Sage Share Discussion Threads

[spacecake] 17/5/2019 11:11

Weak market response to good progress.

[maddox] 17/1/2019 09:38

Strong Q1 Trading Update which signals that the problem areas they have had are recovering contributing to 7.6% organic growth. The underlying picture is growth in SaaS revenue of 27.7% off-set by the expected decline in software licence revenue of 5.8% as customers transition to the new contracts. There is also an up-lift on pricing as customers move to the new Cloud product set.

North America double-digit growth continues with 10.4% recurring revenue growth.

Mr Market seemed to like it with the share price spiking-up to 644p before settling to 30p (5.2%)up at 623p as I post.

Regards, Maddox

[maddox] 15/1/2019 16:57

Sage to sell US payroll outsourcing business for £78m - statutory profit on disposal £23m. This division was flagged as a strategic disposal and follows on from the sale of their US payments business back in June 2017.

The US business has been transformed over the last two years from being a problem stagnant area to recently posting 12% organic revenue growth and 13% recurring revenue growth (+10% excluding the Sage Intacct business). The US is now the model that UK business is seeking to emulate.

Regards Maddox

[bountyhunter] 28/11/2018 16:01

that means they are probably buying ;-)

[maddox] 28/11/2018 15:56

Thanks mamcw,

Always extremely valuable to have user insight and it'll be great to hear how your upgrade goes - well and trouble-free I hope of course. And your thoughts on Cloud 50 when you get yours hands on it.

Nice to see the share price trending up (just above 600p as I post) just as we see Analysts downgrades :-)

Regards Maddox

[mamcw] 27/11/2018 19:26

Hi Maddox

The main issue with moving to different software is the hassle factor / the worry that something goes wrong and you end up having to re-enter huge amounts of data. Hence inertia is a strong motivator here and I think will massively benefit Sage for risk averse users like me, who will naturally gravitate to Cloud 50 (most likely in a huge rush around end March!).

I've yet to make the move, but will do as soon as I finalised my year end accounts (31 October).

In the meantime, I'm pleasantly surprised by the strength of the SP, particularly in the face of the negative broker comment.

[essentialinvestor] 23/11/2018 17:59

Were the same brokers as cautious when the share price started with 8?.
Usually too optimistic near the peak, too cautious near the trough.

[bountyhunter] 23/11/2018 17:46

Here is a more balanced view:

[spacecake] 23/11/2018 17:33

CREDIT SUISSE CUTS SAGE GROUP PRICE TARGET TO 530 (625) PENCE - 'NEUTRAL'
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JPMORGAN CUTS SAGE GROUP PRICE TARGET TO 560 (670) PENCE - 'NEUTRAL'
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DEUTSCHE BANK CUTS SAGE GROUP PRICE TARGET TO 505 (540) PENCE - 'HOLD'
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SOCGEN CUTS SAGE GROUP PRICE TARGET TO 465 (583) PENCE - 'SELL'

[maddox] 22/11/2018 23:50

Hi Solooiler,

FY 2019 Guidance: Steve Hare said "So what does all this mean for FY 2019, as Derk sort of alluded to guidance is based on continuing operations at constant exchange rates and takes into the account -- into account the impact of IFRS 15. On this basis, we expect recurring revenue growth of 8% to 9%, with SSRS revenue expected to be flat to down mid-single-digits.

Now, as the pace of transition increases towards subscription, it may be that the overall rate of revenue growth may decrease in the short-term, because we are focused on recurring revenue and subscription. We expect the organic operating margin before the additional investments of GBP 60 million to be broadly stable. But therefore, after the investments resulting in a guided range of around 23% to 25% free cash flow will remain strong."

So 2019 recurring revenue (79% of 2018 revenue) is forecast to grow 8 - 9% but the 'overall' revenue growth rate will be lower as SSRS contracts (18% of 2018 revenue) are displaced by SaaS contracts.

Regards, Maddox

[solooiler] 22/11/2018 20:26

"Looks solid and forecasting a 8-9% revenue growth for 19."

More like 6%

[maddox] 22/11/2018 17:25

Hi mamcw,

Welcome aboard. It'll be great to get your views on Cloud 50 as a product and your decision to stick with Sage, and what you think of the alternatives?

I think MTD may be important for Sage in 2019 in two respects:

Firstly, as a revenue driver from subscription (SaaS) pricing; and

Secondly, the move to cloud-based product - will change the perception of Sage as only offering shrink-wrapped, desk-top, on-premise products.

regards Maddox

[dogwalker] 22/11/2018 16:35

Welcome, oh sage one.

[mamcw] 22/11/2018 15:56

New to this thread, but as an existing Sage user, what made me buy their shares now is the impact that Making Tax Digital is going to have on existing Sage users (like me) who previously bought their software outright. Making Tax Digital is forcing me to upgrade by next April, from which date HMRC will only accept VAT return from compliant software. Sage no longer offer a one-off sale of their software, so I will be forced to move to their Cloud 50 subscription model.

[mozy123] 21/11/2018 10:46

Great point Maddox. Ive added today. The current price is an absolute dream.

[maddox] 21/11/2018 10:22

Hmmm, yep yopf, that's the perception but are you sure about that?

Sages cloud business is larger than Xero and growing fast:

'Sage Business Cloud ARR of £434m, growing at 51%, with £52m of ARR added in Q4 18'

and is profitable too.

Xero 2018 revenue £216m and CAGR of 49%, so half the size, growing slightly slower and still loss making.

Mr Market hasn't woken up to this yet, but will at some point.

[yopf] 21/11/2018 09:11

One problem is the transition to cloud. Xero are fast catching/overtaking sage who were slow to act.

[yopf] 21/11/2018 09:09

Should revisit 490

[mozy123] 21/11/2018 08:53

Looks solid and forecasting a 8-9% revenue growth for 19.

Sage at 800p was pricy. At 500p its cheap as chips.

[mozy123] 21/11/2018 08:53

Looks solid and forecasting a 8-9% revenue growth for 19.

Sage at 800p was pricy. At 500p its cheap as chips.

[bountyhunter] 21/11/2018 07:51

---------- -------

FY18 performance

-- Improvement in H2 18 performance with organic revenue growth of 7.0% achieved, driven by renewed focus on high-quality subscription and recurring revenue, with both August and September showing recurring revenue growth in excess of 7% year-on-year and sequential month-on-month growth, driving momentum into FY19;

-- Recovery in Northern Europe (UK&I), with sequential increases in recurring revenue growth in every month in H2 18 and in France, which in Q4 18 delivered the strongest quarter since Q1 16; double digit organic and recurring growth was also achieved in North America;

-- Strong momentum in cloud connected solutions, delivering ARR growth of 66% and cloud native solutions of Sage Intacct and Sage People, delivering ARR growth of 30% and 49% respectively;


-- Recurring revenue represents 79% of revenue and software subscription is 46% of revenue;
-- Organic operating margin of 27.8% achieved. Non-recurring charge of GBP10m, reflecting provisions and settlement of legal disputes and structural redundancies;

-- Strong free cash flow of GBP356m, 19% of revenue, ROCE of 23% and net debt : EBITDA reduced to 1.2x. 7% increase in full year ordinary dividend to 16.50p, with a policy to maintaining the dividend in real terms going forward;