to management. We are still confident about Skyfire’s cloud technology as trials in general has been delayed. Also, according to our industry sources the coming spring (and fall) are the main contract quarters. A reason for the delayment is according to Core changes in the market. Citrix acquired Bytemobile last year and number 2 and 3 in the market merged at the beginning of this year. Video optimization market share

Others incl Opera's Skyfire

14 %

Venturi Wireless

8%

Openwave Mobility

8%

Citrix

Flash Networks inclu Mobixell Network

30 %

40 %

Source: Core/ Fondsfinans Research

Opera is developing its mobile browsers Revenue growth in 1Q14 for its consumer product (mobile browser) was driven by mobile advertising and license revenue, including the licensing of the Skyfire technology to a “major Internet company”. Opera is also developing its browsers and will deploy compression technology on all products moving forward. This technology is already used in its data savings app “Max”, currently available i US, Euope, Russia, Ukraine and Belarus. New Opera Mini versions are coming for iPhone and iPad, following the release of the new iOS app Opera Coast. The latter has good reviews and strong app downloads. Coast is actually on the top list for “free app downloads” in iPhone in Norway, ahead of Chrome.

Fondsfinans Research

2 May 2014

Page 3

Valuation Our target price is based on a DCF model of NOK 107 supported by SOTP metrics. DCF valuation USD million Total net revenue Revenue growth OPEX (ex. depr., option cost) EBITDA EBITDA margin Depreciation EBIT EBIT Margin Calculated tax Cashflow from operations Net investments wc Investments assets+R&D Net cash flow Years Discounted cash flow

2009 97 0% 87 10 11 % 2 8 8% 2 8 -3 5 6

2010 115 18 % 94 21 18 % 4 17 15 % 5 16 -9 5 20

2011 160 39 % 115 45 28 % 6 39 24 % 11 34 -2 11 26

0

20

26

2012 217 36 % 156 61 28 % 10 51 24 % 14 47 29 14 4 -1.3 4

2013E 300 38 % 218 82 27 % 21 62 21 % 17 65 -14 24 54 -0.3 56

2014E 408 36 % 294 114 28 % 19 95 23 % 27 87 -2 20 69 0.7 65

2015E 538 32 % 369 169 31 % 16 153 28 % 43 126 -4 20 111 1.7 94

2016E 679 26 % 446 233 34 % 16 217 32 % 61 172 -1 20 154 2.7 118

2017E 805 19 % 531 275 34 % 16 259 32 % 72 202 -2 20 184 3.7 129

2018E 926 15 % 639 287 31 % 23 264 29 % 74 213 0 23 190 4.7 121

2019E 1,065 15 % 735 330 31 % 27 304 29 % 85 245 0 27 219 5.7 126

2020E 1,225 15 % 845 380 31 % 31 349 29 % 98 282 0 31 251 6.7 131

Term. 838 4% 578 260 31 % 21 239 29 % 67 193 0 21 172 3.7 120

ASSUMPTIONS Net present value CF 13-14 Net present value CF 15-17 NPV terminal value Estimated EV Net debt Potential Skyfire payouts Value equity No. of shares (fully diluted) NPV share USD NPV share NOK

Beta Risk premium after tax Risk free rate Tax Return equity Return debt Debt ratio WACC WC/Sales Capex/Sales

121 341 1,926 2,388 -83 68 2,402 132.5 18.1 114.0

NPV today

1.2 5% 4% 28.0 % 10.2 % 0.0 % 0.0 % 10.2 % 0% 3%

107

Sum-of-the-parts valuation

Mobile Advertising Mobile browser Operators (excl Skyfire) Skyfire Desktop TVs/Devices Other Totals Potential Skyfire payouts Net debt Market cap (NOK)

2014E 195 49 47 37 60 18 1.10 406

EV/Sales EV (USD) 2.3x 440 8.5x 413 8.5x 398 9.5x 352 2.0x 119 2.0x 36 4.3x

Per share 2013-17E rev (NOK) CAGR (%) 21 41 % 20 29 % 19 26 % 17 53 % 6 -2 % 2 -1 %

