Looks like a painful exercise and an indication that all really isn't well at Sage.
I bought in at 581 and doubled up today at 642 -- I'm wondering now if that was wise?
Often when you panic sack a lot of sales people and 30 seems quite a lot it's a scapegoat exercise for the fact that maybe the software isn't working properly, or there are missing features preventing the customer buying, or you are losing to competition -- sacking the sales people rather than fixing those issues sometimes seems like the macho thing to be seen to be doing, maybe?
It concludes with these caveats against competition, can anyone comment if Sage are addressing these shortfalls, which seem pretty fundamental to me -- I was a bit shocked to learn the software doesn't allow repeatable items like invoices, which seems a fairly noddy thing to implement and considering the age of the company, is a negligent omission in my view.
This is the conclusion from the link below:-
""""There isn't an option to create recurring invoices, which may be inconvenient if you offer any subscription products or services.
The system lacks the ability to schedule automatic payment reminders, track billable hours or add expenses to invoices. As a workaround, you can manually enter billable time and expenses to invoices, but there isn't a built-in feature that streamlines these tasks, and you can't attach receipts to invoices.
It doesn't create purchase orders, which would be useful features for businesses that sell products.
Sage Business Cloud Accounting has an attractive dashboard with graphs and charts that give you a clear overview of your business's health. With the Start plan, you can create invoices, manage your expenses and run a variety of reports to monitor your business's financial health. With the Accounting plan, you can create quotes and estimates and convert them to invoices and track inventory. However, it lacks some of the timesaving automations that many of its competitors offer, including payment reminders, recurring invoices and suggested reconciliation matches. It also lacks the ability to create purchase orders. """"
"LSE:SGE:Sage was always one of those companies you wouldn't bet against. Yes, the rating was high, but the numbers tended to justify the market's generosity, and any wobble - there were a few - was a buying opportunity. However, a 20% plunge at ..."
If they can maintain a 27-30% operating margin and grow at 7% a year, this could be worth a fortune in years to come :-
That's unless you think Microsoft (less so perhaps); Intuit and Xero are going to eat their lunch !!
""Sage Group tumbled on Friday as it cut its full-year guidance to reflect "inconsistent operational execution".
In an update for the six months to the end of March 2018, the software company said it now expects around 7% organic revenue growth for FY18, down from previous guidance of 8%. Guidance for the organic operating margin was unchanged at 27.5%.
Organic revenue growth and subscription growth was lower than management expectations due to inconsistent operational execution. Sage reported organic revenue growth of 6.3% for the period, down from 7.4% growth in the first half of the previous year, as it took a hit from a drop in recurring revenue growth and contract licence slippage in the enterprise segment.
Meanwhile, software subscription growth came in at 25.3%, down from 30.6% in the same period a year ago, but software and software-related services growth was 7.1% compared to a decline of 7.3%.
Sages rolling mid-term guidance remains that organic revenue growth will reach 10% on a sustainable basis and organic operating margins will be at least 27%. The company said further cost savings of 500 basis points will be delivered over this period and either reinvested for growth or realised as an increase to operating margin. Over the long-term, the group aims to achieve organic operating margins of at least 30%.
Chief executive officer Stephen Kelly said: "Growth in H1 18 was lower than our expectations as the pace of execution has been slower than we planned. The market opportunity as outlined at capital markets day 2018 remains unchanged.
The revised revenue guidance targets for FY18 reflect both the performance in H1 18, but also our diligence in ensuring that we focus on recurring revenue to drive sustainable acceleration throughout the rest of FY18 as a platform into FY19. We will provide a further update on our plans at our H1 18 results announcement on 2 May 2018."""
" Chief executive Stephen Kelly said the market opportunity for change, outlined at its recent capital markets day, remained unchanged.
'The revised revenue guidance targets for financial year 2018 reflect both the performance in the first half, but also our diligence in ensuring that we focus on recurring revenue to drive sustainable acceleration throughout the rest of the year as a platform into financial year 2019,' he said."
This is more significant for growing the yield and SP
Just having a look at the technical position underlying the fall in Sage's share price - considering the recent RNS' and the declared short positions. There are no declared short positions greater than 0.5% - so the hedge funds are not (to any notifiable extent) selling Sage short. Aviva have declared that they have lent 0.12% of stock - presumably to Evil Knieval to short. Other institutions are holding their stock.
So the sell-side looks pretty weak and very vulnerable - should buyers look to take advantage of the current price on offer. Also, any seller short of shares will at some point need to buy back in and return the shares borrowed.
I'm thus taking the opportunity to get on the other side of Evil's position before he un-winds. in a tight market for Sage stock (which is the norm) the share price can only go one way.
ice of Mr Evil Knievil to generate some liquidity in Sage. It's a damn difficult share to jump onto, particularly if you're a value investor, as it always looks so expensive. This is due to its 'economic moat' - its strong position in the market - reflected in the 16% Return on Capital, 27% Operating Profit Margin of 27%. At the current 690p share price you get a nice 2.2% yield (based on historic paid dividends).
