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Citrix (CTXS) Q1 Earnings Up on Work-From-Home Amid Coronavirus

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Citrix Systems delivered first-quarter 2020 non-GAAP earnings of $1.73 per share, beating the Zacks Consensus Estimate by 47.86%. The bottom line improved 36% on a year-over-year basis.

Revenues of $860.95 million surpassed the Zacks Consensus Estimate by 17.24%. The figure improved 20% 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 (20% of total revenues) improved 28% year over year to $172.8 million.

Support and services revenues (49%) declined 5% on a year-over-year basis to $418.9 million.

Subscription revenues (31%) surged 89% from the year-ago figure to $268.2 million.

During the quarter under review, SaaS revenues came in at $122 million (46% of total subscription revenues) and were 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 $146 million, up 159% year over year.


 

Notably, shares of Citrix have gained 26.9% year to date, outperforming the industry’s rise of 3.6%.

Revenues as per Product Group

Workspace revenues (76% of total revenues) increased 27% year over year to $654 million due to higher adoption of SaaS-bases subscription solutions. Workspace subscription revenues contributed 34% to the figure. Approximately 61% 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 (21%) improved 5% from the year-ago period to $180 million. Networking subscription revenues soared 131% from the prior-year figure. Networking software revenues contributed 44% to the figure. The company anticipates shift toward software-based solutions from traditional hardware to weigh on Networking revenues going ahead.

However, Professional Services revenues (3%) declined 18% on a year-over-year basis to $27 million. As the business shifts toward subscription solutions, Professional services revenue are anticipated to decline over time.

Customer Wise Revenues

Revenues from SSP customers came in at $20 million (2% of total revenues) during the reported quarter, down 10% year over year. Revenues from non-SSP customers (98% of total revenues) improved 21% year over year to $841 million.

Geographic Revenues

Revenues in the Americas (56% of total revenues) came in at $484 million, up 21% on a year-over-year basis. Meanwhile, revenues in Europe, Middle East and Africa or “EMEA” (34% of total revenues) advanced 24% from the year-ago quarter to $294 million. Revenues in Asia-Pacific and Japan or “APJ” (10% of total revenues) improved 2% year over year to $83 million.

Margin Details

Total operating expenses increased 11.3% year over year to $543.8 million. As a percentage of revenues, the figure contracted 480 basis points (bps) to 63.2%

Non-GAAP operating margin was reported at 31%.
 

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

Balance Sheet & Cash Flow

As of Mar 31, 2020, Citrix had cash and cash equivalents of $524.9 million compared with $545.8 million in the previous quarter. Long-term debt at the end of the quarter came in at $1.731 billion, compared with $742.9 million in the prior quarter.

Cash flow from operations was reported at $284.2 million, compared with $206 million in the prior quarter.

Deferred and unbilled revenues of $2.534 billion grew approximately 19% year over year.

Citrix repurchased shares worth $200 million during the first quarter. The company has $714 million remaining in share repurchase authorization.

The company paid out quarterly dividends worth $43 million.

Notably, Citrix’s board of directors approved a cash dividend of 35 cents per share, payable on Jun 19, to shareholders as on Jun 5.

Q2 View

For second-quarter 2020, Citrix anticipates revenues between $760 million and $770 million. The Zacks Consensus Estimate for revenues is pegged at $761.87 million.

Moreover, non-GAAP earnings are expected in the range of $1.18-$1.23 per share. The Zacks Consensus Estimate for earnings is pegged at $1.18 per share.

Revises 2020 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 $3.10 billion and $3.16 billion, compared with the earlier guided range of $3.10-$3.13 billion. The Zacks Consensus Estimate for revenues is pegged at $3.1 billion.

Moreover, non-GAAP earnings are now expected in the range of $5.40-$5.60, compared with the previously guided range of $5.35-$5.55 per share. The Zacks Consensus Estimate for earnings is pegged at $5.39 per share.

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

Zacks Rank & Other Stocks to Consider

Citrix currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader technology sector include Netlist, Inc. (NLST - Free Report) , Avid Technology, Inc. , and Zoom Video Communications, Inc. (ZM - Free Report) . While Netlist and Avid sport a Zacks Rank #1 (Strong Buy) at present, Zoom carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Netlist, Avid and Zoom is currently pegged at 15%, 20% and 26.56%, respectively.

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