Citrix Systems, Inc.
Q1 2007 Earnings Call Transcript

Published: 26 Apr 2007

[Operator:]

Good afternoon. My name is Celeste and I will be your conference facilitator today. At this time I would like to welcome everyone to the Citrix Systems First Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question and answer period. (Operator Instructions). Thank you. I would now like to introduce Mr. Eduardo Fleites, Director of Investor Relations. Mr. Fleites, you may begin your conference.

[Eduardo Fleites:]

Thank you, Celeste. Good afternoon, everyone and thank you for joining us for today's call where we will be discussing Citrix's first quarter 2007 revenue and financial highlights. Participating in this 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 will be posted immediately following the call. Before we begin our review, I want to reiterate changes introduced last quarter regarding the format of our product performance discussions. We have classified our products into four groupings that map to the evolution of our business. The four groupings include, application virtualization products, application networking products, online services and other, which contains our emerging products. This product classification and historical revenue trends, related to these four groupings have been posted to our website, and David will be discussing their performance in his prepared remarks. As we get started, I want to emphasize that some of the information discussed in this call may be characterized as forward-looking statements made pursuant to the safe harbor provision of the U.S. securities laws. These statements involve a number of factors that could cause actual results to differ materially including risks associated with the company's businesses involving the company's revenue growth, products, their development and distribution, product demand in the pipeline, economic and competitive factors, the company's key strategic relationships, the effect of new accounting pronouncements on revenue and expense recognition, including the effect of FAS 123R on certain of the Company’s GAAP financial measures, acquisition and related integration risks, intellectual property related risks, and the company’s ongoing review of its stock options grants and practices and the related accounting. Additional information concerning these factors is highlighted in the earnings press release and in the company's filings with the SEC including the risk factors, disclosure contained in our most recent form 10-Q filing available from the SEC or the company's investor relations website. Additionally during this call, we may discuss various non-GAAP financial measures as defined by SEC Regulation G. Now I would like to turn it over to David Henshall, our Chief Financial Officer. David?

[David Henshall:]

Thank you, Eduardo. Today I'm pleased to report first quarter 2007 revenue and financial lights for the company demonstrating continued growth across our geographic segments and product areas. In addition to providing you with some commentary on our performance, I'll discuss the current trends in our business and review our current outlook for Q2 in the full year 2007, but before I get started I want to provide you with an update to the ongoing stock option review. As we previously discussed, at the end of Q4 last year the audit committee initiated a voluntary independent review of historical stock option administration over the past 11 years. Unfortunately, due to the scope of the work and the number of parties involved, the review is not yet complete. So the company has been unable to file its 2006 form 10-K with the SEC. Because of this, the financial information reported today is preliminary and limited and does not take into account any adjustments that will be required in connection with the completion of this review. Since the adjustments will affect historical FAS 123R and other expenses, we are unable to provide a complete set of financial statements for the first quarter. At this point though, the audit committee is just about complete with the fact-finding portion of the review and has reached certain determinations. So please refer to our press release for more information. The various parties are currently working to conclude the accounting and tax analysis, and we are obviously very eager to wrap that up as soon as possible so that we can become current with our SEC filings and NASDAQ requirements. In addition, I think it’s fair to say that we underestimated the amount of time and expense that it would take to complete the review. We incurred professional services fees in Q1 of about $6 million, including outside accounting, auditing, legal and tax advisors, the large majority of this expense was not included in our financial guidance for Q1. So let's get back to the financial summary. As you can see from the reported revenue numbers up 18% over Q1 '06, we started 2007 on a great note demonstrating continued momentum and solid execution across our strategy. So looking at the business, there are four key areas I would like to review. First, our application virtualization products and the momentum of our subscription advantage program. Second the company's continued success delivery in software service. Third, our work to establish Citrix as a leading player in the application networking market, and fourth, the emerging products and technologies that we have built and acquired to help fuel future growth. So first let me focus on our application virtualization products. The group grew 8% in Q1 to $224 million in overall revenue, including a 2% decline in license revenue. We anticipated a modest license revenue decline based on the tough comps resulting from last year's end of sale of presentation server XP edition. We continue to see very strong demand for customers renewing their software update subscriptions, over 85% renewal rate in Q1 demonstrating the value delivered by PS 4.5 enhancements and other products. In addition, we have received very positive response from our channel and customers to the changes made to the presentation server line of products. Specifically, PS platinum edition showed solid adoption generating almost 4% of group license sales while only being available for the last three weeks of the quarter. We believe that the changes to the PS product line are positive for customers and partners by delivering significantly more value than prior versions, and for Citrix, these changes should allow us to continue to increase adoption by new customers and also provide a compelling upgrade path to the installed base. The second area of focus is regarding our continued success delivering software as a service. Our GoTo products continue to meet the needs of customers in this rapidly growing segment of the market, which demands secure, affordable, fast, and easy software as a service offerings. Revenue from these products in Q1 was over 47 million, growing nearly 50% from Q1 '06. Within this group, the GoToMyPC products represented about half of total revenue and grew 33% over Q1 last year. GoToAssist contributed about a quarter of the revenue and grew over 30% from a year ago and finally the online collaboration products including GoToMeeting and GoToWebinar continued to be the fastest growth up about a 138% over last year. The third area I would like to highlight is the progress we're making to establish Citrix as a leading player in the application networking market. Our networking products group grew over 50% compared to Q1 '06. We saw continuing strength in the NetScaler product with an increasing percentage of business coming from traditional enterprise customers, and we closed the quarter with over 430 certified NetScaler partners, up over 70 from the December quarter. In addition, we introduced our WAN optimization product, WANScaler into the channel this quarter and generated about $1 million in revenue. We're working on training and certifying qualified partners and to date have already certified over 120 WANScaler partners globally. And the final area I would like to discuss is the performance of our emerging product areas. These groups grew in the triple digits in Q1 albeit off a very small base. The growth in this area was primarily driven by the editions of EdgeSight and Ardence acquisitions. Ardence targets enterprises were strategic diskless computer initiatives where cost, security, and energy consumption are major requirements. During the first quarter, Ardence billed over $4 million to customers, but due to a purchase accounting adjustment, we recognized less than $2 million of revenue. While it's pretty early in the rollout, we have added ten North American partners in the quarter to resell the Ardence desktop and data center additions. And finally, EdgeSight which provides application performance visibility continues to gain traction, really driving customers to upgrade to our PS platinum edition. So in total we are proud to have delivered a performance that gives us a solid foundation to execute on for the remainder of 2007. And Mark will address some of these items in more detail during his comments. Now let me talk briefly about expenses and operations. As a reminder, cost and expenses reported to today do not include stock-based compensation expense under FAS 123R. In the first quarter of fiscal 2007, total cost of revenue and operating expenses, was approximately $250 million. Let me tell you what that includes. It includes total cost of product license and service revenue, total R&D sales and marketing and G&A expenses, amortization expense of approximately $10 million, a $1 million write-off of in-process R&D relating to the closing of the Ardence acquisition, and approximately $6 million of accounting, legal, and tax fees, related to the ongoing stock option review. The increase in costs this quarter, were driven primarily by the fees related to the option review, the OpEx associated with recent acquisitions and ongoing head count investments. Regarding head count growth we ended the first quarter with over 3,900 employees, up a 191 people. The largest increases were related to the 100 employees added through the Ardence acquisition and additions to the sales and services and Citrix online teams. But because of the ongoing options review, we're not in a position to provide any more detail on the P&L or our standard non-GAAP financial measures. So on the balance sheet, cash and investments increased over $100 million from the December quarter now total over 900 million. Deferred revenue grew $20 million in the quarter, bringing the total to 376 million, up 29% from Q1 '06. The driving factors here include the ongoing success of our subscription advantage and get-current programs as well as online subscriptions. Our AR balance at the end of the quarter, was just over 168 million, yielding a DSO of 49 days, which is back within our target range of 45 to 55 days, which I talked about on the Q4 '06 call. So before I talk about guidance, let me just pause for a second. I understand that the limits in this report may be disappointing to some of you. I can certainly tell you it is to me, and while I'm very pleased with the Q1 performance, I would much rather been talking about the results with our usual granularity. Like I said before, we're getting close on the options review and really look forward to talking to you upon the completion of that time. Not withstanding that the company has delivered consistent growth, while still balancing significant investments in the new businesses and the routes to market that are important for long-term success. While many of our initiatives are still in their early stages, I believe that we have created a solid foundation to build on for the remainder of 2007. So finally, I would like to discuss our current outlooks and expectations for the second quarter ending June 30th and for the full year. It should be noted that we're about to make forward-looking statements that incorporate certain risks, so please refer to the safe harbor statements noted in our press release and the rest that are stated in our SEC filings. So to provide you with some context around our forward outlook, we're continuing to see solid revenue traction across multiple areas of the business and are optimistic that the investments we have been making will help sustain the momentum over the next several quarters. We're also seeing a number of areas that we believe are additional investment opportunities to further enhance the platform in our ability to reach even more customers. So with this, for the second quarter, we currently expect total revenue in the range of $317 to $324 million, including contribution of $49 to $50 million from our online services. Total cost of revenue and operating expenses in the range of approximately 254 million to 258 million. Included in this number are amortization expenses in the range of $10 to $11 million, and $3 million for accounting, legal, and tax fees, related to the ongoing stock option review. This estimate second quarter, however, does not take in to account any stock-based compensation expense, or any other charges that may result from the conclusion of the voluntary stock option review. For the full year 2007, we now expect a total revenue in the range of $1.31 billion to $1.33 billion, an increase of approximately $20 million from our prior guidance. Total cost of revenue and operating expenses to be in the range of $1.03 billion, to 1.04 billion, and included in this number is an estimated of amortization expenses in the range of $41 to $42 million, a $1 million write-off of in-process R&D related to the closing of the Ardence acquisition, and $9 million in total accounting, legal, and tax fees, related to the ongoing stock option review. And again, this estimate for full year, fiscal 2007 spending does not take in to account, any stock-based compensation expense or other charges likely to result from the volunteer stock option review. Now I would like to turn it over to Mark to give you additional details on the quarter's performance and to discuss our ongoing business. Mark?

