M&A Alert - January 21, 2010
Opera Software Acquires AdMarvel
Transaction Overview
On January 21st, 2010 Opera Software ASA (OSE: OPERA) acquired the privately held mobile advertising management company AdMarvel for $8mm in cash, and a contingent payment of up to $15mm based on the meeting of financial targets.
Target Description
Admarvel offers a mobile advertising analytic platform to mobile publishers. Admarvel’s platforms allows mobile publishers to manage, track, provision, and source their ads from a full array of advertising networks or sell available advertising inventory directly to advertisers. Admarvel works with a number of ad networks, including JumpTap, Millennial Media, mKhoj, Ringleader Digital, RingRing Media, Mojiva, Admoda, BuzzCity, Movoxx, Nokia, and Zestadz, as well as Google’s AdMob and Apple’s Quattro Wireless. Admarvel manages a range of mobile formats including SMS, WAP and mobile web. AdMarvel has raised a total of $8mm since its founding in 2006, including $2.3mm in Series A funding in December of 2006 from Khosla and Index Ventures and an additional $5.7mm from the same group and new investor Trilogy Equity Partnership (John Stanton and Mikal Thomsen). AdMarvel was founded in 2006 by Mahi de Silva and is based in San Mateo, CA.
Buyer Description
The Norwegian-based Opera Software ASA is best known for its Opera web browsers. Opera web browsers compete against other major web browser developers such as Microsoft (Explorer), Apple Inc. (Safari), Mozilla (Firefox), Google (Chrome), and is used by mainstream Internet users. Opera has built a strong position for its mobile browsers (Opera Mini and Opera Mobile) with an installed base of over 50mm mobile devices. Opera was founded in 1995 by Jon Stephenson von Tetzchner and is based in Oslo, Norway.
Opera is purchasing AdMarvel for $8mm in cash, plus $15mm in additional cash if certain financial goals are met during the next 24 months, according to Techcrunch. AdMarvel’s reported $3mm net annual revenue makes the revenue multiples range from 2.6x to 7.6x, contingent on the meeting of financial targets.
| Transaction Value | $8mm – $23mm |
| Transaction Value/Revenue | 2.6x – 7.6x |
Strategic Rationale
With over 50mm users accessing the web through Opera’s mobile web browsers, Opera Mini and Mobile, Opera has positioned itself as the leading mobile browser vendor, leading the market with just over 25% market share, followed by iPhone’s browser with 21% and Nokia with 19%. Opera is acquiring Admarvel in recognition of the importance of advertising monetization for mobile web based applications. Much like Apple and Google, Opera seeks to provide a platform upon which application developers can deploy and monetize their applications. Admarvel allows Opera to offer an “ad revenue management system” to application developers who develop with Opera mobile web-browsers in mind.
Architect Partners’ Observations
With users of mobile phones outnumbering users of computers by 4 to 1, the explosive growth potential of monetizing this audience has driven the recent flurry of acquisitions of mobile ad networks by major mobile vendors, exemplified by Google’s acquisition of AdMob and Apple’s purchase of Quattro. Opera’s acquisition of Admarvel squarely fits the same theme.
This transaction also highlights a deployment battle that is in the midst of developing, mobile web vs. natively deployed applications. To date, natively deployed mobile applications, as best exemplified by the iPhone application developer, have dominated the market. Google’s view, naturally shared by Opera, is that over time, cloud-deployed applications, which are always Internet connected, will become more prevalent and eventually win. Regardless of deployment model, enabling application developers to monetize via advertising is a crucial element.