Sage issued a notable set of results for its Q1 fiscal 2024, for the quarter ending 31st December 2023. Sage Business Cloud powered the growth, increasing revenues by 18% to £454 million in the quarter. Overall revenue growth was still strong at 10%, rising to £573 million. Outside Sage Business Cloud, that does mean that revenues fell from £138 million to £89 million. It shows that its cloud strategy is working as legacy revenues fall off rapidly. What isn’t clear is what that £89 million consists of. There could be some cause for concern as professional services revenues are falling.
Jonathan Howell, Chief Financial Officer, commented, “Sage has delivered a strong first quarter, sustaining good momentum and growing in line with our plan for the year. Small and mid-sized businesses are continuing to digitalise despite the ongoing macroeconomic uncertainty. Through our trusted cloud solutions and innovative, AI-powered services, we are well positioned to support them. We reiterate our guidance for the full year, as set out in our FY23 results announcement, as we continue to focus on delivering efficient growth.”
North America outperforms the rest of the world
In North America, powered by Sage Intacct, revenues grew 13% to £259 million. That increase was despite a strengthening sterling against the dollar. It is the largest region for Sage and is almost equal to the total of both UKIA and Europe. UKIA grew by 8% to £162 million, and Europe grew by 7% to £152 million, both above inflation.
The growth in Europe was attributed to cloud-connected solutions. In UKIA, growth was mainly powered by its cloud-native solutions, including Sage Intacct, Sage Accounting and Sage Payroll as well as Sage 50 Cloud. North America, the original home of Sage Intacct, which continues to shine, also saw growth from Sage 50 cloud and Sage 200 cloud.
Enterprise Times: What does this mean
It was a strong start to the year for Sage and might have been higher with a weaker pound. The news comes a week after Sage also announced the acquisition of Bridgetown Software, the owner of BidMatrix, a cloud-native bid analysis tool for the construction industry. The acquisition further strengthens the Sage construction portfolio as it looks to gain market share in the cloud software construction sector following the launch of Sage Intacct Construction.
Under the leadership of Steve Hare, Sage has become the cloud software vendor that it promised it would do. It is now making acquisitions that further strengthen its portfolio. Sage Intacct is growing strongly in several sectors, but there was no mention of Sage Intacct Manufacturing in this announcement. Will it look to make acquisitions to further strengthen that multi-tenant solution? What does that mean for Sage X3? Will it officially sunset the legacy solution? Sage X3 is less buoyant a market than it has been in previous years with Percipient selling its Sage X3 business to Datel earlier in 2023 as it focuses on Sage Intacct.