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Sage Group PLC reported a 9% increase in total revenue for the third quarter of 2025, reaching over £1.8 billion, driven by strong growth in its cloud-native offerings. The company also noted an 11% rise in subscription revenue and a significant expansion in its Sage Business Cloud. However, amid a volatile macroeconomic environment, Sage remains focused on expanding its cloud solutions and exploring new verticals.
Key Takeaways
- Sage reported a 9% increase in total revenue for Q3 2025.
- Cloud-native revenue surged by 22%, reflecting a robust shift to digital solutions.
- The company completed a £600 million share buyback, reducing its share count by 16%.
- Sage Copilot was launched in the UK, reaching 150,000 customers.
- The macro environment remains uncertain, but no material changes in customer behavior were observed.
Company Performance
Sage Group continued its upward trajectory with a 9% increase in total revenue for the third quarter, amounting to £620 million for Q3 alone. This growth was bolstered by a 13% rise in Sage Business Cloud revenue, which surpassed £1.5 billion. The company’s strong performance was particularly evident in North America, where it achieved an 11% growth rate.
Financial Highlights
- Total revenue: Over £1.8 billion, a 9% increase year-over-year
- Organic total revenue growth: 9% for the first nine months
- Recurring revenue: Increased by 10% to over £1.8 billion
- Subscription revenue: Grew by 11%, with an 83% subscription penetration
Outlook & Guidance
Looking ahead, Sage expects organic total revenue growth of 9% or above, with operating margins projected to trend upwards in fiscal year 2025 and beyond. The company is focusing on expanding its cloud solutions globally and entering new verticals such as manufacturing and distribution.
Executive Commentary
Jonathan Howell, CFO, highlighted the company’s consistent growth, stating, "We’ve delivered now organic total revenue growth of 9%-10% over the last three years." He also emphasized the launch of Sage Copilot in the UK, which is now available to 150,000 customers. Howell noted, "We are constantly looking for the appropriate technology, the appropriate skill sets."
Risks and Challenges
- Volatile macroeconomic environment could impact future growth.
- Increased competition in the cloud solutions market.
- Potential challenges in expanding into new verticals like manufacturing and distribution.
- Ongoing need to adapt to rapid technological changes.
Q&A
During the earnings call, analysts inquired about the stability of the macro environment and the pricing strategy for Sage Copilot. Executives clarified their expectations for margin improvements and provided insights into the performance of Sage Intacct across different verticals.
Full transcript - Sage Group PLC (SGE) Q3 2025:
Conference Introducer: Good morning, everyone. Welcome to the Q3 Trading Update call for the Sage Group. Your presenter today will be Jonathan Howell, Chief Financial Officer, who is joined by James Sanford, Head of Investor Relations. After the speaker’s presentation, there will be a question-and-answer session. To ask a question, please press star 11 on your keypad. To withdraw your question, press star 11 again. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to Mr. Howell. Please go ahead.
Jonathan Howell, Chief Financial Officer, Sage Group: Thank you, and good morning, everyone. Welcome to Sage’s Q3 Trading Update. I’ll briefly run through the key numbers and the performance of the business. After that, we can open for Q&A. Sage has performed well in the first nine months, delivering good levels of growth in line with our expectations. Total revenue for the group increased by 9% to over GBP 1.8 billion as we continue to scale the business in all regions. In North America, revenue grew by 11% to GBP 846 million, with a strong performance in Sage Intacct, together with continuing growth in Sage 200 and Sage 50. In the United Kingdom, Ireland & Africa region, revenue grew by 9% to GBP 539 million. This was driven by strong progress in Sage Intacct, together with further success in Sage Accounting and Sage 50.
In Europe, revenue increased by 7% to GBP 477 million, with good growth across our cloud solutions, including Sage 200 and Sage X3. Turning now to the main performance drivers. Sage Business Cloud grew by 13% to over GBP 1.5 billion, reflecting good strategic progress as we further expand our global cloud solutions. This includes cloud-native revenue, which grew by 22% to GBP 645 million, and now represents more than a third of the group. Recurring revenue increased by 10% to over GBP 1.8 billion, driven by continued momentum in ARR. This includes subscription revenue growth of 11%, resulting in subscription penetration of 83%, up from 82% last year. For Q3 standalone, total revenue increased by 9% to GBP 620 million, driven by continued growth across Sage Business Cloud. On an organic basis, total revenue for the first nine months increased by 9% to over GBP 1.8 billion.
Finishing on the outlook, with growth so far in line with our plan, we reiterate our full-year guidance as set out at the half-year. Organic total revenue growth is expected to be 9% or above, and we expect operating margins to trend upwards in fiscal year 2025 and beyond. In summary, Sage has performed well throughout the first nine months, in line with expectations. We enter the final quarter with good momentum. Thank you, and now let’s open for questions.
Conference Moderator: Thank you. As a reminder, if you wish to ask a question, please press star 11 on your telephone and wait for your name to be announced. Please stand by while we prepare the first question. The first question comes from Adam Wood at Morgan Stanley. Adam, your line is open. Please go ahead.
