Good morning, and a warm welcome to Sage's 2021 first-half results presentation. I'm going to start with a few brief opening remarks. Jonathan will take you through the numbers. I'll come back and update you on Sage's strategic progress and outlook and give some insight into the momentum that we've created. Let's start with the highlights. Sage has had a good first half despite the continued disruption during the period. I'm pleased with the progress. We've achieved recurring revenue growth of 4.4%. This is in the upper half of our guidance range for the full year. We grew ARR by 4.2%. Our growth strengthened during the period. In the second quarter, Sage increased sequential ARR at the fastest rate since the end of FY 2019. Importantly, this was driven by cloud-native ARR growth of 36%. This, in turn, was underpinned by increasing levels of new customer acquisition and supported by migrations. This is in line with the strategic priorities that we set out at our FY 2020 results in November. With this performance in mind, I'd like to focus on three key messages, starting with the opportunity. Our market opportunity is growing. Our customers have been resilient during the pandemic, adapting their business models to the new reality. Now, as we look toward recovery, small and medium-sized businesses are accelerating their investment in digital technology as they prioritize flexibility, resilience, and productivity. As the economic environment improves, optimism among our customers is increasing. Secondly, our capabilities. These position Sage well for this opportunity. Our global scale, combined with local expertise, gives us a unique understanding of the needs of small and medium-sized businesses. Our solutions enable businesses to be more productive by automating processes and providing better business insights, continuously enriched through innovation. Our customers tell us that our people and our dedication to solving their problems differentiate Sage, and I'd like to take this opportunity to thank all of my colleagues for their determination and hard work over this last year. Our well-established partner network of accountants and resellers, together with a growing ecosystem of ISVs, enhances our capabilities and reach. Thirdly, execution. We are consistently executing in line with our strategy. We continue to rapidly grow Sage Business Cloud revenues, up 18% in the first half. This is at the heart of our strategy. Ultimately, I want all of our customers to be on Sage Business Cloud, where they can benefit from Sage's cloud services as part of a connected digital environment. Our strategic investment is on track as we increase our spending on sales and marketing and accelerate innovation through R&D. We've largely completed our disposals program, resulting in a leaner Sage that's focused on growth across all of our markets. Now I'm going to hand it over to Jonathan, who's going to take us through the financial review of the first half. Thank you, Steve. Good morning. To start with, I'll run through our financial highlights, which demonstrate the strong performance in the first half. As you can see, we've continued to make good strategic progress with consistent execution against our plans. With that in mind, the key messages are, firstly, high-quality recurring revenue growth of 4.4%. This was driven by good progress in new customer acquisition across Sage Business Cloud and was against strong comparators. Secondly, on-target margin. The organic operating margin of 20.2% is in line with our targets. This reflects good business performance and planned investment to accelerate growth. Finally, strong cash conversion at 133%. This continues to be over 100% and remains a core strength of Sage. Turning now to the P&L. First, to be clear, the numbers in this presentation are on an organic basis. Total revenue has increased by 1.4% to GBP 890 million, and recurring revenue is up by 4.4% to GBP 811 million. Organic operating profit is at GBP 180 million, with a margin of 20.2%. This reflects planned investment to accelerate growth across Sage Business Cloud. As a result of this investment, underlying operating profit is GBP 191 million, which is 11% lower than last year. Underlying EPS is GBP 0.1214. We've increased the interim dividend by 2% to GBP 0.0605. This reflects the strong performance and cash generation in the first half and is in line with our policy to maintain the dividend in real terms. Moving on to ARR, this has increased by 4.2% to GBP 1.6 billion. Renewal by value reduced slightly to 97%. This was in line with the second half of FY 2020, reflecting our focus on customer retention, resulting in lower levels of upsell. Churn has remained stable, in line with pre-COVID levels. Importantly, this means that we've added some GBP 110 million of ARR from new customer acquisition and reactivations in the last 12 months, up from GBP 90 million at FY 2020. In line with expectations, our cloud-native solutions have performed particularly well with ARR growth of 36%. Turning now to the revenue bridge, our focus remains on growing Sage Business Cloud in both cloud-native and cloud-connected solutions. Growth of some GBP 71 million, or 18%, reflects strong progress in accelerating new customer acquisition together with continued migrations. Accordingly, revenue to be migrated decreased by GBP 30 million, in line with expectations. Importantly, cloud-native solutions now represent 16% of recurring revenue, up from 13% last year. This demonstrates good execution of our strategy with a shift in revenues towards Sage Business Cloud. The impact of all this is Sage Business Cloud penetration, which is now 65%. This is up from 61% at FY20. Now looking at revenue categories. As you can see, we've delivered recurring revenue growth of 4.4% against strong comparators. This is underpinned by strong growth in subscriptions of 11% to GBP 608 million, which is an increase of nearly GBP 60 million. This was driven by growth from new and existing customers, principally in North America, Northern Europe, and France. Other recurring revenue, which is largely maintenance and support, decreased by 10% due to the ongoing migration of customers to subscription contracts. As expected, other revenue decreased by 21% to GBP 79 million. It is worth reiterating that over 90% of our revenue is now recurring, and 68% of our revenue is from subscriptions, up from 65% at FY20. Now turning to the usual portfolio view of revenue. The overall future Sage Business Cloud opportunity continues to show strong performance with recurring growth of 6%. As I mentioned, Sage Business Cloud penetration is now at 65%. The key points