思杰系統 (CTXS) 2020 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Citrix First Quarter 2020 Earnings Conference Call. (Operator Instructions)

Please be advised that today's conference is being recorded. (Operator Instructions)

I would now like to hand the conference over to your speaker today, Traci Tsuchiguchi, Vice President of Investor Relations. Thank you. Please go ahead, ma'am.

Thanks, Gigi, and good morning, everyone, and thank you for joining us for today's first quarter 2020 earnings call. Participating on the call will be David Henshall, President and Chief Executive Officer; and Arlen Shenkman, Executive Vice President and Chief Financial Officer.

Please note that we have posted our first quarter earnings letter 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. Actual results could differ materially from those anticipated.

Additional information concerning these and other factors is highlighted in today's earnings letter and in the company's filings with the SEC. Copies are available from the SEC or on our Investor Relations website.

Furthermore, we will discuss various non-GAAP financial measures as defined by the 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 our earnings letter on the Investor Relations website -- page of our website.

Now I'd like to turn it over to David, our President and Chief Executive Officer. David?

Good morning, and thank you for joining us. I hope that everyone is staying healthy and safe during this time.

So as you can tell, we've moved our earnings call to occur before the market opens to decrease the scheduling conflicts that have been due to the concentration of companies that typically report after market close this week.

So as you saw in our earnings letter that we released early this morning, we had a very strong first quarter reflecting the importance of Citrix to our customers' business continuity efforts. There's really no doubt that our business benefited from the near-term pickup in demand as a result of this unprecedented pandemic as remote work in general changed from a nice-to-have to being truly mission-critical for all businesses.

More importantly, longer term, we believe that employees and employers will view the way in which we all work through a very different light. Over the long run, we believe that these secular trends will be a tailwind to our business as organizations around the world are really recognizing the benefits to employee productivity, cost reduction and operational flexibility.

That said, as we consider our guidance for the balance of 2020, we certainly remain cautious due to the unknown financial impact that COVID-19 is going to have on economic output all around the world. However, based on the strength of our first quarter as well as visibility into the near-term pipeline, we are raising the top end of our full year outlook for both revenue and EPS. So of course, we're going to continue to assess our outlook for the second half of the year as more information on the scope of economic disruption comes to life.

So with that, we're now happy to open it up for questions and talk through the first quarter.

(Operator Instructions) Our first question comes from the line of Phil Winslow from Wells Fargo.

And glad to hear that you all are healthy and best wish to your families and your team. David, just a question for you. Obviously, strong first quarter results. I wonder if you can give us some color into sort of what you're seeing in the current month. You mentioned some of the visibility you have in Q2. Just maybe compare sort of March to April for us, and then just one quick follow-up.

Sure, Phil. I'd say that if you step back and look at Q1, obviously, March, when everybody realized that they were going to have to put business continuity at the top on the list, there was a surge in demand. So we did a few things.

So we actually did these looking back into the latter part of January and February to prepare for this. So in anticipation, we created a number of unique offerings: offerings for SMB customers to simplify access, security, et cetera; offerings for our installed base customers to just ramp burst capacity very quickly with, we'll call them, limited-use nonrenewable licenses; and a number of other things. And so a lot of uptick clearly throughout March and some continuing into April as well.

It depends a little bit by geography in terms of the rate and pace. If you look at our results based on the geos, you'll see that very strong results across EMEA and the U.S. APAC was a bit more of a general and I see that one continuing over the course of this quarter as well.

And so overall, I'd say, when we look at the coming quarter, clearly, business continuity and related activities continue to be incredibly important to businesses.

Medium term, I think a lot of companies are going to step back and realize that the triage, if you will, that they put in place in Q1, not just Citrix customers, but companies in general, is really limited. I mean the ability to just give somebody a video chat app or connection to e-mail is really the basics. And so we're having conversations now about people stepping back and realizing that their business runs on hundreds and hundreds of applications. So the need for more complete infrastructure is going to continue to be important.

Network bottlenecks, connectivity, those types of things were also raised.

So I'd say the focus will change modestly in Q2 and beyond, but overall, just reinforces the critical position that Citrix plays in our customers' infrastructure.

