Citrix Systems, Inc. Net Income surged on 2,878% and EBITDA Margin increased on 2.6 pp from 27.6% to 30.2%
01/23/2019 • About Citrix Systems, Inc. (
$CTXS) • By InTwits
Citrix Systems, Inc. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- Citrix Systems, Inc. motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for 2014-2018 was 5.4% while average EBITDA Margin was 26.0% for the sames years. In 2018 SBC/Revenue was even higher: 6.8%
- Citrix Systems, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.7%. At the same time it's a lot of higher than industry average of 7.6%.
- CAPEX is quite volatile: $69m in 2018, $81m in 2017, $85m in 2016, $161m in 2015, $165m in 2014
- In the last 5 years the company invested considerably less than D&A: $562m vs. $1,425m. In 2018 this situation was still the same: CAPEX was 69 while D&A was 219
- The company has highly profitable business model: ROIC is 25.2%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.4x while industry average is -2.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased on 5.3%. Revenue growth showed slowdown in 18Q4 - it was 3.1% YoY. During the last 5 years Revenue growth bottomed in 2016 at -16.5% and was accelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 7.4 pp from 23.1% to 30.6% in 2018. EBITDA Margin followed a growing trend at 2.2 pp per annum in the last 5 years.
Gross Margin increased slightly on 0.98 pp from 84.4% to 85.4% in 2018. Gross Margin grew at 1.3 pp per annum in the last 5 years. SG&A as a % of Revenue showed almost no change in 2018. Stock Based Compensation (SBC) as a % of Revenue increased slightly on 1.0 pp from 5.8% to 6.8% in 2018. During 2014-2018 SBC as a % of Revenue bottomed in 2015 at 4.3% and was growing since that time.
Net Income margin jumped on 20.1 pp from -0.73% to 19.4% in 2018. The efficient tax rate was 8.5% in 2018.
Investments (CAPEX, working capital and M&A)
In 2018 the company had CAPEX/Revenue of 2.3%. The company showed decline in CAPEX/Revenue of 2.6 pp from 4.9% in 2015 to 2.3% in 2018. It's average CAPEX/Revenue for the last three years was 2.8%. CAPEX as a % of Revenue stuck to a declining trend at -0.79 pp per annum in the last 5 years.
Accounts receivable as a % of Revenue decreased on 2.1 pp from 25.2% to 23.1% in 2018. Inventories as a % of Revenue showed almost no change at 0.74% in 2018. Accounts payable as a % of Revenue increased on 2.2 pp from 15.2% to 17.4% in 2018.
Citrix Systems, Inc. has spent
$249m on M&A in 2018 which accounts for 8.4% of revenue.
Return on investment
The company operates at high and attractive ROIC (25.2%) and ROE (74.6%). ROIC increased on 8.5 pp from 16.7% to 25.2% in 2018. ROE surged on 75.7 pp from -1.2% to 74.6% in 2018. ROIC stuck to a growing trend at 3.8 pp per annum in the last 5 years.
Leverage (Debt)
Debt level is 1.4x Net Debt / EBITDA and 2.1x Debt / EBITDA. Net Debt / EBITDA surged on 0.1x from 1.3x to 1.4x in 2018. Debt dropped on 10.4% while cash dropped on 44.5%. During 2014-2018 Net Debt/EBITDA bottomed in 2016 at 0.8x and was growing since that time.
Citrix Systems, Inc. has good short term financial stability: Interest coverage ratio (ICR) is 8.5x. Citrix Systems, Inc. has short term refinancing risk: cash is only 53.6% of short term debt.
Average interest expence charged on company's debt was 4.2% in 2018.
Valuation and dividends
The company's trades at EV/EBITDA 16.6x and P/E 23.6x.
The company paid 8.2% of Net Income as dividends in 2018.
Management team
The company's CEO is David James Henshall. David James Henshall is a founder and has 2 years tenure with the company. CEO total compensation was
$19,258,102 in 2018 which included
$1,000,000 salary.
0.93% of the company is owned by insiders. Insider ownership didn't change in 2018.
At the end of financial year the company had 8,200 employees. The number of employees increased on 9.3%. Average revenue per employee in 2018 was
$362,671 and it decreased on 3.7%.
