Update on financial reporting

7 December 2023

As announced in Sage's FY23 results on 22 November 2023, The Sage Group plc. ("Sage" or the "Group") intends to simplify its revenue reporting to enable continued, clear understanding of progress and performance given the recent evolution of the Group, as set out below. These changes will be introduced in Sage's Q1 24 trading update, and will apply to Sage's future financial reporting.

Move from recurring to total revenue

Sage has previously provided revenue metrics and analysis based primarily on recurring revenue. Going forward, Sage will focus its reporting on total revenue, as total and recurring revenue growth rates increasingly converge as a result of the reduction in other revenue (SSRS), in line with the Group's strategy[1]. To facilitate comparison with prior periods, the appendix to this announcement sets out key total revenue figures for FY22 and FY23. Annualised Recurring Revenue (ARR) growth will continue to be provided as a strategic KPI.

Focus on revenue performance by region

Previously Sage has reported revenue performance by region, by portfolio and by type. Reflecting the strong progress made in Sage's transition to subscription and the cloud, revenue analysis by portfolio and by type, together with cloud native ARR and Sage Business Cloud penetration[2], will no longer be provided. In future, Sage will principally report total revenue performance, including commentary on the drivers of growth, on a regional basis. In addition, certain metrics including cloud native total revenue, Sage Business Cloud total revenue and subscription revenue, will be disclosed on a Group basis.

Sage's primary annual and interim financial statements and notes to the accounts will not be impacted by these changes.

APPENDIX - Underlying Total Revenue[3]