Citrix Systems Inc.
) declared robust financial results for the second quarter of 2012,
well above the Zacks Consensus Estimates. GAAP net income, in
second-quarter 2012, was $92 million or 49 cents per share compared
with $81.9 million or 43 cents per share in the prior-year quarter.
Quarterly adjusted earnings per share of 56 cents were miles ahead
of the Zacks Consensus Estimate of 47 cents. Second-quarter net
revenue was $615.2 million, up 15.9% year over year, beating the
Zacks Consensus Estimate of $613 million.
However, the company's financial guidance for the ensuing third
quarter was weak. Consequently, in the after market trade on
NASDAQ, the stock price of Citrix dropped $2.89 (3.85%) to $72.22.
Nevertheless, the company raises its financial guidance for fiscal
2012. Just a few days ago, Citrix's major competitor,
) also provided a rosy outlook for fiscal 2012. Furthermore, the
Board of Directors of Citrix has authorized an additional $400
million to repurchase its common outstanding shares.
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
Gross margin in the second quarter of 2012 was 84.7% compared
with 86.5% in the year-ago quarter. Operating expenses in the
reported quarter were around $438.7 million compared with $363.4
million in the prior-year quarter. Quarterly operating margin was
13.4% compared with 18% in the prior-year quarter. At the end of
the previous quarter, deferred revenue was $1,030 million, up 24.1%
year over year.
During the second quarter of 2012, Citrix generated over $167.8
million of cash from operations and free cash flow (cash flow from
operations less capital expenditures) during the reported quarter
was approximately $139.6 million. At the end of the second quarter
of 2012, the company had nearly $1,708.2 million of cash and
marketable securities compared with $1,477.6 million at the end of
2011. Balance sheet remains free of any debt obligations.
Revenue by Product Mix
Product and Licenses revenue was $187.9 million, up 10% year
over year. License updates and maintenance revenue was $272.5
million, up 18% year over year. Software as a Service revenue was
$125.5 million, an increase of 18% over the prior-year quarter, and
Professional Services revenue was $29.3 million, up 37% year over
Revenue by Product Grouping
Desktop solutions revenue in the second quarter of 2012 was
$343.2 million, up 12.6% year over year. Data Center and Cloud
Solutions revenue was $112.1 million, up 20.2% year over year.
Online Services revenue was $125.5 million, up 17.8% year over
year. Revenue from Other Products was $34.4 million, up 30.3% year
Revenue by Geography
Revenue in the Americas (North & Latin America) region was
$366.6 million. Revenue in Europe, Africa, and the Middle East
region was $179.6 million. Revenue in the Asia Pacific region was
Third Quarter of 2012 Financial Outlook
Management forecasted that the company's third-quarter 2012
revenue will be within the range of $645 million - $655 million.
GAAP earnings per share will be within the range of 36 cents - 38
cents and non-GAAP earnings per share will be between 64 cents and
66 cents. Stock-based compensation expenses will be 21 cents per
Full Fiscal 2012 Financial Outlook
Management forecasted that the company's fiscal 2012 revenue
will be within the range of $2.56 billion - $2.58 billion. GAAP
earnings per share will be within the range of $1.76 - $1.79 and
non-GAAP earnings per share will be within the range of $2.78 -
$2.81. Stock-based compensation expenses will be 80 cents per
Virtualization and cloud computing services are getting rapidly
adopted by business enterprises throughout the world. 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 Outperform recommendation on Citrix
Systems. Currently, it holds a short-term Zacks #3 Rank (Hold) on
the stock primarily due to the high-level of current valuation of
Citrix, which soared 49.6% in the last year.
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