BasWare - Interim report (Q1 and Q3)

BASWARE INTERIM REPORT JANUARY 1 – SEPTEMBER 30, 2017 (IFRS)

Basware Corporation, stock exchange release, October 18, 2017 at 08:45am
Cloud revenue growth continues

SUMMARY
January-September 2017:

  · Net sales EUR 109 534 thousand (EUR 108 369 thousand): growth 1.1 percent
  ·  Cloud revenue growth of 21.4 percent, amounting to 52.4 percent (43.7 %) of
net sales
  ·  Adjusted EBITDA EUR 1 995 thousand (EUR -1 598 thousand)
  ·  Adjusted operating result EUR -5 366 thousand (EUR -7 759 thousand)
  ·  Adjusted earnings per share (diluted) EUR -0.47 (-0.57)
  ·  Operating result EUR -7 038 thousand (EUR -9 932 thousand)
  ·  Earnings per share (diluted) EUR -0.59 (-0.72)

July-September 2017:

  · Net sales EUR 35 444 thousand (EUR 35 295 thousand): growth 0.4 percent
  ·  Cloud revenue growth of 17.6 percent, amounting to 54.6 percent (46.6 %) of
net sales
  ·  Adjusted EBITDA EUR 3 277 thousand (EUR 1 381 thousand)
  ·  Adjusted operating result EUR 977 thousand (EUR -804 thousand)
  ·  Adjusted earnings per share (diluted) EUR 0.03 (-0.10)
  ·  Operating result EUR 821 thousand (EUR -2 218 thousand)
  ·  Earnings per share (diluted) EUR 0.02 (-0.19)

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

                     7-9/   7-9/   Change,   1-9/      1-9/  Change,    1-12/
EUR thousand         2017   2016        %    2017      2016        %     2016
Net sales               35     35   0.4 %     109  108 369     1.1 %  148 580
                       444    295            534
Cloud revenue           19     16   17.6 %     57    47 311   21.4 %   66 242
                       352    455             443
ARR order intake     2 207  1 886   17.1 %  9 470     5 690   66.4 %    7 896

EBITDA               3 121    -33            323    -3 771             -5 394
Adjusted EBITDA      3 277  1 381  137.3 %  1 995   -1 598              2 063

Operating result       821     -2              -7   -9 932    29.1 %  -13 946
                              218            038
Adjusted operating     977   -804              -5   -7 759   30.8 %    -6 490
result                                       366

Result before tax     304      -2              -9  -12 165    22.7 %  -16 256
                              770            403
Result for the        310      -2              -8  -10 269    17.4 %  -14 318
period                        785            484

Cash and cash           25     12   95.2 %     25    12 951   95.2 %   35 755
equivalents           275     951            275

Earnings per share
Diluted, EUR          0.02  -0.19           -0.59     -0.72   18.0 %    -1.00

Adjusted earnings     0.03  -0.10           -0.47     -0.57   16.5 %    -0.48
per share, diluted
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:
It is a little over one year since I became CEO of Basware, and as I look back
over the last twelve months, I am very proud of what all of us at Basware have
achieved, and remain as excited about our future potential as I was on my first
day as CEO. As a shareholder, CEO and employee, I am passionate about our
mission to help organisations simplify their operations and spend smarter. This
is something that every single organisation in the world can benefit from and
making sure that Basware can capture this EUR 15 billion market opportunity is
what drives me. Basware’s offering is differentiated by its Network, the largest
e-invoicing network in the world, which helps customers to make all their
purchasing processes 100 percent paperless.

Cloud revenue growth is Basware’s strategic priority so I am pleased to report
that cloud revenues continue to grow as a proportion of revenues, making up 55
percent of total revenues in the third quarter of 2017, up from 47 percent in
the third quarter of 2016. Total cloud growth continued, up 18 percent compared
to the third quarter of 2016. Subscription order intake continued to be solid
and was up 66 percent for 2017 year-to-date.

Customers are the key to our success and we made some great wins during the
third quarter. It has been particularly pleasing to see our continued strong
progress in the US market, winning customers against the US competition. Deals
won in the third quarter include Aspen Square, Handelsbanken, Zleep Hotels, the
South Yorkshire Police and Crime Commissioner, Nord Pool and Symphony Group. Our
existing maintenance customer base is a huge asset for Basware, and we continued
to make great progress in transforming these customers to our cloud solutions.
This benefits customers by increasing their flexibility and providing them
access to the latest innovations via ongoing automatic updates. Customers
transformed recently include Valmet, Immochan, Bradken, JELD-WEN, Ramboll and
Gjensidige.

Basware continues to lead innovation in our industry and we announced a number
of developments in the third quarter that harness the data in our systems for
the benefit of our customers. We have further enhanced our award-winning
Analytics function with the addition of peer benchmarking and predictive
analytics. We announced our partnership with Nordea to offer Basware’s Discount
product to Nordea’s corporate banking customers to enable them to achieve better
working capital management. We also launched Basware Vault, our compliant,
efficient and secure cloud-based archiving service for e-invoices.

At the same time as focusing on customers and growing cloud revenues, we have
successfully executed the productivity programme announced in November 2016. As
a result we have controlled our cost base while at the same time driving cloud
revenue growth, continuing innovation and increasing sales and marketing
productivity.

Our people are the source of our strength as a company and employee satisfaction
is very important to Basware. It is therefore very pleasing that Basware was a
winner of the Charlotte Business Journal 2017 Best Places to Work award. As well
as demonstrating the strength of our culture and values, it is also a
recognition of Basware’s progress in the US market.

Looking back on the last twelve months, Basware has delivered on all of the
areas that were outlined as strategy enablers in October 2016, in particular,
continuing to strengthen sales and marketing, seeing great progress in offering
value added services to customers, creating a performance culture with all
executive team members now Basware shareholders, and successfully implementing a
productivity programme to enable scalable growth. This sets a very strong
foundation for Basware to capture the significant market opportunity ahead of us
and I am excited and confident about Basware’s future.

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, Tuesday, October 17, 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

Attachments:

10173787.pdf