思杰系統 (CTXS) 2014 Q3 法說會逐字稿

Good afternoon. My name is Dan, and I will be your conference facilitator today. At this time I'd like to welcome everyone to the Citrix Systems third-quarter earnings conference call.

(Operator Instructions)

Thank you. I would now like to introduce Mr. Eduardo Fleites, Vice President of Investor Relations. Mr. Fleites, please go ahead.

Thank you, Dan.

Good afternoon, everyone, and thank you for joining us for today's third-quarter 2014 earnings presentation. Participating on the call will be Mark Templeton, President and Chief Executive Officer, and David Henshall, Chief Operating Officer and Chief Financial Officer. This call is being webcast on Citrix Systems Investor Relations website. The webcast will be posted immediately following the call.

Before we begin, I want to state that we have posted product specifications and historical revenue trends related to our product grouping to our Investor Relations website. I'd like to remind you that today's conversation will contain forward-looking statements made under the Safe Harbor provision of the US securities law. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. 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. Copies are available from the SEC or on the Company's Investor Relations website.

Furthermore, we will discuss various non-GAAP financial measures as defined by 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'd like to turn it over to David Henshall, our Chief Operating Officer and Chief Financial Officer. David?

Thank you, Eduardo and welcome to everyone joining us today.

In Q3 we outlined our vision for the software-defined workplace, recognizing that customers are looking for a better way to mobilize their businesses, while creating a more secure, flexible, and easy-to-use infrastructure. At the same time, we're taking direct action to drive operating efficiencies and return capital to shareholders. This includes reallocating resources, delayering, centralization, and other initiatives that will continue into Q4 in 2015.

So let's review the specifics for the quarter. As you can see from the release, total revenue increased 6.5% year on year to $759 million, while product license revenue was down 4%. We generated cash flow from operations of over $164 million, while adjusted EPS increased 8% to $0.75 a share.

Overall, many of our emerging businesses like mobility, data sharing, and CSPs delivered strong growth, each increasing more than 50% year on year. NetScaler license growth was steady in the low-double digits, while desktop and app virtualization continue to experience the general weakness that we've seen all year and we'll talk about more shortly.

In Q3 we closed 40 transactions greater than $1 million each, up slightly from last year. About half of these deals came from the mobile and desktop business, including a few from the new workspace suite and one for XenMobile as a primary solution. Geographically, the EMEA region is delivering the highest relative growth despite really a mixed demand environment, increasing total revenue 8% and driving 12 multi-million dollar transactions.

Some of this growth is attributable to investments we made over a year ago in network and go-to-market coverage, leading this specific segment up more than 30% year on year. In the Americas, total revenue was up 4%, including 25 large transactions, while the Pacific Japan region also grew 4%.

So next let's look at the Q3 results within our three primary businesses. First, mobile and desktop grew 3% from last year to $393 million. As we've discussed previously, we are driving the broader conversation with customers about transforming their delivery of IT services to enable mobile work styles securely and efficiently.

The XenApp products have been the primary catalyst to these conversations, and we continue to set the bar in the enterprise mobility market with MDM, mobile apps, virtual apps and data, all in a unified, secure solution. 75% of our XenMobile customers have opted for this complete EMM edition, showing the value of our integrated offering versus standalone MDM technologies. This really resonates with our existing customers as we are starting to see large app and desktop customers upgrading to the workspace suite as a vehicle to adopt the mobile solution.

In the aggregate we're pleased with the revenue and pipeline momentum, and while still a relatively small component of overall revenue, the total XenMobile business grew more than 90% year on year in Q3. XenMobile 9, which was released last quarter, really raises the bar for complete end-user experience in this category and should continue to improve competitive differentiation and pipeline closure rates. Future releases will be focused on simplification, really allowing customers and partners to accelerate adoption and time to value.

We're also working to address the softness in desktop and app virtualization where new licenses decline year on year, impacting revenue growth for the whole company. But to understand this business, let me address the three general segments.

First, for the largest, most strategic transformation projects, we continue to execute well, which you can see in the $1 million plus opportunities. While demand in this segment has been roughly flat, we continue to win virtually every competitive opportunity due to the unmatched breadth and performance of XenDesktop with FlexCast.

Second, for customers looking to consume simply as a service, XenApp is the foundational technology being leveraged by Citrix service providers to deliver apps and desktops to their customers. This subscription-based business now services over 500,000 users and again grew more than 50% year on year, now representing about 7% of app and desktop license mix.

And finally, the broad project-specific segment is where we've really experienced most of the bookings decline. Demand in this area has been impacted by customers focusing on deploying multiple different types of applications, not just Windows apps. And additionally, our own internal challenges related to the XenApp product line where we've impacted market awareness and the pace at which customers are migrating to newer platforms.

To address both of these we're innovating rapidly, shipping version 7.6 of both XenApp and XenDesktop in late September, our second major release of the year. These products included new enhancements to the user experience for audio, video, and graphics. We added a mobile SDK, helping customers to re-architect apps for mobile operating systems, and we included specific improvements to directly target cost and complexity in areas like storage.

The goal here is to continue to expand the use cases for these technologies, to broaden the market opportunity while helping our existing customers upgrade and expand their current environments. So we're delivering a complete mobility solution, allowing customers of all sizes to bridge between the worlds of Windows and mobile, on premise or service based. And to do it all with the people-centric experience that only Citrix can provide.

Next, in delivery networking, total revenue increased 6% in the quarter to $155 million. The NetScaler products were again the major driver of this business, showing strong growth within the enterprise customers. This is offset by a decline in volume from the large dot coms in Q3. As we discussed in the past, this part of the business is highly concentrated and therefore fairly volatile on a quarter-to-quarter basis.

For more context on the overall delivery networking, let me touch on a few metrics from Q3. First, product integration initiatives led to over 525 virtualization orders that included networking as part of a solution. We transacted with over 2,200 different customers in the period, compared with about 1,900 last year as we continue to expand the base of both new and cross-sell.

And from a mix perspective, the SDX platform represented 24% of NetScaler license sales, while virtual appliances were 13% of the mix, growing 36% year on year. So we're driving innovation in the data center with our unique technologies across both physical and software-defined networking platforms, powering some of the world's largest clouds and giving enterprises the capabilities to combine best-in-class app networking services on a single consolidated footprint.

