Sage share price tumbles as growth targets remain cautious

Sage’s (LON:SGE) share price has been amongst the biggest fallers on the FTSE 100 index today, as investors digested news from the company’s capital markets day. The UK’s largest software group by market capitalisation said that its growth plans remain cautious, at least in the short term.

“The next two to three years are a transitional period for Sage as we improve the quality of revenue and shift investment materially to drive sustainable growth,” said Stephen Kelly, Sage’s chief executive. “As we do this, we expect to maintain annual organic revenue growth of 6% and operating profit margin of 28%, in-line with our plans for 2015. Beyond the transition period, we expect revenue growth to accelerate and the operating margin to expand.”
Sage acknowledged that it had been slow to respond to changes in the technology sector. Ahead of his first strategy update to analysts, Kelly, who took over as Sage chief executive in November, said that the company could be the leading provider of small-business software if it focused on products delivered online to start-ups and small and medium-sized enterprises. “We failed to execute very well, we were a bit slow to the Cloud, we could have done way better on cross selling,” the CEO remarked. “Our ambition has risen significantly, there’s a tremendous potential for Sage to be the No.1 globally,” he added.
The FTSE 100-listed group is attempting to attract millions of new customers with a suite of mobile accounting apps that could allow business owners to run their company books from a smartphone. Sage will also restructure its operations to reduce costs and free up funds to expand its marketing budget.
By 14:26 BST, Sage’s share price had plunged 4.21 percent to 525.91p. Since the beginning of the year, the accountancy software company has seen its stock rising almost 14 percent.
As of 15:04 BST, Wednesday, 24 June, The Sage Group plc share price is 525.25p.