Sage H1 dividend up 6% to 6.95p, in line with its progressive policy

Johannesburg - Sage, the market leader for integrated accounting, payroll, and payment systems has announced that its underlying total revenue for its first half ended March 2024 increased by 10% to £1,152m, reflecting continued robust demand for its solutions, while its underlying operating profit had also increased by 18% to £254m, with margin increasing by 160 basis points to 0% driven by operating efficiencies as it scales its business.

The global company that prides itself with being a leader in cloud management solutions that support millions of small businesses through its 11 000 employees, said its EBITDA increased by 14% to £299m, with margin increasing by 100 basis points to 9%, while its statutory operating profit increased by 38% to £215m reflecting growth in underlying operating profit together with lower restructuring and M&A-related charges.

Sage said its underlying basic EPS increased by 23% to 2p, while also achieving strong underlying cash conversion of 127%, reflecting continued growth in subscription revenue and good working capital. Its balance sheet refelcted £1.1bn of cash and available liquidity, and net debt to EBITDA of 4x, with an interim dividend up 6% to 95p, in line with its progressive policy.

Steve Hare, Sage Chief Executive Officer said: “Sage performed well in the first half of the year, delivering broad-based revenue growth and significant margin expansion. Demand for our solutions remains robust, with small and mid-sized businesses continuing to trust Sage to automate their accounting, HR and payroll workflows.

“We are resolutely focused on innovation, as both a source of near-term competitive advantage and a foundation for our long-term success. We continue to introduce new AI-powered products and services that deliver enhanced productivity and insights, driving value for both existing and new customers."

Strategic and operational highlights

Sage said its underlying annualised recurring revenue (ARR) was up 11% to £2,253m, reflecting growth across all regions balanced between new and existing customers, while its renewal rate by value of 102%, was ahead of last year (H1 23: 101%), reflecting increased sales to existing customers and continued good retention.

It said Sage Business Cloud revenue increased by 18% to £915m (H1 23: £777m), including cloud native revenue growth of 25% to £353m (H1 23: £283m). Subscription penetration increased to 81% (H1 23: 79%) driven by growth in subscription revenue of 14% to £937m (H1 23: £826m).

The Group explained that it had made strong strategic progress as it further expanded its global cloud solutions across the Group and deepened its vertical-specific capabilities, complemented by the acquisition of Bridgetown. Sage said it will continue to scale the Sage Network to power innovative features and services, including the recent introduction of Sage Copilot, our generative AI-powered digital

“As we look forward, despite the ongoing macroeconomic uncertainty, I am confident that Sage’s proven strategy, underpinned by continued investment, will enable us to deliver further efficient growth,” concluded Hare.