R E P O R T January March 2020 Q 1 / 2 0 2 0 I M P O R T A N T N O - - PowerPoint PPT Presentation

I N T E R I M R E P O R T

January–March 2020

Q 1 / 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

Positive EBIT New customer deals in key markets Business continuity plan in place

EBIT in Q1/2020 amounted to EUR 0.1 million, increase of EUR 7.9 million YoY. Order intake for the quarter amounted to EUR 3.6 million, impacted by Covid- 19. All operations continuing broadly as normal through remote work. Appropriate cost actions being taken.

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C U S T O M E R S U C C E S S I N Q 1 / 2 0

Geographies where Basware supports customers

19% 45% 35% 1% Cloud order intake

EUR 3.6 million lion

%

Cloud order er inta take by regio ion

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N E W A P P R O D R I V E S E F F I C I E N C Y

▪ One-stop shop experience makes invoice processing and deviation management easier ▪ Comprehensive searches and powerful invoice lists increase visibility to invoice data ▪ Customizable work view helps complete tasks faster ▪ Further insights on process bottlenecks and workload management for AP team leaders and shared service centers

”Basware AP Pro is very user-friendly; users can modify the layout according to the task at hand, making it very efficient. It is highly recommended for companies that manage large invoice volumes”

• DB Schenker Oy, one of the pilot customers

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B U S I N E S S C O N T I N U I T Y

Remote

• perations

Validation services Safety first

Basware’s systems are fully operational. Full remote capabilities for project execution, customer support, sales and account management. Lockdown in India and closure of a third party Scan and Capture validation center has led to lower data capture accuracy for some

• customers. Full

validation capacity is being restored. First priority is ensuring safety for customers and

• employees. All

employees are working from home. Travel is restricted.

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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

Order intake substantially impacted by COVID-19 Solid revenue performance Improvements in profitability continued Cash performance as expected €38.2M

Net sales

€0.1M

Operating profit

€32.6M

Cash and cash equivalents

€3.6M

Order intake

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

▪ Uncertainty related to Covid-19 delayed customers’ and prospects’ decisions on deals valued in several EUR millions in total ▪ Impact to Q1 2020 performance realized during the last 2 weeks of the quarter ▪ Impact most substantial in industries which are most vulnerable to Covid-19

4.9 6.4 5.5 6.9 3.6 0.0 2.0 4.0 6.0 8.0 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 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.

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N E T S A L E S

▪ Continued Cloud and Consulting revenue growth ▪ Maintenance decline in line with expectations, also expected to continue through out the year ▪ Growing contribution from Americas and Europe ▪ During the last 2 weeks of the quarter, transaction driven revenue growth clearly decelerating

• The company estimates that approximately 70%
• f the Transaction services revenue is

transaction driven, and 30% subscription driven

EUR thousand 1-3/ 2020 1-3/ 2019 Change, % Change, %1 SaaS 14,191 11,387 24.6 24.2 Transaction services 12,389 11,717 5.7 5.8 Other cloud revenue 1,195 1,178 1.4 0.2 Cloud Revenue total 27,774 24,282 14.4 14.2 Maintenance 4,089 5,713

• 28.4
• 27.9

License sales 79 382

• 79.3
• 80.2

Consulting services 6,496 5,441 19.4 20.2 Other non-cloud revenue

• 193

77 Non-Cloud Revenue total 10,471 11,613

• 9.8
• 9.2

Total 38,245 35,895 6.5 6.6

1On an organic basis at constant currencies

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EUR thousand 1-3/ 2020 1-3/ 2019 Change, % Net sales 38,245 35,895 6.5 Cost of sales

• 17,473
• 18,147
• 3.7

Gross profit 20,772 17,748 17.0 S&M

• 10,767
• 11,375
• 5.3

R&D

• 6,176
• 7,404
• 16.6

G&A

• 3,575
• 4,607
• 22.4

Total operating expenses

• 20,518
• 23,386
• 12.3

Other operating income and expenses

• 153
• 2,142
• 92.8

Operating profit (EBIT) 100

• 7,780

Adjustments

• 59

1,960 Depreciation and amortization 3,970 4,121 Adjusted EBITDA 4,011

• 1,699

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

▪ Overall, improvements in profitability reflect progress in executing in line with company’s strategy

• Scalable growth and profitability
• Increase operational efficiency in our strategic

business

• Simplify what we do

▪ Strong gross margin performance

• Gross margin 54%, +5Pts YoY
• Cloud gross margin 67%, +6Pts YoY
• Consulting continues to improve

▪ Taking action to address cost base given Covid-19 impact to demand

• Yet, minimal impact to Q1 2020 costs

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EUR thousand 1-3/ 2020 1-3/ 2019 Cash flows from operating activities 6,497 1,626 Net change in cash and cash equivalents 1,250

• 5,879

Cash and cash equivalents 32,558 35,117 Gross financial debt 62,264 53,669 Net financial debt 29,706 18,522

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 ▪ Heightened efforts on receivables collection ▪ Increase in gross and net financial debt mainly driven by PIK interest and principal accrual

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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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Business continuity Demand environment Actions

▪ Full capability at Basware to serve customers and continue sales and marketing activities remotely ▪ Order intake impacted by customer behaviour ▪ Majority of Basware’s cloud revenue is subscription based ▪ Network revenues are approximately 30%

• subscription. Variable

component expected to decline ▪ Consulting revenues impacted by order intake and project delays ▪ Maintenance to decline as expected ▪ Network costs scale with volumes ▪ 3rd party spending reduced ▪ Hiring and salary increase freeze ▪ Voluntary part time work for employees ▪ Government subsidies

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O U T L O O K F O R 2 0 2 0 U P D A T E D

Net Sales es Net Sales guidance will be given when it is possible to estimate the COVID-19 pandemic effects more precisely. EBIT Basware’s cost base is scalable and has variable cost components that can be reduced to a certain extent to maintain profitability. EBIT for 2020 is expected to be positive. Basware is updating its 2020 guidance to reflect the estimated impact of the Covid-19 pandemic.

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

Positive EBIT New customer deals in key markets Business continuity plan in place

EBIT in Q1/2020 amounted to EUR 0.1 million, increase of EUR 7.9 million YoY. Order intake for the quarter amounted to EUR 3.6 million, impacted by Covid- 19. All operations continuing broadly as normal through remote work. Appropriate cost actions being taken.

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

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

EUR thousand 1-3/ 2020 1-3/ 2019

EBITDA

4,070

• 3,660

Capitalizations

• 3,111
• 2,993

Finance expenses

• 3,021
• 650

Taxes, excl. deferred taxes

• 628
• 95

Share based compensation, share part

• 1,174
• 953

Gain/loss on sale of assets

285 534

Free cash flow metric ic

• 3,579
• 7,816