Citrix's third quarter was better than expected as demand for its Workspace applications was strong amid remote work arrangements. CEO David Henshall said that Workspace demand should remain strong as work goes hybrid.
The company reported third quarter revenue of $767 million, up 5% from a year ago. Subscription revenue surged 64% to offset product and license declines of 33%. Workspace revenue was $573 million, up 12% from a year ago. Citrix reported third quarter earnings of 78 cents a share and $1.38 a share on a non-GAAP basis.
Wall Street was expecting third quarter revenue of $758.7 million with non-GAAP earnings of $1.25 a share.
On a conference call, Henshall said:
Citrix Workspace is really what's driving the results with total revenue up 12%, including subscriptions, which are growing north of 50%. As companies have spent the last 7 months largely working from home, this concept of back to the office is really moving beyond a discussion of one location versus the other. I think there's a broad realization going on that the hybrid work style blends the best attributes of a physical office environment with the flexibility that individuals need to be productive and really do their best work.
Workspace now represents 75% of Citrix's revenue. Citrix joins Logitech and Netgear as tech vendors riding the work-from-home wave.
For 2020, Citrix is projecting revenue of $3.2 billion to $3.21 billion with non-GAAP earnings of $5.89 a share to $5.99 a share. Fourth quarter revenue will be about $775 million to $785 million with non-GAAP earnings of $1.25 a share to $1.35 a share.
That guidance was ahead of Wall Street estimates. For 2021, Citrix said revenue growth will be up about 4% from a year ago.
Citrix is in the middle of a transition to more of a subscription-based revenue model. Henshall said the third quarter results highlight how Citrix is getting back to accelerating that shift. Henshall said:
First half of the year was very focused from a customer point of view and, frankly, a Citrix point of view on really helping customers move into the pandemic period, enable work from home, everything that was a high priority. Back half of the year, as I've stated a few times, is really focused on getting back to driving more of the strategy of the company, migrating existing users to the cloud, focusing on net new users in SaaS and in some cases, on-prem subscriptions.
Going forward, Henshall said Citrix Workspace is likely to benefit because enterprises are seeing remote work as more transformational.
Companies have gone through this period of realizing that hybrid work is actually more productive than the model that they had before. And so people have gone back and they're reassessing what's the new normal need to look like. That has taken on a number of larger projects around transforming all aspects of their business, how they engage with customers, partners, employees, et cetera. And that's where we come in.
Henshall added that employee experiences are also becoming critical and enterprises are mixing vendors in the cloud. For instance, Henshall said one customer is streaming applications out of Amazon Web Services and using elements of multi-user desktops at Microsoft. Citrix's software manages the orchestration.
"What they're really trying to do is just transform the entire employee experience, their real estate footprint and how they plan to work long term," he said.