Citrix Systems, Inc. has reported financial results for the first quarter of fiscal year 2015 ending March 31, 2015.

Financial Results

For the first quarter of fiscal year 2015, Citrix achieved revenue of $761 million, compared to $751 million in the first quarter of fiscal year 2014, representing 1 percent revenue growth.

GAAP Results

Net income for the first quarter of fiscal year 2015 was $29 million, or $0.18 per diluted share, compared to $56 million, or $0.30 per diluted share, for the first quarter of fiscal year 2014. GAAP results for the first quarter of fiscal year 2015 include restructuring charges of $34 million for severance and facility closing costs related to the 2014 and 2015 restructuring programs designed to increase strategic focus and operational efficiency. The first quarter of fiscal year 2014 GAAP results included a restructuring charge of approximately $10 million for severance costs related to the 2014 restructuring program.

Non-GAAP Results

Non-GAAP net income for the first quarter of fiscal year 2015 was $106 million, or $0.65 per diluted share, compared to $119 million, or $0.64 per diluted share for the first quarter of fiscal year 2014. Non-GAAP net income per diluted share excludes the effects of amortization of acquired intangible assets, stock-based compensation expenses, charges related to amortization of debt discount and restructuring programs as well as a benefit from a previously disclosed patent lawsuit, and the tax effects related to these items.

“While I’m disappointed in our Q1 results, our confidence in the financial, operational and strategic initiatives that we announced last quarter remains strong,” said Mark Templeton, president and CEO for Citrix.  “While these changes position us for our next phase of growth, they had a greater near-term impact on our execution than we anticipated.  Our commitment to margin expansion, however, remains unchanged.

“Looking beyond Q1, I’m excited about the innovations I see across our workspace services, delivery networking and mobility apps businesses.  Through these innovations, we’ll continue our focus on enabling the software-defined workplace.”

Q1 Financial Summary

In reviewing the results for the first quarter of fiscal year 2015 compared to the first quarter of fiscal year 2014:

• Product and license revenue decreased 12 percent;
• Software as a service revenue increased 8 percent;
• Revenue from license updates and maintenance increased 8 percent;
• Professional services revenue, which is comprised of consulting, product training and certification, decreased 13 percent;
• Net revenue increased in the EMEA region by 1 percent and decreased in the Pacific region by 2 percent and in the Americas region by 1 percent;
• Deferred revenue totaled $1.5 billion as of March 31, 2015, compared to $1.4 billion as of March 31, 2014, an increase of 7 percent; and
• Cash flow from operations was $292 million for the first quarter of fiscal year 2015, compared with $288 million for the first quarter of fiscal year 2014.

During the first quarter of fiscal year 2015:

• GAAP gross margin was 83 percent, and non-GAAP gross margin was 85 percent, which excludes the effects of amortization of acquired product related intangible assets and stock-based compensation expense;
• GAAP operating margin was 7 percent, and non-GAAP operating margin was 19 percent, which excludes the effects of amortization of acquired intangible assets, stock-based compensation expense, costs associated with the restructuring programs, and the benefit related to a previously disclosed patent lawsuit; and
• The company repurchased 2.4 million shares at an average price of $63.12.

Financial Outlook for Second Quarter 2015

Citrix management expects to achieve the following results for the second quarter of fiscal year 2015 ending June 30, 2015:

• Net revenue is targeted to be in the range of $785 million to $795 million.
• GAAP gross margin is targeted to be in the range of 82 percent to 83 percent. Non-GAAP gross margin is targeted to be in the range of 84 percent to 85 percent, which excludes 2 percent related to the effects of amortization of acquired product related intangible assets and stock-based compensation expense.
• GAAP diluted earnings per share is targeted to be in the range of $0.41 to $0.43. Non-GAAP diluted earnings per share is targeted to be in the range of $0.80 to $0.83, which excludes $0.24 related to the effects of stock-based compensation expenses, $0.17 related to the effects of amortization of acquired intangible assets, $0.08 related to restructuring charges, $0.05 related to the effects of amortization of debt discount and $(0.12) to $(0.17) for the tax effects related to these items.
• GAAP tax rate is targeted to be in the range of 19 percent to 20 percent. Non-GAAP tax rate, which excludes the effects of amortization of acquired intangible assets, stock-based compensation expenses, amortization of debt discount and restructuring charges, is targeted to be in the range of 23 percent to 24 percent.

Financial Outlook for Fiscal Year 2015

Citrix management expects to achieve the following results for the fiscal year ending December 31, 2015:

• Net revenue is targeted to be in the range of $3.22 billion to $3.25 billion.
• GAAP gross margin is targeted to be in the range of 83 percent to 84 percent. Non-GAAP gross margin is targeted to be in the range of 85 percent to 86 percent, which excludes 2 percent related to the effects of amortization of acquired product related intangible assets and stock-based compensation expense.
• GAAP diluted earnings per share is targeted to be in the range of $2.04 to $2.10. Non-GAAP diluted earnings per share is targeted to be in the range of $3.55 to $3.60, which excludes $0.93 related to the effects of stock-based compensation expenses, $0.68 related to the effects of amortization of acquired intangible assets, $0.29 related to restructuring charges, $0.20 related to the effects of amortization of debt discount, $(0.01) related to a benefit from a previously disclosed patent lawsuit and $(0.53) to $(0.64) for the tax effects related to these items.
• GAAP tax rate is targeted to be in the range of 19 percent to 20 percent. Non-GAAP tax rate, which excludes the effects of amortization of acquired intangible assets, stock-based compensation expenses, amortization of debt discount, a benefit from a previously disclosed patent lawsuit, and restructuring charges, is targeted to be in the range of 23 percent to 24 percent.

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 https://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 https://www.citrix.com/investors.