The Sage Group plc

Revenue grew 11% in the first half, recurring revenue also grew 11%, operating profit increased 15% to GBP 326 million, and underlying EPS rose 16% to 23.7p. Operating margin expanded 80 basis points to 23.9%, cash conversion was 116%, cash from operations was GBP 378 million, free cash flow was GBP 241 million, and ARR increased by around GBP 275 million to GBP 2.7 billion. Renewal rate by value improved to 102%, new customer acquisition increased to GBP 200 million from GBP 190 million last year, and the interim dividend rose 8% to 8.05p. For FY26, management now expects organic revenue growth above 9% and said operating margins should continue trending upward.

Stephen Hare framed the quarter as evidence that Sage is becoming more valuable through trusted AI embedded in mission-critical finance, HR, and payroll workflows. He emphasized that Sage’s advantage comes from domain expertise, proprietary data, governance, and a scaled ecosystem, not just access to large language models. His tone was confident and strategic, repeatedly stressing that AI should be adopted in a controlled, explainable, and auditable way because “nearly right is wrong” in finance.

Jacqui Cartin said the first half showed accelerating revenue growth, expanding margins, and strong cash generation, with revenue up 11%, operating margin at 23.9%, and EPS up 16% to 23.7p. She highlighted ARR of GBP 2.7 billion, renewal rate by value of 102%, operating profit of GBP 326 million, operating cash flow of GBP 378 million, free cash flow of GBP 241 million, and GBP 1.1 billion of available liquidity. She also noted leverage at around 2x, at the upper end of the 1 to 2x target range, and said capital allocation remains focused on organic investment, tuck-in M&A, dividends, and share buybacks, including GBP 600 million announced and around GBP 350 million completed in H1.

Analysts focused on the drivers of growth acceleration, the sustainability of the 102% renewal rate, AI monetization, competitive pressure from native AI players, and whether ARR momentum can continue. Management said growth was broad-based, with North America up 14% and UKIA up 10%, and that improved renewals reflected pricing, cross-sell, upsell, and slightly better churn. On AI, Stephen Hare said Sage is prioritizing adoption first and monetization later, describing direct AI monetization as still modest, while Jacqui said the growth acceleration is already helped by AI features rolling out in key markets. On competition, Hare argued Sage is also “native AI” given its long AI investment and said trust, accuracy, and compliance remain the key differentiators.