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Basware Oyj Interim / Quarterly Report 2021
3257_rns_2021-07-15_76cee322-645f-46d9-8068-c58fd6930296.pdf
Interim / Quarterly Report
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basware
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HALF YEAR FINANCIAL REPORT
January-June 2021
Q2/2021
basware
Half Year Financial Report January-June 2021
Basware Half Year Financial Report January-June 2021: Net sales and profitability growth in line with expectations, loan renegotiated after the review period, cash benefit of minimum EUR 12 million
April-June 2021
- Cloud ARR order intake amounted to EUR 5.6 million (EUR 6.1 million)
- Net sales increased 2.1 percent to EUR 38,571 thousand (EUR 37,769 thousand), which amounted to 2.8 percent organic growth at constant currencies
- Cloud revenue increased 10.4 percent to EUR 29,633 thousand (EUR 26,841 thousand), which amounted to 11.2 percent organic growth at constant currencies
- EBIT increased 40.1 percent to EUR 1,800 thousand (EUR 1,285 thousand)
- Earnings per share (diluted) were EUR -0.10 (EUR -0.07)
January-June 2021
- Cloud ARR order intake amounted to EUR 8.5 million (EUR 9.7 million)
- Net sales increased 0.4 percent to EUR 76,313 thousand (EUR 76,014 thousand), which amounted to 1.4 percent organic growth at constant currencies
- Cloud revenue increased 7.4 percent to EUR 58,676 thousand (EUR 54,615 thousand), which amounted to 8.6 percent organic growth at constant currencies
- EBIT more than doubled to EUR 3,180 thousand (EUR 1,385 thousand)
- Earnings per share (diluted) were EUR -0.20 (EUR -0.33)
Key figures
| EUR thousand | 4-6/2021 | 4-6/2020 | Change, % | 1-6/2021 | 1-6/2020 | Change, % | 2020 |
|---|---|---|---|---|---|---|---|
| Net sales | 38,571 | 37,769 | 2.1 | 76,313 | 76,014 | 0.4 | 151,579 |
| Cloud revenue | 29,633 | 26,841 | 10.4 | 58,676 | 54,615 | 7.4 | 110,312 |
| Cloud ARR order intake | 5,611 | 6,130 | -8.5 | 8,479 | 9,747 | -13.0 | 19,250 |
| EBIT | 1,800 | 1,285 | 40.1 | 3,180 | 1,385 | 129.6 | 4,667 |
| EBITDA | 5,852 | 5,156 | 13.5 | 11,077 | 9,226 | 20.1 | 20,207 |
| Gearing, %^{1} | 55.4 | 53.4 | 3.8 | 55.4 | 53.4 | 3.8 | 53.0 |
| Cash and cash equivalents^{1} | 40,560 | 34,850 | 16.4 | 40,560 | 34,850 | 16.4 | 40,461 |
| Cash flows from operating activities | 1,278 | 5,597 | -77.2 | 7,636 | 12,093 | -36.9 | 25,252 |
| Earnings per share, diluted, EUR | -0.10 | -0.07 | -35.1 | -0.20 | -0.33 | 38.6 | -0.51 |
| Personnel^{1} | 1,340 | 1,343 | -0.2 | 1,340 | 1,343 | -0.2 | 1,336 |
$^{1}$ At the end of the period.
The half year financial report is unaudited.
Guidance for 2021
Basware expects the gradual normalization of the business environment to continue in the second half of the year and keeps guidance for the full year 2021 unchanged:
- Modest positive Net sales growth on an organic constant currency basis
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report January-June 2021
- EBIT approximately at the same level or better than the previous year
CEO Klaus Andersen:
"Basware continued to perform according to plan in the second quarter. Net sales, profitability and new logo order intake developed well, and we saw the business environment showing signs of recovery. Total net sales were EUR 38.6 million, which amounted to 2.8% organic growth at constant currencies. Maintenance revenues declined according to expectations while Cloud revenue grew with 11.2% and Consulting revenue continued to grow with 1.4% organic at constant currencies. EBIT amounted to EUR 1.8 million for the quarter, which is a solid growth of 40% compared to the corresponding quarter last year. EBITDA amounted to EUR 5.9 million for the period and Cash from operating activities was EUR 1.3 million at the end of the quarter.
Order intake continued to be impacted with caution in the markets but to a lesser extent than what we have seen earlier. Signs of market recovery were visible in all Basware's sales regions, and the number of deals influenced by our partners significantly increased this quarter. Cloud order intake amounted to EUR 5.6 million in Q2. Many new logos were signed during the quarter, including US based companies JLG, a leading manufacturer of lift equipment and SeaWorld Parks & Entertainment, a leading theme park & entertainment company. Other notable new logos were French based companies Thales, a global leader in advanced technologies and Groupe Bertrand, a leading catering company.
The partnership with PwC announced in Q1 is progressing well. Ongoing projects and the level of activities surrounding future opportunities are gaining momentum. We added IT-P GmbH, a well-known provider of SAP, Microsoft and Oracle integrations, to the Basware partner network in Germany during Q2.
We reached an important milestone in Q2 when we received the ISO 9001 certification for our global quality management system: a significant achievement enabling us to continue our journey towards increased efficiency and higher quality of service on a solidified and externally validated foundation.
We continued to improve our technological solutions this quarter. We added diversity data to our Supplier Management solution, allowing our customers to identify minority-owned and small business suppliers within their base. Additionally, an advanced connector was created by Oracle for Oracle Fusion Cloud ERP users to effortlessly connect to Basware's e-invoicing receiving solution.
In June, we announced that Chief Customer Officer, Jussi Vasama decided to pursue his future career outside Basware. For now, selected members of the senior management team within the Basware Services organization assume the responsibilities for Professional Services and Customer Support.
As announced earlier this week, a significant event materialized after the review period when we signed an amendment agreement to our existing debt facility with Macquarie Capital Principal Finance. As a result of the renegotiated terms and conditions, we will realize a cash benefit of minimum EUR 12 million over the remaining duration of the Loan. Our financial strength has materially improved during the last two years, which enabled us now to successfully re-negotiate our existing debt facility.
As our markets are starting to indicate recovery and our partnering strategy is gaining momentum, we have increased confidence in our ability to continue to deliver profitable growth in line with our guidance also in the second half of the year."
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report January-June 2021
Net sales
| Net sales by revenue type, EUR thousand | 4-6/2021 | 4-6/2020 | Change, % | 1-6/2021 | 1-6/2020 | Change, % | 2020 |
|---|---|---|---|---|---|---|---|
| Cloud | 29,633 | 26,841 | 10.4 | 58,676 | 54,615 | 7.4 | 110,312 |
| Consulting | 7,233 | 7,197 | 0.5 | 14,418 | 13,693 | 5.3 | 26,875 |
| Maintenance, license and other | 1,706 | 3,731 | -54.3 | 3,219 | 7,706 | -58.2 | 14,392 |
| Total | 38,571 | 37,769 | 2.1 | 76,313 | 76,014 | 0.4 | 151,579 |
| Net sales by customer location, EUR thousand | 4-6/2021 | 4-6/2020 | Change, % | 1-6/2021 | 1-6/2020 | Change, % | 2020 |
| Americas | 8,463 | 8,783 | -3.6 | 16,801 | 17,645 | -4.8 | 35,013 |
| Europe | 13,399 | 13,001 | 3.1 | 26,675 | 25,789 | 3.4 | 52,176 |
| Nordics | 14,648 | 14,015 | 4.5 | 28,801 | 28,525 | 1.0 | 56,428 |
| APAC | 2,061 | 1,971 | 4.6 | 4,037 | 4,056 | -0.5 | 7,962 |
| Total | 38,571 | 37,769 | 2.1 | 76,313 | 76,014 | 0.4 | 151,579 |
Net sales by revenue type
Net sales by customer location
- Cloud 77%
- Consulting 19%
-
Maintenance, license and other 4%
-
Americas 22%
- Europe 35%
- Nordics 38%
- APAC 5%
Basware's net sales for the second quarter amounted to EUR 38,571 thousand (EUR 37,769 thousand), an increase of 2.1 percent. This equated to 2.8 percent organic growth at constant currencies.
