Product Strategy & Technology Vision
Seminar for Investors and Analysts
30 September 2020
© 2020 The Sage Group plc or its licensors. All rights reserved. Important notice
The following presentation is being made only to, and is only directed at, persons to whom such predicting customer behaviour; customers may not respond as we expected to our sales and presentation may lawfully be communicated (“relevant persons”). Any person who is not a marketing activities; the competitive environment; our ability to adapt to technological change; relevant person should not act or rely on this presentation or any of its contents. Information in business interruption or failure of our systems architecture and communication systems; the following presentation relating to the price at which relevant investments have been bought or problems with implementing upgrades to our applications and supporting information technology sold in the past or the yield on such investments cannot be relied upon as a guide to the future infrastructure; any failure to properly use and protect personal customer information and data; performance of such investments. our ability to manage and maintain third party business partnerships; increased regulation of our businesses; any failure to process transactions effectively; any failure to adequately protect This presentation does not constitute an offering of securities or otherwise constitute an invitation against potential fraudulent activities; any significant quality problems or delays; the global or inducement to any person to underwrite, subscribe for or otherwise acquire securities in The macro-economic environment; our inability to attract, retain and develop talented people; our Sage Group plc (the “Company”) or any company which is a subsidiary of the Company ability to repurchase shares; our inability to adequately protect our intellectual property rights; disruptions, expenses and risks associated with any acquisitions and divestitures; amortisation of The release, publication or distribution of this presentation in certain jurisdictions may be acquired intangible assets and impairment charges; our use of debt to finance acquisitions or restricted by law, and therefore persons in such jurisdictions into which this presentation is other activities; and the cost of, and potential adverse results in, litigation involving intellectual released, published or distributed should inform themselves about, and observe, such property, competition authority, shareholder and other matters. These forward-looking statements restrictions. speak only as at the date of this presentation. Except as required by the Financial Conduct Authority, or by law, the Company expressly excludes any obligation to update or revise publicly Certain statements contained in this presentation constitute forward-looking statements. All any forward-looking statement, whether as a result of new information, future events, or statements other than statements of historical facts included in this presentation, including, otherwise. Nothing in the foregoing is intended to or shall exclude any liability for, or remedy in without limitation, those regarding the Company’s financial condition, business strategy, plans respect of, fraudulent misrepresentation. and objectives, are forward-looking statements. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “believes”, “estimates”, Rounding: As a result of rounding throughout this document, it is possible that tables may not “anticipates”, “expects”, “intends”, “may”, “will”, or “should” or, in each case, their negative or cast and change percentages may not calculate precisely other variations or comparable terminology. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance Terminology: Unless stated otherwise all references to revenue are organic or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Materiality: Only figures over £1m are considered to be material for the purposes of this Such forward-looking statements are based on numerous assumptions regarding the Company’s presentation. present and future business strategies and the environment in which the Company will operate in the future. Such risks, uncertainties and other factors include, among others: Inherent difficulty in
© 2020 The Sage Group plc or its licensors. All rights reserved. 2 Agenda
Welcome & Introduction Steve Hare, Chief Executive Officer
Technology Roadmap and Vision Aaron Harris, Chief Technology Officer
Product Strategy Update Lee Perkins, Chief Operating Officer
Wrap-up Steve Hare, Chief Executive Officer
Q&A
© 2020 The Sage Group plc or its licensors. All rights reserved. Today’s presenters
Aaron Harris Lee Perkins Chief Technology Officer Chief Operating Officer
