PR Newswire | Feb 25, 2021 07:04AM EST

expectations for revenue growth and adjusted EBITDA

02/25 06:00 CST

Opera Limited announces fourth quarter 2020 financial results, exceeds expectations for revenue growth and adjusted EBITDAMultiple new initiatives gaining traction, investments in gaming, fintech, and expansion of Opera News to developed marketsCompany raises growth estimates, sees year-over-year revenues increasing nearly 40% at the midpoint (up from 25% prior indication) OSLO, Norway, Feb. 25, 2021

OSLO, Norway, Feb. 25, 2021 /PRNewswire/ -- Opera Limited (NASDAQ: OPRA), one of the world's largest internet consumer brands with over 380 million monthly active users, today announced its unaudited consolidated financial results for the quarter ended December 31, 2020:

Fourth quarter 2020 financial highlights

Three Months Twelve Months Ended Ended Year-over- December 31, Year-over- December 31,

[US$ thousands, except for margins year % year %and per ADS amounts] 2019 2020 2019 2020 change change

Revenue 48,763 50,446 3.5 % 177,078 165,274 -6.7 %

Net income (loss) 21,973 25,404 15.6 % 57,899 176,052 204.1 %

Margin 45.1 % 50.4 % 32.7 % 106.5 %

Adjusted EBITDA (1) 6,752 14,271 111.4 % 24,233 25,188 3.9 %

Margin 13.9 % 28.3 % 13.7 % 15.2 %

Adjusted net income (1) 12,662 34,699 174.0 % 50,475 52,280 3.6 %

Margin 25.9 % 68.8 % 27.9 % 31.6 %

Diluted net income per ADS, US$ 0.18 0.22 20.2 % 0.51 1.48 188.0 %

Diluted adjusted net income per ADS, 0.10 0.30 185.3 % 0.45 0.44 -1.9 %US$ (1)

(1) Please see the separate section "About non-IFRS financial measures" for the definitions of adjusted EBITDA and adjusted net income.

"These results demonstrate the potential for Opera to generate significant growth thanks to Opera's two complementary strengths," noted co-CEO Song Lin. "First, our core businesses - the Opera Browser, and Opera News - are operating at greater scale, with higher user engagement, in our key markets. This is a direct reflection of how well we're executing, and increases our ability to monetize. Combined with continued COVID-19 recovery, our user driven search and advertising revenues increased 22% versus the prior quarter, and 14% versus the year-ago quarter, representing a solid foundation and allowing us to offer an even stronger outlook for 2021. Second, the strategic investments we have made in adjacent categories, including gaming and fintech, leverage our core strengths and are significantly accelerating our overall growth potential. We're going to keep making these investments given their clear promise, high growth, and ability to deliver new revenue streams."

Fourth Quarter and Recent Business Highlights

* Opera's monthly active user base increased by 29 million in 2020. * The Company reached 79 million average monthly PC users in the fourth quarter, up 17% year-over-year (vs. up 10% year-over-year in the third quarter). * The Opera GX browser user base now exceeds 7 million users, up 350% year-over-year in December. * Opera News revenue grew over 150% year-over-year and 60% compared to the third quarter. * Opera achieved record revenue on mobile. Opera recently launched an in-browser messaging feature, Hype, in Africa, which is an example of a feature aimed at increasing engagement within our Opera Mini browser. Opera for Android, Opera's flagship mobile browser reached 79 million users, doubling in 2.5 years. * Investment in our strategic growth initiatives continued, including the recent acquisition of YoYo Games and creation of Opera Gaming, and the launch of the Dify digital wallet and in-browser cashback offering, broadening Opera's opportunities in gaming and ecommerce. In addition, the huge success of Opera News in Africa has led to a decision to test the product in several developed markets.

"In sum", continued Mr. Lin, "we are doing two things extremely well: operating our core businesses such that they continue to scale and create new paths to monetization, and simultaneously executing against our growth strategy. We're entering 2021 with good momentum and the possibility to generate what many had previously expected would be 2022 revenues. We believe we have all the elements in place to enjoy sustained, long-term growth."

