INTERIM REPORT Q1/2015 ESA TIHILÄ, CEO NICLAS ROSENLEW, CFO APRIL 14, 2015 1
INTERIM REPORT Q1/2015 BUSINESS REVIEW 2
KEY EVENTS IN Q1/2015 Revenue growth at a good level: The Network Services sales grew strongly The Solution Services sales continued steadily Building Financing Services business & services has continued Definitive agreement with Arrowgrass Acquisition of Procserve in the UK on April 8 Basware Commerce Network The growth in the transaction volume continued, up 28.5 percent year-on-year With Basware Discount, as a service on the Basware Commerce Network, more than one million businesses will be able to benefit from early payment terms, managed online in real time. 3
Q1/2015 KEY FINANCIALS Net sales EUR 34 041 thousand (EUR 31 013 thousand), +9.8 % Operating profit EUR 1 132 thousand (EUR 310 thousand), +265.2 % 4 Net sales EUR thousand 40 000 35 000 30 000 25 000 20 000 15 000 10 000 5 000 - Q1 Q2 Q3 Q4 2010 2011 2012 2013 2014 2015
1Q/2015 IN BRIEF: REVENUE GROWTH AT A GOOD LEVEL Revenue growth of 9.8 percent year-on-year: Net sales of Network Services grew 38.9 % year-on-year Demand for SaaS services at a good level, SaaS revenue grew 21.5 % Billable utilization rate continued to develop positively Several significant new customer agreements SaaS revenue SaaS revenue grew by 21.5 percent 5
GROWTH OF TRANSACTION VOLUMES 2010 - Q1/2015 Million transactions 25,0 20,0 15,0 10,0 5,0 - Q1 Q2 Q3 Q4 2010 2011 2012 2013 2014 2015 The growth in the transaction volume continued, up 28.5 % year-on-year, 22.1 million transactions were processed via Basware Commerce Network. 6
Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 40 000 35 000 30 000 25 000 20 000 15 000 SHARE OF RECURRING REVENUE, ROLLING 12 MONTHS AVERAGE EUR thousand 80,0 % 70,0 % 60,0 % 50,0 % 40,0 % 30,0 % The share of recurring revenue of net sales decreased to 63.7 % (66.9 %) in Q1/2015 10 000 20,0 % Net sales 5 000 0 10,0 % 0,0 % Share of recurring revenue, rolling 4 quarters average 7
SAAS VERSUS LICENSE SALES DYNAMICS 100 % 90 % 80 % 70 % 60 % 50 % 40 % 30 % 20 % 10 % 0 % 2010 2011 2012 2013 2014 Q1/2015 SaaS License sales 8
INTERIM REPORT Q1/2015 FINANCIAL REVIEW 9
REPORTING (IFRS) 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 2015, the company reports revenue from products and services as follows: Network Services (e-invoicing solutions and services) and Solution Services (software solutions and services). Recurring revenue reported by the company consists of the net sales excluding license sales and professional services revenue. Alliance fees related to financing-related value added services of non-recurring nature are not included in the recurring revenue reported. Basware reports the following geographical areas: Finland, EMEIA & Russia, and Americas & APAC. The reported areas have been adjusted to reflect the growth in the share of the Group's international business. Net sales are reported by the customer s location, and net sales and operating profit are also reported by the location of the assets. 10
BASWARE GROUP EUR million 35,0 30,0 25,0 20,0 15,0 10,0 5,0 0,0 Q1/2014 Q2/2014 Q3/2014 Q4/2014 Q1/2015 Net sales Operating profit EUR thousand Q1 2015 Q1 2014 YoY growth Q4 2014 QoQ growth Net sales 34 041 31 013 9.8% 34 664-1.8 % Material and services -4 009-2 978 34.6% -3 559 12.6 % Personnel expenses -20 811-20 078 3.7% -20 803 0.0 % Depreciation and amortization -1 658-1 789-7.3% -1 735-4.5 % Other operating expenses -6 449-6 034 6.9% -6 865-6.1 % Operating profit (EBIT) 1 132 310 265.2% 1 701-33.4 % Net Profit 595-76 2 204-73.0 % EPS, EUR (diluted) 0.04-0.01 0.11-63.6 % 11 Personnel 1516 1 460 3.7% 1 498 1.2 %
