Sage Group, the Newcastle-based international SME accounting software giant, said on Thursday its revenue increased 2.6% to £1.329 billion in the first nine months of the year and by 5% to £440 million in the third quarter.

Recurring revenue increased 5% to £1.22 billion over the nine months, with this performance supported by software subscription growth of 11% to £920 million.

In its outlook, Sage said that following a strong third quarter performance, it now expects full year 2021 recurring revenue growth to be slightly above its previous guidance range of 3% to 5%.

The group’s guidance across other metrics remains unchanged.

In a trading update for the nine months ended June 30, 2021, Sage said: “Regionally, North America achieved recurring revenue growth of 7% to £475m (Q3 20 YTD: £445m) mainly reflecting a good performance from Sage Intacct, with continued strength in new customer acquisition.

“In Northern Europe recurring revenue increased by 4% to £292m (Q3 20 YTD: £281m), driven by accelerating growth in cloud native solutions including Sage Accounting, together with further growth in Sage 50 cloud connected.

“In International, recurring revenue grew by 4% to £454m (Q3 20 YTD £436m), with particular strength in cloud connected products, together with growth in cloud native solutions.

“In terms of the portfolio view of revenue, the Future Sage Business Cloud Opportunity (products within, or to be migrated to, Sage Business Cloud) increased by 7% to £1,103m.

“This was underpinned by strong growth in cloud native recurring revenue of 32% to £205m (Q3 20 YTD: £155m), primarily through new customer acquisition, and supported by migrations to both cloud native and cloud connected solutions.

“Sage Business Cloud penetration increased to 66% (Q3 20 YTD: 60%).

“In the third quarter, recurring revenue grew by 6.1% to £409m (Q3 20: £385m).

“This was driven principally by an acceleration in the growth of cloud native revenue, up 37% to £74m (Q3 20: £54m), together with continued growth in cloud connected.

“This growth has been strengthened by the group’s programme of additional strategic investment in sales, marketing and innovation.

“Other revenue (SSRS and processing) decreased by 18% to £109m in the first nine months of the year, and by 9% to £31m (Q3 20: £34m) in the third quarter, in line with our strategy to transition away from licence sales and low margin professional services implementations.

“Total group revenue increased by 2.6% to £1,329m in the first nine months of the year, and by 5.0% to £440m (Q3 20: £419m) in the third quarter.”

On its financial position, Sage said group net debt was £160 million at June 30, 2021, with cash and available liquidity of £1.3 billion.

Sage chief financial officer Jonathan Howell said: “The performance of the group in the first nine months of the year demonstrates continued delivery against our strategy.

“Sage’s growth is accelerating, driven by increasing demand for Sage Business Cloud solutions, particularly in cloud native, as we support customers in their digital transformation.

“Through our additional strategic investment, we are building strong foundations to drive further sustainable growth and support the long-term success of the group.”