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Micro Focus shares jump as newly acquired HPE software firm reports quarterly profit growth

Micro Focus said two months of HPE software revenue will be reported in its half year results
HPE software revenues will be lower than expected for the year

Micro Focus International PLC (LON:MCRO) shares shot higher after releasing third quarter results for the newly acquired software business of Hewlett Packard Enterprises (HPE).

The UK tech firm, which completed the acquisition last week, said operating profits at HPE software rose 36% to US$179mln in the third quarter from US$131mln a year ago.

READ:Micro Focus International to merge with Hewlett Packard Enterprise's software arm

Profits were boosted by an increase in the operating margin to 24.9% from 17.8% as the company reduced operating expenditure.

However, revenue fell 3% to US$718mln in the third quarter from US$738mln last year and is likely to be less than expected for the year at between US$2.89bn and US$2.96bn.

READ: Micro Focus expects to deliver medium term benefits from HPE merger

"The reduction in adjusted revenue from the 12 months ended 31 July 2017 is driven by the active reduction of less profitable professional services in sub-scale service lines and geographies together with lower licence revenue offset by increasing SaaS [software as a service] revenue and support revenue being broadly flat," the company said.

Micro Focus said two months of the HPE software revenue will be reported in its half year results, to be published at the end of October.

Shares in Micro Focus jumped 7.75% to 2,378p in morning trading.

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