There is a later BB thread..... |
Strong 1Q25 Update today - whilst 'in-line' with 10% revenue growth - this is against FX headwinds and 1Q seasonality. SGE are 'very comfortable' with full-year guidance [current consensus 9.2%]. So reading the runes we might see stronger acceleration and an up-tick in guidance.
Intacct is the product to watch: Responsible for the 11% North America revenue growth; It is now a significant growth driver in the UK. However, still early days in Europe - so acceleration yet to appear.
The Brokers are still somewhat sceptical with a consensus share price target of 1355p - only 1.4% ahead of yesterdays close of 1336.5p. |
There will always be dissent online , I think it is the nature of the internet that quietly satisfied customers tend not to post , whilst unhappy ones have a lot to say. Must confess I have been using free software for VAT return since MTD. Mind you it is about as simple a VAT return as possible as we have no income , only expenses , as our product will provide no income for another 40 yrs! (forestry). |
wad collector,
Likewise, I'm up >4x. Quite impressed that SGE is so well received in the British market. Plenty of grumps about its software can be found on line, but it's captured a lot of the market; was even forced to pay for it myself when my ltd co was obliged to go MTD. |
Moving to a new ATH , four bagger in last decade and yet almost silent BB, which seems extraordinary to me for a Tech stock. Maybe there is nothing to say... |
I am beginning to think this BB title is a little outdated... |
Thought I’d have a look at the Brokers’ Analysts’ recommendations on Sage:
Strong Buy........4
Buy...............5
Neutral...........8
Sell..............1
Strong Sell.......2
.................20
Source: Sharecast.com
I note that Canaccord have responded to the sparkling results with a reiterated Sell Recommendation but have increased their share price target to 1090p up from 970p, and 615p previously (Jul24). The Brokers’ consensus target of 1248p is 3% below today’s close of 1289p. The Brokers, with only a couple of exceptions Jefferies, Citi, have been sceptical of SGE throughout its period of transition so it’ll be interesting to see whether this continues, or we see some break ranks and upgrade to Buys. |
 Well, well, well that was a nice surprize - I wasn't expecting such a positive market reaction to Sage's excellent FY24 Results. The shares rose 19% closing at 1269.5p.
Mr Market was clearly warming to SGE but then cooled on cautious remarks in the 1H24 Analyst Briefing. Nothing to take exception to in these results:
>> Underlying revenue +9% statutory +7%
>> Underlying Operating Profit +21% statutory +43% revealing the operational gearing.
>> Underlying basic eps 37.9p +23% statutory 32.1p +55%
>> EBITDA margin widened +1.6 ppts to 26.6%
>> Underlying Cash conversion 123%
>> Dividend lifted 6% y-o-y
>> Free cashflow increased 30% to £524m
>> Share buy-back up to £400m
As the SaaS transformation is largely complete the Underlying and Statutory figures are aligning. It looks like the flywheel effect has firmly kicked following the previous investment in marketing now generating profitable growth and cash. The buy-back programme suggests that they have more than sufficient cash for investment in marketing and up to a £400m surplus. The buy-back also suggests that they're thankfully not looking for a large acquisition. |
Impressive performance, especially in an AIM bashing market. |
4*
Sage Group posted another strong set of FY numbers this morning confirming more strong and efficient growth. Underlying total revenue increased by 9% to £2,332m, reflecting the strength of the Group’s subscription-based recurring revenue model. Underlying operating profit grew by 21% to £529m, driving a particularly strong margin increase of 220 basis points to 22.7%, with disciplined cost management supporting ongoing investment. EBITDA was up by 16% to £622m while statutory operating profit increased by 43% to £452m...from WealthOracle
wealthoracle.co.uk/detailed-result-full/SGE/995 |
44% of underlying revenue USA and Canada.
29% of underlying revenue UK, Ireland and Africa.
27% of underlying revenue France, Iberia, and Central Europe
(Underlying revenue is typically reported in a company's income statement, which shows the revenue and expenses related to just its core business activities.) |
Intuit are also up sharply since Trump won the presidential race. |
So what was all that about?? Massively underperforms the FTSE on the way and then seven trading days later, with the FTSE broadly where it was on 31st of October, Sage rallies from mid £9.60s to mid £10.60s. On no news, that's madness and I can't attribute the rise to Trump. Talking my own book, I did sell some puts down there. |
I wonder who the Capital Group bought their 5% from. Holdings RNS at 4.30pm today |
SGE share price has recovered after the 6% dip yesterday, it fell to 997p before recovering and closing at 1071 (-1/4%).
As expected the journalists had to attribute an explanation: 'Shares in Sage fell sharply on Tuesday after the enterprise software group reported a slight slowdown in top-line growth in its third quarter.' Josh White, Sharecast.
However, we already had that information at 1H24 and there was clearly no further deterioration in sales growth - as the guidance was maintained, and as I posted above, there was plenty of positive indicators.
