VMware, Citrix Come In Ahead of Estimates
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Virtualization players VMware and Citrix to demonstrate the relative strength of their market segment, posting second-quarter results above Wall Street estimates.
Yet both also showed signs of weakness as the economy took its toll on the bottom line.
VMware (NYSE: VMW) reported revenues of $456 million, flat compared to the same period a year ago. Income before one-time charges totaled $80 million or $0.20 per share, ahead of analyst consensus of $0.19 per share, according to Reuters Estimates. That's still down from a year ago, however, when non-GAAP income came to $92 million, or $0.23 per share.
On a GAAP basis, VMware earnings totaled $33 million, or $0.08 per share, down sharply from the $52 million, or $0.13 per share, it posted in Q2 2008.
Citrix (NYSE: CTXS), meanwhile, posted net income of $43 million, or $0.23 per share, compared to $35 million, or $0.18 per diluted share, a year ago. The figures include a restructuring charge of around $2 million.
Minus that and other one-time charges, non-GAAP income totaled $72 million, or $0.39 per share, just ahead of the $71 million, or $0.38 per share, Citrix saw for its second quarter of 2008. Wall Street analysts had been expecting income of $0.38 per share on revenue of $386.2 million, according to Reuters Estimates.
"I'm pleased with our second quarter results," said Mark Templeton, president and chief executive officer for Citrix. "We are still in a tough economic climate, especially in the EMEA market, but our customers are embracing IT as an on-demand service, confirming our strategy around desktop virtualization, the next generation datacenter and SaaS."
For VMware, the quarter showed relative staying power in services revenues -- software revenues and professional services -- which grew 32 percent from last year to total $228 million. However, license revenues also dropped by 228 million, a decline of 20 percent, which the company attributed to the withering economic environment.
"Once again we executed well, driving strong cash flows while continuing to invest in our long-term growth opportunities," VMware CFO Mark Peek said in a statement.
Likewise, Citrix said its product license revenue decreased 15 percent, while license update revenue grew 9 percent and online services revenue increased 18 percent. The company's technical services revenue -- consulting, education and technical support -- also grew 3 percent.
Citrix executives said third-quarter and full-year revenue should come in flat compared to a year ago.
VMware's Peek said Q3 revenues should come in between $465 million and $480 million, while full-year revenues will grow 1 percent to 3 percent over last year.
VMware's majority owner, EMC (NYSE: EMC), is slated to report earnings tomorrow.