Sage share price tumbles as group trims revenue guidance

First-half growth falls short of company expectations

Sage share price tumbles as group trims revenue guidance

Shares in The Sage Group (LON:SGE) have posted a hefty fall in London in today’s session as the blue-chip software maker trimmed its revenue guidance. The move came as the group’s first-half growth missed estimates.

As of 12:19 BST, Sage’s share price had given up 10.27 percent to 603.00p, pressuring the benchmark FTSE 100 index which currently stands 0.11 percent higher at 7,266.36 points. The group’s shares have lost just under 10 percent of their value over the past year, as compared with less than a one-percent dip in the Footsie.

Sage trims revenue guidance

The Sage Group announced in an unscheduled trading update today that it had revised down its outlook from about eight-percent organic revenue growth to around seven percent. The company further posted organic revenue growth of 6.3 percent for the six months ended March 31, impacted by a decline in recurring revenue growth, as well as contract licence slippage in the enterprise segment. The software maker meanwhile left its organic operating margin guidance unchanged at 27.5 percent.

“Growth in H1 18 was lower than our expectations as the pace of execution has been slower than we planned,” Sage’s chief executive Stephen Kelly commented in the statement, adding that the company would provide a further update on our plans at its interim results announcement on May 2.

Analysts weigh in on update

“The unchanged margin guidance raises the question of whether further investments are required, or if this is purely an execution/cultural shift that is being slow to take effect,” analysts at UBS said, as quoted by Proactive Investors. “We expect the shares to be impacted much more than the 100bp cut to guidance might imply to earnings, given the seeming challenges in the transition and lingering risks perceived to future targets.”

As of 12:28 BST, Friday, 13 April, The Sage Group plc share price is 603.00p.

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