Basware Interim Report January 1-September 30, 2015 (IFRS)
Basware Corporation, stock exchange release, October 12, 2015 at 08:45
BASWARE INTERIM REPORT JANUARY 1 - SEPTEMBER 30, 2015 (IFRS)
Revenue developed favourably with key markets growing 95 percent
- Net sales EUR 104 200 thousand (EUR 93 010 thousand) - growth 12.0 percent
- Operating profit EUR 371 thousand (EUR 2 624 thousand) - 0.4 percent of net sales (2.8%)
- Growth of Network Services net sales 46.4 percent
- Recurring revenue 68.2 percent (67.8%) of net sales
- Earnings per share (diluted) EUR 0.01 (0.11)
- Net sales EUR 33 569 thousand (EUR 30 164 thousand) - growth of 11.3 percent
- Operating profit EUR 996 thousand (EUR 1 162 thousand) - 3.0 percent of net sales (3.9%)
- Growth of Network Services net sales 48.3 percent
- Recurring revenue 72.2 percent (70.1%) of net sales
- Earnings per share (diluted) EUR 0.09 (0.05)
Basware expects its net sales and operating profit (EBIT) for 2015 to grow compared to 2014.
The Interim Report is unaudited.
GROUP KEY FIGURES
|Net sales||33 569||30 164||11.3||104 200||93 010||12.0||127674|
|EBITDA||2 823||2 923||-3.4||5 678||7 918||-28.3||11 354|
|Operating profit||996||1 162||-14.3||371||2 624||-85.9||4 325|
|% of net sales||3.0%||3.9%||0.4%||2.8%||3.4%|
|Profit before tax||1 488||694||114.4||282||2 124||-86.7||4 328|
|Profit for the period||1 249||777||60.7||129||1 505||-91.4||2 959|
|Return on equity, %||3.6 %||2.6%||0.1 %||1.7%||2.5%|
|Return on investment, %||3.8 %||3.0%||1.2 %||3.1%||4.4%|
|Cash and cash equivalents||36 824||60 156||-38.8||36 824||60 156||-38.8||28 954|
|Gearing, %||-25.5 %||-39.3%||-25.5 %||-39.3%||-38.6%|
|Equity ratio, %||77.4 %||80.6%||77.4 %||80.6%||82.7%|
|Earnings per share|
|Equity per share, EUR||9.73||9.90||-18.7||9.73||9.90||-18.7||9.88|
Basware is the global leader in providing purchase-to-pay and e-invoicing solutions in the world of commerce. Basware empowers companies to unlock value across their financial operations by simplifying and streamlining key financial processes. Basware helps its customers to succeed and create added value to their business through better financial management. Basware Commerce Network, the largest open business network in the world, connects 1 million companies across 100 countries and enables easy collaboration between buyers and suppliers of all sizes. Through this network, leading companies around the world achieve improved spend control, efficiency, and closer relations with their suppliers. With Basware, businesses can introduce completely new ways of buying and selling to achieve significant cost savings and boost their cash flow.
CEO Esa Tihilä:
Revenue developed favourably also during the third quarter, growth of 11.3 percent year-on-year. Net sales for the third quarter amounted to EUR 33 569 thousand (EUR 30 164 thousand). The year-on-year growth in key markets was at a good level: net sales continued to grow strongly in the US, the UK and Germany, with combined revenue growth of 95 percent. Operating profit was EUR 996 thousand (EUR 1 162 thousand). The profit was burdened by continued investments in the selected key operations, such as Financing Services. The international share of Basware's net sales year-to-date totaled to 65.8 percent (62.1%) at the end of the period.