Hi, good morning, Jonathan. Thanks for taking the question. It does look as if we’ve had a little uptick on the organic top line for you after a few quarters where we’ve had sort of very gentle deceleration. I wonder if you could talk about what that reflects in the environment and any color you can give in particular areas where you’re seeing improvement to drive that, please. Thank you.
Jonathan Howell, Chief Financial Officer, Sage Group: Yes, thank you, Adam. Yes, we’ve seen a slight uptick, as you say, in the organic performance. Nonetheless, we’ve seen underlying revenue growth of 9% in Q3 year to date. That, as I said in the introduction, is very much in line with our expectations. We’ve seen solid growth in North America, with total revenue up 11%. That’s very much in line with the first half. As I said, we’ve seen a very strong performance from Sage Intacct, with good support from Sage 200 and Sage 50. Across North America now, we’re sustaining double-digit growth off an increasingly large base. UKIA, strong revenue performance, up 9%. Similarly, that was in line with the first half. We’ve got Sage Intacct in this region scaling rapidly now, particularly through NCA. In Europe, revenues up 7%, just slightly down on the first half, which was 8%.
That’s good levels of growth across the whole Sage Business Cloud. In terms of the backdrop, during the first half, the macro environment for us was broadly stable. As we said at the results call in May, it’s since become a bit more volatile and uncertain. Despite that, we have seen no material changes in customer behavior at the Q3 mark. It’s just worth reminding ourselves that Sage is a diverse business, both in terms of geography and product, and therefore has inbuilt resilience. We’re in a structurally growing sector where SMBs are increasingly adopting digital tools, and we position the business well to continue to benefit from these trends. I hope, Adam, that answers your question.
Absolutely, rundown. Thank you.
Conference Moderator: Next question comes from Toby Ogg at JP Morgan. Your line is open. Please go ahead.
Yeah, hi, morning, Jonathan. Thanks for the question. Perhaps you could just give us just an update on the ARR development in 3Q and just how the organic sequential looked in 3Q this year versus 3Q last year. I also know, just looking forward, there’s a difficult comp on the ARR coming up in Q4, just given the strong Q4 last year. Just anything for us to think about here. Heading into Q4 as well on the ARR side. Thank you.
Jonathan Howell, Chief Financial Officer, Sage Group: Yeah, so just to recap on the year so far in terms of sequential growth. In Q1, it was about 2%. In Q2, it was about 2.5%. In Q3, it was about 2% again. We continue to have good momentum. This underpins our confidence in our full-year guidance, which we reiterated this morning. If you’re looking at a comparison against the prior year, Q3 sequential growth in the prior year was a little above 2%. This year’s growth is just slightly below last year’s level. Importantly, I think this is very much within the normal quarterly variation that we’d expect to see. It certainly remains consistent, as I’ve said, with the guidance that we’ve reiterated. On Q4, yes, it’s a stronger comp that we’re running into.
Given what I’ve just explained in terms of the momentum that we’ve seen during the course of the year, we’re confident in the guidance that we’re giving.
Understood. Thank you.
Conference Moderator: Please stand by for your next question. The next question comes from Kai Korschelt at Canaccord Genuity. Your line is open. Please go ahead.
Yeah, thank you. Good morning. Thanks for taking my question again. I have a question around Intacct, particularly in the US. I appreciate you said there’s no major change in buying behavior, but it looks like quite a few software companies, more in the sort of enterprise segment, seem to have seen a bit of incremental hesitation in the second quarter, particularly with this sort of tariff uncertainty. If you have any color on whether you’ve seen anything similar, that would be super helpful. The second question was just around Xero. They acquired a bill payments platform recently. I think Intuit has something similar. Just wondering if you think more strategically about your tech stack. Do you think you have all the ingredients, or would something like sort of payments or perhaps MarTech might be a bit more attractive?
I appreciate you’ve been buying sort of other functionality bits over the last 12-18 months. Any color here would be appreciated. I have a follow-up. Thank you.
Jonathan Howell, Chief Financial Officer, Sage Group: Yes, so just in terms of the macro backdrop, I’ve just covered that in one of the previous questions. Just to provide a bit more detail. We’ve delivered now organic total revenue growth of 9%-10% over the last three years. Whilst we’ve been doing that, we’ve been improving the business mix. Cloud-native revenue is now over a third of total group revenue, and that is growing at over 20%. Specifically on Intacct, in the US now, we have ARR approaching $500 million, and that’s growing at over 20%. Internationally, in other words, ex-US, we have ARR of more than $60 million, and that’s growing at over 50%. We will continue to invest in these core products of ours and the platform, which again will give us momentum as we move into FY2026. Lastly, in terms of M&A, as you know, M&A is a very important part of our strategy.
