BASWARE’S INTERIM REPORT Q1/2014/media/Files/B/Basware-IR...Basware’s Interim Report Q1/2014 Share of recurring revenue increased to 66.9 % of net sales (63.6 %) •Net sales EUR

BASWARE’S INTERIM REPORT Q1/2014

Esa Tihilä, CEO

Mika Harjuaho, CFO

Basware’s Interim Report Q1/2014

April 10, 2014

Contents

• Business review of Q1/2014

• Financial review of Q1/2014

• Future outlook


Key events in Q1/2014

• Network Services net sales developed strongly; strong growth of the transaction volume continued

• The core of Solution Services business – Alusta – is maturing and its sales is expected to develop more favorably during the rest of the year

• International net sales and international share of net sales grew

• Cooperation with MasterCard for creating a new global e-payment solution for Purchase to Pay proceeds as planned

• Refreshed brand promise: Unlocking value in a connected business world

• Saving and rationalization measures will result to approximately EUR 2.5 million annual cost savings, starting from second quarter


Share of recurring

revenue increased to

66.9 % of net sales

(63.6 %)

• Net sales EUR 31 013 thousand (EUR

29 828 thousand), +4.0 percent

0300060009000

120001500018000210002400027000300003300036000

Q1/11 Q1/12 Q1/13 Q1/2014 Q2/11 Q2/12 Q2/13 Q3/11 Q3/12 Q3/13 Q4/11 Q4/12 Q4/13

• Operating profit EUR 310 thousand

(EUR -1 569 thousand)

Net sales

EUR thousand

Q1/2014 key financials

Q1/2014 in brief: Transactions processed by

Network Services increased by 25.5 percent

• Network Services net sales + 23.0 %; the growth was

entirely organic; and Solution Services net sales -1.4 %

• 17.2 million transactions processed through

Basware Commerce Network

• International net sales grew by +9.2 % and the

international share of net sales was 64.1 % (61.1%)

• Share of recurring revenue of net sales grew, totaling to

66.9 % (63.6 %) of net sales

• EBITDA amounted to EUR 2 099 thousand (EUR 233

thousand), +802.0 %


Transaction volume

amounted to 17.2

million, up +25.5 %

0,01,02,03,04,05,06,07,08,09,0

10,011,012,013,014,015,016,017,018,019,020,0

Q1 Q2 Q3 Q4

2010 2011 2012 2013 2014Million

transactions

The transaction volume

was 17.2 million during

the quarter, growth of

25.5 %

Growth of transaction volumes 2010-Q1/2014


35,0 %

40,0 %

45,0 %

50,0 %

55,0 %

60,0 %

65,0 %

70,0 %

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000


Share of recurring revenue, rolling 12 months average

EUR thousand

Net sales

Share of recurring

revenue, rolling 4

quarters average

The share of

recurring revenue of

net sales increased

to 66.9 % (63.6 %)

during the quarter


SaaS versus license sales dynamics 2007-Q1/2014

0 %

10 %

20 %

30 %

40 %

50 %

60 %

70 %

80 %

90 %

100 %

2007 2008 2009 2010 2011 2012 2013 Q1/2014

SaaS

License Sales

FINANCIAL REVIEW Q1/2014

Mika Harjuaho, CFO


• Basware reports one operating segment: Purchase to Pay, P2P. The segment

is divided into the Network Services and Solution Services businesses that

support each other.

• As of 2014, the company reports revenue from products and services as

follows: Network Services (e-invoicing solutions and services) and Solution

Services (software solutions and services).*

• As previously, Customer Support and Automation Services together form the

recurring revenue reported by the company.

• As geographic information Basware reports geographical areas Finland,

Scandinavia, rest of Europe, and Other. Net sales are reported by the

customer’s location, and net sales and operating profit are also reported by

the location of the assets.


Reporting (IFRS)

*Revenue reported also according to the previous reporting practice: License sales,

Professional Services, Customer Support, and Automation Services

EUR thousand Q1/14 Q1/13 Q2/14 Q2/13 Q3/14 Q3/13 Q4/14 Q4/13

Net sales 31 013 29 828 31 789 28 682 33 049

Growth % 4.0% 8.7% 10.7% 5.8% 8.6%

Other operating income 177 58 1 623 61 173

Materials and services 2 978 2 542 2 987 2 967 3 265

Personnel expenses 20 078 20 518 20 611 16 464 19 327

Depreciation and write-offs 1 789 1 801 1 755 1 748 1 748

Other operating expenses 6 034 6 594 7 152 5 703 6 751

Operating profit 310 -1 569 908 1 861 2 131

20 000

30 000

40 000

Q1 Q2 Q3 Q4

2014 201324%

26% 23%

27%

Net sales 2013

Q1 Q2 Q3 Q4

Net sales


Development of quarterly net sales & profit

8 032

22 981 Network Services

Solutions Services

Network Services & Solution Services:

net sales in Q1/2014

• Network Services: e-invoicing solutions and services

• Solution Services: software solutions and services


EUR thousand

(23 299, -1.4 %)

