Citrix Systems, Inc.
Q2 2007 Earnings Call Transcript

Published: 19 Jul 2007

[Operator:]

Good afternoon. My name is Mark and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Citrix Systems Second 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, Mark. Good afternoon everyone and thank you for joining us for today's call, where we will be discussing Citrix second quarter 2007 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 classification and historical revenue trends related to our four product groupings for website. And that 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 provisions 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, acquisition and related integration risks and the company's voluntary review of the stock option granting practices and the related accounting. Additional information concerning these factors are highlighted in the earnings press release and in the company's filings with the SEC, including the Safe Harbor disclosure contained in our most recent 10-K filing, available from the SEC or the Company's Investor Relations website. Additionally, during this call, we will discuss various non-GAAP financial measures as defined by SEC Regulation G. More information on the non-GAAP financial measures can be found at the end of the press release dated today and on the Investor Relations page of the Citrix Systems corporate website. Now, I would like to turn it over to David Henshall, our Chief Financial Officer. David?

[David J. Henshall:]

Thank you, Eduardo. Today, I am pleased to report second quarter 2007 revenue and financial highlights for the company. In addition to providing you with some commentary on our performance, I'll discuss the trends in our business and review our current outlook for Q3 and full year 2007. Before I get started however, let me provide an update of the voluntary stock option review. As we've already said, the Company intends to restate certain historical financial statements in order to record additional non-cash stock-based compensation and other expenses. Please refer to our press release for further details. We also announced previously, our decision to consult with the office of the Chief Accountant of the SEC, on certain interpretive issues before filing the 2006 10-K and first quarter 10-Q. However, since the process is still ongoing, the company has not yet determined the final amount of the additional non-cash comp expense, or the resulting tax impact, it's going to be recorded. As you know, the financial information report today is preliminary and limited, and does not take into account any adjustments we will be required to make in connection with the 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 second quarter, or our regular level of detail around the operations of the business. We are obviously very eager to get this wrapped up as soon as possible, so that we can become current with our SEC filings and NASDAQ requirements. So, let's get back to the financial summary. As you see from the reported revenue numbers, up 21% over Q2 '06, we are seeing solid momentum as we enter the second half of the year, including very balanced growth across each geographic segment. Looking at the business in more detail, there is only three key areas I would like to review. One, our App Virtualization business, primarily focused on the first full quarter of results following the product line changes; two, our work to establish Citrix as a leading player in the application networking market and three, the company's continued success, delivering online software as a service. So first let me focus on our App Virtualization products. The Group grew 16% year-over-year to $247 million in total revenue. Included in this is a 16 % increase in product license revenue. The license growth was stronger than expected and really driven by a few primary catalysts, most of which can be attributed to the product line changes we announced at the end of Q1. So in particular, we got a great response from customers and partners on the new Platinum edition of Presentation Server 4.5. In addition to the new 4.5 features, Platinum significantly adds more value than prior versions by integrating EdgeSight Access Gateway and Password Manager, all at the same price point as the former Access suite bundle. In fact PS Platinum contributed nearly 18% of App Virtualization license revenue in the period, about double the impact the Access Suite has had on prior periods. We also saw positive response to the newly upgraded Enterprise edition of PS 4.5. By adding that streaming capabilities to Enterprise, we are significantly expanding its value beyond client server apps, allowing us to increase the ASP and to add more upgrade activity. And while on --, modest purchasing in anticipation of the May 15th price increase of PS Enterprise, we're very satisfied with the trends in licensing. On the subscription business, we continue to see strong customer demand with a near 80% renewal rate in Q2. The rate was down slightly from last quarter, largely due to a number of customers choosing to purchase the upgrade license, the Platinum and simply renewing the subscription on one of the other products. It's a real positive indicator, one that we are going to be watching in the second half of the year. The second area of focus is our Application Networking business. App Networking grew 12% compared to Q2 '06. While this growth rate was below plan, there is a few contributing factors that are important to note. First, at the beginning of the quarter, we announced our new NetScaler 8.0 and NetScaler Platinum editions. Unfortunately, the new versions didn't ship until very late in the quarter. While this resulted in a lower recognized revenue number, we are entering Q3 with a strong NetScaler pipeline, we are very optimistic about the demand for version 8.0. Second, since we include SSL VPN licenses as an integrated part of PS Platinum, some of our standalone Access Gateway business moved up into Platinum orders, helping contribute to the success of our products. And finally, while we saw solid bookings growth in the quarter for WANScaler, we made the decision to defer our revenue until certain features, they were originally scheduled to be released in Q2, are generally available later in this quarter. So this tactical issues aside, we continue to be pleased with the progress of our App Networking business. Demand for the new versions is growing and as a result, we expect to see a significant sequential increase in revenue for Q3. The last area I'd liked to highlight is our continued success delivering software as a service. Our go-to products continue to meet the need of customers in this rapidly growing segment of the market which demands secure, affordable, fast and easy software as a service offering. Revenue from these services in Q2 was $52 million, growing over 47% compared to Q2 '06. Within the group, GoToMyPC represented about half of total revenue and grew 30%, GoToAssist contributed about a quarter of revenue and grew 33% over last year. And finally the online collaborations services including GoToMeeting and GoToWebinar continue to be the fastest growing in the group, up a 120% year-over-year. So in total, looking across all the product groups, we're proud to have delivered this performance and Mark will address some of these items in more detail, in his comments. So now let me turn briefly to expenses and operations. As a remainder, cost and expenses reported today do not include stock-based comp expense under FAS 123R. In the second quarter of fiscal 2007, total cost of revenue and operating expenses were approximately $268 million. So let me tell you what that includes. First, total cost of product license and services revenue, total R&D, sales and marketing and G&A expenses, amortization of approximately $10 million and over $3 million in accounting, legal and tax fees related to the voluntary stock option review. The primary drivers of the expense increase from Q1 included marketing programs, commissions and headcount investments. In the second quarter, we added 155 people, bringing total headcount of 4088, with the largest increases in the sales and services, Citrix Online and App Networking teams. Because of the options review as I stated before, we are not in a position to provide additional detail on the P&L, or standard non-GAAP financial metrics at this time. On the balance sheet, cash and investments increased over $80 million sequentially to nearly $1 billion. Deferred revenue grew $18 million to just under $400 million and DSOs were 48 days, within our target range of 45 to 55 days. So overall, I am pleased with the Q2 performance. The business continues to deliver consistent growth, while still allowing us to balance significant investments in the new business and routes to market that are important for long-term success. And while many of our initiatives are still in a early stages, I believe we created a solid foundation to build on for the remainder of 2007. So finally, I would like to discuss our current outlook and expectations for third quarter ending September 30th and for the full year. It should be noted that we are about to make forward-looking statements that incorporate certain risks. So please refer the Safe Harbor statement noted in our press release and the risks that are stated in our SEC filings. So let me some provide you with some context around our forward outlook. Obviously, we are continuing to see solid revenue traction across multiple areas of business. And as I said, we are optimistic about our application delivery strategy and the investments we have been making to help sustain the momentum in the future quarters. We also see a number of areas of opportunity that we believe will benefit from additional investments to further enhance our product line and our ability to effectively reach more customers. With this, for the third quarter, we currently expect total revenue in the range of $335 million to $343 million, including contribution of $53 million to $54 million from our Online Services. Total cost of revenue and operating expenses in the range of approximately $266 million to $272 million and included in this number is amortization in the range of $10 million to $11 million and $2 million for accounting, legal and tax fees related to the voluntary stock option review. And please note that this estimate in our third quarter spending does not take into account any stock-based compensation expense or other charges that are likely to result from the conclusion of the operations review. For the full year 2007, we now expect total revenue in the range of $1.34 billion to $1.36 billion, an increase of approximately $30 million from our prior guidance. Total positive revenue and operating expenses to be in the range of $1.066 billion to $1.076 billion and again included in this number is amortization expense in the range of $41 million to $42 million, a $1.2 million write-off of in-process R&D related to the closing of the Ardence acquisition and $11 million for accounting, legal and tax fees related to the ongoing stock option review. And again, this estimate for fiscal year 2007 spending does not take into account any stock-based comp expense or other charges likely to result from the voluntary stock option review. Now I'd like to turn it over to Mark to give you additional details on the quarter's performance and discuss our ongoing businesses. Mark?

