Micro Focus reports revenue dip as it continues its single platform shift

Enterprise software group Micro Focus reported a revenue of $2.9bn (£2.1bn), a decline of five per cent, but said it “remains on track” to achieve its stated goal of revenue stabilisation towards the end of the 2023 trading year.

The company said it expects to report a weak adjusted EBITDA margin in its fiscal year 2021: about 36 per cent, lower than last year’s 39 per cent.

The expected weakness reflects the revenue decline, targeted investments and the impact of the transition to the single enterprise-wide platform.

The Group has been operating on one single IT platform since July and has now successfully closed two quarters on the new platform.

SaaS and other recurring revenue continued to moderate and is expected to decline four per cent. Consulting revenue was also down eight percent, with an improving trajectory in the second half.

However, Stephen Murdoch, chief executive, commented: “We continue to deliver on our strategic objectives and the pace of change in our business is accelerating.”

“Our customer-centric investments are delivering meaningful improvements in both sales and our operating performance with the transition to a single enterprise-wide platform creating the foundation for further simplification and productivity improvements.”

Murdoch continued: “The sale of the Digital Safe business shows the underlying value of our assets and is a clear example of how we can deliver incremental value to all our stakeholders.”

Micro Focus will provide an update on the progress on strategy and key priorities over the next two years on November 30.

Ben Castillo-Bernaus, analyst at Exane BNP Paribas, said: “The news this morning of Revenue declines slightly better than market expectations may help the shares this morning, but we believe attention will focus on the strategy update in 2 weeks.”

Shares were down one per cent this afternoon to 407.42p.