14th May 2021 07:51
(Alliance News) - Accounting software firm Sage Group PLC on Friday reported a fall in interim profit but strengthened its outlook for organic recurring revenue growth.
Revenue for the half-year to March 31 fell 4% to GBP937 million. Organic total revenue, meanwhile, rose 1.4% and organic recurring revenue was up 4.4%, underpinned by software subscription revenue growth of 11%.
Growth in recurring revenue reflects Sage's focus on acquiring new customers and migrating existing customers to Sage Business Cloud, supported by strong customer retention.
"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.
Pretax profit fell to GBP190 million from GBP275 million.
The organic operating profit margin fell to 20.2% from 23.2%, which the company said reflected its planned additional strategic investment to accelerate growth across Sage Business Cloud with a focus on cloud native solutions.
Despite the profit fall, the firm bumped up its dividend by 2% to 6.05 pence from 5.93p paid a year ago.
Following the strong performance in the half, Sage said it now expects organic recurring revenue growth for the full-year to be towards the top end of its 3% to 5% guidance range. As previously guided, the organic operating margin is expected to be up to three percentage points below the 2020 financial year, reflecting "strategic investment" in the business.
"Looking beyond financial 2021, we expect margins to trend upwards over time, as this additional investment drives recurring revenue growth and operating efficiencies," the company said.
By Evelina Grecenko; [email protected]
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