SEC Filing | Opera Limited

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As confidentially submitted to the Securities and Exchange Commission on June 8, 2018

Registration No. 333-

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM F-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

Opera Limited*

(Exact name of Registrant as specified in its charter)

Not Applicable

(Translation of Registrant’s name into English)

	Cayman Islands			7372			Not Applicable
	(State or other jurisdiction of incorporation or organization)			(Primary Standard Industrial Classification Code Number)			(I.R.S. Employer Identification Number)

Gjerdrums vei 19, 0484 Oslo, Norway
+47 2369-2400

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

[•]

(Name, address, including zip code, and telephone number, including area code, of agent for service)

copies to:

	David T. Zhang, Esq. Benjamin W. James, Esq. Kirkland & Ellis International LLP c/o 26th Floor, Gloucester Tower, The Landmark 15 Queen’s Road Central, Hong Kong +852 3761-3300			Aaron McParlan, Esq. General Counsel Gjerdrums vei 19 0484 Oslo, Norway +47 2369-2400			Dan Ouyang, Esq. Wilson Sonsini Goodrich & Rosati Professional Corporation Unit 2901, 29F, Tower C, Beijing Yintai Centre, No. 2 Jianguomenwai Avenue, Chaoyang District Beijing 100022, P.R. China +86 10-6529-8300
	Steve Lin, Esq. Kirkland & Ellis International LLP 29th Floor, China World Office 2 No. 1 Jian Guo Men Wai Avenue Beijing 100004, P.R. China +86 10-5737-9315						Weiheng Chen, Esq. Wilson Sonsini Goodrich & Rosati Suite 1509, 15/F, Jardine House, 1 Connaught Place, Central Hong Kong +852 3972-4955

Approximate date of commencement of proposed sale to the public: as soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933. Emerging growth company ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

CALCULATION OF REGISTRATION FEE

Title of each class of securities to be registered

Proposed maximum aggregate
offering price(2)(3)

Amount of registration fee

Ordinary shares, par value US$0.0001 per share(1)

US$

(1)

American depositary shares issuable upon deposit of the ordinary shares registered hereby will be registered under a separate registration statement on Form F-6 (Registration No. ). Each American depositary share represents ordinary share(s).

(2)

Includes ordinary shares initially offered and sold outside the United States that may be resold from time to time in the United States either as part of their distribution or within 40 days after the later of the effective date of this registration statement and the date the ordinary shares are first bona fide offered to the public, and also includes ordinary shares that may be purchased by the underwriters pursuant to an option to purchase additional ADSs. These ordinary shares are not being registered for the purpose of sales outside the United States.

(3)

Estimated solely for the purpose of determining the amount of registration fee in accordance with Rule 457(o) under the Securities Act of 1933.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to such Section 8(a), may determine.

The Registrant, Opera Limited, is an exempted company incorporated under the laws of the Cayman Islands with limited liability. Prior to completion of this offering, Opera Limited, a company created for the purpose of facilitating the initial public offering contemplated hereby, will become the holding company of our group by way of an exchange of equity interests in which the existing members of Kunhoo Software LLC, a limited liability company incorporated under the laws of the Cayman Islands and the current parent company of our group, will exchange their interests in Kunhoo Software LLC for shares having substantially the same rights in Opera Limited.

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The information in this preliminary prospectus is not complete and may be changed. We [and the selling shareholder[s]] may not sell the securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we [and the selling shareholder[s]] are not soliciting any offer to buy these securities in any jurisdiction where such offer or sale is not permitted.

Subject to Completion. Dated , 2018.

American Depositary Shares

Opera Limited

Representing Ordinary Shares

This is an initial public offering of American depositary shares, or ADSs, by Opera Limited.

Opera Limited is offering ADSs[, and the selling shareholder[s] named in this prospectus, including [•], [is/are] offering [an aggregate of] ADSs,] to be sold in the offering. [We will not receive any proceeds from the sale of ADSs by the selling shareholder[s].]

Prior to this offering, there has been no public market for the ADSs or our ordinary shares. It is currently estimated that the initial public offering price per ADS will be between US$ and US$ . We [have applied] to list the ADSs on the NASDAQ Global Select Market under the symbol “ .”

We are an “emerging growth company” as defined under applicable U.S. securities laws and, as such, we are eligible for reduced public company reporting requirements.

We are a “controlled company” under the rules of the NASDAQ, and may be exempt from certain corporate governance requirements, though we do not intend to rely on such exemptions. See “Risk Factors — Risks Related to Our ADSs and This Offering — As a “controlled company” under the rules of the NASDAQ, we may be exempt from certain corporate governance requirements that could adversely affect our public shareholders.”

See “Risk Factors” beginning on page 12 to read about factors you should consider before buying the ADSs.

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

Per ADS

Total

Initial public offering price

US$

Underwriting discounts and commissions(1)

US$

Proceeds, before expenses, to us

US$

[Proceeds, before expenses, to the selling shareholder[s]]

US$

(1)

For a description of compensation payable to the underwriters, see “Underwriting.”

The underwriters have the option to purchase up to an additional ADSs from us [and [the/certain] selling shareholder[s]] at the initial public offering price less the underwriting discounts and commissions within 30 days from the date of this prospectus.

The underwriters expect to deliver the ADSs against payment in New York, New York on , 2018.

	CICC			Citigroup
	(in alphabetical order)

Prospectus dated , 2018.

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	Page
Prospectus Summary		1
Risk Factors		12
Special Note Regarding Forward-Looking Statements and Industry Data		40
Use of Proceeds		42
Dividend Policy		43
Capitalization		44
Dilution		45
Enforceability of Civil Liabilities		47
Corporate History and Structure		49
Selected Consolidated Historical and Pro Forma Financial Information		52
Management’s Discussion and Analysis of Financial Condition and Results of Operations		54
Business		78
Management		97
Principal [and Selling] Shareholders		104
Related Party Transactions		106
Description of Share Capital		108
Description of American Depositary Shares		118
Shares Eligible for Future Sale		127
Taxation		129
Underwriting		137
Expenses Related to This Offering		146
Legal Matters		147
Experts		148
Where You Can Find Additional Information		149
Index to Consolidated Financial Statements		F-1

This prospectus contains certain estimates and information concerning our industry, including market position, market size, and growth rates of the markets in which we participate. This information involves a number of assumptions and limitations, and you are cautioned not to give undue weight to these estimates. We have not independently verified the accuracy or completeness of the data contained in these industry publications and reports. The industry in which we operate is subject to a high degree of uncertainty and risk due to variety of factors, including those described in the “Risk Factors” section. These and other factors could cause results to differ materially from those expressed in these publications and reports.

You should rely only on the information contained in this prospectus or in any related free-writing prospectus. We [and the selling shareholder[s]] have not authorized anyone to provide you with information different from that contained in this prospectus or in any related free-writing prospectus. We [and the selling shareholder[s]] are offering to sell, and seeking offers to buy, the ADSs offered hereby, but only under circumstances and in jurisdictions where offers and sales are permitted and lawful to do so. The information contained in this prospectus is current only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the ADSs.

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Neither we[, the selling shareholder[s]] nor any of the underwriters have taken any action that would permit a public offering of the ADSs outside the United States or permit the possession or distribution of this prospectus or any related free-writing prospectus outside the United States. Persons outside the United States who come into possession of this prospectus or any related free-writing prospectus must inform themselves about and observe any restrictions relating to the offering of the ADSs and the distribution of the prospectus outside the United States.

Until , 2018 (the 25th day after the date of this prospectus), all dealers that buy, sell or trade ADSs, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

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PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements and notes appearing elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in the ADSs discussed under “Risk Factors,” before deciding whether to buy the ADSs.

Our Mission

Our mission is to enable global internet users to discover and access digital content and services in a fast, easy and personalized manner.

Our Business

Opera is one of the world’s leading browser providers and an influential player in the field of integrated AI-driven digital content discovery and recommendation platforms. Given the growing importance of online content consumption, we believe that the future of digital content discovery is one where consumers will enjoy highly personalized experiences enabled by AI algorithms and big data. With a long and proven track record of innovation in both core performance and functionality, and an established global brand, we served 321.0 million average MAUs in the fourth quarter of 2017, of which 235.3 million were smartphone and PC users compared to 206.3 million smartphone and PC users during the fourth quarter of 2016.

We believe consumers opt to use our browsers because we provide a better-targeted solution. Our browsers are all available globally, while users in Africa and Asia are attracted to our mobile browsers because of their efficient design and usability, and users across North America and Europe choose our PC browsers because of their unique features. Our mobile browsers, with a global user base at 266.2 million average MAUs in the fourth quarter of 2017, of which 180.4 million were smartphone users, compared to 164.1 million smartphone users in the fourth quarter of 2016, are among the market leaders in high growth regions such as South Asia, Southeast Asia and Africa in terms of market share, according to StatCounter. Our PC browsers, available for both Windows and macOS platforms, also had a substantial user base of 54.8 million average MAUs in the fourth quarter of 2017, compared to 42.2 million during the fourth quarter of 2016.

The browsers of today are transforming from web-browsing utilities into smarter products providing users with faster, easier and more personalized access to internet content. As technologies such as AI and big data analytics advance, consumers expect their online experiences to be increasingly customized, interactive and engaging. As a result, consumers are turning to mobile apps that deliver more personalized content discovery, enabled by big data and AI technologies. With our Opera browser serving as the initial portal through which our users access the internet, we can develop additional applications and functions on top to fulfill users’ needs and increase their time spent on our products.

We first launched Opera News service, based on AIRE, our AI-powered content discovery and recommendation platform, as an integrated feature within our mobile browsers in January 2017. We also launched the standalone app, Opera News App, in January 2018. We constantly refine and optimize our AI platform with insights from our massive user base and adopt technologies including natural language processing, computer vision, image understanding to process content, and machine learning technology, including gradient boosting decision trees and deep neural networks in our recommendation engines to recommend personalized content to each individual user. Since the launch of Opera News, we have experienced tremendous user growth with 72.4 million average MAUs accessing Opera News in the fourth quarter of 2017. In addition, the average user time spent for AIRE-enabled browsers reached approximately 29.0 minutes per day during the same period.

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We generate revenue mainly through agreements with our search partners and partners that deliver services and advertisements to our users. Driven by the rapid adoption of our modern mobile applications, we have experienced strong revenue growth. During 2017, we recorded US$128.9 million in operating revenue, up by 20.1% from US$107.3 million in operating revenue on a pro forma consolidated basis during 2016. We generated a net loss of US$12.7 million in 2016 on a pro forma consolidated basis and had net income of US$6.1 million in 2017. Our adjusted EBITDA was US$10.2 million on a pro forma consolidated basis in 2016, and US$34.1 million in 2017. To see how we define and calculate adjusted EBITDA, a reconciliation between adjusted EBITDA and net income (loss) (the most directly comparable IFRS financial measure) and a discussion about the limitations of non-IFRS financial measures, please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-IFRS Financial Measures.”

Our Market Opportunity

The last decade has seen rapid developments in internet and mobile internet infrastructure, with regions such as North America and Europe being the most well-developed. Meanwhile, regions including Southeast Asia, South Asia and Africa are still underpenetrated in terms of internet and mobile broadband connections. As internet infrastructure in underpenetrated regions continues to develop, the number of internet and mobile internet users is also expected to increase and bring substantial growth to the internet economy.

OS vendors, including Apple, Microsoft and Google, have invested in PC and mobile browser initiatives, which are typically focused on delivering a global commonly acceptable interface with wide compatibility and relatively limited feature sets in order to cater to their broad spectrum of OS users. Against this backdrop of “mass market” browsers, there are certain browser solutions, typically PC browsers, that cater to more demanding users and certain browser solutions, typically mobile browsers, that cater to users in more constrained hardware environments. These solutions generally offer unique features, such as memory and battery consumption management, improved loading speeds, crash avoidance, privacy protection and other built-in functionality.

Content consumption on mobile devices differs from content consumption on PCs. As mobile devices typically have small screens, it is harder for users to actively navigate and consume content across web pages and websites. In addition, users often consume content on their mobile devices in a fragmented manner throughout the day, and might not have enough time to search for and discover content that would interest them. As a result, a new generation of applications is emerging that aggregate content from multiple sources across the web, using AI to carefully dissect the choices and preferences of users in order to provide highly curated content that is customized to each user’s individual interests.

We believe that browsers and AI-powered content aggregation apps function as key engagement gateways that position their respective developers as effective gate keepers. By controlling the apps that users most often engage with, successful developers are positioned to influence user engagement across the internet economy—one of the largest and fastest growing economic eco-systems in the world. According to Statista, worldwide digital advertising revenue was US$247.9 billion in 2017, and is expected to grow to US$376.3 billion in 2021. Worldwide search advertising revenue, a feature commonly controlled by web browser preferences, is expected to grow to US$165.2 billion by 2021, up 47% from US$112.4 billion in 2017.

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Our Strengths

We believe that the following strengths contribute to our success and set us apart from our peers:

•

established global internet brand with a massive user base;

•

innovative products propelling robust organic growth;

•

proven monetization model;

•

strong relationships with a broad mix of strategic partners; and

•

global and visionary leadership.

Our Strategies

We intend to pursue the following strategies to further grow our business:

•

grow our user base through continued product innovation;

•

increase user engagement and stickiness through AI;

•

grow and improve our monetization capability; and

•

seek partnerships and further enhance our content-driven ecosystem.

Our Challenges

We believe some of the major risks and uncertainties that may materially and adversely affect us include the following:

•

our ability to maintain or grow the size of our user base or the level of engagement of our users;

•

intense competition and our ability to continue to innovate and provide products and services that meet the needs of our users;

•

rapid changes in technologies and mobile devices;

•

managing or expanding our business across the expansive and diverse markets that we operate in;

•

our ability to maintain profitability in the future;

•

a small number of business partners contribute a significant portion of our revenues; and

•

our existing business and expansion strategy depend on certain key collaborative arrangements, and we may be unable to maintain or develop these relationships.

In addition, we face risks and uncertainties related to our compliance with applicable regulations and policies in our principal markets and operations.

See “Risk Factors” and other information included in this prospectus for a detailed discussion of the above and other challenges and risks.

Corporate History and Structure

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under the laws of Norway in June 1995. In September 1996, our predecessor introduced the first version of our “Opera” branded browser software and have since been a pioneer in redefining the web browsing experience and providing personalized content discovery platforms for hundreds of millions of global internet users. In March 2004, Otello converted to a public company and was listed on the Oslo stock exchange, Oslo Børs, under the ticker code “OPERA.”

Prior to our acquisition of Opera Software AS and its subsidiaries, including the business of providing mobile and PC web browsers as well as certain related products and services, or the “Consumer Business,” the Consumer Business was one of Otello’s major business lines. In March 2016, the Consumer Business, including all related assets, rights and obligations, and the majority of Otello’s other businesses were contributed to Opera Software AS. During August and September 2016, Otello undertook a number of internal transactions to establish Opera Software AS as the ultimate holding company of all entities related to its Consumer Business, and to move Otello’s corporate activities and other businesses to be held outside of Opera Software AS. On November 3, 2016, Kunhoo Software AS acquired all of the shares of Opera Software AS for a consideration of US$575.0 million less working capital adjustments. In March 2018, Opera Limited was incorporated as our proposed listing entity in the Cayman Islands. Prior to completion of this offering, Opera Limited will become the Group’s holding company by way of an exchange of equity interests in which the existing members of Kunhoo Software LLC exchange their interests in Kunhoo Software LLC for shares having substantially the same rights in Opera Limited.

Our company is a holding company that does not have substantive operations. We conduct our principal activities through our subsidiaries, which are located in Norway, Ireland, Sweden, Poland, the PRC, the United States, India and the Netherlands.

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The chart below summarizes our corporate structure and identifies our principal subsidiaries and their places of incorporation as of the date of this prospectus:

Prior to completion of this offering, Opera Limited will become the Group’s holding company by way of an exchange of equity interests in which the existing members of Kunhoo Software LLC will exchange their interests in Kunhoo Software LLC for shares having substantially the same rights in Opera Limited.

20% held by nominee shareholder.

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Corporate Information

Our principal executive offices are located at Gjerdrums vei 19, 0484 Oslo, Norway. Our telephone number at this address is +47 23 69 24 00. Our registered office in Cayman Islands is [at the offices of Maples Corporate Services Limited at P.O. Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands]. Our agent for service of process in the United States is [•].

We are a foreign private issuer under the U.S. Securities Exchange Act of 1934, as amended, or “the Exchange Act,” and as such we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers. See “Risk Factors—Risks Related to Our Business and Industry—We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to United States domestic public companies.”

Investors should contact us for any inquiries through the address and telephone number of our principal executive offices. Our website is www.opera.com. The information contained on our website is not a part of this prospectus.

As a company with less than US$1.07 billion in revenue for our last fiscal year, we qualify as an “emerging growth company” pursuant to the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements compared to those that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company’s internal control over financial reporting. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. However, we have elected to “opt out” of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted for public companies. This decision to opt out of the extended transition period under the JOBS Act is irrevocable.

We will remain an emerging growth company until the earliest of (a) the last day of the fiscal year during which we have total annual gross revenue of at least US$1.07 billion; (b) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (c) the date on which we have, during the preceding three-year period, issued more than US$1.07 billion in non-convertible debt; or (d) the date on which we are deemed to be a “large accelerated filer” under the Exchange Act, which would occur if the market value of the ADSs that are held by non-affiliates exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.

Conventions Which Apply to This Prospectus

Unless we indicate otherwise, all information in this prospectus reflects no exercise by the underwriters of their option to purchase up to additional ADSs representing ordinary shares from us [and [the/certain] selling shareholder[s]].

