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Another Race for Change is happening in the transformation of Sage as it also wrestles with the impact of Cloud-based competition and searches out growth areas of a business where it has historically been very successful. Our comment on the full year results, see here, highlighted the roll-out of Cloud propositions across its user base and the growth in ERP and Mobile applications.
The IMS today for Q1 reported trading in line with expectations in all regions. The UK and Ireland operation benefited from legislative change and mainland Europe continued to improve despite problems in France and Spain. American operations were boosted by higher support revenues and success in the cloud-based ERP proposition.
The target for the current year is 6% revenue growth, and the company remains confident. Progress will be helped by the improving economic background in the UK and US and the wider roll-out of cloud and other new propositions. However, cloud-based competition continues to mount and will offer attractive terms to customers as they build market share, pressuring Sage’s position. At the year-end subscription revenue was only 8% of the total and this ratio, along with the top line figure, are the key indicators of Sage’s transformation. There is still much to do.