Great. And then just to follow up on that. If you think about the deployment types, obviously, one of the things that you've been talking about is -- over the past several years is the shift to the cloud from your partnerships with Microsoft. With sort of the crisis taking place and maybe some of the strain on on-premise data centers, do you see an acceleration in shift to the cloud? And how do you think that is and will play out?

Two things, Phil. I mean if you look at our business specifically in Q1, we have such a large base that is still on premises and we have over 7 million licenses in the cloud today. You balance that against roughly 100 million licenses that are on prem. So for our business, we saw a lot more expansion across that on prem, just sheer volume.

But in general, I think that this current crisis is really going to accelerate the overall trends that we've seen in the industry, whether that is the adoption of public cloud, SaaS, remote and flexible working. These are trends that were already in place before this crisis hit. I think this will just serve as an accelerant to continue to move those forward because businesses realize that this isn't a onetime event. This is really an example of just the overall trends and the reasons they were adopting many of these new technologies and business models.

Our next question comes from the line of Karl Keirstead from Deutsche Bank.

And congrats on the quarter and for the collective company efforts to help so many customers through this crisis. I wanted to ask you a couple of questions, maybe one for you, one for Arlen.

Dave, for you, maybe you could describe mechanically how 2Q plays out as you phase out these limited use or burst capacity licenses. I presume that a portion of customers taking advantage of those programs will have to come back to Citrix assuming they're going to continue operating at elevated capacity levels to negotiate new deals, I presume, at more normalized price points. So maybe you could describe how that will work. Obviously, your 2Q revs guidance implies a decel back down to a more normalized 3% growth rate. But maybe you could talk through mechanically how this end of the burst capacity will play out.

Sure, Karl. I mean, against the backdrop of a very, very uncertain economic environment is how I think everyone should view our forward guidance. You talked specifically about the mechanics, you're right. A lot of companies around the world went into this crisis assuming that the shelter-in-place orders were going to be a matter of weeks. I think many people are stepping back now and realizing that we're not going to get back to a more normalized environment until vaccines are widely distributed around the globe, and so that becomes quarters or even years.

And with that as a backdrop, we certainly believe that part of our operational execution over the next few quarters is about helping take some of these burst capacity licenses and really work to transition them into more permanent long-term cloud licenses. That's going to be the right decision for customers and so we'll put programs in place to do that as well.

Okay. Great. And then maybe for Arlen. Arlen, despite the massive upside to reported revenues, a few of the other metrics didn't get quite the same lift. Operating cash flow was solid, but up only 6%. Reported deferred revs was actually flat year-over-year. I suspect that there are some cash collection payment term issues that might be causing this dynamic of huge revenue lift, but some of the other metrics not getting a lift. Do you mind describing those? And if in your response, you could confirm whether you still feel comfortable with the free cash flow target of $7 to $8 per share this year.

Yes. Thanks for the question, Karl. As you said, there's obviously a number of moving factors in the free cash flow and in some of the revenue there. There's subscription mix and then there's the mix within subscription. And as you highlight, if you look at this quarter, we had -- on-prem was up essentially -- perpetual licenses were up 28%. And as you also saw, we had a pretty significant increase in on-term flex licenses, which obviously also come up upfront. So that leaves us a great opportunity to go renew those as you highlight. But you're right, those things do move within that.

And again, there's a number of factors involved, but we feel comfortable with where we are in terms of our performance, and obviously, in terms of how we're thinking about our free cash flow for the year.

Our next question comes from the line of Heather Bellini from Goldman Sachs.

Great. Thank you, David and Arlen, for taking the questions and hosting the call in the morning. A couple of quick questions. Just on the line of what Karl was saying just about kind of what you're seeing in terms of payment terms. Is there anything you could tell us about, from your existing customers, what you're seeing about their ability to pay bills on time? Are they asking for longer terms?

Also, are -- people who just happen to have renewals up in the quarter or even so far this quarter, are you seeing them ask for discounts like we're hearing from other vendors?

And then, David, I just wanted to follow up on the limited-use licenses you're mentioning, is the -- what is the term of those? Is it variable? Is it no more than 3 months so that -- is it -- was it a month's license? As you suggested, people thought we wouldn't have been in this situation for as long as we've been in. But can you share with us some specifics on how long those limited-use licenses, what the duration of those are before we start to see whether or not people can convert? And then I just had a follow-up.

Sure, Heather. Let me take the first part of that -- the second part of that question then, Arlen, why don't you jump in on the first part.