Business Outlook

Mr. Frode Jacobsen, Opera's CFO, said, "Growth in our core business accelerated in the fourth quarter, leading us to raise our revenue growth expectations in 2021 from 25% to 39%, or $65 million above 2020, at the midpoint. We expect our core business to benefit from the additional economies of scale similar to what we experienced in the fourth quarter, but we are using this strength as an opportunity to accelerate growth through high return investments in our key initiatives -- European fintech, gaming and Opera News in developed markets -- which will impact near-term margins as we enter a new phase of accelerated growth."

For the full year 2021, Opera expects revenue of $220 million to $240 million, representing an increase of $30 million at the midpoint compared to prior guidance. Adjusted EBITDA is anticipated to be $10 million to $30 million.

For the first quarter 2021, Opera expects revenue of $47 million to $48 million, representing 18% year-over-year growth at the midpoint, roughly a 15 percentage point increase versus the fourth quarter. Adjusted EBITDA will be around breakeven as Opera invests aggressively in growth.

Nanobank and other investments

On a pro forma basis in the fourth quarter, Nanobank posted revenue of $46.0 million, up 32% compared to the third quarter, and disbursed 3.2 million loans representing $239 million in total value. Adjusted EBITDA was $13.8 million and post-tax profit was $12.3 million. The growth was primarily driven by strength in Indonesia and Mexico.

In terms of other investments, OPay continues to grow and scale its payment offerings. In December, OPay processed a gross transaction value of $2.0 billion on its platform, more than four-times the level in January 2020, and is in the process of launching in a new African geography. StarMaker continues to experience strong growth. Daily active users doubled in 2020 and fourth quarter revenues were at an annual run rate of over $130 million, more than three times the year-ago period.

Opera owns 42% of Nanobank, 13.1% of OPay and 19.35% of StarMaker.

Fourth quarter 2020 consolidated financial results

All comparisons in this section are relative to the fourth quarter of 2019 unless otherwise stated. Our former emerging markets fintech and retail revenues are not included in comparisons as they are classified as discontinued operations.

Revenue increased 3% to $50.4 million

* Search revenue increased 13%, or 21% versus the third quarter 2020, to $25.7 million due to strong PC user growth and as monetization recovered from COVID-19. * Advertising revenue increased 16%, or 23% versus the third quarter 2020, to $23.3 million due to strong Opera News monetization and ad monetization increases. * Technology licensing and other revenue was $1.5 million. This declined $4.5 million compared to the previous year as Opera has been phasing out low-margin professional services for an investee.

Operating expenses decreased 6% to $46.4 million.

* Cost of revenue was $2.7 million, a decrease of 38%. Within this total, $1.9 million related to the browser and news business area and $0.8 million related to other revenue. * Personnel expenses, including share-based remuneration, were $15.6 million, an 8% decrease. This expense consists of cash-based compensation expense of $14.6 million, and $1.0 million of share-based remuneration expense. * Marketing and distribution expenses were $12.3 million, a decrease of 6%. * Depreciation and amortization expenses were $5.9 million, flat year-over-year. * Other operating expenses were $5.9 million, a 31% decrease driven by reduced travel and general reductions. * Non-recurring costs were $3.3 million and predominantly related to the dissolution of the Powerbets joint venture.

Operating profitwas $8.0 million, representing an operating margin of 16%, compared to operating loss of $0.7 million and a negative 1% margin during the fourth quarter of 2019. The increase was primarily due to lower operating expenses and the shift away from "technology licensing and other" revenue.

Other items include share of net profit of associates and joint ventures of $5.2 million, predominantly related to Nanobank, and an $8.0 million increase in the fair value of preferred shares in Starmaker and OPay following year-end assessments. Further, net finance income was $6.6 million, primarily related to marketable securities held as part of our treasury function.

Income taxexpense was $0.1 million in the quarter.

