ReadSofts Q413 & FY13

Per kerberg President and CEO 2014-02-14

ReadSofts Year-End Report 2013

ReadSoft facts

ReadSofts Year-End Report 2013

What we do
Business process automation
business documents

Industries Manufacturing Government Retail Service providers Bank & Finance Survey companies Insurance Energy companies

capture

supplier

order confirmation shipping notification delivery note invoice

workflow

buy stuff (Purchase-to-Pay)

buyer

purchase order proof of delivery remittance advice

sell stuff (Order-to-Cash)

target business systems

other

claims applications questionnaires

process business docs in high volume (Multichannel Process Automation)

ReadSofts Year-End Report 2013

Customers

and many more...

ReadSofts Year-End Report 2013

Financial Development Q413 & FY13

ReadSofts Year-End Report 2013

EBITDA-margin of 15% in Q413

Sales decreased with 5% to 230.1 (243.2) MSEK
Sales decreased with 4% in constant currencies

License revenue decreased with 2% to 91.4 (92.9) MSEK

License sales increased with 1% in constant currencies

Operating profit EBITDA was 34.1 (45.4) MSEK

Non-recurring costs of 6,5 MSEK

Profit before tax was 29.3 (45.0) MSEK Cash-flow from operating activities amounted to 16.7 (30.5) MSEK
Numbers and comments compared to the corresponding period the previous year
ReadSofts Year-End Report 2013

Remarks from Q413

We delivered a solid EBITDA profit margin of 15%
Despite the fact that we have taken, among other things, non-recurring costs in conjunction with a reorganization

1(2)

License sales grew by 1% in constant currencies compared to Q412 (which was the best overall quarter in ReadSofts history) We continued to invest in our cloud solutions and launched new and extended functionality for ReadSoft Online
ReadSoft Onlines cloud based solution for Dynamics AX was also certified with the highest accreditation by Microsoft

We launched a new set of mobile applications for the mobile software platforms iOS, Android, BlackBerry and Windows 8
ReadSofts Year-End Report 2013

Remarks from Q413

Our recurring revenue continued to grow
11% growth compared to Q412 Increased by more than six percentage points and accounted for 42.4% of our total sales Includes our support and maintenance agreements, software subscriptions, and revenues from our cloud and e-invoicing solutions (ReadSoft Online and ReadSoft Expert Systems) Very important for our future revenue mix

2(2)

Our markets in the US, Asia and South Africa have shown the way with good profitability and growth during the quarter ReadSoft North America closed six large deals during the quarter to a value of 22.5 MSEK Andrew Pery was appointed as Chief Marketing Officer for ReadSoft
ReadSofts Year-End Report 2013

Full year 2013

Sales decreased with 3% to 761.3 (781.7) MSEK
Sales were flat in constant currencies

License revenue decreased with 2% to 243.6 (248.3) MSEK

License sales increased with 1% in constant currencies

Operating profit EBITDA was 19.9 (63.0) MSEK Profit before tax was 9.3 (63.2) MSEK Cash-flow from operating activities amounted to 73.3 (74.8) MSEK

Numbers and comments compared to the corresponding period the previous year
ReadSofts Year-End Report 2013

Important milestones in 2013

Good increase in our recurring revenues

1(3)

Accounted for 47% of our total sales, an increase of six percentage points compared to 2012

Acquisition of Expert Systems Development Svenska AB

Expert Systems has one of the leading cloud based e-invoicing solutions in the Nordics Great addition to our product portfolio that creates good upselling opportunities for our subsidiaries that also are recurring revenue based

Our performance for the full year 2013 was affected by

Several new large license deals were subscription based, which hurt us in the short run Non-recurring costs associated with our acquisition of Expert Systems Non-recurring costs related to the cost reduction program that we initiated during Q213 The global roll-out of XBOUND took longer than expected, we consequently didnt reach our full sales potential within this area. This also affected our hardware sales connected to the XBOUND sales Decrease in our billable consulting hours in Q113 impacted the result negatively

ReadSoft's Year-End Report 2013

Important milestones in 2013

License sales more than doubled in 2013

2(3)

The strategic move to create a dedicated sales team selling our Oracle solution on a global basis proved to be very successful We continued to increase the number of large deals A cost reduction program was initiated in Q213 and was completed in Q413
Restructuring costs affected the result by 9 MSEK Approximately 30 employees left the company The annual cost savings from the program will be in the range of 20-22 MSEK, in effect from January 2014
The money saved will partially be reused for investments and recruitments in areas where we see good potential for development

ReadSoft's Year-End Report 2013

Important milestones in 2013

3(3)

ReadSoft Online was launched integrated with Microsoft Dynamics AX

Our cloud solution is the first of its kind that is integrated with the Windows Azure platform