1,758 68 -83 1,773

83 3 -4 84

28 %

Base range 3.7x 8.5x 8.5x 10.0x 2.5x 2.5x

Potential acquisition pricing Acquisition price base (NOK per High range share) 5.0x 34 10.0x 19 10.0x 19 13.0x 18 4.0x 7 4.0x 2

5.2x

6.7x

99 3 -4 107

Acquisition price high (NOK per share) 46 23 22 23 11 3 129 3 -4 136

Source: Opera Software/ Fondsfinans Research

Opera reiterated its 2014 guidance Opera has a good track record with its guidance, and we are comfortable that the company will meet its 2014 guidance. 2014 guidance versus estimates USDm Revenue Adj EBITDA EBITDA margin

2014 Guidance 390-410 108-116 28 %

Consensus 406 115 28 %

Track record Fondsfinans 408 115 28 %

USDm Revenue Adj EBIT

2013 Guidance 280-295 52-62

2013 Actual 300 62

2012 Guidance 200-215 48-53

2012 Actual 216 50

Source: Opera Software/ Fondsfinans Research

Page 4

2 May 2014

Fondsfinans Research

20x

30x

5x

10x

0x

0x

15x

Apr 14 Jan 14 Oct 13 Jul 13

Apr 14 Jan 14 Oct 13 Jul 13

Apr 13 Jan 13 Oct 12 Jul 12 Apr 12 Jan 12 Oct 11 Jul 11 Apr 11

Average OPERA NO

Apr 13

Jan 13 Oct 12 Jul 12 Apr 12 Jan 12

Oct 11 Jul 11

Jan 11 Oct 10 Jul 10

OPERA NO OPERA NO

Apr 11 Jan 11 Oct 10

0.0

0.0

Jan 14

Jul 13

Jan 13

Jul 12

Jan 12

Jul 11

Jan 11

Jul 10

Jan 10

Jan 10

Jul 10

Jan 11

Jul 11

Jan 12

Jul 12

Jan 13

Jul 13

Jan 14

0

0

Apr 10

20

20

Jul 10

1.0

1.0

0.5

2.0

30

30

Jan 10

10

10

3.0

2.0

Apr 14 Jan 14

3.0

50

50

80 80

4.0 2.5

Apr 10

5x

4x

40

1.5

40

Oct 13 Jul 13 Apr 13 Jan 13 Oct 12 Jul 12

Apr 12 Jan 12 Oct 11 Jul 11 Apr 11 Jan 11 Oct 10 Jul 10 Apr 10

Share price versus 2015E EPS Share price versus 2014E EPS

Jan 10

6x

x

10x

5.0 Esti mate Esti mate

Apr 14

8x

15x

70 70

90 3.5

90

Jan 14

14x

25x

6.0 100 4.0 100

Oct 13 Jul 13

Apr 13 Jan 13 Oct 12 Jul 12 Apr 12

Jan 12

16x

30x

0x

Jan 10

Average OPERA NO

Page 5

2 May 2014

Fondsfinans Research

Oct 11

Jul 11 Apr 11

Jan 11 Oct 10 Jul 10 Apr 10 Jan 10

EV/EBITDA 2015 P/E 2015

x

20x

EPS estimate (NOK) 25x

40x

Price

40x

60x

Average OPERA NO

Average OPERA NO

EPS estimate (NOK)

EV/EBITDA 2014 P/E 2014

60 60

Price

OPERA - Update 1Q14

Pricing relative to historical multiples

50x

35x

30x

10x

20x

12x

10x

0x

2x

Source. Bloomberg/ Fondsfinans Research

Financials P&L, Balance & Cash flow (USDm) P&L Revenues Revenue growth (%) EBITDA EBITDA margin (%) EBIT EBIT margin (%) Pre-tax profit Pre-tax margin (%) Net profit Net margin (%)

