I N T E R I M 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 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 Positive EBIT New customer Business continuity deals in key plan in place markets EBIT in Q1/2020 Order intake for the All operations amounted to EUR 0.1 quarter amounted to continuing broadly as million, increase of EUR 3.6 million, normal through remote EUR 7.9 million YoY. impacted by Covid- work. 19. Appropriate cost actions being taken. 3
C U S T O M E R S U C C E S S I N Q 1 / 2 0 Cloud order intake EUR 3.6 million lion 35% 19% 45% 1% % Cloud order er inta take by regio ion Geographies where Basware supports customers 4
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 ” Basware AP Pro is very user-friendly; users can tasks faster modify the layout according to the task at hand, making it very efficient. It is highly recommended ▪ Further insights on process bottlenecks for companies that manage large invoice volumes ” and workload management for AP team - DB Schenker Oy, one of the pilot customers leaders and shared service centers 5
B U S I N E S S C O N T I N U I T Y Safety first Remote Validation operations services First priority is Basware’s systems Lockdown in India ensuring safety for are fully operational. and closure of a third customers and Full remote party Scan and employees. All capabilities for Capture validation employees are project execution, center has led to working from home. customer support, lower data capture Travel is restricted. sales and account accuracy for some management. customers. Full validation capacity is being restored. 6
F I N A N C I A L R E V I E W 7
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 €3.6M €38.2M €0.1M €32.6M Order intake Net sales Operating profit Cash and cash equivalents Order intake Solid revenue Improvements Cash substantially performance in profitability performance impacted by continued as expected COVID-19 8
C L O U D O R D E R I N T A K E Uncertainty related to Covid-19 delayed ▪ 8.0 customers’ and prospects’ decisions on deals valued in several EUR millions in total 6.0 Impact to Q1 2020 performance realized ▪ during the last 2 weeks of the quarter Impact most substantial in industries which ▪ 4.0 are most vulnerable to Covid-19 2.0 EUR million 4.9 6.4 5.5 6.9 3.6 0.0 Q1/19 Q2/19 Q3/19 Q4/19 Q1/20 Annual recurring revenue gross order intake is calculated by summing the total order intake in the period expressed as an annual contract value. 9
N E T S A L E S Continued Cloud and Consulting revenue ▪ 1-3/ 1-3/ EUR thousand Change, % Change, % 1 2020 2019 growth Maintenance decline in line with ▪ SaaS 14,191 11,387 24.6 24.2 expectations, also expected to continue Transaction services 12,389 11,717 5.7 5.8 through out the year Other cloud revenue 1,195 1,178 1.4 0.2 Cloud Revenue total 27,774 24,282 14.4 14.2 Growing contribution from Americas and ▪ Europe Maintenance 4,089 5,713 -28.4 -27.9 During the last 2 weeks of the quarter, ▪ License sales 79 382 -79.3 -80.2 transaction driven revenue growth clearly Consulting services 6,496 5,441 19.4 20.2 decelerating Other non-cloud -193 77 revenue - The company estimates that approximately 70% Non-Cloud Revenue 10,471 11,613 -9.8 -9.2 of the Transaction services revenue is total transaction driven, and 30% subscription driven Total 38,245 35,895 6.5 6.6 1 On an organic basis at constant currencies 10
P R O F I T A B I L I T Y Overall, improvements in profitability ▪ 1-3/ 1-3/ Change, EUR thousand 2020 2019 % reflect progress in executing in line with Net sales 38,245 35,895 6.5 company’s strategy Cost of sales -17,473 -18,147 -3.7 - Scalable growth and profitability Gross profit 20,772 17,748 17.0 - Increase operational efficiency in our strategic S&M business -10,767 -11,375 -5.3 - Simplify what we do R&D -6,176 -7,404 -16.6 G&A -3,575 -4,607 -22.4 ▪ Strong gross margin performance Total operating expenses -20,518 -23,386 -12.3 - Gross margin 54%, +5Pts YoY Other operating income and - Cloud gross margin 67%, +6Pts YoY -153 -2,142 -92.8 expenses - Consulting continues to improve Operating profit (EBIT) 100 -7,780 Taking action to address cost base given ▪ Adjustments -59 1,960 Covid-19 impact to demand Depreciation and amortization 3,970 4,121 - Yet, minimal impact to Q1 2020 costs Adjusted EBITDA 4,011 -1,699 11
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 ▪ 1-3/ 1-3/ EUR thousand 2020 2019 by higher profitability Cash flows from operating activities 6,497 1,626 Heightened efforts on receivables collection Net change in cash and cash equivalents 1,250 -5,879 ▪ Increase in gross and net financial debt ▪ Cash and cash equivalents 32,558 35,117 mainly driven by PIK interest and principal accrual Gross financial debt 62,264 53,669 Net financial debt 29,706 18,522 12
O U T L O O K 13
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 14
Business Demand Actions continuity environment ▪ Full capability at Basware to ▪ Order intake impacted by ▪ Network costs scale with serve customers and customer behaviour volumes continue sales and marketing activities Majority of Basware’s cloud 3rd party spending reduced ▪ ▪ remotely revenue is subscription based Hiring and salary increase ▪ freeze ▪ Network revenues are approximately 30% Voluntary part time work for ▪ subscription. Variable employees component expected to decline ▪ Government subsidies Consulting revenues ▪ impacted by order intake and project delays ▪ Maintenance to decline as expected 15
O U T L O O K F O R 2 0 2 0 U P D A T E D Basware is updating its 2020 guidance to reflect the estimated impact of the Covid-19 pandemic. EBIT Net Sales es Basware’s cost base is scalable Net Sales guidance will be given and has variable cost components when it is possible to estimate the that can be reduced to a certain COVID-19 pandemic effects more extent to maintain profitability. precisely. EBIT for 2020 is expected to be positive. 16
K E Y T A K E A W A Y S Positive EBIT New customer Business continuity deals in key plan in place markets EBIT in Q1/2020 Order intake for the All operations amounted to EUR 0.1 quarter amounted to continuing broadly as million, increase of EUR 3.6 million, normal through remote EUR 7.9 million YoY. impacted by Covid- work. 19. Appropriate cost actions being taken. 17
Q & A
A P P E N D I X 19
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 1-3/ 1-3/ EUR thousand 2020 2019 -1,445 EBITDA 4,070 -3,660 Capitalizations -3,111 -2,993 -3,579 -4,774 Finance expenses -3,021 -650 Taxes, excl. deferred taxes -628 -95 Share based compensation, share part -1,174 -953 -7,816 Gain/loss on sale of assets 285 534 -9,794 Free cash flow metric ic -3,579 -7,816 20
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