Citrix Systems today reported financial results for the second quarter of fiscal year 2017 ended June 30, 2017.

Financial Results

For the second quarter of fiscal year 2017, Citrix achieved revenue from continuing operations of $693 million, compared to $674 million in the second quarter of fiscal year 2016, representing 3 percent revenue growth.

GAAP Results

Net income from continuing operations for the second quarter of fiscal year 2017 was $109 million, or $0.70 per diluted share, compared to $106 million, or $0.68 per diluted share, for the second quarter of fiscal year 2016. Net income for the second quarter of fiscal year 2017 includes a net international tax benefit of approximately $10 million, or $0.06 per diluted share, primarily related to an international statutory tax transaction.

Non-GAAP Results

Non-GAAP net income from continuing operations for the second quarter of fiscal year 2017 was $158 million, or $1.03 per diluted share, compared to $157 million, or $1.00 per diluted share for the second quarter of fiscal year 2016. Non-GAAP net income from continuing operations for the second 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, separation costs, and the tax effects related to these items. Non-GAAP net income per diluted share also reflects the anti-dilutive impact of the company's convertible note hedges.

"Q2 demonstrated a clear acceleration in the momentum of our cloud transformation, with a strong demand for Citrix Cloud and our subscription-based solutions," said David Henshall, president and CEO of Citrix. "As a result, we are seeing double-digit growth in deferred revenue and an acceleration in overall billings, which proves the value of the innovation that we are delivering to customers and partners and the success we can expect in the future."

Q2 Financial Summary

In reviewing the results from continuing operations for the second quarter of fiscal year 2017 compared to the second quarter of fiscal year 2016:

• Product and license revenue decreased 4 percent;
• Software as a service revenue increased 27 percent;
• Revenue from license updates and maintenance increased 6 percent;
• Professional services revenue, which is comprised of consulting, product training and certification, decreased 9 percent;
• Net revenue increased in the Pacific region by 10 percent, increased in the EMEA region by 6 percent, and remained consistent in the Americas region;
• Deferred revenue totaled $1.7 billion as of June 30, 2017, compared to $1.5 billion as of June 30, 2016, an increase of 13 percent; and
• Cash flow from continuing operations was $164 million for the second quarter of fiscal year 2017, compared to $194 million for the second quarter of fiscal year 2016.

During the second quarter of fiscal year 2017:

• 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 26 percent, excluding the effects of stock-based compensation expense, amortization of acquired intangible assets, and costs associated with restructuring programs.

Financial Outlook for Third Quarter 2017

Citrix management expects to achieve the following results for the third quarter of fiscal year 2017 ending September 30, 2017:

• Net revenue is targeted to be in the range of $685 million to $695 million.
• GAAP diluted earnings per share is targeted to be in the range of $0.68 to $0.70. Non-GAAP diluted earnings per share is targeted to be in the range of $1.02 to $1.05, excluding $0.32 related to the effects of stock-based compensation expenses, $0.11 related to the effects of amortization of acquired intangible assets, $0.06 related to the effects of amortization of debt discount, $0.03 to $0.04 related to restructuring charges and $0.16 to $0.20 for the tax effects related to these items. Non-GAAP diluted earnings per share reflects the anti-dilutive impact of the convertible note hedges, which cannot be calculated without unreasonable efforts.

Financial Outlook for Fiscal Year 2017

Citrix management expects to achieve the following results from continuing operations for the fiscal year ending December 31, 2017:

• Net revenue is targeted to be in the range of $2.81 billion to $2.83 billion.
• GAAP diluted earnings per share from continuing operations is targeted to be in the range of $2.59 to $2.74. Non-GAAP diluted earnings per share from continuing operations is targeted to be in the range of $4.60 to $4.65, excluding $1.07 related to the effects of stock-based compensation expenses, $0.42 related to the effects of amortization of acquired intangible assets, $0.22 related to the effects of amortization of debt discount, approximately $60 to $70 million or $0.36 to $0.44 related to restructuring charges, and $0.39 to $0.51 for the tax effects related to these items. Non-GAAP diluted earnings per share from continuing operations also excludes $0.30 related to certain tax charges incurred in connection with the separation of the GoTo business. Non-GAAP diluted earnings per share reflects the anti-dilutive impact of the convertible note hedges, which cannot be calculated without unreasonable efforts.