Citrix has reported financial results for the third quarter of fiscal year 2017 ended September 30, 2017.

Financial Results

For the third quarter of fiscal year 2017, Citrix achieved revenue from continuing operations of $691 million, compared to $669 million in the third quarter of fiscal year 2016, representing 3 percent revenue growth.

GAAP Results

Net income from continuing operations for the third quarter of fiscal year 2017 was $127 million, or $0.82 per diluted share, compared to $112 million, or $0.71 per diluted share, for the third quarter of fiscal year 2016. Net income from continuing operations for the third quarter of fiscal year 2017 and 2016 includes restructuring charges of $9 million and $12 million, respectively, for severance and facility closing costs. Net income for the third quarter of fiscal year 2017 includes a tax benefit of approximately $8 million, or $0.05 per diluted share, related to the expiration of the statute of limitation for a prior domestic tax year.

Non-GAAP Results

Non-GAAP net income from continuing operations for the third quarter of fiscal year 2017 was $186 million, or $1.22 per diluted share, compared to $170 million, or $1.08 per diluted share for the third quarter of fiscal year 2016. Non-GAAP net income from continuing operations for the third 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, and the tax effects related to these items. Non-GAAP net income from continuing operations for the third quarter of fiscal year 2016 also excludes separation costs and the tax effect related to this item. Non-GAAP net income per diluted share for the third quarter of fiscal year 2017 also reflects the anti-dilutive impact of the company’s convertible note hedges.

“I am pleased with our execution this quarter and our renewed discipline in managing our business. We are moving quickly to drive business transformation across Citrix, aligning with our customers’ desire to support multi-cloud and hybrid-cloud environments,” said David Henshall, president and CEO.

“I am excited about the opportunity we have moving forward and our potential over the next several years.”

Q3 Financial Summary

In reviewing the results from continuing operations for the third quarter of fiscal year 2017 compared to the third quarter of fiscal year 2016:

• Product and license revenue decreased 4 percent;
• Product and license revenue decreased 7 percent;
• Software as a service revenue increased 32 percent;
• Revenue from license updates and maintenance increased 6 percent;
• Professional services revenue, which is comprised of consulting, product training and certification, increased 7 percent;
• Net revenue increased in the EMEA region by 7 percent; increased in the Americas region by 2 percent; and decreased in the APJ region by 1 percent;
• Subscription revenue as a percentage of total revenue was 12 percent
• Deferred revenue totaled $1.7 billion as of September 30, 2017, compared to $1.5 billion as of September 30, 2016, an increase of 13 percent; and
• Cash flow from continuing operations was $255 million for the third quarter of fiscal year 2017, compared to $238 million for the third quarter of fiscal year 2016.

During the third quarter of fiscal year 2017:

• GAAP gross margin was 85 percent. Non-GAAP gross margin was 87 percent, excluding the effects of amortization of acquired product related intangible assets and stock-based compensation expense; and
• GAAP operating margin was 20 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.

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 $2.82 billion to $2.83 billion.
• GAAP diluted earnings per share from continuing operations is targeted to be in the range of $2.80 to $2.93. Non-GAAP diluted earnings per share from continuing operations is targeted to be in the range of $4.79 to $4.81, excluding $0.46 related to the effects of amortization of acquired intangible assets, $1.07 related to the effects of stock-based compensation expenses, $0.22 related to the effects of amortization of debt discount, $0.37 related to restructuring charges, and $0.41 to $0.56 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.

Preliminary Outlook for Fiscal Year 2018

The company’s current preliminary outlook for the full fiscal year 2018 is for net revenue to grow by approximately 1 to 2 percent, excluding the transition impact of ASC 606 adoption, which will be effective January 1, 2018. In addition, Citrix management is targeting GAAP operating margin to be in the range of 19 percent to 20 percent, and non-GAAP operating margin to be in the range of 29 percent to 30 percent, excluding 6 percent related to the effects of stock-based compensation expense, 2 percent related to the effects of amortization of acquired intangible assets, and 2 percent related to restructuring charges.

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

Third 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 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.

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