Software firm Sage has boosted revenues thanks to growth of its cloud services, particularly in the US market.
The Tyneside-based accountancy program provider said its underlying recurring revenue had increased by 12% to £2.09bn in the year to the end of September as underlying profit grew by 18% to £456m. In new results revealed to investors on the London Stock Exchange, Sage also said statutory operating profit fell by 14% to £315m, which reflected one-off gains from disposals in 2022 and property restructuring and merger and acquisition-related charges in 2023.
Bosses said the global operator had increased its margin by 140 bps to 20.9%, driven by efficiencies, with the trend expected to continue into 2024. Sage has also launched a £350m share buyback programme which will run from now until April next year.
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The strongest growth came from Sage's US market where recurring revenue grew 16% to £944m, supported by demand for its Sage Intacct and cloud connected products, and where CEO Steve Hare said there was perhaps more business optimism. In the UK and Ireland, recurring revenue grew 10% to £611m thanks to customer interest in cloud native solutions and the firm's Sage 50 cloud product. Meanwhile, in Europe, recurring revenue grew 7% to £541m, which it said reflected growth across the Sage Business Cloud portfolio.
Asked about the efficiencies behind Sage's margin growth, Mr Hare told BusinessLive: "If you go back five years we deliberately set out to increase investment levels in both research and development and marketing, so that we could really transform and accelerate the growth of Sage. We are continuing to do that, but as we're growing more quickly, we don't need to increase at quite the same rate. We're getting that operating leverage as we grow and we're also now starting to get the efficiencies from a more scaled sales and marketing operation; we're doing more things globally, and we're doing it once rather than repeating it multiple times in different regions."
Mr Hare added: "Sage performed well in FY23, delivering double-digit revenue growth, increased profitability and strong cash flows. We sustained good momentum throughout the year in all regions, driven by consistent strategic execution. We continue to help small and mid-sized businesses succeed, providing them with the tools and expertise they need to simplify their accounting and HR processes, streamline their operations, and make more informed business decisions. Through the Sage Network, we are delivering innovative, AI-powered services to customers, faster and more efficiently than ever before.
"Small and mid-sized businesses are continuing to digitalise, despite the macroeconomic uncertainty. We are building a resilient platform to deliver sustained, efficient growth, and I am confident that Sage is well positioned to take advantage of the market opportunity in 2024 and beyond."
Sage said it expects total organic recurring revenue in 2024 to broadly match this year's performance. The firm has proposed a final dividend of 12.75p, increasing the full year dividend by 5% to 19.3p.
