Basware Oyj — Interim / Quarterly Report 2021

Apr 20, 2021

basware
Simplify Operations, Spend Smarter.

INTERIM REPORT

January-March 2021

Q1/2021

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basware
Interim Report January-March 2021

Basware Interim Report January-March 2021: Net sales in line with expectations, positive development in profitability and order intake impacted by continued uncertainty in the business environment

January-March 2021

• Cloud ARR order intake amounted to EUR 2.9 million (EUR 3.6 million)
• Net sales decreased 1.3 percent to EUR 37,742 thousand (EUR 38,245 thousand), which amounted to 0.0 percent organic growth at constant currencies
• Cloud revenue increased 4.6 percent to EUR 29,043 thousand (EUR 27,774 thousand), which amounted to 6.0 percent organic growth at constant currencies
• EBIT amounted to EUR 1,380 thousand (EUR 100 thousand)
• Earnings per share (diluted) were EUR -0.10 (EUR -0.25)

Key figures

EUR thousand	1-3/2021	1-3/2020	Change, %	2020
Net sales	37,742	38,245	-1.3	151,579
Cloud revenue	29,043	27,774	4.6	110,312
Cloud ARR order intake	2,868	3,617	-20.7	19,250
EBIT	1,380	100		4,667
EBITDA	5,225	4,070	28.4	20,207
Gearing, %^{1}	47.6	53.4	-10.7	53.0
Cash and cash equivalents^{1}	43,080	32,558	32.3	40,461
Cash flows from operating activities	6,358	6,497	-2.1	25,252
Earnings per share, diluted, EUR	-0.10	-0.25	58.8	-0.51
Personnel^{1}	1,334	1,342	-0.6	1,336

1 At the end of the period.
The interim report is unaudited.

Guidance for 2021

Basware expects uncertainty in the business environment to continue in the first half of 2021 and keeps the 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

CEO Klaus Andersen:

"Basware's profitability and cash position continued to develop positively during the first quarter of the year with net sales developing in line with expectations. Total net sales were EUR 37.7 million, which amounted to flat organic growth at constant currencies. The expected accelerated reduction in

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

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basware

Interim Report January-March 2021

maintenance revenues were compensated by the Cloud revenue growth of 6% and Consulting revenue growth of 12% organic at constant currencies in Q1. EBIT amounted to EUR 1.4 million for the quarter, a substantial improvement of EUR 1.3 million compared to the corresponding period last year, Cash from operating activities delivered EUR 6.4 million.

Order intake continued to be impacted by uncertainty in the business environment primarily caused by the pandemic. The cautiousness, especially among large enterprises, seen during the crisis continued into the first quarter and impacted sales activities. Cloud order intake amounted to EUR 2.9 million.

Nevertheless, we welcomed several, important new customers in Q1 and continued to expand our business relationships with many of our existing customers. Among others, Jeld-Wen Inc., a global manufacturing company based in North America, joined as a new customer in Q1 and we increased our cloud business with existing customers such as GKN Automotive and Valmet.

Our partner and co-exist strategy reached an important milestone as we signed a contract with Harbour Energy Plc, a leading independent North Sea oil and gas group, enabled by a partner led joint bid together with a global procurement focused competitor of ours. In March, PwC Germany, a leading auditing and consultancy firm, also became a member of our partner ecosystem, with Basware cloud solutions now being used by PwC Germany to deliver finance transformations to their customers.

We were pleased to receive a Leader category recognition from IDC MarketScape 2020-2021 report in February. We also continued to develop and expand our solutions further with the new and fully integrated Shopping Experience in Basware Purchase to Pay being completed. Global Statutory compliance remains a key element within our network services and our journey continued by adding a new E-Invoice Receiving Solution compliant with China Fapiao Regulations allowing customers to quickly and easily detect non-compliant invoices.

In March, we announced that Chief Revenue Officer, Paul Taylor stepped down from the Basware Executive Team to take on the role of Country Manager for United Kingdom and Ireland leading one of Basware's key growth markets. The search for a new Chief Revenue Officer has now commenced and, in the interim, I will act as the Chief Revenue Officer.

Our full year guidance remains unchanged and we continue to expect a gradual normalization of the business environment towards the second half of the year."

