Slide 1: Sage Year End Results FY19
Sage Year End Results FY19 London Stock Exchange 20 November 2019 #SageResults 1
Slide 2: Safe Harbour
Safe Harbour The following presentation is being made only to, and is only directed at, persons to whom such presentation protect against potential fraudulent activities; any significant quality problems or delays; the global macro- may lawfully be communicated (“relevant persons”). Any person who i
Slide 3: Steve Hare, CEO
Steve Hare, CEO Welcome Overview Financial review Strategy Outlook Q&A #SageResults Sage Group plc Financial Year 2019 3
Slide 4: Highlights of a strong FY19
Highlights of a strong FY19 Financial Strategic Focus performance execution #SageResults Sage Group plc Financial Year 2019 4
Slide 5: Jonathan Howell, CFO
Jonathan Howell, CFO Welcome Overview Financial review Strategy Outlook Q&A #SageResults Sage Group plc Financial Year 2019 5
Slide 6: Financial highlights
Financial highlights High quality On target Strong cash recurring margin conversion revenue growth 10.8% 23.7% 129% #SageResults Sage Group plc Financial Year 2019 6
Slide 7: P&L summary
P&L summary FY19 FY18 Change £m £m % Total Organic Revenue1 £1,822m £1,725m 5.6% Recurring revenue £1,559m £1,406m 10.8% Organic operating profit £432m £496m (13.0%) Organic operating profit margin % 23.7% 28.8% (5.1% pts) Underlying operating profit £448m £509m (12.1%) Underlying operating profit m
Slide 8: Revenue categories
Revenue categories Recurring revenue penetration £1,822m +6% 86% Software £776m Software subscription £1,004m +29% subscription penetration +11% 55% Recurring revenue Other recurring £630m £554m -12% SSRS £310m -18% Renewal £255m by value Processing £9m £8m -3% FY18 FY19 101% #SageResults Sage Group
Slide 9: Portfolio view of recurring revenue
Portfolio view of recurring revenue £1,559m +11% £170m +27% Cloud native £133m Cloud connected £222m £482m +117% Sage Business Cloud +13% penetration Future Sage Business 48% To be migrated £857m £900m -17% Cloud £713m opportunity Other £194m £193m 0% FY18 FY19 #SageResults Sage Group plc Financial
Slide 10: Regional overview
Regional overview #SageResults Sage Group plc Financial Year 2019 10
Slide 11: North America
North America 56% FY19 performance USA 66% Software subscription penetration • 7% recurring revenue growth FY18: 46% • High penetration on cloud connected Sage Business Cloud solutions penetration FY18: 54% Canada Organic Revenue by Category FY19 FY18 Growth • 13% recurring revenue growth Organic to
Slide 12: Northern Europe
Northern Europe 70% FY19 performance 67% Software subscription penetration • Strong performance in the year FY18: 52% • Recurring revenue growth 16% Sage Business Cloud penetration FY18: 28% – Strong migration, new customer acquisition and reactivation – Cloud connected solutions driving growth Orga
Slide 13: Central and Southern Europe
Central and Southern Europe 45% FY19 performance 25% Software subscription penetration France FY18: 37% • 5% recurring revenue growth Sage Business Cloud penetration • Growth driven through migration to cloud FY18: 10% connected solutions Organic Revenue by Category FY19 FY18 Growth Central Europe O
Slide 14: International
International 57% FY19 performance 9% Software subscription penetration Africa and Middle East FY18: 54% • 12% recurring revenue growth Sage Business Cloud penetration • Local products and cloud native solutions FY18: 7% driving growth Organic Revenue by Category FY19 FY18 Growth Australia & Asia Or
Slide 15: Strong cash flow and financial position
Strong cash flow and financial position Key metrics Underlying operating Underlying cash flow Underlying cash £448m from operating £577m 129% profit conversion activities Depreciation and £33m amortisation Non-recurring items (£24m) Closing net debt (£393m) Share-based payments £26m Net interest pai
Slide 16: Capital allocation
Capital allocation To become a great SaaS company for customers and colleagues alike 1 2 3 4 Organic M&A and portfolio Maintain the ordinary Additional investment rationalisation dividend in real terms returns Strong and stable financial position Broad range of 1.0x – 2.0x net debt: EBITDA over the
Slide 17: Summary
Summary High quality On target Strong cash recurring margin conversion revenue growth 10.8% 23.7% 129% #SageResults Sage Group plc Financial Year 2019 17
Slide 18: Steve Hare, CEO
Steve Hare, CEO Welcome Overview Financial review Strategy Outlook Q&A #SageResults Sage Group plc Financial Year 2019 18
Slide 19: Purpose, vision and strategy
Purpose, vision and strategy Purpose: To transform the way people think and work, so their organizations can thrive Vision: To become a great SaaS company for our customers and colleagues alike 3 strategic lenses: Customer Colleague Innovation success success #SageResults Sage Group plc Financial Ye
Slide 20: Focus
Focus Focus Strategic decisions Customer Software Portfolio segments categories management #SageResults Sage Group plc Financial Year 2019 20
