Jan

232019

Citrix Reports Fourth Quarter and Fiscal Year Financial Results

Quarterly revenue of $802 million up 3% year-over-year. Annual revenue of $2.97 billion up 5% year-over-year. Quarterly subscription revenue of $130 million up 45% year-over-year. Annual subscription revenue of $455 million up 45% year-over-year. Quarterly GAAP diluted EPS of $1.15; non-GAAP diluted EPS of $1.67. Annual GAAP diluted EPS of $3.94; non-GAAP diluted EPS of $5.65. Deferred and unbilled revenue up 12% year-over-year. Board of Directors declares $0.35 per share quarterly dividend

FORT LAUDERDALE, Fla. - January 23, 2019 - Citrix Systems, Inc. (NASDAQ:CTXS) today reported financial results for the fourth quarter and fiscal year ended December 31, 2018.

Financial Results

For the fourth quarter of fiscal year 2018, Citrix achieved revenue of $802 million, compared to $778 million in the fourth quarter of fiscal year 2017, representing 3 percent revenue growth. For fiscal year 2018, Citrix reported annual revenue of $2.97 billion, compared to $2.82 billion for fiscal year 2017, a 5 percent increase.

GAAP Results

Net income for the fourth quarter of fiscal year 2018 was $166 million, or $1.15 per diluted share, compared to a net loss of $284 million, or $1.93 per diluted share, for the fourth quarter of fiscal year 2017. Net income (loss) for the fourth quarter of fiscal years 2018 and 2017 includes restructuring charges of $4 million and $54 million, respectively, for severance and facility closing costs. Net loss for the fourth quarter of fiscal year 2017 includes charges for the estimated impact from the enactment of U.S. tax reform related to the transition tax on accumulated overseas profits and the reduction of our U.S. deferred tax assets and liabilities due to the U.S. federal tax rate reduction from 35% to 21%. Approximately $364 million in tax expense was recorded for transition tax on foreign earnings and profits, and approximately $65 million in tax expense was recorded related to the reduction of U.S. deferred tax assets and liabilities, resulting in total charges of $429 million for the fourth quarter of fiscal year 2017.

Annual net income for fiscal year 2018 was $576 million, or $3.94 per diluted share, compared to $22 million, or $0.14 per diluted share for fiscal year 2017. Net income for fiscal years 2018 and 2017 includes restructuring charges of $17 million and $72 million, respectively, for severance and facility closing costs. Annual net income for fiscal year 2018 also includes a $27 million benefit related to adjustments in our estimates of the one-time effects of U.S. tax reform. Annual net income for fiscal year 2017 also includes $429 million in charges for the estimated impact from the enactment of U.S. tax reform related to the transition tax on accumulated overseas profits and the reduction of our U.S. deferred tax assets and liabilities.
 

Non-GAAP Results

Non-GAAP net income for the fourth quarter of fiscal year 2018 was $232 million, or $1.67 per diluted share, compared to $248 million, or $1.66 per diluted share for the fourth quarter of fiscal year 2017. Non-GAAP net income for the fourth quarter of fiscal years 2018 and 2017 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 for the fourth quarter of fiscal year 2017 also excludes the tax impact related to the separation of the GoTo business along with charges for the estimated impact from the enactment of U.S. tax reform related to the transition tax on accumulated overseas profits and the reduction of our US deferred tax assets and liabilities due to the U.S federal tax rate reduction from 35% to 21%. Non-GAAP net income per diluted share for the fourth quarter of fiscal years 2018 and 2017 also reflects the anti-dilutive impact of the company’s convertible note hedges.

Annual non-GAAP net income for fiscal year 2018 was $791 million, or $5.65 per diluted share, compared to $744 million, or $4.85 per diluted share for fiscal year 2017. Annual non-GAAP net income for fiscal years 2018 and 2017 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. Annual non-GAAP net income for fiscal year 2018 excludes a benefit related to adjustments in our estimates of the one-time effects of U.S. tax reform. Annual non-GAAP net income for fiscal year 2017 also excludes costs related to the separation of the GoTo business and related tax impacts along with charges for the estimated impact from U.S. tax reform related to the transition tax and the reduction of our U.S. deferred tax assets and liabilities. Non-GAAP net income per diluted share for fiscal years 2018 and 2017 also 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 March 22, 2019 to all shareholders of record as of the close of business on March 8, 2019. During the fourth quarter of 2018, Citrix repurchased $380 million of shares, completing its commitment from the fourth quarter of 2017 to return $2 billion to shareholders, and further returned $47 million to shareholders through its inaugural quarterly dividend.

