So what: The provider of cloud-based collaboration and business productivity software achieved most of its gains in the trading days following the release of its third-quarter 2015 earnings report on Oct. 21:
Citrix reported revenue of $813 milion, a 7% gain over the prior-year quarter. The top line was supported by a 15.4% rise in the company's software-as-a-service business segment, which recorded sales of $190.1 million. Through the first nine months of this year, software as a service has proved itself the company's fastest-growing revenue stream, offsetting revenue declines in the product and licenses and professional services segments.
The company also posted appreciable improvements in profit and earnings per share. Citrix finished the quarter with $55.9 million in net income, outpacing the comparable quarter by 17.7%. Similarly, diluted earnings per share expanded by nearly 21%, to $0.35.
Adjusting for one-time events, operating results showed even more strength. Citrix recently announced its intention to explore strategic alternatives for its ByteMobile and GoTo businesses. During the quarter, the company took non-cash impairment charges against intangible assets in the ByteMobile business of $64.5 million. Removing this charge, the quarter's operating margin of nearly 8% (equal to Q3 2014's margin) nearly doubles to 15.8%.
The operating gains stem from management's ambition to control costs, a theme it's emphasized to analysts over the last few quarters. During the quarter, Citrix decreased operating costs as a percentage of revenue dollars in each of the three major expense categories on its income statement (research and development, sales and marketing, and general and administrative expenses).
Now what: Alongside the earnings release, longtime CEO Mark Templeton announced his retirement. Executive Chairman of the Board Robert Calderoni has been named Interim President and CEO. The executive transition won't change Citrix's focus on its next generation of software, including products like ShareFile, the company's secure data platform, which saw product subscription growth of nearly 40% last quarter.
Investors have reason to be enthusiastic about the increased clarity in Citrix's business model. Exploring alternatives for products on the wane, while cutting costs and pouring resources into promising cloud-based offerings, should continue to boost earnings per share over the long term.
Asit Sharma has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.