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 - - PowerPoint PPT Presentation

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

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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.

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K E Y T A K E A W A Y S

Strong order intake at EUR 6.1 million EBIT positive EUR 1.3 million, increase of EUR 7.5 million YoY Operations adapted quickly & efficiently to changed business environment

Better than expected performance driven by consistent execution despite Covid-19

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B U S I N E S S R E S I L I E N C E

Consulting and support Sales and marketing R&D, Products and Production

Major re-planning of global project portfolio Consistent utilization Projects executed fully remotely Improvements in support productivity and customer satisfaction Shift to digital marketing channels Virtual events, meetings and negotiations Managing extended customer approval processes Pipeline inflow and development R&D roadmap executed as planned Scan and capture validation service restored

5

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 business enablement Secure and reliable digital tools Support for working from anywhere

Digital Office HR Finance, Legal and Sourcing

Moving to fully remote working globally Communication Moving gradually back to normal Uninterrupted

• perations

Increased business transparency Customers enquiries

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C U S T O M E R S U C C E S S I N Q 2 / 2 0

Geographies where Basware supports customers

28% 40% 29% 3% Cloud order intake

EUR 6.1 million lion

%

Cloud order er inta take by regio ion

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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

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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

Best results are gained when companies standardize non- strategic processes and use specialized solutions in key areas. AP Automation is one of the most common areas where best-of-breed, point solution can bring specialization value.

“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

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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%

• f companies have business

continuity plans in place, while 85% said that automation technology would be helpful for their business continuity needs. When disaster strikes, large enterprises that have heavily invested in process automation may be able to weather the storm.” “While many finance executives are slashing costs to weather the downturn, some view investments in technology as essential to better equip newly remote finance teams

• r strengthen other parts of the

business.”

“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

F I N A N C I A L R E V I E W

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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

Strong order intake Solid revenue performance Sequential improvements in profitability Cash performance as expected €37.8M

Net sales

€1.3M

Operating profit

€34.9M

Cash and cash equivalents

€6.1M

Order intake

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C L O U D O R D E R I N T A K E

EUR million

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

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

▪ Overall, strong performance in Q2/2020 ▪ Particularly strong performance in France, Benelux and Finland ▪ Expansion sales were strong ▪ Share of order intake from new customers higher than in Q1, although new customer acquisition continues to be impacted by Covid-19 situation

4.7 6.4 4.5 5.9 4.9 6.4 5.5 6.9 3.6 6.1 0.0 2.0 4.0 6.0 8.0

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N E T S A L E S

▪ SaaS growth resilient ▪ Transaction services growth impacted by Covid-19 but less than expected ▪ Continued Consulting revenue growth enabled by fully remote delivery model ▪ Maintenance decline in line with expectations, also expected to continue through out the year

EUR thousand 4-6/ 2020 4-6/ 2019 Change, % Change, %1 SaaS 14,534 11,838 22.8 23.0 Transaction services 11,103 11,777

• 5.7
• 5.3

Other cloud revenue 1,204 1,137 5.9 7.3 Cloud Revenue total 26,841 24,752 8.4 8.8 Maintenance 3,657 5,401

• 32.3
• 31.5

License sales 102 215

• 52.4
• 52.6

Consulting services 7,197 6,052 18.9 20.0 Other non-cloud revenue

• 28
• 100

71.9 70.7 Non-Cloud Revenue total 10,928 11,569

• 5.5
• 4.6

Total 37,769 36,320 4.0 4.5

1On an organic basis at constant currencies

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EUR thousand 4-6/ 2020 4-6/ 2019 Change, % Net sales 37,769 36,320 4.0 Cost of sales

• 16,589
• 18,502
• 10.3

Gross profit 21,180 17,819 18.9 S&M

• 9,496
• 12,207
• 22.2

R&D

• 6,516
• 6,908
• 5.7

G&A

• 3,253
• 2,673

21.7 Total operating expenses

• 19,265
• 21,788
• 11.6

Other operating income and expenses

• 631
• 2,211
• 71.5

Operating profit (EBIT) 1,285

• 6,181

Adjustments 131 2,032

• 93.6

Depreciation and amortization 3,871 3,936

• 1.6

Adjusted EBITDA 5,287

• 213

P R O F I T A B I L I T Y

▪ Improvements in profitability driven by systematic strategy execution and the Covid-19 related cost actions initiated in March 2020 ▪ Strong gross margin performance

• Gross margin 56%, +7Pts YoY (+2Pts QtQ)
• Cloud gross margin 68%, +5Pts YoY (+1pt QtQ)
• Consulting continues to improve

▪ S&M YoY growth rate impacted by integration of BD&A function to Direct Sales in Q2 2019, as well as Covid-19 related reductions in Q1 2020 ▪ G&A YoY growth rate impacted by reversal

• f share-based compensation accruals in

Q2 2019 lowering comparison period number

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EUR thousand 4-6/ 2020 4-6/ 2019 Cash flows from operating activities 5,597

• 3,665

Net change in cash and cash equivalents 2,161 28,456 Cash and cash equivalents 34,850 63,373 Gross financial debt 64,830 87,307 Net financial debt 29,980 23,935

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

▪ Driven by higher profitability and ▪ EUR 4.5 million net positive impact from governmental Covid-19 related payment deferral options taken in H1

▪ Heightened efforts on receivables collection

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O U T L O O K

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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 two weeks of March

Q1 Q1 Q2 Q2

Global business activity impacted

Q3 Q3

Global business activity impacted but signs of recovery

Q4 Q4

Global business activity will gradually head towards more normal conditions

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O U T L O O K F O R 2 0 2 0

Net Sales es Net Sales guidance will be given when it is possible to estimate the COVID-19 pandemic effects more precisely. EBIT EBIT for 2020 is expected to be positive. Basware reiterates full year guidance as announced on April 21, 2020.

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BUSINESS RESILIENCE

KEY TAKEAWAYS

CONSISTENT STRATEGY EXECUTION INCREASED DEMAND FOR DIGITALIZATION

Q & A

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A P P E N D I X

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F R E E C A S H F L O W M E T R I C

• 7,816
• 9,794
• 1,445
• 4,774
• 3,579
• 1,293

Q1/2019 Q2/2019 Q3/2019 Q4/2019 Q1/2020 Q2/2020

EUR thousand 4-6/ 2020 4-6/ 2019

EBITDA

5,156

• 2,245

Capitalizations

• 2,605
• 2,964

Finance expenses

• 2,865
• 2,786

Taxes, excl. deferred taxes

• 107
• 269

Share based compensation, share part

• 1,030
• 1,080

Gain/loss on sale of assets

158

• 450

Free cash flow metric ic

• 1,293
• 9,794