Sage Group Plc · LSE:SGE
Sage — The Sage Group — H1 2018 Earnings Presentation
33 slides from Sage's earnings presentation, May 2018
Slide 1: Results for the six months ended 31 March 2018
Results for the six months ended 31 March 2018 #SageResults
Slide 2: Safe harbour
Safe harbour The following presentation is being made only to, and is only directed at, persons to whom predicting customer behaviour; customers may not respond as we expected to our such presentation may lawfully be communicated (“relevant persons”). Any person who is sales and marketing activities
Slide 3: Stephen Kelly, CEO: agenda
Stephen Kelly @SKellyCEO Chief Executive Officer • Welcome • H2 18 delivery plan • CFO review • Strategy • Outlook • Q&A 3 #SageResults Sage Group plc Interim Results 2018
Slide 4: H2 18 Delivery Plan
H2 18 Delivery Plan 1 2 3 Enterprise Subscription Leadership Management 4 #SageResults Sage Group plc Interim Results 2018
Slide 5: FY18 Outlook
FY18 Outlook Around 27.5% Around 7% organic organic revenue operating growth margin 5 #SageResults Sage Group plc Interim Results 2018
Slide 6: Steve Hare, Chief Financial Officer
Steve Hare @SteveHareCFO Chief Financial Officer 6 #SageResults Sage Group plc Interim Results 2018
Slide 7: H1 18 summary
H1 18 summary 1 2 3 Strong Focus on Confidence in underlying subscription FY18 guidance business 7 #SageResults Sage Group plc Interim Results 2018
Slide 8: Financial summary
Financial summary H1 18 H1 17 Growth Organic1 revenue £908m £854m 6.3% Sage Business Cloud revenue £164m £100m 64% Sage Business Cloud ARR1 £336m £215m 57% Underlying1 operating profit margin2 % 24.5% 25.3% (0.8%) 1 See appendix for definitions 2 In FY18, there is no difference between organic and u
Slide 9: Financial summary
Financial summary H1 18 H1 17 Change Underlying operating profit margin1 % 24.5% 25.3% (0.8%) Underlying basic EPS2 14.25p 14.12p 0.9% Underlying adjusted EPS2 14.25p 12.33p 15.5% Non-GAAP EBITDA3 margin % 26.9% 27.5% (0.6%) 1 In FY18, there is no difference between organic and underlying operating
Slide 10: Strong capital metrics
Strong capital metrics Underlying operating Underlying cash flow £222m £221m Opening net debt (£813m) profit from operating activities Depreciation/ Free cash flow £157m amortisation/impairment/ £17m Net interest paid (£12m) profit on disposal M&A (£8m) Share-based payments £5m Income tax paid (£29m
Slide 11: Revenue categories
Revenue categories +6% 78% Recurring mix H1 17: 78% Software subscription +25% +6% Recurring Other revenue recurring -11% 44% SSRS +7% Software subscription Processing +2% penetration H1 17: 37% H1 17 H1 18 11 #SageResults Sage Group plc Interim Results 2018
Slide 12: Impact of subscription model
Impact of subscription model Licence contract Subscription contract Customer ARR H2 18 Revenue H2 18 Revenue acquired April 1st £1.1m £500k £250k September 1st £1.0m £500k £40k 12 #SageResults Sage Group plc Interim Results 2018
Slide 13: H2 Sources of growth
H2 18 Sources of growth Cloud Enterprise Progress in connected Management France 13 #SageResults Sage Group plc Interim Results 2018
Slide 14: Software subscriber growth
Software subscriber growth Growth in ASB of £187m to £820m in H1 18 30% 800 62 750 36 700 89 ASB (£m) 820 650 600 633 550 500 H1 17 Cloud connected Cloud native Desktop H1 18 14 #SageResults Sage Group plc Interim Results 2018
Slide 15: Regional overview
Regional overview Europe North America International 15 #SageResults Sage Group plc Interim Results 2018
Slide 16: Europe
Europe 40% H1 18 revenue growth • Northern Europe: • Revenue 4%; flat recurring 77% Software subscription • Sage Accounting revenue 54% penetration • Sage People ARR 70% H1 17: 36% • France: revenue and recurring both 1% Recurring mix H1 17: 78% • Central Europe: revenue 11%; recurring 12% • Iberia:
Slide 17: North America
