Specialist
Former VP at The Sage Group plc
Agenda
- Sage’s (LON: SGE) market share and competitive position in southern Europe across product lines and customer sizes, focusing on France
- Sage's cloud connected products – demand drivers and uptake trends
- Growth potential for cloud-native products
- Recurring revenue growth outlook
Questions
1.
Could you give us some rough estimate splits of Sage Group’s French revenue across the SSB, SMB, enterprise and accountancies segments?
2.
The company’s key product lines in France seem to have been Sage 50cloud, 100cloud, X3 and Sage 1000. How do revenues split between these key products?
3.
It seems that the main three product lines combined – 100cloud, 50cloud and X3 – generate around 60- 70% of Sage’s revenue. Is the remaining 30-40% of revenue very fragmented across a lot of different products?
4.
Sage’s total revenue declined 1% in 2020, but recurring revenue increased 4%. Organic revenue growth was 2-3% in 2018 and 2019, and the recurring revenue was 3-5%. How have Sage’s core product lines performed relative to growth as a whole in France? Why do you think products have over- or underperformed?
5.
Have any of Sage’s core product lines over- or underperformed vs the total performance of the French market? Are there any product lines where you think Sage is losing, maintaining or gaining market share?
6.
You mentioned SSB represents around 20% of Sage’s revenue, SMB 40% and enterprise 30%. How is demand for cloud-native software developing in the French market across those customer segments? Is that leading to market share declines for Sage, given it doesn’t yet have a cloud-native solution, apart from Sage Accounting, which generates a very small amount of revenue?
7.
Is Sage losing market share in France across certain product lines or customer sizes?
8.
You mentioned Sage might be losing market share in France through its accountant product, HR, payroll and Sage 1000. How much of the company’s revenue in France do those products account for? Is it 10-15%?
9.
100cloud and X3 seem to be the real growth drivers in the French market, both growing at about 10% organic growth. What is driving that? Is that primarily shifting on-premise customers over to the cloud, or is that also driven by a lot of net new customer growth as well?
10.
Could you estimate the penetration of cloud-connected products in France? It sounds as though cloud native is very small at around 1%. Would you say that 60% of customers who are eligible to use cloud connected are on cloud-connected products? How would you think about that relative to the UK or North American market?
11.
Sage’s management mentioned that around 60% of its customers migrated to Sage connected cloud across southern Europe, including in Spain and Portugal. I think it was referring to Sage 50cloud and Sage 200cloud. Are you saying that the penetration for cloud-connected products in France should be up to about 90%?
12.
How much of a threat could it be to Sage that it doesn’t really have a cloud-native product focused on the French market? Will that impact its competitiveness? It seems that competitors are struggling with the same issue.
13.
Are cloud-native players such as Intuit, Xero and Exact coming in and disrupting the market in the SSB segment?
14.
Do you think Sage’s position within the SMB and enterprise segment is very defensible, given its product set relative to competitors and the lack of cloud-native solutions in that market?
15.
What are your thoughts on Sage’s product strategy in the French market? Do you think it puts the company in a position of strength, or are you concerned about the way that it has thought about product development?
16.
Is there anything that you think could be a real threat to the business and its competitive position in France?
17.
What is your outlook for Sage? Organic growth has been low in France, but recurring revenue has been a bit higher at 3-5% YoY. What do you think is actually achievable across those two metrics, given that it seems Sage has converted a sizeable proportion of its revenue base onto cloud-connected products in France?
18.
Would you expect low-to-mid single-digit organic and recurring revenue growth in France across the next 2-3 years? What needs to happen in the French market for Sage to achieve or surpass this expectation?
19.
Is there anything you’d like to reinforce or go over that we’ve covered today?
Gain access to Premium Content
Submit your details to access up to 5 Forum Transcripts or to request a complimentary 48 hour week trial
The information, material and content contained in this transcript (“Content”) is for information purposes only and does not constitute advice of any type or a trade recommendation and should not form the basis of any investment decision.This transcript has been edited by Third Bridge for ease of reading. Third Bridge Group Limited and its affiliates (together “Third Bridge”) make no representation and accept no liability for the Contentor for any errors, omissions or inaccuracies in respect of it. The views of the specialist expressed in the Content are those of the specialist and they are not endorsed by, nor do they represent the opinion of, Third Bridge. Third Bridge reserves all copyright, intellectual and other property rights in the Content. Any modification, reformatting, copying, displaying, distributing, transmitting, publishing, licensing, creating derivative works from, transferring or selling any Content is strictly prohibited