Responsible for Sage’s technology strategy and Responsible for leading Sage’s product strategy and innovation agenda operations globally Previously CTO at Sage Intacct, establishing it as the Previous roles include leading Sage’s UK business, as innovation leader in cloud financial management well as Sage’s commercial and product organisations solutions Joined Sage in 2011 Joined Sage in 2017 20 years’ commercial and general management 25 years of high-tech engineering leadership experience in public and private equity backed companies
© 2020 The Sage Group plc or its licensors. All rights reserved. 4 Sage’s Purpose, Vision and Strategy
Purpose To transform the way people think and work so their organisations can thrive
Vision To become a great SaaS company for customers and colleagues alike
Strategy
Customer success Colleague success Innovation
© 2020 The Sage Group plc or its licensors. All rights reserved. 5 Our focus
Focus
Strategic decisions
Customer Software Portfolio segments categories management
© 2020 The Sage Group plc or its licensors. All rights reserved. 6 Growing Sage Business Cloud
Sage Business Cloud penetration since H1 18
60% Cloud connected 42% 56% Cloud native 14%
50%
40%
30%
20% H1 FY H1 FY H1
FY18 FY19 FY20
© 2020 The Sage Group plc or its licensors. All rights reserved. 7 Sage Business Cloud A digital environment
© 2020 The Sage Group plc or its licensors. All rights reserved. 8 Agenda
Welcome & Introduction Steve Hare, Chief Executive Officer
Technology Roadmap and Vision Aaron Harris, Chief Technology Officer
Product Strategy Update Lee Perkins, Chief Operating Officer
Wrap-up Steve Hare, Chief Executive Officer
Q&A
© 2020 The Sage Group plc or its licensors. All rights reserved. Technology change is accelerating
© 2020 The Sage Group plc or its licensors. All rights reserved. 10 What does this mean for financial management software?
Enough scalability to capture every transaction in real-time, with enough detail to look at all business dimensions
Effortless, economical elasticity for uneven processing requirements
Zero latency analytics
Massive datasets and unconstrained machine learning
Enough computing power to audit every transaction, not just samples
© 2020 The Sage Group plc or its licensors. All rights reserved. 11 The perfect storm
Cloud Computing Digital
Covid-19 Transformation
AI
© 2020 The Sage Group plc or its licensors. All rights reserved. 12 At Sage our technology vision is to…
1. Enable our customers on their Digital Transformation journey
2. Elevate the work of humans
© 2020 The Sage Group plc or its licensors. All rights reserved. 13 Sage Business Cloud
Digital Environment for Finance and People professionals, composed of platforms, applications and services where it is easy to connect, collaborate and do business.
© 2020 The Sage Group plc or its licensors. All rights reserved. 14 Meet Annie Owner, Webalicious Get paid on time Raise invoices Annie is a 28-year old owner of a small website design agency.
Connect with prospects, Track cash flow customers and suppliers Create Sage ID
Setup your business
Connect to Sage Business Cloud Network
Choose our messaging service
Join Sage Business Cloud Network on selected messaging service Create Sage ID
Setup your business
Connect to Sage Business Cloud Network
Choose our messaging service
Join Sage Business Cloud Network on selected messaging service Create Sage ID
Setup your business
Connect to Sage Business Cloud Network
Choose our messaging service
Join Sage Business Cloud Network on selected messaging service Create Sage ID
Setup your business
Connect to Sage Business Cloud Network
Choose our messaging service
Join Sage Business Cloud Network on selected messaging service Create Sage ID
Setup your business
Connect to Sage Business Cloud Network
Choose our messaging service
Join Sage Business Cloud Network on selected messaging service Create Sage ID
Setup your business
Connect to Sage Business Cloud Network
Choose our messaging service
Join Sage Business Cloud Network on selected messaging service Meet Bob Accounts Payable, Inst-a-eat
Pay vendors on time Bob is an Accounts Clerk in the Automated bill Accounts Payable department of a process mid-sized company.
Support on-boarding Accurate up-to-date of new vendors information Add We
Webalicious 7595 Irvine Center Dr, Suite 100, Irvine, CA, 92618 Weber Inc. 10701 N Ambassador Dr, Kansas City, MO, 64153 Weimann Llc. 705 Tri State Pkwy, Gurnee, IL, 60031 Western Plumbing 3045 Santa Carlotta St, La Crescenta-Montrose, CA, 91214 Weston Wall Inc. 2120 Hillhurst Ave, Los Angeles, CA, 90027 Web
Webalicious 7595 Irvine Center Dr, Suite 100, Irvine, CA, 92618 Weber Inc. 10701 N Ambassador Dr, Kansas City, MO, 64153 Weimann Llc. 705 Tri State Pkwy, Gurnee, IL, 60031 Western Plumbing 3045 Santa Carlotta St, La Crescenta-Montrose, CA, 91214 Weston Wall Inc. 2120 Hillhurst Ave, Los Angeles, CA, 90027 Save & Connect
Webalicious Active
This company is a part of Sage Business Cloud Network. [email protected] Annie Walker
941-299-9999
7595 Irvine Center Dr, Suite 100 Irvine CA
92618 United States 9:01
This customer is a Connected Customer of Sage Business Cloud Network. The invoice will be delivered directly as a vendor bill, not via email. The customer will be notified.
