The overall numbers were pretty much in line with expectations for Micro Focus half way through the year but what was noteworthy was the increase in full year guidance, which was due to acquisitions during the period (six months to October 31 2013) that are nudging the company towards the much sought after growth position.
Full year revenue guidance was increased from a range of 0%-5% to 3%-6% (constant currency) due to the effect of the Iona and SoferTe acquisitions which were closed during the period, plus the OpenFusion Corba assets from the PrismTech deal that closed in November just after the period ended and the AccuRev purchase which is going through at the moment (for details on the acquisitions see here). Iona alone added $11m to revenue during H1.
Looking back, H1 was period of sustained activity that shows the determination of management to remix the business and minimise the impact of niche products and take down the interest in consultancy. Looking forward these new assets will play an important part in stimulating growth but there is still plenty of work to be done to realise the goal. H1 revenue was up a marginal 0.4% to $207.5m, although that was a 2.4% lift in constant currency. Excluding revenue from Iona and the declining niche and consultancy businesses, revenue was broadly flat. Pre-tax profit was down 7% to $70.5m, (minus 3% cc), with adjusted EBITDA down 1.7% to $89.9 m (+1.6% in cc). Overall, H1 was solid but H2 has the potential to be better still.