Citrix Systems (CTXS)

Q4 2011 Earnings Call

January 25, 2012 4:45 pm ET


Eduardo Fleites - Director of Investor Relations

Mark B. Templeton - Chief Executive Officer, President and Director

David James Henshall - Chief Financial Officer, Principal Accounting Officer and Executive Vice President of Operations


Adam H. Holt - Morgan Stanley, Research Division

Unknown Analyst

Steven M. Ashley - Robert W. Baird & Co. Incorporated, Research Division

Kash G. Rangan - BofA Merrill Lynch, Research Division

Heather Bellini - Goldman Sachs Group Inc., Research Division

Michael Turits - Raymond James & Associates, Inc., Research Division

Rob D. Owens - Pacific Crest Securities, Inc., Research Division

Philip Winslow - Crédit Suisse AG, Research Division

Bhavan Suri - William Blair & Company L.L.C., Research Division

Walter H. Pritchard - Citigroup Inc, Research Division



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Good afternoon. My name is Shomaria and I will be your conference operator today. At this time, I would like to welcome everyone to the Citrix Systems Fourth Quarter and 2011 Financial Results Conference Call. [Operator Instructions]

I would now like to introduce Mr. Eduardo Fleites, Vice President of Investor Relations. Mr. Fleites, you may begin your conference.

Eduardo Fleites

Thank you, Shomaria. Good afternoon, everyone, and thank you for joining us for today's call, where we will be discussing Citrix's Fourth Quarter and Fiscal Year 2011 Financial Results.

Participating in the call will be Mark Templeton, President and Chief Executive Officer; and David Henshall, Executive Vice President Operations and Chief Financial Officer.

This call is being webcast with a slide presentation on the Citrix Systems Investor Relations website, and the slide presentation associated with the webcast will be posted immediately following the call.

Before we begin the review of our financial results, I want to state that we have posted product classification and historical revenue trends related to our product groupings to the Investor Relations page of our website.

I'd like to remind you that today's conversation will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Securities laws. These statements are based on current expectations and assumptions that are subject to risks and uncertainties, such as the impact of the global economic climate, uncertainty in the IT spending environment, risks associated with our products, acquisitions and competition. Obviously, these risks could cause actual results to differ from those anticipated.

Additional information concerning these and other factors is highlighted in today's press release and in the company's filings with the SEC, including the risk factor disclosure contained in our most recent annual report on Form 10-K, which is available from the SEC or on the company's Investor Relations website.

Furthermore, we will discuss various non-GAAP financial measures as defined by the SEC's Reg G. A reconciliation of the differences between GAAP and non-GAAP financial measures discussed on today's call can be found at the end of today's press release and on the Investor Relations page of our website.

Now I would like to turn it over to David Henshall, our Chief Financial Officer. David?

David James Henshall

Thanks, Eduardo, and welcome to everyone joining us here today. As you can see from the release, we finished off the year with great momentum across all of our businesses, delivering $619 million in total revenue, $126 million increase to deferred revenue, $170 million in cash flow from ops and adjusted EPS of $0.78 a share.

For the full year 2011, we had a record performance across all of our major metrics: total revenue was up 18% to $2.2 billion; product license revenue increased more than 20%; GAAP EPS was up 28% to $1.87; while adjusted EPS was $2.48 a share.

So we're continuing to drive readership across desktop virtualization. We're delivering innovative new technologies in cloud networking. We're expanding the breadth of our SaaS products to facilitate change in work styles. These are all trends that can be clearly seen on our results.

So drilling into the numbers for Q4. Revenue from new license sales was $229 million, up 17% from last year, clearly led by the demand for the desktop solutions. License update revenue increased 9% driven by Subscription Advantage renewals and our desktop Trade-up Program. Technical services increased 34%, again due to strong demand for consulting, and our Software-as-a-Service business grew 21%.

From a geographic perspective, the Americas region is executing really well, delivering a revenue growth of 16% from last year, total revenue of $278 million. The results in the geo were fairly balanced through our Q4 with strength coming from both desktop solutions and from NetScaler. And the Americas teams also drove 31 individual transactions over $1 million each, really reflecting the more strategic engagement that we've been building with customers throughout the year.

International, the business environment was mixed in Q4, really similar to what we're seeing all year. In EMEA, revenue was up 12% to $171 million. We continue to see solid engagement with big customers at a strategic level, including a number of multiyear commitments and 14 deals greater than $1 million each. However, the demand profile was uneven across the region. And some areas showing caution initiating capital area projects.

And finally, Japan and Pacific remain our fastest growing markets, combining for 37% total revenue growth and more than 40% growth in new product license. Strong teams in these 2 regions are continuing to post terrific numbers each quarter.

So overall, a very solid quarter to cap off a great year for Citrix. So now, let's look at our Q4 results within our 3 primary businesses.

First, our desktop solutions business, which grew 14% over last year to $369 million, including license growth of 18%. For the full year, license revenue was also up 18% and at the top end of the range that we set for 2011.

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