Opera acquires mobile video advertising company AdColony

Opera has acquired three-year-old mobile video advertising platform company AdColony for $75 million plus up to another $275 million tied to “ambitious” platform revenue goals over the next two years, and raised its guidance as a result of the purchase.
Opera said with the acquisition, its mobile video advertising reach will extend to more than 700 million global customers. Opera already has a mobile advertising subsidiary, Opera Mediaworks; the acquisition will provide “a robust specialization around mobile video — the fastest growing segment within the mobile advertising industry,” said Lars Boilesen, CEO of Opera Software, in a statement on the purchase.
Opera expects the acquisition to be immediately beneficial, and has increased its 2014 financial guidance as a result. The company expects that it will record between $435-460 million in revenue compared to $390-$410 million guidance before the purchase was announced. Expected revenue from AdColony is $45-50 million.
The purchase details for AdColony include $75 million in cash, with the first $30 million of earn-out considerations to be paid in stock; with up to $275 million in performance-based cash or stock payments covering 2014, 2015 and 2016. Opera said it anticipates paying about about $170 million of the total possible earn-out figure, for a total purchase price of $245 million.
AdColony was launched in 2011 and delivers mobile video ads across both iOS and Android smartphone and tablet apps, with proprietary technology for improving ad playback performance and load times, with interactive elements. AdColony said its customers include more than 70% of the world’s top-grossing app publishers, and its published case studies include brands such as McDonald’s, Scion, Microsoft and Sony Pictures.
The privately-held company is backed by Insight Venture Partners. It has offices in Los Angeles, New York, Seattle and San Francisco.
Mahi de Silva, CEO of the Opera Mediaworks subsidiary, said AdColony will augment Opera Mediaworks’ offerings and “deliver an even better results-oriented, end-to-end offering for brands, agencies and publishers globally.”
Will Kassoy, CEO of AdColony, will stay in that position and take on the role of CMO for Opera Mediaworks. Opera said that AdColony will continue to support existing customers as usual, post-acquisition. The transaction is expected to close in the third quarter.
Opera also announced this week that its mobile browser is now the default option on the Nokia X family of smartphones.