Slide 1: Sage Full-Year Results
Sage Full-Year Results For the period ended 30 September 2024 20 November 2024
Slide 2: Important notice
Important notice The following presentation is being made only to, and is only directed at, persons to whom such factors include, among others: inherent difficulty in predicting customer behaviour; customers presentation may lawfully be communicated (“relevant persons”). Any person who is not a rele
Slide 3: Steve Hare, CEO
Steve Hare CEO • Overview • Financial review and outlook • Strategic update • Q&A
Slide 4: Continuing our strong growth trajectory
Continuing our strong growth trajectory Robust • Double-digit ARR growth for the third consecutive year. growth • Disciplined cost control driving record operating profit. Focused • Innovating to enhance productivity and insights for customers. innovation • Integrating solutions into suites and buil
Slide 5: Jonathan Howell, CFO
Jonathan Howell CFO • Overview • Financial review and outlook • Strategic update • Q&A
Slide 6: Strong financial performance
Strong financial performance Revenue Operating Basic EPS Cash growth margin growth conversion 9% 22.7% 23% 123% FY 23: 10% FY 23: 20.5% FY 23: 22% FY 23: 116% Unless otherwise stated, all references in this presentation to revenue, profit and margin are on an underlying basis. Please note that table
Slide 7: Robust ARR growth
Robust ARR growth +11% +10% 2,339 ARR growth £m 2,112 +1% 101% 11% FY 23: +11% Renewal by value xisting enewal ew 101% underlying customers 1 by value customers 2 underlying FY 23: 102% A A 1. Growth from existing customers including upsell, cross-sell and pricing, net of churn 2. Includes acquisiti
Slide 8: Efficient growth driving earnings
Efficient growth driving earnings Underlying FY 24 FY 23 Change Organic change Total revenue £2,332m £2,133m +9% +9% Recurring revenue £2,257m £2,048m +10% +10% Operating profit £529m £438m +21% +21% Operating profit margin % 22.7% 20.5% +2.2 ppts +2.2 ppts EBITDA £622m £534m +16% EBITDA margin % 26
Slide 9: Continued cloud expansion
Continued cloud expansion Sage Business Cloud Cloud native Subscription revenue growth revenue growth penetration 16% 23% 82% FY 23: 25% FY 23: 33% FY 23: 79% © 2024 The Sage Group plc, or its licensors. All rights reserved. Page 9
Slide 10: North America: broad-based growth
North America: broad-based growth US Underlying total revenue (£m) • Significant growth in Sage Intacct. • Further success in NCA, together with strong sales to 1,052 +12% existing customers. 940 134 +11% 121 • Supported by growth in Sage 200 and Sage 50. Canada 918 +12% 819 • Strong renewals and ne
Slide 11: UKIA: continued strength
UKIA: continued strength UK & Ireland Underlying total revenue (£m) • Strong growth in Sage Intacct reflecting new customer wins. • Small business solutions, including Sage Accounting, Sage 670 +8% 620 Payroll and Sage HR, performing well. 165 +11% 149 • Further growth in Sage 50 and Sage 200. Afric
Slide 12: Europe: accelerating
Europe: accelerating France Underlying total revenue (£m) • Good performance in Sage 200 and Sage X3, alongside growth in accountant and payroll solutions. Central Europe 610 +6% 573 148 +6% • Strong growth from cloud HR and payroll solutions, 140 supported by sales to existing Sage 200 customers. 1
Slide 13: Investment driving growth and margin
Investment driving growth and margin ARR growth and underlying operating margin Recent progression Sales and Marketing £911m (FY 23: £824m) 39% Underlying +12% +11% +11% as % of total revenue ARR growth Research and Development £344m Underlying 22.7% operating 19.2% 20.5% (FY 23: £334m) 15% margin a
Slide 14: Excellent cash generation
Excellent cash generation 123% Underlying cash conversion ( ) ( ) £m nderlying epreciation, Share based orking Capex perating nterest, ree cash flow operating amortisation payments capital cash flow tax and other profit and other See appendix for definitions © 2024 The Sage Group plc, or its licenso
Slide 15: Robust financial position
Robust financial position Cash and liquidity Net debt Net debt leverage £1.1bn £738m 1.2x • Net debt leverage within medium term target range of 1-2x. • Launched share buyback programme of up to £ m, reflecting Sage’s strong cash generation, robust financial position and the Board’s confidence in Sa
Slide 16: Outlook
Outlook Looking ahead, we expect: • Organic total revenue growth for FY25 to be 9% or above. • Operating margins to trend upwards in FY25 and beyond, as we focus on efficiently scaling the Group. Legendary Entertainment Sage customer © 2024 The Sage Group plc, or its licensors. All rights reserved.