Hilarious Evils' mention of Microsoft as a competitor - Microsoft Money was no longer sold or supported as an accounting package back in 2009 - see https://en.wikipedia.org/wiki/Microsoft_Money
Microsoft is a strategic partner of Sage and they have a global technology agreement involving Azure and Office 365 cloud platform integration.
I don't think Mr Evil has done his homework on this one.
"I offer a titchy bit more on Sage (LON:SGE) there is a long way to go. But the fundamental problem is that SGEs software, which has been such a walloping success over the years, now has competition from Microsoft, Xero and Intuit. Accountants tend to be loyal to the devil they know but .
Tangible net liabilities are minus £1 billion and the capitalisation is £8 billion. Thats a big gap."
This is one of the comments, how widely representative it is I don't know :-
John Toon 6 months ago
For a review like this to come up with a result that reflects the exact opposite of what is happening in the market is pretty worrying!
Sage were very much late to the cloud party and their product is way behind the other two previously mentioned. It might be easy to set up but the world has moved on from direct bank feeds and its all about increased automation and integration with other 3rd party apps.
"Sage will find it challenging to meet its full-year targets, reckon analysts at Deutsche Bank, after a weak first quarter and growing competition from the likes of Quickbooks and Xero.
DB, which maintained its 'hold' rating and 740p target, said organic revenue growth of 6.3%, with 7% growth in recurring revenue, was due to "sales execution issues" and subscription growth slowed to 26% from 30% the prior year.
Management, which blamed the shortfall on a training initiative across the sales force which cost around two weeks of lost productivity, reiterated full-year guidance of "around 8% organic and around 27.5% organic operating margin" but said the first half would be closer to 7%, with flat margins year-on-year, which analysts said left the second half "looking particularly challenging".
Estimating the impact of the Intacct and Fairsail acquisitions, along with the US Payments divestment, the analysts add around two percentage points to the top line versus last year's reporting metric, on which Sage managed 5.9%, therefore, organic growth has actually declined by around 1.5pp on an 'apples to apples' basis.
With little detail given by management around Sage One, other than to say that the focus remains more toward ARR than subscriptions, the analysts felt this suggested that recent efforts to increase pricing to more reasonable levels are constraining subscription growth/driving churn, in line with the experience in 2H17."
Quarterly report to 31.12.17 sounds good but due to perversity of the markets they had expected better. See; https://www.investegate.co.uk/sage-group-plc--sge-/rns/q1-trading-update/201801240700057273C/
It's the subtle sting in the tail for a company deriving a lot of profit from across the pond and Europe "Sterling has strengthened against all major currencies except the Euro in our operating territories, leading to exchange rate headwinds, particularly in the translation of the US Dollar. "
"In keeping with the accounting profession it serves, the rise in shares at software company LSE:SGE:Sage has been steady and unassuming. But when you consider we're talking about a journey that began in 2012, when the shares stood at a mere 254p, ..."
"LSE:SGE:Sage's weaker-than-expected start to the financial year had the City boo-boys patting themselves on the back and the share price below 600p for the first time since June. But the accountancy software giant had already warned that growth ..."
"The Questor Column:
Sage investment? Not when shares trade at 18 times forecast earnings:
Last months Sage Summit at Londons ExCel centre had a lot to live up to. When the FTSE 100 software company put on its business conference for distribution partrillioners, customers and fun-loving accountants in Chicago last summer, Sir Richard Branson and Gwyneth Paltrow put in an appearance. Sage has made good progress in migrating its existing customers on to more lucrative subscription contracts and is simplifying the business to cut cost. Even if it stagnates, Sage has a lot of appeal, including 80% recurring revenues. Its ratio of net debt to earnings is also the lowest it has been for three years, leaving scope for £150 million in share buybacks from this year on.
The niggle is that its shares are trading at 18 times next years forecast earnings, suggesting it is being viewed as a growth stock just as there are signs of declining momentum. If only its sales figures were as impressive as some of its get-togethers. There is currently better value elsewhere.
marcher thanks for the link. Quite interesting to compare.
Whatit does imply though is that Xero is a much more comprehensive package.
There seems to be no clear price comparison as the starting prices are meaningless unless you specify the time / what features are included in the price etc.
Seems inconclusive, if not more favourably weighted toward Xero.
I read the article very carefully.
Apart from general stuff about the overall market having gone up, and that therefore it will come back down again at some point, and general stuff showing how clever the writer is about interpreting patterns in charts, what the article seems to say about Sage specifically is that it might go up, or it might go down, but that it might stay the same for a while.
"A lesson in trading from SageLSE:SGE:Sage has been one of my favourite shares and now the chart pattern could be sending a warning that what happened to this share could also take place in the general market as measured by the FTSE 100. It is ..."
Hi GI, your link referred to an article from April 2016 and compared Sage 50 with Xero.
In the meantime Sage have upped their game with SageOne which is also cloud based.
Here is a more recent comparison:-
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