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(SGE.L) Sage Group Plc Shares Tumble 8% on Forecast Cut

Analyst Team trader
Updated 16 May 2024

Sage Group Plc shares (LON: SGE) have pulled back sharply today, experiencing a decline of almost 9% at the time of writing. Facing a backdrop of economic uncertainty, the British multinational enterprise software company has revised its annual revenue forecast, slightly dimming its growth expectations.

Sage Group, which has long been recognized as a leading force in the enterprise software sector, is now projecting an annual revenue growth of 9%, a marginal step back from its previous forecast of 10%. Analysts at Stifel have indicated that this revision comes after Sage Group reported an H1 underlying revenue of 1.15 billion pounds ($1.46 billion), which did not meet consensus estimates—a slightly lower figure of 1.17 billion pounds was predicted.

The share value of Sage Group reached its lowest in 6 months, marking a significant downturn for the company that had been trading up at all time highs very recently.

Whilst the drop looks bad on the day, the longer term trajectory for the firm has been very bullish, with gains over the past 12 months (after today's pullback) still up a lofty 33.13%.

To mitigate the impact of this forecast slash, Sage Group is likely to pursue strategic initiatives aimed at revitalizing growth and renewing investor confidence. Some of the highlights raised in the report are

  • Continuing to invest in the business to drive sustainable growth.
  • Expecting costs to increase at a slower rate than revenue, resulting in
    margin trending upwards in FY24 and beyond

In H1 24 Sage increased underlying total revenue by 10% to £1,152m:

  • Recurring revenue of £1,112m, including software subscription and
    other recurring revenue (i.e. maintenance and support).
  • Other revenue of £40m, mainly professional services and licences.

For Sage Group, a company that has historically held a strong position in the enterprise software market, the road ahead may require significant adjustments to align with the changing economic landscape and technological demands.

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The AskTraders Analyst Team features experts in technical and fundamental analysis, as well as traders specializing in stocks, forex, and cryptocurrency.