Sage Group Plc · LSE:SGE
Sage — H1 2025 Earnings Presentation
36 slides from Sage's earnings presentation, May 15, 2025
Slide 1: Sage Half-Year Results
Sage Half-Year Results For the period ended 31 March 2025 15 May 2025
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: Growth through AI accounting
Growth through AI accounting Strong and • Broad-based growth across all regions. stable growth • Scaling efficiently through disciplined cost control and operating leverage. Driving • Sage Copilot driving productivity and insights. customer value • At the forefront of AI innovation in accountancy, H
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% 23.2% 17% 115% H1 24: 10% H1 24: 21.8% H1 24: 23% H1 24: 127% 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% 2,454 ARR growth £m 2,218 +1% 101% 11% H1 24: +11% Renewal by value H1 24 Existing Renewal New H1 25 101% underlying customers 1 by value customers 2 underlying H1 24: 102% ARR ARR 1. Growth from existing customers including upsell, cross-sell and pricing, net of churn 2.
Slide 8: Efficient growth driving earnings
Efficient growth driving earnings Underlying H1 25 H1 24 Change Organic change Total revenue £1,242m £1,134m +9% +9% Recurring revenue £1,203m £1,095m +10% +9% Operating profit £288m £247m +16% +16% Operating profit margin % 23.2% 21.8% +1.4 ppts +1.4 ppts EBITDA £334m £292m +14% EBITDA margin % 26.
Slide 9: Continued cloud expansion
Continued cloud expansion Sage Business Cloud Cloud native Subscription revenue growth revenue growth penetration 13% 22% 83% H1 24: 18% H1 24: 25% H1 24: 81% © 2025 The Sage Group plc, or its licensors. All rights reserved. Page 9
Slide 10: North America: continued strength
North America: continued strength US Underlying total revenue (£m) • Significant further growth in Sage Intacct. • Strength in both new and existing customer revenues 568 +11% across key industry verticals. 511 70 +12% 62 • Supported by growth in Sage 200, Sage X3 and Sage 50. Canada 498 +11% 449 •
Slide 11: UKIA: accelerating
UKIA: accelerating UK & Ireland Underlying total revenue (£m) • Strong growth in Sage Intacct driven by accelerating new customer acquisition. • Small business solutions, including Sage Accounting, 358 +9% 329 Sage Payroll and Sage HR, performing well. 87 +8% 81 • Further growth in Sage 50 and Sage
Slide 12: Europe: broad-based growth
Europe: broad-based growth France Underlying total revenue (£m) • Strong performance in Sage X3 and Sage 200, alongside HR and payroll solutions. 316 +8% • Good early traction in Sage Intacct. 294 77 +8% Central Europe 71 74 81 +10% • Strong growth from cloud HR and payroll solutions, supported by s
Slide 13: Investment driving growth and margin
Investment driving growth and margin ARR growth and underlying operating margin Recent progression Sales and Marketing £493m (H1 24: £450m) 40% Underlying +11% +11% +11% as % of total revenue ARR growth Underlying Research and Development £191m 23.2% 15% operating 22.5% 20.4% (H1 24: £172m) margin a
Slide 14: Strong cash generation
Strong cash generation 115% Underlying 400 cash conversion +29 350 +22 330 +23 -32 300 288 246 £m 250 -84 200 150 100 Underlying Depreciation, Share based Working Capex Operating Interest, Free cash flow operating amortisation payments capital cash flow tax and other profit and other See appendix fo
Slide 15: Robust financial position
Robust financial position Cash and liquidity Net debt Net debt leverage £1.2bn £976m 1.5x • Net debt leverage within medium term target range of 1-2x. • Extended ongoing £400m share buyback programme by up to a further £200m. • Significant capacity for future capital priorities to support organic an
Slide 16: Outlook
Outlook Against the background of a more volatile and uncertain macroeconomic environment, we currently continue to expect: • Organic total revenue growth in FY25 to be 9% or above. • Operating margins to trend upwards in FY25 and beyond, as we focus on efficiently scaling the Group. Data Intellect
Slide 17: Steve Hare, CEO
Steve Hare CEO • Overview • Financial review and outlook • Strategic update • Q&A
