BasWare - Interim report (Q1 and Q3)

Basware Interim Report January 1-March 31, 2016 (IFRS)

Basware Corporation, stock exchange release, April 19, 2016 at 08:45

BASWARE INTERIM REPORT JANUARY 1 - MARCH 31, 2016 (IFRS)

SUMMARY

Basware invested for future growth and transition to the cloud accelerated

January-March 2016:

  * Net sales EUR 34 125 thousand (EUR 34 041 thousand)
  * Organic revenue growth 3.5 percent at constant currencies
  * Adjusted EBITDA EUR -517 thousand (EUR 18 thousand)
  * Recurring revenue 72.9 percent (63.7%) of net sales
  * Earnings per share (diluted) EUR -0.21 (0.04)

The Interim Report is unaudited.

According to Basware's refined strategy, the company is targeting accelerated
revenue growth during its strategy period 2016-2018. In 2016, Basware will
accelerate its growth-related investments primarily focused on its cloud
business, sales and marketing and related supporting activities as well as in
the rollout of Basware's Financing Services offering. For 2016, Basware expects
organic revenue growth of 5 percent or more for the year at constant currencies,
and temporary pressure on margins driven by accelerated growth investments
resulting in adjusted EBITDA (excluding non-recurring items) around break-even.
The growth related accelerated operating investments are planned to amount to
approximately 20 million euros.

GROUP KEY FIGURES



                            01-03/    01-03/ Change,   1-12/

 EUR thousand                 2016      2015       %    2015
-------------------------------------------------------------


 Net sales                  34 125    34 041     0.2 143 410

 Organic revenue growth*     3.5 %

 EBITDA                       -867     2 790          11 902

 Adjusted EBITDA* *           -517        18          12 337

 Operating result           -2 716     1 132           4 676

   % of net sales           -8.0 %      3.3%           3.3 %

 Result before tax          -3 773       856           3 563

 Result for the period      -2 957       595           3 083



 Return on equity, %         -8.5%      1.7%           2.2 %

 Return on investment, %    -8.5 %      4.7%           3.6 %

 Cash and cash equivalents  54 654 73 624***   -25.8  33 238

 Gearing, %                -28.9 %    -50.2%         -22.4 %

 Equity ratio, %            66.3 %     74.3%          79.1 %



 Earnings per share

 Undiluted, EUR              -0.21      0.04            0.22

 Diluted, EUR                -0.21      0.04            0.22

 Equity per share, EUR        9.64      9.89    -3.6    9.97




*at constant currencies
**EBITDA excluding non-recurring items
*** Including short term deposits maturing within 3 months from the period end

BUSINESS OPERATIONS

Basware is the global leader in providing networked purchase-to-pay solutions,
e-invoicing and innovative financing services. Basware's commerce and financing
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 Esa Tihilä:

Basware's transition to a cloud and SaaS-based company continued to accelerate,
with strong momentum in SaaS deals during the first quarter, and we expect this
positive trend to continue. In the first quarter, we won a number of important
Network agreements and were especially pleased with the strengthening of our
sender-related business. This will positively impact growth in coming quarters.
The Financing Services business generated significant deal activity and the
first customers have started using Financing Services solutions and services.
Overall however, as expected, the transition to SaaS continued to drag on total
net sales growth as net sales of licenses were down significantly in the first
quarter.

Sales of services developed well in the first quarter. The orderbook grew more
strongly than expected and 26 Alusta deals (compared to 11 in Q1/2015) were
closed. Network transactions amounted to 24.8 million during the quarter, with
March a record month (8.7 million transactions). 15 agreements were closed in
Financing Services during the quarter. Financing Services has enhanced the
quality of all customer discussions, adding another dimension to differentiate
Basware's solutions and services.

Basware executed against the announced growth enablers in its refined strategy
for 2016-2018, investing in demand generation and sales in particular. Sales and
marketing headcount grew 16.3 percent in the first quarter, with the rate of
additions expected to increase during the second quarter due to the lead time in
hiring processes. These investments are expected to show returns in late 2016
and early 2017.

