FAREWELL ON A HIGH AS MCDERMOTT STANDS DOWN WITH STRONG THIRD-QUARTER SAP RESULTS

SAP shares rose over 9% on Friday as stronger-than-expected third quarter results showed revenue up 13% and cloud revenue in particular jumping 37% – a positive announcement followed the next day with CEO Bill McDermott, 58,  announcing he was not going to renew his contract with co-CEO’s Jennifer Morgan and Christian Klein taking over straight away.

https://www.sap.com/docs/download/investors/2019/sap-2019-q3-preannouncement.pdf

https://news.sap.com/2019/10/sap-set-course-future-next-generation-leadership/

Highlights:

  • SAP S/4HANA now over 12,000 customers
  • Operating profit up 36%
  • “Ambition 2020” predicts more (70-75%) predictable revenue i.e. cloud plus software support
  • 2020 revenue projected at ~€29bn 
  • McDermott remaining in an advisory capacity until the end of the year to ensure a smooth transition
  • Plan seems to have been shaped with Hasso Plattner over a year ago and been smoothly managed
  • McDermott served as CEO for a decade seeing dramatic growth for SAP, particularly expanding its portfolio and initiating a major shift to cloud
  • Morgan and Klein are both already Executive Board members
  • Morgan, who joined SAP in 2004, was president of the Cloud Business Group, overseeing Qualtrics, SAP SuccessFactors, SAP Ariba, SAP Fieldglass, SAP Customer Experience and SAP Concur
  • Klein, who started his career at SAP two decades ago as a student, most recently served as the company’s chief operating officer, also overseeing product development for the flagship ERP solution SAP S/4HANA®. Previously, he worked as SAP SuccessFactors chief financial officer and as SAP chief controlling officer

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