思杰系統 (CTXS) 2018 Q3 法說會逐字稿

I would like to welcome everyone to the Citrix Systems Third Quarter Earnings Conference Call. (Operator Instructions) Thank you.

I would now like to introduce Ms. Dawn Morris, Manager of Investor Relations. Ms. Morris, you may begin your conference.

Thank you. Good afternoon, everyone, and thank you for joining us for today's third quarter 2018 earnings presentation. Participating on the call will be David Henshall, President and Chief Executive Officer; and Drew Del Matto, Executive Vice President and Chief Financial Officer.

This presentation is being webcast on Citrix Systems' Investor Relations website, and the webcast replay will be posted immediately following the call.

Before we begin, I want to state that we have posted product specification and historical revenue trends related to our product groupings 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 U.S. 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 our Investor Relations website.

Furthermore, we'll discuss various non-GAAP financial measures as defined by SEC's Regulation 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 Drew, our Executive Vice President and Chief Financial Officer. Drew?

Thank you, Dawn, and welcome to everyone joining us today. Our transition to the cloud continues to gain momentum, driving our Q3 revenue growth rate, which has now doubled over last year. Financial highlights include: Revenue grew 6% year-over-year, led by subscription revenue growth of 37% year-on-year. Our adjusted operating margin was 32%. Adjusted EPS was $1.40 per share, up 15% versus last year. And cash flow from operations was $301 million, a record -- a Q3 record, growing 18% over last year.

Q3 was a typical back-end-loaded quarter due to summertime seasonality around the world. This impacted the timing of revenue from cloud and subscription transactions, both of which closed in late September. The result was a deceleration in the subscription revenue growth rate from our second quarter. We expect subscription revenue to reaccelerate in Q4 as we'll see a full quarter of revenue from our September transactions plus the benefit of a typically more linear bookings quarter.

Our Q3 Enterprise business was solid as we closed 55 $1 million-plus transactions, with concentration in health care, technology and government sectors. We saw strength in our cloud and subscription offerings across our portfolio, particularly in Workspace Services as customers embrace our future of work vision, driving higher productivity and employee engagement.

All of our geographies grew at a consistent rate, with the transition of enterprises to our subscription offering strong across all regions. Citrix Cloud simplifies hybrid cloud adoption, providing the same infrastructure on-premise or in the cloud. Customers are realizing the value of reduced infrastructure complexity, better overall user experience, increased security, faster access to innovation and flexibility to align with their business initiatives.

Next, let's take a closer look at Q3 results within our primary businesses. Workspace Services maintained its momentum, growing 7% year-over-year to $462 million. This was driven by a continuation of recent trends towards our unified Workspace and CSP offerings. Within Workspace Services, subscriptions were roughly half of the total Workspace product bookings mix in Q3.

We also saw stable results in the networking business. Networking revenue increased 5% year-on-year to $195 million in Q3, with subscription revenue increasing 95% over last year. This reflects the strength of our hybrid cloud offerings, providing the flexibility, performance and visibility as enterprises anticipate and execute their cloud strategies.

Finally, our content collaboration revenue increased 12% year-over-year to $47 million in the quarter. As we discussed over the past year, ShareFile is becoming more of an integrated file sync and sharing solution for our enterprise Workspace customers, moving away from its prior focus on just the stand-alone SMB space. As such, the reporting of the content collaboration results will be integrated within our Workspace business during 2019. We'll provide more details on our Q4 '18 earnings call.

Let's now turn to operations. Our adjusted operating margin was 32% in Q3. We'll continue to balance expanding our profitability with the investments needed to support growing pipeline and sales capacity as we transition the business model.

As mentioned, cash flow from operations was $301 million, up 18%, bringing our trailing 12-month cash flow to $1.1 billion. Deferred and unbilled revenue combined grew $187 million or 11% over last year. Unbilled subscription revenue grew nearly 330% or $140 million versus Q3 of last year. Deferred revenue was $1.68 billion in Q3 of '18.

Please note that the adoption of the new revenue accounting standard ASC 606 creates about a 300 basis point headwind that you will need to adjust for when comparing deferred and unbilled revenue for Q3 '18 to Q3 '17.

