BASWARE INTERIM REPORT Q3/2013

Transcription

1 Basware s Interim Report Q3/2013 BASWARE INTERIM REPORT Q3/2013 Esa Tihilä, CEO October 10, 2013

2 Contents Business review of Q3/2013 Financial review of Q3/2013 Future outlook Basware s Interim Report Q3/2013

3 Q3/2013 in brief: Strong growth in Automation Services continued Net sales grew & the company returned to profitability Strong growth in Automation Services continued (net sales up by 43.8%) SaaS net sales increased by 17.4 percent; demand for software licenses continued to be soft; license sales decreased by 18.3 percent Transaction volume increased significantly compared to the corresponding quarter in 2012 Share of recurring revenue (Customer Support and Automation Services) of net sales grew, totaling to 66.8% of net sales (60.5%) Cost efficiency drive is on target: originally targeted annual cost-savings of EUR 3 million compared to the June level revised to EUR 4 million by the end of 2013 Transaction volume amounted to 14.4 million, up 69.5% Basware s Interim Report Q3/2013

4 Growth of transaction volumes 2010-Q3/2013 Million transactions 15,0 14,0 13,0 12,0 11,0 10,0 9,0 8,0 7,0 6,0 5,0 4,0 3,0 2,0 1,0 0, Q1 Q2 Q3 Q4 The transaction volume grew significantly during the quarter: the volume processed by the Automation Services business was 14.4 million, growth of 69.5 % The revised transaction volumes: Q1: 13.7 million Q2: 14.4 million Q3: 14.4 million Basware s Interim Report Q3/2013

5 Share of recurring revenue, rolling 12 months average EUR thousand ,0 % 60,0 % 55,0 % 50,0 % 45,0 % 40,0 % 35,0 % Recurring revenue (Customer Support and Automation Services) continued to account for an increasing share of net sales, totaling 66.8 % of net sales in Q3/2013 Net sales Share of recurring revenue, rolling 4 quarters average Basware s Interim Report Q3/2013

6 Key events in Q3/2013: Strong growth in Automation Services continued Net sales grew from services in line with our strategy Strong growth in Automation Services continued Basware Commerce Network grows strongly Increasing number of small & medium-sized suppliers and buyers connected to Basware Commerce Network in more than a hundred countries Strategic partnerships with MasterCard in e-payment solutions and with BravoSolution in Source-to-Pay solutions New strategic partnerships Basware s Interim Report Q3/2013

7 Basware & MasterCard: A strategic partnership to create a unique global e-payment service Basware and MasterCard partner to transform the way businesses pay and get paid.. simplifies payments and boosts cash flow for both buyers and suppliers combines MasterCard's global payment network with the Basware Commerce Network MasterCard s network reach 65,000 transactions every minute financial institutions connected In 210 countries Operating with 150 currencies Basware s network reach Over 50 M transactions annually $420 billion spend trading partners In over 100 countries Basware s Interim Report Q3/2013

8 Building on top of Basware Commerce Network Immediate, significant commercial value on top of transactional processes Basware Portal E-invoices Suppliers BASWARE COMMERCE NETWORK E-invoices Buyers Basware s Interim Report Q3/2013

9 Q3 transformation: Purchase to Pay (P2P) deals Q3/2013 Q3/2012 License sales # of new P2P deals SaaS* # of new P2P deals Total # of new P2P deals Growth in # of new P2P deals % *The SaaS deal numbers exclude renewals & InvoiceReady Basware s Interim Report Q3/2013

10 SaaS versus license sales dynamics 2007-Q3/ % 90 % 80 % 70 % 60 % 50 % 40 % SaaS License Sales 30 % 20 % 10 % 0 % YTD Q3/ Basware s Interim Report Q3/2013

11 Basware s Interim Report Q3/2013 FINANCIAL REVIEW Q3/2013

12 Reporting (IFRS) As of the first quarter in 2012 Basware Corporation reports one operating segment: Purchase to Pay, P2P. Basware reports income for products and services as follows: License sales, Professional Services, Customer Support, and Automation Services (previously License Sales, Professional Services, Maintenance, and Automation Services). Customer Support comprises of previous Maintenance and Extended customer support previously reported under Professional Services. Extended customer support agreements are continuous service agreements spanning several years. Customer Support and Automation Services together form the recurring revenue reported by the company. License Sales consist of the Purchase to Pay product family together with payment, financial planning and reporting solutions sold only in Finland. Automation Services include e-invoicing, scanning services, printing services, catalog management, purchase message exchange, activation services and Software as a Service (SaaS) services. Q1/2013: Change in recurring revenue classification Basware reports the estimated revenue to be recognized for current Automation Services agreements that are in production as well as for new, signed agreements in the next twelve months. Automation Services agreements typically expand several years or are valid until further notice. As geographic information Basware reports geographical areas Finland, Scandinavia, rest of Europe and Other. In the geographical information net sales is split by customer s location. Net sales and operating profit are also reported by the location of the assets. In annual financial statements the geographical information of non-current assets is reported by the location of the assets Basware s Interim Report Q3/2013

13 Q3/2013 key financials: Strong growth in Automation Services continued Net sales EUR thousand (EUR thousand), +5.8 percent Operating profit EUR thousand (EUR thousand), percent Net sales EUR thousand Q1/10 Q1/11 Q1/12 Q1/13 Q2/10 Q2/11 Q2/12 Q2/13 Q3/10 Q3/11 Q3/12 Q3/13 Q4/10 Q4/11 Q4/12

