Opera Software Buy

Preview 3Q10 08 November 2010 Share Price: NOK 29.80 (05.11.2010)

Results Date 15 November 2010 Target: NOK 40.00 (30.00)

Share data (NOK) 08.11.2010 Excellent play on mobile data growth

Sector IT - Software
In the last months, we have seen a very clear message from about every
Reuters/Bloomberg OPERA.OL/NO mobile operator that data users and traffic is exploding. Being evident in the
Risk rating High most advanced markets for a few years, this is now a universal trend, also
Outstanding shares 119,6 influencing emerging and low-ARPU markets. This seems to be the strongest
Market cap 3 563 trend shift we have seen in the telco world since the introduction of GSM.
Net interest bearing debt -550 Operators will be seizing the opportunity to capitalize on this trend and
Enterprise value 3 013 increase ARPU while managing network capex. Opera Mini is a unique value
Free float 53 % proposition to both users and operators to realize the mobile web, and we see
Average volume 474 753 an extremely good business environment for Opera now and in coming years.
High/low 52w 29,2 / 16,1
We expect Opera to report 3Q sales of NOK 176m. This represents YoY
Weight OSEBX 0,23 %
growth of 31%. This is the first quarter of high growth since the realignment in
Rel. Perf 3/6/12 10 / 21 / 16
Q3 last year. We expect EBIT at NOK 35m, reaching 20% margin. The
Abs. Perf. 3/6/12 22 / 32 / 44 revenue estimate is in the middle of Opera’s guided range for Q3, while the
EBIT is above the high end due to a lower OPEX forecast.
Share Price
32 The most important driver for Opera is without doubt development and outlook
28
for licensed Mini users, both in OEM deals (AT&T, Vodafone etc) and revenue
24
sharing deals. We expect the Q3 report to show 6.8m licensed users, up from
20

16
4.5m at Q2. We also expect Opera to announce users by end of October,
12
which we estimate at 7.8m. This implies 850k net additions per month in the
8 three months since the last known data point, which was 5.2m by end of July.
03.11.2009

03.12.2009

02.01.2010

01.02.2010

03.03.2010

02.04.2010

02.05.2010

01.06.2010

01.07.2010

31.07.2010

30.08.2010

29.09.2010

29.10.2010

OPERA
Being a large part of revenues, Opera Desktop is still important, and we expect
47m active users with NOK 58m of revenue. Q3 should also see a meaningful
increase in ‘Device OEM’ revenues coming from Internet connected TVs. We
forecast NOK 36m of revenue in the segment, up 20% QoQ.
Estimate changes
Curr. Prev. Curr. Prev. Change in

Sales
2010E
686
2010E
690
2011E
881
2011E
885
2010E 2011E
-4 -5
We upgrade the growth trend in the forecasts and DCF model to reflect the
EBITDA adj.
EBITDA
146
129
150
133
249
229
254
235
-4
-4
-5
-6
current very strong trends toward mobile data in emerging markets and arrive
EBIT
Pre-tax profit adj.
106
83
110
87
186
202
192
208
-4
-4
-6
-6
at a new DCF-based target of NOK 40, keeping a Buy recommendation.
EPS adjusted 0,70 0,72 1,22 1,25 -0,02 -0,04

Curr. Prev. Curr. Prev. Change in % Key figures (NOKm) 2009 2010E 2011E 2012E 2q10 3q10E
2010E 2010E 2011E 2011E 2010E 2011E
PC/Desktop 227 230 224 246 -2 % -9 %
Revenues 613 686 881 1 131 168,9 176,0
Operators 219 218 379 369 0% 3% EBITDA 68 129 229 344 34,3 41,3
Device OEMs 134 133 181 175 0% 3%
Mobile OEMS 80 81 49 50 -1 % -1 % EBIT 54 106 186 280 28,8 35,1
Mini Consumer 27 28 48 45 -2 % 8%
PTP 44 83 202 303 26,6 38,4
EPS adjusted 0,38 0,70 1,22 1,82 0,18 0,23
CEPS 0,49 0,90 1,58 2,35 0,23 0,28
Revenue growth 23 % 12 % 28 % 28 % -2 % 31 %
EBIT margin 9% 15 % 21 % 25 % 17 % 20 %
EV/Sales 3,0 4,4 3,4 2,7
EV/EBITDA, static 27,4 23,3 13,1 8,8
EV/EBIT, static 34,1 28,5 16,2 10,7
Prepared by analyst:
P/E 53,2 42,6 24,5 16,4
Arild Nysæther
P/E ex current cash n.m. 57,5 22,5 14,9
Fondsfinans ASA
TEL: +47 23 11 30 82 ROE 5% 9% 19 % 23 %
an@fondsfinans.no Source: Opera / FF research