And finally, revenue from our SaaS delivered mobile apps grew 12% to $165 million. Collaboration remains the largest part of this business, contributing over 60% of the mix and growing 13% in Q3. Our ShareFile product line had another solid quarter, growing North of 50% year on year, surpassing 50,000 customers and over 10 million unique users. Growth here is coming across document-centric verticals, enterprise customers, and tight integration.

Strategically, this is an example of how we're leveraging these individual applications across our other solutions to expand both reach and differentiation within the category. For example, XenMobile contains an integrated data fabric powered by ShareFile which increases the value and experience of the total solution while giving customers the option to leverage either on-prem or cloud storage platforms, depending on their business and security needs.

Turning to operations, adjusted gross margin in the quarter was 85%, down about 75 basis points from a year ago, but up sequentially based on mix and ongoing cost optimizations. While margins will continue to reflect the mix of revenue, we continue to expect that this trend will level off as we move into next year.

Adjusted op margins in the quarter was 21%, slightly ahead of expectations due to the actions to rebalance resources directly against our most strategic imperatives, refinements to the structure, and other targeted cost actions. And cash flow, as I mentioned earlier, was $164 million in the quarter and about $885 million for the trailing 12 months. This is approximately $5 per share.

On the balance sheet, cash and investments totaled $1.8 billion at the end of the quarter, up primarily due to cash flow from ops. Deferred revenue increased to over $1.4 billion in Q3, growing $133 million from last year, but down sequentially from Q2, reflecting the period weakness in virtualization and the related maintenance bookings.

And finally, as we've discussed earlier this year, we're working to optimize our cap structure and programmatically return capital to shareholders. In Q3 we repurchased approximately 1.5 million shares, leaving about $300 million remaining under the current buyback authorization.

Turning to our current outlook and expectations for Q4 and 2015, I'd like to first provide some context around our guidance. We will be investing in the high-growth businesses, future strategic categories like workspace services cloud, and the tactical items necessary to reignite license growth. But doing so with an overall focus on continuing to optimize our business model and margin profile.

We expect to see the strongest forward growth coming from NetScaler, XenMobile, CSPs, and mobile apps. However, given recent results, we're going to remain very cautious on the expectations for desktop and app virtualization until we can see better traction within this business.

Therefore, we are reducing our current full-year expectations for total revenue growth while reiterating our estimates for EPS. So for FY14, our current expectations are now for total revenue growth in the range of $3.13 billion to $3.14 billion, and adjusted EPS of between $3.22 and $3.25 per share.

With respect to next year, we are currently in the middle of our planning cycle for 2015. Given our recent bookings volatility, we're going to wait until our next call to discuss the specific revenue outlook for 2015. However, we will continue to optimize our business and margin expectations. And we'll be targeting an increase in adjusted operating margin of 100 basis points for next year.

So now I'd like to turn it over to Mark to give you additional details on the quarter's performance and discuss our ongoing businesses. Mark?

Thanks, David and good afternoon, everyone.

I'm pleased with our overall operational and strategic performance in Q3. While our results were clearly mixed, we executed well on important product releases, channel programs, and partnership initiatives. At the same time, our operational focus helped us deliver on profitability priorities.

As David indicated, the pivot of our traditional desktop business, a pause in dot com buildout, and a tighter selling environment in a number of markets including China, Russia, and Japan were all headwinds to our top line. In Q3, we accelerated our focus on leading the market and the industry conversation for mobile workspaces.

Next, I'd like to highlight our execution and progress across business priorities I outlined in July for delivering customer value, competitive differentiation, and profitable growth. Let's start with our workspace services business that provides secure access to any Windows, web, and mobile app across any device.

In June, we introduced the Citrix Workspace Suite, our solution that brings together apps, desktops, data, and services under one licensing structure. It's designed for midmarket, large, and global enterprises. After the first full quarter of availability, we closed several multi-million dollar deals in healthcare and financial services verticals. Though still early in the launch, we expect the Workspace Suite to drive an uptick in strategic account penetration, increase recurring revenue per customer, and further distance ourselves from competitors in the market.

Windows app delivery is an essential part of delivering workspace as a service. Late in Q3 we released version 7.6 of XenApp and XenDesktop with user experience, security, and performance enhancements that enable even the most compute- and graphics-intensive environments.

Customers and partners are thrilled with HDX performance over mobile networks, with native support for Chromebooks, simple, no client access from any HTML5 browser, and support for faster USB peripherals. Importantly, we also delivered migration tools that make it easier for customers to move XenApp and XenDesktop to Windows Server 2012. A simpler migration to a simpler platform to manage while delivering the best Windows apps as a service experience. We've seen a significant increase in trial downloads as partners and customers begin making migration, buying, and rollout plans.

Now in its first quarter of availability, XenMobile 9 is fueling solid growth and adoption, especially in the most demanding customer segments where security and experience are paramount. XenMobile 9 is a milestone release that simplifies user experience, strengthens security, and expands the Worx apps family. It also includes the concierge feature, an online support service for mobile users built on Citrix GoToAssist.

This focus on the total experience is setting the competitive pace in the space. We're beating and displacing MDM-centric offerings with superior user experience, end-to-end data security, beautifully integrated mobility apps, and leveraging our technology across the portfolio.

We have a very aggressive roadmap for our workspace services business, particularly designed to enable simplicity, speed, and scale-out for medium and large enterprises. Secondly, to deliver the industry's most integrated solution for mobile workspace services. And third, to accelerate growth for Citrix service providers.

So now moving to delivery networking, where we are continuing to expand in go-to-market coverage and partnerships, through technical integrations, OEM products, and end-market partnering with Cisco. We are also building out go-to-market capacity with new networking centric channels. The product line roadmap is focused in several areas, including tighter NetScaler configuration and security integrations with our workspace services products including XenMobile, XenApp, and XenDesktop.

Secondly, enhancements that are pretty exciting I'd say for CloudBridge that autoconfigure, support video caching, and enable multi-site, multi-cloud deployments of XenMobile, XenApp, and XenDesktop over WAN links. And significant enhancements that increase the opportunity for NetScaler in carrier networks. So excellent innovation and go-to-market progress for our delivery network product line.

Finally, I'd like to talk about our SaaS-delivered mobile apps for secure communications, document sharing, and workflow. In Q3, our ShareFile product line had another solid quarter of growth coming from three areas: document-centric verticals like financial, medical, and legal; secondly, enterprise customer adoptions; and third, tight integration with XenMobile and our Worx apps.

