Citrix Systems, Inc.
Q4 2007 Earnings Call Transcript

Published: 24 Jan 2008

[Operator:]

I would like to welcome everyone to the Citrix Systems Fourth Quarter and Full Year 2007 Earnings Conference Call. (Operator Instructions) I would now like to turn the conference over to Mr. Eduardo Fleites. Sir, you may begin your conference.

[Eduardo Fleites:]

Good afternoon everyone and thank you for joining us for today’s call where we will be discussing Citrix Fourth Quarter and Fiscal Year ’07 Financial Results. Participating in the call will be Mark Templeton, President and Chief Executive Officer and David Henshall, Senior Vice President and CFO. This call is being webcast with a slide presentation on the Citrix System’s 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 would just state that we have posted product classification and historical revenue trends related to our four product groupings to our website. 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 US Securities Laws. This 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 effects of FAS (123)R on certain of the Company’s GAAP financial measures, acquisition and related integration risk. Additional information concerning these factors is 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-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 of certain adjusted figures which include operating expenses, gross and operating margin, operating and net income and earnings per share. The most directly comparable GAAP financial measures and a reconciliation of the differences discussed on today’s call can be found at the end of our press release dated today and on the investors 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 Henshall:]

Welcome to everyone joining us this afternoon. This is the report on Fourth Quarter and Fiscal Year 2007 results for the company. As you can see from the numbers, we have closed out 2007 with a great fourth quarter completing another record year for Citrix demonstrating a strong demand and momentum throughout the business and continued execution against our strategy. Q4 results were highlighted by outstanding revenue growth in our PS Platinum and NetScaler products at the investments we have been making and development in go-to market infrastructure continue to drive market growth. In total, we reported quarterly revenue of $400 million up 24% over Q4 ’06 and a total of $1.4 billion for the full year. Product license revenue for the quarter was $178 million, also up 24% over last year. Adjusted operating margin of 25% for Q4 and adjusted EPS of $0.49 for the period and $1.59 for the full year. So overall, solid results for the quarter and the year across all product groups and geographies. Next, let me provide a little more color on the four remaining product areas and the trends in those businesses that we saw during Q4. First, our app virtualization products which provide customers the best way to manage and deliver Windows applications. In total, the group grew 16% year-over-year to $285 million in Q4 revenue. For the full year, the group grew 15%. The key driver in Q4 was the continued success of the Platinum addition of Presentation Server 4.5 contributing 26% of total app virtualization license revenue. As we have seen in prior quarters, the strong demand for Platinum is driving an increase in ASPs and average deal size for new customers in this business. In fact, during the period, there were six PS Platinum deals greater than a million dollars demonstrating the strategic value that customers are experiencing with this solution. Looking forward, we now believe that PS Platinum could contribute upwards of 30% of new app virtualization license revenue for the full year 2008. Also, existing customers are also renewing subscription advantage contracts at strong levels, about 85% helping to drive an increase in deferred revenue by over $47 million sequentially. The second area of focus I want to cover is our app networking business. Total revenue in this group accelerated a $48 million for the fourth quarter, an increase of 48% year-over-year. For the full year, we recognized a $155 million in total revenue up 42%. The primary driver here is the NetScaler product line. Both in terms of the Platinum addition, about 15% of the mix and the success we have had n diversifying our customer base. Of the transactions greater than 50K in the quarter, about half came from traditional enterprise accounts. And as we have discussed in prior quarters, we are focused on building out our capacity to service out networking customers and while still a work in process, we have double field sales and SC headcounts since last year. One example of this expansion has been the Pacific region, which had a great quarter with NetScaler growing over 50% from the prior year. The third product area I would like to highlight is our success delivery in software as a service through our online services division. Citrix Online delivered another great quarter with revenue of $59 million, up 37% from last year. For the full year, Citrix Online grew 44% to $214 million. This result is the tangible payout of our continued focus on the SMB market with products that are simple to use and predictable priced. The growth in this division continues to be led by the real time ad collaboration solutions delivering 79% year-over-year revenue growth. In 2008, we are going to continue working on expansion into international markets and adding operational capacity to meet the growing user demand, increased efficiencies