Citrix Systems, Inc. (NASDAQ:CTXS) today reported financial
results for the first quarter of fiscal 2011 ended March 31,
2011.
FINANCIAL RESULTS
In the first quarter of fiscal 2011, Citrix achieved revenue of
$491 million, compared to $414 million in the first quarter of
fiscal 2010, representing 18 percent revenue growth.
GAAP Results
Net income for the first quarter of fiscal 2011 was $74 million,
or $0.38 per diluted share, compared to $47 million, or $0.25 per
diluted share, for the first quarter of 2010.
Non-GAAP Results
Non-GAAP net income in the first quarter of fiscal 2011 was $97
million, or $0.50 per diluted share, compared to $75 million, or
$0.40 per diluted share, in the comparable period last year.
Non-GAAP net income for both periods excludes the effects of
amortization of intangible assets primarily related to business
combinations, stock-based compensation expenses, charges recorded
in connection with the restructuring program that the company
implemented in January 2009 and the tax effects related to those
items.
“I’m pleased with our results for the first quarter,” said Mark
Templeton, president and chief executive officer for Citrix.
“Customer demand was solid across our core SaaS, desktop and
networking markets, especially in the Americas and Pacific,
supported by large, strategic technical services engagements.
“Clearly, the industry is rapidly moving from “PC era” to
“cloud era,” where users are demanding -- and CIOs are embracing --
the consumerization of IT. We’re driving the transition with
products that change how people collaborate, how desktops are
delivered, and how delivery networks are built.
“This transformation is elevating our presence as a strategic
vendor, increasing our engagement with C-level executives, and
driving more interest in our virtual computing platform.”
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 March 31, 2011, approximately $11.5 million remained for
repurchases from previous authorizations.
Q1 Financial Summary
In reviewing the first quarter results of 2011, compared to the
first quarter of 2010:
- Product license revenue increased 22
percent;
- Revenue from license updates grew 9
percent;
- Online services revenue grew 17
percent;
- Technical services revenue, which is
comprised of consulting, education and technical support, grew 44
percent;
- Revenue increased in the America’s
region by 22 percent; the EMEA region by 12 percent and the Pacific
region by 25 percent;
- Deferred revenue totaled $789 million,
compared to $636 million as of March 31, 2010;
- GAAP operating margin was 16 percent
for the quarter and non-GAAP operating margin was 23 percent for
the quarter, excluding the effects of amortization of intangible
assets primarily related to business combinations, stock-based
compensation expense and costs associated with the 2009
restructuring program;
- Cash flow from operations was $159
million, compared with $144 million in the first quarter of 2010;
and
- The company repurchased 1.6 million
shares at an average price of $68.97.
Financial Outlook for Second Quarter 2011
Citrix management expects to achieve the following results
during its second fiscal quarter of 2011 ending June 30, 2011:
- Net revenue is expected to be in the
range of $515 million to $525 million.
- GAAP diluted earnings per share is
expected to be in the range of $0.41 to $0.42. Non-GAAP diluted
earnings per share is expected to be in the range of $0.54 to
$0.55, excluding $0.08 related to the effects of amortization of
intangible assets primarily related to business combinations, $0.12
related to the effects of stock-based compensation expenses, and
$(0.06) to $(0.08) for the effect of the differential between the
GAAP and non-GAAP tax rates and tax effects related to these
items.
- Non-GAAP tax rate, which excludes the
effects of amortization of intangible assets primarily related to
business combinations and stock-based compensation expense, is
expected to be in the range of 22% to 23%.
The above statements are based on current expectations. These
statements are forward-looking, and actual results may differ
materially.
Financial Outlook for Fiscal Year 2011
Citrix management expects to achieve the following results
during fiscal year 2011 ending December 31, 2011:
- Net revenue is expected to be in the
range of $2.14 billion to $2.17 billion.
