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Sage reiterates guidance after strong start to fiscal year

The group said its financial position remains strong and net debt as at 31 December 2018 was £602mln (£668m as at 30 September 2018)
Sage Group
The group reports in sterling but earns a lot of dollars and euros so it is facing exchange rate tailwinds

The first quarter of accountancy software provider Sage Group PLC’s (LON:SGE) fiscal year saw an acceleration in organic revenue growth.

The group’s organic revenue in the final three months of 2018 increase by 7.6% to £465mln from a year earlier; in the final half of the preceding fiscal year, the organic growth rate was 7.0%.

READ: Sage agrees disposal of its US-based payroll outsourcing business to iSolved HCM

The bulk of the growth came from customers that have migrated to Sage Business Cloud, where revenue rose 9.3% to £380mln. The old-school software licensing-per-seat business saw revenue edged up 0.6% to £85mln.

North America delivered year-on-year revenue growth of 10.4% to £154mln while the UK & Ireland notched up revenue growth of 5.9% to £96mln, marginally topping the 5.8% growth in revenue (to £69mln) seen in France.

Recurring revenue increased by 10.5% to £387mln, underpinned by software subscription growth of 27.7% to £237mln, Sage said.

Software and software-related services revenue declined by 5.8% to £65mln reflecting the managed decline in licences as the business makes the transition to a subscription-based model.

"We have been encouraged by the strong start to FY19, reflecting the renewed focus on high-quality subscription and recurring revenue as we continue the journey to becoming a great SaaS business. Looking ahead we reiterate our full year guidance for FY19 as outlined at the FY18 results announcement,” said Steve Hare, the chief executive officer of Sage.

Shares in Sage were up 6.4% in early deals.
 

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