We closed the third largest deal in ReadSofts history, worth 15.6 MSEK, with a leading German BPO-company We introduced XBOUND on the North American market:
Signed the first large deal almost immediately, worth 1 MUSD per year, with DISC Corporation

Several important product launched were made, for ex

INVOICES 5-7, extracts and validates all data regardless of source and format, makes it easier to adopt e-invoicing PROCESS DIRECTOR 7.2 (PD), automates several new business processes. PD is the most widely implemented AP automation solution for SAP PROCESSIT 7.3, our enhanced Oracle-validated solution offers new market-driven features and seamless integration with ReadSofts proven cloud-based service for invoice capture

ReadSoft's Year-End Report 2013

Financial position December 31, 2013

Solid financial position Positive cash flow from operating activities:
60.4 MSEK in cash at the end of the quarter

Credit line of 97.0 MSEK (18.2 MSEK utilized) Asset ratio of 42.4 (44.6) percent The Board of Directors dividend proposal SEK 0.60 per share

ReadSofts Year-End Report 2013

15% EBITDA-margin in Q413

Development rolling 12 months
SEKm %

900 800 700 600 500

20

15

10 400 300 200 100 0 Q1 Q2 2011 Q3 Q4 Q1 Q2 2012 Q3 Q4 Q1 Q2 2013 Q3 Q4 0 5

Sales, SEKm

EBITDA, %

ReadSofts Year-End Report 2013

The Nordic region had the best development

Sales rolling 12 months per geographic market, SEK million
400

300

200

Nordic region Rest of Europe USA and the rest of the world

100

0 Q1 Q2 2011 Q3 Q4 Q1 Q2 2012 Q3 Q4 Q1 Q2 2013 Q3 Q4

ReadSofts Year-End Report 2013

Revenue distribution
Revenue distribution rolling 12 months, SEK million
300 250 200
Licenses

150 100 50 0 Q4 2011 Q4 2012 Q4 2013

Maintenance agreements Professional services Hardware, other

ReadSofts Year-End Report 2013

Strong increase in recurring revenues

Recurring revenue rolling 12 months
SEKm 400 350 300 250 200 150 100 50 0 Q1 Q2 2012 Q3 Q4 Q1 Q2 2013 Q3 Q4 Q1 Q2 2014 Q3 Q4 30 35
Recurring revenue/Total revenue %

50 45 40
Recurring revenue

ReadSofts Year-End Report 2013

Industry recognition
Harvey Spencer Associates

Software vendors have grabbed hold of the concept of SPAs (Smart Process Applications). This should not be a surprise; SPAs represent a large and emerging market. Vendors in the ECM, BPM, and case management markets like Kofax, ReadSoft, Fujitsu see SPAs as a refreshing way to position their agile technology to the business decision-makers, where budgets and IT staff are migrating.
Source: Smart Process Apps - One Year Later, Forrester, Craig Le Clair, December 10, 2013

ReadSoft is referenced on a short list: as a vendor offering a suite of applications that supports indirect spending for goods and services, from requisition through approval to pay.
Source: Hype Cycle for Procurement, 2013, Gartner, July, 31 2013

ReadSoft owns 11% of the Batch Transaction Capture segment, the largest (40%) of four market segments within the Document Capture Software Market.
Source: The 2012-2013 Worldwide Market for Document Capture Software: Featuring 20112016 Market Analysis, Harvey Spencer Associates, Inc., 2012

as an AP Invoice Automation Vendor.

Source: IT Market Clock for Financial Management Applications, Nigel Rayner, Gartner, August 2013

ReadSofts Year-End Report 2013

Going Forward

ReadSofts Year-End Report 2013

Going forward
We will continue to give priority to margin improvements
We have adjusted our organization further by merging our 2 lab organizations to 1 and consolidating our 4 regions to 3 We have appointed Bjrn Karlsson as EVP Product Management with the charger to enhance products and reach a higher degree of scalability

We will focus on profitable growth

Our cloud-based solutions are growing rapidly and are well positioned We will continue to focus on increasing our recurring revenue We will enhance our sales organization where we see growth potential We will continue the global roll-out of our acquired solutions to the global market and to our subsidiaries

The most likely scenario is a market that will be somewhat volatile but still fairly good and growing
A cost conscious market where companies focus on efficiency gains is positive to us, but we foresee somewhat longer decision cycles

ReadSofts Year-End Report 2013

Thank you!
Financial calendar
Interim Report January-March 2014 Annual General Meeting Interim Report January-June 2014 Interim Report January-September 2014 Year-End Report 2014 April 28 , 2014 April 28, 2014 July 18, 2014 October 21, 2014 February 12, 2015

Contact:
Per kerberg, President and CEO Johan Holmqvist, Vice President Corporate Communications Jan Bertilsson, CFO Phone: +46 (0)42-490 21 00 Email: firstname.lastname@readsoft.com

ReadSofts Year-End Report 2013