to note are cloud-native solutions have delivered recurring growth of 30% to GBP 130 million. This was mainly driven by continued good growth in Sage Intacct, together with accelerating growth in other cloud-native solutions. The growth in cloud-connected revenue of 14% to GBP 345 million is principally driven by the international region, with continued growth in North America and Northern Europe. Recurring revenue in the non-Sage Business Cloud portfolio decreased by 8% to GBP 82 million, in line with our expectations. Looking now at the regions, North America delivered recurring revenue growth of 6%, and Sage Business Cloud penetration is now at some 73%. Cloud-native growth is driven by Sage Intacct, resulting in recurring growth of 19% to GBP 78 million. Growth in cloud-connected services is driven by both existing customer migration and new customer acquisition in both the Sage 50 and Sage 200 franchises. Northern Europe had recurring revenue growth of 3%, and Sage Business Cloud penetration is now at some 85%. This reflects accelerating growth in cloud-native solutions and continued success in Sage 50 cloud-connected. Cloud-native growth is driven by new customer acquisition in accounting and HR solutions, supported by ongoing migrations. Sage Intacct continues to build good momentum in ARR. Finally, the international region now includes Central and Southern Europe. Recurring revenue grew by 4%, and Sage Business Cloud penetration now stands at 43%, compared to 32% last year. France, which is the largest country in this region, grew recurring revenue by 5%. This was driven by growth across the Sage Business Cloud. Africa and APAC delivered strong recurring growth of 8%. This reflects good performance in local products and cloud-native solutions, particularly Sage Accounting in Africa. This was offset by a decline of 4% in Iberia, reflecting a reduction in maintenance and support revenues. Looking now at the evolution of our cost base, our planned strategic investment remains on track. This is helping drive growth across Sage Business Cloud, including the very good performance in our cloud-native solutions. In line with these plans, investment in sales and marketing has increased to GBP 340 million. This represents 42% of recurring revenue, an increase of 100 basis points. Investment in product development grew by 240 basis points to GBP 135 million. This now represents some 17% of recurring revenue. Steve will give more color on this later. Turning now to the cash flow, this remains a core strength of the business. Cash conversion of 133% continues to be strong. Importantly, this has now been over 100% for more than two years. As you can see from the bridge, working capital improvements are the key driver of this due to growth in subscription revenue and continued strength in debtor collections. Net of interest and tax, this has generated free cash flow of GBP 190 million. Turning to the balance sheet and leverage, as a result of particular focus in recent years, Sage has a resilient balance sheet and strong liquidity, which has served us well during this period of economic uncertainty. The group has over GBP 700 million of cash and also undrawn facilities of almost GBP 700 million. This means that cash and available liquidity totals nearly GBP 1.4 billion. The group issued a GBP 350 million sterling bond in March, extending its debt maturity profile and diversifying its sources of funding. Net debt has reduced to GBP 96 million, and net debt to EBITDA is now 0.2x. Turning now to capital allocation, our policy remains unchanged. We will continue to focus on organic investment and acquisitions to accelerate execution against our strategy. We will maintain the dividend in real terms, and therefore we've increased the interim dividend by 2%. Lastly, we will consider returning surplus capital to shareholders. In line with this, Sage announced in March the launch of a GBP 300 million share buyback. This reflects both the sale proceeds from recent disposals and strong cash generation. As I mentioned, our leverage ratio is currently 0.2x. Over time, we expect to move back to our medium-term range of 1x to 2x through organic investment, M&A, and capital returns. To summarize, Sage has delivered a strong and consistent performance, resulting in recurring revenue growth of 4.4%. Secondly, we've delivered an organic operating margin of 20.2%, in line with our targets. Finally, strong cash conversion of 133%. This remains a core strength for Sage. Thank you, and now I'll hand back to Steve Hare. Thanks, Jonathan. As you've heard, the business performed well in the first half, and as I said, this is a result of continued strategic execution. Underpinning this is our purpose: We're here to help our customers thrive. This, together with our overarching value that we do the right thing, shapes the important role that we have to play in supporting businesses and equipping them for the future. Our purpose extends beyond our customers and also shapes the wider role that we play in helping our communities and the planet. This isn't new to Sage. We set up Sage Foundation five years ago as a way for colleagues to channel their energies into charitable causes, and we're committed to knocking down barriers so that everyone has the opportunity to thrive, both at Sage and in our wider communities. As we reflect on how the events of the last year have highlighted inequalities in society, we want to do more. For example, by developing digital and business skills in underrepresented groups, we can help to build and support the next generation of more diverse and sustainable businesses. As part of our environmental commitment, we've been evaluating emissions across our own operations, but also our full supply chain, and we will shortly commit to science-based targets with a roadmap to net zero, building on our favorable ESG ratings from MSCI and Sustainalytics. All of this is the right thing to do. It's also good business. I believe that strong performance comes from being purpose-driven. It means we attract people who care, we can better address key business risks, and it makes us the first choice for customers who are looking to support positive change. Our purpose is core to our culture and is key to ensuring we have engaged, motivated colleagues. Alongside this, we're investing in the core areas of digital marketing, artificial intelligence, and innovation to enhance our SaaS capabilities. Providing training and development opportunities is key. For example, over 1,000 colleagues across the organization have now undertaken our 10X continuous innovation training, which is encouraging people to