Sage boosts profit and margins as AI tools drive growth
Accounting software giant Sage has posted a strong set of half year results, powered by rising demand for cloud services and adoption of its AI tools.
The firm’s operating profit went up 16 per cent to £288m, whilst revenue saw a nine per cent uptick to £1.24bn, Sage told the market on Thursday.
Sage said margin expansion was underpinned by disciplined cost control and the continued shift towards higher-margin subscription products, which now account for 83 per cent of total revenue.
The Newcastle-based company has extended its share buyback programme by another £200m, and lifted its interim dividend by seven per cent, reflecting its strong balance sheet and robust cash flow.
Meanwhile, Sage’s annualised recurring revenue (ARR) rose 11 per cent to £2.45bn, with 13 per cent revenue growth in its cloud platform and 22 per cent in cloud native solutions, like Sage Intaact.
This drove the firm’s nine per cent UK revenue rise.
‘Era of AI’?
Chief executive Steve Hare said the firm’s Sage Copilot AI assistant, which was launched last year, is “transforming customer workflows and now supports thousands of customers” across the UK, US, and Europe.
Just yesterday, the firm announced that it will offer free access to the tool, helping accountants and bookkeepers to embrace the near “era of AI” in accounting.
“Sage delivered strong results”, he said. “Our performance reflects the strength of our accounting, HR, and payroll solutions, underpinned by ongoing investment in our network platform”.
“Amid a more volatile and uncertain macroeconomic environment, Sage remains resilient and diversified. Small and mid-sized businesses continue to adopt digital technologies to become more productive and efficient”.
Despite global uncertainty, Sage said it remains on track to hit at least nine per cent revenue growth for the full year, with further margin improvement expected.
The company’s firm pivot to cloud services and AI comes amid intensifying competition from global tech giants in business automation.