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8 Dec 2022 07:00
Update on financial reporting
8 December 2022
As announced in Sage's FY22 results on 16 November 2022, Sage intends to evolve its financial reporting by giving greater emphasis to underlying revenue and profit measures, and by amending the presentation of its regional reporting. These changes will be introduced in Sage's Q1 23 trading update, and will apply to Sage's future financial reporting. Further details are set out below.
To facilitate comparison with prior periods, the appendix to this announcement sets out key reporting figures for FY22 reflecting these changes. Sage's primary annual and interim financial statements and notes to the accounts will not be impacted.
Focus on underlying measures
In addition to statutory financial reporting measures, Sage also provides non-GAAP Alternative Performance Measures (APMs) including underlying and organic measures, to help assess financial performance. Underlying measures allow management and investors to understand the performance of the Group on a constant currency basis excluding recurring and non-recurring items, while organic measures also adjust for the impact of acquisitions and disposals[1].
Going forward, Sage will provide financial metrics and analysis including the breakdown of revenue by category, by strategic product portfolio and by region, together with Annualised Recurring Revenue (ARR), on an underlying basis alongside organic growth rates. Sage Business Cloud penetration and subscription penetration will also be provided on an underlying basis. Previously this information was provided primarily on an organic basis. Certain organic revenue and profit measures including recurring and total revenue by region will continue to be provided in the interim and full year results.
Sage believes that these changes will enable a clearer understanding of both the organic and inorganic performance of the Group.
Change to regional reporting
Sage also intends to amend the presentation of its regional reporting, to reflect recent changes to the way in which the Group manages its operations. Going forward, Sage will report performance across the following regions: North America, comprising the US, Sage Intacct and Canada; UKIA, comprising Northern Europe (UK & Ireland) and Africa & APAC; and Europe, comprising France, Central Europe and Iberia.
Enquiries: | Sage: | +44 (0) 7721 599502 | FGS Global: | +44 (0) 20 7251 3801 |
James Sandford, Investor Relations | Conor McClafferty | |||
David Ginivan, Corporate PR | Sophia Johnston | |||
APPENDIX - FY22 underlying measures[2]
Underlying measures (£m) | Q1 22 | H1 22 | Q3 22 YTD | FY 22 |
Recurring revenue by portfolio[3] |
|
|
|
|
Cloud native | 90 | 191 | 308 | 435 |
Cloud connected | 190 | 385 | 589 | 842 |
Sage Business Cloud | 280 | 576 | 897 | 1,277 |
Products with potential to migrate | 117 | 228 | 343 | 426 |
Future Sage Business Cloud Opportunity | 397 | 804 | 1,240 | 1,703 |
Non-Sage Business Cloud | 35 | 70 | 105 | 142 |
Recurring revenue by region |
|
|
|
|
North America | 174 | 357 | 562 | 787 |
UKIA[4] | 134 | 273 | 417 | 568 |
Europe | 124 | 244 | 366 | 490 |
Recurring revenue by category | ||||
Software subscription | 337 | 688 | 1,064 | 1,464 |
Other recurring | 95 | 186 | 281 | 381 |
Total recurring revenue | 432 | 874 | 1,345 | 1,845 |
Other revenue (SSRS) | 31 | 61 | 84 | 104 |
Total revenue | 463 | 935 | 1,429 | 1,949 |
Underlying operating profit | 183 | 377 | ||
|
|
| ||
Annualised Recurring Revenue (ARR) | 1,809 | 2,057 | ||
of which cloud native |
| 448 |
| 560 |
Breakdown of revenue by region
Underlying measures (£m) | Recurring revenue | Total revenue | ||
H1 22 | FY 22 | H1 22 | FY 22 | |
North America | ||||
US | 305 | 674 | 323 | 704 |
of which Sage Intacct | 102 | 231 | 105 | 237 |
Canada | 52 | 113 | 54 | 115 |
UKIA | ||||
Northern Europe (UK & Ireland) | 208 | 428 | 212 | 434 |
Africa and APAC | 65 | 140 | 72 | 153 |
Europe | ||||
France | 128 | 258 | 136 | 273 |
Central Europe | 56 | 112 | 71 | 136 |
Iberia | 60 | 120 | 67 | 134 |
[1] APMs including underlying and organic measures are defined in Appendix 1 (on pages 13 and 14) of Sage's FY22 full year results announcement, dated 16 November 2022.
[2] The figures set out above are provided at FY22 exchange rates. In line with Sage's APM definitions, they will be retranslated at current period exchange rates when reported as comparator figures during FY23, to enable the Group's performance to be assessed on a constant currency basis.
[3] As Other revenue (SSRS) now accounts for only 5% of total revenue, the breakdown of revenue by strategic product portfolio will only be provided on a recurring revenue basis going forward.
[4] United Kingdom, Ireland, Africa and APAC
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