FINANCIAL RESULTS Q2 2016 ESA TIHILÄ, CEO NICLAS ROSENLEW, CFO JULY 19, 2016
IMPORTANT NOTICE The following information contains, or may be deemed to contain, forward-looking statements. These statements relate to future events or future financial performance, including, but not limited to, expectations regarding market growth and development as well growth and profitability of Basware. In some cases, such forward-looking statements can be identified by terminology such as expect, plan, anticipate, intend, believe, estimate, predict, potential, or continue, or the negative of those terms or other comparable terminology. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Future results may vary from the results expressed in, or implied by, the forward-looking statements, possibly to a material degree. All forward-looking statements included herein are based on information presently available to Basware and, accordingly, Basware assumes no obligation to update any forward-looking statements, unless obligated to do so pursuant to an applicable law or regulation. Nothing in this presentation constitutes investment advice and this presentation shall not constitute an offer to sell or the solicitation of an offer to buy any securities of Basware or otherwise to engage in any investment activity. 2
CEO REVIEW ESA TIHILÄ
HUGE MARKET POTENTIAL FOR E-INVOICING 370 billion invoices annually, globally, 95% currently in paper and unstructured data format Current Total Addressable Market: 3 billion e-invoices, 1% of total E-invoice Other electronic formats Paper and unstructured data 4 Source: Management estimates, Billentis, EESPA. Covers B2B, B2G and B2C
BASWARE A LEADER IN GARTNER S MAGIC QUADRANT FOR PROCURE-TO-PAY SUITES P2P suite Leaders demonstrate a market-defining vision of how technology and services can help procurement establish, develop and maintain contract compliance and cost-effective processes for managing and controlling external spend. They have the ability to execute against their vision with products and services, and they have demonstrated results in the form of growth and customer satisfaction. Leaders successfully sell into multiple industries and multiple geographies. Leaders are often what other providers in the market measure themselves against, and they are the most likely vendors from this report to be in the P2P suite business five years from now. Source: Gartner (June 2016) *Gartner, Magic Quadrant for Procure-to-Pay Suites, Deborah R Wilson, Paolo Malinverno, Magnus Bergfors, Desere Edwards, 13 June 2016 This graphic was published by Gartner, Inc. as part of a larger research document and should be evaluated in the context of the entire document. The Gartner document is available upon request from www.basware.com. Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner's research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.
Q2 2016 HIGHLIGHTS Strategy: Accelerate Network growth Extend cloud P2P leadership Unleash Financing Services Q2 2016 Progress: 27.2 million Q2 Transactions (+15.7%) June record month at 9.2 million SaaS revenues +99.0% 27 new P2P SaaS deals closed (vs 19 in Q2 2015) Select customers live in Arrowgrass JV Focus on development work continues
CLOUD TRANSITION CONTINUED IN Q2 2016 Cloud Revenues* Recurring Revenues** Q2 2016 Progress: 42.4% Cloud vs 37.6% in Q2 2015 70.6% Recurring vs 68.7% in Q2 2015 Announced 2018 Goal: 2/3rds Cloud 80% Recurring * Cloud revenue includes transactions services, SaaS and other subscription and financing services revenue excluding alliance fees ** Recurring revenue consists of net sales excluding license sales, non-recurring consulting revenue and alliance fees
Q2 INVESTMENTS FOR THE STRATEGY Announced Growth Enablers: Investing in demand generation and sales Further shortening of delivery times Scalable company infrastructure Q2 2016 Progress: Sales and marketing headcount up 19.6% Bulk of new sales and marketing hires now made 34 Alusta go-lives vs 15 in Q2 2015 Express delivery for Alusta now available in select countries Progress on moving to public cloud infrastructure Continued focus on productivity
