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BASWARE: THE TIME IS NOW
JP MORGAN TECH CEO CONFERENCE
20 JUNE 2016
IMPORTANT NOTICE
The following information contains, or may be deemed to contain, forward-looking statements. These
statements relate to future events or future financial performance, including, but not limited to,
expectations regarding market growth and development as well growth and profitability of Basware. In
some cases, such forward-looking statements can be identified by terminology such as “expect”, “plan”,
“anticipate”, “intend”, “believe”, “estimate”, “predict”, “potential”, or “continue”, or the negative of those
terms or other comparable terminology. By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on circumstances that may or may not occur in
the future. Future results may vary from the results expressed in, or implied by, the forward-looking
statements, possibly to a material degree. All forward-looking statements included herein are based on
information presently available to Basware and, accordingly, Basware assumes no obligation to update
any forward-looking statements, unless obligated to do so pursuant to an applicable law or regulation.
Nothing in this presentation constitutes investment advice and this presentation shall not constitute an
offer to sell or the solicitation of an offer to buy any securities of Basware or otherwise to engage in any
investment activity.
2
3
Future Potential:
100%
e-invoices
HUGE MARKET POTENTIAL FOR E-INVOICING
4
370 billion invoices annually, globally,
95% currently in paper format
Current Total
Addressable
Market:
3 billion e-invoices,
1% of total
Source: Management estimates, Billentis, EESPA. Covers B2B, B2G and B2C
E-invoice Other electronic formats Paper and unstructured data
WHY E-INVOICING WILL GROW:PULL FROM EFFICIENCY GAINS
80% of
businesses
still
process
invoices
manually(1)
An e-invoice costs less than a stamp to send
Admin costs drop dramatically (60-80%)
Organisations get paid faster (by up to 45 days)
Cashflow management improves
5 (1) US Federal Reserve Banks of Minneapolis & Chicago study
WHY E-INVOICING WILL GROW:PUSH FROM REGULATION
EU and US
public sector
mandated to
support
e-invoicing
from end 2018
More than 50 governments pushing e-invoicing
• Cut costs
• Increases tax income
• Reduces fraud
65% of businesses supply the public sector
= 14 million companies in the EU alone
6
THE LEADING PROVIDER OF E-INVOICING AND NETWORKED PURCHASE-TO-PAY SOLUTIONS
E-invoicing solutions &
operator between
buyers & suppliers
• 1 million connected companies
in over 100 countries
• Over 100m annualized
transactions
Invoice automation,
procurement & travel and
expense management
software and analytics
• 2500+ large customers, 1.2
million users
New value added
innovations: Basware Pay,
Basware Discount &
Basware Advance
• Partnerships include
MasterCard, Arrowgrass, ING
• 40 clients already signed up
Largest
e-invoicing Network
7
NetworkP2P Financing Services
#1 in Accounts Payable Top 3 in Procurement
AN EXTENSIVE AND INTERNATIONAL CUSTOMER BASE
8
Finland34%
US, UK, Germany
27%
Other39%
2015 Net sales breakdown by geography
GLOBAL LEADER IN A FRAGMENTED MARKET
P2P NetworkFinancing
Services
Global
competition from
ERP providers
Smaller local
providers
Very few global
competitors
Multiple small
local competitors
Offering is unique
in breadth
Competition
depends on
customer size
9
#1 in Accounts
Payable and Top 3
in Procurement
#1 e-invoicing
operator globallyNascent market
7% share of
addressable
market
3% share of
addressable
market
Nascent market
BASWARE IS UNIQUELY POSITIONED TO CAPTURE MARKET GROWTH
WHY BASWARE
Strategy Focused on
Growth
World’s Largest Open
Network
Established and
Loyal Customer Base
Better Products
Unique Integrated
Offering
Geographical Reach
and Know-How
10
2016-2018 STRATEGY PRIORITIES SET IN FEBRUARY 2016
Extend cloud
Purchase to Pay
leadership
Accelerate
Network growth
Unleash
Financing
Services
1. Accelerate
all three
businesses:
2. Supported
and enabled
by:
Further
shortening of
delivery times
Investing in
demand
generation
and sales
Scalable
company
infrastructure
11
Further expand
to SMBs
Key markets:
US, UK,
Germany
Public sector
3. With key
areas of
customer
focus:
2018 STRATEGIC GOALSSET IN FEBRUARY 2016
Top line & transaction growth
€220 to €280 million
Growth is #1 priority
Focus on growing cloud
businesses and recurring
revenue
Opex increase to implement
necessary growth enablers
Improving profitability over
time
Select acquisitions
2/3 of total revenues