[Mark Templeton:]

Thanks, David. I'm really pleased with our first quarter performance. 2007 is off to a terrific start. The business is looking really solid. The pipeline growth for PS platinum edition is really impressive. It's giving us great confidence in the positioning, pricing, packaging, and integration moves we made in that area. We're also seeing EdgeSight have a really positive impact on PS business in general and even influencing several significant upgrades to platinum. Our application networking products grew 50% including a solid sequential growth from NetScaler. Increasing renewal rates of license updates as David mentioned a record of 85% in Q1, really confirms the customer value and features we have added to our products over the past few quarters. Growth in technical services was 28% for the quarter, showing that we're now helping customers more and more architect and implement much larger, more strategic systems and our online division growth of 50% now puts us on trajectory to exceed $200 million in that area of revenue this year. So these are the positive indicators that really make me bullish about the business. So next I would like highlight some other aspects of our first quarter, including the launch of our 643 program as well as products we announced. In January, we hosted our annual sales and partner event, Summit '07 where we unveiled the industry's most comprehensive vision for application delivery. More than 3,000 Citrix partners and employees came to Orlando. We educated them and trained them based upon a well-defined game plan called 643. This plan makes it simpler for them to capitalize on complete application delivery solutions. Here is what it means for the next 12 to 18 months our to GoTo market strategy is focused on six strategic application delivery products targeting four different IT buyers, and three core selling strategies for medium, large, and global enterprises around the world. Across our partner and field teams, 643 has been received enthusiastically, and it's already producing results. There are six strategic points of presence for an end to end delivery system. It begins with a trio of products that deliver applications right at their point of origin, presentation server for delivering Windows-based client server and desktop application, NetScaler for delivering web-based applications with the best performance and security, and desktop server for delivering Windows desktop through virtualization to office workers in a whole new way. Next there are a pair of products that live at the point of control. Access gateway for securing access to all application types whether they are Windows or web, WANScaler for accelerating the delivery of applications to branch office users. A product we introduced during Summit, for the first time to Citrix partners, and for visibility in to the users' access experience, we have a product that lives at the point of access right with the user and that’s EdgeSight for application performance monitoring. These six products are the focus of our field and partner organizations. Our GoTo market strategy targets four different types of IT buyers. First there is IT infrastructure ops. The person who is accountable for delivering windows applications, especially for line of business purposes. Then there's the network architect, the person who is directly responsible for delivering web applications with the best security and performance. Then there are desktop operations, the person who deals with Window's desktops, who’s now trying to figure out how to migrate to Microsoft Vista and Office 2007 and then there's the CIO or the strategic IT buyer. This is the person responsible for the success of all applications, who oversees the infrastructure, networking, and desktop delivery decisions and, most importantly, makes sure that IT is enabling the business. The third component of the plan focuses on the specific tools, programs, and incentives to help our field teams execute these three sales strategies. First, we're amplifying our application delivery message. Our teams are out there telling the full Citrix story about, first, the business flexibility that our infrastructure enables, and second, how we can reduce costs, improve performance, and ensure security from end to end when delivering any application. The second strategy is to penetrate and upgrade the presentation server install base. We're selling and up selling a complete solution by leading with a new platinum addition of presentation server a much more feature rich offering. And the third strategy is to acceleration our application networking business by leveraging existing relationships. We're synchronizing every Citrix partner to get authorized and cross-sell our application networking products bringing our App delivery value to network buyers within many established Citrix accounts. So that's our game plan for 2007, our teams are really enthusiastic. Why? Because 6-4-3 is simple, it differentiates us. It differentiates them, and aligns strategy execution and compensation incentives for everyone and its already having an impact let me give you an example. Within a week after summit a North American rep had a customer meeting originally set up to discuss a deal for a 100 seats of presentation server. Rather than having that discussion he used his summit training and led with the full Citrix story around application delivery, and presented a more complete solution, which included all six products, including the new PS platinum edition. A $20,000 PS opportunity, turned in to a broader solution featuring multiple products and a six-figure opportunity PS Platinum opportunity for 1 to $2,000 seats. The visibility of this project may even lead to a larger opportunity for the customer to standardize on over 15,000 seats. So a tactical customer meeting turned into strategic conversation, based upon the 6-4-3 game plan. Our plan is helping partners execute and win by leveraging the most compelling value proposition that Citrix has ever had to offer. At a time when application delivery is becoming a defining issue for IT. This plan relies on consistent delivery against the product pipeline we have established over the past year. So I would like to highlight the new product shipments that we have seen since the beginning of the year and mention others that are still in development. First is presentation server. It was really a big quarter for our application virtualization team. Shipping presentation server 4.5, version 4.5 includes the release of the new platinum edition, making presentation server the only product on the market that virtualizes and streams and secures, and measures the delivery of both corporate and personal window's Apps. Simply stated it's now a legitimate main stream solution for the delivery of all windows applications. At $600 per CCU presentation server platinum is priced at the same level as the access suite, our previous top of the line bundled offering, but it delivers more value by integrating some of the newest technologies, including application performance monitoring with EdgeSight, secure application access with access gateway our new application streaming capability for the on demand delivery of windows desktop applications, and the early customer response has been impressive. We're seeing the leading indicators of customer moving up the product family stack from advanced to enter prize, from enterprise to platinum, driving a higher ASP for the entire PS product family. Next is desktop server. Desktop server was introduced earlier this month and expands our product line to include the delivery of virtualized windows desktops delivered securely from the data center. The debut of this new technology marks our entrance in to the high potential virtual desktop market, a market expected to grow dramatically over the next few years. Analysts have estimated that as many as 400 million window's desk tops will be upgraded to Microsoft's new window's Vista, faced with large sale migrations many organizations are reevaluating their desktop delivery methods, looking for most cost