H A L F Y E A R F I N A N C I A L R E P O R T January – June 2020 Q 2 / 2 0 2 0
I M P O R T A N T N O T I C E 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
K E Y T A K E A W A Y S Better than expected performance driven by consistent execution despite Covid-19 Strong order EBIT positive Operations adapted intake at EUR 1.3 million, quickly & efficiently increase of EUR to changed business EUR 6.1 million 7.5 million YoY environment 3
B U S I N E S S R E S I L I E N C E Sales and Consulting and R&D, Products and marketing support Production Shift to digital Major re-planning of R&D roadmap executed marketing channels global project portfolio as planned Virtual events, meetings Consistent utilization Scan and capture and negotiations validation service Projects executed fully restored Managing extended remotely customer approval processes Improvements in support productivity and Pipeline inflow and customer satisfaction development 4
B U S I N E S S R E S I L I E N C E Enterprise operations – a prerequisite for performance Digital Office HR Finance, Legal and Sourcing Digital business Moving to fully remote Uninterrupted enablement working globally operations Secure and reliable Communication Increased business digital tools transparency Moving gradually back Support for working to normal Customers enquiries from anywhere 5
C U S T O M E R S U C C E S S I N Q 2 / 2 0 Cloud order intake EUR 6.1 million lion 29% 28% 40% 3% % Cloud order er inta take by regio ion Geographies where Basware supports customers 6
C O N T I N U E D I N V E S T M E N T S F O R T H E F U T U R E AI powered data extraction in SmartPDF AI now in pilot production Next generation SmartPDF solution leverages machine learning to capture invoice data from any PDF file to automatically extract the invoice data without human intervention First pilot started in June 2020 and gradual rollout to more customers during H2 2020 7
I N D U S T R Y F O C U S S H I F T I N G T O E C O S Y S T E M A P P R O A C H AP Automation is one of the Best results are gained when most common areas where companies standardize non- best-of-breed, point solution strategic processes and use can bring specialization value. specialized solutions in key areas. “Win Big by Starting With High -Value, Low- Risk Procurement Applications”, May 28, 2020, Garner “Determining Your Future Tech Strategy”, Magnus Bergfors, VP European Research and Lead Analyst, Spend Matters at Basware Digital Connect webinar 8
A U T O M A T I O N E N A B L E S C O N T I N U I T Y “New research shows that over 60% “While many finance executives are of companies have business slashing costs to weather the continuity plans in place, while 85% downturn, some view investments said that automation technology in technology as essential to better would be helpful for their business equip newly remote finance teams continuity needs. When disaster or strengthen other parts of the strikes, large enterprises that have business.” heavily invested in process automation may be able to weather the storm.” “How AP Departments Can Ensure Business Continuity”, Sanjoy Malik, May 1, 2020, Forbes “CFOs Look to Ramp Up Automation Investments Amid Pandemic”, Mark Maurer, April 8, 2020, The Wall Street Journal 9
F I N A N C I A L R E V I E W
F I N A N C I A L P E R F O R M A N C E O V E R V I E W €6.1M €37.8M €1.3M €34.9M Order intake Net sales Operating profit Cash and cash equivalents Strong order Solid revenue Sequential Cash intake performance improvements performance in profitability as expected 11
C L O U D O R D E R I N T A K E Overall, strong performance in Q2/2020 ▪ 8.0 Particularly strong performance in France, ▪ Benelux and Finland 6.0 Expansion sales were strong ▪ 4.0 Share of order intake from new customers ▪ higher than in Q1, although new customer acquisition continues to be impacted by 2.0 Covid-19 situation EUR million 4.7 6.4 4.5 5.9 4.9 6.4 5.5 6.9 3.6 6.1 0.0 Annual recurring revenue gross order intake is calculated by summing the total order intake in the period expressed as an annual contract value. 12