- GAAP diluted earnings per share is
expected to be in the range of $1.91 to $1.94. Non-GAAP diluted
earnings per share is expected to be in the range of $2.38 to
$2.41, excluding $0.31 related to the effects of amortization of
intangible assets primarily related to business combinations, $0.44
related to the effects of stock-based compensation expenses, and
$(0.25) to $(0.31) for the effect of the differential between the
GAAP and non-GAAP tax rates and tax effects related to these
items.
The above statements are based on current expectations. These
statements are forward-looking, and actual results may differ
materially.
Company, Product and Alliance Highlights
During the first quarter of 2011, Citrix announced:
- A partnership with Skype to deliver Web
and audio conferencing capabilities enabled with Citrix®
GoToMeeting® technology.
- The close of the Netviewer AG
acquisition, a leading, privately held European
Software-as-a-Service (SaaS) vendor in collaboration and IT
services, which will accelerate Citrix’s global expansion and
extend its SaaS leadership in Europe.
- Engineering support to Amazon for the
optimization of Citrix products and Windows applications that run
on Amazon Web Services (AWS) to further enhance interoperability
and performance of Windows workloads on AWS, while ensuring
continued innovation for the Xen virtualization platform.
- New Citrix NetScaler® DataStream
technology that addresses companies’ need to manage the explosive
growth in cloud, mobile and corporate data.
- Citrix XenServer® is certified on IBM
System x and BladeCenter Servers, which enables customers to more
easily leverage Citrix XenServer and IBM servers to automate
datacenter management processes and increase efficiency of
datacenter infrastructures.
- Xen.org, the open source industry
standard for virtualization hosted by Citrix, announced the
availability of Xen Cloud Platform (XCP) 1.0, a full-featured
solution for enterprises that want to build private clouds, as well
as open source enthusiasts, universities and researchers to
experiment with cloud computing.
- Its first Citrix Startup Accelerator
investment, Primadesk, which helps users search, manage and backup
their personal cloud data with one simple interface no matter what
device they use.
Conference Call Information
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 by visiting the Investor Relations section of
the Citrix corporate website at http://www.citrix.com/investors for
approximately 30 days. In addition, an audio replay of the
conference call will be available for approximately 15 days by
dialing (800) 642-1687 or (706) 645-9291 (passcode required:
58832886).
About Citrix
Citrix Systems, Inc. (NASDAQ:CTXS) is a leading provider of
virtual computing solutions that help people work and play from
anywhere on any device. More than 230,000 enterprises rely on
Citrix to create better ways for people, IT and business to work
through virtual meetings, desktops and datacenters. Citrix
virtualization, networking and cloud solutions deliver over 100
million corporate desktops and touch 75 percent of Internet users
each day. Citrix partners with over 10,000 companies in 100
countries. Annual revenue in 2010 was $1.87 billion.
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 Second
Quarter 2011 and Financial Outlook for Fiscal Year 2011 sections,
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, the impact of the global economy and uncertainty in the
IT spending environment, including Citrix's European markets; the
success and growth of the company's product lines, including risks
associated with successfully introducing new products into Citrix's
distribution channels, including XenDesktop; the company's product
concentration and its ability to develop and commercialize new
products and services, including XenDesktop and its other
virtualization offerings, while maintaining sales of its
established products, especially XenApp; disruptions due to changes
in key personnel and succession risks; 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, OEM's 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; Citrix's ability to develop server, application and
desktop virtualization products, and jointly market those products
with Microsoft; the introduction of new products by competitors or
the entry of new competitors into the markets for Citrix's products
as the enterprise software landscape evolves; the ability of Citrix
to make suitable acquisitions on favorable terms in the future and
to successfully integrate those acquisitions; failure to further
develop and successfully market the technology and products of
acquired companies, including the possible failure to achieve or
maintain anticipated revenues and profits from acquisitions,
including the acquisition of Netviewer; the management of
anticipated future growth; the recruitment and retention of
qualified employees, including those of acquired companies; risks
in effectively controlling operating expenses, including failure to
manage unexpected expenses; impairment of the value of the
company's investments; the effect of new accounting pronouncements
on revenue and expense recognition; litigation and disputes,
including challenges to our intellectual property rights or
allegations of infringement of the intellectual property rights of
third parties; the inability to further innovate our technology due
to the intellectual property rights of third parties; changes in
the company's pricing and licensing models, promotional programs
and product mix, all of which may impact Citrix's revenue
recognition, including with respect to XenDesktop and SaaS business
models, or those of its competitors; charges in the event of the
impairment of assets acquired through business combinations and
licenses; competition, international market readiness and execution
and other risks associated with the markets for Citrix's Web-based
access, collaboration and IT management services and for our Web
application delivery appliances; unanticipated changes in tax rates
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.
