It has been about a month since the last earnings report for Citrix Systems, Inc. CTXS). Shares have added about 10.3% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is CTXS due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Citrix Systems delivered first-quarter 2018 adjusted earnings of $1.29 per share, which beat the Zacks Consensus Estimate by 24 cents. The figure surged 33% on a year-over-year basis.
Revenues increased 5.2% from the year-ago quarter to $697.2 million and comfortably surpassed the Zacks Consensus Estimate of $676 million. Revenues were hurt by $10 million negative impact from the adoption of ASC 606.
Product and license (23% of revenues) revenues declined 6% year over year to $160.7 million. Subscription (14.8% of revenues) revenues surged 49.3% from the year-ago to $103.2 million. Support and services (62.1% of revenues) revenues inched up 2.5% on a year-over-year basis to $433.3 million.
Revenues as per Product Group
Workspace services (59.2% of revenues) increased 3% year over year to $412.6 million. Management stated that 42% of new product bookings were subscription based.
Networking (29.9% of revenues) revenues rose 7.9% from the year-ago to $208.6 million. SSP and enterprise product bookings were each up roughly 20% from the year-ago quarter.
Content Collaboration (6.4% of revenues) revenues climbed 14.9% on a year-over-year basis to $44.7 million.
Professional services (4.5% of revenues) advanced 5.4% year over year to $31.3 million.
Professional services (4.5% of revenues) increased 5.4% year over year to $31.3 million.
Revenues in Americas increased 5% year over year to $414 million. There were 33 transactions worth more than $1 million in the reported quarter.
Europe, Middle East and Africa (EMEA) revenues were up 7% from the year-ago quarter to $215 million. There were 12 transactions worth more than $1 million in the reported quarter.
Asia-Pacific and Japan (APJ) revenues dipped 1% from the year-ago quarter to $69 million. There were five transactions worth more than $1 million in the reported quarter.
Reported operating expenses as percentage of revenues declined 530 basis points (bps) on a year-over-year basis to 60.7%.
Research and development (R&D), sales, marketing & services, and general & administrative (G&A) declined 140 bps, 120 bps and 240 bps, respectively.
As a result, reported operating margin expanded 520 bps from the year-ago quarter to 23.7%. Adjusted operating margin expanded 400 bps on a year-over-year basis to 32%.
Balance Sheet & Cash Flow
As of Mar 31, 2018, cash and cash equivalents were $954.7 million as compared with $1.12 billion as of Dec 31, 2017. Cash flow from operations was $358 million in the first quarter.
As of Mar 31, 2018, deferred revenues grossed $1.7 billion as compared with $1.9 billion in the previous quarter.
Citrix repurchased approximately 8.4 million shares during the first quarter.
For second-quarter 2018, Citrix anticipates revenues between $710 million and $720 million. Non-GAAP earnings are expected between $1.18 and $1.22 per share.
For 2018, Citrix expects revenues between $2.88 billion and $2.91 billion. Non-GAAP operating margin is expected to be in the range of 30-31%. Moreover, non-GAAP earnings are expected between $5.20 and $5.30 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There have been nine revisions higher for the current quarter compared to one lower. Last month, the consensus estimate has shifted by 19.1% due to these changes.
Citrix Systems, Inc. Price and Consensus
At this time, CTXS has a nice Growth Score of B, though it is lagging a lot on the momentum front with a D. Following the exact same course, the stock was also allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for growth based on our styles scores.
Estimates have been broadly trending upward for the stock and the magnitude of these revisions looks promising. It comes with little surprise CTXS has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.