The Sage Group (SGE) H2 2025 earnings summary

Executive summary

• Achieved double-digit underlying ARR growth for the fourth consecutive year, reflecting a resilient business model and disciplined cost control driving operating profit, margin, and EPS expansion.

• Strong profit margin and EPS expansion, with robust cash flows supporting both organic and inorganic investments and shareholder returns.

• Accelerated innovation through AI-powered solutions, including Sage Copilot and cloud-native products, driving customer value and operational efficiency.

• Strategic focus on connecting products and SMBs, growing customer base, and delivering AI-driven productivity and insights, supported by targeted acquisitions and product enhancements.

Financial highlights

• Underlying total revenue rose 10% year-over-year to £2,513m, driven by the subscription-based model and recurring revenue up 10% to £2,436m.

• Operating profit margin expanded by 150 basis points to 23.9%, with underlying operating profit up 17% to £600m.

• Underlying EPS increased by 18% to 43.2 pence; profit after tax rose 14% to £423m.

• Cash conversion reached 110%, with £660m generated from operations and free cash flow of £517m.

• Dividend per share grew 7% to 21.85p, with a final dividend of 14.4p.

Outlook and guidance

• Entering FY2026 with strong momentum; organic total revenue growth expected at 9% or above.

• Operating margins anticipated to continue trending upwards, with margin expansion at the lower end of the 50-100 basis point range.

• Continued investment in AI and product innovation to drive future growth.