Quarterly revenue of $778 million up 6 percent
year-over-year
Quarterly GAAP diluted loss per share of $1.93
includes one-time charge of $429 million for U.S. tax reform
Quarterly non-GAAP diluted EPS of $1.66
excludes one-time charge of $429 million for U.S. tax reform
Quarterly GAAP operating margin of 24 percent;
non-GAAP operating margin of 40 percent
Deferred revenue of $1.9 billion up 11 percent
year-over-year
Repurchased approximately 7 million shares in
fourth quarter
Citrix Systems, Inc. (NASDAQ:CTXS) today reported financial
results for the fourth quarter and fiscal year ended
December 31, 2017.
Financial Results
For the fourth quarter of fiscal year 2017, Citrix achieved
revenue from continuing operations of $778 million, compared to
$735 million in the fourth quarter of fiscal year 2016,
representing 6 percent revenue growth. For fiscal year 2017, Citrix
reported annual revenue from continuing operations of $2.82
billion, compared to $2.74 billion for fiscal year 2016, a 3
percent increase.
GAAP Results
Net loss from continuing operations for the fourth quarter of
fiscal year 2017 was $284 million, or $1.93 per diluted share,
compared to net income from continuing operations of $179 million,
or $1.13 per diluted share, for the fourth quarter of fiscal year
2016. Net (loss) income from continuing operations for the fourth
quarter of fiscal year 2017 and 2016 includes restructuring charges
of $54 million and $6 million, respectively, for severance and
facility closing costs. Net loss for the fourth quarter of fiscal
year 2017 includes charges for the estimated impact from the
enactment of the Tax Cuts and Jobs Act in December 2017 related to
the transition tax on accumulated overseas profits and the
revaluation of our U.S. deferred tax assets and liabilities due to
the U.S. federal tax rate reduction from 35% to 21%. Approximately
$364 million in tax expense was recorded for the transition tax on
overseas earnings, and approximately $65 million in tax expense was
recorded related to the revaluation of U.S. deferred tax assets and
liabilities, resulting in total charges of $429 million. The
impacts of U.S. tax reform may differ from this estimate, and the
estimated charges may accordingly be adjusted over the course of
2018.
Annual net income from continuing operations for fiscal year
2017 was $22 million, or $0.14 per diluted share, compared to $470
million, or $2.99 per diluted share for fiscal year 2016. Annual
net income from continuing operations for fiscal year 2017 and 2016
includes restructuring charges of $72 million and $67 million,
respectively, for severance and facility closing costs. Annual net
income from continuing operations for fiscal year 2017 also
includes $429 million in charges for the estimated impact from the
enactment of the Tax Cuts and Jobs Act in December 2017 related to
the transition tax on accumulated overseas profits and the
revaluation of our U.S. deferred tax assets and liabilities.
Non-GAAP Results
Non-GAAP net income from continuing operations for the fourth
quarter of fiscal year 2017 was $248 million, or $1.66 per diluted
share, compared to $218 million, or $1.38 per diluted share for the
fourth quarter of fiscal year 2016. Non-GAAP net income from
continuing operations for the fourth 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
fourth quarter of fiscal year 2017 also excludes tax impact related
to the separation of the GoTo business along with charges for the
estimated impact from the enactment of the Tax Cuts and Jobs Act in
December 2017 related to the transition tax on accumulated overseas
profits and the revaluation of our U.S. deferred tax assets and
liabilities. Non-GAAP net income from continuing operations for the
fourth 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 fourth quarter of fiscal year 2017 also
reflects the anti-dilutive impact of the company’s convertible note
hedges.
Annual non-GAAP net income from continuing operations for fiscal
year 2017 was $744 million, or $4.85 per diluted share, compared to
$700 million, or $4.45 per diluted share for fiscal year 2016.