Slide 18: Strategic framework for growth
Strategic framework for growth 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 trus
Slide 19: Meeting the needs of our customers
Meeting the needs of our customers SMBs remain resilient Despite the uncertain macroeconomic environment. SMBs continue to see digitisation benefits Two thirds of SMBs expect their investment in technology to rise over the next year1. Sage helps SMBs overcome obstacles By boosting visibility, effici
Slide 20: Connect
Strategic focus area Connect Connecting SMBs through our trusted and thriving network Progress update • Recognised as a ‘Major Player’ by IDC for Accounts Receivable automation. • Accounts Payable automation continues to scale rapidly. “ “The integration of Sage Sales Management with Sage 50 has sig
Slide 21: Grow
Strategic focus area Grow Winning new customers and delighting our existing ones Progress update • Scaling Sage Intacct across the Group. • Enhancing reach through industry suites including in the US and UK. • Building out solutions for small businesses and reinforcing relationships with accountants
Slide 22: Deliver
Strategic focus area Deliver Delivering productivity and insights driven by AI Progress update • Developed and scaled Sage Copilot to selected customers of key products across our markets: o Sage Accounting, Sage 50, Sage Active, Sage for Accountants and Sage Intacct. “ “Sage is helping us to make t
Slide 23: Delivering for our stakeholders
Delivering for our stakeholders Customers Partners Colleagues Society Shareholders • Award-winning solutions • Investing in partner • Ranked among UK’s best • Helping SMBs be more • Targeting sustainable such as Sage Intacct and relationships. employers by the sustainable. growth in shareholder Sage
Slide 24: Creating value through efficient growth
Creating value through efficient growth 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 investme
Slide 25: Key messages
Key messages Strong and Driving Consistent stable growth customer value execution © 2025 The Sage Group plc, or its licensors. All rights reserved. Page 25
Slide 26: Q&A
Q&A • Overview • Financial review and outlook • Strategic update • Q&A © 2025 The Sage Group plc, or its licensors. All rights reserved. Page 26
Slide 27: Appendix
Appendix @
Slide 28: Sage Business Cloud portfolio
Sage Business Cloud portfolio Cloud Connected Cloud Native Accounting and Financials People and Payroll Mid-sized • Sage 200 • Sage Intacct • Sage HR • Sage X3 • Sage People businesses Small • Sage 50 • Sage Active • Sage HR businesses • Sage 50 Payroll • Sage Accounting • Sage Payroll Sage Network
Slide 29: 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 underlying EBITDA over the medium term, with flexibility to move outside this range as business needs require
Slide 30: Bridge from underlying to organic
Bridge from underlying to organic ARR Recurring revenue Total revenue Operating profit £m H1 25 H1 24 Growth H1 25 H1 24 Growth H1 25 H1 24 Growth H1 25 H1 24 Growth Underlying 2,454 2,218 +11% 1,203 1,095 +10% 1,242 1,134 +9% 288 247 +16% Acquisitions1 (5) 6 (3) 3 (3) 3 - 1 Disposals - - - - - - -
Slide 31: Cloud and subscription revenue mix
Cloud and subscription revenue mix Cloud revenue mix Subscription revenue mix Organic Organic £m H1 25 H1 24 Change £m H1 25 H1 24 Change change change Cloud native 425 349 +22% +20% Subscription 1,031 923 +12% +11% Cloud connected 595 552 +8% +8% Other recurring revenue 172 172 - - Sage Business Cl
Slide 32: Cloud mix over time
Cloud mix over time 21% 20% 20% 20% 18% 18% 27% 26% 25% 24% 36% 33% 38% 37% 45% 44% 42% 46% 53% 50% 55% 54% 63% 48% 48% 49% 49% 49% 49% 47% 47% 48% 46% 44% 42% 42% 42% 40% 41% 39% 40% 37% 33% 34% 35% 27% 31% 31% 31% 34% 34% 27% 27% 28% 28% 30% 20% 21% 22% 23% 15% 15% 16% 17% 10% 12% 12% 12% 13% Q419
Slide 33: 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. • Achieved CDP ‘A’ l
Slide 34: 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 35: 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 36: 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