Net sales

Net sales by revenue type, EUR thousand	1-3/2021	1-3/2020	Change, %	2020
Cloud	29,043	27,774	4.6	110,312
Consulting	7,185	6,496	10.6	26,875
Maintenance, license and other	1,514	3,975	-61.9	14,392
Total	37,742	38,245	-1.3	151,579
Net sales by customer location, EUR thousand	1-3/2021	1-3/2020	Change, %	2020
Americas	8,338	8,862	-5.9	35,013
Europe	13,276	12,788	3.8	52,176
Nordics	14,153	14,510	-2.5	56,428
APAC	1,975	2,085	-5.3	7,962
Total	37,742	38,245	-1.3	151,579

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

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basware

Interim Report January-March 2021

Net sales by revenue type

Cloud 77%
Consulting 19%
Maintenance, license and other 4%

Net sales by customer location

Americas 22%
Europe 35%
Nordics 38%
APAC 5%

Basware's net sales for the first quarter amounted to EUR 37,742 thousand (EUR 38,245 thousand), a decrease of 1.3 percent. This equated to 0.0 percent organic growth at constant currencies.

Cloud revenues continued to grow during the first quarter. Cloud revenues in the first quarter were EUR 29,043 thousand (EUR 27,774 thousand), up by 4.6 percent, equating to 6.0 percent organic growth at constant currencies and accounted for 77.0 percent (72.6%) of net sales.

In the first quarter consulting revenues increased 10.6 percent, equating to 12.2 percent organic growth at constant currencies.

Maintenance and license revenues declined in line with expectations as Basware transitions customers to the cloud. In the first quarter maintenance, license and other revenues decreased 61.9 percent, equating to a 61.9 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 first quarter in comparison to the first quarter of 2020. At constant currencies net sales from Americas grew by 1.8 percent in the first quarter of 2021.

Cloud order intake

EUR thousand	1-3/2021	1-3/2020	Change, %	2020
Cloud	2,868	3,617	-20.7	19,250

Cloud order intake by customer location in Q1/2021 and Q1/2020

Americas 26%
Europe 39%
Nordics 35%
APAC 0%

Americas 19%
Europe 45%
Nordics 35%
APAC 1%

Basware's total cloud annual recurring revenue (ARR) gross order intake in the first quarter amounted to EUR 2,868 thousand (EUR 3,617 thousand), a decrease of 20.7 percent from corresponding period last year. This equated to 19.8 percent decline on an organic constant currency basis. The order intake continued to be impacted by uncertainty in the business environment primarily caused by the pandemic. The

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

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basware
Interim Report January-March 2021

cautiousness, especially among large enterprises, continued in the first quarter and impacted the company's sales activities.

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	1-3/2021	1-3/2020	Change, %	2020
Net sales	37,742	38,245	-1.3	151,579
Cost of sales	-16,415	-17,473	-6.1	-65,941
Gross profit	21,326	20,772	2.7	85,638
Sales and marketing	-9,242	-10,767	-14.2	-40,001
Research and development	-6,830	-6,176	10.6	-25,930
General and administration	-3,761	-3,575	5.2	-14,096
Total operating expenses	-19,833	-20,518	-3.3	-80,027
Other operating income and expenses	-113	-153	-26.0	-944
EBIT	1,380	100		4,667
EBITDA	5,225	4,070	28.4	20,207

In the first quarter, cost of sales amounted to EUR 16,415 thousand (EUR 17,473 thousand), a decrease of 6.1 percent. The cloud gross margin was 69 percent in the first quarter, up 2 percentage points in comparison to the first quarter of 2020.

Out of the total operating expenses, sales and marketing expenses decreased 14.2 percent, research and development expenses increased 10.6 percent and general and administration expenses increased 5.2 percent during the first quarter. Sales and marketing costs reduced in comparison with the first quarter of 2020 mainly as a result of the pandemic preventing travel and physical events particularly in marketing.

Basware's research and development investments including capitalizations but excluding amortizations totalled EUR 6,203 thousand (EUR 6,258 thousand), or 16.4 percent (16.4%) of net sales during the quarter.

Basware's EBITDA was EUR 5,225 thousand (EUR 4,070 thousand) and adjusted EBITDA was EUR 5,278 thousand (EUR 4,011 thousand) in the first quarter. The adjustments to EBITDA totalled EUR 53 thousand (EUR -59 thousand) in the quarter. Other operating income and expenses amounted to EUR -113 thousand (EUR -153 thousand).

Basware's EBIT for the quarter amounted to EUR 1,380 thousand (EUR 100 thousand).

Basware's loss before tax was EUR -1,405 thousand (EUR -2,665 thousand) and loss for the quarter EUR -1,478 thousand (EUR -3,647 thousand). Taxes for the quarter impacted the result by EUR -72 thousand (EUR -981 thousand).