Use of Non-GAAP Financial Measures
In Citrix’s earnings release, conference call, slide
presentation or webcast, Citrix may use or discuss non-GAAP
financial measures as defined by SEC Regulation G. The GAAP
financial measure most directly comparable to each non-GAAP
financial measure used or discussed and a reconciliation of the
differences between each non-GAAP financial measure and the
comparable GAAP financial measure are included in this press
release after the condensed consolidated financial statement or can
be found on the Investor Relations page of the Citrix corporate Web
site at http://www.citrix.com/investors.
Citrix®, GoToMeeting®, NetScaler®, and XenServer®, are
trademarks or registered trademarks of Citrix Systems, Inc. and/or
one or more of its subsidiaries, and may be registered in the U.S.
Patent and Trademark Office and in other countries. Xen® is a
trademark of Citrix Systems, Inc. managed on behalf of Xen.org, and
may be registered in the U.S. Patent and Trademark Office and in
other countries. All other trademarks and registered trademarks are
property of their respective owners.
CITRIX SYSTEMS, INC.
Condensed Consolidated Statements of
Income
(In thousands, except per share data -
unaudited)
Three Months Ended
March 31,
2011 2010 Revenues: Product licenses $150,260
$122,706 License updates 177,876 162,955 Online services 99,772
84,950 Technical services 62,980 43,661 Total net revenues 490,888
414,272 Cost of net revenues: Cost of product license
revenues 14,041 12,651 Cost of services revenues 30,666 23,690
Amortization of product related intangible assets 12,699 12,358
Total cost of net revenues 57,406 48,699 Gross margin 433,482
365,573 Operating expenses: Research and development 82,718
77,702 Sales, marketing and services 194,243 170,520 General and
administrative 72,105 60,619 Amortization of other intangible
assets 3,509 4,157 Restructuring 24 500 Total operating expenses
352,599 313,498 Income from operations 80,883 52,075
Other income, net 7,572 3,933 Income before income taxes 88,455
56,008 Income taxes 15,108 8,659 Net income 73,347 47,349
Net loss attributable to non-controlling interest 156 - Net income
attributable to Citrix Systems, Inc $73,503 $47,349 Earnings
per common share – diluted $0.38 $0.25 Weighted average shares
outstanding – diluted 191,500 188,842
CITRIX SYSTEMS, INC.
Condensed Consolidated Balance
Sheets
(In thousands - unaudited)
March 31, 2011
December 31, 2010
ASSETS: Cash and cash equivalents $515,340 $396,162
Short-term investments 414,579 497,643 Accounts receivable, net
297,190 378,395 Other current assets, net 204,730 198,279 Total
current assets 1,431,839 1,470,479 Long-term investments
708,906 791,854 Property and equipment, net 261,235 250,482
Goodwill and other intangible assets, net 1,239,469 1,099,244 Other
long-term assets 111,116 91,541 Total assets $3,752,565 $3,703,600
LIABILITIES AND STOCKHOLDERS’ EQUITY: Accounts
payable and accrued expenses $295,876 $355,680 Current portion of
deferred revenues 678,186 664,332 Total current liabilities 974,062
1,020,012 Long-term portion of deferred revenues 110,569
114,638 Other liabilities 48,960 8,362 Stockholders' equity
2,618,974 2,560,588 Total liabilities and stockholders’ equity
$3,752,565 $3,703,600
CITRIX SYSTEMS, INC.