14 Development of quarterly net sales & profit EUR thousand Q1/13 Q1/12 Q2/13 Q2/12 Q3/13 Q3/12 Q4/13 Q4/12 Net sales Growth % 8.7% 5.3% 10.7% 5.3% 5.8% 12.1% 0.7% Other operating income Materials and services Personnel expenses Depreciation and write-offs Other operating expenses Operating profit Net sales % Net sales % Q1 Q2 Q3 Q Basware s Interim Report Q3/ % Q1 Q2 Q3 Q4 25%

15 Net sales by operation Q3/2013 EUR thousand Automation Services, growth of 43.8% Customer support, growth of 2.3% License sales, decrease of 18.3% Professional Services, decrease of 7.4% Customer support Licenses Professional Services Automation Services Licenses = License sales of software products Professional Services = Consulting services Customer support = comprises of previous Maintenance and Extended customer support previously reported under Professional Services. Extended customer support agreements are continuous service agreements spanning several years. Automation Services = e-invoicing, scanning services, printing services, catalogue management, purchase message exchange, activation services, SaaS services and opening fees Reclassified revenue from Professional Services to Automation Services: Q1: 511 k Q2: 462 k Basware s Interim Report Q3/2013

16 R&D in 2013 R&D expenses amounted to EUR thousand (EUR thousand) Decrease of 2.2 percent, 13.9 percent of net sales (15.4%) EUR thousand (EUR thousand) of R&D expenses capitalized R&D expenses 13.9% of net sales R&D costs included in the P&L totaled EUR thousand (EUR 9 264thousand), or 10.8 percent (11.1%) of net sales. R&D unit personnel 356 (362) 24.1% of personnel Including 155 people in India; units also in Finland, Romania and Belgium Basware s Interim Report Q3/2013

17 Personnel Geographical location of personnel employees at the end of Q3/2013 Number of personnel has grown most in Indian office, and due to acquisition of e- invoicing business of Certipost in Belgium Average age of personnel is 34.6 years; 51.9% have an academic degree India Other Finland 1400 Rest of Europe Scandinavia Products Personnel groups Admin Sales & Marketing Consulting & Services Basware s Interim Report Q3/2013

18 Q3/2013 in brief EUR Million Q3/13 Q3/12 Net sales Growth of net sales, % 5.8% 12.1% Operating profit (EBIT) Change of operating profit % -17.7% -25.6% % of net sales 6.5% 8.3% Net profit/loss Share of recurring revenue, % 66.8% 60.5% Earnings per share, euro Change of earnings per share, % -35.8% -35.0% EBITDA amounted to EUR thousand (EUR thousand), a decrease of 11.3% Fixed costs Growth of fixed costs, % 6.6% 15.6% Personnel, September Growth of personnel, % Personnel costs R&D expenses Basware s Interim Report Q3/2013

19 Finance & investments Total assets on the balance sheet EUR thousand (EUR thousand) Cash and liquid assets EUR thousand (EUR thousand) Cash flows from operating activities EUR thousand (EUR 7 334thousand) Equity ratio 73.1 percent (80.2 %) Gearing -6.7 percent (-27.5%) Total gross investments EUR thousand (EUR thousand) includes capitalized R&D expenses and acquisitions Basware s Interim Report Q3/2013

20 Share & shareholders Number of shareholders (14 586) at the end of September 2013 Share price development during January September 2013: Highest EUR (EUR 24.00), lowest EUR (EUR 16.70) Closing price EUR (EUR 22.50) Average price of the share EUR (EUR 20.68) Traded shares ( ) 5.3% (9.7%) of all shares Market capitalization EUR (EUR ) Basware s Interim Report Q3/2013

21 Basware s Interim Report Q3/2013 FUTURE OUTLOOK

22 Basware outlook 2013 The acquisition of the e-invoicing business of the Belgian company Certipost was confirmed on January 2, The company estimated the operating profit of the acquired business after non-recurring expenses of approximately EUR 1.5 million recognized in the first quarter to be approximately EUR 0.5 million negative for 2013, while the earlier estimate was approximately EUR 1.6 million negative. According to the previous estimate for 2013, the operating profit was expected to be slightly positive. The operating profit includes group services charged to the parent company, such as expenses related to R&D, customer support, and administration. The development of Alusta software and services will continue strongly also this year in order to maintain product leadership in Purchase-to-Pay processes. The emphasis of R&D expenses will shift gradually from Alusta product development towards the product development of Automation Services as of The development of the net sales of Professional Services is supported by fixed-price delivery packages as well as consultation fees based on individual transactions in addition to hourly charged project work. In order to support license and SaaS business sales, we have made significant changes in the sales management and sales organization as well as further specified the sales models for new customer acquisition as well as customer account management methods. The efficiency drive launched by the company in June to improve profit-making ability has proceeded as targeted. The originally targeted annual cost-savings of EUR 3 million compared to the June level has been revised to EUR 4 million by the end of Basware expects its net sales for 2013 to grow and operating profit (EBIT) for 2013 to be positive Basware s Interim Report Q3/2013

23 Objectives for the strategy period until end of 2015 Basware s long-term objective to grow annually percent in net sales boosted by over 50 percent growth in Automation Services which is intact compared to the previous strategy period. The long-term objective for operating profit margin continues to be percent of net sales which is expected to improve towards the end of the period. The share of recurring revenue is aimed to grow to 70 percent compared with current 55 percent, with Software as a Service (SaaS) and electronic invoicing contributing most to the growth, thus improving the profitability Basware s Interim Report Q3/2013

24 Basware s Interim Report Q3/2013 NEXT REPORT Q4 Interim Report in January 2014