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Jan

272010

Citrix Reports Fourth Quarter and Fiscal Year Financial Results

Quarterly Revenue of $451 million Fourth Quarter Cash Flow from Operations of $178 million Fourth Quarter GAAP Diluted Earnings Per Share of $0.47 Fourth Quarter Non-GAAP Diluted Earnings Per Share of $0.66
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Citrix Reports Fourth Quarter and Fiscal Year Financial Results

FORT LAUDERDALE, Fla. - Citrix Systems, Inc. (Nasdaq:CTXS) today reported financial results for the fourth quarter and fiscal year ended December 31, 2009.

FINANCIAL RESULTS
In the fourth quarter of fiscal 2009, Citrix achieved revenue of $451 million, compared to $416 million in the fourth quarter of fiscal 2008, representing 9 percent revenue growth.  For the fiscal year 2009, Citrix reported annual revenues of $1.61 billion, compared to $1.58 billion in the previous year, a 2 percent increase.

GAAP Results
Net income for the fourth quarter of fiscal 2009 was $88 million, or $0.47 per diluted share, compared to $60 million, or $0.33 per diluted share, for the fourth quarter of 2008.  Annual net income for 2009 was $191 million, or $1.03 per diluted share, compared to $178 million, or $0.96 per diluted share in fiscal 2008.

Non-GAAP Results
Non-GAAP net income in the fourth quarter of fiscal 2009 was $123 million, or $0.66 per diluted share, compared to $87 million, or $0.48 per diluted share, in the comparable period last year. This includes net tax benefits of approximately $23 million recognized in the quarter. Non-GAAP net income for both periods excludes the effects of amortization of intangible assets primarily related to business combinations and stock-based compensation expense and the tax effects related to those items. In addition, non-GAAP net income for the fourth quarter of 2009 excludes charges recorded in connection with the restructuring program that the company implemented in January 2009, and the tax effects related to those items. Non-GAAP net income in the fourth quarter of 2008 excludes a non-cash benefit of approximately $6 million related to the adjustment of payroll taxes accrued in connection with the company’s voluntary, independent investigation of its historical stock option granting practices that was concluded in 2007.  It also excludes in-process research and development and related tax effects.

Annual non-GAAP net income for 2009 was $334 million, or $1.81 per diluted share, compared to $304 million, or $1.63 per diluted share, in 2008. Non-GAAP net income for both periods excludes the effects of the amortization of intangible assets primarily related to business combinations, stock-based compensation expenses, and the tax effects related to those items. In addition, non-GAAP net income for 2009 excludes charges recorded in connection with the restructuring program that the company implemented in January 2009, and the tax effects related to those items. Non-GAAP net income for 2008 excludes the non-cash benefit related to payroll taxes taken in the fourth quarter of fiscal 2008 and of in-process research and development related to business combinations.

“I’m pleased with our results for the fourth quarter, and for the full year in light of the uncertain market conditions we faced,” said Mark Templeton, president and chief executive officer for Citrix.

“In the fourth quarter, we saw a lot of interest in desktop virtualization. That combined with the timely launch of XenDesktop and uncommitted IT budget dollars, helped propel a record-breaking quarter. For the full year, our disciplined financial and operational management served us well, and we are positioned for continued improvement in our cost model.  In addition, we continue to see CIOs looking for ways to simplify and drive costs out of enterprise computing. Going forward, we’ll set our sights on helping those CIOs by bringing desktop virtualization to the mainstream, broadening the reach of web collaboration, and powering public and private clouds.”

Q4 Financial Summary
In reviewing the fourth quarter results of 2009, compared to the fourth quarter of 2008:

  • Product license revenue increased 4 percent;
  • Revenue from license updates grew 6 percent;
  • Online services revenue grew 18 percent;
  • Technical services revenue, which is comprised of consulting, education and technical support, grew 20 percent;
  • Revenue increased in the Americas’ region by 7 percent, increased in the EMEA region by 3 percent, and increased in the Pacific region by 21 percent;
  • Deferred revenue totaled $619 million, compared to $533 million on December 31, 2008;
  • GAAP operating margin was 17 percent for the quarter, and non-GAAP operating margin was 28 percent for the quarter, excluding the effects of amortization of intangible assets primarily related to business combinations, stock-based compensation expense and costs associated with the restructuring program;
  • Cash flow from operations was $178 million, compared with $166 million in the fourth quarter of 2008; and
  • The company repurchased 2.0 million shares at an average net price of $38.54 per share.