[Mark B. Templeton:]

Thanks David and thanks for joining us today. I am really pleased with our second quarter results, capping off a strong first half performance for Citrix. As you can see, we finished well ahead of our guidance posting a record $334 million in Q2 and $642 million for the first half, growing 21% and 20% respectively. Picking up from last quarter, I continue to be bullish about growth. Leading indicators in the business are strong; our Windows app delivery products supporting by new positioning, packaging and pricing for presentation server showed really great strength in Q2. Our Web app delivery products bolstered by the new NetScaler 8 release created strong demand at the end of the quarter, driving the best NetScaler pipeline ever. We are encouraged by cross product channel certifications and product-based incentive payouts. More channel partners are selling multiple Citrix products. Our online services team had another stellar quarter, almost $52 million in revenue, growing 47% in Q2. First half revenue from license updates and technical services were up 18% and 25% respectively, really showing that customers are architecting and implementing larger systems. During Q1, we introduced our new application delivery messaging model and trained thousands of employees and partners. At the same time, we introduced the 6-4-3 Go-to-market plan. To refresh you, our 6-4-3 plan is focused on 6 strategic application delivery products, targeting four different IT buyers and three core selling strategies for mid to large size enterprises. The plan is supported by a record number of product releases in the first half of '07; PS 4.5, Access Gateways 4.5, and EdgeSight 4.5, all released in Q1; NetScaler 8 and WANScaler 4.1 released in late Q2. And we also released the first version of Desktop Server in Q2 and updated the Ardence product lines. These messaging, go-to-market product plans are working, and is showing in the results. So, we are well positioned to deliver a great second half performance to continue the pace of investment across our 3 growth engines; App Virtualization, App Networking, and Online Services, and to stay aggressive, defining, building, and leading the app delivery infrastructure market. Shelling and up selling a complete solution to our customer base by leading with the new Platinum edition of Presentation Server was a big focus in Q2. The success of PS Platinum helped drive strong license growth. We introduced the product in March 2007, making Presentation Server the only solution that virtualizes, streams, secures and measures the delivery of both corporate and personal Windows applications. As we exited Q1, three months ago, the pipeline for Platinum was very strong. In Q2, those opportunities began to produce revenue. In fact, new license sales and upgrades of PS Platinum as David mentioned amounted to around 18% of our Virtualization licensing, driving higher ASPs and generating larger, more strategic sales in our customer base. For example, at the end of Q2 we met with the CIO and executive IT team of a large Midwest bank to discuss their market expansion plans. Quickly, an Enterprise edition discussion became a Platinum opportunity. Leading with Platinum, positioned us not only to establish Presentation Server as the bank's strategic windows app delivery infrastructure, but also to replace a single fine art competitor to expand their use of Access Gateway and to introduce the use of EdgeSight across the bank. Since summit, I spent a lot of time in the field, seeing our customer facing teams lead with many conversations with customers around the benefits of PS Platinum. Many partners during the quarter did exactly the same thing, taking advantage of our Platinum upgrade incentive program. The Q2 results for PS Platinum was impressive, giving us continued confidence in the position, pricing, packaging, integration moves we made there. The release of EdgeSight 4.5 made a big difference in Q2. We have quite a few examples of customers that started the EdgeSight pilots. Then realizing they would get EdgeSight as part of Platinum, leading to upgrades of all or part of their Presentation Server. We are also seeing great interest in the new EdgeSight for load testing and in the quarter we closed 15 deals. Desktop Server released early in Q2 got off to a great start, posting over 3000 downloads of the trial version during the quarter. We selected over a dozen Fortune 500 companies for our strategic piloting and evaluation program. As you know, this market is very young. We expect to see demand acceleration in the next 12 to 18 months as customer look for better, more cost effective ways to migrate office workers to Windows Vista. To drive market acceptance, we have exciting plans in this space. Focusing on enhanced user experience and leveraging our strategic partnership with Microsoft to make it easier for customers to deliver Windows Vista. So was just a great quarter for App Virtualization business. Next let's talk about App Networking. We were also pleased with our overall progress on the App Networking front. While the tactical challenges David mentioned reduced our revenue in the quarter, our overall business metrics remain solid. Bookings were up, pipeline is at an all time high, and our competitive position has never been stronger. The biggest highlight of Q2 was the release of NetScaler 8 and the new NetScaler Platinum edition. Our product line, we believe will be just as revolutionary in the web app delivery market as Presentation Server 4.5 is proving to be for Windows app delivery. NetScaler 8 closed important gaps in our Enterprise feature set, leading us well positioned to expand our share of the mainstream enterprise market. It also introduced several exciting new capabilities; we believe leapfrog the competition. With version 8, NetScaler becomes the first product on the market to offer fully integrated App Firewall and SSL VPN capabilities, providing Enterprise customers with unparallel security for mission critical web apps. The new release also gives customers, the ability to monitor end-user experience with an integrated version of EdgeSight, designed specifically for web apps. This is a game changing capability that most competitors will be hard pressed to match. Finally, NetScaler 8 marked the debut of our exciting new AppExpert technology, making the creation of app specific policies of net. While the competition in this market is strong, we believe we have once again raised the bar and established an entirely new level of differentiation. The early demand in quarterly bookings for NetScaler 8 were very encouraging and we are looking forward to a great Q3, as these products move into full scale production. While