FONDSFINANS ASA, 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, mail@fondsfinans.no
We refer to important information written later in this report
Opera Software Preview 3Q010

Opera’s unique value proposition

With opera for mobile phones, the browser on the phone communicates with
Opera’s server farms and not to the Internet directly. Opera’s servers fetch the
requested page, compress it and send a ready-processed image of the page back
to the phone. To the user, the technicalities are ‘under the hood’ and the experience
is equal to a traditional browser in almost all cases.
This framework has a number of very important benefits:

• Since the processing is done on the servers, the requirements of phone are
very low. With other browsers, the full web experience requires a very
advanced and costly mobile phone. With Opera, the full web is experienced
on just about any phone.

• Since only a compressed image is sent to the phone, data traffic is reduced
by 80-90% compared to the same page in HTML. This makes data cost
drop by as much for the users. For operators, it means less utilisation of
fixed data plans.

• Because data traffic is reduced by 80-90%, Opera makes surfing fast even
on slow or congested networks. Opera works well on 2G networks,
important for emerging markets. The benefits are as great in the most
developed market on 3G networks, as the rapid adoption of smart phones
has congested networks.

• For emerging market users with low or mid-end phones it means that the full
web is accessible for the first time and at a reasonable usage cost.

• For developed markets users, it is a way of saving considerably on high

data charges, to use when travelling or to get through in congested
networks. It is also a better browsing experience than the included browser
on most smart phones.

• For the network operator, it is a unique value proposition. Driving data

usage penetration, it is a way to increase ARPU. Iphone/Android/Win7 now
account for about 20% of new phones. The other 80% needs a browser to
drive data ARPU. Opera’s systems have demonstrated for years how it
drives usage to a different level than standard browsers. Since the
incremental data traffic is limited, the increased ARPU is achieved with
limited capex.
The compelling advantages of Opera’s software for phones have led to a user base
of 70 million active Opera branded users.
A number of operators have licensed an OEM version of the software recently. This
includes tier one operators in both developed and emerging markets.

Page 2 8 November 2010 Fondsfinans Research

Preview 3Q10 Opera Software

Opera’s contracts and ramp-up pipeline

Opera signed Vodafone and AT&T during 2009, and ramp-up began towards the
end of the year. Since the contracts were signed, the operators have shown great
commitment and are phasing launches through markets and phone segments.
Since then, Opera has signed several new significant contracts, including Sprint, SK
Telecom (no1 in Korea), Verizon and Telenor (no7 overall in the world). In emerging
markets, Opera is working to convert the large user base into licences users, and
has struck deals with MTS, Megafon and Tele2 (combined 70% of Russian market),
Telkomsel (no1 Indonesia), Smart (no1 Philippines) as well as several others.
We estimate that operators under contact have about 1.2 billion subscribers and
expect this number to increase significantly with new contracts.

Q2 news flow. Q3 could also see announcements

Fondsfinans Research 8 November 2010 Page 3

Opera Software Preview 3Q010

Development
Licensed user development total Month by month
9,0 1,2

8,0
1,0
7,0
0,8
6,0

Net adds per month

Mill active users

5,0 0,6

4,0
0,4
3,0

2,0 0,2

1,0
0,0
J FMAMJ J ASOND J FMAMJ J ASOND J FMAMJ J ASO
0,0 2008 2009 2010
J FMAMJ J ASOND J FMAMJ J ASONDJ FMAMJ J ASOND J FMAMJ J ASO
2007 2008 2009 2010 -0,2

Developing the product and interest in the market, Opera spent three years getting
to the first million licensed active users in 2009. By the end of 2010 we expect
Opera to reach 10 mill users. With the continued ramp up of existing contracts as
well as flow of new deals, the additions should continue to accelerate going forward.
Revenue will scale about linearly with users, as Opera gets paid per active user per
quarter on a recurring basis. The fee varies, but is about EUR 0.5 per user per
quarter.

