TIDMSGE
RNS Number : 5299U
Sage Group PLC
02 August 2022
The Sage Group plc
Trading update for the nine months ended 30 June 2022
The Sage Group plc (FTSE: SGE), the leader in accounting,
financial, HR and payroll technology for small and mid-sized
businesses, today issues a trading update for the nine months ended
30 June 2022.
Jonathan Howell, Chief Financial Officer, commented:
"Sage has performed strongly in the first nine months of the
year, with momentum continuing to build, as more businesses choose
Sage Business Cloud solutions to support their digital
transformation. As a result, we now expect organic recurring
revenue growth for FY22 to be towards the top end of our guidance
range of 8% to 9%. While we are mindful of broader macroeconomic
trends, I am confident that continued delivery against our
strategic priorities will ensure Sage remains well-positioned for
the future."
Organic Revenue Performance Q3 22 Q3 21 Growth YTD
[1] YTD YTD
Revenue by Category
Recurring Revenue GBP1,330m GBP1,223m +GBP107m +9%
Other Revenue (SSRS [2] ) GBP82m GBP109m -GBP27m -25%
----------- ----------- ---------- -----
Organic Total Revenue GBP1,412m GBP1,332m +GBP80m +6%
Portfolio View of Recurring
Revenue
Future Sage Business Cloud Opportunity GBP1,226m GBP1,107m +GBP119m +11%
of which Sage Business Cloud GBP886m GBP736m +GBP150m +20%
Non-Sage Business Cloud GBP104m GBP116m -GBP12m -11%
----------- ----------- ---------- -----
Recurring Revenue GBP1,330m GBP1,223m +GBP107m +9%
----------- ----------- ---------- -----
Recurring revenue for the first nine months of the year
increased by 9% to GBP1,330m, driven by a 20% rise in Sage Business
Cloud revenue to GBP886m. Software subscription revenue grew by 14%
to GBP1,051m (Q3 21 YTD: GBP922m), resulting in subscription
penetration of 75% (Q3 21: 69%).
Regionally, North America achieved recurring revenue growth of
13% to GBP557m (Q3 21 YTD: GBP493m), with a strong performance from
Sage Intacct alongside growth in cloud connected products. In
Northern Europe recurring revenue grew by 7% to GBP311m (Q3 21 YTD:
GBP291m), driven by continued success in cloud native solutions
including Sage Accounting, Sage Intacct and Sage HR, supported by
growth in Sage 50 cloud connected. In International, recurring
revenue increased by 5% to GBP462m (Q3 21 YTD: GBP439m), with
growth across the Sage Business Cloud portfolio.
In terms of the portfolio view of recurring revenue, the Future
Sage Business Cloud Opportunity (products within, or to be migrated
to, Sage Business Cloud) increased by 11% to GBP1,226m. This was
driven by strong growth in cloud native recurring revenue of 42% to
GBP297m (Q3 21 YTD: GBP209m) primarily through new customer
acquisition, together with further growth in the cloud connected
portfolio supported by progress in migrations. Sage Business Cloud
penetration increased to 72% (Q3 21: 67%).
In the third quarter, recurring revenue grew by 10% to GBP464m
(Q3 21: GBP423m), with growth accelerating as the year has
progressed, supported by continued investment in sales, marketing
and innovation.
Other revenue (SSRS) decreased by 25% to GBP82m in the first
nine months of the year and by 25% to GBP24m (Q3 21: GBP32m) in the
third quarter, in line with our strategy to transition away from
licence sales and professional services implementations.
Total Group revenue increased by 6% to GBP1,412m in the first
nine months of the year, and by 7% to GBP488m (Q3 21: GBP456m) in
the third quarter.
Outlook
Following a strong performance in the third quarter, we now
expect organic recurring revenue growth for FY22 to be towards the
top end of our guidance range of 8% to 9%. The Group's guidance
across other metrics remains unchanged.
Foreign exchange
Sterling has weakened against the US dollar but strengthened
against the Euro, leading to a slight exchange rate tailwind in the
first nine months of the year.
Analyst and investor conference call
Jonathan Howell will host a webcast and conference call today at
8.30am UK time. The webcast can be accessed via the following link:
https://edge.media-server.com/mmc/p/m5fxihqq . To join the
conference call, please register via:
https://register.vevent.com/register/BIbacac033b69c40baabd2b03e15df7835
.
Enquiries
Sage +44 (0) 7807 702 113
Jonathan Howell, Chief Financial Officer
James Sandford, Investor Relations
David Ginivan, Corporate PR
FGS Global +44 (0) 20 7251 3801
Conor McClafferty
Sophia Johnston
Sage-LON@fgsglobal.com
About Sage
Sage exists to knock down barriers so everyone can thrive,
starting with the millions of small and mid-sized businesses served
by us, our partners and accountants. Customers trust our finance,
HR and payroll software to make work and money flow. By digitising
business processes and relationships with customers, suppliers,
employees, banks and governments, our digital network connects
SMBs, removing friction and delivering insights. Knocking down
barriers also means we use our time, technology and experience to
tackle digital inequality, economic inequality and the climate
crisis.
[1] All numbers in this document are organic. Organic results
exclude contributions from assets held for sale and in-year
acquisitions.
[2] Software and software-related services.
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