BasWare - Half Year financial report

BASWARE HALF YEAR FINANCIAL REPORT JANUARY 1 – JUNE 30, 2017 (IFRS)

Basware Corporation, stock exchange release, July 19, 2017 at 08:45
SUMMARY

Cloud revenues at historical high
January-June 2017:

-       Net sales EUR 74 090 thousand (EUR 73 073 thousand): growth 1.4 percent.

-       Cloud revenue growth of 23.4 percent, amounting to 51.4 percent (42.3 %)
of net sales

-       Adjusted EBITDA EUR -1 282 thousand (EUR -2 978 thousand)

-       Adjusted operating result EUR -6 343 thousand (EUR -6 955 thousand)

-       Adjusted earnings per share (diluted) EUR -0.51 (-0.47)

-       Operating result EUR -7 859 thousand (EUR -7 714 thousand)

-       Earnings per share (diluted) EUR -0.61 (-0.52)

April-June 2017:

-       Net sales EUR 37 289 thousand (EUR 38 948 thousand): decline 4.3
percent

-       Cloud revenue growth of 18.8 percent, amounting to 52.5 percent (42.4 %)
of net sales

-       Adjusted EBITDA EUR 320 thousand (EUR -2 461 thousand)

-       Adjusted operating result EUR -2 149 thousand (EUR -4 589 thousand)

-       Adjusted earnings per share (diluted) EUR -0.19 (-0.29)

-       Operating result EUR -2 767 thousand (EUR -4 999 thousand)

-       Earnings per share (diluted) EUR -0.24 (-0.32)

The Interim Report is unaudited.

Basware is targeting accelerated revenue growth during its strategy period 2017
-2020. Basware’s number one strategic priority is cloud revenue growth which it
will achieve by extending its leadership in networked purchase to pay, growing
its network and expanding value added services. For 2017, Basware expects its
cloud revenues to grow by approximately 20 percent, and adjusted EBITDA at
breakeven.


GROUP KEY FIGURES

               4-6/        4  Change     1-6/    1-6/   Change   1-12/
                        -6/
EUR            2017    2016        %     2017    2016        %     2016
thousand

Net sales         37      38    -4.3%  74 090  73 073    1.4%   148 580
                 289     948
EBITDA          -298      -2    89.6%  -2 798  -3 737   25.1%    -5 394
                         870
Adjusted         320      -2           -1 282  -2 978   57.0%     2 063
EBITDA                   461
Operating         -2      -4    44.6%  -7 859  -7 714   -1.9%   -13 946
result           767     999
   % of net
sales
Adjusted          -2      -4    53.2%  -6 343  -6 955    8.8%    -6 490
operating        149     589
result
Result            -3      -5    35.6%  -9 707  -9 395   -3.3%   -16 256
before tax       621     622
Result for        -3      -4    24.6%  -8 794  -7 485  -17.5%   -14 318
the period       414     528

Return on     -11.0%  -13.2%           -13.9%  -10.7%            -10.5%
equity, %
Return on      -7.4%  -14.4%            -9.6%  -11.7%             -9.5%
investment,
%
Cash and          23      21     8.3%  23 610  21 799    8.3%    35 755
cash             610     799
equivalents
Gearing, %     13.9%   -4.7%            13.9%   -4.7%              8.7%
Equity         56.1%   66.1%            56.1%   66.1%             58.5%
ratio, %

Earnings
per share
Diluted,       -0.24   -0.32    24.9%   -0.61   -0.52  -16.8%     -1.00
EUR
Adjusted       -0.19   -0.29    32.7%   -0.51   -0.47   -7.4%     -0.48
earnings
per share
diluted
Equity per      8.38    9.68   -13.4%    8.38    9.68  -13.4%      9.26
share, EUR

BUSINESS OPERATIONS

Basware is the global leader in networked purchase-to-pay solutions, including e
-invoicing and financing services. Basware’s commerce network connects
businesses in over 100 countries and territories around the globe. As the
largest open business network in the world, Basware provides scale and reach for
organizations of all sizes, enabling them to grow their business and unlock
value across their operations by simplifying and streamlining financial
processes. Small and large companies around the world achieve significant cost
savings, more flexible payment terms, greater efficiencies and closer
relationships with their suppliers.