our entry into the financial office app delivery market is still early; we also made significant progress in our WANScaler business this quarter. Less than 6 months ago, after introducing WANScaler to our partner community, we have now over 300 partners authorized on the product, a nearly three fourth increase over last quarter. Demand continues to grow, especially in the emerging markets where WAN performance is most challenging. I'm also very pleased with the innovation we've seen from the WANScaler team. In Interop Las Vegas, we demonstrated the industry's first ever interoperable WAN optimization and SSL VPN software client, giving mobile laptop users LAN-like app performance without security trade-off-set. Well, we are deferring WANScaler revenue until the client ships, we are building partner excitement authorizing and certifying, driving customer opportunities and implementing solutions. Next I'd like to shift to our Online Services business. Our simpler is better software as a service approach combined with great online sales and marketing execution is fueling growth and higher usage of our GoTo services than ever before. Each service grew by more than 30%, with GoToMeeting now with GoToWebinar, continuing to be one of the fastest growing services in the industry. The trend to work flexibly, especially away from the office continues to accelerate, and GoToMyPC connections grew by 29% in Q1 and Q2. GoToMyPC additionally won communications solutions product of the year. Real time remote support is rapidly becoming a must-have capability for investor breed, customer support experience over the web. GoToAssist customer session growth was up 57% over last year. In Q2 we also launched a new version of GoToAssist, version 8 combines best in class remote support with real-time collaboration and redefines the gold standard for remote support winning TMCs CRM Excellence award. More SMB customers are realizing how effective the combination of the traditional conference call and real time visual collaboration can be. This is the utmost [ph] force behind the growth in GoToMeeting. EarthLink, one of our partners with over 1.9 million broadband subscribers expanded its alliance with our online division in Q2, promoting GoToMeeting and GoToWebinar to their SMB customers. Additionally GoToMeeting, one another impressive round of awards from the SIIA, from the eLearning Guild and was cited for best overall experience and highest ease of use in the in the Wainhouse Research web metric survey. Our go-to-market strategy is to continue the focus on being the first choice for small and medium businesses, looking for simple solutions for real time collaboration and remote access. So, a great first half of building momentum in all of our businesses. Q2 marked the first full quarter since launching our new messaging at summit. To be honest, the speed of uptake with employees, partners and customers has exceeded my expectations. The response to our app delivering messaging is making huge fans to everyone, giving IT executives a clear and flexible architecture for aligning IT with business objectives. Surveys of enterprise CIOs tell us their most strategic challenges are no longer technology issues. They are around the business relevance of IT, enabling business change and market responsiveness tops the list of CIO priorities. This was the consistent theme I heard during Q2 while I spent a lot time in major U.S. and European markets, holding many, many CIO type meetings at very high levels. Our partners and customers really getting it, app delivery is resonating extremely well and we fully intend to establish Citrix as the category leader. Our strategic approach taps into some of today's hottest software markets for App Virtualization, for App Networking and for software as a service. And as you can see from our records results, these markets offered tremendous growth potential, rewarding us for continued the investment in geographic go-to-markets gaps, the pace of product innovation and the integration of acquisitions. Echoing David's comments, we continue to strive for top class operating performance while we build out a strategic market position. App delivery is a profoundly strategic opportunity for Citrix. Our vision, execution and financial results have put us in an amazing position. We are gaining traction with our go-to-market programs and staying aggressive with geographic build out. We are maintaining velocity of product innovation, including the upcoming Delaware release of Presentation Server, the Pictor project with Boeing, the WANScaler Evergreen project with Microsoft, the Kent workforce continuity project with IBM and several exciting application networking online services projects you will be hearing more about in coming months. I am very proud of our first half and Q2 results; record revenues in presentations server, solid leading indicators within opportunity pipelines and great execution of our long-term vision. Thank you for your continued support and belief in our strategy and now we would like to open up for questions.

[Operator:]

[Operator Instructions]. Your first question is from the line of Daniel Ives with Friedman Billings Ramsey.

[Dan Ives:]

Thank you. Congrats in the quarter. When you are looking at kind of Platinum as a percent of revenue next few quarters, may be just generally, how do you see that kind of trending into 3Q and 4Q as a percent of Presentation Server?

[David J. Henshall:]

Let me take the first half and then I will ask Mark to add some commentary. I think if you look at as a percentage of really VSG and I use that metric because that's the way we have measured the access re-contribution in the past. I mean, with nearly 20% contribution, I think, it was certainly fair to say that it's ahead of our expectations. We had talked about over a contracted period getting to up to a third; I think that coming out of the gate we are just very happy with that. And we are pretty mindful right now looking into how to forecast that with only one quarter of experience under our belt right now, but I will say that certainly the pipeline and the activity we are seeing is really being led in a large degree by Platinum. So, the value proposition that we put together in that product, the pricing differential between the other versions of the product and just some of the focus around the messaging, I think is helping to drive this contribution. So going to into the next couple of quarters, I think that right now, the way to be thinking about it is, between about 10% and 20% contribution will be reasonable. And then once we have couple or more of quarters experience, we will be able to provide more granularity on that metric going forward.