2012 217 36 % 61 28 % 51 24 % 27 12 % 17 29 %

2013 300 38 % 82 27 % 62 21 % 67 22 % 60 21 %

2014E 408 36 % 115 28 % 95 23 % 88 22 % 62 15 %

2015E 538 32 % 169 31 % 153 28 % 158 29 % 114 12 %

2016E 679 26 % 233 34 % 217 32 % 226 33 % 162 9%

2017E 805 19 % 275 34 % 259 32 % 269 33 % 194 8%

2018E 913 13 % 295 32 % 279 31 % 293 32 % 211 7%

4Q12 61 41 % 16 27 % 14 22 % 3 4% 2 102 %

1Q13 62 32 % 17 28 % 14 23 % 7 12 % 4 100 %

2Q13 73 39 % 21 28 % 15 21 % 12 16 % 6 85 %

3Q13 75 34 % 22 29 % 16 21 % 4 5% 1 82 %

4Q13 90 46 % 23 26 % 17 19 % 45 50 % 49 69 %

1Q14 87 40 % 23 26 % 15 17 % 5 6% 3 71 %

2Q14E 96 31 % 25 26 % 21 22 % 22 23 % 16 65 %

3Q14E 102 35 % 31 31 % 27 27 % 28 28 % 20 61 %

4Q14E 124 38 % 36 29 % 32 26 % 33 27 % 24 50 %

1Q15E 108 24 % 28 26 % 24 23 % 26 24 % 18 57 %

2Q15E 128 34 % 39 31 % 35 27 % 36 28 % 26 49 %

Balance

2012 92

2013 225

2014E 236

2015E 240

2016E 244

2017E 248

2018E 252

4Q12 92

1Q13 203

2Q13 203

3Q13 206

4Q13 225

1Q14 233

2Q14E 234

3Q14E 235

4Q14E 236

1Q15E 237

2Q15E 238

16

15

15

15

15

15

15

16

14

13

15

15

15

15

15

15

15

15

Non-current assets Tangible fixed assets

57

143

247

359

520

715

926

57

54

56

70

143

147

195

217

247

257

280

Current assets

132

259

429

605

833

1,085

1,350

132

166

174

181

259

259

335

366

429

416

467

Total assets

240

507

679

860

1,092

1,348

1,617

240

383

390

403

507

507

584

616

679

668

720

Equity

144

314

378

494

658

854

1,070

144

162

167

174

314

320

332

353

378

398

421

26 70

75 144

73 213

73 282

73 350

73 409

73 463

26 70

94 127

98 124

92 137

75 144

73 114

73 164

73 175

73 213

73 182

73 214

239

533

664

848

1,080

1,336

1,605

239

383

390

402

533

507

569

601

664

652

708

60 %

59 %

57 %

58 %

61 %

64 %

67 %

60 %

42 %

43 %

43 %

59 %

63 %

58 %

59 %

57 %

61 %

59 %

-57

-83

-187

-299

-460

-655

-866

-57

7

4

-10

-83

-87

-135

-157

-187

-197

-220

2012 26

2013 68

2014E 88

2015E 158

2016E 226

2017E 269

2018E 293

4Q12 2

1Q13 7

2Q13 12

3Q13 4

4Q13 45

1Q14 5

2Q14E 22

3Q14E 28

4Q14E 33

1Q15E 26

2Q15E 36

38

50

135

140

187

220

236

16

3

11

20

15

15

58

27

35

16

36

Cash and cash equivalents

Non-current liabilities Current liabilities Total equity and liabilities Equity share (%) NIBD

