Software group Sage today backed its SME customers to lead the economic recovery after forecasting that its own revenues will be at the top end of hopes this year.
The cloud-focused accountancy services business has been buoyed by growth in underlying revenues of 4.4% to £811 million in the six months to March 31, despite most of the previous year’s performance covering before the pandemic.
The company, which was founded in 1981 and joined the FTSE 100 index in 1999, has migrated more of its customers to Sage Business Cloud, a trend it believes will accelerate its own growth as businesses become more digitally-enabled.
Newcastle-based Sage now thinks that revenues this year will rise at the upper end of its 3%-5% guidance, having been 8.5% higher in the previous financial year.
CEO Steve Hare said the company’s experience of supporting SMEs had been vital through the pandemic. He added: “We believe that small and medium-sized businesses will lead the recovery.”
Operating profits were down 12% to £180 million as margins fell three percentage points in order to support strategic investment behind the business cloud roll-out.
In November, shares slumped 13% after Sage disclosed its plan to spend an additional £50-£60 million on research and development and marketing.
Beyond this year, Sage said it expects margins to trend upwards over time as the additional investment drives recurring revenues growth and operating efficiencies.