Annual Financial Summary
In reviewing 2009 results compared to 2008 results:

  • Product license revenue decreased 13 percent;
  • Revenue from license updates grew 8 percent;
  • Online services revenue grew 19 percent;
  • Technical services revenue, which is comprised of consulting, education and technical support, grew 13 percent;
  • Revenue grew in the Americas’ region by 4 percent, decreased in the EMEA region by 8 percent, and grew in the Pacific region by 1 percent;
  • GAAP operating margin was 11 percent for fiscal 2009, and non-GAAP operating margin was 24 percent, excluding the effects of amortization of intangible assets primarily related to business combinations, stock-based compensation expense, and costs associated with the restructuring program;
  • Cash flow from operations was $484 million for fiscal 2009 compared with $462 million last year; and
  • During fiscal 2009, the company repurchased 6.5 million shares at an average net price per share of $33.23.

Financial Outlook for First Quarter 2010
Citrix management expects to achieve the following results during its first fiscal quarter 2010 ending March 31, 2010:

  • Net revenue is expected to be in the range of $405 million to $410 million;
  • Interest income is expected to be $3 million to $4 million; and
  • GAAP diluted earnings per share is expected to be in the range of $0.23 to $0.25.  Non-GAAP diluted earnings per share is expected to be in the range of $0.39 to $0.40, excluding $0.09 related to the effects of amortization of intangible assets primarily related to business combinations, $0.14 related to the effects of stock-based compensation expenses, and $(0.07) to $(0.08) for the effect of the differential between the GAAP and non-GAAP tax rates and tax effects related to these items.


The above statements are based on current expectations. These statements are forward-looking, and actual results may differ materially.


Financial Outlook for Fiscal Year 2010
Citrix management expects to achieve the following results during its fiscal year 2010 ending December 31, 2010:  

  • Net revenue is expected to be in the range of $1.74 billion to $1.76 billion;
  • Non-GAAP operating margin is expected to increase between 75 and 100 basis points compared to the fiscal year 2009, excluding the effects of amortization and stock-based compensation expense, and restructuring;
  • Interest income is expected to be $16 million to $19 million; and
  • GAAP diluted earnings per share is expected to be in the range of $1.33 to $1.34. Non-GAAP diluted earnings per share is expected to be in the range of $1.87 to $1.90, excluding $0.32 related to the effects of amortization of intangible assets primarily related to business combinations, $0.53 related to the effects of stock-based compensation expenses, and $(0.29) to $(0.31) for the effect of the differential between the GAAP and non-GAAP tax rates and tax effects related to these items.


The above statements are based on current expectations. These statements are forward-looking, and actual results may differ materially.


Company, Product and Alliance Highlights
During the fourth quarter of 2009, Citrix announced:

  • Citrix® XenDesktop® 4, the first and only product to deliver every type of virtual desktop from a single, integrated solution thanks to its new FlexCast™ technology. Additionally, XenDesktop 4 now integrates all the capabilities of Citrix® XenApp™.
  • Enhanced high-definition HDX™ technology, available in Citrix XenDesktop 4, which delivers the best possible user experience for real-time multimedia and 3D content while utilizing 90 percent less bandwidth than competing solutions.
  • The “Trade-up to XenDesktop 4” program that allows XenApp customers to trade up their existing concurrent user licenses for twice the number of XenDesktop 4 user licenses.
  • The new Citrix Ready™ Open Desktop Virtualization program, which validates that 10,000 third-party products from 200 industry partners are ready to deploy with Citrix XenDesktop 4
  • XenDesktop won an InfoWorld Technology of the Year award, being honored as one of the best and most innovative products on the IT landscape.
  • Availability of Citrix Essentials™ for Microsoft® Hyper-V™, which now includes Citrix StorageLink™ Site Recovery, a powerful set of tools that make end-to-end business continuity accessible, affordable, and easy to deploy.
  • “Pay As You Grow” pricing for Citrix® NetScaler® that gives customers unprecedented licensing flexibility to expand capacity and functionality on demand, while managing hardware costs.
  • Availability of Citrix® Dazzle™ for Windows and Mac, along with new versions of Citrix Receiver™ for Windows, Mac, iPhone, Blackberry and Android, bringing self service and mobility to virtual desktop users.

Conference Call Information
Citrix will host a conference call today at 4:45 p.m. ET to discuss its financial results, quarterly highlights and business outlook. The call will include a slide presentation, and participants are encouraged to listen to and view the presentation via webcast at http://www.citrix.com/investors.  

