Hello, Welcome to Sage's First Half Results. I'm delighted to be joined today by Jacqui Cartin, our Group Financial Controller and EVP of Group Finance, whilst Jonathan, our CFO, recovers from a recent operation. I'm very pleased to say that we expect Jonathan back in the office in early June. Let me take you through the overview. Sage delivered strong results in the first half as we continue to execute on our ambition to be the trusted network for small and mid-sized businesses. We accelerated revenue growth to double digits, expanded our underlying operating margin, and significantly increased free cash flow. There's three key messages I'd like to emphasize today. Firstly, Sage has built strong momentum, and this is underpinned by broad growth drivers. Across the group, Sage Business Cloud is delivering significant growth. This includes not only Sage Intacct and Cloud Native, but also Sage 50, Sage 200, and Sage X3 across our main markets. Demand for our mission-critical finance, HR, and payroll solutions is robust, and it's growing as SMBs continue to digitize. Secondly, we're accelerating the pace of innovation, expanding our global cloud solutions across our markets, as well as developing new solutions such as Sage Active. Through our growing digital network platform, we're delivering innovative cloud services to customers across Sage Business Cloud, and we're well-positioned for the next generation of AI, which we expect will drive significant productivity benefits for customers, for accountants, and for Sage. Finally, our performance is driven by consistent execution in line with our strategy. We are leveraging our global scale and expertise across our markets, while at the same time continuing to use our local knowledge to provide solutions to our customers. We're delivering against our strategic priorities with good progress in all areas, and we're optimizing our go-to-market and sales operations, making them more efficient and effective as we focus on scaling the group. Now, I'll come back later to talk more about our progress, but for now, I'm gonna hand over to Jacqui for the financial review. Thanks, Steve. Good morning, everyone. I'm pleased to be here today to share our first half financial results and our full year outlook. In summary, as Steve mentioned, it's been another strong period for Sage as we continue to execute in line with our strategy. Let's start with the highlights. Just to remind you that all numbers are now reported on an underlying basis, unless otherwise stated. Firstly, we achieved recurring revenue growth of 12%, underpinned by continued strength across Sage Business Cloud. This reflects positive momentum in all regions. Secondly, operating margin was 20.8% and has continued to trend upwards as we efficiently scale the business. Finally, our cash conversion was again strong at 117%, driven by continued growth in subscription revenue and good working capital management. Turning to our key growth drivers. ARR growth accelerated to 12%. That's up from 7% this time last year. This growth continues to be well-balanced between new and existing customers, it means that ARR now stands at GBP 2.1 billion. That's up more than GBP 200 million compared to the prior year. Cloud Native ARR growth was 30% with another strong performance from Sage Intacct. Renewal rate by value was 101%, that's up from 100% this time last year. This was due to good retention rates, strong customer add-ons, and targeted price increases. We've also added GBP 190 million of ARR from new customers, up from GBP 150 million in the previous year. The strength we're seeing across these drivers means that we enter the second half with good momentum. Looking at the P&L. We achieved double-digit total revenue growth at 10%, driven by recurring revenue growth of 12% to over GBP 1 billion. Operating profit grew by 14% to GBP 227 million, with margin expanding to 20.8%. On an organic basis, which adjusts for the impact of M&A, operating profit increased by 19%. This has led to growth in underlying EPS of 13% to GBP 0.1568. Reflecting the strong performance of the business, we've increased the interim dividend to GBP 0.0655, and that's up by 4%. As you can see from the revenue bridge, our growth continues to be fueled by Sage Business Cloud, which delivered recurring revenue growth of almost GBP 180 million or 29%. Importantly, this was driven by both Cloud Native and Cloud Connected Solutions with strength from both new and existing customers. This reflects the growing demand from SMBs for digital solutions to automate workflows and gain better insights. Migrations have also continued to drive growth, especially in Cloud Connected, where the pace of product migration has now accelerated. As a result, revenue to be migrated has decreased by GBP 64 million, in line with our strategy. The impact of all of this is an increase in Sage Business Cloud penetration, which is now 82%. This is up from 72% last year, with an increasing number of customers now able to connect to Sage's cloud services and our ecosystem via the Sage Digital Network. As you can see here, we saw further growth in software subscription revenues, increasing by 18% in the period to over GBP 850 million. Subscription penetration continued to increase, up to 78%. As expected, other recurring revenue and non-recurring revenue continued to decline by 7% and 24% respectively. Recurring revenue now represents 96% of our total. This really underlines the high quality and resilience of our business. Let's take a look at the portfolio view, where we saw particularly strong growth across our cloud solutions. The future Sage Business Cloud opportunity showed continued strength, with recurring revenue up by 13% to GBP 964 million. As I mentioned earlier, Sage Business Cloud penetration is now at 82%. Growth of 38% in Cloud Native to GBP 285 million was driven by new customers and supported by migrations. While growth of 25% in Cloud Connected to GBP 502 million reflects good growth from existing and new customers, together with faster migration of products to Sage Business Cloud. As you can see, the pace of cloud growth remains significantly ahead of the group as a whole, with Sage Business Cloud growth now at 