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Edited Transcript of BAS1V.HE earnings conference call or presentation 22-Oct-19 8:00am GMT

Nine Months 2019 Basware Oyj Earnings Call

Espoo Oct 25, 2019 (Thomson StreetEvents) -- Edited Transcript of Basware Oyj earnings conference call or presentation Tuesday, October 22, 2019 at 8:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Ben Selby

Basware Oyj - VP of IR & Treasury

* Klaus Andersen

Basware Oyj - CEO

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Conference Call Participants

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* Julian Alexander Serafini

Jefferies LLC, Research Division - Equity Analyst

* Matti Riikonen

Carnegie Investment Bank AB, Research Division - Financial Analyst

* Petri Aho

Inderes Oy - Partner & Analyst

* Sami Sarkamies

Nordea Markets, Research Division - Senior Analyst of TMT

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Presentation

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Ben Selby, Basware Oyj - VP of IR & Treasury [1]

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Good morning and welcome to the Basware Third Quarter 2019 Results Presentation. I'm Ben Selby, Head of Investor Relations, and I'm joined by Basware’s CEO, Klaus Andersen. This presentation is taking place live in Helsinki and also streamed live via webcast for our international audience. There will be the opportunity to ask questions at the end of the presentation, and a recording of the presentation will be made available on Basware’s website.

Before we begin, I must draw your attention to this important notice about forward-looking statements as well as to the risk factors outlined in Basware’s interim report.

I will now hand over to Klaus to begin the presentation.

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Klaus Andersen, Basware Oyj - CEO [2]

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Thank you very much, Ben, and good morning to everyone, also from me. Let's start with the key takeaways from today's presentation. The effect of our productivity program is now very visible in our numbers, and we are very satisfied with the outcome. And in certain areas, the improvements we are seeing has actually come slightly ahead of plan.

Our order intake for this quarter was strong and amounted to EUR 5.5 million; strong improvement in our Professional Services business, up more than 30% on a year-on-year basis and up also compared to Q1 and Q2 this year. So all in all, a very good quarter for Basware.

As usual, we would like to say a few words of how the external world is looking at us and what we have seen from the external world in Q3. And for the fourth time, Basware is in Gartner's Magic Quadrant for P2P suites.

Looking at the underlying drivers of Gartner's assessment, the so-called critical capabilities, we ranked #1 across a field of 13 vendors in a number of areas. So accounts payable, AP-focused use cases, number one; e-invoicing capabilities, supply chain financing, integration capabilities and partner ecosystem; and in some of the categories, with quite a sizable gap between us and the runner-ups. So very pleasant reading.

Our philosophy of opening up our platform through open and modern APIs is being well received in the market, both by analysts, customers and prospects. It means that we can coexist with other systems and still ensure full data capture and 100% spend visibility. We will continue this approach of opening up our platform, and we will cooperate with specialist vendors, so-called best-of-breed vendors, in areas where we don't have enough functionality ourself, and we will even offer our customers to integrate seamlessly with competitive systems. This is especially valuable for large customers because large customers can select whatever system they want for a particular business area, and they don't have to take it all from one vendor. They can go best-of-breed.

Implementation. They can implement their new systems in a phased approach, which is much more manageable and less risky compared to a big bang approach. This is also an important move and an important strategy when it comes to our relations with advisory partners because it opens up the possibility for them to suggest best-of-breed solutions to their clients instead of full suite from only one provider. We have so far engaged in technology partnership talks with 3 U.S. specialist vendors, all vendors that complement our offerings very well.

On the customer side, in Q3, we had a strong order intake this quarter, as said. And in Q3, we continue to add really well-known and large clients to our client base. Our key markets contributed strongly and especially in North America and the U.K., and we signed a large North American department store as a new client this quarter. And a significant deal was made with the U.K. public sector, alongside with a series of sizable expansion deals with existing customers.

75% of the order intake in Q3 came from net new names and expansion business, which is really nice to see. And the average deal size for new customers continues to increase. So our clients are getting bigger and bigger. And that is a very good foundation for future expansions with these clients going forward.

