GLOBAL LEADER IN NETWORKED PURCHASE-TO-PAY Investor presentation - - PowerPoint PPT Presentation

Investor presentation

BASWARE – GLOBAL LEADER IN NETWORKED PURCHASE-TO-PAY

November 2019

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.

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EUR 141 million revenue in 2018

We help our customers simplify operations and spend smarter by automating their procurement and finance processes We are the global leader with largest e- invoicing network in the world #1 in accounts payable automation and #1-3 in procurement

BASWARE IN BRIEF

~1,300 employees

in 14 countries Customers in

100+ countries

MARKET LEADER

Nordics 37% 23% Americas 35% Europe 6% APAC Revenue by area (Q3/2019)

68% revenue

comes from cloud

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EUR 650 billion managed spend in 2018

SIMPLIFYOPERATIONS, SPENDSMARTER

✓ to optimize spend with analytics ✓ to spend under management ✓ to AP automation From inefficient invoice process From uncontrolled spend From lack of cashflow visibility 307% return on investment and a payback time of 12 months1)

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Receive Source Order Shop Invoice Match Analyze Pay

1) Total economic impact of Basware’s Purchase-to-Pay Cloud Solution, Forrester 2017

INVESTMENT HIGHLIGHTS

Large addressable market Market leader with unique offering Profitable cloud growth

• EUR 15 billion market potential
• Leader in networked purchase-to-pay
• Largest e-invoicing network and

innovator in analytics

• Actions on-going to improve profitability

while retaining cloud growth

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SUPPORTIVE MEGATRENDS EUR 141 million

Basware 2018 revenues

EUR ~5 billion

Current market

EUR 15 billion

Market potential

DIGITALIZATION & AUTOMATION RAPID TECHNOLOGICAL DEVELOPMENT SUSTAINABILITY

LARGE ADDRESSABLE MARKET

HUGE MARKET OPPORTUNITY

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COMPETITIVE DIFFERENTIATORS

PROCUREMENT E-INVOICING NETWORK & AP AUTOMATION

• 100% invoice

capture

• 100% spend

visibility

• 100% end-user

adoption ANALYTICS

LARGEST & MOST GLOBAL E-INVOICING NETWORK €650BN SPEND - 150M INVOICES

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BASWARE IS A RECOGNIZED MARKET LEADER

Leader with strong market understanding, innovation and product roadmap, and customer experience “well suited to multinational organizations moving to digital procurement and looking to automate invoice processing” MAGIC QUADRANT FOR PROCURE TO PAY SUITES 2019 “an impressive company that offers a leading solution among global P2P providers” PROCURE TO PAY NAVIGATOR 2016 Leader with highest score for Adaptability “a particularly strong fit for enterprises that want to automate processing of high invoice volumes” Leader with highest score for invoice automation 2017 8

BASWARE CHOSEN BY CUSTOMERS ACROSS THE WORLD AND ACROSS INDUSTRIES

Geographies where Basware supports customers Automotive Manufacturing Healthcare / Pharma Telco / Media Energy / Utility Food / Beverage Services Industrials Transport / Lodging Retail Finance / Professional Public Sector

2,500+ buyer customers

use source-to-pay solutions

1.5m+ organisations

connected to network

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EUR 650 billion annual spend managed

CONTINUED CLOUD REVENUE GROWTH

• Cloud revenue growth

+11% in Q3/19*

• Cloud 68% of total

revenue

• Non-cloud revenue

declines in line with expectations as Basware transitions customers to cloud

EUR million1)

*On an organic basis at constant currencies

1)Q1/2017-Q2/2018 revenue has been adjusted for disposals and is indicative only.

