Sage CEO believes SME companies will lead the recovery
Sage Group (LON:SGE), the British software company, saw its profits before tax drop by 31% to £190m during the first half of its financial year.
The FTSE 100 firm also confirmed to investors that its revenue fell by 4% to £937m, during the period of six months ending in March.
Sage’s organic growth in H1 was 4.4%, while the company said it will reach the top end of its previous 3-5% guidance over the course of the whole year.
The company outlined its strategy of moving customers over to Sage Business Cloud, which it believes will hasten its growth as companies become more digitally savvy.
The Sage share price is up by 3.56% at the time of writing to 645.80p.
AJ Bell investment director Russ Mould, commented on Sage’s results:
“The latest results from accounting software firm Sage may be a little hard to pick through but the conclusion seems to be that the company is heading in roughly the right direction.”
“Critically there was evidence of at least some of the organic growth in recurring revenue which is front and centre in the company’s strategy.”
“Historically Sage was a ‘steady-eddy’ business built on a license sales model, where most of the contracted cash came up front with high margin servicing and maintenance income rolling in over the term of the contract.”
Commenting on the results, Sage CEO Steve Hare said:
“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. 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.”
“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.”