Citrix Systems, Inc. (NASDAQ:CTXS) today reported financial
results for the third quarter of fiscal 2011 ended September 30,
2011.
FINANCIAL RESULTS
In the third quarter of fiscal 2011, Citrix achieved revenue of
$565 million, compared to $472 million in the third quarter of
fiscal 2010, representing 20 percent revenue growth.
GAAP Results
Net income for the third quarter of fiscal 2011 was $92 million,
or $0.49 per diluted share, compared to $88 million, or $0.46 per
diluted share, for the third quarter of 2010.
Non-GAAP Results
Non-GAAP net income in the third quarter of fiscal 2011 was $121
million, or $0.64 per diluted share, compared to $118 million, or
$0.62 per diluted share, in the comparable period last year.
Non-GAAP net income excludes the effects of amortization of
intangible assets primarily related to business combinations,
stock-based compensation expenses and the tax effects related to
those items. In addition, non-GAAP net income for the third quarter
of fiscal 2010 excludes amounts recorded in connection with the
restructuring program that the company implemented in January 2009
and the related tax effect.
“This was a great quarter for Citrix,” said Mark Templeton,
president and chief executive officer for Citrix. “I couldn’t be
more delighted or proud of our Q3 performance across geographies,
business lines and financially.
“We have strong positions across SaaS and collaboration,
virtualization and desktop, networking and cloud platform markets…
and the investments we’ve made over the past year in people,
infrastructure, innovation and go-to-market is powering growth
through geographical reach and business model diversity.”
Q3 Financial Summary
In reviewing the third quarter results of 2011, compared to the
third quarter of 2010:
- Product license revenue increased 28
percent;
- Revenue from license updates increased
7 percent;
- Online services revenue increased 20
percent;
- Technical services revenue, which is
comprised of consulting, education and technical support, increased
37 percent;
- Revenue increased in the America’s
region by 21 percent, increased in the EMEA region by 12 percent,
and increased in the Pacific region by 39 percent;
- Deferred revenue totaled $834 million,
compared to $680 million as of September 30, 2010;
- GAAP operating margin was 19 percent
for the quarter and non-GAAP operating margin was 26 percent for
the quarter, excluding the effects of amortization of intangible
assets primarily related to business combination and stock-based
compensation expenses;
- Cash flow from operations was $188
million, compared with $190 million in the third quarter of 2010;
and
- The company repurchased 2.2 million
shares at an average price of $56.68.
ShareFile Acquisition
In October 2011, Citrix announced the acquisition of ShareFile™,
a market leading provider of secure, cloud-based data storage,
sharing and collaboration. The ShareFile product line makes it easy
for businesses of all sizes to securely store, sync and share
business documents and files, both inside and outside the company.
ShareFile's centralized cloud storage capability also allows users
to share files across multiple devices and access them from any
location.
App-DNA Acquisition
Yesterday, Citrix announced that it has agreed to acquire
App-DNA™, a leader in application migration and management and
long-time Citrix partner. The acquisition is subject to customary
closing conditions and is expected to close in the fourth quarter.
App-DNA technology adds a significant component to the Citrix
Desktop Transformation strategy aimed at helping customers speed
deployments of desktop virtualization enterprise-wide. The App-DNA
AppTitude™ product enables organizations to quickly and
intelligently assess their application portfolio and migration
plans.
Financial Outlook for Fourth Quarter 2011
Citrix management expects to achieve the following results
during its fourth fiscal quarter of 2011 ending December 31,
2011:
- Revenue is expected to be in the range
of $610.0 million to $620.0 million.
- GAAP diluted earnings per share is
targeted to be in the range of $0.59 to $0.60. Non-GAAP diluted
earnings per share is expected to be in the range of $0.75 to
$0.76, excluding $0.11 related to the effects of amortization of
intangible assets primarily related to business combinations, $0.15
related to the effects of stock-based compensation expenses, and
$(0.09) to $(0.11) for 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
targeted to be in the range of 22 percent to 23 percent.
The above statements are based on current targets and include
the impact of recent acquisitions. 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:
- Revenue is targeted to be in the range
of $2.20 billion to $2.21 billion.
- GAAP diluted earnings per share is
targeted to be in the range of $1.88 to $1.90. Non-GAAP diluted
earnings per share is targeted to be in the range of $2.45 to
$2.46, excluding $0.38 related to the effects of amortization of
intangible assets primarily related to business combinations, $0.48
related to the effects of stock-based compensation expenses, and
$(0.28) to $(0.31) for the tax effects related to these items.
The above statements are based on current targets and include
the impact of recent acquisitions. These statements are
forward-looking, and actual results may differ materially.
Preliminary Outlook for Fiscal Year 2012
The company’s preliminary outlook for the full fiscal year 2012
is for net revenue to be in the range of $2.47 billion to $2.48
billion.
The above statement is based on current targets and includes the
impact of recent acquisitions. This statement is forward-looking,
and actual results may differ materially.
