17th Nov 2021 09:32
(Alliance News) - Sage Group PLC on Wednesday reported an overall weaker performance for its recently ended financial year, but it now expects to see an upwards margin trend and recurring revenue growth.
For the year ended September 30, the accounting software firm posted pretax profit of GBP347 million, down 7.0% from GBP373 million the year before, mainly due to additional costs from the group's investment into sales, marketing and product development, aimed at growing its Sage Business Cloud division.
In addition, revenue dropped 2.6% year-on-year to GBP1.85 billion from GBP1.90 billion, reflecting the disposal of Sage Pay and the group's Brazilian business in the 2020 financial year, and hurt from foreign exchange headwinds.
However, organic recurring revenue grew 5.1% to GBP1.64 billion, driven by a rise in software subscription as focus remained on bringing in new customers.
Sage declared a final dividend of 11.63 pence, bringing the total payout to 17.68p, up 2.5% from 17.25p the year before.
Looking ahead, Sage expects organic recurring revenue growth to accelerate in its new financial year, seen in the region of 8% to 9%. Organic operating margin is "expected to trend upwards in FY22 and beyond", after dipping 2.7 percentage points to 19.3% in the recently ended financial year.
"Sage delivered a strong performance in FY21. We achieved recurring revenue growth ahead of our initial expectations and ended the year with real momentum, supported by our strategic investment in sales, marketing and innovation. Our cloud native solutions have performed particularly well, as more new customers choose Sage to take care of their accounting, people and payroll processes - removing friction, delivering business insights, and giving them a competitive edge," said Chief Executive Officer Steve Hare.
Shares in Sage Group were up 2.6% at 748.20 pence on Wednesday morning in London, the best performer in the FTSE 100 index.
By Dayo Laniyan; [email protected]
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