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Citrix Systems Enters 2018 Leaner, but Still in Fighting Shape

By Eric Volkman - Feb 14, 2018 at 8:11PM

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The company reported a good 2017 after jettisoning the GoTo business.

Citrix Systems (CTXS 0.34%) entered 2018 as a skinnier, more focused company. The provider of software virtualization services made a key divestment last year, and what's left is a core business that is showing good signs of strength and viability.

That was apparent with the company's recently released fourth-quarter and fiscal-2017 results. Lets take a closer look at the numbers.

Man using a cellphone

Image source: Getty Images.

GoTo gone

Citrix managed to boost revenue in all four of its product categories in the final quarter of the year. Honorable mention goes to software as a service, which saw a nearly 40% year-over-year improvement in the quarter to almost $50 million. Collectively, the quartet (which also includes product and licenses, license updates and maintenance, and professional services) produced net revenue of just under $778 million in Q4, a 6% increase.

In the press release heralding the results, new-ish CEO David Henshall (who took over in July 2017) said that "our partners and our customers are really embracing our new subscription services, which have jumpstarted the multi-year plan that we presented in October 2017."

As with many other American companies, Citrix's net profit took a hit due to adjustments in advance of the changes to corporate income tax. The bottom line dived into the red, to the tune of almost $284 million, from the year-ago profit of just under $200 million.

Adjusting for the tax charge and other one-time items, the company's net income was $248.5 million ($1.66 per share), up from Q4 2016's $217.5 million. That exceeded the average analyst estimate, while the revenue figure was broadly in line with expectations.

Zooming out to the full fiscal year, Citrix's revenue inched up by 3% to $2.82 billion, while its headline net loss was $20.7 million (2016 result: a profit of $536 million). That was skewed by the tax charge, of course; on an adjusted basis the bottom line was a shade under $744 million ($4.85 per share), against the previous year's $700 million.

Revenue improved even though Citrix no longer holds the popular GoTo suite of productivity solutions. Early last year, Citrix completed the planned spinoff of that business unit -- which wasn't all that complementary to its core offerings -- into a new entity that was then merged with LogMeIn.

Even though Citrix added some bulk following the signing of that deal by purchasing application layering specialist Unidesk, it still exited 2017 a smaller company. Its total assets slimmed by nearly 10%, to just over $5.8 billion.

The right business at the right time

Citrix is expecting slight improvements on both its top and bottom lines. It believes it will book revenue of $2.86 billion to $2.88 billion in fiscal 2018, with adjusted earnings coming in at $4.80 to $4.90 per share. Yet the company has a recent history of beating bottom-line estimates, so we shouldn't be surprised if the actual figure lands higher.

Regardless, Citrix is a well-managed company that provides services the tech world requires, especially in a world becoming increasingly connected with mobile devices. With that sensible narrowed focus on its core business, it should continue to be a big player in its segment.

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