Citrix Reports Second Quarter 2017 Financial Results
Quarterly revenue of $693 million up 3% year-over-year
Quarterly GAAP diluted EPS of $0.70; non-GAAP diluted EPS of $1.03 on a continuing operations basis
Deferred revenue of $1.7 billion up 13 percent year-over-year
Citrix Systems, Inc. (NASDAQ:CTXS) today reported financial results for the second quarter of fiscal year 2017 ended
June 30, 2017.
Financial Results
For the second quarter of fiscal year 2017, Citrix achieved revenue from continuing operations of $693 million, compared to $674
million in the second quarter of fiscal year 2016, representing 3 percent revenue growth.
GAAP Results
Net income from continuing operations for the second quarter of fiscal year 2017 was $109 million, or $0.70 per diluted share,
compared to $106 million, or $0.68 per diluted share, for the second quarter of fiscal year 2016. Net income for the second quarter
of fiscal year 2017 includes a net international tax benefit of approximately $10 million, or $0.06 per diluted share, primarily
related to an international statutory tax transaction.
Non-GAAP Results
Non-GAAP net income from continuing operations for the second quarter of fiscal year 2017 was $158 million, or $1.03 per diluted
share, compared to $157 million, or $1.00 per diluted share for the second quarter of fiscal year 2016. Non-GAAP net income from
continuing operations for the second quarter of fiscal year 2017 and 2016 excludes the effects of stock-based compensation expense,
amortization of acquired intangible assets, amortization of debt discount, restructuring charges, separation costs, and the tax
effects related to these items. Non-GAAP net income per diluted share also reflects the anti-dilutive impact of the company’s
convertible note hedges.
“Q2 demonstrated a clear acceleration in the momentum of our cloud transformation, with a strong demand for Citrix Cloud and our
subscription-based solutions,” said David Henshall, president and CEO of Citrix. “As a result, we are seeing double-digit growth in
deferred revenue and an acceleration in overall billings, which proves the value of the innovation that we are delivering to
customers and partners and the success we can expect in the future.”
Q2 Financial Summary
In reviewing the results from continuing operations for the second quarter of fiscal year 2017 compared to the second quarter of
fiscal year 2016:
- Product and license revenue decreased 4 percent;
- Software as a service revenue increased 27 percent;
- Revenue from license updates and maintenance increased 6 percent;
- Professional services revenue, which is comprised of consulting, product training and certification,
decreased 9 percent;
- Net revenue increased in the Pacific region by 10 percent, increased in the EMEA region by 6 percent,
and remained consistent in the Americas region;
- Deferred revenue totaled $1.7 billion as of June 30, 2017, compared to $1.5 billion as of
June 30, 2016, an increase of 13 percent; and
- Cash flow from continuing operations was $164 million for the second quarter of fiscal year 2017,
compared to $194 million for the second quarter of fiscal year 2016.
During the second quarter of fiscal year 2017:
- GAAP gross margin was 84 percent. Non-GAAP gross margin was 86 percent, excluding the effects of
amortization of acquired product related intangible assets and stock-based compensation expense; and
- GAAP operating margin was 18 percent. Non-GAAP operating margin was 26 percent, excluding the effects
of stock-based compensation expense, amortization of acquired intangible assets, and costs associated with restructuring
programs.
Financial Outlook for Third Quarter 2017
Citrix management expects to achieve the following results for the third quarter of fiscal year 2017 ending September 30,
2017:
- Net revenue is targeted to be in the range of $685 million to $695 million.
- GAAP diluted earnings per share is targeted to be in the range of $0.68 to $0.70. Non-GAAP diluted
earnings per share is targeted to be in the range of $1.02 to $1.05, excluding $0.32 related to the effects of stock-based
compensation expenses, $0.11 related to the effects of amortization of acquired intangible assets, $0.06 related to the effects
of amortization of debt discount, $0.03 to $0.04 related to restructuring charges and $0.16 to $0.20 for the tax effects related
to these items. Non-GAAP diluted earnings per share reflects the anti-dilutive impact of the convertible note hedges, which
cannot be calculated without unreasonable efforts.
Financial Outlook for Fiscal Year 2017
Citrix management expects to achieve the following results from continuing operations for the fiscal year ending
December 31, 2017:
- Net revenue is targeted to be in the range of $2.81 billion to $2.83 billion.
