Subscribers boost gives accounting software giant Sage profit spike of 16%

sage accounts

The FTSE 100 software developer Sage coaxed more of its customers on to subscription deals, sending profits up 16 per cent.

The Newcastle-based company, which develops accountancy and payroll software for small businesses, reported revenues rising from £899 million to £957 million in the six months to the end of March.

Recurring revenues grew 10.2 per cent over the period to £779 million and now represent 83 per cent of group turnover. Subscription revenue made increased from £380 million to £485 million, 52 per cent of recurring revenues.

Operating profits rose 13 per cent to £210 million over the first half of its financial year and pre-tax earnings increased by 16 per cent to £198 million. The results were in line with expectations.

Sage, founded in 1981, initially sold CD-roms with bookkeeping software. It used to charge customers an annual licence fee but has over recent years tried to move them to subscriptions. The shift is designed to provide more predictable revenue streams but it has proved turbulent. The company cut growth forecasts twice last year, ousted its chief executive and promoted Steve Hare, its finance director, to the top job.

The company has a market value of £8 billion, about £1.5 billion larger than Micro Focus, Britain’s only other FTSE 100 software company. It has come under pressure from a range of new competitors, including Xero and Salesforce, offering payroll and bookkeeping services over the cloud.

This morning Sage said that recurring revenues grew 10.2 per cent over the period to £779 million and now represent 83 per cent of turnover.

In North America, its largest division, sales grew by 20 per cent. In northern Europe, which includes Britain, they rose by 4 per cent.

The company said that full-year organic recurring revenue growth would be at the “top end or slightly exceed” its previous forecast for a rise of between 8 per cent and 9 per cent. Full-year turnover would remain unchanged and the company maintained its organic operating profit margin guidance of between 23 per cent and 25 per cent growth.

The company lifted its half-time dividend from 5.65p to 5.79p.

Mr. Hare, 58, said that he had been “encouraged by the strong start” to the financial year. “We will continue to focus on driving high-quality recurring and subscription revenue in the second half of the year,” he added.

The company has appointed a new independent director. John Bates is the chief executive of Eggplant, which specialises in AI-powered software test automation.

Qualities of a Good Accounting Software

A well-regarded accounting software is highly beneficial to its user. So, how should a business choose an accounting software?

Here are the good qualities that accounting software should have:

  • Fast: One thing that a great automated accounting software should have is a fast load time. With fast accounting software, there’s minimal or zero delay, allowing you to accomplish more tasks.
  • Easy to Use: Great accounting software should be easy to use and understand, and not complicated or designed for computer tech experts.
  • Scalable: Businesses need a tool that’s made for the moment and the future. It should accommodate the growth of your company and stay efficient for many years to come.
  • Versatile: Choose an accounting software that provides a wide array of features tailor-fit to accounting tasks needed. Take note that this tool will be used to write checks, track expenses, generate reports, record savings, and more.
  • Helpful: An accounting software provider should have a help center or dedicated customer support number to address technical problems.
  • Efficient: Accountants have different ideas of what efficiency means. Generally, accounting software efficiency must be defined based on the business’s needs. While some accountants prefer accounting software that enables double-entry bookkeeping, there are those who use it to generate reports or integrate with different software programs.
  • Customizable: Great accounting software has customizable features, such as deleting page tabs to show pages a user wants to access. A software that’s too standardized can be difficult to use in resolving unique problems, so having a customized accounting software is a great investment.
  • Automated: Accountants don’t want to spend hours calculating when they can simply click a few buttons to generate data reports for analysis. Opt for an automated accounting software that finishes tasks with no human error and will increase productivity.
  • Collaborative: Good accounting software should be easily shared with others. Users should able to protect the contents with verified usernames and passwords. There must be reliable features that’ll allow full control of who can access certain types of information.