Basware announced on February 2, 2016 its strategy for 2016 to 2018, when the company held also Capital Markets Day. On October 19, 2016 we announced refinements to our strategy targets and additional actions to improve execution and boost future growth:
Basware is the global leader in providing networked purchase-to-pay solutions, including e-invoicing and financing services. Basware has passed a tipping point in its transition from a license-dominated software company to a cloud-based services provider. Cloud revenue growth is Basware’s primary objective and Basware will continue to strengthen its leading market position in in order to grow cloud revenue.
Clarification of priorities and vision
Basware’s vision of the significant growth potential in the markets it operates in and Basware’s ability to capture that opportunity is unchanged.
Vesa Tykkyläinen was appointed as CEO of Basware on 26th September, 2016. Since taking on the role of CEO, in conjunction with the Basware executive team and Board, he has undertaken a review of Basware’s business and has concluded that more focus and simplicity are needed in order to better execute the strategy.
Cloud revenue growth is Basware’s primary objective and where long term value in our business will be created. Cloud revenues are comprised of revenues from SaaS, other subscriptions, network transactions and financing services.
Enabling execution of Basware’s strategy
Since announcing its strategy in February, Basware has invested in operating investments to accelerate growth. This has included a 25 percent increase in sales and marketing headcount. The positive effects of these investments will take time to be visible in increased net sales.
As part of the review of the business conducted since Vesa Tykkyläinen became CEO, an additional set of actions to boost future growth, simplify our operations and improve our productivity have been identified. These actions will mainly be targeted at:
- Continuing to strengthen sales and marketing to drive cloud revenue growth
- Focusing on Customer Success by further improving customer satisfaction and experience
- Continuing to grow and monetize the network and data assets with financing and other value added services, focusing on product development and partnerships
- Increasing productivity by simplifying our operations and increasing scalability
- Evolving our culture and way of working to focus more on performance
As before, organic growth is the key focus and this will be supported by a disciplined acquisition strategy.
Refinements to strategy targets
The CEO review of Basware’s business concluded that the long term opportunity remains intact. However there will be a timing shift in achieving the original targets outlined in February 2016. Basware is therefore moving the horizon for its strategy period from 2018 to 2020.
Simplifying Basware’s operations begins with rationalizing its targets. For the period from 2017 to 2020, Basware will focus on three key metrics aimed at boosting cloud revenues:
- Cloud revenues to increase by more than 20% CAGR on an organic basis
- Annual net sales greater than EUR 220 million
- Recurring revenue approximately 80% of net sales
At the same time Basware will continue to improve underlying profitability (excluding growth related investments) over the period.
Financing services and similar value added services based on Basware’s significant network data asset continue being a core part of Basware’s growth strategy. As the market is nascent and exact revenues difficult to forecast, a specific financing services revenue forecast is not included in the revised strategy goals.
These refined strategy targets provide clarity of mission and focus Basware on the areas of our business where most value will be created for the company and its shareholders.
With these actions, Basware looks forward to further strengthening its global leadership position in networked purchase-to-pay and to driving cloud revenue growth.