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Micro Focus closing deals faster than expected

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Micro Focus International PLC (LON:MCRO) flashed out of the traps on Tuesday after it said it has been trading ahead of expectations.

The legacy software specialist expects to report revenue of around US$1.4bn for the six months to the end of April, which although down by about 5% year-on-year on a constant currency basis is ahead of market expectations.

The adjusted EBITDA (underlying earnings) margin at roughly 36% is also ahead of current market expectations, the FTSE 250 firm said.

Sales execution in the period was strong, resulting in an improvement in sales conversion rates and a number of deals closing earlier than expected, Micro Focus said.

“The product investments and operational changes we are making are beginning to deliver performance improvements, and our value propositions are resonating with customers and partners, as demonstrated by the signing of the significant, long term commercial agreement with AWS [Amazon Web Services],” said Stephen Murdoch, the chief executive officer of Micro Focus.

“Our recovery programme and specifically our systems transformation is progressing as planned despite the challenges of executing this within the constraints of a global lockdown.

“As a business, we continue to monitor the impact of COVID-19 on our workforce, with particular focus currently on supporting our colleagues in India,” he added,

“Whilst there is a great deal to do, we are encouraged by our progress and remain committed to delivering revenue stabilisation and sustainable cash flow generation for our shareholders,” Murdoch said,

Shares in Micro Focus were up 7.8% at 508p.

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