Basware Oyj — Interim / Quarterly Report 2021

Feb 3, 2022

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Financial Statements Bulletin January-December 2021

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

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Financial Statements Bulletin January-December 2021

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− Basware Financial Statements Bulletin January December 2021: Order intake back to growth, net sales and EBIT in line with expectations

October-December 2021

• Cloud ARR order intake amounted to EUR 6.0 million (EUR 5.9 million)

• Net sales increased 2.4 percent to EUR 39,742 thousand (EUR 38,793 thousand), which amounted to 0.5 percent organic growth at constant currencies

• Cloud revenue increased 10.4 percent to EUR 31,628 thousand (EUR 28,660 thousand), which amounted to 8.4 percent organic growth at constant currencies

• EBIT increased 26.2 percent to EUR 1,532 thousand (EUR 1,213 thousand)

• Earnings per share (diluted) were EUR -0.04 (EUR -0.13)

January-December 2021

• Cloud ARR order intake amounted to EUR 17.1 million (EUR 19.3 million)

• Net sales increased 1.0 percent to EUR 153,155 thousand (EUR 151,579 thousand), which amounted to 0.9 percent organic growth at constant currencies

• Cloud revenue increased 8.8 percent to EUR 119,996 thousand (EUR 110,312 thousand), which amounted to 8.6 percent organic growth at constant currencies

• EBIT increased 53.1 percent to EUR 7,144 thousand (EUR 4,667 thousand)

• Earnings per share (diluted) were EUR -0.99 (EUR -0.51)

Key figures

	EUR thousand	10-12/ 2021	10-12/ 2020	Change, %	1-12/ 2021	1-12/ 2020	Change, %
	Net sales	39,742	38,793	2.4	153,155	151,579	1.0
	Cloud revenue	31,628	28,660	10.4	119,996	110,312	8.8
	Cloud ARR order intake	6,010	5,899	1.9	17,064	19,250	-11.4
	EBIT	1,532	1,213	26.2	7,144	4,667	53.1
	EBITDA	5,362	5,044	6.3	22,828	20,207	13.0
	Gearing, %1	72.5	53.0	36.8	72.5	53.0	36.8
	Cash and cash equivalents1	31,060	40,461	-23.2	31,060	40,461	-23.2
	Cash flow from operating activities	8,795	5,633	56.1	20,435	25,252	-19.1
	Earnings per share, diluted, EUR	-0.04	-0.13	64.4	-0.99	-0.51	-93.7
	Personnel1	1,347	1,336	0.8	1,347	1,336	0.8
1	At the end of the period.

The Financial Statements Bulletin is unaudited.

Guidance for 2022

Basware guides the following for the full year 2022:

• Order Intake to grow between 15 and 35 percent at organic constant currencies

• • Net sales to grow between 3 and 6 percent at organic constant currencies

• EBIT between EUR 7 and 10 million

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

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Financial Statements Bulletin January-December 2021

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CEO Klaus Andersen:

“Q4 was a good quarter for us overall. Net sales and profitability developed as expected. Total net sales grew 1%, at organic constant currencies, to EUR 39.7 million, while Cloud revenue grew 8% at organic constant currencies, amounting to EUR 31.6 million. Consulting revenue amounted to EUR 6.6 million in Q4, a decline compared to the same quarter last year. Increased partner implementation activity, especially in North America, and a lower number of new projects coming in earlier in the year impacted the Consulting revenues in Q4. Maintenance and License revenue declined in line with expectations. EBIT continued to develop positively and amounted to EUR 1.5 million for the quarter, an increase of 26% YoY. Our cash position remained strong and was EUR 31.1 million at the end of the quarter.

In 2021 we essentially completed our Cloud journey, with 80% of revenues in Q4 coming from the Cloud software business and 17% from Cloud related professional services. Net sales amounted to EUR 153.2 million, 1% organic growth at constant currencies compared to 2020. Cloud revenue reached EUR 120 million, an organic growth of 9% at constant currencies compared to 2020. Consulting revenues amounted to EUR 26.9 million, a small increase compared to 2020. Maintenance and License revenue declined as expected and according to the strategy. EBIT was EUR 7.1 million with a robust increase of 53% compared to 2020.

In 2021, as a result of our Cloud journey progress and a growing loyal customer base, we delivered strong cloud metrics, with Basware's gross renewal rate at 96 percent and net renewal rate at 104 percent. Cloud gross margin was 68.3 percent in 2021, 0.6 percentage point higher than in 2020. Our customer lifetime value to customer acquisition cost ratio (LTV/CAC) was 7.2 times in 2021.

Order intake for the quarter was EUR 6.0 million, growing 1.9% YoY. New logo order intake grew 35.9% YoY and contributed to the total order intake for the quarter with EUR 1.8 million. Many well-known companies such as Auchan, Carmeuse, Grass Valley, SRV and DOF signed up for our cloud services in Q4.

Full year order intake was EUR 17.1 million compared to EUR 19.3 million in 2020, bearing in mind that the large US fast food chain signed in Q3 is not visible in the 2021 order intake numbers. The positive trend in our Partner reseller channel continued, with approximately 18% or EUR 3.1 million of the full year order intake coming from resellers. In 2020 that number was EUR 2.3 million or approximately 12%.

In Q4 we launched to selected pilot customers an exciting innovation and add-on service, Smart Coding, using Artificial Intelligence. Smart Coding helps to reduce the number of touches on invoices by creating machine-learning based coding proposals, thus reducing the time spent on invoice processing even further. In addition, we continued to support our customers in their compliance journey in the global e-invoicing space and introduced an e-invoice compliance map to our homepages with comprehensive descriptions of e-invoicing requirements across the globe. In Procurement we are constantly increasing the depth of functionalities and capabilities. The demand for our next generation Basware Purchase solution grew steadily during the year and we reached 40% growth in number of customers with production usage at the end of the year.

