Sage reported Half Year 2016 earnings this morning (5/5/16).
Some highlights:
- Statutory (I think this means GAAP) growth in revenue 4%
- Organic (I think this means stripping out certain products recently acquired or held for disposal) growth in revenue 6%
- When you hear Sage talk about 27% margin realize that this is somewhat controllable by Sage through cost cutbacks, the more difficult number is the top line revenue.
- Subscription is the default option that Sage is using to sell new deals - except for X3. Products are still available on perpetual but Sage is pushing subscription as the first option. Watch for SSRS (traditional licensing) to continue double-digit decreases in growth due to Sage pushing Subscriptioni.
- Sage 100 c is referred to repeatedly as ""Sage 100 Cloud"" - um, ok ...
- Sage 50 in NA (primarily Canada) called out for growth (I think this product recently pushed users to subscription)
- I spotted one mention of Sage Live and that was to indicate it went on sale in UK fully during February 2016
- No mention of Salesforce or the ecosystem
- No mention of Sage CRM
- Sage Payroll in NA seems to be doing well - perhaps this is spillover from ACA? Similar to how users panicked around Y2K time
- No customer count given for Sage Live
- Sage One customer counts have always been on the KPI and are provided
- Sage One has 230,000 subscribers to what is described as ""our portfolio of Sage One products"" - I'm unsure this is all the same product. A few years back Sage re-classified some software as ""Sage One"" which bumped their installed numbers.
- Flat X3 HY2016 revenue in North America
- Less than 9% of total revenues is coming from traditional perpetual license sales
- New Sage One app on iOS coming soon
- 70 of Sage's top 100 executives are new within the last year
- The CBC (Customer Business Center) are to support and grow global products - ""Customer Business Centres (CBCs) established in North America and Europe to integrate digital marketing, sales and service operations for customers using global products"" <= IMO: Digital Marketing = Click Here To Subscribe
- Within Sage's report they state "" During the transition to global Sage products, we continue to manage the local product base and plan and evolve these in line with longer-term aspirations."" - one of the first clear statements that Sage will turn their attention to their global products. Long term that leaves questions about how the products we work with will be managed.
Sage remains very focused on:
- Golden Triangle = Payments, Payroll, Accounting - this is their focus for driving revenue
- Subscription = Although as subscription grows, regular SSRS (licensing) shrinks so in at least some cases they are taking money out of one pocket and putting it into another
- There is scant information on user counts provided - the only product I saw with user counts was the Sage One portfolio - every other product is described in terms of revenue increase and it's not possible to tell whether that's from price, new customer addition, migration, etc.
Sage's target is 6% earnings growth / 27% margin. They must be fairly comfortable that they can hit this within their existing model as they keep harping on it.
Sage seems to have pretty good internal tracking in place as they have been on target with most revenue / growth projections.
Sage continues to move to adopt X3 internally for their own accounting.