Major UK developer Sage Group had a solid first half, but warned the second half will be tough as a result of the pandemic. For the six months ended 31 March 2020, the financial software company saw organic sales growth of 5.7% to £935m.The company's operating profit was £213m, a 3% increase. Recurring revenue jumped 10.3% to £826m, with more customers migrating to a subscription model and the Sage Business Cloud.
Sage Pay and the Brazilian business were sold in the period and cloud native company CakeHR was acquired.
The Northern Europe region outperformed the rest of the group with organic revenue up 10% to £198m, which included a 13% rise in recurring revenue.
Covid-19 started to have a real impact in late March, driving licence and professional services sales down, but the firm said deterioration was even steeper in April, with deferrals and fewer new customers.
Across the full year, the company anticipates organic recurring revenue growth will be below its previous guidance of 8%-9%. The decline in other revenue “will accelerate significantly in the second half”, said Sage, with “an associated impact on margin”.
So far, the firm has not furloughed any staff in the group or made any redundancies.Steve Hare (pictured), Sage CEO, said: “Sage has had a strong first half, sustaining last year’s growth momentum as we continue to focus on recurring revenue growth, and making good progress in strategic execution.
“Despite the near-term uncertainties, I believe our continuing investment into Sage Business Cloud, together with our focus on customers, colleagues and innovation, form a strong base for the future performance of Sage.”
