Sage Group Plc · LSE:SGE
Sage — FY2017 Earnings Presentation
43 slides from Sage's earnings presentation, 2017
Slide 1: Sage Group Plc year end results 2017
Sage Group Plc year end results 2017 Denise Zannu Owner of Black Mermaid’s Bath & Body
Slide 2: Safe harbour
Safe harbour The following presentation is being made only to, and is only directed at, persons to whom such sales and marketing activities; the competitive environment; our ability to adapt to technological presentation may lawfully be communicated (“relevant persons”). Any person who is not a rele
Slide 3: Agenda
Agenda • Welcome Stephen Kelly • CFO review Chief Executive Officer • Progress @SKellyCEO • Outlook • Q&A 03 Sage Group plc Year End Results 2017 #SageResults
Slide 4: Progress in the transformation
Progress in the transformation 04 Sage Group plc Year End Results 2017 #SageResults
Slide 5: Progress in the transformation
27% Progress in the transformation Software subscription penetration Net promoter score 37% 37% +25 27% 27% 10% 7% 27% 27% 4% 22% +3 4% FY14 FY15 FY16 FY17 Q1 15 FY15 FY16 Q4 17 G&A as a % of revenue Cloud annualised recurring revenue 19% £300m 27% 27% £2m 14% 4% FY14 FY15 FY16 FY17 FY14 FY15 FY16 F
Slide 6: FY17 Summary
FY17 Summary Accelerating Transformation The strategy is momentum through complete working Sage Business Cloud 06 Sage Group plc Year End Results 2017 #SageResults
Slide 7: Steve Hare, Chief Financial Officer
Steve Hare Chief Financial Officer @SteveHareCFO 07 Sage Group plc Year End Results 2017 #SageResults
Slide 8: Organic and underlying revenue
Organic and underlying revenue Revenue FY17 FY16 Growth Organic revenue* £1,696m £1,591m +6.6% Organic adjustments £24m £5m Impact of foreign exchange - (£157m) Underlying (as reported) revenue £1,720m £1,439m +19.5% Recurring items (£5m) - Statutory revenue £1,715m £1,439m +19.2% Operating Profit M
Slide 9: Financial summary
Financial summary FY17 FY16 Change Organic revenue £1,696m £1,591m +6.6% Organic operating profit £475m £431m +10.3% Organic Margin % 28.0% 27.1% +90bps Underlying basic EPS 31.90p 30.82p +3.5% Underlying adjusted EPS 33.10p 30.82p +7.4% Non-recurring items (exceptional costs) (£70m) (£108m) Recurri
Slide 10: Strong capital metrics
Strong capital metrics Underlying Underlying cash flow from £496m £470m Opening net debt (£398m) operating profit operating activities Free cash flow £276m Depreciation/ £36m amortisation Net interest (£20m) M&A (£544m) Share-based £6m Ordinary Payments (£157m) dividends Change in working capital Ta
Slide 11: Organic revenue categories
Organic revenue categories +7% +30% Software subscription +9% Recurring Revenue Other -5% recurring -1% SSRS Processing +2% FY16 FY17 11 Sage Group plc Year End Results 2017 #SageResults
Slide 12: Software subscriber growth
Software subscriber growth Growth in ASB of £170m to £705m in FY17 750 32% 700 8 1 25 21 650 22 40 ASB (£m) 600 53 550 705 500 535 450 400 Sep-16 Sage 50C Sage 200C Sage One Sage 50 SageX3X3 Sage Live Other Sep-17 12 Sage Group plc Year End Results 2017 #SageResults
Slide 13: Sage Business Cloud Revenue
Sage Business Cloud Revenue Revenue FY17 ARR FY16 ARR Growth Cloud enabled1 £173m £80m +117% Internally generated pure cloud2 £36m £19m +88% Acquired cloud3 £91m £65m +41% Sage Business Cloud £300m £164m +83% 1 Cloud enabled versions of Sage 50 and Sage 200 families 2 Sage One, Sage Live, cloud-vers
Slide 14: Regional overview
Regional overview Europe* North America International *Aggregation of Northern Europe and Central & Southern Europe 14 Sage Group plc Year End Results 2017 #SageResults
Slide 15: Europe
Software subscription penetration Europe Recurring Mix 37% FY 16: 33% FY17 performance • Central Europe: 12% revenue growth 78% FY 16: 78% • Iberia: 10% revenue growth • Northern Europe: 7% revenue growth, driven by: • 86% growth in Sage 50 Cloud • Sage X3 – 48% growth • France: 1% revenue growth •
Slide 16: North America
Software subscription North America Recurring Mix penetration 25% 79% FY 16: 14% FY17 performance • North America: software subscription growth up FY 16: 76% 97% • Canada: double digit organic and recurring growth, driven by Sage 50 Cloud and Sage 200 Cloud • USA: triple digit software subscription
Slide 17: International
Software International subscription penetration Recurring Mix 56% FY 16: 50% FY17 performance • Double digit growth in Brazil, Africa and Middle East 73% FY 16: 70% • Increased software subscription penetration • Australia: 7% growth, with strong recurring revenue growth • Winning in the market: • S
Slide 18: Financial discipline
Financial discipline Managed portfolio Annualised savings >£50m Efficient Capital Allocation Profitable growth Strong financial discipline 18 Sage Group plc Year End Results 2017 #SageResults
Slide 19: Organic Operating Profit Margin
Organic Operating Profit Margin +360bps -60bps -210bps 35% 30% 25% 20% 15% 27.1% 28.0% 10% 5% FY16 G&A Product GTM FY17 Development 19 Sage Group plc Year End Results 2017 #SageResults
Slide 20: Iberia Organic Revenue Growth