Annual non-GAAP net income from continuing operations for fiscal
year 2017 and 2016 excludes the effects of stock-based compensation
expense, amortization of acquired intangible assets, amortization
of debt discount, separation costs, restructuring charges and the
tax effects related to these items. Annual non-GAAP net income from
continuing operations for fiscal year 2017 also excludes tax impact
related to the separation of the GoTo business along with charges
for the estimated impact from U.S. tax reform related to the
transition tax and the revaluation of our U.S. deferred tax assets
and liabilities. Annual non-GAAP net income per diluted share for
fiscal year 2017 also reflects the anti-dilutive impact of the
company’s convertible note hedges.
“This quarter, we delivered strong financial results, while at
the same time, accelerating innovation across our portfolio and in
the cloud. Our sales execution was excellent, driving double-digit
product and subscription bookings growth and the fastest revenue
growth of the year,” said David Henshall, president and CEO.
“Our partners and our customers are really embracing our new
subscription services, which have jumpstarted the multi-year plan
that we presented in October 2017. I’m proud of how the team is
executing, and I’m confident that we will see continued success in
2018.”
Q4 Financial Summary
In reviewing the results from continuing operations for the
fourth quarter of fiscal year 2017 compared to the fourth quarter
of fiscal year 2016:
- Product and license revenue increased 3
percent;
- Software as a service revenue increased
38 percent;
- Revenue from license updates and
maintenance increased 4 percent;
- Professional services revenue, which is
comprised of consulting, product training and certification,
increased 13 percent;
- Net revenue increased in the APJ region
by 10 percent; increased in the Americas region by 8 percent; and
increased in the EMEA region by 1 percent;
- Subscription revenue as a percentage of
total revenue was 12 percent;
- Deferred revenue totaled $1.9 billion
as of December 31, 2017, compared to $1.7 billion as of
December 31, 2016, an increase of 11 percent;
- Cash flow from continuing operations
was $254 million for the fourth quarter of fiscal year 2017,
compared to $208 million for the fourth quarter of fiscal year
2016; and
During the fourth quarter of fiscal year 2017:
- GAAP gross margin was 84 percent.
Non-GAAP gross margin was 88 percent, excluding the effects of
stock-based compensation expense and amortization of acquired
product related intangible assets;
- GAAP operating margin was 24 percent.
Non-GAAP operating margin was 40 percent, excluding the effects of
stock-based compensation expense, amortization of acquired
intangible assets, and costs associated with restructuring
programs.
- The company repurchased approximately
7.1 million shares under its accelerated share repurchase program.
At the end of December 2017, the company had $1.4 billion remaining
in its current share repurchase authorization.
Annual Financial Summary
In reviewing the results from continuing operations for fiscal
year 2017 compared to fiscal year 2016:
- Product and license revenue decreased 3
percent;
- Software as a service revenue increased
31 percent;
- Revenue from license updates and
maintenance increased 5 percent;
- Professional services revenue, which is
comprised of consulting, product training and certification,
remained consistent;
- Net revenue increased in the APJ region
by 7 percent and increased in the Americas and EMEA regions by 3
percent;
- Subscription revenue as a percentage of
total revenue was 11 percent; and
- Cash flow from continuing operations
was $964 million for fiscal year 2017 compared with $947 million
for fiscal year 2016.
During the year ended December 31, 2017:
- GAAP gross margin was 84 percent.
Non-GAAP gross margin was 87 percent, excluding stock-based
compensation expense and the effects of amortization of acquired
product related intangible assets;
- 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; and
- The company repurchased 15.5 million
shares at an average price of $81.01.
Financial Outlook for Fiscal Year 2018
Citrix management expects to achieve the following results for
the fiscal year ending December 31, 2018, which does not
reflect the adoption of ASC 606.
- Net revenue is targeted to be in the
range of $2.86 billion to $2.88 billion.
- GAAP diluted earnings per share is
targeted to be in the range of $3.18 to $3.33.
