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Citrix Reports Fourth Quarter and Fiscal Year Financial Results

Citrix Reports Fourth Quarter and Fiscal Year Financial Results

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.  

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