Sage Group PLC

Business and Financial Review • Dec 8, 2022

National Storage Mechanism | Additional information

RNS Number : 9821I

Sage Group PLC

08 December 2022

Update on financial reporting

8 December 2022

As announced in Sage's FY22 results on 16 November 2022, Sage intends to evolve its financial reporting by giving greater emphasis to underlying revenue and profit measures, and by amending the presentation of its regional reporting. These changes will be introduced in Sage's Q1 23 trading update, and will apply to Sage's future financial reporting. Further details are set out below.

To facilitate comparison with prior periods, the appendix to this announcement sets out key reporting figures for FY22 reflecting these changes. Sage's primary annual and interim financial statements and notes to the accounts will not be impacted.

Focus on underlying measures

In addition to statutory financial reporting measures, Sage also provides non-GAAP Alternative Performance Measures (APMs) including underlying and organic measures, to help assess financial performance. Underlying measures allow management and investors to understand the performance of the Group on a constant currency basis excluding recurring and non-recurring items, while organic measures also adjust for the impact of acquisitions and disposals[1].

Going forward, Sage will provide financial metrics and analysis including the breakdown of revenue by category, by strategic product portfolio and by region, together with Annualised Recurring Revenue (ARR), on an underlying basis alongside organic growth rates.  Sage Business Cloud penetration and subscription penetration will also be provided on an underlying basis. Previously this information was provided primarily on an organic basis. Certain organic revenue and profit measures including recurring and total revenue by region will continue to be provided in the interim and full year results. 

Sage believes that these changes will enable a clearer understanding of both the organic and inorganic performance of the Group.

Change to regional reporting

Sage also intends to amend the presentation of its regional reporting, to reflect recent changes to the way in which the Group manages its operations. Going forward, Sage will report performance across the following regions: North America, comprising the US, Sage Intacct and Canada; UKIA, comprising Northern Europe (UK & Ireland) and Africa & APAC; and Europe, comprising France, Central Europe and Iberia.

Enquiries:	Sage:	+44 (0) 7721 599502	FGS Global:	+44 (0) 20 7251 3801
	James Sandford, Investor Relations		Conor McClafferty
	David Ginivan, Corporate PR		Sophia Johnston

APPENDIX - FY22 underlying measures[2]

Underlying measures (£m)	Q1 22	H1 22	Q3 22 YTD	FY 22
Recurring revenue by portfolio[3]
Cloud native	90	191	308	435
Cloud connected	190	385	589	842
Sage Business Cloud	280	576	897	1,277
Products with potential to migrate	117	228	343	426
Future Sage Business Cloud Opportunity	397	804	1,240	1,703
Non-Sage Business Cloud	35	70	105	142
Recurring revenue by region
North America	174	357	562	787
UKIA[4]	134	273	417	568
Europe	124	244	366	490
Recurring revenue by category
Software subscription	337	688	1,064	1,464
Other recurring	95	186	281	381
Total recurring revenue	432	874	1,345	1,845
Other revenue (SSRS)	31	61	84	104
Total revenue	463	935	1,429	1,949
Underlying operating profit		183		377
Annualised Recurring Revenue (ARR)		1,809		2,057
of which cloud native		448		560

Breakdown of revenue by region

Underlying measures (£m)	Recurring revenue		Total revenue
H1 22	FY 22	H1 22	FY 22
North America
US	305	674	323	704
of which Sage Intacct	102	231	105	237
Canada	52	113	54	115
UKIA
Northern Europe (UK & Ireland)	208	428	212	434
Africa and APAC	65	140	72	153
Europe
France	128	258	136	273
Central Europe	56	112	71	136
Iberia	60	120	67	134

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[1] APMs including underlying and organic measures are defined in Appendix 1 (on pages 13 and 14) of Sage's FY22 full year results announcement, dated 16 November 2022.

[2] The figures set out above are provided at FY22 exchange rates. In line with Sage's APM definitions, they will be retranslated at current period exchange rates when reported as comparator figures during FY23, to enable the Group's performance to be assessed on a constant currency basis.

[3] As Other revenue (SSRS) now accounts for only 5% of total revenue, the breakdown of revenue by strategic product portfolio will only be provided on a recurring revenue basis going forward.

[4] United Kingdom, Ireland, Africa and APAC

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