Citrix stood up well in Q2, despite being buffeted by changes in spending patterns in Europe and a shaky income position, due to ongoing sales of its Xen product line and its GoTo family of SaaS collaboration services.
Worldwide revenue was nicely up in the quarter ending June 30 - 16% to $615m. On the surface net income looked positive at $92m (vs $82m) but c$22m of that was due to a tax benefit – without that Citrix would have been reporting a decline. This pattern of top line growth but shaky profitability was also evident in Q1 (see Citrix grows the top line, but profits suffer). At the end of its financial year the company had issued a soft outlook (see here) so the results are not unexpected and reflect market conditions more than Citrix deficiencies.
Delving into regional performance, EMEA was a mixed picture. Although revenue was up 21%, customers are jittery about the economy according to CFO David Henshall, resulting in them either stalling projects or breaking them into pieces to spread over multiple quarters. This pattern was seen across the regions but was particularly noticeable in EMEA (and is something we at TechMarketView are also hearing from other suppliers). With revenue growth of 1% the America’s region was solid rather than sparkling, while as might be expected Asia-Pacific delivered the best growth, with revenue up 24%.
In terms of worldwide performance, product and licence revenue was up 10% while maintenance was up 18%. Professional Services soared by 37%. SaaS revenue jumped a reassuring 18%. At $125.5m, SaaS revenue is coming into sight of the combined revenue total from hardware and software licence sales ($187.9m), and illustrates just how much momentum Citrix has. With its Xen and SaaS lines, it is well positioned to continue reaping the benefits of the move to the cloud. Q3 outlook is revenue in the $645m to $655m range, and $2.56bn to 2.58bn for the full year.