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Sage Group PLC reported a robust performance in its Q3 2025 earnings call, with total revenue increasing by 9% to over £1.8 billion. The company’s cloud data revenue saw a significant rise of 22%, contributing more than one-third of the group’s total revenue. The stock price reflected positive investor sentiment, rising by 2% to 864.2 pence, nearing its 52-week high. According to InvestingPro data, the stock has delivered an impressive 122% return over the past year, with a current market capitalization of $47.2 billion. This performance underscores Sage’s strategic focus on cloud solutions and subscription-based models.
Key Takeaways
- Total revenue increased by 9% year-over-year to over £1.8 billion.
- Sage Business Cloud revenue rose by 13%, reaching over £1.5 billion.
- Cloud data revenue surged 22%, now making up over one-third of total revenue.
- The stock price increased by 2%, reflecting strong market confidence.
- Sage completed a £600 million share buyback.
Company Performance
Sage Group demonstrated strong performance in Q3 2025, with significant growth in its cloud and subscription services. The company maintained double-digit growth in North America and saw steady increases in its UKIA and European markets. InvestingPro analysis shows the company maintains a "GOOD" Financial Health Score of 2.63, supported by strong price momentum and relative value metrics. This growth aligns with the broader industry trend of small and medium-sized businesses increasingly adopting digital tools, a shift that Sage has capitalized on with its Sage Business Cloud and other innovations.
Financial Highlights
- Revenue: £1.8 billion, a 9% increase year-over-year.
- Sage Business Cloud revenue: £1.5 billion, up 13%.
- Cloud data revenue: £645 million, a 22% increase.
- Recurring revenue: £1.8 billion, a 10% rise.
- Subscription revenue: 11% growth, with 83% subscription penetration.
Outlook & Guidance
Sage expects full-year organic total revenue growth of 9% or above and anticipates operating margins to trend upwards in FY 2025 and beyond. The company is focused on both organic and inorganic growth, with plans to expand its Sage Copilot offering to the US market. Future projections include an EPS forecast of 6.54 USD for FY 2025 and 7.45 USD for FY 2026.
Executive Commentary
Jonathan Howell, CFO, emphasized the company’s resilience, stating, "Sage is a diverse business both in terms of geography and product and is therefore has inbuilt resilience." He also highlighted the company’s strategic priorities, noting, "The first priority is organic and inorganic growth, to put capital behind that."
Risks and Challenges
- Macro environment volatility: While no material changes in customer behavior were noted, the volatile macro environment remains a concern.
- Competition: Although no significant changes were reported, the competitive landscape in cloud solutions could pose challenges.
- Expansion risks: As Sage expands into new verticals and territories, execution risks could impact growth.
Q&A
During the earnings call, analysts inquired about the stability of the macro environment and the sequential growth of Sage Intacct’s ARR. The company addressed these concerns by highlighting its strong performance and strategic focus on expanding its cloud offerings and verticals.
Full transcript - Sage Group PLC (SGE) Q3 2025:
Conference Operator: 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 Sandford, Head of Investor Relations. After the speakers’ presentation, there will be a question and answer session. 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, and after that, we can open for q and 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 1,800,000,000.0 as we continue to scale the business in all regions.
In North America, revenue grew by 11% to 846,000,000 with a strong performance in Sage Intacct together with continuing growth in Sage 200 and Sage 50. In The UKIA region, revenue grew by 9% to 539,000,000. This was driven by strong progress in Sage Intacct together with further success in Sage Accounting and Sage 50. And in Europe, revenue increased by 7% to 477,000,000 with good growth across our cloud solutions, including Sage 200 and Sage x three. Turning now to the main performance drivers.
Sage Business Cloud grew by 13% to over 1,500,000,000.0, reflecting good strategic progress as we further expand our global cloud solutions. This includes cloud data revenue, which grew by 22% to 645,000,000 and now represents more than a third of the group. Recurring revenue increased by 10% to over 1,800,000,000.0, 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 q three standalone, total revenue increased by 9% to 620,000,000, driven by continued growth across Sage business plans.
On an organic basis, total revenue for the first nine months increased by 9% to over 1,800,000,000.0. So 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 FY ’25 and beyond. So in summary, Sage has performed well throughout the first nine months in line with expectations.
And we enter the final quarter with good momentum. Thank you. And now let’s open for questions.
