FINANCIAL REVIEW Klaus Andersen, CEO Ben Selby, VP, IR and - - PowerPoint PPT Presentation

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FINANCIAL REVIEW Klaus Andersen, CEO Ben Selby, VP, IR and - - PowerPoint PPT Presentation

HALF-YEAR FINANCIAL REVIEW Klaus Andersen, CEO Ben Selby, VP, IR and Treasury August 6, 2019 Q2/2019 Half-Year Financial Review January June IMPORTANT NOTICE The following information contains, or may be deemed to contain,


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SLIDE 1

Q2/2019

HALF-YEAR FINANCIAL REVIEW

Half-Year Financial Review January–June

Klaus Andersen, CEO Ben Selby, VP, IR and Treasury August 6, 2019

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SLIDE 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

  • ther 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,

  • r 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

  • f an offer to buy any securities of Basware or otherwise to engage in any investment activity.

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SLIDE 3

Order intake all-time high at EUR 6.4 million

KEY TAKEAWAYS

Adjusted EBITDA guidance for 2019 upgraded

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Productivity programme actions almost fully implemented

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SLIDE 4

CONTINUED INDUSTRY LEADERSHIP

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Value Leader in Spend Matters’ Q2/2019 Procure-to-Pay SolutionMap SmartOrders with actionable emails Advanced Analytics dashboard enhancements Basware again recognized as a Leader in Gartner’s Magic Quadrant

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SLIDE 5

CUSTOMER SUCCESS

EXAMPLES OF CUSTOMER WINS IN Q2/2019

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SLIDE 6

PRODUCTIVITY PROGRAMME SUMMARY

✓ Productivity programme actions almost fully implemented ✓ EUR 10m annual cost savings in 2020 compared to Q1/2019 within reach ✓ S&M H2/2018 investment level retained ✓ R&D investment level retained for strategic products and services

Significantly improve profitability Retain cloud growth Simplify the business

Basware expects to reach positive EBIT in 2020 and positive free cash flow on a run rate basis when exiting 2020

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SLIDE 7

PRODUCTIVITY PROGRAMME STATUS

Focus areas Status

Focus investments on long term strategic products and consolidate product portfolio

  • Long term Procurement product strategy implemented
  • Financing Services focus on Dynamic Discount

Align global organizational setup with Basware’s global unified operating model

  • Global operating model implemented worldwide
  • Further centralization of customer support services and

corporate IT services

  • Investments in sales and marketing are being rebalanced

to where the opportunities for growth are highest Improve profitability of professional services

  • Initial actions taken, further improvements planned
  • Re-organisation implemented with more client facing

roles and less internal roles

  • Shared common services and capabilities in professional

services now available globally Reduce external spending

  • Spend analysis and actions continue

Reduce headcount

  • Active headcount reduction of 64 employees globally
  • Leaner management set-up
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SLIDE 8

NEW KEY HIRES

Martti Nurminen, CFO, as of January 2020 latest

Key work experience:

  • Currently CFO, Solteq Plc
  • CFO, Affecto Plc
  • Finance Director, Johnson Controls

Blair Tolbard, General manager, North America and VP of Sales, as of June 2019

Key work experience:

  • Group Vice President of Sales, Jaggaer
  • Co-Founder and President, MiCore Solutions
  • Positions at Oracle and IBM

General manager, UK and VP of Sales

Recruitment process completed, expected to start in coming months

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SLIDE 9

Q2/2019 HIGHLIGHTS

STRATEGIC PRIORITY: SCALABLE CLOUD REVENUE GROWTH

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Cloud order intake EUR 6.4m Cloud revenue growth 12% Cloud revenues 68% of total

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SLIDE 10

FINANCIAL REVIEW

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SLIDE 11

Q2 CLOUD AND TOTAL REVENUE GROWTH

Cloud Non Cloud

68%

Cloud as a proportion of total revenues Organic cloud growth at constant currencies

+12%

Organic total growth at constant currencies

+3%

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CLOUD ORDER INTAKE

EUR million

  • All time high order

intake

  • Continued good

progress with cloud

  • rder intake from

new customers

  • Strong performance

in the US and Finland

  • Unsatisfactory

performance in the UK

Annual recurring revenue gross order intake is calculated by summing the total

  • rder intake in the period expressed as an annual contract value.

