Sage today is reporting 6 month unaudited earnings through March 31, 2012 (aka H1 2012) – adding 129,000 new paying customers H1 2012 vs 131,000 in H1 2011. Overall organic revenue growth is reported as 2% H1 2012 vs 5% in H1 2011.
Reuters is reporting that Sage’s earnings missed forecasts and that as a result share price is down.
Total revenue growth rates in North America appear to be flat with organic subscriptions growing 2% vs 4% in H1 2011. Notably Sage is ramping up for an North America imminent launch of SageOne, their pure SaaS entry level accounting offering.
Some interesting takeaways from the report (which you can download here). Where bolding is added that is my emphasis to what I consider the key takeaways as they relate to Sage performance in North America:
the cross-sell of integrated payment solutions into our accounting software customer base continued as an area of focus.
Cross-sell revenues represent a quarter of our payments division’s revenues yet we have still sold integrated payments solutions to a very small proportion of our accounting software customer base – a great future opportunity.
We have also renewed our focus on accelerating growth. This involves changing the way we will run our business, including a more disciplined approach to resource allocation, portfolio management and execution.
A feature of the period has been the combination of three main factors which have acted as a near- term constraint on growth. The continued switch to subscription revenues has been a primary factor, which reflects the way we are driving the business strategically and which has served to reduce reported revenue by approximately 1%. The macroeconomic environment has also been a constraint, holding back our European growth in particular. Comparisons to the prior period are, as previously highlighted, impacted by one-off benefits enjoyed in H1 2011, which will be less of a factor in the second half.
Our payments businesses continued to perform well, with an organic revenue growth rate of 10% overall. Payments remains a great example of how we can expand our offerings to support our customers and the integration and cross- selling opportunities this creates are compelling.
Sage ERP X3, our global mid-market ERP solution, delivered organic revenue growth of 3%* in the period, with continued double digit growth outside of France, offset by difficult economic conditions in France, its largest market.
..every business in the Group has a consistent focus on the high growth products in their portfolios. Aligned to this is greater discipline in ensuring resources and investment are re-allocated to support these growth opportunities; and strengthened execution, embedding the best group-wide disciplines and practices across all businesses.
Total revenues for SSRS were £221.7m (H1 2011: £232.2m*), which contracted organically by 4%*. SSRS revenues include stand-alone software licence sales (including new licences, upgrades and migrations) and professional services, hardware and business forms. Our strategy of migration of software revenues to subscription revenue clearly impacted this growth.
From a strategic perspective, there are some significant developments being driven through North America which means the business is currently going through a period of transformation. Importantly, as previously announced, we are in the process of rebranding all products to maximise the leverage of the Sage brand. So, for instance, Sage Peachtree in the US and Sage Simply Accounting in Canada will become Sage 50 U.S. Edition and Sage 50 Canadian Edition respectively, and Sage ERP MAS 90 will become Sage 100. We consider this consistent use of the Sage brand to be a vital underpinning to cross-sell initiatives.
Sage 2012 6 Month (Presentation PDF)