Shock CEO de­par­ture leaves ques­tions lin­ger­ing for Sage in­vestors

Stephen Kelly’s exit sug­gests soft­ware firm in need of a shake-up

Shares - - BIG NEWS -

THE UK’S LARGEST listed soft­ware busi­ness Sage (SGE) has sur­pris­ingly parted com­pany with its chief ex­ec­u­tive Stephen Kelly (3 Sep) in a move that left in­vestors shocked.

Kelly joined Sage four years ago and has over­seen a ma­jor over­haul at the FTSE 100 ac­count­ing and en­ter­prise soft­ware com­pany, in­clud­ing build­ing a far more sub­stan­tial cloud busi­ness.

Ge­orge O’Con­nor, an an­a­lyst at bro­ker Stifel, es­ti­mates Sage to be the 12th largest listed cloud ven­dor in the world with close on £400m of cloud rev­enue last year.

But am­bi­tions to ac­cel­er­ate or­ganic growth this year have gone off the rails. A slow start to 2018 cul­mi­nated in a rev­enue warn­ing in April send­ing the share price spin­ning lower. The stock is cur­rently trad­ing at 596.2p, the low­est it has been in more than two years, com­pared to lev­els above 800p in Jan­uary.

Sage soft­ware is be­lieved to be used by half of the small or medium-sized busi­nesses in Bri­tain, for things like pay­roll and hu­man re­sources. It also has a sub­stan­tial in­ter­na­tional busi­ness but the com­pany has come un­der in­tense pres­sure from emerg­ing ri­vals, cloud spe­cial­ists like Xero, MYOB and Kash­flow.

Sage was one of Shares picks for 2018 on the ba­sis that it would be able to ac­cel­er­ate or­ganic growth. That has ev­i­dently proved harder to ex­e­cute than ei­ther the com­pany or we en­vis­aged. The com­pany is now on the hunt for a new chief ex­ec­u­tive with the skill set to drive grow for­ward.

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