Net income was $25.4 million, comprising $27.7 million in profits from continued operations and $2.3 million loss from discontinued operations following an adjustment to the initial valuation of our shares in Nanobank. This compared to a net income of $22.0 million in the fourth quarter of 2019.

Net income per ADS was $0.22 in the quarter. Each ADS represents two shares in Opera Limited. In the quarter, the average number of shares outstanding was 229.5 million, corresponding to 114.8 million ADSs.

Adjusted EBITDA was $14.3 million, representing a 28% adjusted EBITDA margin, compared to adjusted EBITDA of $6.8 million in the fourth quarter 2019. Adjusted EBITDA excludes share-based remuneration and non-recurring expenses, as well as other income and discontinued operations.

Adjusted net income was $34.7 million in the quarter, compared to adjusted net income of $12.7 million in fourth quarter 2019. Adjusted net income excludes share-based remuneration, non-recurring expenses, discontinued operations and amortization of intangible assets related to acquisitions.

Adjusted net income per ADS was $0.30 in the quarter.

Share repurchases were 0.9 million ADSs in the quarter for a total spend of $8.2 million. In 2020, we repurchased 5.9 million ADSs for a total spend of $49.0 million.

Discontinued operationsinclude Opera's retail business, which was discontinued following a strategic assessment as it had not been profit generating, and Opera's former emerging markets fintech business, which was contributed to Nanobank on August 19, 2020. Opera owns 42% of Nanobank as of December 31, 2020.

We have posted unaudited supplemental information at https://investor.opera.com, including: 1) Opera's financial historical results by quarter over 2019 and 2020, reflecting microlending and retail as discontinued operations; and 2) Nanobank financial results by quarter over 2019 and 2020 (pro forma prior to August 19, 2020).

Conference call

Opera's management will host a conference call to discuss the fourth quarter 2020 financial results on Thursday, February 25th at 8:00 am Eastern Time (EST) (2:00 PM Central European Time, 9:00 PM Beijing/Hong Kong time). Listeners may access the call by dialing the following numbers:

United States: +1 833 570-1161China: +86 400 682 8609Hong Kong: +852 5819 4851Norway: +47 2396 4173United Kingdom: +44 (0)203 107 0289International: +1 918 922-6511Confirmation Code: 6964699

A live webcast of the conference call will be posted at https://investor.opera.com.

About non-IFRS financial measures

To supplement our consolidated financial statements, which are prepared and presented based on 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), net finance expense (income), share of net loss (income) of associates and joint ventures, restructuring costs, depreciation and amortization, share-based remuneration, other income, non-recurring expenses and discontinued operations.

We define adjusted net income as net income excluding share-based remuneration, amortization of acquired intangible assets, non-recurring expenses and discontinued operations, net of associated income tax adjustments.

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. Please refer to our financial statements at the end of this announcement for a table reconciling our non-IFRS financial measures to net income (loss), the most directly comparable IFRS financial measure.

Safe harbor statement

This press release contains statements of a forward-looking nature. These statements, including statements relating to the Company and its investees' 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 the Company, its investees, and the industry in which they operate. Potential risks and uncertainties include, but are not limited to, those relating to: the duration and development of the COVID-19 pandemic as well as changes in consumer behaviours as a result of such pandemic; the Company and its goals and strategies; expected development and launch, and market acceptance, of products and services; Company and its investees' expectations regarding demand for and market acceptance of their brands, platforms and services; Company's expectations regarding growth in its user base, user retention and level of engagement; Company's ability to attract, retain and monetize users; Company's ability to continue to develop new technologies and/or upgrade its existing technologies; quarterly variations in Company's operating results caused by factors beyond its control; and global macroeconomic conditions and their potential impact in the markets in which Company or its investees have businesses. All information provided in this press release is as of the date hereof, and the Company 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 the Company 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 the Company's filings with the U.S. Securities and Exchange Commission, including its annual reports on Form 20-F.

About Opera

Opera is a global web innovator. Opera's browsers, news products and fintech solutions are the trusted choice of more than 380 million monthly active users worldwide. Opera is headquartered in Oslo, Norway and listed on the NASDAQ stock exchange (OPRA).

UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS

Three Months Ended Twelve Months Ended December 31, December 31,

[US$ thousands, except per 2019 2020 2019 2020share and ADS amounts]

Revenue 48,763 50,446 177,078 165,274

Other income - 3,910 - 9,479

Operating expenses

Cost of revenue (4,384) (2,710) (14,239) (12,112)

Personnel expenses including (16,998) (15,606) (51,283) (59,936)share-based remuneration

Marketing and distribution (13,148) (12,318) (64,883) (47,860)expenses

Credit loss expense (380) (607) (580) (1,849)

Depreciation and amortization (5,969) (5,876) (18,843) (20,234)

Non-recurring expenses - (3,321) - (6,543)

Other expenses (8,577) (5,929) (27,787) (23,037)

Total operating expenses (49,455) (46,367) (177,614) (171,570)

Operating profit (loss) (692) 7,990 (537) 3,182

Share of net income (loss) of 837 5,187 (3,818) 3,865associates and joint ventures

Change in fair value ofpreferred shares in 6,992 8,000 37,900 14,000associates

Net finance income (expense)

Finance income 6,561 5,166 10,532 13,633

Finance expense (184) (30) (655) (516)

Net foreign exchange gain 467 1,421 (25) 833(loss)

Net finance income (expense) 6,844 6,557 9,851 13,950

Profit before income taxes 13,981 27,735 43,396 34,997

Income tax (expense) benefit (3,793) (56) (2,658) (689)

Profit from continuing 10,188 27,680 40,739 34,310operations

Profit (loss) from 11,784 (2,276) 17,161 141,742discontinued operations

Net income 21,973 25,404 57,899 176,052

Net income attributable to:

Equity holders of the parent 21,973 25,404 57,899 176,052

Non-controlling interests - - - -

Total net income attributed 21,973 25,404 57,899 176,052

Weighted average number ofordinary shares outstanding

Basic, millions(1) 237.44 229.54 224.63 234.57

Diluted, millions(2) 241.76 232.49 224.83 237.39

Profit per ordinary sharefrom continuing operations

Basic, US$ 0.04 0.12 0.18 0.15

Diluted, US$ 0.04 0.12 0.18 0.14

Profit per ADS fromcontinuing operations

Basic, US$ 0.09 0.24 0.36 0.29

Diluted, US$ 0.08 0.24 0.36 0.29

Net income per ordinary share

Basic, US$ 0.09 0.11 0.26 0.75

Diluted, US$ 0.09 0.11 0.25 0.74

Net income per ADS

Basic, US$ 0.19 0.22 0.52 1.50

Diluted, US$ 0.18 0.22 0.51 1.48

(1) As of December 31, 2020, the total number of shares outstanding for Opera Limited was 228,285,684, equivalent to 114,142,842 ADSs.

(2) Includes the net dilutive impact of employee equity awards, all of which are dilutive.

UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

Three Months Twelve Months Ended Ended December 31, December 31,

[US$ thousands] 2019 2020 2019 2020

Net income 21,973 25,404 57,899 176,052

Other comprehensive income (loss) thatmay be reclassified to the Statement ofOperations in subsequent periods (net oftax)

Exchange differences on translation of 301 944 (1,790) 42foreign operations

Reclassification of exchange differences - (151) 7 2,936on loss of control

Share of other comprehensive income - - (41) -(loss) of associates and joint ventures

Net other comprehensive income (loss)that may be reclassified to the 301 793 (1,824) 2,978Statement of Operations in subsequentperiods

Total comprehensive income 22,274 26,198 56,075 179,031

Total comprehensive income attributableto:

