Citrix System Outperforms - Analyst Blog

Yesterday, after market close, Citrix System Inc (CTXS) declared financial results for the fourth quarter of 2009. GAAP net income in the reported quarter was $88.2 million or 47 cents per share compared to a net income of $60.1 million or 33 cents per share in the prior-year quarter. However, adjusted (excluding intangible asset amortization and restructuring charges) EPS in the same quarter was 59 cents, significantly above the Zacks Consensus Estimate of 40 cents.

Quarterly net revenue was $451.2 million, up 9% year over year. According to segments, Product Licenses revenue was $168.3 million, up 4% year over year. License updates revenue was $156.4 million, up 6% year over year. Online Services revenue was $82 million, increasing 18% over prior-year quarter. Technical Services revenue was $44.5 million, up 20% year over year.

During the quarter, Citrix achieved record-breaking revenues mainly due to its desktop business, which includes both Application and Desktop Virtualization solutions. Virtualization business generated $290 million of quarterly revenue, up 5% year over year. The newly launched XenDesktop 4 product received significant market traction and contributed $30 million in the same quarter. Data Centre and Cloud Computing business that provide Application Networking and Server Virtualization solutions generated $70 million of quarterly revenue, up 18% year over year.

Geographically, sales in the Americas increased 7% year over year. Rebound in large strategic transactions with customers resulted in an increase of 3% sales in the Europe, Africa, and the Middle East region and also an increase of 21% in sales in the Asia-Pacific region.

Gross margin in the quarter was 88.3% compared to 88.8% in the year-ago quarter. Operating expenses in the reported quarter was $320.7 million compared to $306 million in the prior-year quarter. Quarterly operating margin was 17.3% compared to 15.2% in the prior-year quarter. During the same quarter, Citrix repurchased 2 million of its common outstanding shares for a total consideration of around $77.1 million.

During the quarter under discussion, Citrix generated $177.7 million of cash from operations and free cash flow (cash flow from operations less capital expenditures) was $158.2 million. At the end of fiscal 2009, the company had $1,207.3 million in cash and marketable securities compared to $850.9 million at the end of the previous year. Citrix’s balance sheet remains free of any debt obligations.

Future Financial Outlook

Management forecasted that the company’s first quarter 2010 revenue will be within the range of $405 million−$410 million. GAAP EPS will be within the range of 23 cents to 25 cents and non-GAAP EPS will be within the range of 39 cents to 40 cents.

Full fiscal 2010 revenue will be within the range of $1.74 billion to $1.76 billion. GAAP EPS will be within the range of $1.33 to $1.34 and non-GAAP EPS will be within the range of $1.87 to $1.90.