Basware Interim Report January 1-June 30, 2015 (IFRS)

Friday, 10 July, 2015
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Basware Corporation, stock exchange release, July 10, 2015 at 08:45

BASWARE INTERIM REPORT APRIL 1 - JUNE 30, 2015 (IFRS)

SUMMARY

January-June 2015: Revenue developed favourably

  • Net sales EUR 70 631 thousand (EUR 62 846 thousand) - growth 12.4 percent
  • Operating result EUR -625 thousand (EUR 1 462 thousand) - -0.9 percent of net sales (2.3%)
  • Growth of Network Services net sales 45.1 percent
  • Recurring revenue 66.3 percent (66.7%) of net sales
  • Earnings per share (diluted) EUR -0.08 (0.06)

April-June 2015:

  • Net sales EUR 36 590 thousand (EUR 31 833 thousand) - growth of 14.9 percent
  • Operating result EUR -1 757  thousand (EUR 1 152 thousand) - -4.8 percent of net sales (3.6%)
  • Growth of Network Services net sales 51.9 percent
  • Recurring revenue 68.8 percent (66.5%) of net sales
  • Earnings per share (diluted) EUR -0.12 (0.06)

Basware expects its net sales and operating profit (EBIT) for 2015 to grow compared to 2014.

The Interim Report is unaudited.

GROUP KEY FIGURES

                     
  4-6/ 4-6/ Change, 1-6/ 1-6/ Change, 1-12/  
EUR thousand 2015 2014 % 2015 2014 % 2014  
                 
Net sales 36 590 31 833 14.9% 70 631 62 846 12.4% 127 674  
EBITDA 64 2 896 -97.8% 2 855 4 995 -42.9% 11 354  
Operating result -1 757 1 152   -625 1 462   4 325  
  % of net sales -4.8% 3.6%   -0.9 2.3%   3.4%  
Result before tax -2 602 1 149   -1 206 1 160   4 328  
Result for the period -1 715 804   -1 120 728   2 959  
                 
Equity ratio, % -4.9% 3.4%   -1.9% 1.5%   2.5%  
  -3.5% 5.8%   0.5% 3.8%   4.4%  
Earnings per share 62 570 19 954 213.6% 62 570 19 954 213.6% 28 954  
Undiluted, EUR -33.7% -13.7%   -33.7% -13.7%   -38.6%  
Diluted, EUR 67.9% 70.5%   67.9% 70.5%   82.7%  
                 
                 
  -0.12 0.06   -0.08 0.06   0.22  
  -0.12 0.06   -0.08 0.06   0.22  
Equity per share, EUR 9.80 7.46 31.4% 9.80 7.46 31.4% 9.88  
                 
                                   

BUSINESS OPERATIONS

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 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 continued to develop favorably during the second quarter, growth of 14.9 percent year-on-year. Net sales for the second quarter amounted to EUR 36 590 thousand (EUR 31 833 thousand). The year-on-year growth in key markets was at a good level: net sales grew strongly in Germany, the UK, and the US. The number of transactions within the Basware Network grew according to the plan and the SaaS business grew well. Operating result was EUR -1 757 thousand (EUR 1 152 thousand). The result was impacted by selected one-off costs related to acquisitions activities and business improvement projects amounting to approximately EUR 2 100 thousand as well as continued investments in the selected key operations, such as Financing Services.

The Network Services sales grew strongly during the second quarter, which was driven both by organic growth as well as the acquisition of Procserve. The net sales of Network Services amounted to EUR 12 296 thousand (EUR 8 096 thousand) during the second quarter, growth of 51.9 percent year-on-year. The growth in the transaction volume continued also during the second quarter, up 25.8 percent year-on-year. A total of 23.5 million transactions were processed via Basware Network during the quarter. An increasing amount of the transactions come from the e-invoicing target markets in which the e-invoicing penetration is relatively low while the growth is levelling off in some markets where the penetration is relatively high.

The Solution Services sales continued steadily also during the second quarter. The net sales of the Solution Services business amounted to EUR 24 294 thousand for the second quarter (EUR 23 737 thousand). The demand for SaaS services continued at a good level, represented by the SaaS revenue growth of 23.0 percent year-on-year. The productivity has improved due to improvements in billable utilization rate, faster go-lives and an increasing number of Alusta sales agreements.

The first customers have been signed for Basware Pay as well as Basware Discount which was introduced to the market during the first quarter within the Financing Services product suite. 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 in progress. Building the Financing Services business and services has continued.

Basware acquired Procserve, the leading e-procurement solution provider for the public sector in the UK, in April and the integration has proceeded well. As of June 30, 2015, following the new Procurement Policy Note, Crown Commercial Service actioned the public sector organizations in the UK to be ready to accept e-invoices. Across Basware's markets, there is a continued push from governments and public sector to adopt e-invoicing. In May, Basware launched a white paper "Why are governments not paperless?" examining the impact and the benefits of e-invoicing adoption on governments worldwide.

In accordance with its strategy, Basware's geographic expansion and achieving strong growth in Basware Network continue to be the main objectives, pursued both organically and through mergers and acquisitions. Development of the Financing Services business and services and establishing and finding new significant partnerships in the business will continue actively during the second half of 2015. As part of the ongoing Customers for Life initiative, tasked with significantly improving the customer's experience in how they engage with Basware, the company has established a new centralized unit for customer support. The new Customer Care unit is responsible for the development and improvement of customer support at Basware globally.

FUTURE OUTLOOK

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.

Outlook 2015

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. 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 marginally 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, Friday, July 10, 2015

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

 

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