Apr

222015

Citrix Reports First Quarter Financial Results

Quarterly revenue of $761 million up 1 percent year over year{br}Record cash flow from operations of $292 million

SANTA CLARA, Calif. — April 22, 2015 — Citrix Systems, Inc. (NASDAQ:CTXS) today reported financial results for the first quarter of fiscal year 2015 ending March 31, 2015.

Financial Results

For the first quarter of fiscal year 2015, Citrix achieved revenue of $761 million, compared to $751 million in the first quarter of fiscal year 2014, representing 1 percent revenue growth.

GAAP Results

Net income for the first quarter of fiscal year 2015 was $29 million, or $0.18 per diluted share, compared to $56 million, or $0.30 per diluted share, for the first quarter of fiscal year 2014. GAAP results for the first quarter of fiscal year 2015 include restructuring charges of $34 million for severance and facility closing costs related to the 2014 and 2015 restructuring programs designed to increase strategic focus and operational efficiency. The first quarter of fiscal year 2014 GAAP results included a restructuring charge of approximately $10 million for severance costs related to the 2014 restructuring program.

Non-GAAP Results

Non-GAAP net income for the first quarter of fiscal year 2015 was $106 million, or $0.65 per diluted share, compared to $119 million, or $0.64 per diluted share for the first quarter of fiscal year 2014. Non-GAAP net income per diluted share excludes the effects of amortization of acquired intangible assets, stock-based compensation expenses, charges related to amortization of debt discount and restructuring programs as well as a benefit from a previously disclosed patent lawsuit, and the tax effects related to these items.

"While I'm disappointed in our Q1 results, our confidence in the financial, operational and strategic initiatives that we announced last quarter remains strong,” said Mark Templeton, president and CEO for Citrix.  “While these changes position us for our next phase of growth, they had a greater near-term impact on our execution than we anticipated.  Our commitment to margin expansion, however, remains unchanged.

“Looking beyond Q1, I'm excited about the innovations I see across our workspace services, delivery networking and mobility apps businesses.  Through these innovations, we'll continue our focus on enabling the software-defined workplace.”

Q1 Financial Summary

In reviewing the results for the first quarter of fiscal year 2015 compared to the first quarter of fiscal year 2014:

  • Product and license revenue decreased 12 percent;
  • Software as a service revenue increased 8 percent;
  • Revenue from license updates and maintenance increased 8 percent;
  • Professional services revenue, which is comprised of consulting, product training and certification, decreased 13 percent;
  • Net revenue increased in the EMEA region by 1 percent and decreased in the Pacific region by 2 percent and in the Americas region by 1 percent;
  • Deferred revenue totaled $1.5 billion as of March 31, 2015, compared to $1.4 billion as of March 31, 2014, an increase of 7 percent; and
  • Cash flow from operations was $292 million for the first quarter of fiscal year 2015, compared with $288 million for the first quarter of fiscal year 2014.

During the first quarter of fiscal year 2015:

  • GAAP gross margin was 83 percent, and non-GAAP gross margin was 85 percent, which excludes the effects of amortization of acquired product related intangible assets and stock-based compensation expense;
  • GAAP operating margin was 7 percent, and non-GAAP operating margin was 19 percent, which excludes the effects of amortization of acquired intangible assets, stock-based compensation expense, costs associated with the restructuring programs, and the benefit related to a previously disclosed patent lawsuit; and
  • The company repurchased 2.4 million shares at an average price of $63.12.

Financial Outlook for Second Quarter 2015

Citrix management expects to achieve the following results for the second quarter of fiscal year 2015 ending June 30, 2015:

  • Net revenue is targeted to be in the range of $785 million to $795 million.
  • GAAP gross margin is targeted to be in the range of 82 percent to 83 percent. Non-GAAP gross margin is targeted to be in the range of 84 percent to 85 percent, which excludes 2 percent related to the effects of amortization of acquired product related intangible assets and stock-based compensation expense.
  • GAAP diluted earnings per share is targeted to be in the range of $0.41 to $0.43. Non-GAAP diluted earnings per share is targeted to be in the range of $0.80 to $0.83, which excludes $0.24 related to the effects of stock-based compensation expenses, $0.17 related to the effects of amortization of acquired intangible assets, $0.08 related to restructuring charges, $0.05 related to the effects of amortization of debt discount and $(0.12) to $(0.17) for the tax effects related to these items.
  • GAAP tax rate is targeted to be in the range of 19 percent to 20 percent. Non-GAAP tax rate, which excludes the effects of amortization of acquired intangible assets, stock-based compensation expenses, amortization of debt discount and restructuring charges, is targeted to be in the range of 23 percent to 24 percent.

