The Sage Group reported a “strong start to year” yesterday, with software subscription revenue growth up by 13 per cent to £336m.
Nonetheless, investors seemed unimpressed, with shares dropping over six per cent on the London market.
Analysts at Jefferies suggested that it was instead a mixed start to 2022, describing the growth as “somewhat light”, with total group revenue increasing by only five per cent to £458m.
However, the payroll tech firm reported recurring revenue growth up eight per cent to £429m, underpinned by a 21 per cent rise in Sage Business Cloud revenue to £280m, with continued strength in new customer acquisition.
Jefferies analysts echoed the confidence in the company’s strong customer acquisition.
With the continued relevance of remote working, cloud opportunities for the firm also grew 10 per cent to £394m.
This was driven by strong growth in cloud native revenue of 44 per cent to £90m primarily through new customer acquisition for the FTSE 100 firm, as well as further growth in the cloud connected portfolio.
Last week, Sage completed the previously announced acquisition of Brightpearl, a cloud native multichannel retail management system for the retail and ecommerce vertical.
Nevertheless, the group did report that other revenue decreased by 22 per cent to £29m, in line with the firm’s strategy to transition away from licence sales and professional services implementations.
Jonathan Howell, chief finance officer, said: “Sage has made a strong start to the year, accelerating growth in line with expectations. Sage Business Cloud has performed particularly well, driven by continued growth in both cloud native and cloud connected solutions, as we execute on our strategy to be the trusted network for small and mid-sized businesses.”