Apr

202016

Citrix Reports First Quarter Financial Results

Quarterly revenue of $826 million up 9 percent year over year Quarterly GAAP operating margin of 13 percent; non-GAAP operating margin of 29 percent Quarterly GAAP diluted EPS of $0.54; non-GAAP diluted EPS of $1.18 Record quarterly cash flow from operations of $340 million

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SANTA CLARA, Calif. — April 20, 2016 — Citrix Systems, Inc. (NASDAQ:CTXS) today reported financial results for the first quarter of fiscal year 2016 ended March 31, 2016.

Financial Results

For the first quarter of fiscal year 2016, Citrix achieved revenue of $826 million, compared to $761 million in the first quarter of fiscal year 2015, representing 9 percent revenue growth.

GAAP Results

Net income for the first quarter of fiscal year 2016 was $83 million, or $0.54 per diluted share, compared to $29 million, or $0.18 per diluted share, for the first quarter of fiscal year 2015. Net income for the first quarter of fiscal year 2016 includes restructuring charges of $46 million for severance and facility closing costs related to the 2015 restructuring program and $15 million in separation costs associated with the previously announced spin-off of the GoTo business.  Net income for the first quarter of fiscal year 2015 includes restructuring charges of $34 million for severance and facility closing costs related to the 2015 restructuring program.

Non-GAAP Results

Non-GAAP net income for the first quarter of fiscal year 2016 was $184 million, or $1.18 per diluted share, compared to $106 million, or $0.65 per diluted share for the first quarter of fiscal year 2015. Non-GAAP net income for the first quarter of fiscal years 2016 and 2015 excludes the effects of stock-based compensation expense, amortization of acquired intangible assets, amortization of debt discount, restructuring charges, and the tax effects related to these items. Non-GAAP net income for the first quarter of fiscal year 2016 also excludes separation costs associated with the previously announced spin-off of the GoTo business and the tax effect related to this item. Non-GAAP net income for the first quarter of fiscal year 2015 also excludes a benefit from a patent lawsuit and the tax effect related to this item.

“I am very pleased with our performance this quarter on both the top line and bottom line,” said Kirill Tatarinov, chief executive officer for Citrix.  “The progress we made in refocusing the company - simplifying our portfolio and sharpening our message – is starting to pay off. 

 “We are seeing a strong improvement in our operating margin, and our focused strategy has made it easier for our field teams and channel partners to execute; consequently, we saw improvement in the top line. It gives us a measure of confidence that we are on the right path, and it gives us opportunities to solidify our leadership position in our core areas.”

Board Update

Also, the Citrix Board of Directors today announced that Board members Tom Bogan and Francis deSouza will not be standing for re-election to the company's Board at the Citrix annual shareholder meeting on June 23, 2016.

 “Tom and Francis have demonstrated thoughtful and insightful leadership in their service and commitment to the Board,” said Bob Calderoni, executive chairman of the Board. “We offer our deep thanks to both for their service to the company, the Board and our shareholders.”

“And I offer a special thanks to Tom, who has served tirelessly on the Board for 13 years, including 10 as chairman.”

Bogan and deSouza both are not standing for re-election to the Board to spend more time on their chief executive officer roles.  Bogan was appointed chief executive officer of Adaptive Insights in January 2015, and it was recently announced that deSouza would be assuming the role of chief executive officer at Illumina in July 2016.

The Board reiterated its commitment to recruiting Board members with outstanding capabilities and the diverse skills needed to oversee Citrix for the long term.

