Citrix promises to transform by doing more of the same
More cloud, more integration and more security is new CEO Henshall's plan
Citrix's new CEO has revealed his plan for the company and it looks like more of the same.
Speaking on the company's Q3 earnings call, CEO David Henshall said “to understand the context behind our strategy, you need to step back and look at the infrastructure from a customer's point of view.”
“They are adopting cloud services and SaaS applications on a broad basis,” but most will “still have the majority of workloads running on prem for five years.”
Citrix's strategy is therefore to do three things: Build a cloud with lots of services, so customers can shop from one provider instead of several; Provide security products that manage multi-cloud environments; Create a unified users experience so that when organisations use multiple SaaS services and clouds, their users get some consistency.
“What we are doing is providing an integrated approach for administration, identity, authentication, provision and management,” Henshall told investors. “Citrix is hosting the management layer while the customers gets the choice where to run the workload from any clouds or from any on premise datacenter. We integrate the administration and control across all of these environments allowing them to embrace the hybrid-cloud architecture, while reducing their need for specialized IT skills.”
The plan will see most Citrix revenue come from subscriptions, Henshall said, as “With this strategy, we expect to expand our total addressable market by more than 35% over time”.
“The financial opportunity is pretty straight forward, when you look at it from a unit economics point of view of a new cloud customer as well as occur installed base customers adopting Citrix Cloud subscriptions. In each case the customer can consume Citrix Cloud s either SaaS or a hybrid cloud offering the ladder of giving them the choice between the two.”
Henshall also reported a robust set of results for the company's third quarter. Revenue hit US$691m, up three per cent year-over-year. Net income was $127m. or $0.82 per diluted share, rather nicer numbers than the $112m and $0.71 this time last year.
SaaS revenue surged 32 per cent and there's now $1.7bn of deferred revenue on the books. EMEA starred, with revenue up by seven percent, although Asia fell by a single point.
+Comment: Henshall's strategy is far from startling, because it is pretty much steady as she goes for Citrix's products. The company has emphasised subscriptions and its cloud services for several quarters: nothing the CEO said yesterday suggests new directions for the company's products. Rather he seems to hope that Citrix can help customers consume multiple cloud services, but have one management plane providing application publishing and security services all while using whatever infrastructure makes sense. This is an an idea The Register has encountered by plenty of other vendors, from the likes of VMware which goes head-to-head with Citrix to emerging vendors of cloud access service brokers that promise to build from single-sign-on to more profound experiences.
But this transformation plan may not be about technology: Henshall made repeated reference to a new operating model and revealed new accounting practices and metrics Citrix will use to explain its progress.
If that's the main idea, fair enough: as a listed company must enhance shareholder value above all. But it will sure be interesting to see if Citrix can transform its business without either transforming the technological foundations or adding a new wing that offers entirely new growth possibilities. ?