Basware Oyj : Q2 2022 Interim report

Half Year Financial Report

January-June 2022

Basware Half Year Financial Report January−June 2022: Net sales and adjusted EBIT in line with expectations, one-off items related to the tender offer impacted reported

EBIT

April-June 2022

• Cloud ARR order intake decreased 7.4 percent to EUR 5.2 million (EUR 5.6 million), which amounted to 9.7 percent organic decrease at constant currencies
• Net sales increased 5.2 percent to EUR 40,563 thousand (EUR 38,571 thousand), which amounted to 2.3 percent organic growth at constant currencies
• Cloud revenue increased 11.4 percent to EUR 33,024 thousand (EUR 29,633 thousand), which amounted to 8.1 percent organic growth at constant currencies
• EBIT decreased to EUR -8,755 thousand (EUR 1,800 thousand)
• Adjusted EBIT increased 2.1 percent to EUR 1,965 thousand (EUR 1,926 thousand)
• Loss for the period was EUR -9,737 thousand (EUR -1,407 thousand)
• Adjusted profit for the period was EUR 983 thousand (EUR -1,282 thousand)
• Earnings per share (diluted) were EUR -0.67 (EUR -0.10)
• Adjusted earnings per share (diluted) were EUR 0.07 (EUR -0.09)

January-June 2022

• Cloud ARR order intake increased 8.8 percent to EUR 9.2 million (EUR 8.5 million), which amounted to 6.5 percent organic growth at constant currencies
• Net sales increased 4.1 percent to EUR 79,441 thousand (EUR 76,313 thousand), which amounted to 1.8 percent organic growth at constant currencies
• Cloud revenue increased 10.8 percent to EUR 65,021 thousand (EUR 58,676 thousand), which amounted to 8.1 percent organic growth at constant currencies
• EBIT decreased to EUR -6,415 thousand (EUR 3,180 thousand)
• Adjusted EBIT increased 30.5 percent to EUR 4,383 thousand (EUR 3,385 thousand)
• Loss for the period was EUR -8,799 thousand (EUR -2,885 thousand)
• Adjusted profit for the period was EUR 1,999 thousand (EUR -2,707 thousand)
• Earnings per share (diluted) were EUR -0.61 (EUR -0.20)
• Adjusted earnings per share (diluted) were EUR 0.14 (EUR -0.19)

Key figures

EUR thousand		4-6/		4-6/ Change,		1-6/		1-6/	Change,	2021
	2022		2021	%		2022		2021	%
Net sales		40,563		38,571	5.2		79,441		76,313	4.1	153,155
Cloud revenue		33,024		29,633	11.4		65,021		58,676	10.8	119,996
Cloud ARR order intake		5,197		5,611	-7.4		9,226		8,479	8.8	17,064
EBIT		-8,755		1,800	N/A		-6,415		3,180	N/A	7,144
Adjusted EBIT		1,965		1,926	2.1		4,383		3,385	30.5	7,501
EBITDA		-4,518		5,852	N/A		2,015		11,077	-81.8	22,828
Adjusted EBITDA		6,202		5,977	3.8		12,813		11,255	13.8	23,186
Gearing, %1		79.5		55.4	43.5		79.5		55.4	43.5	72.5
Cash and cash equivalents1		28,759		40,560	-29.1		28,759		40,560	-29.1	31,060
Cash flow from operating activities		3,851		1,278	201.3		6,241		7,636	-18.3	20,435
Earnings per share, diluted, EUR		-0.67		-0.10	570.0		-0.61		-0.20	205.0	-0.99
Adjusted earnings per share, diluted, EUR		0.07		-0.09	N/A		0.14		-0.19	N/A	-0.96
Personnel1		1,382		1,340	3.1		1,382		1,340	3.1	1,347

1 At the end of the period.

The half year financial report is unaudited.

