ii view: Sage Group predicts robust growth in 2026
Now aided by AI assistant Sage Copilot and boasting an enviable dividend track record. Analyst Keith Bowman looks at prospects.
19th November 2025 11:10
by Keith Bowman from interactive investor
Full-year results to 30 September
- Adjusted revenues up 10% to £2.51 billion
- Adjusted operating profit up 16% to £600 million
- Final dividend of 14.4p per share
- Total dividend for the year up 7% to 21.85p per share
- New £300 million share buyback programme
- Net debt up 61% to £1.19 billion from a year ago
Chief executive Steve Hare said:
"Sage delivered another good performance in FY25. Strong, broad-based revenue growth and significant margin expansion reflect our focus on strategic execution, our resilient business model, and continuing investment in our products, our platform and our people.
"We are excited by the pace of technological change. AI is opening up new possibilities for businesses and creating a significant opportunity for Sage, enabling us to enhance and accelerate the benefits our software provides.”
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ii round-up:
Sage Group (The) (LSE:SGE) today predicted at least 9% growth in sales for the year to September 2026, with the accounting, HR and payroll solutions software provider announcing a new share buyback programme of up to £300 million.
Adjusted sales for the year to 30 September 2025 rose 10% to £2.51 billion, including an acceleration in growth to 9.6% in the final quarter from 9% in Q3. Annual adjusted operating profit rose 16% to £600 million, with Sage also predicting a further expansion in the adjusted profit margin of 27.6% in the year ahead.
Shares in the FTSE 100 company rose 3% in UK trading having come into these latest results little changed over the last year. That’s similar to US rival and owner of QuickBooks, Intuit Inc (NASDAQ:INTU), and behind a near one-fifth rise in the FTSE 100 index.
Sage’s accounting and payroll solutions software is used by millions of small- and medium-sized enterprises (SMEs) around the world.
Revenues stripped of acquisitions for North America rose 11% to £1.14 billion, driven by demand from mid-sized businesses. Sales on the same basis for the combined UK, Ireland, Asia and Africa region climbed 9% to £729 million, while sales for the remaining European region improved 6% to £646 million.
A final dividend of 14p per share and payable to eligible shareholders on 10 February, takes the total dividend for the year up 7% to 21.85p per share.
Broker Morgan Stanley reiterated its ‘overweight’ stance on Sage shares post the news, flagging a fair value share price of 1,400p per share.
A first-quarter trading update is scheduled for 27 January.
ii view:
Started in 1981 and headquartered in Newcastle Upon Tyne, Sage came to the UK stock market in 1989. Today it employs over 10,000 people. The US generated more revenues during 2024 at 39% with other major markets including the UK at 20% and France 13%. Competitors include both Microsoft Corp (NASDAQ:MSFT) and SAP SE (XETRA:SAP).
For investors, the introduction of trade tariffs in the US is likely to have raised costs for many of its customers, making business and even survival that bit harder. Similarly, in the UK, a previous increase in employee related taxes will have done the same here. Competition away from accounting software is not to be ignored with the likes of Workday Inc Class A (NASDAQ:WDAY) pushing hard, while the longer-term impact of AI on the world of accounting is still yet to play out.
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More favourably, management continues to forecast growth in sales and profit margin. Investment in artificial intelligence tools is being made. A diversity of both product and geographical region exists, while more than 20 years of consecutive annual dividend increases leave the shares on a forecast dividend yield of a modest 2%.
On balance, and despite ongoing risks, this well-managed UK software company looks to remain worthy of consideration for many diversified investor portfolios.
Positives:
- Product and geographical diversity
- Progressive dividend policy
Negatives:
- Uncertain economic outlook
- Subject to currency movements
The average rating of stock market analysts:
Strong hold
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