basware’s interim report q3/2014/media/files/b/basware-ir...r&d in q3/2014 r&d expenses...

BASWARE’S INTERIM REPORTQ3/2014

Esa Tihilä, CEO

Mika Harjuaho, CFO

October 10, 2014

Basware’s Interim Report Q3/2014

Contents

• Business review of Q3/2014

• Financial review of Q3/2014

• Future outlook


BUSINESS REVIEWQ3/2014

Esa Tihilä, CEO


Key events in Q3/2014

• Network Services business continued to grow strongly; organic growth in transactions accelerated to a record-high number

• Solution Services business developed positively

• Share of recurring revenue of net sales continued to grow; international net sales and international share of net sales grew

• Basware established a new business called Basware Financing Services, delivering new & innovative financing services for buyers and suppliers, combining payment with financing services for companies of all sizes

• Basware Pay, a global e-payment solution, offered in collaboration with MasterCard, launched

• Directed share issue carried out to a limited number of international institutional investors


Share of recurring

revenue increased to

70.1 % of net sales

(66.8 %)

• Net sales EUR 30 164 thousand (EUR

28 682 thousand), +5.2 percent

0300060009000

120001500018000210002400027000300003300036000

Q1/11 Q1/12 Q1/13 Q1/14 Q2/11 Q2/12 Q2/13 Q2/14 Q3/11 Q3/12 Q3/13 Q3/14 Q4/11 Q4/12 Q4/13

• Operating profit EUR 1 162 thousand

(EUR 1 861 thousand), -37.9 percent

Net sales

EUR thousand

Q3/2014 key financials

Q3/2014 in brief: Network Services business

continued to grow strongly and Solution Services

business developed positively

• Network Services net sales +22.1 % and Solution

Services net sales +0.1 %

• 20.3 million transactions processed through

Basware Commerce Network, +8.9 % from previous

quarter (18.7 million)

• Share of recurring revenue of net sales grew, totaling to

70.1 % (66.8 %) of net sales

• International share of net sales was 61.8 % (60.7 %),

international net sales grew by +1.1 %


Transaction volume

amounted to 20.3

million, up +41.4 %

0,01,02,03,04,05,06,07,08,09,0

10,011,012,013,014,015,016,017,018,019,020,0

Q1 Q2 Q3 Q4

2010 2011 2012 2013 2014Million

transactions

The transaction volume

was 20.3 million during

the quarter, growth of

all-time high 41.4 %

Growth of transaction volumes 2010-Q3/2014


35,0 %

40,0 %

45,0 %

50,0 %

55,0 %

60,0 %

65,0 %

70,0 %

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000


Share of recurring revenue, rolling 12 months average

EUR thousand

Net sales

Share of recurring

revenue, rolling 4

quarters average

The share of

recurring revenue of

net sales increased

to 70.1 % (66.8 %)

during the quarter


SaaS versus license sales dynamics 2007-Q3/2014

0 %

10 %

20 %

30 %

40 %

50 %

60 %

70 %

80 %

90 %

100 %

2007 2008 2009 2010 2011 2012 2013 CUMQ3/2014

SaaS

License sales

FINANCIAL REVIEWQ3/2014

Mika Harjuaho, CFO


• Basware reports one operating segment: Purchase to Pay, P2P. The segment

is divided into the Network Services and Solution Services businesses that

support each other.

• As of 2014, the company reports revenue from products and services as

follows: Network Services (e-invoicing solutions and services) and Solution

Services (software solutions and services).*

• As previously, Customer Support and Automation Services together form the

recurring revenue reported by the company.

• As geographic information Basware reports geographical areas Finland,

Scandinavia, rest of Europe, and Other. Net sales are reported by the

customer’s location, and net sales and operating profit are also reported by

the location of the assets.


Reporting (IFRS)

*Revenue reported also according to the previous reporting practice: License sales,

Professional Services, Customer Support, and Automation Services

20 000

30 000

40 000

Q1 Q2 Q3 Q4

2014 2013

EUR thousand Q1/14 Q1/13 Q2/14 Q2/13 Q3/14 Q3/13 Q4/14 Q4/13

Net sales 31 013 29 828 31 833 31 789 30 164 28 682 33 049

Growth % 4.0% 8.7% 0.1% 10.7% 5,2 % 5.8% 8.6%

Other operating income 177 58 27 1 623 57 61 173

Materials and services 2 978 2 542 3 057 2 987 3 200 2 967 3 265

Personnel expenses 20 078 20 518 19 561 20 611 17 337 16 464 19 327

Depreciation and amortization 1 789 1 801 1 744 1 755 1 760 1 748 1 748

Other operating expenses 6 034 6 594 6 345 7 152 6 761 5 703 6 751

Operating result 310 -1 569 1 152 908 1 162 1 861 2 131

24%

26%23%

27%

Net sales 2013

Q1 Q2 Q3 Q4

Net sales


Development of quarterly net sales & profit

8 010

22 154 Network Services

Solutions Services

Network Services & Solution Services:

net sales in Q3/2014

• Network Services: e-invoicing solutions and services

• Solution Services: software solutions and services


EUR thousand

(22 125, +0.1 %)

(6 559, +22.1 %)

R&D in Q3/2014

R&D expenses 13.8 % of net sales

22.5 % of personnel


R&D expenses amounted to EUR

12 830 thousand (EUR 12 571

thousand):

• Increase of 2,0 percent, 13.8 % of

net sales (13.9 %)

