17th Jan 2019 08:53
LONDON (Alliance News) - Sage Group PLC on Thursday said revenue increased in the first quarter of its current financial year as it progressed on its transition to a software-as-a-service company.
Sage shares were trading 5.9% higher on Thursday morning in London at 628.00 pence each, making Sage the best performer in FTSE 100 index.
At the end of November, Sage had said it intends to focus on "accelerating" its transition to a software-as-a-service firm in financial 2019, hoping to increase recurring revenue and subscriptions.
The blue-chip enterprise software firm reported a 7.6% increase in organic revenue for the three months to the end of December to GBP465 million. Organic revenue excludes businesses acquired during the current financial year.
The growth reflects an improvement in product sales within the company's Business Cloud accounting software arm, where revenue rose by 9.3% to GBP380 million. Revenue from other product sales grew by 0.6% to GBP85 million.
Recurring revenue rose by 11% to GBP387 million, underpinned by software subscription growth of 28% to GBP237 million. Software and software-related services revenue declined, however, by 5.8% to GBP65 million.
Geographically, Sage said North America delivered revenue growth of 10% to GBP154 million, driven by cloud-connected solutions and Sage Intacct financial management software.
The UK & Ireland showed strong signs of recovery, the company said, with revenue growth of 5.9% to GBP96 million, driven by Sage 50 cloud software.
In France, revenue rose by 5.8% to GBP69 million, driven by Sage 200 cloud accounting software.
Performance in other regions was largely in line with expectations, Sage noted.
"We have been encouraged by the strong start to financial 2019, reflecting the renewed focus on high-quality subscription and recurring revenue as we continue the journey to becoming a great software-as-a-service business," said Chief Executive Steve Hare.
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