Equity holders of the parent 22,274 26,198 56,075 179,031

Non-controlling interests - - - -

Total comprehensive income attributed 22,274 26,198 56,075 179,031

UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As of December 31,

[US$ thousands] 2019 2020

ASSETS

Non-current assets

Furniture, fixtures and equipment 26,053 18,167

Intangible assets 110,807 111,954

Goodwill 421,578 424,961

Investments in associates and joint ventures 76,300 359,576

Non-current financial assets 1,351 1,490

Deferred tax assets 6,204 3,996

Total non-current assets 642,293 920,144

Current assets

Trade receivables 49,371 32,606

Loans to customers 93,115 68

Other receivables 59,112 10,750

Prepayments 25,809 9,061

Inventories 7,752 -

Other current financial assets 1,535 856

Marketable securities 42,146 -

Cash and cash equivalents 139,487 134,168

Total cash, cash equivalents, and marketable 181,633 134,168securities

Total current assets 418,327 187,508

TOTAL ASSETS 1,060,620 1,107,652

EQUITY AND LIABILITIES

Equity

Share capital 24 24

Other paid in capital 814,177 765,129

Retained earnings 99,513 280,211

Foreign currency translation reserve (1,508) 1,343

Equity attributed to equity holders of the parent 912,206 1,046,707

Non-controlling interests - -

Total equity 912,206 1,046,707

Non-current liabilities

Non-current lease liabilities and other loans 9,181 3,584

Deferred tax liabilities 10,526 11,745

Other non-current liabilities 137 68

Total non-current liabilities 19,844 15,397

Current liabilities

Trade and other payables 57,125 25,454

Current lease liabilities and other loans 47,793 5,389

Income tax payable 7,803 1,321

Deferred revenue 708 345

Other current liabilities 15,142 13,040

Total current liabilities 128,570 45,548

Total liabilities 148,414 60,945

TOTAL EQUITY AND LIABILITIES 1,060,620 1,107,652

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Foreign[US$ thousands] Share Other paid Retained currency Total equity capital in capital earnings translation reserve

As of December31, 2018, as 22 738,690 36,432 316 775,460previouslyreported

Impact ofimplementing - - 64 - 64IFRS 16 Leases

As of January 1, 22 738,690 36,496 316 775,5242019, restated

Net income - - 57,899 - 57,899

Othercomprehensive - - - (1,824) (1,824)income (loss)

Totalcomprehensive - - 57,899 (1,824) 56,075income (loss)

Contribution ofequity, net of 2 81,267 - - 81,267transactioncosts

Acquisition of - (5,780) - - (5,780)treasury shares

Share-basedremuneration - - 5,118 - 5,118expense

As of December 24 814,177 99,513 (1,508) 912,20631, 2019

Foreign[US$ thousands] Share Other paid Retained currency Total equity capital in capital earnings translation reserve

As of December 24 814,177 99,513 (1,508) 912,20631, 2019

Net income - - 176,052 - 176,052

Othercomprehensive - - - 2,978 2,978income

Totalcomprehensive - - 176,052 2,978 179,030income

Acquisition of - (49,049) - - (49,049)treasury shares

Reclassificationof foreigncurrency - - 126 (126) -translationreserve

Share-basedremuneration - - 4,521 - 4,521expense

As of December 24 765,129 280,211 1,343 1,046,70831, 2020

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

Three Months Ended Twelve Months Ended December 31, December 31,

[US$ thousands] 2019 2020 2019 2020

Cash flow from operatingactivities

Net income (loss) beforeincome taxes from continuing 13,981 27,735 43,396 34,997operations

Net income (loss) beforeincome taxes from discontinued 12,621 (734) 20,124 139,792operations

Income taxes paid (8,503) (1,886) (9,870) (9,887)

Depreciation and amortization 6,000 5,879 18,934 20,390

Share of net loss (income) of (837) (5,187) 3,818 (3,865)associates and joint ventures

Change in fair value ofpreferred shares in associates (6,992) (8,000) (37,900) (14,000)and joint ventures

Equity component of 1,478 886 5,118 4,521share-based payment expense

Gain on disposal of fintech - - - (152,048)segment

Net finance income (expense) (6,028) (6,557) (8,756) (13,950)

Change in inventories (5,820) 179 (7,752) 7,752

Change in trade and other (3,691) (544) (14,206) 19,572receivables

Change in loans to customers (37,607) (68) (90,023) 73,365

Change in trade and other 15,583 (605) 39,168 (25,135)payables

Change in deferred revenue (451) (2,404) (1,224) (346)

