Financial Statement - First Quarter 2004

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Note: The quarterly financial statement is based on the same principles as the annual accounts. All accounts are made in accordance with NRS 11.

Highlights

• Revenues of MNOK 21.7 in Q1 2004, up from MNOK 12.4 in 1Q 2003, a growth of 75%
• Earnings before interest and tax ("EBIT") of MNOK -3.4 in 1Q04 compared to MNOK -6.4 in 1Q03
• Opera was listed on the Oslo Stock Exchange on March 11, 2004. The offering was more than 20 times oversubscribed, and raised MNOK 125 in new equity
• Opera on several new devices coming from Nokia, Sharp, and Kyocera.
• Opera unveiled several innovations including the mobileIPG, making it possible to retrieve TV listings on handsets so to record programs at home while on the move

Financials

Operating revenues in the first quarter of 2004 ("1Q04") was MNOK 21.7, up from MNOK 12.4 in 1Q03. The turnover increased by 75% on a year-to-year basis.

EBIT in 1Q04 was MNOK -3.4, compared to MNOK -6.4 in 1Q03.

Income from Internet devices was MNOK 14.7 in 1Q04, up from MNOK 6.9 in 1Q03. Income from desktop products was MNOK 7.0, up from MNOK 5.5 last year.

The operating costs increased from MNOK 18.8 in 1Q03 to MNOK 25.1 in 1Q04, a growth of 33.7%.

Payroll and related expenses grew from MNOK 13.2 in 1Q03 to MNOK 16.2 in 1Q04, mainly due to customer-driven organizational growth.

Opera successfully completed an issue of shares in connection with the company's listing on Oslo Børs on March 11, 2004. The company sought to place up to 27.944.900 shares in the IPO, indicating a price range of NOK 8 to NOK 10 per share. As approximately 560 million shares were subscribed for in this price range, an oversubscription of more than 20 times, the price per share was set at NOK 10. Around 83 percent of the subscriptions came from international investors, and 96 percent of the subscribers were institutional investors. The company raised MNOK 125 in the IPO.

Cash and cash equivalents were MNOK 146 at the end of 1Q04.

Internet Devices

The income from Internet devices grew from MNOK 6.9 in 1Q03 to MNOK 14.7 in 1Q04, a growth of 111%.

In January, it was announced that Sharp had chosen to include Opera on the Sharp Zaurus SL-6000 Linux-based PDA. Opera was also in the SL-6000's predecessors, the SL-5500 and SL-5600, receiving praise from media and users alike.

The Zaurus was the first device announced to include the latest in Opera's browser development for Mobiles, Opera version 7. Opera 7 ensures the highest performance with added speed and the most advanced standards support available in the mobile market.

In February, Opera and Motorola's Personal Communications Sector (PCS) announced a licensing agreement to deliver Opera's Internet browser on multiple Motorola PCS handsets. The agreement also provides Motorola PCS with a licensing power for the Opera Platform, a full integration solution between handheld devices' local applications and operator's online content. This announcement complemented the joint product and distribution agreement between Opera and Motorola Global Software Group announced in January.

At a press conference at the CeBIT trade fair in March, Nokia unveiled the new Nokia 7610 handset. The 7610 includes the Opera browser in the standard sales package.

In March, Opera revealed the first result of its cooperation with Kyocera in the Chinese market. Lucent LU PS-900 and ZTE V91, both designed and developed by Kyocera, are the first handsets in the upcoming new generation of browsercentric phones where access to the full Internet is the device's key feature. These devices are designed from the ground up to allow for a great Internet experience, including a high-quality screen and an Opera-branded softkey that easily brings users online for Web surfing.

Kyocera phone featuring Opera-branded softkey

PC/Desktop

Income from Desktop grew from MNOK 5.5 in 1Q03 to MNOK 7.0 in 1Q04, a growth of 29%.

The revenue growth is driven by increased advertising revenue. Desktop license revenue decreased in 1Q04 compared to 1Q03 when Opera 7 was launched.

Continued innovation

Continued innovation Opera's emphasis on innovation continued to yield visible results in 1Q04. Opera unveiled several technologies that received wide coverage in the media: Medium-Screen Rendering (MSR), the mobile Interactive Program Guide (mobileIPG), and the upcoming release of a multimodal desktop browser in cooperation with IBM.

