British accountancy software company Sage said it saw no signs of improved confidence among small-business customers, when posting full-year results that met forecasts, helped by the weak pound and cost cuts.
"Conditions have stabilised in the second half but at this stage it is too early to predict economic recovery," chief executive Paul Walker told reporters today.
"We know there is a lot of pent-up demand out there. We know they will continue to spend on services, but we need to see SMEs (small and medium-sized enterprises) become more confident before they start buying software again."
Sage, which sells business management software to nearly six million SMEs, posted adjusted pretax profit of £307.5 million for the year to end-September, down 2 per cent in constant currency, on revenue of £1.44 billion, 4 per cent lower on the same basis.
Subscription revenue, which bundles software with services and maintenance, grew 2 per cent, helping compensate for weak demand for new software which was down 16 per cent.
Sage shares were up 2.3 per cent at 219.6 pence by 1023 GMT, outperforming a 0.4 percent stronger DJ European technology index.
"Net debt is a bit better and US growth also a bit better than expected," said Panmure Gordon analyst George O'Connor, who has a 'buy' rating on the stock. "Otherwise Sage is performing in line. This is a company you could set your watch by."
Numis, however, said Sage's "muted" growth expectations reduced its appeal. "With organic growth likely to be close to zero in 2010, a long-term track record of organic growth no better than nominal GDP, and some technology risk as products age... we certainly struggle to see how Sage reclaims a premium rating," the brokerage said in a note.
Sage reacted to the downturn by cutting about 1,000 jobs, resulting in annualised savings of £54 million, or roughly 5 per cent of its 2008 cost base.
Software giants such as Microsoft have long coveted Sage's customer base, but Mr Walker said the competitive threat had not materialised and Sage had maintained market share in the United States.
He also said Salesforce.com, which sells sales applications using a software as a service (SaaS) model, was not encroaching on its territory. "We haven't seen any competition from them in our main space." Sage said it was not seeing high demand for its own SaaS product.
Sage raised its total dividend for the year by 3 per cent to 7.43 pence.
Reuters