Exhibit 99.1
Citrix Reports Third Quarter Earnings
Results; Year-over-year Quarterly Revenue Growth of 21%; Diluted
Earnings Per Share of $0.23; Adjusted Diluted Earnings Per Share of
$0.29
FORT LAUDERDALE, Fla.--(BUSINESS WIRE)--Oct. 19, 2005--Citrix
Systems, Inc. (NASDAQ:CTXS), the global leader in access
infrastructure solutions, today reported financial results for its
third quarter of fiscal 2005 ended September 30, 2005.
Financial Results
In the third quarter of fiscal 2005, Citrix achieved revenue of
$226.9 million, compared to $187.6 million in the third quarter of
fiscal 2004, representing 21 percent revenue growth.
GAAP Results
Net income for the third quarter of fiscal 2005 was $41.0 million
or $0.23 per diluted share - which includes a $7.0 million expense
charge for in-process research and development associated with the
NetScaler acquisition - compared to net income of $38.4 million or
$0.22 per diluted share, for the third quarter of fiscal 2004.
Non-GAAP Results
Net income, adjusted to exclude the effects of amortization of
intangible assets, amortization of deferred stock-based compensation
and in-process research and development, was $52.2 million for the
third quarter of fiscal 2005 or $0.29 per diluted share, compared to
$42.3 million or $0.24 per diluted share, in the comparable period
last year.
"Our third quarter results were excellent," said Mark Templeton,
president and chief executive officer for Citrix. "Good momentum drove
solid growth in revenue, adjusted earnings per share and cash flow.
"We saw strong performance and accelerating momentum from our new
products, especially with our online services, gateways and
application networking product lines. The results indicate that
customers are finding our much broader portfolio of products and
services to be the most compelling set of access infrastructure
solutions on the market.
"We just kicked off the fourth quarter with Citrix iForum,
explaining our vision for access to a record number of customers and
previewing new technologies and capabilities. The excitement and
interest was high, and we look forward to capitalizing on the momentum
generated at iForum in the coming quarters."
Q3 Financial Summary
In reviewing the third quarter results of 2005:
-- The Americas region grew revenue 18 percent; the EMEA region
grew 14 percent, and the Pacific region grew 11 percent
compared to the third quarter of 2004.
-- Product license revenue increased 10 percent compared to the
third quarter of 2004.
-- Online services contributed $26.2 million of revenue, up 86
percent year over year on a GAAP basis and 63 percent when
considering purchase accounting adjustments compared to the
third quarter of 2004.
-- Revenue from license updates grew 20 percent compared to the
third quarter of 2004.
-- Technical services revenue, which is comprised of consulting,
education and technical support, grew 30 percent compared to
the third quarter of 2004.
-- Deferred revenue totaled $255 million compared to $202
million in the third quarter of 2004.
-- Operating margin was 20 percent for the quarter; adjusted
operating margin was 27 percent for the quarter excluding the
effects of amortization of intangible assets, amortization of
deferred stock-based compensation, and the write off of
in-process research and development related to business
combinations.
-- Cash flow from operations was over $76 million, compared to
$62 million in the third quarter of 2004. This brings total
trailing twelve months cash flow from operations to $295
million.
-- In its stock repurchase activity, the company repurchased 3.4
million shares of its common stock at an average net price per
share of $23.99. The company has over $100 million remaining
under the current repurchase authorization.
Financial Outlook for Fourth Quarter 2005
Citrix management offers the following guidance for the fourth
quarter of 2005.
-- Net revenue is expected to be in the range of $243 million to
$251 million.
-- Total adjusted operating expenses are expected to increase 7
percent to 8 percent sequentially.
-- GAAP diluted earnings per share is expected to be in the range
of $0.25 to $0.27, and diluted earnings per share adjusted to
exclude the effects of amortization of intangible assets and
amortization of deferred stock-based compensation is expected
to be in the range of $0.30 to $0.32.
The above statements are based on current expectations. These
statements are forward-looking and actual results may differ
materially.
Financial Outlook for Fiscal Year 2005
Citrix management offers the following guidance, which includes
the impact of the NetScaler acquisition, for the fiscal year 2005.
The company expects net revenue to be in the range of $883 million
to $891 million. The company expects GAAP diluted earnings per share
to be in the range of $0.85 to $0.87, and adjusted diluted earnings
per share to be in the range of $1.10 to $1.12. Adjusted diluted
earnings per share excludes the effects of amortization of intangible
assets, amortization of deferred stock-based compensation, the write
down of in-process research and development and tax provision related
to the repatriation of foreign earnings under the American Jobs
Creation Act (AJCA).