effective, secure, and reliable ways to do this. We believe an on demand service based in the data center is a better way to deliver a window's desk top to most office workers. The early feedback we're getting from customer and partners is very positive. In fact the tech preview of desktop server has been downloaded by over 3,000 unique customers since it was first made available. We have already identified 10 enterprise customers that will pilot version 1.0 which is available now. We continue to view 2007 as a year for educating, testing and piloting with desktop server customers this is the state of the virtual desktop market for 2007. And we expect revenue to begin contributing in 2008. In January, we closed the acquisition of Arden's, and it's now running as a Citrix division. Arden's has the core IT and technology for real time provisioning of operating systems. It's amazing technology that allows IT operations teams to centrally boot desktops, servers, blades and other devices from Arden’s V-Disc images. Think of it this way, you can power on a bare metal device and the operating system can be streamed to it over the network in real time. Taking full advantage of local processing power, these provisioning capabilities are very effective in the data center. In fact Arden's data center edition is a powerful tool for simplifying the management and migration of larger scale presentation server environments. With data center edition, a virtual disk image of a configured presentation server or any of its components can be streamed to disk-less bare metal servers in real time saving hugely on data center storage, power, and administration. With the product’s roll back, roll forward feature, it's simple to trial test and implement, new versions of presentation server even including patches to the underlying window's server operating system. In Q1 in actually last month of the quarter, we had five Citrix customers buy licenses for Arden's data center edition to provision their upgrade to presentation server 4.5. We expect to see more of this in Q2 and going forward. Next, NetScaler 8.0, with the recent release of NetScaler version 8.0, we continue to raise the bar for delivering web applications with the best performance, security, and cost savings. In this release, NetScaler now fully integrates the market-leading web App firewall from our earlier (indiscernible) acquisition, making it easy to secure, sensitive application data, without deploying a separate product. This release all gives network managers the ability to monitor end user performance of web Apps. By integrating our Edge site application performance monitoring technology NetScaler becomes the first and only web App delivery system to offer this important capability built in. We believe measuring end user experience is critical for customers, and this feature is a game changer in the web App delivery landscape. Version 8.0 also includes significant enhancements to the (indiscernible) expert policy engine. Our AP ex for visual policy builder makes it easy for network architects to customize NetScaler for any enterprise web. Apps, App expert rules can be created via easy to use graphical interfaces and intuitive policy options. Network architects are not required to become software programmers or application experts, nor do they need to pay consultants thousands of dollars per day to write custom scripts for each application. Additionally, AP expert policy framework makes it easier to mix and match functions offering higher levels of service. This release sets new ease of use standards for configuring powerful application and user-specific policies. While the competition in this market is strong, we have once again raised the bar and established a level of differentiation that we believe is unmatched. Next is WANScaler, WANScaler just introduced at summit as I mentioned addresses application delivery for branch offices. During the conference we offered training classes, allowing partners to get authorized to sell this new product on-site. Training class attendance was standing room only and we have already authorized over 120 partners. Even though we're in the early stages of ramping WANScaler, the leading indicators are strong. There is strong interest from both partners and customers and increasing growth in our opportunity pipeline, it's both a Greenfield and competitive market. So we are staying aggressive with development and distribution. Later this quarter we'll be announcing WANScaler version 4.1. So stay tuned. That's the progress we made overall during Q1 with the six products we are promoting to medium, large, and global enterprises. I'm pleased with it, and I think it's a tremendous, tremendous quarter. Next, I would like to talk about our online services as David mentioned, our software service products really targeting the presumer (ph) and F&B customers continue to perform extremely well, growing at a 50% clip. These products continue to set a high bar for competition and for financial results. We saw a record increase in deferred revenue from online services during Q1, in both GoToMyPC and Go To assist revenues grew over 30% revenues from GoToMeeting and GoToWebinar accounted for over a quarter of the online services revenue and continue to grow at triple digit rates. We like what we're seeing with GoToWebinar it’s a game changing product that makes it very easy for anyone to demonstrate train and present information to large audiences over the web. Historically online events have been pretty complex processes, often involving 50 to 100 time consuming steps. GoToWebinar is winning because it reduces it’s a three self service steps, making it very simple to deliver a successful Webinar. It's also the only Webinar product that can simultaneously reach 1,000 attendees for less than the cost of a mobile phone service. Having contributed over $47 million this quarter our online services are now on a trajectory to surpass $200 million in revenue this year. So overall our momentum continues to build, while IT spending is growing at a meager single-digit rate, we have been growing in the double digits, substantially faster than the market. I believe we can continue to do so. We're in some of the hottest areas in today's software market, virtualization, application networking and software as a service. This gives us three business engines to deliver sustainable growth over the coming years. These growth engines give us tremendous confidence in our future, at the same time we're anticipating customer needs by acquiring core technology and building an exciting pipeline of new products during Q1 we acquired Ardence. Technology will enable us to improve monitoring and management of processor work Loads across presentation server environments, and all of our products that are built on top of window's server 2003 and long horn server. We also acquired (indiscernible) a product that provides an intuitive load-testing solution designed to determine how presentation server and desktop server configurations will scale, helping our customers remove performance bottlenecks and eliminating risks associated with system changes. We're also expanding our partnership with Microsoft through the joint development of a new branch office in a box appliance that we have discussed in this past this will further extend our WAN opportunities and increase our addressable market opportunity. And we're also building a work force continuity FAS product. A project we code name Kent that gives businesses on-demand communication, collaboration, and application delivery capabilities that they need to handle unforeseen vents that prevent workers from getting to the office. Our pace of investment and our vision for App delivery has put us in an amazing position. The business relevance of application delivery infrastructure is growing rapidly, driven by the velocity of business change that will be emblematic of the next five years. We're offering the kind of flexibility, security, and efficiencies that businesses need from IT now and in the future. So, next we would like to open it up for questions. Celeste?