CEO Vesa Tykkyläinen:
As a shareholder, CEO and employee, what excites me about Basware is our mission
to help organisations to simplify their operations and spend smarter. We help
customers make their purchasing processes 100 percent paperless and we are the
best placed to do this because of our Network, the largest e-invoicing network
in the world. Every single organisation can make their purchasing processes
better by adopting our solutions, and this huge market opportunity is worth EUR
15 billion annually in North America and Europe. The executive team at Basware
all share my passion, and following stock purchases made this quarter, all
members of the executive team are now Basware shareholders.

I’m therefore proud to report that this quarter we reached a number of key
milestones on the route towards our strategic priority of cloud revenue growth.
Basware recorded the highest ever quarterly cloud revenues in the second quarter
of 2017. Cloud revenues now account for 53 percent of Basware’s total revenues,
continuing to grow as a proportion of revenues after passing the 50 percent mark
in the first quarter.

Basware’s subscription order intake continued to be strong, even against a
strong comparison period in the second quarter of 2016. We won a number of
significant deals from key customers including ATU, Tennis Australia, Thames
Valley Police, Hoag Memorial Hospital and BSI (the British Standards
Institution). These are just a selection of our wins in the second quarter, but
they showcase the geographical and industry breadth of our customers. Our sales
performance in the US market continues to be particularly pleasing, winning a
number of deals against the US competition. In fact, the US is now the biggest
contributor to our purchase-to-pay revenues.

Overall revenue and order intake performance in Network was not completely
satisfactory this quarter, and the same in consulting. However, I am confident
that there is significant further potential in both areas.

The strength of Basware is in its people, so I am very pleased that we further
strengthened our sales team with the addition of new sales heads in the UK,
Germany and Norway, who all started working at Basware this quarter. In May, our
new SVP of Network and Financing Services and our new SVP of Customer Services
both also began in their new roles.

Basware is recognised as a trail blazer by industry analysts and in May was
cited as a Leader in “The Forrester Wave™: eProcurement, Q2 2017” report.
According to the Forrester report, Basware excels in invoice automation for
global organizations and is a particularly strong fit for enterprises that want
to automate processing of high invoice volumes. Also in May, Basware announced
the strengthening of its solutions with the addition of a new strategic sourcing
offering to provide customers with a one-stop-shop for the entire Source-to-Pay
process. Basware continued the strengthening of its brand with the launch of a
new corporate website, which went live in May.

I am very pleased with the progress that Basware has made this quarter. We
continue to win significant new customers, we continue to be recognised as an
industry leader, and we continue to take actions to improve our operations. I
remain very confident in our ability to capture the significant market
opportunity ahead of Basware.

FUTURE OUTLOOK
Operating environment and market outlook

All organisations need to manage their purchasing processes from procurement
through to handling invoices and paying them. Currently many organisations only
have unsophisticated or partial tools to manage these processes and as a result
many are faced with unmanaged spending, inefficient manual and paper-based
processes and poor visibility of cashflows. Basware offers a uniquely complete
solution for these challenges that is differentiated by the Basware network, the
largest e-invoicing network in the world, and enables customers to manage 100
percent of their spending and make their purchasing processes completely
paperless.

Basware expects the demand for networked purchase to pay services to continue to
grow. The total potential market for networked purchase to pay services is
estimated to be worth EUR 15 billion in annual revenues in Europe and North
America.

Outlook 2017

Basware’s number one strategic priority is cloud revenue growth during its
strategy period 2017-2020 which it will achieve by extending its leadership in
networked purchase to pay, growing its network and expanding value added
services. For 2017, Basware expects its cloud revenues to grow by approximately
20 percent, and adjusted EBITDA at breakeven.

Espoo, Finland, Wednesday, July 19, 2017
BASWARE CORPORATION

Board of Directors

Vesa Tykkyläinen, CEO, Basware Corporation

For more information, please contact:

Niclas Rosenlew, CFO, Basware Corporation

Tel. +358 50 480 2160, niclas.rosenlew@basware.com

Distribution:

Nasdaq Helsinki

Key media

www.basware.com/investors (http://www.basware.com/investors)

Attachments:

07186806.pdf