REALIZING THE POTENTIAL ANNUAL20 REPORT20 Otello Corporation ASA Q4 Table of contents $259M $86.1 M Otello Corporation ASA - Annual Report 2020 Group Overview 04 CEO Letter 08 AdColony 10 Bemobi 20 Skyfire 40 Vewd 44 Q3 Shareholder information 48 $172.9M Representation of Board of Directors 52 $63.2M Report from the Board of Directors 54 Otello Group financial statements 72 Parent company financial statements 132 Auditor’s report 156 Declaration of executive compensation policies 162 Principles of corporate governance 166 Q2 $109.7M $54M Q1 $55.7M Revenue of 2020 2 OTELLO CORPORATION ASA - ANNUAL REPORT 2020 OTELLO CORPORATION ASA - ANNUAL REPORT 2020 3 2015 ACQUIRED ADQUOTA 2016 LINKEDIN BUSINESS OPERA 1997 2005 2010 2018 2019 2021 2013 CHANGED ACQUIRED FIRST WEB OPERA MINI ACQUIRED BROWSER ADCOLONY NAME TO NOVITECH BROWSER RELEASED ADMARVEL ACQUIRED 2015 BUSINESS SOLD RELEASED SKYFIRE OTELLO ACQUIRED SOLD CORPORATION BEMOBI 1995 2004 2014 2016 2017 OPERA OPERA 2015 MAJORITY SURFEASY ACQUIRED ACQUIRED STAKE IN 2021 SOFTWARE LISTED ON OSLO VEWD SOLD TO ADCOLONY SURFEASY BEMOBI FOUNDED STOCK EXCHANGE SOLD SYMANTEC IPO holder in Bemobi Brazil with an ownership believers in AdColony, its people and its prod- below 50%. Consequently, Bemobi financials ucts, but also see the need to participate in An exciting journey will not be consolidated into Otello’s accounts a consolidating market where bigger is better going forward but will be booked according to and we believe that Digital Turbine, with its As we entered 2021, two major events oc- the Bovespa stock exchange in Brazil, Febru- the equity method. massive user base, extensive global relation- curred after the reporting period. AdColony ary 9, 2021, and had its first day of trading ships and distribution, will be uniquely posi- was sold to Digital Turbine and the Bemobi on February 10, 2021, on the São Paulo stock AdColony sold to Digital Turbine tioned to benefit via the seamless integration IPO was successfully completed. exchange (“Secondary Greenshoe”) under the On February 26, 2021, it was announced that of AdColony’s mobile video advertising exper- ticker symbol “BMOB3”. The price was set of AdColony was sold to Digital Turbine for a tise and global brand advertiser awareness. Bemobi IPO successfully completed R$22.00 per common share for its Initial Public total estimated consideration of $400 mil- The combination will yield a highly-differen- On February 9, 2021, it was announced that Offering (IPO), determined after completion lion. AdColony has been a very successful tiated and more vertically-integrated solution Bemobi Mobile Tech S.A. (“Bemobi Brasil”), the of the bookbuilding process. Following the turnaround over the last 3 years which was for the mobile advertising industry. We look parent company of Otello’s activities in Brazil successful IPO of Bemobi on Bovespa in Brazil, crowned with 15% YoY growth in 2020 vs 2019 forward to joining Digital Turbine to help nav- and internationally was successfully listed on Otello Corporation ASA is now a major share- and very solid EBITDA margins. We are big igate this innovation. 4 OTELLO CORPORATION ASA - ANNUAL REPORT 2020 OTELLO CORPORATION ASA - ANNUAL REPORT 2020 5 Realizing the Potential Realizing the Potential is not only this year’s still volatile. It was encouraging to see the was hit hard by Covid-19 in 2020 as emerging better availability and connectivity to the concept for the Annual Report, but It also Performance Business returning to YoY rev- markets was struggling. Bemobi was a rela- world due to our technology. We believe that reflects Otello’s financial year of 2020 and enue growth in the last quarter of the year, tive winner in the space, and we believe we our long-term strategy has been working the start of 2021. We have seen a year with which sets us up nicely for 2021 The cost for will exit the pandemic with a stronger com- well and that we can now start to climb new a strong growth on the heels of successful AdColony has been lower and the OPEX is re- pany. Based on the continued success of Be- mountains. This past year, we are more than turnaround for AdColony, which posted YoY duced by over 50% the last 3 years and we mobi, Otello have pursued a separate listing happy to have climbed the mountain after growth of 15% in 2020 vs 2019. Even more im- are now at a sustainable level from where of Bemobi in Brazil where did our initial fil- periods in the valley. Otello as a brand and pressive is this growth put into the context we can scale revenue. For Bemobi, we saw ing in 4Q20 and a successful IPO in February a company ended 2020 with a turnaround