SAP SE (SAP) - Get SAP SE Sponsored ADR Report shares surged higher Friday after its high-profile CEO, Bill McDermott, said he will step down after nearly a decade at the helm of the he enterprise software group.
McDermott, 58, best-known for his deal-making skills that lead to a rapid expansion for the Walldorf, Germany-based group, announced his surprise departure just hours after the group published stronger-than-expected third quarter profits that showed a 37% increase in cloud revenues, which came in at €1.79 billion, and a 28% jump in earnings to €1.04 per share.
SAP said McDermott will be replaced by two current company executives, American-born Jennifer Morgan, who headed the group's cloud division, and Christian Klein, SAP's chief operating officer.
"SAP would not be what it is today without Bill McDermott," said SAP supervisory board chairman Hasso Plattner. "Bill made invaluable contributions to this company and he was a main driver of SAP's transition to the cloud, which will fuel our growth for many years to come."
"Bill and I made the decision over a year ago to expand Jennifer and Christian's roles as part of a long-term process to develop them as our next generation of leaders," Plattner added. "We are confident in their vision and capabilities as we take SAP to its next phase of growth and innovation."
SAP shares were marked 8.6% higher in Frankfurt trading Friday to change hands at €113.94 each, extending their year-to-date gain to just over 31% with a market value of $140 billion.
Earlier this year, McDermott welcomed what he called a "fantastic investor" to the group's list of owners after activists Elliott Management unveiled a $1.3 billion stake in the software group on the same day he published aggressive near-term profit targets.
"I think our shareholders are going to be super-psyched," McDermott said of his ambition to grow adjusted operating margins by around 1 percentage points a year through 2023. SAP said late Thursday that its third quarter operating margin rose 1.7 percentage points to 30.4% on a non-IFRS basis.
McDermott told CNBC Friday that Elliott's stake "absolutely did not" impact his decision to step down, saying instead that after 17 years with the company, including a decade at CEO, it was simply time to move on.
"Elliott Management has been an excellent investor and an excellent advisor for SAP," McDermott said. "It has been a total positive and I have enjoyed my interactions with them. That may be contrary to the experience that others have had, but it's been my experience."