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Except where the context otherwise requires:

•

“active user” refers to a user, calculated based on device identification, that has accessed one of our mobile browsers, PC browsers or other applications at least once during a given period. A unique user that is active in more than one of the applications on our platform is counted as more than one active user;

•

“ADSs” refer to American depositary shares, each of which represents ordinary share[s];

•

“China” or “PRC” refers to the People’s Republic of China, excluding, for the purpose of this prospectus only, Taiwan and the special administrative regions of Hong Kong and Macau;

•

“MAUs” or “monthly active users” refer to the number of active users during each month within a given period;

•

“shares” or “ordinary shares” refer to our ordinary shares, par value US$ per share;

•

“US$,” “U.S. Dollars,” “$” and “dollars” refer to the legal currency of the United States; and

•

“we,” “us,” “our company,” “the Group,” “our group,” “our” or “Opera” refers to Kunhoo Software LLC, a limited liability company incorporated under the laws of the Cayman Islands, its consolidated subsidiaries and its consolidated affiliated entities, or Opera Limited, an exempt company incorporated under the laws of the Cayman Islands with limited liability, which will become the holding company of our group prior to the completion of this offering.

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THE OFFERING

The following assumes that the underwriters will not exercise their option to purchase additional ADSs in the offering, unless otherwise indicated.

Offering Price

We expect that the initial public offering price will be between US$ and US$ per ADS.

ADSs Offered by Us

ADSs (or ADSs if the underwriters exercise their option to purchase additional ADSs in full).

[ADSs Offered by the Selling Shareholder[s]]

ADSs (or ADSs if the underwriters exercise their option to purchase additional ADSs in full).

ADSs Outstanding Immediately After This Offering

ADSs (or ADSs if the underwriters exercise their option to purchase additional ADSs in full).

Ordinary Shares Outstanding Immediately After This Offering

[ordinary shares (or ordinary shares if the underwriters exercise their option to purchase additional ADSs in full).

Proposed NASDAQ symbol

The ADSs

Each ADS represents ordinary share[s].

The depositary will hold the ordinary shares underlying your ADSs and you will have rights as provided in the deposit agreement.

We do not expect to pay dividends in the foreseeable future. If, however, we declare dividends on our ordinary shares, the depositary will pay you the cash dividends and other distributions it receives on our ordinary shares, after deducting its fees and expenses.

You may turn in your ADSs to the depositary in exchange for ordinary shares. The depositary will charge you fees for any exchange. We may amend or terminate the deposit agreement without your consent. If you continue to hold your ADSs, you agree to be bound by the deposit agreement as amended.

To better understand the terms of the ADSs, you should carefully read the “Description of American Depositary Shares” section of this prospectus. You should also read the deposit agreement, which is filed as an exhibit to the registration statement that includes this prospectus.

Option to Purchase Additional ADSs

We [and the/certain] selling shareholder[s]] have granted to the underwriters an option, exercisable within 30 days from the date of this prospectus, to purchase up to additional ADSs.

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Use of Proceeds

We estimate that we will receive net proceeds from this offering of approximately US$ million (or US$ million if the underwriters exercise their option to purchase additional ADSs in full), after deducting underwriting discounts and commissions and estimated offering expenses payable by us and assuming an initial public offering price of US$ per ADS, being the mid-point of the estimated range of the initial public offering price shown on the front cover of this prospectus.

We plan to use the net proceeds of this offering primarily for the following purposes:

•

US$ million for research and development to continue to strengthen our AI-driven content discovery and recommendation platform and overall product portfolio;

•

US$ million for distribution and marketing to further improve brand awareness across all markets and attract new users to our products;

•

US$ million to pursue strategic partnership, investment and acquisition opportunities, though currently we have not identified any potential targets; and

•

the remainder for working capital and other general corporate purposes. See “Use of Proceeds” for additional information.

[We will not receive any of the proceeds from the sale of ADSs by the selling shareholder[s].]

Lock-up

[We, our directors and executive officers, [the selling shareholder[s], our existing shareholders, and certain restricted share unit holders] have agreed with the underwriters, subject to certain exceptions, not to sell, transfer or otherwise dispose of any ADSs, ordinary shares or similar securities or any securities convertible into or exchangeable or exercisable for our ordinary shares or ADSs, for a period ending 180 days after the date of this prospectus. See “Shares Eligible for Future Sale” and “Underwriting” for more information.]

Risk Factors

See “Risk Factors” and other information included in this prospectus for a discussion of risks you should carefully consider before investing in the ADSs.

Depositary

[Directed Share Program

At our request, the underwriters have reserved for sale, at the initial public offering price, up to ADSs offered by this prospectus to our directors, officers, employees, business associates and related persons.]

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SUMMARY CONSOLIDATED HISTORICAL AND PRO FORMA FINANCIAL INFORMATION

The following summary consolidated statements of operations data for the period from January 1, 2016 to November 3, 2016 (the “Predecessor”) and from inception of Kunhoo Software LLC on July 26, 2016 to December 31, 2016 and for the year ended December 31, 2017, and summary consolidated statements of financial position data as of December 31, 2016 and 2017 (the “Successor”), have been derived from our audited consolidated financial statements included elsewhere in this prospectus.

The consolidated financial statements are prepared and presented in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board, or IFRS. Our historical results are not necessarily indicative of results expected for future periods. You should read this “Summary Consolidated Financial Data and Operating Data” section together with our consolidated financial statements and the related notes and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section included elsewhere in this prospectus.

The following tables also set forth the summary pro forma consolidated statement of operations for the year ended December 31, 2016 which reflects the effect of the acquisition of Opera Software AS and its subsidiaries and the Consumer Business on November 3, 2016, by Kunhoo Software LLC and its subsidiaries, or the Group, as if such transaction had occurred on January 1, 2016. Prior to the acquisition, the Group had no operations. See “Management’s Discussion and Analysis of Financial Condition and Results of Operation—Unaudited Pro Forma Consolidated Financial Information” for more information. The pro forma adjustments are based upon currently available information and certain assumptions that are factually supportable and that we believe are reasonable under the circumstances. The pro forma financial information does not necessarily represent, what our actual consolidated results of operations would have been had the transactions occurred on the dates indicated, nor are they necessarily indicative of results that may be expected for any future period.

Summary Consolidated Statement of Operations

	2016						2017

	Predecessor for the period from January 1, 2016 to November 3, 2016		Successor Group since inception on July 26, 2016 to December 31, 2016		Unaudited pro forma consolidated Group for the year ended December 31, 2016(1)		Successor Group for the year ended December 31, 2017
			(US$ in thousands, except for percentages)
Operating revenue and other income:
Operating revenue		88,518		18,767		107,285		128,893
Other income		—		—		—		5,460
Operating expenses:
Payouts to publishers and monetization partners		(638)		(469)		(1,107)		(1,303)
Personnel expenses including share-based remuneration		(35,493)		(5,972)		(41,465)		(44,315)
Depreciation and amortization		(9,586)		(3,082)		(16,712)		(16,604)
Other operating expenses		(42,486)		(19,032)		(55,418)		(58,652)
Restructuring costs		(3,911)		—		(3,911)		(3,240)
Total operating expenses		(92,113)		(28,555)		(118,613)		(124,114)
Operating profit (loss)		(3,595)		(9,788)		(11,328)		10,239
Income (loss) from associates and joint ventures:
Share of net income (loss) of associates and joint ventures		(2,664)		(237)		(2,901)		(1,670)

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	2016						2017

	Predecessor for the period from January 1, 2016 to November 3, 2016		Successor Group since inception on July 26, 2016 to December 31, 2016		Unaudited pro forma consolidated Group for the year ended December 31, 2016(1)		Successor Group for the year ended December 31, 2017
			(US$ in thousands, except for percentages)
Net financial income (loss):
Financial income		—		37		37		1,054
Financial expense		(1,378)		(24)		(1,402)		(238)
Net foreign exchange gains (losses)		(1,212)		212		(1,000)		(1,881)
Total net financial income (loss)		(2,590)		225		(2,365)		(1,065)
Net income (loss) before income taxes		(8,849)		(9,800)		(16,594)		7,504
Income tax (expense) benefit		743		2,096		3,850		(1,440)
Net income (loss)		(8,106)		(7,704)		(12,744)		6,064
Non-IFRS Financial Measures
Adjusted EBITDA(2)		10,816		(6,706)		10,210		34,119
Adjusted net income (loss)(2)		(7,229)		(7,704)		(11,866)		14,962

(1)

Including pro forma adjustments. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Unaudited Pro Forma Consolidated Financial Information.”

(2)

To see how we define and calculate adjusted EBITDA and adjusted net income (loss), a reconciliation between adjusted EBITDA and net income (loss), and adjusted net income (loss) and net income (loss) (for each, the most directly comparable IFRS financial measures) and a discussion about the limitations of non-IFRS financial measures, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-IFRS Financial Measures.”

	Successor Group as of December 31, 2016		Successor Group as of December 31, 2017
	(US$ in thousands)
Summary Consolidated Statement of Financial Position Data:
Total non-current assets		561,511		561,989
Intangible assets		124,536		118,620
Investments in associates and joint ventures		1,043		5,517
Total current assets		78,967		74,311
Cash and cash equivalents		34,181		33,207
Total assets		640,479		636,300
Total equity		568,197		583,503
Total non-current liabilities		19,010		15,947
Total current liabilities		53,272		36,850
Total liabilities		72,282		52,797
Total equity and liabilities		640,479		636,300

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RISK FACTORS

An investment in our ADSs involves significant risks. You should consider carefully all of the information in this prospectus, including the risks and uncertainties described below, before making an investment in our ADSs. Any of the following risks could have a material and adverse effect on our business, financial condition and results of operations. In any such case, the market price of our ADSs could decline, and you may lose all or part of your investment.

Risks Related to Our Business and Industry

We may fail to maintain or grow the size of our user base or the level of engagement of our users.

The size and engagement level of our user base are critical to our success. Our business and financial performance have been and will continue to be significantly affected by our success in adding, retaining and engaging active users. We continue to invest significant resources to grow our user base and increase user engagement, whether through innovations, providing new or improved content or services, marketing efforts or other means. While our user base has expanded significantly in the last three years, we cannot assure you that our user base and engagement levels will continue growing at satisfactory rates, or at all. Our user growth and engagement could be adversely affected if:

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we fail to maintain the popularity of our platforms among users;

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we are unable to continue to develop products that work with a variety of mobile operating systems, networks and smartphones;

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we are unable to maintain the quality of our existing content and services;

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we are unsuccessful in innovating or introducing new, best-in-class content and services;

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we fail to adapt to changes in user preferences, market trends or advancements in technology;

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our partners who provide content to Opera News and our other platform applications do not create content that is engaging, useful, or relevant to users;

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our partners who provide content to Opera News and our other platform applications decide not to renew agreements or devote their resources to create engaging content;

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our global distribution partners decide not to pre-install our software on their products;

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we fail to provide adequate service to users or partners;

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technical or other problems prevent us from delivering our content or services in a timely and reliable manner or otherwise affect the user experience;

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there are user concerns related to privacy, safety, fund security or other factors;

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there are adverse changes to our platforms that are mandated by, or that we elect to make to address, legislation, regulation or litigation, including settlements or consent decrees;

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we fail to maintain the brand image of our platforms or our reputation is damaged; or

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there are unexpected changes to the demographic trends or economic development in the markets that we compete in.

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Our efforts to avoid or address any of these events could require us to incur substantial expenditures to modify or adapt our content, services or platforms. If we fail to retain or continue growing our user base, or if our users reduce their engagement with our platforms, our business, financial condition and results of operations could be materially and adversely affected.

We face intense competition and if we do not continue to innovate and provide products and services that meet the needs of our users, we may not remain competitive.

We face intense competition in all of the products and services we offer. In the browser space, we generally compete with other global browser developers, including Google (Chrome browser), Apple (Safari browser) and Microsoft (Internet Explorer and Edge browsers) and with other regional internet companies that have strong positions in particular countries. In the content space, we have faced significant competition from other internet companies promoting their own content products and services globally, including Google and Apple, and traditional media such as local and global newspapers and magazines. In addition, we compete with all major internet companies for user attention and advertising spend. Moreover, in emerging international markets, where mobile devices often lack large storage capabilities, we may compete with other applications for the limited space available on a user’s mobile device. As we introduce new products, as our existing products evolve, or as other companies introduce new products and services, we may become subject to additional competition. For example, in 2018, we launched Opera News App, our first standalone AI-powered news-publishing app. While we view Opera News App as an extension of Opera’s mobile product portfolio, adding new products and services subjects us to additional competition and new competitors.

Many of our current and potential competitors have significantly greater resources and broader global recognition and occupy better competitive positions in certain markets than we do. These factors may allow our competitors to respond to new or emerging technologies and changes in market requirements better than we can. Our competitors may also develop products, features or services that are similar to ours or that achieve greater market acceptance. These products, features and services may undertake more far-reaching and successful product development efforts or marketing campaigns, or may adopt more aggressive pricing policies. In addition, our partners may use information that we share with them to develop or work with competitors to develop products or features that compete with us. Certain competitors, including Apple, Microsoft and Google, could use strong or dominant positions in one or more markets to gain competitive advantages against us in areas where we operate, including by:

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integrating competing features into products they control such as web browsers or mobile device operating systems;

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making acquisitions for similar or complementary products or services; or

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impeding Opera’s accessibility and usability by modifying existing hardware and software on which the Opera application operates.

As a result, our competitors may acquire and engage users at the expense of our user growth or engagement, which may seriously harm our business.

We believe that our ability to compete effectively depends on many factors, many of which are beyond our control, including:

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the usefulness, novelty, performance and reliability of our products compared to our competitors;

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the size and demographics of our MAUs;

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the timing and market acceptance of our products, including developments and enhancements of our competitors’ products;

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our ability to monetize our products;

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the effectiveness of our marketing and distribution teams;

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our ability to establish and maintain partners’ interest in using Opera;

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the frequency, relative prominence and type of advertisements displayed on our application or by our competitors;

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the effectiveness of our customer service and support efforts;

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the effectiveness of our marketing activities;

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changes as a result of legislation, regulatory authorities or litigation, including settlements and consent decrees, some of which may have a disproportionate effect on us;

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acquisitions or consolidation within our industry;

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our ability to attract, retain and motivate talented employees, particularly engineers and sales personnel;

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our ability to cost-effectively manage and scale our rapidly growing operations; and

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our reputation and brand strength relative to our competitors.

If we cannot effectively compete, our user engagement may decrease, which could make us less attractive to users, advertisers and partners and seriously harm our business.

We may fail to keep up with rapid changes in technologies and mobile devices.

The PC and mobile internet industry is characterized by rapid technological changes. Our future success will depend on our ability to respond to rapidly changing technologies, adapt our services to evolving industry standards and improve the performance and reliability of our products and services. Our failure to adapt to such changes could harm our business. In addition, changes in mobile devices resulting from technological development may also adversely affect our business. In 2017, we began to provide AI-curated news in real-time to our users through our browsers and standalone news app as part of our push to provide more relevant content recommendations on our platform in response to this market trend. However, if we are slow to develop new products and services for the latest mobile devices, or if the products and services we develop are not widely accepted and used by mobile device users, we may not be able to capture a significant share of this increasingly important market. In addition, the widespread adoption of new internet, mobile, networking or telecommunications technologies or other technological changes could require substantial expenditures to modify or adapt our products, services or infrastructure. If we fail to keep up with rapid technological changes to remain competitive, our future success may be adversely affected.

We may not succeed in managing or expanding our business across the expansive and diverse markets that we operate in.

Our business has become increasingly complex as we have expanded the markets in which we operate, the variety of products and services we offer and the overall scale of our operations. We have expanded and expect to continue to expand our headcount, office facilities and infrastructure. As our operations continue to expand, our technology infrastructure systems and corporate functions will need to be scaled to support our operations, and if they fail to do so, it could negatively affect our business, financial condition and results of operations.

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The markets where we operate are diverse and fragmented, with varying levels of economic and infrastructure development and distinct legal and regulatory systems, and do not operate seamlessly across borders as a single or common market. Managing our growing businesses across these emerging markets requires considerable management attention and resources. Should we choose to expand into additional markets, these complexities and challenges could further increase. Because each market presents its own unique challenges, the scalability of our business is dependent on our ability to tailor our content and services to this diversity.

Our growing multi-market operations also require certain additional costs, including costs relating to staffing, logistics, intellectual property protection, tariffs and other trade barriers. Moreover, we may become subject to risks associated with:

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recruiting and retaining talented and capable management and employees in various markets;

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challenges caused by distance, language and cultural differences;

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providing content and services that appeal to the tastes and preferences of users in multiple markets;

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implementing our businesses in a manner that complies with local laws and practices, which may differ significantly from market to market;

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maintaining adequate internal and accounting control across various markets, each with its own accounting principles that must be reconciled to IFRS upon consolidation;

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currency exchange rate fluctuations;

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protectionist laws and business practices;

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complex local tax regimes;

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potential political, economic and social instability;

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potential local government initiatives to restrict access to our products and services; and

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higher costs associated with doing business in multiple markets.

Any of the foregoing could negatively affect our business, financial condition and results of operations.

We had net losses in 2016 and we may not maintain profitability in the future.

We had net losses of US$7.7 million for the period from July 26, 2016 to December 31, 2016 or net losses of US$12.7 million on a pro forma consolidated basis, in 2016, primarily due to acquisitions and increases in expenses in developing new products and marketing efforts in certain markets. In 2017, we had net income of US$6.1 million. Notwithstanding, we expect our operating expenses to increase in the future as we expand our operations. Furthermore, as a public company, we will incur additional legal, accounting and other expenses that we did not incur as a private company. If our revenue does not grow at a greater rate than our expenses, we will not be able to maintain profitability. We may incur significant losses in the future for many reasons, including without limitation the other risks and uncertainties described in this prospectus. Additionally, we may encounter unforeseen expenses, operating delays, or other unknown factors that may result in losses in future periods. If our expenses exceed our revenue, we may not be able to maintain profitability.