Financial Outlook for Fiscal Year 2015

Citrix management expects to achieve the following results for the fiscal year ending December 31, 2015:

  • Net revenue is targeted to be in the range of $3.22 billion to $3.25 billion.
  • GAAP gross margin is targeted to be in the range of 83 percent to 84 percent. Non-GAAP gross margin is targeted to be in the range of 85 percent to 86 percent, which excludes 2 percent related to the effects of amortization of acquired product related intangible assets and stock-based compensation expense.
  • GAAP diluted earnings per share is targeted to be in the range of $2.04 to $2.10. Non-GAAP diluted earnings per share is targeted to be in the range of $3.55 to $3.60, which excludes $0.93 related to the effects of stock-based compensation expenses, $0.68 related to the effects of amortization of acquired intangible assets, $0.29 related to restructuring charges, $0.20 related to the effects of amortization of debt discount, $(0.01) related to a benefit from a previously disclosed patent lawsuit and $(0.53) to $(0.64) for the tax effects related to these items.
  • GAAP tax rate is targeted to be in the range of 19 percent to 20 percent. Non-GAAP tax rate, which excludes the effects of amortization of acquired intangible assets, stock-based compensation expenses, amortization of debt discount, a benefit from a previously disclosed patent lawsuit, and restructuring charges, is targeted to be in the range of 23 percent to 24 percent.

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

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 for approximately 30 days on the Investor Relations section of the Citrix corporate website at http://www.citrix.com/investors.

About Citrix

Citrix (NASDAQ:CTXS) is leading the transition to software-defining the workplace, uniting virtualization, mobility management, networking and SaaS solutions to enable new ways for businesses and people to work better. Citrix solutions power business mobility through secure, mobile workspaces that provide people with instant access to apps, desktops, data and communications on any device, over any network and cloud. With annual revenue in 2014 of $3.14 billion, Citrix solutions are in use at more than 330,000 organizations and by over 100 million users globally. Learn more at www.citrix.com.

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 Fiscal Year 2015 and Second Quarter 2015 sections and 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, foreign exchange rate volatility and uncertainty in the IT spending environment; the success and growth of the company's product lines, including  competition, demand and pricing dynamics and other transitions in the markets for Citrix’s virtualization products and collaboration services; the company’s ability to develop and commercialize new products and services, including its enterprise mobility products, while growing its established virtualization, networking and collaboration products and services; disruptions to execution due to its restructuring programs, changes and transitions in key personnel and succession risks; the introduction of new products by competitors or the entry of new competitors into the markets for Citrix's products and services; changes in our revenue mix towards products and services with lower gross margins; seasonal fluctuations in the company's business; failure to execute Citrix's sales and marketing plans; failure to successfully partner with key distributors, resellers, system integrators, service providers 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; the ability of Citrix to make suitable acquisitions on favorable terms in the future; risks associated with Citrix's acquisitions, including failure to further develop and successfully market the technology and products of acquired companies, failure to achieve or maintain anticipated revenues and operating performance contributions from acquisitions, which could dilute earnings, the retention of key employees from acquired companies, difficulties and delays integrating personnel, operations, technologies and products, disruption to our ongoing business and diversion of management's attention from our ongoing business; the recruitment and retention of qualified employees; risks in effectively controlling operating expenses, including failure to achieve anticipated cost savings from the restructuring programs and other cost reduction initiatives; ability to effectively manage our capital structure and the impact of related changes on our operating results and financial condition; the effect of new accounting pronouncements on revenue and expense recognition; the risks associated with securing data and maintaining security of our networks and customer data stored by our services; failure to comply with federal, state and international regulations; litigation and disputes, including challenges to our intellectual property rights or allegations of infringement of the intellectual property rights of others; the inability to further innovate our technology or enter into new businesses due to the intellectual property rights of others; changes in the company's pricing and licensing models, promotional programs and product mix, all of which may impact Citrix's revenue recognition; charges in the event of a write-off or impairment of acquired assets, underperforming businesses, investments or licenses; international market readiness, execution and other risks associated with the markets for Citrix's products and services; unanticipated changes in tax rates, non-renewal of tax credits 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.

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Full Financial Report

For media inquiries, contact:

Eric Armstrong
Citrix Systems, Inc.
(954) 267-2977
eric.armstrong@citrix.com

For investor inquiries, contact:

Eduardo Fleites
Citrix Systems, Inc.
(954) 229-5758
eduardo.fleites@citrix.com