So overall, the license structure was somewhat customized based on what the customers needed at that point in time. But I'd say that, overall, it was a year or less. It certainly didn't -- none of them extended beyond 1 year. They are nonrenewable licenses really just intended as burst capacity.

The context, again, similar to what I said earlier, is that once we come out of this, regardless of how long that takes, the expectation is that we'll land in a place that is somewhere between where we are and where we were when it comes to remote work. Most of the customers that I talk to are realizing a level of productivity benefits, cost savings and employee engagement that they hadn't -- expect and so they're going back and questioning some of their original assumptions, whether that is real estate footprint, travel, attendance at major conferences. And so longer term, I expect that these will -- this environment will continue to be a secular change that's very good for our business.

In fact, Gartner just released a survey a few days ago pointing out that 74% of companies believe that they're going to expand remote work once the crisis has passed. So I think it's a combination of both conversion of our short-term licenses that we put in place to help customers through the pandemic as well as broad secular changes that will occur over the course of many quarters or years.

And then, Arlen, on the payment terms?

Yes. On payment terms, Heather, we obviously kept our finger really on the pulse of that as we entered the quarter. I look back at a number of deals, and frankly, it was pretty limited. Certainly, we're sensitive to customers' needs and we're responsive, but it was nothing really, honestly, out of the ordinary in terms of what we saw in terms of discounting or request for extended payment terms or collections.

And then, David, my only other question for you is just long-term deferred revenue. Just in this environment, given people are trying to conserve cash, should we expect this to just start ticking down from here? Do you have any color you could give us about that line item, given people might not want to be paying multiple years upfront for quite some time?

Yes. It's hard to forecast at this point in time. I mean, if you look at our duration, it obviously came down because of all the shorter-term capacity that we put in place. But in general, you step back and look at our future committed revenue and it was up 19% year-over-year versus, I don't know, 13%, 15% growth in the back half of last year. So we did see a broad acceleration.

I think it will depend over the next couple of quarters in terms of how companies' individual businesses are impacted. But in general, the importance of infrastructure to keep the roles that are effective remotely, to keep those people engaged is going to continue to be very strategic and very high on the list of what customers are prioritizing. So we'll come back and report on that when we have better visibility into what some of those dynamics are.

Our next question comes from the line of Mark Moerdler from Bernstein Research.

And congratulations on the quarter, and hope everyone on the call stays safe and healthy. I've got 2 questions. David, the strong Workspace beat, was this predominantly due to existing customers buying more capacity? Or were you seeing uptick in new clients buying Workspace and implementing it? And then a follow-up question.

Sure, Karl (sic) [Mark]. I'd say the context for the answer is that Citrix has a footprint in just about every medium and large business in the world. I mean we have hundreds of thousands of accounts right now. So by definition, most of our business does come from existing customers.

And -- however, as you've seen in some of our earlier presentations, we're generally penetrated about 30% into the available knowledge workers in those businesses. So we have a lot of room to continue to expand penetration. So that's where the bulk would come from.

We did add well over 1,000 net new customers in the quarter, but those tend to be more on the small-, medium-sized business as we have such broad distribution across large companies.

Excellent. And then on Networking, can you give us some more color on the Networking beat? With products were clients purchasing? Were they buying term licenses or hardware, software? Was there special discounting? Any color would be appreciated.

Sure, Mark. Networking is continuing the similar trends that we have talked about in prior calls. The ability to deliver a pooled capacity license, which allows customers to share -- effectively share capacity across a whole bunch of different deployment models, whether that is on-prem, in the cloud, hybrid, et cetera, is a story that resonates and so that's been the primary driver of the business overall.

If you look at our earnings letter, we will point out that software accounted for 44% of total Networking revenue. That's continued to move up pretty dramatically. So we've seen good results there.

We also pointed out that Networking subscription in the first quarter increased over 130% year-over-year. So it's a continuation of the trends that we have seen before.

Our next question comes from the line of Walter Pritchard from Citi.

David, a couple of questions for you on the product side just around your plans. As it relates to your phaseout of perpetual, how are you thinking about that this year given what's been sort of a change in the landscape?

And then interested just on the strategic projects that you've highlighted, things like trade-up and so forth that could weaken in the second half. How did you see that type of business fare in the first quarter?