29%. In line with our strategy to focus on solutions with a clear pathway to the cloud, recurring revenue in non-Sage Business Cloud was unchanged at GBP 75 million. Moving now to our regional performance. In North America, we delivered broad-based recurring revenue growth of 17%, mainly driven by the medium segment. Sage Intacct continued to grow strongly, driven by further success in attracting new customers and supported by cross-sell and upsell across the existing base. Our Sage 50 and Sage 200 franchises have also significantly contributed to growth in the region. As a result, Sage Business Cloud penetration increased to 84%, up from 76% this time last year. We've seen continued strength in the UKIA region, where recurring revenue grew by 11%. Growth in the U.K. and Ireland was 10%. Cloud Native growth in the UK was fueled by the small business suite, including Sage Accounting, along with Sage Intacct, which is now starting to scale rapidly. This was supported by good levels of growth in Sage 50. In Africa and APAC, growth accelerated to 15%, driven by Sage Accounting, Sage Payroll, and Sage Intacct. The result of all of this is Sage Business Cloud penetration of 88%, up from 76% last year. In Europe, recurring revenue growth accelerated to 6%. This includes the impact of the disposal of Sage Switzerland on Central Europe. Organic growth, which excludes the disposal impact, was 8%. In France and Iberia, growth accelerated to 7%, driven by a good performance across Sage Business Cloud. In Central Europe, growth was 10% on an organic basis, with a strong performance in Sage HR. This has resulted in a significant increase in Sage Business Cloud penetration, now at 70%, up from 61% last year. The growth we're achieving is fueled by continued investment in the business. As we grow the top line, this creates the headroom for us to invest more in absolute terms, driving sustainable growth, while at the same time enabling us to expand the margin. This efficient growth resulted in a margin of 20.8%, a 60 basis point increase from the prior year. Investment in sales and marketing is now at 40% of recurring revenue, down from 43% last year, as we drive efficiencies in our sales motion. Investment in R&D at 17% of recurring revenue remains a key priority for the group. We've maintained a disciplined approach to cost, with G&A now running at just 9% of recurring revenue. Importantly, we expect to continue to grow our revenues faster than our costs. Now let's turn to cash flow. Cash generation remains a core strength of Sage, and in the first half, the group generated GBP 266 million of cash from underlying operations, resulting in continued strong cash conversion of 117%. As a result, free cash flow was GBP 194 million, net of interest and tax. Our ability to generate cash supports our strong balance sheet, including cash and available liquidity of GBP 1.2 billion. In February, we issued EUR 500 million of notes under our new EMTN program, which we use to repay outstanding USPP debt. This has extended our debt maturity profile and diversified our funding sources. We also completed the acquisition of Sage Earth, an innovative carbon accounting solution, during the first half. This means that our net debt leverage, at 1.3x, is well within our midterm target range of 1-2x. We retain the flexibility to move outside this range should business needs require. Importantly, this gives us significant capacity to support both organic and inorganic growth moving forward. What does this mean for the outlook? We have built good momentum in the first half, having made further strategic progress to drive strong growth in revenue and margin. We are now expecting organic recurring revenue growth to be in the region of 11% for FY23. In other respects, our outlook is unchanged. We continue to expect other revenue to decline in line with our strategy. We expect operating margins to trend upwards in FY23 and beyond, as we continue to focus on efficiently scaling the group. Thank you. I'll now hand back to Steve. Thanks very much, Jacqui. Our strong performance in the first half is underpinned by our strategic framework for growth. This guides our actions and shapes our decisions as we fulfill our purpose and ambition. It ensures we're all working towards the same objectives and doing so in the right way in line with our values. It's driven through our five strategic priorities, which I'm gonna talk about shortly, as we seek to deliver value for all of our stakeholders. Now, knocking down barriers starts with our customers. SMBs represent 98% of all businesses in our key markets, and they account for almost two-thirds of private sector jobs. They are the lifeblood of the global economy, and our experience over many years is that they tend to be resilient, agile, and quick to spot opportunity. Every week, I talk to customers and partners like Ryan Panchoo of Vegan Bakery, Borough 22, who you can see here on the slide. He told me recently that despite the economic headwinds, he's optimistic and full of ambition. This is a message I hear again and again, and it's supported by our recent survey of almost 12,000 SMBs, where more than 80% say they're confident about their company's future success. The majority are set to increase their technology spend over the next year as they continue to digitize. Overall, the number of SMBs consistently grows. Our analysis predicts 1 million more in our key markets by 2025, as the economy expands and more entrepreneurs pursue their dreams. Against this backdrop, I'm confident in our continued ability to drive growth. We empower SMBs with our solutions, enabling them to automate processes, gain better business insights, and comply with regulation. We provide advice, importantly, customers can always access our experts by phone when they need human support. We use our position to champion and lobby for SMBs, engaging with policymakers to create a more supportive business environment. The foundation of our customer proposition is our digital network, a set of connected products and services, including those shown on the slide, that enable our customers to transform their accounting, HR, and payroll workflows. The network benefits customers by creating