Engaging and aligning all our stakeholders towards our long-term value creation is crucial. I am very pleased that in Q4 we established, for the first time in Basware’s history, a long-term Employee share savings plan. An initiative that gives all Basware employees the opportunity to become an even more integrated part of company’s long-term value creation.

Going into 2022, the momentum we have in Procurement clearly indicates that we are steadily heading towards becoming best in class, not only in Networked Accounts Payable, but also in the wider Networked Purchase-to-Pay space. In 2022 our focus is on accelerating sustainable growth. We will continue to strive towards improved sales execution and efficient demand generation, and at the same time increasing the capacity in this area. Based on the pipeline development we experienced in the second half of 2021 and the order intake performance in the last quarter of 2021, we have increased confidence in continuing the growth in order intake in 2022.”

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

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Financial Statements Bulletin January-December 2021

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Net sales

Net sales
Net sales by revenue type,	10-12/	10-12/	Change,	1-12/	1-12/	Change,
EUR thousand	2021	2020	%	2021	2020	%
Cloud	31,628	28,660	10.4	119,996	110,312	8.8
Consulting	6,643	7,002	-5.1	26,942	26,875	0.2
Maintenance, license and other	1,472	3,131	-53.0	6,216	14,392	-56.8
Total	39,742	38,793	2.4	153,155	151,579	1.0
Net sales by customer location,	10-12/	10-12/	Change,	1-12/	1-12/	Change,
EUR thousand	2021	2020	%	2021	2020	%
Americas	8,474	9,060	-6.5	33,641	35,013	-3.9
Europe	14,577	13,503	8.0	54,767	52,176	5.0
Nordics	14,696	14,338	2.5	56,904	56,428	0.8
APAC	1,994	1,892	5.4	7,843	7,962	-1.5
Total	39,742	38,793	2.4	153,155	151,579	1.0

Net sales by revenue type

Net sales by customer location

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Cloud 80% Americas 21%
Consulting 17% Europe 37%
Q4/21 Q4/21
Nordics 37%
Maintenance, license
and other 3% APAC 5%
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Basware’s net sales for the fourth quarter amounted to EUR 39,742 thousand (EUR 38,793 thousand), an increase of 2.4 percent. This equated to 0.5 percent organic growth at constant currencies.

Basware’s net sales for the year 2021 amounted to EUR 153,155 thousand (EUR 151,579 thousand), an increase of 1.0 percent. This equated to 0.9 percent organic growth at constant currencies.

Cloud revenues continued to grow during the fourth quarter. Cloud revenues in the fourth quarter were EUR 31,628 thousand (EUR 28,660 thousand), up by 10.4 percent, equating to 8.4 percent organic growth at constant currencies and accounted for 79.6 percent (73.9%) of net sales.

In the fourth quarter consulting revenues decreased 5.1 percent, equating to 7.6 percent organic decrease at constant currencies. Increased partner implementation activity, especially in North America, and a lower number of new projects coming in earlier in the year impacted the Consulting revenues in the fourth quarter.

Maintenance and license revenues declined in line with expectations as Basware transitions customers to the cloud and discontinues some of Basware’s legacy services. In the fourth quarter maintenance, license and other revenues decreased 53.0 percent, equating to 53.6 percent organic decrease at constant currencies. The accelerated decline in maintenance is due to end of life of some of Basware’s legacy onpremise products triggered on January 1[st] 2021.

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

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Financial Statements Bulletin January-December 2021

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Basware’s net sales for the fourth quarter from the Americas was positively impacted by the development of US dollar against the Euro. At constant currencies net sales for the fourth quarter from Americas declined by 10.3 percent YoY. Net sales from Americas for the fourth quarter was negatively impacted by significantly increased partner implementation activity. Basware’s net sales for the full year 2021 from Americas was negatively impacted by the development of US dollar against Euro. At constant currencies net sales from Americas in 2021 declined by 0.9 percent year on year.

Cloud order intake

Cloud order intake
Order intake by type,	10-12/	10-12/	Change,	1-12/	1-12/	Change,
EUR thousand	2021	2020	%	2021	2020	%
New logo	1,772	1,304	35.9	6,045	6,065	-0.3
Expansion	3,039	3,746	-18.9	8,378	9,357	-10.5
Transformation	1,199	849	41.2	2,641	3,828	-31.0
Total	6,010	5,899	1.9	17,064	19,250	-11.4

Order intake by type,	Q4	Q3	Q2	Q1	Q4	Q3	Q2	Q1
EUR thousand	2021	2021	2021	2021	2020	2020	2020	2020
New logo	1,772	767	2,795	711	1,304	1,143	2,624	994
Expansion	3,039	1,434	2,214	1,691	3,746	1,587	2,262	1,763
Transformation	1,199	373	602	467	849	875	1,244	860
Total	6,010	2,575	5,611	2,868	5,899	3,604	6,131	3,617

Cloud order intake by customer location in Q4/2021 and Q4/2020

Q4/21	Q4/21		Americas 9% Europe 52%	Q4/20		Americas 13% Europe 59%
			Nordics 39% APAC 0%			Nordics 23% APAC 5%

Basware’s total cloud annual recurring revenue (ARR) gross order intake in the fourth quarter amounted to EUR 6,010 thousand (EUR 5,899 thousand), an increase of 1.9 percent from corresponding period last year. This equated to 0.8 percent growth on an organic constant currency basis.

