BASWARE – GLOBAL LEADER IN NETWORKED PURCHASE-TO-PAY Investor presentation November 2019
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 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
BASWARE IN BRIEF Revenue by area (Q3/2019) 68% revenue We help our customers MARKET LEADER simplify operations comes from cloud and spend smarter by automating their Nordics 37% procurement and finance processes Americas Europe 35% We are the global 23% APAC 6% leader with largest e- invoicing network in the world #1 in accounts payable automation and #1-3 in procurement EUR 650 billion ~1,300 employees EUR 141 million Customers in 100+ countries managed spend in 14 countries revenue in 2018 in 2018 3
SIMPLIFYOPERATIONS, SPENDSMARTER ✓ to AP automation From inefficient invoice process Analyze Source Pay ✓ to spend under From uncontrolled management spend Match Shop From lack of ✓ to optimize spend cashflow visibility with analytics Invoice Order 307% return on investment and a payback Receive time of 12 months 1) 4 1) Total economic impact of Basware’s Purchase -to-Pay Cloud Solution, Forrester 2017
INVESTMENT HIGHLIGHTS • EUR 15 billion market potential Large addressable market • Leader in networked purchase-to-pay Market leader with unique offering Largest e-invoicing network and • innovator in analytics Actions on-going to improve profitability • Profitable cloud growth while retaining cloud growth 5
LARGE ADDRESSABLE MARKET SUPPORTIVE MEGATRENDS HUGE MARKET OPPORTUNITY DIGITALIZATION & AUTOMATION EUR 15 billion Market potential RAPID TECHNOLOGICAL DEVELOPMENT EUR ~5 billion EUR SUSTAINABILITY Current market 141 million Basware 2018 revenues 6
COMPETITIVE DIFFERENTIATORS E-INVOICING NETWORK ANALYTICS PROCUREMENT & AP AUTOMATION - 100% end-user - 100% spend - 100% invoice adoption visibility capture LARGEST & MOST GLOBAL E-INVOICING NETWORK €650BN SPEND - 150M INVOICES 7
BASWARE IS A RECOGNIZED MARKET LEADER 2017 PROCURE TO PAY NAVIGATOR 2016 MAGIC QUADRANT FOR PROCURE TO PAY SUITES 2019 Leader with highest score for Adaptability Leader with strong market understanding, innovation and Leader with highest score for “an impressive company that offers a leading product roadmap, and customer experience invoice automation solution among global P2P providers” “well suited to multinational organizations “a particularly strong fit for enterprises that moving to digital procurement and looking to want to automate processing of high invoice automate invoice processing” volumes” 8
BASWARE CHOSEN BY CUSTOMERS ACROSS THE WORLD AND ACROSS INDUSTRIES 1.5m+ organisations 2,500+ buyer customers EUR 650 billion Automotive Services connected to network use source-to-pay solutions annual spend managed Manufacturing Industrials Healthcare / Pharma Transport / Lodging Retail Telco / Media Finance / Professional Energy / Utility Food / Beverage Public Sector Geographies where Basware supports customers 9
CONTINUED CLOUD REVENUE GROWTH • Cloud revenue growth 25.00 +11% in Q3/19 * 20.00 • Cloud 68% of total revenue 15.00 • Non-cloud revenue declines in line with 10.00 expectations as Basware EUR million 1) 5.00 transitions customers to cloud 0.00 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Cloud revenue Consulting Maintenance, license and other revenue 1) Q1/2017-Q2/2018 revenue has been adjusted for disposals and is indicative only. *On an organic basis at constant currencies 10
PRODUCTIVITY PROGRAMME UPDATE Programme status Significantly improve profitability ✓ Focusing investments on long term strategic products and consolidating product portfolio ✓ Global organizational setup aligned with Basware’s global unified operating model Retain cloud growth ✓ Improving profitability of professional services ✓ Reducing external spending ✓ Headcount reduction of 64 employees Simplify the business ✓ EUR 10 million annual cost savings in 2020 compared to Q1/2019 within reach Basware expects to reach positive EBIT in 2020 and positive free cash flow on a run rate basis when exiting 2020 11