Going back to Q1 announcements. In April, we launched our productivity program to significantly improve our profitability, simplify our business while retaining our growth. And this slide is the slide that we presented back in the end of April. And we are now at the tail end of that program, and the results are very visible in our accounts now. We have taken a step change in our cost run rate, simplifying and streamlining our operations. And we have done that while maintaining the growth and the level of order intake that we were aiming at. So we are well on the way to reach our 2020 target of a positive EBIT and positive free cash flow generation when exiting 2020.

So this is sort of the last time that we will talk about the productivity program, but let me highlight a few of the numbers, which makes it very, very, very clear that we -- that -- what we have done. So strong results from the productivity program are now visible.

Let's start with the profitability things. The gross margin is up 6 percentage points compared to the previous quarter, and we are fully on track to reach the target of EUR 10 million run rate cost savings in -- compared to Q1 2019 for next year. And we have managed to implement the program at a cost of slightly less than we anticipated and estimated. So the total cost for the program was EUR 1.9 million.

As we said, consulting business is improving as well. Consulting revenue is up more than 30% compared to the same quarter last year. And all in all, I think the numbers, they talk for themselves. I would say this is a testament that the productivity program has been implemented in a very efficient way. And I'm very happy that we can share the tangible results of the program with this quarterly report. Ben will take you more through the numbers of Q3. So now I will hand it over to Ben to do that. All yours, Ben.

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Ben Selby, Basware Oyj - VP of IR & Treasury [3]

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Thank you, Klaus. So if we start off with the financial highlights of Q3, Cloud growth was 11%, and we'll come back to that in a little bit. That's not what we expect fully going forward. Total growth was 8%. That's actually the highest growth rate that we've had in terms of total growth since the end of 2015, when Basware started to go into the cloud transition in earnest.

Our profitability, EBIT was up EUR 940,000, positive EUR 940,000 in the third quarter, the first time we've had positive EBIT on a like-for-like basis, excluding the impact of disposals also since the end of 2015. And our operating cash flow was positive EUR 1.5 million, and that's the first time that we've had a positive operating cash flow in the third quarter since 2014. Q3 is normally a quarterly outflow quarter for cash given the holiday season. So taking this all together, we can really say that Basware is on track to its targeted profitable growth.

Looking forward to order intake. Order intake expressed as annual recurring revenue was EUR 5.5 million in Q3, up 22% from 1 year ago. That's a particularly good result when you consider that Q3 is normally a relatively quiet quarter for order intake given the holiday season. And in fact, this was the best Q3 that Basware has had.

Good performance continued in the U.S. market, and it was also pleasing to see, for the first time in many quarters, a solid contribution from the U.K. Importantly, the quality of the order intake also continued to improve, and this is in line with the trend that we've seen from the H1 continuing. So the average deal size continued to increase. And that's important. It's in line with our strategy to go after larger customers. And also the mix improved. So we had a higher proportion from expansions and new customers together at 75% of the total, and that's important because we are relying less and less on transformations from the maintenance base to drive our order intake and future growth.

Looking at Basware’s net sales progression. In the third quarter, overall, our total revenue growth was 8%. As said, the highest that we've seen since 2015. Cloud revenue growth was 11.5%. We do not expect this to be the normalized cloud growth rate going forward. The cloud growth rate was negatively impacted by the wanted churn of nonstrategic unprofitable contracts that we have not renewed, and this is part of the productivity program and in line with what we commented on in the second quarter results.

Consulting revenues were up 30.7%. As Klaus said, there are strong signs that the consulting business is improving. The growth rate this quarter was also exceptionally high as a -- for a couple of reasons. Firstly, there was the timing of a number of project deliveries came in Q3, which impacted that number, particularly in the U.S., where there's been a strong order intake earlier in the year. Additionally, with the movement of some of our consulting resources to central locations in India and Romania, this has actually reduced some of the traditional seasonality that we've seen in Q3. So that's helped the growth rate as well.

Looking forward, on consulting, whilst there will always be quarterly variations, our expectation is that consulting revenues will now be flat to growing in the future, on average.

Turning to maintenance and license. The rate of decline increased from the first half to minus 19%. This is in line with what we expected and is driven by the fact that we entered some of our legacy products into end-of-life. That was announced in Q1, became effective at the end of Q2 and has now hit the numbers. So what we can say is that going forward, our expectation is that the decline rate in maintenance and license will be at around this level, but it will have a smaller and smaller impact on total growth going forward as it's a smaller and smaller part of the overall revenues.