Basware’s cloud order intake for the year 2021 amounted to EUR 17,064 thousand (EUR 19,250 thousand), a decrease of 11.4 percent. This equated to 11.2 percent decline on an organic constant currency basis. Full year order intake performance was impacted by uncertainty in the business environment primarily caused by the pandemic. Based on the systematic actions to improve sales execution throughout the year, order intake returned to growth in Q4 2021.

Basware reports from Q4 2021 onwards the distribution of cloud order intake into new logo, expansion and transformation order intake types. In Q4 2021 the company reports as an additional disclosure the distribution of order intake between 2020−2021 by quarter and by year. New logo means a new customer to Basware with whom it does not have prior significant business.

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

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Financial Statements Bulletin January-December 2021

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Out of total cloud order intake, new logo increased by 35.9 percent for the fourth quarter compared to corresponding quarter last year and amounted to EUR 1,772 thousand (EUR 1,304 thousand). Expansion decreased by 18.9 percent for the fourth quarter and amounted to EUR 3,039 thousand (EUR 3,746 thousand). The corresponding period last year included a significant customer expansion deal and by adjusting for it, expansion sales growth for Q4 2021 was strong and broad based. In the fourth quarter new logos represented 29%, expansions 51% and transformations 20% of the total cloud order intake. For the year 2021, order intake consisted of 35% new logos, 49% expansions, and 15% transformations.

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

Financial performance

Financial performance
EUR thousand	10-12/ 2021	10-12/ 2020	Change, %	1-12/ 2021	1-12/ 2020	Change, %
Net sales	39,742	38,793	2.4	153,155	151,579	1.0
Cost of sales	-17,275	-16,474	4.9	-66,837	-65,941	1.4
Gross profit	22,467	22,318	0.7	86,317	85,638	0.8
Sales and marketing	-11,162	-10,853	2.8	-38,286	-40,001	-4.3
Research and development	-7,030	-6,692	5.0	-27,928	-25,930	7.7
General and administration	-3,077	-3,565	-13.7	-13,038	-14,096	-7.5
Total operating expenses	-21,269	-21,111	0.8	-79,252	-80,027	-1.0
Other operatingincome and expenses	333	5	6148.0	79	-944	N/A
EBIT	1,532	1,213	26.2	7,144	4,667	53.1
EBITDA	5,362	5,044	6.3	22,828	20,207	13.0

In the fourth quarter, cost of sales amounted to EUR 17,275 thousand (EUR 16,474 thousand), an increase of 4.9 percent. The cloud gross margin was 68 percent in the fourth quarter, flat in comparison to the fourth quarter of 2020.

Out of the total operating expenses, sales and marketing expenses increased 2.8 percent, research and development expenses increased 5.0 percent and general and administration expenses decreased 13.7 percent during the fourth quarter. Sales and marketing costs increased in comparison with the fourth quarter of 2020 mainly due to increased investments into demand generation activities. Research and development costs increased in comparison to corresponding period last year mainly due to higher amortizations of completed development projects, and by a lower level of capitalization of R&D expenses. General and administration costs decreased in comparison to corresponding period last year mainly because of lower level of incentive costs.

Basware’s research and development investments including capitalizations but excluding amortizations totalled EUR 6,370 thousand (EUR 6,196 thousand), or 16.0 percent (16.0%) of net sales during the quarter.

Basware’s EBITDA was EUR 5,362 thousand (EUR 5,044 thousand) and adjusted EBITDA was EUR 5,458 thousand (EUR 5,098 thousand) in the fourth quarter. The adjustments to EBITDA totalled EUR 96 thousand (EUR 53 thousand) in the quarter. Other operating income and expenses amounted to EUR 333 thousand (EUR 5 thousand).

Basware’s EBIT for the quarter amounted to EUR 1,532 thousand (EUR 1,213 thousand).

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

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Financial Statements Bulletin January-December 2021

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In 2021, Basware’s EBITDA was EUR 22,828 thousand (EUR 20,207 thousand) and EBIT EUR 7,144 thousand (EUR 4,667 thousand).

Basware’s loss before taxes was EUR -302 thousand (EUR -2,188 thousand) and loss for the quarter EUR -650 thousand (EUR -1,821 thousand). Taxes for the quarter impacted the result by EUR -349 thousand (EUR 367 thousand). Finance income and expenses for the quarter amounted to EUR -1,833 thousand (EUR -3,401 thousand).

Diluted earnings per share were EUR -0.04 (EUR -0.13) for the quarter.

Cash flow, financing and investments

Cash flow from operating activities developed strongly during the fourth quarter and were EUR 8,795 thousand (EUR 5,633 thousand). The improvement in cash flows compared to corresponding period last year was mainly due to higher profitability and improved working-capital practices. Reporting period’s cash flow from operating activities was positively impacted by reduction in financial expenses as result of refinancing completed during the third quarter of 2021. EUR 897 thousand of the utilized payment deferral opportunities offered by different entities as a result Covid-19 situation are remaining to be repaid by the end of 2022.

Basware’s cash and cash equivalents including short-term deposits totalled EUR 31,060 thousand (EUR 40,461 thousand) at the end of the quarter. Cash balance decreased in comparison mainly because of the refinancing related payments of EUR 9,886 thousand during the third quarter of which EUR 8,332 thousand was related to the payment of the exit fee of the original debt facility and EUR 1,599 thousand related to the transaction fees. In connection with executing the refinancing transaction, EUR 5,000 thousand was transferred to a pledged bank account during the third quarter of 2021, attributable to an adjustment in the covenant terms related to the guarantee the Company has from Garantia for its multi-issuer bond.

