Citrix Systems, Inc. (NASDAQ:CTXS) today reported financial
results for the fourth quarter and fiscal year ended December 31,
2011.
FINANCIAL RESULTS
In the fourth quarter of fiscal year 2011, Citrix achieved
revenue of $619 million, compared to $530 million in the fourth
quarter of fiscal year 2010, representing 17 percent revenue
growth. For the fiscal year 2011, Citrix reported annual revenues
of $2.21 billion, compared to $1.87 billion in fiscal year 2010, an
18 percent increase.
GAAP Results
Net income for the fourth quarter of fiscal 2011 was $109
million, or $0.58 per diluted share, compared to $94 million, or
$0.49 per diluted share, for the fourth quarter of 2010. Annual net
income for 2011 was $356 million, or $1.87 per diluted share,
compared to $277 million, or $1.46 per diluted share, in fiscal
year 2010.
Non-GAAP Results
Non-GAAP net income in the fourth quarter of fiscal 2011 was
$147 million, or $0.78 per diluted share, compared to $125 million,
or $0.65 per diluted share, in the fourth quarter of fiscal year
2010. 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 fourth
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.
Annual non-GAAP net income for 2011 was $473 million, or $2.48
per diluted share, compared to $396 million, or $2.08 per diluted
share, in 2010. 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 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 to cap another record year,” said Mark
Templeton, president and chief executive officer for Citrix.
“Greater diversity in our products and channel, combined with a
compelling vision, is driving more C-level engagement as well as
more up-sell and cross-sell opportunities. As a result, we are
seeing more strategic deals, more use of our products as an
end-to-end system, and deeper engagement with our customers through
services.
“I’m pleased with how the team’s great execution across
strategy, innovation and operations has delivered growth in both
revenue and profit.”
Q4 Financial Summary
In reviewing the fourth quarter results of 2011, compared to the
fourth quarter of 2010:
- Product license revenue increased 17
percent;
- Revenue from license updates increased
9 percent;
- Software as a service revenue increased
21 percent;
- Technical services revenue, which is
comprised of consulting, education and technical support, increased
34 percent;
- Revenue increased in the America’s
region by 16 percent, increased in the EMEA region by 12 percent
and increased in the Pacific region by 37 percent;
- Deferred revenue totaled $960 million,
compared to $779 million as of December 31, 2010;
- GAAP operating margin was 22 percent
for the quarter and non-GAAP operating margin was 30 percent for
the quarter, excluding the effects of amortization of intangible
assets primarily related to business combinations and stock-based
compensation expenses;
- Cash flow from operations was $170
million, compared with $179 million in the fourth quarter of 2010;
and
- The company repurchased 1.4 million
shares at an average price of $70.84.
Annual Financial Summary
In reviewing 2011 results compared to 2010 results:
- Product license revenue increased 20
percent;
- License updates revenue increased 9
percent;
- Software as a service revenue increased
19 percent;
- Technical services revenue, which is
comprised of consulting, education and technical support, increased
36 percent;
- Revenue increased in the Americas’
region by 19 percent, increased in the EMEA region by 11 percent,
and increased in the Pacific region by 33 percent;
- GAAP operating margin was 19 percent
for fiscal 2011, and non-GAAP operating margin was 26 percent,
excluding the effects of amortization of intangible assets
primarily related to business combinations, stock-based
compensation expenses and costs associated with the 2009
restructuring program;
- Cash flow from operations was $679
million for fiscal 2011 compared with $616 million last year;
and
- During fiscal 2011, the company
repurchased 6.5 million shares at an average price of $67.84.
Financial Outlook for Fiscal Year 2012
Citrix management expects to achieve the following results
during its fiscal year 2012 ending December 31, 2012:
- Revenue is targeted to be in the range
of $2.49 billion to $2.51 billion;
- GAAP diluted earnings per share is
targeted to be in the range of $1.88 to $1.97. Non-GAAP diluted
earnings per share is targeted to be in the range of $2.70 to
$2.74, excluding $0.41 related to the effects of amortization of
intangible assets primarily related to business combinations, $0.71
related to the effects of stock-based compensation expenses, and
$(0.26) to $(0.39) 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.