Sure. On trade-up, trade-up was deprioritized certainly in the first quarter. I mean our teams were working around the clock just to help customers focus on getting their infrastructure up ramped, debugged, et cetera. So we didn't have a whole lot of time to focus on that. I mean we'll start to pivot back to that over the next couple of quarters.

Could you repeat the first part of your question, please?

Just on the perpetual licenses and how you're thinking about it. I mean you were in a position, I think, for the year where you were looking at ultimately phasing those out. How does that -- does that change at all given the environment we're in now?

Walter, I think that really -- no real change. I mean, as we've stated, we expect to do so by the end of this year. We haven't set an exact end-of-life date. But we've already started to make the changes in terms of sales compensation and others to deprioritize that and really continue driving our subscription transition.

We will, of course, be sensitive to customers in this unique environment. But I'd say that our plans really haven't changed.

Our next question comes from the line of Sanjit Singh from Morgan Stanley.

Congrats on a really impressive Q1. Had a couple of questions. Maybe to start with Arlen. A number of your peers have frankly taken the task of withdrawing their full year guidance. And so my first question is what sort of gives you the confidence? Obviously, you had a really strong Q1. But as sort of David mentioned, we are going to a more uncertain second half. So what are some of the underlying assumptions you guys made that gave you the confidence to guide to the full year? And how is that taking into account people returning to work earlier versus later. Just if you could sort of walk through some of the fundamental assumptions around giving guidance.

Thanks. I think we feel good about the trend that we're in and I think you see that in terms of how we're thinking about the second quarter, and as David said, in terms of the relevance the strategy we've been executing upon it. So we see ourselves continuing to be part of an incredibly important conversation with our customers around remote work and enablement, and we think that will continue. That being said, the amount of uncertainty in the back half of the year is pretty significant.

So we're -- I think we remain confident in terms of our near-term execution. We understand our customers' needs and we understand where we are economically. In the back half of the year, I think we frankly feel as if there's just a lot more uncertainty in terms of the overall economic picture and where we'll end in the back half.

Got it. And then maybe, David, to follow up on Heather's question around the longer-term opportunity. You just recently stated that about -- you're at 30% penetration coming into this crisis of information workers. What has the sort of near-term sort of demand -- what sort of insight has that given you in terms of where that penetration could go ultimately? What is the sort of low-hanging fruit in terms of what verticals are the most under-penetrated coming in that could see the potential to really adopt this technology in a much more meaningful way going forward after we get past these short-term limited-use licenses?

I think a similar answer to what Arlen just articulated is that the conversation that we're having with customers is really important. I mean we've been able to prove that a lot of roles around the world can be performed remotely without a loss of productivity, security engagement, et cetera. And so while remote access had been seen as a tool for a limited group of employees, in some cases, even a perk, it becomes much more mainstream long term as companies step back and rethink their real estate footprints, their ability to access talent around the world in places where they don't have offices and many other real operational drivers that go well beyond the realities of business continuity.

I think this situation we're in right now has also increased the visibility of business continuity when it comes to people well beyond what it was historically, which tended to be more focused around systems and infrastructure. And so this is now a board-level conversation to make sure that businesses can continue to operate to the best of their abilities regardless of situation.

So I think that the overall conversation continues to be much more strategic over time. And for us, it probably means that Citrix as a vendor continues to increase and the strategic importance with all of our customers.

Right now, obviously, we've been focused on short-term needs and helping the companies be productive. Longer term, what this will expose is that the needs of employee engagement, employee experience, employee productivity and a lot of the overall value proposition that we talk about with some of our new solutions around the digital workspace I think will also really increase because the need to make people as productive as possible is very pronounced and it's certainly impactful to businesses.

Our next question comes from the line of Robert Majek from Raymond James.

Congrats on the strong quarter. You're benefiting from the shift to work from home, which is driving higher penetration rates, but the percentage of unemployed in the U.S. is in the mid- to high teens right now. How should we think about these 2 drivers and how it balances out for your results this year? And I have one follow-up question.

Robert, when we look at the opportunity pool, we always subsegment the total employee base that is operated by our customers into those that are knowledge workers or utilize compute as a critical part of their job day-to-day. So we really tend to look at those roles, which can be performed remotely, not just total employment.

And so while it's really unfortunate, the segments of the economy that have been most impacted in the short term wouldn't have been a typical opportunity for Citrix seeds. And so there's a little bit of a balance there and it's an important one that we think through as well.

