Sage delivers 6.5% organic revenue growth in first 9 months

Recurring revenue growth showed some acceleration, increasing to 6.8% in the third quarter and 6.6% for the first nine months of the year. Within recurring revenue, software subscription increased by 25.0% in the first nine months of the year.

Sage said it was confident of achieving full year full year guidance of around 7% organic revenue growth and 27.5% organic operating margin.

Software and software related services revenue increased by 7.7%, reflecting continuing strong performance in training and services, offset by a decline in licence revenue as the business transitions to subscription, Sage said in its nine month trading statement.

Its business cloud operation reported recurring revenue of £386m, showing growth from the £336m at the half year and 56% growth year on year, it added.

North America continued to perform strongly across the US, Canada and Sage Intacct, with growth driven through both cloud connected and cloud native solutions.

In Europe, Iberia and Central Europe both delivered double digit revenue growth in the quarter and there were early signs of recovery in France, which delivered the strongest quarter since the final quarter of 2016, Sage said.

"In Northern Europe (UK and Ireland), although performance in the quarter was flat, management have laid the foundations for a stronger FY19 through recurring revenue, adding more cloud connected subscriptions in the third quarter than in the first two quarters of the year, combined," the company said.

"In the International region, growth has been driven by Africa and Australia, underpinned by recurring revenue, offset by weaker performance in Brazil and Asia."