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Citrix (CTXS) Earnings & Revenues Beat Estimates in Q4

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Citrix Systems Inc. (CTXS - Free Report) delivered fourth-quarter 2018 non-GAAP earnings of $1.67 per share, beating the Zacks Consensus Estimate of $1.59 per share. The figure increased by 1 cent from the year ago-quarter.

Revenues rose 3.1% from the year-ago quarter to $801.9 million and comfortably surpassed the Zacks Consensus Estimate of $790 million.

Product and license (26.3% of total revenues) decreased 10.9% year over year to almost $210.8 million. Subscription (16.2%) revenues surged 44.7% from the year-ago figure to $129.8 million. Support and services (57.5%) revenues rose 2.2% on a year-over-year basis to almost $461.3 million.

During the quarter under review, SaaS revenue came in at $78 million and accounted for nearly 10% of total revenues. Notably, SaaS revenues are the most significant part of subscription transition.

Notably, the company’s shares have gained 15.6% year over year, substantially outperforming the industry’s rally of 10.3%.

Revenues as per Product Group

Workspace revenues increased 6% year over year to $557 million due to rapid adoption of unified workspace solutions. Workspace subscription revenues increased 35% year over year during the fourth quarter. Management stated that approximately 60% of new product bookings were subscription based.

Networking revenues declined 4% from the year-ago to $206 million. Notably, a dip in the SSP business negatively impacted networking revenue by roughly $20 million during the reported quarter. Management is elated that subscription based revenues more than doubled from the prior-year figure on the back of hybrid cloud offerings.

Content Collaboration revenues climbed 4% on a year-over-year basis to $47 million. With ShareFile is gaining traction for the company’s enterprise Workspace customers, management anticipates integrating Content Collaboration business with Workspace results during 2019.

Geographic Revenues

Revenues in Americas decreased 1% year over year to $440 million. Europe, Middle East and Africa (EMEA) revenues advanced 10% from the year-ago quarter to $$279.4 million. Asia-Pacific and Japan (APJ) revenues increased 4% year over year to $82.4 million.

Notably, subscription revenues increased more than 40% year over year during the quarter under quarter in the Americas and in EMEA. In APJ the same almost doubled year over year.

Margin Details

Non-GAAP gross margin during the reported quarter came in at 88%. Non-GAAP operating margin was reported at 35%, which contracted by 500 basis points from the year-ago figure of 40%.

Balance Sheet & Cash Flow

As of Dec 31, 2018, cash and cash equivalents were $618.8 million as compared with $1.205 billion in the previous quarter. Cash flow from operations was reported at $206 million.

Deferred and unbilled revenues of $2.17 billion grew approximately 12% year over year.

Citrix repurchased approximately 3.7 million shares worth $380 million during the fourth quarter. Moreover, roughly $770 million is still remaining under share repurchase authorization.

The company increased paid the first-ever quarterly dividend payment of 35 cents worth $47 million during the quarter under review.

Full year 2018 Highlights

Citrix reported non-GAAP earnings of $5.67 per share. Revenues increased 5% year over year to $2.97 billion.

Product and license decreased 4% year over year. Subscription revenues surged 45% from the year-ago figure. Support and services revenues rose 2% on a year-over-year basis.

Guidance

For first-quarter 2019, Citrix anticipates revenues between $700 million and $710 million The Zacks Consensus Estimate for revenues is pegged at $790.3 million.

Moreover, non-GAAP earnings are expected in the range of $1.15-$1.20 per share. The Zacks Consensus Estimate for earnings is pegged at $1.59 per share.

Citrix provided guidance for fiscal 2019. The company expects revenues between $3.08 billion and $3.09 billion. The Zacks Consensus Estimate for revenues is pegged at $3.09 billion.

Non-GAAP operating margin is anticipated to be in the range of 31.5% to 32%. Moreover, non-GAAP earnings are expected to be approximately $6.00 per share. The Zacks Consensus Estimate for earnings is pegged at $6.04 per share.

Zacks Rank & Stocks to Consider

Citrix carries a Zacks Rank #3 (Hold).

Few better-ranked stocks in the broader technology sector are Twitter, Inc. (TWTR - Free Report) , Pure Storage, Inc. (PSTG - Free Report) and Marvell Technology Group Ltd. (MRVL - Free Report) , both flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Twitter, Pure Storage and Marvell is currently pegged at 22.1%, 17.5% and 9.4%, respectively.

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