Shares in The Sage Group plc (LON: SGE) have crashed on Wednesday morning, after the firm reported mixed annual results.
The Sage Group is a British multinational enterprise software company, which have applications with accounting and finance practice.
Shares of Sage Group crashed 3.58% to 715p on Wednesday following the disappointing results. 20/11/19 12:30BST.
The FTSE100 (INDEXFTSE: UKX) listed firm said to shareholders that it had experienced strong recurring revenue growth but a decline in annual profit.
The accounting software business said that for the financial year that ended September 30, revenue was up 4.9% to £1.94 billion from £1.82 billion in financial 2018.
Organic revenue growth was 5.6% to £1.8 billion from £1.7 billion, underpinned by software subscription revenue growth.
Profit before tax was £425.0 million, down 11% from £475.0 million in 2018. Underlying profit before tax was down 9% to £361.0 million, compared to £398.0 million in 2018.
Sage increased its full-year dividend by 2.5% to 16.91 pence from 16.50p “in line with the policy of maintaining the dividend in real terms”, which may act as a consolidation to shareholders.
The company alluded to expectations of recurring revenue growth of 8-9% in the new financial year.
The revenue growth will be driven by its push into software-as-a-service offerings on the Sage Business Cloud. Meanwhile other revenue, including software and software-related services, is expected to decline “by high single digits”.
Chief Executive Officer Steve Hare said: “We will continue to prioritize high-quality recurring revenue growth over SSRS, and whilst we do not expect a linear progression in financial performance during this multi-year transition, our recent strong performance and continued progress towards becoming a great SaaS company means that we look forward with confidence.”
The software and technology industry has seen mixed experiences by firm, with many businesses seeing volatile share prices.
Firms such as Kape Technologies (LON: KAPE) saw their shares rally yesterday after a deal was agreed to purchase PIA. Following the same trend, Sophos Group (LON: SOPH) saw their shares rally after a strong update.
The industry has been volatile, however shareholders of Sage may be concerned about the profit figures in the update.
A mix of uncertain market conditions and poor company performance can be said as the main cause for this slump, but the confidence of Sage should reassure shareholders for future outlook.