Oct

192016

Citrix Reports Third Quarter Financial Results

Quarterly revenue of $841 million up 3 percent year over year Quarterly GAAP operating margin of 18 percent; non-GAAP operating margin of 30 percent Quarterly GAAP diluted EPS of $0.84; non-GAAP diluted EPS of $1.32 Quarterly cash flow from operations of $288 million, up 11 percent year-over-year

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SANTA CLARA, Calif. — October 19, 2016 — Citrix Systems, Inc. (NASDAQ:CTXS) today reported financial results for the third quarter of fiscal year 2016 ended September 30, 2016.

Financial Results

For the third quarter of fiscal year 2016, Citrix achieved revenue of $841 million, compared to $813 million in the third quarter of fiscal year 2015, representing 3 percent revenue growth.

GAAP Results

Net income for the third quarter of fiscal year 2016 was $132 million, or $0.84 per diluted share, compared to $56 million, or $0.35 per diluted share, for the third quarter of fiscal year 2015. The third quarter of fiscal year 2015 GAAP net income includes impairment charges of approximately $65 million related to certain intangible assets from the acquisition of ByteMobile, which are included in amortization of product related and other intangible assets.  In addition, net income for the third quarter of fiscal year 2016 includes $18 million in separation costs associated with the proposed separation of our GoTo business and subsequent merger with LogMeIn.

Non-GAAP Results

Non-GAAP net income for the third quarter of fiscal year 2016 was $208 million, or $1.32 per diluted share, compared to $168 million, or $1.04 per diluted share, for the third quarter of fiscal year 2015. Non-GAAP net income for the third 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 third quarter of fiscal year 2016 also excludes $18 million in separation costs associated with the proposed separation of our GoTo business and subsequent merger with LogMeIn.

"Our strong results this quarter show clearly how our renewed focus is resonating in the marketplace,” said Kirill Tatarinov, CEO for Citrix.

“We are seeing growth in all of our core areas of business — including our Workspace Services business, which is showing improving growth for the second consecutive quarter. And we have demonstrated tremendous progress in the workforce and cultural transformation that defines us as a company and that will continue to power us forward. Our vision is clear; our strategy is crisp; and our execution has improved dramatically."

Q3 Financial Summary

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

  • Product and license revenue remained flat;
  • Software as a service revenue increased 9 percent;
  • Revenue from license updates and maintenance increased 5 percent;
  • Professional services revenue, which is comprised of consulting, product training and certification, decreased 19 percent;
  • Net revenue increased in the Americas region by 8 percent, increased in the Pacific region by less than 1 percent, and decreased in the EMEA region by 4 percent;
  • Deferred revenue totaled $1.6 billion as of September 30, 2016, compared to $1.5 billion as of September 30, 2015, an increase of 7 percent; and
  • Cash flow from operations was $288 million for the third quarter of fiscal year 2016, compared with $260 million for the third quarter of fiscal year 2015.

During the third quarter of fiscal year 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; and
  • GAAP operating margin was 18 percent. Non-GAAP operating margin was 30 percent, excluding the effects of stock-based compensation expense, amortization of acquired intangible assets, separation costs related to the proposed separation of our GoTo business and subsequent merger with LogMeIn and costs associated with the 2015 restructuring program.

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 $3.40 billion to $3.41 billion with core Citrix revenue, excluding the GoTo business, targeted to be in the range of $2.71 billion to $2.72 billion.
  • GAAP diluted earnings per share is targeted to be in the range of $3.04 to $3.05. Non-GAAP diluted earnings per share is targeted to be in the range of $5.18 to $5.20, excluding $1.17 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, $0.59 related to separation costs associated with the proposed separation of our GoTo business and subsequent merger with LogMeIn, $0.43 related to restructuring charges and $0.81 to $0.84 for the tax effects related to these items.

Preliminary Outlook for Fiscal Year 2017

The company’s current preliminary outlook for the full fiscal year 2017, excluding the GoTo business, is for net revenue to grow by approximately 3% to 4%. In addition, Citrix management is targeting GAAP operating margin, excluding the GoTo business, to be in the range of 22% to 23% and Non-GAAP operating margin to be in the range of 32% to 33%. Non-GAAP operating margin excludes the effects of stock-based compensation expense, amortization of acquired intangible assets, separation costs associated with the proposed separation of our GoTo business and subsequent merger with LogMeIn, and restructuring charges.

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

Third 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.

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 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 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 Third Quarter 2015 sections and under the Non-GAAP Financial Measures Reconciliation section, statements related to Citrix’s exploration of strategic alternatives regarding the GoTo family of products, statements related to Citrix’s potential sale of its ByteMobile business, statements concerning the formation of an Operations Committee of the Board of Directors of Citrix and its review of operations and capital structure, 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; the uncertainty as to which strategic alternatives may be available with respect to the GoTo family of products, whether any transaction will be commenced or completed, and the timing and value of any such transaction; the uncertainty as to a potential sale of the ByteMobile business, whether such sale will be completed, and the timing and value of any such sale transaction; disruptions to execution due to Citrix’s restructuring programs and operational review, review of strategic alternatives with respect to the GoTo family of products, potential sale of the ByteMobile business and changes and transitions in key personnel and succession risk; risks associated with the on-going CEO succession process; 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, the planned review by the Operations Committee of the Board of Directors 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; 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
eric.armstrong@citrix.com

For investor inquiries, contact:

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