(Reuters) - UK software firm Sage Group Plc announced the departure of Chief Executive Stephen Kelly on Friday, appointing an interim chief operating officer and starting the search for a successor as it seeks to prop up slowing growth.
Shares in the company, which reported lower-than-expected organic revenue growth in the first half and cut its full-year growth targets, lost as much as 10 percent in early trading, knocking roughly 690 million pounds off its market value.
That made it the biggest faller on both the FTSE 100 index and the pan-European FTSEurofirst 300 index on Friday.
The accounting, payroll and human-resources software provider said Chief Financial Officer Steve Hare would take over as chief operating officer on an interim basis. Kelly will remain available to the company until May 31 next year but has stepped down as director and CEO.
“While the shares might react negatively to the announcement of CEO Stephen Kelly stepping down, we believe the board’s decision to appoint CFO Steve Hare as the interim COO is positive,” Jefferies analysts wrote in a note, calling Hare an ideal choice for the next CEO.
Sage in May blamed “inconsistent operational execution” for the shortfall in organic revenue growth, while also reporting slower expansion in subscriptions.
It has been seeking to migrate to cloud-based subscription services from packaged software, like most of its competitors.
“Under his (Kelly’s) leadership the strategy to become a leading SaaS (software as a service) business has been defined. The board remains fully supportive of the overall strategy,” Sage Chairman Donald Brydon said on Friday.
Trading continues to be in line with full-year guidance of about 7 percent organic revenue growth and about 27.5 percent organic operating margin, the company added.
Reporting by Muvija M in Bengaluru; Editing by Amrutha Gayathri and Jan Harvey