N E T S A L E S SaaS growth resilient ▪ 4-6/ 4-6/ EUR thousand Change, % Change, % 1 2020 2019 Transaction services growth impacted by ▪ Covid-19 but less than expected SaaS 14,534 11,838 22.8 23.0 Transaction services 11,103 11,777 -5.7 -5.3 Continued Consulting revenue growth ▪ Other cloud revenue 1,204 1,137 5.9 7.3 enabled by fully remote delivery model Cloud Revenue total 26,841 24,752 8.4 8.8 Maintenance decline in line with ▪ expectations, also expected to continue Maintenance 3,657 5,401 -32.3 -31.5 through out the year License sales 102 215 -52.4 -52.6 Consulting services 7,197 6,052 18.9 20.0 Other non-cloud -28 -100 71.9 70.7 revenue Non-Cloud Revenue 10,928 11,569 -5.5 -4.6 total Total 37,769 36,320 4.0 4.5 1 On an organic basis at constant currencies 13
P R O F I T A B I L I T Y Improvements in profitability driven by ▪ 4-6/ 4-6/ Change, EUR thousand 2020 2019 % systematic strategy execution and the Net sales 37,769 36,320 4.0 Covid-19 related cost actions initiated in Cost of sales -16,589 -18,502 -10.3 March 2020 Gross profit 21,180 17,819 18.9 Strong gross margin performance ▪ S&M -9,496 -12,207 -22.2 - Gross margin 56%, +7Pts YoY (+2Pts QtQ) R&D -6,516 -6,908 -5.7 - Cloud gross margin 68%, +5Pts YoY (+1pt QtQ) G&A -3,253 -2,673 21.7 - Consulting continues to improve Total operating expenses -19,265 -21,788 -11.6 ▪ S&M YoY growth rate impacted by Other operating income and -631 -2,211 -71.5 expenses integration of BD&A function to Direct Sales Operating profit (EBIT) 1,285 -6,181 in Q2 2019, as well as Covid-19 related reductions in Q1 2020 Adjustments 131 2,032 -93.6 Depreciation and amortization 3,871 3,936 -1.6 ▪ G&A YoY growth rate impacted by reversal Adjusted EBITDA 5,287 -213 of share-based compensation accruals in Q2 2019 lowering comparison period number 14
C A S H F L O W A N D B A L A N C E S H E E T Improvement in operating cash flows ▪ 4-6/ 4-6/ EUR thousand 2020 2019 Driven by higher profitability and ▪ Cash flows from operating activities 5,597 -3,665 ▪ EUR 4.5 million net positive impact from Net change in cash and cash equivalents 2,161 28,456 governmental Covid-19 related payment deferral options taken in H1 Cash and cash equivalents 34,850 63,373 Heightened efforts on receivables collection ▪ Gross financial debt 64,830 87,307 Net financial debt 29,980 23,935 15
O U T L O O K 16
A S S U M P T I O N S B E H I N D B A S W A R E ’ S E X P E C T A T I O N S F O R 2 0 2 0 First negative impacts due to Covid-19 pandemic seen in last Q1 Q1 two weeks of March Global business activity impacted Q2 Q2 Global business activity impacted but signs of recovery Q3 Q3 Global business activity will gradually head towards Q4 Q4 more normal conditions 17
O U T L O O K F O R 2 0 2 0 Basware reiterates full year guidance as announced on April 21, 2020. EBIT Net Sales es EBIT for 2020 is expected to be Net Sales guidance will be given positive. when it is possible to estimate the COVID-19 pandemic effects more precisely. 18
KEY TAKEAWAYS BUSINESS CONSISTENT INCREASED RESILIENCE STRATEGY DEMAND FOR EXECUTION DIGITALIZATION 19
Q & A
A P P E N D I X 21
F R E E C A S H F L O W M E T R I C Q1/2019 Q2/2019 Q3/2019 Q4/2019 Q1/2020 Q2/2020 4-6/ 4-6/ EUR thousand 2020 2019 -1,445 -1,293 EBITDA 5,156 -2,245 Capitalizations -2,605 -2,964 -3,579 -4,774 Finance expenses -2,865 -2,786 Taxes, excl. deferred taxes -107 -269 Share based compensation, share part -1,030 -1,080 -7,816 Gain/loss on sale of assets 158 -450 -9,794 Free cash flow metric ic -1,293 -9,794 22
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