NETWORK SERVICES & SOLUTION SERVICES IN Q1/2015 EUR thousand 25 000 SOLUTIONS SERVICES Net sales by business in Q1/2015: Solution Services (software solutions & services): EUR 22 928 (23 011) thousand, -0.4%; SaaS increased, offset by a decline in license sales Network Services (e-invoicing solutions & services): EUR 11 112 (8 002) thousand, +38.9 %; includes EUR 3 million non-recurring alliance fees; volumes increased by 28.5% 20 000 15 000 10 000 12 000 10 000 Q1/2014 Q2/2014 Q3/2014 Q4/2014 Q1/2015 NETWORK SERVICES 8 000 6 000 12 (25 642, -0.6 %) 4 000
EXPENSES, FINANCE & INVESTMENTS Continuing investment activities: Fixed costs including depreciation and amortization amounted to EUR 28 918 thousand (27 901), +3.6% R&D expenses amounted to EUR 4 808 thousand (4 474), 14.1% of net sales, +7.5% Capitalized R&D expenses amounted to EUR 1 692 thousand (844) The operative cash flow amounted to EUR 19 775 thousand (13 422) Cash & cash equivalents including short-term deposits amounted to EUR 73 624 thousand Increased cash position Cash and equivalents amounted to EUR 73 624 thousand 13
INTERIM REPORT Q1/2015 FUTURE OUTLOOK 14
BASWARE S KEY BUSINESS AREAS Solution Services Network Services Financing Services Software business: software used within organisations Ranked #1 or #2 globally Sold as licenses or SaaS 30+ years of expertise on Invoice Automation, Procurement, Travel & Expense Management 2500+ large customers globally 1.2 million users E-invoicing business: operator between buyers & suppliers Also add-on scanning & supplier activation services 1 million companies in 100 countries 80+ million transactions in Basware Commerce Network Financing services: new value added innovations Expected revenue in the end of 2015 Basware Pay, Basware Discount & upcoming e-invoicing based, supplier driven, invoice financing service Based on Basware Commerce Network Partnerships with MasterCard, Arrowgrass, ING
PROCSERVE IS NOW A BASWARE COMPANY Announcement on April 8, 2015: Basware acquired Procserve, the leading e- procurement solution provider for the public sector in the UK Acquisition price is ~EUR 25.9 million; the net sales of Procserve ~EUR 9.6 million in 2014 Procserve s & Basware s cloud-based e- procurement solutions and networks complement each other Through the acquisitions over the recent years, Basware is already the leading e-invoicing operator in the Nordics, the Benelux market and Germany, and with the recent acquisition the company significantly strengthens its foothold in the UK 16
BASWARE OUTLOOK Basware expects its net sales and operating profit (EBIT) for 2015 to grow compared to 2014: Strong growth in Network Services by developing & automating the connection of buyers and suppliers to the e-invoicing service, by utilizing digital marketing and sales channels more extensively, and through acquisitions Sales of Alusta are expected to have a positive effect on software net sales and professional services. Fixed costs are expected to develop moderately. The company will invest more extensively in sales and marketing as well as research and development of new solutions and services, including Financing Services. In 2015, the acquisition of Procserve and related integration costs are expected to exceed the savings starting from the second quarter of the year and the cost synergies to be marginally net positive next year. The joint venture which has been established with Arrowgrass Capital Partners LLP is expected to add net costs in 2015. Active analysis of acquisition targets especially in the e-invoicing market in Europe and in the U.S. will continue. 17
NEXT REPORT Q2 Interim Report on July 10, 2015 Investors www.basware.com/investors www.basware.com/annualreport Basware www.basware.com www.twitter.com/basware www.facebook.com/baswarecorporation www.linkedin.com/company/basware 18