- Non-GAAP diluted earnings per share is
targeted to be in the range of $4.80 to $4.90, excluding $1.39
related to the effects of stock-based compensation expenses, $0.38
related to the effects of amortization of acquired intangible
assets, $0.24 related to the effects of amortization of debt
discount, $0.10 related to restructuring charges, and $0.39 to
$0.64 for the tax effects related to these items. Non-GAAP diluted
earnings per share reflects the anti-dilutive impact of the
convertible note hedges and does not include any additional impacts
related to U.S. tax reform, both of which cannot be calculated
without unreasonable efforts.
Financial Outlook for First Quarter 2018
Citrix management expects to achieve the following results for
the first quarter of fiscal year 2018 ending March 31, 2018, which
does not reflect the adoption of ASC 606.
- Net revenue is targeted to be in the
range of $670 million to $680 million.
- GAAP diluted earnings per share is
targeted to be in the range of $0.69 to $0.71.
- Non-GAAP diluted earnings per share is
targeted to be in the range of $1.03 to $1.06, excluding $0.28
related to the effects of stock-based compensation expenses, $0.09
related to the effects of amortization of acquired intangible
assets, $0.06 related to the effects of amortization of debt
discount, $0.03 related to restructuring charges, and $0.09 to
$0.14 for the tax effects related to these items. Non-GAAP diluted
earnings per share reflects the anti-dilutive impact of the
convertible note hedges and does not include any additional impacts
related to U.S. tax reform, both of which cannot be calculated
without unreasonable efforts.
Fourth Quarter Earnings Conference Call
Citrix will host a conference call today at 4:45 p.m. ET to
discuss its financial results 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 for approximately 30 days on the Investor
Relations section of the Citrix corporate website at http://www.citrix.com/investors.
About Citrix
Citrix (NASDAQ:CTXS) aims to power a world where people,
organizations and things are securely connected and accessible to
make the extraordinary possible. We help customers reimagine the
future of work by providing the most comprehensive secure digital
workspace that unifies the apps, data and services people need to
be productive, and simplifies IT’s ability to adopt and manage
complex cloud environments. Citrix solutions are in use by more
than 400,000 organizations including 99 percent of the Fortune 100
and 98 percent of the Fortune 500.
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 CEO and president, statements
contained in the Financial Outlook sections 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 success and growth of the company's product
lines, including competition, demand and pricing dynamics and the
impact of our transition to new business models, including a
subscription model; the impact of U.S. tax reform, including
unanticipated transition taxes, changes in valuation of tax assets
and liabilities, non-renewal of tax credits or exposure to
additional tax liabilities; the impact of the global economy,
volatility in global stock markets, foreign exchange rate
volatility and uncertainty in the IT spending environment; the
risks associated with maintaining the security of our products,
services, and networks, including securing customer data stored by
our services; changes in Citrix’s pricing and licensing models,
promotional programs and product mix, all of which may impact
Citrix's revenue recognition; increased competition in markets for
Citrix's virtualization and networking products and secure data
services and the introduction of new products by competitors or the
entry of new competitors into these markets; the concentration of
customers in Citrix’s networking business; the company's ability to
develop, maintain a high level of quality and commercialize new
products and services while growing its established virtualization
and networking 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 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 and reliance on large service provider
customers; 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
recruitment and retention of qualified employees; transitions in
key personnel and succession risk, including transitions in the
company's executive leadership; risks in effectively controlling
operating expenses; ability to effectively manage our capital
structure and the impact of related changes on our operating
results and financial condition; the effect of new accounting
pronouncements on revenue and expense recognition; the ability of
Citrix to make suitable acquisitions on favorable terms in the
future; risks associated with Citrix's acquisitions and
divestitures, 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, and
failure to realize expected benefits or synergies from
divestitures; 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; the
ability to maintain and protect our collection of brands; 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; risks related to
servicing our debt; risks of political uncertainty and social
turmoil; and other risks detailed in Citrix'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.
CITRIX SYSTEMS, INC.
