Quarterly revenue of $719 million up 3%
year-over-year
Quarterly subscription revenue of $142 million
up 37% year-over-year
Quarterly SaaS revenue of $85 million up 43%
year-over-year
Workspace Revenue of $515 million up 13%
year-over-year
Quarterly GAAP diluted EPS of $0.78; non-GAAP
diluted EPS of $1.27
Deferred and unbilled revenue up 21%
year-over-year
Board of Directors declares $0.35 per share
quarterly dividend
Citrix Systems, Inc. (NASDAQ:CTXS) today reported financial
results for the first quarter of fiscal year 2019 ended
March 31, 2019.
Financial Results
For the first quarter of fiscal year 2019, Citrix achieved
revenue of $719 million, compared to $697 million in the first
quarter of fiscal year 2018, representing 3 percent revenue
growth.
GAAP Results
Net income for the first quarter of fiscal year 2019 was $110
million, or $0.78 per diluted share, compared to net income of $144
million, or $0.99 per diluted share, for the first quarter of
fiscal year 2018.
Non-GAAP Results
Non-GAAP net income for the first quarter of fiscal year 2019
was $172 million, or $1.27 per diluted share, compared to $184
million, or $1.29 per diluted share for the first quarter of fiscal
year 2018. Non-GAAP net income for the first quarter of fiscal
years 2019 and 2018 excludes the effects of stock-based
compensation expense, amortization of acquired intangible assets,
amortization of debt discount, restructuring charges and the tax
effects related to these items. Non-GAAP net income per diluted
share for the first quarter of fiscal years 2019 and 2018 reflects
the anti-dilutive impact of the company’s convertible note
hedges.
In addition to financial results, Citrix also announced that its
Board of Directors declared a quarterly cash dividend of $0.35 per
share payable on June 21, 2019 to all shareholders of record as of
the close of business on June 7, 2019.
“We’re pleased to report solid first quarter results, which were
driven by accelerated revenue growth in our Workspace business,”
said David Henshall, president and CEO of Citrix. “Workspace
revenue grew 13% year-over-year, its fastest rate of growth since
2012. Our subscription model transition continues to progress well,
and SaaS, which accounted for 60% of our subscription business,
delivered strong 43% year over year growth.”
Q1 Financial Summary
The results for the first quarter of fiscal year 2019 compared
to the first quarter of fiscal year 2018 are as follows:
- Subscription revenue increased 37
percent;
- Product and license revenue decreased
16 percent;
- Support and services revenue increased
2 percent;
- Deferred and unbilled revenue totaled
$2.14 billion as of March 31, 2019, compared to $1.77 billion
as of March 31, 2018, an increase of 21 percent; and
- Cash flow from operations was $268
million for the first quarter of fiscal year 2019, compared to $358
million for the first quarter of fiscal year 2018.
During the first quarter of fiscal year 2019 (1):
- Subscription revenue as a percentage of
total revenue was 20 percent;
- GAAP gross margin was 85 percent, and
non-GAAP gross margin was 87 percent;
- GAAP operating margin was 17 percent,
and non-GAAP operating margin was 28 percent; and
- The company repurchased approximately
1.5 million shares.
Financial Outlook for Second Quarter 2019 (1)
Citrix management expects to achieve the following results for
the second quarter of fiscal year 2019:
- Net revenue is targeted to be in the
range of $765 million to $775 million;
- GAAP diluted earnings per share is
targeted to be in the range of $0.76 to $0.81; and
- Non-GAAP diluted earnings per share is
targeted to be in the range of $1.30 to $1.35.
Financial Outlook for Fiscal Year 2019 (1)
Citrix management expects to achieve the following results for
fiscal year 2019:
- Net revenue is targeted to be in the
range of $3.08 billion to $3.09 billion;
- GAAP operating margin is targeted to be
in the range of 20.4 percent to 20.9 percent;
- Non-GAAP operating margin is targeted
to be in the range of 31.5 percent to 32.0 percent;
- GAAP diluted earnings per share is
targeted to be approximately $3.69; and
- Non-GAAP diluted earnings per share is
targeted to be approximately $6.00.
The above statements are based on current targets. These
statements are forward-looking, and actual results may differ
materially.
(1) A reconciliation of GAAP to non-GAAP measures has been
provided in the financial statement tables included in this press
release. An explanation of these measures is also included below
under the heading "Reconciliation of Non-GAAP Financial Measures to
Comparable U.S. GAAP Measures."
First Quarter Earnings Letter and Conference Call
Our first quarter earnings letter, discussing financial results,
quarterly highlights and business outlook is posted at
http://www.citrix.com/investors. Citrix will host a conference call
today at 4:45 p.m. ET to address questions.