In the quarter, we closed two multi-million dollar deals, we saw good traction in EMEA, and solid performance in our SMB segments. And with the recent acquisition of RightSignature, we're expanding our document sharing offerings to include professional electronic document signing, saving time and money by going paperless wherever legally-binding documents are regularly exchanged. This will add to the stickiness and recurring revenue of ShareFile, it will open new avenues for customer acquisition, and it will further build out our mobile productivity suite.

Our GoToMeeting business has been focused on innovation like the new virtual whiteboard feature, HD audio, and even faster ad hoc meetings. In Q3 we also introduced the new freemium version of GoToMeeting and additional integrations with ShareFile and our XenMobile Worx apps. All this is directed at enabling faster customer acquisition, better retention rates, and competitive differentiation.

Looking ahead, we'll continue to expand our mobile app portfolio to gain further leverage of our SMB direct go-to-market model. Secondly, to increase recurrent revenue and retention in core verticals. And third, to continue to differentiate XenMobile with additional mobile apps. This will further leverage our audio, video, document, and screen-sharing technologies across product families.

Looking forward, significant market and customer trends are fueling our business. BYO everything and consumerization 2.0. An intense focus on user experience and data security across many customer segments. Expansion of infrastructure and services clouds, giving customers more choices than ever for apps and infrastructure. Broad initiatives we see driving employee engagement to drive retention rates, faster onboarding, and human capital leverage. And a greener and more collaborative workplace as workplaces get reinvented for higher occupancy rates and better productivity for the born-digital generation.

As we look forward, we see a rapidly-evolving world where a software-defined workplace is the way to a mobility-transformed the business. Citrix is enabling customers with the workspace apps and delivery infrastructure they need for a new era workforce, workplace, and workflows. Our products deliver compelling business and human outcomes that put user experience, security, and flexibility first.

I'm confident in this direction for Citrix. We'll continue to streamline product offerings, consolidate infrastructure, and optimize for increased profitability, while shifting investments to drive revenue growth, customer value, and shareholder returns.

And now I'd like to open it up for questions.

(Operator Instructions)

Rick Sherlund, Nomura.

I wondered if you could touch on the opportunity for more than 100 bps of operating margins expansion next year, in terms of any possible restructuring? Would you say there's a chance to drive significantly more margin expansion out of next year?

And also if you could just touch on the environment out there. It seems like there's an awful lot of companies that are coming in light in the quarter. It seems like just about every company. Is there something you're seeing that's affecting big deals or that might kind of explain why we're seeing one company after another seeming to have a bigger challenge this quarter than we've seen recently?

Sure, Rick. Let me take the second half of that question first. I'd say the environment was certainly mixed. The way I would characterize it in most places was simply a lack of urgency to complete large capital transactions. The only place that I would have specifics to talk about would be around the markets that Mark talked about in his script. China, Russia, and Japan. Probably really the three.

Central Europe was strong. US federal was strong. US individual regions were mixed and probably had individual characteristics. So I think the only thing I'd say is just the overall lack of urgency is probably the best way to phrase it.

In terms of the overall margin structure, looking at next year, the team is looking at 100 basis points as more of a planning objective. That's how we're thinking about it at this point in time. We're still working through the 2015 plan, and upside to that will largely be driven by revenue upside; we're clearly not giving revenue guidance right now, we're working through a lot of moving parts across the portfolio right now, and we want to get that settled down before we give a specific goal.

But think of the 100 basis points as a baseline. And a pattern that we expect to be delivering for multiple years into the future.

Great. Thank you.

Phil Winslow, Credit Suisse.

Just got a question back on the desktop and mobile side. You guys have been pretty upfront about some of the technical issues you all had with XenMobile and then the XenApp and XenDesktop 7 and 7.5 releases, but as you mentioned you had the XenMobile 9 release in June and then the 7.6 with the XenApp and XenDesktop in the month of September.

How should we think about when those newer product releases actually start to turn the ship here positive again? What are the milestones you're looking for? Is it something with the channel, customers, pipeline, how should I just think about this and when it starts to show up in the numbers again? Thanks.

Phil, I'd say that there are really two different businesses. And so there's different ways to think about it. For an emerging business like XenMobile where most of the customers we're working with are new customers, rapid release cycles don't have quite the same impact. This just drives our ability to accelerate pipeline closure or closure rates as we look at it.

So from a pipeline closure rate just to give you one metric, that improved on a sequential basis. And a lot of that is attributable to XenMobile 9. With our larger, big strategic customers, they've had very specific security features or unique elements that they want to see included into the solution, and so we build those in and that allows them to just broaden the deployment. So that would be the way I'd think about XenMobile.

The other thing that I mentioned just briefly in my script, and I've talked about it in previous quarters is just really simplifying the overall architecture and experience of the solution to allow customers to get through the POC, onboarding, and expansion cycles faster. That allows us to have much greater go-to-market leverage and reach. And that's where the next couple of releases are really focused as well.

So we're on a really rapid cycle innovation-wise. I think we are really happy with where we are from a differentiation point of view, and the overall business grew 90% last quarter. So we're doing a lot of things in the right direction. Clearly a lot of work to do.

The question about the app and desktop business, we are really focused especially on the XenApp side where we're working out of a little bit of Citrix-specific issues that have been caused over the last year and half, two years or so. And so this is our second major release of the year, 7.6. Very much focused on expanding use cases as we describe it. Where the products are going to be able to really leverage that long tail of Windows, places where security is paramount, places where we can drive simplification for mobile app delivery, et cetera. That is critical for new customers. And then as we bring in more migration capabilities, that just allows our existing customer base to move to that new platform and take advantage of those features.

So short answer, much faster impact on mobile. Multi-quarter impact on a big product line like app and desktop.

Got it. Thanks, guys.

Gregg Moskowitz, Cowen and Company.

I wanted to ask about NetScaler because I believe Q3 a year ago also did see a very big fairly big drop-off in volumes from the large dot coms, so it was a bit surprising to hear of another decline here versus an easier compare. And I do realize this business is lumpy, but really just wanted to get a sense of your outlook, specifically of large dot coms using NetScaler going forward. Thank you.

Greg, it's David. I'd say the overall outlook is still very positive, it's just that the concentration of that business makes it very volatile quarter to quarter.