[Operator:]

Ladies and gentlemen, at this time I would like to remind you, if you would like to ask a question, please press star then the No. 1 on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Sarah Friar with Goldman Sachs.

[Sarah Friar:]

The quarter, Mark, could you help me with those ME application Virtualization area, do you think we're now at a point where license revenue can start to grow there now that we have gone through some assessable comps on your 4.5 and some of those price increases kicking in?

[Mark Templeton:]

I think we're well positioned for that, Sarah. I think Q2 we still had a little hang over from the XP end of sales from last year, but I think all of the moves that we have made, really are setting us up well for, especially the back end of the year.

[Sarah Friar:]

So then as you think of the full year license growth rate, is mid-single digits back to where you kind of where you used to guide to, does that seem realistic?

[David Henshall:]

Hey Sarah this is David let me answer that I think that you know consistent with what we have said for a long time, we still look at this as a you know a low single-digit growth business.

[Sarah Friar:]

Okay.

[David Henshall:]

No change to that outlook at this point in time. You know as Mark mentioned I think that you know we're pretty optimistic about all the changes we have made in PS product line, the ability that we have got to bring a lot more value to customers through platinum, which will you know ultimately have the effect of raising ASPs and things like that if we're successful. So we think we're making a lot of moves we’re positioned and looking forward to the rest of the year.

[Sarah Friar:]

And I have just one other quick one for you David, Can you give us any sense on cash flow from OPS. I know that you weren't able to give a lot of detail?

[David Henshall:]

Unfortunately I'm really precluded from talking about a lot of the you know the other financial metrics that we usually discuss just given the fact that P&O is not complete. But I point you to the, you know, to the normal main drivers of cash flow, it you know, the change in AR, the change in deferred and net income. And we'll be in a position to give a more complete cash flow statement. As soon at the option review is concluded.

[Sarah Friar:]

Okay, great. Thanks a lot.

[Operator:]

Your next question comes from the line of Adam Holt with J.P. Morgan.

[Adam Holt:]

Good afternoon. Thank you. I had a couple of questions on the application networking business. You gave the license number for Virtualization, would you be comfortable giving us the same number for App Networking. And then secondly as you look at the trajectory around WANScaler and how trapping into the channel, do you still feel comfortable that that business can do you know over 10 million in licensed revenue for this year?

[David Henshall:]

Let me take the second part of that question first. You know, we’re consistent with where we were when we acquired orbital (ph) you know we talked about you know 10 million or so in revenue for the full year. Yeah I think we still feel comfortable with that like I said in my prepared remarks it's very, very early stage in this market. We're just getting the products in to the hands of partners and it is certainly going to be a ramping story, more toward the back half but you know we're happy with where we are from a product standpoint, we’re making a lot of investment on that front, and I think we have got a great opportunity, frankly in that market space. So you know yes. I’d say on the other question about overall revenue. I mean, we are looking at the products, you know, the way that they are disclosed on the slides that are on our website and also associated with this release. In terms of, you know, license support and services combined, and those are the remarks that I made about the App Networking business growing over 50% was all inclusive.

[Mark Templeton:]

Adam, this is Mark. The thing I would add to the answer that David gave you about WANScaler is that you know every time we introduce a new product in to our channel at summit, we see probably about a two quarter, what I like to call a flat spot, and it's the time that's being taken to authorize and certify technical and selling people in the channels, conduct all the field readiness, et cetera, and we saw that with access gateway at midyear we were behind, and by the end of the year we blew the plan away that we had going in to the year, and it's because it takes some time for us to, you know, get in to the sales cycle and in to the rhythm of our partners. We have also only authorized about 120, and that's growing all the time. I spent some time in the Pacific last quarter, and saw tremendous interest there in getting on board, and learning and being authorized on WANScaler. We also have some fantastic new product releases coming to enhance the product, some of the areas that we know we have been a little bit behind in for certain types of applications, so we're excited and that, and that will be a building process, and then of course the work we're doing with Microsoft. Last Friday, I got an in-depth briefing and demonstration of the WANScaler product running on the Microsoft platform. Very impressive, and very bullish about what I saw there. So it will be a building kind of year for WANScaler, and I think we'll see you know, a good second half with the product.

