Citrix Systems, Inc. has reported financial results for the first quarter of fiscal year 2018 ended March 31, 2018.

Financial Results

For the first quarter of fiscal year 2018, Citrix achieved revenue of $697 million, compared to $663 million in the first quarter of fiscal year 2017, representing 5 percent revenue growth.

GAAP Results

Net income for the first quarter of fiscal year 2018 was $144 million, or $0.99 per diluted share, compared to $70 million, or $0.44 per diluted share, for the first quarter of fiscal year 2017. Net income for the first quarter of fiscal year 2018 and 2017 includes restructuring charges of $6 million and $8 million, respectively, for severance and facility closing costs. Additionally, net income for the first quarter of fiscal year 2017 includes $46 million in charges related to changes in the company’s expectations of the realisability of certain state R&D tax credits resulting from the separation of the GoTo business, partially offset by a tax benefit of approximately $18 million from the adoption of Accounting Standard Update 2016-09 in the first quarter of fiscal year 2017.

Non-GAAP Results

Non-GAAP net income for the first quarter of fiscal year 2018 was $184 million, or $1.29 per diluted share, compared to $152 million, or $0.97 per diluted share for the first quarter of fiscal year 2017. Non-GAAP net income for the first 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 first quarter of fiscal year 2017 also excludes separation costs and the tax effect related to this item and charges related to changes in the company’s expectations of the realizability of certain state R&D tax credits resulting from the separation of the GoTo business. Non-GAAP net income per diluted share for the first quarter of fiscal years 2018 and 2017 also reflects the anti-dilutive impact of the company’s convertible note hedges.

“This quarter, we delivered strong financial results while at the same time accelerating innovation across our portfolio. Our subscription-based revenue accelerated for the fifth quarter in a row as we are seeing the benefit of transitioning our business model,” said David Henshall, president and CEO of Citrix. “Our focus on integrating the portfolio, with investments in analytics and cloud, position us nicely for the rest of the year.”

Q1 Financial Summary

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

• Subscription revenue increased 49 percent;
• Product and license revenue decreased 6 percent;
• Support and services revenue increased 3 percent;
• Net revenue increased in the EMEA region by 7 percent; increased in the Americas region by 5 percent; and decreased in the APJ region by 1 percent;
• Subscription revenue as a percentage of total revenue was 15 percent;
• Deferred revenue totaled $1.69 billion as of March 31, 2018, compared to $1.66 as of March 31, 2017, an increase of 1 percent; and
• Cash flow from operations was $358 million for the first quarter of fiscal year 2018, compared to $292 million for the first quarter of fiscal year 2017.

During the first quarter of fiscal year 2018:

• GAAP gross margin was 84 percent. Non-GAAP gross margin was 86 percent, excluding the effects of stock-based compensation expense and amortization of acquired product related intangible assets;
• GAAP operating margin was 24 percent. Non-GAAP operating margin was 32 percent, excluding the effects of stock-based compensation expense, amortization of acquired intangible assets, and costs associated with restructuring programs; and
• The company repurchased approximately 8.4 million shares during the first quarter.

All results above reflect continuing operations.

Financial Outlook for Second Quarter 2018

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

• Net revenue is targeted to be in the range of $710 million to $720 million.
• GAAP diluted earnings per share is targeted to be in the range of $0.72 to $0.76.
• Non-GAAP diluted earnings per share is targeted to be in the range of $1.18 to $1.22, excluding $0.11 related to the effects of amortization of acquired intangible assets, $0.40 related to the effects of stock-based compensation expenses, $0.06 related to the effects of amortization of debt discount, $0.01 related to restructuring charges, and $0.08 to $0.16 for the tax effects related to these items. Non-GAAP diluted earnings per share reflects the anti-dilutive impact of the convertible note hedges and does not include any additional impacts related to our convertible note warrants or U.S. tax reform, all of which cannot be calculated without unreasonable efforts.

Financial Outlook for Fiscal Year 2018

Citrix management expects to achieve the following results for the fiscal year ending December 31, 2018:

• Net revenue is targeted to be in the range of $2.88 billion to $2.91 billion.
• GAAP diluted earnings per share is targeted to be in the range of $3.45 to $3.59.
• Non-GAAP diluted earnings per share is targeted to be in the range of $5.20 to $5.30, excluding $0.44 related to the effects of amortization of acquired intangible assets, $1.51 related to the effects of stock-based compensation expenses, $0.25 related to the effects of amortization of debt discount, $0.09 related to restructuring charges, and $0.44 to $0.68 for the tax effects related to these items. Non-GAAP diluted earnings per share reflects the anti-dilutive impact of the convertible note hedges and does not include any additional impacts related to our convertible note warrants or U.S. tax reform, all of which cannot be calculated without unreasonable efforts.
• In addition, Citrix management is targeting GAAP operating margin to be in the range of 20 percent to 21 percent, and non-GAAP operating margin to be in the range of 30 percent to 31 percent, excluding 7 percent related to the effects of stock-based compensation expense, 2 percent related to the effects of amortization of acquired intangible assets, and less than a percent related to restructuring charges.

The above statements are based on current targets. These statements are forward-looking, and actual results may differ materially.