Citrix Systems (CTXS) Q3 2011 Earnings Call October 27, 2011 8:00 am ET Executives Eduardo Fleites - Director of Investor Relations Mark B. Templeton - Chief Executive Officer, President and Director David James Henshall - Chief Financial Officer, Principal Accounting Officer and Senior Vice President of Finance Analysts Daniel H. Ives - FBR Capital Markets & Co., Research Division Adam H. Holt - Morgan Stanley, Research Division Steven M. Ashley - Robert W. Baird & Co. Incorporated, Research Division Kash G. Rangan - BofA Merrill Lynch, Research Division Heather Bellini - Goldman Sachs Group Inc., Research Division John S. DiFucci - JP Morgan Chase & Co, Research Division Philip Winslow - Crédit Suisse AG, Research Division Michael Turits - Raymond James & Associates, Inc., Research Division Rob D. Owens - Pacific Crest Securities, Inc., Research Division S. Kirk Materne - Evercore Partners Inc., Research Division Unknown Analyst - Presentation Operator
Before we begin the review of our financial results, I want to state that we have posted product classification and historical revenue trends related to our product groupings to the Investor Relations page of our website. I would 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 the 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 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 Executive Vice President and Chief Financial Officer. David? David James Henshall Thanks, Eduardo, and welcome to everyone joining us this morning. Today, we're hosting the call from Citrix Synergy in Barcelona. It's our annual customer and partner event in Europe. We're really excited to actually have a record number of attendees this week, up more than 40% from last year. Mark will give you an update on the event later in the call. So turning to Q3, revenue grew 20% to $565 million, adjusted EPS was $0.64, and we generated almost $190 million in cash flow from operations. We're continuing to drive leadership across Desktop Virtualization, delivering significant new technologies in cloud networking, and expanding the capabilities and footprint in our SaaS business. Trends that can be clearly seen in our results.
In the third quarter, revenue from new license sales was $194 million, up 28% from last year; license update revenue increased 7%; tech services increased 37%, led by consulting demand and support agreements; and finally, SaaS revenue was $110 million, up 20%.From a geographic perspective, the Americas region continues to execute really well, with revenue up 21% from last year including 26 individual deals greater than $1 million each with a metric that has more than doubled from a year ago. In EMEA, revenue was up 12% to $137 million; and Japan and Pacific posted another strong quarter with combined revenue growth of 39%. So overall, a very good quarter. So now, let's take a look at the Q3 results within our 3 main businesses. First, Desktop solutions grew 14% in total revenue from last year to $316 million, including product license growth of 24%. Year-to-date, this license revenue in this business is up 18% and is at the top of our 16% to 18% license growth target that we set for the full year. In Q3, sales of XenDesktop product were up more than 65% year-on-year, with about 20% of revenue coming through the trade-off program and the balance from new licenses. XenApp also increased last -- from last year as more customers are looking to application virtualization as a great way to deliver apps to tablets and other mobile devices. There's also a few other metrics that I think really demonstrate the breadth of adoption we're seeing, as well as the strategic value the customers are placing on Desktop Virtualization within their infrastructure. In Q3, there were $22 million-plus deals for XenDesktop, easily a record, and representing customers from healthcare, retail, insurance, government, education and other verticals. In total, over 3,000 different customers purchased XenDesktop, including 174 transactions for more than 1,000 seats each and 24 deals for over 5,000 seats each. Read the rest of this transcript for free on seekingalpha.com