Citrix Reports Third Quarter Financial Results

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Citrix Reports Third Quarter Financial Results

Quarterly Revenue of $641 Million, up 13 Percent Year-over-Year

Third Quarter GAAP Diluted Earnings Per Share of $0.41


Third Quarter Non-GAAP Diluted Earnings Per Share of $0.68

Deferred Revenue of $1.05 Billion up 26 Percent Year-over-Year

SANTA CLARA, Calif.--(BUSINESS WIRE)-- Citrix (NAS: CTXS) today reported financial results for the third quarter of fiscal 2012 ended September 30, 2012.

FINANCIAL RESULTS

In the third quarter of fiscal 2012, Citrix achieved revenue of $641 million, compared to $565 million in the third quarter of fiscal 2011, representing 13 percent revenue growth.

GAAP Results

Net income for the third quarter of fiscal 2012 was $78 million, or $0.41 per diluted share, compared to $92 million, or $0.49 per diluted share, for the third quarter of 2011.

Non-GAAP Results

Non-GAAP net income in the third quarter of fiscal 2012 was $128 million, or $0.68 per diluted share, compared to $121 million, or $0.64 per diluted share, for the third quarter of 2011. Non-GAAP net income excludes the effects of amortization of acquired intangible assets, stock-based compensation expenses, and the tax effects related to these items.

"We executed well in Q3 in spite of the macro factors creating heightened uncertainty around IT spending," said Mark Templeton, president and chief executive officer for Citrix. "We continue to see a fundamental transformation of IT taking place. And Citrix remains in a great position as customers prioritize their investments for a world shaped by mobile workstyles and cloud services."

Q3 Financial Summary

In reviewing the results from the third quarter of 2012, compared to the third quarter of 2011:

  • Product and licenses revenue increased 1 percent;
  • Software as a service revenue increased 18 percent;
  • Revenue from license updates and maintenance increased 19 percent;
  • Professional services revenue, which is comprised of consulting, product training and certification, increased 34 percent;
  • Revenue increased in the EMEA region by 20 percent, increased in the Pacific region by 17 percent, and increased in the America's region by 7 percent;
  • Deferred revenue totaled $1.05 billion, compared to $834 million as of September 30, 2011;
  • Cash flow from operations was $181 million, compared with $188 million in the third quarter of 2011;
  • GAAP operating margin was 13 percent for the quarter and non-GAAP operating margin was 24 percent for the quarter, excluding the effects of amortization of acquired intangible assets and stock-based compensation expenses; and
  • The company repurchased 1.0 million shares at an average price of $76.28.

Financial Outlook for Fourth Quarter 2012

Citrix management expects to achieve the following results during its fourth fiscal quarter of 2012 ending December 31, 2012:

  • Net revenue is targeted to be in the range of $700.0 million to $710.0 million.
  • GAAP diluted earnings per share is targeted to be in the range of $0.55 to $0.57. Non-GAAP diluted earnings per share is targeted to be in the range of $0.83 to $0.85, excluding $0.17 related to the effects of amortization of acquired intangible assets, $0.22 related to the effects of stock-based compensation expenses, and $(0.09) to $(0.13) for the tax effects related to these items.

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

Financial Outlook for Fiscal Year 2012

Citrix management expects to achieve the following results during fiscal year 2012 ending December 31, 2012:

  • Net revenue is targeted to be in the range of $2.55 billion to $2.56 billion.
  • GAAP diluted earnings per share is targeted to be in the range of $1.81 to $1.83. Non-GAAP diluted earnings per share is expected to be in the range of $2.80 to $2.82, excluding $0.61 related to the effects of amortization of acquired intangible assets, $0.79 related to the effects of stock-based compensation expenses, and $(0.39) to $(0.43) for the tax effects related to these items.

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

Preliminary Outlook for Fiscal Year 2013

The company's preliminary outlook for the full fiscal year 2013 is for net revenue to grow by approximately 14%. In addition, Citrix management is targeting an approximately 50 basis point expansion in Non-GAAP operating margins from 2012 levels. Non-GAAP operating margin excludes the effects of amortization of acquired intangible assets and stock-based compensation expense.

These statements are based on current targets and 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 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 by visiting the Investor Relations section of the Citrix corporate website at http://www.citrix.com/investors for approximately 30 days. In addition, an audio replay of the conference call will be available by dialing (855) 859-2056 or (404) 537-3406 (passcode required: 36764318).

