Citrix Reports Second Quarter Earnings Results

Year-over-year Quarterly Revenue Growth of 17%

GAAP Diluted Earnings Per Share of $0.18

Non-GAAP Diluted Earnings Per Share of $0.38
FORT LAUDERDALE, Fla.--(Business Wire)--
Citrix Systems, Inc. (NASDAQ:CTXS), the global leader in
Application Delivery Infrastructure, today reported financial results
for the second quarter of fiscal 2008 ended June 30, 2008.

Financial Results

In the second quarter of fiscal 2008, Citrix achieved revenue of
$392 million, compared to $334 million in the second quarter of fiscal
2007, representing 17 percent revenue growth.

GAAP Results

Net income for the second quarter of fiscal 2008 was $35 million,
or $0.18 per diluted share, compared to $53 million, or $0.29 per
diluted share, for the second quarter of 2007.

Non-GAAP Results

Non-GAAP net income in the second quarter of 2008 increased two
percent to $71 million, or $0.38 per diluted share, compared to $70
million, or $0.38 per diluted share, in the comparable period last
year. Non-GAAP net income excludes the effects of amortization of
intangible assets primarily related to business combinations,
stock-based compensation expenses and the tax effects related to those
items.

"I'm delighted with another solid quarter," said Mark Templeton,
president and chief executive officer of Citrix. "We saw double digit
revenue growth in each of our geographic segments, and we achieved our
non-GAAP EPS targets. Overall a great quarter in a tough
macro-economic environment."

Q2 Financial Highlights

In reviewing the second quarter results of 2008, compared to the
second quarter of 2007:

-- Product license revenue increased 12 percent;

-- Revenue from license updates grew 16 percent;

-- Online services increased 23 percent;

-- Technical services revenue, which is comprised of consulting,
education and technical support, grew 34 percent;

-- Revenue grew in the EMEA region by 22 percent; the America's
region by 13 percent, and the Pacific region by 11 percent;

-- Deferred revenue totaled $476 million, compared to $395
million on June 30, 2007;

-- Operating margin was seven percent for the quarter; non-GAAP
operating margin was 21 percent for the quarter, excluding the
effects of amortization of intangible assets primarily related
to business combinations and stock-based compensation expense;

-- Cash flow from operations was $75 million, bringing the total
12 month trailing cash flow from operations to $379 million;
and,

-- Repurchased shares for the quarter were 2.1 million shares at
an average price paid per share of $33.50.

Financial Outlook for Third Quarter 2008

Citrix management expects to achieve the following results during
its third fiscal quarter of 2008 ending September 30, 2008:

-- Net revenue is expected to be in the range of $385 million to
$400 million, compared to $350 million in the third quarter of
2007;

-- GAAP diluted earnings per share is expected to be in the range
of $0.12 to $0.16. Non-GAAP diluted earnings per share is
expected to be in the range of $0.36 to $0.39, excluding $0.09
related to the effects of amortization of intangible assets
primarily related to business combinations and $0.14 to $0.15
related to the effects of stock-based compensation expenses.

The above statements are based on current expectations. These
statements are forward-looking, and actual results may differ
materially.

Financial Outlook for Fiscal Year 2008

Citrix management expects to achieve the following results for the
fiscal year 2008:

-- The company expects net revenue to be in the range of $1.59
billion to $1.62 billion.

-- The company expects GAAP diluted earnings per share to be in
the range of $0.57 to $0.64. Non-GAAP diluted earnings per
share to be in the range of $1.54 to $1.60, excluding $0.34
related to the effects of the amortization of intangible
assets and $0.62 to $0.63 related to the effects of
stock-based compensation expenses.

The above statements are based on current expectations. These
statements are forward-looking, and actual results may differ
materially.

