Citrix Systems, Inc. (NASDAQ:CTXS) today reported financial results for
the first quarter of fiscal 2013 ended March 31, 2013.
FINANCIAL RESULTS
For the first quarter of fiscal year 2013, Citrix achieved revenue of
$673 million, compared to $589 million in the first quarter of fiscal
year 2012, representing 14 percent revenue growth.
GAAP Results
Net income for the first quarter of fiscal year 2013 was $60 million, or
$0.32 per diluted share, compared to $68 million, or $0.36 per diluted
share, for the first quarter of fiscal year 2012. Net income for the
first quarter of fiscal year 2013 includes net tax benefits of
approximately $9 million, or $0.05 per diluted share.
Non-GAAP Results
Non-GAAP net income for the first quarter of fiscal year 2013 was $117
million, or $0.62 per diluted share, compared to $111 million, or $0.59
per diluted share, for the first quarter of fiscal year 2012. Non-GAAP
net income includes net tax benefits of approximately $9 million
recognized in the first quarter of fiscal year 2013, or $0.05 per
diluted share. Non-GAAP net income excludes the effects of amortization
of acquired intangible assets, stock-based compensation expenses and the
tax effects related to these items.
“In spite of the macro factors negatively impacting IT spending, we
executed well in Q1,” said Mark Templeton, president and chief executive
officer for Citrix. “Consistently, CIOs everywhere tell me they are
challenged by the transformation, consumerization and fragmentation
taking place in computing. These forces are creating even more interest
in mobility and cloud services.
“We remain focused on our long-term strategy to help our customers as
they invest in these areas.”
Q1 Financial Summary
In reviewing the results for the first quarter of fiscal year 2013,
compared to the first quarter of fiscal year 2012:
-
Product and license revenue increased 8 percent;
-
Software as a service revenue increased 14 percent;
-
Revenue from license updates and maintenance increased 19 percent;
-
Professional services revenue, which is comprised of consulting,
product training and certification, increased 2 percent;
-
Revenue increased in the Americas region by 17 percent, increased in
the Pacific region by 15 percent and increased in the EMEA region by 9
percent;
-
Deferred revenue totaled $1.2 billion, compared to $983 million as of
March 31, 2012, an increase of 25%;
-
GAAP operating margin was 8 percent and non-GAAP operating margin was
20 percent, excluding the effects of amortization of acquired
intangible assets and stock-based compensation expenses;
-
Cash flow from operations was $249 million for the first quarter of
fiscal year 2013, compared with $243 million for the first quarter of
fiscal year 2012; and
-
The company repurchased 1.2 million shares at an average price of
$71.51.
Financial Outlook for Second Quarter 2013
Citrix management expects to achieve the following results for the
second quarter of fiscal year 2013 ending June 30, 2013:
-
Net revenue is targeted to be in the range of $705 million to $715
million;
-
Other income is targeted to be approximately $1 million;
-
GAAP diluted earnings per share is targeted to be in the range of
$0.31 to $0.32. Non-GAAP diluted earnings per share is targeted to be
in the range of $0.62 to $0.63, excluding $0.18 related to the effects
of amortization of acquired intangible assets, $0.26 related to the
effects of stock-based compensation expenses, and $(0.12) to $(0.14)
for the tax effects related to these items;
-
Non-GAAP tax rate, which excludes the effects of amortization of
acquired intangible assets and stock-based compensation, 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.
Financial Outlook for Fiscal Year 2013
Citrix management expects to achieve the following results for the
fiscal year ending December 31, 2013:
-
Net revenue is targeted to be in the range of $2.95 billion to $2.98
billion;
-
Other income is targeted to be approximately $4 million;
-
GAAP diluted earnings per share is targeted to be in the range of
$1.91 to $1.95. Non-GAAP diluted earnings per share is targeted to be
in the range of $3.08 to $3.11, excluding $0.74 related to the effects
of amortization of acquired intangible assets, $1.01 related to the
effects of stock-based compensation expenses, and $(0.55) to $(0.62)
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.
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
(855) 859-2056 or (404) 537-3406 (passcode required: 27690921).
About Citrix
Citrix (NASDAQ:CTXS) is the cloud computing company that enables mobile
workstyles – empowering people to work and collaborate from anywhere,
accessing apps and data on any of the latest devices, as easily as they
would in their own office – simply and securely. Citrix cloud computing
solutions help IT and service providers build both private and public
clouds – leveraging virtualization and networking technologies to
deliver high-performance, elastic and cost-effective services for mobile
workstyles. With market leading solutions for mobility, desktop
virtualization, cloud networking, cloud platforms, collaboration, and
data sharing, Citrix helps organizations of all sizes achieve the kind
of speed and agility necessary to succeed in an increasingly mobile and
dynamic world. Citrix products are in use at more than 260,000
organizations and by over 100 million users globally. Annual revenue in
2012 was $2.59 billion.
