Software subscriptions drive Sage's revenue growth

27th Jan 2016 07:15

(ShareCast News) - Sage's first quarter revenues were up, driven by strong software subscription revenue.The FTSE 100 company saw group organic revenue for the three months to 31 December rise 6.6%.Organic recurring revenue grew by 10.4%, with a 35.7% rise in software subscription revenue.However, software and software related services revenue dropped by 5.3%, reflecting the move to subscription services.Organic processing revenue also increased by 5.4%, which included Sage Payroll Solutions, acquired at the start of the last financial year.Foreign exchange has also had an impact, with the relative strength of pound against a number of currencies including the euro, the rand, and the Brazilian real, offset by the US dollar.The company said it remains on track to deliver at least 6% organic revenue growth and 27% operating margin for the full year.Chief financial officer Steve Hare said this first quarter performance demonstrates continued momentum and was in line with expectations."Our business transformation is on track and we are focussed on its execution to realise our long-term plan for sustainable and improved quality growth."Whilst we expect the transition to be non-linear, the first quarter represents good progress."