Condensed Consolidated Statements of
Income
(In thousands, except per share data -
unaudited)
Three Months EndedDecember
31,
Year EndedDecember 31,
2017 2016 2017 2016
Revenues: Product and licenses $ 262,545 $ 255,317 $ 857,253 $
882,898 Software as a service 49,709 36,130 175,762 134,682 License
updates and maintenance 427,202 409,218 1,659,936 1,587,271
Professional services 38,401 33,919 131,735
131,229 Total net revenues 777,857 734,584
2,824,686 2,736,080 Cost of net revenues: Cost of
product and license revenues 33,633 28,314 123,356 121,391 Cost of
services and maintenance revenues 65,680 59,206 250,602 228,080
Amortization and impairment of product related intangible assets
22,626 12,196 65,688 55,418
Total cost of net revenues
121,939 99,716 439,646 404,889 Gross
margin 655,918 634,868 2,385,040 2,331,191
Operating expenses: Research and development 99,323 90,750
415,801 395,373 Sales, marketing and services 241,548 251,996
1,006,112 976,339 General and administrative 65,532 80,061 302,565
316,838 Amortization and impairment of other intangible assets
6,119 3,627 17,190 15,076 Restructuring 53,697 6,089
72,375 67,401 Total operating expenses 466,219
432,523 1,814,043 1,771,027 Income from
operations 189,699 202,345 570,997 560,164 Interest income 8,763
4,578 27,808 16,686 Interest expense (16,323 ) (11,344 ) (51,609 )
(44,949 ) Other (expense) income, net (16 ) (3,350 ) 3,150
(4,131 ) Income from continuing operations before income taxes
182,123 192,229 550,346 527,770 Income tax expense 466,012
13,653 528,361 57,915 (Loss) Income from
continuing operations (283,889 ) 178,576 21,985 469,855 Income
(loss) from discontinued operations, net of income taxes —
21,274 (42,704 ) 66,257 Net (loss) income $ (283,889
) $ 199,850 $ (20,719 ) $ 536,112 Basic (loss)
earnings per share: (Loss) income from continuing operations $
(1.93 ) $ 1.15 $ 0.15 $ 3.03 Income (loss) from discontinued
operations — 0.13 (0.28 ) 0.43 Basic net
(loss) earnings per share $ (1.93 ) $ 1.28 $ (0.13 ) $ 3.46
Diluted (loss) earnings per share: (Loss) income from continuing
operations $ (1.93 ) $ 1.13 $ 0.14 $ 2.99 Income (loss) from
discontinued operations — 0.13 (0.27 ) 0.42
Diluted net (loss) earnings per share: $ (1.93 ) $ 1.26 $ (0.13 ) $
3.41 Weighted average shares outstanding: Basic 147,390
155,948 150,779 155,134 Diluted 147,390
158,196 155,503 157,084
CITRIX SYSTEMS, INC.
Condensed Consolidated Balance
Sheets
(In thousands - unaudited)
December 31, 2017 December
31, 2016 ASSETS Cash and cash equivalents $ 1,115,130 $
836,095 Short-term investments 632,516 726,923 Accounts receivable,
net 712,535 681,206 Inventories, net 13,912 12,522 Prepaid expenses
and other current assets 147,330 124,842 Current assets of
discontinued operations — 179,689 Total
current assets 2,621,423 2,561,277 Long-term investments 984,328
980,142 Property and equipment, net 252,932 261,954 Goodwill
1,614,494 1,585,893 Other intangible assets, net 141,952 173,681
Deferred tax assets, net 152,362 233,900 Other assets 52,685 54,449
Long-term assets of discontinued operations — 538,931
Total assets $ 5,820,176 $ 6,390,227
LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS'
EQUITY Accounts payable $ 66,893 $ 72,724 Accrued expenses and
other current liabilities 277,679 256,799 Income taxes payable
34,033 39,771 Current portion of deferred revenues 1,308,474
1,208,229 Convertible notes — 1,348,156 Current liabilities of
discontinued operations — 172,670 Total
current liabilities 1,687,079 3,098,349 Long-term portion of
deferred revenues 555,769 476,135 Long-term debt 2,127,474 —
Long-term income taxes payable 335,457 — Other liabilities 121,936
119,813 Long-term liabilities of discontinued operations — 7,708
Commitments and contingencies Temporary equity from Convertible
notes — 79,495 Stockholders' equity: Preferred stock at $.01 par
value: 5,000 shares authorized, none issued and outstanding — —
Common stock 306 303 Additional paid-in capital 4,883,670 4,761,588
Retained earnings 3,509,484 4,010,737 Accumulated other
comprehensive loss (10,806 ) (28,704 ) Less - common stock in
treasury, at cost (7,390,193 ) (6,135,197 ) Total
stockholders' equity 992,461 2,608,727 Total
liabilities, temporary equity and stockholders' equity $ 5,820,176
$ 6,390,227
CITRIX SYSTEMS, INC.