• EUR 2 853 thousand (EUR

2 842 thousand) of R&D expenses

capitalized

• R&D costs included in the P&L

totaled EUR 9 977 thousand (EUR

9 729 thousand), or 10.7 % (10.8

%) of net sales

R&D unit personnel 330 (356):

• 142 (155) people in India; units

also in Finland, Romania and

Belgium

Personnel

0

200

400

600

800

1000

1200

1400

Q1/1

0

Q2/1

0

Q3/1

0

Q4/1

0

Q1/1

1

Q2/1

1

Q3/1

1

Q4/1

1

Q1/1

2

Q2/1

2

Q3/1

2

Q4/1

2

Q1/1

3

Q2/1

3

Q3/1

3

Q4/1

3

Q1/1

4

Q2/1

4

Q3/1

4

Sales & Marketing

Consulting & Services

Products

Admin

Personnel groups

Finland

Rest of Europe

India

Other

Geographical location of personnel

Scandinavia


• 1 480 employees at the end of Q3/2014

• Average age of personnel is 34.8 years;

47.91% have an academic degree

• 68.2 % in APAC & India, Europe and Northern

America; 31.8 % in Finland

EUR million Q3/14 Q3/13

Net sales 30.2 28.7

Growth of net sales, % 5.2% 5.8%

Operating profit (EBIT) 1.2 1.9

% of net sales 3.9% 6.5%

Net profit 0.8 1.0

Share of recurring revenue, % 70.1 66.8%

Earnings per share, euro 0.05 0.07

Fixed costs 23.7 22.2

Change of fixed costs, % 6.3% 6.6%

Personnel, Oct 30 1 464 1 487

Change in personnel, % -1,5 6.3

Personnel costs 17.3 16.5

R&D expenses, Q3 3.8 3.1


Development of fixed

expenses influenced

by the exchange of

annual holiday pay to

additional leave as

part of the efficiency

drive in Q3/2013.

Q3/2014 in brief

Finance & investments


• Total assets on the balance sheet EUR 173 739 thousand(EUR 131 968 thousand)

• Cash and liquid assets EUR 60 156 thousand (EUR 15 124 thousand)

• Cash flows from

– Operating activities EUR 13 942 thousand (EUR 4 129 thousand)

– Investments EUR -3 256 thousand (EUR -18 284 thousand)

– Financing EUR 35 999 thousand (EUR -4 809 thousand)

• Equity ratio 80.6 percent (73.1 %)

• Gearing -39.3 percent (-6.7 %)

• Total gross investments EUR 3 872 thousand (EUR 19 458 thousand)

– includes capitalized R&D expenses and acquisitions

Share & shareholders

• Number of shareholders 13 815 (13 840) at the end of Oct 2014

• Share price development during January-October 2014:

• Highest EUR 41.00 (EUR 23.10), lowest EUR 23.50 (EUR 18.70)

• Closing price EUR 39.35 (EUR 21.70)

• Average price of the share EUR 34.89 (EUR 19.39)

• Traded shares 4 012 169 (679 872)

• 28.4 % (5.3 %) of all shares

• Market capitalization EUR 556 661 863 (EUR 278 812 906)


FUTURE OUTLOOK

Esa Tihilä, CEO


Innovative financing services for buyers and suppliers,

combining payment with financing services for companies of

all sizes:

• The first solution available now called Basware Pay,

a global e-payment solution, offered in collaboration with

MasterCard

• Upcoming: A factoring solution enabling suppliers to

receive early payment for invoices with financing provided

via Arrowgrass, and a buyer-funded supplier financing

solution for dynamic discounting

9/3/201420

Fundamentally different way to enable businesses to access and benefit from new sources of trade finance to intelligently manage cash flows available via the Basware Commerce Network, the world’s largest business commerce network

Basware’s Financing Services

A best-in-class Purchase to Pay portfolio - helping businesses of all sizes buy better, sell better and pay and be paid in new ways.

Purchase-to-pay

E-invoicing

E-procurement

E-payments

AP Automation

Travel & Expense

Analytics

Financing Services

BASWARE COMMERCE NETWORK

Solutions for a connected world

Open Commerce

Network

New Financing Services

Global Expertise

Customer Success

Innovation Culture

Leading Technology

Platform

Best-in-Class

Solutions

Basware moving forward A unique platform for growth – open network, e-invoicing and purchase to pay solutions, value added financing services, new partnerships and global expertise.

• Basware is pursuing accelerated growth that exceeds the market growth in its Network Services. Stronger growth can be achieved by developing and automating the connection of buyers and suppliers to the e-invoicing services, by utilizing digital marketing and sales channels more extensively, and through acquisitions.

• The Network Services business is expected to grow strongly during the rest of the year. In the Solution Services business, sales of Alusta are expected to have a positive effect on software net sales and Professional Services.

• The fixed costs for the second half of the year are estimated to be on a par with the first half. The company will continue to improve the profit-making ability in the Solution Services business also during the last quarter by ensuring the effective use of resources in Professional Services and improving the billing rate in relation to demand. The company will continue to invest 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.

• Decisions about investments required by the growth will be made during the last quarter as required by the market situation and development of business operations.

• Basware expects its net sales and operating profit (EBIT) for 2014 to grow compared to 2013.


Basware outlook 2014

NEXT REPORT

Q4 Interim Report in January 2015


basware’s interim report q3/2014/media/files/b/basware-ir...r&d in q3/2014 r&d expenses...

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