Sage Group Share Price Surged 11.1% on Full-Year 2023 Results

The Sage Group PLC (LON: SGE) share price surged 11.1% at 9:41 GMT after releasing its financial results for the full year ended 30 September 2023. The company reported that its underlying recurring revenue witnessed a 12% increase, reaching £2,096 million.

The revenue growth was primarily driven by the impressive expansion of Sage Business Cloud, which saw a 25% increase, reaching £1,628 million. Underlying total revenue also surged by 10% to £2,184 million. Furthermore, Underlying operating profit experienced robust growth, increasing by 18% to £456 million. 

The improvement in profitability was driven by a 140 basis point increase in margin, reaching 20.9%. The gains were attributed to operational efficiencies as the Group scaled its operations.

EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) increased by 16% to £553 million, with a 120 basis point margin increase reaching 25.3%. 

Statutory operating profit, however, declined by 14% to £315 million. The decrease can be attributed to one-off gains from business disposals in FY22 and charges related to property restructuring and M&A activities in FY23.

The company demonstrated strong cash conversion, achieving 116%, reflecting subscription revenue growth and effective working capital management.

A proposed final dividend of 12.75p has been put forward, resulting in a 5% increase in the full-year dividend to 19.3p. The dividend increase aligns with the company's progressive dividend policy.

Additionally, a share buyback program of up to £350 million has been announced separately, reflecting the Board's confidence in Sage's prospects, strong cash generation, and solid financial position.

Steve Hare, Sage Group’s Chief Executive Officer, commented: “Sage performed well in FY23, delivering double-digit revenue growth, increased profitability and strong cash flows. We sustained good momentum throughout the year in all regions, driven by consistent strategic execution. We continue to help small and mid-sized businesses succeed, providing them with the tools and expertise they need to simplify their accounting and HR processes, streamline their operations, and make more informed business decisions.  Through the Sage Network, we are delivering innovative, AI-powered services to customers faster and more efficiently than ever before.”

Sage share price. 

The Sage share price surged 11.08% to trade at 1105.25p from Tuesday’s closing price of 995.00p.