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A small number of business partners contribute a significant portion of our revenues.

A small number of business partners contribute a significant portion of our revenues. In 2017, our top two largest business partners in aggregate contributed approximately 56.1% of our operating revenue, with Google and Yandex accounting for 43.2% and 12.9% of our operating revenue, respectively. Although we continue to diversify our partner base, we anticipate that a limited number of partners will continue to contribute a significant portion of our revenues for the near future. Consequently, any of the following events may materially and adversely impact our business, results of operations and growth prospects:

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reduction, delay or cancellation of services by our large search partners;

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failure by one or more of our large search partners to pay for our services; or

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loss of one or more of our significant search customers and any failure to identify and acquire additional or replacement partners.

In addition, during 2017, 63.2% of our revenues were generated from monetization partners domiciled in two geographic markets, with 49.0% and 14.2% from Ireland and Russia, respectively. This geographic concentration is not an indication of where user activity occurs as our end users are located across the world, but because of the geographic concentration of domicile among our primary monetization partners, we are especially exposed to risks related to the economic conditions, regional specific legislation and tax law of these two countries.

We rely on our users’ searches on Opera browsers for the majority of our revenues.

We share in the revenue generated by the search partners when our users conduct searches initiated within the URL bar or search boxes embedded in our PC and mobile browsers. Revenue generated from search partners amounted to 54.4% of our operating revenue, or 50.9% of our operating revenue on a pro forma consolidated basis, in 2016 and 52.9% of our operating revenue in 2017. The revenue sharing and fee arrangement with these search partners are subject to change. If our search partners reduce or discontinue their advertising spending with us, we fail to attract new search or advertising partners or the fees we receive for the traffic we refer to our search partners significantly decrease, our business, financial condition and results of operations could be materially and adversely affected.

Our existing business and our expansion strategy depend on certain key collaborative arrangements, and we may be unable to maintain or develop these relationships.

Our existing business, and our strategy for developing our business, involve maintaining and developing various types of collaborations with third parties, which provide us with access to additional user traffic, search services, products and technology. For example, our collaborations with Google and Yandex allow us to provide our users with best-in-class search services. We also work with leading device manufacturers and chipset vendors to ensure cost-efficient and reliable distribution of our products and services. Moreover, as part of our focus on expanding our AI capabilities, we formed strong relationships with high profile media and independent content providers to obtain comprehensive news and other content that we can make available to users on our platform. We consider these collaborations to be important to our ability to deliver attractive services, products and content offerings to our users, in order to maintain and expand our user and advertiser bases, and we believe that it will continue to be important for us to develop similar partnerships in the future. Our inability to maintain and grow such relationships could have an adverse impact on our existing business and our growth prospects.

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We also have existing, and hope to develop additional, relationships with mobile device manufacturers for pre-installation of our browsers and standalone news app. If we are unable to maintain and expand such relationships, the quality and reach of delivery of our services will be adversely affected, and it may also be difficult for us to maintain and expand our user base and enhance awareness of our brand. In addition, our competitors may establish the same relationships that we have, which would tend to diminish any advantage we might otherwise gain from these relationships.

We may fail to maintain and expand our collaborations with third party operators of internet properties.

We place promotional links to some of our search engine providers on our browsers, thereby providing easy access to premier search services for our users and increasing our search revenues. Moreover, we rely on third party operators of internet properties for auxiliary services. For example, we use Google BigQuery to store and analyze most of our system data including number of active users, clicks-per-user, impressions, comments, likes, visits, etc. Google BigQuery allows us to affordably and seamlessly scale our data warehouse capacity, which is key as we derive insights from our massive user base to enhance our AI-powered content discovery platform. If these third parties decide to stop collaborating with us, our revenues and growth and operations may be adversely affected.

Privacy concerns relating to our services and the use of user information could negatively impact our user base or user engagement, or subject us to governmental regulation and other legal obligations.

We collect user profile, user location and other personal data from our users in order to better understand our users and their needs and to support our AI-powered content discovery and recommendation platform and big data analytical capabilities for more targeted services such as personalized news, videos and other online content recommendations. Concerns about the collection, use, disclosure or security of personal information and data or other privacy-related matters, even if unfounded, could damage our reputation, cause us to lose users and subject us to regulatory investigations, all of which may adversely affect our business. While we strive to comply with applicable data protection laws and regulations, as well as our privacy policies pursuant to our terms of use and other obligations we may have with respect to privacy and data protection, any failure or perceived failure to comply with these laws, regulations or policies may result, and in some cases have resulted, in inquiries and other proceedings or actions against us by government agencies or others, as well as negative publicity and damage to our reputation and brands, each of which could cause us to lose users and have an adverse effect on our business and operating results.

Any actual or perceived systems failure or compromise of our security that results in the unauthorized access to or release of the data or chat history of our users could significantly reduce our users’ willingness to use our services, as well as harm our reputation and brands. We expect to continue expending significant resources to protect against security breaches. The risk that these types of events could seriously harm our business is likely to increase as we expand the number of services we offer and increase the size of our user base.

Because we store, process and use data, some of which contains personal information, we are subject to complex and evolving laws and regulations across multiple jurisdictions regarding privacy, data protection and other matters.

We are subject to a variety of laws and regulations in the European Union and other markets that involve matters central to our business, including user privacy, rights of publicity, data protection, content, intellectual property, distribution, electronic contracts and other communications, competition, protection of minors, consumer protection, taxation and online-payment services. These laws can be particularly restrictive in certain countries, and constantly evolve and remain subject to significant change. In addition, the application and interpretation of these laws and regulations are often uncertain, particularly in the new

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and rapidly evolving industry in which we operate. Because we store, process and use data, some of which contains personal information, we are subject to complex and evolving laws and regulations regarding privacy, data protection and other matters. Many of these laws and regulations are subject to change and uncertain interpretation, and could result in investigations, claims, changes to our business practices, increased cost of operations and declines in user growth, retention or engagement, any of which could seriously harm our business.

Several proposals are pending before legislative and regulatory bodies in some of our key markets such as the European Union, Russia and India that could significantly affect our business. In the European Union, the General Data Protection Regulation, or the GDPR (replacing the 1995 Data Protection Directive), will go into effect on May 25, 2018. The GDPR applies to processing of personal data by businesses established in the European Union/EEA, regardless of whether the processing of personal data takes place in the European Union or not. With main establishment in Norway, all our processing of personal data is subject to the GDPR. The GDPR may require us to change our policies and procedures. Non-compliance may seriously harm our business and may result in significant penalties. Also the E-Privacy Regulation (replacing the 2002 E-Privacy Directive) which is currently being processed by the legislative bodies of the European Union, is likely to affect our business. There is uncertainty relating to the potential impact of the E-Privacy Regulation and how its requirements will relate to the requirements of the GDPR.

Furthermore, in July 2014, notable amendments to the Russia Data Protection Act No. 152 FZ dated July 27, 2006, or the DPA, were adopted and came into force on September 1, 2015. The amendments require all personal data operators to store and process any personal data of Russian individuals within databases located in Russia, subject to few exceptions. The penalty for violation of this requirement is ultimately the blocking of websites involving unlawful handling of Russian personal data. A Register of Infringers of the Rights of Personal Data Subjects has been established by the Roskomnadzor, the federal governmental agency responsible for media and telecommunications, and the Roskomnadzor may move to block websites. A track record of enforcement and legal interpretation has not been established, so it is still unclear as to how this register and the website blocking would work in practice. According to statements by Russian regulators, the storing and processing of personal data of Russian individuals outside of Russia can still be compliant with the law as long as primary storage and processing of such data is done in Russia. Since 2015, we have contracted with a third party data center provider to store data that is subject to the DPA in servers located in St. Petersburg, Russia. Although we believe we are in compliance with the DPA, the implementation and enforcement of the DPA by Russian regulators is uncertain. If we are found to be in non-compliance by the Russian regulatory authorities, our websites, products and services may be blocked in Russia, which may adversely affect our business, financial condition and results of operations.

Our business depends on a strong brand and reputation, and we may not be able to maintain and enhance our brand or reputation or there may be negative publicity against us.

We believe that our “Opera” brand and our reputation have contributed significantly to the success of our business. We also believe that maintaining and enhancing the “Opera” brand and our reputation are critical to increasing the number of our users and customers. As our market becomes increasingly competitive, our success in maintaining and enhancing our brand and reputation will depend largely on our ability to remain as a leading provider of AI-powered news feed, browser and other products and services, which may become more expensive and challenging.

We consistently conduct marketing and brand promotion efforts and over the years have increased related spending. In addition, we work closely with key mobile device manufacturer partners to pre-install Opera products and co-market our products and services. However, we cannot assure you that our marketing and brand promotion activities in the future will achieve the expected brand promotion effect to acquire users in a cost-effective way. If we fail to maintain and further promote the “Opera” brand or our reputation, or if we incur excessive expenses in this effort, our business and results of operations may be materially and adversely affected.

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Our ongoing investment in new businesses and new products, services and technologies is inherently risky and could disrupt our ongoing businesses.

We have invested and expect to continue to invest in new businesses, products, services and technologies. Such endeavors may involve significant risks and uncertainties, including insufficient revenues from such investments to offset any new liabilities assumed and expenses associated with these new investments, inadequate return of capital on our investments, distraction of management from current operations and unidentified issues not discovered in our due diligence of such strategies and offerings that could cause us to fail to realize the anticipated benefits of such investments and incur unanticipated liabilities. Because these new ventures are inherently risky, no assurance can be given that such strategies and offerings will be successful and will not adversely affect our reputation, financial condition and operating results.

We operate a platform that includes third parties over whose actions we have no control.

Our AI-powered content discovery platform integrates the services of third party search engines and content providers. We cannot control the actions of these third parties and if they do not perform their functions to our satisfaction or the satisfaction of our users, it may damage the reputation of our platform. Our browsers integrate online search capabilities from leading international and regional search companies. We cannot be certain that our search partners will provide our users with the search results that they are looking for. Our browsers also contain short-cuts to third party e-commerce, travel and other businesses and we cannot be certain that the products and services that these third-parties provide will all be legitimate, of a sufficiently high quality or that they will accurately represent the products and services in their postings. Further, while we have agreements with each of these parties, any legal protections we might have in our agreements could be insufficient to compensate us for our losses and may not be able to repair the damage to our reputation.

We rely upon third party channels and partners in distributing products and services.

We rely upon a number of third party channels to provide products and services to our users. For example, we primarily rely on third party application distribution channels, such as the Apple App Store and the Google Play Store, to allow users to download our applications and games. In addition, we work closely with key mobile manufacturers to pre-install Opera products on their mobile phones. We also rely upon data center providers to store important and valuable data. If any of these third party channel providers delivers unsatisfactory services, engages in fraudulent action, or is unable or refuses to continue to provide its services to us and our users for any reason, it may materially and adversely affect our business, financial condition and results of operations.

We may fail to attract, motivate and retain the key members of our management team or other experienced and capable employees.

Our future success is significantly dependent upon the continued service of our executives and other key employees. If we lose the services of any member of management or any key personnel, we may not be able to locate a suitable or qualified replacement and we may incur additional expenses to recruit and train a replacement, which could severely disrupt our business and growth.

To maintain and grow our business, we will need to identify, hire, develop, motivate and retain highly skilled employees. Identifying, recruiting, training, integrating and retaining qualified individuals requires significant time, expense and attention. In addition, from time to time, there may be changes in our management team that may be disruptive to our business. We may also be subject to local hiring restrictions in certain markets, particularly in connection with the hiring of foreign employees, which may affect the flexibility of our management team. If our management team, including any new hires that we make, fail to work together effectively and execute our plans and strategies, or if we are not able to recruit and retain

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employees effectively, our ability to achieve our strategic objectives will be adversely affected and our business and growth prospects will be harmed.

Competition for highly skilled personnel is intense, particularly in the markets where our business operations are located. We may need to invest significant amounts of cash and equity to attract and retain new employees and we may not be able to realize returns on these investments.

We may fail to maintain or improve our technology infrastructure.

We are constantly upgrading our technology to provide improved performance, increased scale and better integration among our platforms. Adopting new technologies, upgrading our internet ecosystem infrastructure, maintaining and improving our technology infrastructure require significant investments of time and resources, including adding new hardware, updating software and recruiting and training new engineering personnel. Adverse consequences for the failure to do so may include unanticipated system disruptions, security breaches, computer virus attacks, slower response times, decreased user satisfaction and delays in reporting accurate operating and financial information. In addition, many of the software and interfaces we use are internally developed and proprietary technology. If we experience problems with the functionality and effectiveness of our software or platforms, or are unable to maintain and constantly improve our technology infrastructure to handle our business needs and ensure a consistent and acceptable level of service for our users, our business, financial condition, results of operation and prospects, as well as our reputation, could be materially and adversely affected.

Mobile malware, viruses, hacking and phishing attacks, spamming and improper or illegal use of Opera could seriously harm our business and reputation.

Mobile malware, viruses, hacking and phishing attacks have become more prevalent in our industry, have occurred on our systems in the past and may occur on our systems in the future. Because of our prominence, we believe that we are an attractive target for these sorts of attacks. Although it is difficult to determine what, if any, harm may directly result from an interruption or attack, any failure to maintain performance, reliability, security and availability of our products and technical infrastructure to the satisfaction of our users may seriously harm our reputation and our ability to retain existing users and attract new users. If these activities increase on our platform, our reputation, user growth and engagement, and operational cost structure could be seriously harmed.

We may not be able to prevent others from unauthorized use of our intellectual property or brands.

We regard our patents, copyrights, trademarks, trade secrets, and other intellectual property as critical to our business. Unauthorized use of our intellectual property by third parties may adversely affect our business and reputation. We rely on a combination of intellectual property laws and contractual arrangements to protect our proprietary rights. It is often difficult to register, maintain and enforce intellectual property rights in the markets where we operate. For example, statutory laws and regulations are subject to judicial interpretation and enforcement and may not be applied consistently due to the lack of clear guidance on statutory interpretation in Africa, Southeast Asia, China, Russia and India. In addition, contractual agreements may be breached by counterparties and there may not be adequate remedies available to us for any such breach. Accordingly, we may not be able to effectively protect our intellectual property rights or to enforce our contractual rights. Policing any unauthorized use of our intellectual property is difficult and costly and the steps we have taken may be inadequate to prevent the misappropriation of our intellectual property. In the event that we resort to litigation to enforce our intellectual property rights, such litigation could result in substantial costs and a diversion of our managerial and financial resources. We can provide no assurance that we will prevail in such litigation. In addition, our trade secrets may be leaked or otherwise become available to, or be independently discovered by, our competitors.

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Some of our applications contain open source software, which may pose increased risk to our proprietary software.

We use open source software in some of our applications, including our Opera browsers, which incorporate Chromium browser technology, and will use open source software in the future. In addition, we regularly contribute source code to open source software projects and release internal software projects under open source licenses, and anticipate doing so in the future. The terms of many open source licenses to which we are subject have not been interpreted by U.S. or foreign courts, and there is a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to sell or distribute our applications. Additionally, we may from time to time face threats or claims from third parties claiming ownership of, or demanding release of, the alleged open source software or derivative works we developed using such software, which could include our proprietary source code, or otherwise seeking to enforce the terms of the applicable open source license. These threats or claims could result in litigation and could require us to make our source code freely available, purchase a costly license or cease offering the implicated applications unless and until we can re-engineer them to avoid infringement. Such a re-engineering process could require significant additional research and development resources, and we may not be able to complete it successfully. In addition to risks related to license requirements, our use of certain open source software may lead to greater risks than use of third party commercial software, as open source licensors generally do not provide warranties or controls on the origin of the software. Additionally, because any software source code we contribute to open source projects is publicly available, our ability to protect our intellectual property rights with respect to such software source code may be limited or lost entirely, and we are unable to prevent our competitors or others from using such contributed software source code. Any of these risks could be difficult to eliminate or manage and, if not addressed, could adversely affect our business, financial condition and results of operations.

We rely upon the internet infrastructure, data center providers and telecommunications networks in the markets where we operate.

Our business depends on the performance and reliability of the internet infrastructure and contracted data center providers in the markets where we operate. We may not have access to alternative networks or data servers in the event of disruptions or failures of, or other problems with, the relevant internet infrastructure. In addition, the internet infrastructure, especially in the emerging markets where we operate, may not support the demands associated with continued growth in internet usage.

We use third party data center providers for the storing of data related to our business. We do not control the operation of these facilities and rely on contracted agreements to employ their use. The owners of the data center facilities have no obligation to renew their agreements with us on commercially reasonable terms, or at all. If we are unable to renew these agreements on commercially reasonable terms, or if one of our data center providers is acquired by another party, we may be required to transfer our servers and other infrastructure to new data center facilities, and we may incur significant costs and possible lengthy service interruptions in connection with doing so. Any changes in third party service levels at our data centers or any errors, defects, disruptions or other performance problems with our browsers or other services could adversely affect our reputation and adversely affect the online browsing experience. If navigation through our browsers is slower than our users expect, users may use our services less, if at all. Interruptions in our services might reduce our revenue, subject us to potential liability or adversely affect our ability to attract advertisers.

We also rely on major telecommunications operators in the markets where we operate to provide us with data communications capacity primarily through local telecommunications lines and data centers to host our servers. We and our users may not have access to alternative services in the event of disruptions or failures of, or other problems with, the fixed telecommunications networks of these telecommunications operators, or if such operators otherwise fail to provide such services. Any unscheduled service interruption

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could disrupt our operations, damage our reputation and result in a decrease in our revenue. Furthermore, we have no control over the costs of the services provided by the telecommunications operators to us and our users. If the prices that we pay for telecommunications and internet services rise significantly, our gross margins could be significantly reduced. In addition, if internet access fees or other charges to internet users increase, our user traffic may decrease, which in turn may cause our revenue to decline.

