Shares in Micro Focus, the FTSE 100-listed software company tumbled 17% on Monday morning after slightly weaker than expected results and a disappointing outlook.
The company, which focuses on licensing legacy software, reported an 81% rise in revenue in the six months to 31 October to $1.23bn.
Other first-half highlights
- Operating profit rose 38.2% to $220m on a constant currency basis
- Pre-tax profit rose 33.8% to $145.7m on a constant currency basis
- Diluted earnings per shares fell 9.1% to 34.64 US cents
- Dividend per share rose 16.4% to 34.6 US cents
The results were the company's first to include contributions made by Hewlett Packard, which Micro Focus acquired last year, and these proved disappointing.
“It’s been a horrible start to 2018 for Micro Focus, with the company lowering on guidance and in particular, commenting on disappointing results from its newly acquired software unit for HP," said Jordan Hiscott at Ayondo Markets.
Meanwhile, the company's outlook for the rest of its financial year failed to impress, after it said it expected revenues to fall between 2-4% as a result of declines in the existing Micro Focus Product Portfolio.
"This has been a recent concern for the market as it focussed on the longer-term growth picture, which in turn has seen a bumpier ride for investors and the share price over the last year," said Graham Spooner at The Share Centre.
The shares reacted badly to the results, falling more than 17%. By late morning in London, the shares were down 16.54% at £21.55.