The above statements are based on current expectations. These
statements are forward-looking and actual results may differ
materially.
Company, Product and Alliance Highlights
During the third quarter 2005, Citrix:
-- Received Microsoft's Global ISV Partner of the Year Award for
2005. In the three years that Microsoft has bestowed this
award, Citrix won the top honor in 2003 and 2005, and was a
finalist in 2004.
-- Announced the general availability of Citrix Access
Essentials(TM), specifically developed, packaged and priced to
bring secure application virtualization and efficient
centralized management of information resources within easy
reach of small and mid-sized businesses.
-- Announced powerful new tools in Citrix(R) GoToMeeting(TM) 2.0
for conducting online meetings, training sessions and group
presentations with fast, secure and reliable on-demand
performance.
-- Completed the acquisition of privately held NetScaler Inc.,
strengthening Citrix's customer value proposition by improving
the performance of any application delivered through the
Citrix Access Platform.
-- Announced the validation of the integration of Citrix Access
Suite(TM) version 4.0 with Oracle's JD Edwards EnterpriseOne
version 8.11.
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: 706-634-0155
or 888-799-0519 using passcode: CITRIX. A replay of the webcast can
be viewed by visiting the Investor Relations section of the Citrix
corporate Web site at http://www.citrix.com/investors for
approximately thirty days. In addition, an audio replay of the
conference call will be available through October 21, 2005, by dialing
800-642-1687 or 706-645-9291 (passcode required: 9780020).
About Citrix
Citrix Systems, Inc. (Nasdaq:CTXS) is the global leader and most
trusted name in on-demand access. More than 160,000 organizations
around the world use the Citrix Access Platform to provide the best
possible access experience to any application for any user. Citrix
customers include 100% of the Fortune 100 companies and 98% of the
Fortune Global 500, as well as hundreds of thousands of small
businesses and individuals. Citrix has approximately 6,200 channel and
alliance partners in more than 100 countries. Citrix annual revenues
in 2004 were $741 million. Learn more at http://www.citrix.com.
For Citrix Investors
This release contains forward-looking statements which are made
pursuant to the safe harbor provisions 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 management, the statements contained in the Financial
Outlook for Fourth Quarter 2005, Financial Outlook for Fiscal Year
2005 and in the reconciliation of non-GAAP financial measures to
comparable U.S. GAAP measures concerning management's forecast of
revenues and earnings per share, statements regarding existing and new
products and services, and 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, the success of the company's product lines, the
company's product concentration and its ability to develop and
commercialize new products and services, the success of investments in
foreign operations and vertical and geographic markets, the company's
ability to successfully integrate the operations and employees of
acquired companies, and the possible failure to achieve anticipated
revenues and profits from acquisitions, the company's ability to
maintain and expand its core business in large enterprise accounts,
the company's ability to attract and retain small sized customers, the
size, timing and recognition of revenue from significant orders, the
effect of new accounting pronouncements on revenue and expense
recognition, the company's reliance on and the success of the
company's independent distributors and resellers for the marketing and
distribution of the company's products and the success of the
company's marketing and licensing programs, increased competition,
changes in the company's pricing policies or those of its competitors;
management of operations and operating expenses, charges in the event
of the impairment of assets acquired through business combinations and
licenses, the management of anticipated future growth and the
recruitment and retention of qualified employees, competition and
other risks associated with the market for our Web-based access,
training and customer assistance products, as well as risks of
downturns in economic conditions generally; political and social
turmoil, and the uncertainty in the IT spending environment and other
risks detailed in the company'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.
Use of Non-GAAP Financial Measures
In our earnings release, conference call, slide presentation or
webcast, we may use or discuss non-GAAP financial measures as defined
by SEC Regulation G. The GAAP financial measure most directly
comparable to each non-GAAP financial measure used or discussed and a
reconciliation of the differences between each non-GAAP financial
measure and the comparable GAAP financial measure are included in this
press release after the condensed consolidated financial statement and
can be found on the Investor Relations page of the Citrix corporate
Web site at http://www.citrix.com/investors.
