12 Stocks of Christmas: Sage

Sage (LON:SGE) has long been held up as a pillar of UK business. Indeed, in 2020 the company’s founder was knighted for his services to our nation’s commercial endeavours.

But it hasn’t always been a star performer in the UK stock market.

Sage was slower than its peers in the US to switch from a licensing to a subscription model. In 2019, when the likes of Intuit and Xero were making most of their revenue from recurring subscriptions, the equivalent figure at Sage was only 51%.

Like many software companies which have made the move from lumpy licensing revenue to subscriptions, margins have taken a bit of a battering along the way. And as Sage‘s transition came later and has taken longer, margins have been weaker than many of its peers.

The company also had a rough time during the pandemic. As it specialises in selling accounting software for smaller businesses (which were disproportionately affected by Covid-19 policies), sales were disappointing.

But in 2025, as Donald Trump marches back into the White House with promises to make small and medium sized American businesses (which contribute 39% of Sage’s top line) great again, the company is sitting in a good position....