- Sage Group has reported a near 5% rise in recurring revenue for the final three months of 2020, as it confirms plans to 'progressively increase investment' over the coming year.

The Group's recurring revenue increased by 4.7% to £408 million, supported by software subscription growth of 11.3% to £303 million. As a result, subscription penetration increased to 68% (FY20: 65%).

Regionally, North America achieved growth in recurring revenue of 6.4% to £160 million for the three months to December 31, 2020, compared with £150m in the first quarter of 2020, driven principally by a good performance from Sage Intacct.

In Northern Europe recurring revenue increased by 3.3% to £96 million (Q1 20: £93 million), reflecting mainly momentum in cloud connected, together with growth in cloud native solutions. Performance in other regions was largely in line with expectations.

Total Group revenue increased by 1.4% to £447 million.

In terms of the portfolio view of recurring revenue, the Future Sage Business Cloud Opportunity (products within, or to be migrated to, Sage Business Cloud) grew by 6.2% to £366 million. This was underpinned by strong growth in cloud native revenue of 26.7% to £63 million (Q1 20: £50 million), primarily through new customer acquisition, and further growth in cloud connected.

Sage Business Cloud penetration increased to 64% (FY20: 61%).

Other revenue (SSRS and processing) decreased by 24.0% to £39 million, a similar rate of decline to that seen in FY20. This reduction is in line with Sage's strategy to transition away from licence sales and professional services revenue, and to increase the Group's focus on subscription revenue.

Jonathan Howell, chief financial officer, said: 'We have continued to deliver against our strategy in the first quarter, growing recurring revenue in line with our plan for the year, supported by good demand for Sage Business Cloud solutions. Accordingly, we reiterate our guidance for the full year, as set out in our FY20 results announcement.

He added: 'While the pandemic increases uncertainty in the near term, we continue to expect that our investment in Sage Business Cloud will drive the growth and long-term success of Sage.'

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