Sage shares jump nearly 20% as investment pays off

Sage Group shares rose to an all-time high as it reported a 21 per cent rise in annual profits and announced a £400 million share buyback.
The business software group posted underlying operating profits of £529 million in the year to September 30, up from £438 million the previous year.
Steve Hare, chief executive, said: “This set of results, where we have had a strong fourth quarter, has given people the reassurance that they were looking for that we can continue to deliver this growth but we can also do it efficiently.”
Sage reported an 11 per cent rise in annualised recurring revenue (ARR) — income from subscriptions — to £2.34 billion, surpassing analysts’ expectations.
Hare, who has led the company since 2018, said: “We’ve been investing strongly for the last six years since I became CEO and that return is starting to come through. We’re investing in innovation, we’re delivering productivity to our customers using both our strong traditional products but also increasingly with AI.”
Shares in Sage Group rose by 211½p, or 19.6 per cent, climbing to an all time high of £12.88½. Its stock reaction exceeded expectations from analysts at Shore Capital, who forecast “a neutral/slightly positive reaction in the shares this morning”.
The company, based in Newcastle-upon-Tyne, provides accounting, human resources and payroll software to almost half of Britain’s small businesses. It employs 11,000 people globally, including 3,200 in the UK and Ireland, where it makes 25 per cent of its revenue.
It also has a strong presence in North America, where its 2,600 staff derive nearly half of its revenue. The company was ahead of the game in moving its clients on to the cloud and to subscription deals that now generate nearly 80 per cent of its income.
“North America remains the fastest growing market that’s driven by Sage Intact, which is our financial product for mid-market customers,” Hare said. He added that the US “tends to lead the way around things like adoption of digital tools, so that continues to be strong”.
Sage Group reported a 7 per cent increase in revenues in the UK and Ireland, while the group’s Europe division posted a 6 per cent growth in revenues during the year to September 30.
“In all our markets we are acquiring new customers but we’re also delivering more and more new products and services that we can sell to existing customers. So it’s quite balanced growth both geographically but also in terms of the growth that’s coming from new customers and existing customers,” Hare said.
Sage invested heavily in artificial intelligence over the past five years and the group’s generative AI-based digital assistant, Sage Copilot, is available with some of its products.
Hare said: “There’s a lot of hype around AI and how effective these types of assistants are and we’re taking a slightly different approach which is we’re making Sage Copilot quite narrow. It’s quite specific and we are constantly enhancing that local domain knowledge.
In recent years Sage has been on an acquisition spree of smaller tech businesses as part of its growth strategy. In September 2024 the group bought Infineo, a French software company, and last year it completed the acquisition of the American construction platform Corecon.
Hare said that acquisitions “will continue to be part of our strategy and are likely to be a sort of bolt-on nature”.
Sage Group announced that its full-year dividend would rise to 20.45p per share, a 6 per cent increase. The group has forecast total revenue growth of 9 per cent for the 2025 financial year.