experiment, iterate, and learn without the fear of failure. Supporting colleague well-being is a key priority. In addition to our thriving colleague support networks, we've been running initiatives focused on mental, physical, and financial well-being. We've also given colleagues additional well-being days over and above their normal holiday allowance. We're making sure that we retain these initiatives as our offices start to reopen and as we transition to new ways of working and collaborating under a hybrid model. I'm pleased and proud that, in spite of the pressures of lockdown and remote working, our people continue to show real enthusiasm and commitment and are willing to share that publicly. As a result, Sage has been listed among Glassdoor's best places to work in the U.K., Canada, France, and the U.S. Turning to customer insights, the breadth of our business gives us really good visibility into small and medium business trends globally. What we've seen is that customers have been resilient, adapting their businesses to the new environment, and they're accelerating their investment in technology to become more flexible and more productive. This includes not just finance systems, but also people and payroll, as businesses do more to ensure colleague recognition and retention. As the world starts to look to the future, confidence is definitely increasing. In our recent survey of U.S. businesses, 75% anticipate growth this year, and almost half expect their revenue to return to pre-COVID levels by the end of the year. There has also been a record number of new business formations. Finally, driving an inclusive, sustainable recovery is really important. Over 70% of our customers say that they, like Sage, are committed to improving their environmental and social impact. They want to work with companies that are doing the same. All of this means that the opportunity for Sage is increasing. Now, as I said at the start of the presentation, Sage is well-positioned to capture this opportunity. With about half our revenue coming from solutions for small businesses and half from solutions for medium businesses, we are a global business with a well-established brand. Our customers trust us. We champion their interests with governments and at global events like the G7's business conference this week. Our solutions, whether cloud-native or cloud-connected, enable businesses to be more productive, resilient, and flexible. We are innovating to enrich these solutions, not just adding better features, but providing a rich digital environment—a network of applications and services that make it easier for customers to connect, collaborate, and do business. Customer engagement with these services is rapidly accelerating. With almost 10 million logins to Sage Business Cloud services in March, that's up nearly 40% during the first half. Sage is differentiated in particular by our people and their dedication, not just to serving customers, but to solving their problems and helping them thrive. Sage also has a well-established partner network, including accountants to support the small business segment, resellers and distribution partners to support medium-sized businesses, and ISVs to enhance the capabilities and reach of our solutions. Last week, we launched Sage Intacct into the AWS marketplace, further enhancing our distribution. To lead our global partner strategy, I'm delighted that we've hired Aziz Benmalek, who spent many years at Microsoft and brings deep partner and customer knowledge. As I said in November, we would focus initially on accelerating cloud-native growth in the medium segment in North America and in the small segment in the U.K. In the medium segment, we've successfully driven growth through Sage Intacct, adding over 700 new customers in North America during the first half. That's an increase of more than 50% compared to the first half of FY20, driven by increased demand and supported by progress in migrations. Also, outside North America, we've now achieved almost GBP 3.5 million of ARR from Sage Intacct, and that's up from just under GBP 2 million at the end of FY20. ContactEngine, shown here on the slide, is a really good example of a customer migrating to Sage Intacct. They're experts in conversational AI technology and started in the U.K. with just six people but have rapidly grown to more than 85 people on both sides of the Atlantic. They've grown with Sage, graduating from Sage 50 to Sage Intacct as their processes matured, and they're now benefiting from multicurrency capabilities, bespoke reporting, and integration with their other systems. To drive further growth, we are investing to enable Sage Intacct to address additional industry verticals more effectively. Beyond Sage Intacct, we've also seen cloud-native growth through migrations to Sage Partner Cloud, our managed cloud solution, complemented by the launch of a new cloud-hosted data and analytics service. In the small segment, we've focused on developing and growing our cloud-native software suite, initially in the U.K. To drive growth, we've invested in sales and marketing, optimizing our e-commerce platform, and growing the accountants' channel. As a result, Sage Accounting is winning more customers at a higher average contract value than ever before. Direct customer wins through the digital channel have doubled in the first half. Customer wins through accountants are up by a third. We've also increased the rate of cross-sell of Sage Payroll to Sage Accounting customers by 50%, and we've grown Sage HR, both through new customer acquisition and significantly through migrations. Customer ratings of Sage Accounting are also improving. Its Net Promoter Score is up 24 points year-on-year. On the slide, you can see someone I spoke to recently, Sam Mitcham, from SJCM Accountancy in Lancashire. Sam set up her accountancy practice in 2019, and she's needed to be agile, giving advice on government initiatives, loans, and furlough schemes, all while growing her client base. Sam chose Sage based on the quality of our solutions, but critically, also on our human customer support element. She's now become a member of our Accountants Advisory Board, providing valuable feedback on our products and services. As Jonathan showed earlier, we've increased our strategic investment in both sales and marketing and R&D during the first half. This is very much in line with our plan and is helping to drive growth. In sales and marketing, we're investing in the capacity and capabilities of our sales teams, but we're also driving growth through increased digital marketing investment, and most notably, through our Boss It advertising campaign. Let's