Opera Software Q3 2009 Financial Results

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1. nobody says:

   November 16, 2009 at 6:11 am

   well, it doesnt look that good.

   it is second quarter of desktop decline (that means either: user base decrease OR (more probably) reduced effectiveness of business model used to create income per one desktop user (ie. not prolonged deals with search providers, or prolonged, but on worse terms)

   and given, that payrol generates most costs – as in all companies – it cant be said, that it is a problem with currency ratios – only part of workforce is in norway.

   in general, maybe theyll do something with their product so users want to use it, not on various deals with other companies. these companies will be interested only if opera is used by users. same with mobile carriers – they will buy it only if opera delivers website compatibility similar to webkit browsers (it doesnt now) and cost of buying it from opera is lower than developing it inhouse. not to mention, that opera mobile has limited number of platforms supported, while webkits are almost everywhere..

   ps. that ‘summary’ part is amazing bable

   • Crackerflack says:

     November 16, 2009 at 7:26 am

     The USD has weakened considerably compared to the NOK, and since Opera has Google as a desktop revenue generator it should go without saying that the slower revenue growth is due to these less than ideal exchange rates.

     Most of Opera’s income is in USD and EUR. Most of their expenses are in NOK. It goes without saying that the way the NOK has been getting stronger and stronger was going to impact the revenues and expenses.

     Also, as they explain in their presentation, they’re transitioning from a lot of non-recurring engineering revenue to more focus on standardized products with licensing and revenue sharing contract, which means that they lost those non-recurring engineering revenues right now. License sales are still as high as expected. So it looks like it’s the dropping of NREs which is causing slower growth.

     But that’s just right now.

     Opera runs on more platforms than anything else, by the way. Even more platforms than WebKit.

     What’s wrong with the summary? I can’t see anything wrong with it what so ever. Considering that they have said that signed contracts sometimes don’t materialize as significant revenue until up to 12-18 months later, they obviously know what kind of revenue they are expecting in the coming months.

2. nobody says:

   November 16, 2009 at 8:33 am

   “The USD has weakened considerably compared to the NOK, and since Opera has Google as a desktop revenue generator it should go without saying that the slower revenue growth is due to these less than ideal exchange rates.

   Most of Opera’s income is in USD and EUR. Most of their expenses are in NOK. It goes without saying that the way the NOK has been getting stronger and stronger was going to impact the revenues and expenses.”

   this problem of currency exchange is normaly reduced with something called ‘options’. these are used to secure company from unpleasant effects of exactly what happened now. it is a kind of insurance. im sure that opera knows what these are, and is using them. so blaming everything on bad ratios is rather avoiding answering some tought questions rather than pointing real answer.

   “Also, as they explain in their presentation, they’re transitioning from a lot of non-recurring engineering revenue to more focus on standardized products with licensing and revenue sharing contract, which means that they lost those non-recurring engineering revenues right now. License sales are still as high as expected. So it looks like it’s the dropping of NREs which is causing slower growth.”

   i wander what these NRE are in case of opera, and what percentage of their commitment. if they are willing to sell wrap-boxed software, then they sure has to know who is going to buy it. ofc they will not tell this, but it is a surprising move. esp on mobiles, where almost every phone needs a bit of work to make it work with browser. so standarisation isnt possible, and this part of NRE (if i understand it right) is, and will make a major part of effort.

   or maybe they are going to outsource it? but this only shifts expenses, not reduces them.

   about summary? aside from lots of words, no information, for me the ‘focus on operators’ part is quite amusing.

   this will work ONLY if there is no competition, because opera mobile now is less attractive product than webkit browser (for end user) and after major ports on various systems are available (and these will be mostly free) it will also be less attractive for customers.

   and there is mobile firefox around, that had much improved and it has HYPE, something marketing guys in big corporations like very much. i doubt that ignoring desktop (because this is what opera does) is all that briliant move – most mobile and internet devices ARE NOT branded with opera logo… (wii channel..)

   • Crackerflack says:

     November 16, 2009 at 9:54 am

     I’m not sure how you expect options to make up for the currency situation for the USD. If you look at the graphs the major jump in Q4 of 2008 coincides with an unusually strong USD. The USD has now started weakening, and has weakened considerably.

     Opera has a huge pile of cash in the bank anyway so it’s not like they are in trouble.

     But if you ignore the 3 quarters where the USD was unusually strong you will see that this quarter seems to be more in line with the kind of growth Opera had been seeing until Q3 of 2008. There is nothing to answer here because the currency situation explains it all.

     What NREs are in Opera? Like most software companies, I would guess: You do work on the application to adapt it to the customer’s requirements. And what they are saying it that they are doing a lot of work to standardize products and make them easier to customize. That’s part of the expenses through 2009 at least, and you probably noticed Opera Mobile 10 and Opera Mini 5 using the same UI?

