Jan

272016

Citrix Reports Fourth Quarter and Fiscal Year Financial Results

Quarterly revenue of $905 million up 6 percent year over year Quarterly GAAP operating margin of 12 percent; non-GAAP operating margin of 32 percent Quarterly GAAP diluted EPS of $0.84; non-GAAP diluted EPS of $1.66 Record annual cash flow from operations of $1.03 billion Board of directors authorizes $400 million increase to share repurchase program

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SANTA CLARA, Calif. — January 27, 2016 — Citrix Systems, Inc. (NASDAQ:CTXS) today reported financial results for the fourth quarter and fiscal year ended December 31, 2015.

Financial Results

For the fourth quarter of fiscal year 2015, Citrix achieved revenue of $905 million, compared to $851 million in the fourth quarter of fiscal year 2014, representing 6 percent revenue growth. For fiscal year 2015, Citrix reported annual revenue of $3.28 billion, compared to $3.14 billion for fiscal year 2014, a 4 percent increase.

GAAP Results

Net income for the fourth quarter of fiscal year 2015 was $131 million, or $0.84 per diluted share, compared to $95 million, or $0.58 per diluted share, for the fourth quarter of fiscal year 2014. Net income for the fourth quarter of fiscal year 2015 includes impairment charges of $58 million related to certain intangible assets, which are included in amortization of product related and other intangible assets. In addition, net income for the fourth quarter of fiscal year 2015 includes restructuring charges of $38 million for severance and facility closing costs related to the 2015 restructuring programs and $6 million in separation costs associated with the previously announced spin-off of the GoTo business. Net income for the fourth quarter of fiscal year 2015 also includes net tax benefits of $25 million, or $0.16 per diluted share, primarily related to the extension of the 2015 federal research and development tax credit and a change in the mix of income between U.S. and foreign operations driven by the impairment of certain intangible assets.

Annual net income for fiscal year 2015 was $319 million, or $1.99 per diluted share, compared to $252 million, or $1.47 per diluted share for fiscal year 2014. Annual net income for fiscal year 2015 includes impairment charges of $123 million related to certain intangible assets, which are included in amortization of product related and other intangible assets.  In addition, annual net income for the fiscal year 2015 includes a restructuring charge of $100 million for severance and facility closing costs related to the 2015 restructuring programs.  Net income for fiscal year 2015 also includes net tax benefits of $21 million, or $0.12 per diluted share, primarily related to the closing of audits with the IRS for certain tax years during the second quarter of fiscal year 2015. Results for fiscal year 2014 included impairment charges of $60 million related to certain intangible assets, which are included in amortization of product related and other intangible assets, a charge of $21 million related to a patent lawsuit, as well as a restructuring charge of $20 million for severance costs related to a restructuring program implemented in the first quarter of 2014. In addition, net income for fiscal year 2014 included net tax benefits of $9 million, or $0.05 per diluted share, primarily related to the closing of audits with the IRS for certain tax years.

Non-GAAP Results

Non-GAAP net income for the fourth quarter of fiscal year 2015 was $259 million, or $1.66 per diluted share, compared to $180 million, or $1.10 per diluted share for the fourth quarter of fiscal year 2014. Non-GAAP net income for the fourth quarter of fiscal year 2015 includes net tax benefits of $25 million, or $0.16 per diluted share. Non-GAAP net income for the fourth quarter of fiscal year 2015 and 2014 excludes the effects of amortization of acquired intangible assets, stock-based compensation expense, amortization of debt discount, restructuring charges, and the tax effects related to these items. Non-GAAP net income for the fourth quarter of fiscal year 2015 also excludes separation costs associated with the previously announced spin-off of the GoTo business and the tax effect related to this item.

Annual non-GAAP net income for fiscal year 2015 was $695 million, or $4.34 per diluted share, compared to $565 million, or $3.30 per diluted share for fiscal year 2014. Annual non-GAAP net income for fiscal year 2015 includes net tax benefits of $21 million, or $0.12 per diluted share. Annual non-GAAP net income for fiscal year 2014 included net tax benefits of $9 million, or $0.05 per diluted share. Annual non-GAAP net income for fiscal year 2015 and 2014 excludes the effects of amortization of acquired intangible assets, stock-based compensation expenses, amortization of debt discount, the effect of a patent lawsuit, restructuring charges, and the tax effects related to these items. Annual non-GAAP net income for the fiscal year 2015 also excludes separation costs associated with the previously announced spin-off of the GoTo business and the tax effect related to this item.