The conference call may be accessed by dialing: (888) 799-0519
or (706) 634-0155, using passcode: CITRIX. A replay of the
conference call can be accessed for approximately 90 days on the
Investor Relations section of the Citrix corporate website at
http://www.citrix.com/investors.
About Citrix
Citrix (NASDAQ:CTXS) is powering a better way to work with
unified workspace, networking, and analytics solutions that help
organizations unlock innovation, engage customers, and boost
productivity, without sacrificing security. With Citrix, users get
a seamless work experience and IT has a unified platform to secure,
manage, and monitor diverse technologies in complex cloud
environments. Citrix solutions are in use by more than 400,000
organizations including 99 percent of the Fortune 100 and 98
percent of the Fortune 500. Learn more at www.citrix.com.
For Citrix Investors
This release contains forward-looking statements 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
CEO and president, statements contained in the Financial Outlook
sections and 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, risks associated with our ability to
continue to grow the company's Workspace business and continued
demand for Citrix Workspace; our ability to transition to a
subscription business model, including our ability to deepen our
subscription customer relationships, and our ability to grow the
percentage of subscription bookings and paid subscribers; the
impact of the global economic and political environment on our
business, volatility in global stock markets, foreign exchange rate
volatility and uncertainty in IT spending; the risks associated
with maintaining the security of our products, services, and
networks, including securing customer data, and the risks
associated with our ability to manage our recent cyber security
incident, and the impact of that incident; changes in Citrix’s
pricing and licensing models, promotional programs and product mix,
all of which may impact Citrix's revenue recognition; our ability
to expand our customer base and attract more users within our
customer base; the introduction of new products by competitors or
the entry of new competitors into the markets for Citrix's products
and services; the concentration of customers in Citrix’s networking
business; the company's ability to innovate and develop new
products and services while growing its established virtualization
and networking products and services; changes in our revenue mix
towards products and services with lower gross margins; 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, service providers and
strategic partners, such as Microsoft; transitions in key personnel
and succession risk; the company's ability to maintain and expand
its business in large enterprise accounts and reliance on large
service provider customers; 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; the ability of Citrix to make suitable acquisitions on
favorable terms in the future; risks associated with Citrix's
acquisitions and divestitures, including failure to further develop
and successfully market the technology and products of acquired
companies, failure to achieve or maintain anticipated revenues and
operating performance contributions from acquisitions, which could
dilute earnings, the retention of key employees from acquired
companies, difficulties and delays integrating personnel,
operations, technologies and products, and disruption to our
ongoing business and diversion of management's attention from our
ongoing business; the recruitment and retention of qualified
employees; risks in effectively controlling operating expenses, and
our ability to improve our operating margin in the second half of
the year; ability to effectively manage our capital structure and
the impact of related changes on our operating results and
financial condition; the effect of new accounting pronouncements on
revenue and expense recognition; 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 ability to maintain and protect our collection of
brands; charges in the event of a write-off or impairment of
acquired assets, underperforming businesses, investments or
licenses; international market readiness, execution and other risks
associated with the markets for Citrix's products and services;
risks related to servicing our debt; risks of political uncertainty
and social turmoil; and other risks detailed in Citrix'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® is a trademark or registered trademark 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.
CITRIX SYSTEMS, INC. Condensed Consolidated Statements of
Income (In thousands, except per share data - unaudited)
Three Months Ended March 31, 2019
2018 Revenues: Subscription $ 141,606 $ 103,158
Product and license 135,022 160,697 Support and services 442,515
433,337 Total net revenues 719,143
697,192 Cost of net revenues: Cost of subscription,
support and services 71,428 63,385 Cost of product and license
revenues 25,744 33,872 Amortization of product related intangible
assets 10,301 11,029 Total cost of net
revenues 107,473 108,286 Gross margin 611,670
588,906 Operating expenses: Research and
development 130,263 98,550 Sales, marketing and services 274,655
251,213 General and administrative 77,547 63,727 Amortization of
