Citrix rallies on Q2 beat, strong EPS guidance

In addition to beating Q2 estimates, Citrix (CTXS +4.2%) has guided for 2014 revenue growth of 8.5%-10% and EPS of $3.20-$3.25. The former is in-line with a 9.4% consensus, but the latter is above a $3.10 consensus.

The EPS guidance hike is attributed to cost controls and "capital structure" initiatives. 20.9M shares were repurchased in Q2.

Q3 guidance is light - revenue of $765M-$775M and EPS of $0.70-$0.73 vs. a consensus of $785.8M and $0.76. On the CC (transcript), Citrix said it wanted to maintain a "conservative bias" due to last year's Q3 challenges.

Citrix's networking & cloud sales, which include its NetScaler application delivery controllers, grew 9% in Q2 to $179M, as a Cisco partnership continues bearing fruit. The company admits a shift towards networking sales is pressuring gross margin.

SaaS/cloud sales rose 12% to $161M; communications products such as GoToMeeting (Web/mobile confrencing) accounted for 60% of the total.

The core mobile & desktop business (includes PC/app virtualization and MDM offerings, seeing tough competition from VMware) only rose 4% to $396M. Citrix's subscription business (+50% Y/Y, now handling over 400K users) was a strong point in this segment.

FBR (Outperform) sees a mobile/desktop turnaround afoot, as "newer versions of [Citrix's] mobility solutions (e.g. XenMobile 9 released in 2Q), a good desktop product cycle and Workspace Services" act as catalysts.

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