Basware Half-Year Financial Report January 1 – June 30, 2019: All-time high cloud order intake, productivity programme actions result in profitability guidance upgrade

Basware Corporation, stock exchange release, August 6, 2019 at 8:45 am EEST

April-June 2019:

-        Net sales EUR 36,320 thousand (EUR 34,969 thousand): increase of 3.9 percent, organic growth at constant currencies 3.0 percent

-        Organic cloud revenue growth at constant currencies 12.4 percent, amounting to 68.1 percent (62.3%) of net sales

-        Cloud ARR order intake amounted to EUR 6,429 thousand (EUR 6,392 thousand)

-        Adjusted EBITDA EUR -213 thousand (EUR -2,674 thousand)

-        Adjusted operating profit/loss EUR -4,149 thousand (EUR -5,416 thousand)

-        Operating profit/loss EUR -6,181 thousand (EUR -6,329 thousand)

-        Adjusted earnings per share (diluted) amounted to EUR -0.51 (EUR -0.34) and earnings per share (diluted) were EUR -0.65 (EUR -0.40)

January-June 2019:

-        Net sales EUR 72,215 thousand (EUR 70,939 thousand): increase of 1.8 percent, organic growth at constant currencies 4.3 percent

-        Organic cloud revenue growth at constant currencies 13.4 percent, amounting to 67.9 percent (60.8%) of net sales

-        Cloud ARR order intake amounted to EUR 11,365 thousand (EUR 11,049 thousand)

-        Adjusted EBITDA EUR -1,913 thousand (EUR -2,661 thousand)

-        Adjusted operating profit/loss EUR -9,970 thousand (EUR -8,033 thousand)

-        Operating profit/loss EUR -13,962 thousand (EUR 6,166 thousand)

-        Adjusted earnings per share (diluted) amounted to EUR -0.94 (EUR-0.94) and earnings per share (diluted) were EUR -1.22 (EUR 0.05)

Key figures

EUR thousand 4-6/
2019
4-6/
2018
Change, % 1-6/
2019
1-6/
2018
Change, % 2018
Net sales 36,320 34,969 3.9 72,215 70,939 1.8 141,417
Cloud revenue 24,752 21,783 13.6 49,034 43,126 13.7 89,482
Cloud ARR order intake 6,429 6,392 0.6 11,365 11,049 2.9 21,474
EBITDA -2,245 -3,587 37.4 -5 905  11,538 9,217
Adjusted EBITDA -213 -2,674 92.0 -1,913 -2,661 28.1 -4,364
Operating profit/loss (EBIT) -6,181 -6,329 2.3 -13,962 6,166 -1,471
Adjusted operating profit/loss -4,149 -5,416 23.4 -9,970 -8,033 -24.1 -15,052
Gearing, %1 42.1% 5.9% 42.1% 5.9% 14.9%
Cash and cash equivalents1 63,373 41,413 53.0 63,373 41,413 53.0 40,747
Free cash flow metric -9,794 -7,787 -25.8 -17,610 -12,624 -39.5 -19,829
Earnings per share, diluted, EUR -0.65 -0.40 -64.2 -1.22 0.05 -0.49
Adjusted earnings per share,diluted, EUR -0.51 -0.34 -53.1 -0.94 -0.94 0.01 -1.44
Personnel1 1,354 1,745 -22.4 1,354 1,745 -22.4 1,412

1 At the end of the period.

Notes on comparability

Basware has adopted IFRS 16 ‘Leases’ as of January 1, 2019 with modified retrospective method of application, and accordingly the comparative information has not been restated. IFRS 16 impacts comparability for the following financial information:

-      Depreciation expenses have increased significantly and correspondingly rent expenses decreased significantly. Depreciation expenses for right-of-use-assets in the second quarter of 2019 totalled EUR 1,120 thousand and in the first half of the year EUR 2,371 thousand. The aforementioned improves reported EBITDA compared to 2018.

-      Balance sheet totals on January 1, 2019 have increased by EUR 17,012 thousand due to recognition of right-of-use-assets and lease liabilities.

-      Principal payments of lease liabilities are separately presented in the cash flow from financing activities and totalled EUR 1,080 thousand during the second quarter of 2019. For the first half of 2019 the payments of lease liabilities totalled EUR 2,032 thousand.

