Yesterday sure was a great day for Citrix Systems (Nasdaq: CTXS) investors after the company reported nothing but good news in its latest earnings results.

Third-quarter revenue jumped 20% to $565.3 million, driven by strength in product license revenue, which put up a 28% increase. Technical services revenue, which includes consulting, education, and technical support, also showed a healthy pop of 37%, although it remained the smallest component of sales. Gross margin shrank slightly from 87.7% last year to 86.4%.

Citrix's deferred revenue balance, which is a critical indicator of the company's sales pipeline, increased by 22.6% year-over-year to $834 million. The balance sheet looks solid with $1.5 billion cash and investments and no long-term debt, while Citrix generated $188 million in cash flow from operations during the quarter.

Non-GAAP earnings per share totaled up to $0.64 per share. Both figures crushed the $544.8 million in sales and $0.58-per-share profit that the market was expecting. As rosy as the results were, it gets better. Next quarter's revenue is expected in the range of $610 million to $620 million with earnings of $0.75 to $0.76, both of which put the consensus estimates to shame.

During the quarter, the company announced the acquisition of ShareFile, after getting spurned by Box.net, to crank up the heat on rivals VMWare (NYSE: VMW) and Microsoft (Nasdaq: MSFT). Virtualization continues to gain traction, and you can tell by looking at Citrix's top and bottom lines. I happen to like VMWare better in the sector, which also happens to be an official Motley Fool Rule Breakers pick.

Add Citrix Systems to your Watchlist as its competition with VMWare heats up. Sign up for a free trial of Rule Breakers to read why VMWare might deserve a spot in your portfolio.

Fool contributor Evan Niu holds no position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Microsoft. Motley Fool newsletter services have recommended buying shares of VMware and Microsoft and creating a bull call spread position in Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.