Condensed Consolidated Statement of
Cash Flows
(In thousands - unaudited)
Year Ended OPERATING ACTIVITIES December
31, 2017 Net loss $ (20,719 ) Loss from discontinued operations
42,704 Adjustments to reconcile net loss to net cash provided by
operating activities of continuing operations: Depreciation,
amortization and other 208,313 Stock-based compensation expense
165,120 Deferred income tax expense 94,158 Effects of exchange rate
changes on monetary assets and liabilities denominated in foreign
currencies (7,645 ) Other non-cash items 11,924 Total
adjustments to reconcile net loss to net cash provided by operating
activities 471,870 Changes in operating assets and liabilities, net
of the effects of acquisitions: Accounts receivable (33,904 )
Inventories (2,545 ) Prepaid expenses and other current assets
(18,327 ) Other assets 2,116 Income taxes, net 318,795 Accounts
payable (7,238 ) Accrued expenses and other current liabilities
34,886 Deferred revenues 174,426 Other liabilities 2,282
Total changes in operating assets and
liabilities, net of the effects of acquisitions
470,491 Net cash provided by operating activities of
continuing operations 964,346 Net cash used in operating activities
of discontinued operations (56,070 ) Net cash provided by operating
activities 908,276
INVESTING ACTIVITIES Purchases of
available-for-sale investments (1,155,659 ) Proceeds from sales of
available-for-sale investments 775,135 Proceeds from maturities of
available-for-sale investments 466,900 Purchases of property and
equipment (80,901 ) Cash paid for acquisitions, net of cash
acquired (60,449 ) Cash paid for licensing agreements and
technology (7,379 ) Other 2,323 Net cash used in investing
activities of continuing operations (60,030 ) Net cash used in
investing activities of discontinued operations (3,891 ) Net cash
used in investing activities (63,921 )
FINANCING ACTIVITIES
Proceeds from issuance of common stock under stock-based
compensation plans 2,114 Proceeds from credit facility 165,000
Repayment of credit facility (165,000 ) Proceeds from senior notes,
net of issuance costs 741,039 Repayment of acquired debt (4,000 )
Stock repurchases, net (1,174,957 ) Accelerated stock repurchase
program (150,000 ) Cash paid for tax withholding on vested stock
awards (80,040 ) Transfer of cash to GoTo Business resulting from
the separation (28,523 ) Net cash used in financing activities
(694,367 ) Effect of exchange rate changes on cash and cash
equivalents 8,186 Change in cash and cash equivalents
158,174 Cash and cash equivalents at beginning of period, including
cash of discontinued operations of $120,861 956,956 Cash and
cash equivalents at end of period $ 1,115,130
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 and related conference call, slide
presentation or webcast to the most directly comparable GAAP
financial measure. 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,
separation costs, the related tax effect of those items, charges
related to the implementation of U.S. tax reform and
separation-related tax charges or benefits. The income tax effect
on non-GAAP items is calculated based upon the tax laws and
statutory income tax rates applicable in the tax jurisdiction(s) of
the underlying non-GAAP adjustment. The Company also reflects the
effect of anti-dilutive convertible note hedges in the number of
shares used in non-GAAP diluted earnings per share. These non-GAAP
financial measures are presented on a continuing operations basis.