Basware’s total assets on the balance sheet at the end of the quarter were EUR 220,720 thousand (EUR 224,862 thousand). Net cash flow from investments was EUR -2,476 thousand (EUR -1,989 thousand) in the quarter.

The equity ratio was 33.1 percent (36.7%) and gearing 72.5 percent (53.0%). Gearing increased because of lower cash balance and decreased equity driven by the loss for the period, both attributable to the refinancing transaction as expected. The Company’s interest-bearing liabilities excluding leasing liabilities totalled EUR 71,402 thousand (EUR 68,837 thousand), of which current liabilities accounted for EUR 1,175 thousand (EUR 2,173 thousand). The return on investment was 4.6 percent (2.9%) and return on equity -3.6 percent (-8.7%) in the quarter.

Personnel

Personnel	by	area,	on	average	10-12/ 2021	10-12/ 2020	Change, %	1-12/ 2021	1-12/ 2020	Change, %
Americas					90	105	-14.2	98	106	-7.6
Europe					388	376	3.4	380	373	1.9
Nordics					410	422	-2.9	416	425	-2.3
APAC					460	430	7.1	446	430	3.7
Total					1,349	1,333	1.2	1,339	1,334	0.4

Basware employed 1,349 (1,333) people on average during the quarter and 1,347 (1,336) at the end of the quarter.

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

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Financial Statements Bulletin January-December 2021

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On 31 December 2021, 12.0 percent (13.6%) of the personnel worked in sales and marketing, 31.8 percent (33.2%) in R&D, production and products, 44.8 percent (42.4%) in consulting and customer services and 11.4 percent (10.7%) in administration.

Basware’s personnel expenses were EUR 21,395 thousand (EUR 22,624 thousand) in the quarter.

Share and shareholders

	Share Indicators	1-12/2021	1-12/2020
	Share price performance, EUR
	- lowest price	28.25	15.66
	- highest price	43.85	42.85
	- average price	37.43	29.58
	- closing price	30.25	42.00
	Market capitalization at end of period1, EUR	437,293,788	605,449,320
	Number of shares1
	- at end of the period	14,455,993	14,415,460
	- average during the period	14,445,824	14,407,595
	- average during the period, diluted	14,580,596	14,638,935
	Number of traded shares (share issue adjusted) in Nasdaq Helsinki	4,162,965	4,817,685
	% of average number of shares	28.6%	33.4%
	Treasury shares held by the Company at end of the period	7,943	5,476
	% of total shares	0.1%	0.0%
	Share capital, EUR	3,528,368	3,528,368
	Earnings per share, undiluted, EUR	-0.99	-0.51
	Earnings per share, diluted, EUR	-0.99	-0.51
	Adjusted earnings per share, undiluted, EUR	-0.96	-0.50
	Adjusted earnings per share, diluted, EUR	-0.96	-0.50
	Equity per share, EUR	5.06	5.73
	Price per earnings (P/E)	-30.70	-82.56
1	Excluding treasury shares

Basware had 11,533 (11,864) shareholders at the end of the quarter, including nominee-registers. Nomineeregistered holdings accounted for 54.1 percent (56.4%) of the total number of shares.

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

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Financial Statements Bulletin January-December 2021

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Share price development and trading 1 January – 31 December 2021

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60.00 800 000
700 000
50.00
600 000
40.00
500 000
30.00 400 000
300 000
20.00
200 000
10.00
100 000
0.00 0
Trading volume on Nasdaq Helsinki Basware Oyj OMX Helsinki (rebased)
04.01.2021 13.01.2021 21.01.2021 29.01.2021 08.02.2021 16.02.2021 24.02.2021 04.03.2021 12.03.2021 22.03.2021 30.03.2021 09.04.2021 19.04.2021 27.04.2021 05.05.2021 14.05.2021 24.05.2021 01.06.2021 09.06.2021 17.06.2021 28.06.2021 06.07.2021 14.07.2021 22.07.2021 30.07.2021 09.08.2021 17.08.2021 25.08.2021 02.09.2021 10.09.2021 20.09.2021 28.09.2021 06.10.2021 14.10.2021 22.10.2021 01.11.2021 09.11.2021 17.11.2021 25.11.2021 03.12.2021 14.12.2021 22.12.2021
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(Source: Modular Finance AB)

Flagging notifications

During 2021, Basware Corporation received the following notifications from major shareholders:

Announcement date	Shareholder	Threshold	Total holding, %
9 February	Arrowgrass Master Fund Ltd	Below 15%	14.3%
23 February	LongPath Partners LP	Over 10%	10.11%
15 April	Arrowgrass Master Fund Ltd	Below 10%	9.2%
20July	Arrowgrass Master Fund Ltd	Below 5%	4.4%

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.

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

9

Financial Statements Bulletin January-December 2021

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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 18 March 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/governance/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 growth is estimated to be slightly over 8 percent from 2022 onwards. In 2021, the Purchase-to-Pay core markets that Basware addresses were estimated to be worth EUR 4.3 billion and these markets are expected to grow to EUR 6.2 million by 2025. Purchase-to-Pay markets are 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 330 thousand annual recurring cloud revenue in 2021. 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 2021 Basware’s gross renewal rate was 96 percent and net renewal rate was 104 percent. The gross margin for cloud revenues in 2021 was 68 percent. Together these make the lifetime value of customer contracts high. In 2021 Basware had a customer lifetime value to customer acquisition cost ratio of approximately seven 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

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

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Financial Statements Bulletin January-December 2021

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customer cloud transformations and reallocate resources to long-term strategic areas. Basware has identified accelerating its Network business as the sixth Must-Win battle from 2021 onwards.