Financial Outlook for First Quarter 2012
Citrix management expects to achieve the following results
during its first fiscal quarter of 2012 ending March 31, 2012:
- Revenue is targeted to be in the range
of $555.0 million to $565.0 million.
- GAAP diluted earnings per share is
targeted to be in the range of $0.30 to $0.31. Non-GAAP diluted
earnings per share is targeted to be in the range of $0.49 to
$0.51, excluding $0.10 related to the effects of amortization of
intangible assets primarily related to business combinations, $0.16
related to the effects of stock-based compensation expenses, and
$(0.05) to $(0.08) for the 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. These
statements are forward-looking, and actual results may differ
materially.
Company, Product and Alliance Highlights
During the fourth quarter of 2011, Citrix announced:
- A strategic alliance with Cisco to
develop and deliver solutions that help customers simplify and
accelerate large-scale desktop virtualization deployments,
including high-definition virtual desktops and applications and
improved end user experiences, over a highly secure Citrix®
HDX™-enabled Cisco network.
- The acquisition of App-DNA™, a leader
in application migration and management and long-time Citrix
partner, to help customers speed deployments of desktop
virtualization enterprise-wide.
- A broad new set of products, solutions
and programs, including Citrix VDI-in-a-Box 5, designed to help
small and medium businesses (SMBs) move from the PC Era to the
Cloud Era by capitalizing on the benefits of desktop
virtualization.
- New additions to Citrix NetScaler® MPX™
and SDX product lines that deliver high performance and
virtualization to tackle large-scale network consolidation
initiatives with the flexibility to scale without additional
hardware – requirements for building private and public
clouds.
- Citrix NetScaler CloudConnectors™,
which create an end-to-end service delivery fabric to enable
enterprises and Internet application and content providers to knit
on- and off-premise datacenter capabilities into a seamless system
with increased optimizations.
- The next stage of the Citrix strategy
for Citrix CloudGateway™, the industry’s first unified service
broker that aggregates, controls and delivers Windows, Web, SaaS
and mobile applications to any user on any device, accelerating
enterprise adoption of cloud and mobility.
- The Citrix CloudPortal™, a new product
line designed to help providers transform general purpose cloud
infrastructure into profitable cloud businesses, as well as the
next release of its flagship Citrix CloudStack™ platform, acquired
in 2011 through the acquisition of Cloud.com.
- Citrix completed the acquisition of
ShareFile™, a market-leading provider of secure, cloud-based data
storage, sharing and collaboration, with products that make it easy
for businesses of all sizes to securely store, sync and share
business documents and files across multiple devices and access
them from any location.
- The opening of its recently acquired
ShareFile data cloud to create a “Follow-Me-Data Fabric” for
sharing business data across a wide range of applications, devices
and services. This makes it easy for third-party developers and
vendors to incorporate common data services like search, share,
sync, secure and remote wipe into their solutions through a set of
open APIs.
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:
41804390).
