Why Micro Focus Stock Fell Wednesday

Here's what you should know about the infrastructure software company's interim results.

Daniel Sparks
Daniel Sparks
Jul 10, 2019 at 2:05PM
Technology and Telecom

What happened

Shares of Micro Focus International (NYSE:MFGP) slumped on Wednesday, declining about 10.5% as of 1:30 p.m. EDT.

The infrastructure software company's loss follows the release of interim results for the six months ending April 30. Licensing revenue for the British company was worse than expected, perhaps explaining the Street's pessimistic response to the report. In addition, the company said the integration of its recent acquisition of Hewlett Packard Enterprise's (HPE's) software business has proved difficult.

A chalkboard sketch of a chart showing a stock price falling

Image source: Getty Images.

So what

Revenue for the six-month period declined 7.5% year over year to $1.66 billion. Notably, management said its 11.1% year-over-year decline in licensing revenue was worse than expected. But overall revenue for the period was solid enough for management to reiterate its full-year top-line guidance.

Regarding the HPE software issue, Micro Focus said, "the complexities of the HPE Software business integration continue to require detailed attention and substantial programme planning and execution."


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Now what

Despite challenges with HPE's software business, management said it remains confident that it can complete the integration and ultimately deliver on its original thesis of "making Micro Focus an efficient and optimised platform operating at scale with sector-leading margins and the opportunity to grow further through acquisition."