Opera Software, the Norway-based company that makes browsers for mobile and other devices, today reported its quarterly results and announced another acquisition along the way: apprupt, a mobile startup based out of Germany that focuses on rich media advertising, which will become part of its Opera Mediaworks advertising subsidiary. The news comes as Opera reported first quarter sales of $87 million, up 40% over the same quarter a year ago.
However, its earnings per share dropped by quite a bit: undiluted EPS was only $0.019 diluted EPS was $0.018 versus to $0.030 and $0.029, respectively, a year ago — perhaps a mark of the investment it has been making into new products to grow revenue in the future. New launches included Opera Max, a data-savings app that Opera hopes will drive more users to its services; and an update to its ad exchange with more programmatic services.
Opera is not disclosing the terms of the apprupt deal. “The size of the transaction and it’s contributions to Opera revenue and earnings are not material today, so we are not disclosing the terms of the transaction,” Mahi de Silva, CEO of Opera Mediaworks, said in an interview. Apprupt had raised funding of an undisclosed amount (at least “seven-digit euros”) from investors that include T-Venture (a subsidiary of Deutsche Telekom), Neuhaus Partners and KfW.
This is Opera’s eighth acquisition in the last four years, and there is apparently more to come. “We are actively looking for opportunities to extend our platform to deliver more value to our current and prospective customers around the world,” de Silva says.
That’s a sign of more consolidation in the online advertising space, and also of how bigger players are looking for more ad tech to enhance their basic offerings as a way of monetizing better in what is otherwise a low-margin space and competing better against the likes of Google, currently the leader in mobile advertising.
To monetise browser services and provide a supplement to licensing revenues Opera makes from deals with carriers who use its services, Opera has been building up its advertising business for some time now. AdMarvel, which it acquired in 2010, has been at the center of its rich media services in particular, which give advertisers the ability to include more dynamic ad formats such as video to complement more basic ad formats like search.
The idea with apprupt is twofold. It will help Opera to build out its business further in Germany specifically — apprupt says it reaches 22 million mobile users currently, and includes publishers like Bauer, IDG and Tomorrow Focus Media among its 250 mobile websites and apps. The company projects that the German ad market will be worth some $1.8 billion by 2017.
And it will also be used to expand Opera’s wider efforts in rich media advertising worldwide. “The DNA of the apprupt team is very complementary to the DNA of Opera Mediaworks: entrepreneur-driven, focused on technology and innovation, and driving more efficiency and transparency in the marketplace,” de Silva says. “Apprupt has developed unique offerings ranging from creative tools to ad management, campaign optimization and reporting that will get integrated into the Opera Mediaworks technology platform.”
At the moment, it makes sense for Opera to put more investment into its advertising business: it accounts for the biggest proportion, although not the majority, of its revenues. Opera noted today that Mobile Publishers and Advertisers generated Q1 revenues of $31.7 million in Q1, up 72% over a year ago. Compare that to its two next-biggest revenue streams, Mobile Operators with $18.6 million (up 47%) and Desktop Consumers with sales of $18.5 million — up only 6%, with total audience of 51 million and continuing to decline, a sign of the bigger mobile shift worldwide.
Total mobile ad impressions were 187 billion, up 24%, indicating that Opera is managing to squeeze more revenue growth out of less traffic growth. Still, you could argue that it needs to do more to keep pace with the wider mobile ad market: eMarketer in March estimated that mobile ad spend globally jumped by more than 100%.