connections between business ecosystems, helping to automate workflows, both within and between organizations. From inception, it's been designed as a powerful platform for innovation in the era of artificial intelligence with unique scale and access to data. For example, we've used the digital network to develop our accounts payable automation service, recently launched in the U.S., the U.K., and France. We've brought Sage Intelligent Time, our smart time assistant, to new markets. We've expanded our outlier detection service, which learns from customer behavior and is now averaging close to 600,000 predictions per week. That's up six-fold in the last three months. We're also very excited about the developments in generative AI and the new possibilities it opens up for SMBs to boost productivity and elevate human work. We're already embracing it, starting next week, when we'll share with our partners a connected accounting inbox that provides natural language responses built on GPT-4. Importantly, we're building all of these solutions in line with our values, promoting confidence and supporting our ambition. To be the trusted network for SMBs. Looking ahead, our continued investment and strategic partnerships position us well to be a leader in this important and fast-moving area. Let's turn to our strategic priorities, starting with scaling Sage Intacct. We focused on enhancing the solution and optimizing sales and marketing. As a result, we grew Sage Intacct ARR in the U.S. by around 30%. Outside the U.S., we doubled it to GBP 25 million, building traction in the U.K., Canada, South Africa, and Australia. Across verticals, Sage Intacct Construction and Real Estate saw new customer additions up by more than 50%. Just last week, we acquired Corecon, a cloud-native project management solution for the construction industry. We also issued a major new release of Sage Intacct Manufacturing and are working with customers and partners across six countries to drive growth. Feedback continues to be strong. I recently spoke to Phase 3, a professional and managed services provider based in Manchester. They told me Sage Intacct saves them three days a month of manual effort. Having established Sage Intacct across our English-speaking markets, we're now rolling the solution out in continental Europe, starting with its recent launch in France. On to our second strategic priority, expanding Medium beyond financials. Our new AI-powered service to automate accounts payable is rapidly gaining traction. In the last three months, we processed more than 200,000 invoices for around 3,000 customers across Sage Intacct in the U.S., Sage 50 in France, and Sage Accounting in the U.K. This is the same service provided via the digital network to customers of all three solutions. It's getting some great feedback. Cambio Communities, an affordable housing operator in Michigan, told us accounts payable automation has doubled, if not tripled, their productivity, elevating their team's work and freeing up time to add value in other areas. Following rapid growth in North America, Sage Intacct Planning, our powerful budgeting tool, is now also available in the U.K., South Africa, and Australia. On to our third strategic priority, which is to build the small business engine. Sage continues to achieve good levels of growth from its small business solutions, including Sage Accounting, Sage HR, and Sage 50. Alongside our digital sales, we're also focused on winning over accountants. Sage for Accountants has now been adopted by almost 5,000 practices in the U.K. just 18 months after launch. It's fueling new Sage Accounting customers. It's supporting the strong growth of GoProposal and, Futrli, our client onboarding and cash flow advisory solutions. To help accountants better manage their smaller clients, we've also created a new tier of Sage Accounting in the U.K. to help those taxpayers with the simplest of tax affairs. We've also launched Sage for Accountants in Canada, with further markets expected to follow. On to scaling the digital network, which is key to driving the data flows that support more powerful solutions and deliver richer customer experiences. By rapidly growing Sage Business Cloud and the connected services we offer, we are enabling and encouraging more network participation. We're doing this by attracting new customers and by continuing to migrate existing customers and products, and we're making good progress. As Jacqui said, Sage Business Cloud penetration is now up to 82%. We're also expanding our global Cloud-native solutions, including Sage Active, a cloud-native multi-legislation solution for SMBs in Europe. We've just launched this in France. We're developing new services that are powered by the digital network, adding value for customers and for partners, such as Equifax, shown here on the slide, who use our network to streamline credit applications for consumers. On to our final priority, learn and disrupt, where we focus on innovating both organically and via partnerships, including with Microsoft and Amazon Web Services, both top-tier sponsors of our partner summit in the U.S. next week. Through Microsoft, we've delivered key integrations with products such as Teams to simplify approval and collaboration workflows. We've had early access to Copilot, a new AI-based productivity tool, to support our sales teams in France. We continue to build solutions on both the AWS and Azure platforms, providing our customers with flexibility and choice as part of our multi-cloud strategy. Let's turn to our stakeholders, starting with our customers. As I said earlier, I talk to customers every week, and I'm always inspired by their optimism and can-do attitude as we deliver innovative solutions that remove friction from their lives. Customer satisfaction is a key focus, and whilst we're not complacent. We are really proud to have almost 14,000 five-star customer reviews on Trustpilot. We're driving brand awareness with distinctive global marketing and major sports partnerships, including Major League Baseball, The Hundred cricket, and the Rugby World Cup. These are creating engagement. During the recent Guinness Six Nations, Sage content accounted for a third of all rugby