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Citrix Reports First Quarter 2017 Financial Results

Citrix Reports First Quarter 2017 Financial Results

FORT LAUDERDALE, Fla. - April 26, 2017 - Citrix Systems, Inc. (NASDAQ:CTXS) today reported financial results for the first quarter of fiscal year 2017 ended March 31, 2017.

Financial Results

For the first quarter of fiscal year 2017, Citrix achieved revenue from continuing operations of $663 million, compared to $659 million in the first quarter of fiscal year 2016, representing 1 percent revenue growth.

As previously announced, the spin-off and merger of Citrix’s GoTo business with LogMeIn was completed following the close of business on January 31, 2017. Accordingly, the GoTo business results of operations, assets and liabilities, and cash flows are reflected as discontinued operations for all periods presented.

GAAP Results

Net income from continuing operations for the first quarter of fiscal year 2017 was $70 million, or $0.44 per diluted share, compared to $73 million, or $0.47 per diluted share, for the first quarter of fiscal year 2016. Net income from continuing operations for the first quarter of fiscal year 2017 and 2016 includes restructuring charges of $8 million and $46 million, respectively, for severance and facility closing costs. Additionally, net income from continuing operations for the first quarter of fiscal year 2017 includes $46 million in charges relating to changes in the Company’s expectations of realizability of certain state R&D tax credits resulting from the separation of the GoTo business, partially offset by a tax benefit of approximately $18 million from the adoption of Accounting Standard Update 2016-09 in the first quarter of fiscal year 2017.

Non-GAAP Results

Non-GAAP net income from continuing operations for the first quarter of fiscal year 2017 was $152 million, or $0.97 per diluted share, compared to $155 million, or $1.00 per diluted share for the first quarter of fiscal year 2016. Non-GAAP net income from continuing operations for the first quarter of fiscal year 2017 and 2016 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. Non-GAAP net income from continuing operations for the first quarter of fiscal year 2017 also excludes charges relating to changes in the Company’s expectations of realizability of certain state R&D tax credits resulting from the separation of the GoTo business.

"This was another strong quarter of execution by our global team,” said Kirill Tatarinov, CEO for Citrix. "The momentum of our cloud transformation is accelerating. Our innovation and competitive positioning in that space is already paying off, and our solutions are benefiting our customers and partners.”

Q1 Financial Summary

In reviewing the results from continuing operations for the first quarter of fiscal year 2017 compared to the first quarter of fiscal year 2016:

  • Product and license revenue decreased 5 percent;
  • Software as a service revenue increased 24 percent;
  • Revenue from license updates and maintenance increased 2 percent;
  • Professional services revenue, which is comprised of consulting, product training and certification, decreased 9 percent;
  • Net revenue increased in the Pacific region by 10 percent, increased in the Americas region by 1 percent, and decreased in the EMEA region by 2 percent;
  • Deferred revenue totaled $1.7 billion as of March 31, 2017, compared to $1.5 billion as of March 31, 2016, an increase of 11 percent; and
  • Cash flow from continuing operations was $292 million for the first quarter of fiscal year 2017, compared with $307 million for the first quarter of fiscal year 2016.

During the first quarter of fiscal year 2017:

  • GAAP gross margin was 85 percent. Non-GAAP gross margin was 87 percent, excluding the effects of amortization of acquired product related intangible assets and stock-based compensation expense; and
  • GAAP operating margin was 19 percent. Non-GAAP operating margin was 28 percent, excluding the effects of stock-based compensation expense, amortization of acquired intangible assets, separation costs related to the separation of the GoTo business and subsequent merger with LogMeIn, and costs associated with restructuring programs.
  •  The Company repurchased 7.1 million shares at an average price of $78.55.

Financial Outlook for Second Quarter 2017

Citrix management expects to achieve the following results from continuing operations for the second quarter of fiscal year 2017 ending June 30, 2017:

  • Net revenue is targeted to be in the range of $685 million to $695 million.
  • GAAP diluted earnings per share from continuing operations is targeted to be in the range of $0.70 to $0.74. Non-GAAP diluted earnings per share from continuing operations is targeted to be in the range of $0.97 to $1.00, excluding $0.18 related to the effects of stock-based compensation expenses, $0.10 related to the effects of amortization of acquired intangible assets, $0.06 related to the effects of amortization of debt discount, $0.03 related to restructuring charges and $0.07 to $0.14 for the tax effects related to these items.

Financial Outlook for Fiscal Year 2017

Citrix management expects to achieve the following results from continuing operations 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 from continuing operations is targeted to be in the range of $3.02 to $3.21. Non-GAAP diluted earnings per share from continuing operations is targeted to be in the range of $4.60 to $4.65, excluding $0.42 related to the effects of amortization of acquired intangible assets, $0.76 related to the effects of stock-based compensation expenses, $0.22 related to the effects of amortization of debt discount, $0.12 related to restructuring charges, and $0.19 to $0.43 for the tax effects related to these items. Non-GAAP diluted earnings per share from continuing operations also is expected to exclude $0.30 related to certain tax charges 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.

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.  

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