UNLOCKING VALUE IN THE WORLD OF CONNECTED COMMERCE MORGAN STANLEY EUROPEAN TECHNOLOGY, MEDIA & TELECOM CONFERENCE 2015 NOVEMBER 11, 2015

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Kory Henderson
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1 UNLOCKING VALUE IN THE WORLD OF CONNECTED COMMERCE MORGAN STANLEY EUROPEAN TECHNOLOGY, MEDIA & TELECOM CONFERENCE 2015 NOVEMBER 11, 2015

2 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.

3 Our business Key facts GLOBAL LEADER IN E-INVOICING & PURCHASE TO PAY (P2P) Basware is the leading provider of networked purchase-to-pay solutions, spanning e-invoicing to innovative financing services in the world of commerce Founded 1985; Publicly listed 2000 HQ in Finland, offices globally Net sales of million (LTM as of Q3 2015) NETWORK SERVICES SOLUTION SERVICES FINANCING SERVICES e-invoicing solutions & operator between buyers & suppliers Invoice automation, procurement & TEM software within organizations New value added innovations: Basware Pay, Basware Discount & Basware Advance Basware Commerce Network connects 1 million companies in over 100 countries large customers 1.2 million users License / SaaS Basware Commerce Network enabled Partnerships include e.g. MasterCard, Arrowgrass, ING Note: 2015 LTM = 4Q/2014-3Q/2015

RECOGNIZED GLOBAL LEADERSHIP Ranked constantly as a leader by leading independent research companies Working capital optimization Automated Accounts Payable (AP) Purchase-to- Pay (P2P)

4 RECOGNIZED GLOBAL LEADERSHIP Ranked constantly as a leader by leading independent research companies Working capital optimization Automated Accounts Payable (AP) Purchase-to- Pay (P2P) Basware Commerce Network 1,000,000 organizations > 100 countries 500 billion value of transactions p.a. 100 million transactions # 1 in AP & e-invoicing Top 3 in P2P # 1 B2B Commerce Network

5 OUR OPPORTUNITY TO UNLOCK The world of commerce today is inefficient things take too long, things cost too much resulting in an ocean of untapped economic value. $16 Potential savings per invoice processed using AP automation and e-invoicing 55 days Average payment time from invoice received $2 trillion Potential annual saving that AP Automation, e-invoicing and e-procurement can provide to the world of commerce 5-10 days Can be saved through invoice automation 20% 13.5 days Average time to process an invoice Potential savings due to improved compliance using e-procurement

BASWARE P2P PAYS BACK IN NO TIME A COMMISSIONED STUDY CONDUCTED BY FORRESTER CONSULTING ON BEHALF OF BASWARE: We can now finally see on a nationwide level which actual

We can use these insights to better negotiate with existing suppliers and even contract with suppliers in areas where we previously didn t have any arrangements.

6 BASWARE P2P PAYS BACK IN NO TIME A COMMISSIONED STUDY CONDUCTED BY FORRESTER CONSULTING ON BEHALF OF BASWARE: We can now finally see on a nationwide level which actual suppliers we use and how much we use them. We can use these insights to better negotiate with existing suppliers and even contract with suppliers in areas where we previously didn t have any arrangements. Development manager at a large property management company We systematically go after achieving early-pay discounts. In the past, we captured about 50% of all early-pay discounts that were available to us; with Basware, we were able to push it to 95%. Manager, finance at a large manufacturing company

7 THREE CORE COMPONENTS TO FREE UP CASH Networked Purchase-to-Pay Basware Commerce Network Financing Services

8 SUCCESSFUL TRANSITION FROM LICENSE TO CLOUD

9 TRANSITION TO FAST GROWING CLOUD-BASED SERVICES Constant growth year-on-year 12% 38% Cloud businesses have grown fast Positive cash flow Strong balance sheet 88% 62% LTM SaaS and Network License and consulting License and consulting businesses provide a solid base Cloud transition temporarily depresses group growth & EBIT margins, this will unwind as transition completes Note: License and consulting: license sales and related maintenance as well as all consulting services.saas and Network: P2P SaaS, transactions, Procserve and transaction network related partnership income LTM = 4Q/2014-3Q/2015.

10 Revenue ( in millions) ACCELERATING GROWTH ON STABLE & CASH GENERATIVE BASE Revenue by type ( LTM) Transactions SaaS Consulting License Maintenance Other Network related LTM Transaction Network: Accelerated adoption of e-invoicing in Europe and US Income per transaction Basis for value added Financing Services Purchase-to-Pay: Increasing demand for the best in class, cloud-based P2P solutions License sales conversion to SaaS reaching a turning point Revenue recognition slowing nearterm revenue Maintenance & consulting provide a stable revenue base Note: Other Network related includes Procserve and network related partnership income LTM = 4Q/2014-3Q/2015.

