Is the Sage branding push working? This message from my sister seems to indicate that it’s at least driving overall company awareness. Would she have noticed this advertisement if it was for Peachtree or Businessworks or Simply Accounting or Abra or Accpac?
There seems to be some improvement overall, and earnings exceeded analyst expectations, but the company fell short of predicting a return to revenue growth in North America (which now is second to Mainland Europe as Sage’s top revenue provider).
North America appeared to suffered as the region with what appeared to be the only decline in subscription revenue (see the full Sage slide deck below for details).
Maintenance is the ever important recurring revenue item that customers pay for ongoing support, new releases and upgrades of their existing software.
In a perfect world maintenance would continue to grow (Sage North America reported an addition of 17,000 support contracts) as new subscribers are added and continue to renew their contracts.
Here’s what Sage reported for subscription growth (see chart below for details):
North America: – 2%
Mainland Europe: +2%
Rest of World: +13%
I’ve long said that maintenance (subscription) renewals and growth are what I gauge to be the key indicators of customer happiness. Within the past year Sage North America has modified subscription margins for many of their business partners (raising sales performance requirements as well as outright margin change). It’s tough to say what the results would have been without those modifications.
Full earnings slide deck after the jump