[Adam Holt:]

And if I could just a quick follow-up on the buyback, it sounds like we're getting close to resolution on the options review, presumably that would mean then that you will be in the market with a buyback once you get resolution.

[David Henshall:]

Yeah we will back in the market at that point of time. Right now we have about 300 million or so remaining under the current authorization, and you know would expect to you know resume our normal program once the window opens up.

[Adam Holt:]

Great. Thanks for the help.

[Operator:]

Your next question comes from the line of Phil Winslow with Credit Suisse.

[Phil Winslow:]

Hi, guys, good quarter. This may have been answered in your remarks, but I got cut off from the call, but could you just comment on the ASP trends and just obvious with the May 15 date coming with you know the price increases, and just sort of what the early feedback has been from the other channel partners and customers, but also in just because of raising prices but the additional functionality that you all have put in to the enterprise edition and platinum in particular?

[Mark Templeton:]

Phil, this is Mark, so for Q1 we really didn't see any material change in the mix or ASPs, for presentation server and the key thing to note there is something that David mentioned in his comments, and that is PS 4.5 in the new configuration with platinum enterprise and advance, was only available the last three weeks of the quarter. Which on one hand makes it pretty impressive that platinum accounted for 4% of the (indiscernible) revenue, but at the same time, you know, we haven't seen, haven't had enough of runway to have it impact ASPs and to really measure the kind of mix changes we will actually see. If you look at the pipeline and all of the anecdotal data, its very encouraging, seeing, you know, customers that were buying standard will buy advanced. Customers that were buying advanced will be much more interested in stepping up to enterprise. And then many customers that were buying enterprise were really buying enterprise because they wanted, quote, “to own our most powerful application Virtualization product.” Now that product is platinum edition and, so we're optimistic about those same customers as they come around another buying cycle, either to update or upgrade their systems will actually step up, you know, to the platinum edition. So I think we're going to see this play out. We'll certainly get a great indication this quarter, and we'll see that play out over the next two and three quarters, because some of these cycles especially for platinum are longer because it's a much more you know robust solution.

[Phil Winslow:]

Just one more question. If you do look at the platinum edition what is sort of the most compelling sort of additional feature set that you have put in there? Is Edge Sight starting to resinate and move the needle with customers?

[Mark Templeton:]

The answer is yes, very much so we saw EdgeSight actually in several cases, notable cases, go from being an EdgeSight, only kind of conversation to a platinum conversation, which, frankly we did not anticipate that kind of uplift from EdgeSight, but the big contribution of EdgeSight is as an added value and a must-have capability for any customer that is going to be serious about App delivery, and want to really know what kind of user experience they are delivering. So that's a big adder to the Platinum edition and then of course platinum inherits all of the enhancements that 4.5 in general bring, especially the streaming capability that we built in to the enterprise edition. So now whether you want to virtualize or stream to deliver a window's application, you know, you can do that with all of the single sign-on access control, secure transmission over the network through SSL, and end user measurement with the platinum edition, so I think that's why everyone is pretty excited about it. I think we had one chart in the deck that really showed almost like, you know, bar, almost like a bar chart of value reading left to right and I would refer you back to that to really get the top line view of what is new.

[Phil Winslow:]

Great. All right. Thanks, guys

[Mark Templeton:]

Hi Phil. Thanks a lot.

[Operator:]

Your next question comes from the line of Israel Hernandez with Lehman Brothers.

[Israel Hernandez:]

Hi, good afternoon. Hi gentlemen and good quarter. Dave, can you comment on the linearity during the quarter? You know what did you see particularly during the months of March there has been some concern raised by IBM and EMT and some others that the U.S. is slowing, wondering what your experience was? And also I don't think you give us in your prepared remarks, but can you talk about the international contribution of the business and how, how do the regions fair?

[David Henshall:]

Sure. Let me talk to the first part. I think the linearity that we saw in the first quarter was, you know, pretty standard for what we have seen in prior periods. I think we actually had a good March. So you know nothing that I would highlight on that point from a geographic standpoint, the Americas you know was really the stand-out region, including North America and Latin America, growing 27% year-over-year. In the media market it was flat from a year-over-year perspective they also had a pretty tough comp last year after posting a great first quarter in 2006. So that growth rate was a little bit slower than normal. The Pacific region grew over 15% year-over-year, and online services, as you know, which is not included in the geographic segments - is growing nearly 50% as I mentioned before. So you know pretty much in line with expectations around the world, and the same for linearity, I would say.

[Israel Hernandez:]

Are you seeing any changes, though, in terms of customer spending intentions at this point or is this just kind of business as usual right now?

[David Henshall:]

I would say it's business as usual at this point in time. I think that you know as Mark described in his comments in some of the questions, I mean we're seeing a lot of discussions, pretty constructive discussions around platinum and you know higher levels than realistic solutions I think we have in the past. So I think it's very constructive at this point.

[Israel Hernandez:]

Great. Thank you.

[Operator:]

Your next question comes from the line of Steve Ashley with Robert Baird.

[Steve Ashley:]

Dave, can you talk to maybe what the get-current contribution (indiscernible)?

[David Henshall:]

Yeah, get-current, we continue to have another good quarter for get-current across both what we call reinstatement, which are people that have lapsed less than a year and recovery, which really lapsed their subscription for more than a year. I think both of which were up pretty substantially on a year-over-year basis and showed little bit of you know seasonal decline from Q4 to Q1 like we expected. So, you know, all in, those programs and the teams that are driving those are continuing to do a great job. You know, I would refer people back to the slides that we used at our financial analysts stage to really drill into the opportunity set there is out there with you know several million licenses of what we believe are active customers that are not on current subscription right now. So it will continue to be a focus area for us throughout the balance of the year especially as we bring a lot of the newer technologies platinum and various upgrade alternatives to that installed base.

[Steve Ashley:]

Could the number have been around that 10 million mark prior to the fourth quarter?

[David Henshall:]

Yeah, it was north of that.

[Steve Ashley:]

Okay great. And then you also in your prepared remarks you kind of reference recognized some opportunities for increased investment. Is that a change, and did I hear that right and are you spending or investing money in some new places?

