The Sage Group plc

Good morning, everyone. Welcome to the Q3 Trading Update Call for the Sage Group. Your presenter today will be Jonathan Howell, Chief Financial Officer, who is joined by James Sanford, Head of Investor Relations. After the speaker's presentation, there will be a question and answer session. To ask a question, you will need to press star 1 and 1. I would now like to hand the conference over to Mr. Howell. Please go ahead.

Thank you very much. Good morning, everyone, and welcome to Sage's Q3 trading update. I'll briefly run through the key numbers and the performance of the business. And after that, we can open for Q&A. Sage has performed well in the first nine months, sustaining good momentum and delivering revenue growth in line with expectations. Total revenue for the group increased by 9% to over 1.7 billion, driven by continued growth in demand for our software and services. Regionally, North America revenue grew by 12% to 786 million, with a good performance in Sage Intacct, together with continuing growth in Sage 50 Cloud, and Sage 200 Cloud. In the UK IA region, revenue grew by 8% to 497 million. This was driven by strong progress in cloud-native solutions, including Sage Intacct, Sage Accounting, and Sage Payroll, alongside growth in Sage 50 Cloud. And in Europe, revenue increased by 6% to $454 million, with a strong performance, particularly in Sage 200 Cloud, HR, and Payroll. Turning now to the main performance drivers. Sage Business Cloud revenue grew by 16% to almost $1.4 billion. with growth remaining well-balanced between new and existing customers. Cloud-native revenue grew by 23% to $539 million, reflecting continued success in new customer acquisition. And in cloud-connected, revenue growth was driven by both existing and new customers. Recurring revenue increased by 10%, to almost 1.7 billion, representing 97% of total revenue. This includes subscription revenue growth of 13%, resulting in subscription penetration of 82%, up from 79% this time last year. For Q3 standalone, total revenue increased by 9%, to $584 million, driven by continued growth across Sage Business Cloud. And 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 half year. Organic total revenue growth is expected to be broadly in line with H1, and we expect operating margins to trend upwards in FY24 and beyond. So in summary, Sage has performed well throughout the first nine months in line with expectations. We enter the final quarter with good momentum as we continue to focus on transforming the workflows of small and mid-sized businesses to deliver sustainable, efficient growth. Thank you. And now let's open for questions.

Thank you. If you wish to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. We will take our first question. Your first question comes from the line of Adam Wood from Morgan Stanley. Please go ahead. Your line is open.