Why Micro Focus Stock Fell Sharply on Wednesday

Shares of enterprise software company Micro Focus (NYSE: MFGP) tumbled on Wednesday. The stock fell by as much as 16.9%, and was down by 15.3% as of 3:15 p.m. ET.

The pullback followed the release of the tech company's interim results for the six-month period that ended April 30. A year-over-year decline in revenue seems to have spooked some investors. 

Micro Focus reported revenue of $1.3 billion for the period, down 6.8% year over year on a constant-currency basis when excluding Digital Safe (an asset it sold for $63 million) from the comparison. In addition, the company's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) as a percentage of revenue narrowed. The important profitability margin metric came in at 35.4%, compared to 36.7% in the prior-year period. The primary cause for that slimmer margin, management explained, was the decline in revenue.

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Source Fool.com