The Sage Group PLC (LSE:SGE), the FTSE 100 accounting and business software group, saw its shares slip 2% to 878p on Thursday despite delivering first-half results that came in ahead of consensus on both revenue and profit.
Underlying total revenue for the six months rose 10.7% to £1.363 billion, marginally ahead of the £1.355 billion expected by analysts, while underlying operating profit grew 14.4% to £326 million against a consensus forecast of £321 million.
Operating margins expanded by 80 basis points, suggesting the group is beginning to extract more profit from its recurring revenue base.
Annual recurring revenue, the key measure of the health of a subscription software business, increased 11% to £2.727 billion, with the renewal rate by value ticking up to 102% from 101%.
North America was the standout region, delivering underlying revenue growth of 14% to £616 million, while the UK and Ireland grew 10% to £395 million and Europe advanced 7% to £352 million.
Sage raised its full-year guidance, saying it now expects organic total revenue growth to come in above 9%, a modest upgrade from the previous language of 9% or more.
Consensus sits at £2.753 billion for the full year, implying 9.6% growth.
The group is leaning heavily into artificial intelligence and agentic tools to drive better customer outcomes, using automation to generate insights and manage increasingly complex business processes.
The interim dividend was lifted 8% to 8.05p, and Sage said its £300 million share buyback programme announced in March is progressing well, bringing total buybacks announced in the first half to £600 million.
Panmure Liberum repeated its 'hold' call and 1,300p price target in the wake of the numbers.