The conference call may also be accessed by dialing:  (888) 799-0519 or (706) 634-0155, using passcode: CITRIX. A replay of the webcast can be viewed by visiting the Investor Relations section of the Citrix corporate website at http://www.citrix.com/investors for approximately 30 days.  In addition, an audio replay of the conference call will be available for approximately 30  days by dialing (800) 642-1687 or (706) 645-9291 (passcode required: 49871918).

About Citrix
Citrix Systems, Inc. (NASDAQ:CTXS) is a leading provider of virtualization, networking and cloud computing solutions for more than 230,000 organizations worldwide. Its Citrix Delivery Center™, Citrix Cloud Center™ (C3) and Citrix Online product families radically simplify computing for millions of users, delivering desktops and applications as an on-demand service to any user, in any location on any device. Citrix customers include the world’s largest Internet companies, 99 percent of Fortune Global 500 enterprises, and hundreds of thousands of small businesses and prosumers worldwide. Citrix partners with over 10,000 companies worldwide in more than 100 countries. Founded in 1989, annual revenue in 2009 was $1.6 billion.

For Citrix Investors
This release contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and of Section 21E of the Securities Exchange Act of 1934. The forward-looking statements in this release do not constitute guarantees of future performance. Investors are cautioned that statements in this press release, which are not strictly historical statements, including, without limitation, statements by Citrix’s president and chief executive officer, statements contained in the Financial Outlook for First Quarter 2010, and Fiscal Year 2010 sections, under the Non-GAAP Financial Measures Reconciliation section, and statements regarding management’s plans, objectives and strategies, constitute forward-looking statements. Such forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated by the forward-looking statements, including, without limitation, the impact of the  global economy and uncertainty in the IT spending environment, including Citrix’s European markets; the success and growth of the company’s product lines, including risks associated with successfully introducing new products into Citrix’s distribution channels, including XenDesktop 4; the company’s product concentration and its ability to develop and commercialize new products and services, including XenDesktop 4 and its other virtualization offerings, while maintaining growth in its core products, especially XenApp; failure to execute Citrix’s sales and marketing plans; failure to successfully partner with key distributors, resellers, OEM’s and strategic partners and the company’s reliance on and the success of those partners for the marketing and distribution of the company’s products; the company’s ability to maintain and expand its business in small sized and large enterprise accounts; the size, timing and recognition of revenue from significant orders; the success of investments in its product groups, foreign operations and vertical and geographic markets; Citrix’s ability to develop server, application and desktop virtualization products, and jointly market those products with Microsoft; the introduction of new products by competitors or the entry of new competitors into the markets for Citrix’s products as the enterprise software landscape evolves; failure to further develop and successfully market the technology and products of acquired companies, including the possible failure to achieve or maintain anticipated revenues and profits from acquisitions; the management of anticipated future growth and the recruitment and retention of qualified employees, including those of acquired companies, and any disruptions due to changes in key personnel; risks in effectively controlling operating expenses, including failure to manage unexpected expenses; impairment of the value of the company’s investments; the effect of new accounting pronouncements on revenue and expense recognition; litigation, including litigation challenging our intellectual property rights; changes in the company’s pricing, packaging and licensing models which may impact Citrix’s revenue recognition, including with respect to XenDesktop 4 and SaaS business models, or those of its competitors; charges in the event of the impairment of assets acquired through business combinations and licenses; competition and other risks associated with the markets for Citrix’s Web-based access, collaboration and customer assistance services and for our Web application delivery appliances; unanticipated changes in tax rates or exposure to additional tax liabilities; risks of political and social turmoil; and other risks detailed in the company’s filings with the Securities and Exchange Commission. Citrix assumes no obligation to update any forward-looking information contained in this press release or with respect to the announcements described herein.

Use of Non-GAAP Financial Measures
In Citrix’s earnings release, conference call, slide presentation or webcast, Citrix may use or discuss non-GAAP financial measures as defined by SEC Regulation G. The GAAP financial measure most directly comparable to each non-GAAP financial measure used or discussed and a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure are included in this press release after the condensed consolidated financial statement or can be found on the Investor Relations page of the Citrix corporate Web site at http://www.citrix.com/investors.

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Citrix®, XenApp™, XenDesktop®, NetScaler®, HDX™, FlexCast™, Dazzle™, StorageLink™, Citrix Essentials™, Citrix Cloud Center™, Citrix Delivery Center™, and Citrix Ready™ are trademarks of Citrix Systems, Inc. and/or one or more of its subsidiaries, and may be registered in the U.S. Patent and Trademark Office and in other countries. All other trademarks and registered trademarks are property of their respective owners.