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Sage Revenue Rises 34% in First-Half 2007 Despite Challenges in North America Sign Up to receive Daily News Alerts in your E-mail Inbox
Posted on Wednesday, May 09, 2007 5:15:00 PM |
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Following a year in which it acquired seven companies, enterprise software and services provider Sage Group saw a 34% rise in revenue in the first half of its fiscal 2007 and vowed to focus on improving organic growth.
Total revenue of £574.7 million in the six-month period ended March 31 was a significant improvement on the £455.9 million reported in the equivalent 2006 time frame. EBITA (earnings before interest, tax, and net amortization) also saw double-digit growth, up 22% year over year to £138.6 million.
Other financial highlights for Sage included 7% organic revenue growth. Group Finance Director Paul Harrison said in a presentation today to financial analysts that Sage continues to realize a growing percentage of revenue from organic sources, such as support contracts, which include software license upgrades.
For Sage Software Inc., the North American unit of U.K.-based Sage Group, revenue increased to £254.1 million from £152.4 million in the same period a year ago on strong contributions from sales of acquired products.
However, organic growth for the North American division was nearly flat, according to company officials, with mid-market revenue growing just 3% over last year's first half. Sage attributed the less-than-desirable numbers to its MAS 90 accounting product losing business to another accounting software line, the Quantam product sold under the Peachtree brand. Sage officials also noted that customers of the CRM product SalesLogix were holding off purchasing new licenses until the second half of 2007, when a new release is scheduled.
The company also announced a reorganization of its North American business structure, but said the move was not a reaction to the recent slow growth. Sage Software, which was previously structured around product groups and market size, will be divided into four units. The Business Management division will include all of the company's accounting and CRM products, as well as those for such applications as fixed asset management. Sage Group CEO Paul Walker said this alignment will help better position similar products, such as the MAS and Peachtree lines. Nina Smith, former Sage chief marketing officer, will lead the Business Management Division.
The other new divisions include Industry and Specialized Solutions (for construction and payroll outsourcing industries), a Healthcare division, and Payment Solutions, which comprises the payment-processing business of Verus Financial Management Inc., which Sage acquired in February 2006.
The new units will allow North American Chief Executive Ron Verni "to focus where he thinks focus is required," Walker said. "[Verni] will be spending a lot of time making sure we really deliver, for example, on our Healthcare division, and that we do build out and expand on our Payment Solutions, as well as overseeing the other two new divisions."
In a prepared statement, Walker said that Sage's first-half performance has been in line with expectations. "After a record number of acquisitions last year, the focus in the first half of this year has been on integration and growth in our organic business," he said. "For the remainder of the year, we will concentrate on further operational improvements to recent acquisitions, the reorganization of our North American business, and sustained organic growth."
That said, Sage yesterday announced its acquisition of U.K.-based HR and payroll management software and services provider Snowdrop Systems Ltd., in an all-cash deal worth £17 million.
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