Has Sage Group PLC lowered expectations enough ahead of results?


Software group Sage Group PLC (LON:SGE) reports half-year numbers on what is expected to be a quiet Friday in the City diary.

Sage’s story in recent years has been about moving away from licence sales and professional services and converting its customers to cloud-based services, with an update in January giving management a chance to emphasise how its priority is to grow recurring revenues.

For the final three months of 2020, the first quarter of the FTSE 100 company’s financial year, it reported an 11.3% rise in subscriptions helped generate a 4.7% rise recurring revenues, offsetting a 24% decline in ‘legacy’ revenues.

“Expectations have been lowered sufficiently,” said UBS at the time, with the prioritisation of recurring revenue growth “is in tune with investors’ priorities”.

However, the UBS analysts still have “medium-term structural concerns” around competitive pressures, while also seeing potential headwinds to earnings from further disposals of non-core assets.

Sage has been a rollercoaster stock in recent years, zooming up above 800s and down to the 500s, with recent levels in the mid-600s posing investors a big question of which way it will swing next.

Significant announcements expected on Friday May 14: 

Interims: Sage Group PLC (LON:SGE)

Economic data: US retail sales, US production



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