100.00 $1,200.00 $25,200.00 90.00 $1,080.00 $22,680.00
9:01 Everything starts with building a Digital Relationship ACCOUNTANT
CUSTOMERS REGULATORY AUTHORITIES
SUPPLIERS ORGANISATIONS
Sage ID Unique Digital Identity for FINANCIAL EMPLOYEES INSTITUTIONS INDIVIDUALS ORGANISATIONS Enabling seamless, tailored Creating global understanding experience of business relationships
© 2020 The Sage Group plc or its licensors. All rights reserved. 43 Sage Business Cloud creates a Digital Network FINANCIAL CUSTOMERS INSTITUTIONS
SUPPLIERS REGULATORY AUTHORITIES
EMPLOYEES ACCOUNTANT
Digitising relationships Transactions, communications, and processes Sage Customer workflow, and mutual trust
© 2020 The Sage Group plc or its licensors. All rights reserved. 44 Sage Business Cloud leverages AI for Everyone
CUSTOMERS FINANCIAL INSTITUTIONS
SUPPLIERS REGULATORY AUTHORITIES
Document Capture Forecasts Fraud Prevention
EMPLOYEES ACCOUNTANT Benchmarks Categorisation Recommendations
Sage Customer
Learning from combined activity of millions
© 2020 The Sage Group plc or its licensors. All rights reserved. 45 Sage Business Cloud delivers a consistent Digital Experience FINANCIAL CUSTOMERS INSTITUTIONS
SUPPLIERS REGULATORY AUTHORITIES
EMPLOYEES ACCOUNTANT
Sage People Sage Intacct
Consistent across Modern and mobile platforms, apps, and services Sage Customer ways of working
© 2020 The Sage Group plc or its licensors. All rights reserved. 46 Sage’s Business Cloud is Here today CUSTOMERS FINANCIAL INSTITUTIONS
SUPPLIERS REGULATORY AUTHORITIES 2M+ Invoices 220K+ Bank Feed Delivered Connections
EMPLOYEES ACCOUNTANT 100K+ Auto-entry 1.5M VAT returns Connections 25% of the UK’s total
2.5M Payroll/HR 200K+ Tax Payment Connections Connections
Sage Customer
6.7M+ logins last month
© 2020 The Sage Group plc or its licensors. All rights reserved. 47 Adding value to our Cloud Connected customers
Cloud functionality Connected solution
Smart Invoices Employee self-service Payroll
Automated receipt Bank capture feeds & rules Financial statements
Digital Assistant Approvals
Office Online 365 payments Single Sign-On Tax Automated calculations bank reconciliation Reporting & Filing
© 2020 The Sage Group plc or its licensors. All rights reserved. 48 Making our portfolio greater than the sum of its parts
While we serve customers through Sage products, Sage Business Cloud digital environment will provide automation, connections, insights, a seamless experience and ultimately, customer success in an era of digital transformation.
