Our Business Model

Micro Focus has a proven financial and operating model which is aligned to create value for both our customers and shareholders

Our Business Model

The typical stages of a product life cycle are from new product introduction through to high growth to broad adoption and maturity, to decline and ultimately obsolescence. Click or touch the hotspots to find out more.

Market dynamics


>  Innovative and often disruptive technologies
>  High capex and R&D
>  User base rapidly expanding
>  Products repeatedly enhanced

Investment strategy


>  Investing in growth

Market dynamics


>  Infrastructure software; embedded products
>  Limited growth capex
>  Margin expansion and efficiency opportunities


Investment strategy


>  Returns driven by maximising cash flow

We are an infrastructure software company. We make, sell and support software. Our focus is delivering what we call customer centric innovation. This is innovation that enables customers to bridge existing and emerging technologies, protecting investments and supporting their digital transformation. We seek to be agile and efficient, easy to do business with, and to have a stable, skilled and diverse workforce. Our goal is to deliver consistently high levels of shareholders returns for the long-term.

Current portfolio

Underpinning the business model and clear execution and investment discipline.

When considering investment priorities, both organic and inorganic, we evaluate our options against a set of characteristics mapped to each stage of this adoption cycle enabling the categorisation of our product portfolio into one of the four quadrants represented in the table below:

New models

Products or consumption models (cloud and subscription) that open new opportunities could become growth drivers or represent emerging use cases that we need to be able to embrace.

Growth Drivers

Products with consistent growth performance and market opportunity to build the future revenue foundations of the Group.

Optimize

Products with declining revenue performance driven by the market or execution where the trajectory must be corrected to move back to the core category or investments focused to optimize long-term returns.

Core

Products that have maintained broadly at revenue performance but represent the current foundations of the Group and must be protected and extended.

How we run our business

The Micro Focus strategy and proven operating model continues to position this organisation as a financially strong and successful leader in the infrastructure software sector. Key to our strategy is the consistent delivery of “Customer centric innovation” that delivers tangible business impact for customers in all stages of the software lifecycles. This results in enabling new business models or use cases, reducing operational costs and risks, and protecting existing investments so to extend productive use.

By enabling customers to apply the latest innovations to their existing technology investments; Micro Focus helps customers gain additional return on investment they have already made and reduces risk by allowing them to preserve and protect their existing data and business logic.

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The customer proposition

What sets us apart

  • 1. Strong products and intellectual property

    Our products are deeply embedded in customers’ infrastructure and underpin transactions, processes and systems globally.

  • 2. Broad portfolio

    Our portfolio delivers solutions across many IT disciplines and provides customers with the opportunity to simplify their vendor landscape.

  • 3. Customer centric innovation

    We fully understand the needs of customers and deliver tangible business impact.

  • 4. The four-box model

    Our investment priorities consider opportunities in all stages of the product lifecycle to ensure that we maximise the value delivered to the customers over the entire life of a product.

What drives our business and what this means to our customers

  • Bridging the now and the next for improved return on investment

    Within our business we bridge the now and the next, enabling mission critical applications and data to continue to be leveraged across the organisation. Which means our customers can extend productive use and maximise return on investment (“ROI”).

  • Latest innovative features to reduce risk

    Our business builds the latest innovative features and capabilities that are enterprise-grade and scalable into our core products. Which means our customers can run and transform their business through adopting innovation with less risk.

  • Easy to do business with for flexibility

    Our business provides customers with the choices they need to meet their IT operating objectives and run their business models. This flexibility in both deployment and commercial models makes it easy to do business. Our customers can select their own enterprise and budget allowing them to plan for today and tomorrow with flexibility to adapt and change.

  • The four-box model

    The four-box model Our investment priorities consider opportunities in all stages of the product lifecycle to ensure that we maximise the value delivered to the customers over the entire life of a product.

