WASHINGTON: Good growth across Europe triggered a revenue rise of 6.6% in Sage Group Plc’s first quarter, the firm said. The software giant, headquartered in Newcastle, issued a trading update for the three months ended 31 December 2015 in which group organic revenue increased by 6.6% and organic recurring revenue grew by 10.4%, driven by software subscription revenue which increased by 35.7% for the quarter.
The firm said sales within its software and software related services revenue declined by 5.3% – a reflection of planned transition to subscription relationships which means there has been less upfront revenue from new licences and upgrades. Its processing revenue increased by 5.4% and is a figure which includes Sage Payroll Solutions which was acquired at the start of the 2015 financial year.
The stock market note said: “Management is confident s confident that Sage remains on course to meet the financial year 2016 guidance, delivering at least 6% organic revenue growth and 27% operating margin, weighting investment for growth towards the first half of the year.”
Directors said the company’s performance was led by good growth in Europe, which was balanced by a slower performance in its international region. Performance in Africa has remained strong but it has been slower in some other geographies, they said.
The Group’s financial position was said to remain strong with net debt as of 31 December 2015 of £408m, down from £425m as of 30 September 2015. During the first quarter the firm said it has been affected by exchange rate headwinds, reflecting the relative strength of the pound against currencies in some of the territories it operates in, most notably, the Euro, the South African Rand and the Brazilian Real, partially offset by the relative strength of the US dollar.
Steve Hare, chief financial officer, said: “The performance in the first quarter demonstrates continued momentum and was in line with expectations. “Our business transformation is on track and we are focussed on its execution to realise our long-term plan for sustainable and improved quality growth. Whilst we expect the transition to be non-linear, the first quarter represents good progress.”
