Profits fall 31 per cent at software group Sage

The business said that pre-tax profit dropped 31 per cent to £190m in the six months to the end of March. Revenue also dropped, by four per cent to £937m.

However, the business pointed to its organic recurring revenue, a separate measure which essentially catches subscriptions. This rose 4.4 per cent to £811m over the period.

“Sage performed strongly in the first half against tough comparators, with continued recurring revenue growth and increasing levels of new customer acquisition, principally in cloud native solutions,” said chief executive Steve Hare.

These signs now mean that Sage thinks organic recurring revenue looks set to register growth towards the top end of its previous three per cent to five per cent guidance.

It also expects a drop in other types of one-off revenues, reflecting the company’s plan to move towards a more subscription-based model which can allow it to lock in recurring sales for many years.

Mr Hare said that the company sees a way out of the economic disaster brought by the pandemic through its small customers.

“Our deep sense of purpose and experience of supporting small and medium-sized businesses through change has equipped us well to play a vital role throughout the pandemic, and I am proud of the way our colleagues around the world have shown dedication to our customers and partners,” he said.

“We believe that small and medium-sized businesses will lead the recovery, and I am confident that our strategic investment in Sage Business Cloud will continue to accelerate growth, as customers become stronger and more digitally-enabled.”

Shares in the company rose by more than three per cent on Friday morning following the update.

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