take a quick look at this campaign for those of you who haven't seen it. Who's the boss? I'm the boss. No, I'm the boss. He thinks he's the boss, but I'm definitely the boss. Yeah, I'm still the boss. Taking control of business? I was born ready. Invoices, sorted. Expenses, smashed. It's live in almost all of our geographies. "Boss It" has had a really positive impact on perceptions of Sage, driving engagement and sales. In the U.K. alone, it's significantly increased website clicks and online conversion. We're taking this campaign to new audiences. For example, reflecting the fact that 60% of business owners who launched their venture during the pandemic are aged between 18 and 34, we ran "Boss It" as the first-ever B2B campaign targeting small businesses on TikTok. This resulted in over 1 million user-generated video responses of businesses showing how they've been bossing it through the challenges of last year. Amazingly, it generated over 7 billion views—a really powerful driver of brand awareness and perception. Going into the second half, we'll invest further in the Sage brand, looking to drive deeper customer engagement and to take Sage to new audiences. Turning to innovation. In R&D, we're investing to accelerate the development of the Sage Business Cloud digital environment, to enrich our cloud solutions, and to enhance our AI capabilities. The digital environment is the focus for Sage's technology strategy. By enhancing the services available through Sage Business Cloud, we're making the environment more compelling to customers, increasing the number of users, and growing the value of the network. That's why we've made further investments to create a more scalable and configurable microservices architecture, allowing easier deployment of new cloud services and integrations with third-party software. We've also invested in the services themselves. For example, we've enhanced our service for bank reconciliations, with over 11,000 banks now connected. This take-up has grown by more than 50% in the last six months. We're developing other services too, such as secure digital invoicing, collaboration, and workflow tools. In AI and machine learning, we've substantially expanded our team of data scientists and AI engineers, and the sheer scale of Sage Business Cloud across cloud-native and cloud-connected means we can develop more accurate AI tools much more quickly. For example, our general ledger outlier detection tool has identified over 15,000 incorrect journal entries since its commercial launch in February. This is based on a training data set that is growing by 500,000 transactions a day. Our recent acquisition of Task Sheriff, an Israeli-based AI specialist, will further bolster our capabilities in this area. We're also investing in strategic partnerships that allow us to innovate and broaden our insight into emerging business trends. In December, we completed a minority investment and strategic partnership with Brightpearl to enhance our e-commerce capability, unlocking further opportunities for Sage Intacct. We also made a minority investment in CountingUp, a combined accounting and banking app for sole traders and micro businesses. Two days ago, we announced our new partnership with Tide to provide accounting and compliance as a service to small business owners and entrepreneurs. Let's move on to the outlook. Following the strong performance in the first half, full-year recurring revenue growth is now expected to be towards the top end of the 3%-5% range. Other revenue will continue to decline in line with the strategy. Consistent with previous guidance, we expect our margin to be up to three percentage points below last year, reflecting the strategic investments that we're making in the business. Now, as we look beyond FY 2021, we continue to expect margins to trend upwards over time, driven by top-line growth and operating efficiencies. To conclude, Sage performed well in the first half. The market opportunity for Sage is growing. Digital transformation among our customers is accelerating, and we have the right solutions to help them transform and thrive. We have a strong platform from which to scale, and I'm happy with the levels of investment that we're making and the returns that we're seeing. We also have a team that knows how to execute, delivering high performance with a strong sense of purpose. I firmly believe that the actions we are taking will drive the success of Sage for all our shareholders and all our stakeholders, supporting colleagues, customers, partners, and communities, both now and in the long term. Thank you very much. That concludes today's presentation, and Jonathan and I would now be happy to take any questions. I'm going to hand over to the operator. Thank you. We will now begin the question and answer session. If you wish to ask a question, please press star and one on your telephone keypad and wait for your name to be announced. If you wish to cancel your request, please press the hash key. Once again, it is star and one to ask a question, please. Your first question comes from the line of Paul Kratz from Jefferies. Your line is open. Hi, good morning, everyone. Thank you for taking my question. I just had one question really around the development of your annualized recurring revenue. If I look at your FY20 figures of GBP 1.61 billion, and I factor in churn, it suggests that customer additions in the first half have been maybe a little bit slower. Is there anything else that we should take into account for that, for example, FX, or any other one-off impact that might be within that? Thanks very much for your question, Paul. I think, if we look at the first half and compare it to the same half in FY 2020, we've definitely seen a pickup in new customer acquisition. I think we've quoted, for example, with Sage Intacct, that we've added 700 customers in that first half, which is a 40% increase over the same period in the previous FY 2020. Also in the small segment in the U.K., we've also seen a pickup in NCA. We've quoted that we've added over GBP 110 million of ARR through new customer acquisition and migrations. About two-thirds of that is NCA. We're definitely seeing strength there. Yes, I could also add that if you compare that with the July year-end FY 2020 figure, you'd see that we grew at GBP 90 million in terms of ARR. Therefore, there's a good increase compared with the last year-end number that we gave. There is improvement there. Just maybe a follow-up question. In the second half, it is clear that there is going to be an acceleration, I guess, in your ARR growth. Could you maybe share with us any kind of figures around exit