Citrix (CTXS) Q3 Earnings And Revenues Beat; View Raised

Citrix Systems Inc. (NASDAQ:CTXS) posted encouraging results in the third quarter of 2016, both in terms of earnings and revenues.

The cloud computing company’s earnings (excluding special items) of $1.11 per share beat the Zacks Consensus Estimate of 97 cents. Higher-than-expected revenues contributed to the earnings beat.

Operating Results

Net revenue came in at $841 million, up 3% on a year-over-year basis. The top line also came in above the Zacks Consensus Estimate of $826.5 million. Gross margin was 86% in the quarter under review compared with 85% in the prior-year quarter. Quarterly operating margin was 30% as against 28% in the prior-year quarter. At the end of the reported quarter, deferred revenues grossed $1.6 billion compared with $1.5 billion a year ago.

During the third quarter, Citrix generated approximately $288 million of cash from operations compared with $260 million for the third quarter of 2015. The company exited the quarter with $1,309 million in cash and cash equivalents as against $368.5 million at the end of 2015.

Revenues by Product Mix

Product and Licenses revenues of $206.2 million were flat year over year. License updates and maintenance revenues totaled $398.2 million, up 5% year over year. Software-as-a-Service (SaaS) revenues came in at $207.1 million, reflecting a 9% increase from the prior-year quarter. Professional Services revenues declined 19% to $29.9 million in the reported quarter.

Revenues by Geography

Revenues in the Americas (both North & Latin America) were up 8% year over year. Revenues in Europe, Africa and the Middle East decreased 4% but increased less than 1% in the Asia Pacific region, on a year-over-year basis.

Outlook for 2016

The Fort Lauderdale, FL-based company raised its revenue estimates to a band of $3.40–$3.41 billion from the earlier guidance of $3.37–$3.39 billion, which excludes the GoTo business. GoTo is expected to merge with LogMeIn in the first quarter of 2017. Earnings per share (excluding adjustments) are now projected in the range of $5.18–$5.20 instead of $5.00–$5.10. The Zacks Consensus Estimate for 2016 revenues and earnings is $3.39 billion and $4.16, respectively.

Outlook for 2017

Excluding the GoTo business, net revenue is expected to grow in the range of 3% to 4%. Operating margin is anticipated to be around 32–33%.

In spite of competition from peers such as Infoblox Inc. (NYSE:BLOX) , Autodesk Inc. (NASDAQ:ADSK) and Avid Technology, Inc. (NASDAQ:AVID) , Citrix has seen impressive growth in the past few quarters. Also, this Zacks Rank #3 (Hold) company’s prospects appear bright. You can see the complete list of today’s Zacks #1 Rank stocks here.

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