By Paul Sandle
LONDON (Reuters) -British software company Sage said momentum in its cloud business would keep organic recurring revenue motoring in the second half as its customers turn to its digital products to help adapt to tougher economic conditions.
The company, which provides accounting and other software to small and medium-sized businesses (SMBs), met market expectations on Friday with an 8% rise in organic recurring revenue in the six months to end-March.
Chief Executive Steve Hare said SMBs were still confident about their own prospects even as the economic backdrop in Britain and Sage’s other markets darkened.
“They feel they’ve become a lot more adaptable and resilient over the last couple of years,” he said in an interview.
All businesses were facing costs pressures, he said, and labour shortages continued to be a problem for many.
He said it was important to balance Sage’s own increased costs, particularly for staff, with the prices it charges customers.
“We don’t want to be burdening our small and mid-sized customers with large price increases,” he said. “It’s important that we deliver additional value to them, we give them additional functionality.”
Sage reported a 4% rise in organic operating profit to 184 million pounds ($225 million), representing a 19.9% margin, slightly down on the same period a year ago but an improvement on the previous six months.
Hare said spending on promotions would likely increase in the second half but the margin would still be ahead for the full year. “From here, every year the margin will get slightly better,” he said.
($1 = 0.8187 pounds)
(Reporting by Paul SandleEditing by James Davey and Mark Potter)
