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Citrix Reports Fourth Quarter and Fiscal Year 2021 Financial Results

Citrix Systems, Inc. (NASDAQ:CTXS) today reported financial results for the fourth quarter and fiscal year ended December 31, 2021.

Financial Results

For the fourth quarter of fiscal year 2021, Citrix achieved revenue of $851 million, compared to $810 million in the fourth quarter of fiscal year 2020, representing 5 percent revenue growth. For fiscal year 2021, Citrix reported annual revenue of $3.22 billion, compared to $3.24 billion for fiscal year 2020, a 1 percent decrease.

GAAP Results

Net income for the fourth quarter of fiscal year 2021 was $103 million, or $0.81 per diluted share, compared to $112 million, or $0.89 per diluted share, for the fourth quarter of fiscal year 2020. Net income for the fourth quarter of fiscal year 2021 includes restructuring charges of $103 million for severance and facility closing costs and a $120 million income tax benefit related to the finalization of transitional tax relief in accordance with the enactment of federal tax reform in Switzerland.

Annual net income for fiscal year 2021 was $307 million, or $2.44 per diluted share, compared to $504 million, or $4.00 per diluted share for fiscal year 2020. Net income for fiscal years 2021 and 2020 includes restructuring charges of $103 million and $12 million, respectively, for severance and facility closing costs. Net income for fiscal 2021 also includes an income tax benefit of $120M for transitional tax relief in Switzerland.

Non-GAAP Results (1)

Non-GAAP net income for the fourth quarter of fiscal year 2021 was $186 million, or $1.47 per diluted share, compared to $183 million, or $1.46 per diluted share for the fourth quarter of fiscal year 2020. Non-GAAP net income for the fourth quarter of fiscal years 2021 and 2020 excludes the effects of stock-based compensation expense, amortization and impairment of acquired intangible assets, restructuring charges and the tax effects related to these items. Non-GAAP net income for the fourth quarter of fiscal year 2021 also excludes the impacts from transitional tax relief in Switzerland.

Annual non-GAAP net income for fiscal year 2021 was $673 million, or $5.33 per diluted share, compared to $769 million, or $6.10 per diluted share for fiscal year 2020. Annual non-GAAP net income for fiscal years 2021 and 2020 excludes the effects of stock-based compensation expense, amortization and impairment of acquired intangible assets, restructuring charges, and the tax effects related to these items. Annual non-GAAP net income for fiscal year 2021 also excludes acquisition-related costs and the impacts from transitional tax relief in Switzerland.

(1) A reconciliation of GAAP to non-GAAP measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading "Reconciliation of Non-GAAP Financial Measures to Comparable U.S. GAAP Measures."

Cancellation of Earnings Conference Call and Suspension of Guidance

Citrix also announced today that is has entered into a definitive agreement to be acquired by an affiliate of Elliott Investment Management L.P. and Vista Equity Partners. A copy of the press release can be found by visiting the Investor Relations section of the Citrix corporate website at http://www.citrix.com/investors. In light of the announced transaction with Elliott and Vista, Citrix will not host an earnings conference call. In addition, Citrix will not provide guidance for the first quarter 2022 or the full year 2022 as a result of the pending transaction.

About Citrix

Citrix (NASDAQ:CTXS) builds the secure, unified digital workspace technology that helps organizations unlock human potential and deliver a consistent workspace experience wherever work needs to get done. With Citrix, users get a seamless work experience and IT has a unified platform to secure, manage, and monitor diverse technologies in complex cloud environments. Learn more at www.citrix.com.