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0.00 5.00 10.00 15.00 20.00 25.00

Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19

Cloud revenue Consulting Maintenance, license and other revenue

PRODUCTIVITY PROGRAMME UPDATE

Basware expects to reach positive EBIT in 2020 and positive free cash flow on a run rate basis when exiting 2020 Simplify the business Retain cloud growth Significantly improve profitability

Programme status ✓ Focusing investments on long term strategic products and consolidating product portfolio ✓ Global organizational setup aligned with Basware’s global unified operating model ✓ Improving profitability of professional services ✓ Reducing external spending ✓ Headcount reduction of 64 employees ✓ EUR 10 million annual cost savings in 2020 compared to Q1/2019 within reach

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PRODUCTIVITY PROGRAMME RESULTS

Gross margin, %

+6

percentage points Q2/19 → Q3/19

Target of EUR 10 million annual cost savings on track Consulting revenue

+31%

Q3/18 → Q3/19

1.9 M€

Programme costs Order intake

+22%

Q3/18 → Q3/19

Q3/19 FINANCIAL HIGHLIGHTS

Cloud growth

+11%

Total growth

+8%

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EBIT

+940k

Operating cashflow

+1.5m

On track to profitable growth

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

OUTLOOK FOR 2019

BASWARE’S STRATEGICAL PRIORITY IS PROFITABLE CLOUD GROWTH.

*On an organic basis at constant currencies

Adjusted EBITDA EUR 3 million or better

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WHY INVEST IN BASWARE?

Market leader with unique offering Profitable cloud growth Large addressable market

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APPENDIX

FROM TRANSITION TO PROFITABLE GROWTH

Push to Cloud Simplification and profitable growth

Consolidation

• f R&D sites

Transition to AWS initiated Sale of non- strategic businesses Functional

• rganization

Cost conscious approach Cloud focused strategy Scanning services

• utsourced

Productivity programme launched Cloud revenues reach 2/3 of total Consolidation of product portfolio

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CLOUD ORDER INTAKE GROWTH

• Reported as annual

recurring revenue (ARR) gross order intake

• Share of cloud order

intake from new customers increasing

• Key markets: US, UK,

Germany and France

EUR million

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4.0 5.5 3.5 4.9 4.7 6.4 4.5 5.9 4.9 6.4 5.5 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19

KEY FIGURES Q3/2019

EUR thousand 7-9/2019 7-9/2018 Change, % 2018 Net sales 36,823 33,991 8.3 141,417 Cloud 25,018 22,440 11.5 89,482 Consulting 6,491 4,966 30.7 23,567 Maintenance, license and other 5,314 6,585

• 19.3

28,368 Cost of sales

• 16,550
• 16,101

2.8

• 69,620

Gross profit 20,273 17,890 13.3 71,797 Sales and marketing

• 9,809
• 10,759
• 8.8
• 43,041

Research and development

• 5,906
• 6,599
• 10.5
• 27,222

General and administration

• 3,576
• 4,003
• 10.7
• 16,247

Total operating expenses

• 19,292
• 21,361
• 9.7
• 86,510

Other operating income and expenses

• 42
• 361
• 86.7

13,242 Operating profit (EBIT) 940

• 3,787
• 1,471

Adjustments

• 211

187

• 13,581

Depreciation and amortization

• 3,973
• 2,723

45.9 10,688 Adjusted EBITDA 4,702

• 877
• 4,364

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SHAREHOLDER BREAKDOWN – Q3/2019

TOP 20 SHAREHOLDERS* SHAREHOLDER DISTRIBUTION

% of shares Sep 30, 2019

1 Arrowgrass Capital Partners 25.0 3,600,698 2 INVESCO Asset Management (Oppenheimer) 7.7 1,108,293 3 Sihvo Ilkka Juhani 6.2 887,300 4 Eräkangas Kirsi Maria 4.4 626,055 5 Vaajoensuu Hannu 4.0 575,857 6 Ilmarinen Mutual Pension Insurance Company 2.9 420,830 7 Perttunen, Sakari 2.7 384,375 8 Veritas Pension Insurance Company Ltd. 2.4 345,102 9 The State Pension Fund 1.8 256,000 10 Pöllänen Antti 1.4 198,033 11 Perttunen, Meimi 1.0 145,107 12 Danske Invest Finnish Institutional Equity Fund 0.8 115,000 13 OP-Finland Small Firms Fund 0.7 94,922 14 Vaajoensuu Petra 0.6 83,800 15 Vaajoensuu, Matias 0.6 83,800 16 Vaajoensuu Sara 0.6 83,700 17 Danske Invest Finnish Small Cap Fund 0.4 60,000 18 Nordea Pro Finland Fund 0.4 53,286 19 Koripalloilun Tukisäätiö Sr 0.3 45,000 20 Swiss Life Luxembourg Sa 0.3 42,905 Top 20 in total 64% 9,210,063 Total number of shares 100% 14,401,936