Opera Branded development total Month by month

80 6,0

70 5,0

60 4,0
Mill active users

3,0
Net adds per month

50

40 2,0

1,0
30

0,0
20 J FMAM J J A SOND J FMAMJ J A SOND J FMAM J J A SO
2008 2009 2010
-1,0
10
-2,0
0
J FMAMJ J ASOND J FMAMJ J ASOND J FMAMJ J ASOND J FMAMJ J ASO
2007 2008 2009 2010 -3,0

Opera has seen great success in the land grab phase of the Opera Branded and
free version of Opera Mini. Opera now has 70 mill active users on a monthly basis,
and this is about double the level of a year ago. Currently Opera has a search
referral deal with Google which provides some income. The greater potential lies in
converting these users into licensed deals, which Opera has been successful with in
Russia so far. In addition there is great monetization potential with advertising, as
Opera controls the front screen of the browser. We also believe this user base is of
great strategic value. If development continues, Opera will with a strong brand
control the front screen of 100 – 150 mill emerging market web users, which
probably has a large value to the right buyer.

Page 4 8 November 2010 Fondsfinans Research

Preview 3Q10 Opera Software

Opera Model
2009 2010E 2011E 2012E 1q09 2q09 3q09 4q09 1q10 2q10 3q10E 4q10E
DESKTOP
Active users 39 238 49 609 49 907 49 907 34 500 37 950 38 500 46 000 52 000 49 000 47 530 49 907
ARPU USD 0,789 0,766 0,766 0,766 0,206 0,190 0,183 0,210 0,181 0,188 0,197 0,200
DESKTOP REVENUE MNOK 184,9 226,5 223,6 223,6 47,0 44,8 42,8 50,4 52,0 59,1 58,5 56,9
59 % 22 % -1 % 0%
OPERATORS
Quarterly active Mini users 1 200 5 891 16 456 28 842 1 100 950 1 100 1 650 2 500 4 500 6 817 9 749
Quarterly active Widget/turbo users 0 0 0 0 0 0 0 0 0 0 0 0
Licence per active user EUR 4,9 2,6 1,9 1,8 1,26 1,26 1,26 1,1 0,78 0,67 0,6 0,55
Mini licence revenue mNOK 50,4 115,8 251,6 416,4 12,4 10,6 12,1 15,2 15,8 23,9 32,5 43,5

Opera Mobile Shipments 8 400 9 539 10 510 10 720 2 100 2 100 2 100 2 100 2 500 2 300 2 346 2 393
Licence per shipment USD 0,4 0,4 0,4 0,4 0,4 0,4 0,4 0,4 0,4 0,4 0,4 0,4
Mobile licence revenue mNOK 21,1 23,0 24,6 25,1 5,8 5,5 5,1 4,8 5,9 5,7 5,8 5,6

Sum operator licence revenue NOK 71,5 138,7 276,2 441,5 18,2 16,0 17,3 20,0 21,7 29,6 38,3 49,1

Development income EUR 4,4 3,9 5,2 5,2 1,2 1,4 0,8 1,0 0,8 1,5 0,8 0,8
Development income NOK 38,5 31,2 42,7 42,7 10,8 12,4 7,0 8,4 6,5 11,9 6,4 6,5
Maintenance & support EUR 6,7 6,1 7,3 8,7 1,7 1,7 1,7 1,7 1,4 1,4 1,5 1,8
Maintenance & support NOK 58,3 48,7 59,8 71,7 15,0 14,8 14,6 14,0 11,1 11,1 11,9 14,6

OPERATORS REVENUE MNOK 168,3 218,7 378,6 555,9 43,9 43,2 38,8 42,4 39,3 52,6 56,6 70,2
73 % 30 % 73 % 47 %
MOBILE OEM
Opera Mobile shipments OEM 11 800 8 972 8 332 9 558 4 900 2 400 2 400 2 100 2 900 2 400 2 040 1 632
Licence per shipment USD 0,41 0,69 0,50 0,50 0,40 0,40 0,40 0,40 0,40 0,85 0,80 0,80
OEM Mobile licence revenue NOK 30,3 37,2 24,4 28,0 13,5 6,2 5,9 4,8 6,8 12,7 10,0 7,6
Share of segment 24,9 % 46,4 % 49,8 % 53,2 % 33 % 20 % 21 % 23 % 27 % 59 % 56 % 48 %