- GAAP diluted earnings per share from continuing operations is targeted to be in the range of $2.59 to
$2.74. Non-GAAP diluted earnings per share from continuing operations is targeted to be in the range of $4.60 to $4.65, excluding
$1.07 related to the effects of stock-based compensation expenses, $0.42 related to the effects of amortization of acquired
intangible assets, $0.22 related to the effects of amortization of debt discount, approximately $60 to $70 million or $0.36 to
$0.44 related to restructuring charges, and $0.39 to $0.51 for the tax effects related to these items. Non-GAAP diluted earnings
per share from continuing operations also excludes $0.30 related to certain tax charges incurred in connection with the
separation of the GoTo business. Non-GAAP diluted earnings per share reflects the anti-dilutive impact of the convertible note
hedges, which cannot be calculated without unreasonable efforts.
The above statements are based on current targets. These statements are forward-looking, and actual results may differ
materially.
Second 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 .
About Citrix
Citrix (NASDAQ:CTXS) aims to power a world where people, organizations and things are securely connected and accessible to make
the extraordinary possible. We help customers reimagine the future of work by providing the most comprehensive secure digital
workspace that unifies the apps, data and services people need to be productive, and simplifies IT’s ability to adopt and manage
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.
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 transitions in key personnel and succession risk,
including transitions in the company's Chief Executive Officer, President and Chief Financial Officer; the impact of the global
economy, volatility in global stock markets, foreign exchange rate volatility and uncertainty in the IT spending environment;
changes in Citrix’s pricing and licensing models, promotional programs and product mix, all of which may impact Citrix's revenue
recognition; the success and growth of the company's product lines, including competition, demand and pricing dynamics and our
ability to transition to new business models, including a subscription model, and markets for Citrix's virtualization and
networking products and secure data services; 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 develop, maintain a high level of quality and commercialize 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; disruptions to execution due to actions that may be taken as a result of
Citrix's operational reviews; 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; 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, disruption to our ongoing business and diversion of management's attention from our ongoing business,
and failure to realize expected benefits or synergies from divestitures; risks associated with the failure to achieve the expected
strategic, operational and competitive benefits of the separation of the GoTo business, and the effect of the separation on
Citrix’s shareholders, customers, partners and employees; tax risks related to the separation of the GoTo 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; 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; 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.
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
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Revenues: |
|
|
|
|
|
|
|
|
Product and licenses |
|
$ |
211,009 |
|
|
$ |
219,507 |
|
|
$ |
402,606 |
|
|
$ |
421,540 |
Software as a service |
|
41,513 |
|
|
32,764 |
|
|
80,243 |
|
|
63,879 |
License updates and maintenance |
|
409,028 |
|
|
386,864 |
|
|
811,783 |
|
|
779,882 |
Professional services |
|
31,677 |
|
|
34,852 |
|
|
61,272 |
|
|
67,459 |
Total net revenues |
|
693,227 |
|
|
673,987 |
|
|
1,355,904 |
|
|
1,332,760 |
|
|
|
|
|
|
|
|
|
Cost of net revenues: |
|
|
|
|
|
|
|
|
Cost of product and license revenues |
|
32,735 |
|
|
33,623 |
|
|
62,446 |
|
|
65,018 |
Cost of services and maintenance revenues |
|
64,167 |
|
|
59,178 |
|
|
123,826 |
|
|
113,537 |
Amortization of product related intangible assets |
|
12,410 |