To give you a little bit more visibility into just NetScaler standalone, the business that is selling into what we call enterprise accounts, so think of that as attached to a virtualization or mobile sale or just a core ADC type opportunity. That business grew 20% year on year in Q3. That is offset by a single-digit decline in what we call the dot coms. And so that's kind of the next click down.

And then within the broader networking business there are a few other pieces. Our sales into telcos for example for video optimization was down year on year, offsetting some of the NetScaler growth. So hope that helps.

It does. Thanks, David.

Raimo Lenschow, Barclays.

Can I just follow on from Rick's question about like everyone missing Q3? The lack of urgency is something that we heard last year already. Is there maybe a structural shift going on from what you see in the business that we probably need to think about a greater weighting on Q4, and a maybe slightly less heavy weighting on the September quarter?

Just wondering because we have the same like messy earnings season last year already, and in Q4 everything got kind of came together and now it looks like the same thing is happening out here again. Just trying to kind of get your perspective here. Thank you.

I'd say Raimo, it's possible. Over the 20 years that I've been here, Q3 has always been a challenging quarter and the most variable quarter of the year. And so we may actually be seeing a pattern where customers are absorbing the investments from earlier in the year and planning on Q4 spending more so now than in prior years. It's just a speculation at this point.

But I think the other thing to think about is in Q3, the general disruptions that we saw economic, geopolitical, et cetera, around the world, they do have an impact. And they do have an impact in the economies and cultures where people are more just naturally more conservative and will -- we'll wait. We'll give it another month, they'll give it another week, whatever, they'll give it another quarter.

So I think we had a lot of -- I think everyone had a lot of help in Q3 from an uncertain set of circumstances that affect businesses of all shapes and sizes. So we don't have -- we're not economists. We don't have those kinds of forecasts or insights, but that's kind of how it felt like overall. And we certainly see that in the reports in many of our larger scale peers in the industry.

Okay. Perfect. Thank you.

Heather Bellini, Goldman Sachs.

I just had a question about a lot of large tech companies have been looking at ways to enhance shareholder value of late. And spinoffs have become more popular. I'm just wondering if you've ever looked at this as an option for any of your business segments? And do you think it would make sense to consider?

Heather, we're always looking at the portfolio through a few lenses. One certainly is multi-year, long-term strategic lens. And other lens is competitive landscape and growth. And the other one is profitability.

And over the years, as we've acquired technologies, products, and companies, and developed, we've actually done this multiples of times, but most of our actions have been to either end-of-life of product, or to move a product from being something that we go-to-market with or we'll move it from there, narrow the investment in it, and put it in the foundational set of technologies.

So a couple of examples right now are how we're investing in CloudPlatform and XenServer across a narrower set of use cases that actually are to support our own platform and service providers. And what that does is significantly reduce the go-to-market costs, et cetera. As well as it narrows the focus and the cost on development as well.

So we're constantly looking at the portfolio and we'll certainly consider all things that make sense to make sure that we are putting all the effort and focusing our spending as well as our strategy around where customers are going. And I think we've been pretty clear about these three significant segments: delivery networking, workspace services, and mobile apps.

And so that's where we'll concentrate our investments from a product and go-to-market perspective. And then streamline in other areas around the foundation underneath them that we like to think of as convergence-type infrastructure, so that our products can be provisioned in an any-cloud kind of environment. So whether it's a software-defined data center, private cloud, or infrastructure as a service, public cloud, or the mix of those two in a hybrid model, that's the real focus of these foundational technologies.

Thank you.

Kirk Materne, Evercore.

Matt Williams in for Kirk. Just maybe two quick questions from us and then I'll hop back in the queue. Number one, could you just talk a little bit about whether the trade up program is really impacting the results or what you're seeing along those lines?

And then secondly, the impact from RightSignature. Is there anything in the guidance, the 4Q guidance there, and maybe just talk a little bit about the decision to buy versus partner in the electronic signature market? That would be helpful. Thank you.

Matt, I'll take the second part of the question about RightSignature first and then we'll talk a little bit about trade up. So we've been partnering with RightSignature actually for quite some time, over a year. And any ShareFile customer has been able to actually go into their ShareFile console if you will and connect in RightSignature and get a nice integration between the two.

As a result, we've been able to actually measure synergy, cross-selling capabilities. And it's very positive. And so the decision to acquire RightSignature was really based upon the work that we did to validate integration and validate the cross-selling and validate the customer segments that we are serving certainly on a verticals basis within the ShareFile business.

And so what we'll do there is bring our go-to-market engine to the RightSignature product line and add to the customer base there. And as I mentioned, it will help us from a cross-selling perspective, with ShareFile, continue to have better retention rates, et cetera, because the product is stickier because you're using ShareFile for more document task flows.

And then the second big piece is we'll be able to acquire customers coming from a different perspective, looking for an e-signature product, and then cross-sell them a license and service to ShareFile. And then the third thing is it will give us a platform for doing some interesting task flow and workflow integrations that will find their way into the Worx app family either as an additional product, but more likely as an integration that makes receiving documents, let's say in our secure mail product like Worx Mail, very easy to then sign them electronically and move them on without ever touching them with a device beyond a smartphone or a tablet.

So that's what we have in mind there. And pretty excited about it. And stay tuned.

Matt, specifically to your question about trade up, just looking specifically at the entire workspace suite trade up, it's early. We've got one quarter now. I'd say that Q4 will be the real telling one but early results are positive.

We had a few million dollars coming out of just workspace suite trade up. And the workspace suite as a standalone was low double-digit millions. And so we're moving, we're certainly moving that message pretty aggressively right now and customers are looking at it as an easy way to adopt mobile. And for those customers that have already standardized on XenApp or XenDesktop for some element, it's a great extension of that engagement.

Great. Thanks for the color, guys.

(Operator Instructions)

Steve Ashley, Robert W Baird.

Just like to go back to the XenDesktop business. And wonder if shipping XenApp 7.6 late in the quarter caused the market to freeze and had an impact, if you had any thoughts on that?

Steve, I think shipping a product late in the quarter is a general phenomenon that has that effect even though the more strategic customers will be in the early access program, and maybe even the white glove program with us.

And I think the main thing is the addition of migration tools is the thing that will make the big difference here, and by the way we'll be following the migration tool release with some other interesting things in Q1 that we'll move from migration to automation. And that will have an effect on customers in terms of making it really easy and simple to move. And we think that in conjunction with a general desire for customers to move to Windows Server 2012 to get some of the benefits that 2012 has, as well as the things that we're continuing to put in, we'll have another point release coming on XenApp.