Citrix(R), Citrix Access Suite(TM), Citrix iForum(TM),
GoToMeeting(TM) and Citrix Access Essentials(TM) are trademarks 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 Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
-----------------------------------
Revenues:
Product licenses $97,262 $88,455 $279,304 $263,597
License updates 84,511 70,406 242,141 196,284
Services 45,174 28,717 118,621 67,309
------------------------------------
Total net revenues 226,947 187,578 640,066 527,190
Cost of revenues:
Cost of product license
revenues 4,828 853 8,473 3,022
Cost of services revenues 6,611 4,543 16,521 11,535
Amortization of core and
product technology 4,477 3,379 11,488 10,011
------------------------------------
Total cost of
revenues 15,916 8,775 36,482 24,568
Gross margin 211,031 178,803 603,584 502,622
Operating expenses:
Research and development 27,055 21,832 78,522 63,043
Sales, marketing and support 96,092 82,612 282,521 237,544
General and administrative 31,755 26,142 89,119 78,730
Amortization of other
intangible assets 3,147 1,894 7,538 4,493
Amortization of deferred
stock-based
compensation 1,189 -- 1,386 --
In-process research and
development 7,000 -- 7,000 18,700
------------------------------------
Total operating
expenses 166,238 132,480 466,086 402,510
------------------------------------
Income from operations 44,793 46,323 137,498 100,112
Write-off of deferred debt
issuance costs -- -- -- (7,219)
Other income, net 5,570 3,307 15,641 8,382
------------------------------------
Income before income taxes 50,363 49,630 153,139 101,275
Income taxes 9,410 11,182 45,740 22,027
------------------------------------
Net income $40,953 $38,448 $107,399 $79,248
====================================
Earnings per share - diluted $0.23 $0.22 $0.61 $0.46
====================================
Weighted average shares
outstanding - diluted 178,210 172,870 176,441 173,911
====================================
Adjusted net income $52,240 $42,320 $142,058 $110,524
====================================
Adjusted earnings per share -
diluted $0.29 $0.24 $0.81 $0.64
====================================
Note: See accompanying reconciliation of non-GAAP financial
measures to comparable U.S. GAAP measures (unaudited).
CITRIX SYSTEMS, INC.
Condensed Consolidated Balance Sheets
(In thousands - unaudited)
September 30, December 31,
2005 2004
--------------------------
ASSETS:
Cash and cash equivalents $508,231 $73,485
Short-term investments -- 159,656
Accounts receivable, net 111,130 108,399
Other current assets 75,198 85,040
--------------------------
Total current assets 694,559 426,580
Restricted cash equivalents and
investments 63,742 149,051
Long-term investments 51,347 183,974
Property and equipment, net 70,061 69,281
Goodwill and other intangible assets, net 714,890 448,624
Other long-term assets 19,675 8,574
--------------------------
Total assets $1,614,274 $1,286,084
==========================
LIABILITIES AND
STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $160,055 $131,287
Current portion of deferred revenues 239,271 210,872
--------------------------
Total current liabilities 399,326 342,159
Long-term debt 75,000 --
Long-term portion of deferred revenues 16,223 14,271
Other liabilities 1,328 4,749
Stockholders' equity 1,122,397 924,905
--------------------------
Total liabilities and stockholders'
equity $1,614,274 $1,286,084
==========================
CITRIX SYSTEMS, INC.
Condensed Consolidated Statement of Cash Flows
(In thousands - unaudited)
Nine Months
Ended September
30, 2005
-------------------
OPERATING ACTIVITIES
Net Income $107,399
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization and depreciation 34,871
Amortization of deferred stock-based
compensation 1,386
In-process research and development 7,000
Provision for accounts receivable allowances 4,144
Tax benefit related to the exercise of non-
statutory stock options and disqualifying
dispositions of incentive stock options 19,306
Other non-cash items (136)
-------------------
Total adjustments to reconcile net
income to net cash provided by
operating
activities 66,571
Changes in operating assets and liabilities:
Accounts receivable 963
Prepaid expenses and other current
assets 3,678
Other assets 211
Deferred tax assets, net (3,475)
Accounts payable and accrued
expenses 17,745
Deferred revenues 24,861
Other liabilities (2,952)
-------------------
Total changes in operating assets
and liabilities 41,031
-------------------
Net cash provided by operating activities 215,001
INVESTING ACTIVITIES
Net proceeds from sales, maturities and purchases
of available-for-sale investments 373,814
Cash paid for acquisition, net of cash acquired (137,770)
Purchases of property and equipment (16,699)
-------------------
Net cash provided by investing activities 219,345
FINANCING ACTIVITIES
Proceeds from issuance of common stock 60,933
Net proceeds from term loan and revolving credit
facility 75,000
Cash paid under stock repurchase programs (135,533)
-------------------
Net cash provided by financing activities 400
-------------------
Change in cash and cash equivalents 434,746
Cash and cash equivalents at beginning of period 73,485
-------------------
Cash and cash equivalents at end of period $508,231
===================
Reconciliation of Non-GAAP Financial Measures to Comparable U.S.