At the end of Q3, we have approximately $2.5 billion in cash and investments and repurchased approximately 1 million shares in the period. Today, we announced that our Board of Directors authorized an additional $750 million for share repurchases. This brings our total current authorization for repurchases to approximately $1.1 billion. Since we announced our $2 billion share repurchase program in November of 2017, we've repurchased approximately $1.6 billion at an average price of approximately $91 per share. We expect to complete the remaining $370 million in share repurchases during our Q4.

As you can see from our announcement, Citrix' Board of Directors also declared a dividend of $0.35 per share to be paid this quarter. Additional details can be found in today's release.

Now turning to guidance for Q4 '18 and the full year. In line with our multiyear strategy, we expect to see continued momentum in the adoption of our cloud services and subscription-based offerings. As such, we are increasing our full year guidance for 2018 to include: revenue between $2.95 billion and $2.97 billion, adjusted operating margin of 30.5% to 31.5% and adjusted EPS of $5.55 to $5.60 per share.

We'd also like to provide an initial view into our expectations for FY '19. Please note that while we're still working through our planning cycle, which is typical at this point in our fourth quarter, in 2019, we plan to continue investing in go-to-market capacity, demand generation, innovation and the infrastructure areas necessary to scale our cloud services. At a high level, as of now, we're currently looking at FY '19 revenue growth to be about 4% and adjusted EPS of about $6. Very important to note that behind these numbers, we are assuming that the mix of subscription as a percent of product bookings increases from 40% this year to between 50% and 55% next year. This incremental mix shift will create a 1 to 2 percentage point headwind to the revenue growth rate for next year.

For quarterization, I would encourage you to look back at the historical seasonality of our results for the ramp of margins and EPS throughout the year. The results were skewed due to our 2017 restructuring and the adoption of ASC 606. 2019 operating margin expansion and EPS growth will be skewed towards the second half due to normal seasonality, our continued shift to subscription revenue and our recent investments in building sales capacity. We'll provide more detail on our next earnings call in January.

I'd now like to turn the call over to David to give further color on the quarter and our areas of focus moving forward. David?

Welcome, everyone, and thanks for joining us today. As Drew noted, Q3 was just another good quarter outside of financial expectations while we continue to execute on the transformation across the company. More importantly, though, customers and partners are embracing our strategy and really driving the multiyear plan. Despite the headwind from the ongoing mix shift, reported numbers are once again really solid, largely due to the strength of new product bookings for the Citrix Workspace.

As you heard, our reported revenue growth doubled over last year. While at the same time, the contribution from subscriptions increased from 12% to 15% in total revenue. You couple this with cost discipline, and we delivered a lot of upside against both margin and EPS goals. It's good performance for Q3, which as Drew pointed out, historically has some seasonality to it due to the summer holidays around the globe.

In the quarter, our Workspace business continued to lead our execution. What's happening here is that the vision we laid out last year for delivering a general-purpose digital workspace is resonating. Customers are seeing that Citrix adds a lot of value to their long-term initiatives in terms of simplifying hybrid cloud environments, improving security and accelerating the adoption of new innovation. Additionally, due to our support of all major cloud platform providers, we give customers the flexibility to migrate workloads to and among the clouds of their choice. In total, Citrix Cloud now includes more than a dozen services, with options for SaaS and hybrid models as well as services for those customers with only on-premises implementations, to help them manage and monitor their infrastructure much more effectively.

As we talked about last quarter, customer momentum, it really stepped up after our Synergy sales conference in May. We've had great feedback regarding the alignment and clarity of our strategy as well as a record volume of new innovations and announcements that we made with great partners like Microsoft, Google, ServiceNow and Samsung. Our message has been focused on the future of work and how we help lower IT infrastructure costs while delivering higher employee productivity and engagement. The current cloud mobile era of technology has created really unprecedented flexibility in compute and in work style opportunities. However, most of our customers we see need to deploy a variety of discrete point product solutions to help manage this, an approach that frankly is just really complex and very expensive. Our focus has been to help them abstract away as much of the complexity associated with these niche products as possible and highlight the benefits of our complete integrated solutions.