and ensure reliability. I was going to take time for these investments to add to the profitability division, these are examples of how we plan to invest for growth and compete vigorously to expand our market leadership. The last area I would like to touch on is our new business and server virtualization market. After closing the acquisition of XenSource in Q4, the business delivered approximately $2 million in revenue at the top of our prior guidance range. Also, as forecasted, the total impact of the acquisition was dilutive to adjusted EPS by about $0.03. In 2008, we expect about half of XenServer bookings to be driven by OEM’s. With these partners preparing to launch new product offerings in Q2. Since we receive royalties one quarter in arrears, new OEM’s will begin contributing in Q3. Therefore, revenue will be skewed towards the second half as we have said in the past with the first half focused on building out a go-to market foundation. Mark is going to provide more details on this business later in the call. So in total, looking across all the product areas, we are happy to have delivered this kind of record performance giving us the solid foundation and momentum as we enter into 2008. Now let me talk a little bit about expenses and operations in the quarter and some of the items that impacted the Q4 results. Operating expenses were $271 million, up 27% year-over-year and up 15% sequentially. Overall, compared to last year, the increase was driven by several factors, primarily headcount additions, increased variable selling costs and the APEX associated with the acquisition of XenSource. So the largest unique expense item in Q4 were sales commissions which were up several million. This was primarily caused by all GOs exceeding their internal plans and by specific sales incentives on PS Platinum and NetScaler products designed to drive strategic initiatives. The strength of which were evident in the reported revenue results. We expect to return to a more normalized commission rate in the first quarter. Regarding headcount, we currently have about 46,000 employees up over 300 from last quarter. Included in this number are about 85 people that joined the company through the XenSource acquisition. The largest increases overall continue to be in the sales and services team focused on server virtualization and application networking. And finally, our adjusted tax rate in Q4 was 14% as compared to the 22% rate we posted in Q307. While the continued strength of our international business helps keep the tax rate down, the biggest driver here was a one time benefit from a reduction of tax contingencies related to prior years. So turning back to the balance sheet, we currently have $860 million in cash and investments, in fact, we generated $112 million in cash flow from ops in Q4 bringing the 12-month total to over $420 million both records for the business. After closing the XenSource acquisition in Q4, we increased the pace of our repurchase program spending about $200 million to retire roughly 5.4 million shares. In order to continue this program through 08, the company’s board has just authorized a $300 million increase to our e-purchase program giving the company a total of about $330 million in the program as we enter into the first quarter. So overall, looking at the results, I am really pleased with the Q4 financial performance. We have continued to execute against our strategy while delivering strong growth and profitability. So finally, I would like to discuss our current outlook and expectations for the first quarter and for the full year 2008. Before we discuss numbers though, let me provide you with some context around our forward outlook. Obviously, we are continuing to see solid demand across multiple areas in the business, we are also optimistic that our strategy is becoming more mainstream for customers and the investments that we have been making will help sustain our momentum in the future quarters. We are unchanged in our position regarding the huge market opportunity in front of us and while carefully monitoring the broader economic climate, we will continue to make those investments to strengthen the competitive advantage of our solutions as well as our ability to effectively reach more customers around the world. So turning back to the numbers, for the first quarter of 2008, we currently expect total revenue in the range of $367 million to $377 million and included in this is XenSource revenue of $3 million to $5 million and online services of $61 million to $62 million. Interest income in the quarter of $10 million, our adjusted tax rate of 23% to 24%, shares outstanding 194 million to 195 million shares and adjusted EPS in the range of $0.33 to $0.35. And for the full year 2008, we are providing guidance for the first time. In our current outlook is total revenue in the range of $1.615 billion to $1.645 billion and adjusted EPS in the range of $1.61 to $1.64 per share. Included in these amounts is our prior guidance regarding the impact of the XenSource acquisition, and just to remind everybody, we expect $50 million in total revenue and total expenses of $60 million to $70 million for the year, so the investments plus the additional shares that were issued for the acquisition will generate dilution of between $0.15 and $0.20 for the full year 2008 with the dilution being modestly front and loaded in the year. Now, I would like to turn it over to Mark to give you additional details on the quarter’s performance and discuss our ongoing businesses.