About Citrix

Citrix (NAS: CTXS) transforms how businesses and IT work and people collaborate in the cloud era. With market-leading cloud, collaboration, networking and virtualization technologies, Citrix powers mobile workstyles and cloud services, making complex enterprise IT simpler and more accessible for 260,000 organizations. Citrix products touch 75 percent of Internet users each day and it partners with more than 10,000 companies in 100 countries. Annual revenue in 2011 was $2.21 billion. Learn more at www.citrix.com.

For Citrix Investors

This release contains forward-looking statements which 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 president and chief executive officer, statements contained in the Financial Outlook for Fourth Quarter 2012, Financial Outlook for Fiscal Year 2012 and Preliminary Outlook for Fiscal year 2013 sections, 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, the impact of the global economy and uncertainty in the IT spending environment; the success and growth of the company's product lines, including risks associated with successfully introducing new products into Citrix's distribution channels and ability of markets for these products to become mainstream and sustain growth; the company's product concentration and its ability to develop and commercialize new products and services, including XenDesktop and its other virtualization, networking and cloud offerings, while maintaining sales of its established products, especially XenApp; disruptions due to changes in key personnel and succession risks; seasonal fluctuations in the company's business; failure to execute Citrix's sales and marketing plans; failure to successfully partner with key distributors, resellers, system integrators, OEM's and strategic partners and the company's reliance on and 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 small sized and large enterprise accounts; 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; Citrix's ability to develop virtualization, networking, cloud platform and collaboration products; the introduction of new products by competitors or the entry of new competitors into the markets for Citrix's products and services; the ability of Citrix to make suitable acquisitions on favorable terms in the future; risks associated with Citrix's acquisitions (including its recently completed acquisition of Bytemobile), 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; the management of expenses associated with anticipated future growth; the recruitment and retention of qualified employees; risks in effectively controlling operating expenses, including failure to manage untargeted expenses; the effect of new accounting pronouncements on revenue and expense recognition; the risks associated with securing data and maintaining security of customer data stored by our services, including in an environment of anticipated higher demand; 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; changes in the company's pricing and licensing models, promotional programs and product mix, all of which may impact Citrix's revenue recognition, including with respect to XenDesktop and SaaS business models, or those of its competitors; charges in the event of the impairment of acquired assets, investments or licenses; competition, international market readiness, execution and other risks associated with the markets for Citrix's products and services; unanticipated changes in tax rates or exposure to additional tax liabilities; risks of political and social turmoil; and other risks detailed in the company'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 trademarks or registered trademarks 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

September 30,

Nine Months Ended

September 30,

2012 2011 2012 2011
Revenues:  
Product and licenses$195,690$193,880$561,971$515,466
Software as a service129,659109,558375,902315,809
License updates and maintenance (a)285,051238,710822,113691,771
Professional services (a)31,022 23,200  86,141 63,980
Total net revenues641,422565,3481,846,1271,587,026
 
Cost of net revenues:
Cost of product and licenses revenues24,21822,34563,87654,834
Cost of services and maintenance revenues (b)58,92042,665166,328116,745
Amortization of product related intangible assets22,930 14,679  56,565 39,920
Total cost of net revenues106,06879,689286,769211,499
Gross margin535,354485,6591,559,3581,375,527
 
Operating expenses:
Research and development (b)114,71396,676328,363278,598
Sales, marketing and services (b)263,136223,967773,732640,907
General and administrative (b)65,25255,907186,407162,970
Amortization of other intangible assets9,8384,43025,49911,876
Restructuring- -  - 24
Total operating expenses452,939 380,980  1,314,001 1,094,375
 
Income from operations82,415104,679245,357281,152
 
Other income (loss), net8,483 (1,861) 15,636 10,799
Income before income taxes90,898102,818260,993291,951
 
Income tax expense12,653 10,642  22,475 45,020
Net income78,24592,176238,518246,931
Net loss attributable to non-controlling interest- -  - 692
Net income attributable to Citrix Systems, Inc.$78,245 $92,176  $238,518 $247,623
 
Earnings per common share - diluted$0.41 $0.49  $1.26 $1.30
Weighted average shares outstanding - diluted189,671 189,730  189,282 191,155
 

Certain fiscal 2012 reclassifications have been reflected retroactively to provide comparability.