As we promised, all of the new innovations that we unveiled at Synergy were released for general availability during Q3. And over the next few quarters, we'll be working with customers on the adoption of the Workspace app, providing access to all of their applications and content needed to be productive across all users in the enterprise. This includes differentiated capabilities such as federated identity, unified experience, out-of-the-box integration with leading SaaS apps, a broad approach to universal endpoint management and, if required, access to Citrix virtual apps on desktops from an easy-to-use, all-in-one interface.

Most importantly, we're now delivering a digital workspace for general-purpose use, which is assuring that every employee has access to everything they need to be productive all in one package. Every employee, every app on any network. This translates into greater value and productivity for customers and expanded market opportunity for Citrix.

And in September at Microsoft Ignite, we announced the development and planned release of a new cloud-based Desktop-as-a-Service offering, positioning us to gain share in the fastest-growing segment of virtualization market. The Citrix DaaS offering developed on top of Windows Virtual Desktop and hosted on -- with Microsoft Azure, enables businesses to deliver services in a turnkey end-to-end solution built with our market-leading HDX technology to provide maximum performance. So stay tuned for further announcements on the future launch dates. Lots of exciting innovation across the board.

So turning back to Q3. Let me talk about a couple of large transactions that highlight the discussions that we're driving with both new and with our existing customers. The first is a 150-year-old banking organization operating in the Western U.S. They have been a long-term XenApp and XenDesktop customers, delivering virtualized applications in VDI. They started evaluating Citrix Cloud earlier this year as part of their corporate hybrid cloud strategy. But after Synergy, they started looking at the new Workspace app as a potential way to unify existing branch office applications and widely used SaaS-based applications into a single-access and user experience.

As their evaluations progress, they also embraced Citrix content collaboration as a way to deliver secure content to branches and Citrix Analytics to provide an enhanced visibility and security with their application usage. This evaluation concluded with a roughly $1 million subscription transaction for our cloud service using the current customer transition program we put in place several quarters ago. Ultimately, we're not only modernizing the management of their virtual apps and desktops, but we're expanding to new users with improved experience and security and additional use cases in SaaS, web and mobile apps.

Second example I want to highlight is a global food and beverage company. This company was hit hard by a malware outage last year, impacting a large number of employees for over 2 weeks. They asked Citrix to propose a solution that supported existing BPO projects using Azure Cloud while at the same time addressing new use cases, like BYOD and mobility all from a single platform. And of course, security was a paramount concern. Final solution we landed on was a 3-year agreement for the Citrix Cloud app service, providing high availability to applications with an evergreen infrastructure that is continuously managed and updated. Additionally, secure global access and 2-factor authentication will be enabled with our virtual networking, allowing them to also retire their current VPN solution for simplification and cost reduction.

These are just a couple of examples of how our focus on delivering experience, security and choice are proving to be so valuable for both new and existing customers and why we're winning these types of opportunities. These examples also demonstrate our customers are committing to us for multiple years, fully validating the direction as part of our current and future road map.

So let's talk about networking for a minute as revenue within this area was stable in Q3. However, on a bookings basis, the hyperscale SSP segment was actually relatively weak, down about 20% year-on-year, with the Enterprise segment growing in double digits. In total, the mix for SSP was 21% compared to 27% of the mix a year ago. As we've been discussing over many quarters now, the SSP business is highly concentrated and, therefore, can be pretty volatile on a quarter-to-quarter basis. Our strategy has been to invest in the larger enterprise market, addressing traditional ADC use cases, hybrid multicloud and DevOps as data center architectures are gradually shifting more towards microservices. Our software-based approach here to networking gives us strong flexibility to help customers migrate through this evolution.

Another good example of this in the third quarter was a European mobile network operator and a current ADC customer. Historically, their use of ADC has been fairly simple and pretty straightforward. However, as they look forward, they requested a proposed solution that was not just NFD-ready but, really, more future-proof from an architectural standpoint. The final solution that we delivered and closed as a $2 million contract will include both physical and virtual networking products, integrated with pooled capacity licensing to enhance their mobile network and provide additional capabilities like TCP optimization, content filtering and others. This exemplifies how our shift to software-based networking and more flexible and scalable licensing is a step in the right direction and healthy growth preferences in this market.

