Wednesday 22 January 2020 12:33 pm

Sage reports strong revenue growth amid continued subscription momentum

Software company Sage has reported strong revenue growth for the first quarter of the 2020 financial year, boosted by the performance of its software subscription business. 

Total group revenue at the Newcastle-headquartered company grew 6.7 per cent to £465m in the three months ending 31 December, with recurring revenue increasing 11 per cent year-on-year.

Sage said this recurring revenue growth was underpinned by strong software subscription growth, which rose 25 per cent during the quarter to £286m.

The growth was “principally” driven by its business in North America and Northern Europe, Sage said, with revenues from the regions increasing 12 per cent and 15 per cent respectively.

Shares in the company rose as much as 4.99 per cent following the trading update, making Sage the second highest riser in the FTSE 100 in morning trading.

“Sage had a strong first quarter as expected,” said chief financial officer Jonathan Howell.

“We have sustained last year’s growth momentum into the first quarter of the 2020 financial year, as we continue to focus on driving recurring revenue through the transition to cloud-based subscription services,” he added.

Howell said Sage was reiterating its guidance for the full financial year, as outlined in its 2019 results. 

In the results, which were announced in November, Sage issued guidance for recurring revenue growth of between eight and nine per cent, and an organic operating margin of around 23 per cent.