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What's in Store for Citrix Systems (CTXS) in Q2 Earnings?

Zacks Equity Research

Citrix Systems, Inc. CTXS is slated to report second-quarter 2019 results on Jul 24.

Notably, the company has surpassed the Zacks Consensus Estimate in the trailing four quarters, with a positive earnings surprise of 8.1%.

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

Past-Quarter Performance

Citrix delivered first-quarter 2019 non-GAAP earnings of $1.27 per share, beating the Zacks Consensus Estimate of $1.17 per share. However, the figure decreased by 2 cents from the year ago-quarter.

Revenues rose 3% from the year-ago quarter to $719.1 million and comfortably surpassed the Zacks Consensus Estimate of $712 million.

What to Expect in Q2?

For second-quarter 2019, Citrix anticipates revenues between $765 million and $775 million.  Moreover, non-GAAP earnings are expected in the range of $1.30-$1.35 per share.

The Zacks Consensus Estimate for second-quarter earnings is pegged at $1.33 per share, unchanged over the last 30 days. This indicates an improvement of about 3.9% from year-ago reported figure. The Zacks Consensus Estimate for quarterly sales stands at $771.6 million, suggesting growth of 3.9% from the prior-year quarter.

Let’s see how things are shaping up prior to this announcement.

Factors Likely to Influence Q2 Results

As Citrix prioritizes transition to the cloud, it is witnessing a higher mix of product bookings that are subscription based. During the last reported quarter, SaaS revenue was up 43% year over year. Notably, SaaS revenues are the most significant part of subscription transition.

Subscription revenues came in at $142 million in the last reported quarter, up 37% year over year. With an aim to capitalize on this growth, the company is making every effort to enhance subscription offerings with new capabilities which is expected to favor second-quarter results.

The Zacks Consensus Estimate for Subscription revenues is pegged at $153 million.

Moreover, solid adoption of unified workspace solutions and hybrid cloud offerings hold promise. Furthermore, traction witnessed by ShareFile deserves a special mention. We believe the momentum is likely to persist as evident from deal wins in the second quarter.

Citrix recently announced that it intends to expand its intelligent digital workspace workspace solutions to Google Cloud. In doing so, Citrix will aid companies to efficiently deliver apps to Google devices and operating systems, thereby creating a digital work experience to drive productivity and innovation. Notably, in the last reported quarter, management stated that 62% of new product bookings in Workspace services were subscription based.

Additionally, acquisition of Cedexis has enabled the company to gain traffic management capabilities. With the enhanced engagement features, the company is well poised to gain new enterprise customers in the to-be-reported quarter.

In the quarter under review, the company introduced innovations to Citrix digital workspace solution with more security capabilities. This is likely to lead to new customer additions, consequently generating incremental revenues, favoring the top line in the upcoming quarterly results.

We believe synergies from buyouts, strategic alliances and addition of innovative capabilities are likely to act as tailwinds for the to-be-reported quarter’s results.

What the Zacks Model Unveils

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Citrixhas a Zacks Rank #3 and an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some stocks which you may consider as our model shows that these have the right combination of elements to post an earnings beat in its upcoming release:

Lockheed Martin Corporation LMT has an Earnings ESP of +0.14% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

AmerisourceBergen Corporation ABC has an Earnings ESP of +0.67% and a Zacks Rank #2.

PayPal Holdings, Inc. PYPL has an Earnings ESP of +14.38% and a Zacks Rank #2.

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