Technology group Sage points to growth despite fall in profits

Newcastle software group Sage saw revenue and profits fall in the first half of its financial year but says it is on track to see growth and had “performed well’.

The company saw revenues drop 4% to £937m in the six months to the end of March while operating profit fell 30% to £203m.

But Sage’s preferred measure of organic recurring revenue grew by 4.4% and the company said it expects this growth to be towards the top end of the 3% to 5% it has previously told shareholders to expect for the financial year.

Sage said it had performed well against a tough comparitive period in 2020, which included significant sums from disposals.

The company said it had made strategic investment to accelerate its growth and was continuing its focus on migrating customers to its Sage Business Cloud platform.

Commenting on the results, CEO Steve Hare said: “Sage performed strongly in the first half against tough comparators, with continued recurring revenue growth and increasing levels of new customer acquisition, principally in cloud native solutions.

Sage CEO Steve Hare

“Our deep sense of purpose and experience of supporting small and medium-sized businesses through change has equipped us well to play a vital role throughout the pandemic, and I am proud of the way our colleagues around the world have shown dedication to our customers and partners.

“We believe that small and medium-sized businesses will lead the recovery, and I am confident that our strategic investment in Sage Business Cloud will continue to accelerate growth, as customers become stronger and more digitally-enabled.”

Sage its organic recurring revenue increased by 4.4% to £811m, but this was offset by a 21% decrease in other revenue to £79m.

It said it had a resilient balance sheet with £718m of cash and £656m of undrawn facilities.

The period saw Sage complete the disposal of its Polish businesses and agreements to sell businesses in Switzerland, Australia and Asia. It had also made a number of acquisitions and investments in smaller technology firms.

The company said: “Sage performed well during the first half, against the backdrop of the continuing pandemic.

“We remained resolutely focused on executing the strategic priorities we set out at our FY20 results – including accelerating growth with a focus on cloud native solutions, increasing our strategic investment in sales, marketing and innovation across Sage Business Cloud, and continuing to embed SaaS capabilities and culture throughout the organisation.

“The events of the last year have highlighted the importance of our purpose – to transform the way people think and work so their organisations can thrive. Our purpose and our values, the most important of which is to ‘do the right thing’, have guided our actions throughout the pandemic, and we are proud of the steps we’ve taken to help customers, colleagues and partners adapt to the challenges of Covid.

“Increasingly, small and medium-sized businesses are investing in technology that makes them more productive, more resilient and better able to compete in the digital economy. Our strong strategic progress leaves Sage well-positioned for growth as we support customers in their adoption of digital solutions.”

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