That said, obviously, we're very sensitive to the overall economic environment and how that's going to play out over the balance of the year and how it's going to impact individual customers differently.

That's helpful. And what's the price difference between the limited use and the full licenses? Have you started to see any customers upgrade from the limited use to the full license?

And what level of upgrades have you baked into the full year guide?

I'd say it's -- there's no easy answer to the pricing question because a lot of these were customer-specific and a little bit bespoke. But if you look at the overall programs that were out there, it was way less than half the price of a traditional license.

In terms of people upgrading, it's too early to have that conversation yet. We'll talk about that once we have a couple of months under our belt.

Our next question comes from the line of Ittai Kidron from Oppenheimer.

And I'd like to echo some of my peers' comments on the good work and keeping everybody safe. We appreciate that. A couple of questions from me. First on the -- on exposures, Arlen, maybe you could talk about how much of your business is tied into SMB or perhaps to some of the more troubled verticals like travel, hospitality and the like.

Yes. We have obviously been through that analysis, and I think as you've seen over the years, we have a very, very broad customer base. And as David just articulated, we tend to have a very high focus on knowledge workers.

So what I would say is, obviously, we do have some exposure that's baked in generally into how we're approaching the business and is part of our analysis. But it's not an overweight or anything that you think would have an impact on a business as diversified and as horizontal as ours is.

Got it. And then as a follow-up, looking at your Networking business, I think everybody has been talking about how cloud should benefit substantially from what's going on here. Your SSP revenue didn't really move on a year-over-year basis. I know that visibility in this vertical is a little bit more complicated, but is there any view on whether that business should pick up as well given everything that's going on?

The SSP business, as you know, is a choppy business. As you mentioned, it was off a bit. But honestly, it represents about 2% of our revenue at this point. And so we'll continue to see our SSPs also continue to buy product, but it will continue to decrease as a percentage of our overall revenue.

Our next question comes from the line of Jason Ader from William Blair.

I've got 2 questions. First, I want to understand the $111 million you guys pointed out in your letter on the business continuity. What does actually that mean?

And then second question, what do you see as the competitive threat from Windows Virtual Desktop?

So on the first part of the question, what we wanted to do is just provide some incremental color in terms of the business drivers during the quarter. And while business continuity has always been one of the core value propositions that we deliver as part of our solution, it obviously increased. And while this is intended to be just a little bit more qualitative of a metric, it's just giving people insights into how much of our business was specifically tagged around business continuity. It doesn't mean that other parts of our quarter weren't influenced by that. But when we look at it, there was certainly a higher concentration than we've seen in prior periods. So we just wanted to give more specific guidance around that.

And then if you look at further down in the letter, when we talk about ARR, we did exclude all of those temporary burst capacity licenses from our ARR calculation. They did not meet the traditional definition. And so don't expect those to be in there as well. We look at it more as a number of people have said, if we here are successful in converting those to more permanent structures, those will be additive to ARR in future quarters.

Can you give us a quantification of how much of the bookings came from those limited-use licenses?

It's in the letter, but it's over $40 million worth of revenue in the period.

Okay. And then on the Windows Virtual Desktop?

Yes. So we continue to work very closely with Microsoft. We continue to have a lot of joint engagement from a go-to-market standpoint around customers that are deploying everything from Azure as base capacity that are looking at Windows Virtual Desktop as a resource zone that can be managed with Citrix Cloud. We saw a pretty good uptick in Citrix managed desktops in Q1. Think of that as a turnkey DaaS offering that sits on top of Windows Virtual Desktop to really offer not just Azure capacity, but all of the capabilities around a fully functioning desktop.

Continue to have most conversations focused on customers that have a mixed-use environment, customers that have resource zones that include things like Citrix on-prem, Citrix Cloud, Citrix on WVD or even WVD natively. And I think that's going to continue to be the primary focus over the next few quarters.

And WVD can't serve as that sort of single pane of glass?

Well, they're different capability sets, different scopes of technology and really a different focus. And so up to this point, it's been additive for most of our customers.

Our next question comes from the line of Kirk Materne from Evercore ISI.

