Sage issued its full-year 2017 results in with Stephen Kelly, CEO and Steve Hare, CFO looking back at a job well done. Kelly commented, “I am pleased to confirm that the transformation we outlined in and out in FY15 is now complete.”
The results are good. Organic revenue hit £1,696 million, up 6.6% year on year and profits hit 28%. So, is the transformation complete? While Kelly’s statement would seem to indicate that it is the language during the analyst presentation would infer that this is merely the first step on a longer journey.
The announcement focused on progress to date, however, rather than looking forward. Both Kelly and Hare avoided detailing their longer-term future plans, deferring that news until a capital markets day to be held in January.
What has Kelly achieved?
When Kelly and Hare arrived at Sage in 2014, the largest software company based in the UK was a mess. It had multiple products and had made little progress on cloud product suites. It had grown through multiple acquisitions but there was a little synergy or strong culture at the company.
Much of that has changed. Kelly introduced the Sage Foundation. It has donated nearly £2 million in grants to small charities in the last year. Under its umbrella, Sage employees spent nearly 23,000 paid days volunteering for local charities across the globe. This has helped to bring the company together although there is still work to do if the figures from Glassdoor are to be believed. The overall trend has been upwards and as Sage moves from cost-cutting to expansion it could increase even more.
That cost-cutting has seen G&A expenses as a proportion of revenue drop by 5% from 19% to 14%. This is a significant drop and likely to have had a negative impact on morale.