TIDMSGE
RNS Number : 8289G
Sage Group PLC
29 July 2021
Trading update for the nine months ended 30 June 2021
The Sage Group plc (the "Group") today announces its trading
update for the nine months ended 30 June 2021.
Financial performance
Organic [1] Revenue Mix Q3 21 Q3 20
YTD YTD Growth YTD
Revenue by Category
Recurring Revenue GBP1,220m GBP1,162m +GBP58m +5%
Other Revenue (SSRS [2] &
Processing) GBP109m GBP134m -GBP25m -18%
----------- ----------- --------- -----
Organic Total Revenue GBP1,329m GBP1,296m +GBP33m +3%
Portfolio View of Recurring
Revenue
Future Sage Business Cloud
opportunity GBP1,103m GBP1,031m +GBP72m +7%
Non-Sage Business Cloud GBP116m GBP131m -GBP15m -11%
----------- ----------- --------- -----
Recurring Revenue GBP1,220m GBP1,162m +GBP58m +5%
Sage has performed strongly in the first nine months of the
year, as momentum in the business continues to strengthen.
Recurring revenue increased by 5.0% to GBP1,220m, supported by
software subscription growth of 11% to GBP920m (Q3 20 YTD:
GBP830m). As a result, subscription penetration increased to 69%
(Q3 20 YTD: 64%).
Regionally, North America achieved recurring revenue growth of
7% to GBP475m (Q3 20 YTD: GBP445m) mainly reflecting a good
performance from Sage Intacct, with continued strength in new
customer acquisition. In Northern Europe recurring revenue
increased by 4% to GBP292m (Q3 20 YTD: GBP281m), driven by
accelerating growth in cloud native solutions including Sage
Accounting, together with further growth in Sage 50 cloud
connected. In International, recurring revenue grew by 4% to
GBP454m (Q3 20 YTD GBP436m), with particular strength in cloud
connected products, together with growth in cloud native
solutions.
In terms of the portfolio view of revenue, the Future Sage
Business Cloud Opportunity (products within, or to be migrated to,
Sage Business Cloud) increased by 7% to GBP1,103m. This was
underpinned by strong growth in cloud native recurring revenue of
32% to GBP205m (Q3 20 YTD: GBP155m), primarily through new customer
acquisition, and supported by migrations to both cloud native and
cloud connected solutions. Sage Business Cloud penetration
increased to 66% (Q3 20 YTD: 60%).
In the third quarter, recurring revenue grew by 6.1% to GBP409m
(Q3 20: GBP385m). This was driven principally by an acceleration in
the growth of cloud native revenue, up 37% to GBP74m (Q3 20:
GBP54m), together with continued growth in cloud connected. This
growth has been strengthened by the Group's programme of additional
strategic investment in sales, marketing and innovation.
Other revenue (SSRS and processing) decreased by 18% to GBP109m
in the first nine months of the year, and by 9% to GBP31m (Q3 20:
GBP34m) in the third quarter, in line with our strategy to
transition away from licence sales and low margin professional
services implementations.
Total Group revenue increased by 2.6% to GBP1,329m in the first
nine months of the year, and by 5.0% to GBP440m (Q3 20: GBP419m) in
the third quarter.
Financial position
Group net debt was GBP160m as at 30 June 2021 (GBP96m as at 31
March 2021), with cash and available liquidity of GBP1.3bn.
Outlook
Following a strong performance in the third quarter, we now
expect full year FY21 recurring revenue growth to be slightly above
our previous guidance range of 3% to 5%. The Group's guidance
across other metrics remains unchanged.
Jonathan Howell, Chief Financial Officer, commented:
"The performance of the Group in the first nine months of the
year demonstrates continued delivery against our strategy. Sage's
growth is accelerating, driven by increasing demand for Sage
Business Cloud solutions, particularly in cloud native, as we
support customers in their digital transformation. Through our
additional strategic investment, we are building strong foundations
to drive further sustainable growth and support the long-term
success of the Group."
Foreign exchange
Sterling strengthened against the US dollar in the year to date,
leading to an exchange rate headwind.
Analyst and investor conference call
Jonathan Howell will host a conference call at 8:30am BST today,
which will be webcast via the following link
https://edge.media-server.com/mmc/p/ugr7vfeu. The call may also be
accessed using the dial-in number 0800 279 6619 (United Kingdom) or
+44 (0) 207 192 8338 (International) and pin code 6428008. A replay
of the call will also be available for one week after the event on
0844 571 8951 (United Kingdom) or +44 (0) 3333 009 785
(International), pin code 6428008.
Enquiries
The Sage Group plc +44 (0) 191 294 3457
Jonathan Howell, Chief Financial Officer
James Sandford, Investor Relations
Amy Lawson, Media
Finsbury Glover Hering +44 (0) 20 7251 3801
Conor McClafferty
Amanda Healy
About Sage
Sage (FTSE: SGE) is the global market leader for technology that
provides small and medium businesses with the visibility,
flexibility and efficiency to manage finances, operations and
people. With our partners, Sage is trusted by millions of customers
worldwide to deliver the best cloud technology and support. Our
years of experience mean that our colleagues and partners
understand how to serve our customers and communities through the
good, and more challenging times. We are here to help, with
practical advice, solutions, expertise and insight.
[1] All numbers in this document are organic. Organic results
exclude contributions from assets held for sale.
[2] Software and software-related services.
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