Back to top

Image: Bigstock

Citrix (CTXS) Q2 Earnings and Revenues Surpass Estimates

Read MoreHide Full Article

Citrix Systems reported second-quarter 2020 non-GAAP earnings of $1.53 per share, beating the Zacks Consensus Estimate by 26.5%. The bottom line also improved 26.4% on a year-over-year basis.

Revenues of $798.93 million surpassed the Zacks Consensus Estimate by 4.1%. The top line improved 7% on a year-over-year basis. Robust adoption of the company’s offerings enabling secure remote work amid coronavirus crisis-induced work-from-home wave was a key catalyst.

Product and license revenues (16% of total revenues) declined 8% year over year to $130 million.

Support and services revenues (53%) decreased 6% on a year-over-year basis to $426 million.

Subscription revenues (31%) surged 56% from the year-ago figure to $243 million.

During the quarter under review, SaaS revenues were $131 million (54% of total subscription revenues), up 43% year over year. Notably, SaaS revenues account for significant part of subscription transition. Other subscription revenues in the reported quarter came in at $113 million, soaring 75% year over year.


 

Notably, shares of Citrix have gained 50.7% year to date, compared with the industry’s growth of 27.4%.

Revenues as per Product Group

Workspace revenues (73% of total revenues) increased 9% year over year to $585 million due to higher adoption of SaaS-bases subscription solutions. Workspace subscription revenues contributed 34% to the figure. Approximately 76% of Workspace product bookings were subscription based. Management noted sharp increase in Workspace deployments as employees were compelled to work remotely in the wake of the coronavirus pandemic, which called for secure remote work infrastructure.

Networking revenues (23%) improved 4% from the year-ago period to $186 million. Networking subscription revenues soared 73% from the prior-year figure. Networking software revenues contributed 36% to the figure. Approximately 77% of Networking product bookings were subscription based. The company anticipates shift toward software-based solutions from traditional hardware to weigh on Networking revenues in the days ahead.

However, Professional Services revenues (4%) declined 21% on a year-over-year basis to $28 million. As the business shifts toward subscription solutions, Professional services revenues are anticipated to decline over time.

Customer Wise Revenues

Revenues from SSP customers amounted to $30 million (4% of total revenues) during the reported quarter, up 25% year over year. Revenues from non-SSP customers (96% of total revenues) improved 6% year over year to $769 million.

Geographic Revenues

Revenues in the Americas (54% of total revenues) came in at $432 million, flat on a year-over-year basis. Meanwhile, revenues in Europe, Middle East and Africa or “EMEA” (35% of total revenues) advanced 15% from the year-ago quarter to $277 million. Revenues in Asia-Pacific and Japan or “APJ” (11% of total revenues) improved 18% year over year to $90 million.

Margin Details

Total operating expenses increased 2.3% year over year to $533 million. As a percentage of revenues, the figure contracted 290 basis points (bps) to 66.7%.

Non-GAAP operating margin was reported at 31%, flat sequentially.

Balance Sheet & Cash Flow

As of Jun 30, 2020, Citrix had cash and cash equivalents of $555.1 million compared with $524.9 million as of Mar 31, 2020. As of Jun 30, 2020, long-term debt at the end of the quarter came in at $1.73 billion, flat sequentially.

Cash flow from operations was reported at $419 million, compared with $284.2 million in the prior quarter.

Deferred and unbilled revenues of $2.654 billion grew approximately 19% year over year.

The company has $714 million remaining in share repurchase authorization.

The company paid out quarterly dividends worth $43 million.
 

Citrix Systems, Inc. Price, Consensus and EPS Surprise

Citrix Systems, Inc. Price, Consensus and EPS Surprise

Citrix Systems, Inc. price-consensus-eps-surprise-chart | Citrix Systems, Inc. Quote

Notably, Citrix’s board of directors approved a cash dividend of 35 cents per share, payable on Sep 25, to shareholders as on Sep 11.

Q3 View

For third-quarter 2020, Citrix anticipates revenues between $750 million and $760 million. The Zacks Consensus Estimate for revenues is pegged at $742.5 million.

Moreover, non-GAAP earnings are expected in the range of $1.20-$1.25 per share. The Zacks Consensus Estimate for earnings is pegged at $1.19 per share.

Raises 2020 Revenue Guidance

For full-year 2020, Citrix updated guidance on the heels of strong pipeline for secure, remote work offerings. The company now expects revenues between $3.18 billion and $3.21 billion, compared with the earlier guided range of $3.10-$3.16 billion. The Zacks Consensus Estimate for revenues is pegged at $3.15 billion.

Moreover, non-GAAP earnings are now expected between $5.65 and $5.85, compared with the previously guided range of $5.40-$5.60 per share. The Zacks Consensus Estimate for earnings is pegged at $5.56 per share.

Management continues to anticipate non-GAAP operating margin in the range of 28-29%.

Zacks Rank & Stocks to Consider

Citrix currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are Synaptics Incorporated (SYNA - Free Report) , Advanced Micro Devices, Inc. (AMD - Free Report) , and Microchip Technology Incorporated (MCHP - Free Report) . While Synaptics and Microchip sport a Zacks Rank #1 (Strong Buy) at present, AMD carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Synaptics, Microchip and AMD are set to report earnings on Aug 5, Aug 4, and July 28, respectively.

Long-term earnings growth rate of AMD, Microchip and Synaptics is pegged at 40.25%, 14.5% and 10%, respectively.

The Hottest Tech Mega-Trend of All

Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>

Published in