Citrix Systems, Inc. today reported financial results for the third quarter of fiscal year 2018 ended September 30, 2018.

Financial Results

For the third quarter of fiscal year 2018, Citrix achieved revenue of $732 million, compared to $691 million in the third quarter of fiscal year 2017, representing 6 percent revenue growth.

GAAP Results

Net income for the third quarter of fiscal year 2018 was $159 million, or $1.08 per diluted share, compared to $127 million, or $0.82 per diluted share, for the third quarter of fiscal year 2017. Net income for the third quarter of fiscal year 2018 includes a tax benefit of approximately $23 million, or $0.16 per diluted share, related to the estimated transition tax on deemed repatriation of deferred foreign income. Net income for the third quarter of fiscal year 2017 includes restructuring charges of approximately $9 million, or $0.06 per diluted share, primarily for facility closing costs and a tax benefit of approximately $8 million, or $0.05 per diluted share, related to the expiration of the statute of limitation for a prior domestic tax year.

Non-GAAP Results

Non-GAAP net income for the third quarter of fiscal year 2018 was $197 million, or $1.40 per diluted share, compared to $186 million, or $1.22 per diluted share for the third quarter of fiscal year 2017. Non-GAAP net income for the third quarter of fiscal years 2018 and 2017 excludes the effects of stock-based compensation expense, amortization of intangible assets, amortization of debt discount, restructuring credits and charges and the tax effects related to these items. Non-GAAP net income for the third quarter of fiscal year 2018 also excludes a tax benefit related to the estimated transition tax on deemed repatriation of deferred foreign income. Non-GAAP net income per diluted share for the third quarter of fiscal years 2018 and 2017 reflects the anti-dilutive impact of the company's convertible note hedges.

In addition to quarterly financial results, Citrix also announced that its Board of Directors declared a $0.35 per share dividend payable December 21, 2018 to all shareholders of record as of the close of business on December 7, 2018 and authorized it to repurchase up to an additional $750 million of its common stock. As of September 30, 2018, approximately $398 million remained for repurchases from previous authorizations.

"Our solid performance this quarter was yet another positive step as we continue to execute on our transformation as a company," said David Henshall, president and CEO. "We've doubled revenue growth rates from a year ago, and we've delivered a lot of upside against margin and EPS goals. Organizations are looking to operate in a multi-cloud, hybrid-cloud world, and Citrix is uniquely positioned to provide the simple, secure, and unified solutions they need to address these challenges."

Q3 Financial Summary

The results for the third quarter of fiscal year 2018 compared to the third quarter of fiscal year 2017 are as follows:

• Subscription revenue increased 37 percent;
• Product and license revenue increased 1 percent;
• Support and services revenue increased 2 percent; and
• Net revenue increased in the EMEA region by 7 percent; increased in the Americas region by 6 percent; and increased in the APJ region by 2 percent.

During the third quarter of fiscal year 2018 ⁽¹⁾:

• GAAP gross margin was 86 percent and non-GAAP gross margin was 88 percent;
• GAAP operating margin was 23 percent and non-GAAP operating margin was 32 percent;
• Subscription revenue as a percentage of total revenue was 15 percent;
• Deferred and unbilled revenue totaled $1.9 billion as of September 30, 2018, compared to $1.7 billion as of September 30, 2017, an increase of 11 percent;
• Cash flow from operations was $301 million; and
• The company repurchased approximately 1.1 million shares during the third quarter.

Financial Outlook for Fiscal Year 2018

Citrix management expects to achieve the following results for fiscal year 2018:

• Net revenue is targeted to be in the range of $2.95 billion to $2.97 billion.
• GAAP operating margin is targeted to be in the range of 21 percent to 22 percent, and
• Non-GAAP operating margin is targeted to be in the range of 30.5 percent to 31.5 percent.
• GAAP diluted earnings per share is targeted to be in the range of $3.81 to $3.88, and
• Non-GAAP diluted earnings per share is targeted to be in the range of $5.55 to $5.60.

Preliminary Financial Outlook for Fiscal Year 2019

The company's current preliminary outlook for the full fiscal year 2019 is for net revenue to grow by approximately 4 percent. In addition, Citrix management is targeting GAAP diluted earnings per share to be approximately $3.93 and non-GAAP diluted earnings per share to be approximately $6.00.

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