TikTok views. For colleagues, we encourage an inclusive, high-performing, and accountable culture. Our latest group-wide pulse survey achieved a response rate of almost 90% and confirmed that overall colleague satisfaction is strong. In December, we published our first diversity, equity, and inclusion impact report with improved gender diversity amongst our leadership teams. I visited many of our colleagues during the first half in North America, Europe, and South Africa, and it's been fantastic to see their engagement and passion. I'd like to thank all colleagues for their efforts in achieving this first half performance. On to society, where Sage supports sustainable and inclusive growth. Our progress towards net zero by 2040 was recognized in April through our inclusion in the Financial Times Europe Climate Leaders list. We're also supporting customers on their own journey to net zero, enabling them to use their accounting data to manage their carbon footprints through Sage Earth. It was a real privilege last month to be there in person to kick off Sage's partnership with Morehouse College in Atlanta, Georgia, to support more young Black people pursuing a career in technology. For shareholders, our overriding objective is to create sustainable growth in shareholder value. The way we're doing this is by growing revenue in absolute terms and by doing so more efficiently over time. There are several attributes to our model that give us confidence in this area. Firstly, our strategic framework is delivering growth in all regions. We're rolling out global cloud solutions across our markets, led by Sage Intacct. We're adding value to existing and new customers by delivering new cloud services. We're scaling and leveraging the digital network to deliver innovative AI-powered solutions, transforming the workflows of SMBs. Second, Sage is differentiated by our leading technology, the breadth of our business, and our human touch. We have deep expertise across financials, payroll, and HR, serving a wide range of SMBs across diverse geographies. We're supported by a broad ecosystem of partners, accountants, resellers, and ISVs who enrich and expand the reach of our offering. We combine our solutions with a human touch, providing business advice and expertise backed by human customer support. Finally, as we grow the business in absolute terms, this creates headroom both to increase investment and to expand margins. This is helping us to build a scalable platform to deliver sustained efficient growth. In conclusion, Sage has had a strong first half, delivering broad-based growth, and we enter the second half with good momentum. Our investments have enabled us to accelerate innovation as we find more ways to help our customers to be more productive and more efficient. We continue to execute well with consistent delivery against our strategy, giving us confidence in the continued success of the group. That concludes today's presentation. Thank you very much for watching, and Jacqui and I would now be happy to take your questions. Thank you. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. We will now take the first question. It comes from the line of George Webb from Morgan Stanley. Please go ahead. Hi. Morning, Steve and Jacqui, congrats on the first strong first half performance. A couple of questions on my end, please. Firstly, just on the margin outlook for the year, you mentioned you're up 60 basis points in the first half, demonstrating how that operating leverage can kick in when you're running at high rates of organic recurring growth. The outlook for the second half is still strong growth. Should we continue to see the benefits of operating leverage into the second half of the year, or is there any margin seasonality that we should expect? Secondly, Steve, you mentioned that Sage for Accountants has been adopted by nearly 5,000 practices. Can you give us a sense of how much further there is to go on that or what level of adoption you think you can get to when you look out a few years? Perhaps also what's your strategy for marketing and attracting those accountants that perhaps have not been Sage adopters in the past? Thank you. Sure. Thanks, George. I'll take the second one first, and then Jacqui Cartin can cover the first one. On Sage for Accountants, you know, in the U.K., there's something in excess of around 20,000 accountants in the U.K. We're pleased with getting to 5,000. I think we'll keep pushing. You know, we definitely expect to get north of 10,000. Quite how far we get in the second half, we'll see. We see this as a really critical enabler to deal with the second point that you said, which is, this is a really good way of bringing accountants to Sage who have typically perhaps only worked exclusively with one of the other players. One of the advantages actually of acquiring GoProposal and Futrli is that both of those have a much higher proportion of customers who are non-Sage customers. We're very much committed to an open architecture, so we're not saying that, you know, deploy Sage for Accountants and then only use Sage with your end user customers. You know, our aim is very much that, you know, use Sage for Accountants, and you can also incorporate clients if they're using other people's technology. We want you to adopt Sage for Accountants to give you that overall integrated experience, you know, for your own practice. So we see it as a very important. Margin, Jacqui Cartin? Yeah. Thanks, George. Just in terms of that uplift from the first half last year, 60 basis points. As you mentioned, we've got good operating leverage now coming through from the double-digit total revenue growth, that's enabling that expansion of the margin, but also giving us good capacity to continue to increase investments in absolute terms to drive growth. Importantly, that is sitting alongside efficiencies that we are now continuing to generate in the sales motion, and you've seen the sales and marketing as a percentage of recurring revenue coming down from 43%- 40% in the first half. That efficient growth is enabling the margin expansion and is very much consistent with what we said we would do. As we look ahead to the second half, you should expect to see