Sage Group’s ‘renewed focus’ on recurring revenue delivers full-year turnover of £1.85bn

Enterprise software firm The Sage Group plc has delivered an uptick in its annual profits and revenues thanks to a ‘renewed focus’ on high-quality subscription and recurring revenue.

The Newcastle-headquartered company generated a pre-tax profit of £398m in the 12 months to September 30 2018, a year-on-year increase of 16%.

Revenues for the period climbed 7.6% to £1.85bn, while operating profit rose 22.7% to £427m.

The full-year results were boosted by an improved performance during H2. Both August and September showed recurring revenue growth of more than 7% year on year and sequential month-on-month growth, the firm said, driving momentum into the 2018/19 financial year.

It also recorded recovery in its Northern Europe (UK&I) operation, where sequential increases in recurring revenue growth were seen in every month during the second half of the year.

During Q4, France saw its strongest quarter since Q1 2015/16. Double-digit organic and recurring growth was also achieved in North America, Sage said.

Chief exec Steve Hare commented: “Sage has shown stronger performance in the second half of FY18.

“The renewed focus on high-quality subscription and recurring revenue has generated momentum as we exited the year.”

Looking ahead to its 2018/19 financial year, Sage has forecast organic operating margins to be broadly stable before the impact of a planned £60m investment to accelerate its transition to SaaS.

Mr Hare continued: “As CEO I will put customers, colleagues and innovation at the heart of everything we do to accelerate the transition to becoming a great SaaS business.

“That means investing further resource in Sage Business Cloud, a continued commitment to customer success and a culture which values the individuals and promotes collaboration. Increased investment in these areas will lead to an acceleration in high-quality sustainable recurring revenue growth.”

Mr Hare was appointed CEO of the company earlier this month after former boss Stephen Kelly came to an agreement with the board to step down.