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Full Year 2023 results

Results for the year ended 30 September 2023 (audited).

Wednesday 22 November 2023
Download the full PDF of the press release

Strong performance driven by consistent strategic execution

Steve Hare, Chief Executive Officer, commented:

“Sage performed well in FY23, delivering double-digit revenue growth, increased profitability and strong cash flows. We sustained good momentum throughout the year in all regions, driven by consistent strategic execution.

“We continue to help small and mid-sized businesses succeed, providing them with the tools and expertise they need to simplify their accounting and HR processes, streamline their operations, and make more informed business decisions. Through the Sage Network, we are delivering innovative, AI-powered services to customers, faster and more efficiently than ever before.

“Small and mid-sized businesses are continuing to digitalise, despite the macroeconomic uncertainty. We are building a resilient platform to deliver sustained, efficient growth, and I am confident that Sage is well positioned to take advantage of the market opportunity in 2024 and beyond.”

 

Underlying Financial APMs1
FY23 FY222 Change Organic change
Annualised Recurring Revenue (ARR) £2,188m
£1,964m
+11% +11%
Underlying Total Revenue
£2,184m £1,982m +10% +10%
Underlying Recurring Revenue
£2,096m
£1,875m
+12%
+11%
Underlying Operating Profit
£456m
£386m
+18%
+22%
         % Operating Profit Margin
20.9%
19.5%
+1.4 ppts +2.2 ppts
EBITDA
£553m
£477m
+16%
 
         % EBITDA Margin 25.3%
24.1%
+1.2 ppts
 
Underlying Basic EPS (p)
32.3p 26.4p +22%  
Underlying Cash Conversion 116% 107% +9 ppts  
         
Statutory Measures FY23 FY22 Change  
Revenue
£2,184m £1,947m +12%
 
Operating Profit £315m £367m -14%  

% Operating Profit Margin

14.4% 18.9% -4.5 ppts  
Basic EPS (p)
20.7p 25.5p -19%  
Dividend Per Share (p)
19.3p 18.4p +5%  

Please note that tables may not cast and change percentages may not calculate precisely due to rounding.


Financial highlights   

  • Underlying recurring revenue increased by 12% to £2,096m, underpinned by Sage Business Cloud growth of 25% to £1,628m. Underlying total revenue increased by 10% to £2,184m.
  • Underlying operating profit grew by 18% to £456m, with margin increasing by 140 bps to 20.9% driven by operating efficiencies as we scale the Group.
  • EBITDA increased by 16% to £553m, with margin increasing by 120 bps to 25.3%.
  • Statutory operating profit decreased by 14% to £315m, including one-off gains on business disposals in FY22, together with property restructuring and M&A-related charges in FY23.
  • Underlying basic EPS increased by 22% to 32.3p. 
  • Strong underlying cash conversion of 116% reflecting growth in subscription revenue and continued good working capital management.
  • Robust balance sheet, with £1.3bn of cash and available liquidity and net debt to EBITDA of 1.0x.

Shareholder returns

  • Proposed final dividend of 12.75p, increasing the full year dividend by 5% to 19.3p, in line with our progressive policy.
  • Share buyback programme of up to £350m announced separately this morning, reflecting the Board’s confidence in Sage’s future prospects, together with Sage’s strong cash generation and robust financial position.

Strategic and operational highlights

  • Underlying annualised recurring revenue (ARR) up 11% to £2,188m, reflecting broad-based growth across all regions balanced between new and existing customers.
  • £190m of ARR added through new customer acquisition on an organic basis, up from £180m in FY22.
  • Cloud native ARR up 28% to £684m (FY22: £534m), driven largely by new customers, with a continued strong performance from Sage Intacct.
  • Renewal rate by value of 102% (FY22: 101%), ahead of last year, reflecting increased sales to existing customers and good retention rates.
  • Sage Business Cloud penetration of 84% (FY22: 75%), enabling more customers to connect to Sage’s cloud services and ecosystem via the Sage Network.
  • Subscription penetration of 79% (FY22: 75%), reflecting continued growth from subscription contracts.
  • Strong strategic progress including further growth in global cloud solutions across our markets, with continued investment in innovation complemented by the acquisitions of Spherics and Corecon.

Outlook

Sage enters FY24 with good momentum driven by consistent strategic execution. Looking ahead, we expect organic total revenue growth in FY24 to be broadly in line with FY23. Operating margins are expected to trend upwards in FY24 and beyond, as we focus on efficiently scaling the Group.

About Sage

Sage exists to knock down barriers so everyone can thrive, starting with the millions of small and mid-sized businesses (SMBs) served by us, our partners and accountants. Customers trust our finance, HR and payroll software to make work and money flow. By digitising business processes and relationships with customers, suppliers, employees, banks and governments, our digital network connects SMBs, removing friction and delivering insights. Knocking down barriers also means we use our time, technology and experience to tackle digital inequality, economic inequality and the climate crisis.

Enquiries:

Sage: +44 (0) 7341 479956
Caroline Xu, Group Finance
James Sandford, Investor Relations
David Ginivan, Corporate PR

FGS Global: +44 (0) 20 7251 3801
Conor McClafferty
Sophia Johnston

A presentation for investors and analysts will be held at 8.30am UK time. The live webcast can be accessed via sage.com/investors or directly via the following link: https://edge.media-server.com/mmc/p/sb4btbwk. To join the conference call, please register via https://register.vevent.com/register/BI46eb1e22ac7245dcbfd330d9d13d3736.

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