Shares, total

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Executive team & Board 6.4 % International Institutional Investors 55.5 % Other Founders 15.1 % Finnish Institutional Investors 10.7 % Households 7.7 % Other Unknown 4.6 %

* Based on Euroclear Finland and major shareholder flagging notifications

Q3/2019 FINANCIAL REVIEW

Significant improvement in profitability now visible

Q3/19 KEY TAKEAWAYS

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Strong order intake from key markets Consulting business improving

Q3 NET SALES PROGRESSION

• Cloud revenue growth

rate impacted by discontinuation of non- strategic unprofitable contracts

• Project deliveries

particularly in the US contributed positively to consulting revenues

• Churn in maintenance

increased due to solutions going into end-of-life

• USD strength improved

reported figures

*On an organic basis at constant currencies

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Net sales by revenue type, EUR thousand 7-9/ 2019 7-9/ 2018 Change, % Change, %* Cloud 25,018 22,440 11.5 10.7 Consulting 6,491 4,966 30.7 29.7 Maintenance, license and

• ther

5,314 6,585

• 19.3
• 19.1

Total 36,823 33,991 8.3 7.7

Q3 PROFITABILITY

• The execution of the

productivity programme has reduced total costs and improved profitability

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EUR thousand 7-9/2019 7-9/2018 Change,% Net sales 36,823 33,991 8.3 Cost of sales

• 16,550
• 16,101

2.8 Gross profit 20,273 17,890 13.3 Sales and marketing

• 9,809
• 10,759
• 8.8

Research and development

• 5,906
• 6,599
• 10.5

General and administration

• 3,576
• 4,003
• 10.7

Total operating expenses

• 19,292
• 21,361
• 9.7

Other operating income and expenses

• 42
• 361
• 86.7

Operating profit (EBIT) 940

• 3,787

Adjustments

• 211

187 Depreciation and amortization

• 3,973
• 2,723

45.9 Adjusted EBITDA 4,702

• 877

FREE CASH FLOW METRIC

• 4,836
• 7,787
• 3,129
• 4,076
• 7,816
• 9,794
• 1 445

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

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EUR thousand 7-9/2019 7-9/2018 EBITDA 4,913

• 1,064

Capitalizations

• 2,072
• 2,102

Finance expenses

• 2,933
• 386

Taxes, excl. deferred taxes

• 152
• 271

Payment of lease liabilities1

• 1,093
• Share based compensation, share

part

• 108

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

• 1,445
• 3,129
• Free cash flow metric

improved

• Improvements in

profitability in Q3/2019 off-set the increased financing expenses

• Basware expects to

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

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

Q3 CASH FLOW AND BALANCE SHEET

• The improvement in cash flows

was mainly due to higher profitability, which was partly

• ff-set by working capital

timing differences

• EUR 30 million club loan repaid

in September 2019

• Current interest bearing

liabilities dropped to EUR 2 million

• Total of EUR 5 million debt

maturing by end of 2022

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EUR thousand 7-9/ 2019 7-9/ 2018 Cash flows from operating activities 1,474

• 2,676

Net change in cash and cash equivalents

• 32,763

4,760 Cash and cash equivalents 30,640 46,235 Gross financial debt 58,556 57,202 Net financial debt 27,915 10,967 Gross debt including leases* 75,086 57,202 Net debt including leases* 44,446 10,967

*Comparison impacted by IFRS16 methodology change