The second Must-Win Battle Delivery Capabilities was completed in 2021 and will be left out from the MustWin Battles, leaving five Must-Win Battles from 2022 onwards. Transformations now and after, which was defined as the fifth Must-Win Battle for year 2021, is renamed to Ignite Growth. With the Must-Win battle Ignite Growth Basware is focusing on accelerating growth in its business as the cloud transformations for Basware’s clients have essentially been completed. Ignite Growth will be effective from 2022 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 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 45 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.

Basware announced on May 2021 that the Basware quality management system has been certified according to the International Organisation for Standardisation (ISO) 9001:2015 standard, the most widely

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recognised international quality management standard. In 2021, Basware also started a project to certify its information security management system (ISMS) according to ISO27001 standard.

Other events of the quarter

On 24 November, the company announced that The Board of Directors of Basware has resolved to establish a new long-term share savings plan for the employees of Basware Corporation and its subsidiaries. The objective of the Employee Share Savings Plan (ESSP) is to offer all employees at Basware a favourable opportunity to invest a part of their salary in Basware shares. The intent of the initiative is to increase alignment of interests between employees and shareholders in Basware’s long-term value creation.

On 1 December, Basware arranged an investor briefing related to its strategy execution status. In the virtual briefing, the strategic priorities, Must Win Battles, for the last strategy period was refined. Must Win Battle delivery capabilities, is completed and will be left out from the Must Win Battles with five Must Win Battles remaining. Must Win Battle transformations now and after, is renamed to ignite growth as Basware has completed its cloud transformations for its clients and the focus is shifted to accelerate growth.

On 17 December, the company announced that The Board of Directors of Basware has resolved to establish a new long-term incentive structure for the company's management and key employees, which entails two share-based plans: Performance Share Plan 2022−2024, which steers key employees toward realizing established strategic objectives and increasing shareholder value, and Restricted Share Plan 2022, for selected key contributors in key markets. The aim of the new plans is to further align the objectives of shareholders and key employees, to retain key employees at the company, and to offer them competitive reward plans based on acquiring, receiving and holding the company's shares.

Events after the quarter

There were no significant events after the quarter.

Future outlook

Themes affecting net sales and EBIT

Basware considers the following key drivers affecting net sales and EBIT in 2022:

• Gradual improvements in the business environment throughout the year

• Gradual improvements in demand generation and sales execution throughout the year, and the timing in the ramp-up of Sales and Marketing capacity and spending

• Cloud revenues impacted by cloud order intake volume and timing, churn and network transaction volume driven revenues. Approximately fifty percent of Basware’s network transaction services revenues are subscription based

• Consulting services revenue is driven primarily by new logo wins, expansion sales, services adoption and efficiency projects for existing customers, as well as the level of partner delivered implementations

• Revenues from maintenance and license will continue to decline approximately at the same rate as in 2021

• Improvements in scalability and operational efficiency are expected to continue

• Inflation and labour costs

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Guidance for 2022

Basware guides the following for the full year 2022:

• Order Intake to grow between 15 and 35 percent at organic constant currencies

• Net sales to grow between 3 and 6 percent at organic constant currencies

• EBIT between EUR 7 and 10 million

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.

Board of Directors’ proposal for dividend

On 31 December 2021, the Group’s parent company’s distributable funds were EUR 12,533 thousand. The Board of Directors proposes to the Annual General Meeting that no dividend be paid for 2021.

Basware Corporation’s Annual General Meeting is planned to be held on 22 March 2022.

Basware Corporation’s financial calendar for 2022

• 21 April 2022 at 8.45 a.m. EEST Interim Report for 1 January–31 March 2022

• 21 July 2022 at 8.45 a.m. EEST Half-Year Financial Report for 1 January–30 June 2022

• • 25 October 2022 at 8.45 a.m. EEST Interim Report for 1 January–30 September 2022

Espoo, Finland, on Wednesday, 2 February 2022

BASWARE CORPORATION

Board of Directors

Klaus Andersen, CEO

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

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Financial Statements Bulletin January-December 2021

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

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

EUR thousand	10-12/ 2021	10-12/ 2020	Change, %	1-12/ 2021	1-12/ 2020	Change, %
NET SALES	39,742	38,793	2.4	153,155	151,579	1.0
Cost of sales	-17,275	-16,474	4.9	-66,837	-65,941	1.4
GROSS PROFIT	22,467	22,318	0.7	86,317	85,638	0.8
Sales and marketing	-11,162	-10,853	2.8	-38,286	-40,001	-4.3
Research and development	-7,030	-6,692	5.0	-27,928	-25,930	7.7
General and administration	-3,077	-3,565	-13.7	-13,038	-14,096	-7.5
Total operating expenses	-21,269	-21,111	0.8	-79,252	-80,027	-1.0
Other operatingincome and expenses	333	5	6,148.0	79	-944	N/A
OPERATING PROFIT	1,532	1,213	26.2	7,144	4,667	53.1
Finance income and expenses	-1,833	-3,401	-46.1	-20,565	-11,652	76.5
PROFIT/LOSS BEFORE TAXES	-302	-2,188	86.2	-13,421	-6,985	-92.1
Income taxes	-349	367	N/A	-812	-345	135.6
PROFIT/LOSS FOR THE PERIOD	-650	-1,821	64.3	-14,233	-7,329	-94.2
Other comprehensive income
Other comprehensive income that will not
be reclassified to profit or loss
Remeasurement of employee benefits	-22	-4	-435.3	-33	-5	-610.1
Other comprehensive income that may be
reclassified subsequently to profit or loss
Exchange differences on translating foreign operations	1,585	-472	N/A	4,977	-4,964	N/A
Cash flow hedges	117	-187	N/A	808	-435	N/A
Income tax relating to components of other comprehensive income	-24	27	N/A	-131	112	N/A
Other comprehensive income for the year net of tax	1,656	-636	N/A	5,621	-5,292	N/A
TOTAL COMPREHENSIVE INCOME	1,006	-2,458	N/A	-8,612	-12,621	31.8
Profit/loss attributable to:
Equity holders of the parent company	-650	-1,821	64.3	-14,233	-7,329	-94.2
Total comprehensive income attributable
to:
Equity holders of the parent company	1,006	-2,458	N/A	-8,612	-12,621	31,8
Earnings per share
undiluted, EUR	-0.04	-0.13	64.4	-0.99	-0.51	-93.7
diluted, EUR	-0.04	-0.13	64.4	-0.99	-0.51	-93.7