A key area of management attention during the quarter has been on the efficiency
and speed of delivering our services to customers in order to improve the
revenue growth rates. A number of initiatives have been implemented to drive
this, including piloting in Sweden a rapid deployment methodology for Alusta
deliveries, moving to a global allocation of resources in Professional Services
and greater regional oversight to drive timely deliveries.

Developing the customer services function is also key to Basware's strategy.
Customer satisfaction is now tied to incentives at all levels in the Basware
organization. Feedback from customers has been positive and we have had
especially good feedback on the quality of our products and services.

Actions related to improving the quality of our operations play an important
part of ensuring good customer services, revenue growth and efficiency of
delivery. Key first quarter product achievements included the development of a
sending solution enabling suppliers to start sending PDF invoices to Basware
without any installations, as well as adding Vendor Management and Business
Directory to our Network services.

Basware's acquisition and partnership activity also supported progress towards
the 2018 goals. On March 31, 2016, Basware announced the acquisition of Verian,
a leading cloud based e-procurement solution provider in the US. The acquisition
will further strengthen Basware's market position in the US, doubling company's
operations locally, and will add new talent and additional e-procurement
capabilities to Basware. The acquisition will also extend Basware's network by
offering our market leading open commerce and financing network and Financing
Services to Verian's customers. In March Basware also announced a partnership
with WEX Inc. to offer Basware Financing Services to their broad customer base.

FUTURE OUTLOOK

Operating environment and market outlook

Companies of all sizes globally are under pressure to improve their cash flows,
find new innovative payment strategies, and automate their financial processes
and functions. The company expects the same to continue also in 2016 and the
continuous demand for services to remain at a favorable level among its
customers.

Consolidation is expected to continue in the business environment, with the role
of services as an industry standard growing in companies' portfolios. According
to industry research, e-invoicing has become more common and the number of e-
invoices has grown substantially in Europe and the rest of the world. Public
sector e-commerce initiatives, launched particularly across the EU and the US,
are expected to drive further adoption of e-invoicing. The growing e-invoicing
market and companies' interest in other payment and financing added value
solutions will offer excellent growth opportunities in future years.

Outlook 2016

As part of its refined strategy for 2016-2018, Basware will accelerate operating
investments in 2016 to drive higher organic growth. In particular go-to-market
and related activities will be expanded, with a focus on the UK, the US, and
Germany, and the development of the Financing Services offering will be
accelerated. In addition, Basware will invest in R&D activities aimed at
shortening the implementation times of Basware's solutions and services with new
and existing customers. The growth related accelerated operating investments are
planned to amount to approximately 20 million euros.

While EBITDA margin will be temporarily impacted in 2016 due to the investments,
the underlying profitability will continue to improve as a result of efficiency
and simplification initiatives. These initiatives include continuous cost of
sales reduction of Basware's cloud-based business, increasing use of online
tools and services to selectively automate demand generation and sales
activities, as well as various supporting process simplification and scalability
related actions.

For 2016, Basware expects organic revenue growth of 5 percent or more for the
year at constant currencies, and temporary pressure on margins driven by
accelerated growth investments resulting in adjusted EBITDA (excluding non-
recurring items) around break-even. The company also expects its SaaS net sales
to grow as well as to sustain strong growth of Basware's network. The continued
increase in the company's recurring revenue is expected to outpace the
progressive slowdown in license net sales. Seasonality affects Basware's
business throughout the year, and typically the last quarter of the year has
been the strongest quarter.

Organic growth will continue to be supported by a disciplined acquisition
strategy, aimed at strengthening the company's position in key markets,
especially in the e-invoicing market in Europe and in the US.

Espoo, Finland, Tuesday, April 19, 2016

BASWARE CORPORATION
Board of Directors

Esa Tihilä, CEO, Basware Corporation

For more information, please contact:

Niclas Rosenlew, CFO, Basware Corporation
+358 504 802 160

Distribution:
Nasdaq Helsinki
Key media
www.basware.com/investors





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Basware Q1/2016 Interim Report.pdf