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Citrix (CTXS) to Report Q3 Earnings: What's in the Cards?

Zacks Equity Research

 Citrix Systems, Inc. CTXS is slated to report third-quarter 2019 results on Oct 24.

Notably, the company has surpassed the Zacks Consensus Estimate in three of the trailing four quarters, with the positive earnings surprise being 4.1%.

Q3 Estimates

For third-quarter 2019, Citrix anticipates revenues between $700 million and $720 million. Moreover, non-GAAP earnings are expected in the range of $1.15-$1.30 per share.

The Zacks Consensus Estimate for third-quarter earnings is pegged at $1.24 per share, unchanged over the last seven days. This indicates a decline of 11.4% from year-ago reported figure. The Zacks Consensus Estimate for quarterly sales stands at $714.2 million, suggesting a decline of 2.5% from the prior-year quarter.

Citrix Systems, Inc. Price and EPS Surprise


Citrix Systems, Inc. Price and EPS Surprise

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

Past-Quarter Performance

Citrix had reported second-quarter 2019 non-GAAP earnings of $1.21 per share, which missed the Zacks Consensus Estimate of $1.33 per share. Moreover, the figure declined by 7 cents from the year ago-quarter.

Revenues of $749 million lagged the Zacks Consensus Estimate of $772 million. However, the figure improved 1% from the year-ago quarter.

Let’s see how things are shaping up prior to this announcement.

Factors to Consider

Citrix’s prioritizing of transition to the cloud is anticipated to reflect in the third-quarter performance as it is witnessing a higher mix of product bookings that are subscription based. During the last reported quarter, SaaS revenues were up 59% year over year. Notably, SaaS revenues are the most significant part of subscription transition.

Subscription revenues surged 41% year over year in the last reported quarter. The third-quarter results are likely to reflect Citrix’s efforts to enhance subscription offerings with new capabilities.

The Zacks Consensus Estimate for Subscription revenues is pegged at $157 million.

Solid adoption of unified workspace solutions and hybrid cloud offerings is likely to contribute to third-quarter performance. Furthermore, traction witnessed by ShareFile deserves a special mention. In fact, deal wins in the third quarter indicate that the trend is likely to have continued in the quarter to be reported.

Citrix has left no stone unturned to capitalize on increasing popularity of enterprise workspace productivity solutions. The ongoing workspace trends of Bring Your Own Devices (BYOD) and increasing number of mobile workers is anticipated to have added strength to its desktop virtualization solutions in the third quarter.

Moreover, rise in enterprise spend on workspace productivity solutions from small and medium enterprises, healthcare companies and increasing demand across Asia-Pacific is anticipated to get reflected in the third-quarter performance.

The company’s third-quarter top line is likely to reflect robust adoption of its Subscription services.

Strategic alliances, synergies from buyouts, and addition of innovative capabilities are likely to have benefited Citrix in the to-be-reported quarter.

However, increasing investments on portfolio expansion, product enhancements and strategic acquisitions are anticipated to get reflected in the third-quarter performance

Key Developments

Citrix SD-WAN solution was recently selected by Custom Molded Products (CMP), to boost network performance of digital workspaces. Further, San Francisco 49ers football team implemented Citrix’s digital workspace solutions to provide an engaging fan experience.

The company collaborated with Palo Alto Networks PANW, notable cybersecurity company, to facilitate deployment of firewalls in Citrix SD-WAN, empowering customers with robust security capabilities. This is likely to lead to new customer additions, consequently generating incremental revenues which will favor the top line.

Additionally, acquisitions of Cedexis and Sapho remain noteworthy. The buyouts are expected to aid Citrix in enhancing Workspace suite with guided work capabilities and traffic management functionalities.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Citrix this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Citrixis +0.64%.

Zacks Rank: The company currently carries a Zacks Rank of 3.

Stocks With Favorable Combination

Here are some other stocks you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat.

Veoneer, Inc. VNE has an Earnings ESP of +7.17% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

SAP SE SAP has an Earnings ESP of +4.35% and a Zacks Rank #3.

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