Member Article

Sage on track for 2015 targets following encouraging finish to the year

Newcastle-based Sage Group plc has announced that key financial milestones for 2014 have been achieved, as the company reports an organic revenue growth of 5% (2013: 4%) and organic operating profit margin of 27.5% (2013: 27.1%).

Organic revenue stands in total at £1,306 million, up by 4.9% on last year’s £1,246 million. Organic recurring revenue now stands at £951 million with organic software and software-related services up 0.5% to £355 million.

Sage reports that its results show the company is on track to deliver the 2015 financial targets of 6% organic revenue growth and 28% operating profit margin.

A software subscription revenue growth of 28% (2013: 13%) was the primary driver of organic revenue growth.

Improved revenue mix with recurring revenue representing 73% of Group revenue (2013: 71%); and recurring revenue growth, with strong subscription growth, underpins the group’s confidence in meeting 2015 targets.

The company reports that its sound execution against strategic priorities allowed subscription base to increase and cloud momentum to build, benefitting the company.

The move to higher quality software subscription revenue continued, with a 29% increase in the organic annualised value of the software subscriber base to £220 million (2013: £170 million).

Subscription is driving increased customer loyalty, which is reflected in an increase in the recurring contract renewal rate to 83% (2013: 82%).

Strong momentum for Sage One as a small business global cloud solution; present in 10 markets and ca.150% increase in paying subscriptions to 86,000 (2013: 35,000*), driven by strong run-rates in the UK & Ireland (“UKI”) and South Africa.

Chief Executive Officer, Stephen Kelly, said: “I would like to thank Guy Berruyer for leading Sage to deliver an encouraging set of results with a strong finish to the year.

“I reconfirm the Board’s financial targets for 2015 and recognise the 2014 results as an important milestone on the path to meeting them.

“Our financial performance demonstrates the strength of Sage’s global business and the quality of relationships it has with millions of SME customers worldwide.

“Looking ahead, I believe that Sage, as a trusted partner to our customers, can be even more instrumental in supporting the success of SMEs around the world.

“I look forward to building on Sage’s technology leadership, both in the cloud and on-premise, together with our outstanding customer support, to the benefit of our current and future SME customers.”