Company, Product and Alliance Highlights

During the second quarter of 2008, Citrix announced:

-- Citrix(R) XenDesktop(TM) 2.0 began shipping;

-- Citrix(R) NetScaler(R) MPX, which reduces datacenter costs by
delivering twice as many Web applications;

-- A new Citrix Access Gateway(TM) release adding intelligent
policy-based controls for Citrix XenDesktop;

-- Citrix(R) XenServer(TM) is now factory integrated on Dell
PowerEdge servers;

-- A new Citrix XenServer pricing model allowing unlimited
virtual machines per server at a single low price; and,

-- Microsoft honored the company with its 2008 Microsoft Partner
of the Year Global ISV - Infrastructure and 2008 Microsoft
Partner for Citizenship awards.

Conference Call Information

Citrix will host a conference call today at 4:45 p.m. ET 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
http://www.citrix.com/investors.

The conference call may also be accessed by dialing: 888-799-0519
or 706-634-0155, using passcode: CITRIX. A replay of the webcast can
be viewed by visiting the Investor Relations section of the Citrix
corporate website at http://www.citrix.com/investors for approximately
30 days. In addition, an audio replay of the conference call will be
available for approximately fifteen days by dialing 800-642-1687 or
706-645-9291 (passcode required: 55194356).

About Citrix

Citrix Systems, Inc. (NASDAQ:CTXS) is the global leader and the
most trusted name in Application Delivery Infrastructure. More than
215,000 organizations worldwide rely on Citrix to deliver any
application to users anywhere with the best performance, highest
security and lowest cost. Citrix customers include 100 percent of the
Fortune 100 companies and 99 percent of the Fortune Global 500, as
well as hundreds of thousands of small businesses and prosumers.
Citrix has approximately 8,000 partners in more than 100 countries.
Annual revenue in 2007 was $1.4 billion.

For Citrix Investors

This release contains forward-looking statements which are 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, including, without limitation, statements by
management, the statements contained in the Financial Outlook for
Third Fiscal Quarter 2008, Financial Outlook for Fiscal Year 2008 and
statements regarding management's plans, objectives and strategies,
constitute forward-looking statements. Such forward-looking statements
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, the
uncertainty in the IT spending environment and the risk of a downturn
in economic conditions generally; the success and growth of the
company's product lines, including risks associated with successfully
introducing new products into Citrix's distribution channels; risks in
effectively controlling operating expenses; the company's product
concentration and its ability to develop and commercialize new
products and services; disruptions due to changes in key personnel;
the success of investments in its product groups, foreign operations
and vertical and geographic markets; Citrix's and Microsoft's ability
to develop and market application delivery and virtualization
products; the introduction of new products by competitors or the entry
of new competitors into the markets for Citrix's products; failure to
further develop and successfully market the technology and products of
acquired companies, including the possible failure to achieve or
maintain anticipated revenues and profits from acquisitions; failure
to execute Citrix's sales and marketing plans; failure to successfully
partner with key distributors, resellers, OEM's and strategic
partners; the company's ability to maintain and expand its business in
small sized and large enterprise accounts; the size, timing and
recognition of revenue from significant orders; the effect of new
accounting pronouncements on revenue and expense recognition; the
company's reliance on and the success of the company's independent
distributors and resellers for the marketing and distribution of the
company's products and the success of the company's marketing and
licensing programs; litigation; increased competition; changes in the
company's pricing policies or those of its competitors; charges in the
event of the impairment of assets acquired through business
combinations and licenses; impairment of the value of the company's
investment in auction rate securities; the management of anticipated
future growth and the recruitment and retention of qualified
employees, including those of acquired companies; competition and
other risks associated with the markets for our Web-based access,
collaboration and customer assistance services and for our Web
application delivery appliances; risks of political and social
turmoil; and other risks detailed in the company'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.

Use of Non-GAAP Financial Measures

In our earnings release, conference call, slide presentation or
webcast, we may use or discuss non-GAAP financial measures as defined
by SEC Regulation G. The GAAP financial measure most directly
comparable to each non-GAAP financial measure used or discussed and a
reconciliation of the differences between each non-GAAP financial
measure and the comparable GAAP financial measure are included in this
press release after the condensed consolidated financial statement and
can be found on the Investor Relations page of the Citrix corporate
Web site at http://www.citrix.com/investors.

