RESULTS PRESENTATION Q4 2018 Vesa Tykkyläinen, CEO Niclas Rosenlew, CFO January 31, 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
CEO REVIEW
BASWARE IN BRIEF SIMPLIFY OPERATIONS SPEND SMARTER Global leader in networked Source-to-Pay Market potential worth EUR 15 billion annually EUR 1 billion revenue long-term growth vision
KEY EVENTS IN STRATEGY EXECUTION 2018 Cloud revenues +16% Move to a Scanning services functional outsourcing organization partnership Cloud order intake +22% Disposing Partnering Strategy updated: non-core organization New mid-term Gross margin businesses established target and 53% long-term growth vision Employees ~1,400
CUSTOMER SUCCESS EXAMPLES OF GLOBAL CUSTOMER WINS ACROSS INDUSTRIES IN 2018
CUSTOMER SUCCESS EXAMPLES OF CUSTOMER TRANSFORMATIONS SIGNED IN 2018
LEADING INDUSTRY INNOVATION IN Q4/2018 #SUPERFINANCE IN Q1 2018 Value Leader in Spend Matters’ Q4 2018 Procure-to-Pay SolutionMap New functions in Procurement Marketplace and Basware Analytics New enablement services and PDF eOrder solution for suppliers
Q4/2018 HIGHLIGHTS All time high quarterly cloud revenues STRATEGIC PRIORITY: Cloud revenues 66% of CLOUD REVENUE total GROWTH +58% more Partner deals 9
FINANCIAL REVIEW
ORGANIC CLOUD REVENUE GROWTH FEEDS TOTAL GROWTH Organic cloud Cloud as a Organic total growth at constant proportion of Q4 growth at constant currencies in 2018 total revenues currencies in 2018 +16% +5% 66% Cloud Non Cloud 11
CLOUD ORDER INTAKE GROWTH 25,0 • Includes all SaaS and Network recurring revenues 20,0 EUR million • Time lag to visibility 15,0 in revenues: • ~1/4 year 1 10,0 • 50-60% year 2 5,0 5.9 21.5 4.9 17.9 0,0 Q4/2017 Q4/2018 2017 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. 12 *Organic constant currency growth rate
Q4/2018 NET SALES PROGRESSION Net sales by revenue type, 10-12 10-12 Change Change* • Headline growth EUR thousand 2018 2017 impacted by SaaS 10 866 9 532 14.0% 21.0% disposals Transaction services 11 758 10 770 9.2% 9.3% Cloud • Significant cloud Other cloud revenue 1 292 1 310 -1.4% -1.3% potential in Cloud Revenue total 23 916 21 612 10.7% 13.6% existing maintenance Maintenance 5 899 8 856 -33.4% -12.6% customer base Non-Cloud License sales 661 1 383 -52.2% -20.6% being addressed Consulting services 6 063 7 447 -18.6% -6.3% Other non-cloud revenue -52 -54 Non-Cloud Revenue total 12 571 17 631 -28.7% -10.2% Group Total 36 488 39 243 -7.0% 4.1% 13 *On an organic basis at constant currencies
Q4/2018 PROFITABILITY EUR thousand 10-12 10-12 Change • Growth rates 2018 2017 impacted by Net sales 36 488 39 243 -7.0% disposals and Cost of sales -17 026 -19 087 -10.8% sales and Gross profit 19 462 20 156 -3.4% marketing Sales and marketing -11 969 -9 947 20.3% investments Research and development -6 848 -7 603 -9.9% General and administration -4 061 -4 465 -9.0% Total operating expenses -22 878 -22 014 3.9% Other operating income and -433 -1 004 -56.9% expenses Operating profit/loss -3 850 -2 862 -34.5% Adjustments 431 1 023 -57.9% Depreciation and amortization 2 593 2 747 -5.6% Adjusted EBITDA -826 908 14
UNDERLYING PROFITABILITY Underlying profitability Adjusted EBITDA (EURm) improvement EUR ~EUR 7.6m ~8m EUR 3.3m EUR ~6.6m EUR - 4.4m EUR ~0.7m EBITDA Additional Additional 2017 contribution 2018 Adjusted EBITDA S&M Spend share-based of disposed Adjusted EBITDA in 2018 compensation businesses in 2018 in 2017 15
Q4/2018 CASH FLOW AND BALANCE SHEET • Strong liquidity EUR thousand 10-12 10-12 2018 2017 position with cash and undrawn bank Cash flows from operating activities -2 840 -1 795 facilities totalling EUR Net change in cash and cash equivalents -5 323 -4 566 51 million Cash and cash equivalents 40 747 20 683 Total available liquidity* 50 747 30 683 *Includes undrawn bank facilities and short term deposits 16
IFRS 16 ESTIMATED IMPACT 2019 EBITDA EUR 4-6 million Assets and liabilities EUR 17.5-19.5 million Basware implements IFRS16 from 1 January 2019 onwards. The estimates describe the approximate impact on full year 2019 EBITDA and assets and liabilities.
OUTLOOK FOR 2019 BASWARE’S NUMBER ONE STRATEGIC PRIORITY IS CLOUD REVENUE GROWTH. FOR 2019 BASWARE EXPECTS SCALABLE CLOUD GROWTH TO CONTINUE*: Total revenues to Cloud revenues to Adjusted EBITDA to grow at grow at be at breakeven or approximately 5% approximately 15% better *On an organic basis at constant currencies After IFRS16 changes have been applied. 18
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