Finally, there are several new SD-WAN wins in a variety of areas, including cross-sell to existing Workspace customers to improve the performance of remote sites, optimize HDX traffic and other capabilities. While still a relatively small part of the overall business, SD-WAN is growing pretty rapidly right now, and we've launched a number of product and go-to-market initiatives to help support managed service providers, Microsoft Virtual WAN and Office 365 as well as deeper integrations into our Workspace Service.

So as we exit this year, I feel really good about our momentum and purpose. We're more aligned and more focused on the customer success than ever before. Clearly, the financial results are well ahead of our multiyear targets, and we're proving that we can drive a cloud transition and accelerate both revenue and margins. So really powerful combination. It's clear that our customers are looking to operate in a multicloud, hybrid cloud world, and Citrix is clearly positioned to provide simple, secure and unified solutions to help them address these challenges and simplify their road maps. We're excited about the future, and I'm confident in the progress we've made so far in 2018.

Thank you very much. And as always, we look forward to your questions.

(Operator Instructions) We have Philip Winslow.

A question to the team just on Workspace Services because, obviously, you saw another quarter of a mix shift towards subscription. I think you said 57% versus 34% in the year-ago quarter and then 50% last quarter. It's -- obviously, we're seeing that shift there. But if I look at just the revenue numbers that you're putting up as well, continued strength there even with just the shift towards more ratable on average showing up on balance sheet in unbilled. So I guess, the question is, if you look at the past few quarters here, what sort of, I guess, is just driving that overall strength and reacceleration in the Workspace Services business? Is it going back to some of these big customers you haven't engaged with in a while like the example you gave and sort of, I guess, catching up on them

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the best performance, the best security, the best manageability. So all that is continuing to move forward. Citrix Cloud is a real driver, though, I mean, and that just allows for even traditional or on-premises customers to have a number of services that help optimize the underlying infrastructure, provide health checks, just give them much more flexibility, much more simplification. And then the ability to stay current and adopt our new innovation. The bigger strategic direction, though, is as we talk about the future of work and we talk about the Workspace and everything that, that's going to be able to address, we're unlocking non-virtualization use cases. You'll hear me talk a lot about general purpose. And what that means is really the idea of creating more of a general-purpose Workspace platform that is now applicable to every user in every enterprise, regardless of whether you need virtualization or not because of new capabilities to deliver security to SaaS or security to mobile apps and really provide an integrated experience across any device. So it's that broader -- the overall broader strategy and articulation that's really helping uptick the market overall.

Got it. And then just one follow-up to that. I mean, obviously, in Q2, you had substantial big wins, about just $1 million on the mega size wins. Yes, this quarter seems to be a bit broader in terms of where the strength came on. I just wondered if you could give us some color into sort of what you're seeing on sort of the big deal products, in particular, in terms of pipelines as well just sort of the breadth, I guess, the strength that seems to be coming back as well.

Yes. Big deals in general were good. They're down a little bit sequentially from Q2 to Q3. It's always our seasonally weakest quarter and our most back-end-loaded quarter. So that's nothing unexpected there. I wouldn't be surprised if we see record number of large deals coming out of Q4, really, across all geos and across enterprises. You saw in the reported numbers we've got good balance across the 3 geos right now. So it's not really concentrated. It's just general strength.

And your next question comes from Michael Turits.

A question for you, David. I just want to get a better sense on NetScaler in the SD-WAN space and kind of what the traction like -- has been like. And then in particular, who are you going up against? Is it is Cisco and VMware mainly?

