Sage Experiences Biggest Drop in 24 Years
Sage Experienced Biggest Drop in 24 Years
According to Bloomberg, Sage Group just experienced a record-low drop which saw their shares fall by a total of 20% in London. The fall has been described by Sage executives as “the biggest drop since July 1993”.
Sage Group, the largest software company in the UK, released warnings after their sales efforts missed by a good country mile this year. However, analysts flagged their concerns already in January. “While the outlook for the full year 2018 organic margin is unchanged at 27.5%, clearly there is more uncertainty around whether that is achievable” explained analysts at Shore Capital on June 29th.
The decline should not come as a complete surprise. Sage Group has struggled over the past few years to adapt to new industry trends. With cloud-based solutions rising in popularity, Sage simply took too long in developing a good and functional cloud-based alternative to their more traditional on-premise solutions.
By clinging to the past, Sage lost plenty of their market share, and especially in their home market of the UK, to Xero. This negative development could have been avoided by taking a more proactive approach to technological developments. Ben Kepes at ComputerWorld points out that “While all three of the traditional SMB accounting software vendors, Intuit, Sage and MYOB, could rightly be accused of being sloth-like in their move to the cloud, my take is that Sage was the slowest of the lot”.
It appears as if measures are being taken to cancel out their poor results. The company is currently in the process of transitioning to a subscription-based model in the attempt of getting customers to purchase their new cloud products.
Chief Executive Officer at Sage Group, Stephen Kelly, responded to the news with the following: “Growth over the first half of 2018 was lower than our expectations as the pace of expectations has been slower than we planned”.
So, will Sage be able to turn the tide? The next few months will show.
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