rates or how renewal rates are looking at this point that gives you the confidence to raise your guidance in the first half? Yes, if you look at the progression of ARR, last year at the first-half stage, we had ARR growth of 10%. As we exited last year, FY 2020, we grew ARR at 4.8%, and we just reported 4.2%. If you recall at the Q1 stage, we expected that the decline in the ARR growth rate would bottom out during the course of the first half. As you can see from the guidance that we've given today for recurring revenue, that's completely compatible with that. We're now guiding that recurring revenue will grow towards the top end of the 3%-5% range. Therefore, if we are exiting at the top end of the range of recurring revenue, then by definition ARR will be higher than that when we exit FY 2021. We are expecting that to accelerate during the course of the year. Thank you. Thank you. Thank you. The next question comes from the line from Adam Wood from Morgan Stanley. Your line is open. Hi, good morning. Thanks for taking the question. I've got two, please. First of all, regarding Sage Business Cloud, we've seen very strong growth in the first half at 18%. However, you're flagging that some of that is being helped by migrations from products outside of that scope. Obviously, very simplistically, we can look at what the group is doing if we put everything together. Not everything that falls out of the other space will be going into Sage Business Cloud. Could you maybe just give us a little bit of a feel for what's going on in Sage Business Cloud, excluding those internal migrations—what's happening externally and with new customers? That was the first one. Then secondly, you commented a few times about Sage Accounting. It feels as if there's a little bit of a change in the market there, and you're having more success. Could you talk about the competitive environment and maybe specifically on support, how you're managing to make that cost-effective in that space, which I think has been a challenge in the past? Thank you. Sure. I'll say a few words, and then I'll let Jonathan talk a little bit more about the details of Sage Business Cloud. We've definitely seen a switch in Sage Business Cloud to more of the growth coming from new customer acquisition rather than from migration and reactivation, but Jonathan can give a bit more color. I'll just answer that second question. We're definitely making more progress with Sage Accounting in the U.K. and with the whole suite. It's not just accounting; it's also the HR and payroll add-ons. We've seen our win rates improve, and we've seen our ACV improve. I would be the first to admit that it's a very competitive market, but the good news is the market's getting bigger all the time. As small businesses invest more and more in their digital tools, the size of that market is increasing, but we're definitely making progress. Jonathan, do you want to talk about Sage Business Cloud? Yes, I think the most important thing we've seen develop in Sage Business Cloud in the first half is the growth in cloud native. You can see on a recurring revenue basis that grew at 30% to GBP 130 million, and on an ARR basis, it grew by 36%. About 60% of that ARR base comes from Intacct, and that grew at 19% in North America in the first half. Therefore, by definition, the other products in that cloud-native space were growing significantly faster. That's really come from Sage Accounting, Sage People, and Sage HR, where not only have we seen NCA, we've also seen good migrations with Sage Partner Cloud. You take all of that together, you can see a rapid increase in ARR growth in cloud-native, and that is also complemented and supplemented by what we're seeing going on in cloud-connected. As you know now, North America and Northern Europe are substantially migrated into cloud-connected. That's the Sage 50 base, the Sage 200 base in those territories is in the region of about 85%-90% migrated. We still have further to go in continental Europe, where that migration is probably about 60% of the way through. All in all, we've got a good mix of growth coming into the Sage Business Cloud. Some of that was the existing trend, which we saw going into cloud-connected over the last two years, and some of that is new through both NCA and also migrations. I think, just on cloud native, one last point to note is that of the total growth in cloud native, about a quarter or so came from migrations. By definition, the rest of that is NCA or upsell and cross-sell, and the bulk of that is NCA. That's very helpful. Thank you. Thank you. The next question comes from the line from Ben Castillo-Bernaus from Exane BNP Paribas. Your line is open. Good morning. Yes, thanks for taking my question. Two things really on NCA and the marketing spend. On the NCA trends, you mentioned in Q1 that you would sort of return to something like 80% of pre-COVID levels. Can you just talk about where we are now versus pre-COVID levels? Importantly, how does that compare to your expectations, say, at the end of FY 2020 when you thought, what was your time horizon on returning to those levels? Secondly, can you touch on the "Boss It" marketing campaign, even using TikTok now, which is quite the change for Sage. Can you just talk about the traction you're having there versus your initial expectations before you launched it? It's just an attempt to take the fight more to the likes of Xero and Intuit, who have historically had success in that low end of the market. Has the success in those campaigns sort of changed your outlook on where you'll allocate incremental spend for the rest of this year? Thanks. Sure. Thanks for the question. On NCA, we are really back at, in terms of run rate, I would say we are back at pre-COVID levels now. Actually, as I alluded to in terms of the pipeline, we're seeing increasing confidence and optimism among the small to medium business community. Therefore, from an opportunity perspective, there are reasons to be optimistic about how the size of the market opportunity is actually increasing as people look to invest in digital tools. In terms of where we are versus where we thought we were, maybe a year or so ago, it was obviously very difficult to predict a year ago. I would say we're probably about where we thought things would be. Maybe a bit more optimism, maybe a bit more confidence than perhaps we would have anticipated. In terms of results, it's probably pretty much in line. In terms of the "Boss It" campaign, and in particular what we did on TikTok, we are looking to refresh how Sage is perceived from a brand perspective. We are looking to win our fair share of voice and market across