Sage shares fell nearly 5% on Wednesday after the company disappointed expectations on organic revenue growth.
Organic revenues grew by 6.3% over the final three months of 2017, the company´s fiscal 2018 first quarter, behind management´s earlier guidance for 8% growth.
“We expect acceleration throughout the year including a stronger Q2 and we reiterate our full year guidance of around 8% organic revenue growth and around 27.5% organic operating margin for FY18,” said Steve Hare, chief financial officer at Sage.
“As we outlined at the time of the full year results, we have invested heavily in sales training in the first quarter to set up the business for success, particularly in Sage Business Cloud, resulting in the delay of some revenue into the second quarter. Quarterly phasing of organic revenue growth is therefore expected to be similar to prior financial years,” explained Hare.
Sage shares have had a strong run, and still remain up about 25% over the past year.
In November, the company beat results forecasts and indicated it was looking at possible acquisition targets.
In a trading update on Wednesday, the UK-listed provider of accounting software also said that software subscriptions had grown 26% over the final three months of 2017.
Organic software and software related services (SSRS) revenue increased by 4%, which Sage claimed was a reflection of continuing strong performance in training and services and enterprise management, offset by a decline in revenues from “other licences”.
On a regional basis, North America has performed strongly with a strong contribution from Sage Business Cloud, given the region´s significant tilt towards cloud technology.
However, France continued to significantly underperform relative to the rest of the group, weighing on both organic revenue and recurring revenue growth. Sage said it still expected recovery in France during the second half of 2018.