Citrix Systems Inc. (CTXS) delivered an impressive performance in the fourth quarter of 2014, outshining the Zacks Consensus Estimate both in terms of revenues as well as earnings. The company’s fourth-quarter earnings (including stock-based compensation expense) of 90 cents comfortably beat the Zacks Consensus Estimate of 80 cents and was also higher than the year-ago figure of 87 cents.
Higher-than-expected revenues contributed to the earnings beat in the final quarter of 2014. Including special items, Citrix Systems reported earnings of 58 cents per share, down 21.6%.
Total revenue in the reported quarter climbed 6.1% year over year to $851 million. Quarterly revenues also outpaced the Zacks Consensus Estimate of $847 million. Gross margin in the reported quarter (excluding stock-based compensation expenses and other special items) stood at 85%, down 0.5% sequentially. Gross margin in the reported quarter (excluding stock-based compensation expenses and other special items) came in at 26%.
During the fourth quarter of 2014, Citrix generated approximately $190 million of cash from operations against $164.1 million in the preceding quarter. The company exited 2014 with $260.1 million of cash and cash equivalents compared with $280.7 million at the end of 2013. Also, the company had $1,292.9 million of convertible notes outstanding in the reported quarter.
Revenues in Details
Product and Licenses revenues were $267.4 million, down 1% year over year. License updates and maintenance revenues were $367 million, up 8.9% year over year. Software-as-a-Service (SaaS) revenues came in at $168 million, reflecting a 10% increase from the prior-year quarter while Professional Services revenues were around $48.8 million, up 15.5% year over year.
Revenues in the Americas (both North & Latin America) were $351.7 million, up 4%. Revenues in Europe, Africa, and the Middle East increased 7.3% to $249.2 million. Revenues in the Asia-Pacific region reached $82.3 million, up 4.7%.
Workspace Services revenues climbed 2% to $437 million in the reported quarter. Quarterly revenues from the delivery networking business climbed 11% to $195 million. Revenues from the company’s SaaS delivered mobility apps climbed 10% to $168 million with most of the revenues (60%) coming from the communications cloud family.
Financial Outlook
The company expects revenues in the range of $780 million to $790 million for the first quarter of 2015. Adjusted earnings for the first quarter are projected in the band of 70 cents to 72 cents. The Zacks Consensus Estimate for the first quarter of 2015 hints at earnings of 56 cents on revenues of $800 million.
For full-year 2015, Citrix expects revenues in the band of $3.29 billion to $3.33 billion. Management projected adjusted earnings per share in the range of $3.60 to $3.65. The Zacks Consensus Estimate for full-year 2015 hints at earnings of $2.78 per share on revenues of $3.36 billion.
Job Cuts Announced
Apart from the earnings results, the company also announced 900 job cuts as a cost-cutting measure aimed at improving efficiencies. Out of the 900 jobs trimmed, 700 are full-time in nature while the remaining pertain to contractor jobs. The move is expected to result in pre-tax annual savings in the band of $90 million to $100 million. Moreover, the company expects to incur pre-tax charges in the band of approximately $40 million to $45 million pertaining to employee severance arrangements in 2015. Furthermore, the restructuring is projected to cost the company (pre-tax) $9 million to $10 million related to the consolidation of leased facilities during the year.
Zacks Rank
Citrix Systems currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the industry are Imperva Inc. (IMPV), Adobe Systems Incorporated (ADBE) and Epiq Systems, Inc. (EPIQ). Imperva sports a Zacks Rank #1 (Strong Buy), while Adobe Systems and Epiq Systems carry a Zacks Rank #2 (Buy).
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