PRODUCTIVITY PROGRAMME RESULTS Gross margin, % Consulting revenue +6 +31% percentage points Q3/18 → Q3/19 Q2/19 → Q3/19 Programme costs Order intake Target of EUR 10 +22% 1.9 M€ million annual cost savings on track Q3/18 → Q3/19
Q3/19 FINANCIAL HIGHLIGHTS +11% +8% Cloud growth Total growth +940k +1.5m EBIT Operating cashflow On track to profitable growth 13
OUTLOOK FOR 2019 BASWARE’S STRATEGICAL PRIORITY IS PROFITABLE CLOUD GROWTH. Total revenues to Cloud revenues to Adjusted EBITDA grow at grow at EUR 3 million or approximately 5%* approximately 15%* better * On an organic basis at constant currencies 14
WHY INVEST IN BASWARE? Large addressable market Market leader with unique offering Profitable cloud growth 15
APPENDIX
FROM TRANSITION TO PROFITABLE GROWTH Push to Cloud Scanning Productivity Sale of non- Cost Consolidation services programme strategic conscious of R&D sites outsourced launched businesses approach Cloud Cloud focused Transition to Functional Consolidation of revenues strategy AWS initiated organization product portfolio reach 2/3 of total Simplification and profitable growth 17
CLOUD ORDER INTAKE GROWTH • Reported as annual recurring revenue (ARR) gross order intake 6.4 6.4 • Share of cloud order 5.9 intake from new 5.5 5.5 customers increasing 4.9 4.9 4.7 4.5 • Key markets: US, UK, 4.0 3.5 Germany and France EUR million Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 18
KEY FIGURES Q3/2019 EUR thousand 7-9/2019 7-9/2018 Change, % 2018 36,823 33,991 8.3 Net sales 141,417 25,018 22,440 11.5 89,482 Cloud 6,491 4,966 30.7 23,567 Consulting 5,314 6,585 -19.3 28,368 Maintenance, license and other Cost of sales -16,550 -16,101 2.8 -69,620 Gross profit 20,273 17,890 13.3 71,797 Sales and marketing -9,809 -10,759 -8.8 -43,041 Research and development -5,906 -6,599 -10.5 -27,222 General and administration -3,576 -4,003 -10.7 -16,247 Total operating expenses -19,292 -21,361 -9.7 -86,510 Other operating income and expenses -42 -361 -86.7 13,242 Operating profit (EBIT) 940 -3,787 -1,471 Adjustments -211 187 -13,581 Depreciation and amortization -3,973 -2,723 45.9 10,688 Adjusted EBITDA 4,702 -877 -4,364 19
SHAREHOLDER BREAKDOWN – Q3/2019 Shares, % of shares SHAREHOLDER DISTRIBUTION TOP 20 SHAREHOLDERS* total Sep 30, 2019 1 Arrowgrass Capital Partners 25.0 3,600,698 2 INVESCO Asset Management (Oppenheimer) 7.7 1,108,293 Other 3 Sihvo Ilkka Juhani 6.2 887,300 Unknown Executive 4 Eräkangas Kirsi Maria 4.4 626,055 Households 4.6 % team & Board 7.7 % 5 Vaajoensuu Hannu 4.0 575,857 6.4 % Finnish 6 Ilmarinen Mutual Pension Insurance Company 2.9 420,830 Institutional 7 Perttunen, Sakari 2.7 384,375 Investors 8 Veritas Pension Insurance Company Ltd. 2.4 345,102 10.7 % 9 The State Pension Fund 1.8 256,000 10 Pöllänen Antti 1.4 198,033 Other 11 Perttunen, Meimi 1.0 145,107 Founders International 12 Danske Invest Finnish Institutional Equity Fund 0.8 115,000 15.1 % Institutional 13 OP-Finland Small Firms Fund 0.7 94,922 Investors 55.5 % 14 Vaajoensuu Petra 0.6 83,800 15 Vaajoensuu, Matias 0.6 83,800 16 Vaajoensuu Sara 0.6 83,700 17 Danske Invest Finnish Small Cap Fund 0.4 60,000 18 Nordea Pro Finland Fund 0.4 53,286 19 Koripalloilun Tukisäätiö Sr 0.3 45,000 20 Swiss Life Luxembourg Sa 0.3 42,905 Top 20 in total 64% 9,210,063 Total number of shares 100% 14,401,936 * Based on Euroclear Finland and major shareholder flagging notifications 20
Q3/2019 FINANCIAL REVIEW
Q3/19 KEY TAKEAWAYS Significant improvement in profitability now visible Strong order intake from key markets Consulting business improving 22
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