Sage focuses on AI development as revenues soar

The accounting and payroll tech specialist said demand remains strong

Software giant Sage says it focussed on developing its AI offer as customers show “curiosity” about its potential.

The FTSE-100 firm issued a trading update to investors on the London Stock Exchange in which it said total revenue was up 11% to more than £2bn across the nine months to the end of June. Sage said it continues to see strong demand across all of its products.

Speaking to investors and analysts, CEO Steve Hare said customers were increasingly opting to incorporate AI technology across their accounts payable function, and in using the technology to spot unusual transactions. Mr Hare said the introduction of Making Tax Digital in the UK and the growing prevalence of e-invoicing in Europe were providing tailwinds.

In its Q3 update, Sage pointed to a 14% increase in revenue across North America to £932m, thanks to strength in its Sage Intacct and Sage 50 and Sage 200 products. In its UK, Ireland and Africa business revenue grew by 10% to £602m, driven by the rapid scaling of Sage Intacct, alongside strong growth in Sage 50 and a good performance from Sage’s cloud native solutions for small businesses.

Meanwhile in Europe, revenue was up 7% to £528m, with growth said to have come from Sage X3 and Sage 200, supported by other accounting, HR and payroll solutions.

Sage Business Cloud revenue grew by 15% to more than £1.7bn, thanks to growing uptake of the firm’s cloud solutions and expansion of its AI capabilities. And within Sage Business Cloud, cloud native revenue increased by 25% to £794m.

That performance helped drive a 12% increase in third quarter revenue to £699m as Q3 software subscription revenue grew by 13% to more than £1.7bn. Sage continues to expect organic revenue growth to be above 9% this year.

Jacqui Cartin, chief financial officer, said: “Sage has delivered nine months of accelerating revenue growth, with momentum strengthening further in the third quarter. This reflects focused execution as we deepen AI capabilities across our platform, scale key products including Sage Intacct, and increase the value customers get from Sage.

“Demand from new and existing customers remains strong, with small and mid-sized businesses increasingly relying on Sage for finance, HR and payroll workflows, where getting it right is essential. This gives us confidence in delivering sustainable, efficient growth, and we reiterate our guidance for the full year.”