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Citrix (CTXS) Beats on Q3 Earnings & Revenues, Ups 19' View

Zacks Equity Research

Citrix Systems CTXS delivered third-quarter 2019 non-GAAP earnings of $1.52 per share, beating the Zacks Consensus Estimate by 22.6%. The figure improved 8.6% on a year-over-year basis.

Revenues of $732.9 million surpassed the Zacks Consensus Estimate by 2.6%. However, the figure remained almost flat compared with the year-ago quarter.

Product and license (17.9% of total revenues) decreased 23.3% year over year to $131.1 million.

Support and services (60.3%) revenues declined 1.8% on a year-over-year basis to almost $442 million.

Subscription (21.8%) revenues surged 43.3% from the year-ago figure to $159.9 million.

During the quarter under review, SaaS revenue came in at $101 million (63% of total subscription revenues) and was up 43% year over year. Notably, SaaS revenues form the most significant part of subscription transition. Other subscription revenues during the reported quarter came in at $59 million, up 43.9% year over year.

Revenues as per Product Group

Workspace revenues (70% of total revenues) increased 1% year over year to $513 million due to higher adoption of SaaS-bases subscription solutions. Workspace subscription revenues contributed 26% to the figure. Approximately 75% of Workspace product bookings were subscription based.

Networking revenues (26%) declined 4% from the year-ago to $188 million, owing to sluggish demand for hardware-based appliances. Nonetheless, Networking subscription revenues surged 75% from the prior-year figure. The company anticipates shift toward software-based solutions from traditional hardware to weigh on Networking revenues going ahead.

Professional Services revenues (4%) advanced 14.3% on a year-over-year basis to $32 million.

Revenues as per Customer

Revenues from SSP customers came in at $39 million (5% of total revenues) during the reported quarter, up 11% year over year. Revenues from non-SSP customers declined 1% year over year and came in at $694 million.
 

Citrix Systems, Inc. Price, Consensus and EPS Surprise

 

Citrix Systems, Inc. Price, Consensus and EPS Surprise

Citrix Systems, Inc. price-consensus-eps-surprise-chart | Citrix Systems, Inc. Quote

Geographic Revenues

Revenues in the Americas came in at $418 million, down 3% on a year-over-year basis. Meanwhile, revenues in Europe, Middle East and Africa (EMEA) improved 3% from the year-ago quarter to $236 million. Revenues in Asia-Pacific and Japan (APJ) advanced 9.7% year over year to $79 million.

Margin Details

Total operating expenses increased 6.8% year over year to $495.2 million. As a percentage of revenues, the figure expanded 430 bps to 67.6%

Non-GAAP operating margin was reported at 29.2%, which contracted 260 bps from the year-ago figure, primarily impacted by the shift toward subscription model.

Balance Sheet & Cash Flow

Cash and cash equivalents at the end of the quarter were $493.8 million compared with $504.7 million in the previous quarter. Long-term debt at the end of the quarter came in at $742.7 million, compared with $742.5 million in the prior quarter.

Cash flow from operations was reported at $147 million, compared with $162 million in the prior quarter.

Deferred and unbilled revenues of $2.175 billion grew approximately 13% year over year.

Citrix repurchased shares 1.2 million during the third quarter. The company enhanced share repurchase authorization by $600 million, bringing total authorization to approximately $1 billion.

The company paid out quarterly dividend of 35 cents worth $45 million.

Guidance

Citrix revised guidance for 2019. The company now anticipates revenues between $2.99 billion and $3.01 billion, compared with the previous guidance in the range of $2.97 billion and $3.01 billion. The Zacks Consensus Estimate for revenues for 2019 is pegged at $2.99 billion.

Moreover, non-GAAP earnings are now expected to be in the range of $5.60-$5.70 per share, compared with the previous guidance of $5.35-$5.60. The Zacks Consensus Estimate for earnings for 2019 is pegged at $5.48 per share.

The company continues to anticipate non-GAAP operating margin in the range of 29% to 30%.

For 2020, Citrix expects revenues to improve 3-4% year over year. Non-GAAP earnings are projected in the range of $5.25-$5.45 per share.

Zacks Rank and Key Picks

Citrix carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are Benefitfocus, Inc. BNFT, MKS Instruments, Inc. MKSI and Five9, Inc. FIVN, each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Benefitfocus, MKS Instruments and Five9 is currently pegged at 20%, 12% and 10%, respectively.

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