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Sage Group's organic revenue growth picks-up

Sage was late in switching to a software-as-a-service model but the idea seems to be taking hold now
Sage Group display
Software subscription revenue increased by 25.0% in the first nine months of the fiscal year

Organic revenue growth picked up in the fiscal third quarter at The Sage Group PLC (LON:SGE), the accountancy software giant.

The group’s like-for-like year-on-year revenue increased 6.8% in the third quarter, raising the growth rate for the first nine months of the trading year (which runs to the end of September) to 6.6%.

READ: Sage Group's first half profits fall as organic revenue growth misses expectations

The pick-up was welcomed by the City after the firm had disappointed in the second quarter with an organic growth rate of 8.3%. The shares were up 1.9% at 637.2p in mid-morning trading.

Software and software-related services (SSRS) revenue increased by 7.7% in the three months to the end of June from the same period of 2017, reflecting continued strong performance in training and services, offset by a decline in licence revenue as the business makes the transition to a subscription-based model.

"We have delivered acceleration in both organic and recurring revenue growth, demonstrating the impact of our primary focus on driving high-quality recurring revenue growth through Sage Business Cloud,” said Steve Hare, the chief financial officer of Sage.

The Sage Business Cloud’s annualised recurring revenue rose to £386mln, up from £336mln at the start of the quarter and up 56% year on year.

“We remain confident of achieving full year FY18 guidance of around 7% organic revenue growth and around 27.5% organic operating margin," Hare added.

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