Sage Group Plc · LSE:SGE
Sage — H1 2019 Earnings Presentation
35 slides from Sage's earnings presentation, May 17, 2019
Slide 1: Sage Interim Results 2019
Sage Interim Results 2019 London Stock Exchange 17 May 2019 #SageResults 1
Slide 2: Safe Harbour
Safe Harbour The following presentation is being made only to, and is only directed at, persons to whom such presentation protect against potential fraudulent activities; any significant quality problems or delays; the global macro- may lawfully be communicated (“relevant persons”). Any person who i
Slide 3: Steve Hare, CEO: Welcome and Overview
Steve Hare, CEO Welcome Overview Financial review Strategy Outlook Q&A #SageResults Sage Group plc Interim Results 2019 3
Slide 4: Purpose, vision and strategy
Purpose, vision and strategy Purpose: To transform the way people think and work, so their organizations can thrive Vision: To become a great SaaS company for our customers and colleagues alike 3 strategic lenses: Customer Colleague Innovation success success #SageResults Sage Group plc Interim Resu
Slide 5: Key messages
Key messages Recurring Strategic Focus revenue execution growth #SageResults Sage Group plc Interim Results 2019 5
Slide 6: Jonathan Howell, CFO: Financial review
Jonathan Howell, CFO Welcome Overview Financial review Strategy Outlook Q&A #SageResults Sage Group plc Interim Results 2019 6
Slide 7: Summary
Summary High quality Strong cash On target recurring conversion margin revenue growth #SageResults Sage Group plc Interim Results 2019 7
Slide 8: P&L summary
P&L summary H1 19 H1 18 Change £m £m % Total Organic Revenue £941m £886m 6.2% Recurring revenue £779m £707m 10.2% Organic operating profit £218m £220m (0.8%) Organic operating profit margin % 23.2% 24.8% (1.6 %pts) Underlying operating profit £218m £224m (2.9%) Underlying operating profit margin % 2
Slide 9: Revenue categories
Revenue categories £941m +6.2% 83% Recurring revenue Software penetration subscription £380m H118: 80% £485m +28% +10.2% Recurring Maintenance & revenue Support £327m £294m -10% 52% SSRS £155m £137m -12% Software subscription Processing £24m £25m +3% penetration H118: 43% H1 18 H1 19 #SageResults Sa
Slide 10: Organic revenue by portfolio
Organic revenue by portfolio Recurring Total H119 H118 Growth H119 H118 Growth £m £m % £m £m % Cloud native £80m £63m 27% £86m £68m 26% Cloud connected £210m £94m 124% £219m £100m 120% Sage Business Cloud £291m £157m 85% £306m £168m 82% Products with potential to migrate £373m £434m -14% £467m £544m
Slide 11: Regional overview
Regional overview #SageResults Sage Group plc Interim Results 2019 11
Slide 12: North America
North America 55% H119 performance USA 64% Software subscription penetration • 8% recurring revenue growth H118: 43% • High penetration on cloud connected growth Sage Business Cloud penetration Canada H118: 50% • 13% recurring revenue growth Organic Revenue by Category H119 H118 Growth • Cloud conne
Slide 13: Northern Europe
Northern Europe 56% H119 performance 59% Software subscription penetration Recurring revenue growth 14% H118: 43% • Strong migration, new customer acquisition Sage Business Cloud penetration and reactivation in cloud connected H118: 26% Organic Revenue by Category H119 H118 Growth Total revenue grow
Slide 14: Central and Southern Europe
Central and Southern Europe 43% H119 performance 21% Software subscription penetration France H118: 37% • 5% recurring revenue growth Sage Business Cloud penetration • Growth driven through cloud connected H118: 8% solutions Organic Revenue by Category H119 H118 Growth • SSRS decline with focus on d
Slide 15: International
International 58% H119 performance 11% Software subscription penetration Africa and Middle East H118: 56% • 12% recurring revenue growth Sage Business Cloud penetration • Local products driving growth H118: 9% • Growth in SSRS Organic Revenue by Category H119 H118 Growth Organic total revenue £129m
Slide 16: Strong cash flow and financial position
Strong cash flow and financial position Key metrics Underlying operating Underlying cash flow Underlying cash £218m from operating £330m 151% profit conversion activities Depreciation and £16m amortisation Non-recurring items (£20m) Closing net debt (£448m) Share-based payments £13m Net interest pai
Slide 17: Capital allocation
Capital allocation To become a great SaaS company for customers and colleagues alike 1 2 3 4 Organic M&A and Maintain the Additional investment portfolio ordinary dividend returns rationalisation in real terms Strong and stable financial position Broad range of 1.0x – 2.0x net debt: EBITDA over the
