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Citrix Reports Fourth Quarter and Fiscal Year Financial Results – 6 Percent Year Over Year

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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  

Citrix Systems, Inc. (NASDAQ:CTXS) today reported financial results for the fourth quarter and fiscal year ended December 31, 2015.

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.

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