Well, I talked a little bit about networking overall in my prepared comments. SD-WAN, it's a pretty crowded market space right now. It's fairly nascent, so it's not moving the needle too much. And therefore, the growth rates are large, but it's off a small base. What we're focused on there is a couple of things: optimizing the Workspace where we can just continue to help with delivery to branches, optimizing HDX traffic. And more things that we're doing fairly recently, though, haven't really impacted the numbers yet with Microsoft around the Virtual WAN, optimizing O365, providing solutions for MSPs. A number of those are really future investments. So I'd say stay tuned on the SD-WAN piece. It's a little bit more of a future at this point. Going back to the big business on the rest of networking, it's really a tale of 2 segments more than anything else. The SSP segment, as everyone knows, is highly concentrated and, therefore, is always really volatile quarter-to-quarter. Q3 was one of those quarters that was down pretty sharply. It was actually down about 20% year-on-year. When I look at underlying bookings, represented just 21% of the overall mix versus the enterprise, which was up about low double digits in terms of demand. So that's been function of our strategy, though, as well. I mean, we knew that the SSPs have been concentrated for a long time so we've been investing much more broadly around expanding capacity in the enterprise, making sure that we have really strong story around hybrid multicloud, the ability to really be flexible with licensing across physical and virtual environments and a number of those initiatives that we've talked about many times. So I'd say, competitively, the landscape hasn't changed too much. It's a lot of F5 in the traditional ADC category and then a number of vendors when you talk about emerging markets like SD-WAN.

Got it. And then one other thing I want to touch upon. Just as you increased that mix shift to subscription, just any update you could provide on the channel and the go-to-market strategy there would be great.

Yes. I mean, the overall strategy doesn't change that much. I mean, we've obviously been going through a lot of work with our channel to really help them understand what -- where we want the channel focused in a -- let's call it the cloud-first world as we look forward a number of years. So I'd say channel is in transition in a lot of ways. Those partners that have made the transition towards being CSPs and really embracing subscription and Citrix Cloud are doing extremely well. They have reported growth rates that are much, much stronger than in our overall business. Those partners, however, that are more historically focused and oriented towards renewing maintenance agreements, that's more of a challenging transition. We've certainly put the incentives behind the strategic direction of the company, and we're going to keep pushing there over the next couple of years. We are doing more direct touch, as you'd imagine as we sell more cloud services. And we have been continuing to build out our direct go-to-market now for a few years. And so you'll see us continue to do that as well.

And your next question comes from Raimo Lenschow.

This is actually David on for Raimo. First, thanks for clarifying the subscription revenue bookings linearity this quarter. That makes sense. Maybe more of a high-level question first for David. Since the Microsoft announcement about entering the Desktop-as-a-Service market, I'm curious to see what you've heard from customers so far. And maybe longer term, how do you see that relationship with Microsoft evolving?

Yes. The relationship with Microsoft overall continues to be great. I mean, we do so many things across Azure, across Citrix Cloud, across interoperability, whether it's on the networking side, on the mobility side and then obviously on the Workspace side. So as Microsoft continues to evolve their platforms, it used to be called RDS, now it's Azure Remote Desktop, we'll continue to build on top of those platforms and just extend the service for customers. The thing that we announced, however, just at Microsoft Ignite was 2 important points. One was we'll effectively become a Microsoft CSP in some dimensions. And really, what that means is that we can now provide more turnkey-complete solutions, bundling in Microsoft capabilities along with Citrix-native DaaS service built on top of Azure. We haven't announced exactly when that product is going to be GA, so stay tuned for that as well. But it's just a continuation of the relationship we've had for a couple of decades now. Feedback from customers has been, "Love to see it. Anxious to get our hands on it." That's pretty much where we are. We'll, of course, be doing that on a white-glove basis over the next quarter or so and then talk much more about GA as we go forward.

That makes sense. And maybe if I may, a quick follow-up on the transition. In the previous calls, you mentioned that the first half of '18 would be focused more on net new customers or net new whitespace for Citrix Cloud and subscription and that TTU motions would kick in the second half of the year. Just curious what you're trending here and what kind of the split between net new customers versus existing base you've seen this quarter.

Yes. TTU continues to be a small minority overall number, and that's by design. And so when you -- if you step back and when you think about it strategically, we wanted to make sure that we're generating a lot of momentum in net new accounts and net new use cases. It may be an existing customer but just outside of what I would consider there a traditional virtualization deployment. So that's how you should think about where we've had the focus. Now as we go forward, though, I mean -- TTU is trading up and transitions is what the acronym stands for. It's just a combination of helping those customers today that have a virtual deployment operate it much more efficiently and give them the ease to adopt hybrid cloud in their own environment but also start to expand into much more of these general-purpose capabilities that I talked about before. So that'll be a bit more gradual motion, and we'll start to ramp that in Q4 and then, of course, into next year.