us continue to invest, but importantly, costs will now grow at a slower rate than revenue, and that will enable further expansion of the margin in the second half, and also underpins the guidance that we have set out today to expand margins in FY23 and beyond. Very clear. Thank you. Thank you. We will now take the next question from the line of James Goodman from Barclays. Please go ahead. Morning. Thanks for taking my questions. Just firstly on the outlook for the recurring revenue where you've increased the guidance this morning, encouraging to see, but at the same time, of course, you've delivered a very strong ARR quarter, and we're at 11.8% now for the first half, and you've delivered over 12% recurring in for the first half of the year. Anything other than conservatism baked into that for the second half of the year, or any reason we shouldn't see it, you know, much closer to the sort of trajectory of the business currently? The other question I had was just around the portfolio view of the business. Wondered if you could go into a couple of the moves that seemed a bit more exaggerated this half period. I think the Cloud Connected growth was quite accelerated at, I think, 25%. The To Migrate declined by a similar amount, yet the non-Sage Business Cloud was flat. Maybe you could add some context to those movements. Thank you. Sure. Thanks, James. I'll let Jacqui sort of walk through the detail, but just high level on that second point, I think it's a very important point that, you know, we continue to see strong growth from the cloud native products across the piece. We've been saying for some time that enabled by Sage Business Cloud and by the digital network, as we get more and more of our cloud-connected customers really connected into that network, it's enabling us to deliver cloud services consistently across that network. We've given a few examples of where we are able to deliver the same cloud service both to our native customers and to our connected customers. You'll continue to see us doing this. We've got a number of things in the pipeline where you'll see us being able to, you know, really activate that kind of traditional Cloud Connected network and hopefully therefore see stronger growth there. Yeah. Jacqui, do you... Just to add to that, I think the way you should be thinking about it, is when we look at that Sage Business Cloud growth in the first half of 29%, as Steve mentioned, that's now much more broad-based, supported by both the Cloud Native and the Cloud Connected base, which has now grown by 25%. That Cloud Connected base, we added GBP 90 million of recurring revenue in the first half, driven by that increase in consumption that Steve references, and that's very different to the sort of what you would have seen a few years back, where the Sage 50 desktop was migrated, and we got one-off ACV uplifts. This is a much more sustainable sort of growth foundation than we've seen previously. Importantly, you can see that reflected in the fact that the To Be Migrated, that's declined by only GBP 64 million. The uplift that we're seeing now in Cloud Connected is much higher, and that's driving that broader base of growth across Sage Business Cloud. I think on the. Understood. Thank you. On the outlook for recurring revenue, I mean, if the key here really is, you know, second half has much tougher comparators. I think the way to think about it is we have momentum, and our ambition is to continue driving that momentum. You know, overall, that kind of low double digit 11% recurring revenue is a good place to be. You know, as I say, tougher comparators, but if you take the year as a whole, you know, that 11% is obviously above where we, you know, it's above our expectations of where we were sort of six months ago and shows a, you know, an increasing confidence that we're, you know, we're really creating and driving that momentum. I would just add to that, if you look at the sequential growth in the ARR for the first half, we reported 2% in Q1, that was 3% in Q2. That gives us good momentum as we enter the second half. It's just lapping those tougher comparators that's creating that more balanced growth as we expected it would, when we set out the guidance at the beginning of the year. Understood. Thank you. Thank you. We will now take the next question from the line of Ben Castillo-Bernaus from BNP Paribas. Please go ahead. Good morning. Yeah, thank you very much for taking my questions. Firstly, just on that ARR growth, could you talk about just what your maybe expectations are for the exit rate, ARR growth of this FY? Obviously, the comps do get tougher, up to +12% vs the +7% that you saw in H1. That'd be helpful. The second question, just around the impact of generative AI on your OpEx line items. How should we think about that? Should this be seen as a need to increase your R&D intensity to initially build those AI solutions and therefore maybe a margin headwind? Is it the opposite where you should see productivity gains and therefore could be an accelerated margin expansion tailwind? Thank you. Sure. I'd take the second one first. I think as far as the R&D is concerned, no, it's not a margin headwind. I mean, we think, you know, R&D at that kind of 16%, 17% of recurring revenue is the right place to be. We may do some reallocation within that, if we see that that's appropriate, but we see no need to increase it in total. As far as internal productivity is concerned, yes, I mean, it can only be helpful. I mean, we already have examples historically, you know, particularly areas like finance, where we have deployed machine learning and robotics to drive productivity. Generative AI with its ability to provide greater insights will undoubtedly assist productivity not just in the back office, but also in the front office. Our real focus is how can we use AI to help our customers? How can we help our small midsize customers be more productive and so, you know, embedding within our product, which we've been doing for a number of years, but we see a number of opportunities to enhance that. Indeed, next week at our supplier, sorry, our partner conference in the U.S., we'll be announcing the release of a Sage Inbox, which is a product which