[Dan Ives:]

Okay. And just the final question; in regards to margins, I mean you guys had started the quarter and just hoping that... it looks like revenue rates accelerate. How do you view margin expansion in regards to, seeing that flow out of the bottom line, just walk us through in regards to that debt balance and just how we should kind of view that going forward?

[David J. Henshall:]

Yes,as we said many times I mean right now, we are certainly biased for growth. I mean this is a growth industry. When you see the acceleration in the revenue number and given the opportunities on our market and we really believe are participating in some of the most white hot markets across software technology in general. It's really incumbent upon us to go and attack that opportunity right now. So, we are going to continue to invest heavily against the product opportunity whether that is to complete the platform or really enhance the go-to-market activities in each year in each way that it makes sense for that particular market. So, we are operating within the range that we have been stating publicly for the several years, obviously we are towards the lower half of that range right now, partially burdened by the ongoing stock option expense, but also just given the market opportunity right now. In fact, I'd say that when we look at headcount growth, really an area that we have been focused on, we probably be growing faster, if we have the capabilities to fund and attract, highly capable people.

[Dan Ives:]

Thanks.

[Operator:]

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

[Adam Holt:]

Good afternoon. I like to add the congratulations. My first question relates to the PS strength in the quarter. A couple of questions about sort of execution on the sales side; did you see a particularly strong quarter from your direct business as well as... were there any particularly large deals. What was the influence of larger deals in the quarter?

[Mark B. Templeton:]

Adam, this is Mark. I will talk about the sort of what I saw in the field as I traveled and frankly saw it across and there were lots of partners and with customers where we actually calling with ERMs and the experience I had was very broad-based where we have lot of partners shipping customers that where their strategic customers to Platinum, especially if they were coming up for renewals. And then ERMs were really using the Platinum story leading with it and taking some of the... what would have been formally enterprise deal and moving it to Platinum because of the value proposition that David mentioned earlier. So, I would say it was pretty broad-based.

[David J. Henshall:]

Yes, just Adam, to put a little context around that, our two largest transactions in the quarter were both Platinum deals and I will say of the top 10, six were being driven by PS Platinum.

[Adam Holt:]

Terrific. And if I could just shift for a question on the A&G business, it sounds like you've got a quite a bit of confidence in a re-acceleration of that business in the... into the third quarter. I was hoping maybe you could drill down a little bit on what gives you that comfort level? And then just lastly, you talked about a 30% to 40% growth rate in that business for the year. Is that still an achievable target, should we expect to see I guess that kind of level of re-acceleration in the back half? Thanks.

[David J. Henshall:]

Let me take first part of that question, Mark. I think that, right now we... the things that are giving us the confidential in that business is really balancing a combination of the new products that are just been released as of the end of last quarter and in the WANScaler case, in this quarter as well. The product pipeline that we saw exiting Q2 and into the third quarter and then, just finally the momentum that we have on the market side, we've got nearly 350 partners authorized and ready to sell the WANScaler products. I think the number of NetScaler partners is now over 450 and so, we have got a lot of momentum in the market. As far as the ongoing growth rates, I mean they are burdened a little bit by some of the execution issues in the second quarter but, certainly for the year that business will grow materially faster than the company as a whole.

[Adam Holt:]

Terrific, Thank you.

[Operator:]

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

[Ed Maguire:]

Yes, good afternoon. I was wondering if you could comment a bit on given the strengthen in the Platinum edition, how much of that was existing customers taking an advantage of upgrade opportunities in... and what was the proportion you see it roughly?

[David J. Henshall:]

As far as the upgrade business for Platinum we did see upgrades that were... GE is running probably two or three above the levels that we had seen from people upgrading to the former Access Suite. So, that contributed a 20% or so of the Platinum revenue during the quarter, so we are very happy with the upgrades. And if you remember, we had a channel program in place called the Jump program which was around just upgrade me please was what the acronym stood for that. That was really focused on driving mine share and activity metrics around the channel and I think we have been successful in that front. So, the upgrades are looking good, in fact, if you caught it in my remarks, I commented that we did see a number of customers that were coming up for renewal on their subscription advantage program for one of the other products, choose instead of renewing to simply upgrade and buy the new license for Platinum. So, a lot of good metrics, again we are watching those closely going into the second half of the year to try and get, couple of quarters that trending under our belt, so really be able to drill into the numbers.

[Ed Maguire:]

Okay. And on the WANScaler deferrals, is it... could you quantify how much that would have been in the quarter. And also just in terms of your goals for the number of resellers trained here at about 300 now, where would you like that to be by the end of the year?

[David J. Henshall:]

As far as the deferral numbers I... I rather not get into the actual details of that. I think it's fair to say that it's immaterial to the total of the company's revenue right now. But we have stated previously that we expect the WANScaler revenue to contribute $10 million or $12 million for the year. And I still think that's reasonable range. It's just now obviously with more back-end loaded from a recognized standpoint. As far as channel partners, right now with 350 or so I think we are making great progress sequentially. If we exit the year somewhere north of 500 to 600, I think that will be a great achievement and really where we are going to be focused.

[Ed Maguire:]

Great. Thank you.

[Operator:]

The next question is from the line Phil Winslow with Credit Suisse

[Phil Winslow:]

Hi guys. And it has just to do just the success you are seeing on the Platinum side, you discontinued the standard edition this quarter as well, just wondering if you can give us a sense for just what you seeing as far as those customers moving up to the Advance, Enterprise edition as well as just the Enterprise customers who saw their price point go up on the... on May 15th as well?

[David J. Henshall:]

Sure. Let me take that question. I think, a couple of... couple of things I would be thinking about is, as far as the price increase that you referenced regarding the PS Enterprise I think we did see some purchasing ahead of the price increase which took effect on May 15th and that's one of the reasons why we are being somewhat thoughtful about the Q3 and Q4 expectations, just simply because it is hard to know if any of that was future period business and we believe there maybe a modest amount. As far as the actual recognized revenue for the individual components, we didn't break it out, but I will say it's certainly up on a year-over-year and a sequential basis for the Advance and the Enterprise editions.