Just a brief comment on the difference between organic constant currency growth rates and reported growth rates. The main difference this quarter is because of the strengthening of the dollar versus the euro over the last 12 months.

Turning to profitability. This is the first quarter where the positive effects of the productivity program can be seen in the P&L. And in summary, before we go into the line items, all of the cost lines have been impacted and reduced, and profitability has improved as a result of the actions taken in the productivity program.

EBIT in Q3 was EUR 940,000 positive, and adjusted EBITDA was EUR 4.7 million positive. On a like-for-like basis, that's the first quarter Basware has been EBIT positive since Q4 2015.

Looking at the line items. Cost of sales was EUR 16.6 million, up 2.8% from the previous year, but growing significantly less than net sales. This, therefore, improved the gross profit by 13% from Q3 2018, and as a result, as Klaus commented, the gross margin has improved significantly, up 6 percentage points from Q2.

Sales and marketing spending has reduced by 8.8% from Q3 2018. Here, the change is mainly due to the integration of our business development and alliances team back into the direct sales force. We are now tackling partners in a more efficient way, focusing on larger opportunities with advisory partners and spending less time on smaller value-added resellers.

And then looking at R&D and G&A expenses, these were both down a little bit more than 10% each as a result of the actions taken as part of the productivity program.

Moving on to free cash flow. We announced in April as part of the productivity program that Basware expects to reach positive free cash flow on a run rate basis by the end of 2020. The purpose of this metric is to provide a clear view of all costs related to Basware's operations, and so it's defined as EBITDA minus capitalizations, minus total debt service costs, minus tax and minus payment of lease liabilities. It excludes the share part of share-based compensation and any impact from acquisitions or disposals.

In the third quarter, the free cash flow metric was minus EUR 1.4 million. This was a significant improvement from the second quarter of 2019, driven by the increase in profitability as a result of the productivity program. And compared to Q3 2018, the free cash flow metric improved by EUR 1.5 million. Although the Q3 2019 free cash flow metric includes higher financing costs, this was more than offset by the improvements in profitability.

If we look at actual cash flows, cash flow from operating activities in Q3 was EUR 1.5 million positive, up significantly from Q3 2018 and the first time since 2014 that operating cash flow has been positive in the third quarter. The cause of this was the improvement in profitability that we talked through, partially countered by working capital timing differences. Overall, the cash position at the end of the quarter was EUR 30.6 million. The cash position reduced from Q2 as we expected because we repaid our EUR 30 million club loan in September as we communicated we would at Q2 results.

This now concluded Basware’s refinancing activities, and we've now taken care of all meaningful near-term debt maturities. We now have only EUR 5 million of debt maturing between now and the end of 2022, of which only EUR 2 million falls in 2020.

So to conclude and summarize the financial review, there are a lot of signs that the business is moving in the right direction. Last quarter, Basware had positive operating cash flow for the first time in Q3 since 2014. Last quarter, Basware had positive EBIT for the first time on a like-for-like basis since 2015. And last quarter, Basware had its highest total growth rate since 2015.

With that, back to Klaus.

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Klaus Andersen, Basware Oyj - CEO [4]

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Thank you, Ben. So outlook for the full year. Our outlook for the full year is unchanged. So total revenue growth on an organic constant currency basis, approximately 5%. We expect this to be slightly above the 5% but still within the boundaries of approximate. Cloud revenue growth on an organic constant currencies basis, approximately 15%. Here, we expect it to be slightly below the 15% but still within the boundaries of the word approximately. And when I say within the boundaries of approximately, the way we treat the word approximately is plus/minus 2 percentage points. And adjusted EBITDA, EUR 3 million or better. We expect this to be biased towards the better. But we keep the outlook for the year unchanged for now.

So let's go back to where we started. Q3 was a good quarter for Basware. Profitability improvements are now very visible in our numbers. Order intake has picked up again, and we are seeing signs of improvements in the consulting business actually faster than anticipated. We have taken the business through a step change and are now well underway to generate profit and achieve the targets that we have set ourselves for 2020.

Thank you very much for listening in today, both people in the audience and people remotely. And now I would like to open up the floor for questions.