Development income EUR 10,4 5,4 3,0 3,0 3,0 2,9 2,6 1,9 2,3 1,1 1,0 1,0
Development income NOK 91,3 43,0 24,6 24,6 26,9 25,7 22,7 16,0 18,2 8,7 8,0 8,1
Share of segment 75,1 % 53,6 % 50,2 % 46,8 % 67 % 80 % 79 % 77 % 73 % 41 % 44 % 52 %

MOBILE OEM REVENUE MNOK 121,6 80,2 49,0 52,6 40,4 31,9 28,6 20,8 25,0 21,4 18,0 15,7
-25 % -34 % -39 % 7%
DEVICE OEM
Licence fees EUR 10,8 12,6 17,3 21,6 2,3 4,7 1,5 2,3 2,5 2,6 3,5 4,0
Licence fees NOK 94,5 101,2 141,9 177,4 20,6 41,6 13,1 19,1 20,3 20,6 27,8 32,5
Share of segment 77,3 % 75,7 % 78,4 % 78,4 % 73,0 % 84,7 % 63,8 % 79,0 % 69,4 % 69,3 % 77,8 % 83,3 %

Development income EUR 3,2 4,1 4,8 6,0 0,9 0,9 0,9 0,6 1,1 1,2 1,0 0,8
Development income NOK 27,7 32,5 39,1 48,8 7,6 7,5 7,4 5,1 8,9 9,1 8,0 6,5
Share of segment 22,7 % 24,3 % 21,6 % 21,6 % 27,0 % 15,3 % 36,2 % 21,0 % 30,6 % 30,7 % 22,2 % 16,7 %

DEVICE OEM REVENUE MNOK 122,1 133,6 181,0 226,2 28,2 49,1 20,5 24,2 29,2 29,7 35,8 39,0
7% 9% 35 % 25 %
MINI CONSUMER
Opera Mini users 32 872 68 099 108 597 143 520 23 075 26 464 35 635 46 314 55 275 59 469 71 073 86 578
ARPU USD 0,079 0,072 0,079 0,089 0,021 0,019 0,018 0,021 0,020 0,018 0,018 0,018
MINI CONSUMER REVENUE MNOK 14,3 27,3 48,4 73,0 2,9 3,1 3,5 4,9 5,9 6,3 7,0 8,1
115 % 91 % 78 % 51 %
Totals
Desktop 184,9 226,5 223,6 223,6 47,0 44,8 42,8 50,4 52,0 59,1 58,5 56,9
Operators 168,3 218,7 378,6 555,9 43,9 43,2 38,8 42,4 39,3 52,6 56,6 70,2
Mobile OEM 121,6 80,2 49,0 52,6 40,4 31,9 28,6 20,8 25,0 21,4 18,0 15,7
Devices OEM 122,1 133,6 181,0 226,2 28,2 49,1 20,5 24,2 29,2 29,7 35,8 39,0
Mini Opera Branded 14,3 27,3 48,4 73,0 2,9 3,1 3,5 4,9 5,9 6,3 7,0 8,1
SUM REVENUES 611,3 686,3 880,6 1 131,3 162,4 172,0 134,2 142,7 151,4 169,0 176,0 189,8
Growth 23 % 12 % 28 % 28 % 58 % 53 % 8% -9 % -7 % -2 % 31 % 33 %

Desktop 30 % 33 % 25 % 20 % 29 % 26 % 32 % 35 % 34 % 35 % 33 % 30 %
Operators 28 % 32 % 43 % 49 % 27 % 25 % 29 % 30 % 26 % 31 % 32 % 37 %
Mobile OEM 20 % 12 % 6% 5% 25 % 19 % 21 % 15 % 17 % 13 % 10 % 8%
Devices OEM 20 % 19 % 21 % 20 % 17 % 29 % 15 % 17 % 19 % 18 % 20 % 21 %
Mini Opera Branded 2% 4% 6% 6% 2% 2% 3% 3% 4% 4% 4% 4%

Revenue by type
Licence fees 196,3 277,1 442,5 646,9 52,3 63,9 36,2 43,9 48,7 62,9 76,2 89,2
Online content 199,2 253,8 272,0 296,6 49,9 47,8 46,2 55,3 58,0 65,3 65,6 64,9
Maintenance & support 58,3 48,7 59,8 71,7 15,0 14,8 14,6 14,0 11,1 11,1 11,9 14,6
Consulting 157,5 106,7 106,3 116,1 45,3 45,6 37,2 29,5 33,6 29,7 22,3 21,1
SUM 611,3 686,3 880,6 1 131,3 162,4 172,0 134,2 142,7 151,4 169,0 176,0 189,8