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
EUR thousand	Dec 31, 2021	Dec 31, 2020	Change, %
ASSETS
Non-current assets
Intangible assets	38,786	41,927	-7.5
Goodwill	80,257	76,676	4.7
Tangible assets	1,366	1,023	33.4
Right-of-use assets	11,470	14,322	-19.9
Non-current financial assets	13	13	-0.2
Other receivables	8,133	3,541	129.7
Contract assets	0	6	N/A
Deferred tax assets	11,673	10,592	10.2
Non-current assets	151,697	148,101	2.4
Current assets
Trade receivables	27,407	26,602	3.0
Other receivables	9,471	8,714	8.7
Contract assets	639	818	-21.9
Income tax receivables	445	166	168.4
Cash and cash equivalents	31,060	40,461	-23.2
Current assets	69,023	76,761	-10.1
ASSETS	220,720	224,862	-1.8

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
EUR thousand	Dec 31, 2021	Dec 31, 2020	Change, %
EQUITY AND LIABILITIES
Shareholders’ equity
Share capital	3,528	3,528	0.0
Share premium account	1,187	1,187	0.0
Invested unrestricted equity fund	110,290	110,290	0.0
Other reserves	1,006	289	248.4
Translation differences	-8,205	-13,137	-37.5
Retained earnings	-34,843	-19,600	77.8
Shareholders’ equity	72,963	82,557	-11.6
Non-current liabilities
Deferred tax liability	5,960	5,071	17.5
Interest-bearing liabilities	70,227	66,665	5.3
Leasing liabilities, interest-bearing	8,986	11,647	-22.9
Contract liabilities	2,133	2,791	-23.6
Liabilities from employee benefits	509	388	31.2
Non-current liabilities	87,814	86,562	1.4
Current liabilities
Interest-bearing liabilities	1,175	2,173	-45.9
Leasing liabilities, interest-bearing	3,560	3,727	-4.5
Trade payables and other liabilities	34,930	30,470	14.6
Contract liabilities	19,965	19,177	4.1
Income tax liabilities	313	196	59.9
Current liabilities	59,943	55,743	7.5
EQUITY AND LIABILITIES	220,720	224,862	-1.8

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

		Share		Inv. un-
	Share	premium	Treasury	restricted	Other	Translation	Retained
EUR thousand	capital	account	shares	equity	reserves	differences	**earnings **	Total
SHAREHOLDERS’ EQUITY Jan 1, 2021	3,528	1,187	0	110,290	289	-13,137	-19,600	82,557
Comprehensive income						4,932	-14,229	-9,297
Share based payments							-982	-982
Defined benefit plan							-33	-33
Cash flow hedges					717			717
SHAREHOLDERS’ EQUITY Dec 31, 2021	3,528	1,187	0	110,290	1,006	-8,205	-34,843	72,963
		Share		Inv. un-
	Share	premium	Treasury	restricted	Other	Translation	Retained
EUR thousand	capital	account	shares	equity	reserves	differences	**earnings **	Total
SHAREHOLDERS’ EQUITY Jan 1, 2020	3,528	1,187	-98	110,388	653	-8,226	-13,347	94,086
Comprehensive income						-4,912	-7,340	-12,253
Share based payments			98	-98			1,092	1,092
Defined benefit plan							-5	-5
Cash flow hedges					-363			-363
SHAREHOLDERS’ EQUITY Dec 31, 2020	3,528	1,187	0	110,290	289	-13,137	-19,600	82,557

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CONSOLIDATED STATEMENT OF CASH FLOWS

