Synopsis:
Strong end-customer demand, record revenue in Europe, and a record quarter for electronic licensing combined to push revenue up 25% sequentially and adjusted earnings per share up approximately 130% sequentially. Channel inventory levels were in balance with demand.
January 23, 2003 - Citrix Systems, Inc. (Nasdaq: CTXS), a global leader in virtual workplace software and services, today reported results for the fourth quarter and fiscal year ended December 31, 2002. Citrix also announced today the appointment of Tom Bogan, president and chief operating officer for Rational Software Corporation (Nasdaq: RATL), and Gary Morin, executive vice president and chief financial officer for Lexmark International (NYSE: LXK), to Citrix's board of directors. Both begin their duties as board members immediately. (Please see separate news release titled Citrix Taps Industry Veterans for Board Seats; Appoints Executives to Lead Marketing, Legal and Business Planning for additional detail.)
Financial Results
Revenues for the three months ended December 31, 2002 were $148.8 million compared to $158.0 million in the same period of the prior year. Net income was $39.6 million for the fourth quarter of 2002, or $0.23 per share, as compared to $25.6 million, or $0.13 per share, in the comparable period of the prior year. Net income, adjusted to exclude the effect of amortisation of intangible assets primarily related to business combinations, was $40.6 million for the fourth quarter, or $0.23 per share, as compared to $39.4 million, or $0.21 per share, in the comparable period of the prior year.
Annual net revenues for 2002 were $527.4 million, as compared to $591.6 million in the previous year. Annual net income for 2002 was $93.9 million, or $0.52 per share, as compared to net income for 2001 of $105.3 million, or $0.54 per share. Net income, adjusted to exclude the effects of write-offs for in-process research and development and amortisation of intangible assets primarily related to business combinations, was $100.8 million, or $0.56 per share, for 2002, compared to $151.0 million, or $0.78 per share, for 2001.
"Strong end-customer demand for our software, especially in Europe, and a strong increase in reorders through our electronic licensing program, helped us post a solid fourth quarter," said Mark Templeton, president and chief executive officer for Citrix. "December was a stronger month than we anticipated, as higher levels of customer spending, especially in the government sector, and the release of pent-up demand resulted in a quarter that exceeded our overall expectations. "Looking back, 2002 was a difficult year, one marked by pervasive uncertainty, a weak macroeconomic climate and tight IT spending budgets. We took some difficult actions to reduce expenses, including centralising our product development organisations. We altered our partner programs to reinvigorate the channel, and continued to invest in our 'customer touch' programs, such as enterprise relationship managers, to improve the experience our customers have when dealing with us.
"While we expect difficult economic conditions to persist in 2003, we feel these moves have positioned us well to respond when economic and IT spending levels improve.
"Overall, our results for the quarter are particularly gratifying because we believe they illustrate the value our customers and partners see in our suite of software products. With the advent of Web technologies, Web services, more complex applications, a more mobile workforce and increasing pressure on IT departments, strategically and financially, our software is more relevant today than it ever has been."
Financial Highlights
* The company had a record quarter for electronic licensing,
amounting to approximately 47% of end-customer demand.
* Deferred revenue related to products and services grew by
$10 million during the quarter to $104 million, primarily due to increases in the Subscription Advantage Program.
* Adjusted operating margin was 32% for the quarter, excluding
the effect of amortisation of intangible assets primarily related to business combinations.
* Cash flow from operations was approximately $63 million for
the quarter.
* Cash and investments totalled $719 million at the end of the
quarter, an increase of about $47 million from the end of the third quarter of 2002.
* As part of the company's stock repurchase program, the
company repurchased approximately 3.6 million shares of its common stock during the quarter.
* Citrix's EMEA region posted a record quarter with
approximately $65 million in revenue.
* Revenue was up 25% over the third quarter of 2002, and
adjusted earnings per share were up approximately 130% over the third quarter.
Customer Highlights
The company entered into a number of major deals in the fourth quarter. Marquee deals included: AOK Public Health Insurance in Germany; Banco Bilbao Vizcaya Argentaris in Spain; Caisse Nationale Assurance Vieillesse in France; the U.S. Department of Health and Human Services; Deutsche Telekom; and Telenor Business Solutions in Denmark.
In addition, the company entered into five central government deals in Europe including: Government of the Netherlands, Statens OG Kommunernes, Kommentus in Sweden, and agencies out of the Land Baden-Wurttemberg, and the Ministry of Finance State of North Rhine-Westphalia.