In the first half of 2021, Basware's net sales amounted to EUR 76,313 thousand (EUR 76,014 thousand), an increase of 0.4 percent. This equated to 1.4 percent organic growth at constant currencies.
Cloud revenues continued to grow during the second quarter. Cloud revenues in the second quarter were EUR 29,633 thousand (EUR 26,841 thousand), up by 10.4 percent, equating to 11.2 percent organic growth at constant currencies and accounted for 76.8 percent (71.1%) of net sales.
In the second quarter consulting revenues increased 0.5 percent, equating to 1.4 percent organic growth at constant currencies.
Maintenance and license revenues declined in line with expectations as Basware transitions customers to the cloud. In the second quarter maintenance, license and other revenues decreased 54.3 percent, equating to a 54.6 percent organic decrease at constant currencies. The accelerated decline in maintenance is due to end of life of some of Basware's legacy on-premise products triggered on January 1st 2021.
Basware's net sales from Americas were negatively impacted by the development of US Dollar against Euro during the second quarter in comparison to the second quarter of 2020. At constant currencies net sales from Americas grew by 4.3 percent in the second quarter of 2021.
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report
January-June 2021
Cloud order intake
| EUR thousand | 4-6/2021 | 4-6/2020 | Change, % | 1-6/2021 | 1-6/2020 | Change, % | 2020 |
|---|---|---|---|---|---|---|---|
| Cloud | 5,611 | 6,130 | -8.5 | 8,479 | 9,747 | -13.0 | 19,250 |
Cloud order intake by customer location in Q2/2021 and Q2/2020
- Americas 29%
- Europe 40%
- Nordics 26%
-
APAC 5%
-
Americas 28%
- Europe 40%
- Nordics 29%
- APAC 3%
Basware's total cloud annual recurring revenue (ARR) gross order intake in the second quarter amounted to EUR 5,611 thousand (EUR 6,130 thousand), a decrease of 8.5 percent from corresponding period last year. This equated to 6.8 percent decline on an organic constant currency basis. Order intake continued to be impacted by caution in the markets but less than during the previous quarters.
There will be a time lag before order intake is visible in net sales. Historically, around one quarter of the full years 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 Alternative Performance Measures and Key Indicators.
Financial performance
| EUR thousand | 4-6/2021 | 4-6/2020 | Change, % | 1-6/2021 | 1-6/2020 | Change, % | 2020 |
|---|---|---|---|---|---|---|---|
| Net sales | 38,571 | 37,769 | 2.1 | 76,313 | 76,014 | 0.4 | 151,579 |
| Cost of sales | -17,137 | -16,589 | 3.3 | -33,553 | -34,062 | -1.5 | -65,941 |
| Gross profit | 21,434 | 21,180 | 1.2 | 42,760 | 41,952 | 1.9 | 85,638 |
| Sales and marketing | -9,113 | -9,496 | -4.0 | -18,355 | -20,262 | -9.4 | -40,001 |
| Research and development | -6,879 | -6,516 | 5.6 | -13,709 | -12,692 | 8.0 | -25,930 |
| General and administration | -3,427 | -3,253 | 5.3 | -7,187 | -6,829 | 5.3 | -14,096 |
| Total operating expenses | -19,418 | -19,265 | 0.8 | -39,251 | -39,783 | -1.3 | -80,027 |
| Other operating income and expenses | -215 | -631 | -65.9 | -328 | -784 | -58.1 | -944 |
| EBIT | 1,800 | 1,285 | 40.1 | 3,180 | 1,385 | 129.6 | 4,667 |
| EBITDA | 5,852 | 5,156 | 13.5 | 11,077 | 9,226 | 20.1 | 20,207 |
In the second quarter, cost of sales amounted to EUR 17,137 thousand (EUR 16,589 thousand), an increase of 3.3 percent. The cloud gross margin was 68 percent in the second quarter, flat in comparison to the second quarter of 2020.
Out of the total operating expenses, sales and marketing expenses decreased 4.0 percent, research and development expenses increased 5.6 percent and general and administration expenses increased 5.3
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report January-June 2021
percent during the second quarter. Sales and marketing costs reduced in comparison with the second quarter of 2020 due to a lower level of incentives. Research and development costs increased in comparison to corresponding period last year mainly due to amortisations. General and administration costs increased in comparison to corresponding period last year as a result of one-off activities.
Basware's research and development investments including capitalizations but excluding amortizations totalled EUR 6,424 thousand (EUR 6,441 thousand), or 16.7 percent (17.1%) of net sales during the quarter.
Basware's EBITDA was EUR 5,852 thousand (EUR 5,156 thousand) and adjusted EBITDA was EUR 5,977 thousand (EUR 5,287 thousand) in the second quarter. The adjustments to EBITDA totalled EUR 125 thousand (EUR 131 thousand) in the quarter. Other operating income and expenses amounted to EUR -215 thousand (EUR -631 thousand).
Basware's EBIT for the quarter amounted to EUR 1,800 thousand (EUR 1,285 thousand).
In the first half of the year, Basware's EBITDA was EUR 11,077 thousand (EUR 9,226 thousand) and EBIT EUR 3,180 thousand (EUR 1,385 thousand).
Basware's loss before tax was EUR -1,212 thousand (EUR -1,372 thousand) and loss for the quarter EUR -1,407 thousand (EUR -1,038 thousand). Taxes for the quarter impacted the result by EUR -195 thousand (EUR 334 thousand).
Diluted earnings per share were EUR -0.10 (EUR -0.07) for the quarter.
Cash flows, financing and investments
Cash flows from operating activities were EUR 1,278 thousand (EUR 5,597 thousand) during the second quarter. Last year's cash flows from operating activities were positively impacted by the payment deferral opportunities offered by different entities of approximately EUR 3.6 million as a result of the Covid-19 situation in comparison with EUR 0.5 million of payment deferral opportunities that were utilized in the reporting period. EUR 1.1 million of payment deferrals are remaining to be repaid by the end of 2022.
Basware's cash and cash equivalents including short-term deposits totalled EUR 40,560 thousand (EUR 34,850 thousand) at the end of the quarter.
Basware's total assets on the balance sheet at the end of the quarter were EUR 227,556 thousand (EUR 227,631 thousand). Net cash flows from investments were EUR -2,431 thousand (EUR -2,582 thousand) in the quarter.
