Sage Group Shares Soar After 400 Million-Pound Share Buyback Plan, Strong Growth

By Najat Kantouar

Sage Group shares soared to their highest level in more than 20 years after the company launched a 400 million pounds ($507.2 million) share buyback program and increased its dividend payout.

In early European trading, shares were up 182 pence, or 16.9%, at 1,259 pence, marking the company's best one-day percentage rise since April 2001. Year-to-date, shares have risen 7% and are up 28% over the past 12 months.

The buyback program--which is expected to start Wednesday and end by June 3, 2025--is supported by the company's strong cash generation and robust financial position, Sage said.

The board also declared a final dividend of 13.50 pence a share, taking the total payout for the year to 20.45 pence a share, up from 19.3 pence a year earlier.

The accounting-software specialist's free cash flow increased 30% over the year to 524 million pounds, reflecting growth in subscription revenue and continued good working capital management, it said. It had cash and liquidity at Sept. 30 of 1.1 billion pounds.

For the year ended Sept. 30, the company posted a rise in pretax profit to 426 million pounds from 282 million pounds a year earlier, missing a consensus of 454.5 million pounds based on the forecasts of seven analysts taken from FactSet.

Operating profit--a key metric for the company--increased to 452 million pounds from 315 million pounds, while underlying operating profit rose to 529 million pounds from 438 million pounds.

Revenue rose to 2.33 billion pounds from 2.18 billion pounds, slightly below market consensus of 2.34 billion pounds, based on the forecasts of 16 analysts. Underlying annualized recurring revenue rose 11% to 2.34 billion pounds.

Underlying operating profit margin was 22.7%, while the operating margin was 19.4% compared with 20.5% and 14.4%, respectively, for the comparable period a year earlier. Organic revenue growth in fiscal 2024 was 9%.

Looking ahead, Sage expects fiscal 2025 organic total revenue growth to be 9% or above, in line with fiscal 2024's growth. It also expects operating margins to trend upward as the group focuses on its expansion strategy.

Write to Najat Kantouar at najat.kantouar@wsj.com

(END) Dow Jones Newswires

November 20, 2024 04:15 ET (09:15 GMT)

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