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 Second
Quarter 2013 and Financial Outlook for Fiscal Year 2013 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, the impact of
the global economy and uncertainty in the IT spending environment; 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 its enterprise mobility and cloud platform
products, while maintaining development and sales of its established
virtualization, networking and collaboration products and services;
disruptions due to changes and transitions 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; 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; risks associated with Citrix's
acquisitions, 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,
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, 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 our
networks and customer data stored by our services; 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; charges in the event of the impairment of acquired assets,
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® is a 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.
|
|
|
CITRIX SYSTEMS, INC.
Condensed Consolidated Statements of Income
(In thousands, except per share data - unaudited)
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
2013
|
|
2012
|
Revenues:
|
|
|
|
|
Product and licenses
|
|
$
|
193,083
|
|
|
$
|
178,364
|
Software as a service
|
|
|
137,566
|
|
|
|
120,733
|
License updates and maintenance
|
|
|
315,738
|
|
|
|
264,525
|
Professional services
|
|
|
26,512
|
|
|
|
25,873
|
Total net revenues
|
|
|
672,899
|
|
|
|
589,495
|
|
|
|
|
|
Cost of net revenues:
|
|
|
|
|
Cost of product and license revenues
|
|
|
25,794
|
|
|
|
18,804
|
Cost of services and maintenance revenues
|
|
|
64,411
|
|
|
|
51,004
|
Amortization of product related intangible assets
|
|
|
24,709
|
|
|
|
16,535
|
Total cost of net revenues
|
|
|
114,914
|
|
|
|
86,343
|
Gross margin
|
|
|
557,985
|
|
|
|
503,152
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
Research and development
|
|
|
130,492
|
|
|
|
103,622
|
Sales, marketing and services
|
|
|
297,682
|
|
|
|
248,457
|
General and administrative
|
|
|
62,785
|
|
|
|
59,856
|
Amortization of other intangible assets
|
|
|
10,418
|
|
|
|
10,467
|
Total operating expenses
|
|
|
501,377
|
|
|
|
422,402
|
|
|
|
|
|
Income from operations
|
|
|
56,608
|
|
|
|
80,750
|
|
|
|
|
|
Other income, net
|
|
|
1,196
|
|
|
|
3,800
|
Income before income taxes
|
|
|
57,804
|
|
|
|
84,550
|
|
|
|
|
|
Income tax (benefit) expense
|
|
|
(1,884
|
)
|
|
|
16,283
|
Net income
|
|
$
|
59,688
|
|
|
$
|
68,267
|
|
|
|
|
|
Earnings per common share – diluted
|
|
$
|
0.32
|
|
|
$
|
0.36
|
Weighted average shares outstanding – diluted
|
|
|
189,011
|
|
|
|
188,884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CITRIX SYSTEMS, INC.
Condensed Consolidated Balance Sheets
(In thousands - unaudited)
|
|
|
|
|
|
|
|
March 31, 2013
|
|
December 31, 2012
|
ASSETS:
|
|
|
|
|
Cash and cash equivalents
|
|
$251,465
|
|
$643,609
|
Short-term investments
|
|
406,479
|
|
285,022
|
Accounts receivable, net
|
|
450,939
|
|
630,956
|
Inventories, net
|
|
11,229
|
|
10,723
|
Prepaid expenses and other current assets
|
|
141,295
|
|
106,579
|
Current portion of deferred tax assets, net
|
|
40,068
|
|
36,846
|
Total current assets
|
|
1,301,475
|
|
1,713,735
|
|
|
|
|
|
Long-term investments
|
|
747,004
|
|
595,313
|
Property and equipment, net
|
|
302,378
|
|
303,294
|
Goodwill
|
|
1,761,824
|
|
1,518,219
|
Other intangible assets, net
|
|
590,689
|
|
556,205
|
Long-term portion of deferred tax assets, net
|
|
77,935
|
|
43,097
|
Other assets
|
|
67,034
|
|
66,539
|
Total assets
|
|
$4,848,339
|
|
$4,796,402
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY:
|
|
|
|
|
Accounts payable
|
|
$61,613
|
|
$71,116
|
Accrued expenses and other current liabilities
|
|
245,907
|
|
257,135
|
Income taxes payable
|
|
10,907
|
|
49,346
|
Current portion of deferred revenues
|
|
986,023
|
|
965,276
|
Total current liabilities
|
|
1,304,450
|
|
1,342,873
|
|
|
|
|
|
Long-term portion of deferred revenues
|
|
245,358
|
|
232,719
|
Other liabilities
|
|
104,384
|
|
99,033
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
Common stock
|
|
289
|
|
287
|
Additional paid-in capital
|
|
3,798,931
|
|
3,691,111
|
Retained earnings
|
|
2,623,706
|
|
2,564,018
|
Accumulated other comprehensive loss
|
|
(18,240)
|
|
(7,705)
|
Less – common stock in treasury, at cost
|
|
(3,210,539)
|
|
(3,125,934)
|
Total stockholders' equity
|
|
3,194,147
|
|
3,121,777
|
Total liabilities and stockholders’ equity
|
|
$4,848,339
|
|
$4,796,402
|
|
|
|
|
|
|
|
|
CITRIX SYSTEMS, INC.
Condensed Consolidated Statement of Cash Flows
(In thousands - unaudited)
|
|
|
|
|
|
Three Months Ended March 31, 2013
|
OPERATING ACTIVITIES
|
|
|
Net Income
|
|
$
|
59,688
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
Amortization and depreciation
|
|
|
64,536
|
|
Stock-based compensation expense
|
|
|
43,556
|
|
Provision for accounts receivable allowances
|
|
|
2,026
|
|
Deferred income tax benefit
|
|
|
(18,189
|
)
|
Other non-cash items
|
|
|
(1,640
|
)
|
Total adjustments to reconcile net income to net cash provided by
operating activities
|
|
|
90,289
|
|
Changes in operating assets and liabilities, net of the effects of
acquisitions:
|
|
|
Accounts receivable
|
|
|
183,892
|
|
Prepaid expenses and other current assets
|
|
|
(35,158
|
)
|
Inventory
|
|
|
(1,140
|
)
|
Other assets
|
|
|
811
|
|
Accounts payable
|
|
|
(11,312
|
)
|
Accrued expenses and other current liabilities
|
|
|
(21,338
|
)
|
Deferred revenues
|
|
|
21,448
|
|
Income taxes, net
|
|
|
(43,333
|
)
|
Other liabilities
|
|
|
5,632
|
|
Total changes in operating assets and liabilities, net of the
effects of acquisitions
|
|
|
99,502
|
|
Net cash provided by operating activities
|
|
|
249,479
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
Purchases of available-for-sale investments, net
|
|
|
(273,909
|
)
|
Purchases of property and equipment
|
|
|
(28,297
|
)
|
Purchases of other assets
|
|
|
(1,102
|
)
|
Cash paid for acquisitions, net of cash acquired
|
|
|
(324,049
|
)
|
Cash paid for licensing and core technology
|
|
|
(2,236
|
)
|
Net cash used in investing activities
|
|
|
(629,593
|
)
|
|
|
|
FINANCING ACTIVITIES
|
|
|
Proceeds from issuance of common stock under stock-based
compensation plans
|
|
|
25,251
|
|
Excess tax benefit from exercise of stock options
|
|
|
26,795
|
|
Stock repurchases, net
|
|
|
(63,618
|
)
|
Net cash used in financing activities
|
|
|
(11,572
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
(458
|
)
|
Change in cash and cash equivalents
|
|
|
(392,144
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
643,609
|
|
Cash and cash equivalents at end of period
|
|
$
|
251,465
|
|
|
|
|
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
acquired intangible assets, stock-based compensation expenses 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 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 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.
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 newly acquired intangible assets, 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 March 31,
|
|
|
2013
|
GAAP operating margin
|
|
8.4%
|
Add: stock-based compensation
|
|
6.5%
|
Add: amortization of product related intangible assets
|
|
3.7%
|
Add: amortization of other intangible assets
|
|
1.5%
|
Non-GAAP operating margin
|
|
20.1%
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
2013
|
|
2012
|
GAAP net income
|
|
$
|
59,688
|
|
|
$
|
68,267
|
|
Add: stock-based compensation
|
|
|
43,556
|
|
|
|
30,557
|
|
Add: amortization of product related intangible assets
|
|
|
24,709
|
|
|
|
16,535
|
|
Add: amortization of other intangible assets
|
|
|
10,418
|
|
|
|
10,467
|
|
Less: tax effects related to above items
|
|
|
(21,320
|
)
|
|
|
(15,167
|
)
|
Non-GAAP net income
|
|
$
|
117,051
|
|
|
$
|
110,659
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
2013
|
|
2012
|
GAAP earnings per share – diluted
|
|
$
|
0.32
|
|
|
$
|
0.36
|
|
Add: stock-based compensation
|
|
|
0.23
|
|
|
|
0.16
|
|
Add: amortization of product related intangible assets
|
|
|
0.13
|
|
|
|
0.09
|
|
Add: amortization of other intangible assets
|
|
|
0.06
|
|
|
|
0.06
|
|
Less: tax effects related to above items
|
|
|
(0.12
|
)
|
|
|
(0.08
|
)
|
Non-GAAP earnings per share – diluted
|
|
$
|
0.62
|
|
|
$
|
0.59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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CITRIX SYSTEMS, INC.
Forward Looking Guidance
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For the Three Months Ended June 30,
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For the Twelve Months Ended December 31,
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2013
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2013
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GAAP earnings per share - diluted
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$0.31 to $0.32
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$1.91 to $1.95
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Add: adjustments to exclude the effects of amortization of
intangible assets
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0.18
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0.74
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Add: adjustments to exclude the effects of expenses related to
stock-based compensation
Less: tax effects related to above items
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0.26
(0.12) to (0.14)
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1.01
(0.55) to (0.62)
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Non-GAAP earnings per share - diluted
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$0.62 to $0.63
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$3.08 to $3.11
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For the Three Months Ended June 30,
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2013
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GAAP tax rate
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13.0% - 14.0%
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Add: tax effects of stock-based compensation and amortization of
intangible assets
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9.0
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Non-GAAP tax rate
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22.0% - 23.0%
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