Citrix Systems (CTXS)
Q4 2010 Earnings Call
January 26, 2011 4:45 pm ET
Mark Templeton - Chief Executive Officer, President and Director
David Henshall - Chief Financial Officer, Principal Accounting Officer and Senior Vice President of Finance
Eduardo Fleites - Director of Investor Relations
Louis Miscioscia - Collins Stewart LLC
Adam Holt - Morgan Stanley
S. Kirk Materne - Evercore Partners Inc.
John DiFucci - JP Morgan Chase & Co
Bhavan Suri - William Blair & Company L.L.C.
Philip Winslow - Crédit Suisse AG
Daniel Ives - FBR Capital Markets & Co.
Steven Ashley - Robert W. Baird & Co. Incorporated
Rob Owens - Pacific Crest Securities, Inc.
Israel Hernandez - Barclays Capital
Michael Turits - Raymond James & Associates
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Good afternoon. My name is Casey, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Citrix Systems 2010 Fourth Quarter and Fiscal Year Financial Results Conference Call. [Operator Instructions] I would now like to introduce Mr. Eduardo Fleites, Senior Director of Investor Relations. Mr. Fleites, you may begin.
Thank you, Casey. Good afternoon, everyone, and thank you for joining us for today's call, where we will be discussing Citrix's Fourth Quarter and Full-year 2010 Financial Results. Participating in the call will be Mark Templeton, President and Chief Executive Officer; and David Henshall, Senior Vice President and Chief Financial Officer. This call is being webcast with a slide presentation on the Citrix Systems Investor Relations website, and the slide presentation associated with the webcast will be posted immediately following the call.
Before we begin the review of our financial results, I want to state that we have posted product reclassification and historical revenue trends related to our product grouping to the Investor Relations page of our website. I'd like to remind you that today's conversation will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Securities laws. These statements are based on current expectations and assumptions that are subject to risks and uncertainties, such as the impact of the global economic climate, uncertainty in the IT spending environment, risks associated with our products, acquisitions and competition. 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, including the risk factor disclosure contained in our most recent annual report on Form 10-K, which is available from the SEC or on the company's Investor Relations website.
Furthermore, we will discuss various non-GAAP financial measures as defined by the 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 would like to turn it over to David Henshall, our Chief Financial Officer. David?
Thanks, Eduardo, and welcome to everyone joining us this afternoon. As you can see from the release, we finished off the year with great momentum across all of our businesses, delivering $530 million in total revenue, nearly $100 million increase to deferred revenue and $180 million in cash flow from operations.
For the full year 2010, total revenue was up 16% to $1.87 billion, GAAP earnings per share increased 41% to $1.46, while adjusted EPS was $2.08. I'm really pleased with our execution in the field, gains in app, networking and SaaS, and a growing leadership across desktop virtualization, trends that can be clearly seen in our financials.
So looking at the fourth quarter, revenue from new license sales was $196 million, up 17% from last year. License update revenue increased 13% annually driven by demand for subscription advantage renewals and the XenDesktop Trade-up program. Tech services increased 40% led by record consulting utilization and support agreements attached to our NetScaler products. And finally, online SaaS revenue was $95 million, up 16%.
From a geographic perspective, the Americas region continues to execute really well, delivering revenue up 27% from last year to $239 million. Included in this number is product license growth of about 36% year-on-year, and 16 transactions greater than $1 million. Internationally, the business environment was mixed in Q4, similar to what were seeing all year. Japan and Pacific combine for a steady 15% year-over-year revenue growth, while EMEA revenue was up 7% to $153 million as we continue to see uneven demand across Europe. This was despite closing $12 million-plus transactions in the region. We remain a little cautious on these markets going into 2011.
So overall, a very solid quarter to cap off a great year for Citrix. As we entered 2011, customer activity metrics and pipeline continue at record levels. We remain focused on delivering financial results, while investing to expand our capabilities and capacity across our main product categories of Desktop, Data Center and cloud and SaaS.
So let's take a look at the Q4 results within those three areas. First, our Desktop Solutions business grew 14% over last year to over $325 million, including license growth of 16%. The results were led by XenDesktop, with strong demand drove total revenue of $95 million, up 60% sequentially, and up 230% from last year. Of the $62 million in XenDesktop license revenue, approximately 70% came from new licenses and 30% from licenses acquired through the Trade-up program.
So to provide a little more context on the XenDesktop business in Q4, there are a few metrics I think really demonstrate the breath of adoption we're seeing and the strategic value that customers are placing on desktop virtualization within their infrastructure. In fact, more than $30 million of the growth in deferred revenue during Q4 is attributable to XD subscription advantage renewals and trade ups. 15 of the 29 deals over $1 million in the quarter included XenDesktop licenses. There are more than 230 XD transactions greater than 1,000 seats each and over 30 with 5,000 seats each. Download to Vevo licenses increased by more than 100% sequentially. And finally, over 3,000 different customers bought XenDesktop in the period. So throughout 2010, we captured almost 10,000 XD customers, up 3x over 2009, with 5,000 of them taking advantage of the 2010 trade up promotions.