AdColony shoots down Opera Software’s Q1 to USD15 million loss


Opera Software, the mobile browser company said has just reported a net loss of USD15 million for the first quarter of the year.

Its loss for the quarter is a slight improvement from its last year’s performance when it reported a net loss of USD17.78 million.

The result also shows that the Oslo-based company also saw a significant decline in its revenue for the first quarter fell by 17% year on year.

The significant fall was attributed to its AdColony which saw its revenue dip to USD107.4 million compared to gross revenue of USD129.1 million recorded within the same quarter in 2016.

AdColony is its mobile advertising unit which accounts for more than 70% of its revenue base. A year on year decline is a sign of worry that the company might not be able to get back into profit anytime soon.

Growth in the company’s Bemobi and SurfEasy unit drastically offset the loss but was not enough as its adjusted EBITDA declined to USD0.5 million compared to USD10.0 million in 2016.

The company will need to cap its leverage as total borrowing has grown to USD100.1 million compared to USD35.0 million last year. Total asset position also fell to USD774.9 million compared to USD915.3 million posted last year. Liabilities are however smaller down to USD274.1 million versus USD562.9 million last year.

Giving an insight into its leverage portfolio, Opera noted in its report to its shareholders that:

in November 2016, Opera signed an agreement with DNB Bank ASA for a secured credit facility of $150 million (of which
$100 million is a term loan and $50 million is a Revolving Credit Facility). As at 31 March 2017, $100 million is outstanding.

The revolving facility is undrawn, whilst the term loan is fully outstanding.

The facility is primarily secured by a pledge in shares in Opera Distribution AS, Opera Mediaworks Holding AS,
and Performance and Privacy Ireland Ltd, as well as charges over trade receivables in the parent company.
The loan and credit facility have the following covenants: A) i) the Leverage Ratio to be below 2.00:1. B) the Equity Ratio to hold the minimum level of 30%. The Group is compliant as at March 31, 2017.

To get back into profit, Opera will need to expand its coverage into other markets. Earlier this week, the company announced it will be spending a total of USD100 million across Africa, with USD10 million coming to Nigeria’s Internet and content ecosystem.

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