other intangible assets 3,529 3,666 Restructuring 2,832
6,187 Total operating expenses 488,826
423,343 Income from operations 122,844 165,563 Interest
income 9,674 8,731 Interest expense (18,033 ) (20,336 ) Other
income (expense), net 3,699 (3,012 ) Income before
income taxes 118,184 150,946 Income tax expense 7,836
6,687 Net income $ 110,348 $ 144,259
Earnings per share: Basic $ 0.84 $ 1.04 Diluted $
0.78 $ 0.99 Weighted average shares outstanding:
Basic 131,483 139,248 Diluted 141,025 146,388
CITRIX SYSTEMS, INC. Condensed Consolidated Balance
Sheets (In thousands - unaudited) March
31, 2019 December 31, 2018 ASSETS Cash and
cash equivalents $ 1,612,679 $ 618,766 Short-term investments,
available-for-sale 173,601 583,615 Accounts receivable, net 482,647
688,420 Inventories, net 23,145 21,905 Prepaid expenses and other
current assets 160,938 174,195 Total current
assets 2,453,010 2,086,901 Long-term investments,
available-for-sale 86,340 574,319 Property and equipment, net
243,132 243,396 Operating lease right-of-use assets 191,951 —
Goodwill 1,802,756 1,802,670 Other intangible assets, net 155,091
167,187 Deferred tax assets, net 104,448 136,998 Other assets
130,728 124,578 Total assets $ 5,167,456
$ 5,136,049
LIABILITIES, TEMPORARY
EQUITY, AND STOCKHOLDERS' EQUITY Accounts payable $ 81,476 $
75,551 Accrued expenses and other current liabilities 292,663
290,492 Income taxes payable 2,220 44,409 Current portion of
convertible notes 1,163,199 1,155,445 Current portion of deferred
revenues 1,303,210 1,345,243 Total current
liabilities 2,842,768 2,911,140 Long-term portion of deferred
revenues 453,507 489,329 Long-term debt 742,100 741,825 Long-term
income taxes payable 285,626 285,627 Operating lease liabilities
203,580 — Other liabilities 83,834 148,499 Temporary equity from
convertible notes 1,163 8,110 Stockholders' equity: Common stock
312 310 Additional paid-in capital 5,495,935 5,404,500 Retained
earnings 4,232,181 4,169,019 Accumulated other comprehensive loss
(5,483 ) (8,154 ) 9,722,945 9,565,675 Less - common stock in
treasury, at cost (9,168,067 ) (9,014,156 ) Total
stockholders' equity 554,878 551,519 Total
liabilities, temporary equity and stockholders' equity $ 5,167,456
$ 5,136,049
CITRIX SYSTEMS, INC. Condensed Consolidated Statement of
Cash Flows (In thousands - unaudited) Three
Months Ended March 31, 2019 OPERATING ACTIVITIES
Net Income $ 110,348 Adjustments to reconcile net income to net
cash provided by operating activities: Depreciation, amortization
and other 62,472 Stock-based compensation expense 65,234 Deferred
income tax expense 23,993 Effects of exchange rate changes on
monetary assets and liabilities denominated in foreign currencies
(1,939 ) Other non-cash items 845 Total adjustments to
reconcile net income to net cash provided by operating activities
150,605 Changes in operating assets and liabilities, net of the
effects of acquisitions: Accounts receivable 204,406 Inventories
(1,876 ) Prepaid expenses and other current assets 17,534 Other
assets (15,891 ) Income taxes, net (49,379 ) Accounts payable 6,134
Accrued expenses and other current liabilities (81,979 ) Deferred
revenues (77,855 ) Other liabilities 5,519 Total changes in
operating assets and liabilities, net of the effects of
acquisitions 6,613 Net cash provided by operating activities
267,566
INVESTING ACTIVITIES Purchases of
available-for-sale investments (7,094 ) Proceeds from sales of
available-for-sale investments 772,954 Proceeds from maturities of
available-for-sale investments 134,325 Purchases of property and
equipment (17,277 ) Cash paid for licensing agreements, patents and
technology (590 ) Other 575 Net cash provided by investing
activities 882,893
FINANCING ACTIVITIES Stock
repurchases, net (93,805 ) Cash paid for tax withholding on vested
stock awards (17,662 ) Cash paid for dividends (46,024 ) Net cash
used in financing activities (157,491 ) Effect of exchange
rate changes on cash and cash equivalents 945 Change in cash
and cash equivalents 993,913 Cash and cash equivalents at
beginning of period 618,766 Cash and cash equivalents at end
of period $ 1,612,679
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 earnings letter and conference
call or webcast to the most directly comparable GAAP financial
measure. These measures differ from GAAP in that they exclude
amortization primarily related to acquired intangible assets and
debt discount, stock-based compensation expenses and charges
associated with the Company’s restructuring programs, the related
tax effect of those items. The income tax effect on non-GAAP items
is calculated based upon the tax laws and statutory income tax
rates applicable in the tax jurisdiction(s) of the underlying
non-GAAP adjustment. The Company also reflects the effect of
anti-dilutive convertible note hedges in the number of shares used
in non-GAAP diluted earnings per share. 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 or cash charges that are the result of discrete
activities 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 of intangible assets and stock-based compensation
expenses and the related tax effects that are primarily related to
acquisitions, 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 of intangible assets 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.
