Basware – talking to their CEO, Esa Tihila

We've featured Basware pretty regularly over the last year or so. As a very major player in e-invoicing, then purchase to pay, and now very recently also with spend analytics and sourcing capability, that's not surprising. But they are unusual in being both a pure procurement / supply chain firm and publicly quoted. So we get quarterly updates on their performance as they declare numbers for their investors on the Helsinki stock market.  That’s something privately held firms don’t have to do, for which most are truly thankful!

We featured the recent Basware profits warning here which suggested earnings this year would be below previous estimates, and this month they released their latest figures, the interim report for 2013. Not surprisingly they were in line with the recent statement. Sales were up 9.7% but the company slipped into a small loss with operating profit at -1.1% of revenues, although cash flow was still positive.

There is much talk about “transition” in the accompanying statement, and given the slower than planned implementation of their new Alusta platform, as well as a gradual move from traditional software license sales to a “cloud” and therefore subscription based model, there is certainly some truth in that.

I also had the chance to meet Basware's Chief Executive, Esa Tihila, when he was in London for various meetings connected with the results, and you can read more about my discussion with him on our US site (it’s a Spend Matters PRO article, so subscription required).

As we've said before, you can look at Basware's performance and share price in one of two ways. It may be  a "blip", which once issues like Alusta and Certipost (their Belgian acquisition which is taking time to settle down) are overcome will see the firm and the share price on a strong upward trend again, or they could be signs of a deeper malaise. Tihila was certainly bullish about prospects, in a rational, no-BS, Finnish sort of way!

He was convincing in his comments around getting Certipost back on track, now that initial people and contractual issues have been resolved. He also pointed out the strength and loyalty of Basware's customer base. But on the other hand, competition from established players like SAP and new boys such as Coupa is stronger than ever. So if you forced me into a view, I would be positive about prospects, but one way or another, the next year will be very interesting and important for the firm.

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