SAGE ID & NETWORK SAGE DESIGN SYSTEM
Common tools for Network of people & Cross-channel Cross-device experience common tasks organisations experience
MARKETPLACE
APPLICATIONS SERVICE FABRIC
SAGE FINANCE & PEOPLE PLATFORMS
© 2020 The Sage Group plc or its licensors. All rights reserved. 49 Customer benefits
Products and services that help customers digitise their businesses
Digital Environment Modern ways of interaction that reflect humans doing for Finance and People new, more valuable work professionals, where it is easy to connect, collaborate and do business. Consistent design and experience that creates comfort and confidence
A network that enables customers to work digitally across their ecosystems
An environment that learns from all to deliver powerful AI capabilities
© 2020 The Sage Group plc or its licensors. All rights reserved. 50 Key takeaways – Technology Vision
SBC defines our technology strategy and brings together our products and services
Enables digital business models and elevates the work of humans
SBC services and capabilities are already operating at scale today
© 2020 The Sage Group plc or its licensors. All rights reserved. 51 Agenda
Welcome & Introduction Steve Hare, Chief Executive Officer
Technology Roadmap and Vision Aaron Harris, Chief Technology Officer
Product Strategy Update Lee Perkins, Chief Operating Officer
Wrap-up Steve Hare, Chief Executive Officer
Q&A
© 2020 The Sage Group plc or its licensors. All rights reserved. Key messages – Product Strategy update
Focus the portfolio
Taking customers with us
Cloud unlocks everything
© 2020 The Sage Group plc or its licensors. All rights reserved. 53 Focus the portfolio
2018 2019 Today
Acquisition
End of Life
Sage Business Cloud
Disposal
© 2020 The Sage Group plc or its licensors. All rights reserved. 54 Taking customers with us
Sage Sage
Technology Connected Cloud Service Fabric Native Cloud
H1 18 Subscription H1 20 Subscription 44% penetration 62% penetration
Subscription Revenue Growth
62% (H1 18 - H1 20) Subscription
© 2020 The Sage Group plc or its licensors. All rights reserved. 55 Sage Business Cloud portfolio
Cloud Connected Cloud Native Accounting & Financials People & Payroll
Sage X3 Sage Intacct Sage People Sage 200 Cloud ‘SEOS’ MEDIUM
Sage 50 Cloud CakeHR Sage Accounting Sage 50 Payroll Sage Payroll SMALL
Sage Service Fabric
*SEOS - Sage ERP Online Services
© 2020 The Sage Group plc or its licensors. All rights reserved. 56 Winning in Small Focus: UK
© 2020 The Sage Group plc or its licensors. All rights reserved. Meeting customer needs in Small
1 2 3 4 5 6 Get customers, Get payroll Engage my Get organised Get tax right Get visibility get paid right team
I need to get It’s hard to stay Tax and I struggle Running payroll My team has paid fast with organised and compliance to understand is a hassle and grown so it’s confidence, on top of my is confusing my finances and I’m unsure if I’m become much however and receipts, and always determine what paying workers harder to share wherever my paperwork, stock changing so I decisions I can or calculating and collaborate customers want and finances fear surprises make to achieve payroll taxes on tasks and to pay more generally and fines my business correctly keep them objectives engaged
© 2020 The Sage Group plc or its licensors. All rights reserved. 58 Taking customers with us
Accounting
NCA
Payroll
Small Sage Business Cloud
Cake HR
Migration Sage 50 Connected Cloud
AutoEntry
© 2020 The Sage Group plc or its licensors. All rights reserved. 59 Case Study: SBC Accounting plus AutoEntry
Sage Business AutoEntry Cloud Accounting AutoEntry sales to 5x accountants Cross sell growth Cloud accounting doubled putting Small AI / ML H1 to H2 20 Business back in unlocking H1 to H2 20 control of Finance automation and People “I have been using AutoEntry since April 2016 and it has changed the way I work. It has helped streamline my business and improve my profitability. My clients love the ease of using the app or emailing the Native cloud growth documents direct to AutoEntry. I love that it can deal with sales purchase invoices and the statement • Build accountant • Drive customer migration scanning function saves hours of data input.” advocacy to drive NCA and NCA opportunity -Alison Edward, Simply Balances
© 2020 The Sage Group plc or its licensors. All rights reserved. 60 Progress and momentum
Awards and recognition
AutoEntry Internationalisation to date
Sage Accounting ‘Sage outflanks rivals…’ named ‘Leader’ May 2020
‘Sage Business Cloud Accounting is bang up to date – a cloud-based accounting solution that covers all the key bases’ August 2020
© 2020 The Sage Group plc or its licensors. All rights reserved. 61 Winning in Small – demo
© 2020 The Sage Group plc or its licensors. All rights reserved. Winning in Medium Focus: US
© 2020 The Sage Group plc or its licensors. All rights reserved. Meeting customer needs in Medium
FINANCE What happened? 1.0 Finance People
FINANCE The Intelligent Organisation Why did it happen? 2.0 Powered by Intelligent GL™ Analytics
Budgeting FINANCE What will happen & Planning and what should 3.0 we do?