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 of intangible assets and 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 of intangible assets 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 Company has engaged in various
restructuring activities over the past several years that have
resulted in costs associated with reductions in headcount,
consolidation of leased facilities and related costs. Each
restructuring activity has been a discrete event based on a unique
set of business objectives or circumstances, and each has differed
from the others in terms of its operational implementation,
business impact and scope. While the Company’s operations
previously benefited from the employees and facilities covered by
the various restructuring charges, these employees and facilities
have benefited different parts of the Company’s business in
different ways, and the amount of these charges has varied
significantly from period to period. 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.
- Separation costs represent transaction
and transition costs associated with preparing businesses for
independent operations consisting primarily of financial advisory
fees, legal fees, accounting fees, tax services and information
systems infrastructure duplication. These charges are not
anticipated to be ongoing costs; and, thus, are outside of the
normal operations of the Company's business. As such, the Company
believes that these expenses do not accurately reflect the
underlying performance of continuing operations for the period in
which they are incurred.
- The Company has convertible note hedges
in place to offset potential dilution from the embedded conversion
feature in its convertible notes. For GAAP diluted earnings per
share purposes, the Company cannot reflect the anti-dilutive impact
of the convertible note hedges. The Company believes that
reflecting the anti-dilutive impact of the convertible note hedges
in non-GAAP diluted earnings per share provides investors with
useful information in evaluating the financial performance of the
Company on a per share basis.
- Separation-related tax charges or
benefits, which may include reversals of certain state R&D
credits due to changes in expectations of realizability as a result
of the separation of a significant business of the Company. The
Company believes that these items do not accurately reflect the
underlying performance of continuing operations for the period in
which they are incurred.
- Tax charges resulting from the
enactment of U.S. tax reform. These charges are not anticipated to
be ongoing costs; and, thus, are outside of the normal operations
of the Company’s business. Therefore, the Company 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.
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.
Three Months EndedDecember 31,
2017
GAAP gross margin 84.3% Add: stock-based compensation 0.2 Add:
amortization of product related intangible assets 3.0 Non-GAAP
gross margin 87.5%
Three Months EndedDecember 31,
2017
GAAP operating margin 24.4% Add: stock-based compensation 4.9 Add:
amortization of product related intangible assets 2.9 Add:
amortization of other intangible assets 0.8 Add: restructuring
charges 6.9 Non-GAAP operating margin 39.9%
Three Months
Ended December 31, 2017 2016 GAAP net
(loss) income from continuing operations $(283,889) $178,575
Add: stock-based compensation 37,901 37,467 Add: amortization of
product related intangible assets 22,626 12,196 Add: amortization
of other intangible assets 6,119 3,627 Add: amortization of debt
discount 8,621 8,346 Add: separation costs — 793 Add: restructuring
charges 53,697 6,090 Less: tax effects related to above items
(33,580 ) (29,571 ) Add: separation-related tax charges 7,600 —
Add: charges related to U.S. tax reform 429,400 —
Non-GAAP net income from continuing operations $248,495
$217,523
Three Months Ended December
31, 2017 2016 Number of shares used in
diluted (loss) earnings per share calculations: GAAP
weighted average shares outstanding (“WASO”) 147,390 158,196
Add: effect of convertible note hedges and
WASO from anti-dilutive shares for GAAP purposes*
2,356 — Non-GAAP weighted average shares outstanding
149,746 158,196
Three Months Ended December
31, 2017 2016 GAAP (loss) earnings per
share from continuing operations - diluted $(1.93) $1.13
Add: stock-based compensation 0.25 0.24 Add: amortization of
product related intangible assets 0.15 0.08 Add: amortization of
other intangible assets 0.04 0.02 Add: amortization of debt
discount 0.06 0.05 Add: separation costs — 0.01 Add: restructuring
charges 0.36 0.04 Less: tax effects related to above items (0.21 )
(0.19 ) Add: separation-related tax charges 0.05 — Add: charges
related to U.S. tax reform 2.87 — Add: impact on WASO from
anti-dilutive shares for GAAP purposes* 0.02 —
Non-GAAP earnings per share from continuing operations - diluted
$1.66 $1.38
*Per ASC 260, anti-dilutive shares were excluded from GAAP
weighted average shares outstanding due to Q4'17 including a GAAP
loss from continuing operations. These shares were included in the
non-GAAP weighted average shares outstanding as Q4'17 included
non-GAAP net income from continuing operations.