Hope everyone's doing well. David, you talked a little bit about sort of the broader shift of work from home becoming more of a, I think, a board-level point of discussion as we get into broader digital transformation conversations. Obviously, right now, everybody is just trying to sort of level set and get their employees set up. I guess how many of your conversations these days are really about sort of the longer term versus just the near term?

And within that conversation, was just kind of curious, are people thinking about sort of the transition from licenses to subscription? Or is it really just about, look, I got to rethink what's going on today and then call me in 6 months and we can talk about sort of the future then once things have settled out a little bit. I'm just trying to get a sense on how much of your discussions these days are focused more on just the here and now versus sort of the longer-term strategy of work from home?

It's a good question, Kirk. I think, obviously, in the month of March, just about every conversation was focused on here and now. And frankly, on a personal basis, I was spending more time with hospitals and those types of organizations to just try to get them ramped up as quickly as they possibly could. So we were very, very focused on customers.

I'd say over time, though, I mean, discussions with my peers and other companies, it's really focused more on the longer-term benefits of work from home, the realization that people are as productive as they were in the office, and in many cases, more so. There's a lot of conversations going on about real estate, around travel, around large conferences and those types of things.

I think it's too early to say that we've got meta trends that are in place, but I think it's conversations that people are realizing that this is not just a set of capabilities that should be available to a limited subset of your employee base, but can be looked at on a much more broad basis and thought of it as just part of your overall infrastructure.

So I'd say it's relatively early, but the trends that we talk about and the drivers long term, I think, are certainly in place.

And somewhat related to that, just in terms of your expansion, I think, of your relationships with some of the bigger GSIs. Again, I think everybody was just trying to deal with, again, the here and now. But were there more inbound calls from those partners not maybe trying to set up deals for tomorrow, but starting to put together more, I think, comprehensive solutions that you all could go to market with in a bigger way, perhaps in 3, 6, 9 months, whenever things normalize a little bit?

Kirk, we are, of course, working through a number of opportunities with large partners, go-to-market and technology partners, but we're not in a position to kind of preannounce anything. Let's wait till we get things completed and then we'll talk about them.

Our next question comes from the line of Matt Hedberg from RBC Capital Markets.

Glad you guys are all well and helping all of us out. David, I'm curious, how long do you plan to sell some of these bespoke limited-use seats? And when looking across your existing base at the end of the quarter, do you have a sense for how full or maybe prepared your base is in terms of, I guess, these business continuity seats?

Second part of the question, Matt, no. I mean, we have a subset of customers, obviously, that we have talked to. I mean we have a customer base that reach into the hundreds of thousands. I will say that specifically to the limited-use licenses, we've announced that we will be phasing them out by the end of April. So that part of the program will phase out.

Of course, we're going to be focused on other initiatives across go-to-market, things that have arisen in a lot of customer environments that have been recognized as a bottleneck. There's also a large set of customers out there, maybe not customers of Citrix, but just businesses in general that took very short-term focused solutions like a VPN or something that they stepped back and realized that delivering the entire infrastructure over a more protracted period of time takes a more complete solution. So I think those are the kind of discussions that will transition into more of a complete digital workspace.

And then longer term, it will be focused on employee engagement, employee productivity, benefits of cloud, flexibility and the same types of conversations we would have been having 3 months ago.

That's super helpful. And then I found your comment really, really interesting noting that post-COVID, you think CIOs will settle somewhere between where they were pre-COVID and where they are today in terms of remote workers. I guess we'll see how that plays out. How do you think that impacts some of your other businesses like SD-WAN, you mentioned VPN, but maybe some of that -- those sorts of -- what are CIOs thinking about those sorts of businesses?

Well, I'd say that similar to my prior remarks, the secondary effect of some of these short-term solutions, those customers are going back and looking at overall performance, looking at network capacity and capabilities there. And so it will probably follow through with more opportunities long term.

Our next question comes from the line of Brent Thill from Jefferies.

On the go to market, are you going to accelerate your quota-carrying capacity this year based on what you're seeing? Or do you leave your plan unchanged going into this?

Well, I think we're looking at a number of different plans. I mean, we, as an organization, in general, are still hiring. We are still hiring quota-carrying capacity. We're still hiring in engineering, customer success and a number of other areas and we'll just balance that based on what the opportunities are in front of us.

Given the unique circumstances around the current environment, we're obviously replanning a few priorities and strategies and whatnot to just focus on what is most important for customers and what can help them over the balance of 2020.

