Sage keeping hold of customers

Dec 2 2009 By Karen Dent, The Journal

NEWCASTLE software giant Sage says it is staying afloat during the recession by hanging on to its current customers.

The company, which makes computer accountancy packages mainly used by small businesses, reported a 2% fall in pre-tax profits to £307.5m in the year to the end of September.

The company, which axed 700 jobs - including 200 in the UK - earlier this year, said it cut costs by 5% but continued to pump  £174.6m into research and development.

Sage which employs 13,400 people and serves more than six million businesses worldwide, won 245,000 more customers during the year. More than eight in 10 of its current clients re-signed for support contracts in what the company called a “challenging market”.

There was a 16% fall in income from software and software-related services because of weaker demand caused by the recession.

Sage chief executive, Paul Walker, said: “The strength of our business model has helped us navigate through the economic downturn.

“Our customers continue to rely on us as a trusted partner in running their businesses more efficiently, and the demand for high quality support remains strong.

“This can be seen in the growth in our recurring subscription revenues which has compensated for weaker demand for software and software-related services revenues.”

He said that conditions were better in the second half of the year.

“However, at this stage, we are not yet seeing a general recovery in our markets,” said Mr Walker.