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Questions and Answers

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Matti Riikonen, Carnegie Investment Bank AB, Research Division - Financial Analyst [1]

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It's Matti Riikonen, Carnegie. A couple of questions. First of all, the order intake, 20% roughly was fairly good after first half numbers. Was there any unusual positives or negatives in that number? So did you have a kind of normal quarter in the flow of the business so that none of your project wins did not come as a surprise and basically, there was no postponement of project wins to Q4?

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Klaus Andersen, Basware Oyj - CEO [2]

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So -- okay. So the spillover to Q4 was, I would say, at a normal level, not like Q1, for example. So that was normal. I think the -- if you look at the order intake for -- from Q3, then almost all countries have contributed well to the order intake in Q3, but especially the U.S. has contributed very well to the order intake in Q3.

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Matti Riikonen, Carnegie Investment Bank AB, Research Division - Financial Analyst [3]

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All right. Then a question related to gross margin and the consulting business. Now you had a particularly good quarter in consulting. You said that you had to finalize projects, which led to 30% increase in the consulting. That probably meant that also the utilization in the consulting business was good. So did that have a kind of very positive contribution on your gross margin as well? Or I mean, how do you otherwise explain the big increase in the gross margins of like 6 percentage points to 55%, which is already a fairly good level? So any thoughts on that would be helpful. And then for the future, is now the 55% a level where we should expect you to stay or the level where you can still improve from going forward? So that -- was there anything unusual in the gross margin in Q3?

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Klaus Andersen, Basware Oyj - CEO [4]

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Yes. I can answer first, and then, Ben, you can chip in. So the biggest contributor to the increase in the margin is the consulting business in Q3. So it has taken sort of a massive step upwards. And if you recall what we talked about in Q2 and Q1 when we talked about the productivity program, we said that we would sort of run the whole global setup in the global operating model, meaning that we are able to both do professional services in the regions close to the clients, but supported by professional services capacity in Romania and India, and that we have implemented.

And then we also said that we have changed the number of roles within our consultancy organization. So we have more people in field operations. So we have less internal focused people and more people focused towards the projects and the clients. And the combination of these 2 things and the fact that we have been busy with projects has moved us upwards.

We also discussed in April when we talked about the consulting business as part of the productivity program, we talked about the portfolio of projects and the terms and conditions we have entered some of these contracts on, that we would need to go through a period of time where this project portfolio would be sort of cleaned up for legacy. So that we enter new projects, it would be on a more reasonable level when it comes to terms and conditions for the professional services part. And I would say all these initiatives has, together, sort of led to the result we have seen here.

I would say we have taken a step change in the consulting business, but we will still, as Ben is saying, going forward, we will still see volatility in the -- in that business quarter-by-quarter because it's driven by projects and so on. So that we will see. I expect that we have increased it, and we'll see it on a -- the volatility sort of averaging around a higher number. And so that's -- I think that's the comment I have on the consulting.

And I'm especially happy because I -- this is a longer-term turnaround on the Professional Services side. And it's very, very nice that we already now see tangible results. But before this is sort of completely streamlined, we still have some way to go on the Professional Services side.

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Ben Selby, Basware Oyj - VP of IR & Treasury [5]

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And it's probably fair to say that -- so as Klaus said, a step change to where we are. This should be around the new normal, but then there is scope for further, and that's not just coming from consulting, but there's still further optimization and also growth-related gross margin improvements to come from, for example, AWS usage and so on.

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Matti Riikonen, Carnegie Investment Bank AB, Research Division - Financial Analyst [6]

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Great. Yes, that's probably the second part of my question, that if you think about, let's say, let's put consulting aside, if it's on a plateau that can be -- that you can live with, then it's good. But then if we think about the more scalable parts in your business, meaning cloud services, what can you still do to improve your gross margin? But it's still kind of in the process of finalizing.

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Klaus Andersen, Basware Oyj - CEO [7]

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So I think our production costs is one of the areas that we constantly focus on, and we are permanently driving that further down, and we will be able to do that over the next 18 months that we can sort of constantly drive it down. And you can actually see in the numbers that our production costs are coming down slightly. Even though the number of clients on the platform is actually growing, but the production costs are actually coming down. But we still have some of the legacy systems running in different data centers. We still have obligations to have data backed up in some of these data centers. And these obligations will slowly over time, over the next 18 months and so on, they will disappear. And then we can close down and reduce the production costs even further.