will help all of our customers backed by AI to drive productivity in terms of how they're dealing with routine workflows. On AI-- on ARR, I'll just make one comment, and then I'll let Jacqui pick it up. I think that we don't guide to ARR, but structurally, I think, you know the message I want to leave you with is, I've said for a number of years that our ambition is to drive consistent double-digit growth. We don't give midterm guidance, but that's the ambition now is to maintain this momentum. As Jacqui said, sequential growth is really, really important now quarter-on-quarter. Obviously, you know, ARR is a slightly volatile leading indicator. Exactly where we are in that double-digit range, we'll see. Our aspiration is obviously for it to be double-digit. I think I would just add that, as Steve mentioned, from a momentum perspective, we enter the second half with strong momentum, and really good secular tailwinds in terms of that sort of trend towards digitization and what we are seeing from our customers in terms of demand. Notwithstanding that tougher comparator pace that we've touched upon, we are expecting a good acceleration on the recurring revenue growth from the around 9.5% that we reported last year, to the region of 11% for this year. A good level of acceleration for the full year. You can expect the key drivers underpinning that ARR for the full year to continue to be that sustainably low level of churn and good levels of NCA, and importantly, continued strength in that cross-sell and upsell as we continue to invest in the digital network. Clearly, we'll update you in Q3 on the ARR. Got it. Thank you. If I can just squeeze in a quick follow-up just on the sales marketing intensity. It was down 3 percentage points year-over-year. Margins were only up 60 basis points. Could you just add a comment on the offsetting factors in there that drove that margin expansion? Thank you. Yeah. It's a good question. As I mentioned, we're obviously driving double-digit top-line revenue growth now, which is creating strong operating leverage. Alongside that, we're driving these efficiencies in the sales motion. The pace that I would withdraw out here is twice the percentage, in terms of the recurring revenue, the proportion has decreased. We have continued to increase the absolute level of sales and marketing. That's gone up by about GBP 20 million in the first half. The combination now of that sort of double-digit top-line growth with a more efficient sustainable growth engine means that we are now able to continue to drive these more sustainably high levels of revenue growth whilst also expanding the margin. That's very much consistent with the strategy that we've set out and what we said we would do. Thank you. Thank you. We will now take the next question from the line of Alex Nguyen from Jefferies. Please go ahead. Hi. Good morning. Thank you for taking my questions. I guess if I'm just being a bit critical on the ARR, I saw that the Cloud Native for this half was growing 30%, which I think appears a bit softer compared to other periods, if I'm not wrong. Could you provide a little bit of color on that, and if there's anything that we should be aware of? Secondly, this for modeling purpose, but I noticed there's a GBP 20 million charge this quarter for lease downsizing, and I note a comment that this charge will continue in the second half of the year. If you could quantify how much would that be, that'd be helpful. Thank you. Just on the first one in terms of market dynamics, I think, you know, at 30% growth, we continue to grow much stronger than the market average. Obviously, you know, at some point you sort of slightly get into the law of big numbers. Particularly in Intacct, which has been, you know, growing at the sort of 30%-35%, but some periods a bit quicker than that, and also in the smaller business in Sage Accounting, et cetera. You know, Cloud Native is now, I think we're up to about GBP 400 million or something of ARR. To continue to grow at that kind of 30% is a very healthy number. Jacqui can talk a little bit about the comparator last year when we did grow at sort of 50%+, but that was a very sort of unusual half that I think was helped by a number of factors. Yeah. I think when we look at the 30% this year, it continues to be underpinned by that real strength in Sage Intacct. We continue to see strong levels of demand across Sage Intacct in the U.S. Importantly, it's also supported by other Cloud Native solutions, including Sage Accounting and Sage HR. A good breadth of products within the Cloud Native portfolio are contributing to that 30%. When we look at the prior year, that was growth of 51% on an underlying basis. That benefits from the acquisitions that we did in the prior year that included Brightpearl. If you look at that growth on a like for like basis, effectively it's more like 40%. Now whilst as we mentioned, the growth is slightly slower than what it was last year, I think Steve's point on the law of large numbers is very important. Also I would add that the actual amount that we're adding in terms of ARR continues to grow significantly in absolute terms. We added around GBP 140 million of ARR in the first half, so a good level of growth overall. Importantly, it sits alongside that broader-based Cloud Connected growth that we're now seeing, so supporting that overall Sage Business Cloud piece in totality. We expect to continue to see those good growth drivers within both Cloud Native and Cloud Connected moving forward. Awesome. In terms of the property piece, yes, we've reported a GBP 20 million charge in the first half of this year, that's very much just following a strategic review of our leases during the first half of the year. In terms of expectations for the second half, that will be completed, that program, by the end of September, it will be below the level that we have reported at the first half, so slightly lower than that GBP 20 million for the first half. That's very clear. Thank you. Thank you. We will now take the next question from the line of Balajee Tirupati from Citi. Please go ahead. Hi. Thank you. Balajee Tirupati from Citi. Two questions from my side, if I may. Firstly, could you share view on North America market where we have in general seen a higher degree of macro softening as well as bank challenges? Also, if you could comment on the U.K. mid-business segment. While you have Intacct now, your competitors from small business segment are also trying to increase the mid-market mix. Are you seeing any increase in competitive intensity there? Thank you. Sure. On the North American market, I think, you know, in common with a number of the other markets, there are some headwinds, as you mentioned. I think if you look at the dynamics that we have, the number of small mid-sized businesses, first of all, is increasing. There's no reduction in overall number of small mid-sized businesses. Secondly, small mid-sized businesses on average are underinvested in technology. We've recently done a survey of nearly 12,000 businesses, small mid-sized businesses globally. 