Increasing focus on core enterprise strategy of
secure and reliable app and data delivery
Providing FY’16 GAAP diluted EPS outlook of
$2.64 - $2.82; non-GAAP diluted EPS outlook of $4.40 - $4.50
Targeting 17 percent GAAP operating margin for
2016; at least 28 percent non-GAAP operating margin for 2016;
targeting at least 30 percent non-GAAP operating margin for
2017
Announces plans to spin off GoTo businesses
into separate company
Citrix Systems, Inc. (NASDAQ:CTXS) today announced the initial
results of its operations review. The decisions made will allow the
company to significantly increase focus on its core enterprise
strategy of secure and reliable delivery of applications and data,
and consequently build a more efficient, scalable and profitable
company. Immediate actions include rationalizing the company’s
current product portfolio, realigning and optimizing operations and
resources, and a restructuring of its labor force.
Key conclusions and initial plans from the company’s operational
review include, but are not limited to:
- A determination that a spinoff of the
GoTo family of products into a separate public company is in the
best interest of all stakeholders, allowing both companies to
enhance its strategic focus and respective competitive positions,
while permitting Citrix to improve operational efficiency. Please
see news release here for additional detail.
- Plans to increase emphasis and
resources to core enterprise products for secure and reliable
application and data delivery, including XenApp, XenDesktop,
XenMobile, ShareFile and NetScaler. To achieve this focus, the
company will end investment in certain other products and programs,
in some cases moving technologies into strategic products, in other
cases providing an orderly end-of-life to non-core products. The
evaluation of all products, technologies, offerings and programs is
ongoing, and will focus on enterprise readiness, ability to drive
customer value, and growth and profitability prospects.
- A realignment of resources that is
expected to eliminate about 1,000 full-time and contract roles,
excluding the effect of spinning off the GoTo business. The
restructuring will focus on simplification of the company’s
enterprise go-to-market motion and roles while improving coverage,
reflect changes in the company’s product focus, and balance
resources with demand across the company’s marketing, general and
administration areas. The majority of these actions will take place
in November 2015 and in January 2016.
As a result of these actions, Citrix said it expects to achieve
approximately $200 million in annualized pre-tax cost savings, with
approximately 75% of those cost savings anticipated to be realized
in fiscal year 2016. Citrix currently expects to incur pre-tax
charges in the range of approximately $65 million to $85 million
related to employee severance arrangements during the fourth
quarter of fiscal year 2015 and during fiscal year 2016.
“We are simplifying our business in all areas – product,
marketing, sales, operations and development,” said Bob Calderoni,
interim CEO and president, and executive chairman. “Focusing on our
core strengths and simplifying how we work with customers and
partners will help us improve execution, drive higher profit and
begin investing for growth in areas in which we provide the
greatest customer value.”
Financial Outlook
As a result of these initiatives, for the fiscal year ending
December 31, 2016, Citrix management expects to achieve:
- Net revenue growth of one to two
percent;
- GAAP operating margin of 17 percent,
and non-GAAP operating margin of at least 28 percent, excluding 6
percent related to the effects of stock-based compensation
expenses, 3 percent related to the effects of amortization of
acquired intangible assets, and 2 percent related to restructuring
charges; and,
- GAAP diluted earnings per share in the
range of $2.64 to $2.82, and non-GAAP diluted earnings per share in
the range of $4.40 to $4.50, excluding $1.16 related to the effects
of stock-based compensation expenses, $0.70 related to the effects
of amortization of acquired intangible assets, $0.53 related to
restructuring charges, $0.21 related to the effects of amortization
of debt discount, and $(0.74) to $(1.02) for the tax effects
related to these items.
For the fiscal year ending December 31, 2017, Citrix management
expects to achieve revenue growth of four to five percent and is
targeting non-GAAP operating margin of at least 30 percent.
The above statements are based on current targets, are
consolidated and do not account for the spinoff of the GoTo
businesses. These statements are forward-looking, and actual
results may differ materially.
