Sage Q1 in line, exploring possible sale of US payments business

FTSE 100 software company Sage said trading in the first quarter has been in line with its expectations and it is confident of achieving guidance of at least 6% organic revenue growth for the year, as it announced the possible sale of its US payments business.

In the three months to the end of December, group organic revenue was up 5.1%. Growth for the quarter excluding the US payments business, where it is evaluating strategic options including a potential sale, was 5.9%.

Organic recurring revenue grew by 9.6%, driven by software subscription growth of 31%, and the number of software subscription contracts now stands at 1.1m.

Meanwhile, organic software and software related services (SSRS) revenue fell by 10%, reflecting the continuing planned migration to subscription.

Sage said all of its major countries are running to or exceeding plan, with the exception of the US, where the payments business showed a slight decline in revenue, and France, where the SSRS revenue decline was more pronounced.

Chief financial officer Steve Hare said: “Q1 results are broadly in line with our expectations. We indicated at the time of the full year results that the early part of FY17 would start more slowly, with growth accelerating through the year and into FY18.

“Management is clear that FY17 is all about delivery. The strategy is working: our customer for life engine continues to drive high quality revenue growth and we are starting to see encouraging signs of new customer acquisition as we continue to invest in the business.”