Slide 21: Focus – portfolio view of recurring revenue
Focus – portfolio view of recurring revenue £1.6bn £170m +£300m Cloud native £133m Cloud connected £222m £482m added to Sage Business Cloud To be migrated £857m £900m £713m Other £194m £193m FY18 FY19 #SageResults Sage Group plc Financial Year 2019 21
Slide 22: Focus – building ARR
Focus – building ARR Opening ARR 100% £1.5bn Less churn Net ARR Plus migration Plus up-sell & cross-sell Renewal by value 101% £1.5bn Plus reactivation Plus new customer acquisition Closing ARR 113% £1.7bn #SageResults Sage Group plc Financial Year 2019 22
Slide 23: Focus – building ARR
Focus – building ARR Value Actual ARR Expected ARR Time FY19 FY20 #SageResults Sage Group plc Financial Year 2019 23
Slide 24: Customer success
Customer success Taking a customer-centric approach to everything we do FY19 progress • Teams focused on small and medium customers • CRM system launched in UK • Digitisation and integration of customer services What’s next • CRM system to launch in US and other key geographies • Further enhancement
Slide 25: Colleague success
Colleague success Culture that values individuals & encourages collaboration FY19 progress • Investment in leaders and colleagues • 22 point increase in colleague NPS What’s next • Further embedding culture and values • Training and development • Investing and developing talent KPIs eNPS, which in t
Slide 26: Innovation
Innovation Solutions that delight customers and transform how they think and work FY19 progress • Intacct launches in Australia and UK • Sage Accounting selected as platform for small business cloud native What’s to come • Intacct launch in South Africa • Sage Accounting Professional launch in UK •
Slide 27: Innovation
Innovation Sage Business Cloud vision Marketplace Sage Design System Applications and services Digital Experience Services Platforms Customer Journey Sage ID Service Fabric #SageResults Sage Group plc Financial Year 2019 27
Slide 28: Sage Business Cloud
Sage Business Cloud Cloud native Current portfolio Cloud Accounting and People and connected Financials Payroll Medium Small (small) Service fabric #SageResults Sage Group plc Financial Year 2019 28
Slide 29: Sage Business Cloud
Sage Business Cloud Cloud native Future portfolio Cloud Accounting and People and connected Financials Payroll Medium (medium) (small) (Professional) Small (small) Service fabric #SageResults Sage Group plc Financial Year 2019 29
Slide 30: Innovation
Innovation Solutions that delight customers and transform how they think and work FY19 progress • Intacct launches in Australia and UK • Sage Accounting selected as platform for small business cloud native What’s to come • Intacct launch in South Africa • Sage Accounting Professional launch in UK •
Slide 31: FY20 guidance
FY20 guidance Recurring Other Organic revenue revenue operating margin 8% – 9% High single Around 23% digit decline #SageResults Sage Group plc Financial Year 2019 31
Slide 32: Key messages
Key messages Strategic & Financial operational Focus performance execution #SageResults Sage Group plc Financial Year 2019 32
Slide 33: Q&A
Q&A #SageResults #SageResults Sage Group plc Financial Year 2019 33
Slide 34: Appendix – Strategic KPIs
Appendix Strategic KPIs ARR Subscription Sage Business Renewal by value penetration Cloud penetration +13% 55% 49% 101% #SageResults Sage Group plc Financial Year 2019 34
Slide 35: Bridge to assets held for sale and disposals
Appendix Bridge to assets held for sale and disposals Recurring revenue Total revenue Profit FY19 Growth FY19 Growth FY19 Margin £m % £m % £m % Organic 1,559 10.8% 1,822 5.6% 432 23.7% Sage Pay 1 40 14 Brazilian Business 51 53 2 Including assets held for sale 1,611 10.7% 1,915 5.2% 448 23.4% South A
Slide 36: Glossary
Glossary Measure/Description Underlying (revenue and profit) measures Underlying measures are adjusted to exclude items which would distort the understanding of the performance for the year or comparability between periods: − Recurring items include purchase price adjustments including amortisation
Slide 37: Glossary
Glossary Measure/Description Free cash flow Free Cash Flow is Cash Flow from Operating Activities minus non-recurring cash items, interest paid, tax paid and adjusted for profit and loss foreign exchange movements. % Subscription Penetration Organic software subscription revenue as a percentage of o
Slide 38: Glossary – Revenue types
Glossary – Revenue types Measure/Description Revenue Type Description Recurring revenue Recurring revenue is revenue earned from customers for the provision of a good or service over a contractual term, with the customer being unable to Subscription contracts continue to benefit from the full functi
Slide 39: Thank you
Thank you © 2019 The Sage Group plc or its licensors. Sage, Sage logos, Sage product and service names mentioned herein are the trademarks of The Sage Group plc or its licensors. All other trademarks are the property of their respective owners.