Licence fees 32 % 40 % 50 % 57 % 32 % 37 % 27 % 31 % 32 % 37 % 43 % 47 %
Online Content 33 % 37 % 31 % 26 % 31 % 28 % 34 % 39 % 38 % 39 % 37 % 34 %
Maintenance & Support 10 % 7% 7% 6% 9% 9% 11 % 10 % 7% 7% 7% 8%
Consulting 26 % 16 % 12 % 10 % 28 % 26 % 28 % 21 % 22 % 18 % 13 % 11 %

Source: FF research

Fondsfinans Research 8 November 2010 Page 5

Opera Software Preview 3Q010

DCF Valuation
NOK million 2009 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E Term.
Total net revenue 613 686 881 1 131 1 358 1 629 1 873 2 155 2 478 2 552
Revenue growth 23 % 12 % 28 % 28 % 20 % 20 % 15 % 15 % 15 % 3%
OPEX (ex. depr., option cost) 531 540 631 764 950 1 140 1 311 1 508 1 734 1 786
EBITDA 82 146 249 368 407 489 562 646 743 766
EBITDA margin 13 % 21 % 28 % 32 % 30 % 30 % 30 % 30 % 30 % 30 %
Depreciation 13 23 44 63 54 65 75 86 99 102
EBIT 54 106 186 280 353 424 487 560 644 664
EBIT Margin 9% 15 % 21 % 25 % 26 % 26 % 26 % 26 % 26 % 26 %
Calculated tax 15 30 52 79 99 119 136 157 180 186
Cashflow from operations 52 100 177 265 308 370 426 490 563 580
Net investments wc -44 -55 -33 -43 23 27 24 28 32 7
Net investments assets 43 79 41 49 54 65 75 86 99 102
Net cash flow 53 76 169 259 232 278 326 375 432 470
Years 0 0,1 1,1 2,1 3,1 4,1 5,1 6,1 7,1 7,1
Discounted cash flow 0 75 152 211 172 187 200 209 219 238

ASSUMPTIONS
Beta 1,2
Net present value CF 11-12 363 Risk premium after tax 5%
Net present value CF 13-17 987 Risk free rate 4%
NPV terminal value 3 415 Tax 28,0 %
Estimated EV 4 764 Return equity 10,0 %
Net cash 31.12.10 -586 Return debt 0,0 %
Value equity 5 350 Debt ratio 0,0 %
No. of shares (fully diluted) 127,2 WACC 10,0 %
NPV share NOK 42 WC/Sales 10 %
Capex/Sales 4%
NPV today 41

Source: FF research

Page 6 8 November 2010 Fondsfinans Research

Preview 3Q10 Opera Software

Cash flow and balance

INCOME STATEMENT 2008 2009 2010E 2011E 2012E 1q10 2q10 3q10E 4q10E 1q11E 2q11E 3q11E 4q11E
PC/Desktop 116 185 227 224 224 52 59 59 57 53 55 58 58
Internet Devices 381 428 460 657 908 99 110 117 133 144 156 170 186
Revenues 497 613 686 881 1 131 151 169 176 190 197 211 228 245
Growth 58 % 23 % 12 % 28 % 28 % -7 % -2 % 31 % 33 % 30 % 25 % 29 % 29 %
Operating expenses 408 545 557 651 788 141 135 135 147 157 159 161 175
EBITDA 89 68 129 229 344 10 34 41 43 40 52 67 70
EBITDA margin 18 % 11 % 19 % 26 % 30 % 7% 20 % 23 % 23 % 20 % 25 % 29 % 29 %

Depreciation 8 13 23 44 63 5 6 6 7 8 10 12 14
EBIT 81 54 106 186 280 5 29 35 37 32 42 55 56
EBIT margin 0 0 0 0 0 0 0 0 0 0 0 0 0

Net financial items 24 10 10 16 22 2 2 3 3 4 4 4 5

Pre-tax profit 130 44 83 202 303 -22 27 38 40 36 46 60 61

Income tax -40 -14 -23 -57 -85 6 -7 -11 -11 -10 -13 -17 -17
Net Income 90 31 60 146 218 -16 19 28 29 26 33 43 44
Adjustments 17 -14 -24 0 0 -21 -3 0 0 0 0 0 0
Net Income adjusted 73 45 84 146 218 5 22 28 29 26 33 43 44