[Phil Winslow:]

And then finally, when you do think about spending and you had mentioned near terms and long-term, I wonder if you could just sort of gave that for us obviously sort of a multi year strategy in place right now. Where are you going to focus your spending and how do you just think about sort of spending as a percentage of revenue and so forth across those category?

[David J. Henshall:]

Well, to take your question reverse order, I think it's really probably a question about operating margins and where we expect those to go longer term and we've been very, very consistent for the last several years of our operating range and we balance that with what we stated is really a bias towards growth. We still plan to execute within that range but it's, obviously been towards the lower end of that range for the last many quarters. I think going forward, we are going to continue to invest pretty heavily across the product set, making sure that we have got the market leading products in the appropriate integrations etcetera to complete the application delivery strategy, but probably more importantly to really flush out all the go-to-market requirements to be able to meet the demand that is out there right now. And at the end, really driving the company towards a higher overall growth rate and you have seen the growth rate even accelerate in the last couple of quarters.

[Phil Winslow:]

Great, thanks guys.

[Operator:]

And the next question is from the line of Dino Diana with UBS.

[Dino Diana:]

Hey guys, nice quarter.

[David J. Henshall:]

Thank you.

[Dino Diana:]

On the... sure. On the license side for Presentation Server, did you say 16% of the license side for virtualization position?

[David J. Henshall:]

Yes, we saw 16% of VSG license growth was the increase year-over-year. It was... okay, it just happened also be the growth of the group in total.

[Dino Diana:]

Okay. And that's comparable to the minus 2% of last quarter rise. This is pretty much... just all organic. This is just pretty much all just... no new lines... there is no new lines in that business right?

[David J. Henshall:]

That's all organic.

[Dino Diana:]

Wow! Nice quarter. On the --...

[David J. Henshall:]

Thank you very much.

[Dino Diana:]

On the margin side for the Networking business, I think the first quarter, probably the first time it hit profitability so, just trying to get a sense for when that comes up into that. It's kind of a corporate 20% rangeish? How long you think it takes for to get there?

[Mark B. Templeton:]

I'm sorry after which business were you are referring to?

[Dino Diana:]

The App Networking and I guess the NetScaler and some of the other business there. My understanding was that at first quarter, in the past quarter, it is the first time it really got kind of both profitability, or hit profitable... that's profitable. So I am wondering when do they get to the 20% range in line with rest of the business?

[David J. Henshall:]

Dino, I think I mean unfortunately there's not much granularity I can give beyond just kind of general themes on the... on the specifics of the business, given the ongoing option review.

[Dino Diana:]

Okay.

[David J. Henshall:]

So, I mean I have to differ that question. But fair to say, we are going to continue to invest in that business and obviously there is a tremendous amount of leverage there as we leverage our go-to-market engine.

[Dino Diana:]

Okay, alright. And do you have any sense for kind of the license growth in Presentation Server implied in your guidance for 3Q and the rest of the year?

[David J. Henshall:]

Well, I think that right now as I said before, I mean, we have talked about the App Virtualization business growing in kind of a low, mid single-digit range. And I don't think, we are ready to change that yet, even though we have such a great second quarter. It's again one data point, we are looking for a few trends. That said however, we are coming into a pretty easy comp in Q3 on a year-over-year basis. So I do think that we will be looking at growth rates, significantly ahead of that kind of long-term target and for Q4 it's much tougher comp and obviously, we'll provide a lot more commentary as we get deeper into the third quarter. So as to reiterate what Mark said, great traction, especially with Platinum, lot of pipeline visibility and we are excited about what we are seeing right now.

[Dino Diana:]

Okay, thanks.

[Operator:]

I think the next question is from the line of Sarah Friar with Goldman Sachs.

[Sarah Friar:]

Good afternoon, guys. Just a follow-up on that kind of outside license growth statement, you know, when you saw this a year ago as you launched the new product upgrade, it turned out it going to pull forward. So I guess I just want to make sure what Platinum, that's is more penned up demand that you are filling up now from kind of what its been, kind of poorer growth on the license basis rather than pulling anything forward. Can you give us some color and some comfort around that?

[David J. Henshall:]

Sure, Sarah. I mean they are really different dynamics that we saw in the Q4 of '05 and Q1 '06 timeframe and really what was going on there is that customers were losing the opportunity to purchase a real high runner product, historically. And so that was I guess, look forward and essentially, just take out any future demand that they had, given the lack of future availability. I think in this case, I mean, we certainly probably converted some Access Suite deals to Platinum. But really this is for us, this is about increasing penetration in new accounts and broadening the applicability of the solution in general. So I did give a little bit of commentary in my prepared remarks which would... just talking about timing and any potential for buy ahead of the price increase and just trying to be confident about that, I think in general we're talking about new business and the routes here.

[Sarah Friar:]

Great. Okay. And then, so then two other quick things

[David J. Henshall:]

Yes, I think you're right. I mean, our primary use of cash over the last several years has really been around share repurchase and we haven't been in the market for a few quarters now because of the option reviews. So obviously we're going to be biased for continuing that program as we go forward. The timing of when we're going to be able to do that obviously is, it's out of our hands right now. In terms of just working through the final part of the period, we do have, I will say, just back on the buyback, we've got $350ish million remaining against the current authorization for our share repurchase program and we'll be back at it as soon as we can.

[Sarah Friar:]

Okay. And then just a final one a bit more of a technology one, just given a lot of the hype you're going to see around the WAN now as they come out. On the debt side, you just released or just... you have a fairly new product there, but it seems like when we talk to customers that this is the next kind of big front for Virtualization as on the desktop side. Could you give us any sense for your... kind of how you're... your thoughts on how that product is tracking?

