REG - Sage Group PLC - Trading update for nine months ended 30 June 2023

SageAnnouncement

27/07/2023 07:15

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RNS Number : 3271H  Sage Group PLC  27 July 2023

The Sage Group plc

Trading update for the nine months ended 30 June 2023

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 2023 1  (#_edn1) .

Jonathan Howell, Chief Financial Officer, commented:

"Sage has performed strongly throughout the first nine months, in line with
our expectations, as we help small and mid-sized businesses become more
productive and resilient. Sage continues to build strong momentum, driving the
delivery of sustainable, efficient growth. Accordingly, we reiterate our
guidance for the full year, as set out in our half year results announcement."

 Underlying Revenue Performance 2  (#_edn2)  Q3 23 YTD  Q3 22 YTD  Growth  Organic

Growth

 Revenue by Category
 Recurring Revenue                           £1,562m    £1,394m    +12%    +12%
 Other Revenue (SSRS 3  (#_edn3) )           £68m       £87m       -22%    -21%
 Total Revenue                               £1,630m    £1,481m    +10%    +10%

 Recurring Revenue by Region
 North America                               £702m      £603m      +16%    +15%
 UKIA                                        £456m      £412m      +11%    +9%
 Europe                                      £404m      £379m      +7%     +8%

 Recurring Revenue by Portfolio
 Future Sage Business Cloud Opportunity      £1,449m    £1,283m    +13%    +12%
        of which Sage Business Cloud         £1,201m    £930m      +29%    +28%
 Non-Sage Business Cloud                     £113m      £110m      +3%     +3%

Recurring revenue for the first nine months of the year increased by 12% to
£1,562m, underpinned by a 29% rise in Sage Business Cloud revenue to
£1,201m. Software subscription revenue grew by 17% to £1,286m (Q3 22 YTD:
£1,098m), resulting in subscription penetration of 79% (Q3 22: 74%).

Regionally, recurring revenue in North America grew by 16% to £702m, with a
strong performance from Sage Intacct together with growth in cloud connected
products. In the UKIA region, recurring revenue increased by 11% to £456m,
reflecting strength in cloud native small business solutions and Sage Intacct,
alongside growth in Sage 50 cloud. In Europe, recurring revenue increased by
7% to £404m, with growth across Sage Business Cloud.

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 13% to £1,449m. This was driven by 36% growth in cloud native recurring
revenue (31% on an organic basis) to £436m (Q3 22 YTD: £322m) primarily
through new customer acquisition, as well as further growth in cloud connected
products. Sage Business Cloud penetration increased to 83% (Q3 22: 73%),
enabling more customers to connect to Sage's cloud services and ecosystem via
Sage's digital network.

In the third quarter, recurring revenue increased by 11% to £523m (Q3 22:
£469m) against a strengthening comparator, driven by continued growth across
the Sage Business Cloud portfolio.

Other revenue (SSRS) decreased by 22% to £68m in the first nine months of the
year and by 16% to £20m (Q3 22: £24m) in the third quarter, in line with our
strategy to transition away from licence sales and professional services
implementations.

Total revenue increased by 10% to £1,630m in the first nine months of the
year, and by 10% to £543m (Q3 22: £493m) in the third quarter.

 

Foreign exchange

Sterling has weakened against the US Dollar and the Euro compared with the
prior period, leading to an 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/f5c4xdn5
(https://edge.media-server.com/mmc/p/f5c4xdn5) . To join the conference call,
please register via:
https://register.vevent.com/register/BIdcf248b33f4442bdbf54e32c9c4951cf
(https://register.vevent.com/register/BIdcf248b33f4442bdbf54e32c9c4951cf) .

Enquiries

Sage +44 (0) 7341 479956

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  (#_ednref1) All figures are on an underlying basis unless otherwise
stated.

 2  (#_ednref2) 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  (#_ednref3) Software and software-related services.

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