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Highlights
- Revenue Growth: Underlying total revenue rose 9% to £2,332m, driven by recurring subscription-based revenue.
- Profit Performance: Operating profit up 21% to £529m, with a significant margin increase to 22.7%.
- Shareholder Returns: Full-year dividend increased by 6% to 20.45p, along with a £400m share buyback program.
Sage Group plc (LSE:SGE) has announced its financial results for the year ending 30 September 2024, demonstrating robust growth in key areas, supported by its subscription-based revenue model and ongoing strategic initiatives.
Financial Performance
The group reported a 9% increase in underlying total revenue, reaching £2,332m. This growth was primarily fueled by Sage's strong recurring revenue streams, which continue to perform well across its global operations.
Sage's underlying operating profit grew by 21%, reaching £529m, resulting in a 220 basis point increase in operating margin to 22.7%. This strong margin expansion was supported by disciplined cost management, enabling Sage to continue investing in future growth opportunities. EBITDA also increased by 16% to £622m, with a margin improvement of 160 basis points to 26.6%.
Statutory operating profit saw an even larger increase of 43% to £452m, driven by higher underlying profits, lower M&A-related expenses, and the non-recurrence of prior year restructuring charges. Underlying basic earnings per share (EPS) rose by 23% to 37.9p, reflecting the company's strong financial performance.
Free cash flow surged by 30% to £524m, with an impressive 123% cash conversion rate, underlining Sage's effective cash management and the growth of its subscription-based model. The company ended the year with a strong balance sheet, boasting £1.1bn in cash and available liquidity, and a net debt to EBITDA ratio of 1.2x.
Shareholder Returns and Future Outlook
In line with its progressive dividend policy, Sage has proposed a final dividend of 13.50p, bringing the total dividend for the year to 20.45p, a 6% increase compared to the previous year. Additionally, the company announced a £400m share buyback program, demonstrating confidence in its financial health and future prospects.
Looking ahead to FY25, Sage is optimistic about maintaining its strong momentum. The company expects to achieve organic total revenue growth of 9% or above in FY25, with operating margins continuing to improve as it scales its operations more efficiently.
Strategic and Operational Progress
Sage made significant strides in its strategic goals, with underlying annualised recurring revenue (ARR) up 11% to £2,339m, reflecting growth across all regions, and a strong retention rate of 101%.
The company saw a 16% increase in Sage Business Cloud revenue, reaching £1,871m, and a 23% growth in cloud-native revenue to £732m. Subscription revenue also grew by 13% to £1,910m, with subscription penetration rising to 82%.
Further strategic progress was made with the expansion of global cloud solutions, development of vertical-specific capabilities, and the rollout of new software suites across the Group. The introduction of Sage Copilot, a generative AI-powered assistant, has been particularly well-received, now available to over 8,000 customers using Sage Accounting, Sage for Accountants, and Sage Active.
