Sage shows signs of recovery

Accountancy software vendor posts revenue growth after struggles in H1

Sage has mounted a recovery in Q3 after a revenue miss earlier in the year sent its share price tumbling.

In a trading update Sage said that organic revenue in its third quarter was up 6.8 per cent.

Sage did not provide exact revenue figures in the news release, but said that cloud recurring revenue was up 56 per cent year on year to £386m.

The growth comes after the accountancy software vendor saw its share price drop almost 19 per cent earlier in the year.

Steve Hare, CFO at Sage, said: "We have delivered acceleration in both organic and recurring revenue growth, demonstrating the impact of our primary focus on driving high-quality recurring revenue growth through Sage Business Cloud.

"We remain confident of achieving full-year FY18 guidance of around seven per cent organic revenue growth and around 27.5 per cent organic operating margin."

Revenue in northern Europe, including the UK and Ireland, was flat, while Iberia and central Europe saw double-digit growth and France saw "early signs of recovery".

Angela Eager of TechMarketView highlighted Sage's strong cloud growth as proof that the business can continue to recover.

"What is reassuring is that cloud annualised recurring revenue improved sequentially," she said.

"There are very early signs of progress, for example more cloud connected subscriptions sold in Q3 than in the first two quarters of the year, combined.

"There is certainly market opportunity for Sage but, as is the case with most software suppliers, the cloud journey is difficult and non-linear."