REG - Sage Group PLC - Trading update for nine months ended 30 June 2022

SageAnnouncement

02/08/2022 07:00

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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 1  (#_ftn1)    Q3 22 YTD  Q3 21 YTD  Growth YTD

 Revenue by Category
 Recurring Revenue                          £1,330m    £1,223m    +£107m   +9%
 Other Revenue (SSRS 2  (#_ftn2) )          £82m       £109m      -£27m    -25%
 Organic Total Revenue                      £1,412m    £1,332m    +£80m    +6%

 Portfolio View of Recurring Revenue
 Future Sage Business Cloud Opportunity     £1,226m    £1,107m    +£119m   +11%
        of which Sage Business Cloud        £886m      £736m      +£150m   +20%
 Non-Sage Business Cloud                    £104m      £116m      -£12m    -11%
 Recurring Revenue                          £1,330m    £1,223m    +£107m   +9%

Recurring revenue for the first nine months of the year increased by 9% to
£1,330m, driven by a 20% rise in Sage Business Cloud revenue to £886m.
Software subscription revenue grew by 14% to £1,051m (Q3 21 YTD: £922m),
resulting in subscription penetration of 75% (Q3 21: 69%).

Regionally, North America achieved recurring revenue growth of 13% to £557m
(Q3 21 YTD: £493m), with a strong performance from Sage Intacct alongside
growth in cloud connected products. In Northern Europe recurring revenue grew
by 7% to £311m (Q3 21 YTD: £291m), 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 £462m (Q3 21 YTD: £439m), 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 £1,226m. This was driven by strong growth in cloud native
recurring revenue of 42% to £297m (Q3 21 YTD: £209m) 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 £464m (Q3 21: £423m),
with growth accelerating as the year has progressed, supported by continued
investment in sales, marketing and innovation.

Other revenue (SSRS) decreased by 25% to £82m in the first nine months of the
year and by 25% to £24m (Q3 21: £32m) 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 £1,412m in the first nine months of
the year, and by 7% to £488m (Q3 21: £456m) 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
(https://edge.media-server.com/mmc/p/m5fxihqq) . To join the conference call,
please register via:
https://register.vevent.com/register/BIbacac033b69c40baabd2b03e15df7835
(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  (#_ftnref1) All numbers in this document are organic. Organic results
exclude contributions from assets held for sale and in-year acquisitions.

 2  (#_ftnref2) Software and software-related services.

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