     Outsourcing will reduce expenses because Opera Software is based in Norway. Norway is one of the most expensive countries in the world. You think it’s strange that Opera has grown massively in countries like Poland? They recently opened a second office there.

     Lower wages = lower expenses.

     Opera seems to be very attractive to operators. And there doesn’t need to be no competition. Competition is fine. The market is huge. But it’s interesting that everyone from Vodafone to T-Mobile to Verizon to AT&T are going for Opera. You got the recent AT&T announcement, right?

     I don’t see how Opera is ignoring the desktop. If you look at the desktop blog, they have a lot of people working in the desktop department, and desktop revenue is a 3rd of their total revenue.

     Mobile Firefox is a lot of hype, but they haven’t really delivered a whole lot yet. They even put Windows Mobile and Symbian on the backburner, and are now focusing on Android and Maemo. Apparently it wasn’t as easy as everyone thought to port a desktop browser to mobile phones.

     BTW, Opera Mini 5 and Mobile 10 have gotten a lot of hype too, and that was after people actually got to test them. During the Opera presentation, they explained that there was a lot of interest from OEMs and operators about Mini5 and Mobile10.

     This whole discussion is rather pointless thought, because it seems more and more likely that Opera will be bought up by some major company.

     • nobody says:

       November 16, 2009 at 10:36 am

       “This whole discussion is rather pointless thought, because it seems more and more likely that Opera will be bought up by some major company.”

       oooh? why? this is something that on the other hand i find highly unlikely. opera main asset is their browser engine. all other is useless without that engine. it is cheaper to hire 20 guys and have them adapt webkit (or 200 guys, it is still cheaper than going trough not so fun proces of buying and destroying another company). takeovers are really expensive. most probably is, that some parts can be interesting to major players (what players?) but a company as a whole? not likely.

       apple? no. MS? no. any of the phone manufactures? not likely, opera has too many deals with other manufactures. carriers? not their part of the business.. mozilla? what for.. opera is needed for others to be their idea/test playground. not really dangerous competitor, but stable provider of good ideas (and bad execution). i think that it is best in interest of all parties that opera survives as an independant entity.

       really, if you have any clues, please, tell who is going/might be interested in aquiring opera?

       btw. outsourcing sensitive and highly specialised work (like dealing with new models of phones and software) is rarely an option companies take with pleasure. securing work environment costs more than you can save on differences between wages, and this is very long term investment.

       • Crackerflack says:

         November 16, 2009 at 10:48 am

         There’s more to a browser than an engine. And considering how long it took even Google to produce a WebKit browser it seems that it’s actually quite expensive and time-consuming. No, it is not necessarily cheaper to use WebKit. Remember, once you create a browser it’s a long-term investment. And WebKit is dominated by Apple. It would be in the interest of a lot of companies to not use an engine tweaked to perfectly suit Apple’s needs, but not necessarily everyone else’s.

         Deals with other manufacturers doesn’t mean that one of them can’t buy Opera. In fact, it might be a good idea since they could cancel all these other contracts as soon as possible, giving themselves a competitive advantage.

         Opera Mini alone makes Opera a highly tempting acquisition target for operators, so that’s another possibility. Look at all the operator deals, and imagine the massive advantage the purchaser would have over other operators. There’s a reason why operators are throwing themselves at Opera.

         Call it outsourcing, or call it something else. Opera is setting up offices all over the world and filling them with people, and most places in the world have much cheaper labor than Norway.

         So who could buy Opera? Any major operator, or any major consumer electronics company. A lot of companies are producing a huge range of products, and Opera being the most portable browser would be the easiest solution to get a browser on all the buyer’s devices.

         • DonkeyKong says:

           November 16, 2009 at 12:58 pm

           Opera has also nearly 100 million monthly users and that aslo could be interesting for some who want a quick start in this marked.

           http://my.opera.com/chooseopera/blog/2009/11/10/opera-talks-tor-odland

           My self hope that Opera will do it on their own, we need at least ONE software company in Europe:)

3. Eice says:

   November 17, 2009 at 12:25 am

   Is it just me, or are conversations much more informative and interesting to read when Th(r)oe(ll) isn’t around? :)

   • Crackerflack says:

     November 17, 2009 at 3:32 am

     Good job trying to sabotage the discussion by posting pointless spam like that. Look in the mirror, ok?

     • Eice says:

       November 17, 2009 at 4:54 am

       … or maybe I spoke too soon.

       • nobody says:

         November 17, 2009 at 5:23 am

         you certainly did, it isnt that easy to change personality, but it was a good attempt

         anyway, back on topic :)

         • Thoe says:

           November 17, 2009 at 6:12 am

           Why are you talking to yourself? Pathetic.