Cash flow Pre-tax profit Operating cash flow Capex

-10

-10

-14

-16

-16

-16

-16

-6

-3

-1

-4

-2

-2

-4

-4

-4

-4

-4

Net cash flow from investing activities

-63

-108

-52

-20

-20

-20

-20

-21

-80

-6

-11

-11

-37

-5

-5

-5

-5

-5

Net cash flow from financing activities

-1

165

-3

-5

-5

-5

-5

1

73

-3

5

90

1

-5

0

0

0

-5

Cash and cash equivalents at end of period

59

165

245

361

522

717

928

57

54

57

70

164

143

191

213

243

254

280

Segmental overview (USDm) USDm Desktop - Users, average - ARPU Total revenues

2012

2013

2014E

2015E

2016E

2017E

2018E

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14E

3Q14E

4Q14E

1Q15E

2Q15E

56 1.20 68

52 1.15 61

50 1.19 60

48 1.19 57

47 1.19 56

47 1.19 56

47 1.19 56

55 0.30 17

55 0.32 18

52 0.27 14

51 0.27 14

51 0.30 15

51 0.36 19

50 0.27 13

49 0.27 13

49 0.29 14

48 0.36 18

48 0.27 13

202 0.10 20

254 0.15 38

288 0.17 49

325 0.20 65

366 0.26 94

386 0.27 106

386 0.27 106

220 0.02 5

238 0.03 8

251 0.05 12

262 0.03 8

267 0.04 11

276 0.05 14

284 0.04 11

292 0.04 12

301 0.04 12

310 0.04 14

320 0.05 15

Operators

40

58

80

115

133

149

162

11

12

15

16

16

16

19

21

23

26

28

Mobile publishers and advertisers

54

119

195

280

375

472

567

20

18

28

30

43

32

47

47

69

45

68

TV/ devices

28

18

18

18

18

18

18

9

5

3

7

3

4

3

7

4

4

3

Other

1.2

1.7

1.1

1.2

1.2

1.2

1.2

0.3

0.6

0.5

0.5

0.1

0.2

0.3

0.3

0.3

0.3

0.3

Mobile consumer - Users, average - ARPU Total revenues

Source: Opera Software/ Fondsfinans Research

Page 6

2 May 2014

Fondsfinans Research

OPERA - Update 1Q14

Definitions of ratings Buy Neutral

Low risk: with a potential of min 5%. Medium risk: with a potential of min 10%. High risk: with a potential of min 20%. Low risk: -5% to +5%. Medium risk: -10% to +10%. High risk: -20% to +20%.

Sell

Low risk: min 5%. Medium risk: min 10%. High risk: min 20%.

Risk ratings are based on price volatility, fundamental criteria and perceived risk. Ratings are: Low (L), Medium (M) and High (H). Target: Our valuation as of today. Time frame of target: Target is what we value the share as of today.

Recommendation distribution as of 22.04.14:

Companies in each recommendation category that have been investment banking clients over the past 12 months:

Recommendation Buy Neutral Sell Total

Recommendation Buy Neutral Sell Total

No 33 26 4 63

Percent 52 % 41 % 6% 100 %

No 1 2 0 3

Percent 3% 8% 0%

Our intention is to issue preview and update research on a quarterly basis. Our investment recommendation is elaborated in accordance with “The Norwegian Securities Dealers Associations” standards. This report has not been sent to the company for correction of any factual errors. Fondsfinans is organized with Chinese walls between the Corporate Department and the Research/Broking Department. In addition, Fondsfinans has internal instructions and guidelines for handling sensitive information. The analyst receives compensation that is impacted by overall firm profitability, including investment banking activities. Fondsfinans is under supervision of The Financial Supervisory Authority of Norway. The recommendation has not been changed (BUY). The previous recommendation was issued 11.04.2014. Ownership per 26.03.13 in Opera: Analyst (including his/her closely related persons or companies): 0, corresponding to 0% of the company share capital Employees (including their respective closely related persons or companies): 0, corresponding to 0% of the company share capital Group Fondsfinans (including the holdings of its Chairman, his spouse and their closely related companies, Erik Must AS and its 100% controlled subsidiaries): 0, corresponding to 0% of the company share capital Fondsfinans may hold shares in Opera as a result of daily trading/market making. Information on such holdings is not given when of non-significant value. Fondsfinans is not acting as market maker in Opera. Fondsfinans has not acted as corporate adviser, lead manager in IPO etc. during the past 12 months. This report was issued and distributed 11.04.2014.

