TIDMSGE
RNS Number : 1915N
Sage Group PLC
19 January 2023
The Sage Group plc
Trading update for the three months ended 31 December 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 three months
ended 31 December 2022[1].
Jonathan Howell, Chief Financial Officer, commented:
"Sage has made a strong start to the year, in line with our
expectations, as Sage Business Cloud solutions help more customers
improve their productivity and resilience. While we are mindful of
the current macroeconomic environment, we remain confident in our
strategy for delivering efficient growth and we reiterate our
guidance for the full year, as set out in our FY22 results
announcement."
Organic
Underlying Revenue Performance[2] Q1 23 Q1 22 % Growth % Growth
---------
Revenue by Category
Recurring Revenue GBP517m GBP460m +12% +12%
Other Revenue (SSRS[3]) GBP23m GBP33m -29% -27%
--------- --------- --------- ----------
Total Revenue GBP540m GBP493m +10% +9%
Recurring Revenue by Region
North America GBP235m GBP198m +18% +16%
UKIA GBP151m GBP135m +12% +10%
Europe GBP131m GBP127m +3% +6%
Recurring Revenue by Portfolio
Future Sage Business Cloud Opportunity GBP479m GBP422m +14% +13%
of which Sage Business Cloud GBP390m GBP298m +31% +28%
Non-Sage Business Cloud GBP38m GBP38m 0% +1%
--------- --------- --------- ----------
Recurring revenue increased by 12% to GBP517m, underpinned by a
31% rise in Sage Business Cloud revenue to GBP390m. Software
subscription revenue grew by 18% to GBP422m (Q1 22: GBP357m),
resulting in subscription penetration of 78% (Q1 22: 73%).
Regionally, in North America recurring revenue increased by 18%
to GBP235m, with a strong performance from Sage Intacct alongside
growth in cloud connected products. In the UKIA region, recurring
revenue grew by 12% to GBP151m, driven by continued success in
cloud native solutions including Sage Intacct and Sage Accounting,
together with growth in Sage 50 cloud connected. In Europe,
recurring revenue increased by 3% to GBP131m, with growth across
the Sage Business Cloud portfolio partly offset by the disposal of
the Swiss business in FY22. Organic recurring revenue growth, which
excludes the disposal impact, was 6%.
In terms of recurring revenue by portfolio, the Future Sage
Business Cloud Opportunity (products within, or to be migrated to,
Sage Business Cloud) grew by 14% to GBP479m. This was driven by 45%
growth in cloud native recurring revenue (35% on an organic basis)
to GBP141m (Q1 22: GBP98m) primarily through new customer
acquisition, as well as further growth in cloud connected supported
by migrations. Sage Business Cloud penetration increased to 81% (Q1
22: 71%), enabling more customers to connect to Sage's digital
network.
Other revenue (SSRS) decreased by 29% to GBP23m, in line with
our strategy to transition away from licence sales and professional
services implementations.
Total revenue increased by 10% to GBP540m. On an organic basis
(excluding the impact of M&A), total revenue growth was 9%.
Foreign exchange
Sterling has weakened against the US Dollar and the Euro,
leading to an exchange rate tailwind.
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/vjzkrh3f . To join the
conference call, please register via:
https://register.vevent.com/register/BI5f4628e0a0484ad5935bb75b71c977a2
.
Enquiries
Sage +44 (0) 77721 599502
Jonathan Howell, Chief Financial Officer
James Sandford, Investor Relations
David Ginivan, Corporate PR
FGS Global +44 (0) 20 7251 3801
Conor McClafferty
Sophia Johnston
About Sage
Sage exists to knock down barriers so everyone can thrive,
starting with the millions of small and mid-sized businesses (SMBs)
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] In line with Sage's financial reporting changes announced on
8 December 2022, all figures are on an underlying basis unless
otherwise stated. In terms of regional reporting, UKIA comprises
Northern Europe (UK & Ireland), Africa & APAC, and Europe
comprises France, Central Europe & Iberia.
[2] Underlying and organic results are presented on a constant
currency basis, while organic growth also excludes the impact of
M&A. Underlying and organic measures are defined on pages
289-290 of Sage's FY22 Annual Report.
[3] Software and software-related services.
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END
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