[Mark B. Templeton:]

Sure, Sarah. So first of all, at the uber level [ph], while there is lots and lots of smoke, there is not a lot of fire in terms of revenue and customers actually installing the stuff. And there are two fundamental reasons are why. There are big issues with the economics and there are issues with the experience that the user gets on the end of the wire. And so I feel so bold to say that it will take 12 to 18 months for the right sort of set of things to happen around technologies for user experience to drive that option, so that when a user gets their first experience they won't be telling the IT guys why are you taking the personnel out of computing. And secondly, some things have to happen around partnerships and integration point etcetera to make the economics work so that... they are largest scale market can develop. Clearly, lot of the investment banks and IT organizations that are very rich and have great leverage on this type of technology, even if it's more expensive than I'd say a desktop PC, they'll go for it in the early stage, but that doesn't really lead to a broad market adoption. It's the right economics and end user experience. So, that's why we are taking this basically as a longer term kind of gain. We think it's a gain that we can have a huge impact and it's ours to lose but a lot of technology and things have to happen before that will take place. And so that's why we are building this expectation around sort of this year is a pilot evaluation year, we will have some new technology to demonstrate and show early next year and I think that's when we'll start to see some adoptions that by the time we exit away it will look... it will be little bit more clear as to how the markets going to ramp going into the next three or four years.

[Sarah Friar:]

Got it. Okay, great. Sounds like a good long-term discussion for us.

[Sarah Friar:]

Thanks a lot.

[Operator:]

Your next question is from the line of Scott Zeller with Needham & Co.

[Scott Zeller:]

Thank you. Asking about the customer base and getting people back to be current, can you tell us now that you've got the new edition of Platinum, can you tell us what the minimum pricing has changed to be, so someone has elapsed. Has there been a significant increase in the... we call it, minimum package one needs to get to become current again? Thanks.

[David J. Henshall:]

Sure, Scott. The answer is not really, I mean we've had our pricing out there for our Get Current programs and in fact, when we increased the license price in May of some of the products, we actually kept the subscription price the same. And so, right now when I look at our Get Current, which for those of you on the call it's the program that we have for people that elapsed on their subscription managed program to really just get current with the latest versions. We saw... consistent with the record Q1 performance, we saw about the same as far as Get Current activity in Q2. So, still out there lot of activity and we are trying to just make it as easy as possible to participate in some of the new technologies.

[Scott Zeller:]

Okay, thanks.

[Operator:]

And the next question is from the line of Steve Ashley with Robert W. Baird.

[Steve Ashley:]

Yes, my congratulations as well. With respect to the Platinum edition, what incremental functionality you think is really maybe the most enticing and is really spawned this initial interest mark?

[Mark B. Templeton:]

Steve, I think when it's all said and done, EdgeSight probably created the tipping point and then probably if the next level helped by the technology, the app streaming technology that went into the Presentation Server Enterprise edition that is part of Platinum as well. I think it's those two things. The strategy that we've employed here and I think if it's pretty much tried and through, is that when we released the first version of Access Suite which is now back in 2003, we established the price point of $600 and over the course of the last few years, we've been working hard to increase those value that you get for the $600 and really establish the price point. I think adding EdgeSight and the app streaming actually was the tipping point. So, where customers now look at Platinum, they look at Enterprise and they will make one or two decisions. You have those that are already strategically committed to Presentation Server and to Citrix and they will say, I want the most powerful Windows app delivery product you have, what is it and the answer is Platinum, or you will get the other customer that will say, I'm looking for a product that gives me an expanded sort of capabilities across particular kind of parts of the business, whether trying to open-up branches in China, support outsourcing offshore in India, I am hoping, I am trying to support, teller working whatever. You get that kind of customer as well.

[Steve Ashley:]

And just a follow up on Sarah's question about partnerships... around the DDI initiatives. What areas will you hope to develop partnerships and is it at the service, is at the SIs, is at the sever vendors, where would you hope to develop some of that?

[Mark B. Templeton:]

Well, the answer is all of the above, which is also one of the issues in the marketplace. There are so many component parts required in the staff to create a system today that it makes the economics really difficult and so our strategy is to try to have the keystone set of technologies offering also the keystone through go-to-market partners like SI who will eventually do this as well as service providers. And then be the basically keystone element that brings together server providers, because you need tons of servers whether they are blade-based or standard type of machines, to bring together the Windows terminal... I'm sorry, the terminal, the Windows terminals guys, all of them. all of which are partners of ours, as well as partners that help in some of the more classical desktop configuration tools, because you need those desktop configuration tools because it's still a Windows desktop.

[Steve Ashley:]

Right. And then just lastly, it looks like the expense guidance for the full year is up about $36 million and David, you talked about taking advantage of hot opportunities and making some investments, can you give us just a little bit more color of where that increase spread may go?

[David J. Henshall:]

Yes, I alluded to it a couple of times based on prior questions, but a lot of it is going to be around headcount. I mean headcount investments and things to build out not only on the platform capabilities standpoint, but probably more on the go-to-market aspect, making sure that we're really able to go out there and meet customer expectations and fulfill all the demand across all the GOs. We've stated a few times like the EMEA and the Pacific markets we are frankly just under invested. And we've got a lot of initiatives that we need to continue to roll out there to be able to leverage some of the success that we've seen in the North American markets into other places in the world. So it's really going to be across those two areas on a primary basis. Then on a secondary basis, we're continuing to build out the infrastructure of the organization for... really for scalability. It's about our systems and our facilities and our ability to leverage the rapid growth we are seeing on the top line. So it's a pretty balanced, but surely across those three areas.

[Steve Ashley:]

Great, thank you.

[Operator:]

The next question is from the line of Steve Freitas with BMO Capital Market.

[Steven Freitas:]

Hi, good afternoon and really nicely done on the core business there.

[Mark B. Templeton:]

Thanks Steve.

[Steven Freitas:]

I was wondering if you could break out NetScaler standalone revenue in the quarter and how that has trended sequentially and perhaps year-over-year?

[David J. Henshall:]

Yes, Steve, we are not... we haven't been breaking out that for several quarters right now. If you look on the website though would give you a view of the overall App Networking product group. And you can see that was up modestly frankly on a year-over-year basis, up about 12%. As far as the contribution of the revenue, obviously NetScaler is by far the largest piece, especially because we didn't recognize any WANScaler revenue in the quarter.

[Steven Freitas:]

Okay. And then is it true that there is a new hardware platform coming online for NetScaler in the next quarter or two, and if so, should that skew demand at all?

[Mark B. Templeton:]

Steve, nothing that we have announced and so we will have that.

[Steven Freitas:]

Okay. That's it for me.

[Mark B. Templeton:]

Okay

[Operator:]

The next question is from the line of Israel Hernandez with Lehman Brothers.