|
|
14,390 |
|
|
25,498 |
|
|
28,447 |
Total cost of net revenues |
|
109,312 |
|
|
107,191 |
|
|
211,770 |
|
|
207,002 |
Gross margin |
|
583,915 |
|
|
566,796 |
|
|
1,144,134 |
|
|
1,125,758 |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Research and development |
|
106,696 |
|
|
100,651 |
|
|
209,365 |
|
|
202,883 |
Sales, marketing and services |
|
268,300 |
|
|
245,921 |
|
|
515,065 |
|
|
479,848 |
General and administrative |
|
81,146 |
|
|
78,883 |
|
|
157,655 |
|
|
157,158 |
Amortization of other intangible assets |
|
3,692 |
|
|
3,822 |
|
|
7,338 |
|
|
7,542 |
Restructuring |
|
2,140 |
|
|
3,580 |
|
|
10,126 |
|
|
49,136 |
Total operating expenses |
|
461,974 |
|
|
432,857 |
|
|
899,549 |
|
|
896,567 |
Income from operations |
|
121,941 |
|
|
133,939 |
|
|
244,585 |
|
|
229,191 |
Interest income |
|
5,560 |
|
|
4,164 |
|
|
11,172 |
|
|
7,915 |
Interest expense |
|
(12,007) |
|
|
(11,196) |
|
|
(23,560) |
|
|
(22,351) |
Other (expense) income, net |
|
(1,141) |
|
|
(272) |
|
|
2,185 |
|
|
(1,275) |
Income from continuing operations before income taxes |
|
114,353 |
|
|
126,635 |
|
|
234,382 |
|
|
213,480 |
Income tax expense |
|
5,524 |
|
|
20,346 |
|
|
55,228 |
|
|
33,937 |
Income from continuing operations |
|
108,829 |
|
|
106,289 |
|
|
179,154 |
|
|
$ |
179,543 |
Income (loss) from discontinued operations, net of income taxes |
|
— |
|
|
14,609 |
|
|
(42,704 |
) |
|
$ |
24,818 |
Net income |
|
$ |
108,829 |
|
|
$ |
120,898 |
|
|
$ |
136,450 |
|
|
$ |
204,361 |
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share: |
|
|
|
|
|
|
|
|
Income from continuing operations |
|
$ |
0.70 |
|
|
$ |
0.68 |
|
|
$ |
1.14 |
|
|
$ |
1.15 |
Income (loss) from discontinued operations |
|
— |
|
|
0.09 |
|
|
(0.27 |
) |
|
0.16 |
Diluted earnings per share: |
|
$ |
0.70 |
|
|
$ |
0.77 |
|
|
$ |
0.87 |
|
|
$ |
1.31 |
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
Weighted average shares outstanding - diluted |
|
156,036 |
|
|
156,666 |
|
|
157,239 |
|
|
156,258 |
|
|
|
|
|
|
|
|
|
|
|
|
|
CITRIX SYSTEMS, INC. |
Condensed Consolidated Balance Sheets |
(In thousands - unaudited)
|
|
|
|
June 30, 2017 |
|
December 31, 2016 |
ASSETS |
|
|
|
|
Cash and cash equivalents |
|
$ |
844,771 |
|
|
$ |
836,095 |
|
Short-term investments |
|
511,092 |
|
|
726,923 |
|
Accounts receivable, net |
|
541,315 |
|
|
681,206 |
|
Inventories, net |
|
13,229 |
|
|
12,522 |
|
Prepaid expenses and other current assets |
|
176,080 |
|
|
124,842 |
|
Current assets of discontinued operations |
|
— |
|
|
179,689 |
|
Total current assets |
|
2,086,487 |
|
|
2,561,277 |
|
Long-term investments |
|
1,045,384 |
|
|
980,142 |
|
Property and equipment, net |
|
252,925 |
|
|
261,954 |
|
Goodwill |
|
1,617,105 |
|
|
1,585,893 |
|
Other intangible assets, net |
|
187,550 |
|
|
173,681 |
|
Deferred tax assets, net |
|
177,375 |
|
|
233,900 |
|
Other assets |
|
64,083 |
|
|
54,449 |
|
Long-term assets of discontinued operations |
|
— |
|
|
538,931 |
|
Total assets |
|
$ |
5,430,909 |
|
|
$ |
6,390,227 |
|
|
|
|
|
|
LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY |
|
|
|
|
Accounts payable |
|
$ |
65,265 |
|
|
$ |
72,724 |
|
Accrued expenses and other current liabilities |
|
240,808 |
|
|
256,799 |
|
Income taxes payable |
|
4,724 |
|
|
39,771 |
|
Current portion of deferred revenues |
|
1,205,692 |
|
|
1,208,229 |
|
Short-term debt |
|
30,000 |
|
|
— |
|
Convertible notes, short-term |
|
— |
|
|
1,348,156 |
|
Current liabilities of discontinued operations |
|
— |
|
|
172,670 |
|
Total current liabilities |
|
1,546,489 |
|
|
3,098,349 |
|
|
|
|
|
|
Long-term portion of deferred revenues |
|
510,209 |
|
|
476,135 |
|
Convertible notes, long-term |
|
1,367,092 |
|
|
— |
|
Other liabilities |
|
125,418 |
|
|
119,813 |
|
Long-term liabilities of discontinued operations |
|
— |
|
|
7,708 |
|
Temporary equity from Convertible notes |
|
— |
|
|
79,495 |
|
Stockholders' equity: |
|
|
|
|
Common stock |
|
305 |
|
|
303 |
|
Additional paid-in capital |
|
4,922,187 |
|
|
4,761,588 |
|
Retained earnings |
|
3,663,732 |
|
|
4,010,737 |
|
Accumulated other comprehensive loss |
|
(8,779 |
) |
|
(28,704 |
) |
Less - common stock in treasury, at cost |
|
(6,695,744 |