12 0.0 2.0 4.0 6.0 8.0 10.0 12.0

Q2/2018 Q2/2019

6.4 6.4

0.0 2.0 4.0 6.0 8.0 10.0 12.0

H1/2018 H1/2019

11.0 11.4

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Q2 NET SALES PROGRESSION

  • Cloud revenue

growth rate was impacted by higher than average amount of credit notes

  • USD strength

improved reported figures

*On an organic basis at constant currencies

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Net sales by revenue type, EUR thousand 4-6/ 2019 4-6/ 2018 Change, % Change, %* Cloud 24,752 21,783 13.6 12.4 Consulting 6,052 6,201

  • 2.4
  • 3.0

Maintenance, license and

  • ther

5,516 6,986

  • 21.0
  • 21.0

Total 36,320 34,969 3.9 3.0

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Q2 PROFITABILITY

  • Adjusted EBITDA at

approximately breakeven

  • Cost of sales impacted by

legacy data back-up hosting costs and previously unbilled license costs

  • Higher investments in sales

and marketing

  • G&A costs decreased due to

Executive Team exits

  • Productivity program costs
  • f EUR 2.1 million in other
  • perating expenses

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EUR thousand 4-6/2019 4-6/2018 Change,% Net sales 36,320 34,969 3.9 Cost of sales

  • 18,502
  • 18,580
  • 0.4

Gross profit 17,819 16,389 8.7 Sales and marketing

  • 12,207
  • 10,434

17.0 Research and development

  • 6,908
  • 6,964
  • 0.8

General and administration

  • 2,673
  • 4,315
  • 38.1

Total operating expenses

  • 21,788
  • 21,712

0.4 Other operating income and expenses

  • 2,211
  • 1,006

119.9 Operating profit (EBIT)

  • 6,181
  • 6,329

2.3 Adjustments 2,032 913 122.6 Depreciation and amortization

  • 3,936
  • 2,742

43.5 Adjusted EBITDA

  • 213
  • 2,674

92.0

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SLIDE 15

FREE CASH FLOW METRIC

  • 4,836
  • 7,787
  • 3,129
  • 4,076
  • 7,816
  • 9,794

Q1/2018 Q2/2018 Q3/2018 Q4/2018 Q1/2019 Q2/2019

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EUR thousand 4-6/2019 4-6/2018 Change, % EBITDA

  • 2,245
  • 3,587

37.4 Capitalizations

  • 2,964
  • 3,706
  • 20.0

Finance expenses

  • 2,786
  • 508

Taxes, excl. deferred taxes

  • 269
  • 85

Payment of lease liabilities1

  • 1,080
  • Share based compensation,

share part

  • 450

99 Gain/loss on sale of assets Free cash flow metric

  • 9,794
  • 7,787
  • 25.8
  • Basware expects to

reach positive free cash flow on a run-rate basis by the end of 2020

  • The purpose of the free

cash flow metric is to provide a clear view of all costs related to Basware’s operations

  • Main difference to

comparison period is the new financing arrangement

1 Payment of lease liabilities in 2018 are included in EBITDA.

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Q2 CASH FLOW AND BALANCE SHEET

  • Improvement in operating

cashflow mainly due to positive changes in working capital

  • EUR 10.3 million bilateral loan

repaid

  • EUR 30 million club loan to be

repaid in September 2019

  • Remaining debt expected after

Q3:

  • Pension loan due 2022

(amortising, EUR 5m remaining)

  • Multi-issuer bond due 2023,

EUR 10m

  • Bregal financing due 2024

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EUR thousand 4-6/ 2019 4-6/ 2018 Cash flows from operating activities

  • 3,665
  • 7,856

Net change in cash and cash equivalents 28,456

  • 12,988

Cash and cash equivalents 63,373 41,413 Gross financial debt 87,307 48,277 Net financial debt 23,935 6,864 Gross debt including leases* 104,564 48,277 Net debt including leases* 41,192 6,864

*Comparison impacted by IFRS16 methodology change

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OUTLOOK

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Total revenues to grow at approximately 5%* Cloud revenues to grow at approximately 15%*

OUTLOOK FOR 2019 UPDATED

AS A RESULT OF THE PRODUCTIVITY PROGRAMME ACTIONS, BASWARE UPGRADES THE PROFITABILITY GUIDANCE FOR 2019. REVENUE GUIDANCE IS UNCHANGED.

*On an organic basis at constant currencies

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Adjusted EBITDA EUR 3 million or better

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Order intake all-time high at EUR 6.4 million

KEY TAKEAWAYS

Adjusted EBITDA guidance for 2019 upgraded

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Productivity programme actions almost fully implemented

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