Those will be catalysts for customers to begin to plan and to move in the first half of the year. So that's the color I'd give you around 7.6 and the timing of the release.

Great. David, I wonder if you could give us any maybe subjective color on fourth-quarter guidance and the assumptions around the NetScaler.com business and the XenApp/XenDesktop business what you're thinking is kind of around those areas related to fourth-quarter guidance. Thanks.

Steve, not really. I'd rather not get into granular byproduct guidance. I'd say that's doing the math it points to year-on-year growth rates prettily similar to what we saw in Q3. Without being explicit about the individual components, the big overriding element right now is just understanding the fundamental growth rates within app and desktop. Everything else is a bit secondary from that point of view, so that's the way I would frame it.

Thank you.

Dan Ives, FBR Capital Markets.

This is Jim Warren for Dan Ives. If you guys could just talk a little bit about the competitive environment in the desktop business specifically and maybe what kind of changes you see in there versus same time last year. And then also you could address linearity in the quarter as well.

Sure. As far as competition, I'd say that all the markets we participate in continue to be highly competitive, whether we're talking about delivery networking, mobility, or virtual apps and desktops. As far as the overall competitive environment change, it hasn't changed much in the last couple of years. As far as standalone vendors, it's largely Citrix and VMware are the two primary players in that space. And then there's other platform related technologies that will pick up simple use cases.

When we look at individual win/loss, and I mentioned this just briefly earlier, the stuff that we track like the larger transactions, and we'll go down 50 to 100 deep in the opportunity pipe, that hasn't changed at all. We're still largely winning all of those at the large strategic end.

The newer business around CSPs, I'm not sure we have great visibility into that because it's really a market expansion for us. These our customers we wouldn't have sold to in the past. Generally, it's SMB or other small businesses looking to just consume IT infrastructure.

I think the place that's highly competitive is really that middle part. Project-specific where competition may engage as a direct extension of an existing data center transaction which we might not even see. So therefore we wouldn't track it as a loss.

But overall, I wouldn't say it's changed much. Every large transaction, and large meaning let's say over 500 seats, will be a competitive bake-off under pretty much all circumstances. And it has been for the past couple of years.

The thing that I would add, Jim, is sort of the of the other side of the coin, what we are doing about the competitive environment. Because while our products are in their seventh generation and we're competing with first-generation alternative products, we're taking that very seriously. And applying everything we've come to know about app delivery in general, whether it's Windows app delivery, web app delivery, or mobile app delivery.

And we're focused heavily on invention and innovation in a few dimensions that actually make a difference in the competitive environment when it's all said and done. The first is on experience. And that's where customers always begin, does it feel natural, native, local? Is it high-performance? And we've gotten to the point where we can actually deliver a professional experience for graphics-intensive apps like Photoshop, Autodesk products, [DESKO] products, et cetera, and all of that actually accretes to all the other types of apps that people use. The most graphical app that I use day to day is PowerPoint. And a lot of people use PowerPoint. So experience is the first.

Second is peripherals. To actually serve segments like healthcare, airlines, banking, et cetera, you have to have deep peripheral support so it's not just about printers or some small piece. It's about broad peripheral support. And as I mentioned in my comments, XenApp 6 has USB 3 peripheral support, which speeds scanning of documents, scanning of tickets at an airline counter, et cetera.

The third area is compatibility. And that takes relationships and deep knowledge of how sophisticated apps are configured. And that's a big place that we invest, especially on the alliance side.

The fourth area I'm pointing out is scale. We test XenApp and XenDesktop at massive scale. Our largest customer today runs 250,000 concurrent users across two data centers. And the second largest is in the 150,000 concurrent user range. So we're running at scale and understand the dynamics of scale.

And then the last piece that's critically important is the device heterogeneity piece. I'd say more than ever, CIOs, IT organizations, they can't bet on the kind of device that they're going to need to provide an application service to. And we, through our very mature HDX and Citrix receiver technologies, can support over 3 billion theoretical devices on the planet. Every smartphone, tablet, laptop, desktop, thin client that you can imagine, including some of the really interesting devices that we're seeing for conference rooms, television in your home, et cetera.

And all of these matter when you're looking at competing. And this is where we're investing heavily, innovating, so that we can drive the profitable growth segments, which David outlined, the first set of segments are security, device, and legacy app driven. The second would be more application-specific segments that have security legaciness, and want to move to a cloud delivery model. And then the third segment is actually service providers that are serving geographic -- have geographic specialty if you will, or vertical specialty.

And I think that is under-estimated and under-appreciated especially in a world where data sovereignty actually matters. And we're very likely to see computer sovereignty emerge as well, which will actually favor more localized service providers. And one of the reasons we're investing in not only tier one like most companies are doing, but tier two and tier three that are servicing more narrow geographies and segments.

I know it's a long answer, but it is the essence of how we're taking the game to the competition, leveraging our competencies, technology base, and understanding of app delivery, that is what the Company has grown up on for 25 years.

That's great. Thanks for the color.

Mark Moerdler, Sanford Bernstein.

So given that the growth in ShareFile was really nice at 50% year over year overall, but SaaS was much lower than that; where are the SaaS products that are growing so slowly? Which ones are the ones where the issues are and what can you (inaudible)?

Mark, it's David. Consistent with what we've talked about last few quarters, the way to think about that business is kind of in three big pieces: collaboration, apps, those are going in the low teens; the ShareFile and the data platform growing north of 60%; and then the place that's been declining is remote access. The primary product there that people remember is GoToMyPC. It's just secular decline of the overall market. The use cases have changed.

And so the remote-access part of the business continues to decline in the high-single digits your year on year, now represents right around 15% of the total mix and declining. So that's really the three big pieces there.

Mark, what I'd add is that in a product like GoToMyPC that is handling well over 1 million devices even today, we are actually leveraging that technology platform in some new ways to extend the life of the investment and give customers a more mobile type of experience.

So last quarter we released a product called ShareConnect that basically allows you to remotely connect to enroll your laptop or desktop into the ShareConnect service. It uses the GoToMyPC infrastructure for brokering the connection and for the speed of the experience, et cetera. And then it displays on your tablet, shows you your recent files, gives you access to them, allows you to edit them locally or edit them back on your PC, which then will launch an app, so there's the notion of application publishing that's built into it. And then if you then want the full desktop, you can go there.

