Basware : Interim Report January 1-March 31, 2013 (IFRS)
Basware Corporation, stock exchange release, April 11, 2013 at 08:45
BASWARE INTERIM REPORT JANUARY 1-MARCH 31, 2013 (IFRS)
SUMMARY
January-March 2013: Net sales increased amidst difficult market conditions and
transition from software to service business
* Net sales EUR 29 828 thousand (EUR 27 435 thousand) - growth 8.7 percent
* Operating profit/loss EUR -1 569 thousand (EUR 1 822 thousand)
* Operating profit/loss -5.3 percent of net sales (6.6%)
* Operating profit/loss before non-recurring items EUR -384 thousand (EUR
1 822 thousand)
* Growth of Automation Services (SaaS and e-Invoicing) 41.0 %
* 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 is EUR 31.5 million, growth of 13.2 percent compared
to the previous quarter
* Recurring revenue (Customer Support and Automation Services) 61.9 percent
(57.1%) of net sales
* Net cash flows from operating activities EUR 9 718 thousand (EUR 10 634
thousand)
* Earnings per share (diluted) EUR -0.07 (EUR 0.11)
Basware expects its net sales for 2013 to grow by more than 15% and operating
profit (EBIT) to grow compared to the previous year.
The figures are unaudited.
GROUP KEY FIGURES
1-3/ 1-3/ Change, 1-12/
EUR thousand 2013 2012 % 2012
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Net sales 29 828 27 435 8.7% 113 699
EBITDA 233 3 188 -92.7% 14 801
Operating profit before IFRS3 amortization -1 337 2 455 10 555
Operating profit -1 569 1 822 8 308
% of net sales -5.3% 6.6% 7.3%
Profit before tax -1 526 1 918 8 357
Profit for the period -962 1 476 5 863
Return on equity, % -3.9% 6.0% 5.8%
Return on investment, % -4.9% 8.0% 8.2%
Liquid assets *) 23 276 34 450 -32.4% 34 519
Gearing, % -13.2% -35.2% -23.8%
Equity ratio, % 63.7% 70.5% 77.6%
Earnings per share, EUR -0.07 0.11 0.46
Earnings per share (diluted), EUR -0.07 0.11 0.46
Parent company's shareholders'
equity per share, EUR 7.51 7.47 0.6 % 7.84
*) Includes cash and cash equivalents
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 (previously
License Sales, Professional Services, Maintenance, and Automation Services).
Customer Support comprises of previous Maintenance and Extended Customer Support
previously reported under Professional Services. Extended customer support
agreements are continuous service agreements spanning several years. Customer
Support and Automation Services together form the recurring revenue reported by
the company.
License Sales consist of the Purchase to Pay product family together with
payment, financial planning and reporting solutions sold only in Finland.
Automation Services include e-Invoicing, scanning services, printing services,
catalog 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 as well as for new, signed
agreements 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. Net sales are split by the customer's
location. Net sales and operating profit are also reported by the location of
the assets. In annual financial statements, the geographical information of non-
current assets is reported by the location of the assets.
CEO Esa Tihilä:
Net sales for Q1 amounted to EUR 29 828 thousand, growth of 8.7 percent compared
to the corresponding period the previous year, and operating profit was at a
loss, EUR -1 569 thousand after non-recurring expenses. The first quarter was
more difficult for the company than expected due to market conditions, ongoing
transition of the business model as well as renewal of the product and service
portfolio. At the same time, the process to integrate the business acquisition
confirmed at the beginning of the year was carried out in the company.
Our net sales grew from services in line with our strategy. In spite of net
sales growth falling short of the targets for the first quarter, quantitatively
speaking, we closed 43 percent more significant Purchase to Pay deals than
during the corresponding period the previous year. This proves that the
fundamental demand for Basware products and services has remained at a good
level.
The amount of significant e-invoice and SaaS deals was lower than expected,
which was mainly due to the market conditions and sales processes taking longer
than usual. Growth in net sales is supported by the focusing of our global sales
efforts on buyer, supplier, and partner organizations. Product and process
improvements accelerate the entry of SaaS and e-invoice deals into production.
The decrease in license sales continued, and it is expected to level off during
the latter half of the year. The maturity of the Alusta product is continuously
improving with new features and updates. Basware Match Plan was launched during
the first quarter, and it will be complemented with Basware Match Order during
the latter half of the year. The first versions of new Basware Purchase and
Analytics products will be launched during the second quarter, and they are
expected to improve the company's competitiveness further.
Automation Services grew almost at the planned rate, 41.0 percent, also during
the first quarter of 2013. We have also connected an increasing number of small
and medium-sized suppliers and buyers to our open Basware Commerce Network with
new products and delivery methods. The transaction volume developed strongly
during this quarter as well, up 62.7 percent.