Financial and operational results
FY ended 12/31/2018
Citrix Systems, Inc. ($CTXS) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 3,143 | 3,276 | 2,736 | 2,825 | 2,974 | 5.3% |
| Gross Profit | 2,523 | 2,661 | 2,331 | 2,385 | 2,540 | 6.5% |
| SG&A | 1,600 | 1,538 | 1,293 | 1,309 | 1,390 | 6.2% |
| EBITDA | 656 | 779 | 776 | 779 | 897 | 15.1% |
| EBIT | 302 | 350 | 560 | 571 | 678 | 18.7% |
| Interest expence | | 44 | 45 | 52 | 80 | 55.3% |
| Tax | 24 | -7 | 58 | 528 | 54 | -89.8% |
| Net Income | 252 | 319 | 536 | -21 | 576 | |
| Stock Based Compensation | 163 | 141 | 137 | 165 | 204 | 23.3% |
Balance Sheet
|
|---|
| Cash | 260 | 369 | 836 | 1,115 | 619 | -44.5% |
| Accounts Receivable | 674 | 669 | 681 | 713 | 688 | -3.4% |
| Inventory | 13 | 11 | 13 | 14 | 22 | 57.5% |
| Accounts Payable | 80 | 95 | 73 | 67 | 76 | 12.9% |
| Short Term Debt | 0 | 0 | 1,348 | 0 | 1,155 | |
| Long Term Debt | 1,293 | 1,325 | 79 | 2,127 | 750 | -64.7% |
Cash flow
|
|---|
| Capex | 165 | 161 | 85 | 81 | 69 | -14.3% |
| Dividends | | | | | 47 | |
| Acquisitions | 101 | 257 | 13 | 60 | 249 | 311.8% |
Ratios
|
|---|
| Revenue growth | 7.7% | 4.2% | -16.5% | 3.2% | 5.3% | |
| EBITDA growth | 1.2% | 18.8% | -0.4% | 0.5% | 15.1% | |
|
|---|
| Gross Margin | 80.3% | 81.2% | 85.2% | 84.4% | 85.4% | 1.0% |
| EBITDA Margin | 20.9% | 23.8% | 28.4% | 27.6% | 30.2% | 2.6% |
| EBIT Margin | 9.6% | 10.7% | 20.5% | 20.2% | 22.8% | 2.6% |
| SG&A, % of revenue | 50.9% | 47.0% | 47.3% | 46.3% | 46.7% | 0.4% |
| SBC, % of revenue | 5.2% | 4.3% | 5.0% | 5.8% | 6.8% | 1.0% |
| Net Income Margin | 8.0% | 9.7% | 19.6% | -0.7% | 19.4% | 20.1% |
| CAPEX, % of revenue | 5.3% | 4.9% | 3.1% | 2.9% | 2.3% | -0.5% |
|
|---|
| ROIC | 9.3% | 10.9% | 16.1% | 16.7% | 25.2% | 8.5% |
| ROE | 9.2% | 15.4% | 23.4% | -1.2% | 74.6% | 75.7% |
| Net Debt/EBITDA | 1.6x | 1.2x | 0.8x | 1.3x | 1.4x | 0.1x |
| Interest expence / Average debt | | 3.4% | 3.3% | 2.9% | 4.2% | 1.3% |
People
|
|---|
| Insider ownership | 0.9% | 0.9% | 0.9% | 0.9% | 0.9% | 0.0% |
| Employees | 10,081 | 9,500 | 9,600 | 7,500 | 8,200 | 9.3% |
| Revenue/Employee, th. $ | 312 | 345 | 285 | 377 | 363 | -3.7% |
Citrix Systems, Inc. ($CTXS) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 697 | 742 | 732 | 802 | | 5.2% | 7.1% | 6.0% | 3.1% |
| EBITDA | 217 | 200 | 220 | 260 | | 26.5% | 17.3% | -23.2% | 4.8% |
| Net Income | 144 | 107 | 159 | 166 | | 422.3% | -1.8% | 25.4% | |
Balance Sheet
|
|---|
| Cash | 955 | 1,022 | 1,205 | 619 | | 5.1% | 20.9% | 28.1% | -44.5% |
| Short Term Debt | 0 | 1,406 | 1,416 | 1,155 | | -100.0% | 4,587.2% | 3,439.9% | |
| Long Term Debt | 2,137 | 769 | 761 | 750 | | 57.4% | -43.7% | -44.7% | -64.7% |
Ratios
|
|---|
| Gross Margin | 84.5% | 85.4% | 85.8% | 85.9% | | -0.1% | 1.1% | 1.1% | 1.6% |
| EBITDA Margin | 31.2% | 26.9% | 30.0% | 32.4% | | 5.2% | 2.3% | -11.4% | 0.5% |
| Net Income Margin | 20.7% | 14.4% | 21.7% | 20.7% | | 16.5% | -1.3% | 3.3% | 57.2% |
Peers in Application Software
Below we provide Citrix Systems, Inc. benchmarking against other companies in Application Software industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| nFusz Inc ($FUSZ) | | | | | 433.3% |