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Matti Riikonen, Carnegie Investment Bank AB, Research Division - Financial Analyst [8]

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Fair enough. Now then moving on to partnering in the software space, where you have said that, particularly in the procurement, you have some, let's say, empty spaces that you would need to fill. And I think we saw that in Gartner's ranking where you are excelling in the invoice automation part, but you are kind of less good in the whole value chain, including the procurement. And now you mentioned that you are negotiating with 3 software vendors or partners to fill in those gaps. Just curious, how many partners do you think that you would need to have in order to have a fully competitive product offering compared to your best competitors? Three is probably not quite enough, but how much would be enough?

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Klaus Andersen, Basware Oyj - CEO [9]

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And that's a good question, and I don't have an exact number for that. But my best guess would be 10, something like that. But it's important to understand that the partner relationships that we are talking about now is slightly different than some of the partner engagements and relationships we have sort of pursued before, because this is actually a relationship where -- from a technology point of view, a relationship where we can sort of refer to them as partners of us when we go into new sales and talk to clients, and they can do the same when they talk to their client base. But it would be still sort of contracting. The customers would still contract directly with us and directly with the partners. So it's not partners where we would sell the software through us. It would still be the clients would have to contract directly with the individual partners.

So it's more, I would say, it's more building on the fact that we actually have an open platform, and we can relatively easily integrate to other systems, even competitors. So we can build up a ecosystem of partners that can easily integrate with our solution, that is then part of our toolbox when we talk to customers about functionality and functionality that we don't have the IP for today.

If you look at it, there is -- there's actually a number of companies out there with very, very strong solutions who are very keen to be part of that ecosystem because the competitors are sort of targeting a wider space when it comes to functionality than we are. And there's no room for them in that setup, whereas there is room for it in our set up. I hope that answered the question.

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Matti Riikonen, Carnegie Investment Bank AB, Research Division - Financial Analyst [10]

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Yes. That's very helpful. Very clear. Thank you.

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Sami Sarkamies, Nordea Markets, Research Division - Senior Analyst of TMT [11]

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Sami Sarkamies, Nordea Markets. I have 3 questions. Firstly, coming back to consulting services. You've been able to achieve quite a strong sales momentum in the recent quarters. Can you open up a bit the main reasons behind this? So what are you doing differently now versus in the past? And then also, can you discuss profitability for consulting services? It's been a low-margin activity in the past, but do you think you will be able to be more profitable in the future also in this area?

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Klaus Andersen, Basware Oyj - CEO [12]

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Again, should I start? And then you can...

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Ben Selby, Basware Oyj - VP of IR & Treasury [13]

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Sure.

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Klaus Andersen, Basware Oyj - CEO [14]

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You can add, Ben. So I think the reasons why you see the better numbers -- or actually much better numbers from consultancy in Q3 is some of the reasons we talked about just before. We actually have more capacity available than we had before because we have moved roles, and we are able to utilize our resources in Romania and India better. And then the level of activity in Q3 has just been high, I would say. And the -- again, here, the project portfolio is -- we constantly run. I think we have ongoing 160, something like that, projects at any point in time. So we start to see also the effect of that project portfolio being renewed. And the projects coming in are coming in with slightly better terms and conditions than what we have seen before.

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Sami Sarkamies, Nordea Markets, Research Division - Senior Analyst of TMT [15]

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Okay. Then I'll ask about the cost savings program. Should we still assume further impact from this EUR 10 million savings program in the coming quarters? Or have we seen all of it as per third quarter?

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Klaus Andersen, Basware Oyj - CEO [16]

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Yes. I would say you have seen almost all of it. So we will continue our business to be cost-conscious in what we are doing and continue to do sensible business decisions also going forward, which should lead to more efficiency. But the step change that we are seeing right now is the outcome of the result. Results that we will see going forward, which I would think we would see would be more based on a normal way of running the business and the continuous optimization of what we are doing because that is the mode that we are in now.

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Sami Sarkamies, Nordea Markets, Research Division - Senior Analyst of TMT [17]

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And then finally, on cloud growth. You've been flagging headwinds from ending of some unprofitable contracts. Did we see all of the impact in the third quarter? Or will there still be further headwinds related to this in the coming quarters?