So the notion here is that while GoToMyPC as a product is declining, the platform, the underlying technology around screen sharing, connection management, and the deeper capabilities that are there, are being used for new products that are related to ShareFile. And then that technology is also an app that's in the Worx family called Worx Desktop. And it again if you buy XenMobile enterprise you get Worx Desktop and it allows every single laptop and desktop in the enterprise to be a virtual desktop.

Thank you.

Ed Maguire, CLSA.

I was wondering just looking back at how the business has historically been on the desktop business has been tied to Windows Server and Windows client product cycles, how have you seen this business really decouple from the cycles around Windows? Has the I guess what we'll call less than exceptional adoption of Windows 8 at the corporate level, does that have any impact on your desktop business? And looking forward do you think that a Windows 10 release may change the conversation that you're having right now?

Ed, I think it's a great observation. I think it's gotten much harder to tell, because Windows is now a cloud service across operating system and apps as well as an on-premise backend service for cloud-based data centers, and basically a mobile operating system more and more.

So on the backend we still see migration and customer uptake very much related to where they're going with Windows Server. And with greater adoption of Windows Server, XenApp and XenDesktop, they perform better, log on times are better. There are a lot of improvements in the experience because we take advantage of enhancements in Windows Server. So I'd say there, like always, we are linked to that part of that migration process for customers.

On the other end, on the client end, I'd say it's harder to tell there, in that today it's even harder to buy a Windows 7 laptop. So what does an enterprise do if they don't want to move to Windows 8 yet?

So I think the way we're looking at it is that in fact, Windows clients are an important but a piece of the mix at the endpoint. And if anything, it shows the IT organizations that they have to design delivery services for apps independent of the endpoints, whether they're running Windows 8, 8.1, Windows 10, Mac, Apple products, OSs, Google, et cetera. And I think that helps us but I don't think it changes the fact that Windows apps themselves in the classic sense are in a long tail kind of cycle.

And we're investing where the long tail opportunity happens to be. And where there are app-specific market segments around engineering, visualization, design, et cetera. As well as big segments like healthcare for example that have a tremendous number of apps including their electronic medical record apps that are very highly compute intensive and they're built on more legacy types of infrastructure. And we'll see that long tail play out for quite some time.

Great. Thank you.

Kash Rangan, Merrill Lynch.

First one for you, Dave, you gave us guidance for Q4. Looks to be in the 5%-ish range. I know that you've not given guidance for calendar 2015 yet, but would it be right to think of your calendar 2015 rough growth rate as not being terribly different from your Q4 growth rate? Or are there any other considerations?

And a couple for you, Mark, if I could, thanks for taking the time. What benefits do you primarily see as a result of the restructuring and reorganization? Are you solving for revenue or are you solving for operating profit in the near term?

And also listening to you talk, it felt like you see a lot of synergies between your businesses that it sounds like maybe it's a bit of a reach here, but it feels like you've done these strategic reviews and concluded that the portfolio needs to stay together, but what would be wrong with that assessment? Thank you.

Kash, let me take the first part of the question. As far as Q4, yes. Our guidance would point to roughly 6% total revenue growth year on year, similar to what we saw in Q3. So we've decelerated throughout the year. We've had 10% growth in the first half, 6% or so in the second half. And so the primary reason why we haven't given 2015 guidance yet. We're looking through the individual product families, the portfolio, and understanding specifically app and desktop. That's really the big driver.

And then how quickly the either emerging businesses can impact overall growth rate, or the specific actions we're taking around the more mature businesses. And so those are the big moving parts at this point in time. And I'm not prepared to give specific guidance about 2015. We've decided we're not going to do that yet. So if you are extending what you saw in the second half, it's really your call at this point.

Kash, I'll take your second question. And so in terms of restructuring, I'd say the things that David talked about around restructuring in terms of consolidations, centralization, some delayering, are about both cost, and about efficiency in terms of better execution and handoffs between teams. And both of those things I think, then, aligns a strategy to drive in the growth segments that we're in that we've outlined on the call today.

And so I think Heather asked the question a different way, but I'd just reassert that we are actually narrowing and streamlining on the portfolio and where we're investing. And that's a constant process and we're doing it probably more aggressively than ever right now.

And then in terms of the portfolio, if you look at what bets we're making, and look at the dependencies then across, it's pretty clear as to the strategic parts of the portfolio for sure. So for example, XenMobile has a huge dependency on our mobile apps. Okay? As well as our delivery networking. And it's an end-to-end kind of a solution. And it's why we're winning. And I think it's why we'll be able to lead this market and why this what we like to call workspace services business will return to good growth as Windows becomes a smaller piece of -- and acknowledged as a piece of the workspace services offering as opposed to an elite offering in and all by itself.

The second area you've seen, I think, for some time that we get great differentiation and growth in our networking business as an attach sale to XenApp and XenDesktop. So without XenApp and XenDesktop we wouldn't get the attached sale, and on the other hand, the attached sale gives us differentiation and competitive advantage when we're in the market competing especially for more strategic types of deals.

And so the latest element that's like that is ShareFile. So we're winning XenApp and XenDesktop deals that are more on the strategic in healthcare, public sector, and financial services because of ShareFile and the data fabric and what we've done to integrate with XenApp and XenDesktop. You'll see a lot more of that in 2015.

So really I think the portfolio actually is at the beginning part of its positive impact in allowing us to win in the various segments that we are playing. So that's the way I think about the portfolio.

And then within that envelope, we're constantly making the streamlining adjustments to how much we're spending on a relative basis on any given component. And yes, there will be some end-of-life processes that will have cost savings impact. Or they'll have investment shift impact.

The investment we're making in XenMobile, we've made some significant shifts from other areas of the business into XenMobile to accelerate our velocity there. So that's how I address the portfolio question you're asking.

Thank you very much.

Karl Keirstead, Deutsche Bank.

Question for David on the operating cash flow. It's just one quarter I realize but it looks like it was down fairly substantially year over year. Could you offer a little bit of color on that and if there was any factors that you would encourage us to keep in mind as we model cash flow in 4Q in 2015? Thanks.

No. There wasn't anything that really stands out beyond just the normal items. I'd say that in Q3 it's more of a reflection on the overall demand environment. And where we closed bookings. Really more than anything else.