The equity ratio was 35.9 percent (38.4%) and gearing 55.4 percent (53.4%). The company's interest-bearing liabilities excluding leasing liabilities totalled EUR 70,216 thousand (EUR 64,830 thousand), of which current liabilities accounted for EUR 2,173 thousand (EUR 2,172 thousand). The return on investment was 4.3 percent (3.5%) and return on equity -6.7 percent (-4.7%) in the quarter.
Personnel
| Personnel by area, on average | 4-6/2021 | 4-6/2020 | Change, % | 1-6/2021 | 1-6/2020 | Change, % | 2020 |
|---|---|---|---|---|---|---|---|
| Americas | 102 | 107 | -5.0 | 103 | 107 | -3.9 | 106 |
| Europe | 377 | 375 | 0.5 | 377 | 371 | 1.6 | 373 |
| Nordics | 419 | 429 | -2.4 | 419 | 428 | -2.1 | 425 |
| APAC | 441 | 432 | 2.0 | 435 | 431 | 0.9 | 430 |
| Total | 1,338 | 1,342 | -0.3 | 1,333 | 1,337 | -0.3 | 1,334 |
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report January-June 2021
Basware employed 1,338 (1,342) people on average during the quarter and 1,340 (1,343) at the end of the quarter.
On June 30, 2021, 13.0 percent (13.8%) of the personnel worked in sales and marketing, 32.6 percent (33.0%) in R&D, production and products, 43.8 percent (42.7%) in consulting and customer services and 10.6 percent (10.5%) in administration.
Basware's personnel expenses were EUR 21,996 thousand (EUR 22,307 thousand) in the quarter.
Share and shareholders
| Share Indicators | 1-6/2021 | 1-6/2020 | 2020 |
|---|---|---|---|
| Share price performance, EUR | |||
| - lowest price | 33.10 | 15.66 | 15.66 |
| - highest price | 43.85 | 32.25 | 42.85 |
| - average price | 38.74 | 25.33 | 29.58 |
| - closing price | 39.75 | 29.85 | 42.00 |
| Market capitalization at end of period^{1}, EUR | 574,600,878 | 430,271,631 | 605,449,320 |
| Number of shares^{1} | |||
| - at end of the period | 14,455,368 | 14,414,460 | 14,415,460 |
| - average during the period | 14,435,745 | 14,400,274 | 14,407,595 |
| - average during the period, diluted | 14,575,469 | 14,639,055 | 14,638,935 |
| Number of traded shares (share issue adjusted) in Nasdaq Helsinki | 2,736,040 | 3,079,929 | 4,817,685 |
| % of average number of shares | 19.0% | 21.4% | 33.4% |
| Treasury shares held by the Company at end of the period | 8,568 | 6,476 | 5,476 |
| % of total shares | 0.1% | 0.0% | 0.0% |
| Share capital, EUR | 3,528,368 | 3,528,368 | 3,528,368 |
| Earnings per share, undiluted, EUR | -0.20 | -0.33 | -0.51 |
| Earnings per share, diluted, EUR | -0.20 | -0.33 | -0.51 |
| Adjusted earnings per share, undiluted, EUR | -0.19 | -0.33 | -0.50 |
| Adjusted earnings per share, diluted, EUR | -0.19 | -0.33 | -0.50 |
| Equity per share, EUR | 5.65 | 6.07 | 5.73 |
| Price per earnings (P/E) | -194.40 | -91.77 | -82.56 |
| ^{1}Excluding treasury shares |
Basware had 11,584 (13,239) shareholders at the end of the quarter, including nominee-registers. Nominee-registered holdings accounted for 52.7 percent (52.4%) of the total number of shares.
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report January-June 2021
Share price development and trading January 1 – June 30, 2021
(Source: Investis Digital)
Flagging notifications
During 2021, Basware Corporation has received the following notifications from major shareholders:
| Announcement date | Shareholder | Threshold | Total holding, % |
|---|---|---|---|
| February 9 | Arrowgrass Master Fund Ltd | Below 15% | 14.3% |
| February 23 | Long Path Partners LP | Over 10% | 10.11% |
| April 15 | Arrowgrass Master Fund Ltd | Below 10% | 9.2% |
Annual General Meeting and authorizations of the Board of Directors
Basware Corporation's Annual General Meeting 2021 was held on March 18, 2021. The Annual General Meeting adopted the annual accounts for the financial period ending on 31 December 2020. The remuneration report was approved, and the members of the Board of Directors as well as the CEO were discharged from liability for the financial period ending on 31 December 2020. The Annual General Meeting resolved in accordance with the proposal of the Board of Directors that no dividend will be paid for the year 2020.
The Annual General Meeting decided the number of members of the Board of Directors to be six. Mr. Ilkka Sihvo, Mr. Michael Ingelög, Mr. Daryl Rolley and Ms. Minna Smedsten were re-elected as members of the Board of Directors, and Mr. Carl Farrell and Mr. Jonathan Meister were elected as new members. The Board of Directors elected in its organizing meeting Michael Ingelög as the Chairperson and Ilkka Sihvo as the Vice Chairperson of the Board of Directors. Minna Smedsten was elected as the Chairperson of the Audit Committee and Carl Farrell, Jonathan Meister and Michael Ingelög as its members. Ilkka Sihvo was elected as the Chairperson of the Remuneration Committee and Daryl Rolley and Michael Ingelög as its members.
Ernst & Young Oy, Authorized Public Accounting Firm, was elected as the company's auditor.
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report January-June 2021
The Annual General Meeting decided to authorize the Board of Directors to decide on repurchase of company's own shares in accordance with the proposal of the Board of Directors. By virtue of the authorization, the Board of Directors is entitled to decide on repurchasing a maximum of 1,446,000 company's own shares. The company's own shares shall be repurchased otherwise than in proportion to the holdings of the shareholders by using the non-restricted equity through trading on regulated market organized by Nasdaq Helsinki Ltd at the market price prevailing at the time of acquisition. The repurchase authorization shall be valid for 18 months and it shall revoke the previous authorizations for repurchasing the company's own shares.
The Annual General Meeting decided to authorize the Board of Directors to decide on issuing new shares and/or conveying the company's own shares held by the company and/or granting special rights entitling to shares. A total maximum of 1,446,000 new shares may be issued and/or company's own shares held by the company may be conveyed. The number of shares to be issued to the company itself together with the shares repurchased by the company on basis of the repurchase authorization shall be at the maximum of 1,446,000 shares. The subscription price of the new shares and the consideration payable for the company's own shares shall be recorded under the invested non-restricted equity fund. The authorizations shall be valid for 18 months.
On March 18, 2021 Basware announced a stock exchange release of the resolutions of the Annual General Meeting. The resolutions from Annual General Meetings are available on Basware's investor website at https://investors.basware.com/en/annual-general-meeting.
Strategy
Basware is a global market leader in networked Purchase-to-Pay with the largest open e-invoicing network in the world. The market opportunity is estimated to be worth EUR 15 billion annually and it is driven by global megatrends such as digitalization and automation, increased regulation, rapid technological development and sustainability. Basware is focused on sustainable growth and profitability, increasing operational efficiency in the strategic business and simplifying operations.
