Citrix Systems Tops Q3 Earnings, Lags Revenues; Ups View

Citrix Systems Inc. (CTXS) reported third-quarter 2014 financial results, wherein its bottom line surpassed the Zacks Consensus Estimate while the top line missed the same.

GAAP net income in third-quarter 2014 came in at $47.5 million or 29 cents per share compared with $76.7 million or 41 cents in the prior-year quarter. Quarterly adjusted earnings per share of 57 cents were significantly higher than the Zacks Consensus Estimate of 51 cents. Total revenue stood at $759 million, up 6.5% year over year but missed the Zacks Consensus Estimate of $772 million.

Gross margin in the reported quarter was 82.1% compared with 82.6% in the year-ago quarter. Operating expenses totaled $564.4 million against $501.4 million in the prior-year quarter. Quarterly operating margin stood at 7.7% against 12.3% in the prior-year quarter. At the end of the reported quarter, deferred revenues were $1.4 billion against $1.3 billion in the year-ago quarter.

During the third quarter of 2014, Citrix generated approximately $164.1 million of cash from operations against $223 million in the prior-year quarter. The company had nearly $747.2 million of cash and marketable securities compared with $734.6 million at the end of 2013. Also, the company had $1,285.1 million of convertible notes outstanding in the reported quarter.

Revenues by Product Mix

Product and Licenses revenues were $193.2 million, down 4.1% year over year. License updates and maintenance revenues were $358.3 million, up 8.8% year over year. Software-as-a-Service (SaaS) revenues came in at $165.3 million, reflecting an 11.5% increase from the prior-year quarter while Professional Services revenues were around $42.3 million, up 25.5% year over year.

Revenues by Product Grouping

Mobile and Desktop revenues in the third quarter totaled $393 million, up 3%. Networking and Cloud Solutions revenues increased 6% year over year to $155 million.

Revenues by Geography

Revenues in the Americas (both North & Latin America) region were $318.2 million, up 4%. Revenues in Europe, Africa, and the Middle East region increased 7.7% to $202.6 million. Revenues in the Asia-Pacific region were $73 million, up 3.8%.

2014 Financial Outlook

Citrix expects revenues in fiscal 2014 in the band of $3.13 billion to $3.14 billion Management projected GAAP earnings in the range of $1.57 to $1.58 while non-GAAP earnings per share will likely be in the $3.22–$3.25 band, exclusive of adjustments.

Stocks to Consider

Citrix Systems currently has a Zacks Rank #4 (Sell). Other stocks worth considering in the Business Software & Services industry are ACI Worldwide, Inc. (ACIW), AUTODESK Autodesk, Inc. (ADSK) and Imperva Inc. (IMPV). All carry a Zacks Rank #1 (Strong Buy).