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Opera Lowers Earnings Estimate; Open To Buyout Offers

August 10, 2015 - Written By Kishalaya Kundu

Norwegian software company Opera Software ASA is reportedly considering a buyout and says that it has a number of potential investors who are interested in buying out the firm. The company on Saturday, released a statement to that effect, saying that it would be interested in a buyout offer, or even a strategic partnership of some sort, now that it is getting feelers from a number of interested parties. The company also said that it is being advised on any possible deal by bankers at Morgan Stanley International and ABG Sundal Collier. The final decision on the matter is expected to be taken by the end of the year.

While Opera as a company is primarily known for making the eponymous internet browser, the main source of income for the firm comes from its online advertising business, which grew 45 percent in the last quarter over the same period last year. According to numbers released by the company, in Q2, 2015, the company earned revenues of $146 million, which fell below the earnings estimates of seven analysts polled by Reuters. While a 45 percent YoY increase seems an extraordinarily handsome return, the seven aforementioned analysts had estimated the company’s revenues to grow by 51 percent.

Opera says, the firm’s lower-than-expected income is a result of the company’s mobile advertising business not doing as well as it had provisioned for. Opera’s Q2 guidance showed an expected EBIDTA of $29 million, while the analysts had predicted $30.6 million. The company’s current revenue guidance for the full year 2015 is between $600 and $618 million, which falls short of its previously released guidance of $630 – $650 million. The company also cut its adjusted full-year EBITDA guidance to $108 million – $118 million from an earlier estimate of $130 million – 140 million. The aforesaid analysts meanwhile, had an expectation of $124 million overall. This was the second time the company revised its guidance downwards this year. Back in February, the company lost 44 percent of its market value in a single trading session following a revised earnings guidance, which warned of lower-than-expected growth.

On a separate note, Opera also announced the acquisition of Brazilian subscription-based Android app-store called Bemobi. The terms of the deal suggest that the Norwegian company paid $29.5 in cash up front and will be required to pay up to $139.5 million, depending on Bemobi’s future financial performance. According to Opera, “The entire earn-out payment, which is tied to aggressive performance targets will be paid out from actual free cash flow generated from the Bemobi products and services, meaning that the transaction will be self-funded after closing”.