EPS basic 0,8 0,3 0,5 1,2 1,8 -0,1 0,2 0,2 0,2 0,2 0,3 0,4 0,4
EPS adjusted 0,6 0,4 0,7 1,2 1,8 0,0 0,2 0,2 0,2 0,2 0,3 0,4 0,4

Cash flow 2008 2009 2010E 2011E 2012E 1q10 2q10 3q10E 4q10E 1q11E 2q11E 3q11E 4q11E
Net profit 90 31 60 146 218 -16 19 28 29 26 33 43 44
Other 60 33 60 96 130 5 20 15 20 17 23 27 29
Cash flow operations 150 64 119 242 348 -10 39 42 48 43 56 70 73
Net investments -17 -43 -79 -41 -49 -52 -7 -8 -12 -8 -8 -9 -15
Free cashflow 132 20 40 201 299 -62 32 35 36 35 47 61 58
Cash flow from finance -36 -37 -1 0 0 -1 0 0 0 0 0 0 0
Net change in cash 97 -17 40 201 299 -63 32 35 36 35 47 61 58

Balance sheet 2008 2009 2010E 2011E 2012E 1q10 2q10 3q10E 4q10E 1q11E 2q11E 3q11E 4q11E
Cash 564 562 586 787 1086 483 516 550 586 621 668 729 787
Trade rec. and other 185 161 282 363 469 225 251 261 282 293 313 338 363
Total current assets 748 723 868 1 150 1 555 708 766 811 868 914 981 1 067 1 150
Fixed assets 32 43 55 52 38 46 48 49 55 55 54 51 52
Intangible fixed assets 16 56 151 151 151 151 151 151 151 151 151 151 151
Total non-current assets 48 99 206 203 189 198 199 200 206 206 205 203 203
Total assets 796 822 1074 1354 1744 906 965 1012 1074 1120 1186 1269 1354

Equity 598 603 679 844 1086 591 614 646 679 709 747 795 844
Liabilities 199 219 395 509 658 315 352 366 395 411 439 474 509
Total equity & liabilities 796 822 1 074 1 354 1 744 906 965 1 012 1 074 1 120 1 186 1 269 1 354

Key Figures 2008 2009 2010E 2011E 2012E 1q10 2q10 3q10E 4q10E 1q11E 2q11E 3q11E 4q11E
Working capital -14 -58 -113 -146 -189 -90 -101 -105 -113 -118 -126 -136 -146
Net int. bearing debt -564 -562 -586 -787 -1086 -435 -516 -550 -586 -621 -668 -729 -787
DSO 134 94 148 148 149 134 134 134 134 134 134 134 134