of a world grappling with a pandemic. For a co-owned channel growth in internation- 2021. Over the past years, we have been on a complete and with growth, and to make sure AdColony this was the first year with growth al markets consistent with our strategy. The journey where Otello has been taking a lead we are ready for the future, we are eager to since 2016. The Brand and Programmatic rev- new voice-based channels and omnichannel within mobile advertising and mobile gam- continue the journey we are on. enue continued the strong growth we saw platform are getting traction in Brazil and are ing. It is all about the digital and mobile life already in 2019, while our Performance is about to begin international rollout. Bemobi we are living. Emerging markets are getting 6 OTELLO CORPORATION ASA - ANNUAL REPORT 2020 OTELLO CORPORATION ASA - ANNUAL REPORT 2020 7 bile phones, we are in a relatively fortunate tors and has reverted to growth from 3Q20 position. However, as AdColony’s revenue is onwards. Due to Bemobi’s unique position, linked to the advertising spend of companies Otello has for some time been exploring the and Bemobi subscriptions bought by con- possibility to list the company separately. In sumers, the pandemic did negatively impact February 2021, Bemobi went public on a over- revenue and profit in 2020, but it is difficult subscribed listing on the Bovespa in Brazil. to quantify the impact. Otello remains Bemobi’s largest shareholder ADCOLONY and is a firm believer in its prospects. The In 2020, AdColony completed the turn- proceeds from the IPO will enable Bemobi to around we started in 2019, and we exited capitalize on its unique position in the mar- 2020 delivering our strongest quarter in over ket both organically and potentially through 3 years and with over 30% YoY growth in strategic activities. 4Q20 vs 4Q19. AdColony continued to deliver positive results despite continued Covid-19 VEWD pandemic headwinds that have significant- In 2020, the English High Court delivered its ly impacted AdColony’s competitors. Thanks decision on remedies in Otello’s dispute with to industry-leading research, consumer in- MFC over the Vewd business. The Court de- sights, and award-winning campaigns glob- termined that MFC should be required to ally, AdColony has been at the top of the purchase Otello’s shares in Last Lion from conversation about mobile games and how Otello for the sum of $48 million and that they factor into the global consumer mindset MFC should be required to purchase the Loan both in general and in this specific moment Note issued in Otello’s favor by a subsidiary in time. of MFC for $5 million plus accrued interest at the time of purchase. If MFC did not pur- AdColony has invested into its tech platform chase Otello’s shares in Last Lion and the over the last 2 years, and this has enabled Loan Note, all of the shares in the Compa- CEO Letter very strong and scalable growth for our pro- ny were to be sold to a third party by a re- grammatic business which ended the year ceiver. MFC has not purchased the shares, 2020 was a very special year, but I am proud FINANCIAL OVERVIEW with close to 100% growth over 2019. Overall, and Otello agreed to give MFC extra time to to see that we exit 2020 as a stronger orga- Otello had a strong 2020 with 8% YoY growth AdColony’s Brand business has been very re- seek refinancing to raise funds to enable it to nization. Despite Covid-19, Otello saw strong despite the negative impact from Covid-19 silient and grew by over 20% in 2020 vs. 2019. pay in the sums due to Otello, which proved growth in revenue and profit vs. 2019, which and adverse FX impact which impacted Be- Its Performance business stabilized in 2020 to be unsuccessful. On March 17, 2021, MFC is a testament to the resilience of the busi- mobi. We ended the year with 23% growth in after several years of contraction. And Ad- and Otello together with the Vewd Group’s nesses we operate and the hard work and 4Q20 vs 4Q19. Across all metrics, we saw im- Colony’s global organization is ready to take secured lender agreed that as an interim al- dedication of the teams, who were able to provements and we are in particular happy the next step and continue to grow in 2021. ternative to the appointment of a receiver, a adjust to a new “normal” and prosper. with the strong operating cash flow which special committee be appointed to sell the turned a negative OCF of $2.7m in 2019 to On February 26, 2021, Otello entered into an company or raise finance to pay Otello what $19.1m in OCF in 2020, due to improved prof- agreement with Digital Turbine to sell AdCol- it is due.