Jan

252017

Citrix Reports Fourth Quarter and Fiscal Year Financial Results

Quarterly revenue of $908 million Quarterly GAAP operating margin of 25 percent; non-GAAP operating margin of 35 percent Quarterly GAAP diluted EPS of $1.26; non-GAAP diluted EPS of $1.61 Record annual cash flow from operations of $1.12 billion Board of directors authorizes $500 million increase to share repurchase program

SANTA CLARA, Calif. — January 25, 2017 — Citrix Systems, Inc. (NASDAQ:CTXS) today reported financial results for the fourth quarter and fiscal year ended December 31, 2016.

Financial Results

For the fourth quarter of fiscal year 2016, Citrix achieved revenue of $908 million, compared to $905 million in the fourth quarter of fiscal year 2015, representing less than one percent revenue growth. For fiscal year 2016, Citrix reported annual revenue of $3.42 billion, compared to $3.28 billion for fiscal year 2015, a 4 percent increase.

GAAP Results

Net income for the fourth quarter of fiscal year 2016 was $200 million, or $1.26 per diluted share, compared to $131 million, or $0.84 per diluted share, for the fourth quarter of fiscal year 2015. Net income for the fourth quarter of fiscal year 2016 and 2015 includes $10 million and $6 million, respectively in separation costs associated with the separation of our GoTo business and subsequent merger with LogMeIn. Net income for the fourth quarter of fiscal year 2016 includes net tax benefits of $12 million, or $0.08 per diluted share, primarily related to the extension of the 2016 federal and state research and development tax credit. 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. Net income for the fourth quarter of fiscal year 2015 also includes impairment charges of approximately $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.

Annual net income for fiscal year 2016 was $536 million, or $3.41 per diluted share, compared to $319 million, or $1.99 per diluted share for fiscal year 2015. Net income for fiscal year 2016 includes restructuring charges of $71 million for severance and facility closing costs and $57 million in separation costs associated with the separation of our GoTo business and subsequent merger with LogMeIn. Results for fiscal year 2015 included impairment charges of $123 million related to certain intangible assets, which are included in amortization of product related and other intangible assets. In addition, net income for fiscal year 2015 includes a restructuring charge of $100 million for severance and facility closing costs.

Non-GAAP Results

Non-GAAP net income for the fourth quarter of fiscal year 2016 was $255 million, or $1.61 per diluted share, compared to $259 million, or $1.66 per diluted share for the fourth quarter of fiscal year 2015. In addition, 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 2016 and 2015 excludes the effects of stock-based compensation expense, amortization of acquired intangible assets, amortization of debt discount, restructuring charges, separation costs, and the tax effects related to these items.

Annual non-GAAP net income for fiscal year 2016 was $835 million, or $5.32 per diluted share, compared to $695 million, or $4.34 per diluted share for fiscal year 2015. 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 2016 and 2015 excludes the effects of stock-based compensation expense, amortization of acquired intangible assets, amortization of debt discount, restructuring charges, separation costs, and the tax effects related to these items. Annual non-GAAP net income for the fiscal year 2015 also excludes the effect of a patent lawsuit 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 $500 million of its common stock. As of December 31, 2016, approximately $900 million remained for repurchases from previous authorizations.

“This was a strong quarter, demonstrating that our commitment to improved focus and streamlined execution is resonating in the marketplace,” said Kirill Tatarinov, CEO at Citrix.

“Overall, 2016 was a great year. We made significant strides in advancing our vision, strategy and culture, while at the same time rapidly expanding profitability and growth in our core business.

“Our progress in 2016 positions us well for sustained profitable growth.”

Q4 Financial Summary

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

  • Product and license revenue decreased 9 percent;
  • Software as a service revenue increased 8 percent;
  • Revenue from license updates and maintenance increased 4 percent;
  • Professional services revenue, which is comprised of consulting, product training and certification, decreased 8 percent;
  • Net revenue decreased in the Americas region by 1 percent, decreased in the EMEA region by less than 1 percent, and increased in the Pacific region by less than 1 percent;
  • Deferred revenue totaled $1.81 billion as of December 31, 2016, compared to $1.65 billion as of December 31, 2015, an increase of 9 percent; and
  • Cash flow from operations was $259 million for the fourth quarter of fiscal year 2016, compared with $282 million for the fourth quarter of fiscal year 2015.

During the fourth quarter of fiscal year 2016:

  • GAAP gross margin was 85 percent. Non-GAAP gross margin was 86 percent, excluding the effects of amortization of acquired product related intangible assets and stock-based compensation expense; and
  • GAAP operating margin was 25 percent. Non-GAAP operating margin was 35 percent, excluding the effects of stock-based compensation expense, amortization of acquired intangible assets, separation costs related to the separation of our GoTo business and subsequent merger with LogMeIn, and costs associated with restructuring programs.