The business acquisition of the leading e-Invoice operator in the Benelux,
Certipost, a bpost company, was closed on January 2, 2013. Following the
acquisition, Basware is the market leader in e-invoicing in Germany and the
Benelux in addition to the Nordic countries. The company intends to continue to
support organic growth in our key markets through acquisitions. With regard to
the acquired business, efficiency benefits are pursued through personnel cuts,
combination of business functions and technologies, and joint infrastructure and
support functions. Restructuring expenses of approximately EUR 1.2 million
related to employment relationships have been booked in the first quarter of
2013.
The competitiveness of Basware software and services is at a good level. In
order to achieve our objective of accelerated global growth and maintain our
product leadership in Purchase to Pay processes, the development of Alusta
software and services will continue strongly this year as well.
We believe that the company will grow more strongly during the rest of the year
than in the first quarter, with the decrease in licence sales leveling off and
the growth of Automation Services continuing. The company's fixed expenses will
grow at a more moderate rate during the last three quarters than in the first
quarter. We have increased the number of personnel during 2012, and we expect
improvement of productivity to decrease the need for recruitments in our
different functions in late 2013.
We target different customer segments in our marketing with our Better Buying -
Better Selling - Connected Commerce customer promises. We have also strengthened
our global sales organization by establishing units focusing on sales and
customer-supplier relationships specializing in direct sales and partner
channels. Teams founded for customer deliveries, packaged solutions, and
financial process consulting take care of deployments of diverse types and
sizes. With regard to customer support services, were have consistently expanded
the service portfolio of extended customer support for major customers around
the world, which improves customer satisfaction.
The above measures are related to the company's transition process, and these
and other investments made are expected to begin to pay themselves back during
the latter half of 2013.
Market outlook and operating environment
According to independent research institutions most recent market estimates the
software market is expected to grow by 6.4 percent globally in 2013 (2012:
6.2%). The entire IT market is expected to grow by 4.1 percent globally (2012:
2.1%).
The market conditions were more difficult than before in the first quarter.
Customers' decision-making was slower than before. The negotiation times of
large international deals in particular have been prolonged because the
customers' requirements are higher in the service business than in the software
business.
With the acquisition of a German e-invoice operator in 2012 and the acquisition
of the network and e-invoicing business of Certipost in Belgium we secured new
customers, competence, and new technology, which improve the company's
competitiveness. Automation Services will have a positive impact on the
competitiveness, improving the predictability and transparency of the company's
net sales and profitability in the long term.
Consolidation is expected to continue in the business environment, with the role
of services growing in companies' portfolios. Basware continues active analysis
of acquisition targets especially in the e-Invoicing market in Europe and in the
U.S. according to its strategy.
The competitiveness of Basware software and services is good. In order to
achieve our objective of accelerated global growth and maintain our product
leadership in Purchase to Pay processes, the development of Alusta software and
services will continue strongly this year as well.
By the end of 2015, Basware aims to become the largest business commerce network
for buyers and suppliers. E-Invoicing and the supporting services are targeted
to connect suppliers and buyers also outside of Basware's existing software
customer base, leading to a higher potential. The penetration rate of e-
Invoicing is low, between 5-30 percent depending on the country, and it has been
estimated to grow strongly. E-invoicing is becoming more common and the related
processes are becoming standard. This creates a good foundation for the growth
of Basware Automation Services.
Offshoring operations hold a significant role in the company's strategy. R&D and
Automation Services operations and other support functions at the Indian office
have already succeeded in gaining a significant role in the company's
operations. The company is also currently expanding the operations of its
Romanian office to cover the product development and support functions of
Automation Services.
Espoo, Finland, April 11, 2013
BASWARE CORPORATION
Board of Directors
For more information, please contact
CEO Esa Tihilä, Basware Corporation
Tel. +358 40 480 7098
Analyst and press briefing and conference call
Basware arranges today, April 11, 2013, a briefing on the Interim Report for the
press and analysts at 11:00 a.m. in Hotel Kämp (Kluuvikatu 2, 2(nd) floor),
Helsinki, Finland. During this briefing CEO Esa Tihilä and CFO Mika Harjuaho
will comment the events and financial performance of the first quarter.
Additional information and registration: Sirje Ahvenlampi, Manager, Investor
Relations, tel. +358 50 557 3822, sirje.ahvenlampi (at) basware.com.
A conference call for analysts will take place on April 11, 2013 at 3:00 p.m.
(GMT+2). More information on registration for the conference on the company's
investor pages: http://www.basware.com/investors.
Distribution:
NASDAQ OMX Helsinki Ltd
Key media
www.basware.com
