July 22, 2009 / 10:36 PM / 9 years ago

UPDATE 2-Citrix Systems Q2 profit beats Street, sees flat Q3 rev

* Q2 adj EPS $0.39 vs est of $0.38

* Rev from product licenses falls

* European business remains soft

* Sees flat Q3 and 2009 rev (Recasts; adds conference call details)

BANGALORE, July 22 (Reuters) - Infrastructure software maker Citrix Systems Inc (CTXS.O) posted quarterly results that narrowly beat market expectations, but continued to forecast flat revenue for the year as its European business remained soft.

Second-quarter revenue from Europe, Middle East and Africa (EMEA) fell 12 percent to $113 million as customers remained conservative with new spending.

“As we’ve seen before in prior economic cycles, the European markets are lagging somewhat and are really now just showing dynamics comparable to what we experienced in the U.S. two or three quarters ago,” Chief Financial Officer David Henshall said on a conference call with analysts.

The Americas region improved slightly as the demand environment proved stronger than the past couple quarters, Citrix said.

The company, which develops virtualization software that allows a single computer to act like many “virtual” machines, said it continued to see a shift in its business mix as customers cut down on costs and preferred subscription offerings over new licenses.

For the second quarter, the company posted a profit of $42.5 million, or 23 cents a share, compared with $34.6 million, or 18 cents a share.

Excluding items, the company earned 39 cents a share.

Total revenue rose slightly to $392.8 million as product license revenue, which fell 15 percent, failed to keep up with the company’s other segments.

Analysts were expecting profit of 38 cents a share, on revenue of $386.2 million, according to Reuters Estimates.

The company’s application virtualization business, its largest revenue earner and the most hit by the spending environment, declined 8 percent.

Citrix said the unit saw more million-dollar plus transactions sequentially as customers were beginning to deploy new, larger projects. However, the run rate tactical project business continued to be soft.

The company’s main rival, VMware Inc (VMW.N), also posted slightly higher-than-expected quarterly profit and said it was beginning to see better visibility into its business, sending its shares up 8 percent. [ID:nN22336935]

Shares of the Fort Lauderdale, Florida-based company were trading down 3 percent at $33.80 after the bell. They closed at $34.70 Wednesday on Nasdaq. (Reporting by Sayantani Ghosh in Bangalore; Editing by Anil D’Silva, Anne Pallivathuckal)

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