[IsraelHernandez:]

Hey guys. Most of my questions have been asked, but can you provide a little color on the product performance on a geographic basis. How is the Platinum edition being accepted in EMEA and particular since it is a fairly large market? And second, what's it going to take for NetScaler and some of the hardware products to really see an acceleration in the demand in Europe in particular. Thanks guys.

[David J. Henshall:]

We will take the geo part that question first and then ask Mark to talk about NetScaler. Regarding the individual GOs if look at total growth, we have real balanced growth frankly in the second quarter. The Americas grew about 18% on total recognized revenue and this is all in. EMEA grew over 15% and the Pacific region grew 26%. So, I mean as compared to prior periods, we have just got a real balanced outlook right now. And I would call out frankly on the Application Virtualization business, the EMEA in particular just had a fantastic quarter, as did Pacific. And so, those products are doing great all around the world right now.

[Mark B. Templeton:]

Israel, in the NetScaler, I think your question really applies to all the international territories both in EMEA and in the Pacific and its really going to take a very simple thing and that is to build out our own capabilities to transfer the technical information that is sale and an implementation requires to customers and to partners in those markets and that takes people. So David talked about the gaps we have in the go-to-market end, SEs, consulting teams, even the enterprise sales guys that specialize in NetScaler products. We are very, very slim in EMEA and in Pacific and so we are going to really do a lot to grow those teams dramatically in the second half. I think its worth noting that part of our delay in doing this is to really to make sure that the products are ready for international markets, that we are ready with the kind of training materials and programs to transfer information to our own employees to on board them, make sure that we understood the demand generation technique etcetera, how to recruit partners, because they are not exactly the same, necessarily as a very successful partner around Presentation Server. So I think we now had enough track under our wheels and a complete portfolio for App Networking, including Access Gateway, and WANScaler to have the confidence to start cranking it up in EMEA and the Pacific. So that's the color I provide around what David said from financial perspective.

[IsraelHernandez:]

Okay, thank you.

[Operator:]

The next question is from the line of Rob Owens of Pacific-Crest Securities.

[Rob Owens:]

Yes, good afternoon. With some of the shift in revenue out of the Networking group into the Virtualization group around SSL, can you give us any type of color what the impact was during the quarter?

[David J. Henshall:]

Well, I mean as we stated before the Platinum contribution was nearly 20% of that Group's revenue. So obviously the Platinum was one of the real key stories for the organization. Anecdotally, I will say that our largest transaction in the quarter was originally scheduled to be a very low seven figure deal, which was SSL VPN as the lead product, which ultimately moved into a Platinum transaction and a much larger deal size. And so while it's really tough to nail down the exact number, anecdotally, we have heard many incidents of it right now. So it did definitely contributed some; but hard to nail it down with specifics.

[Rob Owens:]

So you can't give me a sense what the drag was on the Application Networking Group?

[David J. Henshall:]

No not. I mean, from a ... well, we don't breakout the allocation per se, if you would have just aggregate up the MSRPs it would be about 20 % of platinum.

[Rob Owens:]

Okay, great. And then with your online business, can you talk a little about the international expansion and maybe some of the success you have seen there and do you expect to be able to sustain a 45% to 50% type of growth in this business unit?

[David J. Henshall:]

Well, I think right now on the online business, it's really dominated by domestic markets, and we've said that a couple of times. The team there is just doing a fantastic job executing against the opportunity here. And right now just starting to build out, particularly in the AMEA market. That's one that we're focused on this year, starting to drive more and more investment there, and I think it will really be a story into '08 and '09 as we move into more geos. Frankly that's one of the things that'll allow us to continue to keep the growth rate well above the corporate growth rate as a whole. I think that as far as being able to maintain a near-50% growth rate, we're going to hit the law of large numbers and you're starting to see a little pressure on that already just in the last couple of quarters, and our guidance right now would imply somewhere around 40ish percent growth rate. So while it's still going to be a fantastic business, we certainly don't anticipate it growing 50% into perpetuity.

[Rob Owens:]

Okay. And last question quickly on the gross margin, it was flat sequentially. Given some of the softness we saw in the Application Networking group, why didn't we see that lift a little bit?

[David J. Henshall:]

Well, there is a lot of components inside that... inside the total cost right now. We still shipped a lot of the App Networking products. We also have more in the way of online services. So while it's essentially flat sequentially, I wouldn't read into it too much. I think that certainly, however, as we continue to have a higher concentration coming from the App Networking business, it will be biased for slight margin compression as we've talked about many, many times in the past.

[Rob Owens:]

Great. Thanks.

[Operator:]

The next question is from the line of Todd Raker with Deutsche Bank.

[Todd Raker:]

Hey guys, good quarter. Just one quick question, can you talk about the monthly linearity in the quarter, with the DSO number being so low in this whole issue around pre-buying, what did the monthly linearity look like?

[David J. Henshall:]

Todd, I think you are right. I mean, linearity was a little bit better than what we've seen in kind of a normal quarter. It was more of a kind of 30-30-40 quarter instead of what ends up looking more enterprise software kind of 25-25-50. So, we did see a very strong mid-month of the quarter. We also saw strength continue into the June period. So, nothing terribly impactful there, but just good solid business across the period.

[Todd Raker:]

Okay. And any commentary around Ardence or any kind of quantification in terms of what that did in the quarter?

[David J. Henshall:]

Yes, Ardence continues to grow. I mean, it's still an immaterial part of the overall revenue and one that, if you look at our product classification, is certainly the largest contributor to the emerging businesses right now. And while that total group is only just a little under 2% of total revenue, that's the largest contributor and the fastest growing at this point in time. So I'd say stay tuned into future quarters as we really start to take the covers off that business and highlight it a lot more.

[Todd Raker:]

Okay. Thank guys.

[Operator:]

The next question is from the line of Walter Pritchard with Cowen.

[Walter Pritchard:]

Hi. Just one question, most of them have been asked and answered. Could you tell us about your hiring plans in the second half? You've hired here in the first half, I think, modestly ahead of where I expected and even where your own guidance was coming into Q2. Could you talk about, I think you had 155 additions this quarter. Is that relative pace you expect in Q3 and Q4?

[David J. Henshall:]

I'd say yes; however, if we have the ability to hire faster than that, we probably will.

