The Sage Group (LON:SGE) reported 11% revenue growth for the first nine months of its fiscal year, with third-quarter growth accelerating as demand remained strong across regions and products.
Chief Financial Officer Jacqui Cartin said revenue rose to £2.1 billion during the nine-month period, while standalone third-quarter revenue was nearly £700 million and grew 12%. Organic revenue increased 10% to more than £2 billion in the first nine months.
Regional and cloud growth
North America was the fastest-growing major region, with revenue rising 14% to £932 million. The company cited continued momentum in Sage Intacct, supported by its vertical market approach, as well as growth in Sage 50, Sage 200, payroll and HR products.
Revenue in the UK and Ireland increased 10% to £602 million. Cartin said Sage Intacct continued to scale rapidly, Sage 50 recorded further strong growth, and the cloud-native small-business suite, including Sage Accounting, performed well as embedded services gained momentum.
European revenue increased 7% to £528 million, driven by Sage X3 and Sage 200, broader portfolio growth and increasing traction for Sage Intacct.
- Sage Business Cloud revenue rose 15% to £1.8 billion.
- Cloud-native revenue increased 25% to £794 million.
- Recurring revenue grew 11% to £2 billion.
- Subscription revenue rose 13% to more than £1.7 billion, with subscription penetration reaching 84%.
Cartin told analysts that the company was in its fourth consecutive quarter of acceleration. She highlighted North America and the UK and Ireland as particular contributors, saying the growth was underpinned by demand, disciplined go-to-market execution and the growing monetization of AI features.
She said sequential annualized recurring revenue growth was slightly above 2% in the third quarter, compared with 2.5% in each of the first two quarters. While Sage does not provide detailed ARR reporting at this stage, Cartin said the third-quarter result represented an acceleration compared with the same period a year earlier.
AI adoption and product strategy
Chief Executive Officer Steve Hare said customer interest in AI remained high, particularly around tools that can be trusted within finance, HR and payroll workflows. He said prospects were focused on ensuring technology investments would remain relevant over the long term.
Among mid-market customers, Hare said more than half of new Sage Intacct customers are taking the AI-powered accounts payable module. He also cited customer interest in AI tools that identify anomalies and unusual transactions requiring human review.
Hare said regulatory developments could provide additional support for adoption. In the UK, Making Tax Digital is gaining momentum among smaller customers, while European markets are seeing increased traction around e-invoicing. He said these functions are AI-powered.
On pricing, Cartin said the trends discussed at the half year had continued. Pricing contributed about 5.5% to growth at the half-year stage, consistent with fiscal 2025, and reflected the rollout of new features, including Sage Copilot and other AI capabilities. She said renewal rates continued to benefit from pricing, cross-selling and upselling, while churn remained low and stable.
Hare said Sage’s approach to price increases is intended to provide a “fair value exchange” through additional functionality. The company is also offering Sage 50 customers cloud-hosted options and, for those choosing to migrate, cloud-native products such as Sage Intacct.
Margins, Europe and outlook
Sage reiterated its full-year guidance for organic revenue growth of more than 9%. The company also expects operating margins to trend upward in fiscal 2026 and beyond.
Cartin said Sage expects margin expansion at the lower end of its stated 50-to-100-basis-point range, as it continues to invest in innovation and growth. She attributed the company’s operating leverage to accelerating growth, ongoing efficiency efforts and increasing internal adoption of AI.
The company expects a more balanced full-year growth profile as it enters a fourth quarter that compares against a particularly strong fourth quarter in fiscal 2025. Hare said Sage remained confident it could make progress on a quarter-to-quarter basis in the final quarter and into fiscal 2027.
In continental Europe, Hare said Sage Intacct was making strong progress in France, with Germany following. He also pointed to double-digit growth for Sage X3 in Europe. Cartin said that, at the half year, Sage Intacct grew more than 20% in the U.S. and about 50% outside the U.S., with those trends continuing.
Addressing competition, Hare said the market remains competitive as established and newer vendors deploy AI and agent-based capabilities. However, he said Sage’s stable churn, customer retention and acquisition of new customers indicated it was competing effectively. The company also cited growing customer acquisition through embedded-services partnerships with fintech companies.
Hare said macroeconomic uncertainty had not materially affected customer engagement or the pipeline of interest. While customers remain focused on inflationary pressures such as materials and distribution costs, he said those pressures can encourage investment in productivity, automation and workflow efficiency.
About The Sage Group (LON:SGE)
The Sage Group plc, together with its subsidiaries, provides technology solutions and services for small and medium businesses in the United States, the United Kingdom, France, and internationally. It offers cloud native solutions, such as Sage Intacct, a cloud accounting software product and financial management software; Sage People, a HR and people management solution; Sage 200, a finance and business management solution; Sage X3, a business management solution; Sage Accounting, a solution for small businesses, accountants, and bookkeepers to manage customer data, accounts, and people; Sage Payroll for small businesses manage their payroll; and Sage HR for small and mid-sized businesses for record management, leave management, staff scheduling, and expenses services.