Diluted earnings per share were EUR -0.10 (EUR -0.25) for the quarter.

Cash flows, financing and investments

Cash flows from operating activities were EUR 6,358 thousand (EUR 6,497 thousand) during the first quarter. Cash flows from operating activities were negatively impacted by the net repayment of approximately EUR

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

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basware

Interim Report January-March 2021

0.5 million of a number of payment deferral opportunities offered by different entities as a result of the Covid-19 situation. EUR 0.5 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 43,080 thousand (EUR 32,558 thousand) at the end of the quarter.

Basware's total assets on the balance sheet at the end of the quarter were EUR 231,349 thousand (EUR 228,946 thousand). Net cash flows from investments were EUR -1,865 thousand (EUR -3,074 thousand) in the quarter.

The equity ratio was 36.8 percent (38.8%) and gearing 47.6 percent (53.4%). The company's interest-bearing liabilities excluding leasing liabilities totalled EUR 69,020 thousand (EUR 62,264 thousand), of which current liabilities accounted for EUR 2,173 thousand (EUR 1,996 thousand). The return on investment was 1.8 percent (0.8%) and return on equity -7.0 percent (-16.0%) in the quarter.

Personnel

Personnel on average by area	1-3/2021	1-3/2020	Change, %	2020
Americas	104	108	-3.7	106
Europe	377	366	2.9	373
Nordics	419	427	-1.8	425
APAC	429	431	-0.5	430
Total	1,329	1,332	-0.3	1,334

Basware employed 1,329 (1,332) people on average during the quarter and 1,334 (1,342) at the end of the quarter.

On March 31, 2021, 13.1 percent (14.0%) of the personnel worked in sales and marketing, 32.2 percent (32.8%) in R&D, production and products, 44.1 percent (42.9%) in consulting and customer services and 10.6 percent (10.3%) in administration.

Basware's personnel expenses were EUR 22,298 thousand (EUR 21,645 thousand) in the quarter.

Share and shareholders

Share Indicators	1-3/2021	1-3/2020	2020
Share price performance, EUR
- lowest price	33.10	15.66	15.66
- highest price	43.85	29.10	42.85
- average price	39.55	24.09	29.58
- closing price	36.65	18.90	42.00
Market capitalization at end of period^{1}, EUR	529,789,237	272,115,377	605,449,320
Number of shares^{1}
- at end of the period	14,455,368	14,397,639	14,415,460
- average during the period	14,415,903	14,397,639	14,407,595
- average during the period, diluted	14,556,138	14,659,868	14,638,935
Number of traded shares (share issue adjusted) in Nasdaq Helsinki	1,026,558	2,006,983	4,817,685
% of average number of shares	7.1%	13.9%	33.4%
Treasury shares held by the Company at end of the period	8,568	4,297	5,476
% of total shares	0.1%	0.0%	0.0%

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

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basware

Interim Report January-March 2021

Share capital, EUR	3,528,368	3,528,368	3,528,368
Earnings per share, undiluted, EUR	-0.10	-0.25	-0.51
Earnings per share, diluted, EUR	-0.10	-0.25	-0.51
Adjusted earnings per share, undiluted, EUR	-0.10	-0.26	-0.50
Adjusted earnings per share, diluted, EUR	-0.10	-0.26	-0.50
Equity per share, EUR	5.90	6.17	5.73
Price per earnings (P/E)	-357.55	-74.62	-82.56

¹ Excluding treasury shares

Basware had 11,726 (13,869) shareholders at the end of the quarter, including nominee-registers. Nominee-registered holdings accounted for 56.6 percent (51.4%) of the total number of shares.

Share price development and trading January 1 – March 31, 2021

(Source: Investis Digital)

Flagging notifications

During the period, Basware Corporation 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%

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.

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

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basware
Interim Report January-March 2021

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.

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 via stock exchange release 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

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Interim Report January-March 2021

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.

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 as a result of, for example, 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.

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

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Interim Report January-March 2021

Other events of the quarter

In March, Basware announced that Chief Revenue Officer Paul Taylor had decided to step down from Basware's Executive Team to take the role of Country Manager for United Kingdom and Ireland and lead one of Basware's key markets. Basware has started the recruiting process for a new Chief Revenue Officer. Basware's CEO Klaus Andersen will act as interim Chief Revenue Officer during the recruitment period. The changes were effective as of April 1, 2021.

