The Sage Group (SGE) H2 2024 earnings summary

Executive summary

• Achieved double-digit ARR growth for the third consecutive year, with disciplined cost control and record operating profit, supported by robust revenue growth across all regions.

• Strategic focus on scaling the business, investing in core products, integrating solutions, and embedding AI, notably with the launch of Sage Copilot.

• Consistent execution and innovation, including expansion of cloud solutions and platform scaling for sustainable growth.

• High customer retention and upsell, underpinned by operating efficiencies and disciplined investment.

Financial highlights

• Revenue grew 9% year-over-year to £2,332m, driven by a 10% increase in recurring revenue to £2,257m, now 97% of total revenue.

• Operating profit rose 21% to £529m, with margin at 22.7%, up 220 basis points.

• Profit after tax increased 21% to £382m; EPS up 23% to 37.9p.

• Free cash flow reached £524m, up 30% year-over-year, with cash conversion at 123%.

• Dividend per share increased 6% to 20.45p.

Outlook and guidance

• Organic total revenue growth for FY25 expected to be 9% or above, with operating margins trending upwards.

• Guidance based on strong ARR exit rate of 11% and current pipeline visibility.

• Price increases for FY25 expected in the 4%-5% range.