[David Henshall:]

No, I think that I mean it's a continuation of really the stance and the position we have had for a long time. I mean we're continuing to invest in a long-term focus of the business. We see a lot of growth opportunities not only on the product side to ensure that our products are leaders in their categories, but also on the go-to market side in areas that are really just most effective for each region, whether that's you know incremental feet on the street or new market penetration, etcetera. So I think there are a lot of things that we want to do, and, you know, a lot of things that we're really going to be focused on driving over the balance of the year.

[Steve Ashley:]

And just lastly is NetScaler gaining any traction outside the United States? Thank you.

[Mark Templeton:]

The answer is yes, Steve. It's beginning to gain some traction, and it is spotty based upon the depth of field capabilities that we have in certain areas so parts of Europe we're doing really well. Parts of the Pacific we're doing really well and we're doing really well in places in Latin America as a matter of fact. The common theme is wherever we have good technical people in the field that can work with our partners especially in those early transactions to train them, that's where we're seeing traction, and then especially in enterprise kinds of customers in those regions as well. Again, enterprise overall had a great quarter, but especially in international markets, we saw great traction there.

[Steve Ashley:]

Thank you.

[Operator:]

Your next question comes from the line of Todd Raker with Deutsche Bank.

[Todd Raker:]

Hi, guys, nice quarter.

[David Henshall:]

Thanks, Todd.

[Todd Raker:]

Two questions for you, back to Sarah's question on kind of the core growth rate in the presentation service side of the business. With the price increase kicking in, in the back half of the year, you know, if you still think this is a low single-digit grower, it almost you know, infer that on a unit basis you could be down year-over-year on units. Just kind of walk us through how you are thinking units versus pricing as we think about this six to 12 months out (ph).

[Mark Templeton:]

Well Todd, I'll take it and then maybe David will jump on it. So I think you know what, we're answering the question this way, frankly, because we don't have any data yet to point to in terms of actuals. And then secondly, we don't know what the sales cycles will, in fact be when it comes to platinum and in terms of converting all of the love that we're seeing right now in to cash. Okay? So I think that's you know, giving us, sort of a two responses to you. First, it's to on the upside be cautious and secondly to feel confident about this sort of single, mid-single-digit sort of growth rate that we think the licenses can perform at over a sustained period of time. So that's what you are hearing from us. I think as we get more direct experience and actuals, we'll be able to comment a little bit more clearly on that, but it's just you know hear we are, we are barely now six weeks in to the availability of the products. We're coming up on the end of sale of axis suit in 4.0 and so forth, May 15th, so, you know, there are a lot of moving parts here, and we just want to be a little caution about it.

[Todd Raker:]

Okay. And Mark you commented on kind of Microsoft and your partnerships. Can you dive in you around long horn server, I believe Data two is shipping what do you guys see in terms of functional improvement from Microsoft per se and how do you think your value proposition changes as long horn server shifts?

[Mark Templeton:]

Well, so without sort of getting overly (indiscernible) about it, we do have some good internal, you know kind of white papers and all that we have made available to partners, etc. We certainly can make them available to you on long horn. But the strategy is pretty simple well first of all, long horn brings a whole bunch of technologies forward that improve the performance and scalability of window's server, and a better window's server means a better presentation server, a better desktop server, et cetera. Secondly, we have done a lot already that you see coming out in 4.5 and then the next couple of releases of presentation server that continue to move presentation server up market toward the premium segments. Microsoft always gets the sort of entry-level segments with their basic system, and we acknowledge that, and we have never stood in the way of that, and we have, so we have worked closely with them to find value-add opportunities. So you'll see us doing much more to allow more graphical types of the applications to be virtualized. Some of that is in 4.5. You'll see more of that in the next release. We're doing a lot more in the manageability area making plugging in to Microsoft's management infrastructure, but also doing a lot more to instrument presentation server, and make that information visible to some of our own products and some of our partner's products. We'll do a lot more in making the infrastructure simpler to manage on a larger scale. Some of the intelligence that we're putting in to load management, and the intelligence we're putting in to the system around self healing it is these kinds of thing that make a difference to you know kind of the medium to global size enterprise that, we think that we're, you know, really focused on serving and that Microsoft, I think, you know, believes we're a great partner in. So that's the way to think about it.

[Todd Raker:]

Okay. Last question for you, Citrix online has been an absolute home run of an acquisition. But give that run as an independent entity within you guys, would you ever think of spinning that out or selling it?

[Mark Templeton:]

Not at this time. We think they are contributing, greatly to the company financially, but also strategically. As you see the first evidence of significant evidence of that when we release Project Kent in the back half of the year with IBM as our GoTo market partner. The GoToMyPC infrastructure is a key piece of the system. The entire system is built as a service and a lot of, so you'll get a sense for that. As we go further, you'll see us have a great opportunity to integrate application sharing into some of the other products that we have, and on demand assistance in to other products we have, so, you know, that's what is to expect.

[Todd Raker:]

Okay. Thanks, guys.

[Mark Templeton:]

Thank you, Todd.

[Operator:]

Your next question comes from the line of Ed Maguire with Merrill Lynch.

[Ed Maguire:]

Yes, good afternoon, a question for Dave. I mean, I know you are hampered by the amount of detail you can give us around OpEx, but did the operating expenses during the quarter end up higher or lower than you had initially anticipated?

[David Henshall:]

Interesting question, you know, beyond it is, it is unfortunate one of those areas where I can't just drill in to a whole lot right now. Simply because you got to start with a GAAP number and work backwards from there. And you know really the only (indiscernible) that I can give on expenses is what you see in the press release, in my prepared remarks, but the one thing I would call out is say the expenses associated with the option review, as I mentioned earlier, were obviously substantially higher than we had thought, coming in at about $6 million for the quarter. So you know we certainly missed that one.

[Ed Maguire:]

Okay. Moving on to deal sizes, if you could talk about the average deal sizes that you saw in the quarter in your top 10 deals and also, I know you have got some incentives to encourage cross-selling across the different product lines. Could you just speak to how successful your initiatives there have been so far this quarter?

[Mark Templeton:]

Let me take the second one first, Ed. So the cross-selling and the incentives we put in place, I think you are talking about the jump and the span bonus programs, and, you know, some of the products that are eligible under that program shift late in the quarter, in the last month of the quarter. So it's a, we're encouraged, you know, those expenses come out of contra, so they are in the revenue numbers that David did talk about, and they were up in a good way as a result of our partners taking advantage of both span and jump. We'll have a better read on that this quarter; obviously, when we have a, pretty much a full quarter where all of the projects that are eligible specifically platinum edition, specifically NetScaler, WANScaler, and access gateway enterprise edition and EdgeSight, excuse me are all eligible for this bonus program.

