Citrix Systems Inc. (CTXS) declared strong financial results for the second quarter of 2014, where both its top and bottom line surpassed the corresponding Zacks Consensus Estimate. Consequently, the stock price of Citrix was up 84 cents (1.31%) to $64.94 in aftermarket trading on the Nasdaq.
GAAP net income, in second-quarter 2014, came in at $53 million or 31 cents per share compared with $64.5 million or 34 cents per share in the prior-year quarter. Quarterly adjusted earnings per share of 63 cents were significantly above the Zacks Consensus Estimate of 41 cents.
The total revenue stood at $781.6 million, up 7% year over year and also surpassed the Zacks Consensus Estimate of $772 million.
Gross margin in the reported quarter was 77.6% compared with 82.6% in the year-ago quarter. Operating expenses were around $551.9 million against $527.3 million in the prior-year quarter. Quarterly operating margin was 7% against 10.4% in the prior-year quarter.
During the second quarter, Citrix repurchased 20.9 million shares for a total consideration of about $1,223 million. At the end of the reported quarter, deferred revenues were $1.4 billion against $1.3 billion in the year-ago quarter.
During the second quarter of 2014, Citrix generated approximately $203.5 million of cash from operations while free cash flow (cash flow from operations less capital expenditures) stood at around $166.9 million. The company had nearly $820.4 million of cash and marketable securities compared with $734.7 million at the end of 2013. The company had $1,277.3 million of convertible notes outstanding.
Revenues by Product Mix
Product and Licenses revenues were $231.8 million, up 2% year over year. License updates and maintenance revenues were $347 million, up 7.5% year over year. Software-as-a-Service (SaaS) revenues came in at $160.8 million, reflecting a 11.8% increase from the prior-year quarter while Professional Services revenues were around $42 million, up 15.2% year over year.
Revenues by Product Grouping
Mobile and Desktop revenues in the second quarter of 2014 totaled $395.9 million. Networking and Cloud Solutions revenues were $179.3 million. SaaS revenues were $160.8 million. Other revenues were $45.6 million.
Revenues by Geography
Revenues in the Americas (both North & Latin America) region were $468.5 million. Revenues in Europe, Africa, and the Middle East region came in at $235 million. Revenues in the Asia Pacific region were $78.1 million.
Third Quarter of 2014 Financial Outlook
Management forecasts third-quarter 2014 net revenue to increase to the range of $765–$775 million. GAAP earnings per share are expected in the band of 32–36 cents and non-GAAP earnings per share will likely be between 50 and 55 cents, including stock-based compensation expenses. GAAP gross margin is projected to be between 80.8% and 81.8% while non-GAAP gross margin is anticipated in the range of 84–85%.
2014 Financial Outlook
Management projected 2014 net revenue to increase in the range of 8.5–10%. GAAP gross margin is expected to be in between 80% and 81% while non-GAAP gross margin is anticipated in the range of 84–85%. Non-GAAP tax rate is projected to remain at 22.5% while non-GAAP earnings per share will likely be in the $2.47–$2.52 band, including stock-based compensation expenses.
Other Stocks to Consider
Citrix Systems currently has a Zacks Rank #3 (Hold). Other stocks worth considering in the Business Software & Services industry are MicroStrategy Inc. (MSTR), Progress Software Corp. (PRGS) and Pegasystems Inc. (PEGA). MicroStrategy has a Zacks Rank #1 (Strong Buy) while both Progress Software and Pegasystem carry a Zacks Rank #2 (Buy).
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