Annual Financial Summary

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

  • Product and license revenue increased 1 percent;
  • Software as a service revenue increased 12 percent;
  • Revenue from license updates and maintenance increased 4 percent;
  • Professional services revenue, which is comprised of consulting, product training and certification, decreased 11 percent;
  • Net revenue increased in the Americas region by 8 percent, decreased in the Pacific region by 4 percent, and decreased in the EMEA region by 1 percent; and,
  • Cash flow from operations was $1.12 billion for fiscal year 2016 compared with $1.03 billion for fiscal year 2015.

During the year ended December 31, 2016:

  • GAAP gross margin was 84 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 19 percent. Non-GAAP operating margin was 31 percent, excluding the effects of stock-based compensation expense, amortization of acquired intangible assets, separation costs related to the separation of our GoTo business and subsequent merger with LogMeIn, and costs associated with restructuring programs; and
  • The company received 1.3 million shares from repurchases at an average price of $75.87.

Completion of Spin-Off and Merger of GoTo Business

As previously announced, the spin-off and merger of Citrix’s GoTo business with LogMeIn is expected to be completed following the close of business on January 31, 2017, subject to the satisfaction of certain remaining conditions.

Financial Outlook for Fiscal Year 2017

Excluding the GoTo business, Citrix management expects to achieve the following results at the consolidated level for the fiscal year ending December 31, 2017:

  • Net revenue is targeted to be in the range of $2.81 billion to $2.84 billion.
  • GAAP diluted earnings per share is targeted to be in the range of $2.49 to $2.74. Non-GAAP diluted earnings per share is targeted to be in the range of $4.60 to $4.65, excluding $0.35 related to the effects of amortization of acquired intangible assets, $1.03 related to the effects of stock-based compensation expenses, $0.22 related to the effects of amortization of debt discount, $0.33 related to separation costs associated with separation of the GoTo business, $0.16 related to restructuring charges, and $0.23 to $0.53 for the tax effects related to these items. Non-GAAP diluted earnings per share also is expected to exclude $0.30 related to certain tax charges to be incurred in connection with the separation of the GoTo business.

Financial Outlook for First Quarter 2017

Excluding the GoTo business, Citrix management expects to achieve the following results at the consolidated level for the first quarter of fiscal year 2017 ending March 31, 2017:

  • Net revenue is targeted to be in the range of $655 million to $665 million.
  • GAAP diluted earnings per share is targeted to be in the range of $0.02 to $0.03. Non-GAAP diluted earnings per share is targeted to be in the range of $0.93 to $0.95, excluding $0.09 related to the effects of amortization of acquired intangible assets, $0.24 related to the effects of stock-based compensation expenses, $0.05 related to the effects of amortization of debt discount, $0.28 related to separation costs associated with the separation of the GoTo business, $0.04 related to restructuring charges, and $0.06 to $0.09 for the tax effects related to these items. Non-GAAP diluted earnings per share also is expected to exclude $0.29 related to certain tax changes to be incurred in connection with the separation of the GoTo business.

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

For media inquiries, contact:

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

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

About Citrix

Citrix (NASDAQ:CTXS) aims to power a world where people, organizations and things are securely connected and accessible to make the extraordinary possible. Its technology makes the world’s apps and data secure and easy to access, empowering people to work anywhere and at any time. Citrix provides a complete and integrated portfolio of Workspace-as-a-Service, application delivery, virtualization, mobility, network delivery and file sharing solutions that enables IT to ensure critical systems are securely available to users via the cloud or on-premise and across any device or platform. With annual revenue in 2016 of $3.42 billion, Citrix solutions are in use by more than 400,000 organizations and 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 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 failure to complete the separation of the GoTo Business and proposed Reverse Morris Trust transaction with LogMeIn on a timely basis or at all, and the related disruptions to management and the GoTo Business; risks associated with the future performance of core Citrix if the proposed transaction with LogMeIn is completed, failure to achieve the expected strategic, operational and competitive benefits of the proposed separation of the GoTo Business, and the effect of the separation on Citrix, its shareholders, customers, partners and employees; tax risks related to the separation of the GoTo Business; 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 and networking products and secure data services; the introduction of new products by competitors or the entry of new competitors into the markets for Citrix's products and services; the concentration of customers in Citrix’s networking business; the company's ability to develop, maintain a high level of quality and commercialize new products and services while growing its established virtualization and networking products and services; risks associated with transitions in key personnel and succession risk; 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 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 and reliance on large service provider customers; 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 and divestitures, 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, failure to realize expected benefits or synergies from divestitures; the recruitment and retention of qualified employees; risks in effectively controlling operating expenses; 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; the ability to maintain and protect our collection of brands; 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; risks related to servicing our debt; unanticipated changes in tax rates, non-renewal of tax credits or exposure to additional tax liabilities; risks of political uncertainty 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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