Citrix Systems (CTXS) Q3 Earnings Top Estimates, Decline Y/Y

Citrix Systems Inc. CTXS posted better-than-expected earnings but lower-than-expected revenues in the third quarter of 2017.

The cloud computing company’s earnings (excluding 40 cents from non-recurring items) came in at $1.22 per share, above the Zacks Consensus Estimate of $1.04. The bottom line, however, declined 7.6% from the year-ago figure.

Net revenue came in at $690.9 million, marginally below the Zacks Consensus Estimate of $691.2 million. Revenues also slumped 17.9% on a year-over-year basis. 

The year-over-year decline in earnings and revenues seemed to have displeased investors. Consequently, the stock was down 1.7%in aftermarket trading on Oct 25.

Operating Results

Gross margin (adjusted) was 87% in the quarter under review compared with 86% in the prior-year quarter. Quarterly operating margin (adjusted) was 32% compared with 30% in the prior-year quarter. As of Sep 30, 2017, deferred revenues grossed $1.7 billion compared with $1.5 billion a year ago. Total operating expenses inched up 1.4% to $448.27 million in the reported quarter.

During the third quarter of 2017, Citrix generated approximately $255 million of cash from operations compared with $238 million in the same quarter of 2016. Citrix exited the quarter with $940.87 million in cash and cash equivalents compared with $836.0 million at the end of 2016.

Revenues by Product Mix

Product and Licenses revenues grossed $192.10 million, down 6.8% year over year. License updates and maintenance revenues totaled $420.95 million, up 5.7% year over year. Software-as-a-Service (SaaS) revenues came in at $45.81 million, up 32.1% from the prior-year quarter. Professional Services revenues increased 7.4% to $32.06 million in the reported quarter.

Revenues by Geography

Net revenues in the Americas (both North & Latin America) increased 2% on a year-over-year basis, while it grew 7% in the Europe, Middle East and Africa (EMEA) region. However, revenues in the Asia-Pacific (APJ) region slid by 1%.

 

Citrix Systems, Inc. Price, Consensus and EPS Surprise

 

Citrix Systems, Inc. Price, Consensus and EPS Surprise | Citrix Systems, Inc. Quote

 

Outlook for 2017

The Fort Lauderdale, FL-based company expects net revenue in the range of $2.82-$2.83 billion (previous guidance: $2.81-$2.83 billion). The Zacks Consensus Estimate for the same is $2.82 billion. Earnings per share (on an adjusted basis) are projected in the $4.79-$4.81 band (previous guidance: $4.60-$4.65), ahead of the Zacks Consensus Estimate of $4.62.

Outlook for 2018

The company expects net revenues to increase approximately 1-2% in 2018. Additionally, it expects operating margin (adjusted) in the 29-30% band for full-year 2018.

Upcoming Releases

Investors interested in the broader Computer and Technology sector are keenly awaiting earnings numbers from key players, namely, Harris Corporation HRS, ARRIS International PLC ARRS and Motorola Solutions, Inc. MSI. Harris is scheduled to report first-quarter fiscal 2018 results on Oct 31, while ARRIS and Motorola will reveal third-quarter results on Nov 1 and Nov 2, respectively.

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