) |
|
(6,135,197 |
) |
Total stockholders' equity |
|
1,881,701 |
|
|
2,608,727 |
|
Total liabilities, temporary equity and stockholders' equity |
|
$ |
5,430,909 |
|
|
$ |
6,390,227 |
|
|
CITRIX SYSTEMS, INC. |
Condensed Consolidated Statement of Cash Flows |
(In thousands - unaudited)
|
|
|
|
|
|
Six Months Ended |
|
|
June 30, 2017 |
|
|
|
OPERATING ACTIVITIES |
|
|
Net Income |
|
$ |
136,450 |
|
Loss from discontinued operations |
|
42,704 |
|
Adjustments to reconcile net income to net cash provided by operating
activities: |
|
|
Depreciation, amortization and other |
|
97,403 |
|
Stock-based compensation expense |
|
75,487 |
|
Deferred income tax expense |
|
56,584 |
|
Effects of exchange rate changes on monetary assets and liabilities denominated in
foreign currencies |
|
(6,049 |
) |
Other non-cash items |
|
7,812 |
|
Total adjustments to reconcile net income to net cash provided by operating
activities |
|
231,237 |
|
Changes in operating assets and liabilities, net of the effects of acquisitions: |
|
|
Accounts receivable |
|
140,471 |
|
Inventories |
|
(1,398 |
) |
Prepaid expenses and other current assets |
|
(5,957 |
) |
Other assets |
|
(9,597 |
) |
Income taxes, net |
|
(73,567 |
) |
Accounts payable |
|
(9,272 |
) |
Accrued expenses and other current liabilities |
|
(20,536 |
) |
Deferred revenues |
|
26,084 |
|
Other liabilities |
|
(790 |
) |
Total changes in operating assets and liabilities, net of the effects of
acquisitions |
|
45,438 |
|
Net cash provided by operating activities of continuing operations |
|
455,829 |
|
Net cash used in operating activities of discontinued operations |
|
(56,070 |
) |
Net cash provided by operating activities |
|
399,759 |
|
INVESTING ACTIVITIES |
|
|
Purchases of available-for-sale investments |
|
(590,004 |
) |
Proceeds from sales of available-for-sale investments |
|
562,098 |
|
Proceeds from maturities of available-for-sale investments |
|
179,330 |
|
Purchases of property and equipment |
|
(38,650 |
) |
Cash paid for acquisitions, net of cash acquired |
|
(60,449 |
) |
Cash paid for licensing agreements and technology |
|
(5,155 |
) |
Other |
|
987 |
|
Net cash provided by investing activities of continuing operations |
|
48,157 |
|
Net cash used in investing activities of discontinued operations |
|
(3,891 |
) |
Net cash provided by investing activities |
|
44,266 |
|
FINANCING ACTIVITIES |
|
|
Proceeds from issuance of common stock under stock-based compensation plans |
|
1,490 |
|
Proceeds from credit facility |
|
125,000 |
|
Repayment of credit facility |
|
(95,000 |
) |
Repayment of acquired debt |
|
(4,000 |
) |
Stock repurchases, net |
|
(500,000 |
) |
Cash paid for tax withholding on vested stock awards |
|
(60,547 |
) |
Transfer of cash to GoTo Business resulting from the separation |
|
(28,523 |
) |
Net cash used in financing activities |
|
(561,580 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
5,370 |
|
Change in cash and cash equivalents |
|
(112,185 |
) |
Cash and cash equivalents at beginning of period |
|
956,956 |
|
Cash and cash equivalents at end of period |
|
$ |
844,771 |
|
|
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 and debt
discount, stock-based compensation expenses, charges associated with the Company’s restructuring programs, separation costs, the
related tax effect of those items and separation-related tax charges or benefits. 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. These non-GAAP financial measures are presented on a continuing operations basis. 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 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.
- Separation costs represent transaction and transition costs associated with preparing businesses for
independent operations consisting primarily of financial advisory fees, legal fees, accounting fees, tax services and information
systems infrastructure duplication. These charges are not anticipated to be ongoing costs; and, thus, are outside of the normal
operations of the Company's business. As such, the Company believes that these expenses do not accurately reflect the underlying
performance of continuing operations for the period in which they are incurred.