EUR thousand	10-12/ 2021	10-12/ 2020	1-12/ 2021	1-12/ 2020
Cash flow from operating activities
Profit/loss for the period	-650	-1,821	-14,233	-7,329
Adjustments for profit:
Depreciation and amortisation	3,830	3,831	15,685	15,540
Unrealised foreign exchange gains and losses	97	688	310	690
Financial income and expenses	1,746	2,806	20,217	11,068
Tax on income from operations	349	-367	812	345
Other adjustments	77	1,146	-512	1,566
Total adjustments	6,099	8,104	36,513	29,208
Changes in working capital:
Increase (-) / decrease (+) in trade and other receivables	565	54	749	810
Increase (+) / decrease (-) in trade and other payables	3,299	-173	2,807	5,069
Increase / decrease inprovisions	0	20	0	-211
Total changes in working capital	3,864	-99	3,556	5,668
Financial items in operating activities	-234	-243	-3,899	-1,301
Income taxespaid (-) / received (+)	-283	-308	-1,502	-994
Cash flow from operating activities	8,795	5,633	20,435	25,252
Cash flow used in investing activities
Purchase of tangible and intangible assets	-2,476	-1,989	-8,441	-9,470
Net proceeds from sale of tangible and intangible assets	0	0	33	7
Movements in short-term deposits and fixed deposits	0	0	-5,000	0
Cash flow from investing activities	-2,476	-1,989	-13,408	-9,464
Cash flow from financing activities
Proceeds from current borrowings	0	0	0	176
Repayment of current borrowings	0	0	-1,996	-1,996
Payment related to financing	0	0	-9,886	0
Payment of lease liabilities	-1,024	-1,086	-4,267	-4,257
Cash flow from financing activities	-1,024	-1,086	-16,149	-6,076
Net change in cash and cash equivalents	5,295	2,558	-9,122	9,712
Cash and cash equivalents at the beginning of period	25,865	38,427	40,461	31,672
Net foreign exchange difference	-100	-524	-279	-922
Cash and cash equivalents at the end of period	31,060	40,461	31,060	40,461

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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.

In April 2021, IFRS Interpretations Committee published their final agenda decision on the accounting of configuration and customization costs in a cloud computing arrangement (IAS 38 Intangible Assets). In this agenda decision, the Committee considered when an intangible asset can be recognized in relation to configuration and customization of an application software. As the IFRIC agenda decisions do not have a date when they enter into force, they are expected to be applied as soon as possible.

Basware has cloud computing arrangements and has analysed whether this agenda decision has an impact on the accounting principles related to costs in implementing cloud computing arrangements. As a result of this analysis, it was concluded that the IFRIC agenda decision has an impact on the earlier accounting treatment related to costs in cloud computing arrangements. As an outcome of the analysis, Basware has expensed cloud computing related costs which had a minor impact during the fourth quarter.

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

Adjusted EBIT and EBITDA
EUR thousand	10-12/ 2021	10-12/ 2020	Change, %	1-12/ 2021	1-12/ 2020	Change, %
EBIT	1,532	1,213	26.2	7,144	4,667	53.1
Adjustments:
Acquisition, disposal and restructuring income (-) and expenses (+)	-21	-161	-87.0	-75	-301	-75.1
Efficiency related expenses	117	214	-45.3	432	453	-4.6
Total adjustments	96	53	81.1	357	152	134.9
Adjusted EBIT	1,628	1,266	28.6	7,501	4,819	55.7
Depreciation and amortization	3,830	3,831	0.0	15,685	15,540	0.9
Adjusted EBITDA	5,458	5,098	7.1	23,186	20,359	13.9
% of net sales	13.7%	13.1%		15.1%	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.

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Financial Statements Bulletin January-December 2021

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	EUR thousand	10-12/ 2021	10-12/ 2020	Change, %	Change, %1	1-12/ 2021	1-12/ 2020	Change, %	Change, %1
	Cloud Revenue
	SaaS	17,273	15,173	13.8	11.6	65,227	58,344	11.8	11.9
	Transaction services	13,064	12,127	7.7	6.4	49,844	47,272	5.4	5.3
	Other cloud revenue	1,291	1,361	-5.1	-10.3	4,926	4,696	4.9	2.0
	Cloud Revenue total	31,628	28,660	10.4	8.4	119,996	110,312	8.8	8.6
	Non-Cloud Revenue
	Maintenance	1,443	3,341	-56.8	-57.4	6,051	14,687	-58.8	-59.1
	License sales	54	94	-42.5	-43.9	136	348	-61.0	-63.0
	Consulting services	6,643	7,002	-5.1	-7.6	26,942	26,875	0.2	0.1
	Other non-cloud revenue	-26	-304	-91.6	-91.9	30	-644	N/A	N/A
	Non-Cloud Revenue total	8,114	10,132	-19.9	-21.8	33,158	41,267	-19.6	-19.9
	Total	39,742	38,793	2.4	0.5	153,155	151,579	1.0	0.9
1	Organic at constant currencies.

Net sales by currency

Basware reports a breakdown of net sales by currency due to its multi-currency operations.

% of total net sales	1-12/ 2021	1-12/ 2020
EUR	54.1	52.8
USD	20.5	21.3
GBP	7.3	7.2
Other	18.0	18.6
Group total	100.0	100.0

Fair values of financial assets and liabilities

	Dec	31, 2021	Dec 31,	2020
EUR thousand	Book value	Fair value	Book value	Fair value
Financial assets
Non-current:
Non-current financial assets	13	13	13	13
Non-current trade and other receivables	6,138	6,138	688	688
Current:
Current trade receivables	27,407	27,407	26,602	26,602
Current other receivables	1,192	1,192	1,205	1,205
Cash and cash equivalents	31,060	31,060	40,461	40,461
Financial liabilities
Non-current:

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Financial Statements Bulletin January-December 2021

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Financial liabilities valued at
amortized acquisition cost:
Loans from financial institutions, interest-bearing	70,227	78,151	66,665	77,299
Leasing liabilities, interest-bearing	8,986	8,986	11,647	11,647
Current:
Loans from financial institutions, interest-bearing	1,175	1,175	2,173	2,173
Leasing liabilities, interest-bearing	3,560	3,560	3,727	3,727
Trade payables and other liabilities	12,207	12,207	10,196	10,196

Financial assets arising from derivative financial instruments of EUR 450 thousand are classified as level 2 and unquoted equity shares of EUR 13 thousand as level 3 in the fair value measurement hierarchy.