all of the customers and markets that we're seeking to serve. We're doing a lot of experimenting, so doing something like TikTok was a bit of an experiment to see how that would work from an engagement perspective, and I would say that very much exceeded our expectations in terms of the interaction that we got. The other thing I'd point to this week is that we announced the partnership with Tide to provide accounting as a service as part of their banking offering. I think it's fair to say that type of partnership with Tide is not something we would have done two or three years ago. I'm very excited by doing that sort of thing, where we can access new markets in a very effective way by partnering. Thank you. That's helpful. If I could squeeze one more in, just more on the Sage Intacct side of things about targeting industry verticals. Can you touch on perhaps where the near-term industry focus is that you can go after? Yeah. We're really alluding to doing more in complex distribution, wholesale distribution, and also manufacturing, where historically Intacct has been very strong in the nonprofit service industry, et cetera. We're doing work to, as I say, expand more deeply into those additional verticals. Great, thank you. Thank you. Thank you. Your next question comes from the line from James Goodman from Barclays. Your line is open. Morning. Thank you. Firstly, just coming back to Sage Accounting in the U.K. In the past, you've shared some subscriber numbers for that portfolio, I think in the U.K. and globally, and given us a couple of data points around ARPU. It seems like it's gaining a lot of traction now and has a pretty established market presence. I wondered if you might give us some ballpark figures there, particularly for subscriber numbers and ARPU development in the U.K. Secondly, coming to the investments. A couple of years ago, when you announced significant investments, it took quite some time to actually get that investment into the business, I think because of the time it takes to hire, et cetera. Presumably, there are still some challenges around hiring, and the bulk of the 300 basis point investment you put in in the first half was in the marketing initiatives that you spoke of. Is that really where the investment will remain focused for the second half, or are we seeing an increase in R&D and hiring as well? Do you expect a shift of that investment as we go through the rest of the year? Thank you. Sure. I'll take the marketing question first, and then I'll pass it to Jonathan to see how helpful he's prepared to be regarding your ARPU and subscriber number question. On marketing and R&D, yes, we are adding in terms of hiring, particularly in R&D. As we alluded to, we have been hiring AI and ML specialists and data scientists. We've also been adding to both Intacct and the small business suite, including Sage Accounting, Sage HR, and AutoEntry. Most of the additional money going into sales and marketing is going into marketing, specifically digital marketing, to drive demand generation. It's going into things like the "Boss It" campaign as we seek to enhance our brand, increase our share of voice, and ultimately convert more of the demand generation into digital, particularly for small businesses. Partner channels are also important, so in small businesses, the accounts channel remains incredibly important. In the medium segment, a lot of our growth comes through business partners via our network of VARs. I just want to point out that 39 out of 40 of our top traditional Sage partners who carry Sage 200 and 300 in the U.S. have now signed up and are dual-authorized to carry Sage Intacct. Not only are they now looking for new customers, but they are also expanding their offerings. Using Sage Intacct, but they're also looking at where they can migrate customers from Sage 200, Sage 300 to Intacct. Jonathan, do you want to cover the accounting point? Yes. Thank you, James, for the question. First of all, regarding accounting in the U.K., we've seen a sharp, very marked pickup in NCA. In addition to that, we've seen a good attach rate with Sage HR, AutoEntry, and also our cloud payroll product. That is going very well indeed. The other thing I can reiterate to you is what I said in the previous question: with an ARR growth rate of 36% in cloud native and 60% of that revenue base being Intacct, clearly the other products, which are Sage People, Sage Accounting, and migrations, are growing considerably faster. The other thing I can say is that the LTV to CAC and the unit economics are exactly where we would expect them to be and are demonstrating to us that we are investing the right way and generating good value. As you know, for a good number of years now, we haven't broken down product by product in our individual territories, individual unit counts, so we cannot give specifics on individual counts or ARPU. We're not going to start doing that. I hope the information I've given you, though, gives you a good indication of how positive we feel about these new cloud-native products. Yeah. That's very helpful. Thank you. Just quickly on sort of price, just as it relates to net renewal into the second half. I think you delayed some price rises through COVID, sort of partly related, I guess, to ARPU, but in the 97% net renewal that you had, is there a price element that's going to help you to increase the net renewal into the second half? In the second half, we are likely to continue not implementing across-the-board price increases. There are some discount unwinds, so there's a little bit of help from that. We're not going to put across-the-board price increases through as a matter of norm. Okay. Much appreciated. Thank you. James, sorry, just one additional thing on that, because, sorry, a couple of you, yourself and previously somebody, touched on renewal rate by value. As you can see, it's 97%, which is absolutely in line with the second half of last year. That is underpinned by a churn rate, which has been absolutely consistent in the first half of this year with the second half of last year, which in turn was in line with the first half of FY 2020, which, if you recall, was entirely on a pre-COVID basis. The reason I just want to call that out is to say that across the small and medium segments, across our cloud-native and our longstanding Sage 50 and Sage 200 products, we've seen incredible resilience over the last 12 months. That gives us a really good base, a really good stepping-off point into FY22, with regards to our ability to continue to grow ARR. Okay. Thank you. Thank you. The next question comes from the line from Stacy Pollard from J.P. Morgan. Your line