“I am very pleased with our strong fourth quarter and full year results. All of our key performance metrics came in at or above the targets we provided. More importantly, our subscription model transition accelerated,” said David Henshall, president and CEO.

“Today, I believe we have the best product portfolio we’ve ever had and our long-term vision is resonating with both customers and with partners. The opportunities we see in both Digital Workspace and Networking combined with the investments we are making in the business give me confidence in Citrix’s outlook in the years ahead.”
 

Q4 Financial Summary

In reviewing the results for the fourth quarter of fiscal year 2018 compared to the fourth quarter of fiscal year 2017:

  • Subscription revenue increased 45 percent;
  • Product and license decreased 11 percent;
  • Support and services increased 2 percent;
  • Net revenue increased in the EMEA region by 10 percent; increased in the APJ region by 4 percent; and decreased in the Americas region by 1 percent;
  • Deferred and unbilled revenue totaled $2.17 billion as of December 31, 2018, compared to $1.94 billion as of December 31, 2017, an increase of 12 percent; and
  • Cash flow from operations was $206 million for the fourth quarter of fiscal year 2018, compared to $254 million for the fourth quarter of fiscal year 2017.

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

  • Subscription revenue as a percentage of total revenue was 16 percent;
  • GAAP gross margin was 86 percent and non-GAAP gross margin was 88 percent;
  • GAAP operating margin was 25 percent and non-GAAP operating margin was 35 percent; and
  • The company repurchased approximately 3.7 million shares during the fourth quarter.

Annual Financial Summary

In reviewing the results for fiscal year 2018 compared to fiscal year 2017:

  • Subscription revenue increased 45 percent;
  • Product and license decreased 4 percent;
  • Support and services increased 2 percent;
  • Net revenue increased in the EMEA region by 8 percent; increased in the Americas region by 4 percent; and increased in the APJ region by 3 percent; and
  • Cash flow from operations was $1.04 billion for fiscal year 2018 compared with $964 million for fiscal year 2017.

During the year ended December 31, 2018 (1):

  • Subscription revenue as a percentage of total revenue was 15 percent;
  • GAAP gross margin was 85 percent and non-GAAP gross margin was 87 percent;
  • GAAP operating margin was 23 percent and non-GAAP operating margin was 32 percent; and
  • The company repurchased 15.0 million shares at an average price of $98.90.

Financial Outlook for Fiscal Year 2019(1)

Citrix management expects to achieve the following results for the fiscal year ending December 31, 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 21.2 percent to 21.7 percent, and
  • Non-GAAP operating margin is targeted to be in the range of 31.5 percent to 32 percent.
  • GAAP diluted earnings per share is targeted to approximately $4.03, and
  • Non-GAAP diluted earnings per share is targeted to be approximately $6.00.

Financial Outlook for First Quarter 2019(1)

Citrix management expects to achieve the following results for the first quarter of fiscal year 2019 ending March 31, 2019:

  • Net revenue is targeted to be in the range of $700 million to $710 million.
  • GAAP diluted earnings per share is targeted to be in the range of $0.66 to $0.71, and
  • Non-GAAP diluted earnings per share is targeted to be in the range of $1.15 to $1.20.

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."

Fourth 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

For investor inquiries, contact:

Traci Tsuchiguchi
Citrix Systems, Inc.
(408) 790-8467 traci.tsuchiguchi@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 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, competition, demand and pricing dynamics, and our ability to transition to new business models, including a subscription model; 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; 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 and the company's reliance on the success of those partners for the marketing and distribution of the company's products; 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; 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; unanticipated changes in tax rates, non-renewal of tax credits or exposure to additional tax liabilities; 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.

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