Oct

242018

Citrix Reports Third Quarter 2018 Financial Results

Quarterly revenue of $732 million up 6% year-over-year. Quarterly subscription revenue of $112 million up 37% year-over-year. Quarterly GAAP diluted EPS of $1.08; non-GAAP diluted EPS of $1.40. Cash flow from operations of $301 million up 18% year-over-year. Board of directors declares $0.35 per share dividend and authorizes $750 million increase to share repurchase program

FORT LAUDERDALE, Fla. - October 24, 2018 - Citrix Systems, Inc. (NASDAQ:CTXS) today reported financial results for the third quarter of fiscal year 2018 ended September 30, 2018.    

Financial Results

For the third quarter of fiscal year 2018, Citrix achieved revenue of $732 million, compared to $691 million in the third quarter of fiscal year 2017, representing 6 percent revenue growth.

GAAP Results

Net income for the third quarter of fiscal year 2018 was $159 million, or $1.08 per diluted share, compared to $127 million, or $0.82 per diluted share, for the third quarter of fiscal year 2017. Net income for the third quarter of fiscal year 2018 includes a tax benefit of approximately $23 million, or $0.16 per diluted share, related to the estimated transition tax on deemed repatriation of deferred foreign income. Net income for the third quarter of fiscal year 2017 includes restructuring charges of approximately $9 million, or $0.06 per diluted share, primarily for facility closing costs and a tax benefit of approximately $8 million, or $0.05 per diluted share, related to the expiration of the statute of limitation for a prior domestic tax year.

Non-GAAP Results

Non-GAAP net income for the third quarter of fiscal year 2018 was $197 million, or $1.40 per diluted share, compared to $186 million, or $1.22 per diluted share for the third quarter of fiscal year 2017. Non-GAAP net income for the third quarter of fiscal years 2018 and 2017 excludes the effects of stock-based compensation expense, amortization of intangible assets, amortization of debt discount, restructuring credits and charges and the tax effects related to these items. Non-GAAP net income for the third quarter of fiscal year 2018 also excludes a tax benefit related to the estimated transition tax on deemed repatriation of deferred foreign income. Non-GAAP net income per diluted share for the third quarter of fiscal years 2018 and 2017 reflects the anti-dilutive impact of the company’s convertible note hedges.

In addition to quarterly financial results, Citrix also announced that its Board of Directors declared a $0.35 per share dividend payable December 21, 2018 to all shareholders of record as of the close of business on December 7, 2018 and authorized it to repurchase up to an additional $750 million of its common stock. As of September 30, 2018, approximately $398 million remained for repurchases from previous authorizations. 

“Our solid performance this quarter was yet another positive step as we continue to execute on our transformation as a company,” said David Henshall, president and CEO. “We’ve doubled revenue growth rates from a year ago, and we’ve delivered a lot of upside against margin and EPS goals. Organizations are looking to operate in a multi-cloud, hybrid-cloud world, and Citrix is uniquely positioned to provide the simple, secure, and unified solutions they need to address these challenges.”

Q3 Financial Summary

The results for the third quarter of fiscal year 2018 compared to the third quarter of fiscal year 2017 are as follows:

  • Subscription revenue increased 37 percent;
  • Product and license revenue increased 1 percent;
  • Support and services revenue increased 2 percent; and
  • Net revenue increased in the EMEA region by 7 percent; increased in the Americas region by 6 percent; and increased in the APJ region by 2 percent.

During the third quarter of fiscal year 2018(1):

  • GAAP gross margin was 86 percent and non-GAAP gross margin was 88 percent;
  • GAAP operating margin was 23 percent and non-GAAP operating margin was 32 percent;
  • Subscription revenue as a percentage of total revenue was 15 percent;
  • Deferred and unbilled revenue totaled $1.9 billion as of September 30, 2018, compared to $1.7 billion as of September 30, 2017, an increase of 11 percent;
  • Cash flow from operations was $301 million; and
  • The company repurchased approximately 1.1 million shares during the third quarter. 

Financial Outlook for Fiscal Year 2018(1)

Citrix management expects to achieve the following results for fiscal year 2018:

  • Net revenue is targeted to be in the range of $2.95 billion to $2.97 billion.
  • GAAP operating margin is targeted to be in the range of 21 percent to 22 percent, and
  • Non-GAAP operating margin is targeted to be in the range of 30.5 percent to 31.5 percent.
  • GAAP diluted earnings per share is targeted to be in the range of $3.81 to $3.88, and
  • Non-GAAP diluted earnings per share is targeted to be in the range of $5.55 to $5.60.

Preliminary Financial Outlook for Fiscal Year 2019(1)

The company's current preliminary outlook for the full fiscal year 2019 is for net revenue to grow by approximately 4 percent. In addition, Citrix management is targeting GAAP diluted earnings per share to be approximately $3.93 and non-GAAP diluted earnings per share 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.

Third Quarter Earnings Conference Call

Citrix will host a conference call today at 4:45 p.m. ET to discuss its financial results, quarterly highlights and business outlook. The call will include a slide presentation, and participants are encouraged to listen to and view the presentation via webcast at http://www.citrix.com/investors.

The conference call may also be accessed by dialing: (888) 799-0519 or (706) 634-0155, using passcode: CITRIX. A replay of the webcast can be viewed for approximately 30 days on the Investor Relations section of the Citrix corporate website at http://www.citrix.com/investors.  

Full Financial Report

For media inquiries, contact:

Eric Armstrong
Citrix Systems, Inc.
(954) 267-2977
eric.armstrong@citrix.com

Eduardo Fleites
Citrix Systems, Inc.
(954) 229-5758
eduardo.fleites@citrix.com

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 that 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 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 the success and growth of the Company's product lines, including competition, demand and pricing dynamics and the impact of our transition to new business models, including a subscription model; the impact of the global economy, volatility in global stock markets, foreign exchange rate volatility and uncertainty in the IT spending environment; the risks associated with maintaining the security of our products, services, and networks, including securing customer data stored by our services; changes in Citrix’s pricing and licensing models, promotional programs and product mix, all of which may impact Citrix's revenue recognition; changes to Citrix’s product and service naming and branding; increased competition in markets for Citrix's virtualization and networking products and secure data services and the introduction of new products by competitors or the entry of new competitors into these markets; the concentration of customers in Citrix’s networking business; seasonal fluctuations in the Company's business; failure to successfully partner with key distributors, resellers, system integrators, service providers and strategic partners and the Company's reliance on the success of those partners for the marketing and distribution of the Company's products; the size, timing and recognition of revenue from significant orders; conversion of unbilled revenue and backlog into future revenue; the recruitment and retention of qualified employees; transitions in key personnel and succession risk; risks in effectively controlling operating expenses; 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; the impact of U.S. tax reform, including unanticipated transition taxes, changes in valuation of tax assets and liabilities, non-renewal of tax credits or exposure to additional tax liabilities; 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; litigation and disputes, including challenges to our intellectual property rights or allegations of infringement of the intellectual property rights of others; charges in the event of a write-off or impairment of acquired assets, underperforming businesses, investments or licenses; 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.