Underneath the balance sheet for example, DSOs are down. The structure of accounts receivable looks clean. So it's largely just a reflection of the current business.

Okay. Got it. Thank you thank you.

I certainly expect that to pick back up again in Q4.

Keith Weiss, Morgan Stanley.

Thank you, guys for taking my question. I was hoping to dig into the margin commentary about the 100 basis points target for next year. And I know you cited it as a planning target. But I'm interested in understanding without a firm sense of the revenue run rate, what are some of the levers that you guys have identified, or are there levers you guys have identified? Or what are some of the tools that are you are going to used to sort of hit that 100 basis point target with an uncertainty around what the revenue run rate is?

Yes. So let me put a little context around that, and see if it answers your question. So what I said earlier is that the team is looking at this as a part of a long-term objective. We've stated that we believe our operating margins for a Company this size should be in the 25% to 30% range roughly, and we're operating below that right now for a number of reasons. Some of which are the investments required to build up new businesses. Some of those are underperformance in other areas. And some of those are just scale. Things that have happened over time.

And so as we as a team look at this, I'd say some of the specifics that we are attacking right now and into next year could include everything from delayering certain organizations, driving a more rapid centralization of products, functions, processes, consolidation in some areas. Real estate for example where we've already brought down a couple of larger sites and we're looking to increase density elsewhere. Things that are way outside the boundary of just cost-cutting because cost-cutting's temporary in nature.

And we're looking to drive things that are structural that will lend to a multi-year margin expansion. That's really the big thing. And all of those different elements can be applied at a functional level, at a product level, and at a geo level. And so that's probably the best way to describe how we're thinking about it.

And within that, there's a big shift and reallocation of resource going on to make sure that we are aligning back against what we see as the most strategic or largest growth opportunities over the next couple of years. And so throughout this process, it's simplification and prioritization, is a big theme. And with that will come efficiencies. But the team feels very committed to doing this, and so that's why we call it out as a specific planning objective, even without talking about revenue levels.

Got it. If I could have one follow-up, in terms of simplification and prioritization as the hallmarks on the strategy going forward, how should we think about M&A? We were a little surprised to see M&A take place already this summer in lieu of this simplification. How does M&A factor into a simplification program?

Well, like all companies you're going to continue to do M&A. Most of our M&A has been very, very small in nature. We've announced a couple of things for various reasons. And the largest transaction is still sub-$50 million of capital. So that's probably the way to think about it.

In some cases it's about core innovation. A simple time-to-market, doing things we don't have the capabilities or teams to do internally. Other cases, it's about extending an existing product. So you think about the e-signature business with ShareFile right now. It's an extension of the core. It's either another feeder to the destination of data sharing platform, or just driving further differentiation of those capabilities. So that will drive incremental revenue over time.

But we really haven't done anything of scale in quite some time. And that is largely because we continue to focus, continue to optimize. But within that, a number of small tactical acquisitions are necessary. So those should be the way to think about it going forward as well.

Excellent. Thank you, guys.

Abhey Lamba, Mizuho.

David, you mentioned about the networking slowdown in Web 2.0 customers. Was that specific to one or two clients, or a little more broad-based? And also were there any design changes on your end, or is it just that did not expand this quarter and disturbing NetScaler and they will come back down the road?

In terms of the 2.0, as we all know it's a really concentrated handful of big, big cloud service providers. And so they tend to go through ebb and flow, just big buildouts and then small maintenance purchases for a few quarters after that.

So you roll back and look at the results over the last 8, 10 quarters, and there were periods where we were growing north of 50% year over year, because two or three of them were buying large amounts of infrastructure at the same time. And then we'll decelerate down to midteens, let's say. And that's just a reflection of the maintenance purchases.

So I think the important metric and the way to think about the business is that the broader base enterprise where it's much more sustainable, much more visible, that actually increased north of 20% last quarter. And so that's the base of the business that we're continuing to build out. That's a reflection of like investments we've made in coverage. That's really just a coverage conversation because there's places where we just don't have enough capacity to actually reach and engage customers.

So we've talked about maybe six, seven quarters ago about investing in EMEA, and we did that. We brought on a number of very specific resources to go and drive that opportunity. And that business just in EMEA alone in NetScaler was up north of 30% year on year in Q3. So that's one example.

I do think we've got capacity to add coverage in many other places. And we'll do it as appropriate and where possible. These are also pretty scarce resources, that are being chased by a lot of people. And so it's not as simple as just saying you're going to add dozens of them in one quarter for example. Have to be a bit more thoughtful.

So that's kind of the overall dynamics within the NetScaler business. And then when these large cloud service providers pop, you'll see a pop in that quarter for some incremental large chunk of revenue.

Got it. And I know you're not giving 2015 revenue outlook, but you did say that a lot of it will depend on how application and desktop business can do. Can you give us some puts and takes on how should we think about drivers of that business next year? You clearly have a new XenApp product line, but what are the tailwinds that headwinds that we should be thinking of as we are predicting that business?

The reason why I call it out obviously is that A, it's the largest part of the overall business, and B, it's been in decline for a year now. And so it's an oversimplification to talk about it in those three segments that I did earlier. But it's an easy way to have the conversation.

So on the CSP business, that's really about expanding the TAM. That is really targeting small, medium business, people that are wanting to consume as a service. That is still relatively small. It's less than 10% of the overall mix but it's growing quite rapidly. And of course you'll see incremental investment in those areas. And that becomes a nice bridge to workspace services cloud as well and infrastructure that we'll be delivering as an organization over the next 24 months.

The higher-end business, again, that's just a way to characterize the big, complex, strategic infrastructure, that is one that's been flat, plus or minus 5% any quarter. And that's just that business is relatively steady state, but more penetrated than others. And then that middle project base is largely about just making sure that we're focused on those use cases that are driving the long tail, places where security is paramount, places where delivering graphic-intense applications creates differentiated value. Mobile-specific capabilities, so that you can help customers really take -- think of it as a Windows app and mobilize it if you will for consumption across devices.

These are examples of use cases. Even down to Chromebooks and things like that that we've talked about in the last couple of quarters. So I think the market is becoming a bit more verticalized over time against this backdrop. And until we see greater traction across these areas, is what you're hearing in our hesitation.

Thank you.

So that's kind of the puts and takes there. We are continuing to innovate rapidly as I mentioned earlier. We're on our second big release of the year. More technology's coming out. And those will be addressing largely that middle project based segment as well as CSPs.