On July 12, 2021, Basware made an agreement of its debt facility with Macquarie Principal Financing PTY Limited, effective 12th of July 2021. The debt facility is a EUR 66 million senior secured loan which will be due September 2024 and has a non-call of 24 months. The loan amount of EUR 66 million consists of EUR 50 million related to the debt facility drawn in 2019, EUR 11 million related to previously capitalized interest (PIK interest) and EUR 5 million upsizing to enhance the Company’s overall liquidity position. The cash interest margin of the loan is 6.00 per cent per year.

Commitments and contingent liabilities

Commitments and contingent liabilities
EUR thousand	Dec 31, 2021	Dec 31, 2020
Own guarantees
Guarantees	1,052	1,262
Business mortgage	86,200	0
Commitments on behalf of subsidiaries
Guarantees	862	822
Other commitments
Maturing in less than 1 year	2,831	3,455
Maturing in 1-5 years	572	2,876
Maturinglater than 5years	2	0
Total	3,405	6,331
Total commitments and contingent liabilities	91,518	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. The group does not have pledges, mortgages or guarantees on behalf of external parties.

On July 12, Basware completed an amendment agreement of its debt facility with Macquarie Principal Financing PTY Limited, effective 12th of July 2021. Under the amendment, the debt facility type was changed to a senior secured debt facility which will be due September 2024 in line with the facility’s original maturity and has a non-call of 24 months. As a security for the debt facility mortgage notes with a total nominal of EUR 86.2 million were pledged to the lender.

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Financial Statements Bulletin January-December 2021

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The Group has committed to enter into a lease agreement with expected cash outflows during the coming year. When this occurs, the Group is exposed to potential cash outflows that are not now disclosed in the measurement of rental liabilities or other commitments.

In addition, Basware has an asset of EUR 5,000 thousand in a pledged bank account that is related to the guarantee the Company has from Garantia for its multi-issuer bond.

The Group’s Indian subsidiary is in receipt of Show Cause Notice pertaining to Indian financial year 20172018 and 2018-2019 for goods and service tax liability and if services are considered to be Intermediary services or export of services. This issue is related to a substantial number of global IT companies operating in India. As a result of the analysis made based on the recent circular No. 159/15/2021 dated 20 September 2021 issued by Central Board of Indirect Taxes (CBIC), it has been concluded by the Group that software development services provided by Basware India to Basware Oyj would qualify as export of services. The Group has not recorded any provision related to the Notice as the Group considers it to be more likely than not that it will not realize.

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

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Financial Statements Bulletin January-December 2021

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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.

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

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Financial Statements Bulletin January-December 2021

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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

QUARTERLY INCOME STATEMENT

QUARTERLY INCOME STATEMENT
EUR thousand	10-12/2021	7-9/2021	4-6/2021	1-3/2021	10-12/2020
NET SALES	39,742	37,100	38,571	37,742	38,793
Cost of sales	-17,275	-16,010	-17,137	-16,415	-16,474
GROSS PROFIT	22,467	21,090	21,434	21,326	22,318
Sales and Marketing	-11,162	-8,768	-9,113	-9,242	-10,853
Research and Development	-7,030	-7,190	-6,879	-6,830	-6,692
General and Administration	-3,077	-2,774	-3,427	-3,761	-3,565
Total operating expenses	-21,269	-18,732	-19,418	-19,833	-21,111
Other operatingincome and expenses	333	74	-215	-113	5
OPERATING PROFIT	1,532	2,432	1,800	1,380	1,213
% of net sales	3.9	6.6	4.7	3.7	3.1
Finance income and expenses	-1,833	-12,934	-3,012	-2,785	-3,401
Profit/loss before taxes	-302	-10,503	-1,212	-1,405	-2,188
Income taxes	-349	-195	-195	-72	367
PROFIT/LOSS FOR THE PERIOD	-650	-10,698	-1,407	-1,478	-1,821

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

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Financial Statements Bulletin January-December 2021

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KEY INDICATORS

EUR thousand	10-12/ 2021	10-12/ 2020	1-12/ 2021	1-12/ 2020
Cloud ARR order intake	6,010	5,899	17,064	19,250
Net sales	39,742	38,793	153,155	151,579
Net sales growth, %	2.4%	-1.2%	1.0%	2.2%
Organic net sales growth, %	0.5%	0.8%	0.9%	3.2%
EBIT	1,532	1,213	7,144	4,667
% of net sales	3.9%	3.1%	4.7%	3.1%
EBITDA	5,362	5,044	22,828	20,207
% of net sales	13.5%	13.0%	14.9%	13.3%
Adjusted EBITDA	5,458	5,098	23,186	20,359
Return on equity, %	-3.6%	-8.7%	-18.3%	-8.3%
Return on investment, %	4.6%	2.9%	4.3%	3.1%
Interest-bearing liabilities excl. leasing liabilities	71,402	68,837	71,402	68,837
Cash and cash equivalents	31,060	40,461	31,060	40,461
Cash flow from operating activities	8,795	5,633	20,435	25,252
Gearing, %	72.5%	53.0%	72.5%	53.0%
Gross investments	2,220	2,150	8,554	9,877
% of net sales	5.6%	5.5%	5.6%	6.5%
R&D expenses excluding amortizations	4,440	4,320	17,666	16,447
R&D costs, capitalised	1,930	1,876	7,569	8,372
R&D investments, total	6,370	6,196	25,235	24,819
% of net sales	16.0%	16.0%	16.5%	16.4%
Depreciation and amortization	3,830	3,831	15,685	15,539
Other capitalised expenditure	290	275	985	1,505
Personnel at end of period	1,347	1,336	1,347	1,336

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