[David Henshall:]

Yeah and I would just add on the deal size, nothing terribly unique this quarter. We had a couple of individual transactions over $1 million. We had a number of other transactions between about a $ half million and $1 million. From a geo split, I would say half of those were in the North American markets half of those were in the media markets. And you know specific to NetScaler in the networking working group. We had three customers that in the aggregate were over $1 million in total purchases but not against a single transaction. Two of those three were in the traditional, you know, media metric space, and one of them I would classify in telecom infrastructure.

[Ed Maguire:]

Okay. Thanks.

[David Henshall:]

Pretty consistent across the board, you know, as I did mention earlier, we're seeing a higher and higher percentage of the App networking transaction coming from what we would consider to be you know traditional enterprise customers. You know, certainly along the expectation as we train up more of our partners get the product out there in to the hands of our existing customers and sales organizations.

[Mark Templeton:]

Ed, I would add to that that, you know, these are the kind of metrics we actually like to see to not be overly dependent on kind of seven figure deals and big deals in any quarter. And when we look at the trends around what are we selling to existing customers, either cross-selling or where we're selling licenses for new projects versus a new customer or a brand new project. You know, it still runs about 2/3rds of our revenue comes from, you know, a customer that knows us, that we know them, and, you know, they’re maybe not, they are not huge transactions, maybe up to $800,000, and there's more of a flow to that business within the new customer sort of part of the business, still runs around 1/3 of revenue.

[Operator:]

Your next question comes from Dino Diana from UBS.

[Dino Diana:]

Hi, sorry about that. With regard to operating margins, if we back out the amortization and the write-off and the 6 million legal fees we get to about 24.6. If you follow the same guidance that your guidance about 25% 2-Q (ph) and my question is one is that math, right? And two, what does it mean for your former operating margin guidance of mid-to high 20 range? Is it really you know I guess should we read that it's more concentrated at the low end of that range for full year?

[David Henshall:]

Well, just a coupe couple of things, one like I said a couple of times I am just not really not at liberty to dig in to a lot of the financial line items that I normally am given the ongoing to review, and until there's a GAAP number you know we just can't go in to a lot of detail. But I say at the highest level we're not changing our stance that we have had for a long time. On the way we are operating and running the business. You know our forward outlook, even beyond 2007 continues to be, mid-to upper quartile operating margin, which we consider to be in the mid to upper 20% operating margin which we consider to be in the upper quartile of our peer group, and we will balance that with what we consider to be also significantly above-average growth and investing for the long term. So you know, I can't help you can your math this quarter, just based on the limitations, but you know I hope that helps.

[Dino Diana:]

Okay. I guess from a revenue perspective, just one quick clarification on Ardence is that included in that App Virtualization segment?

[David Henshall:]

No, that's in the other segment.

[Dino Diana:]

In the other, okay. Alright. Thanks.

[Operator:]

Your next question comes from the line of Steve Freitas with BMO Capital.

[Steve Freitas:]

Hi, good afternoon. Nicely done this quarter.

[Mark Templeton:]

Thank you, Steve.

[Steve Freitas:]

This may not be a fair question, but I'm just curious as you look at a year or two years, what do you think will be a larger business, will it be the application networking group or the software as a service group, the online property?

[Mark Templeton:]

Two very different types of businesses in terms of how the revenue, you know, the type of revenue streams they are. I think, sort of in scale, people growth rates, etc., I think it's a horse race, you know, and both of them are addressing very high growth rate, sort of primary markets that are Greenfield, and I think that we have sort of market-leading technologies to go after those Greenfield opportunities and I think in both cases. So I'm not sure I could answer you better than that, Steve.

[Steve Freitas:]

Okay. I guess secondly, if you listen to a lot of the other WAN optimization vendors in the space they make a lot of noise regarding some of the client software innovations that they either are shipping or planning, and from what I recall WANScaler has a similar client software. I just wondering how important you think that piece of technology is going to be and if there's any, you know, bundling advantages that you have relative to your competitors given that you also sell SSL VPN which has a client component and you know the obvious bundling opportunities and pricing opportunities there?

[David Henshall:]

Yes, we have had alpha versions of our client out shown to customers, and you know it's great technology and we'll be one of those and one of the first to offer something to customers in the market that's real. I'd say this, that in the whole scheme of things in WAN optimization, I think we should expect this type of solution to make a difference you know sometime down the road that right now the opportunities around sort of mesh-type configurations, point-to-point configurations, tying in branch offices, etc. And the client actually is more for the, quote, Micro branch (ph). Someone who is working at home and we do have some advantages there, because we will be able to bake some of that technology in to some of our other client software that is widely distributed, either through our App virtualization businesses, or our SSL VPN business, and so forth. So, but, you know, we haven't., we're not sort of thumping our chest about these kinds of things, we're, you know, going step by step after the meat and potato's of the marketplace that I mentioned and we have got some great innovations coming, and then we're pretty confident in what we're doing with Microsoft, in that, we believe that tremendous number of customers would prefer to have a window's-based device in the branch that has the broad set of services ranging from DHCP, DNS and so forth that work very nicely and managed in conjunction with the WAN optimization capabilities that you are putting there And then, you know, tying that in to either windows or non-windows kind of head-in device in the data center that sits in front of, directly in front of you know either windows or web Apps, and I think we have some advantages there. So you know we're going to take this step by step, and, you know, we have got a game plan, and we think it will take, you know, four to six quarters to really play out significantly, and, you know, we're doing it patiently, and step by step.

[Steve Freitas:]

Thanks a lot.

[David Henshall:]

We're great About it.

[Operator:]

Your next question comes from Kirk Materne with Banc of America Securities.

[Kirk Materne:]

Thanks very much. Dave, understanding you are somewhat handcuffed in what you can say on the expense side, but if I look at what's you guys did this quarter and then look at the expense guidance for the second quarter and then the full year, is it fair to say the investments are going to be somewhat front-end loaded this year?

