British software giant The Sage Group has announced it will acquire Intacct Corp., a San Jose, California-based financial software company, for $850 million.
This is the largest-ever acquisition for Sage, the U.K.’s biggest tech firm. The 36-year-old company sells accounting and payroll software to companies across the globe.
The deal is expected to close in August, after which Intacct will be known as Sage Intacct. The acquired 450-person firm will retain its headquarters in San Jose under the leadership of current CEO Robert Reid, according to Sage.
In a statement, Sage said the acquisition demonstrates its commitment to a cloud-first strategy and furthers its goal of becoming a larger player in the U.S. market.
“The acquisition of Intacct supports our ambitions for accelerating growth by winning new customers at scale and builds on our other cloud-first acquisitions,” CEO Stephen Kelly said in the statement. "Intacct opens up huge opportunities in the North American market, representing over half of our total addressable market.”
Sage Transformation
This is the third acquisition this year for Sage following a multi-year “transformation program,” as the company called it.
The transformation included a new executive team, cost-cutting measures, efforts to boost customer retention, focus on organic growth and the launch of new cloud products.
“The Sage of today is very different than three years ago,” Kelly said Tuesday during a call with investors to discuss the acquisition and company financials. “We’re more aligned, driving innovation and efficiency, and we are now primed for accelerating growth while maintaining financial discipline.”
On March 3, Sage announced it would make its first acquisition in years with the purchase of Fairsail, a U.K.-based maker of cloud human capital management (HCM) software. Fairsail was rebranded to Sage People.
Then, on March 29, Sage said it had also agreed to buy San Fransisco-based Compass, an analytics and benchmarking platform for the e-commerce industry.
Financial details of those deals were not disclosed.
Sage said it expects all three acquisitions to boost its annual revenue by more than $26 million.
Founded in 1999, Intacct sells cloud-based enterprise resource planning (ERP) software to customers from startups to firms, both directly and through its channel program.
In June, the company was named a “visionary” in Gartner’s inaugural Magic Quadrant for Cloud Financial Management Suites for Mid-Size, Large and Global Enterprises.
Sage Financials
Sage reported financial results for the third quarter of 2017 on Tuesday, the same day it announced the acquisition.
Organic revenue grew 6.3 percent in the third quarter, not including revenue from North American Payments, the business unit Sage agreed to sell off last month for $260 million.
Factoring in North American Payments, organic revenue growth for the quarter drops to 5.6 percent.
For the first nine months of the 2017 fiscal year, Sage reported organic recurring revenue growth of 9.3 percent, driven largely by a more than 30 percent increase in software subscriptions.
Sage also reported that it is on track for nearly $66 million in annualized cost savings this year, and that it has improved customer retention rates from 84 percent to 86 percent over the last 18 months.
The company has rolled out a suite of new cloud products this 2017 fiscal year, and it says cloud subscriptions have now passed 500,000.
In November of 2016, Sage told The Telegraph it planned to introduce a whopping 27 new cloud-based products by November of 2017.
Founded in 1981, Sage says it has millions of customers and more than 13,000 employees in 23 countries. Atlanta is home to the company’s U.S. headquarters.
