August 31, 2018 / 6:52 AM / 8 months ago

UPDATE 1-Software developer Sage's CEO Stephen Kelly to step down

(Adds analyst comment, outlook, background)

Aug 31 (Reuters) - Sage Group Plc Chief Executive Officer Stephen Kelly is set to leave the British software company in May next year, it said on Friday, and reaffirmed its organic revenue growth targets for the year.

The accounting, payroll and human-resources software provider said its chief financial officer, Steve Hare, would take over as chief operating officer on an interim basis. Hare will run the business until a new CEO is appointed.

“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, which reported slower subscription growth in the first half, has been seeking to migrate to cloud-based subscription services from packaged software, like most of its competitors.

Trading continues to be in line with the full year guidance of about 7 percent organic revenue growth and about 27.5 percent organic operating margin, the FTSE 100 company said on Friday.

The company said in May that “inconsistent operational execution” had led to a lower-than-expected organic revenue growth in the first half and cut full-year organic revenue growth targets. (Reporting by Muvija M in Bengaluru; Editing by Amrutha Gayathri)

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