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Citrix Systems Inc. (CTXS): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

Summary:

Citrix Systems reported mixed results in the third quarter of 2014. While earnings exceeded expectations, revenues lagged the Zacks Consensus Estimate. Encouraged by the earnings beat, the company raised its bottom-line guidance for 2014. We believe the global trend toward virtualization and cloud computing will help Citrix to retain its momentum in the long term. Moreover, both its XenMobile and XenApps are gaining significant market traction in the highly lucrative enterprise mobility segment and Windows app virtualization. In addition, Citrix Systems has come up with an innovative app called ShareConnect, which will provide unique desktop-like facilities to iPads and Android-based tablets. We remain Neutral on the stock.

Overview:

Founded in 1989 and headquartered in Fort Lauderdale, Citrix Systems is a leading provider of virtualization, networking and cloud computing solutions to more than 230,000 organizations worldwide. Its products include XenApp that runs the business logic of applications on a central server, XenServer, an enterprise-class platform for managing server virtualization in the datacenter as a pool of computing and storage resources. The company's products also comprise XenDesktop, an integrated desktop delivery system NetScaler, a Web application delivery and traffic management product and Access Gateway, a line of universal SSL/VPN appliances. Citrix also offers online services, consulting, technical support, and product training and certification services. The company markets and licenses its products through value-added resellers, channel distributors, system integrators, independent software vendors, and original equipment manufacturers as well as through websites. Moreover, the acquisition of Sanbolic, completed in Jan 2015, will enable Citrix to further develop a range of differentiated VDI packages.

Citrix operates in four reportable segments as follows:

License Updates and Maintenance (45% of the total revenue in 2013): This segment consists of fees related to Citrix's Subscription Advantage program that are recognized ratably over the term of the contract, which is typically 12 to 24 months. Subscription Advantage is an annual-renewable program that provides subscribers with automatic delivery of unspecified software upgrades, enhancements and maintenance releases if they become available during the term of the subscription.

Product and Licenses (31%): This segment primarily consists of fees related to the licensing of Citrix's major products including Desktop Solutions products, Datacenter and Cloud products.

Software as a Service (20%): This segment consists primarily of fees related to online service agreements, which are recognized ratably over the contract term.

Professional Services (4%): This segment includes fees from technical support services, which are recognized ratably over the contract term as well as fees from product training and certification and consulting services.

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


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

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