Basware Interim Report January-March 2020: Positive EBIT in the first quarter; 2020 guidance updated due to Covid-19

Basware Corporation, stock exchange release, April 21, 2020 at 8.45 am EEST

January-March 2020

  • Cloud ARR order intake amounted to EUR 3.6 million (EUR 4.9 million)
  • Net sales increased 6.5 percent to EUR 38,245 thousand (EUR 35,895 thousand), which amounted to 6.6 percent organic growth at constant currencies
  • Cloud revenue increased 14.4 percent to EUR 27,774 thousand (EUR 24,282 thousand), which amounted to 14.2 percent organic growth at constant currencies.
  • EBIT amounted to EUR 100 thousand (EUR -7,780 thousand)
  • Earnings per share (diluted) were EUR -0.25 (EUR -0.57)

Key figures

EUR thousand 1-3/
2020
1-3/
2019
Change, % 2019
Net sales 38,245 35,895 6.5 148,302
Cloud revenue 27,774 24,282 14.4 101,442
Cloud ARR order intake 3,617 4,937 -26.7 23,694
EBIT 100 -7,780 -14,537
EBITDA 4,070 -3,660 1,403
Gearing, %1 53.4 33.4 59.6 48.9
Cash and cash equivalents1 32,558 35,117 -7.3 31,672
Cash flows from operating activities 6,497 1,626 4,159
Free cash flow metric -3,579 -7,816 54.2 -23,829
Earnings per share, diluted, EUR -0.25 -0.57 55.4 -1.63
Personnel1 1,342 1,386 -3.2 1,325

1 At the end of the period.

The interim report is unaudited.

Guidance for 2020 updated due to Covid-19

Basware is updating its 2020 guidance to reflect the estimated impact of the Covid-19 pandemic.

Due to the Covid-19 pandemic, the current economic outlook in Basware's main markets involve significant uncertainties. Basware assumes that global business activity will be negatively impacted in the second and third quarters, and in the fourth quarter business activity will gradually head towards more normal conditions. Net Sales guidance will be given when it is possible to estimate the Covid-19 pandemic effects more precisely.

Basware’s cost base is scalable and has variable cost components that can be reduced to a certain extent to maintain profitability. EBIT for 2020 is expected to be positive.

The previous guidance as given on February 4, 2020 was that Basware expects the following for 2020:

  • Net Sales to grow at around the same rate as in 2019 on an organic basis at constant currencies
  • Positive EBIT

Constant currencies mean that the effects of any changes in currencies are eliminated by calculating the figures for the period using 2019 exchange rates. Organic means that the figures are adjusted to remove the effects of any acquisitions or disposals within the past 12 months.

CEO Klaus Andersen:

“Basware’s revenues and profitability developed well during the first quarter of the year, despite disruption caused by Covid-19 pandemic to Basware and its customers. In the first quarter of the year EBIT was positive and cloud revenues increased 14 percent. Strong performance continued in consulting with 19 percent revenue growth. Overall net sales increased particularly in Americas and central Europe.

Cloud order intake was negatively impacted by the uncertain environment in the first quarter and amounted to EUR 3.6 million. Republic National Distributing Company in the US, Specialist Computer Centres in the UK and Groupe Dubreuil in France among others signed new deals with Basware. We continue to invest in innovations in order to provide the best-in-class Purchase-to-Pay and Accounts Payable automation solutions. We launched in this quarter the completely new and innovative AP Pro user interface and user experience which increases process automation and efficiency for Accounts Payable professionals. The new AP Pro user experience is particularly well suited for managing large invoice volumes because of its exception handling only design philosophy.

Basware activated its business continuity plan in March and all operations continued nearly unaffected, except for the validation part of the Scan and Capture service which is outsourced to a third-party service provider. Due to the lockdown in India and the consequent closure of the third-party service provider’s validation centre, the service is running with lower capacity and reduced data capture accuracy for some customers. Basware is working to restore full capacity in the validation services together with the service provider. All Basware employees are now working from home and we continue to operate our systems, execute projects, support customers and execute sales and account management through remote access, virtual meetings and events as well as digital signatures.

The majority of Basware’s business is recurring by nature. As invoices are typically related to purchase orders made several weeks prior, there was no notable change in Basware Network volumes until the last two weeks of March. As in any event causing macro uncertainty, we see customers delaying projects and prospects delaying decisions, which will have an impact on Basware’s business in 2020. We estimate that both the second and third quarter will be clearly impacted and in the fourth quarter business will gradually be heading towards more normal conditions. Net Sales guidance will be given when it is possible to estimate the Covid-19 pandemic effects more precisely. At the same time, we are protecting EBIT through scalability of the business model and the cost actions we are taking. In early March, we took immediate actions to address main elements of our cost base appropriately, and the cost savings will be visible in the coming quarters.”

Results conference call 

Basware arranges a conference call for analysts and press, where CEO Klaus Andersen and CFO Martti Nurminen will comment on the events and financial performance of the past quarter. The results briefing can be followed via audiocast or teleconference. A recording of the briefing will be available after the event.

Time: Tuesday, April 21 at 11 am EEST / 9 am BST

Audiocast and teleconference registration: https://basware.videosync.fi/2020-q1-results/

Teleconference numbers:

Finland: +358 981 710 310
Sweden: +46 856 642 651
UK: +44 333 300 0804
US: +1 855 857 0686

PIN: 39157306#
 

Basware Corporation

Klaus Andersen

CEO

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 offers the largest open business network in the world and is the global leader in providing networked purchase-to-pay solutions, e-invoicing and innovative financing services. Our technology empowers organisations with 100% spend visibility by enabling the capture of all financial data across procurement, finance, accounts payable and accounts receivable functions. Basware is a global company doing business in more than 100 countries and is traded on the Helsinki exchange (BAS1V: HE). Find out more at https://investors.basware.com/en.

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