DISCLAIMER This report is provided for information purposes only. It should not be used or considered as an offer to sell or a solicitation of an offer to buy any securities. Any opinions expressed are subject to change without prior notice. This report is based on information from various sources believed to be reliable. Although all reasonable care has been taken to ensure that the information herein is not misleading, Fondsfinans AS makes no representation or warranty expressed or implied as to its accuracy or completeness. Neither Fondsfinans AS, its partners and employees, nor any other person connected with it, accepts any liability whatsoever for any direct or consequential loss of any kind arising out of the use or reliance on the information in this report. This report is prepared for general circulation and general information. It does not take into account the specific investment objectives and financial situation of any recipient. Investors seeking to buy or sell any securities discussed or recommended in this report, should seek independent financial advice relating thereto. This report may not be distributed, quoted from or reproduced for any purpose without written approval by Fondsfinans AS. DISCLOSURE OF INTERESTS Fondsfinans AS is constantly seeking investment-banking mandates, and may at any time perform investment banking or other services or solicit investment banking or other mandates from the company or companies covered in this report. Fondsfinans AS may from time to time as part of its investment services hold positions in securities covered in this report. Under our internal regulations, our analysts are not permitted to purchase new securities in the companies they cover. Holdings are specified as part of shareholder information in each report. DISTRIBUTION IN THE US Research reports are prepared by Fondsfinans AS for information purposes only. Fondsfinans AS and its employees are not subject to the Rules of the Financial Industry Regulatory Authority (FINRA) governing research analyst conflicts. The research reports are intended for distribution in the United States solely to “major U.S. institutional investors” as defined in Rule 15a-6 under the United States Securities Exchange Act of 1934, as amended and may not be furnished to any other person in the United States. Each major U.S. institutional investor that receives a copy of a Fondsfinans AS research report by its acceptance thereof represents and agrees that it shall not distribute or provide copies to any other person. Reports are prepared by Fondsfinans AS and distributed to major U.S. institutional investors under Rule 15a-6(a)(2). These research reports are prepared by Fondsfinans AS and distributed in the United States by Fondsfinans Inc. under Rule 15a-6(a)(2). Any U.S. Person receiving these reports that desires to effect transactions in any securities discussed within the report should call or write Fondsfinans Inc., a member of FINRA.

Fondsfinans Research

2 May 2014

Page 7

OPERA SOFTWARE Sector: Date: Next result: Target (USD): Recommendation:

Analyst: Henriette Trondsen +47 23 11 30 45

Technology 30 Apr 2014

Price (NOK): Price (USD): Book equity per share: Equity ratio: 12 month high/low:

15 Buy

77 12 1.2 57 % 31/ 95

Shares outs.: Market cap (USDm): Net int.-bearing debt (USDm):

132.5m 1,616 -83

Enterprise value (USDm):

1,533

Numbers in USDm

2012

2013

2014E

2015E

2016E

1Q13

2Q13

3Q13

4Q13

1Q14

Operating revenues Growth Y/Y COGS OPEX (excl depreciation) EBITDA Depreciation EBIT Net financial items Pre tax profit Tax Net income

217 35 % 25 131 61 10 51 1 27 -10 17

300 38 % 58 160 82 21 62 -2 67 -7 60

408 36 % 83 211 115 19 95 3 88 -26 62

538 32 % 115 255 169 16 153 5 158 -44 114

679 26 % 154 292 233 16 217 8 226 -63 162

62.0 32 % 9 36.0 17.1 2.9 14.2 0.0 7.3 -3.7 3.6

73.1 39 % 14 38.8 20.6 5.5 15.1 -0.4 11.7 -5.6 6.1

75.4 34 % 15 39.0 21.5 5.8 15.7 -0.3 3.8 -2.5 1.3

89.6 46 % 21 45.8 23.1 6.3 16.8 -1.4 44.6 4.7 49.3

87.0 38 % 16 49.4 23.0 6.7 16.3 0.4 5.1 -2.6 2.5

-18 35

5 55

-7 69

0 114

0 162

-4.8 8.4

-2.1 8.2

-8.1 9.4

20.4 28.9

-7.2 9.7

26 45

81 75

81 88

130 130

178 178

6.5 11.3

11.6 13.7

7.1 15.2

55.6 35.2

9.2 16.4

EBITDA margin EBITDA adj margin (targets) EBIT margin Pre tax margin

28 % 30 % 24 % 12 %

27 % 29 % 21 % 22 %

28 % 29 % 23 % 22 %

31 % 33 % 28 % 29 %

34 % 35 % 32 % 33 %

28 % 43 % 23 % 12 %

28 % 48 % 21 % 16 %

29 % 50 % 21 % 5%

26 % 50 % 19 % 50 %

26 % 44 % 17 % 6%

REVENUE PER SEGMENT Mobile Advertising Mobile Browsing ex Skyfire Desktop TVs/Devices Sum