Company, Product and Alliance Highlights
During the third quarter of 2011, Citrix announced:
- Citrix closed the acquisition of
Cloud.com, a market leading provider of software infrastructure
platforms for cloud providers, further establishing Citrix as a
leader in infrastructure for the rapidly growing cloud provider
market.
- Citrix closed the acquisition of
RingCube®, a leader in user personalization technology for virtual
desktops, accelerating the adoption of virtual desktops by
eliminating the tradeoff between user personalization and
centralized IT management.
- Citrix XenDesktop® 5.5, which adds
major enhancements in user experience, rich consumer device support
and personalization, including the “Personal vDisk” technology
acquired in August from RingCube, making it easier for customers to
deploy highly personalized virtual desktops at a substantially
lower cost.
- Availability of Citrix XenServer® 6,
the most recent edition of its server virtualization product line,
which brings new optimizations and improved scalability and
performance for cloud infrastructure, desktop virtualization and
networking.
- A new edition of CloudStack™, its free
and open source cloud infrastructure platform, which provides
enhanced support for the VMware vSphere and Oracle VM hypervisors,
enabling VMware and Oracle customers to manage their virtualized
servers as a highly available, scalable cloud computing
environment.
- Availability of Citrix GoToMeeting®
with HDFaces™, its award-winning web conferencing solution, now
with high-definition group video conferencing for up to six
attendees, enabling a telepresence-like meeting experience simply
using a webcam and an Internet connection.
- The expansion of its growing line of
mobile workforce solutions for the Android market with the
availability of Citrix GoToMeeting for Android, a free application
that gives Android smartphone users the ability to join online
meetings anywhere, anytime.
- Citrix GoToAssist® remote support
service is now available as an application on the Salesforce.com
AppExchange and is integrated with Salesforce CRM to create a more
comprehensive service experience for customers.
- Citrix GoToManage® app for iPad is
available for free in the App Store, giving IT professionals the
freedom to securely troubleshoot and provide on-demand technical
support to a computer user from anywhere.
Conference Call Information
Citrix will host a conference call today at 8 a.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:
13033739).
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 250,000 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 approximately 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. 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 Fourth
Quarter 2011, Financial Outlook for Fiscal Year 2011 and
Preliminary Outlook for Fiscal Year 2012 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 and ability of markets for these products to
sustain growth; 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; 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 operating performance contributions from
acquisitions; the management of expenses associated with
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 untargeted expenses; the effect of new accounting
pronouncements on revenue and expense recognition; the risks
associated with securing data and maintaining security of customer
files stored by our services, including in an environment of
anticipated higher demand; 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, 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,
investments or licenses; competition, international market
readiness, execution and other risks associated with the markets
for Citrix's products and services; 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.
Citrix®, Sharefile™, Ringcube®, XenDesktop®. XenServer®,
CloudStack™, GoToMeeting®, HDFaces™ GoToAssist®, and GoToManage®
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. All
other trademarks and registered trademarks are property of their
respective owners.
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 statements or
can be found on the Investor Relations page of the Citrix corporate
Web site at http://www.citrix.com/investors.
CITRIX SYSTEMS, INC.
Condensed Consolidated Statements of
Income
(In thousands, except per share data -
unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2011 2010 2011
2010 Revenues: Product licenses $193,880
$151,758 $515,466 $423,197 License updates 187,169 174,128 548,920
505,684 Online services 109,558 91,660 315,809 265,821 Technical
services 74,741 54,687 206,831
150,236 Total net revenues 565,348 472,233 1,587,026 1,344,938
Cost of net revenues: Cost of product license revenues
22,345 19,325 54,834 47,125 Cost of services revenues 39,711 25,934
108,283 75,613 Amortization of product related intangible assets
14,679 12,539 39,920 37,314
Total cost of net revenues 76,735 57,798 203,037 160,052 Gross
margin 488,613 414,435 1,383,989 1,184,886 Operating
expenses: Research and development 88,933 87,399 254,963 244,644
Sales, marketing and services 212,985 174,734 606,587 531,855
General and administrative 77,586 67,404 229,387 188,828
Amortization of other intangible assets 4,430 3,334 11,876 11,267
Restructuring - 87 24 922 Total
operating expenses 383,934 332,958
1,102,837 977,516 Income from operations 104,679
81,477 281,152 207,370 Other (expense) income, net (1,861 )
5,700 10,799 10,508 Income before
income taxes 102,818 87,177 291,951 217,878 Income taxes
10,642 (602 ) 45,020 35,193 Net income
92,176 87,779 246,931 182,685 Net loss attributable to
non-controlling interest - - 692
- Net income attributable to Citrix Systems, Inc. $92,176
$87,779 $247,623 $182,685 Net
income per common share – diluted $0.49 $0.46
$1.30 $0.96 Weighted average shares outstanding –
diluted 189,730 191,004 191,155
189,827
CITRIX SYSTEMS, INC.