Slide 17: Steve Hare, CEO
Steve Hare CEO • Overview • Financial review and outlook • Strategic update • Q&A
Slide 18: Consistent strong strategic progress
Consistent strong strategic progress Scaling Innovating ARR (and growth) Sage Business Cloud revenue (and growth) £2.3bn £1.9bn £2.1bn £1.6bn £1.9bn £1.7bn £1.3bn £1.0bn +11% +11% +25% +16% +12% +24% FY21 FY22 FY23 FY24 FY21 FY22 FY23 FY24 Innovating for Investing growth Delivering R&D spend (and %
Slide 19: Meeting the needs of our customers
Meeting the needs of our customers SMBs remain resilient and confident Reporting rising revenues and profits. Investing more in digital technology To address rising costs and to free up time. SMBs eager to leverage new technologies To save time and elevate their work. SR Veterinary Group Sage custom
Slide 20: Evolved strategic framework
Evolved strategic framework Purpose To knock down barriers so everyone can thrive Ambition To create the world’s most trusted and thriving network for SMBs, powered by Sage Copilot Connect Grow Deliver Strategy Connecting SMBs through our Winning new customers and Delivering productivity and trusted
Slide 21: Connect
Strategic focus area Connect Connecting SMBs through our trusted and thriving network Progress update • Connected more customers to network services such as AP automation. • Enabled new network services such as e-invoicing. • Expanded partnership with Stripe, making it easier for customers to pay an
Slide 22: Grow
Strategic focus area Grow Winning new customers and delighting our existing ones Progress update • Scaling Sage Intacct in North America and UKIA. • Growing our small business solutions. • Establishing Sage Intacct and Sage Active in Europe. ““Sage ntacct lets us focus on the numbers, not on having
Slide 23: Deliver
Strategic focus area Deliver Delivering productivity and insights driven by AI Progress update • Focused on development and adoption of Sage Copilot. • Sage Copilot now available to over 8,000 early-adopter customers and accountants. ““Behind the scenes, Sage Copilot is learning my language, and it
Slide 24: Delivering for our stakeholders
Delivering for our stakeholders Customers Partners Colleagues Society Shareholders • Great technology with a • Making it simpler to • High-performance, • Aim to multiply our • Creating sustainable human touch. work with Sage. accountable and impact by helping SMBs growth in shareholder inclusive cul
Slide 25: Creating value through efficient growth
Creating value through efficient growth Evolved strategic framework is delivering growth in all regions. Creating a scalable platform Differentiated by our leading technology, the to deliver sustained, breadth of our business and our human touch. efficient growth Growth creates headroom to increase
Slide 26: Key messages
Key messages Robust Focused Consistent growth innovation execution © 2024 The Sage Group plc, or its licensors. All rights reserved. Page 26
Slide 27: Q&A
Q&A • Overview • Financial review and outlook • Strategic update • Q&A © 2024 The Sage Group plc, or its licensors. All rights reserved. Page 27
Slide 28: Appendix
Appendix @
Slide 29: Sage Business Cloud portfolio
Sage Business Cloud portfolio Cloud Connected Cloud Native Accounting and Financials People and Payroll Mid-sized • Sage 200 cloud • Sage Intacct • Sage HR • Sage X3 • Sage People businesses Small • Sage 50 cloud • Sage Active • Sage HR businesses • Sage 50 Payroll • Sage Accounting • Sage Payroll S
Slide 30: Capital allocation
Capital allocation 4. Consider 3. Grow the 1. Organic returning 2. M&A dividend investment surplus over time capital Strong and stable financial position Broad range of 1.0x–2.0x net debt to EBITDA over the medium term, with flexibility to move outside this range as business needs require. © 2024 Th
Slide 31: Bridge from underlying to organic
Bridge from underlying to organic ARR Recurring revenue Total revenue Operating profit £m FY24 FY23 Growth FY24 FY23 Growth FY24 FY23 Growth FY24 FY23 Growth Underlying 2,339 2,112 +11% 2,257 2,048 +10% 2,332 2,133 +9% 529 438 +21% Acquisitions1 (5) - - 1 - 1 - - Disposals - - - - - - - - Organic 2,
Slide 32: Cloud and subscription revenue mix
Cloud and subscription revenue mix Cloud revenue mix Subscription revenue mix Organic Organic £m FY24 FY23 Change £m FY24 FY23 Change change change Cloud native 732 597 +23% +22% Subscription 1,910 1,694 +13% +13% Cloud connected 1,139 1,022 +11% +11% Other recurring revenue 347 354 -2% -2% Sage Bus
Slide 33: Cloud mix over time
Cloud mix over time 21% 20% 20% 20% 27% 26% 25% 24% 36% 33% 38% 37% 45% 44% 42% 46% 53% 50% 55% 54% 63% 49% 49% 49% 49% 47% 47% 48% 46% 44% 42% 42% 42% 40% 41% 39% 40% 37% 33% 34% 35% 27% 28% 28% 30% 31% 31% 31% 27% 27% 20% 21% 22% 23% 15% 15% 16% 17% 10% 12% 12% 12% 13% Q419 Q120 Q220 Q320 Q420 Q12
Slide 34: Sustainability highlights
Sustainability highlights Protect the Planet Tech for Good Human by Design Pledged to get to net zero by 2040 Supporting SMBs and communities Championing inclusive, progressive and to halve emissions by 2030 through our trusted, thriving network and healthy working environments. • Emission reduction
Slide 35: Glossary
Glossary Measure/description Underlying (revenue and profit) measures Organic (revenue and profit) measures Underlying measures are adjusted to exclude items which in management’s In addition to the adjustments made for Underlying measures, Organic measures: judgement need to be disclosed separately
Slide 36: Glossary
Glossary Measure/description Underlying Cash Flow from Operations Renewal Rate by Value Underlying Cash Flow from Operations is Underlying Operating Profit adjusted for The ARR from renewals, migrations, upsell, and cross-sell of active customers at non-cash items, net capital expenditure (excluding
Slide 37: About Sage
About Sage Sage exists to knock down barriers so everyone can thrive, starting with the millions of Small and Mid-Sized Businesses (SMBs) served by us, our partners and accountants. Customers trust our finance, HR and payroll software to make work and money flow. By digitising business processes and