Member Article

Strong third quarter for Newcastle’s Sage Group continues yearly momentum

Software firm Sage reports rising revenues and ’continued momentum’ as it moves closer to its yearly targets.

The Newcastle-headquartered business software company revealed an organic revenue increase of 6.6%, with growth of 7.5% in Q3, maintaining what has so far been a strong financial year for the North East plc.

The firm’s management are confident that the business remains on course for full year FY2015 guidance of 28% operating margin, plus at least 6% organic revenue growth.

A trading update for the nine months ended 30 June 2015 also showed that organic recurring revenue grew by 8.3% for the first nine months of the year, with growth of 9.7% for the third quarter. This was primarily driven by organic software subscription revenue growth of 34.2% in the quarter.

Moreover, Sage’s operating cash generation remains strong. During the quarter, an interim dividend of £48m was paid to shareholders and there were no share repurchases or acquisitions. Net debt at 30 June 2015 was £467m (£510m as at 31 March 2015).

Exchange rate headwinds continued to be a feature in the third quarter, reflecting the strength of Sterling relative to a number of currencies in territories in which Sage operates, most notably, the Euro and the Brazilian Real.

Steve Hare, Chief Financial Officer, said: “The Business performance in the quarter showed continued momentum in recurring revenue growth and overall the performance was encouraging, with the revenue growth rates flattered by a weaker Q3 last year.

“As we continue to transition the business towards higher quality revenue growth, through Sage’s Customer for Life strategy we anticipate that some quarters will be stronger than others and we are committed to sustainable, profitable growth generating consistent operating margins, yielding strong free cash flow and progressive dividends.”

Sage Group PLC operates in 23 countries worldwide, employing over 13,000 people.

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