For Citrix Investors

This release contains forward-looking statements made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and 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, may constitute forward-looking statements. Such forward-looking statements, including statements about Citrix entering into a definitive agreement to be acquired, 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, risks associated with the closing of the announced acquisition, the success and growth of the company's product lines, competition, demand and pricing dynamics, and our ability to transition to new business models, including a subscription model; the impact of the global economic and political environment on our business, volatility in global stock markets, foreign exchange rate volatility and uncertainty in IT spending; the risks associated with maintaining the security of our products, services, and networks, including securing customer data; changes in Citrix’s pricing and licensing models, promotional programs and product mix, all of which may impact Citrix's revenue recognition; our ability to expand our customer base and attract more users within our customer base; the introduction of new products by competitors or the entry of new competitors into the markets for Citrix's products and services; the concentration of customers in Citrix’s networking business; the company's ability to innovate and develop new products and services while growing its established virtualization and networking products and services; changes in our revenue mix towards products and services with lower gross margins; seasonal fluctuations in the company's business; failure to execute Citrix's sales and marketing plans; failure to successfully partner with key distributors, resellers, system integrators, service providers and strategic partners and the company's reliance on the success of those partners for the marketing and distribution of the company's products; transitions in key personnel and succession risk; the company's ability to maintain and expand its business in large enterprise accounts and reliance on large service provider customers; the size, timing and recognition of revenue from significant orders; the success of investments in its product groups, foreign operations and vertical and geographic markets; the ability of Citrix to make suitable acquisitions on favorable terms in the future; risks associated with Citrix's acquisitions and divestitures, including failure to further develop and successfully market the technology and products of acquired companies, failure to achieve or maintain anticipated revenues and operating performance contributions from acquisitions, which could dilute earnings, the retention of key employees from acquired companies, difficulties and delays integrating personnel, operations, technologies and products, and disruption to our ongoing business and diversion of management's attention from our ongoing business; the recruitment and retention of qualified employees; risks in effectively controlling operating expenses; ability to effectively manage our capital structure and the impact of related changes on our operating results and financial condition; the effect of new accounting pronouncements on revenue and expense recognition; failure to comply with federal, state and international regulations; litigation and disputes, including challenges to our intellectual property rights or allegations of infringement of the intellectual property rights of others; the ability to maintain and protect our collection of brands; charges in the event of a write-off or impairment of acquired assets, underperforming businesses, investments or licenses; international market readiness, execution and other risks associated with the markets for Citrix's products and services; risks related to servicing our debt; unanticipated changes in tax rates, non-renewal of tax credits or exposure to additional tax liabilities; risks of political uncertainty and social turmoil; and other risks detailed in Citrix'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.

Citrix® is a trademark or registered trademark 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

December 31,

 

Year Ended

December 31,

 

2021

 

 

2020

 

2021

 

 

2020

Revenues:

 

 

 

 

 

 

 

Subscription

$

454,221

 

 

 

$

340,508

 

 

$

1,553,775

 

 

 

$

1,114,798

 

Product and license

42,903

 

 

 

54,428

 

 

171,186

 

 

 

444,437

 

Support and services

353,724

 

 

 

414,720

 

 

1,492,209

 

 

 

1,677,465

 

Total net revenues

850,848

 

 

 

809,656

 

 

3,217,170

 

 

 

3,236,700

 

Cost of net revenues:

 

 

 

 

 

 

 

Cost of subscription, support and services

114,916

 

 

 

106,940

 

 

453,755

 

 

 

389,612

 

Cost of product and license revenues

18,692

 

 

 

18,598

 

 

79,927

 

 

 

76,152

 

Amortization and impairment of product related intangible assets

39,875

 

 

 

7,905

 

 

91,395

 

 

 

32,782

 

Total cost of net revenues

173,483

 

 

 

133,443

 

 

625,077

 

 

 

498,546

 

Gross margin

677,365

 

 

 

676,213

 

 

2,592,093

 

 

 

2,738,154

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

145,452

 

 

 

132,517

 

 

581,600

 

 

 

538,080

 

Sales, marketing and services

304,213

 

 

 

308,098

 

 

1,194,657

 

 

 

1,224,377

 

General and administrative

129,584

 

 

 

99,611

 

 

409,630

 

 

 

352,109

 

Amortization of other intangible assets

19,648

 

 

 

702

 

 

66,263

 

 

