FINANCIAL RESULTSQ2 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
ESA TIHILÄ
CEO REVIEW
HUGE MARKET POTENTIAL FOR E-INVOICING
4
370 billion invoices annually, globally,
95% currently in paper and unstructured data format
Current Total
Addressable
Market:
3 billion e-invoices,
1% of total
Source: Management estimates, Billentis, EESPA. Covers B2B, B2G and B2C
E-invoice Other electronic formats Paper and unstructured data
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.”
*Gartner, Magic Quadrant for Procure-to-Pay Suites, Deborah R Wilson, Paolo Malinverno, Magnus Bergfors, Desere Edwards, 13 June 2016This 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.
Source: Gartner (June 2016)
Q2 2016 HIGHLIGHTS
Extend cloud
P2P leadership
Accelerate
Network growth
Unleash
Financing
Services
SaaS revenues
+99.0%
27.2 million Q2
Transactions
(+15.7%)
Select
customers live
in Arrowgrass
JV
27 new P2P
SaaS deals
closed (vs 19 in
Q2 2015)
June record
month at 9.2
million
Focus on
development
work continues
Strategy:
Q2 2016
Progress:
CLOUD TRANSITION CONTINUED IN Q2 2016
Announced
2018 Goal:
Recurring
Revenues**
Cloud
Revenues*
Q2 2016
Progress:
80% Recurring2/3rds Cloud
70.6% Recurring
vs 68.7%
in Q2 2015
42.4% Cloud
vs 37.6%
in Q2 2015
* 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
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
Q2 INVESTMENTS FOR THE STRATEGY
Announced
Growth
Enablers:
Further
shortening of
delivery times
Investing in
demand
generation
and sales
Scalable
company
infrastructure
Q2 2016
Progress:
Sales and marketing
headcount up 19.6%
Bulk of new sales
and marketing hires
now made
Focus on key markets
Expanding to mid-
market customers
Growing cloud
revenues
VERIAN INTEGRATING WELL
Further strengthens
Basware’s market
position in the US
Stronger customer
offering through
enhanced e-
procurement
Extends Basware’s
network
Rationale Fit with strategy
First cross-sell deals
already achieved:
Network
Verian
procurement and
Alusta
Tehseen Dahya, former
Verian CEO appointed
Head of Basware US
Integration progress
FINANCIAL REVIEW
NICLAS ROSENLEW
(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%
Organic Net Sales 36 298 36 535 68 058 67 522
Organic Net Sales at
Constant Currencies37 092 36 535 1.5% 69 238 67 522 2.5%
KEY GUIDANCE METRICS
(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
6.4% Net
Sales growth
(1.5% organic)
in Q2 2016
Q2 2016 NET SALES PROGRESSION
EUR thousand Q2 2016 Q2 2015 Change
Transaction
services8 919 8 634 3.3%
SaaS 5 904 2 967 99.0%
Consulting
services9 473 9 510 -0.4%
Maintenance 10 385 10 499 -1.1%
License
sales2 588 2 927 -11.6%
Other
revenue1 680 2 054 -18.2%
Group total 38 948 36 590 6.4%
• 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
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
* Operating expenses include employee benefits, depreciations & amortizations, and other operating expenses
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 %
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
+ 1.5% Organic
revenue growth
at constant
currencies
Adjusted
EBITDA
EUR -2 461 K
+ 99.0% total
SaaS revenue
growth
+ 15.7%
Network
transaction
volume growth
+ 19.6% Sales
and Marketing
headcount
Bulk of new
sales and
marketing hires
made
42.4% Cloud
Revenues
27.2 million
Transactions
FinancialsSales
momentumInvesting in
growthTransition to
cloud
MORE INFORMATION:
www.basware.com/investors
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www.linkedin.com/company/basware
Q3 INTERIM REPORT ON OCTOBER 19, 2016
NEXT REPORT