80%+ said they were confident about their future prospects, and over half said they were looking at increasing their investment in technology. You know, we've had another good half in North America, you know, with really North America leading the way in terms of growth, growing overall 17% underlying recurring revenue. We continue to see that as it is our biggest market, it's our biggest total addressable market, and we continue to see good prospects there. In terms of competitors, yes, competitors are talking about, you know, moving upmarket, and I think we see that largely as them trying to hold on to their customers for longer. When we compete for new customers, we very rarely see those smaller competitors. It's, you know, in the mid-market in the U.K., for example, you know, with Sage Intacct, you know, we're nearly always competing against Oracle NetSuite. If I can add one question, sir. One more question there. Your renewal rate has been strong at more than 100%, also aided by pricing actions you have taken. Going forward, what is the view you have in terms of the feedback that you may have received on pricing, price increases? Yeah. To date? what is the view of future price increase? The view we take on price increases is we have not put through price increases to match inflation at a time when our, you know, our customers have got economic headwinds. We've tried to take a kind of fair exchange of value approach. What we do is we put through price increases that compensate for the sort of salary increases, the wage increases we give to our own people internally, so that net-net pricing is not increasing our productivity is not increasing our profitability. Profitability is being increased through our own productivity. I think this year on price, Jacqui, we've put through what? 4%- Yeah, between 4% and 4.5%. Four and five. Yeah. Going forward, you know, we will probably take a very similar approach. It is not our intention to put through aggressive inflation-level price increases. Very useful. Thank you. Thank you. Thank you. We will now take the next question from the line of Toby Ogg from JP Morgan. Please go ahead. Yes. Hey, morning, Steve and Jacqui. Thanks for the questions. Two from me. First one, just on market share dynamics in the U.S. with respect to Intacct. Clearly growth continues to look good there and starting to see some divergence now vs NetSuite. Could you just talk a little bit about the competitive dynamics vs NetSuite? Are you specifically seeing an improvement in win rates, or would you say this growth is more a function of expanding the coverage across different verticals? Just second question on, again, on the margin, and specifically the sales efficiencies you talked about in the sales motion. Could you just give us some specific examples of what those sales efficiencies are? Then when thinking about the sort of the outlook, you know, what are the opportunities for further improvements in sales efficiencies specifically that are still to come? Thank you. Sure. I'd set the U.S. first. I think what we're seeing is the win rates actually have been pretty stable. What we're doing though is exactly what you said, which is we are expanding more into verticals and strengthening our presence in a number of verticals. I think what you're seeing more of is us being able to capture more opportunities. The number one competitor remains Oracle NetSuite, you know, in pretty much every opportunity, that's who we're competing against. Depending on the vertical, we may, you know, it still remains a pretty fragmented market. There are still a lot of specialist suppliers. If you're in the manufacturing vertical or wholesale distribution, et cetera, you meet different people. But the one continuous competitor is NetSuite. I would say win rate's pretty stable. As far as margin efficiency is concerned, I think I would point you to two areas really, just there's two parts to this, which is both is sales and then marketing. If we take marketing first. Marketing, I think the digital marketing journey is increasing in efficiency all the time. We're making more use now of global integrated campaigns. When we're putting together marketing campaigns, we're able to do that now much more on a global basis and then modify them for local consumption. They're not all, you know, completely brand new, separate campaigns. We're getting that efficiency in marketing both from better digitization, but also more effective use of campaigns and brand expenditure, et cetera. In the sales part of the equation, you're also seeing us making more of that journey digitized. You know, a lot of the cost in sales is people. As you grow. What we're increasingly doing is we're not increasing the number of people that we need in line with revenue. We're adding less people because we're able to drive more of the journey digitally, both in small and in medium. Yes, we expect that to continue. As we look to continue to improve the margin, the bulk of that margin improvement will come from sales and marketing efficiencies. I would just add on that, Toby. The important thing to note here is that whilst the proportion of spend in terms of sales and marketing is coming down, and we are creating those efficiencies, in absolute terms, that is continuing to grow, to support the sort of higher levels of growth that we are now