BasWare - Interim report (Q1 and Q3)

Basware Interim Report January 1-September 30, 2015 (IFRS)

Basware Corporation, stock exchange release, October 12, 2015 at 08:45

BASWARE INTERIM REPORT JANUARY 1 - SEPTEMBER 30, 2015 (IFRS)

SUMMARY

Revenue developed favourably with key markets growing 95 percent

January-September 2015:

  * Net sales EUR 104 200 thousand (EUR 93 010 thousand) - growth 12.0 percent
  * Operating profit EUR 371 thousand (EUR 2 624  thousand) - 0.4 percent of net
    sales (2.8%)
  * Growth of Network Services net sales 46.4 percent
  * Recurring revenue 68.2 percent (67.8%) of net sales
  * Earnings per share (diluted) EUR 0.01 (0.11)

July-September 2015:
  * Net sales EUR 33 569 thousand (EUR 30 164 thousand) - growth of 11.3 percent
  * Operating profit EUR 996 thousand (EUR 1 162 thousand) - 3.0 percent of net
    sales (3.9%)
  * Growth of Network Services net sales 48.3 percent
  * Recurring revenue 72.2 percent (70.1%) of net sales
  * Earnings per share (diluted) EUR 0.09 (0.05)

Basware expects its net sales and operating profit (EBIT) for 2015 to grow
compared to 2014.

The Interim Report is unaudited.

GROUP KEY FIGURES


                      7-9/   7-9/ Change,    1-9/   1-9/ Change,  1-12/

 EUR thousand         2015   2014       %    2015   2014       %   2014
------------------------------------------------------------------------


 Net sales          33 569 30 164    11.3 104 200 93 010    12.0 127674

 EBITDA              2 823  2 923    -3.4   5 678  7 918   -28.3 11 354

 Operating profit      996  1 162   -14.3     371  2 624   -85.9  4 325

   % of net sales     3.0%   3.9%            0.4%   2.8%           3.4%

 Profit before tax   1 488    694   114.4     282  2 124   -86.7  4 328

 Profit for the      1 249    777    60.7     129  1 505   -91.4  2 959
 period



 Return on equity,   3.6 %   2.6%           0.1 %   1.7%           2.5%
 %

 Return on           3.8 %   3.0%           1.2 %   3.1%           4.4%
 investment, %

 Cash and cash      36 824 60 156   -38.8  36 824 60 156   -38.8 28 954
 equivalents

 Gearing, %        -25.5 % -39.3%         -25.5 % -39.3%         -38.6%

 Equity ratio, %    77.4 %  80.6%          77.4 %  80.6%          82.7%



 Earnings per
 share

 Undiluted, EUR       0.09   0.05    80.0    0.01   0.11   -90.9   0.22

 Diluted, EUR         0.09   0.05    80.0    0.01   0.11   -90.9   0.22

 Equity per share,    9.73   9.90   -18.7    9.73   9.90   -18.7   9.88
 EUR




BUSINESS OPERATIONS

Basware is the global leader in providing purchase-to-pay and e-invoicing
solutions in the world of commerce. Basware empowers companies to unlock value
across their financial operations by simplifying and streamlining key financial
processes. Basware helps its customers to succeed and create added value to
their business through better financial management. Basware Commerce Network,
the largest open business network in the world, connects 1 million companies
across 100 countries and enables easy collaboration between buyers and suppliers
of all sizes. Through this network, leading companies around the world achieve
improved spend control, efficiency, and closer relations with their suppliers.
With Basware, businesses can introduce completely new ways of buying and selling
to achieve significant cost savings and boost their cash flow.

CEO Esa Tihilä:

Revenue developed favourably also during the third quarter, growth of 11.3
percent year-on-year. Net sales for the third quarter amounted to EUR 33 569
thousand (EUR 30 164 thousand). The year-on-year growth in key markets was at a
good level: net sales continued to grow strongly in the US, the UK and Germany,
with combined revenue growth of 95 percent. Operating profit was EUR 996
thousand (EUR 1 162 thousand). The profit was burdened by continued investments
in the selected key operations, such as Financing Services. The international
share of Basware's net sales year-to-date totaled to 65.8 percent (62.1%) at the
end of the period.

