Business News

Citrix Reports Fourth Quarter and Fiscal Year Financial Results

Thursday 29. January 2009 - Achieves Annual Revenue Growth of 14%; Fourth Quarter GAAP Diluted Earnings Per Share of $0.33; Fourth Quarter Non-GAAP Diluted Earnings Per Share of $0.48; Announces Restructuring Program to Reduce Annualized Operating Expenses by Approximately $50 Million

Citrix Systems, Inc. (NASDAQ:CTXS), the global leader in application delivery infrastructure, today reported financial results for the fourth quarter and fiscal year ended December 31, 2008, and announced a restructuring program to reduce its annual operating expenses.

FINANCIAL RESULTS
In the fourth quarter of fiscal 2008, Citrix achieved revenue of $416 million, compared to $400 million in the fourth quarter of fiscal 2007, representing four percent revenue growth. For the fiscal year 2008, Citrix reported annual revenues of $1.58 billion, compared to $1.39 billion in the previous year, a 14 percent increase.

GAAP Results
Net income for the fourth quarter of fiscal 2008 was $60 million, or $0.33 per diluted share, compared to $63 million, or $0.33 per diluted share for the fourth quarter of 2007. Annual net income for 2008 was $178 million, or $0.96 per diluted share, compared to $214 million, or $1.14 per diluted share in fiscal 2007.

Non-GAAP Results
Non-GAAP net income in the fourth quarter of 2008 was $87 million, or $0.48 per diluted share, compared to $95 million, or $0.49 per diluted share, in the comparable period last year. Non-GAAP net income excludes the effects of amortization of intangible assets primarily related to business combinations, stock-based compensation expenses, the write-off of in-process research and development (IPR&D), and the tax effects related to those items. Non-GAAP net income for the fourth quarter of fiscal 2008 also excludes a non-cash benefit of approximately $6 million related to the adjustment of payroll taxes accrued in connection with the company’s voluntary, independent investigation of its historical stock option granting practices (stock option review) that was concluded in 2007.

Annual non-GAAP net income for 2008 was $304 million, or $1.63 per diluted share, compared to $299 million, or $1.59 per diluted share, in 2007. Non-GAAP net income excludes the effects of the amortization of intangible assets primarily related to business combinations, stock-based compensation expenses, the write-off of IPR&D, and the tax effects related to those items. In addition, non-GAAP net income for 2008 excludes the non-cash benefit related to the adjustment of payroll taxes taken in the fourth quarter of fiscal 2008.

Restructuring Program
Citrix also announced the implementation of a restructuring program and steps to reduce its headcount by approximately 10 percent of the company’s global workforce. Citrix also expects to incur cash and non-cash charges related to the consolidation of facilities as part of the restructuring program. Because the details of its facilities consolidation are not yet final, the company is unable at this time to estimate the amount of charges it may incur in connection with its facilities consolidation.

“I’m pleased with our Q4 results and performance for 2008 – especially in the face of an extraordinary worldwide environment, ” said Mark Templeton, Citrix president and chief executive officer.

“While being fiscally cautious, we are more confident than ever in our vision and business strategy. Citrix products have a long track record of reducing IT costs, while simplifying enterprise computing – exactly what customers need.”

Q4 Financial Summary
In reviewing the fourth quarter results of 2008, compared to the fourth quarter of 2007:
Product license revenue decreased 9 percent;
License updates revenue grew 13 percent;
Online services revenue grew 18 percent;
Technical services revenue, which is comprised of consulting, education and technical support, grew 13 percent;
Revenue grew in the America’s region by 3 percent and in the EMEA region by 2 percent, and decreased in the Pacific region by 6 percent;
Deferred revenue totaled $533 million, compared to $443 million on December 31, 2007, an increase of 21 percent;
Operating margin was 15 percent for the quarter; and non-GAAP operating margin was 26 percent for the quarter, excluding the effects of amortization of intangible assets primarily related to business combinations, stock-based compensation expense, the write-off of IPR&D, and the non-cash benefit related to the adjustment of payroll taxes discussed under non-GAAP results;
Cash flow from operations was $166 million, compared to $113 million in the fourth quarter of 2007; and,
Repurchased shares were 2.2 million shares at an average net price paid of $25.89.
Annual Financial Summary
In reviewing 2008 results compared to 2007 results:
Product license revenue grew 7 percent;
License updates revenue grew 15 percent;
Online services revenue grew 22 percent;
Technical services revenue, which is comprised of consulting, education and technical support, grew 24 percent;
Revenue grew in the America’s region by 9 percent, the EMEA region by 17 percent, and the Pacific region by 10 percent;
Operating margin was 11 percent for fiscal 2008, and non-GAAP operating margin was 23 percent, excluding the effects of amortization of intangible assets primarily related to business combinations, stock-based compensation expense, the write-off of IPR&D, and the non-cash benefit related to the adjustment of payroll taxes discussed under non-GAAP results;
Cash flow from operations was $462 million for fiscal 2008 compared with $422 million last year; and
During fiscal 2008, the company repurchased 10.9 million shares at an average net price per share of $31.71 or a total value of approximately $346 million.
Financial Outlook
Due to the volatility of market conditions in the foreseeable future, it is more likely that Citrix’s actual results could differ materially from expectations. Consequently, the company is providing less quantitative guidance than in previous quarters.

First Quarter 2009
Citrix management currently expects to achieve the following results during its first fiscal quarter 2009 ending March 31, 2009:
Net revenue to be down approximately 5 percent as compared to the first quarter of 2008;
Non-GAAP operating margin to be approximately flat compared to the first quarter of 2008, excluding the effects of amortization of intangible assets primarily related to business combinations, stock-based compensation expense, and restructuring charges; and,
The restructuring of the company’s global workforce announced today, which is expected to result in annualized pre-tax savings of approximately $50 million in employee related expenses. Primarily in the first fiscal quarter 2009, Citrix expects to incur a pre-tax charge in the range of $19 million to $23 million related to its global workforce reduction. Because the details of its facilities consolidation are not yet final, the company is unable at this time to estimate the amount of charges it may incur in connection with its facilities consolidation.
The above statements are based on current expectations. These statements are forward-looking, and actual results may differ materially.

Fiscal Year 2009
Citrix management currently expects to achieve the following results for the fiscal year 2009:
The company expects net revenue to be approximately flat as compared to 2008;
Non-GAAP operating margin to increase by as much as one percent as compared to non-GAAP operating margin from the prior year, excluding the effects of amortization of intangible assets primarily related to business combinations, stock-based compensation expense, and restructuring charges.

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