Our business depends on continued and unimpeded access to the internet by us and our users. Internet access providers may be able to restrict, block, degrade or charge for access to certain of our products and services, which could lead to additional expenses and the loss of users and advertisers.

Our products and services depend on the ability of our users to access the internet. Currently, this access is provided by companies that have significant market power in the broadband and internet access marketplace, including incumbent telephone companies, cable companies, mobile communications companies and government-owned service providers. Some of these providers have taken, or have stated that they may take measures, including legal actions, that could degrade, disrupt or increase the cost of user access to certain of our products by restricting or prohibiting the use of their infrastructure to support or facilitate our offerings, or by charging increased fees to us or our users to provide our offerings.

In addition, in some markets, our products and services may be subject to government-initiated restrictions or blockages. Such interference could result in a loss of existing users and advertisers, and increased costs, and could impair our ability to attract new users and advertisers, thereby harming our revenues and growth.

We plan to continue expanding our operations globally to markets where we have limited operating experience, which may subject us to increased business, economic and regulatory risks.

We plan to continue expanding our business operations globally and translating our products into other languages. Opera is currently available in more than 40 languages, and we have offices in six countries. We plan to enter new markets where we have limited or no experience in marketing, selling and deploying our products and services. If we fail to deploy or manage our operations in international markets successfully, our business may suffer. In the future, as our international operations increase, or more of our expenses are denominated in currencies other than the U.S. dollar or Euros, our operating results may become more sensitive to fluctuations in the exchange rates of the currencies in which we do business. In addition, we are subject to a variety of risks inherent in doing business internationally, including:

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political, social and economic instability;

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risks related to the legal and regulatory environment in foreign jurisdictions, including with respect to privacy, localization and content laws as well as unexpected changes in laws, regulatory requirements and enforcement due to the wide discretion given local lawmakers and regulators regarding the enactment, interpretation and implementation of local regulations;

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potential damage to our brand and reputation due to compliance with local laws, including potential censorship and requirements to provide user information to local authorities;

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fluctuations in currency exchange rates;

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higher levels of credit risk and payment fraud;

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complying with multiple tax jurisdictions;

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enhanced difficulties of integrating any foreign acquisitions;

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complying with a variety of foreign laws, including certain employment laws requiring national collective bargaining agreements that set minimum salaries, benefits, working conditions and termination requirements;

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reduced protection for intellectual property rights in some countries;

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difficulties in staffing and managing global operations and the increased travel, infrastructure and compliance costs associated with multiple international locations;

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regulations that might add difficulties in repatriating cash earned outside our core markets and otherwise preventing us from freely moving cash;

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import and export restrictions and changes in trade regulation;

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complying with statutory equity requirements;

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complying with the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and similar laws in other jurisdictions; and

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complying with export controls and economic sanctions administered by the relevant local authorities, including in the United States and European Union, in our international business.

If we are unable to expand internationally and manage the complexity of our global operations successfully, our business could be seriously harmed.

We may not achieve the intended tax efficiencies of our corporate structure and intercompany arrangements, which could increase our worldwide effective tax rate.

Our corporate structure and intercompany arrangements, including the manner in which we conduct our intercompany and related party transactions, are intended to provide us with worldwide tax efficiencies. The application of tax laws of various jurisdictions to our business activities is subject to interpretation and also depends on our ability to operate our business in a manner consistent with our corporate structure and intercompany arrangements. The tax authorities of jurisdictions where we operate may challenge our methodologies for intercompany and related party arrangements, including transfer pricing, or determine that the manner in which we operate does not achieve the intended tax consequences, which could increase our worldwide effective tax rate and adversely affect our financial position and results of operations.

A certain degree of judgment is required in evaluating our tax positions and determining our provision for income taxes. In the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. For example, our effective tax rate could be adversely affected by lower than anticipated earnings in markets where we have lower statutory rates and higher than anticipated earnings in markets where we have higher statutory rates, by changes in foreign currency exchange rates or by changes in the relevant tax, accounting and other laws, regulations, principles and interpretations. Any of these factors could materially and adversely affect our financial position and results of operations.

Industry data, projections and estimates contained in this prospectus are inherently uncertain and subject to interpretation. Accordingly, you should not place undue reliance on such information.

Certain facts, forecasts and other statistics relating to the industries in which we compete contained in this prospectus have been derived from various public data sources and third party industry reports. In deriving the market size of the aforementioned industries and regions, these industry consultants may have

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adopted different assumptions and estimates, such as the number of internet users. While we generally believe such reports are reliable, we have not independently verified the accuracy or completeness of such information. Such reports may not be prepared on a comparable basis or may not be consistent with other sources.

Industry data, projections and estimates are subject to inherent uncertainty as they necessarily require certain assumptions and judgments. Our industry data and market share data should be interpreted in light of the defined geographic markets and defined industries we operate in. Any discrepancy in the interpretation thereof could lead to different industry data, measurements, projections and estimates and result in errors and inaccuracies.

Our user metrics and other estimates are subject to inherent challenges in measuring our operations.

We regularly review metrics, including our MAUs, to evaluate growth trends, measure our performance and make strategic decisions. These metrics are calculated using internal company data and have not been validated by an independent third party. While these numbers are based on what we believe to be reasonable estimates for the applicable period of measurement, there are inherent challenges in measuring how our platforms are used across large populations throughout the regions that we operate in. For example, we believe that we cannot distinguish individual users who use multiple applications. Our user metrics are also affected by technology on certain mobile devices that automatically runs in the background of our applications when another phone function is used, and this activity can cause our system to miscount the user metrics associated with such applications.

Errors or inaccuracies in our metrics or data could result in incorrect business decisions and inefficiencies. For instance, if a significant understatement or overstatement of active users were to occur, we may expend resources to implement unnecessary business measures or fail to take required actions to remedy an unfavorable trend. Moreover, during the process of upgrading our platform in the past, we have lost certain historical metrics, such as the number of search inquiries, that we rely on to manage our operations. If partners or investors do not perceive our user, geographic or other operating metrics as accurately representing our user base, or if we discover material inaccuracies in our user, geographic or other operating metrics, our reputation may be seriously harmed.

Material weaknesses in our internal control over financial reporting have been identified, and if we fail to implement and maintain effective internal control over financial reporting, we may be unable to accurately report our results of operations, meet our reporting obligations or prevent fraud.

Prior to this offering, we were a private company with limited accounting personnel and other resources with which to address our internal controls and procedures. Our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting. However, in connection with the audit of the consolidated statements of financial position of Kunhoo Software LLC and its subsidiaries as of December 31, 2017 and 2016 (Successor), and the related consolidated statements of operations, total comprehensive income (loss), changes in equity, and cash flows for the year ended 31 December 2017 (Successor) and for the period from July 26, 2016 to December 31, 2016 (Successor), and for the period from January 1, 2016 to November 3, 2016 (Predecessor), and the related notes (collectively, the “consolidated financial statements”), we and our independent registered public accounting firm identified two material weaknesses in our internal control over financial reporting, as defined in the standards established by the Public Company Accounting Oversight Board of the United States, or PCAOB, and other control deficiencies. The two identified material weaknesses arose from our (a) lack of a sufficient number of qualified resources with IFRS, external financial reporting and internal controls expertise and (b) lack of formalized policies and procedures to ensure that significant and unusual transactions and other transactions are sufficiently analyzed and assessed against the requirements of IFRS, including the preparation and review of contemporaneous documentation. Following the

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identification of the material weaknesses and control deficiencies, we have taken and plan to continue to take remedial measures to remedy these weaknesses. For details of these remedies, see ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations—Internal Control over Financial Reporting.’’ However, the implementation of these measures may not fully address the material weaknesses in our internal control over financial reporting, and we cannot conclude that they have been fully remedied. Our failure to correct the material weaknesses or our failure to discover and address any other material weakness or control deficiencies could result in inaccuracies in our financial statements and could also impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. As a result, our business, financial condition, results of operations and prospects, as well as the trading price of our ADSs, may be materially and adversely affected. Moreover, ineffective internal control over financial reporting significantly hinders our ability to prevent fraud.

Furthermore, it is possible that, had our independent registered public accounting firm conducted an audit of our internal control over financial reporting, it might have identified additional material weaknesses and deficiencies. Upon completion of this offering, we will become a public company in the United States subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, will require that we include a report of management on our internal control over financial reporting in our annual report on Form 20-F beginning with our second annual report. In addition, once we cease to be an ‘‘emerging growth company’’ as such term is defined in the JOBS Act, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is adverse if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, after we become a public company, our reporting obligations may place a significant strain on our management, operational and financial resources and systems for the foreseeable future. We may be unable to timely complete our evaluation testing and any required remediation.

During the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404, we may identify other weaknesses and deficiencies in our internal control over financial reporting. In addition, if we fail to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404. If we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could in turn limit our access to capital markets, harm our results of operations, and lead to a decline in the trading price of our ADSs. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions. We may also be required to restate our financial statements from prior periods.

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We may be required to recognize impairment charges.

We have significant amounts of goodwill and intangible assets that totaled US$421.6 million and US$118.6 million, respectively, as of December 31, 2017, and incurred no impairment charges in 2017 with respect to these long-lived assets. We also had US$13.5 million of furniture, fixtures and equipment as of December 31, 2017. In accordance with applicable accounting standards, goodwill and intangible assets that are not amortized are subject to assessment for impairment by applying a fair-value or value in use based test annually, and when certain circumstances warrant. Goodwill, intangible assets and furniture, fixtures and equipment are subject to assessment for impairment if there are indicators of impairment, including:

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losses of key customers;

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unfavorable changes in technology or competition;

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unfavorable changes in user base or user tastes

Based upon future economic and financial market conditions, the operating performance of our reporting units and other factors, including those listed above, future impairment charges could be incurred. It is possible that such impairment, if required, could be material. Any future impairment charges that we are required to record could have a material adverse impact on our results of operations.

We may need additional capital but may not be able to obtain it on favorable terms or at all.

We may require additional capital in order to fund future growth and the development of our businesses and any investments or acquisitions we may decide to pursue. If our cash resources are insufficient to satisfy our cash requirements, we may seek to issue additional equity or debt securities or obtain new or expanded credit facilities. Our ability to obtain external financing in the future is subject to a variety of uncertainties, including our future financial condition, results of operations, cash flows, share price performance, liquidity of international capital and lending markets and governmental regulations in the markets that we operate in. In addition, incurring indebtedness would subject us to increased debt service obligations and could result in operating and financing covenants that would restrict our operations. There can be no assurance that financing will be available in a timely manner or in amounts or on terms acceptable to us, or at all. Any failure to raise needed funds on terms favorable to us, or at all, could severely restrict our liquidity as well as have a material adverse effect on our business, financial condition and results of operations. Moreover, any issuance of equity or equity-linked securities could result in significant dilution to our existing shareholders.

We have limited business insurance coverage.

Consistent with customary industry practice in the markets that we operate in, our business insurance is limited. Any uninsured damage to our platforms, technology infrastructures or disruption of our business operations could require us to incur substantial costs and divert our resources, which could have an adverse effect on our business, financial condition and results of operations.

We are subject to risks related to litigation, including intellectual property claims and regulatory disputes.

We may be, and in some instances have been, subject to claims, lawsuits (including class actions and individual lawsuits), government investigations and other proceedings relating to intellectual property, consumer protection, privacy, labor and employment, import and export practices, competition, securities, tax, marketing and communications practices, commercial disputes and other matters. The number and significance of our legal disputes and inquiries have increased as we have grown larger, as our business has expanded in scope and geographic reach and as our services have increased in complexity.

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As a consequence of a demerger in 2015, one of our subsidiaries, Opera Software AS, may have joint and several obligations towards any liabilities arising from the demerger. See “Corporate History and Structure—Corporate History.” Under Norwegian law, our liability is capped to the real value of the assets transferred to Opera Software AS as part of the demerger. We do not believe that we are subject to any liabilities or obligations resulting from the demerger, however, to the extent that such demerger liabilities or obligations exist, creditors may seek to recover from us, claiming that we are liable to satisfy such obligations. While we believe the outcome of such proceedings will depend on the claim brought forth, litigation is inherently costly and uncertain and could have an adverse effect on our operations.

Moreover, becoming a public company will raise our public profile, which may result in increased litigation and public awareness of such litigation. There is substantial uncertainty regarding the scope and application of many of the laws and regulations to which we are subject, which increases the risk that we will be subject to claims alleging violations of those laws and regulations. Many of these laws and regulations are subject to change and uncertain interpretation, and could result in investigations, claims, changes to our business practices, increased cost of operations and declines in user growth, retention or engagement, any of which could seriously harm our business. In the future, we may also be accused of having, or be found to have, infringed or violated third party intellectual property rights.

Regardless of the outcome, legal proceedings can have a material and adverse impact on us due to their costs, diversion of our resources and other factors. We may decide to settle legal disputes on terms that are unfavorable to us. Furthermore, if any litigation to which we are a party is resolved adversely, we may be subject to an unfavorable judgment that we may not choose to appeal or that may not be reversed upon appeal. We may have to seek a license to continue practices found to be in violation of a third party’s rights. If we are required, or choose to enter into, royalty or licensing arrangements, such arrangements may not be available on reasonable terms, or at all, and may significantly increase our operating costs and expenses. As a result, we may also be required to develop or procure alternative non-infringing technology or discontinue the use of technology, and doing so could require significant effort and expense, or may not be feasible. In addition, the terms of any settlement or judgment in connection with any legal claims, lawsuits or proceedings may require us to cease some or all of our operations, or pay substantial amounts to the other party and could materially and adversely affect our business, financial condition and results of operations.

We are currently subject to, and in the future may from time to time face, intellectual property infringement claims, which could be time consuming and costly to defend, and may require us to pay significant damages or cease offering any of our products or key features of our products.

We cannot be certain that the products, services and intellectual property used in the ordinary course of our business do not or will not infringe valid patents, copyrights or other intellectual property rights held by third parties. We currently are, and may in the future be, subject to claims and legal proceedings relating to the intellectual property of others in the ordinary course of our business, and may in the future be required to pay damages or to agree to restrict our activities. In particular, if we are found to have violated the intellectual property rights of others, we may be enjoined from using such intellectual property, may be ordered to pay damages and may incur licensing fees or be forced to develop alternatives. We may incur substantial expense in defending against third party infringement claims, regardless of their merit. Successful infringement claims against us may result in substantial monetary liability or may materially disrupt the conduct of our business by restricting or prohibiting our use of the intellectual property in question.

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We do not have exclusive rights to certain technology, trademarks and designs that are crucial to our business.

We have applied for various patents relating to our business. While we have succeeded in obtaining some patents, some of our patent applications are still under examination by the various regulatory authorities in the markets that we operate in. Approvals of our patent applications are subject to determinations by the relevant local authorities that there are no prior rights in the applicable territory. In addition, we have also applied for initial registrations and/or changes in registrations relating to transfers of our Opera logos and other of our key trademarks to establish and protect our exclusive rights to these trademarks. While we have succeeded in registering the trademarks for most of these marks in our major markets under certain classes, the applications for initial registration, and/or changes in registrations relating to transfers, of some marks and/or of some of trademarks under other classes are still under examination by the relevant local authorities. Approvals of our initial trademark registration applications, and/or of changes in registrations relating to such transfers, are subject to determinations by the relevant local authorities that there are no prior rights in the applicable territories. We cannot assure you that these patent and trademark applications will be approved. Any rejection of these applications could adversely affect our rights to the affected technology, marks and designs. In addition, even if these applications are approved, we cannot assure you that any issued patents or registered trademarks will be sufficient in scope to provide adequate protection of our rights.

Our business may be adversely affected by third party software applications or practices that interfere with our receipt of information from, or provision of information to, our users, which may impair the user experience on our platform.

Our business may be adversely affected by third party software applications, which may be unintentional or malicious, that make changes to our users’ PCs or mobile devices and interfere with our products and services. These software applications may change the user experience on our platform by hijacking queries, altering or replacing the search results provided by our search engine partners to our users or otherwise interfering with our ability to connect with our users. Such interference can occur without disclosure to or consent from users, and users may associate any resulting negative experience with our products and services. Such software applications are often designed to be difficult to remove, block or disable. Further, software loaded on or added to mobile devices on which our search or other applications, such as Opera News, are pre-installed may be incompatible with or interfere with or prevent the operation of such applications, which might deter the owners of such devices from using our services. If we are unable to successfully prevent or limit any such applications or systems that interfere with our products and services, our ability to deliver a high-quality browsing experience and recommend relevant content to our users may be adversely affected.

Interruption or failure of our information technology and communications systems may result in reduced user traffic and harm to our reputation and business.

Interruption or failure of any of our information technology and communications systems or those of the operators of third party internet properties that we collaborate with could impede or prevent our ability to provide our services. In addition, our operations are vulnerable to natural disasters and other events. Our disaster recovery plan for our servers cannot fully ensure safety in the event of damage from fire, floods, typhoons, earthquakes, power loss, telecommunications failures, hacking and similar events. If any of the foregoing occurs, we may experience a partial or complete system shutdown. Furthermore, our servers, which are hosted at third party internet data centers, are also vulnerable to break-ins, sabotage and vandalism. Some of our systems are not fully redundant, and our disaster recovery planning does not account for all possible scenarios. The occurrence of a natural disaster or a closure of an internet data center by a third party provider without adequate notice could result in lengthy service interruptions.

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Any system failure or inadequacy that causes interruptions in the availability of our services, or increases the response time of our services, could have an adverse impact on our user experience and satisfaction, our attractiveness to users and advertisers and future user traffic and advertising on our platform.

To improve performance and to prevent disruption of our services, we may have to make substantial investments to deploy additional servers or one or more copies of our internet platforms to mirror our online resources.

