Citrix (NASDAQ:CTXS) Shares Fail to Rebound After Third Quarter Profit Warning
NEW YORK – Shares of Citrix Systems (NASDAQ:CTXS) have failed to rebound following a warning on third quarter profit last week. In a statement issued last Thursday, the company warned investors that revenue and profit would both fall short of its earlier estimates for the third quarter – which ended on September 30.
According to the announcement, the company now expects revenue between $ 710 million to $ 712 million, compared to their earlier guidance of $730 million to $740 million. The company also said that third quarter profit would come in near $ .39 per share, compared to earlier estimates of $ .41 to $ .42 per share. Citrix CEO and President Mark Templeton said, ‘while we are disappointed that we fell short of our expectations this quarter, we remain confident in our strategy and markets.’
However, Templeton did not give any reason for the shortfall, rather saying that Citrix will provide more details in the company’s third quarter earnings call scheduled for October 23. Templeton did not that the company will continue their focus on cloud services and mobility.
In recent years, Citrix has branched out from desktop and server virtualization, and earlier this year refocused its go-to-market strategy around mobility. While investors welcomed the pivot into these growth markets, the warning could be a signal that the shift has not delivered returns as quickly as the company previously anticipated.
In their research flash to investors, Wells Fargo (NYSE:WFC) Securities noted that the shortfall could have been caused by ‘some combination of weaker NetScaler, execution issues transitioning from desktop to mobile, and smaller deal sizes.’ Wells Fargo also suggested that MDM and app management products might not be selling well enough to compensate for ‘sluggish desktop performance.’
While shares in the company had been nearly flat year-to-date, the warning sparked a 12 percent drop last week and shares have yet to rebound. Ultimately, Citrix is an interesting play, but the company will have to show that they can consistent revenue growth and profits for investors to buy into the company.
Shares of Citrix closed on Wednesday at $ 57.21.