 

2,799

 

Restructuring

103,323

 

 

 

-

 

 

103,323

 

 

 

11,981

 

Total operating expenses

702,220

 

 

 

540,928

 

 

2,355,473

 

 

 

2,129,346

 

(Loss) income from operations

(24,855

)

 

 

135,285

 

 

236,620

 

 

 

608,808

 

Interest income

320

 

 

 

423

 

 

1,232

 

 

 

3,108

 

Interest expense

(21,719

 

)

 

(16,361

)

 

(91,793

 

)

 

(64,687

)

Other income (expense), net

3,607

 

 

 

(199

)

 

21,088

 

 

 

7,651

 

(Loss) income before income taxes

(42,647

)

 

 

119,148

 

 

167,147

 

 

 

554,880

 

Income tax (benefit) expense

(145,545

)

 

 

7,057

 

 

(140,352

)

 

 

50,434

 

Net income

$

102,898

 

 

 

$

112,091

 

 

$

307,499

 

 

 

$

504,446

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share - diluted

$

0.81

 

 

 

$

0.89

 

 

$

2.44

 

 

 

$

4.00

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - diluted

126,638

 

 

125,384

 

126,259

 

 

126,152

 

CITRIX SYSTEMS, INC.

Condensed Consolidated Balance Sheets

(In thousands - unaudited)

 

December 31, 2021

December 31, 2020

ASSETS

 

 

Cash and cash equivalents

$

513,993

 

$

752,895

 

Short-term investments, available for sale

13,186

 

124,113

 

Accounts receivable, net

885,311

 

858,009

 

Inventories, net

23,158

 

20,089

 

Prepaid expenses and other current assets

283,337

 

236,000

 

Total current assets

1,718,985

 

1,991,106

 

Long-term investments, available for sale

14,754

 

14,365

 

Property and equipment, net

219,031

 

208,811

 

Operating lease right-of-use assets, net

154,685

 

187,129

 

Goodwill

3,400,792

 

1,798,408

 

Other intangible assets, net

760,293

 

81,491

 

Deferred tax assets, net

417,016

 

386,504

 

Other assets

289,961

 

222,533

 

Total assets

$

6,975,517

 

$

4,890,347

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

Accounts payable

$

165,250

 

$

92,266

 

Accrued expenses and other current liabilities

444,767

 

507,185

 

Income taxes payable

35,996

 

42,760

 

Current portion of deferred revenues

1,708,058

 

1,510,216

 

Total current liabilities

2,354,071

 

2,152,427

 

 

 

 

Long-term portion of deferred revenues

329,535

 

392,360

 

Long-term debt

3,326,327

 

1,732,622

 

Long-term income taxes payable

204,782

 

232,086

 

Operating lease liabilities

166,014

 

195,767

 

Other liabilities

47,531

 

72,942

 

Stockholders' equity:

 

 

Common stock

325

 

322

 

Additional paid-in capital

7,041,576

 

6,608,018

 

Retained earnings

5,100,624

 

4,984,333

 

Accumulated other comprehensive loss

(2,896

)

(3,649

)

Less - common stock in treasury, at cost

(11,592,372

)

(11,476,881

)

Total stockholders' equity

547,257

 

112,143

 

Total liabilities and stockholders' equity

$

6,975,517

 

$

4,890,347

 

 

CITRIX SYSTEMS, INC.

Condensed Consolidated Statement of Cash Flows

(In thousands - unaudited)

 

Year Ended

 

December 31, 2021

 

 

OPERATING ACTIVITIES

 

Net income

$

307,499

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

Depreciation, amortization and other

356,986

 

Stock-based compensation expense

346,751

 

Deferred income tax benefit

(160,849

)

Effects of other rate changes on monetary assets and liabilities denominated in foreign currencies

11,709

 

Impairment of long-lived assets

36,861

 

Other non-cash items

(10,931)

 

Total adjustments to reconcile net income to net cash provided by operating activities

580,527

 