© 2020 The Sage Group plc or its licensors. All rights reserved. 64 Taking customers with us
Migrations Sage BMS SEOS Connected Cloud Native Cloud Sage Intacct Native Cloud
Vertical NCA $
$6.6bn US TAM $3.9bn US TAM Sage People Accounting & People & Payroll Native Cloud Financials 2020 2020
BMS: Business Management Solutions comprise Sage 100, 200 and 300 franchises Source for TAM: FY20 IDC Market model (100 – 1,999 employees, Cloud + OnPrem)
© 2020 The Sage Group plc or its licensors. All rights reserved. 65 Taking customers with us
Services-centric Industries Product-centric Industries
SaaS & Nonprofits Professional Healthcare Financial Construction Wholesale Complex Process Discrete Software Services Services & Real Estate Distribution Distribution Manufacturing Manufacturing $
• Security • Human services • HR – Staffing • Multi-location • Single Family • Residential • Wholesale • Electronics and • Food & • Industrial • Artificial • Community dev services assisted living Office construction high tech Beverage machinery Intelligence & capacity • IT consulting – • Skilled nursing • Multi-Family • Commercial • Medical devices • Chemicals • Industrial • Healthcare IT building managed • Multi-office Office construction • Retail trade • Growers supplies services • Marketing IT • Education doctor’s • Asset • Real Estate • Wholesale • Nutraceuticals • Electrical • Int’l relief • Marketing & practices Management equipment Advertising – • HVAC • Cosmeceuticals • Nonprofit • Multi-office • REIT • Electronic parts Digital dental practices • Non durable • Paints & healthcare marketing • Private Equity goods coatings • Membership / agency Mutual benefit • Faith-based
Sage Intacct Sage Intacct Construction WSD Sage Intacct Sage BMS Sage X3
© 2020 The Sage Group plc or its licensors. All rights reserved. 66 Case Study: Sage CRE plus Sage Intacct
Sage CRE Sage Intacct 23 of 25 Launched in March 2020. No.1 provider of Sage CRE partners 24 deals have signed up to be Sage with gross bookings of accounting and Cloud native Intacct resellers, driving over $1M estimating solutions accounting 99% of our business to the US expertise of Sage construction Intacct industry “I've been in this industry a really long time and I've been waiting for a product like this where you have the best financial reporting with construction project management. You're going Construction to dominate the marketplace.”
Launched March 2020 -Terry Gibson, Corporate Controller, Discovery Land Company
© 2020 The Sage Group plc or its licensors. All rights reserved. 67 Progress and momentum
Awards and recognition Sage Intacct has achieved +29% #1 recurring revenue CAGR (FY17 to FY19) Visionary Customer Cloud Financial Satisfaction Management Sage Intacct Internationalisation to date
Leader Preferred Cloud SaaS ERP Provider AR and AP
© 2020 The Sage Group plc or its licensors. All rights reserved. 68 Winning in Medium – demo
© 2020 The Sage Group plc or its licensors. All rights reserved. Key takeaways – Product Strategy update
Focus the portfolio
Taking customers with us
Cloud unlocks everything
© 2020 The Sage Group plc or its licensors. All rights reserved. 70 Agenda
Welcome & Introduction Steve Hare, Chief Executive Officer
Product Strategy Update Lee Perkins, Chief Operating Officer
Technology Roadmap and Vision Aaron Harris, Chief Technology Officer
Wrap-up Steve Hare, Chief Executive Officer
Q&A
© 2020 The Sage Group plc or its licensors. All rights reserved. Q&A
© 2020 The Sage Group plc or its licensors. All rights reserved. Thank you