Events after the quarter

On April 15, 2021, Basware received flagging notifications from Arrowgrass Capital Partners LLP according to which their total holding of shares of Basware Corporation has decreased below ten (10) percent. Arrowgrass Capital Partners LLP’s holding of financial instruments in Basware decreased to 9.2 percent.

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 thirty 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 and expansion sales to 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.

Overall 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 expects uncertainty in the business environment to continue in the first half of 2021 and keeps the 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 | https://investors.basware.com/en

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Interim Report January-March 2021

Basware Corporation's financial calendar for 2021

• 15 July 2021
  Half-Year Financial Report for January 1 – June 30, 2021
• 19 October 2021
  Interim Report for January 1 – September 30, 2021

Espoo, Finland, on Monday, April 19, 2021

BASWARE CORPORATION

Board of Directors

Klaus Andersen, CEO

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

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Interim Report January-March 2021

SUMMARY OF FINANCIAL STATEMENTS AND NOTES TO THE FINANCIAL STATEMENTS JANUARY 1 – MARCH 31, 2021

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

EUR thousand	1-3/2021	1-3/2020	Change, %	2020
NET SALES	37,742	38,245	-1.3	151,579
Cost of sales	-16,415	-17,473	-6.1	-65,941
GROSS PROFIT	21,326	20,772	2.7	85,638
Sales and marketing	-9,242	-10,767	-14.2	-40,001
Research and development	-6,830	-6,176	10.6	-25,930
General and administration	-3,761	-3,575	5.2	-14,096
Total operating expenses	-19,833	-20,518	-3.3	-80,027
Other operating income and expenses	-113	-153	-26.0	-944
OPERATING PROFIT	1,380	100		4,667
Finance income and expenses	-2,785	-2,766	0.7	-11,652
PROFIT/LOSS BEFORE TAX	-1,405	-2,665	47.3	-6,985
Income tax	-72	-981	-92.6	-345
PROFIT/LOSS FOR THE PERIOD	-1,478	-3,647	59.5	-7,329
Other comprehensive income
Other comprehensive income that will not be reclassified to profit or loss
Remeasurement of employee benefits	23	-7		-5
Other comprehensive income that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations	3,386	-2,103		-4,964
Cash flow hedges	519	-155		-435
Income tax relating to components of other comprehensive income	-73	47		112
Other comprehensive income for the year net of tax	3,855	-2,219		-5,292
TOTAL COMPREHENSIVE INCOME	2,377	-5,866		-12,621
Profit/loss attributable to:
Equity holders of the parent company	-1,478	-3,647	59.5	-7,329
Total comprehensive income attributable to:
Equity holders of the parent company	2,377	-5,866		-12,621
Earnings per share
undiluted, EUR	-0.10	-0.25	58.8	-0.51
diluted, EUR	-0.10	-0.25	58.8	-0.51

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

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Interim Report January-March 2021

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

EUR thousand	Mar 31, 2021	Mar 31, 2020	Change, %	Dec 31, 2020
ASSETS
Non-current assets
Intangible assets	41,395	44,285	-6.5	41,927
Goodwill	79,065	79,293	-0.3	76,676
Tangible assets	936	1,110	-15.6	1,023
Right-of-use assets	13,510	16,710	-19.2	14,322
Non-current financial assets	13	38	-65.5	13
Other receivables	3,321	3,716	-10.6	3,541
Contract assets	1	96	-98.6	6
Deferred tax assets	10,888	9,388	16.0	10,592
Non-current assets	149,129	154,635	-3.6	148,101
Current assets
Trade receivables	28,280	30,263	-6.5	26,602
Other receivables	9,755	9,599	1.6	8,714
Contract assets	851	1,386	-38.6	818
Income tax receivables	253	505	-49.9	166
Cash and cash equivalents	43,080	32,558	32.3	40,461
Current assets	82,220	74,311	10.6	76,761
ASSETS	231,349	228,946	1.0	224,862

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

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Interim Report January-March 2021

