INVESTOR PRESENTATION Q3 2018 Vesa Tykkyläinen, CEO Niclas Rosenlew, CFO October 17, 2018
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 th ose 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
STRATEGY UPDATE
BASWARE’S VISION Deliver the best global solution for networked purchasing, invoicing and paying 4
A HUGE MARKET OPPORTUNITY Every organisation can benefit from our solutions Supported by digitalisation, EUR automation and AI megatrends EUR EUR 149m 5bn 15bn Growing market Basware Current Market 2017 market potential revenues size 5
BASWARE’S KEY DIFFERENTIATORS Largest E-invoicing network Uniquely complete solution Captures 100% spend 6
BASWARE’S GROWTH VISION BE THE NUMBER 1 IN UNDISPUTED LARGE EUROPEAN MARKET LEADER MARKETS SIMPLIFY GLOBAL LEADER IN US EUR 1 billion TRADE INTERACTIONS revenues DELIVER ENTER SELECT CUSTOMER VALUE NEW BEYOND GEOGRAPHIES EXPECTATIONS 7
WHERE GROWTH WILL COME FROM New Customer Acquisitions Customer Expansions Customer Transformations Partnering Select M&A 8
STRONG ROI ON S&M INVESTMENTS Increasing investments into Sales and Marketing significantly 7x LTV / CAC ratio 9
MEDIUM TERM TARGET Accelerate to more than 20 % Organic cloud growth by 2022 10
CEO REVIEW
CUSTOMER SUCCESS EXAMPLES OF NEW CUSTOMER WINS AND TRANSFORMATIONS IN Q3 2018 12
PARTNERSHIP WITH XEROX • Scanning services outsourced • Simplifies Basware operations with 387 employees transferring • Focus on e-invoicing 13
Q3 HIGHLIGHTS Cloud revenues 66% of total STRATEGIC PRIORITY: Cloud Order intake +29% CLOUD REVENUE GROWTH Xerox partnership 14
FINANCIAL REVIEW
ORGANIC CLOUD REVENUE GROWTH FEEDS TOTAL GROWTH YTD Organic Cloud Cloud as a YTD Organic Total Growth at Constant proportion of Q3 Growth at Constant Currencies total revenues Currencies +16% +6% 66% Cloud Non Cloud 16
CLOUD ORDER INTAKE GROWTH ACCELERATES 18.0 • Cloud order intake growth accelerates 16.0 14.0 • Includes all SaaS 12.0 and Network 10.0 recurring revenues EUR m 8.0 6.0 • Time lag to visibility in revenues: 4.0 • ~1/4 year 1 2.0 3.5 4.5 13.0 15.5 • 50-60% year 2 0.0 Q3 2017 Q3 2018 YTD 2017 YTD 2018 Annual recurring revenue gross order intake is calculated by summing the total order intake in the period expressed as an annual contract value. This includes all SaaS and Network recurring revenues including transaction revenues. Gross order intake covers new cloud customers, add-ons and renewal uplifts but excludes churn. There will be a time lag before this order intake is visible in net sales. 17 *Organic constant currency growth rate
STRONG CLOUD UNIT ECONOMICS 106% net renewal rate 95% gross renewal rate 19 years customer lifetime CAC LTV 18
Q3 2018 NET SALES PROGRESSION Net sales by revenue type 7-9 7-9 Change Change* • Headline growth (EUR thousand) 2018 2017 impacted by SaaS 10 177 8 903 14.3% 21.0% disposals Revenue Transaction services 11 029 9 875 11.7% 12.4% Cloud • Significant cloud Other cloud revenue 1 233 1 274 -3.2% -3.9% potential in Cloud Revenue total 22 440 20 052 11.9% 15.0% existing maintenance Maintenance 6 150 8 965 -31.4% -8.9% customer base Non-Cloud License sales 401 790 -49.3% -36.7% Revenue being addressed Consulting services 4 966 6 063 -18.1% -8.6% Other non-cloud revenue 34 -42 Non-Cloud Revenue total 11 551 15 776 -26.8% -9.6% Group Total 33 991 35 827 -5.1% 5.2% 19 *On an organic basis at constant currencies
Q3 2018 PROFITABILITY • Growth rates (EUR thousand) 7-9 2018 7-9 2017 Change impacted by Net sales 33 991 35 827 -5.1% disposals, sales Cost of sales -16 101 -16 966 -5.1% and marketing Gross profit 17 890 18 862 -5.2% investments and Sales and marketing -10 759 -7 809 37.8% stock based Research and development -6 599 -6 539 0.9% compensation General and administration -4 003 -3 052 31.2% Total operating expenses -21 361 -17 400 22.8% Other operating income and -316 -257 22.7% expenses Operating profit/loss -3 787 1 205 Adjustments 187 156 19.9% Depreciation and amortization -2 723 -2 300 18.4% Adjusted EBITDA -877 3 661 20
UNDERLYING PROFITABILITY c. EUR 1m c. EUR 3m Total impact: c. EUR 6m c. EUR 2m Adjusted EBITDA EUR -0.88m Additional Additional Disposal S&M Stock based impact compensation spend 21
Q3 2018 CASH FLOW AND BALANCE SHEET • Strong liquidity (EUR thousand) 7-9 7-9 2018 2017 position with cash and undrawn bank Cash flows from operating activities -2 676 -4 840 facilities totalling EUR Net change in cash and cash equivalents 4 760 1 708 56 million • Additional EUR 10 Cash and cash equivalents 46 235 25 275 million financing via Total available liquidity* 56 235 35 275 multi-issuer bond in September *Includes undrawn bank facilities and short term deposits 22
2018 FULL YEAR OUTLOOK Basware’s number one strategic priority is cloud revenue growth. FOR 2018, BASWARE EXPECTS*: Cloud revenues Total costs slightly between EUR 90 and above 2017 levels** EUR 95 million *On an organic basis at constant currencies **Excluding D&A and adjustments to EBITDA 23
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