It provides us with complementary technology and skills. During the course of this year, we’ve completed two small bolt-on acquisitions. Last October, we bought Force Manager, which is the mobile salesforce management tool. Earlier this week, we’ve announced the acquisition of File Technologies, which is an expense management platform for US SMBs. To answer your question, we’re constantly looking for the appropriate technology, the appropriate skill sets, which we can then deploy against our significant international customer base. That will remain a critical part of the strategy as we move forward. Thank you.
Thank you. Could I just double-check on the GBP 200 million buyback extension? Is that largely done now?
Yes, I think. It was complete today. We have now completed the total GBP 600 million share buyback. We have returned GBP 1.6 billion of capital over the last four years. That has reduced the share count by about 16%. It is done very much in line with our normal capital allocation policy. It is probably just worth reiterating that the first priority is organic and inorganic growth, to put capital behind that. Secondly, to pay progressive dividends. We will return surplus capital if we have no other need for it. That is what has driven our sort of allocation decisions between M&A and capital return. Thank you.
Perfect. Thank you.
Conference Moderator: Please stand by for your next question. Next question comes from Frederic Boulan at Bank of America. Your line is open. Please go ahead.
Hey, good morning, Jonathan. If I can ask a question around the competitive environment, especially in the U.S., if you’ve seen any changes, especially around Intuit. Then secondly, on GenAI, if you can spend a bit of time on the reception to your price points in the U.K., where you’ve launched a couple of offers. What has been the reception, the appetite, the feedback? Thank you very much.
Jonathan Howell, Chief Financial Officer, Sage Group: Yes, in terms of the competitive environment, we’ve seen no material change during the course of Q3. As you referenced, Intuit. And I think, as Steve said, at the half year, we believe in what we can see, that is very much focused on retention of their existing base. But overall, across the group, we have not seen a material change in the competitive environment. In terms of GenAI and in particular Copilot, which is our product, we’ve recently expanded the availability of Copilot now in the U.K. It is now available to all direct customers on all three tiers of Sage Accounting in the U.K., and we continue to make it available to Sage 50 customers on a phased basis in the U.K.
Overall now, Sage Copilot is now available to about 150,000 customers in the U.K., and we’re going to continue rolling out certain features for other products, including Sage Intacct. In terms of pricing, I think you said it for the half year, but it’s probably worth repeating it. We are charging more for the additional Copilot functionality. We’re doing that as part of the annual price rises and making sure always it’s a fair value exchange. So far, Sage Accounting and Sage 50 in the U.K., we’ve put those prices up by about 25% and 12%, respectively. This has supported revenue growth in the Q3 stage, but it is a small impact. It is not material at this stage. I think as we look forward, there are future revenue opportunities here.
Firstly, the broader rollout of Copilot to other territories, not least the U.S., and then secondly, there are strong upsell opportunities through additional user licenses or services. The Copilot and GenAI is very much on track with the plans that we set out at the half-year stage. Thank you.
Thank you very much.
Conference Moderator: Please stand by for the next question. The next question comes from Johan Schaller at Deutsche Bank. Your line is open. Please go ahead.
Yeah, good morning, Jonathan. Thanks for taking my question. I was wondering if we could zoom in a little bit more on the dynamics in North America. Particularly around Intacct. I mean, you’ve made obviously very strong progress in the target verticals, like not-for-profit or construction, but maybe outside. The progress has been in certain quarters a bit more challenging in other verticals. What are you seeing more recently here in terms of winning new customers in verticals where you haven’t been so strong historically? As a second question, I was wondering if you could just give us your latest thinking on the margin trajectory in the second half of the year, given what you’re seeing in the market, how you’re thinking about balancing growth against profitability. Thank you.
Jonathan Howell, Chief Financial Officer, Sage Group: Yes, so in terms of the margin, there’s no change to what we said at the half-year results. Sage’s margin in the first half was 23.2%. That was up 140 basis points on an underlying basis. We continue to guide to 50-100 basis points of margin improvement over the full year. This means that we expect a further slight improvement in the margin in the second half. In terms of the performance of Sage Intacct, you’re quite right in saying the question. We’ve continued to focus on the verticals in North America where we are strongest. That’s not-for-profit, construction, software, financial services, and healthcare. As we called out at the first half stage, we are now working hard on newer verticals. The particular focus that we have is on manufacturing distribution, which has the largest time for our business in North America.
We’re serving our larger customers at the top end of the scale through Sage X3, and we’ve been delivering 15% or so growth for the last two years off a base of about $120 million or so. Now we’re beginning to serve smaller mid-market customers through SDMO, the new products, and also Intacct. It’s early days, but it’s moving in the right direction. As I always say, these new products and new initiatives take time to come through, but it’s all going in line with our plan.
Great. Thank you.
Conference Moderator: That’s all the time we have for questions. I will now hand the call over to Mr. Howell for closing remarks.
Jonathan Howell, Chief Financial Officer, Sage Group: Yes, as ever, thank you very much for your time, attention, and good questions. For the rest of today and indeed the rest of the week, James and the IR team will be available to take any additional questions that you may have. Thank you very much.
Conference Moderator: That concludes today’s presentation. Thank you for participating. You may now disconnect. Speakers, please stand by.
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