Sage Group vs Xero: Revenue, Profit and Business Model
Sage Group reported ~$3.3B of revenue in FY2025 and ~$487.1M of net income. Xero reported ~$1.6B of revenue in FY2026 and ~$97.1M of net income.
Latest financial snapshot
Sage Group
- Latest revenue
- ~$3.3B (FY2025)
- Net income
- ~$487.1M
- Net margin
- 14.7%
- Revenue growth
- +8.0% a year, FY2021–FY2025
Xero
- Latest revenue
- ~$1.6B (FY2026)
- Net income
- ~$97.1M
- Net margin
- 6.1%
- Revenue growth
- +25.9% a year, FY2022–FY2026
Financial summary
Sage Group
Sage moved from one-off desktop licences to subscriptions over the past decade. That shift lowered reported growth for a few years but left the group with a highly recurring revenue base. In FY25 (year to 30 September 2025), underlying total revenue grew 10% to ~$3.32 billion (£2,513 million), annualised recurring revenue rose 11% to ~$3.4 billion (£2,574 million), underlying operating profit rose 17% to ~$792 million (£600 million), and the margin widened by 1.5 points to 23.9%. Underlying basic EPS rose 18% to 43.2p. Sage paid a full-year dividend of 21.85p and announced a buyback of up to $396 million (£300 million). In the first half of FY26, revenue rose 11% to ~$1.8 billion (£1,363 million), underlying operating profit rose 15%, and the interim dividend was raised 8%. Nine-month FY26 revenue was ~$2.72 billion (£2,062 million), up 11%. Full-year FY26 results are expected in November 2026.
Xero
For the year ended 31 March 2026 Xero reported operating revenue of ~$1.59 billion (NZ$2.75 billion), up 31%, net profit of ~$96.9 million (NZ$167 million), down 27% because of Melio acquisition costs, and free cash flow of ~$321 million (NZ$554 million). Subscribers rose 11% to 4.92 million and average revenue per customer rose 23% to NZ$55.44.
Revenue and profit by year
Sage Group
| Year | Revenue | Net income | Margin | Growth | Source |
|---|---|---|---|---|---|
| FY2025 | ~$3.3B | ~$487.1M | 14.7% | +7.8% | Source |
| FY2024 | ~$3.1B | ~$426.4M | 13.9% | +6.8% | Source |
| FY2023 | ~$2.9B | ~$278.5M | 9.7% | +12.2% | Source |
| FY2022 | ~$2.6B | ~$343.2M | 13.4% | +5.5% | Source |
| FY2021 | ~$2.4B | ~$376.2M | 15.4% | — | Source |
Xero
| Year | Revenue | Net income | Margin | Growth | Source |
|---|---|---|---|---|---|
| FY2026 | ~$1.6B | ~$97.1M | 6.1% | +30.9% | Source |
| FY2025 | ~$1.2B | ~$132.1M | 10.8% | +22.7% | Source |
| FY2024 | ~$994M | ~$101.3M | 10.2% | +22.4% | Source |
| FY2023 | ~$811.9M | ~-$65.8M | -8.1% | +27.6% | Source |
| FY2022 | ~$636.2M | ~-$5.3M | -0.8% | — | Source |
Where the revenue comes from
Sage Group
No segment breakdown is published.
Xero
- Subscriptions and platform88
Recurring subscription revenue from accounting plans, add-ons and other platform services.
- Melio payments12
Transaction revenue from Melio's US bill pay and receivables platform, which contributed ~$193 million (NZ$332 million) in FY26.
Business model and strategy
Sage Group
How it makes money
Sage makes money mainly from software subscriptions. In FY25, recurring revenue was ~$3.22 billion (£2,436 million), or 97% of the ~$3.32 billion (£2,513 million) total, and software subscription revenue made up about 83% of the group. The remaining ~$102 million (£77 million) came mostly from professional services and licences.
Growth strategy
Sage's growth strategy has three parts: sell Sage Intacct to more mid-sized companies, especially businesses outgrowing QuickBooks, and in new countries; add AI features through Sage Copilot and AI agents that customers can pay more for; and move remaining desktop users to cloud-connected subscriptions. Bolt-on acquisitions, such as Lockstep (2022) and Brightpearl (2022), add workflow and commerce capabilities.
Competitive advantage
Sage's edge rests on local compliance and switching costs. Each country Sage serves has its own tax, payroll and e-invoicing rules, and Sage has built that compliance into its products over four decades, for example supporting HMRC's Making Tax Digital rules in the UK.
Xero
How it makes money
Xero sells monthly software subscriptions to small businesses, sole traders, and accounting and bookkeeping firms. The core product covers bank reconciliation, invoicing, bills, payroll in several markets and financial reporting, and plans are priced in tiers by market. Most customers reach Xero through accountants and bookkeepers, who adopt it for their practice and move clients onto it.
Growth strategy
Xero's strategy centres on three jobs for small businesses (accounting, payments and payroll) in three main markets (Australia and New Zealand, the UK and the US). In the US it is combining Xero and Melio under one leadership team, adding online bill payments inside Xero and embedded payroll. It is also building AI features, including its JAX assistant, into the core product.
Competitive advantage
Xero's main advantage is its accountant and bookkeeper channel in Australia, New Zealand and the UK, which brings small business clients onto the platform. Melio adds a US payments product that it owns.
Questions about Sage Group vs Xero
Which company has higher revenue — The Sage Group plc or Xero?
The Sage Group plc reported ~$3.3B (FY2025), while Xero reported ~$1.6B (FY2026). By last reported revenue, The Sage Group plc is the larger business, with Xero reporting a smaller revenue base. Note: these are from different fiscal years and are not a direct like-for-like comparison.
What is the market cap of The Sage Group plc vs Xero?
The Sage Group plc's market capitalisation stands at $11.5B, while Xero's is $6.5B. The Sage Group plc carries the higher market valuation, reflecting investors' expectations of its future earnings power relative to Xero.
Which is more financially efficient — The Sage Group plc or Xero?
The Sage Group plc generates $276k / employee in revenue per employee, while Xero generates $363k / employee. Xero shows higher revenue efficiency per headcount, though this reflects business model differences — capital-light software companies routinely outperform labour-intensive manufacturers on this metric.
How do The Sage Group plc and Xero make money?
The Sage Group plc and Xero generate revenue in fundamentally different ways. The Sage Group plc: Sage makes money mainly from software subscriptions. Xero: Xero sells monthly software subscriptions to small businesses, sole traders, and accounting and bookkeeping firms.
Which company is valued higher relative to revenue — The Sage Group plc or Xero?
On a price-to-sales (P/S) basis, The Sage Group plc trades at 3.5x P/S and Xero at 4.1x P/S. Xero commands a higher revenue multiple, typically indicating that investors expect faster growth or higher future margins compared to The Sage Group plc. A higher multiple is not inherently better — it may also signal that the stock is priced for perfection.
Is The Sage Group plc bigger than Xero?
By last reported revenue, The Sage Group plc (~$3.3B (FY2025)) is the larger company compared to Xero (~$1.6B (FY2026)). Revenue scale is one dimension of size — market capitalisation, employee count, and geographic reach are also relevant depending on the context.
Figures come from each company's filings and the sources linked beside them. Amounts reported in another currency are shown in US dollars at an approximate rate and marked with ~. Back to the Sage Group vs Xero overview