What happened
Shares of Citrix (NASDAQ: CTXS) have gotten crushed today, down by 11% as of 2:15 p.m. EDT, after the company reported second-quarter earnings. The results topped analysts' estimates, but investors may have been pricing in higher expectations, as the stock has rallied in recent months.
So what
Revenue in the second quarter increased 7% to $799 million, ahead of the $769.1 million in sales that analysts were modeling for. That translated into adjusted earnings per share of $1.53, also beating the $1.23 per share in adjusted profits that Wall Street was expecting. Subscription annualized recurring revenue (ARR) was $949 million in the second quarter, with subscription bookings representing 76% of total product bookings. The shift to remote work is boosting demand for Citrix's virtualization offerings.
Image source: Citrix Systems.
"Citrix has never been more relevant to our customers and our partners," CEO David Henshall wrote in a letter to shareholders. "We are focused and aligned to maximize the opportunity we have to drive continued sustainable growth over the long-term aided by the secular shifts toward remote work, security and employee experience."
Now what
Citrix said that it would discontinue sales of new perpetual licenses for Citrix Workspace effective Oct. 1 as part of its ongoing transition to a subscription model. The tech company warned that the move could impact the timing of how license revenue is recognized and reported in the fourth quarter.
Guidance for the third quarter calls for revenue of $750 million to $760 million, with adjusted earnings per share of $1.20 to $1.25. For the full year, revenue is expected to be $3.18 billion to $3.21 billion, with adjusted earnings per share of $5.65 to $5.85.
10 stocks we like better than Citrix Systems
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Citrix Systems wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of June 2, 2020
Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
