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Citrix has better than expected third quarter

Citrix's new streamlined focus on core areas of the business seems to be paying off, as the company beats Wall Street's expectations

Citrix has reported better than expected third quarter earnings and raised its outlook for the year, showing clear signs that its new strategy is working.

The company reported earnings of $132m, or 84 cents a share, on revenue of $841m, a 3% increase year-over-year. This marks five straight quarters of continuous operating improvement.

Wall Street was expecting earnings of $1.19 a share on revenue of $827m.

Citrix’s decision to shed some of its peripheral assets and focus its core business  was the result of sustained pressure from activist investor Elliott Management. After the appointment of former Microsoft man Krill Tatarinov as CEO, came the accouncement that the GoTo unit the business would be spun out and merged with LogMeIn.

“I am obviously very pleased with our results, clearly demonstrating how our new focus is resonating in the marketplace,” Tatarinov told analysts. “We have seen growth in all of our core areas of business, most importantly, in our Workspace Services business, showing growth for the second consecutive quarter.”

“Our efforts in accelerating product innovation and improving operational processes are working. And the progress on cultural transformation that defines us as a company will continue to power us forward.”

Tatarinov also gave a nod to the firm’s partnership with Microsoft. The two sweethearts furthered their relationship earlier this year, with Citrix identifying Azure as its strategic choice for all of its cloud offerings and Microsoft announcing that it was to wind up its Azure RemoteApp technology in favour of XenApp from Citrix.

“This announcement served as a continued vote of confidence that Citrix is clearly the right partner for future success to deliver more workloads than ever and more adoption of Windows 10 and Office 365,” Tatarinov said.

As to Citrix’s broader partner channel, the CEO said that momentum was ‘continuing to grow’. Citrix had nearly 50 $1m+ deals in Q3, and Tatarinov said that this was a clear signal that the company’s strategy to expand in the mid-market via the channel was working.

“Just last week we hosted our top partners in the Americas to give us tremendous feedback on our mutual progress,” he said.

As for the full-year outlook, Citrix projected revenue between $3.4bn and $3.41bn inclusive of the GoTo business, with non GAAP earnings between $5.18 and $5.20 a share.

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