The Sage Group plc

Sage reported first-half FY '26 revenue growth of 11%, recurring revenue growth of 11%, operating profit up 15% to GBP 326 million, and underlying EPS up 16% to 23.7p. Operating margin expanded 80 basis points to 23.9%, cash conversion was 116%, operating cash flow 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 was GBP 200 million versus GBP 190 million in H1 last year, and the interim dividend was raised 8% to 8.05p. For FY '26, management now expects organic revenue growth above 9% and said operating margins should continue to trend upward.

Stephen Hare framed the quarter as validation of Sage’s strategy to embed trusted AI into mission-critical finance, HR and payroll workflows. He emphasized that Sage’s advantage is not just AI adoption, but AI built around confidence, control and accountability in regulated environments where accuracy matters. His tone was confident and strategic, with repeated references to Sage’s decade-long AI investment, its ecosystem, and its ability to make customers more productive while expanding the market opportunity.

Jacqui Cartin highlighted broad-based execution, with revenue up 11%, operating profit up 15% to GBP 326 million, and EPS up 16% to 23.7p. She noted margin expansion of 80 bps to 23.9%, cash conversion of 116%, operating cash flow of GBP 378 million, free cash flow of GBP 241 million, and liquidity of GBP 1.1 billion. She also pointed to leverage of around 2x, progressive dividends, GBP 600 million of buybacks announced with around GBP 350 million completed in H1, and tuck-in M&A as a capital allocation priority. On outlook, she said FY '26 organic revenue growth is now expected to be above 9% and margins should continue to trend upward.

Analysts focused on what is driving the revenue/ARR acceleration, how much came from pricing versus cross-sell and AI monetization, and whether the 102% renewal rate is sustainable. Management said growth was broad-based and underpinned by strong execution, with AI monetization beginning to show up in renewal rates, pricing around 5.5%, more cross-sell/upsell, and slightly better churn. Questions also probed the Doyen AI acquisition, with Sage saying it is meant to improve migration and implementation tools for bringing customers to Intacct. On competition and AI-native rivals, Steve Hare argued Sage is also 'native AI,' combining large language models with domain expertise and trusted workflows, and said the immediate priority is adoption first, monetization later.