Conference Call
Citrix will host a conference call today at 4:45 p.m. E.T. to
review the results of its operational and strategic review,
including the spinoff of the GoTo family. The call will include a
slide presentation and participants are encouraged to 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.
About Citrix
Citrix (NASDAQ:CTXS) is leading the transition to
software-defining the workplace, uniting virtualization, mobility
management, networking and SaaS solutions to enable new ways for
businesses and people to work better. Citrix solutions power
business mobility through secure, mobile workspaces that provide
people with instant access to apps, desktops, data and
communications on any device, over any network and cloud. With
annual revenue in 2014 of $3.14 billion, Citrix solutions are in
use at more than 400,000 organizations and by over 100 million
users globally. Learn more at www.citrix.com.
For Citrix Investors
This release contains forward-looking statements that 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 interim CEO and president and
executive chairman, statements contained in the Financial Outlook
section and 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, risks associated with the on-going
CEO search process, transitions in key personnel and succession
risk; the completion and timing of the proposed spinoff, the future
performance of core Citrix and the GoTo businesses on a standalone
basis if the spinoff is completed, the expected strategic,
operational and competitive benefits of the proposed spinoff, and
the effect of the separation on Citrix, its shareholders,
customers, partners and employees; the impact of the global
economy, foreign exchange rate volatility and uncertainty in the IT
spending environment; the success and growth of the company's
product lines, including competition, demand and pricing dynamics
and other transitions in the markets for Citrix's virtualization
products and collaboration services; the company's ability to
develop and commercialize new products and services, including its
enterprise mobility products, while growing its established
virtualization and networking products and services; disruptions to
execution due to Citrix's restructuring programs and actions to be
taken as a result of its operational review; the introduction of
new products by competitors or the entry of new competitors into
the markets for Citrix's products and services; changes in our
revenue mix towards products and services with lower gross margins;
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, service
providers 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 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; the ability of Citrix to make suitable
acquisitions on favorable terms in the future; risks associated
with Citrix's acquisitions, 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 recruitment and retention of qualified employees;
risks in effectively controlling operating expenses, including
failure to achieve anticipated cost savings from the restructuring
programs and other cost savings initiatives; ability to effectively
manage our capital structure and the impact of related changes on
our operating results and financial condition; risks and costs
associated with engaging with activist stockholders; the effect of
new accounting pronouncements on revenue and expense recognition;
the risks associated with securing data and maintaining security of
our networks and customer data stored by our services; 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; charges in the event
of a write-off or impairment of acquired assets, underperforming
businesses, investments or licenses; international market
readiness, execution and other risks associated with the markets
for Citrix's products and services; unanticipated changes in tax
rates, non-renewal of tax credits 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 trademark or registered trademark 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.
Reconciliation of Non-GAAP Financial
Measures to Comparable U.S. GAAP Measures
(Unaudited)
Pursuant to the requirements of Regulation G, the Company has
provided a reconciliation of each non-GAAP financial measure used
in this earnings release to the most directly comparable GAAP
financial measure, unless the Company has determined that it is
unreasonable to do so. These measures differ from GAAP in that they
exclude amortization primarily related to acquired intangible
assets and debt discount, stock-based compensation expenses,
charges associated with the Company’s restructuring programs, and
the related tax effect of those items. The Company's basis for
these adjustments is described below.
Management uses these non-GAAP measures for internal reporting
and forecasting purposes, when publicly providing its business
outlook, to evaluate the Company's performance and to evaluate and
compensate the Company's executives. The Company has provided these
non-GAAP financial measures in addition to GAAP financial results
because it believes that these non-GAAP financial measures provide
useful information to certain investors and financial analysts for
comparison across accounting periods not influenced by certain
non-cash items that are not used by management when evaluating the
Company's historical and prospective financial performance. In
addition, the Company has historically provided this or similar
information and understands that some investors and financial
analysts find this information helpful in analyzing the Company's
operating margins, operating expenses and net income and comparing
the Company's financial performance to that of its peer companies
and competitors.