Alliance Highlights
During the fourth quarter, Citrix strengthened relationships with IBM and National Semiconductor, and struck new partnerships with BEA, HP, Oracle and VMWare.
* At Citrix iForum(tm) 2002 held in November, Citrix announced
a partnership with IBM and VMware to produce a joint server and client consolidation solution to help remote offices simplify their IT environments and reduce desktop administration tasks by centralising application delivery. The solution encompasses Citrix® MetaFrame XP(tm) application serving and management software and VMware ESX Server virtual machine software, which runs on the IBM eServer(tm) xSeries(tm) 440 four- to 16-way Intel-processor based system.
* Also at iForum, HP announced a global systems integration
and co-operative support agreement with Citrix. Through the agreement, HP plans to provide services for Citrix's enterprise server-based computing solutions and enhance its ability to resell Citrix solutions on a global basis. HP also announced that it had joined the Citrix Global 2000 program, which provides enterprise customers with flexible licensing and pricing terms, improved account management and simple transactions.
* Also in November at Comdex, Citrix and National Semiconductor
announced that they had collaborated on a new conceptual product, the
Geode(tm) Extended Office (GXO), which combines key Web, office and video-conferencing applications in a compact 5 x 7 footprint. The device incorporates both Bluetooth(tm) and 802.11b wireless capabilities, and offers five times the screen resolution of a high-end PDA.
Other key partnership highlights in the fourth quarter include:
* Citrix announced a licensing agreement with BEA Systems.
The two companies will jointly market, demonstrate and distribute a portlet within BEA's Portal Solution Center to connect Citrix NFuse® Classic portal software with BEA WebLogic Portal 7.0(tm).
* Citrix also announced that it had established a licensing agreement
with Oracle Corporation. Under the agreement, enterprise organizations can leverage Citrix NFuse Classic to deliver existing client/server applications located on a Citrix MetaFrame® application server via enterprise information portals (EIPs) created with the Oracle9i Application Server Portal.
Business Outlook
The company believes that continuing uncertainty in IT spending levels persists, making it particularly difficult to forecast product demand and other related matters. Accordingly, Citrix management offers the following guidance for the quarter ending March 31, 2003:
* Revenue is expected to be in the range of
$120 million to $130 million.
* Adjusted earnings per share is expected to
be in the range of $0.11 to $0.13, excluding the effect of amortisation of intangible assets primarily related to business combinations.
The above statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. These statements do not include the potential impact of amortisation of expenses and other exclusions.
Conference Call Information
Citrix will host a conference call today at 4:45 p.m. EST 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 www.citrix.com/investors <http://www.citrix.com/investors>.
The conference call may also be accessed by dialing: (888) 799-0519 or
(706) 634-0155, using passcode: CITRIX. In addition, a replay of the conference call will be available through January 29, 2003, by dialing (800) 642-1687 or (706) 645-9291 (passcode required: 7533218). A replay of the Webcast can be viewed by visiting the Investor Relations section of the Citrix corporate Website at www.citrix.com/investors <http://www.citrix.com/investors>.
About Citrix
Citrix Systems, Inc. is a global leader in virtual workplace software and services that provide access to applications, information, processes and people on any device, over any network, anywhere, anytime. Citrix makes today's digital office completely virtual - instead of having to go to your office, the office follows you. Working with the world's top industry, integration and consulting partners, Citrix delivers enterprise-ready solutions to business challenges including application deployment, remote office connectivity, workforce mobility and business continuity. More than 120,000 companies worldwide use Citrix Solutions for the Virtual Workplace to give users more mobility, give IT organisations more flexibility and reduce the cost of computing.
Citrix offers two families of products that enable virtual access to
information: Application Server software, including MetaFrame XP, MetaFrame for Windows* and MetaFrame for UNIX*; and Access Portal software, including NFuse Elite, NFuse Classic and Enterprise Services for NFuse. The Company markets its products through a well-established indirect channel comprising approximately 6,000 resellers, integrators and consultants. Citrix is traded on the Nasdaq Stock MarketSM under the symbol CTXS, and is part of the Standard and Poor's 500 Index. Citrix is headquartered in Fort Lauderdale, Florida. For more information, please visit the Citrix Web site at <http://www.citrix.com/>.