(a) During the first quarter of 2012, Citrix reviewed the presentation of its Condensed Consolidated Statements of Income and adopted a revised presentation, which the company believes is more comparable to those presented by other companies in the industry. As a result, technical support, hardware maintenance and software updates revenues, which were previously presented in Technical Services and License Updates are classified together as License Updates and Maintenance. A corresponding change was made to rename Cost of Services Revenues to Cost of Services and Maintenance Revenues; however, there was no change in classification. Product training, certification and consulting services, which were previously presented in Technical Services, are classified together as Professional Services. Product Licenses has been renamed to Product and Licenses to more appropriately describe its composition of both software and hardware; however, there was no change in classification. The classification of Software as a Service remains unchanged. This change in manner of presentation does not affect the Company's total net revenues, total cost of net revenues or gross margin.

Conforming changes related to (a) have been made for the prior period presented, as follows:

 
Three Months Ended September 30, 2011

As Previously Reported

Amount ReclassifiedAs Reported Herein
Revenues:Revenues:
License updates$187,169$51,541License updates and maintenance (2)$238,710
Technical services (1) 74,741 (51,541)Professional services (3) 23,200
Total$261,910$- Total$261,910
 
Nine Months Ended September 30, 2011
As Previously ReportedAmount ReclassifiedAs Reported Herein
Revenues:Revenues:
License updates$548,920$142,851License updates and maintenance (2)$691,771
Technical services (1) 206,831 (142,851)Professional services (3) 63,980
Total$755,751$- Total$755,751

(1) Technical services revenue was comprised of hardware maintenance, consulting services, product training and certification and technical support.

(2) License updates and maintenance is comprised of license updates, hardware and software maintenance and technical support.

(3) Professional services is comprised of consulting services and product training and certification.

(b) During the first quarter of 2012, Citrix revised its methodology for allocating certain IT support costs to more closely align these costs to the employees directly utilizing the related assets and services. As a result, certain IT support costs have been reclassified from general and administrative expenses to cost of services and maintenance revenues, research and development expenses and sales, marketing and services expenses based on the headcount in each of these functional areas. This change in manner of presentation does not affect the company's income from operations or cash flows. Conforming changes related to (b) have been made for the prior period presented, as follows:

 
Three Months Ended September 30, 2011
As Previously ReportedAmount ReclassifiedAs Reported Herein
Cost of services revenues$39,711$2,954Cost of services and maintenance revenues$42,665
Research and development88,9337,743Research and development96,676
Sales, marketing and services212,98510,982Sales, marketing and services223,967
General and administrative 77,586 (21,679)General and administrative 55,907
Total$419,215$- Total$419,215
 
Nine Months Ended September 30, 2011
As Previously ReportedAmount ReclassifiedAs Reported Herein
Cost of services revenues$108,283$8,462Cost of services and maintenance revenues$116,745
Research and development254,96323,635Research and development278,598
Sales, marketing and services606,58734,320Sales, marketing and services640,907
General and administrative229,387 (66,417)General and administrative 162,970
Total$1,199,220$- Total$1,199,220

  

CITRIX SYSTEMS, INC.

Condensed Consolidated Balance Sheets

(In thousands - unaudited)

 

 

September 30, 2012

 

December 31, 2011

ASSETS:
Cash and cash equivalents$324,127$333,296
Short-term investments358,920406,461
Accounts receivable, net456,545484,431
Inventories, net10,9618,507
Prepaid expenses and other current assets124,72395,419
Current portion of deferred tax assets, net 44,238   44,916 
Total current assets1,319,5141,373,030
 
Long-term investments723,205737,844
Property and equipment, net295,934277,429
Goodwill1,504,3731,239,120
Other intangible assets, net575,024343,372
Long-term portion of deferred tax assets, net3,37267,479
Other assets 67,731   61,267 
Total assets$4,489,153  $4,099,541 
 
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable$68,214$58,034
Accrued expenses and other current liabilities234,763223,136
Current portion of deferred tax liabilities, net10279,318
Current portion of deferred revenues 862,795   818,642 
Total current liabilities1,165,8741,179,130
 
Long-term portion of deferred revenues190,358141,241
Long-term portion of deferred tax liabilities, net67,35820,247
Other liabilities29,525 Read Full Story

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