is now open. Hi. Thanks very much for taking my questions. I have 3, please. Firstly, can you give us those cloud-connected numbers for mainland Europe again? How does that compare to cloud-native expectations in Europe? Maybe just a quick comment on Iberia, where recurring revenues fell, perhaps a quick explanation for what happened there versus France and Central Europe, which seemed to do better. Sorry, that was all one question. Number 2, you mentioned operating margins could improve from 2022 onwards, really trying to get a sense of how we should think about that evolution over the next few years. Is it kind of a gradual return to the 21%-23% level that you are at, or are there step changes along the way? Do you think you could ever get back to that 27% that you ran at for quite a number of years? Perhaps that's longer term. Third question, just basically, even with the GBP 300 million in share buybacks, you're probably still running below your comfort zone of one to two times net debt to EBITDA. What happens from here? Are you considering more M&A, and indeed, could you do more disposals as well, or is that pretty much done? Sorry, that was a lot of questions. Thanks, Stacy. I'll pass over to Jonathan on the cloud-connected and the capital allocation. Just a quick word on margin. The way to think about it is we want to reassure people that it is an improving trajectory from here, but it will be gradual. What will come first is an increase in the rate of revenue growth. It's important that we continue to invest, particularly in sales and marketing, to continue to pull through that new customer acquisition. You'll start to see the recurring revenue growth accelerate as Jonathan has alluded to. Then as that happens, the margin will follow. As you know, we're not giving specific guidance, so regarding the timescales, it will be a gradual thing. Jonathan, do you want to handle that? Yes. In terms of France, Germany, and continental Europe, that product mix is still primarily on-premise or cloud-connected. Across the Sage 50 and Sage 200 families, we're about 50%-60% penetrated in terms of migration to cloud-connected. Cloud-native will be a subsequent wave in those territories, but it is definitely planned, and this is where some of the investment is going. In terms of Iberia, that was the one territory, as you could see, where we saw a decline in revenues compared to last year. That was really due to customers who were effectively coming off plan. These were on-premise customers who were coming off plan during the course of the period. Those customers are not lost. They're still using the software, and we hope that when we all emerge from the lockdowns across continental Europe, we will see an improvement there. In terms of capital allocation, you're absolutely right. We're running a 0.2 times net debt to EBITDA at a net debt level of about just under GBP 100 million. We have made a very clear statement in the announcement that we will move back into the range of 1-2 times, and we will do that through three different ways. We will do that through organic investment, through the P&L, which is what we are doing. We will also do additional M&A as we find appropriate opportunities that we can execute on. Then, if there is surplus, we will also return capital to shareholders. To that point, and exactly to your question, we're now about GBP 120 million through the GBP 300 million share buyback program that we started only in March. That will continue, and we anticipate that that will complete towards the end of August or early September. We are therefore really executing completely in line with the capital allocation program and model that I've actually probably talked everybody through consistently over the last two years or so. We will just keep that under review, and we will execute to make sure that we do move back to within the range as you described. I hope that answers the question, Stacy. Just disposals, I guess you're saying that's mostly done? Sorry, say that again, Stacy. On the disposal side, that's largely completed? Yeah. Largely completed. We're very focused now on scaling and growing. Obviously, there may be the odd one, but that's not the focus now. The focus is scaling and growing. Okay, got it. Thanks very much. Thank you. Thank you. The next question comes from Gautam Pillai from Goldman Sachs. Your line is now open. Hey, thanks for taking my questions. Firstly, can I please check if there's an element of conservatism built into the guidance, given the strong start to the year? The business environment is getting better, and comps are considerably easier in the second half. Are you baking in any assumptions of higher churn as the furlough and support schemes roll off? Secondly, Xero commented yesterday on increasing levels of investment to capture more of the growth. Does that have an impact on your investment plan over the midterm? Thank you. Yeah. If we take that second one in terms of the investments in verticals, that's not new. We're just emphasizing that that's what we're doing, but it's part of the existing investment plans. I'll let Jonathan just comment a little bit more about guidance, but just to say that we've seen a lot of resilience in our customer base, and whilst there is always a risk as the furlough and government support schemes are reduced, we do not anticipate that having a material impact. We think that our customer base is showing, as I say, a lot of resilience, and there's a lot of optimism amongst our customers for the future. Anything you want to add, Jonathan? No, just on guidance. What you see that we've done today is we've just moved the guidance towards the top end of the range to 3%-5%. That is completely consistent with our best estimate at this stage. We'll be updating you at Q3 and obviously at the year-end. That is very much our best estimate at this stage. Got it. Thank you. Thank you. The next question comes from the line from Michael Briest from UBS. Your line is now open. Thank you. Good morning. A couple from me. Just starting with a clarification, Jonathan, on ARR, I wasn't sure whether you were saying it was up GBP 90 million sequentially at constant currency. Can you just tell us what the sequential growth in ARR is on an underlying basis? Just looking at the, sort of following up on the last question, I mean, insolvency rates in Europe I think are down about 30%-40% year-on-year, and in North America or the U.S. down 15% because of all the government support. Trying to marry that with your comments just now about business sustainability and your decision not to change the big bad debt provisions you took against COVID last