Basware Corporation | https://investors.basware.com/en

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Half Year Financial Report

January-June 2022

Guidance for 2022

Basware updated its full year 2022 guidance on 27 June 2022 as follows:

• Order Intake to grow between 15 and 35 percent at organic constant currencies
• Net sales to grow between 3 and 6 percent at organic constant currencies
• EBIT between EUR 7 and 10 million, excluding any impact from one-off expenses related to the tender offer from Sapphire BidCo Ltd

Previous guidance given on 3 February 2022:

• Order Intake to grow between 15 and 35 percent at organic constant currencies
• Net sales to grow between 3 and 6 percent at organic constant currencies
• EBIT between EUR 7 and 10 million

CEO Klaus Andersen:

"Second quarter of 2022 developed according to our expectations both in terms of net sales and profitability. Total net sales grew 5.2% as reported and 2.3% at constant currencies y-o-y to EUR 40.6 million. Cloud revenue continued to deliver solid growth of 11.4% as reported and 8.1% at constant currencies y-o- y, amounting to EUR 33.0 million. Consulting revenue was EUR 6.8 million, a decrease of 5.7% as reported and 7.3% at constant currencies y-o-y. Cloud revenue growth was mainly driven by our SaaS business which grew 15.3% as reported and 11.2% at constant currencies, while our implementation partner strategy continued to impact our Consulting revenues, especially in North America. Profitability developed well in line with expectations during the second quarter and adjusted EBIT increased with 2.1% y-o-y to EUR 2.0 million, excluding the impact from the one-off cost items related to the tender offer. Reported EBIT was EUR -8.8 million including one-off cost items. Our cash position was strong, EUR 28.8 million at the end of the quarter.

This quarter we experienced indications of a shift in the external business environment compared to the first quarter of the year. The impact of the war in Ukraine as well as continued high inflation and cost pressures leading to economic uncertainty slowed customer decision making and investments, in particular in markets in Central Europe. Not all regions were equally impacted, and the total order intake amounted to EUR 5.2 million, down 7% y-o-y, which is a solid result in a changing business environment. As a testament to the value we deliver to our customers, expansion sales with existing customers remained strong and made up 57% of the total order intake. New logo business accounted for 43% of total order intake and again multiple new customers selected our advanced Networked Accounts Payable solution during the quarter. Well-known brand names such as Mauser, Black and McDonald and VYV3, among others. In total we welcomed more than 30 new customers in Q2. Partner influenced sales continued to contribute to our order intake in line with previous quarters. During Q2, we also added a new system integrator partner in France, Viseo, to our global partner network. Viseo is focused on providing digital transformation services that help customers adapt to the regulatory compliance requirements of e-invoicing, which come into effect from 2024 in France.

During Q2 we saw a continued improvement in our customer feedback as seen in the Gartner Peer Insights Business-to-Business customer review platform. Basware is now in the top three vendors for customer satisfaction with an average rating of 4.6 out of 5 for the last 12 months as at the end of June 2022.

Outlook for the rest of the year remains unchanged. Order intake, net sales and profitability is expected to develop in accordance with our guidance for the remainder of the year. Due to the tender offer activities, an update to our EBIT guidance was given on the 27th of June 2022. We clarified our full year EBIT guidance to be net of one-off expenses related to the tender offer."

Basware Corporation | https://investors.basware.com/en

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Half Year Financial Report

January-June 2022

Net sales

Net sales by revenue type, EUR	4-6/		4-6/	Change,	1-6/		1-6/	Change,	2021
thousand	2022		2021	%		2022		2021	%
Cloud	33,024		29,633	11.4		65,021		58,676	10.8	119,996
Consulting	6,818		7,233	-5.7		13,056		14,418	-9.4	26,942
Maintenance, license and other	720		1,706	-57.8		1,363		3,219	-57.7	6,216
Total	40,563		38,571	5.2		79,441		76,313	4.1	153,155
			4-6/	Change,			1-6/	Change,
Net sales by customer location, EUR	4-6/			1-6/		2021
thousand	2022		2021	%		2022		2021	%
Americas	9,102		8,463	7.6		17,402		16,801	3.6	33,641
Europe	14,596		13,399	8.9		28,960		26,675	8.6	54,767
Nordics	14,623		14,648	-0.2		28,725		28,801	-0.3	56,904
APAC	2,243		2,061	8.8		4,353		4,037	7.8	7,843
Total	40,563		38,571	5.2		79,441		76,313	4.1	153,155
Net sales by revenue type			Net sales by customer location

	Cloud 81%		Americas 22%
Q2/22	Consulting 17%	Q2/22	Europe 36%
	Nordics 36%
	Maintenance, license
		APAC 6%
	and other 2%

Basware's net sales for the second quarter amounted to EUR 40,563 thousand (EUR 38,571 thousand), an increase of 5.2 percent. This equated to 2.3 percent organic growth at constant currencies.