Our results of operations are subject to seasonal fluctuations due to a number of factors.

We are subject to seasonality and other fluctuations in our business. Revenues from our e-commerce and travel partners are typically affected by seasonality due to various holidays that may result in higher than usual e-commerce transactions and travel-related activities. Thus, our operating results in one or more future quarters or years may fluctuate substantially or fall below the expectations of securities analysts and investors. In such event, the trading price of our ADSs may fluctuate significantly.

Our corporate actions will be substantially controlled by our chairman and chief executive officer, Mr. Yahui Zhou, who will have the ability to control or exert significant influence over important corporate matters that require approval of shareholders, which may deprive you of an opportunity to receive a premium for your ADSs and materially reduce the value of your investment.

Upon the completion of this offering, Mr. Yahui Zhou, our chairman of the board and chief executive officer, will beneficially own % ordinary shares issued and outstanding, representing % of our aggregate voting power. As a result, Mr. Yahui Zhou will have the ability to control or exert significant influence over important corporate matters, investors may be prevented from affecting important corporate matters involving our company that require approval of shareholders, including:

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the composition of our board of directors and, through it, any determinations with respect to our operations, business direction and policies, including the appointment and removal of officers;

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any determinations with respect to mergers or other business combinations;

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our disposition of substantially all of our assets; and

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any change in control.

These actions may be taken even if they are opposed by our other shareholders, including the holders of the ADSs. Furthermore, this concentration of ownership may also discourage, delay or prevent a change in control of our company, which could have the dual effect of depriving our shareholders of an opportunity to receive a premium for their shares as part of a sale of our company and reducing the price of the ADSs. As a result of the foregoing, the value of your investment could be materially reduced.

We may be the subject of anti-competitive, harassing or other detrimental conduct that could harm our reputation and cause us to lose users and customers.

In the future, we may be the target of anti-competitive, harassing, or other detrimental conduct by third parties. Allegations, directly or indirectly against us or any of our executive officers, may be posted in internet chatrooms or on blogs or websites by anyone, whether or not related to us, on an anonymous basis. The availability of information on social media platforms and devices is virtually immediate, as is its impact. Social media platforms and devices immediately publish the content their subscribers and participants post, often without filters or checks on the accuracy of the content posted. Information posted may be inaccurate and adverse to us, and it may harm our business, prospects or financial performance. The harm may be immediate without affording us an opportunity for redress or correction. In addition, such conduct may

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include complaints, anonymous or otherwise, to regulatory agencies. We may be subject to regulatory or internal investigations as a result of such third party conduct and may be required to expend significant time and incur substantial costs to address such third party conduct, and there is no assurance that we will be able to conclusively refute each of the allegations within a reasonable period of time, or at all. Additionally, our reputation could be harmed as a result of the public dissemination of anonymous allegations or malicious statements about our business, which in turn may cause us to lose users and customers and adversely affect the price of our ADSs.

If we fail to detect click-through fraud, we could lose the confidence of our advertisers and our revenues could decline.

Our business is exposed to the risk of click-through fraud on our partners’ advertisements. Click-through fraud occurs when a person clicks advertisements for a reason other than to view the underlying content of advertisements. If our advertising partners fail to detect significant fraudulent clicks or otherwise are unable to prevent significant fraudulent activity, the affected search advertisers may experience a reduced return on their investment in advertising on our platform and lose confidence in the integrity of our search partners’ pay-for-click service systems. If this happens, our revenues from our monetization partners may decline.

We currently report our financial results under IFRS, which differs in certain significant respects from U.S. GAAP.

We report our financial statements under IFRS. There have been and there may in the future certain significant differences between IFRS and U.S. generally accepted accounting principles, or U.S. GAAP, including but not limited to differences related to revenue recognition, share-based compensation expense, income tax, impairment of long-lived assets and earnings per share. As a result, our financial information and reported earnings for historical or future periods could be significantly different if they were prepared in accordance with U.S. GAAP. As a result, you may not be able to meaningfully compare our financial statements under IFRS with those companies that prepare financial statements under U.S. GAAP.

We face risks related to natural disasters, health epidemics or terrorist attacks.

Our business could be adversely affected by natural disasters, such as earthquakes, floods, landslides, tsunamis, outbreaks of health epidemics such as an outbreak of avian influenza, severe acute respiratory syndrome, Zika virus or Ebola virus, as well as terrorist attacks, other acts of violence or war or social instability. If any of these occurs, we may be required to temporarily or permanently close and our business operations may be suspended or terminated.

Fluctuations in foreign currency exchange rates will affect our financial results, which we report in U.S. Dollars.

We operate in multiple jurisdictions, which exposes us to the effects of fluctuations in currency exchange rates. We earn revenue denominated in U.S. Dollars, Euros, Russian Rubles, Norwegian Krone, Indonesian Rupiah, Japanese Yen, Singapore Dollars and Nigerian Naira, among other currencies. We generally incur expenses for employee compensation and other operating expenses in the local currencies in the jurisdictions in which we operate. Fluctuations in the exchange rates between the various currencies that we use could result in expenses being higher and revenue being lower than would be the case if exchange rates were stable. We cannot assure you that movements in foreign currency exchange rates will not have a material adverse effect on our results of operations in future periods. We do not generally enter into hedging contracts to limit our exposure to fluctuations in the value of the currencies that our businesses use. Furthermore, the substantial majority of our revenue is denominated in emerging markets currencies. Because fluctuations in the value of emerging markets currencies are not necessarily correlated, there can be no assurance that our results of operations will not be adversely affected by such volatility.

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Risks Related to Our ADSs and This Offering

An active trading market for the ADSs may not develop and the trading price for the ADSs may fluctuate significantly.

We intend to apply to list our ADSs on the NASDAQ. Prior to the completion of this offering, there has been no public market for our ADSs or our ordinary shares, and we cannot assure you that a liquid public market for our ADSs will develop. If an active public market for our ADSs does not develop following the completion of this offering, the market price and liquidity of our ADSs may be materially and adversely affected. The initial public offering price for our ADSs was determined by negotiation between us and the underwriters based upon several factors, and we can provide no assurance that the trading price of our ADSs after this offering will not decline below the initial public offering price. As a result, investors in our securities may experience a significant decrease in the value of their ADSs.

The trading price of the ADSs is likely to be volatile, which could result in substantial losses to investors.

The trading price of our ADSs is likely to be volatile and could fluctuate widely due to factors beyond our control. This may happen because of broad market and industry factors, like the performance and fluctuation of the market prices of other technology companies that have listed their securities in the United States. A number of technology companies have listed or may be in the process of listing their securities on U.S. stock markets. The securities of some of these companies have experienced significant volatility, including price declines in connection with their initial public offerings. The trading performances of those companies’ securities after their offerings may affect the attitudes of investors toward technology companies listed in the United States in general and consequently may impact the trading performance of our ADSs, regardless of our actual operating performance.

In addition to market and industry factors, the price and trading volume for the ADSs may be highly volatile for factors specific to our own operations, including the following:

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variations in our quarterly or annual revenue, earnings and cash flow;

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announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors;

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announcements of new products, services and expansions by us or our competitors;

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changes in financial estimates by securities analysts;

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detrimental adverse publicity about us, our platforms or our industries;

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additions or departures of key personnel;

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release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; and

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potential litigation or regulatory investigations.

Any of these factors may result in large and sudden changes in the volume and price at which the ADSs will trade.

In the past, shareholders of public companies have often brought securities class action suits against those companies following periods of instability in the market price of their securities. If we were involved in a class action suit, it could divert a significant amount of our management’s attention and other resources from our business and operations and require us to incur significant expenses to defend the suit, which could harm our results of operations. Any such class action suit, whether or not successful, could

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harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.

If securities or industry analysts do not publish research or reports about our business, or if they adversely change their recommendations regarding our ADSs, the market price for our ADSs and trading volume could decline.

The trading market for our ADSs will be influenced by research or reports that industry or securities analysts publish about our business. If one or more analysts who cover us downgrade our ADSs, the market price for our ADSs would likely decline. If one or more of these analysts cease to cover us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the market price or trading volume for our ADSs to decline.

We currently do not expect to pay dividends in the foreseeable future and you must rely on price appreciation of our ADSs for return on your investment.

We currently intend to retain most, if not all, of our available funds and any future earnings to fund the development and growth of our business. As a result, we do not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in our ADSs as a source for any future dividend income.

[Our board of directors has complete discretion as to whether to distribute dividends subject to our memorandum and articles of association and certain restrictions under Cayman Islands law. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our directors.] Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on, among other things, our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiary, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment in our ADSs will likely depend entirely upon any future price appreciation of our ADSs. There is no guarantee that our ADSs will appreciate in value or even maintain the price at which you purchased the ADSs. You may not realize a return on your investment in our ADSs and you may even lose your entire investment in our ADSs.

Substantial future sales or the expectation of substantial sales of our ADSs in the public market could cause the price of our ADSs to decline.

Sales of our ADSs in the public market after this offering, or the perception that these sales could occur, could cause the market price of our ADSs to decline. Upon completion of this offering, we will have ordinary shares outstanding represented by ADSs. All ADSs sold in this offering will be freely transferable without restriction or additional registration under the U.S. Securities Act of 1933, as amended, or the Securities Act. [The ordinary shares outstanding after this offering will be available for sale in the form of ADSs upon the expiration of the 180-day lock-up period beginning from the date of this prospectus, subject to volume and other restrictions as applicable under Rule 144 and Rule 701 under the Securities Act.] Any or all of these shares may be released prior to expiration of the lock-up period at the discretion of the underwriters. To the extent shares are released before the expiration of the lock-up period and these shares are sold into the market, the market price of our ADSs could decline.

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Because the initial public offering price is substantially higher than the pro forma net tangible book value per share, you will experience immediate and substantial dilution.

If you purchase ADSs in this offering, you will pay more for each ADS than the corresponding amount paid by existing shareholders for their ordinary shares. As a result, you will experience immediate and substantial dilution of approximately US$ per ADS (assuming that no outstanding options to acquire ordinary shares are exercised). See “Dilution” for a more complete description of how the value of your investment in our ADSs will be diluted upon the completion of this offering.

Mr. Yahui Zhou, our chairman of the board and chief executive officer, has substantial influence over our company and his interests may not be aligned with the interests of our other shareholders.

Upon the completion of this offering, Mr. Zhou will own % of the total voting power of our total issued and outstanding ordinary shares, assuming the underwriters do not exercise their option to purchase additional ADSs. As a result, Mr. Zhou will have substantial influence over our business, including significant corporate actions such as mergers, consolidations, sales of all or substantially all of our assets, election of directors and other significant corporate actions.

Mr. Zhou may take actions that are not aligned with the interests of our other shareholders and may render new investors unable to influence significant corporate decisions. This concentration of ownership discourage, delay or prevent a change in control of our company, which could deprive our shareholders of an opportunity to receive a premium for their shares as part of a sale of our company and may reduce the price of the ADSs. These actions may be taken even if they are opposed by our other shareholders, including those who purchase ADSs in this offering. In addition, the significant concentration of share ownership may adversely affect the trading price of the ADSs due to investors’ perception that conflicts of interest may exist or arise. For more information regarding our principal shareholders and their affiliated entities, see “Principal Shareholders.”

As a “controlled company” under the rules of the NASDAQ, we may be exempt from certain corporate governance requirements that could adversely affect our public shareholders.

Since Mr. Yahui Zhou, our chairman of the board and chief executive officer, is the beneficial owner of a majority of the voting power of our issued and outstanding share capital following the completion of this offering, we will qualify as a “controlled company” under the rules of the NASDAQ. Under these rules a company of which more than 50% of the voting power is held by an individual, group or another company is a controlled company and may elect not to comply with certain corporate governance requirements, including the requirement that a majority of our directors be independent, as defined in the NASDAQ rules, and the requirement that our compensation and nominating and corporate governance committees consist entirely of independent directors. Although we do not intend to rely upon any such exemptions, we could elect to rely on any or all of these exemptions in the future. Should we choose to do so, so long as we remain a controlled company relying on any of such exemptions and during any transition period following the time when we are no longer a controlled company, you would not have the same protections afforded to shareholders of companies that are subject to all of the NASDAQ corporate governance requirements.

We have not determined a specific use for a portion of the net proceeds from this offering, and we may use these proceeds in ways with which you may not agree.

We have not determined a specific use for a portion of the net proceeds of this offering, and our management will have considerable discretion in deciding how to apply these proceeds. You will not have the opportunity to assess whether the proceeds are being used appropriately before you make your investment decision. You must rely on the judgment of our management regarding the application of the net proceeds of this offering. We cannot assure you that the net proceeds will be used in a manner that would improve our results of operations or increase our ADS price, nor that these net proceeds will be placed only in investments that generate income or appreciate in value.

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If we are a passive foreign investment company for United States federal income tax purposes for any taxable year, United States holders of our ADSs or ordinary shares could be subject to adverse United States federal income tax consequences.

A non-United States corporation will be a passive foreign investment company, or PFIC, for United States federal income tax purposes for any taxable year if either (i) at least 75% of its gross income for such year is passive income or (ii) at least 50% of the value of its assets (based on an average of the quarterly values of the assets) during such year is attributable to assets that produce or are held for the production of passive income. A separate determination must be made after the close of each taxable year as to whether a non-United States corporation is a PFIC for that year. [Based on the current and anticipated value of our assets and composition of our income and assets, we do not expect to be a PFIC for United States federal income tax purposes for our current taxable year ending December 31, 2018.] However, the application of the PFIC rules is subject to uncertainty in several respects, and we cannot assure you the United States Internal Revenue Service, or IRS, will not take a contrary position.

Changes in the composition of our income or composition of our assets may cause us to become a PFIC. The determination of whether we will be a PFIC for any taxable year may depend in part upon the value of our goodwill and other unbooked intangibles not reflected on our balance sheet (which may depend upon the market value of the ADSs or ordinary shares from time to time) and also may be affected by how, and how quickly, we spend our liquid assets and the cash raised in this offering. In estimating the value of our goodwill and other unbooked intangibles, we have taken into account our anticipated market capitalization following the listing of the ADSs or ordinary shares on the NASDAQ. Among other matters, if our market capitalization is less than anticipated or subsequently declines, we may be or become a PFIC for the current or future taxable years because our liquid assets and cash (which are for this purpose considered assets that produce passive income) may then represent a greater percentage of our overall assets. Further, while we believe our classification methodology and valuation approach is reasonable, it is possible that the IRS may challenge our classification or valuation of our goodwill and other unbooked intangibles, which may result in our being or becoming a PFIC for the current or one or more future taxable years.

If we are a PFIC for any taxable year during which a United States person holds ADSs or ordinary shares, certain adverse United States federal income tax consequences could apply to such United States person. See “Taxation—Certain United States Federal Income Tax Considerations—Passive Foreign Investment Company.”

[Our memorandum and articles of association contain anti-takeover provisions that could have a material adverse effect on the rights of holders of our ordinary shares and ADSs.]

[We have adopted amended and restated memorandum and articles of association that will become effective immediately upon completion of this offering. Our new memorandum and articles of association contain provisions to limit the ability of others to acquire control of our company or cause us to engage in change-of-control transactions. These provisions could have the effect of depriving our shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of our company in a tender offer or similar transaction. We anticipate that will beneficially own % of the aggregate voting power of our company immediately following the completion of this offering assuming the underwriters do not exercise their over-allotment option to purchase additional ADSs. In addition, our board of directors has the authority, without further action by our shareholders, to issue preferred shares in one or more series and to fix their designations, powers, preferences, privileges and relative participating, optional or special rights and the qualifications, limitations or restrictions, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights associated with our ordinary shares, in the form of ADSs or otherwise. Preferred shares could be issued quickly with terms calculated to

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delay or prevent a change in control of our company or make removal of management more difficult. If our board of directors decides to issue preferred shares, the price of our ADSs may fall and the voting and other rights of the holders of our ordinary shares and ADSs may be materially and adversely affected.]

You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law.

We are an exempted company limited by shares registered under the laws of the Cayman Islands. Our corporate affairs are governed by our memorandum and articles of association, the Companies Law (2013 Revision) of the Cayman Islands and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States.

Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records or to obtain copies of lists of shareholders of these companies. Our directors have discretion under our articles of association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

Certain corporate governance practices in the Cayman Islands, which is our home country, differ significantly from requirements for companies incorporated in other jurisdictions such as the United States. Currently, we do not plan to rely on home country practice with respect to any corporate governance matter. However, if we choose to follow home country practice in the future, our shareholders may be afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers.

As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States. For a discussion of significant differences between the provisions of the Companies Law of the Cayman Islands and the laws applicable to companies incorporated in the United States and their shareholders, see “Description of Share Capital—Differences in Corporate Law.”

Certain judgments obtained against us by our shareholders may not be enforceable.

We are a Cayman Islands company and the majority of our assets are located outside of the United States. Substantially all of our current operations are conducted in Norway. In addition, a majority of our current directors and officers are nationals and residents of countries other than the United States. Substantially all of the assets of these persons are located outside the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe that your rights have been infringed under the U.S. federal securities laws or

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otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of Norway may render you unable to enforce a judgment against our assets or the assets of our directors and officers. For more information regarding the relevant laws of the Cayman Islands and Norway, see “Enforceability of Civil Liabilities.”

We are an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements.

We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from requirements applicable to other public companies that are not emerging growth companies including, most significantly, not being required to comply with the auditor attestation requirements of Section 404 for so long as we are an emerging growth company. We will remain an emerging growth company until the earliest of (a) the last day of the fiscal year during which we have total annual gross revenue of at least US$1.07 billion; (b) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (c) the date on which we have, during the preceding three-year period, issued more than US$1.07 billion in non-convertible debt; or (d) the date on which we are deemed to be a ‘‘large accelerated filer’’ under the Exchange Act, which would occur if the market value of the ADSs that are held by non-affiliates exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided by the JOBS Act.

