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Sage predicts annual revenue near top of guidance

Fri 14 May 2021 07:04 | A A A

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(Sharecast News) - Sage said it expected annual organic revenue growth to be near the top of guidance after investment in its cloud operation prompted a decline in first half profit.

Underlying operating profit fell 11% to £191m in the six months to the end of March from a year earlier as organic recurring revenue rose 4.4% to £811m. Statutory operating profit dropped 30% to £203m as statutory revenue fell 4% to £937m.

The business software group predicted an increase in annual organic recurring revenue near the top of its guidance range of 3-5% and that other revenue would decline in line with strategy. Sage increased its interim dividend by 2% to 6.05p a share.

The FTSE 100 company said the decline in underlying profit was due to its profit margin shrinking to 20.2% from 23.2%, reflecting extra investment in marketing and product development at its cloud operation. Sage said after 2021 it expected margins to trend upwards as investment pays off.

Steve Hare, Sage's chief executive, said: Sage performed strongly in the first half against tough comparators, with continued recurring revenue growth and increasing levels of new customer acquisition, principally in cloud native solutions. We believe that small and medium-sized businesses will lead the recovery, and I am confident that our strategic investment in Sage Business Cloud will continue to accelerate growth as customers become stronger and more digitally-enabled."

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