Confident Sage expected to hit record high sales

Feb 5 2008 by Iain Laing, The Journal

SOFTWARE company Sage has said it is confident of seeing sales leap to a record high after a “good” start to the financial year means it will hit growth targets.

The Newcastle-based plc achieved £1bn in revenues for the first time in the year to September 30. But the market is expecting Sage to up revenues again to £1.25bn.

Sage, which supplies business management software and services to around 5.5 million customers worldwide, said performance across the UK and mainland Europe was good and noted a “modest improvement“ in its troubled US business.

The firm axed North American chief executive Ron Verni and finance director Jim Eckstaedt last October after disappointing sales figures from the operation.

Group boss Paul Walker took temporary charge and Sage is still searching for a replacement for the chief executive, although it said yesterday the hunt was “progressing well”.

Sage also moved to reassure that the “defensive characteristics” of its business model would help it weather wider economic uncertainties, with a strong cash flow and high level of recurring revenues from support contracts cushioning the effects of any slowdown.

A note from analysts at Deutsche Bank said around 70% of the firm’s revenue was recurring. It said: “Ultimately this is a reassuring trading statement. While the US brings some risks, we sense the worst is over and also feel there is enough momentum in other areas of the business.”