Changes in operating assets and liabilities, net of the effects of acquisitions:

 

Accounts receivable

(24,182)

 

Inventories

(4,028

)

Prepaid expenses and other current assets

(42,932

)

Other assets

(105,548

)

Income taxes, net

(68,198

)

Accounts payable

64,219

 

Accrued expenses and other current liabilities

(127,814)

 

Deferred revenues

101,773

 

Other liabilities

(9,665)

 

Total changes in operating assets and liabilities, net of the effects of acquisitions

(216,375)

 

Net cash provided by operating activities

671,651

 

INVESTING ACTIVITIES

 

Purchases of available-for-sale investments

(23,719

)

Proceeds from maturities of available-for-sale investments

134,273

 

Purchases of property and equipment

(83,432

)

Cash paid for acquisitions, net of cash acquired

(2,022,304

)

Cash paid for licensing agreements, patents and technology

(12,129

)

Other

7,794

 

Net cash used in investing activities

(1,999,517)

 

FINANCING ACTIVITIES

 

Proceeds from issuance of common stock

283

 

Proceeds from term loan credit agreement, net of issuance costs

997,947

 

Repayment on term loan credit agreement

(150,000)

 

Proceeds from senior notes, net of issuance costs

741,393

 

Repayment of acquired debt

(190,000

)

Cash paid for tax withholding on vested stock awards

(115,491

)

Cash paid for dividends

(183,788

)

Other

(5,438

)

Net provided by financing activities

1,094,906

 

Effect of exchange rate changes on cash and cash equivalents

(5,942

)

Change in cash and cash equivalents

(238,902

)

Cash and cash equivalents at beginning of period

752,895

 

Cash and cash equivalents at end of period

$

513,993

 

Reconciliation of Non-GAAP Financial Measures to Comparable U.S. GAAP Measures

(Unaudited)

Pursuant to the requirements of Regulation G, the Company has provided a reconciliation of each non-GAAP financial measure used in this letter to the most directly comparable GAAP financial measure. These measures differ from GAAP in that they exclude amortization primarily related to acquired intangible assets, stock-based compensation expenses, acquisition-related costs and charges associated with the Company’s restructuring programs, and the related tax effect of those items, and charges and benefits related to tax reform. The income tax effect on non-GAAP items is calculated based upon the tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non-GAAP adjustment. The Company’s basis for these adjustments is described below.

Management uses these non-GAAP measures for internal reporting and forecasting purposes, when publicly providing its business outlook, to evaluate the Company’s performance and to evaluate and compensate the Company’s executives. The Company has provided these non-GAAP financial measures in addition to GAAP financial results because it believes that these non-GAAP financial measures provide useful information to certain investors and financial analysts for comparison across accounting periods not influenced by certain non-cash items or cash charges that are the result of discrete activities that are not used by management when evaluating the Company’s historical and prospective financial performance. In addition, the Company has historically provided this or similar information and understands that some investors and financial analysts find this information helpful in analyzing the Company’s operating margins, operating expenses and net income and comparing the Company’s financial performance to that of its peer companies and competitors. Management typically excludes the amounts described above when evaluating the Company’s operating performance and believes that the resulting non-GAAP measures are useful to investors and financial analysts in assessing the Company’s operating performance due to the following factors:

  • The Company does not acquire businesses on a predictable cycle. The Company, therefore, believes that the presentation of non-GAAP measures that adjust for the impact of amortization of intangible assets and stock-based compensation expenses and the related tax effects that are primarily related to acquisitions, provide investors and financial analysts with a consistent basis for comparison across accounting periods and, therefore, are useful to investors and financial analysts in helping them to better understand the Company’s operating results and underlying operational trends.



    Amortization and impairment of intangible assets and the related tax effects are fixed at the time of an acquisition, are then amortized over a period of several years after the acquisition and generally cannot be changed or influenced by management after the acquisition.



