Sage News and Discussion

I can't say that it's time for the fat lady to sing. Yet. **Sage reports a slump in quarterly earnings growth. For the three months ended December 2016 the growth was 5.1% vs 6.6% for the same three months in 2015.** The company does point out that if you take away the payments business in NA that the current quarterly growth goes to 5.9%. Still. This is a possible warning of slowing growth. And as Sage is indicating with payments. If it's not growing .... they may be looking at selling. http://www.smbjumpstreet.com/sage-issues-quarterly-trading-update-december-2016-5-1-growth-5-9-overlook-na-payments/

Telling sign - if SPS is excluded, then growth increases!

What did they expect would happen to SPS when Mr Fucus fired the entire sales department?

[My comment on the Sage Partners, . . . group in LinkedIn] I have not seen any specific numbers associated with the US, but I would expect there would be some acknowledgement of external factors that were in play during that first quarter, specifically the US Presidential election and the uncertainties associated with it. One look at the stock market volatility for the past few months gives a clue as to where businesses stand regarding major new investment in software and services. Even in the second quarter, there may be some question about that. It may be why Steve Hare mentioned the expectation for stronger second half growth. In terms of the US Payments business, Sage has completely botched that up for the past two years. They terminate the reps we dealt with over many years and expect we will fall in line to adopt new procedures which were not clearly defined for anyone. Management and centralized reps of that entity disappear to the point where we started looking for alternatives for our customers. Finally, no incentives were offered, even though they were promised time and time again. With the comment this entity may be sold, good luck with adding any new customers. The reference to the C-line products is clearly not a proper representation. The ""c"" may have been introduced to imply ""cloud"", but continuing this illusion does not seem like something to be said to the investment community. The C-line products do not have a web client and are not even web-enabled, as with Sage CRM. Why introduce marketing language in a financial update to investors?

As long as Steve Hare positioned himself as an expert in software, if he were to be completely transparent to the investors (which would have had disastrous consequences), he should have cited the ill-advised move of sales operations to Atlanta and the out of control situation there, including lack of automation and dependency on new people who probably are not really capable of those jobs - but less expensive. Just wait for the announcements that the channel has let Sage down, so they are taking appropriate steps.

And, finally, an update on my escapades with Sage Atlanta (or should we refer to them as Sage Atlantis, because they seem to have disappeared in many cases), I am as of Friday completely up to date with tier postings and doing quite well. I half expect someone to propose that I don't deserve all that and start taking some of it away.

From the transcript, which seems confusing, so probably not transcribed exactly: ""The slight decline in US payments was not inside of the unexpected and Nancy Harris, who previously led the Canadian business, which by the way is trading very strongly, is driving a greater focus in her role as interim North American President."" Probably was being supportive of Nancy. As far as I can see, she has done nothing, and since sales operations and related have not improved, her internal work is not evident. Perhaps she has been involved in strategic plans to again screw the channel. Don't let her soft-spoken, seemingly pleasant attitude fool you. She misleads and lies like the rest of management.

To give some perspective. Sage announced on this trading update that they've reached 1.1 million software subscriptions. Presumably, this is across every product and every country. By comparison, Intuit, with one product and largely only North America, have [announced 1.5 million software](http://investors.intuit.com/press-releases/press-release-details/2016/QuickBooks-Online-Passes-15-Million-Paid-Subscribers/default.aspx) subscriptions in August 2016 and I believe their goal is 2 million by the end of the year. Sage with multiple companies and significantly more products are about to get lapped by one product in one country. Intuit [market cap](https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=intuit+market+cap) is about $30b Sage [market cap](https://markets.ft.com/data/equities/tearsheet/summary?s=SGE:LSE) 6.59 GBP or roughly $8.30b US

So, how'd that strategy of buying up lots of little unrelated disparate software packages work out so far for Sage?

Payments revenue is 50 gbp, roughly 75% of that comes from NA leaving roughly 10 gbp spread across other regions. Did not sell any X3 cloud deals in Q1 (I believe that's what the transcript said though it's possible there was some translation issue). CFO Hare feels that Sage has 12-18 months more of growth to cherry pick from the installed base before they need to really really (really) get serious about selling new deals. (My Note: I think this remaining timeline matches up with what I would expect Stephen Kelly's remaining time is. If he can get new business ramped up then he probably has more career left. If not, I suspect the board starts getting nervous). You can only increase prices for so long and so much before you start to see noticeable attrition. _So there's quite a lot of lags left in terms of migrating the installed base two subscription. And I think I've said previously that can continue to give us very strong growth coming from the installed base probably for the next 12 to 18 months and that during that period of time and as I've already indicated we need to see really in the second half and as we go into FY18 we need to see the new customer acquisition also kicking in to give us that additional lift in growth and then obviously ultimately the customer for life growth most of it is back as we get to higher levels of subscription penetration._

All a giant rearrangement of the deck chairs...

@MarkChinsky The question is how many times can these be rearranged before it sinks? I know there are other publishers that seem to go through the same exercise, so perhaps it's the industry in general. After all, it seems that management at various levels just moves around from company to company. My thought is the people who decide to work for publishers may not be the best, and the best become resellers.

It's time to admit that organizing Sage globally isn't working. The re-branding of known product names such as MAS90, Peachtree, Accpac, Timberline did not seem to move the needle in terms of driving new customer demand. I don't have statistics on attrition so I can only speak about this from the variety of questions I get from customers and from confused web visitors who seem not to care much what their product is called so long as they can find someone to help them. The re-branding has made that task much more difficult. The important CPA referrer seems very confused and in North America the landscape there has almost entirely moved to QuickBooks (no matter how many of the same CPAs Sage pays to fly into Summit and preach the Sage accountant word). Adding enhancements through ""trial versions"" of bolt-ons like SIA, SI, Sage CRM in my view achieved little except to pick the low hanging fruit (ie customers who might have bought anyhow). The two big tells are: - Executive swift departures - Jodi Uecker and Rich Spring - Abandonment of the Sage CRM integration push

It also seems Sage is about to make the same mistake with X3 as they did with MAS 500. Initially, they invite a limited pool of VARS. Then they supplement with direct and Sage professional services. When both those strategies don't make their budget numbers they open the floodgates to new MAS 500 partners. A boatload takes the bait. Join. Sell one/two deal(s). Leave. Sage is left holding the bag on a bunch of orphans - some of who are using software that has been somewhat customized. Part of the issue here might be that so many Sage people flee that there's no sense of history. There are few people at Sage in a position to stand up and tell those coming in when something has been tried in the past and what the results were. So new people keep trying to reinvent history with what I thnk are very similar results. Sage treats BPAC as an early press release distribution method. BPAC is satisfied so long as their large firm margins don't get cut. See you next quarter for another BPAC press release distribution briefing. Everyone goes home and carries on as always. Given that, it probably won't be too long before another EVP is hired who comes in with a spreadsheet telling us all that our customers definitely are a fit to be cross-sold for 2, 3, or more integrations.

Additional executive swift departures: Paige Erickson, Laura Biasucci (there are others) - lasting less than a year is not a good career move, so something was not right with Sage.

Yes, BPAC is exactly what you characterized and a joke. The only reason we cannot say it is a waste of time is the networking among partners.