The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. However, we have elected to “opt out” of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted for public companies. This decision to opt out of the extended transition period under the JOBS Act is irrevocable.

As a company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices for corporate governance matters that differ significantly from the NASDAQ corporate governance listing standards; these practices may afford less protection to shareholders than they would enjoy if we complied fully with the corporate governance listing standards.

We have applied to list our ADSs on the NASDAQ. The NASDAQ corporate governance listing standards permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the NASDAQ corporate governance listing standards.

For instance, we are not required to: (i) have a majority of the board be independent; (ii) have a compensation committee or a nominations or corporate governance committee consisting entirely of independent directors; or (iii) have regularly scheduled executive sessions with only independent directors each year. Currently, [we do not plan to rely on any of these exemptions], however, if we choose to follow home country practice in the future, our shareholders may be afforded less protection than they would otherwise enjoy under the NASDAQ corporate governance listing standards applicable to U.S. domestic issuers.

We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to United States domestic public companies.

Because we are a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:

•

the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC;

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•

the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act;

•

the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and

•

the selective disclosure rules by issuers of material nonpublic information under Regulation FD.

We will be required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish our results on a quarterly basis through press releases, distributed pursuant to the rules and regulations of the NASDAQ. Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information, which would be made available to you, were you investing in a U.S. domestic issuer.

The voting rights of holders of ADSs are limited by the terms of the deposit agreement, and you may not be able to exercise your right to vote the ordinary shares.

As a holder of our ADSs, you will only be able to exercise the voting rights with respect to the underlying ordinary shares in accordance with the provisions of the deposit agreement. Under the deposit agreement, you must vote by giving voting instructions to the depositary. Upon receipt of your voting instructions, the depositary will vote the underlying ordinary shares in accordance with these instructions. You will not be able to directly exercise your right to vote with respect to the underlying shares unless you withdraw the shares. Under our amended and restated memorandum and articles of association that will become effective immediately upon completion of this offering, the minimum notice period required for convening a general meeting is [14] days. When a general meeting is convened, you may not receive sufficient advance notice to withdraw the shares underlying your ADSs to allow you to vote with respect to any specific matter. If we ask for your instructions, the depositary will notify you of the upcoming vote and will arrange to deliver our voting materials to you. We cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote your shares. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for their manner of carrying out your voting instructions. This means that you may not be able to exercise your right to vote and you may have no legal remedy if the shares underlying your ADSs are not voted as you requested.

[The depositary for our ADSs will give us a discretionary proxy to vote the ordinary shares underlying your ADSs if you do not vote at shareholders’ meetings, except in limited circumstances, which could adversely affect your interests.]

Under the deposit agreement for the ADSs, if you do not vote, the depositary will give us a discretionary proxy to vote our ordinary shares underlying your ADSs at shareholders’ meetings unless:

•

we have failed to timely provide the depositary with notice of the meeting and related voting materials;

•

we have instructed the depositary that we do not wish a discretionary proxy to be given;

•

we have informed the depositary that there is substantial opposition as to a matter to be voted on at the meeting;

•

a matter to be voted on at the meeting would have a material adverse impact on shareholders; or

•

the voting at the meeting is to be made on a show of hands.

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The effect of this discretionary proxy is that if you do not vote at shareholders’ meetings, you cannot prevent our ordinary shares underlying your ADSs from being voted, except under the circumstances described above. This may make it more difficult for shareholders to influence the management of our company. Holders of our ordinary shares are not subject to this discretionary proxy.

You may not receive dividends or other distributions on our ordinary shares and you may not receive any value for them, if it is illegal or impractical to make them available to you.

The depositary of our ADSs has agreed to pay to you the cash dividends or other distributions it or the custodian receives on the ordinary shares or other deposited securities underlying our ADSs, after deducting its fees and expenses. You will receive these distributions in proportion to the number of ordinary shares your ADSs represent. However, the depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any holders of ADSs. For example, it would be unlawful to make a distribution to a holder of ADSs if it consists of securities that require registration under the Securities Act but that are not properly registered or distributed under an applicable exemption from registration. The depositary may also determine that it is not feasible to distribute certain property through the mail. Additionally, the value of certain distributions may be less than the cost of mailing them. In these cases, the depositary may determine not to distribute such property. We have no obligation to register under U.S. securities laws any ADSs, ordinary shares, rights or other securities received through such distributions. We also have no obligation to take any other action to permit the distribution of ADSs, ordinary shares, rights or anything else to holders of ADSs. This means that you may not receive distributions we make on our ordinary shares or any value for them if it is illegal or impractical for us to make them available to you. These restrictions may cause a material decline in the value of our ADSs.

You may experience dilution of your holdings due to inability to participate in rights offerings.

We may, from time to time, distribute rights to our shareholders, including rights to acquire securities. Under the deposit agreement, the depositary will not distribute rights to holders of ADSs unless the distribution and sale of rights and the securities to which these rights relate are either exempt from registration under the Securities Act with respect to all holders of ADSs, or are registered under the provisions of the Securities Act. The depositary may, but is not required to, attempt to sell these undistributed rights to third parties, and may allow the rights to lapse. We may be unable to establish an exemption from registration under the Securities Act, and we are under no obligation to file a registration statement with respect to these rights or underlying securities or to endeavor to have a registration statement declared effective. Accordingly, holders of ADSs may be unable to participate in our rights offerings and may experience dilution of their holdings as a result.

You may be subject to limitations on transfer of your ADSs.

Your ADSs are transferable on the books of the depositary. However, the depositary may close its books at any time or from time to time when it deems expedient in connection with the performance of its duties. The depositary may close its books from time to time for a number of reasons, including in connection with corporate events such as a rights offering, during which time the depositary needs to maintain an exact number of ADS holders on its books for a specified period. The depositary may also close its books in emergencies, and on weekends and public holidays. The depositary may refuse to deliver, transfer or register transfers of our ADSs generally when our share register or the books of the depositary are closed, or at any time if we or the depositary thinks it is advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement or for any other reason.

The requirements of being a public company may strain our resources and divert our management’s attention.

As a public company, we will be subject to the reporting requirements of the Exchange Act, the U.S. Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, the Dodd-Frank Act and the listing standards of

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NASDAQ as applicable to a foreign private issuer, which are different in some material respects from those required for a U.S. public company. We expect that the requirements of these rules and regulations will increase our legal, accounting and financial compliance costs, make some activities more difficult, time consuming and costly, and place significant strain on our personnel, systems and resources. See “—Risks Related to Our Business and Industry—Material weaknesses in our internal control over financial reporting have been identified, and if we fail to implement and maintain effective internal control over financial reporting, we may be unable to accurately report our results of operations, meet our reporting obligations or prevent fraud.” As a result of disclosure of information in this prospectus and in filings required of a public company, our business and financial condition will become more visible, which we believe may result in threatened or actual litigation, including by competitors, shareholders or third parties. If such claims are successful, our business and operating results could be harmed, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and harm our business and operating results.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

This prospectus contains forward-looking statements that involve risks and uncertainties. All statements other than statements of current or historical facts are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, including those listed under “Risk Factors,” that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.

In some cases, you can identify these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “likely to” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include statements about:

•

our goals and strategies;

•

our expected development and launch, and market acceptance, of our products and services;

•

our future business development, financial condition and results of operations;

•

the expected growth in, and market size of, the global internet industry;

•

expected changes in our revenue, costs or expenditures;

•

our expectations regarding demand for and market acceptance of our brand, platforms and services;

•

our expectations regarding growth in our user base and level of engagement;

•

our ability to attract, retain and monetize users;

•

our ability to continue to develop new technologies and/or upgrade our existing technologies;

•

our expectation regarding the use of proceeds from this offering;

•

growth of and trends of competition in our industry;

•

government policies and regulations relating to our industry; and

•

general economic and business conditions in the markets we have businesses.

You should read this prospectus and the documents that we refer to in this prospectus with the understanding that our actual future results may be materially different from and worse than what we expect. Other sections of this prospectus include additional factors which could adversely impact our business and financial performance. Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements.

You should not rely upon forward-looking statements as predictions of future events. The forward-looking statements made in this prospectus relate only to events or information as of the date on

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which the statements are made in this prospectus. Except as required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You should read this prospectus and the documents that we refer to in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect.

This prospectus also contains statistical data and estimates that we obtained from industry publications and reports generated by government or third-party providers of market intelligence. Although we have not independently verified the data, we believe that the publications and reports are reliable. However, the statistical data and estimates in these publications and reports are based on a number of assumptions and if any one or more of the assumptions underlying the market data are later found to be incorrect, actual results may differ from the projections based on these assumptions. In addition, due to the rapidly evolving nature of the online content consumption and e-commerce industries, projections or estimates about our business and financial prospects involve significant risks and uncertainties.

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USE OF PROCEEDS

We estimate that we will receive net proceeds from this offering of approximately US$ million, or approximately US$ million if the underwriters exercise their option to purchase additional ADSs in full, after deducting underwriting discounts and commissions and estimated offering expenses payable by us. These estimates are based upon an assumed initial offering price of US$ per ADS, the mid-point of the estimated range of the initial public offering price shown on the front cover of this prospectus. A US$1.00 change in the assumed initial public offering price of US$ per ADS would, in the case of an increase, increase and, in the case of a decrease, decrease the net proceeds of this offering by US$ million, or approximately US$ million if the underwriters exercise their option to purchase additional ADSs in full, under these assumptions. [We will not receive any of the proceeds from the sale of ADSs by the selling shareholder[s].]

The primary purposes of this offering are to create a public market for our ordinary shares in the form of ADSs for the benefit of all shareholders, retain talented employees by providing them with equity incentives and obtain additional capital. We plan to use the net proceeds of this offering as follows:

•

US$ million for research and development to continue to strengthen our AI-driven content discovery and recommendation platform and overall product portfolio;

•

US$ million for distribution and marketing to further improve brand awareness across all markets and attract new users to our products;

•

US$ million to pursue strategic partnership, investment and acquisition opportunities, though currently we have not identified any potential targets; and

•

the remainder for working capital and other general corporate purposes.

The amounts and timing of any expenditures will vary depending on the amount of cash generated by our operations, and the rate of growth, if any, of our business, and our plans and business conditions. The foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this offering. Our management will have significant flexibility in applying discretion to apply the net proceeds of the offering. If an unforeseen event occurs or business conditions change, we may use the proceeds of this offering differently than as described in this prospectus.

Pending use of the net proceeds, we intend to hold our net proceeds in demand deposits or invest them in interest-bearing government securities.

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DIVIDEND POLICY

We do not have any present plan to pay any cash dividends on our ordinary shares in the foreseeable future after this offering. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.

Our board of directors has discretion as to whether to distribute dividends, subject to certain requirements of Cayman Islands law. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our directors. Under Cayman Islands law, a Cayman Islands company may pay a dividend out of either profit or share premium account, provided that in no circumstances may a dividend be paid if this would result in the company being unable to pay its debts as they fall due in the ordinary course of business. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant. If we pay any dividends on our ordinary shares, we will pay those dividends which are payable in respect of the ordinary shares underlying the ADSs to the depositary, as the registered holder of such ordinary shares, and the depositary then will pay such amounts to the ADS holders who will receive payment to the same extent as holders of our ordinary shares, subject to the terms of the deposit agreement, including the fees and expenses payable thereunder. See “Description of American Depositary Shares.” Cash dividends on our ordinary shares, if any, will be paid in U.S. Dollars.

We are a holding company incorporated in the Cayman Islands. For our cash requirements, including any payment of dividends to our shareholders, we rely upon payments from our operating entities. We rely on a combination of dividend payments from our subsidiaries in markets we operate such as Norway. Regulations in Norway where we utilize dividend payments may restrict the ability of our subsidiaries to pay dividends to us.

See “Business—Norwegian Regulation—Regulations on Dividend Distributions,” and “Risk Factors—Risks Related to Our ADSs and This Offering—We currently do not expect to pay dividends in the foreseeable future and you must rely on price appreciation of our ADSs for return on your investment.”

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CAPITALIZATION

The following table sets forth our capitalization as of December 31, 2017:

•

of Kunhoo Software LLC on an actual basis derived from our audited consolidated financial statements included elsewhere in this prospectus;

•

of Opera Limited on an as adjusted basis to give effect to (i) the change of the Group holding company from Kunhoo Software LLC to Opera Limited before this offering, and (ii) the issuance and sale of ordinary shares in the form of ADSs by us in this offering at an assumed initial public offering price of US$ per ADS, the mid-point of the estimated range of the initial public offering price shown on the front cover of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

You should read this table together with our consolidated financial statements and the related notes included elsewhere in this prospectus and the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

As of December 31, 2017

Actual

As Adjusted

(unaudited)

(US$ thousands, except for
share and per share data)

Long-term borrowings:

Interest bearing loans

3,767

Total long-term borrowings

3,767

Shareholders’ equity:

Ordinary shares (US$ par value; shares authorized, shares issued and outstanding on an actual basis and shares issued and outstanding on an as adjusted basis)

576,531

Additional paid-in capital(1)

—

Retained earnings

5,366

Other component of equity

1,605

Total shareholders’ equity

583,503

Total capitalization(1)(2)

587,270

(1)

A US$1.00 increase (decrease) in the assumed initial public offering price of US$ per ADS, the mid-point of the estimated range of the initial public offering price shown on the front cover of this prospectus, would increase (decrease) each of additional paid-in capital, total shareholders’ equity and total capitalization by US$ million, assuming the number of ADSs offered by us, as set forth on the front cover of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

(2)

Total capitalization means long-term borrowings plus total equity.

The discussion and table above exclude exercise of any outstanding restricted share units pursuant to our share incentive plan[s] after December 31, 2017. See “Management—Share Incentive Plan[s]” for details of these awards.

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DILUTION

If you invest in the ADSs, your interest will be diluted to the extent of the difference between the initial public offering price per ADS and our net tangible book value per ADS after this offering. Dilution results from the fact that the initial public offering price per ordinary share is substantially in excess of the book value per ordinary share attributable to the existing shareholders for our presently outstanding shares.

Our net tangible book value as of December 31, 2017 was approximately US$ million, or US$ per ordinary share and US$ per ADS. Dilution is determined by subtracting as adjusted net tangible book value per ordinary share, after giving effect to the additional proceeds we will receive from this offering, from the assumed initial public offering price per ordinary share.

Without taking into account any other changes in such net tangible book value after December 31, 2017, other than to give effect to the issuance and sale of ADSs in this offering at an assumed initial public offering price of US$ per ADS, the mid-point of the estimated range of the initial public offering price shown on the front cover of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us and assuming the underwriters’ option to purchase additional ADSs is not exercised, our as adjusted net tangible book value as of December 31, 2017 would have been US$ per outstanding ordinary share, including ordinary shares underlying our outstanding ADSs, or US$ per ADS. This represents an immediate increase in net tangible book value of US$ per ordinary share, or US$ per ADS, to existing shareholders and an immediate dilution in net tangible book value of US$ per ordinary share, or US$ per ADS, to investors purchasing ADSs in this offering. The as adjusted information discussed above is illustrative only. The following table illustrates such dilution:

Per Ordinary
Share

Per ADS

Assumed initial public offering price

US$

Net tangible book value as of December 31, 2017

US$

As adjusted net tangible book value after giving effect to this offering

US$

Increase in net tangible book value attributable to this offering

US$

Amount of dilution in net tangible book value to new investors in the offering

US$

A US$1.00 change in the assumed public offering price of US$ per ADS would, in the case of an increase, increase and, in the case of a decrease, decrease our as adjusted net tangible book value as described above by US$ million, the as adjusted net tangible book value per ordinary share and per ADS by US$ per ordinary share and by US$ per ADS, and the dilution per ordinary share and per ADS to new investors in this offering by US$ per ordinary share and US$ per ADS, respectively, assuming no change to the number of ADSs offered by us as set forth on the front cover of this prospectus, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. Our net tangible book value following the completion of this offering is subject to adjustment based on the actual initial public offering price of the ADSs and other terms of this offering determined at pricing.

The following table summarizes, on an as adjusted basis as of December 31, 2017, the differences between the existing shareholders as of December 31, 2017 and the new investors with respect to the number of ordinary shares (in the form of ADSs or ordinary shares) purchased from us in this offering, the total consideration paid and the average price per ordinary share paid and per ADS at an assumed initial public offering price of US$ per ADS before deducting underwriting discounts and commissions and estimated offering expenses payable by us. The total number of ordinary shares does not include ordinary shares underlying the ADSs issuable upon the exercise of the option to purchase additional ADSs which we [and the selling shareholder[s]] granted to the underwriters.

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	Ordinary Shares Purchased			Total Consideration			Average Price
	Number	Percent		Amount in US$ thousands	Percent		per Ordinary Share	Per ADS
Existing shareholders			%			%
New investors			%			%
Total			%			%
			100.0%			100.0%

The discussion and tables above exclude exercise of any outstanding restricted share units pursuant to our share incentive plan after December 31, 2017. See “Management—Share Incentive Plan” for details of these awards. To the extent any of these awards are exercised or vested, there will be further dilution to new investors.

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ENFORCEABILITY OF CIVIL LIABILITIES

We are incorporated under the laws of the Cayman Islands as an exempted company with limited liability. We are incorporated in the Cayman Islands because of certain benefits associated with being a Cayman Islands company, such as political and economic stability, an effective judicial system, a favorable tax system, the absence of foreign exchange control or currency restrictions and the availability of professional and support services. However, the Cayman Islands has a less developed body of securities laws as compared to the United States and provides less protection for investors. In addition, Cayman Islands companies do not have standing to sue before the federal courts of the United States.