Unveiled in January, MSR is a continuation of Opera's work to adapt the Web to every screen size, introduced with the Small-Screen Rendering (SSR) in 2002. While SSR generates a user-friendly version of Web pages for screen sizes used by today's smartphones, it is not a perfect solution for larger screens. MSR delicately squeezes content to fit medium sized screens, without having to resort to horizontal scrolling or zooming on for example PDAs running in 'Landscape' mode.

Mock-up of generic PDA running Opera's MSR technology in landscape mode

MobileIPG: interactive TV program guide both on the small and smaller screen.

Announced in March, the mobileIPG (mobile Interactive Program Guide) demonstrates the potential for the iTV industry when using open, standards-based Webtechnologies. By combining the fact that there is Opera's Web technology in the set-top box as well as on the handset, the industry can in the future make it possible to have live program listings on smartphones, resulting in the option for users to record their favorite TV programs while on the move.

Also in March, Opera announced the upcoming release of a multimodal desktop browser that incorporates IBM's Embedded ViaVoice speech technology. By leveraging IBM's voice libraries in this version of Opera, users will be able to navigate, request information and fill in Web forms using speech and other forms of input in the same interaction. Opera will make the IBM integrated voice browser available later this year.

Organization

As of March 31, the company had 145 employees, compared to 128 employees by the end of December 2003 and 120 employees by the end of 1Q03.

Opera foresees further customer-driven organizational growth in 2004. New employees will mainly be working within the development, quality assurance, documentation and sales departments.

Outlook

Revenue from Internet devices and desktop increased in 1Q04 compared to the same period last year, and this trend is expected to continue. The operating costs will grow mainly due to the planned organizational growth in 2004. The costs are expected to grow at a lower pace than revenues for 2004.

Internet devices

One important limitation for enhanced data services has been the memory capacity of the handsets. The handsets have just not been powerful enough to include advanced software in order to increase data traffic. This is about to change. UBS Investment Research expects that out of the 550 million handsets to be sold in 2004, phones with color screens and camera will account for 68% and 44% respectively. Phones with color screens and cameras require more memory, and the better the quality of the screens and cameras, the more memory is required.

With the increasing memory capacity, Opera believes that during the next years, most new phones will be able to run an HTML browser. With the relatively low cost of a browser compared to the revenue opportunity it represents, Opera expects that operators will request a browser to be preinstalled on most handsets.

Opera's business model is dependent on having the browser included on mass-market phones*. Until recently, Opera has been included on advanced handsets selling in lower volume. This has changed with the Nokia 6600 that, according to media reports, sold more than 2 million units during the first four months after its introduction. Opera believes that, over time, most phones will get more powerful. The company believes that it is well positioned to take a leading role in the market for internet device browsers.

* A mass-market phone is by Opera defined as a handset selling more than 2 million units during its life cycle.

Within the market for digital television, Opera believes general product innovation is accelerating as the market transitions to high-end set-top boxes. Opera believes that its proven, off-the-shelf technology with HTML, JavaScript, CSS and DOM capability is the key to simpler and cheaper hardware to deliver enhanced iTV applications. Opera today offers a range of different solutions, from content viewers for set-top boxes or advanced Web browsers for interactive TV solutions.

Opera believes that the switch to digital transmission for television will be the main driver for Opera's open standard based technology to be adopted by the mass-market.

Desktop

Opera believes that desktop revenue will continue to grow with the number of users. The company believes that advertising will become an increasingly important income generator.

Shareholder and equity related issues

Opera successfully completed an issue of 12,500,000 shares in connection with the company's listing on Oslo Børs on March 11.

As of March 31, 2004, the total number of shares outstanding was 97,152,747.

In an effort to enhance corporate governance, the shareholders decided to increase the external expertise and the independence of the Board of Directors before public listing. Jon S. von Tetzchner and Geir Ivarsøy, the two founders of the company, decided to step down from the Board at an extraordinary general meeting held on January 30, 2004. John R. Patrick, former vice president Internet Technology, IBM Corporation, and a leading Internet visionary, was elected as a new board member.

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