The Network Services sales grew well during the third quarter, supported both by
the organic growth as well as the acquisition, which took place during the
second quarter. The net sales of Network Services amounted to EUR 11 810
thousand (EUR 7 964 thousand) during the third quarter, growth of 48.3 percent
year-on-year. The growth in the transaction volume continued, up 23 percent
year-to-date, and a total of 68.8 million transactions were processed via
Basware Commerce Network at the end of the period. The month-on-month growth
from August to September reached an all-time high, and in September the network
growth reached also an all-time-high, with 8.2 million processed transactions
during the month. This marks also the milestone of 100 million annualized
transactions sent and received across Basware Commerce Network. The significant
growth of the network continued in the e-invoicing target markets, such as the
US, the UK and Germany, while the growth was levelling off in some markets where
the penetration is relatively high.

The Solution Services' order intake continued steadily during the third quarter,
with a positive impact on future recurring revenue. The net sales of the
Solution Services business amounted to EUR 21 758 thousand for the third quarter
(EUR 22 200 thousand). The demand for SaaS services continued at a good level,
represented by the SaaS revenue growth of 18.0 percent year-on-year. The
billable utilization rate improved and there was an increasing number of Alusta
sales agreements, 23 in total, during the quarter. The result was however
impacted by the faster than expected decrease in license sales.

The Financing Services solutions, Basware Pay and Basware Discount, have
continued to attract customer interest, and 12 customers in the UK, the US and
Finland have signed for the new solutions during the quarter. Negotiations with
several new international financial institutions on collaboration with Basware
Pay are underway. The development of the joint venture in the UK and a new e-
invoicing based, supplier driven invoice financing service with Arrowgrass
Capital Partners LLP are proceeding as planned. Investments in and building the
Financing Services business and services have continued.

In accordance with its strategy, Basware's geographic expansion and achieving
strong growth in Basware Commerce Network continue to be the main objectives,
pursued both organically and through acquisitions. Development of the Financing
Services business and services and establishing and finding new significant
partnerships in the business will continue actively during the latter part of
2015. The company also continues actively to develop ways to accelerate the
global growth.

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 2015 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 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. The global market penetration
of e-invoices is estimated to be some 10 percent. The growing e-invoicing market
and companies' interest in other payment and financing added value solutions as
well will offer excellent growth opportunities in future years.

Outlook 2015

The global market growth in e-invoicing has been estimated to be approximately
20 percent. Basware is pursuing strong growth in Network Services by developing
and automating the connection of buyers and suppliers to the e-invoicing
service, by utilizing digital marketing and sales channels more extensively, and
through acquisitions. In the Solution Services business, sales of Alusta are
expected to have a positive effect on software net sales and professional
services.

Basware's operating expenses are expected to develop moderately, the company is
actively managing its cost base and has initiated several productivity
improvement programs during 2015. Seasonality affects Basware's business
throughout the year, and typically the last quarter of the year has been the
strongest quarter.

Basware will invest more extensively in sales and marketing as well as research
and development of new solutions and services, including Financing Services. The
company will continue to improve its profit-making ability in its software
business also this year by ensuring the efficient use of resources in
professional services and improving the billing rate in relation to demand. The
company will continue investments in the Network Services business to achieve
accelerated growth by primarily developing automated solutions for sending and
receiving e-invoices and new ways to achieve accelerated growth in sales.

In 2015, the company expects the acquisition of Procserve and related
integration costs to exceed the savings starting from the second quarter of the
year and the cost synergies to be net positive next year.The company also
expects the joint venture which has been established with Arrowgrass Capital
Partners LLP to add net costs in 2015.

Basware continues active analysis of acquisition targets especially in the e-
invoicing market in Europe and in the U.S. according to its strategy. Decisions
on additional investments required for growth will be made during the year as
required by the market situation and development of business operations.

Basware expects its net sales and operating profit (EBIT) for 2015 to grow
compared to 2014.

Espoo, Finland, Monday, October 12, 2015

BASWARE CORPORATION
Board of Directors

For more information, please contact:

Esa Tihilä, CEO, Basware Corporation
Tel. +358 40 480 7098

Distribution:
NASDAQ OMX Helsinki Ltd
Key media
www.basware.com

[HUG#1958111]

Attachments:

Basware Q3/2015 Interim Report.pdf