[Mark Templeton:]

We had an extraordinary fourth quarter capping off yet another outstanding year, 23% growth in revenue, 18% in product licensing just a fantastic 2007. In fact, I cannot remember a year in the Citrix history where our product, message, theme, and strategic foundation grew as broadly. We drove consistent execution and made solid investments in people, facilities, and systems, all extremely essential for Citrix to go mainstream. So first, I would like to briefly cover three highlights from last year. First, we really improved our focus in app virtualization and acceleration in producing new Platinum additions of presentation server and NetScaler. Growth there was great and competitively, we enhanced the products that differentiate Platinum, releasing 8.0 versions of the Access Gateway and EdgeSight, launching WANScaler and provisioning server. And introducing the EasyCall Gateway. Secondly, we enhanced and updated all of our go-to products again including full support for Windows Vista. Along with additional investment in our online virtualization platform, the fuel growth from new geographies and products will introduce in 2008. And third, we extended our market opportunity to include desktop and server virtualization. With the strategic acquisition of XenSource, adding XenServer V4 to the product portfolio and we announced our Virtual Desktop infrastructure solution XenDesktop, a product that allows leverage of Citrix technical competencies and go-to market partnerships going forward. So, great financial results and a winning strategy. Citrix is emerging with what we need to become the head end for IT services delivering apps and desktops from a very dynamic server infrastructure. And ultimately, driving the transformation of the data center into the delivery center. So now, I would like to turn your attention to 2008. We are feeling really good about 2008 business. Looking at leading indicators, our game plan for the year and the strategic pipeline of products and partnerships we have lined up. We entered the year with solutions that are better known for delivering strong ROI and fast paybacks. That leverage existing IT investments. Strong growth of our 07 license updates and tech services means Citrix infrastructure is becoming more important than ever. We are clearly more prominent on the IT strategic radar. No doubt, these characteristics will be valuable in 2008 as everyone in the tech industry faces potential economic head wins, including Citrix. So next, let us talk about our 2008 priorities, first up, app virtualization. Today, the PS product line is the only infrastructure that offers a universal way to deliver Windows-based apps without ever installing them on both the server and the client. The Platinum edition goes even further providing lower PCO, better security, higher performance and a richer user experience. Last October, we enhanced platinum with the addition of EasyCall and Smart Auditor features. In Q1, we will enhance it again driving PS Platinum as a mainstream way to deliver Windows apps without installation. As I talk with customers, I see the intrinsic value of app virtualization becoming more and relevant and better understood by IT organizations all over the world. At the same time, we have made a huge investment in the Delaware release of the Presentation Server. That leverage is both Windows Server 2003 and the terminal services enhancements coming in the release of Windows Server 2008. So, in 2008, we will actually re-launch Presentation Server in the market as the only solution back in virtualized Windows applications dynamically on both the client and server. A powerful differentiator that brings the benefits of app virtualization to both office and mobile workers for the first time ever. The re-launch process will begin soon in conjunction with the upcoming launch of Windows Server 2008. The excitement kicks off in late February so stay tuned for that. Next, I would like to talk about Web App delivery. We are coming off a strong second half performance entering 2008 with momentum in the Web App delivery market. NetScaler continues to move up the stack providing advanced Web App delivery capabilities for both our internet centric and enterprise customer basis. NetScaler continues to power most of the world’s top internet sites. We have great velocity there. This year, we will be putting added focus on the enterprise segment of Web App delivery. We like what we are seeing in some of the better wins from Q4 and other leading indicators. Enterprise pilots and trials are up and we are seeing some conversions to deployments and data projects. And cross selling is gaining traction as existing presentation server customers are now implementing NetScaler for their Web App delivery needs. Competitively, we are making lots of inroads in many classical load balancing customers and we have recently experienced very impressive growth and met new customers growing over 80% in the latest quarter. NetScaler A and NetScaler Platinum drove second half momentum, leveraging the addition of the X per policy engine, user experience monitoring, integrated SSL VPN and the industry’s toughest app firewall. Our 2008 product road map looks just as strong with a next generation platform coming with impressive advances in scalability, acceleration, app availability and lower PCO, exactly what it takes to serve both internet-centric and enterprise customers. So, we are well positioned with an exciting game plan for 2008 in Web App delivery. Next, online services; Citrix Online delivered another strong quarter driven by continued demand from customers of all sizes taking advantage of our simple to use purpose built remote access, support