Slide 18: Summary
Summary High quality Strong cash On target recurring conversion margin revenue growth 10.2% 151% 23.2% #SageResults Sage Group plc Interim Results 2019 18
Slide 19: Steve Hare, CEO: Strategy
Steve Hare, CEO Welcome Overview Financial review Strategy Outlook Q&A #SageResults Sage Group plc Interim Results 2019 19
Slide 20: Benefits of subscription
Benefits of subscription Higher Higher Higher contract retention lifetime values rates revenue Value Creation Better Lower Lower cost customer CAC to serve economics #SageResults Sage Group plc Interim Results 2019 20
Slide 21: Strategic KPIs
Strategic KPIs ARR Subscription Sage Business Renewal by value penetration Cloud penetration +10% 52% 44% 100% #SageResults Sage Group plc Interim Results 2019 21
Slide 22: Investment in the business
Investment in the business FY19 and beyond Customer Colleague Innovation success success #SageResults Sage Group plc Interim Results 2019 22
Slide 23: Customer success
Customer success Taking a customer-centric approach to everything we do H119 progress • Focus on customer touch points • Investment in sales and service systems • Customer-led marketing KPIs • NPS • Customer Churn • Renewal by value #SageResults Sage Group plc Interim Results 2019 23
Slide 24: Colleague success
Colleague success Culture that values individuals & encourages collaboration H119 progress • Culture and Leadership behaviours • Colleague-led communication • Raising engagement KPIs • Colleague engagement • Foundation days • Attrition / internal promotion #SageResults Sage Group plc Interim Results
Slide 25: Innovation
Innovation Constant, customer-led innovation and accelerating Sage Business Cloud H119 progress • Building Tech Leadership Team • Investing in Sage Business Cloud • Sage Intacct internationalisation • Service fabric KPIs • Sage Business Cloud penetration • Availability of Native Cloud Solutions • Cu
Slide 26: Progress in cloud connected solutions
Progress in cloud connected solutions Employee self-service Payroll Desktop solution Bank feeds Office 365 Online payments Cloud functionality Current functionality #SageResults Sage Group plc Interim Results 2019 26
Slide 27: Progress in cloud connected solutions
Progress in cloud connected solutions Reporting & Filing Employee self-service Invoicing Payroll Desktop solution Financial statements Bank Automated feeds data capture Office 365 Business insights Approvals Online payments Cloud functionality Current functionality Future functionality #SageResults
Slide 28: Innovation
Innovation Constant, customer-led innovation and accelerating Sage Business Cloud H119 progress • Building Tech Leadership Team • Investing in Sage Business Cloud • Sage Intacct internationalisation • Service fabric KPIs • Sage Business Cloud penetration • Availability of Native Cloud Solutions • Cu
Slide 29: FY19 guidance
FY19 guidance SSRS Recurring revenue and processing Organic growth top end lower end operating margin or slightly exceed or below 8% — 9% Flat — mid single 23% — 25% digit decline #SageResults Sage Group plc Interim Results 2019 29
Slide 30: Key messages
Key messages Recurring Strategic Focus revenue execution growth #SageResults Sage Group plc Interim Results 2019 30
Slide 31: Q&A
Q&A #SageResults #SageResults Sage Group plc Interim Results 2019 31
Slide 32: Glossary
Glossary Measure/Description Underlying (revenue and profit) measures Underlying measures are adjusted to exclude items which would distort the understanding of the performance for the year or comparability between periods: - Recurring items include purchase price adjustments including amortisation
Slide 33: Glossary
Glossary Measure/Description Free cash flow Free Cash Flow is Cash Flow from Operating Activities minus non-recurring cash items, interest paid, tax paid and adjusted for profit and loss foreign exchange movements. % Subscription Penetration Organic software subscription revenue as a percentage of o
Slide 34: Glossary – Revenue types
Glossary – Revenue types Measure/Description Revenue Type Description Recurring revenue Recurring revenue is revenue earned from customers for the provision of a good or service, where risks and rewards are transferred to the customer over Subscription contracts the term of a contract, with the cust
Slide 35: Thank you
Thank you © 2019The Sage Group plc or its licensors. Sage, Sage logos, Sage product and service names mentioned herein are the trademarks of The Sage Group plc or its licensors. All other trademarks are the property of their respective owners. 35