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

EUR thousand	Mar 31, 2021	Mar 31, 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
Treasury shares	0	-98	-100.0	0
Invested unrestricted equity fund	110,290	110,388	-0.1	110,290
Other reserves	775	513	51.2	289
Translation differences	-9,796	-10,294	-4.8	-13,137
Retained earnings	-20,755	-16,435	-26.3	-19,600
Shareholders' equity	85,230	88,789	-4.0	82,557
Non-current liabilities
Deferred tax liability	5,295	5,090	4.0	5,071
Interest-bearing liabilities	66,848	60,268	10.9	66,665
Leasing liabilities, interest-bearing	11,103	13,951	-20.4	11,647
Contract liabilities	2,534	2,476	2.3	2,791
Liabilities from employee benefits	410	387	5.8	388
Non-current liabilities	86,189	82,173	4.9	86,562
Current liabilities
Interest-bearing liabilities	2,173	1,996	8.9	2,173
Leasing liabilities, interest-bearing	3,554	3,714	-4.3	3,727
Trade payables and other liabilities	29,973	27,483	9.1	30,470
Contract liabilities	24,040	24,140	-0.4	19,177
Income tax liabilities	189	581	-67.5	196
Current provisions	0	71	-100.0	0
Current liabilities	59,930	57,985	3.4	55,743
EQUITY AND LIABILITIES	231,349	228,946	1.0	224,862

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

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basware

Interim Report January-March 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						3,341	-1,474	1,868
Share based payments							296	296
Defined benefit plan							23	23
Cash flow hedges					487			487
SHAREHOLDERS’ EQUITY Mar 31, 2021	3,528	1,187	0	110,290	775	-9,796	-20,755	85,230
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						-2,069	-3,650	-5,719
Share based payments							569	569
Defined benefit plan							-7	-7
Cash flow hedges					-140			-140
SHAREHOLDERS’ EQUITY Mar 31, 2020	3,528	1,187	-98	110,388	513	-10,294	-16,435	88,789

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

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basware

Interim Report January-March 2021

CONSOLIDATED STATEMENT OF CASH FLOWS

EUR thousand	1-3/2021	1-3/2020	2020
Cash flows from operating activities
Profit/loss for the period	-1,478	-3,647	-7,329
Adjustments for profit:
Depreciation and amortisation	3,845	3,970	15,540
Unrealised foreign exchange gains and losses	28	139	690
Financial income and expenses	2,725	2,708	11,068
Tax on income from operations	72	981	345
Other adjustments	572	489	1,566
Total adjustments	7,242	8,287	29,208
Changes in working capital:
Increase (-) / decrease (+) in trade and other receivables	-1,600	-4,608	810
Increase (+) / decrease (-) in trade and other payables	2,821	7,384	5,069
Increase / decrease in provisions	4	-171	-211
Total changes in working capital	1,225	2,604	5,668
Financial items in operating activities	-247	-310	-1,301
Income taxes paid (-) / received (+)	-384	-442	-994
Cash flows from operating activities	6,358	6,497	25,252
Cash flows used in investing activities
Purchase of tangible and intangible assets	-1,865	-3,074	-9,470
Net proceeds from sale of tangible and intangible assets	0	0	7
Cash flows from investing activities	-1,865	-3,074	-9,464
Cash flows from financing activities
Proceeds from current borrowings	0	0	176
Repayment of current borrowings	-998	-998	-1,996
Payment of lease liabilities	-1,065	-1,174	-4,257
Cash flows from financing activities	-2,063	-2,172	-6,076
Net change in cash and cash equivalents	2,430	1,250	9,712
Cash and cash equivalents at the beginning of period	40,461	31,672	31,672
Net foreign exchange difference	188	-364	-922
Cash and cash equivalents at the end of period	43,080	32,558	40,461

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

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basware

Interim Report January-March 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	1-3/2021	1-3/2020	Change, %	2020
EBIT	1,380	100		4,667
Adjustments:
Acquisition, disposal and restructuring income (-) and expenses (+)	-4	-107	-96.3	-301
Efficiency related expenses	57	48	18.8	453
Total adjustments	53	-59		152
Adjusted EBIT	1,433	41		4,819
Depreciation and amortization	3,845	3,970	-3.1	15,540
Adjusted EBITDA	5,278	4,011	31.6	20,359
% of net sales	14.0%	10.5 %		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.

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

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basware

Interim Report January-March 2021

EUR thousand	1-3/2021	1-3/2020	Change, %	Change, %^{1}	2020
Cloud Revenue
SaaS	15,612	14,191	10.0	11.8	58,344
Transaction services	12,237	12,389	-1.2	-0.4	47,272
Other cloud revenue	1,195	1,195	0.0	1.7	4,696
Cloud Revenue total	29,043	27,774	4.6	6.0	110,312
Non-Cloud Revenue
Maintenance	1,382	4,089	-66.2	-66.1	14,687
License sales	64	79	-18.8	-26.2	348
Consulting services	7,185	6,496	10.6	12.2	26,875
Other non-cloud revenue	67	-193			-644
Non-Cloud Revenue total	8,698	10,471	-16.9	-15.9	41,267
Total	37,742	38,245	-1.3	0.0	151,579
^{1}Organic at constant currencies.

