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

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

INTERIM REVIEW Klaus Andersen, CEO Ben Selby, VP, IR and Treasury October 22, 2019 Q3/2019 Interim Report January-September IMPORTANT NOTICE The following information contains, or may be deemed to contain, forward-looking statements. These


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Q3/2019

INTERIM REVIEW

Interim Report January-September

Klaus Andersen, CEO Ben Selby, VP, IR and Treasury October 22, 2019

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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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Significant improvement in profitability now visible

KEY TAKEAWAYS

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Strong order intake from key markets Consulting business improving

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CONTINUED INDUSTRY LEADERSHIP

#1 for AP Automation & AP use case #1 in e-Invoicing #1 in Partner Ecosystem #1 for Supply Chain Financing #1 in Integration

Gartner’s Critical Capabilities report ranks Basware Basware creates value with open APIs

Coexisting with competitors Partnering with best of breed

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Strong order intake growth continued in the US

CUSTOMER SUCCESS

Average new customer deal size continued to increase

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Improved order intake performance in UK

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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

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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

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SLIDE 8

FINANCIAL REVIEW

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Q3 FINANCIAL HIGHLIGHTS

Cloud growth

+11%

Total growth

+8%

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EBIT

+940k

Operating cashflow

+1.5m

On track to profitable growth

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CLOUD ORDER INTAKE

EUR million

  • Average new

customer deal size continued to increase

  • New customers and

expansions 75% of total order intake

  • Strong performance

in US and UK

  • Growth on organic

constant currency basis 19% in Q3/19 and 7% in Q1-Q3/19

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

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

10 0.0 2.0 4.0 6.0 8.0 10.0 12.0

Q3/2018 Q3/2019

4.5 5.5

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0

Q1-Q3/2018 Q1-Q3/2019

15.5 16.8

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SLIDE 11

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

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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
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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.

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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

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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

BASWARE’S NUMBER ONE STRATEGIC PRIORITY IS SCALABLE CLOUD REVENUE GROWTH.

*On an organic basis at constant currencies

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Adjusted EBITDA EUR 3 million or better

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Significant improvement in profitability now visible

KEY TAKEAWAYS

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Strong order intake from key markets Consulting business improving

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