TIDMMCRO
RNS Number : 9116Y
Micro Focus International plc
18 May 2021
18 May 2021
Micro Focus International plc
Trading Statement
Overview
The Board of Micro Focus International plc ("Micro Focus" or
"the Group", LSE: MCRO.L, NYSE: MFGP), the global enterprise
software group, today issues a trading update for the six months
ended 30 April 2021.
-- Micro Focus expects to report revenue of approximately $1.4bn
for the six months ended 30 April 2021. This performance is ahead
of market expectations and represents a decline of approximately 5%
on a constant currency ("CCY") basis when compared to the first
half of FY20.
-- An expected Adjusted EBITDA margin of approximately 36% for
the first half is also ahead of market expectations, reflecting the
strong licence revenue performance and cost savings from back
office simplification, partially offset by the planned product
investment.
-- Sales execution in the period was strong, resulting in an
improvement in sales conversion rates and a number of deals closing
earlier than expected. The H2 weighting of prior year revenue due
to COVID-19 was also a factor.
-- The Group continues to target a meaningful improvement in the
rate of constant currency revenue decline in FY21 when compared to
FY20, in line with current revenue consensus.
-- As at 30 April 2021 the Group had cash of $0.7bn and Net debt
of $4.1bn, with operating cash generation remaining strong.
Stephen Murdoch commented:
"We are pleased with a period of further solid progress in most
areas of our business. The product investments and operational
changes we are making are beginning to deliver performance
improvements, and our value propositions are resonating with
customers and partners, as demonstrated by the signing of the
significant, long term commercial agreement with AWS.
Our recovery programme and specifically our systems
transformation is progressing as planned despite the challenges of
executing this within the constraints of a global lockdown. I am
proud of the resilience, flexibility and professionalism of our
teams across the organisation. As a business, we continue to
monitor the impact of COVID-19 on our workforce, with particular
focus currently on supporting our colleagues in India.
Whilst there is a great deal to do, we are encouraged by our
progress and remain committed to delivering revenue stabilisation
and sustainable cash flow generation for our shareholders."
Financial Performance
Approximate Y-o-Y revenue trajectory (on a CCY basis) H1 FY21 versus
H1 FY20
Licence 10%
---------------
Maintenance (8)%
---------------
SaaS and other recurring (5)%
---------------
Consulting (9)%
---------------
Total revenue trajectory (5)%
---------------
In the first half of FY21, the Group expects to report a
constant currency revenue decline of approximately 5%.
Licence revenue is expected to increase by approximately 10%
when compared to the first half of FY20, demonstrating the
continuation of sales execution improvements delivered in the
second half of FY20. This strong licence performance includes a
small number of deals closing earlier in FY21 than initially
forecast and performance in the comparable period being impacted by
the onset of COVID-19.
Maintenance revenue is expected to decline by approximately 8%.
Performance is being impacted by a reduction in licence volume in
the previous financial period combined with elevated attrition
rates for a small subset of products. Corrective actions continue
to be implemented, however the improvement of maintenance trends
remains a multi-year initiative with improvements forecast to be
weighted to the outer years.
SaaS and other recurring revenue is expected to decline by
approximately 5% when compared to the first half of FY20, in line
with expectations.
Consulting revenue is expected to decline by 9% but is now
broadly in line with the revenue generated in the second half of
FY20.
Profitability and Cash
The Group's Adjusted EBITDA margin of approximately 36% in the 6
months ended 30 April 2021 is ahead of market expectations due to
strong licence performance and cost savings achieved through a
combination of continued progress in delivering in-year savings and
the annualised impact from initiatives actioned in FY20. These cost
savings have been used to fund continued investment in key product
areas, as outlined previously.
The Group ended the period with cash balances of approximately
$0.7bn and net debt of approximately $4.1bn, in line with
management expectations.
Operational update
The Group has signed multiple commercial agreements in the six
months ended 30 April 2021, including our strategic partnership
with Amazon Web Services ("AWS"). The commercial agreement
formalises a strategic collaboration to accelerate the
modernization of mainframe applications and workloads of large
public and private enterprises to the AWS Cloud. AWS and Micro
Focus will work together to deploy Micro Focus technology for
customers embarking on the transformational journey to modernise
their business-critical mainframe applications and workloads to an
agile, cloud-based production environment.
The Group's transformation activities continue at pace and
within this the key IT system programme remains on track, however
the Group continues to monitor the global impact of COVID-19 on the
programme, particularly within India.
Board changes update
Recruitment of a new Chief Financial Officer is at an advanced
stage.
The Group will announce interim results for the six month period
to 30 April 2021 on 1 July 2021.
This announcement contains information that was previously
Inside Information, as that term is defined in the Market Abuse
Regulation (Regulation (EU) No 596/2014 of the European Parliament
and of the Council of 16 April 2014) as it forms part of domestic
law by virtue of The European Union (Withdrawal) Act 2018.
Enquiries:
Micro Focus Tel: +44 (0)1635 32646
Stephen Murdoch, CEO Investors@microfocus.com
Brian McArthur-Muscroft, CFO
Ben Donnelly, Head of Investor Relations
Brunswick Tel: +44 (0) 20 7404 5959
Sarah West MicroFocus@brunswickgroup.com
Jonathan Glass
Notes to Editors:
About Micro Focus
Micro Focus (LSE: MCRO.L, NYSE: MFGP) is a global enterprise
software company supporting the technology needs and challenges of
the Global 2000. Our solutions help organizations leverage existing
IT investments, enterprise applications and emerging technologies
to address complex, rapidly evolving business requirements while
protecting corporate information at all times. Our product
portfolios are Security, IT Operations Management, Application
Delivery Management, Information Management & Governance and
Application Modernization & Connectivity. For more information,
visit: www.microfocus.com
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
TSTBIGDUBBBDGBR
(END) Dow Jones Newswires
May 18, 2021 02:00 ET (06:00 GMT)
Micro Focus (LSE:MCRO)
Historical Stock Chart
From Apr 2024 to May 2024
Micro Focus (LSE:MCRO)
Historical Stock Chart
From May 2023 to May 2024