REG - Sage Group PLC - Trading update for the 3 months ended 31 Dec 2021

SageAnnouncement

26/01/2022 07:05

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RNS Number : 6266Z  Sage Group PLC  26 January 2022

 Trading update for the three months ended 31 December 2021

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 2021.

Jonathan Howell, Chief Financial Officer, commented:

"Sage has made a strong start to the year, accelerating growth in line with
expectations. Sage Business Cloud has performed particularly well, driven by
continued growth in both cloud native and cloud connected solutions, as we
execute on our strategy to be the trusted network for small and mid-sized
businesses. Accordingly, we reiterate our guidance for the full year, as set
out in our FY21 results announcement."

Financial performance

 Organic Revenue Mix 1                      Q1 22   Q1 21   Growth

 Revenue by Category
 Recurring Revenue                          £429m   £398m   +£31m   +8%
 Other Revenue (SSRS 2  & Processing)       £29m    £37m    -£8m    -22%
 Organic Total Revenue                      £458m   £435m   +£23m   +5%

 Portfolio View of Recurring Revenue
 Future Sage Business Cloud opportunity     £394m   £357m   +£37m   +10%
        of which Sage Business Cloud        £280m   £232m   +£48m   +21%
 Non-Sage Business Cloud                    £35m    £41m    -£6m    -15%
 Recurring Revenue                          £429m   £398m   +£31m   +8%

Recurring revenue grew by 8% to £429m, underpinned by a 21% rise in Sage
Business Cloud revenue to £280m, with continued strength in new customer
acquisition. Software subscription revenue grew by 13% to £336m (Q1 21:
£296m), increasing subscription penetration to 73% (Q1 21: 68%).

Regionally, North America achieved growth in recurring revenue of 11% to
£174m (Q1 21: £157m) reflecting further strength in Sage Intacct, together
with growth in cloud connected products. In Northern Europe, recurring revenue
increased by 7% to £102m (Q1 21: £96m), driven by accelerating growth in
cloud native solutions including Sage Accounting and Sage Intacct. In
International, recurring revenue increased by 5% to £152m (Q1 21: £145m),
with growth across Sage Business Cloud supported by further progress in
migrations.

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)
grew 10% to £394m. This was driven by strong growth in cloud native revenue
of 44% to £90m (Q1 21: £62m) primarily through new customer acquisition, as
well as further growth in the cloud connected portfolio. Sage Business Cloud
penetration increased to 71% (Q1 21: 65%).

Other revenue (SSRS and processing) decreased by 22% to £29m, in line with
our strategy to transition away from licence sales and professional services
implementations.

Total Group revenue increased by 5% to £458m.

On 17 January 2021, Sage completed the previously announced acquisition of
Brightpearl, a cloud native multichannel retail management system for the
retail and ecommerce vertical. The acquisition accelerates our strategy for
growth, including scaling Sage Intacct, broadening the value proposition for
mid-sized businesses and expanding Sage's digital network.

Foreign exchange

Sterling strengthened in the quarter against the US dollar and Euro, leading
to an exchange rate headwind.

Analyst and investor conference call

Jonathan Howell will host a conference call at 8.30am UK time, which can be
accessed via the following link https://edge.media-server.com/mmc/p/44qb4uyo
(https://edge.media-server.com/mmc/p/44qb4uyo) . The call may also be accessed
using the dial-in number 0800 279 6619 (United Kingdom) or +44 (0) 20 7192
8338 (International) and pin code 4589027.

Enquiries

Sage +44 (0) 7900 046714

Jonathan Howell, Chief Financial Officer

James Sandford, Investor Relations

Amy Lawson, Corporate PR

Finsbury Glover Hering +44 (0) 20 7251 3801

Conor McClafferty

Amanda Healy

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  All numbers in this document are organic. Organic results exclude
contributions from assets held for sale and in-year acquisitions.

 2  Software and software-related services.

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