The shares of Citrix Systems gained more than 8% to $75.27 per share after reporting strong financial results for the second quarter and signing a cooperation agreement with Elliott Management.
Citrix Systems financial results
Citrix Systems reported non-GAAP earnings of $1 per share, higher than the $0.82 per share expected by Wall Street analysts for the second quarter. Its revenue increased 1.9% to $796.76 million, above the $790.37 million consensus estimate.
The company said its revenues from product and license dropped 12%, software as a service increased 12%, license updates and maintenance rose 9%, and professional services declined 12%.
In a statement, Citrix Systems CEO Mark Templeton said, “We are starting to see the benefits of the restructuring actions we took at the start of 2015 in terms of margin expansion.”
Templeton also said they are taking steps to make sure that they are focusing their energy on Citrix Systems’ core secure app delivery offerings. They are also positioning the company for better execution, greater efficiency, and profitable growth.
The board of directors of the company created an Operations Committee, which led by its current board member Robert Calderoni. He will work closely with Templeton and the management team to conduct a comprehensive review in the company’s capital structure and operations. Calderoni was also appointed as executive chairman of the board effective immediately.
Citrix Systems’ agreement with Elliott Management
Separately, Citrix Systems entered a cooperation agreement with Elliott Management, activist hedge fund headed by Paul Singer. Elliott and its affiliates own 7.5% stake in the company.
Under the agreement, Citrix Systems appointed Elliott’s Senior Portfolio Manager, Jesse Cohn to its board of directors. Cohn will replace Asiff Hirji, who vacated his seat on the company’s board.
Citrix Systems also agreed to start a search process for an additional independent board member, mutually agreeable to the company and the activist shareholder. Elliott and its affiliates also agreed to customary standstill, voting and other provisions for at least one year.
Cohn said, “We appreciate Citrix’s constructive approach and are pleased to have worked collaboratively with the board and management team to reach this cooperation agreement…We are confident that the initiatives announced today and the addition of new directors to the company’s board will allow Citrix to build upon its position as an innovative industry leader, and to drive significant shareholder value.”