and collaboration services. In 2007, we grossed $200 million in sales placing us in the top tier of all FAS providers. As we evaluate our online business segments, online remote access is maturing, on demand support has global opportunity and real time collaboration is really quite strong. This has guided our priorities as we begin the build out of significant infrastructure to support growth. With a goal of maintaining our number one position GoToMyPC and expansion of that product line, and to support GoToMeeting and GoToWebinar, we had sold nearly 90% attendee growth in 2007. So, significant investments are being made to enhance our collaboration market position in 2008 and beyond. We will fade the product and feature announcements for later this year, but suffice it to say, we are aiming to significantly raise the bar in the real time collaboration experience yet again. GoToAssistant led the online support market for a long time. To optimize our position, we have began the process of more finely segmenting the customer base, separating the corporate customer from the pro-server. This is the strategy behind our recent release of the beta version of GoToAssistExpress, our new easy to use support solution for very small businesses and professionals. If you provide support for your children, mom or dad or close friends, whether they have a Mac or a PC, you should try GoToAssistExpress. The beta response has been just amazing. Next, I would like to talk about our newer virtualization opportunities. ITC projects worldwide spending on virtualization software and services to be $15 billion by 2011. Our XenServer and XenDesktop products firmly position us to tap into server and desktop virtualization segments beginning in 2008. This year, server virtualization, we are preparing ourselves to ramp up and reach take off velocity. The sales integration team has been maniacally focused on hiring the team and recruiting partners since we closed the transaction on November 1, and I am really delighted with the performance. We exceeded our goal of 1000 reseller authorizations exiting the year with 1600 Citrix partners authorized to sell XenServer. We lost a completely virtual online tool for both sales and technical training free for Citrix partners and customers. Hundreds of partners are training themselves preparing for the XenServer launch during Summit 08. In addition, we also on boarded approximately 60 new people to the XenServer team, and added about 400 new customers in Q4. Many new customers are early in conducting initial projects and smaller implementations, all based upon XenServer V4. Leveraging the product’s pass time to value and high performance, seeing the power of XenMotion and enjoying compatibility with our existing storage infrastructure. Our target is to deliver $50 million in 08 revenue and to create a great trajectory for 2009. Our execution focus will include ramping up channel partners, spinning our OEM’s and working more closely with Microsoft across all aspects of enterprise virtualization. Next week at Summit, we will formally introduce the XenServer product family to our channels. We will demonstrate the simplicity and power of XenServer and how to attack the high volume mid market opportunity for server virtualization. Partners will hear about 2008 demand programs, adviser rewards and selling incentives and they will learn how to get trained and certified quickly. Our goal is to exit Q1 with over 2000 resellers authorized for XenServer, with improving partner productivity being our focus going into the second half. Another dimension in our strategy includes OEM’s, both software OEM’s and server hardware OEM’s will be very important in our go-to market mix. We have already announced relationships with NEC, Dell, and HP, fuelling our mutual goals to drive greater use of virtualization and new X86 server shipments. Our strategy also includes the strong alliance with Microsoft in virtualization and continuing our amazing rate of innovation on the Windows platform. Yesterday, we made some announcements with Microsoft across application, desktop and server virtualization, all have been received very enthusiastically by employees, partners and customers. On the server side, we announced that the future release of XenServer will also support and interoperate with Microsoft’s Hyper V HyperVisor, as well as their system management framework, Microsoft Systems Center. Embracing and extending the Windows platform is a core competency for Citrix. This will bring much of XenServer’s current capabilities to Hyper V and introduce new dynamic virtualization services such as real time VM streaming, interoperability, high performance storage and high availability. As a whole, we believe these announcements will grow the primary demand for server virtualization exactly where the money is, running Windows or closed. As exciting as the server virtualization market has been, data center usage is still pretty narrow. The biggest potential clearly lies ahead. The other announcement yesterday was about desktop virtualization, partnering with Microsoft there and placing another key brick in the foundation of our desktop delivery game plan. First, a little background, in October, we announced XenDesktop, our end to end system for virtual desktop infrastructure. In November, we made the XenDesktop tech preview kit available for free download giving customers a first look at our solution. We have had to date about 11,000 downloads of the system with a significant number of pilots beginning and excellent response from early adopters. At Summit, we will unveil our business strategy to our partners showing them how to introduce the most powerful virtual desktop