In addition to quarterly financial results, Citrix also announced that its Board of Directors has authorized it to repurchase up to an additional $400 million of its common stock. As of December 31, 2015, approximately $33 million remained for repurchases from previous authorizations.

“I’m pleased with our progress in the fourth quarter,” said Bob Calderoni, executive chairman for Citrix.  “We saw strong topline growth, improvement in the bottom-line, and we made solid progress in simplifying and focusing our resources on our strategic products.  While there is still much work to do, we are moving in the right direction.

“I am excited that we have secured such an experienced product and business leader as Kirill to build on this positive momentum. I look forward to supporting Kirill and the Citrix leadership team to continue to advance this focused strategy.”

Recently appointed president and CEO for Citrix, Kirill Tatarinov, said:  “I am very excited to be part of Citrix. We have an amazing opportunity ahead of us. And a solid and focused plan in place to capitalize on key market trends and drive sustained profitable growth. I look forward to leading the next chapter in Citrix’s growth story and create even greater value for our customers, partners, and employees.”

Q4 Financial Summary

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

  • Product and license revenue increased 5 percent;
  • Software as a service revenue increased 15 percent;
  • Revenue from license updates and maintenance increased 7 percent;
  • Professional services revenue, which is comprised of consulting, product training and certification, decreased 24 percent;
  • Net revenue increased in the Americas region by 11 percent, increased in the EMEA region by less than 1 percent, and decreased in the Pacific region by 13 percent;
  • Deferred revenue totaled $1.65 billion as of December 31, 2015, compared to $1.56 billion as of December 31, 2014, an increase of 6 percent; and
  • Cash flow from operations was $282 million for the fourth quarter of fiscal year 2015, compared with $190 million for the fourth quarter of fiscal year 2014.

During the fourth quarter of fiscal year 2015:

  • GAAP gross margin was 78 percent. Non-GAAP gross margin was 86 percent, excluding the effects of amortization of acquired product related intangible assets and stock-based compensation expense;
  • GAAP operating margin was 12 percent. Non-GAAP operating margin was 32 percent, excluding the effects of amortization of acquired intangible assets, stock-based compensation expense, costs associated with the restructuring programs and separation costs related to the previously announced spin-off of the GoTo business; and
  • The company received 4.3 million shares from repurchases at an average price of $73.84.

Annual Financial Summary

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

  • Product and license revenue decreased 3 percent;
  • Software as a service revenue increased 12 percent;
  • Revenue from license updates and maintenance increased 7 percent;
  • Professional services revenue, which is comprised of consulting, product training and certification, decreased 16 percent;
  • Net revenue increased in the Americas region by 5 percent, increased in the EMEA region by 1 percent, and decreased in the Pacific region by 7 percent; and
  • Cash flow from operations was $1.03 billion for fiscal year 2015 compared with $846 million for fiscal year 2014.

During the year ended December 31, 2015:

  • GAAP gross margin was 81 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 11 percent. Non-GAAP operating margin was 26 percent, excluding the effects of amortization of acquired intangible assets, stock-based compensation expense, costs associated with the restructuring programs, and separation costs related to the previously announced spin-off of the GoTo business; and
  • The company received 11.4 million shares from repurchases at an average price of $70.38.

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 $3.31 billion to $3.32 billion.
  • GAAP diluted earnings per share is targeted to be in the range of $2.50 to $2.60. Non-GAAP diluted earnings per share is targeted to be in the range of $4.65 to $4.75, excluding $1.27 related to the effects of stock-based compensation expenses, $0.53 related to the effects of amortization of acquired intangible assets, $0.19 related to restructuring charges, $0.21 related to the effects of amortization of debt discount, $0.71 related to separation costs associated with the previously announced spin-off of the GoTo business and $0.66 to $0.86 for the tax effects related to these items.

Financial Outlook for First Quarter 2016

Citrix management expects to achieve the following results at the consolidated level for the first quarter of fiscal year 2016 ending March 31, 2016:

  • Net revenue is targeted to be in the range of $785 million to $790 million.
  • GAAP diluted earnings per share is targeted to be in the range of $0.28 to $0.31. Non-GAAP diluted earnings per share is targeted to be in the range of $0.91 to $0.93, excluding $0.31 related to the effects of stock-based compensation expenses, $0.14 related to the effects of amortization of acquired intangible assets, $0.15 related to restructuring charges, $0.05 related to the effects of amortization of debt discount, $0.17 related to separation costs associated with the previously announced spin-off of the GoTo business and $0.17 to $0.22 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.

Fourth 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