Citrix Systems Inc.
) declared robust financial results for the first quarter of 2011,
significantly above the Zacks Consensus Estimates. Quarterly net
revenue was $589.5 million, up 20% year over year, easily
surpassing the Zacks Consensus Estimate of $562 million. GAAP net
income was $68.3 million or 36 cents per share compared with $73.5
million or 39 cents per share in the prior-year quarter. Quarterly
adjusted EPS of 45 cents was miles ahead of the Zacks Consensus
Estimate of 39 cents.
Global trends toward virtualization and cloud computing are
facilitating the company to post solid results. Management stated
that all three of its business lines, e.g., desktop virtualization,
cloud networking, and web collaboration services are performing
Virtualization and cloud computing services are getting rapidly
adopted by business enterprises throughout the world. Just a few
days ago, Citrix's major competitor,
), provided a rosy outlook for fiscal 2012. Citrix also raised its
previous guidance for fiscal 2012. In the after market trade on
NASDAQ, the stock price of Citrix spiked $5.82 (7.54%) to
Gross margin in the first quarter of 2012 was 85.4% compared
with 87.8% in the year-ago quarter. Operating expenses in the
reported quarter were around $422.4 million compared with $350
million in the prior-year quarter. However, quarterly operating
margin was 13.7% compared with 16.5% in the prior-year quarter.
During the first quarter of 2012, Citrix repurchased 1.6 million of
its common outstanding shares for around $117 million. At the end
of the previous quarter, deferred revenue was $983 million, up
24.6% year over year.
During the first quarter of 2012, Citrix generated over $243.1
million of cash from operations and free cash flow (cash flow from
operations less capital expenditures) during the reported quarter
was approximately $219.9 million. At the end of the first quarter
of 2012, the company had nearly $1,608.7 million of cash and
marketable securities compared with $1,477.6 billion at the end of
2011. Balance sheet remains free of any debt obligations.
Revenue by Product Mix
Product and Licenses revenue was $178.4 million, up 19% year
over year. License updates and maintenance revenue was $264.5
million, up 19% year over year. Software as a Service revenue was
$120.7 million, an increase of 21% over the prior-year quarter, and
Professional Services revenue was $25.9 million, up 33% year over
Revenue by Product Grouping
Desktop solutions revenue in the first quarter of 2012 was
$338.1 million, up 17% year over year. Data Center and Cloud
Solutions revenue was $99.7 million, up 28.3% year over year.
Online Services revenue was $120.7 million, up 20.9% year over
year. Revenue from Other Products was $31 million, up 31.7% year
Revenue by Geography
Revenue in the Americas (North & Latin America) region was
$355.71 million. Revenue in Europe, Africa, and the Middle East
region was $174.5 million. Revenue in the Asia Pacific region was
Second Quarter of 2012 Financial Outlook
Management forecasted that the company's second-quarter 2012
revenue will be within the range of $605 million - $615 million.
GAAP EPS will be within the range of 34 cents - 37 cents and
non-GAAP EPS will be between 58 cents - 59 cents. Stock-based
compensation expenses will be 19 cents per share.
Full Fiscal 2012 Financial Outlook
Management forecasted that the company's fiscal 2012 revenue
will be within the range of $2.53 billion - $2.56 billion. GAAP EPS
will be within the range of $1.87 - $1.92 and non-GAAP EPS will be
within the range of $2.75 - $2.79. Stock-based compensation
expenses will be 75 cents per share.
We believe the virtualization market will continue to flourish
with desktop virtualization as its core theme. This trend is
expected to sustain future growth of Citrix Systems. We maintain
our long-term Neutral recommendation on Citrix Systems. Currently,
it holds a short-term Zacks #4 Rank (Sell) on the stock. We believe
this short-term sell recommendation is primarily attributable to
the high-level of current valuation of Citrix, which soared 53.7%
in the last year.
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