Condensed Consolidated Statement of
Cash Flows
(In thousands - unaudited)
Three Months Ended March
31, 2011
OPERATING ACTIVITIES $73,347 Net Income
Adjustments to reconcile net income to net
cash provided by
Amortization and depreciation 35,849 Stock-based compensation
expense 17,884 Provision for accounts receivable allowances 629
Other non-cash items (1,389)
Total adjustments to reconcile net income
to net cash
52,973 provided by operating activities Changes in operating assets
and liabilities, net of the effects of acquisitions: Accounts
receivable 85,622 Prepaid expenses and other current assets (7,059)
Other assets (1,293) Deferred tax assets, net (14,196) Accounts
payable and accrued expenses (63,215) Deferred revenues 2,240 Other
liabilities 30,809 Total changes in operating assets and
liabilities, net of the effects of acquisitions 32,908 Net cash
provided by operating activities 159,228
INVESTING
ACTIVITIES Proceeds from available-for-sale investments, net of
purchases 166,523 Purchases of property and equipment (26,845)
Purchases of other assets (1,852) Cash paid for acquisitions, net
of cash acquired (118,440) Cash paid for licensing and core
technology (1,522) Net cash provided by investing activities 17,864
FINANCING ACTIVITIES Proceeds from issuance of common
stock under stock-based compensation plans 42,337 Payment on debt
from acquisitions (10,926) Excess tax benefit from exercise of
stock options 15,502 Stock repurchases, net (108,751) Net cash used
in financing activities (61,838) Effect of exchange rate changes on
cash and cash equivalents 3,924 Change in cash and cash equivalents
119,178 Cash and cash equivalents at beginning of period 396,162
Cash and cash equivalents at end of period $515,340
Reconciliation of Non-GAAP Financial
Measures to Comparable U.S. GAAP Measures
(Unaudited)
Pursuant to the requirements of Regulation G, the Company has
provided a reconciliation of each non-GAAP financial measure used
in this earnings release and related conference call, slide
presentation or webcast to the most directly comparable GAAP
financial measure. These measures differ from GAAP in that they
exclude amortization primarily related to business combinations,
stock-based compensation expenses, charges associated with the
Company’s 2009 restructuring program and the related tax effect of
those items. The Company's basis for these adjustments is described
below.
Management uses these non-GAAP measures for internal reporting
and forecasting purposes, when publicly providing its business
outlook, to evaluate the Company's performance and to evaluate and
compensate the Company's executives. The Company has provided these
non-GAAP financial measures in addition to GAAP financial results
because it believes that these non-GAAP financial measures provide
useful information to certain investors and financial analysts for
comparison across accounting periods not influenced by certain
non-cash items that are not used by management when evaluating the
Company's historical and prospective financial performance. In
addition, the Company has historically provided this or similar
information and understands that some investors and financial
analysts find this information helpful in analyzing the Company's
operating margins, operating expenses and net income and comparing
the Company's financial performance to that of its peer companies
and competitors.
Management typically excludes the amounts described above when
evaluating the Company's operating performance and believes that
the resulting non-GAAP measures are useful to investors and
financial analysts in assessing the Company's operating performance
due to the following factors:
- The Company does not acquire businesses
on a predictable cycle. The Company, therefore, believes that the
presentation of non-GAAP measures that adjust for the impact of
amortization and certain stock-based compensation expenses and the
related tax effects that are primarily related to business
combinations, provide investors and financial analysts with a
consistent basis for comparison across accounting periods and,
therefore, are useful to investors and financial analysts in
helping them to better understand the Company's operating results
and underlying operational trends.