What this means for our investors

What sets us apart

  • 1. We operate at size and scale

    As a natural consolidator in the market, we have economies of scale leveraging shared functions and resources across our portfolio.

  • 2. People

    We have a broad, highly experienced management team, skilled in applying the Micro Focus financial and operating model.

  • 3. Highly cash generative portfolio

    We have a broad portfolio of products with significant market positions and high switching costs. This generates significant recurring revenue streams and cash generation.

  • 4. A track record of market consolidation

    We have a proven track-record of consolidating the market and successfully executing complex integrations.

What drives our business and what this means to our investors

  • A proven financial operating model for ROI

    We operate an efficient and fit for purpose operating model supported by strong financial discipline. Which means our investors receive total shareholder returns of between 15% and 20%.

  • Value creation through consolidation for leading operating margins

    We build value creation through consolidation. Our business experience in bringing together complex products through market consolidation, delivers better integration and strong value creation. Which means our investors receive industry leading operating margins.

  • Efficiency in capital allocation for cash returns

    Efficient investment in capital whether organic or inorganic allows us to deliver exceptional levels of cash generation and returns to shareholders.

  • A track record of market consolidation

    We have a proven track-record of consolidating the market and successfully executing complex integrations.

The customer proposition

What sets us apart

  • 1. Strong products and intellectual property

    Our products are deeply embedded in customers’ infrastructure and underpin transactions, processes and systems globally.

  • 2. Broad portfolio

    Our portfolio delivers solutions across many IT disciplines and provides customers with the opportunity to simplify their vendor landscape.

  • 3. Customer centric innovation

    We fully understand the needs of customers and deliver tangible business impact.

  • 4. The four-box model

    Our investment priorities consider opportunities in all stages of the product lifecycle to ensure that we maximise the value delivered to the customers over the entire life of a product.

What drives our business and what this means to our customers

  • Bridging the now and the next for improved return on investment

    Within our business we bridge the now and the next, enabling mission critical applications and data to continue to be leveraged across the organisation. Which means our customers can extend productive use and maximise return on investment (“ROI”).

  • Latest innovative features to reduce risk

    Our business builds the latest innovative features and capabilities that are enterprise-grade and scalable into our core products. Which means our customers can run and transform their business through adopting innovation with less risk.

  • Easy to do business with for flexibility

    Our business provides customers with the choices they need to meet their IT operating objectives and run their business models. This flexibility in both deployment and commercial models makes it easy to do business. Our customers can select their own enterprise and budget allowing them to plan for today and tomorrow with flexibility to adapt and change.

  • The four-box model

    The four-box model Our investment priorities consider opportunities in all stages of the product lifecycle to ensure that we maximise the value delivered to the customers over the entire life of a product.

What this means for our investors

What sets us apart

  • 1. We operate at size and scale

    As a natural consolidator in the market, we have economies of scale leveraging shared functions and resources across our portfolio.

  • 2. People

    We have a broad, highly experienced management team, skilled in applying the Micro Focus financial and operating model.

  • 3. Highly cash generative portfolio

    We have a broad portfolio of products with significant market positions and high switching costs. This generates significant recurring revenue streams and cash generation.

  • 4. A track record of market consolidation

    We have a proven track-record of consolidating the market and successfully executing complex integrations.

What drives our business and what this means to our investors

  • A proven financial operating model for ROI

    We operate an efficient and fit for purpose operating model supported by strong financial discipline. Which means our investors receive total shareholder returns of between 15% and 20%.

  • Value creation through consolidation for leading operating margins

    We build value creation through consolidation. Our business experience in bringing together complex products through market consolidation, delivers better integration and strong value creation. Which means our investors receive industry leading operating margins.

  • Efficiency in capital allocation for cash returns

    Efficient investment in capital whether organic or inorganic allows us to deliver exceptional levels of cash generation and returns to shareholders.

  • A track record of market consolidation

    We have a proven track-record of consolidating the market and successfully executing complex integrations.

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