The Sage Group plc

Good morning, everyone. As usual, I'll briefly run through the key numbers and the performance of the business. And after that, we can open for Q&A. And as a reminder, all numbers in the trading statement are reported on an underlying basis and less otherwise stated. Sage has delivered a strong performance throughout the first nine months in line with expectations, growing both recurring and total revenue by double digits. We increased recurring revenue by 12% to over 1.5 billion. This was driven by continued strong growth in Sage Business Cloud of 29% to 1.2 billion, with growth well balanced between new and existing customers. Subscription revenue increased by 17% to nearly 1.3 billion, resulting in subscription penetration of 79% up from 74% this time last year. Regionally, North America increased recurring revenue by 16% to $702 million, driven by strength in Sage Intact, together with a good performance across the Sage 200 and Sage 50 cloud franchises. In the UK IA region, recurring revenue grew by 11% to $456 million. This was driven by continued progress in cloud native, including Sage Intact and Sage's small business solutions, alongside growth in Sage 50 Cloud. And in Europe, recurring revenue grew by 7% to $404 million, with good growth across Sage Business Cloud, including Sage 200 Cloud and Sage HR. This growth was partly offset by the Swiss disposal in Q1 of last year. Looking at the portfolio view, recurring revenue for the future Sage Business Cloud opportunity increased by 13% to over $1.4 billion. Cloud-native revenue grew by 36% to $436 million. This reflects continuing good levels of new customer acquisition together with the impact of acquisitions in FY22. And Cloud Connected has also continued to grow strongly, driven by existing and new customers, together with migrations to Sage Business Cloud. As a result, Sage Business Cloud penetration has increased to 83%, up from 73% last year, with more customers able to connect to the Sage network. Finally, recurring revenue in the non-Sage Business Cloud portfolio increased by 3% to $113 million. Moving on to the Q3 standalone, recurring revenue increased by 11% to $523 million against a strengthening comparator driven by continued growth across Sage Business Cloud. Total revenue for the first nine months grew by 10% to $1.6 billion, and for Q3, Total revenue also grew by 10% to $543 million. Other revenue continued to decline in line with our strategy. Finishing on the outlook, with growth in the first nine months in line with our plan, we reiterate our full-year guidance as set out at the first half. Organic recurring revenue growth is expected to be in the region of 11%. other revenue will continue to decline in line with strategy. And we expect operating margins to trend upwards in FY23 and beyond. And so in summary, Sage has delivered a strong performance throughout the first nine months in line with expectations. And we enter the final quarter with strong momentum as we continue to focus on delivering sustainable, efficient growth. Thank you. And now let's open for questions.

Thank you. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Please stand by while we prepare your first question. The first question comes from Adam Wood at Morgan Stanley. Adam, your line is open. Please go ahead.

Hi, good morning, Jonathan, and thanks for taking the question. I just wanted to clarify, obviously on the recurring side, we've seen a very slight slowdown in the third quarter, and the unchanged guide from the full year means we probably expect to see another very slight slowdown in the fourth quarter. You've obviously flagged that you've got tougher comparisons on the second half. I just wanted to get a confirmation that it is just still those tough base comps or slightly tougher base comps that's driving that, and there's no kind of underlying change in the macro or the market that you're seeing, that you're signaling with that, please. Thank you.