Citrix Reports Third Quarter Financial Results

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Citrix reported financial results for the third quarter of fiscal year 2016 ended September 30, 2016.

Quarterly revenue of $841 million up 3 percent year over year Quarterly GAAP operating margin of 18 percent; non-GAAP operating margin of 30 percent Quarterly GAAP diluted EPS of $0.84; non-GAAP diluted EPS of $1.32 Quarterly cash flow from operations of $288 million, up 11 percent year-over-year

Financial Results

For the third quarter of fiscal year 2016, Citrix achieved revenue of $841 million, compared to $813 million in the third quarter of fiscal year 2015, representing 3 percent revenue growth.

GAAP Results

Net income for the third quarter of fiscal year 2016 was $132 million, or $0.84 per diluted share, compared to $56 million, or $0.35 per diluted share, for the third quarter of fiscal year 2015. The third quarter of fiscal year 2015 GAAP net income includes impairment charges of approximately $65 million related to certain intangible assets from the acquisition of ByteMobile, which are included in amortization of product related and other intangible assets.  In addition, net income for the third quarter of fiscal year 2016 includes $18 million in separation costs associated with the proposed separation of our GoTo business and subsequent merger with LogMeIn.

Non-GAAP Results

Non-GAAP net income for the third quarter of fiscal year 2016 was $208 million, or $1.32 per diluted share, compared to $168 million, or $1.04 per diluted share, for the third quarter of fiscal year 2015. Non-GAAP net income for the third quarter of fiscal years 2016 and 2015 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 third quarter of fiscal year 2016 also excludes $18 million in separation costs associated with the proposed separation of our GoTo business and subsequent merger with LogMeIn.

“Our strong results this quarter show clearly how our renewed focus is resonating in the marketplace,” said Kirill Tatarinov, CEO for Citrix.

“We are seeing growth in all of our core areas of business — including our Workspace Services business, which is showing improving growth for the second consecutive quarter. And we have demonstrated tremendous progress in the workforce and cultural transformation that defines us as a company and that will continue to power us forward. Our vision is clear; our strategy is crisp; and our execution has improved dramatically.”

Q3 Financial Summary

In reviewing the results for the third quarter of fiscal year 2016 compared to the third quarter of fiscal year 2015:

  • Product and license revenue remained flat;
  • Software as a service revenue increased 9 percent;
  • Revenue from license updates and maintenance increased 5 percent;
  • Professional services revenue, which is comprised of consulting, product training and certification, decreased 19 percent;
  • Net revenue increased in the Americas region by 8 percent, increased in the Pacific region by less than 1 percent, and decreased in the EMEA region by 4 percent;
  • Deferred revenue totaled $1.6 billion as of September 30, 2016, compared to $1.5 billion as of September 30, 2015, an increase of 7 percent; and
  • Cash flow from operations was $288 million for the third quarter of fiscal year 2016, compared with $260 million for the third quarter of fiscal year 2015.

During the third quarter of fiscal year 2016:

  • 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 30 percent, excluding the effects of stock-based compensation expense, amortization of acquired intangible assets, separation costs related to the proposed separation of our GoTo business and subsequent merger with LogMeIn and costs associated with the 2015 restructuring program.

Financial Outlook for Fiscal Year 2016

Citrix management expects to achieve the following results at the consolidated level for the fiscal year ending December 31, 2016:

  • Net revenue is targeted to be in the range of $3.40 billion to $3.41 billion with core Citrix revenue, excluding the GoTo business, targeted to be in the range of $2.71 billion to $2.72 billion.
  • GAAP diluted earnings per share is targeted to be in the range of $3.04 to $3.05. Non-GAAP diluted earnings per share is targeted to be in the range of $5.18 to $5.20, excluding $1.17 related to the effects of stock-based compensation expenses, $0.57 related to the effects of amortization of acquired intangible assets, $0.21 related to the effects of amortization of debt discount, $0.59 related to separation costs associated with the proposed separation of our GoTo business and subsequent merger with LogMeIn, $0.43 related to restructuring charges and $0.81 to $0.84 for the tax effects related to these items.

Preliminary Outlook for Fiscal Year 2017

The company’s current preliminary outlook for the full fiscal year 2017, excluding the GoTo business, is for net revenue to grow by approximately 3% to 4%. In addition, Citrix management is targeting GAAP operating margin, excluding the GoTo business, to be in the range of 22% to 23% and Non-GAAP operating margin to be in the range of 32% to 33%. Non-GAAP operating margin excludes the effects of stock-based compensation expense, amortization of acquired intangible assets, separation costs associated with the proposed separation of our GoTo business and subsequent merger with LogMeIn, and restructuring charges.

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