~80% of total revenues
250 million
transactions annually
>30% CAGR over 2016-2018
>10% of Basware net sales
Priority
Net sales
Transactions
Cloud
revenue
Recurring
revenue
P2P SaaS
Revenue
Financing
Services
12
0
20
40
60
80
100
120
140
160
2010 2011 2012 2013 2014 2015
TIPPING POINT REACHED IN TRANSITION TO CLOUD AND SAAS
Cloud
businesses
drive growth
Net Sales by type (€M, 2010 – 2015)
Maintenance,
license and
consulting
provide a
solid base
Other
Transactions
SaaS
Consulting
Licenses
Maintenance
2015 Net sales mix
2010 Net sales mix
Maintenance, consulting and license
SaaS and Network
13
2015 Net sales:
€143.4 million
2010 Net sales:
€103.1 million
BASWARE’S BUSINESS MODEL:SELF-FINANCING ORGANIC GROWTH
14
Established,
Profitable &
Cash Generative
P2P Business
Invest in
Growing the
Network
And now in FS
to Monetize Data
in the Network
0
5
10
15
20
2010 2011 2012 2013 2014 2015
HISTORICALLY PROFITABLE & CASH GENERATIVE
15
Profitable every
year since
founding in
1985
Consistent
investment into
R&D and
developing new
business areas
EB
ITD
A
(EU
Rm
)
Net
Op
era
tin
g
Cash
flo
w
(EU
Rm
)
R&
D a
s %
of
Net
Sale
s
R&D (expensed) R&D (capitalized)
0
5
10
15
20
2010 2011 2012 2013 2014 2015
0%
5%
10%
15%
20%
2010 2011 2012 2013 2014 2015
EBITDA MARGIN TEMPORARILY IMPACTED; UNDERLYING PROFITABILITY IMPROVING
2015 2016 2017 2018
Basware totalEBITDA 8%
Transactions Gross
Margin50-60%
SaaS Gross
Margin60-70%
Financing
ServicesGross
MarginN/A 80-90%
Consulting Gross
Margin10-20%
License Gross
Margin~90%
Maintenance Gross
Margin>90%
16
ACQUISITIONS SUPPORT BASWARE STRATEGY
17
• Extend Basware Network
• Consolidate P2P competition
• Strengthen our offering
• Focus on key markets
• High share of cloud revenues
• Visible revenue synergy opportunity
• Profitable or clear path to profitability
• Substantial benefits to customers
WITH M&A OUR PRIORITIES ARE... OUR KEY CRITERIA INCLUDES...
DISCIPLINED APPROACH TO ACQUISITIONS
Year Company Country Key rationale
2016 Verian US Strengthen market position in the US. Extend Network to Verian customers. Strengthen eProcurement
2015 Procserve UK Access to UK public sector customers to leverage the eInvoicing opportunity
2013 Certipost Benelux Gain a significant position in the Benelux e-Invoicing market
2012 1stBP Germany Become a leading e-Invoice operator in Germany
BASWARE’S TIME IS NOW FOR THE NEXT PHASE OF GROWTH
18
THE market
leader
Huge market
opportunity
Unique
integrated
structure
APPENDIX
PAPER INVOICE EXAMPLESDIFFERENT FIELDS, LAYOUTS, LANGUAGES
20
E-INVOICE EXAMPLESTRUCTURED DATA, MACHINE READABLE
21
Ex
tra
ct
fro
m X
ML
Fo
rma
t E
-In
vo
ice
:
Ac
co
mp
an
yin
g I
ma
ge
Co
nve
rsio
n:
Note: Customer details blacked out
INTEGRATED OFFERING IS KEY DIFFERENTIATOR
• Software used within companies
• # 1 in Accounts Payable, Top 3 in Procurement
• 30+ years of expertise, Gartner magic quadrant,
recognized as leader by Forrester
• Transition from Licence to SaaS model
• Modern cloud-based architecture
• Powered by Basware Commerce Network
P2P
• Send and receive documents through the Basware
Commerce Network (e.g. e-invoices)
• World’s largest network
• Open network architecture and interoperability
• Transaction based model
• Comprehensive geographical and format coverage
• Enables use of value added services e.g. Financing
• A working capital platform offering clients payables
and receivables financing
• Built on top of Basware Commerce Network,
utilizing data flow between companies
• Financing provided in partnership with financial
institutions or agreed between buyer and seller
• Commission based model
Network
Financing Services
Buyer
Access
Financing
Send / Receive
e-Invoices
Send / Receive
Orders,
Confirmations,
Catalogues and
Other
Documents
Network
Buyer
Supplier
Supplier
Supplier
P2P
Finance
Partners
Financing
Services
Confirmed
Purchase Order
Funding and
payments
AP automation,
E-procurement,
Travel and expense
management and
Analytics
22
HISTORICAL NET SALES TYPE BREAKDOWN
EUR million
34.036.6
33.6
39.2
34.1
Licence Sales
Maintenance
Consulting Services
SaaS
Transaction Services
Other
2.5 2.9 2.1 3.41.5
10.1
8.1
3.6
8.4
2.4
2.5
10.4
10.3
3.2
9.42.6
10.3
7.9
2.9
7.8
2.1
10.5
9.5
3.0
8.6
3.0
10.5
7.9
2.7
7.4
23
FOR INVESTORS
www.basware.com/investors
www.basware.com/annualreport
BASWARE
www.basware.com
www.twitter.com/basware
www.facebook.com/BaswareCorporation
www.linkedin.com/company/basware
FINANCING SERVICES
www.basware.com/financing-services
RESEARCH REPORTS
www.basware.com/knowledge-center
MOREINFORMATION