Change in prepayments 1,048 4,645 (11,437) 12,032

Change in other liabilities 2,322 4,036 5,441 (1,482)

Other 44 112 706 1,616

Net cash flow from (used in) (16,852) 17,487 (44,464) 93,324operating activities

Cash flow from investmentactivities

Purchase of intangibles assets - (8) - (2,286)

Proceeds from sales ofequipment and intangible 6 - 6 -assets

Purchase of equipment (1,714) (165) (8,868) (2,484)

Investment in, and loans to (911) (440) (6,550) (440)associates and joint ventures

Acquisition of subsidiary, net - - - (4,882)of cash acquired

Disbursement of short-term - - - (4,497)loans

Cash transferred with Okash - - - (39,260)Group

Release of escrow account - - - 1,000

Repayment of short-term loans - - - 4,497

Repayment of loans to - - 726 -associates and joint ventures

Deposit of collateral for loan (52,878) - (52,878) (1,000)facility

Net sale (purchase) of listed 10,423 61,624 (35,250) 58,535equity instruments

Development expenditure (964) (615) (4,173) (6,553)

Interest income received - (205) - 326

Net cash flow from (used in) (46,038) 60,191 (106,987) 2,956investing activities

Cash flow from financingactivities

Acquisition of treasury shares - (8,194) (5,780) (49,049)

Proceeds from loans and 21,543 - 43,163 6,905borrowings

Interests on loans and (797) (75) (1,184) (1,752)borrowings

Proceeds from issues of equity 10,778 - 82,630 -instruments

Repayment of loans and (172) 305 (1,509) (52,874)borrowings

Transaction costs on issue of (497) - (1,364) -equity instruments

Payment of lease liabilities - (426) (2,755) (4,202)

Net cash flow from (used in) 30,855 (8,390) 113,200 (100,972)financing activities

Net change in cash and cash (32,034) 69,288 (38,248) (4,692)equivalents

Cash and cash equivalents at 170,697 64,416 177,873 139,487beginning of period

Net foreign exchange 825 465 (137) (627)difference

Cash and cash equivalents at 139,487 134,168 139,487 134,168end of period

Financial details by business area

The tables below specify the contribution by each business area:

[US$ thousands] Three Months Ended December 31, 2019

BrowserBusiness area and Other Total News

Revenue categories

Search 22,641 - 22,641

Advertising 20,164 - 20,164

Technology licensing and other revenue - 5,958 5,958

Total revenue 42,805 5,958 48,763

Cost of revenue (1,030) (3,354) (4,384)

Marketing and distribution expenses (13,148) - (13,148)

Credit loss expense (249) (131) (380)

Direct expenses (14,427) (3,485) (17,912)

Contribution by business area 28,378 2,473 30,852

[US$ thousands] Three Months Ended December 31, 2020

Business area Browser and Other Total News

Revenue categories

Search 25,653 - 25,653

Advertising 23,121 180 23,301

Technology licensing and other revenue - 1,492 1,492

Total revenue 48,774 1,672 50,446

Cost of revenue (1,873) (837) (2,710)

Marketing and distribution expenses (12,068) (250) (12,318)

Credit loss expense (34) (573) (607)

Direct expenses (13,975) (1,660) (15,635)

Contribution by business area 34,799 12 34,810

[US$ thousands] Twelve Months Ended December 31, 2019

Business area Browser and Other Total News

Revenue categories

Search 86,155 - 86,155

Advertising 68,813 - 68,813

Technology licensing and other revenue - 22,111 22,111

Total revenue 154,968 22,111 177,078

Cost of revenue (2,642) (11,597) (14,239)

Marketing and distribution expenses (64,685) (198) (64,883)

Credit loss expense (448) (132) (580)

Direct expenses (67,776) (11,927) (79,702)

