Sage shares rise on strong Q4 earnings, outlook

Shares in Sage Group rose on Monday after the enterprise software company reported stronger-than-anticipated fourth-quarter earnings and upgraded its full-year outlook, pushing the stock to its highest level in two months.

The London-listed company posted adjusted operating profit of £590 million for the three months ended March 31, ahead of analyst expectations of £575 million. Revenue increased 4% year-over-year to £490 million, driven by growth in its cloud-based subscription services.

Sage also raised its fiscal 2024 guidance, forecasting adjusted operating profit of £610 million to £620 million, up from its prior range of £600 million to £610 million. The company cited sustained demand for its financial management and accounting software solutions as key drivers of the upgrade.

Analysts at Jefferies noted that the improved outlook reflected "continued momentum in Sage’s core markets," particularly in North America and Europe. The brokerage maintained a hold rating on the stock but increased its price target to 1,250 pence from 1,150 pence.

Sage’s shares were up 3.2% at 1,185 pence by midday in London, extending gains from Friday’s close. The stock has gained roughly 12% over the past month, outperforming the broader FTSE 100 index.

The company’s cloud revenue grew 11% year-over-year, accounting for 68% of total revenue, up from 64% in the same period last year. Sage’s chief executive, Steve Hare, said the results demonstrated "strong execution" and the benefits of its strategic shift toward cloud-based services.

Investors are closely watching Sage’s progress as it transitions from traditional on-premise software to a cloud-first model, a shift that has been mirrored by peers such as Intuit and Xero in the enterprise software sector.