    Although stock-based compensation is an important aspect of the compensation of the Company’s employees and executives, stock-based compensation expense is generally fixed at the time of grant, then amortized over a period of several years after the grant of the stock-based instrument, and generally cannot be changed or influenced by management after the grant.



    In connection with our acquisitions, we may incur significant expenses which we would not have otherwise incurred as part of our business operations. These acquisition-related costs include professional fees, certain financing costs, and concurrent restructuring activities, including employee severance and other exit costs, as well as changes to the fair value of contingent consideration related to the acquired company. We exclude these costs from our non-GAAP results as they have no direct correlation to the operation of our business, and because we believe that the non-GAAP financial measures excluding these costs provide meaningful supplemental information regarding the spending trends of our business. In addition, these costs vary, depending on the size and complexity of the acquisition, and are not indicative of costs of future acquisitions.



    The Company has engaged in various restructuring activities over the past several years that have resulted in costs associated with reductions in headcount, consolidation of leased facilities and related costs. Each restructuring activity has been a discrete event based on a unique set of business objectives or circumstances, and each has differed from the others in terms of its operational implementation, business impact and scope. While the Company’s operations previously benefited from the employees and facilities covered by the various restructuring charges, these employees and facilities have benefited different parts of the Company’s business in different ways, and the amount of these charges has varied significantly from period to period. The Company, therefore, believes that the exclusion of these charges will better help investors and financial analysts understand the Company’s operating results and underlying operational trends.



    Tax charges or benefits resulting from the enactment of Swiss tax reform. These charges or benefits are not anticipated to be ongoing; and, thus, are outside of the normal operations of the Company’s business. Therefore, the Company believes that the exclusion of these charges or benefits will better help investors and financial analysts understand the Company's operating results and underlying operational trends.

These non-GAAP financial measures are not prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and may differ from the non-GAAP information used by other companies. There are significant limitations associated with the use of non-GAAP financial measures. The additional non-GAAP financial information presented here should be considered in conjunction with, and not as a substitute for or superior to, the financial information presented in accordance with GAAP (such as net income and earnings per share) and should not be considered measures of the Company’s liquidity.

CITRIX SYSTEMS, INC.

GAAP to Non-GAAP Reconciliation

(In thousands, except per share data and operating margin data - unaudited)

The following tables show the non-GAAP financial measures used in this press release reconciled to the most directly comparable GAAP financial measures.

 

Three Months Ended

December 31, 2021

Twelve Months Ended

December 31, 2021

GAAP operating margin

(2.9)%

7.4%

Add: stock-based compensation

11.4

10.8

Add: amortization and impairment of product related and other intangible assets

6.7

4.6

Add: acquisition-related costs

-

0.5

Add: restructuring charges

12.2

3.2

Non-GAAP operating margin

27.4%

26.5%

 

 

 

Three Months Ended

December 31, 2021

Twelve Months Ended

December 31, 2021

 

GAAP net income

$102,898

$307,499

 

Add: stock-based compensation

97,150

346,751

 

Add: amortization and impairment of product related and other intangible assets

57,327

149,411

 

Add: acquisition-related costs

-

23,264

 

Add: restructuring charges

103,323

103,323

 

Less: tax effects related to above items

(54,016)

(137,146)

 

Less: benefit related to Swiss tax reform

(120,359)

(120,359)

 

Non-GAAP net income

$186,323

$672,743

 

 

 

Three Months Ended

December 31, 2021

  Twelve Months Ended

December 31, 201

GAAP earnings per share - diluted

 

$0.81

 

$2.44

Add: stock-based compensation

 

0.77

 

2.75

Add: amortization and impairment of product related and other intangible assets

 

0.46

 

1.18

Add: acquisition-related costs

 

-

 

0.18

Add: restructuring charges

 

0.82

 

0.82

Less: tax effects related to above items

 

(0.44)

 

(1.09)

Less: benefit related to Swiss tax reform

 

(0.95)

 

(0.95)

Non-GAAP earnings per share - diluted

 

$1.47

 

$5.33

 

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