Citrix misses Q1 earnings targets amid supply chain challenges, business model shift

The company said its revenue was negatively impacted by supply chain challenges impacting hardware shipments and a lower-than-expected duration of on-premises term licenses.

Citrix on Thursday missed Wall Street's earnings targets for its fiscal first quarter. The company has been riding a surge in demand for its products and services amid the ongoing work-from-home wave, but said its revenue was negatively impacted by supply chain challenges and a lower-than-expected duration of on-premises term licenses. Citrix also said the first quarter marks the trough in its business model transition to the cloud. 

As for the numbers, the company reported Q1 non-GAAP earnings of $1.42 per share on revenue of $776 million. Wall Street was expecting Q1 earnings of $1.43 per share and revenue of $797 million. 

Elsewhere on the balance sheet, Citrix said Q1 subscription ARR was $1.51 billion, up 81% year over year. Meanwhile, the company said SaaS ARR came to $793 million, up 43% from a year ago. Total ARR, which combines the value of all of Citrix 's subscription sources as well as perpetual license maintenance contracts, was $2.94 billion.

Core to Citrix's growth is its Workspace Suite, which includes its server and desktop and application virtualization products XenApp, XenDesktop, and XenServer, along with XenMobile mobile-device management tools, ShareFile Enterprise file sync and sharing, and networking. 

The company said Workspace revenue declined 11% year over year to $581 million due to the discontinuation of its Workspace perpetual license offering. The company's app delivery and security revenue came to $170 million, down 6% year over year.

Broken out, Citrix said product and license revenues came to $44 million and support and services revenues declined 7% on a year-over-year basis to $389 million. Subscription revenues increased 28% from the year-ago period to $342 million. 

For the second quarter of 2021, Citrix is projecting revenue of $840 million to $850 million with non-GAAP earnings of $1.15 a share to $1.20 a share. Wall Street is expecting diluted EPS of $1.55 per share on revenue of $828.7 million. For the year, Citrix expects revenue between $3.38 billion and $3.42 billion. 

Shares of Citrix were down over 8% in early trading.