GAAP Measures (Unaudited)
We utilize certain non-GAAP financial measures to evaluate our
performance. We consider these measures important indicators of our
success. In addition, Citrix provides these non-GAAP measures of the
company's performance to investors to enable them to, among other
things, better compare Citrix's most recent results of operations
against financial models prepared by the company's investors and
securities analysts, and to provide additional information concerning
the impact of business acquisitions on Citrix's results of operations.
These measures should not be considered an alternative to measurements
required by accounting principles generally accepted in the United
States ("GAAP") such as net income and earnings per share and should
not be considered measures of our liquidity. In addition, our non-GAAP
financial measures may not be comparable to similar measures reported
by other companies.
The following tables reconcile non-GAAP financial measures used in
this release to the most comparable GAAP measure for the respective
periods (in thousands, except for per share information and
percentages):
CITRIX SYSTEMS, INC.
RECONCILIATION OF CONDENSED CONSOLIDATED STATEMENTS OF INCOME
TO THE NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data - unaudited)
Three Months Ended Three Months Ended
September 30, 2005 September 30, 2004
-------------------------------------------------------
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
-------------------------------------------------------
Revenues:
Product
licenses $97,262 -- $97,262 $88,455 -- $88,455
License
updates 84,511 -- 84,511 70,406 -- 70,406
Services 45,174 -- 45,174 28,717 -- 28,717
-------------------------------------------------------
Total net
revenues 226,947 -- 226,947 187,578 -- 187,578
Cost of
revenues:
Cost of
product
license
revenues 4,828 -- 4,828 853 -- 853
Cost of
services
revenues 6,611 -- 6,611 4,543 -- 4,543
Amortization
of core and
product
technology 4,477 (4,477)A -- 3,379 (3,379)A --
-------------------------------------------------------
Total cost of
revenues 15,916 (4,477) 11,439 8,775 (3,379) 5,396
Gross margin 211,031 4,477 215,508 178,803 3,379 182,182
Operating
expenses:
Research and
development 27,055 -- 27,055 21,832 -- 21,832
Sales,
marketing
and support 96,092 -- 96,092 82,612 -- 82,612
General and
administrative 31,755 -- 31,755 26,142 -- 26,142
Amortization
of other
intangible
assets 3,147 (3,147)A -- 1,894 (1,894)A --
Amortization
of deferred
stock-based
compensation 1,189 (1,189)B -- -- -- --
In-process
research and
development 7,000 (7,000)C -- -- -- --
-------------------------------------------------------
Total
operating
expenses 166,238 (11,336) 154,902 132,480 (1,894) 130,586
-------------------------------------------------------
Income from
operations 44,793 15,813 60,606 46,323 5,273 51,596
Other income,
net 5,570 -- 5,570 3,307 -- 3,307
-------------------------------------------------------
Income before
income taxes 50,363 15,813 66,176 49,630 5,273 54,903
Income taxes 9,410 4,526D 13,936 11,182 1,401E 12,583
-------------------------------------------------------
Net Income $40,953 11,287 $52,240 $38,448 $3,872 $42,320
=======================================================
Earnings per
common share -
diluted $0.23 $0.06 $0.29 $0.22 $0.02 $0.24
=======================================================
Weighted
average shares
outstanding -
diluted 178,210 178,210 172,870 172,870
=======================================================
A - To exclude the effects of the amortization of core and product
technology and other intangible assets primarily related to business
combinations.
B - To exclude the effect of amortization of deferred stock-based
compensation.
C - To exclude the effect of the write off of in-process research
and development related to business combinations.
D - To exclude the tax effects of amortization of core and product
technology and other intangible assets, the amortization of deferred
stock-based compensation and the write off of in-process research and
development related to business combinations.
E - To exclude the tax effects of amortization of core and product
technology and other intangible assets.
CITRIX SYSTEMS, INC.
