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Sage Group PLC on Tuesday reported a strong performance for the third quarter of its financial year, citing sales of Business Cloud solutions, as it expects annual revenue growth to top prior guidance.
The FTSE-100 Newcastle, England-based accounting software firm said that for the nine months that ended on June 30, total group revenue increased by 6.0% to £1.41 billion from £1.33 billion a year earlier.
Recurring revenue increased by 9.0% to £1.33 billion compared from £1.22 billion a year earlier, driven by a 20% rise in Sage Business Cloud revenue to £886 million from £736 million.
Sage said software subscription revenue grew by 14% to £1.05 billion from £922 million, which resulted in a subscription penetration of 75%, compared to 69% a year earlier.
Chief Executive Officer Jonathan Howell said: ‘Sage has performed strongly in the first nine months of the year, with momentum continuing to build, as more businesses choose Sage Business Cloud solutions to support their digital transformation. While we are mindful of broader macroeconomic trends, I am confident that continued delivery against our strategic priorities will ensure Sage remains well-positioned for the future.’
On a regional basis, Sage said North America saw recurring revenue growth of 13% to £557 million from £493 million the year earlier, ‘with a strong performance from Sage Intacct alongside growth in cloud connected products,’ it added. In Northern Europe, recurring revenue grew by 7.0% to £311 million from £291 million.
And lastly, in International, recurring revenue rose by 5.0% to £462 million from £439 million a year earlier, with growth across the Sage Business Cloud portfolio.
Looking ahead, Sage said it expects organic recurring revenue growth for financial year that ended September 30 to be towards the top end of its guidance range of 8% to 9%.
Shares were down 0.3% at 705.00 pence each on Tuesday morning in London, having initially risen to 722.60p.
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