Citrix Systems, Inc. Net Income dropped on 26.0% while Revenue increased on 7.5%

01/19/2021 • About Citrix Systems, Inc. ($CTXS) • By InTwits

Citrix Systems, Inc. reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:

• Citrix Systems, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.3%. At the same time it's in pair with industry average of 3.7%
• CAPEX is quite volatile: $155m in FY2020, $198m in FY2019, $99m in FY2018, $70m in FY2017, $67m in FY2016
• In the last 5 years the company invested considerably less than D&A: $340m vs. $643m
• The company has highly profitable business model: ROIC is 33.5%

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 7.5%. Revenue growth showed slowdown in FY20Q4 - it was -0.0% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 4.9 pp from 13.1% to 18.0% in FY2020.

Gross Margin showed almost no change in FY2020. SG&A as a % of Revenue showed almost no change in FY2020. During the last 5 years SG&A as a % of Revenue bottomed in FY2017 at 46.3% and was growing since that time.

Net Income margin decreased on 7.1 pp from 22.6% to 15.6% in FY2020.

Investments (CAPEX, working capital and M&A)

Citrix Systems, Inc.'s CAPEX/Revenue was 1.3% in FY2020. Citrix Systems, Inc.'s CAPEX/Revenue decreased slightly on 1.6 pp from 2.9% in FY2017 to 1.3% in FY2020. For the last three years the average CAPEX/Revenue was 1.9%. CAPEX as a % of Revenue stuck to a declining trend at -0.44 pp per annum in FY2016-FY2020.

Return on investment

The company operates at high and attractive ROIC (33.5%) and ROE (106.2%). ROIC increased on 3.7 pp from 29.8% to 33.5% in FY2020. ROE increased on 8.1 pp from 98.2% to 106% in FY2020. ROIC followed a growing trend at 4.8 pp per annum in FY2016-FY2020. ROE grew at 26.5 pp per annum in the last 5 years.

Management team

David James Henshall is a Citrix Systems, Inc.'s CEO. David James Henshall has spent 3 years with the company. Arlen R Shenkman is a the company's CFO. Arlen R Shenkman has spent 1 year at the company.

Financial and operational results

Citrix Systems, Inc. ($CTXS) key annual financial indicators

mln. $	2016	2017	2018	2019	2020	2020/2019
P&L
Revenue	2,736	2,825	2,974	3,011	3,237	7.5%
Gross Profit	2,331	2,385	2,540	2,547	2,738	7.5%
SG&A	1,293	1,309	1,390	1,453	1,576	8.5%
EBITDA	776	779	897	780	820	5.1%
EBIT	560	571	678
Interest expence	45	52	80
Tax	58	528	54
Net Income	536	-21	576	682	504	-26.0%
Stock Based Compensation	137	165	204
Balance Sheet
Cash	836	1,115	619	546	753	38.0%
Accounts Receivable	681	713	688
Inventory	13	14	22
Accounts Payable	73	67	76
Short Term Debt	1,348	0	1,155	47
Long Term Debt	79	2,127	750	952	1,929	102.6%
Cash flow
Capex	85	81	69	63	41	-34.7%
Dividends			47
Acquisitions	13	60	249
Ratios
Revenue growth	-16.5%	3.2%	5.3%	1.2%	7.5%
EBITDA growth	-0.4%	0.5%	15.1%	-13.1%	5.1%
Gross Margin	85.2%	84.4%	85.4%	84.6%	84.6%	0.0%
EBITDA Margin	28.4%	27.6%	30.2%	25.9%	25.3%	-0.6%
EBIT Margin	20.5%	20.2%	22.8%
SG&A, % of revenue	47.3%	46.3%	46.7%	48.3%	48.7%	0.4%
SBC, % of revenue	5.0%	5.8%	6.8%
Net Income Margin	19.6%	-0.7%	19.4%	22.6%	15.6%	-7.1%
CAPEX, % of revenue	3.1%	2.9%	2.3%	2.1%	1.3%	-0.8%
ROIC	16.1%	16.7%	25.2%	29.8%	33.5%	3.7%
ROE	23.4%	-1.2%	74.6%	98.2%	106.2%	8.1%
Net Debt/EBITDA	0.8x	1.3x	1.4x	0.6x	1.4x	0.9x
Interest expence / Average debt	3.1%	2.9%	4.0%
People
Insider ownership	0.9%	0.9%	0.9%
Employees	9,600	7,500	8,200
Revenue/Employee, th. $	285	377	363

Citrix Systems, Inc. ($CTXS) key quoterly financial indicators

mln. $	FY20Q1	FY20Q2	FY20Q3	FY20Q4		YoY change
P&L
Revenue	861	799	767	810		19.7%	6.7%	4.7%	-0.0%
EBITDA	268	197	181	187		35.6%	6.0%	0.2%	-8.3%
Net Income	181	113	98	112		64.2%	20.8%	-63.7%	-45.9%
Balance Sheet
Cash	525	555	569	753		-67.5%	10.0%	15.2%	38.0%
Long Term Debt	1,932	1,930	1,927	1,929		104.1%	104.8%	100.0%	102.6%
Ratios
Gross Margin	86.6%	84.7%	83.4%	83.5%		1.5%	-0.5%	0.7%	-1.8%
EBITDA Margin	31.1%	24.6%	23.6%	23.1%		3.6%	-0.2%	-1.0%	-2.1%
Net Income Margin	21.0%	14.1%	12.8%	13.8%		5.7%	1.6%	-24.2%	-11.7%

