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 %