Conference Operator: Thank you. As a reminder, if you wish to ask a question, please press First question comes from Adam Wood at Morgan Stanley. Adam, your line is open. Please go ahead.
Adam Wood, Analyst, Morgan Stanley: Hi, good morning, Jonathan. Thanks for taking the question. It does look as if we 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 where you’re seeing improvement to drive that, please? Thank you.
Jonathan Howell, Chief Financial Officer, Sage Group: Yes. Thank you, Adam. So, yes, we’ve seen a a slight uptick, as you say, in the organic performance. Nonetheless, we’ve seen underlying revenue growth of 9% in q q three 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. And as I said, we’ve seen a very strong performance from Sage Intacct with good support from Sage two hundred and Sage fifty. Across North America now, we’re we’re sustaining double digit growth of 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. And then in Europe, revenue’s up 7%, just slightly down on the first half, which was 8%, and that’s good levels of growth across the whole Sage Sage business cloud. And then in terms of the backdrop, during the first half, the macro environment for us was broadly stable. And as we said, at the results call in May, it’s since become a bit more volatile and uncertain.
But despite that, we have seen no material changes in customer behavior at the q three mark. And so, you know, it’s just worth reminding ourselves that Sage is a diverse business both in terms of geography and product and is 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. So I hope I hope, Adam, that that answers your question.
Adam Wood, Analyst, Morgan Stanley: Absolutely. Rundown. Thank you.
Jonathan Howell, Chief Financial Officer, Sage Group: Next
Conference Operator: question comes from Toby Og at JPMorgan. Your line is open. Please go ahead.
Toby Og, Analyst, JPMorgan: Yes. Hi, morning, Jonathan.
Jonathan Howell, Chief Financial Officer, Sage Group: Thanks for the question. Perhaps
Toby Og, Analyst, JPMorgan: 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. And 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. So 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: Yes. So just to recap on the year so far in terms of sequential growth. In Q1, was about 2%. In Q2, it was about 2.5%. And then in Q3 it was about 2% gain.
So we continue to have good momentum, and 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%. So this year’s growth is just slightly below last year’s level. But importantly, I think this is very much within the normal quarterly variation that we’d expect to see and certainly remains consistent, as I’ve said, with the guidance that we reiterated. And then on q four, yes, it’s a it’s a a stronger comp, that we’re running into.
But given, you know, what I’ve just explained in terms of the momentum that we’ve seen during the course of the year, with confidence in the guidance that we’re giving.
Kartikor Shelt, Analyst, Canaccord Genuity: Understood. Thank you.
Conference Operator: Please stand by for your next question. The next question comes from Kartikor Shelt at Canaccord Genuity. Your line is open. Please go ahead.
Kartikor Shelt, Analyst, Canaccord Genuity: Yes. Thank you. Good morning. Thanks for taking my question again. I have a question around Intact, particularly in The U.
S. So appreciate you said there’s no major change in buying behavior, but it looks like quite a few software companies more in sort of enterprise segments seem to have seen a bit of incremental hesitation in the second quarter, particularly with the sort of tariff uncertainty. Yes, 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 with something like sort of payments or perhaps smart tech might be a bit more attractive? And I appreciate you’ve you’ve been buying sort of other functionality bits over the last twelve, eighteen months. Any color here would be appreciated.
And then I have a follow-up. Thank you.
Jonathan Howell, Chief Financial Officer, Sage Group: Yes. So, just just in terms of the macro backdrop, I’ve just covered that to one of the previous questions. But just to provide a bit more detail, we delivered that organic total revenue growth of nine to 10% over the last three years. And whilst we’ve been doing that, you know, we’ve been been improving, the business mix. Cloud native revenue is now over a third of total group revenue, and that is growing at over 20%.
And then specifically on Intact, in The US now, we have ARR approaching 500,000,000, and that’s growing at over 20%. Internationally, in other words, ex US, we have ARR of more than 60,000,000, and that’s growing at over 50%. And we will continue to invest in these core products of ours and the platform, which again, you know, will give us momentum as we move into f 01/26. And then lastly, in terms of M and A, as you know, M and A is a very important part of our strategy. It provides us with complementary technology and skills.
