Micro Focus shares drop as it swings to $1bn loss
The coronavirus pandemic has pushed Micro Focus to a $1.03bn loss, causing concerns for investors as tech businesses struggle through the crisis.
Micro Focus reported a pre-tax loss of $1.03bn for the six months to the end of April, compared to a profit of $1.4bn for the same period last year.
Shares in the London-listed software giant fell more than nine per cent in early trading.
The majority of this loss stemmed from a $922.2m writedown taken during the period, which Micro Focus said was the result of “increased economic uncertainty as a result of Covid-19”.
Revenue from continuing operations dropped 12 per cent to $1.45bn, as buying behaviours from customers hit delays in April amid the pandemic.
It said the crisis had led to an increase in the pre-tax discount rate, expected disruption to new sales activity and timing pressure on renewals.
Micro Focus had cash equivalent of $808.1m, which reflects $633.1m of operating cash and $175m of cash drawn from its revolving credit facility “as a precautionary measure”.
Its available liquidity totals $1.1bn, following the refinancing of a $1.4bn loan last month which means the company has no upcoming loan maturities until June 2024.
“Micro Focus’ business continuity plans have been highly effective and we continue to adapt our working practices to continue supporting our customers and partners,” said Stephen Murdoch, chief executive of Micro Focus.
“Going forward, we see significant opportunities to improve our business and we will continue to progress initiatives to strengthen and simplify our business operations, and stand ready to take further actions if required in these uncertain times.”