.jpg;150;70){kind=logo}
It is still early days in the execution of the strategic change plan Sage revealed in July (see Is Sage still relevant?), so the full year results don’t show significant impact. They will be important subsequently because they contain the baselines for the KPI’s that will show whether Sage is making progress against its plan.
The year to September 30 2012 showed the type of performance variations we have become used to. Revenue from continuing operations was up 3% to £1.34bn. Within that, organic revenue growth was up 2% vs 4% in the year ago period (it has run at c3% over the past decade and is the figure Sage wants to double within three years). Subscriptions revenue was up a welcome 6%, vs 5% growth last year. But there was a 5% decline in software and software related service revenue, vs 3% growth in the previous year, due to weakness in France and Spain and the shift to recurring revenue elsewhere.
Although the European region only saw 1% revenue growth, the UK outperformed with 4% growth, although much of this appears to have come from an increase in maintenance and support revenue. That is a positive sign in terms of customer retention but does not address Sage’s prime directive of growth, which will demand new license and subscription sales. With developments around areas such as Sage One, hybrid cloud, ERP X3, mobile and payments, it does have several lines to work with though. Only Germany put in stronger performance within the region (5%). North America was up 4%.
PBT was up 1% to £334m and EBITA increased by 3% to £366.4m and the margin was maintained at 27%, which demonstrates Sage on-going ability to protect margins even during a period of change, investment and a tough market.
Sage’s perennial problem has been growth. Although it has the foundations in place to enable it, it could be caught out on the execution front and outmaneuvered by cloud pure plays like FinancialForce (the Unit4/Salesforce.com joint venture) and NetSuite, by key rival Microsoft, and even by the SaaS offerings from SAP.