Micro Focus pats itself on the back over SUSE jettison as licensing revenue shrinks

British software firm Micro Focus is bleeding license revenues as sellers abandoned the new pasture business, according to mid-year financial data filed today on the London Stock Exchange.

In the six months ended April 30, the unit fell 11% year-on-year to $ 343.7 million; The only categories of products that registered some type of growth were the modernization and connectivity of applications (1.4%) and the management and governance of information (2.6%).

"The product group experienced significant levels of sales force wear during FY18," Approach said. "This was aggravated by the corrective actions that were taken on the products within the portfolio in the last twelve months, and the improvements we have made in these areas will take time to flow through the portfolio and revenues."

The company's software maintenance business was much better: revenues decreased by one percent to $ 1,054 billion.

SaaS revenues fell 8.3 percent to $ 143.1m, while Micro Focus attempted to "streamline unprofitable operations", while the consulting business reported a turnover of $ 116m,

"The restructuring of consulting operations is progressing as planned and is expected to continue in the second half of the year with the revenue stream beginning to moderate and, ultimately, underlying software revenues, "the company added.

Micro Focus also reported on the separation of the German Linux provider SUSE, which was acquired by a private equity fund for $ 2.5 billion last year, and without problems, with $ 1.7 billion of disposable profits, and $ 1,800 million returned to shareholders in May 2019.

"Through the investment and effective management of SUSE's assets, of being 20% ​​of the total income of the Attachmate Group when it was acquired by Micro Focus in November 2014 for $ 2.3 billion, we got a total cash consideration of $ 2.5 billion just for the SUSE asset only four years later, "said Micro Focus CEO Stephen Murdoch, who was appointed in March 2018

Micro Focus reported a 5.3 percent drop in overall revenue to $ 1,657 billion for the six months ending in April, in line with its own predictions. Operating costs for the period totaled $ 994.8 million. The company said once again that it expects revenues to decrease from 4 to 6 percent in 2019, something that was already said in February and reiterated in March.

In 2017, Micro Focus acquired the HPE software business for $ 8.8 billion, and has been busy digesting it ever since. As a result of the acquisition, only in the last six months, the company had to spend $ 80.9 million in IT infrastructure, $ 56 million in integration, $ 15.7 million in compensation and $ 10.6 million in property costs.

According to Murdoch, actually something good: "We continue to make progress in our important work program to fully integrate the HPE Software business through the sustained application of the Micro Focus business model." As a result, we are pleased to reiterate the guidance of the Whole year".

Meanwhile, the sale of SUSE increased profits during the six months to almost $ 1.4 billion, more than double that of $ 620 million from the previous year. Operating profit was $ 32.6 million, 2.5% more than the $ 31.8 million in the first half of 2018. "The complexities of HPE Software's business integration continue to require detailed attention and substantial program planning and execution. "said the CEO.

"The integration work to improve our operational effectiveness is closely linked to instilling the correct corporate culture of sharper execution, simpler business operations and a dynamic and responsible team," he added, apparently to overshadow a former competitor.

Micro Focus ended the six months with a free cash flow of $ 429.9 million and an adjusted net debt of $ 3.8 billion, approximately $ 530 million less than a year ago.

He said that several "transformation programs" were to be completed by 2020, including a new IT stack for their business processes, which could lead to greater efficiency in the finance, human resources, IT and legal departments. The company will pay a provisional dividend of $ 0.5833 per share to its shareholders in September. ®

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