year. Something doesn't quite match up there. You've still got lots of provisions for bad debt, but you're saying you don't expect attrition to increase, but insolvency is very low versus history. I've got one on margins, which is, you have 300 basis points down in the first half. Is there any prospect it will be better than that for the full year? The guidance is still for up to 300 basis points of effect. Thanks. I'll touch on that insolvency point from a market perspective, and I'll let Jonathan answer the rest. I think if you take the market as a whole, there are going to be some changes. There will be businesses that go out of business. At the same time, there are also, in our major markets, record levels of business formations. What we're also seeing is that amongst bigger businesses, more established businesses that have been around a long time, those sorts of businesses are very resilient. They've seen difficult times previously, and talking to customers and taking our own surveys and customer pulses, our view is that the impact on Sage, which may not be the same for others, but the impact on Sage, we believe will be within the boundaries we've set, i.e., Jonathan can comment more, but we have put bad debt provisions in place. We don't see any reason to take a more pessimistic view looking forward based on the information we have. Quite the reverse. If anything, we're more optimistic, and we're definitely more optimistic about new customer acquisition. Jonathan? Yes. Just on the bad debt provision, this is the additional bad debt provision that we put in place a year ago for the first time from the onset of COVID. That's being held at about GBP 16 million. We have not seen an uptick in bad debts over the last six months or indeed over the last 12 months. Nonetheless, for exactly the point that you raised, we are holding that provision in place, and we will review that as we move through the next couple of quarters. The other thing that's just worth talking about in relation to the resilience of the base is that, if you're looking at us compared with peers, don't forget that about half of our revenue and customer base comes from the small segment, and the other half comes from the medium segment. By definition, those larger, more established businesses are therefore more resilient during a downturn. Then in the small segment, Sage 50, that is towards the top end of the small segment, as opposed to down at the micro and startup. Those are more established businesses, and they've probably been customers of ours for 20 or 30 years. They've been through a couple of recessions. Again, we anticipate against peers that there is a degree of resilience there that may not be at first apparent. Having said that, though, we are holding that bad debt provision, and we will continue to monitor it as we move forward. In terms of sequential growth rates, if you look on an actual currency basis, as you can see, it looks pretty flat, but we always report on a constant currency basis. As you can see, there is momentum there. If you take Q4 last year to Q1 this year, that was 1% sequential growth. Q1 this year to Q2 this year is 2% sequential growth in ARR. This is very much compatible with the momentum that we're talking about and the ARR growth rate bottoming out during the course of the first half. If you just then look at recurring revenue, sequential growth this first half on the second half last year is 3%, and that compares with sequential growth in the second half last year of 2%. All of the measures on a quarterly basis or on a half-year basis are indicating for both ARR and recurring revenue an improving trend as we go into the second half. Then I think lastly, in terms of margin, and I'll be brief on that because we've got very clear guidance. We guided at the beginning of the year for a decrease in margin of up to three percentage points. At the Q1 stage, we slightly changed that guidance and said it would be more second-half weighted, and that's completely consistent with what we're seeing at the first-half stage now. We anticipate that we will continue to invest, and if possible, we will accelerate investment if we think that's appropriate. We are still sticking to that guidance for the full year of up to three percentage points. Don't forget that we are saying that as we move into FY 2022, we do expect that margin to begin to trend upwards over time. Thank you. Thank you. We will now take our last question from the line of Ross Jobber from Edison Group. Your line is now open. Good morning. Thank you very much. I wanted to focus, if I may, on the comment you made about rising margins. You identified two principal drivers: top-line growth and operating efficiencies. It's really the second of those, the operating efficiencies, that I wonder if you could give us more color on. Clearly, you are a scale business in many areas. You've got global scale. Your non-core businesses are now largely disposed of or in the process. I think you described yourself as having a renewed focus. Given that in mind, could you give us a bit more color on exactly which areas these operating efficiencies are going to arise that are going to help drive up the margin? Thank you. Yes, sure. At a high level, the key area really is sales and marketing spend. Jonathan, in his presentation, talked about the structure of the P&L and the fact that we currently spend 42% of recurring revenue on sales and marketing costs. That's high, and the reason it's high is because we're investing upfront to create momentum, particularly around new customer acquisition. Also, as we shift to a more digital model, we have a number of inefficiencies because we are running duplicate sales and marketing processes. As the growth comes and accelerates, and as we make that go-to-market, that sales and marketing more efficient, you will naturally see the amount that we're spending as a percentage of recurring revenue come down. It won't come down in absolute terms, but it will not need to grow at the same rate as revenue. Jonathan, anything you want to add? Sorry, Steve said it all, and there's nothing really to add. When we get to the year-end, we'll be updating you on our investment plans and how that can further drive growth, as well as where we're allocating that additional investment. That's useful. Thank you. All right. Well, thanks very much, everyone. I really appreciate, as always, everyone taking the time to dial in and spend some time with us. We'll look forward to updating you at the end of the third quarter. Thanks very much. That does conclude the conference for today. Thank you all for participating. You may now disconnect.