| CloudCommerce Inc ($CLWD) | | -38.1% | 247.6% | 40.9% | 301.1% |
| Seven Stars Cloud Group, Inc. ($SSC) | | 134.7% | 663.8% | 310.3% | 161.7% |
| Aurora Mobile Limited ($JG) | | | | 304.9% | 150.8% |
| Intelligent Systems Corporation ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (151 companies) | -43.3% | 14.0% | 14.3% | 15.7% | 15.2% |
|---|
| Citrix Systems, Inc. ($CTXS) | | 4.2% | -16.5% | 3.2% | 5.3% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Skkynet Cloud Systems Inc ($SKKY) | 99.7% | 97.4% | 98.0% | 97.6% | 96.5% |
| hopTo Inc ($HPTO) | 91.8% | 87.8% | 95.9% | 98.2% | 95.4% |
| Aware, Inc. ($AWRE) | 75.4% | 87.2% | 90.3% | 94.6% | 92.3% |
| Alteryx, Inc. ($AYX) | 77.5% | 80.5% | 81.3% | 83.4% | 91.0% |
| Aspen Technology, Inc. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (150 companies) | 62.8% | 61.7% | 63.8% | 64.4% | 65.7% |
|---|
| Citrix Systems, Inc. ($CTXS) | 80.3% | 81.2% | 85.2% | 84.4% | 85.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Aspen Technology, Inc. ($AZPN) | 34.5% | 42.2% | 46.0% | 45.2% | 43.3% |
| ANSYS, Inc. ($ANSS) | 45.9% | 45.8% | 45.1% | 41.9% | 41.4% |
| Paycom Software, Inc. ($PAYC) | 15.1% | 19.5% | 35.1% | 34.4% | 35.9% |
| j2 Global, Inc. ($JCOM) | 41.6% | 40.6% | 41.7% | 36.5% | 35.7% |
| Adobe Inc. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (152 companies) | -10.3% | -10.7% | -5.3% | -4.2% | -3.3% |
|---|
| Citrix Systems, Inc. ($CTXS) | 20.9% | 23.8% | 28.4% | 27.6% | 30.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| TimefireVR Inc ($TFVR) | 0.0% | 350.5% | 4.3% | | 1,021.9% |
| MGT Capital Investments Inc ($MGTI) | 0.0% | 36.5% | 221.4% | 129.8% | 344.5% |
| Integrated Ventures Inc ($INTV) | | | | | 199.9% |
| ShotSpotter, Inc. ($SSTI) | | 18.3% | 28.9% | 27.1% | 24.3% |
| Ellie Mae, Inc. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (153 companies) | 2.8% | 2.7% | 2.9% | 2.3% | 2.4% |
|---|
| Citrix Systems, Inc. ($CTXS) | 5.3% | 4.9% | 3.1% | 2.9% | 2.3% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InsPro Technologies Corp ($ITCC) | -558.9% | | | | 127.4% |
| Manhattan Associates, Inc. ($MANH) | 64.8% | 78.7% | 99.3% | 102.5% | 80.9% |
| Intuit Inc. ($INTU) | 34.2% | 23.7% | 52.1% | 72.6% | 66.8% |
| Aspen Technology, Inc. ($AZPN) | 133.4% | | | | 58.1% |
| Paycom Software, Inc. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (179 companies) | -14.4% | -13.1% | -9.8% | -11.8% | -10.4% |
|---|
| Citrix Systems, Inc. ($CTXS) | 9.3% | 10.9% | 16.1% | 16.7% | 25.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Upland Software, Inc. ($UPLD) | | | 16.4x | 115.6x | 16.7x |
| Nuance Communications, Inc. ($NUAN) | 7.9x | 5.7x | 5.3x | 7.1x | 15.2x |
| Asure Software Inc ($ASUR) | 3.4x | 4.5x | 3.6x | 9.5x | 14.5x |
| SS&C Technologies Holdings, Inc. ($SSNC) | 1.7x | 7.3x | 4.6x | 3.1x | 8.5x |
| Avaya Holdings Corp. ($AVYA) | | | | | 7.4x |
| |
|---|
| Median (69 companies) | -1.4x | -1.0x | -0.9x | -0.9x | -0.7x |
|---|
| Citrix Systems, Inc. ($CTXS) | 1.6x | 1.2x | 0.8x | 1.3x | 1.4x |
