BASWARE HALF YEAR FINANCIAL REPORT JANUARY 1 – JUNE 30, 2018 (IFRS)


Basware Corporation, stock exchange release, July 18, 2018, 8.45am

BASWARE HALF YEAR FINANCIAL REPORT JANUARY 1 – JUNE 30, 2018 (IFRS)

Record cloud revenue and order intake

April-June 2018:

  • Net sales EUR 34 969 thousand (EUR 37 287 thousand): decrease of 6.2 percent, organic growth at constant currencies 7.0 percent
  • Organic cloud revenue growth at constant currencies 15.6 percent, amounting to 62.3 percent (53.0 %) of net sales
  • Adjusted EBITDA EUR -2 674 thousand (EUR 318 thousand)
  • Adjusted operating profit/loss EUR -5 416 thousand (EUR -2 151 thousand)
  • Adjusted earnings per share (diluted) EUR -0.34 (-0.19)
  • Operating profit/loss EUR -6 329 thousand (EUR -2 769 thousand)
  • Earnings per share (diluted) EUR -0.40 (-0.24)

January-June 2018:

  • Net sales EUR 70 939 thousand (EUR 74 097 thousand): decrease of 4.3 percent, organic growth at constant currencies 6.1 percent
  • Organic cloud revenue growth at constant currencies 17.0 percent, amounting to 60.8 percent (52.2 %) of net sales
  • Adjusted EBITDA EUR -2 661 thousand (EUR -1 275 thousand)
  • Adjusted operating profit/loss EUR -8 033 thousand (EUR -6 336 thousand)
  • Adjusted earnings per share (diluted) EUR -0.94 (-0.51)
  • Operating profit/loss EUR 6 166 thousand (EUR -7 853 thousand)
  • Earnings per share (diluted) EUR 0.05 (-0.61)

Basware is the global leader in providing networked source-to-pay, e-invoicing and value-added services. Basware’s key strategic priority for the strategy period 2017-2020 is cloud revenue growth. The company continues to strengthen its leading market position in order to grow cloud revenue.

For 2018 Basware expects the following on an organic basis at constant currencies:

  • Cloud revenues to be between EUR 90 and 95 million 
  • Total costs excluding amortization, depreciation and adjustments to be slightly above 2017 levels

Basware has adopted IFRS 15 Revenue from Contracts with Customers as of January 1, 2018 (mandatory application), with full retrospective application. In connection with the IFRS 15 application, the Group has also made certain changes to revenue allocation between Cloud and Non-cloud. Comparatives for 2017 presented in the interim report have been updated to include IFRS 15 restatements and revenue reallocations.

GROUP KEY FIGURES

4-6/  4-6/  Change, 1-6/ 1-6/ Change, 1-12/
EUR thousand  2018  2017  % 2018 2017 %  2017
Net sales  34 969  37 287  -6.2 % 70 939 74 097 -4.3 %  149 167 
Cloud revenue 21 783 19 752  10.3 % 43 126 38 668 11.5 % 80 332
Cloud order intake* 6 392 5 496 16.3 % 11 049 9 520 16.1 % 17 943
EBITDA  -3 587  -300  11 538  -2 792  599 
Adjusted EBITDA -2 674  318  -2 661  -1 275  -108.8 %  3 294 
Operating profit/loss  -6 329  -2 769  -128.6 %  6 166  -7 853  -9 509 
Adjusted operating profit/loss  -5 416  -2 151  -151.8 % -8 033 -6 336 -26.8 %  -6 814 
Profit/loss before tax  -6 712  -3 623  -85.2 %  5 030  -9 700  -12 276 
Profit/loss for the period  -5 746  -3 416  -68.2 %  671  -8 787  -11 524 
Cash and cash equivalents 41 413  23 610  75.4 % 41 413 23 610 75.4 %  20 683 
Earnings per share 
Diluted, EUR  -0.40  -0.24  -68.1 %  0.05  -0.61  -0.80 
Adjusted earnings per share, diluted, EUR  -0.34  -0.19 -72.1 %  -0.94  -0.51  -85.4 %  -0.61 

