SAP shares jump after earnings beat forecasts, company says CEO stepping down

This post was originally published on this site

Shares of SAP SE rallied Friday after the company announced a surprise change in leadership and pre-announced third-quarter earnings that were better than expected.

A 7% gain for heavily-weighted SAP  SAP, +7.23%  helped drive up the German DAX 30 index DAX, +1.73%  and the Stoxx Europe 600 SXXP, +1.34%. U.S.-listed shares SAP, -0.69% SAP, -0.69% were up 8%.

The company pre-announced its results late Thursday, and said its American Chief Executive Bill McDermott would step down immediately and be replaced by two co-CEOs — Jennifer Morgan and Christian Klein. McDermott, who has been at his post for a decade, will remain in an advisory capacity until the end of the year, the company said.

“In our view, McDermott’s departure is somewhat surprising, but appears to follow “the company’s long-term succession plan,’” Warburg analyst Andreas Wolf told clients in a note. The analyst maintained his buy rating on the company.

SAP said third-quarter revenue rose 10% to €6.79 billion ($7.5 billion), ahead of the €6.69 billion analysts were expecting. Cloud and software revenue climbed 10%, and new cloud bookings rose 38%.

Earnings on an non-IFRS (International Financial Reporting Standards) basis were €1.30 per share, ahead of the €1.19 a share expected by analysts. The company reaffirmed its outlook for 2019. Complete earnings will be released on Oct. 21. SAP, -0.69%