Citrix(R), NetScaler(R), Citrix XenDesktop(TM), Citrix Access
Gateway(TM) and Citrix XenServer(TM) are trademarks 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.

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CITRIX SYSTEMS, INC.

Condensed Consolidated Statements of Income
(In thousands, except per share data - unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
-------------------------------------
Revenues:
Product licenses $ 153,458 $136,587 $300,418 $258,654
License updates 137,279 118,163 271,213 230,971
Online services 63,687 51,810 125,672 99,021
Technical services 37,306 27,804 71,461 53,806
-------------------------------------
Total net revenues 391,730 334,364 768,764 642,452

Cost of revenues:
Cost of product license
revenues 12,781 9,846 23,922 18,141
Cost of services revenues 20,100 15,362 38,797 30,253
Amortization of core and
product technology 12,976 6,656 23,569 12,884
-------------------------------------
Total cost of revenues 45,857 31,864 86,288 61,278

Gross margin 345,873 302,500 682,476 581,174

Operating expenses:
Research and development 73,965 47,767 145,495 94,311
Sales, marketing and services 169,244 140,376 335,689 271,025
General and administrative 68,067 55,972 130,704 113,875
Amortization of other
intangible assets 5,707 3,651 11,407 7,798
In-process research and
development - - - 1,200
-------------------------------------
Total operating expenses 316,983 247,766 623,295 488,209
-------------------------------------

Income from operations 28,890 54,734 59,181 92,965

Other income, net 6,322 12,508 14,793 23,846
-------------------------------------
Income before income taxes 35,212 67,242 73,974 116,811

Income taxes 563 13,852 4,947 25,788
-------------------------------------
Net income $ 34,649 $ 53,390 $ 69,027 $ 91,023
=====================================

Earnings per common share -
diluted $ 0.18 $ 0.29 $ 0.37 $ 0.49
=====================================
Weighted average shares
outstanding - diluted 188,021 185,434 189,004 184,893
=====================================
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CITRIX SYSTEMS, INC.

Condensed Consolidated Balance Sheets
(In thousands - unaudited)

June 30, 2008 December 31, 2007
-------------------------------
ASSETS:
Cash and cash equivalents $ 147,381 $ 223,749
Restricted cash equivalents and
investments 62,830 -
Short-term investments 241,454 356,085
Accounts receivable, net 225,277 225,861
Other current assets, net 148,936 128,650
-------------------------------
Total current assets 825,878 934,345

Restricted cash equivalents and
investments 984 63,735
Long-term investments 380,371 218,676
Property and equipment, net 166,933 134,907
Goodwill and other intangible assets,
net 1,171,679 1,164,831
Other long-term assets, net 24,001 18,199
-------------------------------
Total assets $ 2,569,846 $ 2,534,693
===============================

LIABILITIES AND
STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 233,731 $ 246,969
Current portion of deferred revenues 436,231 407,305
-------------------------------
Total current liabilities 669,962 654,274

Long-term portion of deferred revenues 39,308 35,381
Other liabilities 1,405 6,713

Stockholders' equity 1,859,171 1,838,325
-------------------------------
Total liabilities and
stockholders' equity $ 2,569,846 $ 2,534,693
===============================
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CITRIX SYSTEMS, INC.

Condensed Consolidated Statement of Cash Flows
(In thousands - unaudited)

Six Months Ended
June 30, 2008
----------------
OPERATING ACTIVITIES
Net Income $ 69,027
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization and depreciation 59,278
Stock-based compensation expense 60,988
Provision for accounts receivable allowances 1,939
Other non-cash items 5,751
----------------
Total adjustments to reconcile net income
to net cash provided by operating
activities 127,956
Changes in operating assets and liabilities, net
of the effects of acquisitions:
Accounts receivable 1,431
Prepaid expenses and other current assets (18,033)
Other assets 563
Deferred tax assets, net (6,402)
Accounts payable and accrued expenses (20,935)
Deferred revenues 32,853
Other liabilities (5,149)
----------------
Total changes in operating assets and liabilities,
net of the effects of acquisitions (15,672)
----------------
Net cash provided by operating activities 181,311

