Strong organic growth and margin improvement expected in FY24

As expected Sage delivered a strong FY23. Organic recurring revenue growth (+11%) benefited from fast-growing revenue in North America (+15%), the continuing development of Sage Intacct and positive achievements for the other solutions. The underlying operating margin increased to 20.9% of revenue (+1.4pt). Sage had strong free cash flow and announced a share buyback of up to £350m. The 2024 guidance is positive with total organic revenue growth of +10% and a margin improvement in the range of +

Top-line growth, sales & marketing efficiency

H1 23 was solid with organic recurring revenue growth of +12%. North America and UKIA were the most dynamic regions and some improvement was seen in Europe (France, Central Europe, Iberia). The strong growth reflected higher activity with existing customers, new customer wins and price increases to compensate for wage inflation. The underlying operating margin improved significantly (+0.6pt to 20.8% of revenue) thanks to the top-line growth and sales & marketing efficiency. The 2023 guidance of

Initial Equity Trading Comments - 12 May 2023

Strong start to FY23 and unchanged guidance

Sage enjoyed strong organic recurring revenue growth in Q1 23 (+12%) thanks to buoyant activities in the US and the UK. The ARR (Annualized Recurring Revenue) trend remained positive in Q1 23 despite a sequential slowdown (December includes holidays). Price increases are expected to average +4-5% in FY23, as in FY22. To date, Sage has seen no impact from the economic situation on customer demand. The FY23 guidance of organic recurring revenue growth of above +9% was maintained.

Strong FY22, Sage confident for FY23

Sage had a strong FY22 with organic recurring revenue growth at the high end of the guidance (+9%). Small and medium-sized companies continued to invest in cloud solutions and Sage Business cloud revenue growth was substantial (+24%). The ARR was up +12% including an improvement in H2 22 vs H1 22. The renewal rate by value improved to 101% (+2pts). The organic operating margin increased to 19.9% of revenue (+0.4pt). Sage expects a growth acceleration and a higher operating margin in 23.

Good visibility for 2022

Q3 21/22 was strong with an acceleration in organic recurring revenue growth (+10% vs +8% in H1 21/22) thanks to demand for cloud software in small/medium-sized companies. Growth was the fastest in North America. Sage Business Cloud revenue surged by +20%. At present there is no impact from the uncertain economic environment on the activities. Sage is confident that it can achieve the high-end of the recurring revenue growth range in FY21/22 (+8-9%) and confirmed guidance of an improvement in th

New customer wins, renewal rate improvement

In H1 21/22, organic recurring revenue grew by +8% thanks to strong software subscription growth (+14%). The US was the best performer (+13%). The development of Sage Business Cloud was driven by the cloud native solutions with new customer wins and a good performance from the cloud connected solutions. The organic operating margin decreased to 19.9% of revenue (-0.3pts) due to investment in products and marketing. The 2022 guidance was unchanged.

In line with estimates and market-sanctioned

Organic recurring revenue grew by 8% in Q1 21/22. This is a positive achievement. It corresponds to the low-end of 2021/22 guidance (+8-9%). There is no slowdown in Annualised Recurring Revenue growth. During the quarter, organic recurring growth was driven by the migration of existing customers to subscription and the gain of new customers. North America and the UK/Ireland were the best performers. Sage Group confirmed guidance and that it is on track with its goal of organic operating margin i

Organic recurring revenue growth acceleration expected in 2022

In FY2020/21, organic recurring revenue grew by 5.4% thanks to the acquisition of new customers and the ongoing migration of existing customers to subscription contracts. The US was the best performer driven by Sage Intacct (+22%). Sage Business Cloud penetration reached 67% (+7pts). Lower organic operating margin (-2.7pts) was due to higher investments in marketing/sales and R&D. 2022 guidance includes organic recurring revenue growth of +8-9% (above expectations) and an improvement of the orga

Organic growth improvement

Q3 21 was a satisfactory quarter with organic recurring revenue up 6.1%. Cloud native revenue grew significantly (+37% vs +30% in H1 21) thanks to Sage Intacct, Sage Accounting in the UK, Sage People, AutoEntry and the migration from cloud connected software to cloud native solutions. Consequently, organic recurring revenue growth accelerated in 9m21 (+5%) vs H1 21 (+4.4%). By geography, North America was the best performer. 2021 guidance was revised upwards at the top line.

Good organic recurring revenue growth, investments in growth

H1 20/21 was good with organic recurring revenue growth of 4.4%. Growth was sustained by software subscriptions (+11%). Sage Business Cloud revenue increased to 65% of the total. The renewal rate by value stabilised (97%) vs Q1 20/21 and H2 19/20 and the churn was in line with pre-COVID-19 levels which are reassuring. The organic operating margin decreased to 20.2% of revenue (-3pts) due to higher spendings in sales & marketing and R&D as expected. 2020/21 guidance is unchanged.

Good start to FY2020/21

Sage Group released a good set of Q1 20/21 figures with organic recurring revenue growth of 4.7% in line with the full-year guidance (+3-5%). This performance was spread out across various cloud native software and essentially driven by the gain of new customers. Lastly, no deterioration in the churn rate is reassuring considering the continuing tough market conditions. All in all, Sage Group confirmed FY2020/21 guidance.