Contribution by business area 87,192 10,184 97,376

[US$ thousands] Twelve Months Ended December 31, 2020

Business area Browser and Other Total News

Revenue categories

Search 84,180 - 84,180

Advertising 71,510 216 71,726

Technology licensing and other revenue - 9,368 9,368

Total revenue 155,690 9,584 165,274

Cost of revenue (7,487) (4,625) (12,112)

Marketing and distribution expenses (47,042) (818) (47,860)

Credit loss expense (568) (1,281) (1,849)

Direct expenses (55,097) (6,724) (61,821)

Contribution by business area 100,593 2,860 103,453

Personnel expenses including share-based remuneration

The table below specifies the amounts of personnel expenses includingshare-based remuneration:

Three Months Twelve Months[US$ thousands] Ended Ended December 31, December 31,

Personnel expenses including 2019 2020 2019 2020share-based remuneration

Personnel expenses excluding 15,523 14,614 45,355 55,230share-based remuneration

Share-based remuneration, including 1,475 992 5,928 4,706related social security costs

Total 16,998 15,606 51,283 59,936

Other expenses

The table below specifies the nature of other expenses:

Three Months Twelve Months Ended[US$ thousands] Ended December 31, December 31,

Other expenses 2019 2020 2019 2020

Hosting 1,873 2,115 7,151 8,056

Audit, legal and other advisory 1,598 1,529 6,742 5,837services

Software license fees 385 432 2,169 1,882

Rent and other office expense 949 1,015 4,175 3,318

Travel 1,549 209 3,903 1,304

Other 2,222 628 3,645 2,640

Total 8,576 5,929 27,787 23,037

Non-IFRS financial measures

Three Months Ended Twelve Months Ended December 31, December 31,

[US$ thousands, except per 2019 2020 2019 2020share and ADS amounts]

Reconciliation of net income(loss) to adjusted EBITDA

Net income (loss) 21,973 25,404 57,899 176,052

Add: Income tax expense 3,793 56 2,658 689(benefit)

Add: Net finance expense (6,844) (6,557) (9,851) (13,950)(income)

Add: Share of net loss (income)of associates and joint (837) (5,187) 3,818 (3,865)ventures

Add: Change in fair value of (6,992) (8,000) (37,900) (14,000)preferred shares in associates

Add: Depreciation and 5,969 5,876 18,843 20,234amortization

Add: Share-based remuneration 1,475 992 5,928 4,706

Add: Non-recurring expenses - 3,321 - 6,543

Less: Other income - (3,910) - (9,479)

Less: Profit (loss) from (11,784) 2,276 (17,161) (141,742)discontinued operations

Adjusted EBITDA 6,752 14,271 24,233 25,188

Reconciliation of net income(loss) to adjusted net income

Net Income (loss) 21,973 25,404 57,899 176,052

Add: Share-based remuneration 1,483 992 5,928 4,706

Add: Amortization of acquired 1,280 1,341 5,120 5,356intangible assets

Add: Amortization of Nanobank - 1,684 - 2,584intangible assets(1)

Add: Non-recurring expenses - 3,321 - 6,543

Income tax adjustment (2) (305) (319) (1,311) (1,218)

Less: Profit (loss) from (11,784) 2,276 (17,161) (141,742)discontinued operations

Adjusted net income 12,662 34,699 50,475 52,280

Weighted average number ofordinary shares outstanding

Basic, millions 237.44 229.54 224.63 234.57

Diluted, millions 241.76 232.49 224.83 237.39

Adjusted net income (loss) perordinary share

Basic, US$ 0.05 0.15 0.22 0.22

Diluted, US$ 0.05 0.15 0.22 0.22

Adjusted net income (loss) perADS

Basic, US$ 0.11 0.30 0.44 0.45

Diluted, US$ 0.10 0.30 0.45 0.44

(1) The amortization of Nanobank intangible assets is included in the line "Share of net income (loss) of associates and joint ventures".

Reversal of tax benefit related to the social security cost component of(2) share-based remuneration and deferred taxes on the amortization of acquired intangible assets.

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SOURCE Opera Limited