Iberia Organic Revenue Growth 10% 25.2% 7% 27% 27% 5% 2% FY14 FY15 FY16 FY17 20 Sage Group plc Year End Results 2017 #SageResults
Slide 21: FY17 Summary
FY17 Summary Guidance Capital allocation Strong revenue achieved and financial momentum discipline 21 Sage Group plc Year End Results 2017 #SageResults
Slide 22: Stephen Kelly, Chief Executive Officer
Stephen Kelly Chief Executive Officer @SKellyCEO 22 Sage Group plc Year End Results 2017 #SageResults
Slide 23: Strategic Pillars
Strategic Pillars Customers Winning in the for Life Market One Sage Revolutionise Business Capacity for Growth 23 Sage Group plc Year End Results 2017 #SageResults
Slide 24: Customers for Life: Cloud enabled solutions
Customers for Life: Cloud enabled solutions FY17 Revenue £133m +140% Contracts 172,000 +87% Insert stats 24 Sage Group plc Year End Results 2017 #SageResults
Slide 25: Customers for Life
Customers for Life Software subscription revenue penetration NPS scores +7% 78% Recurring Revenue 37% Software 30% subscription +25 Other recurring 46% 41% +3 SSRS 19% 17% Q1 15 FY15 FY16 FY17 Q417 Processing 5% 5% FY16 FY17 25 Sage Group plc Year End Results 2017 #SageResults
Slide 26: Winning in the Market
Winning in the Market Blair Crump President 26 Sage Group plc Year End Results 2017 #SageResults
Slide 27: Winning in the Market – local marketing campaign
Winning in the Market – local marketing campaign 8 million 33% rise 11% rise people reached in web sessions in brand by #sagestories to sage.co.uk awareness celebrating business heroes 27 Sage Group plc Year End Results 2017 #SageResults
Slide 28: Winning in the Market
Winning in the Market FY 14 UK & Product USA Ireland France Spain Germany Canada Brazil RSA Australia 28 Sage Group plc Year End Results 2017 #SageResults
Slide 29: Winning in the Market
Winning in the Market FY 17 UK & Product USA Ireland France Spain Germany Canada Brazil RSA Australia 29 Sage Group plc Year End Results 2017 #SageResults
Slide 30: Winning in the Market
Winning in the Market • Revenue growth +20% • >50 contracts >£100k • Four-fold increase in ACV to £3,900 • ARR +76% • ACV +34% to £81 30 Sage Group plc Year End Results 2017 #SageResults
Slide 31: Revolutionise business: Sage Business Cloud
Revolutionise business SAGE BUSINESS CLOUD 31 Sage Group plc Year End Results 2017 #SageResults
Slide 32: Revolutionise business
Revolutionise business Cloud Products Accounting Financials Enterprise People Payroll Payments & Management Banking Marketplace Applications Sage Developer Platform APIs SDK Tools Platform Artificial Pegg Bot Collective Data Science Services Intelligence Framework Intelligence 32 Sage Group plc Year
Slide 33: Revolutionise business: Strategic alliances
Revolutionise business Strategic alliances 33 Sage Group plc Year End Results 2017 #SageResults
Slide 34: Capacity for Growth
Capacity for Growth Managed portfolio Annualised savings >£50m Efficient Capital Allocation Profitable growth Strong financial discipline 34 Sage Group plc Year End Results 2017 #SageResults
Slide 35: One Sage
One Sage Sage Foundation 23,000 £1.8m Paid days spent in Grants awarded the community in FY17 35 Sage Group plc Year End Results 2017 #SageResults
Slide 36: FY18 Outlook
FY18 Outlook Organic revenue Organic operating No further growth margin exceptional Around 8% Around 27.5% charge from this transformation 36 Sage Group plc Year End Results 2017 #SageResults
Slide 37: FY17 Summary
FY17 Summary The strategy Transformation Accelerating momentum is working complete through Sage Business Cloud 37 Sage Group plc Year End Results 2017 #SageResults
Slide 38: Capital Markets Day 2018
Capital Markets Day 2018 25 January 2018 London
Slide 39: Q&A
Q&A #SageResults 39 Sage Group plc Year End Results 2017 #SageResults
Slide 40: Glossary – Financial drivers
Glossary – Financial drivers Measure /Description Organic revenue Organic revenue neutralises the impact of foreign exchange in prior period figures and excludes the contribution of current and prior period acquisitions, disposals and assets held for sale of standalone businesses. N.B – From FY18 th
Slide 41: Glossary – Financial drivers
Glossary – Financial drivers Measure /Description Interest cover Statutory operating profit for the last twelve months excluding non-recurring items that management judge to be one-off or non-operational, expressed as a multiple of finance costs excluding imputed interest for the same period Dividen
Slide 42: Glossary – Revenue type
Glossary – Revenue type Measure /Description Recurring revenue Recurring revenue is revenue earned from customers for the provision of a good or service, where risks and rewards are transferred to the customer over the term of a contract, with the customer being unable to continue to benefit from th
Slide 43: Glossary – Non-GAAP measures
Glossary – Non-GAAP measures Measure /Description Why we use it Underlying Prior period underlying measures are retranslated at the current year exchange rates to neutralise the effect of currency fluctuations. Underlying measures allow management and investors to compare performance without the pot