TIDMSGE
RNS Number : 3848M
Sage Group PLC
21 January 2021
Trading update for the three months ended 31 December 2020
The Sage Group plc (the "Group") is today issuing its trading
update for the three months ended 31 December 2020.
Financial performance
Organic(1) Revenue Mix Q1 FY21 Q1 FY20 Growth
GBPm GBPm GBPm %
--------- --------- --------- -------
Revenue by Category
Recurring Revenue GBP408m GBP390m +GBP18m +4.7%
Other Revenue (SSRS(2) &
Processing) GBP39m GBP51m -GBP12m -24.0%
--------- --------- --------- -------
Organic Total Revenue GBP447m GBP441m +GBP6m +1.4%
Portfolio View of Recurring
Revenue
Future Sage Business Cloud
opportunity GBP366m GBP345m +GBP21m +6.2%
Non-Sage Business Cloud GBP42m GBP45m -GBP3m -7.2%
--------- --------- --------- -------
Recurring Revenue GBP408m GBP390m +GBP18m +4.7%
Sage performed in line with expectations in the first quarter,
against strong comparators, driven by successful strategic
execution.
Recurring revenue increased by 4.7% to GBP408m, supported by
software subscription growth of 11.3% to GBP303m (Q1 20: GBP272m).
As a result, subscription penetration increased to 68% (FY20:
65%).
Regionally, North America achieved growth in recurring revenue
of 6.4% to GBP160m (Q1 20: GBP150m) driven principally by a good
performance from Sage Intacct. In Northern Europe recurring revenue
increased by 3.3% to GBP96m (Q1 20: GBP93m), reflecting mainly
momentum in cloud connected, together with growth in cloud native
solutions. Performance in other regions was largely in line with
expectations.
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 by 6.2% to GBP366m. This was
underpinned by strong growth in cloud native revenue of 26.7% to
GBP63m (Q1 20: GBP50m), primarily through new customer acquisition,
and further growth in cloud connected. Sage Business Cloud
penetration increased to 64% (FY20: 61%).
In line with our plans to drive further growth in recurring
revenue, we are progressively increasing investment in product
development and sales and marketing during FY21, with a particular
focus on cloud native solutions. As previously indicated, we may
flex the level of this investment during the course of the year, in
response to trading conditions.
Other revenue (SSRS and processing) decreased by 24.0% to
GBP39m, a similar rate of decline to that seen in FY20. This
reduction is in line with Sage's strategy to transition away from
licence sales and professional services revenue, and to increase
the Group's focus on subscription revenue.
Total Group revenue increased by 1.4% to GBP447m.
In line with our strategy to create a simpler and more focused
business, Sage announced in December that it has agreed to sell
Sage Poland to Mid Europa Partners for GBP66m, and Sage's business
in Asia and Australia (excluding global products) to The Access
Group for GBP95m. These businesses were classified as held for sale
and excluded from Sage's organic numbers at the FY20 year end.
(1) All numbers throughout this document are organic. Organic
results exclude contributions from assets held for sale.
Full definitions are available in the FY20 results
announcement
(2) Software and software-related services
Financial position
The Group's balance sheet as at 31 December 2020 remains strong,
with cash and available liquidity of GBP1.2 billion, and net debt
of GBP129m (GBP151m as at 30 September 2020).
Jonathan Howell, Chief Financial Officer, commented:
"We have continued to deliver against our strategy in the first
quarter, growing recurring revenue in line with our plan for the
year, supported by good demand for Sage Business Cloud solutions.
Accordingly, we reiterate our guidance for the full year, as set
out in our FY20 results announcement. While the pandemic increases
uncertainty in the near term, we continue to expect that our
investment in Sage Business Cloud will drive the growth and
long-term success of Sage."
Foreign exchange
Sterling strengthened in the quarter against the US dollar and
other international currencies, and weakened against the Euro,
leading to a broadly neutral exchange rate impact at the Group
level.
Analyst and investor conference call
Jonathan Howell will host a conference call at 8:30am GMT today,
which will be webcast via a link on Sage's investor relations
website, at www.sage.com/investors. The call may also be accessed
using the dial-in number 0800 279 6619 (United Kingdom) or +44 (0)
207 192 8338 (International) and pin code 4389661. A replay of the
call will also be available for one week after the event on 0844
571 8951 (United Kingdom) or +44 (0) 3333 009 785 (International),
pin code 4389661.
Enquiries
The Sage Group plc +44 (0) 7900 046714
Jonathan Howell, Chief Financial Officer
James Sandford, Investor Relations
Amy Lawson, Media
FTI Consulting +44 (0) 20 3727 1000
Charles Palmer
Dwight Burden
About Sage
Sage (FTSE: SGE) is the global market leader for technology that
provides small and medium businesses with the visibility,
flexibility and efficiency to manage finances, operations and
people. With our partners, Sage is trusted by millions of customers
worldwide to deliver the best cloud technology and support. Our
years of experience mean that our colleagues and partners
understand how to serve our customers and communities through the
good, and more challenging times. We are here to help, with
practical advice, solutions, expertise and insight.
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