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Factors Setting the Tone for Citrix's (CTXS) Q2 Earnings

Zacks Equity Research
·4 min read

Citrix Systems CTXS is slated to report second-quarter 2020 results on Jul 23.

For the to-be-reported quarter, the company expects revenues in the range of $760-$770 million, while non-GAAP adjusted earnings are expected to be between $1.18 and $1.23 per share.

The Zacks Consensus Estimate for revenues is pegged at $767.4 million, which indicates a growth of 2.5% from the year-ago quarter’s reported figure.

The consensus mark for second-quarter earnings has been steady at $1.21 per share in the past seven days. The estimate is flat compared with the year-ago quarter’s reported figure.

Notably, the company beat the Zacks Consensus Estimate in three of the trailing four quarters and missed the same once. Citrix has a trailing four-quarter positive earnings surprise of 16.1%, on average.

Let’s see how things have shaped up prior to this announcement.

Citrix Systems, Inc. Price and EPS Surprise

Citrix Systems, Inc. Price and EPS Surprise
Citrix Systems, Inc. Price and EPS Surprise

Citrix Systems, Inc. price-eps-surprise | Citrix Systems, Inc. Quote

Favorable ESP

Our proven model predicts an earnings beat for Citric this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Citrix has an Earnings ESP of +1.56% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Factors Likely to Have Influenced Q2

Citrix’s second-quarter performance is expected to have benefited from the solid traction for subscription-based services. Notably, the company witnessed significant adoption of its subscription services in April as customers tried to maintain business continuity amid the coronavirus pandemic.

Moreover, rise in remote work trends due to the ongoing pandemic boosted the adoption of its desktop virtualization solutions during the quarter under review.

Increasing popularity of the company's products instill optimism in the stock. Notably, shares of Citrix have returned 36% in the year-to-date period compared with the industry’s rally of 24.8%.

Besides, Citrix’s top line is likely to have gained from the COVID-19 induced digital transformation across all industries, as more companies transition from on-premise to the cloud to improve their efficiency. Notably, the company extended its Remote PC Access solution to the cloud to capitalize on this demand.

The company’s efforts to enhance the security capabilities of its offerings amid increasing threat of cyber-attacks is likely to have driven incremental adoption of its products, which is expected to have contributed to second-quarter performance. Markedly, Citrix partnered with Check Point Software Technologies to roll out additional next-gen firewalls within Citrix SD-WAN.

The introduction of burst capacity licenses to attract more small and medium businesses is expected to have boosted the top line during the second quarter. Further, Citrix expects the growing momentum in the United Sates and EMEA regions to have continued in the to-be-reported quarter.

However, the company is facing sluggish demand in its professional services business, which is likely to have limited top-line growth. Also, increasing investments on portfolio expansion and product enhancements are anticipated to have put pressure on margins in the to-be-reported quarter.

Other Stocks to Consider

Here are some other stocks you may consider as our proven model shows that these also have the right mix of elements to beat estimates this time:

Anaplan, Inc. PLAN has an Earnings ESP of +1.64% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Microchip Technology Incorporated MCHP has an Earnings ESP of +2.38% and a Zacks Rank of 1.

Etsy, Inc. ETSY has an Earnings ESP of +23.66% and a Zacks Rank of 2.

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Citrix Systems, Inc. (CTXS) : Free Stock Analysis Report
 
Microchip Technology Incorporated (MCHP) : Free Stock Analysis Report
 
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Anaplan, Inc. (PLAN) : Free Stock Analysis Report
 
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