And your next question comes from Nikolay Beliov.

And David, as you spend some time talking to customers, what are you hearing in terms of the microenvironment, emerging economies, Brexit, Italy, all the moving pieces globally going on? What's customer sentiment?

Yes, Nikolay. I'd say, overall, the general environments pretty good still. I mean, there's a little bit of noise out there. And we've seen a bit of volatility in the last couple of weeks. But in general, the underlying demand drivers for most people remain strong and so, therefore, that translates into a pretty good spending environment. Of course, there's discussions going on about midterm elections, interest rates, Brexit, none of the normal things, but I think people are taking them in stride. And we haven't seen a material change in the demand environment.

Got it. And Drew, just wanted to get a sense for -- did you say the unbilled DR for 3Q was $340 million or $240 million?

Unbilled for Q3 was $243 million.

$243 million. What was it last year same quarter?

$216 million, roughly.

No, that was last quarter.

Oh, I'm sorry. Yes, I'm off. It's 50 -- yes, looking through our color. $57 million.

Okay. And you provided in the supplemental numbers last quarter different numbers. So I guess, we can go for this off-line. But going forward, how do you expect -- talk to us about the seasonality of unbilled DR. Is Q4 going to be the highest and then it tapers down in Q1 and then it starts building up in 2019? I think that's important for us to help us model subscription revenues using the waterfall.

Nicolay, let me jump in there because I don't think we have talked about the duration of unbilled revenue yet. We'll provide -- because that's the one piece you just need to really triangulate what you're getting at. So unbilled, just to remind everybody, our typical cloud contract is 3 years TCV with annual billings. So we bill that first one upfront and the other 2 go into unbilled. And as Drew said, unbilled is nearly $250 million right now versus $50 million a year ago. So I mean, we've had a huge increase in unbilled as we've been driving this transition. So you really should look at that in concert with the actual deferred revenue numbers as well.

So yes, as the mix increases, it continues to increase. That's how to think about it. It follows the mix.

Yes, and going back to my question about the seasonality. Is Q4 going to be the peak in unbilled DR, and then it's going to taper down in Q1 and build up throughout the rest of 2019?

Nicolay, we're not in a position where we're going to give a lot of forward guidance on unbilled at this point in time, so we'll talk about it coming out of Q4 and much more seasonality. We've got 4 quarters of actuals right now, and they've all been pretty strong growth. The strongest of the year, of course, was Q2 this year. We just had a blowout quarter last quarter. And so we wanted to get a little bit more history under our belt before we start forecasting some of these off-balance sheet items.

And your next question comes on from Heather Bellini.

This is actually Mark Grant on for Heather. Just a couple of quick ones for me. Drew, given the revenue and the earnings forecast for next year, and I know we're going to get a lot more detail on this on 4Q, but can you give us a sense of how you're feeling about free cash flow next year? And then any potential updates on churn metrics given the subscription transition?

Sure. Well, it's still -- we're still in the middle of -- we're early in Q4, so we're still early in the planning process. And so the first -- in terms of operating cash flow, you could see that it's clearly going -- yes, it's still just clearly following the revenue, right. As we continue to build the mix up, as the revenue goes up, it's going to follow that. And obviously, the other dimension is as we expand margin, then that just falls to the bottom line. So I think you can get a sense for how we guide in terms of the 4% revenue growth, and about $6 a share in EPS should give you some level of guidance. And that should pop some number out at the bottom. But right now, operating cash flow for the quarter is up -- was up 18% year-on-year, and that's up operating cash flow. And then, again, we've seen the nice uptick kind of following this trend with the revenue being up along with margin expansion, where we're now roughly, I think, through Q3, trailing 12 months, about a little north of $7.50 per share on a free cash flow per share basis. And so we obviously expect that, that should continue to go up as we move towards our 2020 targets. Progress against those targets.

And then any update on the churn metrics?

No, nothing new there.

And your next question comes from Keith Weiss.

