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Remote Working Wave to Drive Citrix's (CTXS) Q1 Earnings

Citrix Systems CTXS is scheduled to release first-quarter 2021 results on Apr 29.

For the to-be-reported quarter, the company expects revenues between $785 million and $795 million. The Zacks Consensus Estimate for revenues is pegged at $797.04 million, which indicates a decline of 7.4% from the year-ago quarter.

Moreover, Citrix expects non-GAAP earnings in the range of $1.40-$1.45 per share. The consensus mark for first-quarter earnings has been steady at $1.42 per share in the past 30 days. The estimate suggests a decline of 17.9% compared with the prior-year reported figure.

Notably, the company beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 24.28%.

Citrix Systems, Inc. Price and EPS Surprise

Citrix Systems, Inc. price-eps-surprise | Citrix Systems, Inc. Quote

Factors Likely to Have Influenced Q1 Performance

Citrix’s first-quarter performance is expected to reflect sluggish demand in its professional services business, which is likely to have limited top-line growth.

Nevertheless, the company is anticipated to have benefited from robust adoption of its workspace and desktop virtualization solutions amid rise in remote work trends due to the ongoing pandemic. This is expected to have bolstered the revenues from subscription-based services and hybrid cloud offerings during the quarter under review.

In fact, the Zacks Consensus Estimate for first-quarter Subscription revenues is pegged at $366 million, which indicates year-over-year improvement of 36.4%.

Moreover, the company’s first-quarter top line is likely to reflect gains from the COVID-19 induced digital transformation across all industries, as more companies transition from on-premise to the cloud to improve efficiency. In fact, the company has extended its Remote PC Access solution to the cloud to capitalize on this demand. Further, traction witnessed by ShareFile deserves a special mention.

Also, Citrix’s efforts to enhance the security capabilities of its offerings amid increasing threat of cyber-attacks is likely to have driven incremental adoption of its products, which is anticipated to have contributed to the first-quarter performance. Moreover, the company added Citrix Web App and API Protection security service for customers utilizing apps and APIs in multi-cloud environment.

Markedly, notable companies including Severn Trent, Grand Pacific Health, U.K.-based Northumbria University, India-based Canara HSBC Oriental Bank of Commerce Life Insurance, Teleperformance, have selected Citrix’s digital workspace solutions.

Besides, the introduction of burst capacity licenses to attract more small and medium businesses is likely to have bolstered the first-quarter top line.

During the quarter under review, the company concluded the buyout of Wrike for $2.25 billion, in a bid to boost its presence in the SaaS-based collaborative work management solutions’ space for enterprises.

Nevertheless, increasing investments on portfolio expansion via product enhancements and acquisitions, amid stiff competition from VMware's Horizon, Workspace ONE, and AirWatch offerings and Amazon Web Service’s Amazon WorkSpaces, are anticipated to have weighed on margins in the first quarter.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Citrix this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Citrix has an Earnings ESP of +0.15% and a Zacks Rank #2, at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks to Consider

Here are some other stocks, which you may consider, as our proven model shows that these too have the right mix of elements to beat estimates this time around:

Texas Instruments TXN has an Earnings ESP of +4.25% and a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Avnet AVT has an Earnings ESP of +0.89% and a Zacks Rank of 2 currently.

Sirius XM Holdings SIRI has an Earnings ESP of +12.90% and a Zacks Rank of 2, at present.

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