Condensed Consolidated Balance
Sheets
(In thousands - unaudited)
September 30, 2011
December 31, 2010
ASSETS: Cash and cash equivalents $312,130 $396,162
Short-term investments 462,921 497,643 Accounts receivable, net
339,494 378,395 Other current assets, net 197,096 198,279
Total current assets 1,311,641 1,470,479 Long-term
investments 765,822 791,854 Property and equipment, net 277,951
250,482 Goodwill and other intangible assets, net 1,438,811
1,099,244 Other long-term assets 88,639 91,541 Total assets
$3,882,864 $3,703,600
LIABILITIES AND
STOCKHOLDERS’ EQUITY: Accounts payable and accrued expenses
$340,359 $355,680 Current portion of deferred revenues 710,379
664,332 Total current liabilities 1,050,738 1,020,012
Long-term portion of deferred revenues 123,287 114,638 Other
liabilities 48,914 8,362 Stockholders' equity 2,659,925
2,560,588 Total liabilities and stockholders’ equity
$3,882,864 $3,703,600
CITRIX SYSTEMS, INC.
Condensed Consolidated Statement of
Cash Flows
(In thousands - unaudited)
Three
MonthsEndedSeptember 30,2011
Nine MonthsEndedSeptember
30,2011
OPERATING ACTIVITIES $92,176 $246,931 Net Income Adjustments
to reconcile net income to net cash provided by operating
activities: Amortization and depreciation 42,889 115,594
Stock-based compensation expense 24,954 63,591 Provision for
accounts receivable allowances 2,713 4,266 Other non-cash items
7,121 7,771 Total adjustments to reconcile net income
to net cash Activities 77,677 191,222 provided by operating
activities Changes in operating assets and liabilities, net of the
effects of acquisitions: Accounts receivable (3,211 ) 41,194
Prepaid expenses and other current assets 11,848 (8,143 ) Other
assets 4,842 5,339 Deferred tax assets, net (5,249 ) (18,285 )
Accounts payable and accrued expenses 7,945 (26,104 ) Deferred
revenues 3,369 46,657 Other liabilities (1,363 ) 30,748
Total changes in operating assets and liabilities, net of the
effects of acquisitions 18,181 71,406 Net cash
provided by operating activities 188,034 509,559
INVESTING ACTIVITIES Proceeds from available-for-sale
investments, net 41,460 64,844 Purchases of property and equipment
(29,399 ) (88,855 ) Purchases of other assets (7,596 ) (15,818 )
Cash paid for acquisitions, net of cash acquired (191,032 )
(309,472 ) Cash paid for licensing and core technology (5,677 )
(13,164 ) Net cash used in investing activities (192,244 ) (362,465
)
FINANCING ACTIVITIES Proceeds from issuance of
common stock under stock-based compensation plans 9,701 94,827
Payment on debt from acquisitions (635 ) (11,561 ) Excess tax
benefit from exercise of stock options 2,599 39,868 Stock
repurchases, net (125,112 ) (337,079 ) Cash paid for
non-controlling interest - (20,207 ) Net cash used in
financing activities (113,447 ) (234,152 ) Effect of exchange rate
changes on cash and cash equivalents (1,029 ) 3,026 Change in cash
and cash equivalents (118,686 ) (84,032 ) Cash and cash equivalents
at beginning of period 430,816 396,162 Cash and cash
equivalents at end of period $312,130 $312,130
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 themost
directly comparable GAAP financial measures.
Three Months Ended September
30,2011
GAAP operating margin 18.5% Add: stock-based compensation 4.4% Add:
amortization of product related intangible assets 2.6% Add:
amortization of other intangible assets 0.8% Non-GAAP operating
margin 26.3%
Three Months Ended September 30,
2011 2010 GAAP net income $92,176
$87,779 Add: stock-based compensation 24,954 30,833 Add:
amortization product related intangible assets 14,679 12,539 Add:
amortization of other intangible assets 4,430 3,334 Add:
restructuring charges - 87 Less: tax effects related to above items
(15,665 ) (16,330 ) Non-GAAP net income $120,574
$118,242
Three Months Ended September
30,
2011 2010 GAAP earnings per share – diluted
$0.49 $0.46 Add: stock-based compensation 0.13 0.16 Add:
amortization of product related intangible assets 0.08 0.07 Add:
amortization of other intangible assets 0.02 0.02 Add:
restructuring charges - - Less: tax effects related to above items
(0.08 ) (0.09 ) Non-GAAP earnings per share – diluted $0.64
$0.62
CITRIX SYSTEMS, INC.
Forward Looking Guidance
For the Three Months
EndedDecember 31,
For the Twelve Months
EndedDecember 31,
2011 2011 GAAP earnings per share - diluted
$0.59 to $0.60 $1. 88 to $1.90 Add: Adjustments to exclude the
effects of amortization of intangible assets 0.11 0.38 Add:
Adjustments to exclude the effects of expenses related to
stock-based 0.15 0.48 compensation (0.09) to (0.11) (0.28)
to (0.31) Less: Tax effects related to above items
Non-GAAP earnings per share - diluted $0.75 to
$0.76 $2.45 to $2.46
Three Months Ended December
31,2011
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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