And during the course of this year, we’ve completed two small bolt on acquisitions. Last October, we bought ForceManager, which is a mobile sales force management tool. And then earlier this week, we’ve announced the acquisition of File Technologies, which is an expense management platform for US SMBs. So 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. And that will remain a a critical part of the staff strategy as we move forward.
Thank you.
Kartikor Shelt, Analyst, Canaccord Genuity: Thank you. Could I just double check on the, 200,000,000 buyback extension? Is that largely, done now?
Jonathan Howell, Chief Financial Officer, Sage Group: Yes. I think, I think it will complete soon. So we have now completed the total 600,000,000 share buyback. We’ve returned 1,600,000,000.0 of capital over the last four years. That’s reduced the cap the share count by about 16%.
It’s done very much in line with our normal capital allocation policy. I was probably just reiterate worth reiterating that. The first priority is organic and inorganic growth, to put capital behind that. Secondly, to pay progressive dividends, and then we will return surplus capital if we have no other need for it. And that’s what’s driven our sort of allocation decisions between M and A and capital return.
Thank you.
Kartikor Shelt, Analyst, Canaccord Genuity: Perfect. Thank you.
Conference Operator: Please stand by for your next question. Next question comes from Frederic Boulan at Bank of America. Your line is open. Please go ahead.
Frederic Boulan, Analyst, Bank of America: 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. And then secondly, on Gen AI, if you can spend a bit of time on the reception to your, price points in The UK 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 q three. As you as you referenced, Intuit, and I think as Steve said at the half year, we believe 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. Then in terms of Jet dot ai and and and in particular Copilot, is our product, we recently expanded the availability of Copilot now in The UK.
It is now available to all direct customers on all three tiers of Sage accounting in The UK, and we continue to make it available to Sage 50 customers on a phased basis in The UK. So overall now, Sage Copilot is now available to about a 150,000 customers in The UK, and we’re going to continue rolling out certain features for other products, including Sage Intacct. And then in terms of pricing, I think we said this at half year, but it’s probably worth repeating it. We are charging more for the additional co pilot 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 fifty in The UK, we put those prices up by about 2512% respectively. This has supported revenue growth, in the in out of q three stage, but it is a small impact. It is not material at this stage. I think as we look forward, there is future revenue opportunities here. Firstly, the broader rollout of co pilots, to other territories, not least The US.
And then and then secondly, you know, there are strong ups and opportunities through additional user licenses or services. So the the the co pilots in Jet dot ai, is very, very very much on track, you know, with the players that we set out at the at the half year stage. Thank you.
Frederic Boulan, Analyst, Bank of America: Thank you very much.
Conference Operator: Please stand by for the next question. Next question comes from Johan Schaaler at Deutsche Bank. Your line is open. Please go ahead.
Johan Schaaler, Analyst, Deutsche Bank: Yes. 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 Intact. 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.
So what are you seeing more recently here in terms of winning new customers in verticals where you haven’t been so strong historically? And then 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?
Adam Wood, Analyst, Morgan Stanley: Thank you.
Jonathan Howell, Chief Financial Officer, Sage Group: Yes. So in terms of, you know, in terms of the margin, there’s no change to what we said at the half year results. Sage’s margin at the first half was 23.2%. That was up 140 basis points, on an underlying basis. We continue to guide to 50 to 100 basis points of margin improvement over the full year.
And this means that we expect a further slight improvement in the margin, in the second half. In terms of, the performance of of, Sage Intacct, you’re 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 health care. But as we called out at the first half stage, we are now working hard on newer verticals, and a particular focus that we have is on manufacturing distribution, which has the largest TAM for our business in North America.
We’re serving our larger customers at the top end of the scale through x three, and we’ve been delivering 15% or so growth for the last two years, off a base of about a 120,000,000 or so. And then we’re beginning to serve smaller mid market customers through SDLO, the new products, and also Intact. It’s early days, but it’s moving in the right direction. And as I always say, these these these new products and new initiatives take time to come through. But it’s all it’s all going in line with our plan.
Johan Schaaler, Analyst, Deutsche Bank: Great. Thank you.
Conference Operator: That’s all the time we have for questions. I will now hand the call over to mister Howell for closing remarks.
Jonathan Howell, Chief Financial Officer, Sage Group: Yes. As as ever, thank you very much, for your time, attention, and and good questions. For the rest of today and 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 Operator: That concludes today’s presentation. Thank you for participating. You may now disconnect. Speakers, please stand by.
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