- Amortization costs and the related tax
effects are fixed at the time of an acquisition, are then amortized
over a period of several years after the acquisition and generally
cannot be changed or influenced by management after the
acquisition.
- Although stock-based compensation is an
important aspect of the compensation of the Company's employees and
executives, stock-based compensation expense is generally fixed at
the time of grant, then amortized over a period of several years
after the grant of the stock-based instrument, and generally cannot
be changed or influenced by management after the grant.
- The charges incurred in conjunction
with the Company's 2009 restructuring program, which relate to
reductions in headcount and exit costs associated with
consolidating certain facilities, are not ongoing costs and, thus,
are outside of the normal operations of the Company's business. The
Company, therefore, believes that the exclusion of these charges
will better help investors and financial analysts understand the
Company's operating results and underlying operational trends as
compared to prior periods.
These non-GAAP financial measures are not prepared in accordance
with accounting principles generally accepted in the United States
("GAAP") and may differ from the non-GAAP information used by other
companies. There are significant limitations associated with the
use of non-GAAP financial measures. The additional non-GAAP
financial information presented here should be considered in
conjunction with, and not as a substitute for or superior to, the
financial information presented in accordance with GAAP (such as
net income and earnings per share) and should not be considered
measures of the Company's liquidity. Furthermore, the Company in
the future may exclude amortization primarily related to new
business combinations, additional charges related to its
restructuring program and the related tax effects from financial
measures that it releases, and the Company expects to continue to
incur stock-based compensation expenses.
CITRIX SYSTEMS, INC.
Non-GAAP Financial Measures
Reconciliation
(In thousands, except per share and
operating margin data - unaudited)
The following tables show the non-GAAP
financial measures used in this press release reconciled to the
most directly comparable GAAP financial measures.
Three Months Ended March 31, 2011 GAAP
operating margin 16.5% Add: stock-based compensation 3.6 Add:
amortization of product related intangible assets 2.6 Add:
amortization of other intangible assets 0.7 Add: 2009 restructuring
charges − Non-GAAP operating margin 23.4%
Three Months Ended March 31, 2011 2010
GAAP net income $73,503 $47,349 Add: stock-based compensation
17,884 24,927 Add: amortization product related intangible assets
12,699 12,358 Add: amortization of other intangible assets 3,509
4,157 Add: 2009 restructuring charges 24 500 Less: tax effects
related to above items (10,975) (14,242) Non-GAAP net income
$96,644 $75,049
Three Months Ended March 31,
2011 2010 GAAP earnings per share – diluted $0.38
$0.25 Add: stock-based compensation 0.09 0.13 Add: amortization of
product related intangible assets 0.07 0.07 Add: amortization of
other intangible assets 0.02 0.02 Add: 2009 restructuring charges −
− Less: tax effects related to above items (0.06) (0.07) Non-GAAP
earnings per share – diluted $0.50 $0.40
CITRIX SYSTEMS, INC.
Forward Looking Guidance
For the Three Months Ended June
30,
For the Twelve Months Ended
December 31,
2011 2011 GAAP earnings per share - diluted $0.41 to
$0.42 $1.91 to $1.94 Add: Adjustments to exclude the effects of
amortization of intangible assets
0.08
0.31
Add: Adjustments to exclude the effects of expenses related to
stock-based compensation
Less: Differential between the GAAP and
non-GAAP tax rates and tax effects related to above items
0.12
(0.06) to (0.08)
0.44
(0.25) to (0.31)
Non-GAAP earnings per share - diluted $0.54 to $0.55 $2.38 to $2.41
Three Months Ended June 30, 2011 GAAP tax rate 17.0%
to 18.0% Add: tax effects of stock-based compensation and
amortization of intangible assets 5.0% Non-GAAP tax rate 22.0% to
23.0%
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