Basware : Basware Interim Report January 1-September 30, 2013 (IFRS)
Basware Corporation, stock exchange release, October 10, 2013 at 08:45
BASWARE INTERIM REPORT JANUARY 1 - SEPTEMBER 30, 2013 (IFRS)
SUMMARY
January-September 2013: Strong growth in Automation Services continues
* Net sales EUR 90 300 thousand (EUR 83 272 thousand) - growth 8.4 percent
* Operating profit EUR 1 201 thousand (EUR 5 381 thousand) - decrease 77.7
percent
* Operating profit 1.3 percent of net sales (6.5%)
* Growth of Automation Services (SaaS and e-Invoicing) 47.8 percent
* Recurring revenue (Maintenance and Automation Services) 63.9 percent (57.9%)
of net sales
* Cash flow from operating activities EUR 4 129 thousand (EUR 7 334 thousand)
* Earnings per share (diluted) EUR 0.03 (0.31) - decrease of 91.1 percent
July-September 2013:
* Net sales EUR 28 682 thousand (EUR 27 119 thousand) - growth 5.8 percent
* Operating profit EUR 1 861 thousand (EUR 2 261 thousand) - decrease 17.7
percent
* Operating profit 6.5 percent of net sales (8.3%)
* Growth of Automation Services (SaaS and e-Invoicing) 43.8 percent
* The estimated revenue to be recognized for current Automation Services
agreements that are in production as well as for new, signed agreements in
the next twelve months increased to EUR 33.6 million (growth from estimate
at the end of the previous quarter 1.1 percent)
* Recurring revenue (Maintenance and Automation Services) 66.8 percent (60.5%)
of net sales
* Earnings per share (diluted) EUR 0.07 (0.12) - decrease of 35.8 percent
Basware expects its net sales for 2013 to grow and operating profit (EBIT) for
2013 to be positive.
The figures are unaudited.
GROUP KEY FIGURES
7-9/ 7-9/ Change, 1-9/ 1-9/ Change, 1-12/
EUR thousand 2013 2012 % 2013 2012 % 2012
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Net sales 28 682 27 119 5.8 % 90 300 83 272 8.4 % 113 699
EBITDA 3 609 4 070 -11.3 % 6 504 10 051 -35.3 % 14 801
Operating profit before
IFRS3 amortization 2 092 2 793 -25.1 % 1 895 7 095 -73.3 % 10 555
Operating profit 1 861 2 261 -17.7 % 1 201 5 381 -77.7 % 8 308
% of net sales 6.5 % 8.3 % 1.3 % 6.5 % 7.3 %
Profit before tax 1 819 2 300 -20.9 % 1 130 5 514 -79.5 % 8 357
Profit for the period 960 1 493 -35.7 % 350 3 918 -91.1 % 5 863
Return on equity, % 4.0 % 6.1 % 0.5 % 5.3 % 5.8 %
Return on investment, % 7.7 % 9.6 % 2.3 % 7.6 % 8.2 %
Liquid assets *) 15 124 27 739 -45.5 % 15 124 27 739 -45.5 % 34 519
Gearing, % -6.7 % -27.5 % -6.7 % -27.5 % -23.8 %
Equity ratio, % 73.1 % 80.2 % 73.1 % 80.2 % 77.6 %
Earnings per share, EUR 0.07 0.12 -35.8 % 0.03 0.31 -91.1 % 0.46
Earnings per share
(diluted), EUR 0.07 0.12 -35.8 % 0.03 0.31 -91.1 % 0.46
Parent company's
shareholders'
equity per share, EUR 7.51 7.71 -2.5 % 7.51 7.71 -2.5 % 7.84
*) Includes cash and cash equivalents
Business operations
Basware is the global leader in providing solutions for better buying, better
selling and connected commerce. Basware provides open, secure, cloud-based
purchase-to-pay and e-invoicing solutions to organizations of all sizes,
resulting in greater efficiencies in procurement, accounts payable and accounts
receivable. Companies across all industries, from small businesses to corporate
giants use Basware solutions to drive sustainable cost savings, proactive
insight to cash flows and improved buyer-supplier relationships. The Basware
Commerce Network is founded on the principles of openness, where all types of
organizations can collaborate and trade, making it the largest in the world.
Today the network connects millions of business users in 900 000 companies
across over 100 countries.
Reporting
Basware Corporation reports one operating segment: Purchase to Pay, P2P.
Basware reports income for products and services as follows: License sales,
Professional Services, Customer Support, and Automation Services.
Customer Support includes the previous Maintenance and expanded customer
support, which was previously reported under Professional Services. Expanded
customer support agreements are continuous service agreements with a term of
several years. Customer Support and Automation Services comprise the recurring
revenue reported by the company.