- Under GAAP, certain convertible debt
instruments that may be settled in cash on conversion are required
to be accounted for as separate liability (debt) and equity
(conversion option) components in a manner that reflects the
issuer’s non-convertible debt borrowing rate. The difference
between the imputed interest expense and the coupon interest
expense, net of the interest amount capitalized, is excluded from
management’s assessment of the company’s operating performance
because management believes that the exclusion of these charges
will better help investors and financial analysts understand the
Company's operating results and underlying operational trends.
- The Company has engaged in various
restructuring activities over the past several years that have
resulted in costs associated with reductions in headcount,
consolidation of leased facilities and related costs. Each
restructuring activity has been a discrete event based on a unique
set of business objectives or circumstances, and each has differed
from the others in terms of its operational implementation,
business impact and scope. While the Company’s operations
previously benefited from the employees and facilities covered by
the various restructuring charges, these employees and facilities
have benefited different parts of the Company’s business in
different ways, and the amount of these charges has varied
significantly from period to period. 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.
- The Company has convertible note hedges
in place to offset potential dilution from the embedded conversion
feature in its convertible notes. For GAAP diluted earnings per
share purposes, the Company cannot reflect the anti-dilutive impact
of the convertible note hedges. The Company believes that
reflecting the anti-dilutive impact of the convertible note hedges
in non-GAAP diluted earnings per share provides investors with
useful information in evaluating the financial performance of the
Company on a per share basis.
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.
CITRIX SYSTEMS, INC.
Non-GAAP Financial Measures
Reconciliation
(In thousands, except per share, gross margin
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 EndedMarch 31,
2019
GAAP gross margin 85.1% Add: stock-based compensation 0.3 Add:
amortization of product related intangible assets 1.1 Non-GAAP
gross margin 86.5%
Three Months EndedMarch 31,
2019
GAAP operating margin 17.1% Add: stock-based compensation 9.1 Add:
amortization of product related intangible assets 1.1 Add:
amortization of other intangible assets 0.5 Add: restructuring
charges 0.4 Non-GAAP operating margin 28.2%
Three Months
Ended March 31, 2019 2018 GAAP net
income $110,348 $144,259 Add: stock-based compensation 65,234
35,723 Add: amortization of product related intangible assets 8,520
11,029 Add: amortization of other intangible assets 3,529 3,666
Add: amortization of debt discount 6,987 8,665 Add: restructuring
charges 2,832 6,187 Less: tax effects related to above items
(25,379 ) (25,905 ) Non-GAAP net income $172,071 $183,624
Three Months Ended March 31, 2019
2018 Number of shares used in diluted earnings per
share calculations: GAAP weighted average shares outstanding
141,025 146,388 Less: effect of convertible note hedges (5,016 )
(4,360 ) Non-GAAP weighted average shares outstanding 136,009
142,028
Three Months Ended March 31,
2019 2018 GAAP earnings per share – diluted $0.78
$0.99 Add: stock-based compensation 0.46 0.25 Add: amortization of
product related intangible assets 0.06 0.07 Add: amortization of
other intangible assets 0.03 0.03 Add: amortization of debt
discount 0.05 0.06 Add: restructuring charges 0.02 0.04 Less: tax
effects related to above items (0.18) (0.18) Add: effect of
convertible note hedges 0.05 0.03 Non-GAAP earnings per share -
diluted $1.27 $1.29
Forward Looking Guidance
For the ThreeMonths
EndedJune 30,
For the TwelveMonths
EndedDecember 31,
2019 2019 GAAP earnings per share – diluted $0.76 to
$0.81 $3.69 Add: adjustments to exclude the effects of amortization
of intangible assets 0.08 0.33 Add: adjustments to exclude the
effects of expenses related to stock-based
Compensation
0.54 2.14 Add: adjustments to exclude the effects of amortization
of debt discount 0.01 0.06 Add: adjustments to exclude the effects
of restructuring 0.02 0.07 Less: tax effects related to above items
(0.08 to 0.18) (0.36) Add: effect of convertible note hedges 0.02
0.07 Non-GAAP earnings per share - diluted $1.30 to $1.35 $6.00
Twelve Months EndedDecember 31,
2019
GAAP operating margin 20.4% to 20.9% Add: adjustment to exclude
stock-based compensation 9.4 Add: adjustment to exclude
amortization of intangible assets 1.4 Add: adjustment to exclude
restructuring charges 0.3 Non-GAAP operating margin 31.5% to 32.0%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190424006054/en/
For media inquiries, contact:Eric Armstrong, Citrix Systems,
Inc.(954) 267-2977 or eric.armstrong@citrix.com
For investor inquiries, contact:Traci Tsuchiguchi, Citrix
Systems, Inc.(408) 790-8467 or traci.tsuchiguchi@citrix.com
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