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Klaus Andersen, Basware Oyj - CEO [18]

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You are not seeing the full effect because there will be stuff, which will go out also in the future. I would say in the grand scheme of things, it would be relatively insignificant because we're not talking about massive amounts of revenue here, but sort of probably in the ballpark of another $1 million or half and half, whatever, over the course of next year, could be visible now.

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Ben Selby, Basware Oyj - VP of IR & Treasury [19]

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Yes. I mean, I think the annual kind of headwind is around a couple of million. It started to kick in during end of the second quarter. But now you start to see a bit more like the full run rate effect.

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Petri Aho, Inderes Oy - Partner & Analyst [20]

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Petri Aho from Inderes. You did some key recruitments during Q2 and Q3, first in U.S., and then in U.K. Can you talk a little bit more about those? And then especially on U.K., you said that you've seen some improvement there. How does the market look going forward, given there's Brexit going on? And will you have more focus on sort of commercial clients than the public sector in the future?

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Klaus Andersen, Basware Oyj - CEO [21]

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Yes. So first of all, I would say I'm very pleased that we are able to attract key people like that for our key positions in the company, and we have been sort of very successful, both in the U.S. and in the U.K. now with Justin to get them on board. I think the U.S. talks for itself. And that's also now a couple of quarters since we filled that position.

The U.K. is -- has just happened. So the new country manager in the U.K. just started. So it would be unfair to say that he is the reason for the good results in the U.K. in Q3 because he was not there in Q3. But at least he gets a very good starting point from when he started. So the existing organizations managed to get a good -- very good quarter out of Q3 in the U.K.

Justin is coming into Basware with amazing domain knowledge, and he has been running SAP Ariba in the U.K. for a period of time. So a very well-known name in the space that we are in. And now I think he needs a couple of months to learn the best way in our business and come up with an idea of how he thinks the best way of approaching the U.K. market would be. But I would say that our focus is more sort of normal clients and not the public sector in the U.K.

And then the question related to Brexit, I'm not able to answer that question. I think nobody can answer that question. There's so many things going on, on a daily basis there. But we will be in both the public sector going forward in the U.K., but I think the primary focus will be the corporate segment.

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Petri Aho, Inderes Oy - Partner & Analyst [22]

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Okay. Maybe to follow-up, that -- would you say that your problems in U.K. have been more internal or external?

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Klaus Andersen, Basware Oyj - CEO [23]

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Again, that's a very good question. I would say that I think it's a combination of both. And I think -- and I hope that getting a fresh view on our positioning in the U.K. compared to the market in the U.K. and so on, will give us new insight and will give us some tailwind to grow that business faster than what we have been able to do before. That's as much as I can say about that.

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Matti Riikonen, Carnegie Investment Bank AB, Research Division - Financial Analyst [24]

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Matti Riikonen, Carnegie again. A question related to your cloud revenue guidance that you maintained in the previous forum. You guide for 15% cloud revenue growth organically and FX adjusted.

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Klaus Andersen, Basware Oyj - CEO [25]

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Yes.

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Matti Riikonen, Carnegie Investment Bank AB, Research Division - Financial Analyst [26]

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And you had 12.5% growth in the first 9 months.

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Klaus Andersen, Basware Oyj - CEO [27]

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Correct.

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Matti Riikonen, Carnegie Investment Bank AB, Research Division - Financial Analyst [28]

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So technically, this implies 22.5% growth in the fourth quarter in the cloud revenue, organic and FX adjusted. So are you kind of going to deliver that? So it's -- I mean, and if so, where does it actually come from? Do you see in your pipeline that it can still be done?

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Klaus Andersen, Basware Oyj - CEO [29]

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So -- okay. So our guidance is approximately 15%. And with approximately, we mean within the boundaries of plus/minus 2%. And that's the same, both for the guidance that we have given on the cloud revenue growth as well as the total revenue growth, right? It's both -- the guidance are both with the word approximately.

And as I said before, we do expect that the top line growth will be slightly above the 5% but still within the boundaries of approximately. And we still expect that the cloud revenue growth will be slightly below the 15% but still within the boundaries of approximately. So that is a little bit sort of more narrow indications of where we think we will end the full year.