Q1 Financial Summary

In reviewing the results for the first quarter of fiscal year 2016 compared to the first quarter of fiscal year 2015:

  • Product and license revenue increased 10 percent;
  • Software as a service revenue increased 17 percent;
  • Revenue from license updates and maintenance increased 6 percent;
  • Professional services revenue, which is comprised of consulting, product training and certification, decreased 12 percent;
  • Net revenue increased in the Americas region by 14 percent, increased in the EMEA region by less than 1 percent, and decreased in the Pacific region by 8 percent;
  • Deferred revenue totaled $1.6 billion as of March 31, 2016, compared to $1.5 billion as of March 31, 2015, an increase of 7 percent; and
  • Cash flow from operations was $340 million for the first quarter of fiscal year 2016, compared with $292 million for the first quarter of fiscal year 2015.

During the first quarter of fiscal year 2016:

  • GAAP gross margin was 83 percent. Non-GAAP gross margin was 85 percent, excluding the effects of amortization of acquired product related intangible assets and stock-based compensation expense;
  • GAAP operating margin was 13 percent. Non-GAAP operating margin was 29 percent, excluding the effects of stock-based compensation expense, amortization of acquired intangible assets, separation costs related to the previously announced spin-off of the GoTo business and costs associated with the 2015 restructuring programs; and
  • The company received 0.9 million shares from repurchases at an average price of $71.96.

Financial Outlook for Second Quarter 2016

Citrix management expects to achieve the following results at the consolidated level for the second quarter of fiscal year 2016 ending June 30, 2016:

  • Net revenue is targeted to be in the range of $810 million to $820 million.
  • GAAP diluted earnings per share is targeted to be in the range of $0.61 to $0.66. Non-GAAP diluted earnings per share is targeted to be in the range of $1.12 to $1.15, excluding $0.31 related to the effects of stock-based compensation expenses, $0.15 related to the effects of amortization of acquired intangible assets, $0.05 related to the effects of amortization of debt discount, $0.12 related to separation costs associated with the previously announced spin-off of the GoTo business, $0.05 related to restructuring charges and $0.14 to $0.22 for the tax effects related to these items.

Financial Outlook for Fiscal Year 2016

Citrix management expects to achieve the following results at the consolidated level for the fiscal year ending December 31, 2016:

  • Net revenue is targeted to be in the range of $3.34 billion to $3.36 billion.
  • GAAP diluted earnings per share is targeted to be in the range of $2.75 to $2.90. Non-GAAP diluted earnings per share is targeted to be in the range of $4.90 to $5.00, excluding $1.25 related to the effects of stock-based compensation expenses, $0.57 related to the effects of amortization of acquired intangible assets, $0.21 related to the effects of amortization of debt discount, $0.53 related to separation costs associated with the previously announced spin-off of the GoTo business, $0.34 related to restructuring charges and $0.65 to $0.90 for the tax effects related to these items.

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

First Quarter Earnings Conference Call

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.

Full Financial Report

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 cloudWith annual revenue in 2015 of $3.28 billion, Citrix solutions are in use at more than 400,000 organizations and by over 100 million users globally. Learn more at www.citrix.com.

For Citrix Investors

This release contains forward-looking statements that 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 executive chairman and by its CEO and president, statements contained in the Financial Outlook 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, risks associated with transitions in key personnel, including our newly appointed CEO, and succession risk; the completion and timing of the proposed spinoff, the future performance of core Citrix and the GoTo businesses on a standalone basis if the spinoff is completed, the expected strategic, operational and competitive benefits of the proposed spinoff, and the effect of the separation on Citrix, its shareholders, customers, partners and employees; the impact of the global economy, volatility in global stock markets, 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 and networking products and services; disruptions to execution due to Citrix's restructuring programs and actions to be taken as a result of its operational review; 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 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 savings initiatives; ability to effectively meet our domestic cash requirements and manage our capital structure and the impact of related changes on our operating results and financial condition; risks and costs associated with engaging with activist stockholders; 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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For media inquiries, contact:
Eric Armstrong, Citrix Systems, Inc.
(954) 267-2977 or eric.armstrong@citrix.com

For investor inquiries, contact:
Eduardo Fleites, Citrix Systems, Inc.
(954) 229-5758 or eduardo.fleites@citrix.com