North America 42% H1 18 revenue growth • North America: software subscription 51% • USA: cloud connected revenue 89% 82% Software subscription • Canada: double digit revenue and recurring growth penetration • Intacct: continued momentum, 31% ARR growth H1 17: 31% Recurring mix H1 17: 80% Revenue H1
Slide 18: International
International 60% H1 18 revenue growth • Africa Middle East: revenue 5%; recurring 11% 75% Software subscription • Brazil: revenue decline 1%, impacted penetration by macro environment H1 17: 56% • Australia: 12% revenue Recurring mix H1 17: 73% Revenue H1 18 H1 17 Growth Focus for H2 18 Recurring £
Slide 19: Underlying Operating Profit Margin
Underlying Operating Profit Margin +140bps +20bps 25% -40bps -50bps -150bps 20% 15% 25.3% 24.5% 10% 5% H1 17 G&A GTM Product Sage Sage H1 18 1 Development People Intacct 1 In FY18, there is no difference between organic and underlying operating margin 19 #SageResults Sage Group plc Interim Results 2
Slide 20: H1 18 summary
H1 18 summary 1 2 3 Strong Focus on Confidence in underlying subscription FY18 guidance business 20 #SageResults Sage Group plc Interim Results 2018
Slide 21: Stephen Kelly, Chief Executive Officer
Stephen Kelly @SKellyCEO Chief Executive Officer 21 #SageResults Sage Group plc Interim Results 2018
Slide 22: Total addressable market
Total addressable market 7% $30bn $28bn 13% Cloud $12bn $14bn On-premise 2% $16bn $16bn 2018 2019 Source: IDC & Gartner , 2017 22 #SageResults Sage Group plc Interim Results 2018
Slide 23: Unique position in the market
Unique position in the market Trusted brand Global reach Market breadth 23 #SageResults Sage Group plc Interim Results 2018
Slide 24: Progress in strategy: Revolutionise Business
Progress in strategy: Revolutionise Business Cloud Products Accounting Financials Sage Intacct Enterprise People Payroll Payments Management & Banking Marketplace Applications Sage Developer Platform APIs Microservices Artificial Pegg Bot Collective Machine Platform Services Intelligence Framework I
Slide 25: Progress in strategy: Customers for Life
Progress in strategy: Customers for Life Cloud Products Accounting Financials Sage Intacct Enterprise People Payroll Payments Management & Banking Revenue H1 18 ARR Growth Cloud connected1 £205m 72% Cloud native2 £131m 37% Sage Business Cloud £336m 57% 1 Cloud connected versions of Sage 50 and Sage
Slide 26: North America: Cloud connected playbook
North America: Cloud connected playbook 26 #SageResults Sage Group plc Interim Results 2018
Slide 27: Progress in strategy: Winning in the Market
Progress in strategy: Winning in the Market Cloud Products Accounting Financials Sage Intacct Enterprise People Payroll Payments Management & Banking Revenue H1 18 ARR Growth Cloud connected1 £205m 72% Cloud native2 £131m 37% Sage Business Cloud £336m 57% 1 Cloud connected versions of Sage 50 and Sa
Slide 28: Winning in the market: ARR growth
Winning in the market: ARR growth 31% 62% 42% Sage Intacct Sage People Sage Accounting 28 #SageResults Sage Group plc Interim Results 2018
Slide 29: Summary
Summary 1 2 3 Confidence in Progress against Platform for FY18 guidance strategy success 29 #SageResults Sage Group plc Interim Results 2018
Slide 30: Q&A
Q&A #SageResults 30 #SageResults Sage Group plc Interim Results 2018
Slide 31: Glossary – Financial drivers
Glossary – Financial drivers Measure /Description Organic In addition to the adjustments made for underlying measures, organic measures exclude the contribution from discontinued operations, disposals and assets held for sale of standalone businesses in the current and prior period and include acqui
Slide 32: Glossary – Financial drivers
Glossary – Financial drivers Measure /Description Underlying cash conversion Underlying cash conversion is underlying cash flow from operating activities divided by underlying operating profit. Underlying cash flow from operating activities is statutory cash flow from operating activities less net c
Slide 33: Glossary – Revenue types
Glossary – Revenue types 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 t