Sage Group plc, the Newcastle-based FTSE 100 global software business, reported higher sales and profit for the year, upped its dividend and announced a share buyback programme of up to £400 million, sending its shares up 19%.
The company, which sells accounting, finance, HR and payroll technology for small and medium-sized businesses, said underlying total revenue increased by 9% to £2.332 billion for the latest 12-month period, helped by its subscription-based recurring revenue model, which now accounts for 97% of its business.
Operating profit grew by 21% to £529 million, as it managed costs better.
Steve Hare, Chief Executive Officer, said: “Sage has delivered another successful year, achieving strong, broad-based revenue growth together with significantly higher profits and cash flows. We also invested further in our products and continued to execute well against our strategic priorities.
“Our high pace of innovation continues, as we enhance existing products and expand key cloud solutions throughout our markets. The Sage Network platform is enabling us to accelerate the delivery of new services, and we’ve made good progress with Sage Copilot, our generative AI-based digital assistant, now available with selected products across our portfolio.
“Small and mid-sized businesses remain resilient, despite the ongoing macroeconomic uncertainty, and they continue to choose Sage to help them become more productive and efficient. Building on our progress to date, we look forward to delivering further sustainable growth in the year ahead.”
Alongside the results, Sage proposed a final dividend of 13.50p, increasing the full year dividend by 6% to 20.45p and announced a share buyback programme of up to £400 million, which it said reflected “Sage’s strong cash generation, robust financial position, and the Board’s confidence in Sage’s future prospects.”
Looking forward, Sage said it is entering the new financial year “with good momentum driven by consistent strategic execution.” It said it expects organic total revenue growth in the current financial year to be 9% or above, while operating margins are expected to trend upwards.
Sage said its latest results were helped by North America, where revenue grew by 12%, driven by a good performance from Sage Intacct together with continued growth in Sage 50 cloud and Sage 200 cloud. In the United Kingdom, Ireland, Africa and APAC region, it said revenue increased by 8%, driven by Sage Intacct together with cloud solutions for small businesses. In Europe, revenue increased by 6%, with growth across our accounting, payroll and HR solutions.
Sage said its principal focus is to grow Sage Business Cloud, which comprises its cloud-native and cloud-connected products.
In the latest year, Sage Business Cloud total revenue increased by 16% to £1.871 billion, driven by growth in cloud native revenue of 23% to £732 million, primarily through new customer acquisition, and by growth in cloud connected revenue from both existing and new customers.
Underlying recurring revenue increased by 10% to £2.257 billion, with software subscription revenue up by 13% to £1.910 billion leading to subscription penetration of 82%, up from 79% a year ago. As a result, it said 97% of the group’s revenue is now recurring.