The Sage Group (SGE) H1 2025 earnings summary

Executive summary

• Achieved strong first-half results with stable, broad-based revenue growth across all regions, driven by double-digit ARR increase, disciplined cost control, and operating leverage.

• Continued innovation in AI, notably with Sage Copilot, enhancing productivity and insights for thousands of customers across the UK, US, and Europe.

• Subscription-based business model and secular growth drivers provide resilience amid volatile macroeconomic conditions.

• Strategic focus on connecting, growing, and delivering value for SMBs through advanced cloud and AI solutions, with ongoing investment in the network platform.

• Resilient performance and confidence in long-term value creation despite macroeconomic volatility.

Financial highlights

• Total revenue grew 9% year-over-year to £1,242m, underpinned by 10% recurring revenue growth; 97% of revenue is recurring.

• Operating profit rose 16% to £288m, with margin expanding 140 basis points to 23.2%.

• EPS increased 17% to 20.8p; profit after tax up 15% to £206m; statutory basic EPS up 19% to 18.2p.

• Cash conversion reached 115%, with £330m generated from operations and free cash flow of £246m.

• Interim dividend increased by 7% to 7.45p per share; share buyback programme extended by up to £200m.

Outlook and guidance

• Organic revenue growth for FY2025 expected at 9% or above, with operating margins trending upwards as the Group scales efficiently.

• Guidance remains realistic but cautious due to macroeconomic uncertainty; strong sales pipeline and product investments support confidence.

• ARR growth of 11% at half-year supports full-year outlook.