Peachtree 2015 Annual Report Download - page 13

Performance
In line with our financial targets we achieved 6% organic
revenue growth for the full year. Consistent with the
strategy, we have continued to drive growth through
recurring revenue, particularly soware subscription
revenue which grew by 29% for the year to £315m.
We are aracting customers with the compelling
benefits of subscription relationships.
Growth in the adoption of soware subscription was
buoyed by both Sage One globally and Sage 50 in North
America and Europe. Total recurring revenue of £953m
represents 68% of Group organic revenue.
The SSRS organic revenue decline of 1% to £287m reflects
the continued substitution effect from the transition to a
predominantly recurring revenue model. Growth was 2%
to £161m in processing revenue and is reported separately
for the first time.
Our disciplined approach to managing costs has increased
the organic margin to 27.1% (FY14: 26.5%), achieved despite
incurring the costs of initial investments to support the
next phase of sustainable growth.
Progress with global products
We have increased Sage One paying subscriptions by over
100% to 173,000, supported by a strong performance in the
UK where subscriptions increased to 92,000. Sage One
is emerging as the accounting product of choice for UK
start-up businesses in terms of new monthly subscribers.
Sage One was launched in Brazil, Malaysia and Australia
during the year and global rollout will continue in FY16.
We are investing in our digital presence to enhance
awareness of Sage One as we target the opportunity
of Small & Medium Businesses which are not currently
using a soware solution to run their business.
Our development of Sage Live, a product which we took
from idea to launch in just 26 weeks, continues at pace
with early adopter customers.
We are winning in the market with Sage X3 and have
improved global revenue by 11% (FY14: 7%), demonstrating
focus on growing our market share. Outside our most
mature market for X3, highlights were revenue growth
of 19% in North America, 33% in International and 19%
in Europe excluding France. Accelerating double digit
revenue growth remains the ambition for X3 and we are
concentrating on both mature and emerging markets to
achieve that level of overall growth. Continued investment
in X3 was evidenced with the launch of Sage X3 cloud,
accessed via web-browser and which also provides
customers with rich functionality.
Strategy
One of my first priorities as CEO was to undertake a
thorough review of the business. As part of our review, we
gathered extensive market and external data and engaged
with customers, partners, accountants and colleagues to
develop a long-term plan for sustainable and improved
quality growth. We presented the findings and outlook
to all 13,000 colleagues in April 2015. The FY16 annual
planning cycle was integrated with the refreshed strategy
and activity was directed to growing the value of installed
customer base; new customer acquisition; technology
innovation and taking a market leading position as
Champion for Entrepreneurs and Small & Medium
Businesses. We are now evolving the business model
and moving from federated and disparate product &
country operations to ‘One Sage’ as a means to leverage
our scale where it is meaningful to so do.
Technology disruption has accelerated. The market
opportunity is growing through cloud-platform, mobile-first
applications, browser access to information and big data
analytics. Within this context, we are prioritising new
customer acquisition to capture increased market
share. Sage is seeking to ‘leap-frog’ first generation cloud
competitors through integrated latest generation cloud-
platform products and through scalable digital distribution
channels. Digital presence is a vital enabler so we are also
improving our digital marketing, including by reducing the
number of website domains we operate from over 50 in
support of a compelling and consistent experience.
Read more about
our global products
on pages 32 and 33
“ We are pleased to have met the financial targets set three
years ago. We have already begun the transformation
outlined at the Capital Markets Day in June 2015 and
highlight today clear signs of early progress.
Transformation is rarely linear and it is clear we have
much to do as we manage the operational risks. Our
balanced and sequenced approach, the experience
of the management team, and the strong underlying
characteristics of the business give me confidence in
the delivery of long term, sustainable, high quality growth.”
The Sage Group plc | Annual Report & Accounts 2015 11
FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT