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Full Year 2019 Results 20 November 2019

Strong recurring revenue growth and significant progress in strategic execution

Wednesday 20 November 2019
Download the full PDF of the press release.


  • Strong growth in high quality recurring revenue, underpinned by over £1bn of software subscription revenue; 
  • Strong underlying cash conversion;
  • Organic operating margin in line with expectations;
  • Capital return of £250m today announced, following announcement of disposal of Sage Pay;
  • Significant progress in strategic execution in FY19 with further momentum into FY20;
  • FY20 guidance reflects continuing focus on recurring revenue and Sage Business Cloud. 

Alternative Performance Measures (APMs)1




Organic Financial APMs (excluding assets held for sale)




Organic Total Revenue




Organic Recurring Revenue




Organic Operating Profit




% Organic Operating Profit Margin



(5.1% pts)





Underlying Financial APMs




Underlying Total Revenue




Underlying Recurring Revenue




Underlying Operating Profit




% Underlying Operating Profit Margin



(4.0% pts)

Underlying Basic EPS












Annualised recurring revenue




Renewal Rate by Value




% Subscription Penetration



10% pts

% Sage Business Cloud Penetration



19% pts

Underlying Cash Conversion



33% pts





Statutory Measures



% Change





Operating Profit




% Operating Profit Margin



(3.4% pts)

Basic EPS (p)




Dividend Per Share (p)




As a result of rounding throughout this document, it is possible that tables may not cast and change percentages may not calculate precisely.
FY19 Financial Performance
  • Organic total revenue (excluding Sage Pay and Brazil, now held for sale) delivered growth of 5.6% to £1,822m, reflecting growth in recurring revenue of 10.8% to £1,559m, underpinned by software subscription revenue growth of 29.4% to £1,004m, offset by a 17.9% decline in SSRS revenue to £255m and a 3.0% decline in processing revenue to £8m;
  • Including the impact of Sage Pay and Brazil, the business delivered total revenue growth of 5.2% to £1,915m3, recurring revenue growth of 10.7% to £1,611m, software subscription revenue growth of 28.1% to £1,041m, offset by an 18.8% decline in SSRS revenue to £260m and slight decline in processing revenue of 0.5% to £45m;
  • Strong growth in recurring revenue of 10.8% and ARR growth of 12.6% reflects the continued focus on attracting new customers and migrating existing customers to subscription and the cloud. Particular strength in recurring revenue growth in Northern Europe and North America at 16% and 12% respectively, and in the Future Sage Business Cloud Opportunity at 13%;
  • Decline in SSRS reflects the on-going transition to subscription revenue and a strong SSRS comparator in the prior year; 
  • Organic operating profit of £432m, a margin of 23.7% (£448m, margin of 23.4% including Sage Pay and Brazil), down from 28.8% in FY18, reflects the increased investment to accelerate strategic execution, combined with increased colleague variable compensation in line with strong business performance and the commitment to colleague success;
  • Non-recurring gain of £28m, largely reflecting the disposal of US Payroll Processing, offset by non-recurring charges for property restructuring costs of £28m and £14m for the impairment of the Brazilian asset held for sale;
  • Underlying cash conversion of 129%, reflecting an improvement in trade receivables and lower levels of FY18 bonus payout in FY19. Free cash flow of £443m and net debt to EBITDA ratio of 0.8x4;
  • An increase in full year dividend of 2.5% to 16.91p, in line with the policy of maintaining the dividend in real terms;
  • Capital return of £250m today announced, reflecting the expected proceeds from Sage Pay and strong cash generation. Further details to be announced on completion of disposal of Sage Pay. 

Progress in strategic execution

Sage’s vision is to become a great SaaS company for customers and colleagues alike. Investment in FY19 has resulted in significant progress in strategic execution to optimise the cloud portfolio and to improve engagement and customer-centric mindset amongst colleagues, as follows:

  • Sage Intacct, the leading solution for cloud native in the medium segment, has been launched in Australia and the UK in 2019 with further plans to launch in South Africa in 2020;
  • Sage has invested in Sage Accounting in FY19 and will launch a more functionally rich tier of this solution for Professional Users in 2020, starting in the UK. Together, they provide the small business solution for cloud native accounts, to acquire new customers and, over time, offer a migration path for existing Sage 50 customers; 
  • Sage has also announced the acquisitions of AutoEntry, a provider of data entry automation, and Allocate.AI, technology that enables automation of time tracking, project planning and resource allocation, to enhance Sage Business Cloud;
  • Disposal of US Payroll Processing completed February 2019, and disposal of Sage Pay announced November 2019 with agreed proceeds of £232m. Brazilian business classified as held for sale at year end FY19. Both Sage Pay and the Brazilian business were largely held within the ‘Other’ portfolio, outside of Sage’s core strategic focus. Further portfolio optimisation expected in FY20;
  • Sage’s organisational design has been re-shaped to provide the business with a more customer-centric view to better serve the small and medium segments of the market, with Executive Committee internal promotions to support this design.

