Newcastle software giant Sage has upgraded its full-year organic recurring revenue growth forecast after a strong uptake of cloud services drove a strong first half performance.
Statutory revenues rose 16 per cent in the six months to March 31, to£1.087bn. Annual recurring revenues rose 12 per cent from £1.878bn to £2.1bn in the period, underpinned by strong Sage Business Cloud growth of 29 per cent to £787m. Geographically, the greatest lift for the company came in North America, which jumped 28 per cent from £376m to £483m. Underlying operating profit increased by 14 per cent to £227m in the period.
Sage’s updated forecast now predicts organic recurring revenue growth for FY23 to be in the region of 11 per cent, driven by continued strength in Business Cloud, compared to its previous “above 9.4 per cent” forecast.
Shares in Sage, which provides software for accounting, payroll and other business processes, rose four per cent to a 16-month high of 858 pence on Wednesday, topping the FTSE 100 index.
Steve Hare, chief executive officer, said: “Sage performed strongly in the first half, accelerating revenue growth, increasing profitability and making further progress against our strategic priorities. Our investments in technology and in sales and marketing are continuing to drive results, as small and mid-sized businesses increasingly choose Sage as a valued partner to transform the way they work.
“We are committed to delivering innovative, AI-powered services that make our customers’ lives easier and their organisations more productive and resilient. Sage’s global platform, centred on our expanding digital network, is enabling us to leverage our scale and collective expertise to maximise the significant opportunities we see across our markets.
“Small and mid-sized businesses are continuing to digitise, despite the macroeconomic uncertainty, and through our trusted technology and human approach Sage is well positioned to support them. I am confident that our proven strategy will enable us to deliver further efficient growth.”
Hare also came to the defence of the London Stock Exchange, during an era when several UK tech firms have either listed, or made noises about listing in New York over the LSE. In an interview with the Evening Standard following the results he said: “We’re proud of our roots. We were born in Newcastle and were very proud of that. What I ask is, ‘What do we need to do to continue to grow the business?’ And we have no problem getting access to capital. We are very proud to be listed in the UK. It is not holding us back.”
