UK software maker Sage has warned that its business is not growing as expected, primarily due to the woeful economic situation across most of Europe.
Sage, seller of accountancy and HR software to small and medium businesses, published a statement on its website ahead of its latest financial results which said while growth in the UK and Ireland and the US was good European performance was "flat" and expected growth had failed to materialise.
"North America continued to demonstrate the sequential quarter by quarter improvement in trading which was anticipated to be a feature of the year," the interim statement said.
"The variable trading performance evident in the first half in Europe continued in the third quarter," the statement added. "The UK and Ireland business demonstrated good growth although conditions in mainland European markets have toughened. Overall performance in Europe has been flat and the anticipated improvement in growth over the first half has not yet materialised."
The statement added Sage’s recent acquisition of Brazilian accounting, tax and payroll and regulatory content software vendor would help expand its presence in new territories. Growth South Africa and Australia was also impressive, Sage said.
CEO Guy Berruyer said: "Whilst we remain cautious on the outlook for Europe, and watchful of this region’s economic climate, the strong fundamentals of our business model remain and we continue to make good progress in executing against our business priorities."
Shares in Sage dipped 3% as a result of statement.
Phil Codling of TechMarketView said: "In today’s brief update, Sage says the UK and Ireland have managed "good growth", but mainland Europe is clearly proving a tougher (and toughening) place to grow. You have to hope tomorrow’s Sage investor day will provide more for analysts to chew on. We look forward to hearing the company’s long-anticipated, and much-needed, multi-year growth strategy."
As well as the economic situation across Europe it is thought that Sage’s business has also been affected by the shift to cloud computing. The company has been criticised for the speed with which it has embraced cloud technology, but has repeatedly denied to CBR that it has been slow to react.
