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

Audioboom Group - Q1 24 revenue growth of +11%, FY24E forecasts reiterated

Audioboom’s FY23 results and Q1 trading update show Q1 24 revenue growth of +11% yoy, $6.7m of March 2024 revenue marking the platform’s highest revenue month since May 2022, and a confident outlook that leads us to reiterate our FY24E forecasts. Following the focus on new initiatives through FY23, the platform is now in its strongest ever operational position, with a record 1.1bn monthly ad impressions created in March 2024, record global audience reach of 38.6m unique global listeners in Janua

Alphawave Semi: FY23 trading update, amended forward guidance

Alphawave Semi has reduced guidance for FY23 and prospectively citing lower revenues from China, changes in expected revenue recognition from long-term contracts, and continuing investment in R&D. The share price has reacted negatively, giving up most of the gains since the trading statement at the end of January. Current consensus, which is a good match for pre-existing guidance, should be reduced, most likely following release of the FY23 results and full 1Q24 trading update due on 23 April. H

Crimson Tide - FY23 reports +15% revenue; investment phase complete

Crimson Tide has reported FY23 results to December in line with expectations, with additional operating leverage benefitting updated FY24 and maiden FY25 and FY26 forecasts. FY23 delivered +15% revenue growth to £6.2m at 86% GM, of which over 90% is recurring, and maintained £5.8m ARR even after unexpected customer churn in the year as we previously noted. Crucially, the Group achieved milestone adj EBITDA profitability of £0.4m at 7% EBITDA margin, and edges closer to adj PBT profitability expe

Morning Note – 16 April 2024

Devolver Digital (DEVO LN) - Rebuild year

Devolver Digital encouragingly delivered 2023 results slightly ahead of expectations and provided a steady medium-term outlook that leads us to reiterate our 2024 Adjusted EBITDA estimates. Longer term, the company is now planning to further develop its two major planned titles, Human Fall Flat 2 and System Era's next major new release. We now expect those major titles to be released in 2026 rather than 2025, meaning we lower our 2025 Adjusted EBITDA forecast to $10.6m from $17.6m but introduce

Morning Note – 15 April 2024

Checkit - New product launch and contract wins

Checkit has won contracts with two customers worth at least £417k over the three-year lives of the contracts, confirming its ability to upsell to its existing customer base and supporting our forecasts. Having trialled the new technology with multiple customers, Checkit has launched its Asset Intelligence module, which uses advanced analytics and machine learning to enhance customer sustainability, reduce costs and increase revenue.

Soft growth patch

Auction Technology Group - H1/24 Trading update

ATG’s H1/24 trading statement indicates revenue for the six-month period to 31 March 2024 was $86m, a 6% increase on H1/23 (1% organic growth), helped by the addition of the EstateSales.Net (ESN) marketplace last year, which performed well in the period. Total marketplace revenue increased 2% (organic), driven by growth in value-added services (VAS) and event fees, offsetting a decline in commission revenue (mainly through lower asset prices).

Morning Note – 17 April 2024

Touchstar - Full year results: Recurring revenue strategy delivers further profit growth

Touchstar is a supplier of mobile data computing solutions and managed services to a variety of industrial sectors. This morning's full year results reflect the outcome of a multi-year strategy coming to fruition for the group, with recurring revenue growth of 8.7% delivering overall revenue growth of 7.1% and in turn a 60% increase in PBT to £0.7m. Over the past few years, Touchstar has focused on enhancing the returns from their product offering through a shift towards recurring software licen

It’s not what you sell, it’s the way that you sell it

This report is intended to help UK small- and mid-cap investors gain a better understanding of software companies’ routes to market, and to highlight how one of the most important facets of the way in which they grow and deliver value is routinely ignored.  We examine sales processes for six UK-listed companies and one that has recently been taken over, and consider why they have followed their respective paths.

LIBERUM: Cirata plc: Cirata from the flames

Engage XR Holdings - Expanding from FY23, FY24E forecasts reiterated

ENGAGE XR’s FY23 results show revenue and net cash in line with the February trading update, EBITDA ahead at -€4.0m vs -€4.5m due to the split of cash outflow between opex and working capital, and a confident outlook that leads us to reiterate our FY24E forecasts. FY23 revenue for the core ENGAGE platform was unchanged vs FY22 at €3.3m, as H2 23 revenue was impacted by the record seven-figure contract announced in February shifting to 2024, and several enterprise customers scaling back renewals

Intelligent Ultrasound Group - GE Healthcare launches new Voluson Signature with

GE Healthcare has announced the launch of the Voluson Signature 20 and 18 ultrasound systems, with the related press release noting these systems ‘comprehensively integrate artificial intelligence’ to improve the ultrasound procedure for clinicians and the women being scanned. These ultrasound systems include SonoLyst, the AI which incorporates Intelligent Ultrasound’s ScanNav Assist and ScanNav AutoCapture AI software. The launch of additional Voluson systems including the SonoLyst suite of AI