About Citrix
Citrix Systems, Inc. (NASDAQ:CTXS) is the company transforming
how people, businesses and IT work and collaborate in the cloud
era. With market-leading cloud, collaboration, networking and
virtualization technologies, Citrix powers mobile work styles and
cloud services, making complex enterprise IT simpler and more
accessible for 250,000 enterprises. Citrix touches 75 percent of
Internet users each day and partners with more than 10,000
companies in 100 countries. Annual revenue in 2011 was $2.21
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 First
Quarter 2012 and Financial 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
become mainstream and 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; the introduction of new products
by competitors or the entry of new competitors into the markets for
Citrix's products and services; 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, including Citrix’s recent
acquisitions in 2011; 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®, HDX™, App-DNA™, NetScaler®, MPX™, CoudConnectors™,
CoudGateway™, CloudPortal™, CloudStack™, and Sharefile™ 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
December 31,
Year Ended
December 31,
2011 2010 2011
2010 Revenues: Product licenses $229,047
$196,255 $744,513 $619,452 License updates 192,914 176,562 741,834
682,246 Software as a service 114,404 94,796 430,213 360,617
Technical services 83,001 62,111 289,832
212,347 Total net revenues 619,366 529,724 2,206,392 1,874,662
Cost of net revenues: Cost of product license revenues
19,559 19,557 74,393 66,682 Cost of services revenues 44,780 30,621
153,063 106,234 Amortization of product related intangible assets
14,821 13,190 54,741 50,504 Total cost of net
revenues 79,160 63,368 282,197 223,420 Gross margin 540,206 466,356
1,924,195 1,651,242 Operating expenses: Research and
development 88,764 82,003 343,727 326,647 Sales, marketing and
services 233,231 197,899 839,818 729,754 General and administrative
77,883 70,047 307,270 258,875 Amortization of other intangible
assets 4,514 3,012 16,390 14,279 Restructuring - 49
24 971 Total operating expenses 404,392 353,010
1,507,229 1,330,526 Income from operations
135,814 113,346 416,966 320,716 Other income, net 2,732
2,596 13,531 13,104 Income before income taxes
138,546 115,942 430,497 333,820 Income taxes 29,847
22,186 74,867 57,379 Net income 108,699 93,756
355,630 276,441 Net loss attributable to non-controlling interest -
624 692 624 Net income attributable to Citrix
Systems, Inc. $108,699 $94,380 $356,322
$277,065 Net income per common share – diluted $0.58
$0.49 $1.87 $1.46 Weighted average shares outstanding
– diluted 188,588 191,627 190,641 190,335
CITRIX SYSTEMS, INC.
Condensed Consolidated Balance
Sheets
(In thousands - unaudited)
December 31, 2011
December 31, 2010
ASSETS: Cash and cash equivalents $333,296 $396,162
Short-term investments 406,461 497,643 Accounts receivable, net
484,431 378,395 Other current assets, net 148,842 198,279
Total current assets 1,373,030 1,470,479 Long-term
investments 737,844 791,854 Property and equipment, net 277,429
250,482 Goodwill and other intangible assets, net 1,582,492
1,099,244 Other long-term assets 128,746 91,541 Total assets
$4,099,541 $3,703,600
LIABILITIES AND
STOCKHOLDERS’ EQUITY: Accounts payable and accrued expenses
$360,488 $355,680 Current portion of deferred revenues 818,642
664,332 Total current liabilities 1,179,130 1,020,012
Long-term portion of deferred revenues 141,241 114,638 Other
liabilities 48,680 8,362 Stockholders' equity 2,730,490
2,560,588 Total liabilities and stockholders’ equity
$4,099,541 $3,703,600
CITRIX SYSTEMS, INC.
