Sage sees revenues reach £1.9bn as businesses continue to adopt cloud products

Software company Sage grew revenue to £1.9bn in the year to the end of September, it has announced.

Software company Sage grew revenue to £1.9bn in the year to the end of September, it has announced.

The Tyneside-based giant saw a 5% revenue increase having attracted new customers throughout the period, particularly across its cloud products. Growth came from the firm's North American sales where recurring revenue grew by 14% to £779m, while its northern Europe territory saw recurring revenue growth of 7% to £419m while internationally the figure grew by 6% to £626m.

Annualised recurring revenue surpassed £2bn thanks to 12% growth - a performance Sage boss Steve Hare described as "fantastic". Statutory operating profit fell by 2% to £367m owing to higher gains on disposals - including Sage Switzerland and its South African payroll outsourcing - in the previous year.

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The firm hailed key UK acquisitions of ecommerce specialist Brightpearl and cashflow management firm Futrli, as well as the purchase of US-based accounting software outfit Lockstep. It also said there had been strong growth from UK small and medium-sized businesses, highlighting the success of its Sage for Accountants product that has attracted more than 2,000 accountancy practices since its launch last November.

Speaking to BusinessLive, Sage CEO Steve Hare said: "We're very cognisant of the macro environment, however what we're seeing among small and mid-sized business is they tend to be underinvested in technology and software. And so, as times get a bit tougher their focus on how they can improve their own productivity and how they can do more with less. Our technology and solutions enable them to do that.

"As we look forward into the next year, whilst there's obviously a few headwinds, we're very confident that we'll continue with our momentum and therefore our revenue growth and indeed our margin growth will continue to accelerate and therefore be better than this last year."

Mr Hare said conversations in the US - which accounts for about 40% of Sage's revenue - indicated to him that consensus among businesses was that inflation had peaked and that optimism was high. But he contrasted that with the UK and the rest of Europe where there were still concerns about further cost increases.

Ahead of the Autumn Statement, Mr Hare called on the UK Government to invest in the digitisation of the economy and small and mid-sized businesses by incentives to investment

Speaking about the prospects in the UK and European markets, Mr Hare added: "Although we face bigger headwinds, there's something like six million businesses in the UK, of which the vast majority are small and mid-sized businesses. But millions of those businesses still don't use accounting and payroll software - they're very underinvested. So, even if things are slowing down, our software is mission critical.

"What you pay for our software is a small part of your total cost base. What we're seeing is people will just continue to look at 'well, how can I continue to drive my productivity? How can I get better insights? How can I get better cashflow forecasting? And our tools give you all of that. No doubt the US will lead the way but I'm still optimistic that we will see accelerating growth in the UK and our European countries too."

Investors were told a final dividend of 12.1p would be paid, resulting in a full year dividend of 18.4p.

 

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