Disappointing sales wiped nearly £596million off the value of Britain’s biggest software company.
In an underwhelming trading update, Sage blamed ‘inconsistent operational execution’ as it lowered its full-year forecasts. It reported revenue growth of 6.3 per cent in the six months to March 31, compared with 7.4 per cent in the same period last year.
Software subscriptions grew 25.3 per cent cover the period, down from 30.6 per cent in the same period of 2017.
Stephen Kelly, Sage’s chief executive admitted that growth was lower than expected
The announcement caused Sage’s shares to suffer its second worst one-day fall since 1999. They fell 8.1 per cent, or 55p, to 617p.
It follows a change in investor sentiment towards technology stocks that has wiped tens of billions off their value in the past month.
As a result of its disappointing update, Newcastle-based Sage has revised down its full-year revenue guidance from 8 per cent to 7 per cent.
Stephen Kelly, Sage’s chief executive, said: ‘Growth was lower than our expectations as the pace of execution has been lower than we planned.’ Analysts at investment bank Investec called the update ‘worrying’ but added that it was ‘not a disaster’.
Russ Mould, of broker AJ Bell, said it is likely Sage will fail to make up the shortfall needed to meet its new forecasts, raising concerns it will issue another warning in the near future.
‘The company is blaming the weaker than anticipated growth in recurring revenue and software subscriptions on operational issues,’ he added.
‘While in theory this means the company remains in control of its own destiny, there is minimal detail on how these problems will be fixed.
‘Investors will be hoping for greater clarity when the company posts its first-half results in May.’
The FTSE 100 posted its second consecutive wafer-thin gain yesterday, ending the day up 0.09 per cent, or 6.22 points, at 7264.56. The FTSE 250 rose 0.33 per cent, or 65.61 points, to 19838.54.
Micro Focus’ shares were up for a second day after it emerged that vulture US hedge fund Elliott had taken a stake in the tech giant. Micro Focus shares were up 7.6pc on Thursday and ended the day on Friday up a further 3.2 per cent, or 40.5p, at 1299p.
Shares in Telecom Plus, which supplies gas, electricity, phone and broadband services, nosedived after broker Peel Hunt said short-term trading looked ‘somewhat dull’.
The broker reduced the firm’s 2019 profit forecast by £2million to £57million. Its shares plunged 10.9 per cent, or 134p, to 1096p, pushing it to the bottom of the FTSE 250.
Analysts at broker RBC Capital Market downgraded Talk Talk, the phone and broadband provider, over fears it will be unable to compete with a resurgent BT looking to ‘reboot its consumer strategy’. Slashing Talk Talk’s rating from ‘outperform’ to ‘perform’ and its target price from 140p to 125p, RBC added: ‘We think Talk Talk is relatively defenceless against any aggressive BT bundling [of packages], which could lead to heavy subscriber losses.’ Talk Talk’s shares slid 2.2per cent, or 2.7p, to 121.4p.
Lionsgold has made a bid to take control of TRAC Technology
On AIM, shares in Lionsgold, a gold exploration and production firm, shone as it bid £1.35million to take control of TRAC Technology, the firm helping it to develop a digital currency called Goldbloc, which is backed by the precious metal. Lionsgold shares rocketed 34.8 per cent, or 0.8p, to 3.1p.
A dividend hike boosted share in power supply firm XP Power.
The firm reported a 9 per cent increase in orders in the three months ending March 31, as well as a 18 per cent rise in revenue. It declared a 16p per share dividend for the quarter, a 7 per cent increase on the year before.
Shares hopped 5.1 per cent, or 180p yesterday, to 3700p.
Echo Energy shares have soared
Shares in Echo Energy soared after it revealed it had brought gas to the surface from a well in Argentina.
The AIM-listed firm said gas flowed freely from the CSo-85 well, which was once used to drill for oil, without the need for intervention. Echo says it will conduct rigorous testing to determine the well’s reserves and whether it makes commercial sense to start production. It is one of three wells Echo has in the region.
Shares boomed 10.3 per cent or 1.4p, to 15.05p.