54 67 68 28 217

119 86 61 18 300

195 97 60 18 408

280 124 57 18 538

375 158 56 18 679

18 21 18 5 62

28 23 14 3 73

30 21 14 7 75

43 22 15 3 90

32 24 19 4 87

376 % -1 % 26 % 3% 35 %

120 % 28 % -10 % -35 % 38 %

64 % 12 % -2 % -2 % 36 %

43 % 28 % -5 % -3 % 32 %

34 % 28 % -1 % 0% 26 %

167 % 31 % 5% -31 % 32 %

107 % 45 % -10 % -61 % 39 %

110 % 8% -25 % 62 % 34 %

120 % 33 % -7 % -63 % 46 %

72 % 19 % 6% -20 % 38 %

120.0 13.2 0.2 0.29 0.37

124.0 12.2 0.2 0.44 0.61

132.5 12.2 0.3 0.52 0.66

132.5 12.2 0.3 0.86 0.98

132.5 12.2 0.3 1.23 1.35

119.8 13.2

120.9 12.2

122.6 5.8

132.5 5.8

132.5 5.8

0.07 0.09

0.07 0.11

0.08 0.12

0.22 0.27

0.07 0.12

45.6 95.2 35.7 6.9 24.7 29.9 11.0 26.7%

27.5 23.1 20.0 4.8 17.4 23.1 4.8 24.0%

23.3 25.5 18.4 3.8 13.3 15.0 4.3 20.0%

14.2 13.9 12.4 2.8 9.1 10.6 3.3 26.2%

9.9 9.8 9.1 2.3 6.6 7.4 2.5 28.2%

Sensitivity EPS estimates Base estimates

2014E 0.52

2015E 0.86

0.22 0.03

0.29 0.03

2012

2013

2014E

2015E

2016E

10 largest shareholders as of

132 108 83 240 96 144

259 240 196 499 219 314

429 251 206 679 286 378

605 255 210 860 355 494

833 259 214 1,092 423 658

1.2 60 % -57 -40 %

2.5 63 % -83 -26 %

2.9 56 % -187 -49 %

3.7 57 % -299 -61 %

5.0 60 % -460 -70 %

37.7 -62.8 -25.2

49.5 -108.2 -58.7

135.2 -52.2 83.0

140.4 -20.0 120.4

186.8 -20.0 166.8

Adjustments Adjusted profit/loss Cash earning reported Cash earnings adjusted

% CHANGE (YoY) Mobile Advertising Mobile Browsing ex Skyfire Desktop TVs/Devices Sum Shares outstanding Share price USD Dividend EPS adjusted CEPS adjusted P/E adjusted P/E adjusted excl current cash P/CEPS adjusted EV/SALES EV/EBITDA EV/EBIT P/BOOK Return on equity (adj.)

Numbers in USDm Current assets Fixed assets - of which goodwill Total assets Liabilities Shareholders' equity Book equity/share Equity ratio Net int. bear. debt Net int. bear. debt/equity Cashflow statement Cashflow from operations Net investments Free cashflow

+ / - 10% sales growth + / - NOK 5m OPEX

Name Ludvig Lorentzen As Folketrygdfondet Arepo Sundt As Ferd Clearstream banking JP Morgan Luxenburg Verdipapirfondet DNB Norge SEB Enskilda Securities JP Morgan Chace Bank N.A. London Total 10 largest Others Total

30 Apr 2014

11,301 8,770 8,187 6,450 6,060 3,805 2,778 2,371 1,875 1,310 52,908 79,631 132,538

% 8.5 % 6.6 % 6.2 % 4.9 % 4.6 % 2.9 % 2.1 % 1.8 % 1.4 % 1.0 % 39.9 % 60.1 % 100 %

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