-      Interest expenses recognized from lease liabilities totalled EUR 231 thousand in the second quarter of 2019 and EUR 449 thousand in the first half of the year.

-      Notes information in 2019 for commitments and contingent liabilities does not include lease liabilities that are recognized as lease liabilities on the balance sheet.

-      IFRS 16 impacts comparability for key figures that are calculated based on balance sheet totals or interest-bearing liabilities.

In February 2018 Basware completed the divestment of two businesses. As a result, it is important to consider the organic growth rate when comparing 2019 financials with 2018 financials as the divestments decrease revenues and profitability.

The interim report is unaudited.

Guidance for 2019 updated

Basware’s key strategic priority for the strategy period 2018-2022 is scalable cloud revenue growth. The company continues to strengthen its leading market position in order to grow scalable cloud revenue.

As a result of the productivity programme actions taken in the second quarter of 2019, Basware is increasing its adjusted EBITDA guidance for 2019. The revenue guidance is unchanged. For 2019, Basware expects the following on an organic basis at constant currencies:

-        Cloud revenues to grow at approximately 15 percent

-        Total revenues to grow at approximately 5 percent

-        Adjusted EBITDA to be EUR 3 million or better

The previous guidance as given on January 31, 2019 was that Basware expects the following on an organic basis at constant currencies:

-        Cloud revenues to grow at approximately 15 percent

-        Total revenues to grow at approximately 5 percent

-        Adjusted EBITDA to be at breakeven or better

CEO Klaus Andersen: 

“In the second quarter of 2019, Basware’s cloud order intake was again on a record-high level at EUR 6.4 million. Strong performance continued in the US, where we signed several new customers such as Holcim, HunterDouglas and Texas Roadhouse. Cloud order intake growth rate was 1 percent compared to the previously highest quarter for cloud order intake in the same quarter of 2018.

At the end of April, Basware launched a productivity programme with expectations to reach positive EBIT in 2020 and positive free cashflow on a run-rate basis by the end of 2020. The majority of the productivity programme actions have been implemented leaving only a small subset for later in the year. Organizational changes and optimization resulted in a headcount reduction of 64 employees globally. We are making good progress in all focus areas and are on track to reach our cost reduction target of EUR 10 million annual run rate saving compared to the first quarter of 2019.

For the first half of the year, organic cloud revenue growth at constant currencies was 13 percent and total revenue growth 4 percent, which are in line with our guidance for 2019. Adjusted EBITDA for the quarter was approximately breakeven at EUR -0.2 million and for the first half of the year amounted to EUR -1.9 million. As a result of the productivity programme actions, we upgrade our profitability guidance for 2019 and expect adjusted EBITDA to be EUR 3 million or better.”

Results briefing webcast and conference call

Basware arranges a briefing for analysts and press, where CEO Klaus Andersen comments on the events and financial performance of the past quarter. The results briefing can be followed via live webcast or teleconference. A recording of the briefing will be available after the event.

Time: Tuesday, August 6, 2019 at 11 am EEST / 9 am BST

Place: Basware, Linnoitustie 2, Cello-building, 02601 Espoo, Finland

Video webcast and teleconference: https://basware.videosync.fi/2019-q2-results

Teleconference numbers:

Finland: +358 981 710 310

Sweden: +46 856 642 651

UK: +44 333 300 08 04

US: +1 631 913 14 22

PIN: 85538859#

BASWARE CORPORATION

For further information, please contact: 

Ben Selby, VP IR & Treasury, Basware Corporation
Tel. +358 50 305 8077, ben.selby@basware.com

Distribution:
Nasdaq Helsinki
Main media
investors.basware.com/en

About Basware:
Basware (Nasdaq: BAS1V) is the global leader in providing networked source-to-pay solutions, e-invoicing and innovative financing services. Basware’s commerce and financing network connects businesses in over 100 countries and territories around the globe. As the largest open business network in the world, Basware provides scale and reach for organizations of all sizes, enabling them to grow their business and unlock value across their operations by simplifying and streamlining financial processes. Small and large companies around the world achieve significant cost savings, more flexible payment terms, greater efficiencies and closer relationships with their suppliers. Find out more at http://investors.basware.com/en.

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