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Citrix Reports 2014 Second Quarter Financial Results

Citrix Systems, Inc. today reported financial results for the second quarter of fiscal year 2014 ended June 30, 2014.

FINANCIAL RESULTS

For the second quarter of fiscal year 2014, Citrix achieved revenue of $782 million, compared to $730 million in the second quarter of fiscal year 2013, representing 7 percent revenue growth.

GAAP Results

Net income for the second quarter of fiscal year 2014 was $53 million, or $0.31 per diluted share, compared to $64 million, or $0.34 per diluted share, for the second quarter of fiscal year 2013. The current quarter GAAP results include impairment charges of approximately $30 million related to certain intangible assets within our Enterprise and Service Provider division, which are included in amortization of product related intangible assets, as well as a restructuring charge of approximately $5 million for severance costs incurred to better align resources to strategic initiatives. In addition, GAAP net income for the second quarter of fiscal year 2014 includes net tax benefits of approximately $9 million, or $0.05 per diluted share, primarily related to the closing of audits with the IRS for certain tax years.

Non-GAAP Results

Non-GAAP net income for the second quarter of fiscal year 2014 was $142 million, or $0.83 per diluted share, compared to $124 million, or $0.66 per diluted share, for the second quarter of fiscal year 2013. Non-GAAP net income excludes the effects of amortization of acquired intangible assets and debt discount, stock-based compensation expenses, the restructuring program implemented in the first quarter of fiscal year 2014 and the tax effects related to these items. Non-GAAP net income for the second quarter of fiscal year 2014 includes net tax benefits of approximately $9 million, or $0.05 per diluted share, primarily related to the closing of audits with the IRS for certain tax years.

“I’m pleased with our performance and results for Q2,” said Mark Templeton, president and CEO at Citrix. “I’m really proud of how our team delivered greater operating efficiencies while driving our very significant pivot to mobility. As we move into the second half, we’ll continue to refine operations to further increase shareholder value and to stay aggressive with valuable solutions for our customers’ mobility needs.

“And, on a personal level, I’m excited to be back, energized, and looking forward to the future here at Citrix.”

Q2 Financial Summary

In reviewing the results for the second quarter of fiscal year 2014, compared to the second quarter of fiscal year 2013:

  • Product and license revenue increased 2 percent;
  • Software as a service revenue increased 12 percent;
  • Revenue from license updates and maintenance increased 7 percent;
  • Professional services revenue, which is comprised of consulting, product training and certification, increased 15 percent;
  • Revenue increased in the EMEA and Pacific regions by 8 percent; and increased in the Americas region by 4 percent;
  • Deferred revenue totaled $1.4 billion as of June 30, 2014, compared to $1.3 billion as of June 30, 2013, an increase of 12 percent; and
  • Cash flow from operations was $204 million for the second quarter of fiscal year 2014, compared with $209 million for the second quarter of fiscal year 2013.

During the second quarter of fiscal year 2014:

  • GAAP gross margin was 78 percent, and non-GAAP gross margin was 85 percent, excluding the effects of amortization of acquired product related intangible assets and stock-based compensation expense; and
  • GAAP operating margin was 7 percent, and non-GAAP operating margin was 22 percent, excluding the effects of amortization of acquired intangible assets, stock-based compensation expenses, and costs associated with the 2014 restructuring program.
  • The company repurchased 20.9 million shares at an average price of $58.50.

Financial Outlook for Third Quarter 2014

Citrix management expects to achieve the following results for the third quarter of fiscal year 2014 ending September 30, 2014:

  • Net revenue is targeted to be in the range of $765 million to $775 million;
  • GAAP gross margin is targeted to be in the range of 81 percent to 82 percent. Non-GAAP gross margin is targeted to be in the range of 84 percent to 85 percent, excluding 3 percent related to the effects of amortization of acquired product related intangible assets and stock-based compensation expense.
  • GAAP diluted earnings per share is targeted to be in the range of $0.32 to $0.36. Non-GAAP diluted earnings per share is targeted to be in the range of $0.70 to $0.73, excluding $0.21 related to the effects of amortization of acquired intangible assets, $0.28 related to the effects of stock-based compensation expenses, $0.05 related to the effects of amortization of debt discount, $0.01 related to the effects of restructuring charges, and $(0.14) to $(0.21) 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 2014

Citrix management expects to achieve the following results for the fiscal year ending December 31, 2014:

  • Net revenue is targeted to be in the range of 8.5 percent to 10 percent;
  • GAAP gross margin is targeted to be in the range of 80 percent to 81 percent. Non-GAAP gross margin is targeted to be in the range of 84 percent to 85 percent, excluding 4 percent related to the effects of amortization of acquired product related intangible assets and stock-based compensation expense.
  • GAAP diluted earnings per share is targeted to be in the range of $1.62 to $1.67. Non-GAAP diluted earnings per share is targeted to be in the range of $3.20 to $3.25, excluding $0.96 related to the effects of amortization of acquired intangible assets, $1.02 related to the effects of stock-based compensation expenses, $0.12 related to the effects of amortization of debt discount, $0.10 related to the effects of restructuring charges, and $(0.57) to $(0.67) for the tax effects related to these items.
  • GAAP tax rate is targeted to be in the range of 14 percent to 14.5 percent. Non-GAAP tax rate, which excludes the effects of amortization of acquired intangible assets, stock-based compensation, restructuring charges and amortization of debt discount, is targeted to be in the range of 22 percent to 22.5 percent.

The above statements are based on current targets. These statements are 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.

Published Thursday, July 24, 2014 6:30 AM by David Marshall
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