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Summary
- The H1 2021 revenue is expected to be above market expectations at US$ 1.4 billion
- The FTSE 250 firm had a cash reserve of US$ 0.7 billion by the end of this April.
Shares of Micro Focus International Plc (LON:MCRO) jumped over 10 per cent in early trading hours as the firm released its trading update for the first half of this year ending 30 April. The H1 2021 revenue is expected to be above market expectations at US$ 1.4 billion. However, it is 5 per cent lower than the corresponding value in H1 2020.
The software firm also expects an adjusted EBITDA margin of close to 36 per cent for the six-monthly period, again above market expectations. The company update said that the primary reason for this surge is a strong licence revenue performance coupled with cost savings arising out of back-office simplifications. The company update also stated that it was in the final stages of recruiting a new Chief Financial Officer (CFO).
Stephen Murdoch, chief executive, Micro Focus, said that the firm was encouraged by its progress update. It is committed to deliver sustainable cash flow generation and revenue stabilisation for its investors, he added.
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Financial highlights
- The FTSE250 firm had a cash reserve of US$ 0.7 billion by the end of this April.
- Its net debt at the end of H1 2021 summed up to be US$ 4.1 billion.
- The firm’s maintenance revenue is likely to fall by roughly 8 per cent for the six-monthly period due to reduced licence volumes and a higher attrition rate.
- The SaaS (and other recurring) revenue is projected to drop by around 5 per cent for the first half of this year, while the consulting revenue might decrease by 9 per cent.
- The group signed a commercial agreement with the Amazon Web Services ("AWS") to facilitate the modernisation of mainframe applications of large enterprises to the AWS Cloud.
- The group’s key transformation activities related to information technology remained on track.
- Sales execution remained strong, leading to a higher sales conversion rate.
- The revenue from the licence segment is projected to rise by 10 per cent for H1 this year.
The interim results for H1 2021 will be announced on 1 July.
Earlier, the company’s financial results for FY20 ended 31 October 2020 stated that its revenue was down 10 per cent from the previous year to US$ 3,001.0 million, while its adjusted EBITDA was lower by 13.6 per cent to a value of US$1,173.7 million. Its adjusted diluted earnings per share for continuing operations were down 21.2 per cent to 154.37 cents.
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Stock performance
The software company provides innovative software that facilitates its clients to upgrade their enterprise applications’ business valuation.
Shares in Micro Focus (market capitalisation: £1.58 billion) were up 10.6 per cent to 521.18 pence at 8.13 AM today.