Source: Opera / FF Research

Fondsfinans Research 8 November 2010 Page 7

Opera Software Preview 3Q010

Revenue break-down Revenue and revenue growth

200 200 100 %
180 180
160 160 80 %
140 140 60 %

Growth Y/Y
120 120
MNOK

MNOK
100 100 40 %
80 80
60 60 20 %
40 40 0%
20 20
0 0 -20 %

3q10E
1q09

2q09

3q09

4q09

1q10

2q10

3q10E
1q09

3q09

1q10
PC/Desktop Internet devices Revenues Growth Curradj growth

OPEX breakdown Revenue and OPEX growth

160 70 %
140 60 %
120 50 %

Growth rate
40 %
100
30 %
80
20 %
60
10 %
40 0%
20 -10 %
0 -20 %
1q09

3q09

1q10

3q10E
3q10E
1q09

2q09

3q09

4q09

1q10

2q10

Payroll expenses Other operating costs Revenue growth OPEX growth EBITDA Margin

EBITDA and margin Active users Mini Opera Branded

45 50 % 80
40
40 % 70
35
30 30 %
60
25 20 %
Mill active users

20 50
15 10 %
10 0% 40
5
-10 % 30
0
-5 -20 %
20
3q10E
1q09

3q09

1q10

10
EBITDA Margin
0
J FMAMJ J ASOND J FMAMJ J ASOND J FMAMJ J ASOND J FMAMJ J ASO
2007 2008 2009 2010

Licensed users Mini OEM Model Users and ARPU desktop

9,0 60 000 0,215

8,0 0,210
50 000
0,205
7,0
0,200
40 000
6,0
Mill active users

0,195

5,0 30 000 0,190

0,185
4,0
20 000
0,180
3,0
0,175
10 000
2,0 0,170

1,0 0 0,165
4q07 1q08 2q08 3q08 4q08 1q09 2q09 3q09 4q09 1q10 2q10 3q10E

0,0 Active users ARPU

J FMAMJ J ASONDJ FMAMJ J ASOND J FMAMJ J ASOND J FMAMJ J ASO
2007 2008 2009 2010

Page 8 8 November 2010 Fondsfinans Research

Preview 3Q10 Opera Software

Risk assessment
Risk must be regarded Opera is exposed to several risk factors. The future in the mobile market is very
high uncertain, with Microsoft and Nokia developing own mobile browsers, and
Operas present technological leadership might not last. At the same time the
structure in the market is hard to predict, operators wants more advanced
phones in order to sell more services, but need to give producers an incentive.
Market shares within different segments are also difficult to predict as well as the
development in number of different phones.

Furthermore the company is highly sensitive to the US dollar. All desktop income
from licenses is in US dollars while a significant part of mobile income also is in
dollar. Totally, the split between dollars and euro are approximately equal.

The upscale of business will also involve some risk factors. The company will
hire several employees this year, to prepare for further growth. This is a move of
investing in future, however, if growth remains slow, the company will still suffer
from high costs.

Fondsfinans Research 8 November 2010 Page 9

Opera Software Preview 3Q010

Definitions of ratings
Buy Low risk: with a potential of min 5%. Medium risk: with a potential of min 10%. High risk: with a
potential of min 15%.
Neutral Low risk: -5% to +5%. Medium risk: -10% to +10%. High risk: -15% to +15%.
Sell Low risk: min 5%. Medium risk: min 10%. High risk: min 15%.
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 25.10.10: Companies in each recommendation category that have been
investment banking clients over the past 12 months:
Recommendation No Percent Recommendation No Percent
Buy 43 80 % Buy 9 21 %
Neutral 7 13 % Neutral 0 0%
Sell 4 7% Sell 0 0%
Total 54 100 % Total 9

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.
The analyst is partner in DIS Fondsfinans.
Fondsfinans is under supervision of The Financial Supervisory Authority of Norway.
The recommendation has not been changed. The previous recommendation was issued 26 August 2010.

Ownership per 08.11.10 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.

This report was issued and distributed 08.11.10.

Page 10 8 November 2010 Fondsfinans Research

 OPERA SOFTWARE Analyst: Arild Nysæther +47 23 11 30 82

Sector: Technology Price (NOK): 29,8 Shares outs.: 119,6m

Date: 08 Nov 2010 Market cap (NOKm): 3 563
Next result: 15 Nov 2010 Book equity per share (NOK): 5,4 Net int.-bearing debt (NOKm): -550
Target: 40,0 Equity ratio: 64 %
Recommendation: Buy 12 month high/low: 29,2 / 16,1 Enterprise value (NOKm): 3 013

Numbers in NOKm 2008 2009 2010E 2011E 2012E 3q09 4q09 1q10 2q10 3q10E
Operating revenues 497 613 686 881 1 131 134,8 142,6 151,4 168,9 176,0
Growth Y/Y 57 % 23 % 12 % 28 % 28 % 8% -9 % -7 % -2 % 31 %
Growth Y/Y const. currency 56 % 14 % 20 % 28 % 28 % -3 % 3% 6% 6% 38 %
OPEX (excl depreciation) 408 545 557 651 788 135,4 134,6 141,1 134,6 134,7
EBITDA 89 68 129 229 344 -0,6 8,0 10,3 34,3 41,3
Depreciation 8 13 23 44 63 4,0 3,3 4,9 5,6 6,1
EBIT 81 54 106 186 280 -4,6 4,7 5,4 28,8 35,1
Net financial items 49 -10 10 16 22 2,0 2,3 1,9 1,8 3,2
Pre tax profit 130 44 116 202 303 -2,7 6,9 7,4 30,6 38,4
Tax -40 -14 -23 -57 -85 4,5 -3,0 6,1 -7,5 -10,7
Profit/loss reported 90 31 93 146 218 1,8 3,9 13,4 23,1 27,6

