Stephen Kelly, the chief executive of Sage, has agreed to step down from his post after talks with the company’s board.
Kelly joined the accounting software company in 2014. He has stepped down from his role as director and chief executive effective immediately on the back of the firm’s lower-than-expected growth.
Earlier this month, the firm revealed that achieving full-year guidance will depend on closing various deals in September.
Steve Hare, the chief financial officer, has taken on the extra role as the chief operating officer on an interim basis. He will have “full executive authority” to run Sage while the board is looking for a successor to Kelly.
It is searching for a candidate who can add scale to the processes of Sage, as it is competing with larger rivals such as SAP and Microsoft on offering businesses with cloud-based accounting packages, as well as some other back-office software.
The share prices of the company plunged by more than six percent on the news to £6.03.
Kelly said that he was “immensely proud” of his achievements at the company.
He stated: “I joined a fragmented organisation with minimal presence in the cloud,” he said, adding that he led a “major cultural transformation” to put Sage on the path to sell cloud software, and delivering shareholder dividends of double the average of the FTSE 100.”
He added: “It has been an honour to build a world-class management team, to serve my colleagues and inspire in them my overriding passion of customer obsession,” he said. “I look forward to Sage’s continued growth and success.”
Donald Brydon, the chairman of Sage, praised Kelly for some “very heavy lifting” since he joined the company, putting it on a path to become a leader in the software-as-a-service space, a strategy that he said the board will be sticking to.
However, investors have said that the company is having a hard time migrating its customers from on-premise software to take advantage of its cloud offerings. This comes despite the cloud growth of 56 percent year-on-year in the firm’s latest financial results.
A fund manager of Hargreaves Lansdown Select Funds, Steve Clayton, stated: “Kelly achieved much during his time at Sage, but entered a company that was behind the pack in terms of moving its products from the PC to the cloud.” Clayton holds some shares in the company.
He added: “Sage is better positioned today than it was then, but profit growth has been held back whilst the business reorganised.”
He said that the departure of Kelly has majorly affected the shares because of a lack of transparency regarding the reasons behind the decision. He called the recent trading update as an evidence of “an uncertain situation.”
The news comes after investors were advised by Deutsche Bank to sell their shares in Sage earlier this month. They said that its mid-market offering is facing pressure from entry-level rivals such as Xero and bigger players that have more developed platforms, such as Microsoft and SAP.