But I think it's important to understand that it's still -- this is still within the guidance that we have.

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Matti Riikonen, Carnegie Investment Bank AB, Research Division - Financial Analyst [30]

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Right. So basically, 13% cloud revenue growth for the full year is still in line with your current guidance of 15% as you defined.

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Klaus Andersen, Basware Oyj - CEO [31]

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Above -- 13% or above would still be within the guidance.

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Unidentified Company Representative, [32]

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Let's move on to questions on the line. So operator, please go ahead.

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Operator [33]

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(Operator Instructions) Our first question comes from the line of Julian Serafini of Jefferies.

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Julian Alexander Serafini, Jefferies LLC, Research Division - Equity Analyst [34]

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The first question on the cloud here are [bookings]. So you mentioned strength in the U.S. market. Is that primarily driven by 1 big deal? And if so, should we expect more similar large big deals going forward?

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Klaus Andersen, Basware Oyj - CEO [35]

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The answer to the question is, yes. The majority of the U.S. order intake this quarter came from 1 very big deal. And yes, I hope that we also, in the future, will see very big deals coming into our order intake.

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Ben Selby, Basware Oyj - VP of IR & Treasury [36]

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And I think this is in line with what we've been talking about in the past quarters as well that large deals will come and go, and it can, therefore, kind of create volatility on the quarterly growth rate for order intake. So something just to be aware of going forward.

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Julian Alexander Serafini, Jefferies LLC, Research Division - Equity Analyst [37]

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Okay. Very nice. It makes sense. It's very logical. And a second follow-up question then. On the adjusted EBITDA, again, you've obviously already generated EUR 4.7 million year-to-date in adjusted EBITDA. You're still guiding for EUR 3 million or better. So it looks like there's some conservatism in the guidance. Is that a good way to read it? I mean, because you mentioned positive upsides of EUR 3 million, but it seems like you're already far ahead of that at this point.

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Klaus Andersen, Basware Oyj - CEO [38]

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So the adjusted EBITDA for the quarter was 4.7%. Correct me, first, if I'm not into the numbers, Ben. The year-to-date number is 2.7%.

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Ben Selby, Basware Oyj - VP of IR & Treasury [39]

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Yes.

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Klaus Andersen, Basware Oyj - CEO [40]

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So we are not above the guidance yet. But as I also said at the end of the presentation is that our expectations is that the adjusted EBITDA for the full year is better than EUR 3 million, which, again, is also what we have guided so far.

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Julian Alexander Serafini, Jefferies LLC, Research Division - Equity Analyst [41]

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Okay. And then one last question just on the competitive landscape. We've seen a number of your larger competitors out there talk about a renewed focus on the procurement state. Have you seen any impact in the market just from a competitive dynamic? Or no changes so far?

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Klaus Andersen, Basware Oyj - CEO [42]

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No change in that this quarter. I would say it's very -- still very dominated by very few players, large players, when we are talking about it from a global perspective and then combined with a lot of smaller regional players. So the competitive landscape is unchanged seen from our point of view also in Q3.

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Operator [43]

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(Operator Instructions) As there are no further questions, I'll hand it back to the speaker.

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Unidentified Company Representative, [44]

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Thank you. Unless there's any more questions in the room, back to you, Klaus.

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Klaus Andersen, Basware Oyj - CEO [45]

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Good. So I would just like to thank you all for coming. And it has been sort of it's -- on our side, it's been a very pleasant interim reporting compared to Q1 and Q2. And it's very, very nice that we can now sort of share the progress with you in the numbers and make it very visible what we are doing and the effect of what we are doing. So thank you for coming.

For all the people in the room, I would sort of encourage you when you go out to go into the reception area downstairs and have a quick view on the artwork, which is hanging down there, which is art of Basware, which is an activity that we have been doing for many, many years, I think, more than 15 years, where we are supporting and arranging for young and upcoming artists, giving them an opportunity to display their art. And that exhibition was opened just last week. And it's very, very, at least, I think that, very, very nice artwork down there. So if you have a little bit of time after this meeting, then I think you should go down there. And both Ben and myself will be down there if you want to small talk when we go around looking at the artwork. Thank you.