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Citrix Tops Earnings, Outlook Tepid - Analyst Blog

By: Zacks.com
Posted: 4/25/2013 1:20:00 PM
Referenced Stocks: CTXS;PRGS;SAP;VMW

Citrix Systems Inc. ( CTXS ) declared mixed financial results for the first quarter of 2013. Importantly, the company's future financial outlook is significantly below the current Zacks Consensus Estimates. The company cited reduction in IT spending and delay of orders as the primary reasons for this sorry state of affairs.

As a result, in the after market trade on NASDAQ, the stock price of Citrix was down $7.66 (11.32%) to $60. Recently, the company's major competitor, VMware Inc. ( VMW ) also provided a tepid outlook for the near-term. Citrix currently has a Zacks Rank #3 (Hold).    

GAAP net income, in first-quarter 2013, was $59.7 million or 32 cents per share compared with $68.3 million or 36 cents per share in the prior-year quarter. Quarterly adjusted earnings per share of 46 cents managed to beat the Zacks Consensus Estimate of 45 cents. First-quarter net revenue was $672.9 million, up 14.2% year over year, but fell below the Zacks Consensus Estimate of $677 million.

Gross margin in the first quarter of 2013 was 82.9% compared with 85.4% in the year-ago quarter. Operating expenses in the reported quarter were around $501.4 million compared with $422.4 million in the prior-year quarter. Quarterly operating margin was 8.4% compared with 13.7% in the prior-year quarter. At the end of the reported quarter, deferred revenue was $1,200 million, up 25% year over year. In the reported quarter, Citrix repurchased 1.2 million of its common shares for a total consideration of about $85.81 million.

During the first quarter of 2013, Citrix generated $249.5 million of cash from operations and free cash flow (cash flow from operations less capital expenditures) was around $221.2 million. At the end of the reported quarter, the company had nearly $1,405 million of cash and marketable securities compared with $1,523.6 million at the end of 2012. Balance sheet remains free of any debt obligations.

Revenue by Product Mix

Product and Licenses revenue was $193.1 million, up 8.3% year over year. License updates and maintenance revenue was $315.7 million, up 19.4% year over year. Software-as-a-Service revenue was $137.6 million, an increase of 13.9% over the prior-year quarter, and Professional Services revenue was $26.5 million, up 2.5% year over year.

Revenue by Product Grouping

Mobileand Desktop revenue in the first quarter of 2013 was $358 million, up 5.2% year over year. Networking and Cloud Solutions revenue was $147.5 million, up by a significant 47.1% year over year. Online Services revenue was $137.6 million, up 14.5% year over year. Revenue from Other Products was $29.8 million, up 6.1% year over year.

Revenue by Geography

Revenue in the Americas (North & Latin America) region was $412.7 million. Revenue in Europe, Africa, and the Middle East region was $191.2 million. Revenue in the Asia Pacific region was $69.1 million.

Second Quarter of 2013 Financial Outlook

Management forecasted second-quarter 2013 revenues of $705 million to $715 million. GAAP earnings per share will be within the range of 31 cents to 32 cents and non-GAAP earnings per share will be between 62 cents and 63 cents. Stock-based compensation expenses will be 26 cents per share.

Outlook for Fiscal 2013

Management forecasted full-year 2013 revenues of $2.95 billion to $2.98 billion. GAAP earnings per share will be within the range of $1.91 to $1.95 and non-GAAP earnings per share will be between $3.08 and $3.11. Stock-based compensation expenses will be $1.01 per share.

Other Stocks to Consider

Other stocks to consider in the computer virtualization industry are Progress Software Corp. ( PRGS ) and SAP AG ( SAP ). Both of them currently carry a Zacks Rank #1 (Strong Buy).



CITRIX SYS INC (CTXS): Free Stock Analysis Report

PROGRESS SOFTWA (PRGS): Free Stock Analysis Report

SAP AG ADR (SAP): Free Stock Analysis Report

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

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