11 Transaction volume (in millions) Transaction revenue ( in millions) NETWORK VOLUME & REVENUE SOLID TRACK RECORD Transaction volume Transaction revenue (1) LTM Annualized transactions LTM Note: 2015 LTM = 4Q/2014-3Q/2015 (1) Includes start-up fees

12 Revenue ( m) Revenue ( m) Revenue ( m) Revenue ( m) SAAS OUTWEIGHING LICENSE DECLINE SaaS Maintenance License Limited local SaaS New global SaaS platform LTM LTM +16% SaaS growth outweighing license decline; SaaS creates greater life time value as the stacking revenues accrue. Conversion to SaaS proceeding according to the strategy. License models generate significantly more revenue & profits upfront. -13% LTM Consulting Note: SaaS includes ASP revenues and SaaS start-up fees. Consulting includes Network Services and Solution Services related consulting. The %s reflect CAGR LTM LTM = 4Q/2014-3Q/ % Very stable business which will gradually erode with transition to the SaaS model. 0% Consulting will evolve with the business; stable profile LTM

13 ALUSTA ENABLING OUR SOLUTIONS Basware s purchase-to-pay (P2P) solutions are powered by Alusta, the unified cloud-based platform Smart Intuitive Flexible Open Mobile, analytics & collaboration tools for insight and productivity Simplicity, familiarity and ease-of-use driving user adoption Solutions & packages for all company sizes ERP agnostic, easy connectivity and onboarding accelerating participation

14 Axis Title Alusta SaaS customers (indexed) PURCHASE TO PAY (P2P) SAAS DEMAND ACCELERATING Growth in number of P2P SaaS customers 90 # of deals (2015 Q1-Q3 vs Q1-Q3): 183% # of deals LTM (CAGR): 83% Q3

STRONG REVENUE GROWTH IN HIGH POTENTIAL MARKETS Revenue by markets (Q1-Q3 2015) Growth in revenue (Q1-Q3 2014 vs Q1-Q3 2015) Highly visible revenue in mature markets Strong growth in key markets 44 %

15 STRONG REVENUE GROWTH IN HIGH POTENTIAL MARKETS Revenue by markets (Q1-Q3 2015) Growth in revenue (Q1-Q vs Q1-Q3 2015) Highly visible revenue in mature markets Strong growth in key markets 44 % Other 39 % Finland 34 % Key markets 27 % (1) 12 % Total revenue Q1-Q3: million (1) Note: Key markets include US, UK and Germany (1) Includes Procserve and partnership income. (2) Excludes Procserve and partnership income. (1) (2) 2 % Total Key markets Finland

16 SIGNIFICANT MARKET POTENTIAL

INDUSTRY DYNAMICS PLAYING IN OUR FAVOR Public sector mandates driving global e-invoicing adaptation Low penetration in large markets and increasing market acceptance TAKING

17 INDUSTRY DYNAMICS PLAYING IN OUR FAVOR Public sector mandates driving global e-invoicing adaptation Low penetration in large markets and increasing market acceptance TAKING OVER THE WORLD Organizations seek savings, efficiencies, transparency and control through digitalization Growth in value added services and emergence of alternative finance

18 BASWARE IS THE LARGEST PLAYER IN THE ATTRACTIVE E-INVOICING MARKET E-invoicing penetration still low worldwide, but growing The market is fairly fragmented, Basware has the largest network Leaders Average Developing Laggars Basware has the strongest growth in the markets with the largest potential and lower penetration Basware s ~100 million transactions make us # 1 e-invoicing operator 2015 EU and US government mandates driving growth in our key markets Network accumulates proprietary payment data giving basis for additional customer services Source: E-invoicing/E-billing Market Overview 2015, published Feb 2015 by Billentis, Bruno Koch. Results of surveys with 20,000+ enterprises and 15,000 consumers, report issued in June 2015.

BASWARE FINANCING SERVICES A working capital platform offering clients payable and receivable financing SUPPLIER DRIVEN BUYER DRIVEN Built on top of Basware Commerce Network, utilizing data flow

19 BASWARE FINANCING SERVICES A working capital platform offering clients payable and receivable financing SUPPLIER DRIVEN BUYER DRIVEN Built on top of Basware Commerce Network, utilizing data flow between companies In partnership with financial institutions Current market entry offerings: Basware Advance BASWARE COMMERCE NETWORK Basware Pay Basware Discount Basware Pay: in partnership with MasterCard Basware Discount: a dynamic discounting solution Basware Advance: in partnership with Arrowgrass

20 MORE INFORMATION FOR INVESTORS BASWARE FINANCING SERVICES RESEARCH REPORTS

FINANCIAL RESULTS Q4/2015 & 2015 ESA TIHILÄ, CEO NICLAS ROSENLEW, CFO FEBRUARY 2, 2016

FINANCIAL RESULTS Q4/2015 & 2015 ESA TIHILÄ, CEO NICLAS ROSENLEW, CFO FEBRUARY 2, 2016 IMPORTANT NOTICE The following information contains, or may be deemed to contain, forward-looking statements. These