Sage has reported a big jump in recurring revenue for its full-year ended 30 September. Overall, organic total revenue - excluding the sold Sage Pay and the “for sale” Brazil business - delivered growth of 5.6% to £1.82bn.
Growth in recurring revenue was 10.8% to £1.56bn, underpinned by software subscription revenue growth of 29.4% to £1bn. “Strong growth in recurring revenue reflects the continued focus on attracting new customers and migrating existing customers to subscription and the cloud,” Sage said.There was particular strength in recurring revenue growth in Northern Europe and North America at 16% and 12% respectively, and in the Future Sage Business Cloud Opportunity at 13%.
Falling underlying operating profits by 12% to £448m (including Sage Pay and the Brazil business) from £509m in FY18, “reflects the increased investment to accelerate strategic execution [to cloud sales]”, and “increased colleague variable compensation in line with strong business performance and the commitment to colleague success”, said Sage.
The underlying net profit fell 13% to £309m. There was an increase in the full year dividend of 2.5% to 16.91p, in line with the “policy of maintaining the dividend in real terms”. There was a capital return of £250m announced, reflecting the expected proceeds from Sage Pay and “strong cash generation”.
Steve Hare, Sage CEO, said: “We’re very encouraged by the acceleration in recurring revenue in FY19. We entered the year with momentum and added sequential ARR every month in the year, putting us further ahead in our transition to Sage Business Cloud than anticipated.”
He added: “We’ve also made significant progress in our strategic execution, particularly in the development and roll out of our cloud offerings and the reshaping of our portfolio. We will continue to prioritise high quality recurring revenue growth over SSRS.”