Continuing progress in strategic execution has resulted in:

  • Strong annualised recurring revenue5 (ARR) growth of 12.6% to £1,685m reflecting growing momentum in the recurring revenue of the business;
  • Recurring revenue now represents 86% of total revenue (FY18: 82%) with 55% software subscription penetration (FY18: 45%);
  • Future Sage Business Cloud opportunity (Sage Business Cloud and products with potential to migrate) recurring revenue growth of 13%. Sage Business Cloud penetration of 48%6 (FY18: 29%), reflecting continuing progress in the shift towards cloud connected and cloud native solutions;
  • Renewal by value7 remains strong at 101% (FY18: 101%), demonstrating the strength of the existing customer base.

Steve Hare, CEO, said:

“We’re very encouraged by the acceleration in recurring revenue in FY19. We entered the year with momentum and added sequential ARR every month in the year, putting us further ahead in our transition to Sage Business Cloud than anticipated. We’ve also made significant progress in our strategic execution, particularly in the development and roll out of our cloud offerings and the reshaping of our portfolio. We will continue to prioritise high quality recurring revenue growth over SSRS, and whilst we do not expect a linear progression in financial performance during this multi-year transition, our recent strong performance and continued progress towards becoming a great SaaS company means that we look forward with confidence.”


Building on the significant ARR created in FY19, we expect recurring revenue growth of 8-9%, driven by strong on-going performance in the Future Sage Business Cloud Opportunity, as we continue to focus on attracting and migrating customers to Sage Business Cloud. Other revenue (SSRS and processing) is expected to decline by high single digits in line with this focus, and organic operating margin is expected to be around 23%, as Sage continues to invest in the transition to SaaS.

About Sage

Sage (FTSE: SGE) is a global market leader for technology that helps small and medium businesses perform at their best. Sage is trusted by millions of customers worldwide to deliver the best cloud technology and support, with our partners, to manage finances, operations, and people. We believe in doing everything we can to help people be the best they can be, so the combined efforts of 13,000 Sage colleagues working with businesses and communities make a real difference to the world. Sage. Perform at your Best.

For more information, visit 

The Sage Group plc 

+44 (0) 191 294 3457 
Lauren Wholley, Investor Relations
Amy Lawson, Corporate PR

FTI Consulting
+44 (0) 20 3727 1000
Charles Palmer 
Dwight Burden
An analyst presentation will be held at 8.30am today at London Stock Exchange plc, 10 Paternoster Square, London, EC4M 7LS. A live webcast of the presentation will be hosted on, dial-in number +44 (0) 207 1928 338, pin code: 6092757#.  A replay of the call will also be available for one week after the event: Tel: +44 (0) 333 300 9785, pin code: 6092757#

1Please see Appendix 1 for guidance of the usage and definitions of the Alternative Performance Measures.
2Organic revenue and operating profit for FY18 is restated to aid comparability with FY19. The definition of organic measures and the basis for the FY18 proforma IFRS 15 adjustments can be found in Appendix 1 with a full reconciliation of organic, underlying and statutory measures on page 11. Unless otherwise specified, all references to revenue, profit and margins are on an organic basis.
3Underlying revenue of £1,936m also reflects disposals of US Payroll processing revenue (£16m) and South African payments business (£5m). Full reconciliation on page 11.
4IFRS 16 impact on net debt to EBITDA ratio explained on page 18.
5Defined as the normalised reported recurring revenue in the last month of the reporting period, adjusted consistently period to period, multiplied by twelve.
6Defined as organic recurring revenue from the Sage Business Cloud as a proportion of the organic recurring revenue of the Future Sage Business Cloud Opportunity.
7Defined as the annualised recurring revenue from renewals, migrations, upsell and cross-sell of active customers at the start of the year, divided by the opening annualised recurring revenue for the year.