Update on financial reporting

8 December 2022

As announced in Sage's FY22 results on 16 November 2022, Sage intends to evolve its financial reporting by giving greater emphasis to underlying revenue and profit measures, and by amending the presentation of its regional reporting. These changes will be introduced in Sage's Q1 23 trading update, and will apply to Sage's future financial reporting. Further details are set out below.

To facilitate comparison with prior periods, the appendix to this announcement sets out key reporting figures for FY22 reflecting these changes. Sage's primary annual and interim financial statements and notes to the accounts will not be impacted.

Focus on underlying measures

In addition to statutory financial reporting measures, Sage also provides non-GAAP Alternative Performance Measures (APMs) including underlying and organic measures, to help assess financial performance. Underlying measures allow management and investors to understand the performance of the Group on a constant currency basis excluding recurring and non-recurring items, while organic measures also adjust for the impact of acquisitions and disposals[1].

Going forward, Sage will provide financial metrics and analysis including the breakdown of revenue by category, by strategic product portfolio and by region, together with Annualised Recurring Revenue (ARR), on an underlying basis alongside organic growth rates.  Sage Business Cloud penetration and subscription penetration will also be provided on an underlying basis. Previously this information was provided primarily on an organic basis. Certain organic revenue and profit measures including recurring and total revenue by region will continue to be provided in the interim and full year results. 

Sage believes that these changes will enable a clearer understanding of both the organic and inorganic performance of the Group.

Change to regional reporting

Sage also intends to amend the presentation of its regional reporting, to reflect recent changes to the way in which the Group manages its operations. Going forward, Sage will report performance across the following regions: North America, comprising the US, Sage Intacct and Canada; UKIA, comprising Northern Europe (UK & Ireland) and Africa & APAC; and Europe, comprising France, Central Europe and Iberia.

APPENDIX - FY22 underlying measures[2]

Breakdown of revenue by region