Management typically excludes the amounts described above when
evaluating the Company's operating performance and believes that
the resulting non-GAAP measures are useful to investors and
financial analysts in assessing the Company's operating performance
due to the following factors:
• The Company does not acquire businesses on
a predictable cycle. The Company, therefore, believes that the
presentation of non-GAAP measures that adjust for the impact of
amortization and certain stock-based compensation expenses and the
related tax effects that are primarily related to acquisitions,
provide investors and financial analysts with a consistent basis
for comparison across accounting periods and, therefore, are useful
to investors and financial analysts in helping them to better
understand the Company's operating results and underlying
operational trends.
• Amortization costs and the related tax
effects are fixed at the time of an acquisition, are then amortized
over a period of several years after the acquisition and generally
cannot be changed or influenced by management after the
acquisition.
• Although stock-based compensation is an
important aspect of the compensation of the Company's employees and
executives, stock-based compensation expense is generally fixed at
the time of grant, then amortized over a period of several years
after the grant of the stock-based instrument, and generally cannot
be changed or influenced by management after the grant.
• Under GAAP, certain convertible debt
instruments that may be settled in cash on conversion are required
to be accounted for as separate liability (debt) and equity
(conversion option) components in a manner that reflects the
issuer’s non-convertible debt borrowing rate. The difference
between the imputed interest expense and the coupon interest
expense, net of the interest amount capitalized, is excluded from
management’s assessment of the company’s operating performance
because management believes that the exclusion of these charges
will better help investors and financial analysts understand the
Company's operating results and underlying operational trends.
• The charges incurred in conjunction with
the Company's restructuring programs, which relate to reductions in
headcount and the consolidation of leased facilities, are not
anticipated to be ongoing costs; and, thus, are outside of the
normal operations of the Company's business. The Company,
therefore, believes that the exclusion of these charges will better
help investors and financial analysts understand the Company's
operating results and underlying operational trends as compared to
prior periods.
These non-GAAP financial measures are not prepared in accordance
with accounting principles generally accepted in the United States
("GAAP") and may differ from the non-GAAP information used by other
companies. There are significant limitations associated with the
use of non-GAAP financial measures. The additional non-GAAP
financial information presented here should be considered in
conjunction with, and not as a substitute for or superior to, the
financial information presented in accordance with GAAP (such as
net income and earnings per share) and should not be considered
measures of the Company's liquidity. Furthermore, the Company in
the future may exclude amortization primarily related to newly
acquired intangible assets and debt discount, additional charges
related to its restructuring programs, and the related tax effects
from financial measures that it releases, and the Company expects
to continue to incur stock-based compensation expenses.
CITRIX SYSTEMS, INC.
Non-GAAP Financial Measures
Reconciliation
(In thousands, except per share, gross
margin and operating margin data - unaudited)
The following tables show the non-GAAP
financial measures used in this press release
reconciled to the most directly comparable
GAAP financial measures.
Forward Looking Guidance
For the Twelve Months Ended December
31,
2016
GAAP operating margin 16.6% Add: stock-based compensation
5.6 Add: amortization of intangible assets 3.3 Add: restructuring
charges 2.5 Non-GAAP operating margin 28.0%
For the
Twelve Months Ended December 31,
2016 GAAP earnings per share – diluted $2.64 to $2.82
Add: adjustments to exclude the effects of
expenses related to stock-based compensation
1.16
Add: adjustments to exclude the effects of
amortization ofintangible assets
0.70
Add: adjustments to exclude the effects of
amortization of debt discount
0.21 Add: adjustments to exclude the effects of restructuring
charges 0.53 Less: tax effects related to above items (0.74) to
(1.02) Non-GAAP earnings per share – diluted $4.40 to $4.50
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151117006916/en/
Citrix Systems, Inc.Eric Armstrong,
954-267-2977eric.armstrong@citrix.comorFor investor
inquiries:Eduardo Fleites,
954-229-5758eduardo.fleites@citrix.com
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