(6 529, +23.0 %)

R&D in Q1/2014

R&D expenses 14.4 % of net sales

22.7 % of personnel


R&D expenses amounted to EUR

4 474 thousand (EUR 4 662

thousand):

• Decrease of 3.2 percent, 14.4 % of

net sales (15.5 %)

• EUR 844 thousand (EUR

1 258 thousand) of R&D expenses

capitalized

• R&D costs included in the P&L

totaled EUR 3 630 thousand (EUR

3 364 thousand), or 11.7 % (11.3

%) of net sales

R&D unit personnel 327 (356):

• 134 people in India; units also in

Finland, Romania and Belgium

Personnel

0

200

400

600

800

1000

1200

1400

Sales & Marketing

Consulting & Services

Products

Admin

Personnel groups

Finland

Rest of Europe

India

Other

Geographical location of personnel

Scandinavia


• 1 441 employees at the end of Q1/2014

• Average age of personnel is 34.8 years;

49.5% have an academic degree

• 66.6 % in APAC & India, Europe and Northern

America; 33.4 % in Finland

Q1/2014 in brief

EUR million Q1/14 Q1/13

Net sales 31.0 29.8

Growth of net sales, % 4.0% 8.7%

Operating profit (EBIT) 0.3 -1.6

% of net sales 1.0% -5.3%

Net profit/loss -0.1 -1.0

Share of recurring revenue, % 66.9% 63.6%

Earnings per share, euro -0.01 -0.07

Fixed costs 26.1 27.1

Growth of fixed costs, % -3.7% 21.9%

Personnel, March 31 1 441 1 486

Growth of personnel, % -3.0 19.4

Personnel costs 20.1 20.5

R&D expenses 4.5 4.6


EBITDA amounted to

EUR 2 099 thousand

(EUR 233 thousand),

an increase of 802.0 %

Finance & investments


• Total assets on the balance sheet EUR 144 508 thousand (EUR 151 489 thousand)

• Cash and liquid assets EUR 21 308 thousand (EUR 23 276 thousand)

• Cash flows from

– Operating activities EUR 13 422 thousand (EUR 9 718 thousand)

– Investments EUR -606 thousand (EUR -17 874 thousand)

– Financing EUR -4 694 thousand (EUR -3 018 thousand)

• Equity ratio 65.9 percent (63.7 %)

• Gearing -15.1 percent (-13.2 %)

• Total gross investments EUR 1 300 thousand (EUR 19 219 thousand)

– includes capitalized R&D expenses and acquisitions

Share & shareholders

• Number of shareholders 13 793 (14 200) at the end of March 2014

• Share price development during January-March 2014:

• Highest EUR 41.00 (EUR 21.69), lowest EUR 23.50 (EUR 19.30)

• Closing price EUR 39.35 (EUR 20.20)

• Average price of the share EUR 33.66 (EUR 20.43)

• Traded shares 2 451 217 (312 873)

• 19.1 % (2.4 %) of all shares

• Market capitalization EUR 505 900 363 (EUR 259 540 124)


FUTURE OUTLOOK

Esa Tihilä, CEO


Strategic focus areas for 2014


The Largest Business Commerce Network

Strengthen our market presence

Maximize transactions

15/150 Win with Alusta

Create customers for life

Strengthening our offering to help our customers

in working capital management

Leading offering for

Purchase to Pay and

financial management

Basware Commerce

Network providing

real-time B2B

cooperation

New services for early

payment, discount

management and

supplier financing


Basware Commerce Network growth accelerators

Growth through partnerships

One click e-invoicing to enable

e-invoicing through Virtual

Operators e.g. ERP vendors

Enhanced network visibility

through network directory to

maximize the network

connectivity

Added value by introducing new

Value Added Services

• E.g. new e-payment service

powered by MasterCard Removing barriers

Easy onboarding to e-invoicing

• E.g. Portal and PDF invoice


While we have been transforming as a company,

our core purpose has also evolved

Unlocking value in a

connected business

world

Value for financial

processes


• Basware is pursuing accelerated growth that exceeds the market growth in its Network Services. Stronger growth can be achieved by developing and automating the connection of buyers and suppliers to the e-invoicing services, by utilizing digital marketing and sales channels more extensively, and through acquisitions.

• The Solution Services business is expected to develop more favorably during the rest of the year. The growth in the sales of Alusta is expected to have a positive effect on software net sales and professional services.

• The development of costs was still moderate during the first quarter of 2014. Decisions about investments required by the growth will be made during the year if the market situation and business development so requires.

• Basware expects its net sales and operating profit (EBIT) for 2014 to grow compared to 2013.


Basware outlook 2014

NEXT REPORT

Q2 Interim Report

on July 10, 2014


Documents

BASWARE’S INTERIM REPORT Q1/2014/media/Files/B/Basware-IR...Basware’s Interim Report Q1/2014 Share of recurring revenue increased to 66.9 % of net sales (63.6 %) •Net sales EUR