[David Henshall:]

Well, I think the investment profile for the year is you know pretty consistent with the way we have looked at it in the past. I mean we certainly aren't trying to necessarily put investments in a specific quarter. You know there's kind of an operational reality about the investments we are making in the business, our ability to consume, if you will, and, you know, we'll be investing throughout the year, because we really are focused on a multi-year view of this business not simply optimizing quarter to quarter. The only unique thing in the two quarters was the stock option review, costs, all of the accounting and legal fees, which are, you know, 6 million in Q1 in the actuals, and a forecast for 3 million in the second quarter, which, you know we will obviously we'll go in to in more granularity upon the Q2 call just given that it is a forecast at this point.

[Kirk Materne:]

(Indiscernible) I won't pursue that any further I guess. And then Mark, can you just give me some idea were NetScaler 8.0 is getting released what sort of your expectations for that product in terms that how long it's going to take to hit its stride? Obvious you guys had a good quarter with NetScaler up sequentially but you know with NetScaler 8.0 where shall we really see a release or of it firing on all cylinders in terms of getting into the channel and getting customers comfortable with it.

[Mark Templeton:]

Yeah, I think, you know we don't expect to see step functions in this kind of thing, because remember our customers are on maintenance, and we'll tend to, you know, update them in place, but the new capabilities, obviously open up new opportunities, and that's all dependent upon the training the field readiness, et cetera that we're doing around the App expert area. Obviously really helps a lot, especially when you are going to market through partners and want partners to be able to go in and really set this up well for a customer, and really take the load off the network architect, et cetera and set up policies and rules. So I would say that, you know, we'll start to see some real impact, probably, you know, later in Q3 as we get the training in place and get a sales cycle going, and obviously we have got the summer season in between.

[Kirk Materne:]

Okay. That's it for me. Thanks.

[Mark Templeton:]

Thanks, Kirk.

[Operator:]

Your next question comes from Rob Owens with Pacific-Crest Securities.

[Rob Owens:]

Yeah, good afternoon, well I want to focus a little bit on the NetScaler side of the business. You mentioned that you were seeing more enterprise customers there. Can you discuss how that mix has changed quarter over quarter and are you seeing anything new on the competitive front or win rates on either side of the business, the enterprise or the dot-com.

[Mark Templeton:]

Let's see, Rob, how can I answer you? Well first on the internet centric business we're still you know pretty much winning 100% of the deals that we are in there, and, you know, that, that's been sort of the hallmark of NetScaler for a long, long time, and we really understand the needs of internet centric customers. We have been building now for a few quarters, this momentum in terms of partners, and in terms of the kind of product features you need go to market through partners to the enterprise, and that's included, you know, kind of lower end appliances, for more entry-level type systems, the ease of use capabilities you see in 8.0, and then the additional authorizations of partners and we see that we're up nicely in Q1 in terms of partner authorizations. So that has lead to actually a much higher transaction rate in the enterprise business, and that's growing nicely. Again, the transactions aren't too, six-figure transactions, they are going to be many sort of under $100,000 deals. But we like that, that's the kind of business that we like, especially when you have a larger scale partner network. Hoping to continue to grow the partner network not only in North America but outside the U.S, and I think I mentioned a little earlier we were, I spent two weeks over in Asia, actually in China in the quarter, and we actually held in the Pacific a two-day training event we called partner accelerator, and over the course we had it in six cities. The final one was in Beijing. We had 300 people come to the Beijing event, spend two days, tremendous interest if you look at the attendants in the sessions on NetScaler and WANScaler, and we saw, we actually trained over 1200 people in the Pacific alone in our partner network across all of the, all six strategic products in the quarter. So we're kind of this machine right? Especially when you get outside the U.S. we're the territories are a little more dispersed.

[David Henshall:]

I would add one comment to that, Rob, just specific to the numbers and the trend I think you were asking about I think it's fair to say that now we're running about 50/50 in terms of enterprise versus more traditional media metrics customers when it comes to revenue. Certainly on a new customer basis, the majority of them are, you know, more traditional enterprise-type customers. A year ago and I would say that the mix was probably 75% media metrics 25% enterprise, so that we certainly trend in that direction really consistent with the way that we have been talking about the growth of the business for sometime.

[Rob Owens:]

Great. And the other question across those two verticals any sense of your win rate improving?

[Mark Templeton:]

Across the two…

[Rob Owens:]

Internet and NetScaler (Indiscernible)

[Mark Templeton:]

It's hard to get better than 100% in the internet centric market, and then the win rates in enterprise are obviously improving, because, you know, we're seeing good growth there, so, you know, we're happy with both of them, and we're especially happy with the leverage we're getting in the GoToMarket with partners. I mean, I think that's super important to understand our game plan here. Not only in terms of the ramp but also you know the kind of features that we are adding to the products the kind of GoToMarket programs we're implementing in the you know the advisor reward bonus program, you know all of that kind of comes together and builds momentum over time. So that's the answer to your question.

[Rob Owens:]

Great. Thanks.

[Mark Templeton:]

Operator, I think we have time for one last call.

[Operator:]

Your next question comes from Katherine Egbert with Jefferies & Co.

[Katherine Egbert:]

Hi, this is Katherine Egbert, Jefferies. Just a quick question, Dave can you quantify the impact of the end of life of XP, the end of maintenance from 3.0 4.0 and then the end of service on access suite that all come up in the next quarter?

[David Henshall:]

Not really. I think that you know it's not a specific number when we look forward. You know, the major event is you know really the end of sale of XP. That was the big one if you look back a year ago and we saw the mayor impact across you know the fourth quarter of 2005 and the first quarter of 2006, and you know we have talked about that a long time. I wouldn't expect any material impact from just the end of maintenance or end of support. I think it's just one of those additional incentives for customers to migrate to the more recent platforms to get current, to get that type of support, but I wouldn't look at it as a stair step, just other incremental positives.

[Katherine Egbert:]

What about the end of sale of the access suite in May?

[David Henshall:]

Well, I think that's not a big deal simply because current access suite customers will be able to participate with the platinum version, so we're actually going to be giving that to them. If they are on current subscription, so we look at it as a real positive for those customers to be able to get those incremental new products for what they have been paying against subscription for the access suite.

[Katherine Egbert:]

Okay. That's helpful. Thanks.

[Operator:]

Ladies and gentlemen, we have reached the allotted time for questions and answers. I will now turn the call back over to management for closing remarks.

[Mark Templeton:]

Once again, thank you for joining us today, and we look forward to seeing you in three months and reporting to you on our Q2 results. Thanks, and have a good day.

[Operator:]

Thank you for participating in today's Citrix conference call. You may now disconnect.