Strong first quarter for Newcastle-headquartered Sage Group

Software firm Sage reports rising revenues and pro-active moves to tackle weak points as it remains on track to hit targets

Sage, at the Great Park, Gosforth
Sage, at the Great Park, Gosforth.

The Newcastle-headquartered business software and services company, Sage Group plc, remains on track to hit targets of 6% organic revenue growth and 28% operating margin in 2015, following a strong start to the financial year.

The firm, which employs around 13,000 people in 23 countries, saw organic revenue rise by 5.3% in the first quarter and now expects to see an acceleration in growth, weighted towards the second half.

A trading update for the three months ended December 31, 2014, also showed organic recurring revenue grew by 7% during the period, primarily driven by software subscription growth.

Organic software and software-related services revenue grew by 1.0%, while organic software subscription revenue soared by 28.8%.

All regions contributed to the strong performance, with Europe delivering particularly good growth on an established software subscription base.

As stated when Sage released its full-year results for 2014, payments in North America and Europe Enterprise - particularly in France - remain points of weakness.

However, management remained focus on taking action in these areas.

Established in 1981, Sage provides millions of SMEs and mid-market companies with business management software and services - from accounting, HR and payroll, to payments, enterprise resource planning and customer relationship management.

The business, which floated on the London Stock Exchange in 1989 and entered the FTSE 100 in 1999. covers the UK &Ireland, mainland Europe, North America, South Africa, Australia, Asia and Brazil.

The Sage Group HQ at Great Park, Newcastle
The Sage Group HQ at Great Park, Newcastle
 

According to the trading update, the group’s operating cash generation remains strong, a share buyback programme seeing 3.5m shares being repurchased for a consideration of £12.4m during the period.

Net debt at December 31, 2014, was £542m, compared to £437m on September 30.

The company’s move to the Cloud within the areas of payroll and HR services has also been accelerated by the acquisition of PAI Group, Inc, on October 16, 2014, allowing it to leverage the additional Software as a Service platform.

Stephen Kelly, who took over as chief executive of Sage in November, said: “This is a solid start to the financial year and the overall growth trajectory remains on track.

“I have been privileged to meet many customers in my first 90 days with Sage.

“SMEs are the growth engine of the economy worldwide and our performance attests to the enduring quality of our relationships with them.

“We look forward to building on this position as a trusted partner to our customers, and to being even more instrumental in supporting their success in the future.”

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