Sage Group PLC said it expects a continued strong performance in its cloud offering to drive revenue growth in the year ahead.
The accounting software company reported a 10% decline in organic operating profit to £343mln for the year to 30 September 2021. The operating margin narrowed to 19.3% from 22%, reflecting the company’s planned strategic investment to accelerate growth in its cloud offering, Sage Business Cloud.
Pre-tax profits fell to £347mln from £373mln in the previous year.
Organic recurring revenue grew by 5% to £1.63bn, ahead of the company’s expectations and boosted by a 19% rise in revenue at Sage Business Cloud to £997mln.
Looking ahead, Sage forecast growth in organic recurring revenue of 8%-9% for the current financial year to end-September 2022, driven by continuing strength in Sage Business Cloud.
The organic operating margin is expected to trend upwards in FY22 and beyond, "as we now focus on scaling the group”, it said.
Commenting on the results, chief executive Steve Hare said: “Having reshaped and invested significantly in the group over the last three years, we are now focused on growing the business in absolute terms, both organically and through acquisitions.”
The company raised its final dividend by 2.7% to 11.63p, taking the full-year payout to 17.68p.
Underlying cash flow from operations fell to £451mln from £505mln during the year, representing an underlying cash conversion of 126%, up from 123%.
Net debt stood at £247mln at 30 September 2021, compared with £151mln a year earlier.
Sage shares rose 1.34% to 738.80p in opening trade.