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RNS Number : 1915N Sage Group PLC 19 January 2023
The Sage Group plc
Trading update for the three months ended 31 December 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 three months ended 31 December 2022 1 .
Jonathan Howell, Chief Financial Officer, commented:
"Sage has made a strong start to the year, in line with our expectations, as
Sage Business Cloud solutions help more customers improve their productivity
and resilience. While we are mindful of the current macroeconomic environment,
we remain confident in our strategy for delivering efficient growth and we
reiterate our guidance for the full year, as set out in our FY22 results
announcement."
Underlying Revenue Performance 2 Q1 23 Q1 22 % Growth Organic
% Growth
Revenue by Category
Recurring Revenue £517m £460m +12% +12%
Other Revenue (SSRS 3 ) £23m £33m -29% -27%
Total Revenue £540m £493m +10% +9%
Recurring Revenue by Region
North America £235m £198m +18% +16%
UKIA £151m £135m +12% +10%
Europe £131m £127m +3% +6%
Recurring Revenue by Portfolio
Future Sage Business Cloud Opportunity £479m £422m +14% +13%
of which Sage Business Cloud £390m £298m +31% +28%
Non-Sage Business Cloud £38m £38m 0% +1%
Recurring revenue increased by 12% to £517m, underpinned by a 31% rise in
Sage Business Cloud revenue to £390m. Software subscription revenue grew by
18% to £422m (Q1 22: £357m), resulting in subscription penetration of 78%
(Q1 22: 73%).
Regionally, in North America recurring revenue increased by 18% to £235m,
with a strong performance from Sage Intacct alongside growth in cloud
connected products. In the UKIA region, recurring revenue grew by 12% to
£151m, driven by continued success in cloud native solutions including Sage
Intacct and Sage Accounting, together with growth in Sage 50 cloud connected.
In Europe, recurring revenue increased by 3% to £131m, with growth across the
Sage Business Cloud portfolio partly offset by the disposal of the Swiss
business in FY22. Organic recurring revenue growth, which excludes the
disposal impact, was 6%.
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 14% to £479m. This was driven by 45% growth in cloud native recurring
revenue (35% on an organic basis) to £141m (Q1 22: £98m) primarily through
new customer acquisition, as well as further growth in cloud connected
supported by migrations. Sage Business Cloud penetration increased to 81% (Q1
22: 71%), enabling more customers to connect to Sage's digital network.
Other revenue (SSRS) decreased by 29% to £23m, in line with our strategy to
transition away from licence sales and professional services implementations.
Total revenue increased by 10% to £540m. On an organic basis (excluding the
impact of M&A), total revenue growth was 9%.
Foreign exchange
Sterling has weakened against the US Dollar and the Euro, leading to an
exchange rate tailwind.
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/vjzkrh3f
(https://edge.media-server.com/mmc/p/vjzkrh3f) . To join the conference call,
please register via:
https://register.vevent.com/register/BI5f4628e0a0484ad5935bb75b71c977a2
(https://register.vevent.com/register/BI5f4628e0a0484ad5935bb75b71c977a2) .
Enquiries
Sage +44 (0) 77721 599502
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 In line with Sage's financial reporting changes announced on 8 December
2022, all figures are on an underlying basis unless otherwise stated. In
terms of regional reporting, UKIA comprises Northern Europe (UK &
Ireland), Africa & APAC, and Europe comprises France, Central Europe &
Iberia.
2 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 Software and software-related services.
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