The FTSE 100 company, which helps businesses manage things such as money and people, said it plans to invest £60mln as it looks to accelerate its shift towards cloud-based, software-as-a-service (SaaS) model.
As a result of the investment, Sage expects margins for the current financial year to fall to between 23-25%. That compares with 27.8% for the year just gone and 28% in fiscal 2017.
Annual profits surge
A recovery in Northern Europe helped boost revenue in the year ended September 30 by almost 8% to £1.85bn (2017: £1.72bn), while pre-tax profits rose 16.4% to £398mln (2017: £342mln).
The final dividend was nudged up to 10.85p from 10.20p a year earlier.
Delivering his first set of results since becoming chief executive, Steve hare said: “Sage has shown stronger performance in the second half of FY18.
“The renewed focus on high-quality subscription and recurring revenue has generated momentum as we exited the year. As CEO I will put customers, colleagues and innovation at the heart of everything we do to accelerate the transition to becoming a great SaaS business.”
Shares were down 4% to 515p on Wednesday morning.