Cloud revenues continued to grow during the second quarter. Cloud revenues in the second quarter were EUR 33,024 thousand (EUR 29,633 thousand), up by 11.4 percent, equating to 8.1 percent organic growth at constant currencies and accounted for 81.4 percent (76.8%) of net sales. The growth in Cloud revenues was mainly driven by the positive development in the SaaS business.

In the second quarter consulting revenues decreased 5.7 percent, equating to 7.3 percent organic decrease at constant currencies. Basware's implementation partner strategy continued to impact Consulting revenues, especially in North America.

Maintenance and license revenues declined in line with expectations as Basware transitions customers to the cloud and discontinues some of Basware's legacy services. In the second quarter maintenance, license and other revenues decreased 57.8 percent, equating to 58.2 percent organic decrease at constant currencies.

Basware's net sales for the second quarter from the Americas was positively impacted by the development of US dollar against Euro. At constant currencies net sales for the second quarter from Americas declined by 4.0 percent y-o-y. Basware's net sales for the second quarter from the Asia Pacific was also positively impacted by the development of Australian dollar against Euro. At constant currencies net sales for the

second

quarter

from

Asia

Pacific

increased

by

4.4

percent

y-o-y.

Basware Corporation | https://investors.basware.com/en

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Half Year Financial Report

January-June 2022

Cloud order intake

Order intake by type,		4-6/		4-6/	Change,		1-6/		1-6/	Change,	2021
EUR thousand		2022		2021	%		2022		2021	%
New logo		2,240		2,795	-19.9		4,060		3,506	15.8	6,045
Expansion		2,676		2,214	20.9		4,486		3,905	14.9	8,378
Transformation		281		602	-53.3		680		1,069	-36.4	2,641
Total		5,197		5,611	-7.4		9,226		8,479	8.8	17,064

Cloud order intake by customer location in Q2/2022 and Q2/2021

	Americas 27%		Americas 29%
Q2/22	Europe 45%	Q2/21	Europe 40%
Nordics 27%	Nordics 26%
	APAC 1%		APAC 5%

Basware's total cloud annual recurring revenue (ARR) gross order intake in the second quarter amounted to EUR 5,197 thousand (EUR 5,611 thousand), a decrease of 7.4 percent from corresponding period last year. This equated to 9.7 percent decrease on an organic constant currency basis. The impact of the war in Ukraine as well as continued high inflation and cost pressures leading to economic uncertainty slowed customer decision making and investments, in particular in markets in Central Europe. Not all regions were equally impacted, which led to a solid result in terms of annual recurring revenue in a changing business environment.

Basware has reported from Q4 2021 onwards the distribution of cloud order intake into new logo, expansion and transformation order intake types. New logo means a new customer to Basware with whom it does not have prior significant business.

Out of total cloud order intake, new logo decreased by 19.9 percent for the second quarter compared to corresponding quarter last year and amounted to EUR 2,240 thousand (EUR 2,795 thousand). Expansion increased by 20.9 percent for the second quarter and amounted to EUR 2,676 thousand (EUR 2,214 thousand). In the second quarter new logos represented 43.1%, expansions 51.5% and transformations 5.4% of the total cloud order intake. In the first half of the year, order intake consisted of 44.0% new logos, 48.6% expansions, and 7.4% transformations.

There will be a time lag before order intake is visible in net sales. Historically, around one quarter of the full year's new ARR order intake converts into revenues in the same year, with roughly fifty to sixty percent converting to revenues in the following year and the remainder thereafter. Further information on the definition of annual recurring revenue gross order intake is included in the section on Definitions of Key Indicators and Alternative Performance Measures.

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