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	FY2016	FY2017	FY2018	FY2019	FY2020
VirnetX Holding Corp ($VHC)	-	-0.2%	-95.9%	34.9%	355,942.4%
AudioEye, Inc. ($AEYE)	-	175.5%	106.6%	90.2%	90.2%
Cloudera, Inc. ($CLDR)	-	57.2%	42.6%	28.9%	65.5%
Integrated Ventures Inc ($INTV)	-	-	-	-8.9%	62.7%
Smartsheet Inc. ($SMAR)	-	64.3%	66.1%	59.7%	52.4%
Median (92 companies)	12.0%	15.7%	15.2%	19.5%	14.7%
Citrix Systems, Inc. ($CTXS)	-	3.2%	5.3%	1.2%	7.5%

Top companies by Gross margin, %

Top 5	FY2016	FY2017	FY2018	FY2019	FY2020
Aware, Inc. ($AWRE)	90.3%	94.6%	92.3%	89.7%	92.8%
Alteryx, Inc. ($AYX)	81.3%	83.4%	91.0%	90.6%	91.1%
Autodesk, Inc. ($ADSK)	85.2%	83.2%	85.2%	88.9%	90.1%
Smith Micro Software, Inc. ($SMSI)	73.2%	77.9%	83.5%	90.9%	89.9%
Cadence Design Systems, Inc. ($CDNS)	85.9%	87.8%	87.9%	88.6%	88.6%
Median (89 companies)	63.8%	64.4%	65.3%	67.9%	69.4%
Citrix Systems, Inc. ($CTXS)	85.2%	84.4%	85.4%	84.6%	84.6%

Top companies by EBITDA margin, %

Top 5	FY2016	FY2017	FY2018	FY2019	FY2020
VirnetX Holding Corp ($VHC)	-1,837.2%	-1,118.0%	-40,379.4%	-23,127.1%	52.2%
j2 Global, Inc. ($JCOM)	41.7%	36.5%	35.7%	38.6%	40.5%
Intelligent Systems Corporation ($INS)	-5.4%	-12.8%	33.6%	43.6%	40.4%
Adobe Inc. ($ADBE)	31.2%	34.2%	35.3%	35.8%	39.7%
SS&C Technologies Holdings, Inc. ($SSNC)	34.9%	37.9%	27.7%	38.2%	38.3%
Median (89 companies)	-5.3%	-4.2%	-3.3%	2.7%	6.8%
Citrix Systems, Inc. ($CTXS)	28.4%	27.6%	30.2%	25.9%	25.3%

Top companies by CAPEX/Revenue, %

Top 5	FY2016	FY2017	FY2018	FY2019	FY2020
MicroStrategy Incorporated ($MSTR)	0.5%	0.8%	1.4%	2.1%	234.8%
Integrated Ventures Inc ($INTV)	-	-	199.9%	15.2%	27.2%
Intelligent Systems Corporation ($INS)	3.8%	9.7%	4.3%	4.9%	19.2%
LivePerson, Inc. ($LPSN)	5.5%	7.9%	8.8%	16.3%	11.4%
PROS Holdings, Inc. ($PRO)	4.7%	0.8%	0.7%	2.1%	11.3%
Median (87 companies)	2.9%	2.3%	2.4%	3.0%	2.6%
Citrix Systems, Inc. ($CTXS)	3.1%	2.9%	2.3%	2.1%	1.3%

Top companies by ROIC, %

Top 5	FY2016	FY2017	FY2018	FY2019	FY2020
VirnetX Holding Corp ($VHC)	-210.9%	-256.8%	-416.3%	-247.2%	137.3%
Manhattan Associates, Inc. ($MANH)	99.3%	102.5%	80.9%	71.7%	53.4%
Sonic Foundry, Inc. ($SOFO)	-18.1%	-50.6%	-786.4%	-	31.3%
Paycom Software, Inc. ($PAYC)	75.4%	51.1%	47.5%	47.5%	28.7%
Adobe Inc. ($ADBE)	15.9%	21.3%	23.3%	22.9%	26.9%
Median (92 companies)	-9.8%	-11.8%	-10.6%	-4.5%	-2.2%
Citrix Systems, Inc. ($CTXS)	16.1%	16.7%	25.2%	29.8%	33.5%

Top companies by Net Debt / EBITDA

Top 5	FY2016	FY2017	FY2018	FY2019	FY2020
Dropbox, Inc. ($DBX)	-	-3.8x	-	2.4x	1,341.0x
Avaya Holdings Corp. ($AVYA)	-	-	7.4x	-	77.9x
Alteryx, Inc. ($AYX)	-	-	2.5x	6.1x	32.2x
Five9, Inc. ($FIVN)	-6.7x	-8.6x	7.3x	5.3x	17.6x
Synchronoss Technologies, Inc. ($SNCR)	-	-	-	-	11.6x
Median (53 companies)	-0.9x	-0.9x	-0.7x	0.4x	0.0x
Citrix Systems, Inc. ($CTXS)	0.8x	1.3x	1.4x	0.6x	1.4x

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