VERIAN INTEGRATING WELL Rationale Fit with strategy Integration progress Further strengthens Basware s market position in the US Stronger customer offering through enhanced e- procurement Extends Basware s network Focus on key markets Expanding to midmarket customers Growing cloud revenues First cross-sell deals already achieved: Network Verian procurement and Alusta Tehseen Dahya, former Verian CEO appointed Head of Basware US
FINANCIAL REVIEW NICLAS ROSENLEW
KEY GUIDANCE METRICS (EUR Thousands) Q2 2016 Q2 2015 Change H1 2016 H1 2015 Change Reported Net Sales 38 948 36 590 6.4 % 73 073 70 631 3.5% 6.4% Net Sales growth (1.5% organic) in Q2 2016 Organic Net Sales 36 298 36 535 68 058 67 522 Organic Net Sales at Constant Currencies 37 092 36 535 1.5% 69 238 67 522 2.5% (EUR Thousands) Q2 2016 Q2 2015 H1 2016 H1 2015 Reported EBITDA -2 870 64-3 737 2 855 Total Adjustments 409 1 715 759-1 057 Adjusted EBITDA -2 461 1 779-2 978 1 798
Q2 2016 NET SALES PROGRESSION SaaS growth accelerated at 34.5% organic, 99.0% total Transaction services revenue increased 3.3%; differences vs transaction volume driven by timing of billing Overall growth impacted by the decline in license sales, maintenance and consulting EUR thousand Q2 2016 Q2 2015 Change Transaction services 8 919 8 634 3.3% SaaS 5 904 2 967 99.0% Consulting services 9 473 9 510-0.4% Maintenance 10 385 10 499-1.1% License sales Other revenue 2 588 2 927-11.6% 1 680 2 054-18.2% Group total 38 948 36 590 6.4%
Q2 OPERATING EXPENSES AND INVESTMENTS Operating Expenses increased by EUR 6.1m versus Q2 2015 Sales and marketing headcount grew 19.6% compared to 12.4% for group headcount R&D Expenses accounted for 14.8% of sales versus 14.0% in Q2 2015 While investing for growth, focus on efficiency of the cost base continued EUR thousand Q2 2016 Q2 2015 Change Employee Benefit Expenses 29 068 23 221 25.2 % Other Operating Expenses 8 792 8 870-0.9 % Depreciation and Amortization 2 129 1 822 16.9 % Total Operating Expenses 39 988 33 913 17.9 % Materials and Services 3 959 4 437-10.8 % R&D Expenses 5 782 5 137 12.6 % Capitalised R&D 2 794 2 222 25.7 % Personnel 1 818 1 618 12.4 % * Operating expenses include employee benefits, depreciations & amortizations, and other operating expenses
Q2 CASHFLOW AND BALANCE SHEET Cashflow from operating activities was EUR -2.96 m in Q2 Cashflow was impacted by the increase in growth investments Cash position continues to be strong, with EUR 21.8 m of cash and cash equivalents Decrease in cash position compared to Q2 2015 related to acqusitions of Procserve and Verian and growth related investments (EUR Thousands) Q2 2016 Q2 2015 Cash flows from operating activities -2 962-28 Net change in cash and cash equivalents -32 812 18 638 Cash and cash equivalents* 21 799 62 570 * Includes short term deposits
KEY GROUP REPORTED FINANCIALS EUR thousand Q2 2016 Q2 2015 Change Net sales 38 948 36 590 6.4% Material and services -3 959-4 437-10.8% Personnel expenses -29 068-23 221 25.2% Other operating expenses -8 792-8 870-0.9% EBITDA -2 870 64 Depreciation and amortization -2 129-1 822 16.9% Operating result (EBIT) -4 999-1 757 184.5% Net result -4 528-1 715 164.1% EPS, EUR (diluted) -0.32-0.12 162.3%
OUTLOOK ESA TIHILÄ
2016 FULL YEAR OUTLOOK Organic revenue growth at constant currencies of 5 percent or more SaaS revenue expected to grow; strong growth of Basware s Network to be sustained Continued increase in recurring revenue to outpace progressive slowdown in license revenues Temporary pressure on margins driven by growth investments Growth related operating investments expected to amount to approximately EUR 20 million Adjusted EBITDA at break-even Disciplined acquisition strategy continues in the e-invoicing key markets; in Europe & US
Q2 2016 SUMMARY HIGHLIGHTS Financials Sales momentum Investing in growth Transition to cloud + 1.5% Organic revenue growth at constant currencies + 99.0% total SaaS revenue growth + 19.6% Sales and Marketing headcount 42.4% Cloud Revenues Adjusted EBITDA EUR -2 461 K + 15.7% Network transaction volume growth Bulk of new sales and marketing hires made 27.2 million Transactions
NEXT REPORT Q3 INTERIM REPORT ON OCTOBER 19, 2016 MORE INFORMATION: www.basware.com/investors www.basware.com www.twitter.com/basware www.facebook.com/baswarecorporation www.linkedin.com/company/basware