Earnings Preview: Citrix Systems

| About: Citrix Systems, (CTXS)
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Citrix Systems (NASDAQ:CTXS) is expected to report Q3 earnings after the market close on Thursday, October 21 with a conference call scheduled for 4:45 pm ET.


The consensus estimate is 49c for EPS and $458.43M for revenue, according to First Call. Guidance provided on the company's last earnings call was for Q3 EPS of 48c-49c and revenue of $450M-$460M.

Analyst Views

Citigroup says Q3 inputs were 'OK' -- in core desktop, which is about 65% of revenue, momentum slowed after the strong Q2 “trade-up” but may re-accelerate in Q4. The firm expects the direct business had some of the same dynamics. In datacenter, about 15% of revenue -- mostly Netscaler, Citigroup continues to hear of strong demand driven by enterprise and service provider capex initiatives in improving application performance. Citigroup expects Online, 20% of revenue, to show another solid quarter of growth. Hiring trends are comparable to 2007 time-frame suggesting operating expenses are biased higher, limiting upside to Citigroup's 49c EPS estimate. Looking forward: Guidance provided on the last earnings call is for FY10 EPS of $1.87-$1.89 on $1.81B-$1.83B in revenue. FY11, Citigroup believes expectations of 10% revenue growth looks safe, but expect that buy-side expectation is in the 15%+ range. The firm expects management may offer initial FY11 revenue guidance that is “double digit.” Conference Call: Investors expect the company may try to de-focus investor from XenDesktop bookings. Preliminary thoughts on FY11 expectations will be expected. Commentary on trade-up activity following adjustments to promotions in July 4 will be closely watched. Additionally, investors will be looking for commentary around the expense ramp. Also, any commentary regarding renewed takeover speculation will be welcomed.