Fair values of financial assets and liabilities

EUR thousand	Mar 31, 2021		Mar 31, 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	1,311	1,311	863	863	688	688
Current:
Current trade receivables	28,280	28,280	30,263	30,263	26,602	26,602
Current other receivables	1,090	1,090	340	340	1,205	1,205
Cash and cash equivalents	43,080	43,080	32,558	32,558	40,461	40,461
Financial liabilities
Non-current:
Financial liabilities valued at amortized acquisition cost:
Loans from financial institutions, interest-bearing^{1}	66,848	77,263	60,268	71,252	66,665	77,299
Leasing liabilities, interest-bearing	11,103	11,103	13,951	13,951	11,647	11,647
Current:
Loans from financial institutions, interest-bearing	2,173	2,173	1,996	1,996	2,173	2,173
Leasing liabilities, interest-bearing	3,554	3,554	3,714	3,714	3,727	3,727
Trade payables and other liabilities	9,005	9,005	9,953	9,953	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.

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

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basware
Interim Report January-March 2021

Financial assets arising from derivative financial instruments of EUR 162 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.

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	Mar 31, 2021	Mar 31, 2020	Dec 31, 2020
Own guarantees
Guarantees	1,239	1,131	1,262
Commitments on behalf of subsidiaries
Guarantees	864	282	822
Other commitments
Maturing in less than 1 year	3,363	3,065	3,455
Maturing in 1-5 years	2,158	4,498	2,876
Total	5,520	7,563	6,331
Total commitments and contingent liabilities	7,624	8,975	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

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basware
Interim Report January-March 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

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basware
Interim Report January-March 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

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basware

Interim Report January-March 2021

QUARTERLY INCOME STATEMENT

EUR thousand	1-3/2021	10-12/2020	7-9/2020	4-6/2020	1-3/2020
NET SALES	37,742	38,793	36,772	37,769	38,245
Cost of sales	-16,415	-16,474	-15,405	-16,589	-17,473
GROSS PROFIT	21,326	22,318	21,368	21,180	20,772
Sales and Marketing	-9,242	-10,853	-8,885	-9,496	-10,767
Research and Development	-6,830	-6,692	-6,546	-6,516	-6,176
General and Administration	-3,761	-3,565	-3,702	-3,253	-3,575
Total operating expenses	-19,833	-21,111	-19,133	-19,265	-20,518
Other operating income and expenses	-113	5	-165	-631	-153
OPERATING PROFIT	1,380	1,213	2,069	1,285	100
% of net sales	3.7	3.1	5.6	3.4	0.3
Finance income and expenses	-2,785	-3,401	-2,829	-2,656	-2,766
Profit/loss before tax	-1,405	-2,188	-760	-1,372	-2,665
Income taxes	-72	367	-64	334	-981
PROFIT/LOSS FOR THE PERIOD	-1,478	-1,821	-824	-1,038	-3,647

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

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basware

Interim Report January-March 2021

KEY INDICATORS

EUR thousand	1-3/2021	1-3/2020	2020
Cloud ARR order intake	2,868	3,617	19,250
Net sales	37,742	38,245	151,579
Net sales growth, %	-1.3%	6.5%	2.2%
Organic net sales growth, %	0.0%	6.6%	3.2%
EBIT	1,380	100	4,667
% of net sales	3.7%	0.3%	3.1%
EBITDA	5,225	4,070	20,207
% of net sales	13.8%	10.6%	13.3%
Adjusted EBITDA	5,278	4,011	20,359
Return on equity, %	-7.0%	-16.0%	-8.3%
Return on investment, %	1.8%	0.8%	3.1%
Interest-bearing liabilities excl. leasing liabilities	69,020	62,264	68,837
Cash and cash equivalents	43,080	32,558	40,461
Cash flows from operating activities	6,358	6,497	25,252
Gearing, %	47.6%	53.4%	53.0%
Gross investments	1,945	3,111	9,877
% of net sales	5.2%	8.1%	6.5%
R&D expenses excluding amortizations	4,399	3,793	16,447
R&D costs, capitalised	1,804	2,465	8,372
R&D investments, total	6,203	6,258	24,819
% of net sales	16.4%	16.4%	16.4%
Depreciation and amortization	3,845	3,970	15,539
Other capitalised expenditure	141	646	1,505
Personnel at end of period	1,334	1,342	1,336

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