[Walter Pritchard:]

Okay, great. Thanks a lot.

[Operator:]

The next question is from the line of Katherine Egbert of Jefferies.

[Katherine Egbert:]

Hi, thanks. Your online business is I think steady grower for you. I mean, would you ever consider adding more online like SAS [ph] offerings?

[David J. Henshall:]

Yes, Katherine, I think it's a good question. I mean, this as a part of our software, as a service offerings right know, it's a great platform and frankly we have been able to leverage the platform to offer many new services right now and I think that in that context we really already have, when we purchased what was ExpertCity several years ago, it was really just predominantly the GoToMyPC product with a little bit of GoToAssist coming in. And we have added obviously many things since that time and have a few things that we haven't... really haven't announced yet. So, overall there is a great deal of opportunity that we can do with the online business. And frankly the challenge is we were just determining the balance of investment for growth versus profitability and, I've said a couple of times I think over time I'd like to invest more into that business so that we can not only maintain the growth rate, but really be able to leverage the... the breadth and the opportunity, I guess, in the product platform as you go forward.

[Mark B. Templeton:]

Katherine, I would add that we are beginning now to organize the group a little bit more around customer segments, which would lead us to do some additional things that are outside the core perhaps real-time collaboration space in context with a specific customer segment and what a customer is buying at the same time and what they are using in conjunction with something like GotoMyPC or GoToMeeting or GoToWebinar. But we have invested a lot in really robust multicast technical platform there that has been able to spawn specifically GoToMeeting and GoToWebinar. We've recently, over the last under last 12 plus months, moved GoToMyPC and GoToAssist to that technical platform and now we are investing in more instances of it and obviously improving its scalability. We are going to... this year by the end of the year, we will have hosted over 100 million session on this platform across all those products and that platform can, in fact, spawn additional products and so stay tuned on that.

[Katherine Egbert:]

Okay. And then last one, Dave, what does it mean that you have gone to the chief accountant of the SEC that there is a lot of stock options inquiries, and that's an unusual sort of... we haven't seen that before, can you just explain what is going on there?

[David J. Henshall:]

Yes, sure, Katherine. Actually most people that are going through these reviews these days are actually just before filing seeking consultation on a lot of the accounting conclusions before filing. So it is actually very common right now, and most of the folks that have filed recently have gone through this process. Really the whole... the mega message here is just make sure that it's done right and it's done completely once.

[Katherine Egbert:]

Okay, thank you.

[David J. Henshall:]

You bet.

[Operator:]

The next question is from the line of Kevin Buttigieg with A.G. Edwards.

[Kevin Buttigieg:]

Thank you. Just quickly back to the question of Evanie [ph] had within the Application Virtualization group, as I recall, the price increases went into effect about the middle of the quarter on May 15th. Did you hold the line on those price increases going into effect then? And if so, could you talk a little bit about the buying activity before the price...before May 15th and after May 15th?

[David J. Henshall:]

Sure Kevin. I mean, you are right. The prices went into effect May 15th. I think it is fair to say that anybody that had obviously been in the pipeline or had quotes out there or things like that, of course we are going to honor the prior price. One thing I would point out to keep in mind is that this is not the type of... really the type of product that you are going to see a tremendous amount of the forward buying or anticipation of a price point change. So it is really just if we saw any, it was business that was already in the pipe. So I don't think it is going to have real material effect for a long period of time.

[Kevin Buttigieg:]

Okay. That said, looking at your guidance for the third quarter by some of my calculations, it sounds like the license revenues within the Application Virtualization group, it looks like your guidance is calling for them to be flat to down sequentially in the third quarter. Is that an accurate statement?

[David J. Henshall:]

Well, I mean, the one thing I would say is we always measure the business on a year-over-year basis and that is pretty consistent. And we are talking about on a year-over-year business, or year-over-year basis, excuse me, the business will grow substantially faster than kind of the long-term targets that we have set out. Eventually because we had such a great quarter, yes, I wouldn't be surprised to see it down sequentially. But again, that is just based on a lot of the commentary that I have talked about in my prepared remarks, and as far as answering some of these questions.

[Kevin Buttigieg:]

Yes, okay, that is consistent with my thinking there as well. And then just real quickly, finally in the past, in your SEC statements, you had disclosed a profitability of the Citrix online business and I recognize now going through the options review that that is going to affect those numbers on a historical basis as well as currently. But I was wondering if you could talk generally speaking about the profitability in the Citrix online business on a non-GAAP basis and where that has been and what the recent trends in that business have been like? In the past I recall you talking about it in a 25% sort of range before unallocated expenses, which was what was in the prior SEC documents.

[David J. Henshall:]

Sure Kevin. I mean, like you said, I mean, there is not much I can say about current period or since we have been doing the stock option review, but just in a thematic context, as we acquired the company, as really has been our pattern, we were running at a little bit of probably a dilutive posture and we were gradually able to march the profitability up over a number of quarters. And up through last year we were operating the business actually above the overall the corporate contribution...or operating margins. And as a pretty self-contained division, I think that is an equivalent apples-to-apples measure. The bigger question is really long-term and as I stated before, it is balancing the tradeoffs between growth and profitability and those are ongoing discussions we have all the time and we continue to evaluate the market opportunities and turn the dials left and right, but it is a great business, continues to be highly profitable, and I think that is all about to say about it.

[Kevin Buttigieg:]

Okay, great. Thanks very much.

[Operator:]

And your next question is from the line of Manny Recarey with Kaufman Brothers.

[Manuel Recarey:]

Thanks for taking my question. As to the NetScaler, last quarter you spoke about you getting some more traction with the Enterprise customers. Did that kind of take a step back in the second quarter and kind of what is your outlook for the second half of the year as that business ramps up?

[David J. Henshall:]

Yes, Manny, no change actually. We have been running about 50

[Manuel Recarey:]

Okay, thanks.

[David J. Henshall:]

Thank you.

[Operator:]

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

[Mark B. Templeton:]

Well, thanks for attending the call today. Fantastic quarter, fantastic first half, lots of momentum in the business, a lot of exciting time for Citrix here. We look forward with great optimism and great focus. So, thanks again, we will see you in three months.

[Operator:]

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