FINANCIAL RESULTS Q3 2016 VESA TYKKYLÄINEN, CEO NICLAS ROSENLEW, CFO OCTOBER 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 VESA TYKKYLÄINEN
Q3 2016 HIGHLIGHTS Unleash Strategy: Accelerate Extend cloud Financing Network growth P2P leadership Services 26.4 million Q3 Maturing the SaaS revenues Transactions solutions +118.7% (+13.8%) Q3 2016 Progress: 21 new P2P September 53 deals signed SaaS deals record month at in total since closed (vs 9 in 9.4m inception Q3 2015)
CLOUD TRANSITION CONTINUED IN Q3 2016 Cloud Recurring Revenues* Revenues** 77.4 % 46.6 % Cloud Recurring vs Q3 2016 vs 39.5 % 72.2 % Progress: in Q3 2015 in Q3 2015 Announced 2/3rds Cloud 80% Recurring 2018 Goal: * 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, consulting revenue related to deliveries, and alliance fees
Q3 INVESTMENTS FOR THE STRATEGY Investing in Further Scalable Announced demand shortening of company Growth generation delivery times infrastructure Enablers: and sales 28 Alusta go-lives Sales and marketing Progress on moving Q3 2016 vs 16 in Q3 2015 headcount up 25% to public cloud Progress: infrastructure Tighter scope control Bulk of new sales and senior and marketing hires Continued focus on management now made productivity oversight
FINANCIAL REVIEW NICLAS ROSENLEW
KEY GUIDANCE METRICS Q3 2016 Q3 2015 1-9 2016 1-9 2015 Change Change (EUR Thousands) Reported Net Sales 35 295 33 569 5.1% 108 369 104 200 4.0% Organic Net Sales 32 678 33 515 100 736 101 036 5.1% Net Organic Net Sales at 33 365 33 515 -0.4% 102 603 101 036 1.6% Constant Currencies Sales growth (-0.4% organic at constant currencies) Q3 2016 Q3 2015 1-9 2016 1-9 2015 (EUR Thousands) in Q3 2016 Reported EBITDA -33 2 823 -3 771 5 678 Total Adjustments 1 414 717 2 173 -340 Adjusted EBITDA 1 381 3 540 -1 598 5 337
Q3 2016 NET SALES PROGRESSION Q3 2016 Q3 2015 Change • SaaS growth accelerated at EUR thousand Transaction 118.7% total, 53.2% organic 8 523 7 817 9.0% services • Transaction services revenue SaaS 6 336 2 897 118.7% increased 9.0%; differences vs Consulting transaction volume driven by 7 439 7 895 -5.8% services decline of start-up fees Maintenance 10 168 10 316 -1.4% • Overall growth impacted by the License decline in license sales, 1 137 2 050 -44.5% sales maintenance and consulting, as Other 1 692 2 594 -34.8% revenue well as weakness in the UK Group total 35 295 33 569 5.1%
Q3 OPERATING EXPENSES AND INVESTMENTS Q3 2016 Q3 2015 Change • Operating Expenses EUR thousand increased by EUR 5.2 m Employee Benefit Expenses 24 070 19 238 25.1% versus Q3 2015 Other Operating Expenses 7 682 7 654 0.4% • Sales and marketing Depreciation and Amortization 2 185 1 827 19.6% headcount grew 24.9% Total Operating Expenses 33 937 28 719 18.2% compared to 13.6% for group Materials and Services 3 576 3 852 -7.2% headcount • R&D Expenses accounted for R&D Expenses 6 066 4 707 28.9% 17.2% of sales versus 14.0% Capitalised R&D 2 639 1 951 35.3% in Q3 2015 While investing for growth, • Personnel 1 869 1 646 13.6% focus on efficiency of the cost base continued * Operating expenses include employee benefits, depreciations & amortizations, and other operating expenses
Q3 CASHFLOW AND BALANCE SHEET • Cashflow from operating activities was EUR -5.5 m in Q3 Q3 2016 Q3 2015 • Cashflow was impacted by the (EUR Thousands) increase in growth Cash flows from operating -5 479 -7 340 activities investments Net change in cash and EUR 13.0m of cash and cash -8 713 -25 120 • cash equivalents equivalents Cash and cash equivalents* 12 951 36 824 • Decrease in cash position compared to Q3 2015 related to acquisitions and growth related investments * Includes short term deposits
KEY GROUP REPORTED FINANCIALS EUR thousand Q3 2016 Q3 2015 Change Net sales 35 295 33 569 5.1% Material and services -3 576 -3 852 -7.2% Personnel expenses -24 070 -19 238 25.1% Other operating expenses -7 682 -7 654 0.4% EBITDA -33 2 823 Depreciation and amortization -2 185 -1 827 19.6% Operating result (EBIT) -2 218 996 Net result -3 711 1 249 EPS, EUR (diluted) -0.26 0.09
Q3 2016 SUMMARY HIGHLIGHTS Sales Investing in Transition to Financials momentum growth cloud -0.4% Organic + 118.7% total + 25% Sales and revenue growth 46.6% Cloud SaaS revenue Marketing at constant Revenues growth headcount currencies + 13.8% Bulk of new Adjusted Network sales and 26.4 million EBITDA transaction marketing hires Transactions EUR 1 381 K volume growth made
OUTLOOK VESA TYKKYLÄINEN
2016 FULL YEAR OUTLOOK • Organic revenue growth at constant currencies expected to be flat in 2016 compared to 5% previously expected • Adjusted EBITDA still expected at breakeven Increase in operating expenses expected to be c. EUR 20 million including • Verian • Revenues from SaaS and Basware’s network expected to continue to grow for the rest of 2016.
STRATEGY ENABLERS Additional Actions To Enable Continue to strengthen sales and marketing Focus on Customer Success Strategy New CEO Grow and monetize network and data assets Review with value added services including financing Increase productivity by simplifying our operations and increasing scalability Evolve our culture and way of working to focus more on performance
REFINED STRATEGY GOALS Strategic Priority 2017-2020 Strategic Goals Cloud revenue growth >20% CAGR on an organic basis Annual net sales Cloud revenue growth >EUR 220 million Recurring revenue ~ 80% of net sales Continue to improve underlying profitability * 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, consulting revenue related to deliveries, and alliance fees
NEXT REPORT Q4 INTERIM REPORT ON FEBRUARY 1, 2017 MORE INFORMATION: www.basware.com/investors www.basware.com www.twitter.com/basware www.facebook.com/BaswareCorporation www.linkedin.com/company/basware
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