Condensed Consolidated Statement of
Cash Flows
(In thousands - unaudited)
Three Months Ended
December 31, 2011
Twelve Months Ended
December 31, 2011
OPERATING ACTIVITIES $108,699 $355,630 Net Income
Adjustments to reconcile net income to net cash provided by
operating activities: Amortization and depreciation 43,661 159,255
Stock-based compensation expense 29,318 92,909 Deferred income tax
benefit (16,679) (16,679) Provision for accounts receivable
allowances 1,541 5,807 Other non-cash items 114 7,885 Total
adjustments to reconcile net income to net cash Activities 57,955
249,177 provided by operating activities Changes in operating
assets and liabilities, net of the effects of acquisitions:
Accounts receivable (136,675) (95,481) Prepaid expenses and other
current assets 6,453 (1,690) Other assets (5,901) (562) Deferred
tax assets, net 15,991 (2,294) Accounts payable and accrued
expenses 1,027 (25,077) Deferred revenues 122,337 168,994 Other
liabilities (323) 30,425 Total changes in operating assets and
liabilities, net of the effects of acquisitions 2,909 74,315 Net
cash provided by operating activities 169,563 679,122
INVESTING ACTIVITIES Proceeds from available-for-sale
investments, net 83,600 148,444 Purchases of property and equipment
(23,077) (111,932) Purchases of other assets (1,061) (16,879) Cash
paid for acquisitions, net of cash acquired (145,905) (455,377)
Cash paid for licensing and core technology (2,273) (15,437) Net
cash used in investing activities (88,716) (451,181)
FINANCING ACTIVITIES Proceeds from issuance of common stock
under stock-based compensation plans 30,779 125,606 Payment on debt
from acquisitions - (11,561) Excess tax benefit from exercise of
stock options 11,791 51,659 Stock repurchases, net (101,032)
(438,111) Cash paid for non-controlling interest - (20,207) Net
cash used in financing activities (58,462) (292,614) Effect of
exchange rate changes on cash and cash equivalents (1,219) 1,807
Change in cash and cash equivalents 21,166 (62,866) Cash and cash
equivalents at beginning of period 312,130 396,162 Cash and cash
equivalents at end of period $333,296 $333,296
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 December 31,
2011
GAAP operating margin 21.9% Add: stock-based compensation 4.8% Add:
amortization of product related intangible assets 2.4% Add:
amortization of other intangible assets 0.7% Non-GAAP operating
margin 29.8%
Three Months Ended December 31,
2011 2010 GAAP net income $108,699
$94,380 Add: stock-based compensation 29,318 19,852 Add:
amortization product related intangible assets 14,821 13,190 Add:
amortization of other intangible assets 4,514 3,012 Add:
restructuring charges - 49 Less: tax effects related to above items
(10,138) (5,959) Non-GAAP net income $147,214
$124,524
Three Months Ended December 31,
2011 2010 GAAP earnings per share – diluted
$0.58 $0.49 Add: stock-based compensation 0.16 0.10 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
(0.06) (0.03) Non-GAAP earnings per share – diluted $0.78
$0.65
Twelve Months Ended December 31,
2011
GAAP operating margin 18.9% Add: stock-based compensation 4.2% Add:
amortization of product related intangible assets 2.5% Add:
amortization of other intangible assets 0.7% Non-GAAP operating
margin 26.3%
Twelve Months Ended December 31,
2011 2010 GAAP net income $356,322
$277,065 Add: stock-based compensation 92,909 103,758 Add:
amortization product related intangible assets 54,741 50,504 Add:
amortization of other intangible assets 16,390 14,279 Add:
restructuring charges 24 971 Less: tax effects related to above
items (47,599) (50,948) Non-GAAP net income $472,787
$395,629
Twelve Months Ended December
31,
2011 2010 GAAP earnings per share – diluted
$1.87 $1.46 Add: stock-based compensation 0.49 0.54 Add:
amortization of product related intangible assets 0.29 0.27 Add:
amortization of other intangible assets 0.08 0.07 Add:
restructuring charges - 0.01 Less: tax effects related to above
items (0.25) (0.27) Non-GAAP earnings per share – diluted
$2.48 $2.08
CITRIX SYSTEMS, INC.
Forward Looking Guidance
For the Three Months Ended
March 31,
For the Twelve Months Ended
December 31,
2012 2012 GAAP earnings per share - diluted
$0.30 to $0.31 $1.88 to $1.97 Add: Adjustments to exclude the
effects of amortization of intangible assets
0.10
0.41
Add: Adjustments to exclude the effects of expenses related to
stock-based compensation
Less: Tax effects related to above
items
0.16
(0.05) to (0.08)
0.71
(0.26) to (0.39)
Non-GAAP earnings per share - diluted $0.49 to $0.51 $2.70
to $2.74
Three Months Ended March 31, 2012 GAAP tax
rate 19.0% to 20.0% Add: tax effects of stock-based compensation
and amortization of intangible assets 3.0% Non-GAAP tax rate 22.0%
to 23.0%
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