Basware's key growth markets are US, UK, Germany and France, where the company sees the greatest opportunity to win new customers. Each of Basware's top 200 key customers brought on average approximately EUR 300 thousand annual recurring cloud revenue in 2020. Through add-on sales and geographical expansions, there is potential to increase the average revenue from existing customers.
Once Basware wins a new customer they typically stay with the company for many years. In 2020 Basware's gross renewal rate was 94 percent and net renewal rate was 104 percent. The gross margin for cloud revenues at the end of 2020 was 68 percent. Together these make the lifetime value of customer contracts high. In 2020 Basware had a customer lifetime value to customer acquisition cost ratio of 5 times.
Basware's long-term ambition is to become the networked Purchase-to-Pay vendor of choice for large global enterprises. Basware moves forward to its vision through six Must-Wins, which define strategic priorities for the period 2020-2022. The Must-Wins relate to customer satisfaction, project delivery capabilities, procurement solution, growing with partners, cloud transformations and Network business. The first Must-Win relates to customer satisfaction, which is a priority across all functions, from first contact to project delivery, products and support. The second Must-Win is enhancing delivery capabilities internally and together with partners to meet customer needs for continuous improvement and change agility. With the number three Must-Win, Basware's aim is to further strengthen its procurement solution and entire Source-to-Pay offering through partnerships and open API architecture. For number four, Basware aims to accelerate cloud growth through partnering. The fifth Must-Win battle is to complete the last phase in customer cloud transformations and reallocate resources to long-term strategic areas. Finally, as part of the 2021 strategy process, Basware also identified accelerating its Network business as one of the key strategic focus areas from 2021 onwards and now forms Must win battle number six.
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report January-June 2021
Risks and uncertainty factors
Basware operates in a market where technological innovation plays a key role. While Basware is recognized as a leader within its segments by independent analysts, it is critical that Basware continues to innovate and develop its offering. Basware invests in product development to ensure the competitiveness of its product portfolio and good end-to-end quality, which impacts customer satisfaction, customer retention and expansion.
Basware has a growth strategy with high net sales growth expectations for the cloud business. Executing the strategy requires significant investments in sales and marketing and related resources in addition to an optimized pricing model with efficient customer delivery. At the same time, the industry transformation from an on-premise license-based business model to a SaaS model will accelerate the decline of certain Basware revenue streams, including license sales and maintenance. The transformation will also make consulting revenues more volatile. Until the transformation is fully complete, this will act as a drag on Group net sales growth. The churn rate may increase as Basware consolidates its product portfolio to focus on the strategic high gross margin business.
Market disruptions such as consolidation of significant competitors, aggressive entries of new competitors or emergence of disruptive technologies may be a risk to Basware's position as a market leader and to Basware's market share.
The fact that more than 50 percent of the company's sales are expected to come from non-euro countries exposes the Group's net sales growth to foreign exchange rate movements. In case there is a significant movement of USD, GBP, NOK, SEK or AUD against the euro, reported net sales may be affected. In addition, a proportion of Basware's costs are denominated in INR and RON. Political risks may have a negative effect on Basware. This includes the uncertainty around the status of the UK in relation to the European Union which may have a negative impact on Basware's business in the UK, and additionally the uncertainty related to taxation and legislation in India which may have a negative impact on Basware's business in India.
Basware considers acquisitions as part of its strategy. Acquisitions entail risks, such as failure in integrating acquisitions or in ensuring that the planned financial benefits and synergies of the acquisitions materialize.
Basware's biggest operational risks relate to service disruption which could be as a result of, data centre failures, various data security threats and non-compliance risks related to Basware's solutions and services, the company's activities or its employees' behaviour. Operational risks are actively managed by continuous improvement in risk monitoring and protection practices, external assessments as well as internal training of Basware's personnel.
The Covid-19 pandemic may have an impact on the timing of organisations' IT project decisions and implementations and on the global volume of invoices sent and received. This may impact Basware's order intake, revenues, operating profit and cash flow. Basware has a business continuity plan in place including extensive remote working capabilities across all functions, however, should the Covid-19 situation materially affect employees' ability to work, this may disturb Basware's ability to serve its customers.
Other events of the quarter
On June 24, Basware announced that Chief Customer Officer Jussi Vasama had decided to step down from Basware's Executive Team. The changes were effective immediately as of June 24, 2021. In the interim period, selected members of the senior management team within the Basware Services organization assumed the responsibilities for Professional Services and Customer Support reporting to CEO Klaus Andersen.
Events after the quarter
On July 12, Basware announced that it has completed an amendment agreement of its debt facility (the
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report
January-June 2021
Loan) with Macquarie Principal Financing PTY Limited, effective 12th of July 2021. As a result of the improved terms, the Company will realize a cash benefit of minimum EUR 12 million over the remaining duration of the Loan, compared with the original debt facility. The renegotiated Loan reflects Basware's improved financial performance and significantly decreases Basware's cost of debt. Under the amendment, the debt facility is upsized to a EUR 66 million senior secured Loan which will be due September 2024 in line with the facility's original maturity and has a non-call of 24 months. The Loan amount of EUR 66 million consists of EUR 50 million related to the original debt facility, EUR 11 million related to previously capitalized interest (PIK interest) and EUR 5 million upsizing to enhance the Company's overall liquidity position.
Future outlook
Themes affecting revenues and EBIT
Basware aims for consistent cloud revenue growth. Cloud revenues are impacted by cloud order intake, churn and network transaction volume driven revenues. Approximately forty percent of Basware's network transaction services revenues are subscription based. Cloud churn continues to be affected by non-strategic contracts which are not renewed. Cloud order intake may be negatively affected by economic uncertainty caused by Covid-19, however in the long run the pandemic is expected to accelerate digitalization megatrends which would support order intake for Basware.
Demand for consulting services is driven primarily by new customer wins, expansion sales and services adoption and efficiency projects for existing customers.
Revenues from maintenance and license will continue to decline as Basware transitions existing licence customers to cloud services. The rate of decline has been increased by end-of-life actions taken during 2019 with effect from January 1st 2021.
Improvements in scalability and operational efficiency are expected to continue. However, due to the Covid-19 situation there may be some impact to the timing of these improvements.
Guidance for 2021
Basware expect the gradual normalization of the business environment to continue in the second half of the year and keeps guidance for the full year 2021 unchanged:
- Modest positive Net sales growth on an organic constant currency basis
- EBIT approximately at the same level or better than the previous year
Constant currencies mean that the effects of any changes in currencies are eliminated by calculating the figures for the period using comparable period's exchange rates. Organic means that the figures are adjusted to remove the effects of any acquisitions or disposals within the past 12 months.
