# The Sage Group plc Organic revenue growth of 7.6% reflects growth in products

- Link: https://www.directorstalkinterviews.com/the-sage-group-plc-organic-revenue-growth-of-7-6-reflects-growth-in-products/412764470
- Published: 2019-01-17T07:21:08+00:00
- Author: Charlotte Edwards

**The [Sage Group plc](https://www.directorstalkinterviews.com/ftse-company/sage-group/sge.l)**(
LON:SGE) today issued its trading update for the three months ended 31 December 
2018.

**Financial performance**

Group organic1 revenue increased by 7.6% to £465m for the first three months of 
the year.

Recurring revenue increased by 10.5% to £387m, underpinned by software subscription
growth of 27.7% to £237m, building on the momentum generated at the end of FY18 
as the business continues to focus on subscription, assisted by a softer comparator
in Q1 18. Software and software related services (SSRS) revenue declined by 5.8%
to £65m reflecting the managed decline in licences as the business transitions to
subscription, offset by a slight increase in services.

Organic revenue growth of 7.6% reflects growth in products within, or to be migrated
to, Sage Business Cloud of 9.3% to £380m and a slight increase of 0.6% to £85m in
products with no current path to Sage Business Cloud.

Regionally, North America delivered revenue growth of 10.4% to £154m, with double
digit recurring revenue driven by cloud connected solutions and Sage Intacct. The
UKI showed strong signs of recovery with revenue growth of 5.9% to £96m and double
digit recurring revenue growth driven by Sage 50 cloud connected migrations. In 
France, revenue growth of 5.8% to £69m reflects continuing recovery in recurring
revenue, driven by Sage 200 cloud connected. Performance in other regions was largely
in line with expectations.

Sage announced on 15 January 2019 that it has entered into an agreement for the 
sale of Sage Payroll Solutions to iSolved HCM, LLC. This business was classified
as held for sale and excluded from organic numbers at year end FY18.

> **Steve Hare, Sage Group Chief Executive Officer, commented:**
> “We have been encouraged by the strong start to FY19, reflecting the renewed focus
> on high-quality subscription and recurring revenue as we continue the journey 
> to becoming a great SaaS business. Looking ahead we reiterate our full year guidance
> for FY19 as outlined at the FY18 results announcement.”

**Foreign exchange**

Sterling has weakened against the US Dollar and the Euro, leading to exchange rate
tailwinds, particularly in the translation of the US Dollar.

**Financial position**

The Group’s financial position remains strong and net debt as at 31 December 2018
was £602m (£668m as at 30 September 2018).

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