*From Q2 2018 onwards cloud order intake is the key order intake figure reported

CEO Vesa Tykkyläinen:

Since I became CEO of Basware in September 2016, the focus has been on putting in place the foundations to enable scalable cloud growth. We have executed well against this objective with significant strengthening of our leadership and personnel, alignment of management and shareholders, introduction of account management and strengthened country management, consolidation of R&D sites, the transition of a fragmented data centre environment to AWS and the sale of non-core assets. This quarter we have continued to further strengthen these foundations. We implemented a functional organisational structure, which added the key positions of Chief Technology Officer and SVP Business Development and Alliances to the executive team and also removed overlaps by combining the separate business areas into a single Products function. We implemented a new customer support portal, which improves how we can serve customers and increases efficiency in our customer services organisation. Additionally, at the beginning of July we announced an agreement to outsource our scanning services.

This quarter our total cloud order intake was EUR 6.4 million, an all-time high. Our order intake performance was particularly strong in the US and we continued to win new customers globally including Voith, Neogen, Tishman Speyer, Kraton Polymers, Western Dental and Imerys, as well as transform existing customers to the cloud, including BrandSafway, Korian and Thermo Fisher. Our cloud revenues continued to grow as a proportion of sales, and now account for 62 percent of total revenues. This is accelerating our total growth, which was 7.0 percent on an organic constant currency basis in the second quarter, up from 1.8 percent in the second quarter of 2017.

In addition to having great customers, we have great solutions. Basware was again recognised as a leader in source-to-pay by Gartner, with a particular emphasis on Basware’s customer focus. Innovations released in the second quarter included Smart PDF, which enables the efficient digitalisation of invoices from “long tail” of suppliers unable or unwilling to send fully electronic invoices, and Basware assistant, a chatbot feature that tangibly improves the user experience and reduces the need for customer training.

I am excited by all the changes we have already successfully implemented at Basware thanks to our great people. Now is the time for us to shift gear and move from internal clean-up to a focus on accelerating growth. Our sales and marketing pipeline is at an all-time high. We will continue to invest in sales and marketing and already have a number of new hires that are still to reach full productivity, which will feed into the future order intake. We now have much more stability in the country organisations and management bandwith to focus on growth. With all the changes that we have made, combined with our great customers, great people and great solutions I am confident for the 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 for 2018

Basware is the global leader in providing networked source-to-pay, e-invoicing and value-added services. Basware’s key strategic priority for the strategy period 2017-2020 is cloud revenue growth. The company continues to strengthen its leading market position in order to grow cloud revenue.

Themes affecting cloud revenues in 2018:

  • SaaS revenues anticipated to continue to grow strongly on an organic basis
  • Transaction services revenues growth anticipated to accelerate as growth initiatives take effect
  • Other cloud revenues continue to be impacted by UK public sector revenues
  • Cloud revenues have a higher proportion of US dollar and Sterling and so are disproportionately affected by foreign exchange movements

Themes affecting non-cloud revenues in 2018:

  • Maintenance and licence revenues will continue to decline as Basware transitions existing customers to cloud services
  • Consulting revenues are also affected by the cloud transition and more standardised implementations
  • Non-cloud revenues are disproportionately affected by the divestments completed in February 2018

For 2018 Basware expects the following on an organic basis at constant currencies:

  • Cloud revenues to be between EUR 90 and 95 million
  • Total costs excluding amortization, depreciation and adjustments to be slightly above 2017 levels

Constant currencies means that the effects of any changes in currencies are eliminated by calculating the figures for the period using 2017 exchange rates. Organic means that the figures are adjusted to remove the effects of any acquisitions or disposals within the past 12 months.

Espoo, Finland, Tuesday, July 17, 2018

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
investors.basware.com/en

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