Basware Corporation's financial calendar for 2021
- 19 October 2021
Interim Report for January 1–September 30, 2021
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report January-June 2021
Espoo, Finland, on Wednesday, July 14, 2021
BASWARE CORPORATION
Board of Directors
Klaus Andersen, CEO
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report
January-June 2021
SUMMARY OF FINANCIAL STATEMENTS AND NOTES TO THE FINANCIAL STATEMENTS JANUARY 1 – JUNE 30, 2021
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| EUR thousand | 4-6/2021 | 4-6/2020 | Change, % | 1-6/2021 | 1-6/2020 | Change, % | 2020 |
|---|---|---|---|---|---|---|---|
| NET SALES | 38,571 | 37,769 | 2.1 | 76,313 | 76,014 | 0.4 | 151,579 |
| Cost of sales | -17,137 | -16,589 | 3.3 | -33,553 | -34,062 | -1.5 | -65,941 |
| GROSS PROFIT | 21,434 | 21,180 | 1.2 | 42,760 | 41,952 | 1.9 | 85,638 |
| Sales and marketing | -9,113 | -9,496 | -4.0 | -18,355 | -20,262 | -9.4 | -40,001 |
| Research and development | -6,879 | -6,516 | 5.6 | -13,709 | -12,692 | 8.0 | -25,930 |
| General and administration | -3,427 | -3,253 | 5.3 | -7,187 | -6,829 | 5.3 | -14,096 |
| Total operating expenses | -19,418 | -19,265 | 0.8 | -39,251 | -39,783 | -1.3 | -80,027 |
| Other operating income and expenses | -215 | -631 | -65.9 | -328 | -784 | -58.1 | -944 |
| OPERATING PROFIT | 1,800 | 1,285 | 40.1 | 3,180 | 1,385 | 129.6 | 4,667 |
| Finance income and expenses | -3,012 | -2,656 | 13.4 | -5,797 | -5,422 | 6.9 | -11,652 |
| PROFIT/LOSS BEFORE TAX | -1,212 | -1,372 | 11.7 | -2,617 | -4,037 | 35.2 | -6,985 |
| Income tax | -195 | 334 | N/A | -268 | -647 | -58.6 | -345 |
| PROFIT/LOSS FOR THE PERIOD | -1,407 | -1,038 | -35.6 | -2,885 | -4,684 | 38.4 | -7,329 |
| Other comprehensive income | |||||||
| Other comprehensive income that will not be reclassified to profit or loss | |||||||
| Remeasurement of employee benefits | -40 | 5 | N/A | -18 | -3 | 598.7 | -5 |
| Other comprehensive income that may be reclassified subsequently to profit or loss | |||||||
| Exchange differences on translating foreign operations | -855 | -583 | 46.7 | 2,531 | -2,686 | N/A | -4,964 |
| Cash flow hedges | -55 | -44 | 24.4 | 465 | -199 | N/A | -435 |
| Income tax relating to components of other comprehensive income | 11 | 30 | -63.1 | -62 | 76 | N/A | 112 |
| Other comprehensive income for the year net of tax | -939 | -593 | 58.5 | 2,916 | -2,812 | N/A | -5,292 |
| TOTAL COMPREHENSIVE INCOME | -2,346 | -1,630 | 43.9 | 31 | -7,496 | N/A | -12,621 |
| Profit/loss attributable to: | |||||||
| Equity holders of the parent company | -1,407 | -1,038 | -35.6 | -2,885 | -4,684 | 38.4 | -7,329 |
| Total comprehensive income attributable to: | |||||||
| Equity holders of the parent company | -2,346 | -1,630 | 43.9 | 31 | -7,496 | N/A | -12,621 |
| Earnings per share | |||||||
| undiluted, EUR | -0.10 | -0.07 | -35.1 | -0.20 | -0.33 | 38.6 | -0.51 |
| diluted, EUR | -0.10 | -0.07 | -35.1 | -0.20 | -0.33 | 38.6 | -0.51 |
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report
January-June 2021
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| EUR thousand | Jun 30, 2021 | Jun 30, 2020 | Change, % | Dec 31, 2020 |
|---|---|---|---|---|
| ASSETS | ||||
| Non-current assets | ||||
| Intangible assets | 40,604 | 43,958 | -7.6 | 41,927 |
| Goodwill | 78,474 | 78,590 | -0.1 | 76,676 |
| Tangible assets | 1,158 | 1,076 | 7.6 | 1,023 |
| Right-of-use assets | 14,347 | 15,712 | -8.7 | 14,322 |
| Non-current financial assets | 13 | 38 | -65.5 | 13 |
| Other receivables | 3,003 | 3,581 | -16.1 | 3,541 |
| Contract assets | 0 | 37 | -100.0 | 6 |
| Deferred tax assets | 11,043 | 9,912 | 11.4 | 10,592 |
| Non-current assets | 148,642 | 152,904 | -2.8 | 148,101 |
| Current assets | ||||
| Trade receivables | 28,808 | 29,731 | -3.1 | 26,602 |
| Other receivables | 8,533 | 8,752 | -2.5 | 8,714 |
| Contract assets | 753 | 1,028 | -26.8 | 818 |
| Income tax receivables | 261 | 367 | -28.8 | 166 |
| Cash and cash equivalents | 40,560 | 34,850 | 16.4 | 40,461 |
| Current assets | 78,914 | 74,727 | 5.6 | 76,761 |
| ASSETS | 227,556 | 227,631 | 0.0 | 224,862 |
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report
January-June 2021
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| EUR thousand | Jun 30, 2021 | Jun 30, 2020 | Change, % | Dec 31, 2020 |
|---|---|---|---|---|
| EQUITY AND LIABILITIES | ||||
| Shareholders' equity | ||||
| Share capital | 3,528 | 3,528 | 0.0 | 3,528 |
| Share premium account | 1,187 | 1,187 | 0.0 | 1,187 |
| Invested unrestricted equity fund | 110,290 | 110,290 | 0.0 | 110,290 |
| Other reserves | 731 | 477 | 53.2 | 289 |
| Translation differences | -10,648 | -10,854 | -1.9 | -13,137 |
| Retained earnings | -23,486 | -17,182 | 36.7 | -19,600 |
| Shareholders' equity | 81,603 | 87,447 | -6.7 | 82,557 |
| Non-current liabilities | ||||
| Deferred tax liability | 5,332 | 5,117 | 4.2 | 5,071 |
| Interest-bearing liabilities | 68,043 | 62,657 | 8.6 | 66,665 |
| Leasing liabilities, interest-bearing | 11,811 | 13,057 | -9.5 | 11,647 |
| Contract liabilities | 2,517 | 2,327 | 8.2 | 2,791 |
| Liabilities from employee benefits | 460 | 380 | 20.8 | 388 |
| Non-current liabilities | 88,162 | 83,539 | 5.5 | 86,562 |
| Current liabilities | ||||
| Interest-bearing liabilities | 2,173 | 2,172 | 0.0 | 2,173 |
| Leasing liabilities, interest-bearing | 3,734 | 3,647 | 2.4 | 3,727 |
| Trade payables and other liabilities | 29,320 | 27,453 | 6.8 | 30,470 |
| Contract liabilities | 22,400 | 22,718 | -1.4 | 19,177 |
| Income tax liabilities | 164 | 616 | -73.3 | 196 |
| Current provisions | 0 | 38 | -100.0 | 0 |
| Current liabilities | 57,790 | 56,645 | 2.0 | 55,743 |
| EQUITY AND LIABILITIES | 227,556 | 227,631 | 0.0 | 224,862 |
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report
January-June 2021
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