And just going forward on the deferred revenue line item. Can you just talk to the importance of that? I think many have asked why we're not seeing faster growth. Do you anticipate that, that will accelerate going forward?

I think as you think about how we're going through this transition, I think it's much more important to focus on that future committed revenue number, which is up 19% year-over-year. So we added about $400 million of unbilled and I think that's a much more important indicator, particularly as we talked about, Brent, which is there's a lot of noise in our deferred number between prepayments and all the other things that happen. So we think that the real place to focus is on future committed revenue.

Our next question comes from the line of Raimo Lenschow from Barclays.

And I echo the comments from my earlier analyst colleagues. Two questions. First, on the emergency buying that -- or the emergency situations that you saw in March, did that continue in April? Or is that -- you mentioned the program for limited uses got extended to April. But are we kind of pretty much done with that in March or you still have more people coming there? That's question one.

And question two is on SMB like what are you hearing from the partners? And what are you seeing in terms of SMB versus Enterprise behavior at the moment? Is there more stress on the SMB side versus Enterprise already? Or what are you seeing there?

Yes. SMB has actually been very resilient throughout this period of time. But for us, it is a relatively small part of our overall business. So it won't move the needle.

In terms of the emergency buying, I'm not sure I would exactly qualify it that same way, but there was certainly a huge step-up in the middle of March that has come down from a level of intensity. And then it becomes more of a sector by sector, geo by geo. As I mentioned at the early part of this call, you didn't see quite the spike in Asia Pacific Japan. It was more gradual over time. It just is a reflection of how quickly countries or regions went into a shelter in place, work-from-home type situation. And as you saw across Asia, that was at a much different pace than the United States, for example, that pretty much moved into that mode over the course of a week or two. So I think we'll certainly not see that level of burst capacity purchasing. But it's still obviously a high priority item for a lot of customers.

Our next question comes from the line of Brad Reback from Stifel.

Great. A couple of quick ones. David, on the M&A front, do you see this COVID situation as an opportunity to potentially get more aggressive as privates maybe have some financial stress?

Hard to tell. I mean it's hard to know exactly what individual companies are thinking from an intent point of view. But I will say when it comes to our internal plans, we continue to be very aggressive in looking at the landscape, looking at opportunities that will accelerate our existing road map or very close adjacencies.

And the backdrop there is, of course, we maintain a very disciplined filter, looking for the right transaction at the right price and making sure that the benefits that we can bring to that are demonstrable.

Great. And then you've mentioned a few times your expectation that COVID may impact on your customer base structurally sets himself up going forward into the future. How does this impact Citrix's structure going forward? And how long do you think it would take to implement those types of changes?

Well, when it comes to our own business, I mean, we're in a very fortunate position. I mean we have been delivering the future of work for 30 years. This is what we do. And so we are way more prepared to be able to work remotely and so we've had a highly distributed workforce.

That said, we have been 100% work from home for the better part of 2 months now. And it raises visibility into certain practical challenges. There are a few roles that just can't be performed as efficiently remotely as they can in person. And even though that's a very limited number for us, it is more pronounced than other industries.

But we're going to take a step back and look at our own infrastructure, our own work-from-home practices and probably balance somewhere in the middle. I'd say that we had pretty good foresight into this. And so in the January time frame, we had gone through stress testing of our systems, some large-scale drills and whatnot. And so as we moved into a 100% work from home, we did it without a hiccup.

We have already decided that we won't be traveling on an internal basis for the balance of 2020. As you would expect, we have canceled most of our large-scale events over the next few quarters. Those are just the practical realities of where we are from an environmental standpoint. We'll step back and look at the most efficient way to go forward. There is certainly in-person meetings with customers and other things that are going to need to happen. But I think building up the skill sets to be as efficient digitally as you are in person is something that Citrix as well as a lot of other companies are going to focus on going forward.

Thank you. At this time, I'm showing no further questions. I would like to turn the call back over to David Henshall, CEO, for closing remarks.

So thank you, again, everyone, for joining the call this morning. As we look ahead to all this global economic uncertainty, we're, of course, going to make the decisions to operate our business in the best interest of our customers, our employees, our communities and our shareholders. We look forward to engaging with many of you virtually this quarter and talking to you again in 3 months. Have a great day, and please stay safe.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.