Citrix Beats on Q1 Earnings, Announces Buyback - Analyst Blog

Citrix Systems Inc. CTXS declared financial results for the first quarter of 2014, where both its top and bottom line surpassed the Zacks Consensus Estimate. Following the results, management declared a $1.5 billion share buyback plan.

GAAP net income, in first-quarter 2014, came in at $55.9 million or 30 cents per share compared with $59.7 million or 32 cents per share in the prior-year quarter. Quarterly adjusted earnings per share of 50 cents easily beat the Zacks Consensus Estimate of 38 cents. The total revenue stood at $750.8 million, up 10.4% year over year and also above the Zacks Consensus Estimate of $735 million.
 

Gross margin in the said quarter was 82.1% compared with 82.9% in the year-ago quarter. Operating expenses were around $554.6 million versus $501.4 million in the prior-year quarter. Quarterly operating margin was 9.6% against 8.4% in the prior-year quarter. At the end of the reported quarter, deferred revenues were $1.4 billion against $1.2 billion in the  year-ago quarter.

During the first quarter of 2014, Citrix generated approximately $287.9 million of cash from operations and free cash flow (cash flow from operations less capital expenditures) was around $257.4 million. The company had nearly $829.3 million of cash and marketable securities compared with $734.7 million at the end of 2013. The balance sheet remains free of any debt obligations.

Revenues by Product Mix

Product and Licenses revenues were $207.4 million, up 6.9% year over year. License updates and maintenance revenues were $343.8 million, up 8.2% year over year. Software-as-a-Service revenues came in at $157.1 million, a 12.4% increase from the prior-year quarter while Professional Services revenues were $42.5 million, up 37.6% year over year.

Revenues by Product Grouping

Mobile and Desktop revenues in the first quarter of 2014 were $381 million, up 7% year over year. Networking and Cloud Solutions revenues were $167 million, up 13% year over year. Communications & Documents Cloud revenues were $157 million, an increase of 14% over the prior-year quarter.

Revenues by Geography

Revenues in the Americas (both North & Latin America) region were $323.4 million, up 9.1% year over year. Revenues in Europe, Africa, and the Middle East region came in at $200.6 million, up 15% year over year. Revenues in the Asia Pacific region were $69.7 million, up 8% year over year.

Second Quarter of 2014 Financial Outlook

Management forecasted second-quarter 2014 net revenue to increase to the range of $765–$775 million. GAAP earnings per share are expected to be 21–24 cents and non-GAAP earnings per share will likely be between 57 and 69 cents, exclusive of stock-based compensation expenses, effects of amortization of acquired intangible assets and restructuring expenses of 19, 28 and 3 cents per share, respectively. GAAP gross margin is projected to be between 81% and 82% while  non-GAAP gross margin is anticipated in the range of 84–85%.

2014 Financial Outlook

Management projected 2014 net revenue to increase in the range of 8.5–10%. Non-GAAP gross margin is expected to be in between 81 and 82% while non-GAAP gross margin is anticipated in the range of 84–85%. Non-GAAP tax rate is projected to remain at 23% while non-GAAP earnings per share will likely be in the $2.90–$2.95 band.

Other Stocks to Consider

Citrix Systems currently has a Zacks Rank #4 (Sell). Other better-ranked stocks worth considering in the Business Software & Services industry are Manhattan Associates, Inc. MANH, Adobe Systems Inc. ADBE and Ansys, Inc. ANSS. Manhattan Associates has a Zacks Rank #1 (Strong Buy) while Adobe and Ansys carry Zacks Rank #2 (Buy).