| EUR thousand | Share capital | Share premium account | Treasury shares | Inv. Un-restricted equity | Other reserves | Translation differences | Retained earnings | Total |
|---|---|---|---|---|---|---|---|---|
| SHAREHOLDERS’ EQUITY Jan 1, 2021 | 3,528 | 1,187 | 0 | 110,290 | 289 | -13,137 | -19,600 | 82,557 |
| Comprehensive income | 2,489 | -2,884 | -395 | |||||
| Share based payments | -985 | -985 | ||||||
| Defined benefit plan | -18 | -18 | ||||||
| Cash flow hedges | 443 | 443 | ||||||
| SHAREHOLDERS’ EQUITY Jun 30, 2021 | 3,528 | 1,187 | 0 | 110,290 | 731 | -10,648 | -23,486 | 81,603 |
| EUR thousand | Share capital | Share premium account | Treasury shares | Inv. Un-restricted equity | Other reserves | Translation differences | Retained earnings | Total |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| SHAREHOLDERS’ EQUITY Jan 1, 2020 | 3,528 | 1,187 | -98 | 110,388 | 653 | -8,226 | -13,347 | 94,086 |
| Comprehensive income | -2,629 | -4,690 | -7,319 | |||||
| Share based payments | 98 | -98 | 857 | 857 | ||||
| Defined benefit plan | -3 | -3 | ||||||
| Cash flow hedges | -175 | -175 | ||||||
| SHAREHOLDERS’ EQUITY Jun 30, 2020 | 3,528 | 1,187 | 0 | 110,290 | 477 | -10,854 | -17,182 | 87,447 |
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report
January-June 2021
CONSOLIDATED STATEMENT OF CASH FLOWS
| EUR thousand | 4-6/2021 | 4-6/2020 | 1-6/2021 | 1-6/2020 | 2020 |
|---|---|---|---|---|---|
| Cash flows from operating activities | |||||
| Profit/loss for the period | -1,407 | -1,038 | -2,885 | -4,684 | -7,329 |
| Adjustments for profit: | |||||
| Depreciation and amortisation | 4,052 | 3,871 | 7,897 | 7,841 | 15,540 |
| Unrealised foreign exchange gains and losses | 209 | -106 | 237 | 33 | 690 |
| Financial income and expenses | 2,795 | 2,749 | 5,520 | 5,457 | 11,068 |
| Tax on income from operations | 195 | -334 | 268 | 647 | 345 |
| Other adjustments | -1,267 | 315 | -696 | 804 | 1,566 |
| Total adjustments | 5,984 | 6,496 | 13,226 | 14,783 | 29,208 |
| Changes in working capital: | |||||
| Increase (-) / decrease (+) in trade and other receivables | 852 | 2,316 | -748 | -2,292 | 810 |
| Increase (+) / decrease (-) in trade and other payables | -3,657 | -1,892 | -835 | 5,491 | 5,069 |
| Increase / decrease in provisions | -4 | -32 | 0 | -203 | -211 |
| Total changes in working capital | -2,808 | 392 | -1,583 | 2,997 | 5,668 |
| Financial items in operating activities | -217 | -320 | -464 | -630 | -1,301 |
| Income taxes paid (-) / received (+) | -273 | 70 | -657 | -372 | -994 |
| Cash flows from operating activities | 1,278 | 5,597 | 7,636 | 12,093 | 25,252 |
| Cash flows used in investing activities | |||||
| Purchase of tangible and intangible assets | -2,431 | -2,582 | -4,296 | -5,656 | -9,470 |
| Net proceeds from sale of tangible and intangible assets | 0 | 0 | 0 | 0 | 7 |
| Cash flows from investing activities | -2,431 | -2,582 | -4,296 | -5,656 | -9,464 |
| Cash flows from financing activities | |||||
| Proceeds from current borrowings | 0 | 176 | 0 | 176 | 176 |
| Repayment of current borrowings | 0 | 0 | -998 | -998 | -1,996 |
| Payment of lease liabilities | -1,083 | -1,030 | -2,148 | -2,204 | -4,257 |
| Cash flows from financing activities | -1,083 | -854 | -3,146 | -3,026 | -6,076 |
| Net change in cash and cash equivalents | -2,236 | 2,161 | 194 | 3,411 | 9,712 |
| Cash and cash equivalents at the beginning of period | 43,080 | 32,558 | 40,461 | 31,672 | 31,672 |
| Net foreign exchange difference | -283 | 130 | -95 | -233 | -922 |
| Cash and cash equivalents at the end of period | 40,560 | 34,850 | 40,560 | 34,850 | 40,461 |
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report January-June 2021
ACCOUNTING PRINCIPLES
This interim report has been prepared in accordance with IAS 34. The same accounting principles have been followed as in the annual financial statements except for the adoption of new standards and amendments effective as of January 1, 2021. The new standards and amendments had no impact on Group figures.
Preparation of financial statements in accordance with IFRS requires Basware's management to make estimates and assumptions that have an effect on the amount of assets and liabilities on the balance sheet at the closing date as well as the amounts of income and expenses for the financial period. In addition, the management must exercise its judgement regarding the application of accounting policies. Since the estimates and assumptions are based on the views at the date of the financial statements, they include risks and uncertainties. The actual results may differ from the estimates and assumptions.
The amounts presented in the income statement and balance sheet are Group figures. The amounts presented in the release are rounded, so the sum of individual figures may differ from the sum reported. Percentage changes for net figures are shown on an absolute basis.
Adjusted EBIT and EBITDA
| EUR thousand | 4-6/2021 | 4-6/2020 | Change, % | 1-6/2021 | 1-6/2020 | Change, % | 2020 |
|---|---|---|---|---|---|---|---|
| EBIT | 1,800 | 1,285 | 40.1 | 3,180 | 1,385 | 129.6 | 4,667 |
| Adjustments: | |||||||
| Acquisition, disposal and restructuring income (-) and expenses (+) | -8 | 77 | N/A | -12 | -31 | -62.4 | -301 |
| Efficiency related expenses | 133 | 54 | 146.9 | 190 | 102 | 86.2 | 453 |
| Total adjustments | 125 | 131 | -4.4 | 178 | 71 | 149.6 | 152 |
| Adjusted EBIT | 1,926 | 1,416 | 36.0 | 3,358 | 1,457 | 130.6 | 4,819 |
| Depreciation and amortization | 4,052 | 3,871 | 4.7 | 7,897 | 7,841 | 0.7 | 15,540 |
| Adjusted EBITDA | 5,977 | 5,287 | 13.1 | 11,255 | 9,298 | 21.1 | 20,359 |
| % of net sales | 15.5% | 14.0% | 14.7% | 12.2% | 13.4% |
Information on products and services
Basware reports one operating segment. The reported segment is comprised of the entire Group, and the segment figures are consistent with the Group figures.