Adjustments 17 -14 0 0 0 0,0 1,0 1,0 1,5 2,0

Adjusted profit/loss 73 45 93 146 218 1,8 2,9 12,4 21,6 25,6

Cash earning reported 98 44 83 189 281 -8,0 7,3 -10,7 24,7 33,8
Cash earnings adjusted 81 58 107 189 281 2,1 7,3 10,2 27,6 33,8
EBITDA margin 18 % 11 % 19 % 26 % 30 % 0% 6% 7% 20 % 23 %
EBIT margin 16 % 9% 15 % 21 % 25 % -3 % 3% 4% 17 % 20 %
Pre tax margin 26 % 7% 12 % 23 % 27 % -12 % 5% -14 % 16 % 22 %
REVENUE PER SEGMENT
Desktop 116 185 227 224 224 43 50 52 59 59
Operators 98 168 219 379 556 39 42 39 53 57
Mobile OEM 162 122 80 49 53 29 21 25 21 18
Device OEM 114 122 134 181 226 21 24 29 30 36
Consumer 7 14 27 48 73 3 5 6 6 7
Sum 497 613 686 881 1 131 135 143 151 169 176

% CHANGE (YoY)
Desktop 73 % 59 % 22 % -1 % 0% 53 % 20 % 11 % 32 % 37 %
Operators 73 % 30 % 73 % -5 % -20 % -14 % -14 % 28 %
Mobile OEM -25 % -34 % -39 % 71 % 65 % 66 % 56 % 53 %
Device OEM 7% 9% 35 % 27 % 27 % 24 % 21 % 21 %
Consumer 115 % 91 % 78 % 3% 2% 3% 3% 3%
Sum 57 % 23 % 12 % 28 % 28 % 8% -9 % -7 % -2 % 31 %
Shares outstanding 119,5 119,5 119,5 119,5 119,5 119,5 119,5 119,5 119,5 119,5
Share price 17,9 20,1 29,8 29,8 29,8 22,5 20,1 29,8 29,8 29,8
Dividend 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0
EPS adjusted 0,61 0,38 0,70 1,22 1,82 -0,02 0,03 0,04 0,18 0,23
CEPS adjusted 0,68 0,49 0,90 1,58 2,35 0,02 0,06 0,09 0,23 0,28

P/E adjusted 29,4 53,2 42,6 24,5 16,4 Sensitivity EPS estimates 2010 2011
P/E adjusted excl current cash 21,7 77,9 57,5 22,5 14,9 Base estimates 0,70 1,22
P/CEPS adjusted 26,4 41,1 33,3 18,8 12,7
EV/SALES 3,2 3,0 4,4 3,4 2,7 + / - 10% sales growth 0,41 0,53
EV/EBITDA 17,7 27,2 23,0 12,1 7,2 + / - NOK 5m OPEX 0,03 0,03
EV/EBIT 19,5 33,9 28,1 14,9 8,8
P/BOOK 3,6 4,0 5,2 4,2 3,3
Return on equity (adj.) 12,9% 7,5% 13,1% 19,1% 22,6%

Numbers in NOKm 2008 2009 2010E 2011E 2012E 10 largest shareholders as of 2010-08-16

Current assets 748 723 868 1 150 1 555 Name %

Fixed assets 48 99 206 203 189 Jpmorgan Chase Bank Na 17 000 14,2 %
- of which goodwill 4 18 109 109 109 Mozart Invest As 15 000 12,5 %
Total assets 796 822 1 074 1 354 1 744 Arepo As 14 012 11,7 %
Liabilities 199 219 395 509 658 Ludvig Lorentzen As 10 150 8,5 %
Shareholders' equity 598 603 679 844 1 086 Skandinaviska Enskilda Banken 4 470 3,7 %
Sundt As 4 405 3,7 %
Book equity/share 5 5 6 7 9 Vital Forsikring Asa(Omløp) 3 059 2,6 %
Equity ratio 75 % 73 % 63 % 62 % 62 % Dnb Nor Nordic Technology Vpf 2 092 1,7 %
Net int. bear. debt -564 -562 -586 -787 -1086 Holberg Norge 1 627 1,4 %
Net int. bear. debt/equity -94 % -93 % -86 % -93 % -100 % Dnb Nor Smb Vpf 1 210 1,0 %
Cashflow statement Total 10 largest 73 025 61,1 %
Cashflow from operations 150 64 119 242 348 Others 46 550 38,9 %
Net investments -17 -43 -79 -41 -49 Total 119 575 100 %
Free cashflow 132 20 40 201 299

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