This is Sanjit Singh for Keith. David, I wanted to do a little bit of a status check relative to some of the initial milestones you laid out last year in terms of your 2020 targets. You talked about hitting, I think you said, 50% to 55% of subscription bookings mix in '19. Does that sort of put you on track in terms of your overall 2020 goals when it comes to subscription, ratable mix as well as top line growth? Would you say that you guys are sort of tracking to plan or ahead of plan relative to the framework you introduced last year?

We're well ahead of plan versus the plan that we laid out. In fact, if you're looking at it on a revenue basis, we'll exit this year, based on current guidance, a better part of $100 million ahead of plan. Cash flows, as Drew just pointed out, cash flow from ops per share is already at $7.60 or so, trailing 12. So I'd say we're executing very well. We are going to exit this year at about 40% mix, up from mid-20s last year, mix of subscription versus perpetual bookings. And we'll continue to drive that next year. If we can get up north of 55%, while it's still a couple of hundred basis point headwind to revenue growth, that's well on the way to our overall goals. I think it's fair that after we exit this year, we'll come back, and going into 2019, update our multiyear goals just once we close out the full year. I think it's a good time to do it.

That makes sense. And just one quick follow-up. The perpetual license business has been stronger than certainly we have expected the last couple of quarters. And any sort of comments that you have on what's driving that strength for the licensed business given that you've seen some weakness from the cloud service providers in NetScaler? So are we seeing sort of more on-prem Workspace deployments than maybe you guys had initially expected? I mean, any sort of color there would be helpful.

Yes, I'd say it's 2 things, not just cloud service providers, but we've had strength in NetScaler enterprise. And so that part of the business is largely perpetual license. And that's the primary driver there. Workspace, it's well over half subscription these days. But since the overall business is growing so nicely, that means perpetual is growing at the same time. So I'd say it's basically just moving from strength to strength.

And your next question comes from Walter Pritchard.

This is Drew Foster on for Walter. You've seen some good progress in terms of large Citrix Cloud deals booked so far this year. And I'm curious to what extent those wins are serving as references to other customers in your pipeline.

Yes. I mean, as you'd imagine, big cloud customers always want to talk to other ones. So we'll -- on the public references, we'll talk about publicly, but most of them are private so will connect CIO to CIO. Top 10 deals for cloud in Q3 were all over $1 million each.

And then just trying to get a better idea of the CSP business in terms of scale. How does that compare in scale relative to the larger Citrix Cloud business?

I'm sorry, did you say the SSP business?

CSP.

Yes, CSP, sorry.

CSP business. Yes, CSP's a minority now. I think CSP business runs $120 million a year roughly. Is that right, Drew?

That's right, yes.

Versus the overall number.

So call it maybe a quarter of the subscription business?

Yes.

And your next question comes from Kirk Materne.

This is Peter Levine for Kirk. I just have one question here. Your initial guide for '19 talked about capacity and infrastructure investments in '19. Can you kind of provide a little more color of what those investments will look like? And then second part to that is, in the second half of '18 versus the first half of '18, I think your capacity, your headcount was somewhat flat. Can you talk about new heads you're bringing on? And how do you plan to deploying? Is it geography, product based and how that would look in '19 as well?

Yes. As Drew pointed out, we're investing in capacity and the infrastructure needed to ramp our cloud services. So you can think about that in 3 big buckets: capacity, quota-carrying and customer-facing people, and that'll be across the globe. As we see opportunity, we'll continue to invest there. Second area would be around the customer success. Those folks will be more responsible for picking up a customer after the initial sale, making sure that they're doing the correct level of enablement, ramping new services, et cetera, just really making sure they're successful. That will ramp up. And then the third is around just cloud operations, the typical things to manage the clouds. These are already big teams, but I'm sure we'll continue to invest behind that. The one area that we didn't really talk or you didn't ask about is around innovation. That's been a combination of both remixing the types of skills that we've had. We've had a lot of that going on over the course of last year. Also, we're continuing to invest in innovation capacity as you see R&D starts to tick up a little bit as well. So those types of things we'll continue to do into 2019.

There are no more questions in queue.

Great. Well, thanks, everybody, for joining us. We'll talk to you again in 3 months.

This concludes today's conference call. You may now disconnect. Have a good day.