Basware reports revenues by type. Cloud revenue includes SaaS, Transaction services (consisting of e-invoicing, scan and capture services, printing services and network start-up fees) and Other cloud revenue. Non-cloud revenue includes Maintenance, License sales, Consulting services (consisting of professional services and customer services management) and Other non-cloud revenue.
| EUR thousand | 4-6/2021 | 4-6/2020 | Change, % | Change, %† | 1-6/2021 | 1-6/2020 | Change, % | Change, %† | 2020 |
|---|---|---|---|---|---|---|---|---|---|
| Cloud Revenue | |||||||||
| SaaS | 16,204 | 14,534 | 11.5 | 12.8 | 31,816 | 28,724 | 10.8 | 12.3 | 58,344 |
| Transaction services | 12,217 | 11,103 | 10.0 | 10.6 | 24,454 | 23,491 | 4.1 | 4.8 | 47,272 |
| Other cloud revenue | 1,211 | 1,204 | 0.5 | -1.8 | 2,406 | 2,400 | 0.3 | -0.1 | 4,696 |
| Cloud Revenue total | 29,633 | 26,841 | 10.4 | 11.2 | 58,676 | 54,615 | 7.4 | 8.6 | 110,312 |
| Non-Cloud Revenue | |||||||||
| Maintenance | 1,702 | 3,657 | -53.4 | -53.8 | 3,085 | 7,746 | -60.2 | -60.3 | 14,687 |
| License sales | 14 | 102 | -86.7 | -86.8 | 78 | 182 | -57.1 | -60.4 | 348 |
| Consulting services | 7,233 | 7,197 | 0.5 | 1.4 | 14,418 | 13,693 | 5.3 | 6.5 | 26,875 |
| Other non-cloud revenue | -10 | -28 | -62.6 | -59.4 | 57 | -221 | N/A | N/A | -644 |
| Non-Cloud Revenue total | 8,939 | 10,928 | -18.2 | -17.8 | 17,637 | 21,399 | -17.6 | -16.9 | 41,267 |
| Total | 38,571 | 37,769 | 2.1 | 2.8 | 76,313 | 76,014 | 0.4 | 1.4 | 151,579 |
†Organic at constant currencies.
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report
January-June 2021
Fair values of financial assets and liabilities
| EUR thousand | Jun 30, 2021 | Jun 30, 2020 | Dec 31, 2020 | |||
|---|---|---|---|---|---|---|
| Book value | Fair value | Book value | Fair value | Book value | Fair value | |
| Financial assets | ||||||
| Non-current: | ||||||
| Non-current financial assets | 13 | 13 | 38 | 38 | 13 | 13 |
| Non-current trade and other receivables | 1,232 | 1,232 | 919 | 919 | 688 | 688 |
| Current: | ||||||
| Current trade receivables | 28,808 | 28,808 | 29,731 | 29,731 | 26,602 | 26,602 |
| Current other receivables | 1,128 | 1,128 | 210 | 210 | 1,205 | 1,205 |
| Cash and cash equivalents | 40,560 | 40,560 | 34,850 | 34,850 | 40,461 | 40,461 |
| Financial liabilities | ||||||
| Non-current: | ||||||
| Financial liabilities valued at amortized acquisition cost: | ||||||
| Loans from financial institutions, interest-bearing¹ | 68,043 | 79,080 | 62,657 | 73,583 | 66,665 | 77,299 |
| Leasing liabilities, interest-bearing | 11,811 | 11,811 | 13,057 | 13,057 | 11,647 | 11,647 |
| Current: | ||||||
| Loans from financial institutions, interest-bearing | 2,173 | 2,173 | 2,172 | 2,172 | 2,173 | 2,173 |
| Leasing liabilities, interest-bearing | 3,734 | 3,734 | 3,647 | 3,647 | 3,727 | 3,727 |
| Trade payables and other liabilities | 9,665 | 9,665 | 11,292 | 11,292 | 10,196 | 10,196 |
¹ Fair value of the loan from is measured to reflect the amount Basware would need to pay if it would repay the loan in full at the end of reporting period. The loan has an exit fee which accrues evenly over the loan period. The value of the exit fee at maturity equals 40 percent of the loan amount.
Financial assets arising from derivative financial instruments of EUR 107 thousand are classified as level 2 and unquoted equity shares of EUR 13 thousand as level 3 in the fair value measurement hierarchy.
In March 2019, Basware entered into a loan totalling EUR 50 million with Bregal Milestone LLP due September 2024. The loan is senior unsecured with a 5.5-year maturity that significantly extends Basware's average debt maturity. The facility was drawn on April 2, 2019 and the proceeds were EUR 45 million. The loan has an exit fee which accrues over the loan period. The value of the exit fee at maturity equals to 40 percent of the loan amount. The cash interest margin on the loan is 8.75 percent annually. The company has the option to utilise PIK interest as an alternative to cash pay interest at the rate of 11.25 percent annually.
On November 23, 2020 the loan was transferred to Macquarie Principal Finance PTY Limited, UK Branch. No changes were made to the terms and conditions of the loan.
In connection with the Loan, Bregal Milestone received without consideration 1,000 freely transferable warrants on April 2, 2019. The subscription period of the Warrant Shares commenced immediately upon the issue of the warrants and will expire on August 22, 2024. The cash subscription price will be subject to adjustments for any dividends as well as customary anti-dilution adjustments resulting from, among other things, any share issues, pursuant to the terms and conditions of the warrants.
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report January-June 2021
On October 9, 2020, Basware received flagging notifications from Bregal Milestone and Briarwood Chase Management LLC according to which Briarwood Chase Management LLC had acquired all warrants from Bregal Milestone.
As a result of the share issue in January 2021, the warrants were adjusted to entitle their holder to subscribe for a total of 1,003,000 shares in the company (before this adjustment, 1,001,000 shares) at an adjusted subscription price of EUR 29.7939 per share (before the adjustment, the subscription price per share was EUR 29.8764). To increase the number of shares that may be subscribed for with the warrants, the Board of Directors exercised on March 18, 2021 the authorization granted by the Annual General Meeting of shareholders held on March 18, 2021 by deciding upon issuance of special rights that entitle their holder to subscribe for 2,000 new shares in the company. These adjustments to the terms and conditions of the warrants became effective upon registration with the Finnish Trade Register on April 8, 2021.
Commitments and contingent liabilities
| EUR thousand | Jun 30, 2021 | Jun 30, 2020 | Dec 31, 2020 |
|---|---|---|---|
| Own guarantees | |||
| Guarantees | 1,233 | 1,108 | 1,262 |
| Commitments on behalf of subsidiaries | |||
| Guarantees | 865 | 287 | 822 |
| Other commitments | |||
| Maturing in less than 1 year | 3,221 | 2,988 | 3,455 |
| Maturing in 1-5 years | 1,503 | 3,735 | 2,876 |
| Total | 4,724 | 6,723 | 6,331 |
| Total commitments and contingent liabilities | 6,822 | 8,118 | 8,415 |
Other commitments include leases and other rental not in scope of IFRS 16, as well as commitments arising from license agreements. Obligations from long term service agreements are not included.
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report January-June 2021
Definitions of Key Indicators and Alternative Performance Measures
Earnings per share (EPS)
Profit for the period
Adjusted average number of shares during the period
Diluted earnings per share (EPS)
Profit for the period
Adjusted average number of shares during the period + dilutive shares
Alternative Performance Measures
Organic revenue growth is calculated by comparing net sales between comparison periods in constant currencies excluding alliance fees as well as net sales from acquisitions or disposals that have taken place in the past 12 months.
Net sales in constant currencies is calculated by eliminating the impact of exchange rate fluctuations by calculating the net sales for the current period by using the comparable period's exchange rates.
Gross investments are total investments made to non-current assets including acquisitions and capitalized research and development costs.
Other capitalized expenditure consists of investments in property, plant & equipment and intangible assets excluding acquisitions and capitalized research and development costs.
