Mixed 3Q for Citrix, Share Raises - Analyst Blog


Citrix Systems Inc. ( CTXS ) declared mixed financial results for the third quarter of 2012. GAAP net income, in third-quarter 2012, was $78.2 million or 41 cents per share compared with $92.2 million or 49 cents per share in the prior-year quarter. Quarterly adjusted earnings per share of 53 cents were well above the Zacks Consensus Estimate of 49 cents. Third-quarter net revenue was $641.4 million, up 13.5% year over year but fell below the Zacks Consensus Estimate of $651 million.

Nevertheless, the company's financial guidance for the ensuing fourth quarter was weak. Despite this, in the after market trade on NASDAQ, the stock price of Citrix raised $1.11 (1.73%) to $65.19. Just a few days ago, Citrix's major competitor, VMware Inc. ( VMW ) maintained its previously given outlook for fiscal 2012.

Gross margin in the third quarter of 2012 was 83.5% compared with 85.9% in the year-ago quarter. Operating expenses in the reported quarter were around $452.9 million compared with $381 million in the prior-year quarter. Quarterly operating margin was 12.9% compared with 18.5% in the prior-year quarter. At the end of the previous quarter, deferred revenue was $1,050 million, up 25.9% year over year. In the reported quarter, Citrix repurchased 1 million of its common shares for a total consideration of $76.3 million.

During the third quarter of 2012, Citrix generated over $181 million of cash from operations and free cash flow (cash flow from operations less capital expenditures) during the reported quarter was approximately $145 million. At the end of the third quarter of 2012, the company had nearly $1,406.3 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 $195.6 million, up 0.9% year over year. License updates and maintenance revenue was $285.1 million, up 19.4% year over year. Software as a Service revenue was $129.7 million, an increase of 18.3% over the prior-year quarter, and Professional Services revenue was $31 million, up 33.7% year over year.

Revenue by Product Grouping

Desktop solutions revenue in the second quarter of 2012 was $348.6 million, up 10.3% year over year. Data Center and Cloud Solutions revenue was $127.5 million, up 14.7% year over year. Online Services revenue was $129.7 million, up 18.3% year over year. Revenue from Other Products was $35.7 million, up 24.4% year over year.

Revenue by Geography

Revenue in the Americas (North & Latin America) region was $391.8 million. Revenue in Europe, Africa, and the Middle East region was $180.1 million. Revenue in the Asia Pacific region was $69.5 million.

Fourth Quarter of 2012 Financial Outlook

Management forecasted that the company's fourth-quarter 2012 revenue will be within the range of $700 million to $710 million. GAAP earnings per share will be within the range of 55 cents to 57 cents and non-GAAP earnings per share will be between 83 cents and 85 cents. Stock-based compensation expenses will be 22 cents per share.

Initial Outlook for Fiscal 2013

Management has expected that the company's fiscal 2013 revenue will grow 14% year over year and its non-GAAP operating margin will be expanded by 0.5% year over year.

Our Recommendation

We maintain our Neutral recommendation on Citrix Systems. Currently, it holds a short-term Zacks #4 Rank (Sell) on the stock.

CITRIX SYS INC (CTXS): Free Stock Analysis Report

VMWARE INC-A (VMW): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: CTXS , VMW



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