RECONCILIATION OF CONDENSED CONSOLIDATED STATEMENTS OF INCOME
TO THE NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data - unaudited)
Nine Months Ended Nine Months Ended
September 30, 2005 September 30, 2004
----------------------------------------------------------
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
----------------------------------------------------------
Revenues:
Product
licenses $279,304 -- $279,304 $263,597 -- $263,597
License
updates 242,141 -- 242,141 196,284 -- 196,284
Services 118,621 -- 118,621 67,309 -- 67,309
----------------------------------------------------------
Total net
revenues 640,066 -- 640,066 527,190 -- 527,190
Cost of
revenues:
Cost of
product
license
revenues 8,473 -- 8,473 3,022 -- 3,022
Cost of
services
revenues 16,521 -- 16,521 11,535 -- 11,535
Amortization
of core and
product
technology 11,488 (11,488)A -- 10,011 (10,011)A --
----------------------------------------------------------
Total cost
of revenues 36,482 (11,488) 24,994 24,568 (10,011) 14,557
Gross margin 603,584 11,488 615,072 502,622 10,011 512,633
Operating
expenses:
Research and
development 78,522 -- 78,522 63,043 -- 63,043
Sales,
marketing
and support 282,521 -- 282,521 237,544 -- 237,544
General and
admini-
strative 89,119 -- 89,119 78,730 -- 78,730
Amortization
of other
intangible
assets 7,538 (7,538)A -- 4,493 (4,493)A --
Amortization
of deferred
stock-based
compensation 1,386 (1,386)B -- -- -- --
In-process
research
and
development 7,000 (7,000)C -- 18,700 (18,700)C --
----------------------------------------------------------
Total
operating
expenses 466,086 (15,924) 450,162 402,510 (23,193) 379,317
----------------------------------------------------------
Income from
operations
Income from
operations 137,498 27,412 164,910 100,112 33,204 133,316
Write-off of
deferred
debt
issuance
costs -- -- -- (7,219) 7,219D --
Other
income, net 15,641 -- 15,641 8,382 -- 8,382
----------------------------------------------------------
Income
before
income
taxes 153,139 27,412 180,551 101,275 40,423 141,698
Income taxes 45,740 (7,247)E 38,493 22,027 9,147F 31,174
----------------------------------------------------------
Net Income $107,399 $34,659 $142,058 $79,248 $31,276 $110,524
==========================================================
Earnings per
common
share -
diluted $0.61 $0.20 $0.81 $0.46 $0.18 $0.64
==========================================================
Weighted
average
shares
outstanding
- diluted 176,441 176,441 173,911 173,911
==========================================================
A - To exclude the effects of the amortization of core and product
technology and other intangible assets primarily related to business
combinations.
B - To exclude the effect of amortization of deferred stock-based
compensation.
C - To exclude the effect of the write-off of in-process research
and development related to business combinations.
D - To exclude the effect of the write-off of deferred debt
issuance costs due to the redemption of the Company's convertible
subordinated debentures.
E - To exclude the tax effect of amortization of core and product
technology and other intangible assets, the amortization of deferred
stock-based compensation, the write-off of in-process research and
development related to business combinations and the tax provision
related to the repatriation of foreign earnings under the AJCA.
F - To exclude the tax effect of amortization of core and product
technology and other intangible assets, the write-off of in-process
research and development related to business combinations and the
write-off of deferred debt issuance costs.
Forward-looking Guidance
for the Three Months Ended December 31, 2005
- ----------------------------------------------------------------------
Earnings Per Share
Range - Diluted
---------------------------
U.S. GAAP measure $0.25 to $0.27
Adjustments to exclude the effects of
amortization of intangible assets and
amortization of deferred stock-based
compensation $0.05
---------------------------
Adjusted figures $0.30 to $0.32
===========================
Forward-looking Guidance
for Fiscal Year Ended December 31, 2005
- ----------------------------------------------------------------------
Earnings Per Share
Range - Diluted
---------------------------
U.S. GAAP measure $0.85 to $0.87
Adjustments to exclude the effects of
amortization of intangible assets,
amortization of deferred stock-based
compensation, the write-off of in-
process research and development, and
the tax provision related to the
repatriation of foreign earnings
related to the AJCA $0.25
---------------------------
Adjusted figures $1.10 to $1.12
===========================
CONTACT: Citrix Systems, Inc., Fort Lauderdale
Eric Armstrong, 954-267-2977
eric.armstrong@citrix.com
or
A&R Partners
Eric Jones, 212-905-6154
ejones@arpartners.com
or
Investor Inquiries
Citrix Systems, Inc.
Jeff Lilly, 954-267-2886
jeff.lilly@citrix.com