The Network Services sales grew well during the third quarter, supported both by the organic growth as well as the acquisition, which took place during the second quarter. The net sales of Network Services amounted to EUR 11 810 thousand (EUR 7 964 thousand) during the third quarter, growth of 48.3 percent year-on-year. The growth in the transaction volume continued, up 23 percent year-to-date, and a total of 68.8 million transactions were processed via Basware Commerce Network at the end of the period. The month-on-month growth from August to September reached an all-time high, and in September the network growth reached also an all-time-high, with 8.2 million processed transactions during the month. This marks also the milestone of 100 million annualized transactions sent and received across Basware Commerce Network. The significant growth of the network continued in the e-invoicing target markets, such as the US, the UK and Germany, while the growth was levelling off in some markets where the penetration is relatively high.
The Solution Services' order intake continued steadily during the third quarter, with a positive impact on future recurring revenue. The net sales of the Solution Services business amounted to EUR 21 758 thousand for the third quarter (EUR 22 200 thousand). The demand for SaaS services continued at a good level, represented by the SaaS revenue growth of 18.0 percent year-on-year. The billable utilization rate improved and there was an increasing number of Alusta sales agreements, 23 in total, during the quarter. The result was however impacted by the faster than expected decrease in license sales.
The Financing Services solutions, Basware Pay and Basware Discount, have continued to attract customer interest, and 12 customers in the UK, the US and Finland have signed for the new solutions during the quarter. Negotiations with several new international financial institutions on collaboration with Basware Pay are underway. The development of the joint venture in the UK and a new e-invoicing based, supplier driven invoice financing service with Arrowgrass Capital Partners LLP are proceeding as planned. Investments in and building the Financing Services business and services have continued.
In accordance with its strategy, Basware's geographic expansion and achieving strong growth in Basware Commerce Network continue to be the main objectives, pursued both organically and through acquisitions. Development of the Financing Services business and services and establishing and finding new significant partnerships in the business will continue actively during the latter part of 2015. The company also continues actively to develop ways to accelerate the global growth.
Operating environment and market outlook
Companies of all sizes globally are under pressure to improve their cash flows, find new innovative payment strategies, and automate their financial processes and functions. The company expects the same to continue also in 2015 and the continuous demand for services to remain at a favorable level among its customers.
Consolidation is expected to continue in the business environment, with the role of services growing in companies' portfolios. According to industry research, e-invoicing has become more common and the number of e-invoices has grown substantially in Europe and the rest of the world. The global market penetration of e-invoices is estimated to be some 10 percent. The growing e-invoicing market and companies' interest in other payment and financing added value solutions as well will offer excellent growth opportunities in future years.
The global market growth in e-invoicing has been estimated to be approximately 20 percent. Basware is pursuing strong growth in Network Services by developing and automating the connection of buyers and suppliers to the e-invoicing service, by utilizing digital marketing and sales channels more extensively, and through acquisitions. In the Solution Services business, sales of Alusta are expected to have a positive effect on software net sales and professional services.
Basware's operating expenses are expected to develop moderately, the company is actively managing its cost base and has initiated several productivity improvement programs during 2015. Seasonality affects Basware's business throughout the year, and typically the last quarter of the year has been the strongest quarter.
Basware will invest more extensively in sales and marketing as well as research and development of new solutions and services, including Financing Services. The company will continue to improve its profit-making ability in its software business also this year by ensuring the efficient use of resources in professional services and improving the billing rate in relation to demand. The company will continue investments 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.
In 2015, the company expects the acquisition of Procserve and related integration costs to exceed the savings starting from the second quarter of the year and the cost synergies to be net positive next year.The company also expects the joint venture which has been established with Arrowgrass Capital Partners LLP to add net costs in 2015.
Basware continues active analysis of acquisition targets especially in the e-invoicing market in Europe and in the U.S. according to its strategy. Decisions on additional investments required for growth will be made during the year as required by the market situation and development of business operations.
Basware expects its net sales and operating profit (EBIT) for 2015 to grow compared to 2014.
Espoo, Finland, Monday, October 12, 2015
Board of Directors
For more information, please contact:
Esa Tihilä, CEO, Basware Corporation
Tel. +358 40 480 7098
NASDAQ OMX Helsinki Ltd