So why the fall? We'll never know - but the simplest explanation is we had some profit taking and a lack of buyers to take the shares. If someone watching with Level 2 would like to give a view?
[SGE is back to 1086p as I post] |
In-line trading update for 3Q24 and guidance reaffirmed – so the immediate 6% share price fall is odd. Perhaps a p/e of 27 is considered to high for the UK market – this ain’t the US where similar firms are on considerably higher valuations. Nevertheless, there is nothing negative in this update that I can see to justify Mr Markets reaction.
Total Rev Growth of 9%, within this, Sage Cloud Native products grew at 23% - this is currently about 30% of total revenue. So, the underlying picture is positive with strong growth drivers – “We now have Best-in-Class products in all our regions”. The star Sage Intacct is performing very strongly in the UK and now launched in France and Germany. [Intacct has been the key growth driver in the US.] The low levels of digital adoption in Europe present SGE with a great opportunity. Looking forward, as Cloud Native becomes a larger proportion of total revenue, we should see the growth rate accelerate.
Margins are set to widen, Sage have pushed up prices 5% but churn is “low and stable” and seeing no material change in the competitive environment.
IMHO investment case is intacct ;-) |
Hi jon,
Shares that are trading on a high p/e are subject to what I call 'Expectation Risk' - if the firm fails to meet the Brokers' expectations the share price will fall. This is what happened with Sage - the results themselves were excellent.
Anyone not closely following Sage will see the share price reaction and think something really calamitous has occurred. Journalists then oblige - finding spurious explanations for the fall. The IC dug up an old Panmure Gordon report from February that talked about tough competition. All complete bs.
There was nothing in these figures or the Trading Update Q&A to suggest that Sage is losing out to competitors - just that US prospects are taking longer to commit as they are being slightly more cautious.
Therefore IMHO Sage's value and prospects are the same - but just cheaper to buy. |
I was going to post something on the morning of the results but it turned into a rant so I stopped. The gist of it was "are the public markets in the UK worth the aggravation?". On most metrics the numbers met expectations but the stock opened down 20%. I know it recovered a little but still. I have been wrong on many stocks before and plenty of Sage analysts think I'm wrong on this one but a FTSE 100 company should not move 20% unless it is a clear profit warning. If, and I of course recognise that it is an if, Sage continues to grow revs and profits at these levels with improving margins, it will be twice the size in 5 years. If a large PE software firm had bought this in the last four years , and for the life of me I can't believe it didn't happen, it would be on their books at North of £16. |
The last results were pretty excellent, here are the highlights:
>> Underlying total revenue increased by 10% to £1,152m
>> Underlying operating profit increased by 18% to £254m
>> Margin increasing by 160 basis points to 22.0%
>> EBITDA increased by 14% to £299m
>> Statutory operating profit increased by 38% to £215m
>> Underlying basic EPS increased by 23% to 18.2p.
>> Strong underlying cash conversion of 127%
>> Robust balance sheet, £1.1bn of cash and liquidity, net debt 1.4x EBITDA
>> Interim dividend up 6% to 6.95p, in line with our progressive policy.
And yet we're 17.5% down on our recent 26 March 52 wk High. Unfortunately expectations were looking for an acceleration in growth and SGE fell just short. Whilst still top-lining its geographies North America has moderated somewhat - whilst other geographies aren't quite ready to pick up the slack. So, overall growth didn't accelerate and so the pundits weighed in with negative comments about 'competitive threats increasing' 'well-funded competitors' etc.
IMHO this is a bump in the road - growth is starting to come through in other geographies - a bit early to move the dial yet but looks promising. Whilst the growth has moderated for the moment the margins will continue to improve - thus profitability and cash generation - so all told we're on course.
And who knew - Sage has now emerged as the UK's AI powerhouse. This is clearly not PR fluff as Sage has fully developed products live and early adopter clients on-board. So, coming from behind our nag appears to now broken through and out in front of its competitors. |
Fill ya boots great value and future strong. CEO on Ian King and positive results.
Market Growing fast with AI solutions in High Demand in the SME market.
Future brighter every day with CEO positive about Future. |
So perhaps EPS of 39p and next year 47p
So pe of 25 to 30 looks fine for a safe growth stock. |
The fool article is a marketing exercise, a few paragraphs of general description, no useful insights - certainly before having to sign-up - I didn't bother. One glaring error - it seems to say the yield is nearly 10% - unfortunately it's more like 1.7%. This might be poor editing and referring to another mystery share that we need to subscribe to discover the name of - but it's far from clear.
This to me probably reflects the quality of Motley Fool's analysis. Why did they pick Sage - that's easy it's gone up 45% in a year - question is were they tipping it a year ago? I'll venture a no. |
Register to chat with like-minded investors on our interactive forums.
Hot Features
Premium