EBITDA is calculated as operating profit (EBIT) plus depreciation and amortization.
Adjusted EBITDA is calculated from EBITDA excluding any adjustments related to alliance fees, acquisitions and disposals, restructuring and efficiency measures, impairment losses and litigation fees and settlements.
Operating profit (EBIT) is the net sum of operating income added to net sales, less cost of sales consisting of materials and services, less the costs resulting from employee benefits, depreciation and amortization as well as other operating expenses and any impairment. Exchange rate differences and gains or losses arising from changes in the fair value of derivatives are included in operating profit, provided that they result from items related to business operations; otherwise they are recognized under financing items. All other items of the consolidated statement of comprehensive income are presented after operating profit.
Adjusted operating profit (Adjusted EBIT) is calculated from operating profit excluding any adjustments related to alliance fees, acquisitions and disposals, restructuring and efficiency measures, impairment losses and litigation fees and settlements.
Annual recurring revenue gross order intake is calculated by summing the total order intake in the period expressed as an annual contract value. For cloud order intake this includes all SaaS and Network recurring revenues including transaction revenues. Gross order intake covers new cloud customers, add-ons and renewal uplifts but excludes churn. There will be a time lag before this order intake is visible in net sales.
Cloud gross churn rate is defined as the total amount of cloud revenues lost during the period, divided by the total cloud revenues at the beginning of the period.
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report
January-June 2021
Cloud net churn rate is defined as the total amount of cloud revenues lost during the period minus the new cloud ARR won from add-on sales to existing customers during the period, divided by the total cloud revenues at the beginning of the period.
Cloud gross renewal rate is defined as 100 percent minus the cloud gross churn rate.
Cloud net renewal rate is defined as 100 percent minus the cloud net churn rate.
Customer lifetime is defined as 1 divided by the cloud gross churn rate.
Lifetime value of the order intake won during the period is calculated by multiplying Cloud ARR order intake during the period by the cloud gross margin and dividing by the cloud gross churn rate.
The customer acquisition cost is defined as the total expenditure on sales and marketing for the 12 months prior to the period (to account for the lead time between new sales and marketing expenditure converting to order intake).
Return on equity (ROE), %
(Profit or loss before taxes – taxes) x 100
Shareholders’ equity (average)
Return on investment (ROI), %
(Profit before taxes + interest and other financial expenses) x 100
Balance sheet total – non-interest-bearing liabilities (average)
Gearing, %
(Interest-bearing liabilities – interest-bearing assets) x 100
Shareholders’ equity
Equity ratio, %
Shareholders’ equity x 100
Balance sheet total – advance payments received
Adjusted earnings per share (EPS) is calculated by excluding from the profit/loss any adjustments related to alliance fees, acquisitions and disposals, restructuring and efficiency measures, impairment losses and litigation fees and settlements.
Equity per share
Shareholders’ equity
Adjusted number of shares at the end of the financial period - own shares
Price-earnings ratio (P/E)
Adjusted share price at the end of the financial period
Earnings per share
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report
January-June 2021
QUARTERLY INCOME STATEMENT
| EUR thousand | 4-6/2021 | 1-3/2021 | 10-12/2020 | 7-9/2020 | 4-6/2020 |
|---|---|---|---|---|---|
| NET SALES | 38,571 | 37,742 | 38,793 | 36,772 | 37,769 |
| Cost of sales | -17,137 | -16,415 | -16,474 | -15,405 | -16,589 |
| GROSS PROFIT | 21,434 | 21,326 | 22,318 | 21,368 | 21,180 |
| Sales and Marketing | -9,113 | -9,242 | -10,853 | -8,885 | -9,496 |
| Research and Development | -6,879 | -6,830 | -6,692 | -6,546 | -6,516 |
| General and Administration | -3,427 | -3,761 | -3,565 | -3,702 | -3,253 |
| Total operating expenses | -19,418 | -19,833 | -21,111 | -19,133 | -19,265 |
| Other operating income and expenses | -215 | -113 | 5 | -165 | -631 |
| OPERATING PROFIT | 1,800 | 1,380 | 1,213 | 2,069 | 1,285 |
| % of net sales | 4.7 | 3.7 | 3.1 | 5.6 | 3.4 |
| Finance income and expenses | -3,012 | -2,785 | -3,401 | -2,829 | -2,656 |
| Profit/loss before tax | -1,212 | -1,405 | -2,188 | -760 | -1,372 |
| Income taxes | -195 | -72 | 367 | -64 | 334 |
| PROFIT/LOSS FOR THE PERIOD | -1,407 | -1,478 | -1,821 | -824 | -1,038 |
Basware Corporation | https://investors.basware.com/en
basware
Half Year Financial Report
January-June 2021
KEY INDICATORS
| EUR thousand | 4-6/2021 | 4-6/2020 | 1-6/2021 | 1-6/2020 | 2020 |
|---|---|---|---|---|---|
| Cloud ARR order intake | 5,611 | 6,130 | 8,479 | 9,747 | 19,250 |
| Net sales | 38,571 | 37,769 | 76,313 | 76,014 | 151,579 |
| Net sales growth, % | 2.1% | 4.0% | 0.4% | 5.3% | 2.2% |
| Organic net sales growth, % | 2.8% | 4.5% | 1.4% | 5.6% | 3.2% |
| EBIT | 1,800 | 1,285 | 3,180 | 1,385 | 4,667 |
| % of net sales | 4.7% | 3.4% | 4.2% | 1.8% | 3.1% |
| EBITDA | 5,852 | 5,156 | 11,077 | 9,226 | 20,207 |
| % of net sales | 15.2% | 13.7% | 14.5% | 12.1% | 13.3% |
| Adjusted EBITDA | 5,977 | 5,287 | 11,255 | 9,298 | 20,359 |
| Return on equity, % | -6.7% | -4.7% | -7.0% | -10.3% | -8.3% |
| Return on investment, % | 4.3% | 3.5% | 3.0% | 2.2% | 3.1% |
| Interest-bearing liabilities excl. leasing liabilities | 70,216 | 64,830 | 70,216 | 64,830 | 68,837 |
| Cash and cash equivalents | 40,560 | 34,850 | 40,560 | 34,850 | 40,461 |
| Cash flows from operating activities | 1,278 | 5,597 | 7,636 | 12,093 | 25,252 |
| Gearing, % | 55.4% | 53.4% | 55.4% | 53.4% | 53.0% |
| Gross investments | 2,592 | 2,605 | 4,537 | 5,716 | 9,877 |
| % of net sales | 6.7% | 6.9% | 5.9% | 7.5% | 6.5% |
| R&D expenses excluding amortizations | 4,224 | 4,148 | 8,623 | 7,941 | 16,447 |
| R&D costs, capitalised | 2,200 | 2,293 | 4,003 | 4,758 | 8,372 |
| R&D investments, total | 6,424 | 6,441 | 12,626 | 12,699 | 24,819 |
| % of net sales | 16.7% | 17.1% | 16.5% | 16.7% | 16.4% |
| Depreciation and amortization | 4,052 | 3,871 | 7,897 | 7,841 | 15,539 |
| Other capitalised expenditure | 392 | 312 | 534 | 958 | 1,505 |
| Personnel at end of period | 1,340 | 1,343 | 1,340 | 1,343 | 1,336 |
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