License sales consist of the Purchase to Pay product family together with
financial planning and reporting solutions sold only in Finland. Automation
Services include e-Invoicing, scanning services, printing services, catalogue
management, purchase message exchange, activation services and Software as a
Service (SaaS) services.
Basware also reports the estimated revenue to be recognized for current
Automation Services agreements that are in production in the next twelve months.
Automation Services agreements typically expand several years or are valid until
further notice.
As geographic information Basware reports geographical areas Finland,
Scandinavia, rest of Europe, and Other. In the geographical information net
sales are split by the customer's location. Net sales and operating profit are
also reported by the location of the assets. In the annual financial statements,
the geographical information of non-current assets is reported by the location
of the assets.
CEO Esa Tihilä comments in conjunction with the Interim Report:
The strong growth in Automation Services continued during the third quarter. The
company's net sales grew and the company returned to profitability. The
company's efficiency drive launched during the second quarter to improve profit-
making ability has continued as targeted. At the same time the originally
targeted annual cost-savings of EUR 3 million compared to the June level has
been revised to EUR 4 million by the end of 2013.
Automation Services net sales have increased according to our strategy, up 43.8
percent during the third quarter. The strong growth in the transaction volume
continued during the quarter, up 69.5 percent. Basware Commerce Network has
grown strongly and we have connected an increasing number of small and medium-
sized suppliers and buyers in more than a hundred countries to the network with
new products and delivery methods.
The demand for software licenses continued to be soft during the quarter, and
license sales decreased by 18.3 percent. At the same time, SaaS net sales
increased by 17.4 percent. The decrease in license sales affects the development
of Professional Services.
According to customer feedback, the competitiveness of Basware software and
services is good. We increasingly emphasize the growth in the sales of Basware
Commerce Network and Alusta software and services in all of our operations. We
have continued the development of Alusta software and services, focusing on
finalizing the accounts payable functions. We expect the accounts payable
functions to reach the level in the upcoming months which will enable us to
start the projects to update the functionality to our existing customers. In the
future, development activities will focus on developing purchasing and travel
management. In the development of e-invoice services, the focus is on developing
automated processes.
We have restructured our organization to ensure faster growth in transaction
volumes and expand the service-based business according to our strategy. We aim
to speed up the adoption of our services and products, accelerate the entry of
SaaS and e-invoice deals into production through product and project
enhancements as well as enhance our operational efficiency. Our aim is to
strengthen the growth globally and maintain our product leadership in Purchase-
to-Pay processes as well as improve our profit-making ability.
The renewal of the company's product and service portfolio and transition of the
business model will continue. The product and service offering has been
strengthened through strategic partnerships. A partnership with MasterCard was
announced in September, connecting MasterCard, one of the world's largest
payment networks, to Basware Commerce Network to launch a revolutionary
electronic payment solution. In September, we also announced collaboration with
the supply management and spend analysis provider BravoSolution in source-to-pay
(S2P) solutions.
FUTURE OUTLOOK
Operating environment and market outlook
Consolidation is expected to continue in the business environment, with the role
of services growing in companies' portfolios. Basware continues the survey of
acquisition targets especially in the e-Invoicing market in Europe and in the
U.S. according to its strategy.
By the end of 2015, Basware aims to become the largest business commerce network
for buyers and suppliers. The penetration rate of e-Invoicing is low, between
5-30 percent depending on the country, and it has been estimated to grow
strongly in the upcoming years.
Outlook 2013
The acquisition of the e-invoicing business of the Belgian company Certipost was
confirmed on January 2, 2013. The company estimated the operating profit of the
acquired business after non-recurring expenses of approximately EUR 1.5 million
recognized in the first quarter to be approximately EUR 0.5 million negative for
2013, while the earlier estimate was approximately EUR 1.6 million negative.
According to the previous estimate for 2013, the operating profit was expected
to be slightly positive. The operating profit includes group services charged to
the parent company, such as expenses related to R&D, customer support, and
administration.
The development of Alusta software and services will continue strongly also this
year in order to maintain product leadership in Purchase-to-Pay processes. The
emphasis of R&D expenses will shift gradually from Alusta product development
towards the product development of Automation Services as of 2014.
The development of the net sales of Professional Services is supported by fixed-
price delivery packages as well as consultation fees based on individual
transactions in addition to hourly charged project work. In order to support
license and SaaS business sales, we have made significant changes in the sales
management and sales organization as well as further specified the sales models
for new customer acquisition as well as customer account management methods.
The efficiency drive launched by the company in June to improve profit-making
ability has proceeded as targeted. The originally targeted annual cost-savings
of EUR 3 million compared to the June level has been revised to EUR 4 million by
the end of 2013.
Basware expects its net sales for 2013 to grow and operating profit (EBIT) for
2013 to be positive.
Espoo, Finland, October 10, 2013
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
