(By Anthony Miller) It was the 10% growth in Sage’s subscription revenues (includes combined software/support contracts, maintenance and transaction processing) that rather saved the year for Sage (see FY08 results here), as business in its core UK and US markets weakened.
Organic group revenue growth of 3% masked dramatically differing fortunes among Sage’s country markets and business lines. In the UK (19% group revenues) , Sage’s flagship low-end product, Sage 50, helped drive the 3% organic growth (FY07: 7%) as high-end products got hit by the market downturn. Europe (35% group revenues) was more of a success story, with 9% organic growth (FY07: 10%), but with greatest weakness in Sage’s German-speaking markets (+1%). Spain (+25%) and Poland (+18%) were the stars. Rest of World revenues grew 14% organically (FY07: 17%) and remain 7% of group sales.
But in the end, it’s Sage’s incredibly resilient support and maintenance contracts which remain the backbone of the business. Sage has been very creative developing new tiered support offerings, witness combined support and software upgrade contract revenues growing 12%. While the prospects for new licence sales and upgrades look rather bleak in Sage’s mature markets, at least the cash should keep flowing.