- Separation-related tax charges or benefits, which may include reversals of certain state R&D
credits due to changes in expectations of realizability as a result of the separation of a significant business of the Company.
The Company believes that these items do not accurately reflect the underlying performance of continuing operations for the
period in which they are incurred.
- 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 Ended June
30, 2017
|
GAAP gross margin |
|
84.2% |
Add: stock-based compensation |
|
0.1 |
Add: amortization of product related intangible assets |
|
1.8 |
Non-GAAP gross margin |
|
86.1% |
|
|
|
Three Months Ended June
30, 2017
|
GAAP operating margin |
|
17.6% |
Add: stock-based compensation |
|
5.9 |
Add: amortization of product related intangible assets |
|
1.8 |
Add: amortization of other intangible assets |
|
0.5 |
Add: restructuring charges |
|
0.3 |
Non-GAAP operating margin |
|
26.1% |
|
|
|
|
|
Three Months Ended June 30, |
|
|
2017 |
|
2016 |
GAAP net income from continuing operations |
|
$108,829 |
|
$106,289 |
Add: stock-based compensation |
|
40,679 |
|
38,367 |
Add: amortization of product related intangible assets |
|
12,410 |
|
14,390 |
Add: amortization of other intangible assets |
|
3,692 |
|
3,822 |
Add: amortization of debt discount |
|
8,472 |
|
8,222 |
Add: separation costs |
|
216 |
|
374 |
Add: restructuring charges |
|
2,140 |
|
3,580 |
Less: tax effects related to above items |
|
(18,731) |
|
(18,097) |
Non-GAAP net income from continuing operations |
|
$157,707 |
|
$156,947 |
|
|
Three Months Ended June 30, |
|
|
2017 |
|
2016 |
Number of shares used in diluted earnings per share calculations: |
|
|
|
|
GAAP weighted average shares outstanding |
|
156,036 |
|
|
156,666 |
Less: effect of convertible note hedges |
|
(2,644 |
) |
|
— |
Non-GAAP weighted average shares outstanding |
|
153,392 |
|
|
156,666 |
|
|
|
Three Months Ended June 30, |
|
|
2017 |
|
2016 |
GAAP earnings per share from continuing operations - diluted |
|
$0.70 |
|
$0.68 |
Add: stock-based compensation |
|
0.27 |
|
0.25 |
Add: amortization of product related intangible assets |
|
0.08 |
|
0.09 |
Add: amortization of other intangible assets |
|
0.03 |
|
0.02 |
Add: amortization of debt discount |
|
0.06 |
|
0.05 |
Add: restructuring charges |
|
0.01 |
|
0.02 |
Less: tax effects related to above items |
|
(0.12) |
|
(0.11) |
Non-GAAP earnings per share from continuing operations - diluted |
|
$1.03 |
|
$1.00 |
|
Forward Looking Guidance
|
|
|
|
|
|
|
|
For the Three
Months Ended
September 30,
|
|
For the Twelve
Months Ended
December 31,
|
|
|
2017 |
|
2017 |
GAAP earnings per share from continuing operations - diluted |
|
$0.68 to $0.70 |
|
$2.59 to $2.74 |
Add: adjustments to exclude the effects of expenses related to stock-based
compensation |
|
0.32 |
|
1.07 |
Add: adjustments to exclude the effects of amortization of intangible assets |
|
0.11 |
|
0.42 |
Add: adjustments to exclude the effects of amortization of debt discount |
|
0.06 |
|
0.22 |
Add: adjustments to exclude the effects of restructuring charges |
|
0.03 to 0.04 |
|
0.36 to 0.44 |
Less: tax effects related to above items |
|
(0.16) to (0.20) |
|
(0.39) to (0.51) |
Add: adjustments to exclude the effects of separation related tax
charges |
|
— |
|
0.30 |
Non-GAAP earnings per share from continuing operations - diluted |
|
$1.02 to $1.05 |
|
$4.60 to $4.65 |
![](http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170802006210r1&sid=mstr1&distro=nx&lang=en)
Citrix Systems, Inc.
For media inquiries:
Eric Armstrong, 954-267-2977
eric.armstrong@citrix.com
or
For investor inquiries:
Eduardo Fleites, 954-229-5758
eduardo.fleites@citrix.com
View source version on businesswire.com: http://www.businesswire.com/news/home/20170802006210/en/