Opera Software revenue down 17% due to drop in AdColony mobile advertising sales

Opera Software revenue results were down 17% to $107 million year-on-year. Adjusted EBITDA dropped from $10 million to $5 million over the course of a year.

In its earnings call, Petter Lade, Opera Software AS, explained that the decline was largely due to lower mobile advertising revenue from the company’s AdColony venture. He added that the decline may be seasonal given that Q1 2016 EBITDA was up 41%.

Lars Rabaek Boilesen, Opera Software ASA, added:

“If we start with AdColony, clearly revenue down. If we look where the revenue is down is performance. It’s down $22 million compared to this quarter last year. The main reason for that is that Q1 last year was really very strong month with a lot of new hit games being launched. […]The SDK of AdColony continues to gain more publisher. And we now have an audience reach of 1.9 billion, so it’s actually up 0.5 billion compared to same quarter last year.”

The company attributes the decline in revenue to a delay in launching its new products during Q4 2016. However, it expects AdColony to recover and increase revenue during 2017 overall, compared to the previous year.

Will Kassoy, CEO AdColony, explained that though performance advertising was down 30% due to larger competition for mobile video supply and pricing, the company is beta testing a range of new ad formats such as vertical video and has boosted supply outside of its SDK with Apollo VII.

“[W]e continue to add bid density by adding 24% more advertisers and campaigns and we continued strong global expansion across APAC and EMEA. In terms of focus today, we have clear line of sight to additional global launches from key AAA advertisers in Q2 and Q3. The vertical video launched in Q1 and continues to ramp up rapidly with the adoption of the new SDK. Our Post Install Event optimization products finished development in Q1 and we’re starting to bring these to market in Q2. And last, we’ve got Apollo VII. The development is complete. We started beta testing with the extended test and tune cycles. For brand advertising, just looking first at our Managed IO and brand performance, we delivered $39.8 million in revenues, a 3% decline from prior year. Highlights include the brand performance business, which achieved 116% growth as we continue to see brand advertisers be more performance-focused. This is one reason why we saw a decline in video as a majority of brand performance is display-based.”