Twelve Months EndedDecember 31,
2017
GAAP gross margin 84.4% Add: stock-based compensation 0.2 Add:
amortization of product related intangible assets 2.3 Non-GAAP
gross margin 86.9%
Twelve Months EndedDecember 31,
2017
GAAP operating margin 20.2% Add: stock-based compensation 5.8 Add:
amortization of product related intangible assets 2.4 Add:
amortization of other intangible assets 0.6 Add: restructuring
charges 2.6 Non-GAAP operating margin 31.6%
Twelve Months
Ended December 31, 2017 2016 GAAP net
income from continuing operations $21,985 $469,855 Add:
stock-based compensation 165,120 152,737 Add: amortization of
product related intangible assets 65,688 55,418 Add: amortization
of other intangible assets 17,190 15,076 Add: amortization of debt
discount 34,039 33,014 Add: separation costs 514 2,540 Add:
restructuring charges 72,375 67,401 Less: tax effects related to
above items (116,079 ) (96,390 ) Add: separation-related tax
charges 53,727 — Add: charges related to U.S. tax reform 429,400
— Non-GAAP net income from continuing
operations $743,959 $699,651
Twelve
Months Ended December 31, 2017 2016 Number
of shares used in diluted earnings per share calculations:
GAAP weighted average shares outstanding 155,503 157,084 Less:
effect of convertible note hedges (2,231 ) — Non-GAAP
weighted average shares outstanding 153,272 157,084
Twelve Months Ended December 31, 2017
2016 GAAP earnings per share from continuing operations -
diluted $0.14 $2.99 Add: stock-based compensation 1.08 0.97
Add: amortization of product related intangible assets 0.44 0.35
Add: amortization of other intangible assets 0.11 0.09 Add:
amortization of debt discount 0.22 0.21 Add: separation costs —
0.02 Add: restructuring charges 0.47 0.43 Less: tax effects related
to above items (0.76 ) (0.61 ) Add: separation-related tax charges
0.35 — Add: charges related to U.S. tax reform 2.80 —
Non-GAAP earnings per share from continuing operations -
diluted $4.85 $4.45
Forward Looking Guidance
For the ThreeMonths
EndedMarch 31,
For the TwelveMonths
EndedDecember 31,
2018 2018 GAAP earnings per share from
continuing operations - diluted $0.69 to $0.71 $3.18 to $3.33 Add:
adjustments to exclude the effects of expenses related to
stock-based compensation
0.28 1.39 Add: adjustments to exclude the effects of amortization
of intangible assets 0.09 0.38 Add: adjustments to exclude the
effects of amortization of debt discount 0.06 0.24 Add: adjustments
to exclude the effects of restructuring charges 0.03 0.10 Less: tax
effects related to above items (0.09) to (0.14) (0.39) to
(0.64) Non-GAAP earnings per share from continuing operations -
diluted $1.03 to $1.06 $4.80 to $4.90
Non-GAAP diluted earnings per share reflects the anti-dilutive
impact of the convertible note hedges and does not include any
additional impacts related to U.S. tax reform, both of which cannot
be calculated without unreasonable efforts.
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version on businesswire.com: http://www.businesswire.com/news/home/20180131006243/en/
Citrix Systems, Inc.For media inquiries, contact:Eric Armstrong,
954-267-2977eric.armstrong@citrix.comorFor investor inquiries,
contact:Eduardo Fleites, 954-229-5758 or eduardo.fleites@citrix.com
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