INVESTING ACTIVITIES
Purchases of available-for-sale investments, net of
proceeds (50,310)
Purchases of property and equipment (62,287)
Cash paid for acquisitions, net of cash acquired (2,139)
Cash paid for licensing agreements (31,531)
----------------
Net cash used in investing activities (146,267)

FINANCING ACTIVITIES
Proceeds from issuance of common stock 32,011
Excess tax benefit from exercise of stock options 4,800
Structured stock repurchases, net (150,143)
Payments on debt (407)
----------------
Net cash used in financing activities (113,739)
Effect of exchange rate changes on cash and cash
equivalents 2,327
----------------
Change in cash and cash equivalents (76,368)
Cash and cash equivalents at beginning of period 223,749
----------------
Cash and cash equivalents at end of period $ 147,381
================

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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 earnings release and related conference call, slide presentation
or webcast to the most directly comparable GAAP financial measure.
These measures differ from GAAP in that they exclude amortization
primarily related to business combinations and stock-based
compensation expenses. 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
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 gross margins,
operating expenses and net income and comparing the company's
financial performance to that of its peer companies and competitors.

Management excludes the expenses 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 and certain stock-based compensation expenses
that are primarily related to business combinations, 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 costs 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 and its related tax impact
are generally fixed at the time of grant, are 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.

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. Furthermore, the company in the future may exclude
amortization and in-process research and development primarily related
to new business combinations from financial measures that it releases,
and the company expects to continue to incur stock-based compensation
expenses.

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CITRIX SYSTEMS, INC.
Non-GAAP Financial Measures Reconciliation
(In thousands, except per share 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
June 30, 2008
-------------------
GAAP operating margin 7.4%
Add: stock-based compensation 8.6%
Add: amortization of core and product
technology 3.3%
Add: amortization of other intangible assets 1.4%
-------------------
Non-GAAP operating margin 20.7%
===================

Three Months Ended
June 30,
2008 2007
-------------------
GAAP net income $ 34,649 $ 53,390
Add: stock-based compensation 33,582 11,786
Add: amortization of core and product
technology 12,976 6,656
Add: amortization of other intangible assets 5,707 3,651
Less: tax effects related to above items (15,997) (5,704)
-------------------
Non-GAAP net income $ 70,917 $ 69,779
===================

GAAP earnings per share - diluted $ 0.18 $ 0.29
Add: stock-based compensation 0.18 0.06
Add: amortization of core and product
technology 0.07 0.04
Add: amortization of other intangible assets 0.03 0.02
Less: tax effects related to above items (0.08) (0.03)
-------------------
Non-GAAP earnings per share - diluted $ 0.38 $ 0.38
===================
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CITRIX SYSTEMS, INC.
Forward-Looking Guidance

For the Three Months For the Twelve Months
Ended September 30, Ended December 31,
2008 2008
------------------------------------------
GAAP earnings per share -
diluted $0.12 to $0.16 $0.57 to $0.64
Add: Adjustments to
exclude the effects of
amortization of
intangible assets 0.09 0.34
Add: Adjustments to
exclude the effects of
expenses related to
stock-based compensation 0.14 to 0.15 0.62 to 0.63
------------------------------------------
Non-GAAP earnings per share
- diluted $0.36 to $0.39 $1.54 to $1.60
==========================================
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Citrix Systems, Inc., Fort Lauderdale
For Media Inquiries:
Eric Armstrong, 954-267-2977
eric.armstrong@citrix.com
or
A&R Edelman
Eric Jones, 212-819-4862
eric.jones@ar-edelman.com
or
For investor inquiries, contact:
Citrix Systems, Inc.
Eduardo Fleites, 954-229-5758
eduardo.fleites@citrix.com

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