Our Take:
- Growth in Key Regions: North America leads with a 12% revenue increase, followed by the UK at 8%, and Europe at 6%.
- Sage Intacct Success: Significant expansion in the UK, achieving over 1,000 customers within two years, and making progress in various verticals.
- Cloud Revenue: Cloud native revenue now constitutes one-third of total revenue, with Sage Intacct growing at 23%.
- Sustainable Pricing Strategy: Consistent price hikes of 4.5% to 5% over the past three years deemed sustainable.
During a 9 month trading update on July 30, 2024, The Sage Group reported a solid 9% revenue growth for the first nine months of 2024, amounting to £1,737m (~$2,240m). North America showed the highest growth at 12%, attributed to strong performances from Sage Intacct, Sage 50 cloud, and Sage 200 cloud. The UKIA and Europe regions followed with growth rates of 8% and 6%, respectively, driven by cloud solutions and continued success in accounting, HR, and payroll services.
Sage Business Cloud revenue saw a significant increase of 16%, with cloud native revenue growing by 23% due to new customer acquisitions. The recurring revenue rose by 10%, reaching £1,680m (~$2,167m), and software subscription revenue grew by 13%, indicating a subscription penetration of 82%. This marks continued momentum in Sage’s transition to a cloud-centric model.
The company reaffirmed its guidance for the full year, citing confidence in its strategy of sustainable growth fueled by innovation and AI investments. Despite macroeconomic uncertainties, Sage’s pricing strategy of consistent annual increases appears to be sustainable, with over two-thirds of its costs being salary-related.
Sage’s third-quarter performance reflected these trends, with a total revenue increase of 9% to £585m (~$754m). However, the company faced foreign exchange challenges due to a stronger Sterling against other currencies, impacting overall revenue growth.
Source: Sage
