Posted on July 25, 2019 by staff

Subscription services drive growth at Sage


Revenues are up at listed accounting tech giant Sage Group as its customers increasingly move towards subscription services.

Total revenues increased by 5.3 per cent to £476 million in the third quarter of the year, and 5.9 per cent to £1.4 billion in the first nine months of the year.

Recurring revenues increased by 11.4 per cent to £405m for the quarter and 10.6 per cent to £1.2bn for the nine-month period.

In the first nine months of the year, software subscription growth was up 28.3 per cent to £752m, reflecting the firm’s focus on attracting new customers and migrating existing customers to cloud software.

In contrast, software and software-related services revenue declined by 15.5 per cent to £195m for the first nine months of the year.

“We remain encouraged by the progress made in recurring revenue in the first nine months of FY19, reflecting Sage’s focus on high-quality subscription and recurring revenue as we continue the transition to becoming a great SaaS company,” said CFO Jonathan Howell.

“We expect full year FY19 recurring revenue growth to slightly exceed guidance of 8-9 per cent and the combined decline in SSRS and processing revenue to be slightly greater than the decline seen in the first nine months of the year.

“We expect organic operating profit margin to be at the lower end of the guided range of 23-25 per cent.”

Sage announced earlier this month that its flagship UK office in Newcastle is moving from North Park to Cobalt Business Park amid plans to invest £300m in the UK by the end of 2020.