Richard Williams, Summit Research.

Just wonder if you could talk a bit about the seasonal impact, just of each product line going into the fourth quarter, and also have you seen any significant changes over the last quarter or two in terms of sales cycles as it relates to the three businesses? Thank you.

Let's see. I'd say for mobile apps, not a lot of seasonality really, that tends to be high volume of transactions, fairly low dollar size.

In terms of the networking business, really all enterprise-based businesses, you do tend to have a forcing function in Q4, it's always the largest quarter of the year. And that's just the way people are conditioned to purchase as well as the way that comp plans and everything else work, so things do get stacked up into a Q4 just naturally.

We talked about earlier the cloud-based business or the dot coms. That is a bit mixed I'd say from a Q4 point of view. It used to be Q3 was a larger quarter back when it was tied to the holiday shopping season, but it's just not the case anymore. It's much more tied to large releases of individual cloud services, devices, things like that.

They do tend to lock down their infrastructure as you go into the back end of the year, so those transactions will happen usually in I'd say the first half of the quarter. But not much beyond that. Mobility because it's brand-new, there's not a lot of patterns there yet. But again, Q4 will likely be the largest quarter of the year for the traditional enterprise reasons that we talked about before.

Okay. Thanks very much.

Matt Hedberg, RBC Capital Markets.

This is actually Matt Swanson on for Matt Hedberg. I just have a couple of questions about some of the macro-environment and relative to the Q3 guidance. I remember you talking about it being a seasonally softer quarter in Europe. Sounds like it was maybe a little bit better than you were expecting. And then the other would be any more color around the federal vertical, which it sounds like was good in the US.

Yes, Matt. Federal was strong. Federal we had a good quarter. There was good demand. It was nice to have an end of their fiscal year which wasn't covered with a cloud of spending and shutdowns and things like that. So I'd call it a fairly traditional quarter in that we did well there, posting north of 20% growth year on year.

As far as Europe, I think you're seeing good execution from our teams in a mixed environment. Clearly, the political situation in Eastern Europe and some of the impact is probably causing people to be more cautious on the timing. That one's hard to measure with a lot of granularity. But you kind of feel that overall tone.

The bigger issues from a macro point of view, at least from a Citrix perspective, have been around Asia and Japan. The markets that we called out, China in particular. Japan as a market for us. Those of the ones that I'd say were more challenging from a macro point of view.

And if I could have one follow-up, we've heard a couple stories about federal deals getting pushed, just weight wise between Q3 and Q4. How do you view that pipeline, I guess?

Federal usually has Q3 as the big quarter of the year. I did hear about things getting stuck and not being able to get through the fed funnel. But I believe fed's funded through like FY17 our something before we have the next major shutdown. So I feel like it will be relatively normal, but I wouldn't expect Q4 to be as large as Q3. It just never is for our business in the fed specific areas.

All right.

US fed.

Michael Turits, Raymond James.

Dave, I may have missed it but did you say at this point about what percentage of the networking space, Web 2.0, makes up at this point? Used to be pretty big but where is it now?

I didn't call it out specifically. It was about 29% I believe in the quarter. I'd have to go back and double check that. I'll check that before we get off this call.

Okay. And then on the desktop side, you talked about weakness and really lack of visibility next year as a toggle or driver. But you hit the street numbers and it was up 3%, which isn't that bad. I think you commented that the implication was that bookings were weaker than reflected in that revenue number. Can you quantify that at all?

No. I'd say it was pretty direct. In terms of overall bookings environment, mostly what I'm picking up is just the overall impact of weakness on desktop and app virtualization. But related maintenance and in many cases multi-year maintenance that comes with large transactions, et cetera. And --

In other words if revs were up 3%, were bookings down in desktop and mobile business?

Yes. Bookings were down in desktop and mobile business.

Great. Thanks, guys.

To answer your first question, the dot coms customers were just over 30% of the mix in the quarter.

Okay. Thank you very much.

(Operator Instructions)

Pat Walravens, JMP.

I thought your comments about the sovereignty in computer sovereignty were intriguing. Can you expand on those and how those requirements might impact your business?

Data sovereignty already has plenty of momentum around the world I'd say led by legislation, regulation in Germany, and then many EU countries following suit at some level. Canada has joined that. And then obviously there are some nations like China that are all about data sovereignty by default.

So we expect to see more of that, especially as you see breaches. And governments then get the moral authority to define -- make data sovereignty a law. And it's also good for their economy because it keeps data centers within a given region or a given country.

I think the same phenomenon is likely to play out on the compute end of the spectrum, in that, as you see attacks that actually attack the compute layer, especially as we have in-memory databases and these types of technologies that actually use the CPU and GPU more in the infrastructure. Again, an attach, a breach, et cetera plus the economics that are implied by buildout of hyper clouds in various countries, are likely to come under, I think, more likely to come under government jurisdiction and under the umbrella of security, privacy, kind of those things.

But there's an economics, jobs, et cetera, because these are pretty clean industries if you think about it. And they don't employ tons of people, but they definitely add to the economy and so forth. So that's basically my personal perspective.

And so how that relates to our business is first of all, data sovereignty is real. And our ShareFile product line actually addresses this very directly with a very cutting-edge and differentiating feature called ShareFile storage zones. So it allows you to have all of the data collaboration, mobility, et cetera, but a storage zone can actually define exactly where the data is stored, including in a private cloud, on a NetApp server if you want it to be, or in your choice, a public cloud.

Data sovereignty also helps our XenApp and XenDesktop business because if you think about it, what this type of product does is it puts the compute where the data is and that's how you get high-performance. And so to the degree that data sovereignty is defined as the location of a database, then putting the compute next to the data helps our XenApp and XenDesktop business. So hopefully that's a little bit of color around what I was referring to earlier.

Got it. That's very helpful. Thank you.

Ladies and gentlemen, we have reached the end of the allotted time for questions and answers. I'll now turn the call back over to Management for closing comments.

I'd just like to reiterate my thanks and welcome for joining the call today. And I know we had an extended Q&A period, but we are certainly here to answer your questions and give you the insights into the business. And as we make the turn here toward a world that's more mobile, more collaborative, and feeds I think on many of the strategies that we've had in place for quite some time. So with that, we'll adjourn the call and we'll see you in three months. Thank you very much.

Thank you for participating in today's Citrix conference call. You may now disconnect.