Disappointing operating margin guidance

In FY2019/20, organic recurring revenue growth (+8.5% despite a negative impact from COVID-19 in H2 19/20) and the organic operating margin (22.1% of revenue) were in line with guidance. The big disappointment was on 2020/21 guidance for the operating margin (up to 3pts below the FY2019/20 level depending on the amount of additional investments), the result of a significant slowdown in organic recurring revenue growth (+3-5% anticipated) and the acceleration in R&D to increase the cloud native g

Tracsis - Interims: FY order book visibility and a doubled pipeline

Interims to January are in line with the February TU, and materially unchanged forecasts for the FY July 2024. After the well flagged expected 1H24 revenue movement of -7% (vs 1H23 which had been strengthened by c£2m perpetual licence sales in the US), prospects for the second half are supported by several new contracts that will generate revenue in 2H24, in addition to material contract delivery milestones from existing large projects such as major TRACS Enterprise, Railhub deployments, and Rem

Eleco - FY23 recurring revenue growth of +22%, EBITDA +2% ahead

Eleco’s FY23 results show robust organic recurring revenue growth of +17% with recurring revenue +22% to £20.7m, adj EBITDA +2% ahead of the January update, and a confident outlook with Q1 ARR already at £24.5m vs £22.6m at FY23. At this point, the excellent start to FY24 leads us to reiterate our FY24-26E revenue, adj EBITDA, EFCF, and DPS, and we include the April 2024 acquisition of Vertical Digital in our FY24-26E net cash, as we explain below. As Eleco builds upon the successful acquisition

An excellent win, momentum rebuilding

Made Tech has won a material expansion (worth up to £19.5m/2yrs) with a long-standing customer, The Department for Levelling Up, Housing and Communities (“DLUHC”). Coming off the back of a soft H1 bookings performance, we expect this win to materially boost investor sentiment and reassure how notwithstanding a tough backdrop (given an impending general election) MTEC continues to outcompete legacy providers and in-so-doing, grow its share of wallet with large/strategic customers. Landing near FY

Morning Note – 24 April 2024

LIBERUM: 1Spatial: Walk the talk and get SaaSy

Alphawave Semi - FY23 results, 1Q24 trading update

Following the updated guidance published last week, Alphawave reported a 74% YoY increase in revenue to US$321.7m for FY23 generating adjusted EBITDA of US$62.6m, up 34% YoY. As previewed, bookings in 1Q24 were strong at US$117.9m, up 20% YoY and ahead of guidance. The results release and conference call confirm that revised guidance mainly reflects a more conservative approach to revenue recognition under new CFO, Rahul Mathur, and an acceleration in the pace at which Alphawave is pivoting away

tinyBuild (TBLD LN) - Focused on H2 recovery

tinyBuild’s FY23 results confirmed a sharp drop in revenue and swing into adjusted EBITDA losses, as well as asset impairments and high cash burn. After already making $10m of annualised cost savings, the company continues to run-down its cash balance and now relies on a H2-weighted release schedule to reduce cash outflows.

LIBERUM: Cerillion: Continued strong trading in 1H

Morning Note – 23 April 2024

Pennant International - FY23 update and appointment

We view confirmation of market forecasts / PEN's February update as providing further validation for the company's strategy. Ongoing business streams (including the concluding stage of the Boeing / Apache contract) provide underpinning for forecasts for the current year and software-derived earnings as strategized look set to rise in FY24 with the launch of the company's GenS technology (well-regarded and long-established OmegaPS series update). Tuesday's statement from the Prime Minister ple

To infinity…

Cerillion has announced a very solid update, as H1 sales and EBITDA are both up 10% y/y to £22.5m and £10.9m respectively, notwithstanding the exceptionally strong base period (sales and EBITDA +27% and +38% resp.). Results therefore point to continued strong customer demand, reflecting how Cerillion’s out-of-the-box product continues to resonate and gain adoption, particularly in a ‘budget conscious’ environment, by offering faster time to market, greater configurability and at a lower cost. Me

Synectics + (SNX, House Stock at 188p) - Positive AGM statement

Checkit - Signposting the path to profitability

In a tough trading environment, Checkit managed to grow FY24 revenue by 17% and reduce EBITDA losses by nearly half. The company has had a positive start to FY25 with new contract wins and the launch of a new module. Focus on growth from its existing customer base combined with strict cost control is helping Checkit to make steady progress towards its target of positive EBITDA and cash generation in FY27.

Hybridan Small Cap Feast - 24 April 24

24th April 2024 * A corporate client of Hybridan LLP ** Arranged by type of listing and date of announcement *** Alphabetically arranged **** Potential means Intention to Float (ITF) has been announced Dish of the day Admissions: Delistings: What’s baking in the oven? ** Potential**** Initial Public Offerings: Reverse Takeovers: 16 April 2024: Electric Guitar (ELEG.L) Concurrent with its Admission to trading on AIM, Electric Guitar is proposing to acquire the entire issued share capital of 3radi

In-line H1, strategic initiatives advancing at pace

As reported in March, underlying EBITDA profitability improved to record levels despite FX headwinds. Further platform and proposition developments were completed, key steps on its digital roadmap, and it has already won 7 contracts YTD. Alongside planned growth in private membership, this will at least offset the loss of one contract. Forecasts are left unchanged today and, as member engagement throttles back up, FX headwinds ease, and proof points of digital efficiency emerge, markets should b