Our constitutional documents do not contain provisions requiring that disputes, including those arising under the securities laws of the United States, between us, our executive officers, directors and shareholders, be subject to arbitration.

Substantially all of our assets are located outside the United States. In addition, most of our directors and executive officers are nationals or residents of jurisdictions other than the United States and substantially all of their assets are located outside the United States. As a result, it may be difficult or impossible for you to effect service of process within the United States upon us or these persons, or to enforce judgments obtained in U.S. courts against us or them, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States. It may also be difficult for you to enforce judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our executive officers and directors.

We have appointed [•] as our agent to receive service of process with respect to any action brought against us in the U.S. District Court for the Southern District of New York in connection with this offering under the federal securities laws of the United States or of any State in the United States or any action brought against us in the Supreme Court of the State of New York in the County of New York in connection with this offering under the securities laws of the State of New York.

Cayman Islands

Maples and Calder, our counsel as to Cayman Islands law, has advised us that there is uncertainty as to whether the courts of the Cayman Islands would (i) recognize or enforce judgments of U.S. courts obtained against us or our directors or executive officers that are predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States, or (ii) entertain original actions brought in the Cayman Islands against us or our directors or executive officers that are predicated upon the securities laws of the United States or any state in the United States.

Maples and Calder has informed us that although there is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States (and the Cayman Islands are not a party to any treaties for the reciprocal enforcement or recognition of such judgments), a judgment obtained in such jurisdiction will be recognized and enforced in the courts of the Cayman Islands at common law, without any re-examination of the merits of the underlying dispute, by an action commenced on the foreign judgment debt in the Grand Court of the Cayman Islands, provided such judgment (a) is given by a competent foreign court with jurisdiction to give the judgment, (b) imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given, (c) is final and conclusive, (d) is not in respect of taxes, a fine or a penalty; and (e) was not obtained in a manner and is not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands. However, the Cayman Islands courts are unlikely to enforce a judgment obtained from the U.S. courts under civil liability provisions of the U.S. federal securities law if such judgment is determined by the courts of the Cayman Islands to give rise to obligations to make payments that are penal or punitive in nature. Because such a determination has not yet been made by a court of the Cayman Islands, it is uncertain whether such civil liability judgments from U.S. courts would be enforceable in the Cayman Islands.

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Norway

Wikborg Rein, our counsel as to Norwegian law, has advised us that there is uncertainty as to whether courts in Norway will enforce judgments obtained in other jurisdictions, including the United States, against us or our directors and officers under the securities laws of those jurisdictions or entertain actions in Norway against our directors and officers under the securities laws of other jurisdictions.

In addition, awards of punitive damages in actions brought in the United States or elsewhere may not be enforceable in Norway. The United States and Norway do not currently have a treaty providing for reciprocal recognition and enforcement of judgements (other than arbitral awards) in civil and commercial matters.

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CORPORATE HISTORY AND STRUCTURE

Corporate History

We are an exempted company with limited liability incorporated in the Cayman Islands. We conduct our business mainly through our operating company, Opera Software AS, in Norway, and its subsidiaries located in countries across the world. We trace our history back to the founding of Otello Corporation ASA, (formerly known as Opera Software ASA), or Otello, a private limited liability company incorporated under the laws of Norway in June 1995. In September 1996, our predecessor introduced the first version of our “Opera” branded browser software and have since been a pioneer in redefining the web browsing experience and providing personalized content discovery platforms for hundreds of millions of global internet users. In March 2004, Otello converted to a public company and was listed on the Oslo stock exchange, Oslo Børs under the ticker code “OPERA.”

•

Demerger from Otello. In March 2016, the Consumer Business, including all related assets, rights and obligations, and the majority of Otello’s other businesses were contributed to Opera Software AS, a wholly owned subsidiary that was formed in December 2015.

•

Restructuring of Otello. Except for activities related to certain Otello businesses and its corporate functions within Opera Software AS, Otello’s businesses were largely operated through distinct entities. However, the ownership hierarchy was not organized in separate legal structures reflecting the underlying businesses. During August and September 2016, Otello undertook a number of internal transactions to establish Opera Software AS as the ultimate holding company of all entities related to its Consumer Business, and to move Otello’s corporate activities and other businesses to be held outside of Opera Software AS.

•

Acquisition by the Group. In July 2016, a consortium of investors led by Mr. Yahui Zhou, our chairman of the board and chief executive officer, established Kunhoo Software LLC, a limited liability company incorporated in the Cayman Islands, and three intermediate holding companies for the purpose of acquiring Opera Software AS. See “—Corporate Structure.” The rights to purchase Opera Software AS were assigned from Golden Brick Capital Private Equity Fund I L.P. to Kunhoo Software AS, one of the Kunhoo intermediate holding companies. Kunhoo Software AS acquired all of the shares of Opera Software AS on November 3, 2016, for a consideration of US$575.0 million less working capital adjustments.

•

Incorporation of the listing entity. In March 2018, Opera Limited was incorporated as our proposed listing entity in the Cayman Islands. Prior to completion of this offering, Opera Limited will become the Group’s holding company by way of an exchange of equity interests in which the existing members of Kunhoo Software LLC exchange their interests in Kunhoo Software LLC for shares having substantially the same rights in Opera Limited. Upon the transfer, the historical consolidated financial statements of Kunhoo Software LLC will become the historical consolidated financial statements of Opera Limited.

Corporate Structure

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•

Kunhoo Software Limited, our wholly owned subsidiary established in Hong Kong on July 27, 2016, is a holding company in Hong Kong;

•

Kunhoo Software S.a.r.l., our wholly owned subsidiary established in Luxembourg on August 16, 2016, is a holding company in Luxembourg;

•

Kunhoo Software AS, our wholly owned subsidiary established in Norway on January 5, 2016, is a holding company in Norway;

•

Opera Software AS, our wholly owned subsidiary established in Norway on December 4, 2015, is an operating entity that owns all of our intellectual property rights, offers products and services to our users, and is party to most of our revenue generating agreements and employs our staff in Norway;

•

Opera Software Ireland Ltd., our wholly owned subsidiary established in Ireland on October 22, 2013, is an operating entity that employs our staff in Ireland;

•

Opera Software International AS, our wholly owned subsidiary established in Norway on January 5, 2005, is a holding company in Norway;

•

Opera Software India Private Limited, our wholly owned subsidiary established in India on February 27, 2007, is an operating entity that employs our staff in India;

•

Opera Software Poland Sp.z.o.o., our wholly owned subsidiary established in Poland on May 21, 2014, is an operating entity that employs our staff in Poland;

•

Opera Software Technology (Beijing) Co., Ltd., our wholly owned subsidiary established in the PRC on February 12, 2009, is an operating entity that employs our staff in the PRC;

•

Opera Software Netherlands B.V., our wholly owned subsidiary established in the Netherlands on June 26, 2013, is a corporate entity that holds our contracts and servers from our Amsterdam and Singapore data centers;

•

Hern Labs AB, our wholly owned subsidiary established in Sweden on May 25, 1998, is an operating entity that employs our staff in Sweden;

•

Opera Software Holdings LLC, our wholly owned subsidiary established in the United States on July, 8, 2016, is a holding company in the United States;

•

Opera Software Americas LLC, our wholly owned subsidiary established in the United States on January 1, 2013, is an operating entity that holds our contracts and servers for our data centers located in the United States;

•

Opesa South Africa (Pty) Limited, our wholly owned subsidiary established in South Africa on March 15, 2017, is an operating entity that employs our staff in South Africa and engages in local collections and monetization;

•

O-Play Digital Services Limited, our wholly owned subsidiary established in Nigeria on June 22, 2017, is an operating entity that engages in local collections and monetization;

•

O-Play Kenya Limited, our subsidiary established in Kenya on May 24, 2017, is an operating entity that engages in local collections and monetization; and

•

Phoneserve Technologies Co. Limited, our subsidiary established in Kenya on April 17, 2015, is an operating entity that engages in local collections and monetization.

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The chart below summarizes our corporate structure and identifies our principal subsidiaries and their places of incorporation as of the date of this prospectus:

20% held by nominee shareholder.

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SELECTED CONSOLIDATED HISTORICAL AND PRO FORMA FINANCIAL INFORMATION

The following selected consolidated statements of operations data for the period from January 1, 2016 to November 3, 2016 (the “Predecessor”) and from inception of Kunhoo Software LLC on July 26, 2016, to December 31, 2016, and for the year ended December 31, 2017, and selected consolidated statements of financial position data as of December 31, 2016 and 2017 (the “Successor”), have been derived from our audited consolidated financial statements included elsewhere in this prospectus.

The consolidated financial statements are prepared and presented in accordance with IFRS, as issued by the International Accounting Standards Board. Our historical results are not necessarily indicative of results expected for future periods. You should read this “Selected Consolidated Financial Data” section together with our consolidated financial statements and the related notes and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section included elsewhere in this prospectus.

The following tables also set forth the selected pro forma consolidated statement of operations for the year ended December 31, 2016, which reflects the effect of the acquisition of Opera Software AS and its subsidiaries and the Consumer Business on November 3, 2016, by Kunhoo Software LLC and its subsidiaries, or the Group, as if such transaction had occurred on January 1, 2016. Prior to the acquisition, the Group had no operations. See “Management’s Discussion and Analysis of Financial Condition and Results of Operation—Unaudited Pro Forma Consolidated Financial Information” for more information. The pro forma adjustments are based upon currently available information and certain assumptions that are factually supportable and that we believe are reasonable under the circumstances. The pro forma financial information does not necessarily reflect, what our actual consolidated results of operations would have been had the transactions occurred on the dates indicated, nor are they necessarily indicative of results that may be expected for any future period.

Selected Consolidated Statement of Operations

	2016						2017

	Predecessor for the period from January 1, 2016 to November 3, 2016		Successor Group since inception on July 26, 2016 to December 31, 2016		Unaudited pro forma consolidated Group for the year ended December 31, 2016(1)		Successor Group for the year ended December 31, 2017
			(US$ in thousands, except for percentages)
Operating revenue and other income:
Operating revenue		88,518		18,767		107,285		128,893
Other income		—		—		—		5,460
Operating expenses:
Payouts to publishers and monetization partners		(638)		(469)		(1,107)		(1,303)
Personnel expenses including share-based remuneration		(35,493)		(5,972)		(41,465)		(44,315)
Depreciation and amortization		(9,586)		(3,082)		(16,712)		(16,604)
Other operating expenses		(42,486)		(19,032)		(55,418)		(58,652)
Restructuring costs		(3,911)		—		(3,911)		(3,240)
Total operating expenses		(92,113)		(28,555)		(118,613)		(124,114)
Operating profit (loss)		(3,595)		(9,788)		(11,328)		10,239
Income (loss) from associate and joint ventures:
Share of net income (loss) of associates and joint ventures		(2,664)		(237)		(2,901)		(1,670)

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	2016						2017

	Predecessor for the period from January 1, 2016 to November 3, 2016		Successor Group since inception on July 26, 2016 to December 31, 2016		Unaudited pro forma consolidated Group for the year ended December 31, 2016(1)		Successor Group for the year ended December 31, 2017
			(US$ in thousands, except for percentages)
Net financial income (loss):
Financial income		—		37		37		1,054
Financial expense		(1,378)		(24)		(1,402)		(238)
Net foreign exchange gains (losses)		(1,212)		212		(1,000)		(1,881)
Total net financial income (loss)		(2,590)		225		(2,365)		(1,065)
Net income (loss) before income taxes		(8,849)		(9,800)		(16,594)		7,504
Income tax (expense) benefit		743		2,096		3,850		(1,440)
Net income (loss)		(8,106)		(7,704)		(12,744)		6,064
Non-IFRS Financial Measures
Adjusted EBITDA(2)		10,816		(6,706)		10,210		34,119
Adjusted net income (loss)(2)		(7,229)		(7,704)		(11,866)		14,962

(1)

Including pro forma adjustments. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Unaudited Pro Forma Consolidated Financial Information.”

(2)

	Successor Group as of December 31, 2016		Successor Group as of December 31, 2017
	(US$ in thousands)
Selected Consolidated Statement of Financial Position Data:
Total non-current assets		561,511		561,989
Intangible assets		124,536		118,620
Investments in associates and joint ventures		1,043		5,517
Total current assets		78,967		74,311
Cash and cash equivalents		34,181		33,207
Total assets		640,479		636,300
Total equity		568,197		583,503
Total non-current liabilities		19,010		15,947
Total current liabilities		53,272		36,850
Total liabilities		72,282		52,797
Total equity and liabilities		640,479		636,300

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the section entitled “Selected Consolidated Financial Data” and our consolidated financial statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and elsewhere in this prospectus.

The unaudited pro forma consolidated financial information for the year ended December 31, 2016 presented in this section is provided supplementally and includes adjustments to give effect to the acquisition of the acquired Consumer Business, held by Opera Software AS with its subsidiaries, or the Predecessor, which was completed on November 3, 2016, as if such transaction had occurred on January 1, 2016. See “—Unaudited Pro Forma Consolidated Financial Information” for a discussion of the adjustments made for the presentation of the pro forma consolidated financial information.

Overview

Factors Affecting Our Results of Operations

Our business and operating results are affected by general factors affecting the global online content consumption and e-commerce industries, which include:

•

overall global economic growth;

•

mobile and PC internet usage and penetration rate by geography;

•

growth of online content consumption, and its popularity as an advertising medium;

•

growth of online commerce and related advertising; and

•

governmental policies and initiatives affecting online content consumption and e-commerce.

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While our business is influenced by these general factors, we believe our results of operations are more directly affected by company specific factors, including the following major factors:

Our Ability to Maintain and Expand Our User Base and Maintain and Enhance User Engagement

Our user base is important for our revenue generation, both because its sheer size makes us an attractive partner for search and advertising partners, and in terms of directly impacting our user-generated revenues. The following table presents certain of our user metrics for the periods indicated:

	Three months ended
	March 31, 2016		June 30, 2016		Sept 30, 2016		Dec 31, 2016		March 31, 2017		June 30, 2017		Sept 30, 2017		Dec 31, 2017
	(in millions)
Smartphone average MAUs		139.8		138.1		146.1		164.1		157.5		160.6		171.5		180.4
PC average MAUs		51.7		45.3		40.5		42.2		42.6		45.6		49.4		54.8
Opera News average MAUs		—		—		—		—		9.1(1)		24.8		39.3		72.4

(1)

Representing MAUs in March 2017 only, which is when MAU figures were first available.

Our total browser average MAUs was 321.0 million in the fourth quarter of 2017, including 266.2 million mobile browser users and 54.8 million PC browser users. Our mobile browser users include 180.4 million smartphone users and 85.7 million feature phone users. All of our Opera News users during the fourth quarter of 2017 were browser users because we did not launch our standalone Opera News App until 2018.

Our smartphone user base followed a positive growth trend across 2016 and 2017, adding 40.7 million MAUs over the period with seasonally highest growth in the third and fourth quarters. In the fourth quarter of 2016, we also increased our marketing activities before returning to a lower spend level in the first quarter of 2017, thereby seeing a decline in smartphone MAUs as the least loyal new users churned away in addition to the seasonal effect.

Our PC user base declined during the second and third quarters of 2016 as we focused the product and marketing on lower volume yet higher value segments, thereafter increasing by 14.3 million MAUs from the third quarter of 2016 to the fourth quarter of 2017.

Our ability to continue to effectively maintain and expand our user base will affect the growth of our business and our revenues going forward. We generate revenues from our business partners, including search providers and advertisers, who are drawn to our platform in part because of the size of our user base, its attractive demographics, and our level of user engagement. Our ability to maintain and expand our user base, as well as maintain and enhance user engagement, depends on, among other things, the effectiveness of our marketing and distribution spend, our ability to continuously offer comprehensive and effective products and services, recommend personalized content through technological innovation and provide a superior content discovery experience.

Our Ability to Monetize

We have long and deep relationships with our monetization partners. Changes in the revenue sharing or fee arrangements with our key monetization partners may materially affect our revenues, although we have not seen material impacts to our revenues over the 2016-2017 period from such pricing related factors. However, for example, a change in the revenue sharing percentage paid by certain of our major partners such as Google or Yandex, or a change in their payment policies or other contractual arrangements, could impact our revenues, either positively or negatively. Likewise, with respect to certain major advertising partners, changes in the fee rate we receive per click or per sale may affect our revenues.

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Further, our revenue generation is affected by our ability to promote and improve our users’ experience with our partners’ services, and our ability to open more advertising inventory. Such improvements provided an increase in revenue per user in 2017.

In 2017, we had approximately 160 monetization partners. We intend to maintain and deepen our relationships with current partners and attract more partners to increase and diversify our revenue sources. Our ability to further increase the number of partners primarily depends on whether we can provide integrated marketing services and help them more precisely reach their targeted users through our AI-powered content discovery platform.

Our Brand Recognition and Market Leadership

We believe that the strong brand recognition of “Opera” is a key element of our success. Our ability to maintain our market share and brand recognition as a leading independent content discovery platform is key to our ability to maintain and enhance relationships with our users, monetization partners, content partners, distribution partners, and increase our revenues. In addition, the reputation and attractiveness of our platform among internet users also serves as a highly efficient marketing channel for our new products and services, through which we plan to introduce additional means of monetization to fuel future revenue growth.

Our Ability to Manage Our Operating Expenses

Our results of operations depend on our ability to manage our operating expenses. Our operating expenses consist primarily of staff cost, marketing and distribution expenses, server hosting expenses and rent. We expect the absolute amount of staff cost, server hosting expenses and rent to increase as we grow our business and as we make necessary adjustments to operate as a public company. We anticipate further investing in our growth by incurring increased marketing and distribution expenses. However, we expect our costs and operating expenses to decrease as a percentage of revenue as we improve our operating efficiency and as a result of economies of scale. For example, we underwent a restructuring process to streamline the business from late 2016 to early 2017, through which we consolidated and strengthened development in our current major hubs, and concentrated our Oslo headquarters around corporate functions, reducing the Oslo headcount from approximately 140 to 40. Following this restructuring, our personnel expenses excluding share-based remuneration decreased 14.1% from 2016, on a pro forma consolidated basis, to 2017. In addition, other operating expenses increased 5.8% from 2016, on a pro forma consolidated basis, to 2017, while our operating revenue increased 20.1% during the same period.