delivering. Yeah. Brilliant. Thank you. Thank you. We will now take the next question. From the line of Kai Korschelt from Canaccord Genuity. Please go ahead. Yeah. Hi, good morning. Thanks for taking my question, and congratulations on the strong results and guidance. I had a question around the Intacct rollout outside of the U.S. I think it's sort of live in France now. It's obviously been a hugely successful product in the U.S. My question is sort of why, you know, what is the limiting factor in terms of the number of geographies and the pace at which you can roll it out? Is it the sort of localizing the product, or is it, you know, perhaps calibrating sales? I'm just wondering, yeah, if you could give us a bit more color around that. Then the second one was around the U.S. market. I... The IRS there has recently, I think, said it will make a sort of free health assessment service available. I know you don't directly play in the sort of TurboTax-type market. I'm just wondering if that could perhaps over time impact demand for some of the accounting solutions, maybe at the sort of micro end of the market. Do you just feel it won't impact you at all? Thank you. Sure. Intacct outside the U.S., yes, we're, you know, we're now rolling out in Europe. We've started with France, but it is absolutely our intention to go into Germany, Iberia, et cetera. The limiting factor is exactly as you said. It is simply a case of sequencing, local compliance and local requirements. It's, it's a global platform, so we're not modifying the global product, but we do have to localize it for those markets, and that takes some time. It is absolutely our intention that our leading financial package for the mid-market everywhere in the world is Sage Intacct. As far as the U.S. market and the sort of micro end is concerned, I mean, I think we're seeing now, you know, in a number of markets, governments, you know, starting to seek to bring more people into a digital environment or digital exchange. Within that market, there is always a place for, you know, the sort of more basic free self-assessment tools. As far as Sage are concerned, in the U.S., it's not going to materially impact us. We don't really play in the micro market in the U.S. We've, we've traditionally, you know, not really competed, not really had a product at that micro level. Actually, you can do a comparison with the U.K., where we do compete at that level, and we just introduced a new tier of Sage Accounting to do exactly that, which is to focus on people who have very, very simple tax needs in order to start them on their digitization journey. It doesn't have a material impact on Sage's revenues. Long term, it may be an opportunity in terms of what we want is for all small mid-sized businesses to adopt digital technology, including accounting tools. Net-net, it's a good thing, but it doesn't have a material impact. That's great. Thank you. Thank you. We will now take the last question. From the line of Kathinka De Kuyper from UBS. Please go ahead. Hi. Thank you very much for taking my question. A few for me, please. Firstly, on the bad debt reversals. I think last year, H1 saw GBP 7 million reversal. Can you comment on what you've done in H1 this year? Secondly, you commented on the sales and marketing intensity and how you're increasing headcount less than revenue growth. Could you give us a sense of what your headcount growth has been and what your plan is for the full year? Maybe touch on attrition rates as well. Finally, can you just touch on your M&A pipelines, maybe some areas of interest and what you've seen around valuation? Thank you. Sure. I'll take those in reverse order. With M&A, look, we continue to be active. It continues to be an integral part of our strategy to look at acquisitions. We've just this last week announced the acquisition of Corecon. We're seeing some dampening of valuations. You know, quality assets are still, you know, in scarce supply. We remain disciplined. In terms of, you know, we're looking, we're open for business, but we don't have any particular areas where we have like a must-do acquisition. It's more how can we acquire technology and acquire functionality which we can integrate into the digital network to solve sort of wider pain points for our customers. On sales and marketing, look, in overall terms, we are broadly holding Sage's headcount pretty flat. What we're doing within that is we are reallocating resources. We're, you know, we are, you know, retraining and moving people into different roles. It's not our intention to materially grow our headcount either in the second half or in the sort of immediate future. That's an integral part of driving our efficiency in both sales and marketing and elsewhere. Jacqui, do you wanna talk about the bad debt? Yeah. In terms of that bad debt provision that was specific to COVID. If you recall, we recognized a provision of around GBP 16 million specifically in relation to the risks around COVID. What we saw during that period was, in fact, that our customer base was very resilient, and that we didn't need any of that COVID bad debt provision. We released the final portion of that in the first half last year. That first half margin from the last year includes that one-off release. When we think about the sort of debtor book in the first half of this year, what I would call out is you continue to see the strong cash conversion that we've delivered of 117%. That's underpinned by continued strength in working capital management, in particular on the DSO. That has remained very strong in the first half, therefore fairly consistent with where we were at the year-end. Good signs in terms of the resilience of our customers, notwithstanding these more tough sort of economic circumstances. Brilliant. Thanks, Jacqui. Thank you. Thank you. That is all the time we have for questions today. I would like to hand back over to Steve Hare for final remarks. Yeah, just to say thanks, everyone, for dialing in. Really appreciate it. You know, we look forward to talking to you again, actually very shortly when we do the Q3 results in July. Thanks very much. That does conclude our conference for today. Thank you for participating. You may now disconnect.