The UK’s Micro Focus has reported mixed interim first half results, with revenues down 5.3 percent on H1 2018, but operating profit up 2.5 percent to $32.6 million.

The Newbury, Berkshire-based software and IT management services firm described the earnings for the six months to end-April as in line with management expectations.

The company has made a strong recovery this year, recovering much of the stock market losses it sustained after it warned markets in July 2018 that its integration of HPE’s software business, bought in 2017 for $8.8 billion, was a year behind schedule.

Integration work is continuing, a presentation pack shows. One slide notes: “Integration workstreams broadly on track. Separation from HPE shared infrastructure complete,” but adds that “consistency and pace of execution need to continue to improve”.

The company said “HPE Software related exceptional spend” hit $163.2 million,
with $80.9 million system related. Total HPE software exceptional forecast spend is on target at $960 million, the company said in the presentation.

CEO Stephen Murdoch said the company was “delivering against our financial and operational commitments and doing what the company does best: making, selling and supporting infrastructure software solutions that customers value.”

He added: “We have continued to make progress on our significant program of work to fully integrate the HPE Software business through the sustained application of the Micro Focus business model.. we are pleased to reiterate full-year guidance.”

Micro Focus Earnings: Licences Down 11%

UK based independent corporate advisor and stockbroker Numis said in an emailed comment: “[Trend Micro’s software] licences were -11%, which we think is somewhat below earlier hopes given the easier H118 compare, but should not surprise following commentary around the May trading update.”

Numis’s analysts added: “Maintenance -2.6% was in line, showing continued trend stability (64% of group revenue). Both SaaS (-10%) and Consulting (-19%) reflect deliberate management re-focusing actions, and combined were a 2.2% drag on group revenues.”

In line with the global software industry, the company, which is quoted in both London and New York, reports its figures in US dollars. H1 revenues were trimmed to $1.66 billion, “reflecting a combination of the company’s trimming of unprofitable business lines, along with the regular drop-off in income from older products.”

Earnings per share was boosted by the company’s ongoing share consolidation programme and the proceeds from the sale of SUSE being returned to shareholders. Micro Focus has returned more than $2.2 billion to shareholders in the period.

The company will report its full year results in February 2020.

Its clients include BMW, Allianz and Orange.