Our marketing and distribution spend in 2017 was stable compared to 2016, increasing by only 1.4% on a pro forma consolidated basis. In the same periods, we grew our PC average MAUs by 7.1%, with 29.9% growth from the fourth quarter of 2016 to the fourth quarter of 2017, and we also grew our smartphone average MAUs by 13.9% from 2016 to 2017, with 9.9% growth from the fourth quarter of 2016 to the fourth quarter of 2017.

We balance distribution initiatives with revenue generation to ensure an attractive return on investment from marketing and distribution. We grew our user-generated search and advertising revenues by 24.5% from 2016, on a pro forma consolidated basis, to 2017, indicative of our ability to enhance monetization on top of ensuring a stable and growing user base, including the impact of the Opera News advertising monetization that started in the second half of 2017.

Our Ability to Strengthen Our Technological Capabilities, Especially AI and Big Data

The internet business in general has undergone constant technological evolution. In particular, AI and big data have been transforming, and will continue to transform, the internet industry, especially the content consumption market. We are dedicated to continually enhancing and applying our capabilities to

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new forms of content discovery and recommendation technologies and other applications. We also plan to develop new products and services that could provide us additional monetization opportunities. To maintain and enhance our innovation capabilities, we have increased our investments in research and development and expect to continue to do so.

Unaudited Pro Forma Consolidated Financial Information

The unaudited pro forma consolidated statement of operations for the year ended December 31, 2016, is based on the historical audited consolidated financial statements of the Group and the audited consolidated financial statements of the acquired Consumer Business, held by Opera Software AS with subsidiaries when acquired (such financial information presented as “Predecessor”). All financial statements, including the Predecessor statements, were prepared in accordance with IFRS using the accounting policies described in our audited consolidated financial statements. Kunhoo Software LLC is a limited liability company incorporated in the Cayman Islands on July 26, 2016, and had no operations prior to the acquisition of the Opera Software AS, although it did incur significant transaction costs prior to the acquisition date. See “Corporate History and Structure—Corporate History.” These pro forma consolidated financial statements give effect to the acquisition of Opera Software AS by the Group as if the acquisition had occurred as of January 1, 2016. The actual acquisition date was November 3, 2016, and included cash consideration of US$575.0 million less working capital adjustments of US$17.3 million that were settled in cash in December 2016 and January 2018. No financing obligations were incurred as a result of the transaction.

Basis of Preparation

The unaudited pro forma financial information was prepared in accordance with Article 11 of Regulation S-X. Accordingly, the historical consolidated financial statements have been adjusted in the pro forma financial statements to give effect to pro forma events that are (i) directly attributable to the acquisition of Opera Software AS, (ii) expected to have a continuing impact on the Group and (iii) factually supportable.

In preparing the unaudited pro forma consolidated financial information, we have utilized the values of identifiable tangible and intangible net assets acquired, including goodwill resulted from the purchase price allocation used to record the purchase of Opera Software AS, and related depreciation and amortization periods and income tax effects when applicable.

The unaudited pro-forma financial consolidated statement of operations does not necessarily reflect what our consolidated results of operations would have been had the acquisition occurred on January 1, 2016. It may also not be useful in predicting future results of operations for the combined Group. The unaudited pro forma statement of operations does not reflect the realization of any expected cost savings as a result of initiatives following the completion of the acquisition. The unaudited pro forma condensed combined financial information should be read in conjunction with “Risk Factors,” “Capitalization,” “Selected Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the audited consolidated financial statements and the related notes included elsewhere in this prospectus.

Assumptions underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with the unaudited pro forma consolidated statement of operations.

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Unaudited Pro Forma Consolidated Statement of Operations

	Predecessor for the period from January 1, 2016 to November 3, 2016		Successor Group from inception on July 26, 2016 to December 31, 2016		Pro forma adjustments		Notes		Unaudited pro forma consolidated Group for the year ended December 31, 2016
			(US$ in thousands)
Operating revenue and other income:
Operating revenue		88,518		18,767		—				107,285
Other income		—		—		—				—
Operating expenses:
Payouts to publishers and monetization partners		(638)		(469)		—				(1,107)
Personnel expenses including share-based remuneration		(35,493)		(5,972)		—				(41,465)
Depreciation and amortization		(9,586)		(3,082)		(4,044)		(1 )		(16,712)
Other operating expenses		(42,486)		(19,032)		6,100		(2 )		(55,418)
Restructuring costs		(3,911)		—		—				(3,911)
Total operating expenses		(92,113)		(28,555)		2,056				(118,613)
Operating profit (loss)		(3,595)		(9,788)		2,056				(11,328)
Income (loss) from associates and joint ventures:
Share of net income (loss) of associates and joint ventures		(2,664)		(237)		—				(2,901)
Net financial income (loss):
Financial income		—		37		—				37
Financial expense		(1,378)		(24)		—				(1,402)
Net foreign exchange gains (losses)		(1,212)		212		—				(1,000)
Total net financial income (loss)		(2,590)		225		—				(2,365)
Net income (loss) before income taxes		(8,849)		(9,800)		2,056				(16,594)
Income tax (expense) benefit		743		2,096		1,011		(3 )		3,850
Net income (loss)		(8,106)		(7,704)		3,067				(12,744)

Notes to the Unaudited Pro Forma Consolidated Statement of Operations

(1)

The adjustment to amortization expense was determined by calculating amortization expense on individual intangible assets assuming that post-acquisition values and useful lives were applied from January 1, 2016, and subtracting the corresponding historical amortization expense on the same assets. The most significant increases in intangible assets with definite lives resulting from the business combination included technology and customer relationships which increased an aggregate of US$51.8 million compared to historical amounts and are amortized over periods ranging from 5 to 15 years on a straight-line basis. In addition, trademarks of US$70.6 million were acquired and determined to have an indefinite useful life and accordingly are not amortized.

(2)

This adjustment represents the elimination of non-recurring transaction costs incurred by the Group of US$6.1 million which are directly related to the acquisition of Opera Software AS.

(3)

The adjustment to income tax expense for the items specified in note (1) is based upon the 2016 statutory tax rate in Norway, where all intangible assets that were subject to an increase in post-acquisition value are held, of 25%. Income tax expense was not adjusted for the transaction costs related to the acquisition since no corresponding tax benefit has been recognized in the historical financial statements of the Successor for the period from July 26, 2016 to December 31, 2016.

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The tables below show further details for certain captions included within the unaudited pro forma consolidated statement of operations. This information is derived from the sum of amounts included in the Predecessor for the period from January 1 to November 3, 2016 and the Successor for the period from July 26 to December 31, 2016 in notes 4, 5 and 6 of the consolidated financial statements and the pro forma adjustments described above.

	Predecessor for the period from January 1, 2016 to acquisition on November 3, 2016		Successor Group from inception on July 26, 2016 to December 31, 2016		Pro forma adjustments		Unaudited pro forma consolidated Group for the year ended December 31, 2016
			(US$ in thousands)
Pro forma operating revenue by revenue type:
Search		44,347		10,215		—		54,561
Advertising		27,960		5,219		—		33,180
Technology licensing/other		16,211		3,333		—		19,544
Total operating revenue		88,518		18,767		—		107,285
Pro forma operating revenue by customer location:
Ireland		32,730		9,310		—		42,041
Russia		13,883		2,868		—		16,751
Other		41,904		6,589		—		48,494
Total operating revenue		88,518		18,767		—		107,285
Pro forma personnel expenses including share-based remuneration:
Personnel expenses excluding share-based remuneration		34,579		5,972		—		40,551
Share-based remuneration, including related social security costs		914		—		—		914
Total personnel expenses including share-based remuneration		35,493		5,972		—		41,465
Pro forma other operating expenses:
Marketing and distribution		22,550		7,980		—		30,530
Hosting		7,894		2,215		—		10,109
Audit, legal and other advisory services		1,577		6,359		(6,100)		1,836
Software license fees		1,068		253		—		1,320
Rent and other office expenses		3,407		545		—		3,952
Travel		1,880		983		—		2,862
Other		4,110		698		—		4,808
Total other operating expenses		42,486		19,032		(6,100)		55,418

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Description of Certain Statement of Operations Items

Operating Revenue

We currently generate operating revenue primarily from search, advertising, and technology licensing and other revenues. The table below sets forth the operating revenue, both in absolute amount and as a percentage of total operating revenue for the periods indicated.

	2016												2017

	Predecessor for the period from January 1, 2016 to November 3, 2016		% of total operating revenue		Successor Group from inception on July 26, 2016 to December 31, 2016		% of total operating revenue		Unaudited pro forma consolidated Group for the year ended December 31, 2016		% of total operating revenue		Successor Group for the year ended December 31, 2017		% of total operating revenue
					(US$ in thousands, except for percentages)
Operating revenue:
Search		44,347		50.1		10,215		54.4		54,561		50.9		68,192		52.9
Advertising		27,960		31.6		5,219		27.8		33,180		30.9		41,047		31.8
Technology licensing/other		16,211		18.3		3,333		17.8		19,544		18.2		19,653		15.2
Total operating revenue		88,518		100.0		18,767		100.0		107,285		100.0		128,893		100.0

Search revenue accounted for 54.4%, or 50.9% on a pro forma consolidated basis, in 2016 and 52.9% in 2017 of our total operating revenue. Through revenue sharing arrangements with our search partners including Google and Yandex, we generate search revenue when our users conduct searches initiated within the URL bar, default search page or search boxes embedded in our PC and mobile browsers, or otherwise redirected to our search partners via our browser functionality.

Advertising revenue accounted for 27.8%, or 30.9% on a pro forma consolidated basis, in 2016 and 31.8% in 2017 of our total operating revenue. We generate advertising revenue by referring traffic from our platform to e-commerce and Online Travel Agency, or OTA, partners and by selling advertisements. The fee arrangements generally include revenue sharing, cost per click or subscription revenues collected by third parties on our behalf.

Technology licensing and other revenue accounted for 17.8%, or 18.2% on a pro forma consolidated basis, in 2016 and 15.2% in 2017 of our total operating revenue. We generate licenses and other revenue mainly from licensing of our proprietary compression technology and providing related maintenance, supporting and hosting services to third parties, as well as enabling customized browser configurations to mobile operators.

Geographically, our operating revenue in 2016 and 2017 was generated primarily from monetization partners domiciled in Ireland and Russia, with no other country exceeding 10% of total operating revenues. The table below sets forth the operating revenue by monetization partners’ domiciled country, both in absolute amount and as a percentage of total operating revenue for the periods indicated. The breakdown of operating revenue by country reflects the country of domicile for our direct source of revenues from our monetization partners which is not necessarily an indication of where user activities occur because the end users are located worldwide.

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	2016												2017

	Predecessor for the period from January 1, 2016 to November 3, 2016		% of total operating revenue		Successor Group from inception on July 26, 2016 to December 31, 2016		% of total operating revenue		Unaudited pro forma consolidated Group for the year ended December 31, 2016		% of total operating revenue		Successor Group for the year ended December 31, 2017		% of total operating revenue
					(US$ in thousands, except for percentages)
Ireland		32,730		37.0		9,310		49.6		42,041		39.2		63,152		49.0
Russia		13,883		15.7		2,868		15.3		16,751		15.6		18,251		14.2
Other		41,904		47.3		6,589		35.1		48,494		45.2		47,490		36.8
Total operating revenue		88,518		100.0		18,767		100.0		107,285		100.0		128,893		100.0

Other Income

In 2017, we entered into a set of agreements with a customer that included a sale of intellectual property, perpetual licensing of other technology, and certain time-restricted hosting services. The licensed technology was in part procured for licensing from a third party. The sale of intellectual property, net of associated costs amounted to US$5.5 million and was recognized as other income. Proceeds allocated to the licensing of our own intellectual property as well as hosting services is recognized as technology licensing and other revenues under our operating revenue.

Operating Expenses

We categorize our operating expenses into (i) payouts to publishers and monetization partners, (ii) personnel expenses including share-based remuneration, (iii) depreciation and amortization, (iv) other operating expenses and (v) restructuring costs. The table below sets forth our operating expenses, both in absolute amount and as a percentage of total operating revenue, for the periods indicated.

	2016												2017

	Predecessor for the period from January 1, 2016 to November 3, 2016		% of total operating revenue		Successor Group from inception on July 26, 2016 to December 31, 2016		% of total operating revenue		Unaudited pro forma consolidated Group for the year ended December 31, 2016		% of total operating revenue(3)		Successor Group for the year ended December 31, 2017		% of total operating revenue and other income
					(US$ in thousands, except for percentages)
Payouts to publishers and monetization partners		638		0.7		469		2.5		1,107		1.0		1,303		1.0
Personnel expenses including share-based remuneration		35,493		40.1		5,972		31.8		41,465		38.6		44,315		34.4
Depreciation and amortization		9,586		10.8		3,082		16.4		16,712(1)		15.6		16,604		12.9
Other operating expenses		42,486		48.0		19,032		101.4		55,418(2)		51.7		58,652		45.5
Restructuring costs		3,911		4.4		—		—		3,911		3.6		3,240		2.5
Total operating expenses		92,113		104.1		28,555		152.2		118,613		110.6		124,114		96.3

(1)

Including a pro forma adjustment of amortization expenses of US$4.0 million. See “—Unaudited Pro Forma Consolidated Financial Information.”

(2)

Including a pro forma adjustment of non-recurring transaction costs of US$6.1 million. See “—Unaudited Pro Forma Consolidated Financial Information.”

(3)

Calculated based on consolidated pro forma operating revenues for the year ended December 31, 2016 of US$107,285 thousand.

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Payouts to Publishers and Monetization Partners

Our payouts to publishers and monetization partners primarily comprise publisher costs and costs of any platform or collection service used to facilitate subscription services where we are the principal of the transaction, which typically consist of fees based upon a percentage of relevant revenues, such as publishers providing content in which we deliver mobile advertisements or operators facilitating payments of Opera branded services. We expect our publisher and revenue share cost to increase in absolute amounts and relative to revenues in the foreseeable future due to the anticipated growth of our business and increasing exposure to content monetization.

Personnel Expenses including Share-based Remuneration

Our personnel expenses including share-based remuneration primarily consist of salaries and bonuses with applicable social security costs, external temporary hire cost, defined-contribution pension cost and other personnel related expenses, as well as share-based remuneration, including related social security costs, related to our employee share incentive plan adopted in 2017. Personnel expenses are net of capitalized development expenses, which amounted to US$0.3 million in 2016, or US$1.9 million on a pro forma consolidated basis, and US$3.5 million in 2017. Capitalized development expenses in 2017 mainly related to the development of Opera News. We expect our personnel expenses to increase in absolute amounts in the foreseeable future due to the anticipated growth of business and expansion of our global operations, as well as periodic salary adjustments. For details of our share incentive plan, see “—Critical Accounting Policies—Share-based payment.” The table below sets forth the breakdown of our personnel expenses, both in absolute amount and as a percentage of total operating revenue for the periods indicated.

	2016												2017

	Predecessor for the period from January 1, 2016 to November 3, 2016		% of total operating revenue		Successor Group from inception on July 26, 2016 to December 31, 2016		% of total operating revenue		Unaudited pro forma consolidated Group for the year ended December 31, 2016		% of total operating revenue(1)		Successor Group for the year ended December 31, 2017		% of total operating revenue
					(US$ in thousands, except for percentages)
Personnel expenses excluding share-based remuneration		34,579		39.1		5,972		31.8		40,551		37.8		34,819		27.0
Share-based remuneration, including related social security costs		914		1.0		—		—		914		0.9		9,496		7.4
Total		35,493		40.1		5,972		31.8		41,465		38.6		44,315		34.4

(1)

Calculated based on consolidated pro forma operating revenues for the year ended December 31, 2016 of US$107,285 thousand.

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Other Operating Expenses

Our other operating expenses primarily consists of marketing and distribution expenses, which includes payments to distribution partners; hosting expenses; professional advisory service fees; software license fees, rent and other office expenses and travel expenses. We expect our other operating expenses to increase in absolute amounts in the foreseeable future due to anticipated growth of our business as well as accounting, insurance, investor relations and other public company costs. The table below sets forth the breakdown of our other operating expenses, both in absolute amount and as a percentage of total operating revenue for the periods indicated.

	2016												2017

	Predecessor for the period from January 1, 2016 to November 3, 2016		% of total operating revenue		Successor Group from inception on July 26, 2016 to December 31, 2016		% of total operating revenue		Unaudited pro forma consolidated Group for the year ended December 31, 2016		% of total operating revenue(2)		Successor Group for the year ended December 31, 2017		% of total operating revenue
					(US$ in thousands, except for percentages)
Marketing and distribution		22,550		25.5		7,980		42.5		30,530		28.5		30,971		24.0
Hosting		7,894		8.9		2,215		11.8		10,109		9.4		12,105		9.4
Audit, legal and other advisory services		1,577		1.8		6,359		33.9		1,836(1)		1.7		3,529		2.7
Software license fees		1,068		1.2		253		1.3		1,320		1.2		1,346		1.0
Rent and other office expenses		3,407		3.8		545		2.9		3,952		3.7		4,304		3.3
Travel		1,880		2.1		983		5.2		2,862		2.7		1,775		1.4
Other		4,110		4.6		698		3.7		4,808		4.5		4,622		3.6
Total other operating expenses		42,486		48.0		19,032		101.4		55,418		51.7		58,652		45.5