What: Shares of Citrix Systems (NASDAQ:CTXS) were up 11% as of 12:40 p.m. Thursday after the software virtualization company reported better-than-expected third-quarter results.
So what: Quarterly revenue rose 7% year over year to $813 million, including a 7% increase in product and license revenue, 15% growth from software-as-a-service revenue, an increase of 6% from license updates and maintenance, and a 13% decline in professional services revenue.
On the bottom line, that translated to a 16% increase in net income to $56 million, and a 20.7% increase in net income per share to $0.35. On an adjusted basis -- which means excluding things like stock-based compensation, restructuring costs, and impairment charges related to acquisitions -- net income rose 34.4% to $168 million, or $1.04 per diluted share.
Analysts, on average, were only expecting adjusted earnings of $0.84 per share on revenue of $786 million.
"Our results are starting to reflect the benefits of the actions we have taken since the start of the year to improve our operating margin and drive integrations among our strategic products," explained current Citrix CEO Mark Templeton. "I am extremely proud of the dedication and work of the Citrix team."
Following the earnings release, Citrix also announced Robert Calderoni, the company's executive chairman of the board, has been appointed interim president and CEO. Recall in July, Citrix announced Templeton had informed the board of his plans to retire after 20 years with the company. Templeton will continue to serve in an advisory capacity through the end of 2015.
Now what: For the full-year 2015, Citrix now expects revenue in the range of $3.24 billion to $3.25 billion, GAAP diluted earnings per share of $1.83 to $2.05, and adjusted diluted earnings per share of $3.85 to $3.90. Analysts' consensus estimates were modeling lower 2015 revenue of $3.23 billion, and adjusted earnings of just $3.71 per share.
Finally, Citrix promised that in mid-November, it will both discuss the results of ongoing operational and strategic reviews, and provide an initial business outlook for fiscal 2016.
Until then, today's report marks an encouraging step in the right direction for Citrix's ongoing transformation, which is intended to reposition the business for sustained long-term growth. If its outlook next month for 2016 is equally encouraging, and as long as Citrix continues to show progress implementing its strategic goals, I expect Citrix Systems stock will also continue to reward patient investors going forward.