infrastructure to customers, the XenDesktop product sampling. XenDesktop integrates five components that are absolutes for successful desktop delivery. First, an enterprise class virtual machine infrastructure. Second, a high speed desktop delivery controller, third, on-demand desktop image provisioning, fourth, a high fidelity user experience and fifth, broad compatibility with desktop appliances, local peripherals, storage management, and disaster recovery and system configuration tools. Yesterdays joint announcement with Microsoft was a watershed event for the virtual desktop market with a strong Microsoft market endorsement, improved B, E, C, D pricing and licensing and planned addition of graphics processing technology in the core Windows platform. This marks the initial step in a longer term plan to collaborate with Microsoft in desktop virtualization. Together with the announced go-to market partnership, we will deliver the best PCO and user experience in virtual desktops. XenDesktop is now entering full beta test status with a planned release late in the first half. Last, I would like to discuss how we will be taking all of these to market. In 2007, our go-to market formula focused on enterprise buyers in the app delivery line of sight, leading with the Platinum editions of Presentation Server and NetScaler. In 2008, we will focus on four product lines, XenServer in the server virtualization market focusing on the volume mid-market customers, Presentation Server in the app virtualization market focusing on Platinum and moving entry level customers to mainstream implementations. NetScaler in the Web App delivery market focusing on enterprise customers with the advantages of Platinum and XenDesktop winning the hearts and minds of early adopters in desktop virtualization. Next week, during our annual summit conference, we will step up training and authorizations across our end to end product stack. Our channel partners will learn how to lead customers with the Platinum difference and to tell a business oriented, high impact story leading to more professional services, bigger deals, higher ASPs and more customer intimacy for our valued partners. We will continue to give our partners the training, incentive, product and support they need to engage across multiple buyers within the enterprise and with the strategic IT buyer. Summit 08 will be our most exciting ever and as always we will have some surprises to share. So to summarize our 2008 priorities, first, we will further strengthen our position in app virtualization by re-launching Presentation Server product family driving aggressive PS Platinum revenue and leveraging the new Windows Server 2008 platform; secondly, increasing our share in enterprise web app delivery, improving the capabilities of NetScaler Platinum and releasing a next generation platform that pushes the envelope on scalability and extensibility; third, we will begin to build on the scale out investment we are making in our online virtualization platform to further penetrate the SMB market, to provide new products, to globalize into new geographic markets and further simplify our customer experience; fourth, we will build velocity in go-to market capacity in desktop an server virtualization by ramping our channel in OEM programs throughout 2008 by leveraging our Microsoft partnership as you saw in yesterday’s announcements and by introducing enhancement to both XenServer and XenDesktop. And finally, we will step up the volume of our app delivery message to driver our end to end system concept increasing our breadth of partnerships and improving the cross integration of our products into a system. This will begin to provide our customers the integration capabilities needed to unlock much more of the value in our infrastructure. This is our plan to continue our growth in top line revenue, in market penetration, in customer value and in go-to market horsepower. Wrapping up now, I am really excited about our Q4 performance exceeding expectations for the quarter, posting record revenue of $400 million growing 24% over last year and wrapping up the year with an impressive $1.4 billion in revenue. I would like to thank the Citrix team, our partners and customers, our vision, execution and financial results have put us in an amazing position, a position to drive the transformation of a data center into the delivery center. So next, I would like to open it up for Q & A.

[Operator:]

(Operator Instructions) Your first question comes from the line of Michael Turits of Raymond James.

[Michael Turits:]

Could you give us this quarter what the growth rate was in Presentation Server license revenues?

[Mark Templeton:]

Sure. The peer Presentation Server license revenue actually had a fantastic quarter up over 15% on a year-over-year basis.

[Michael Turits:]

And then can you also give us an update on how you did with WinScaler on a revenue basis in terms of partners and also where you are in terms of partners on NetScaler particularly abroad.

[Mark Templeton:]

Let me take the WinScaler piece first. It continues to track in line with our original expectations. For the full year, we did about $8 million, maybe a little over $8 million. We talked about a range of $8 million to $10 million, so it continues to do okay, I would say is probably the way I would describe that.

[David Henshall:]

Our bigger focus is not necessarily on the stand alone win market as we have talked about a few times, it is really on providing things unique to our end to end strategy of the data center to the desktop and being able to optimize the traffic that is unique to the Citrix solution and that is where I think you should expect to see this product roadmap go throughout 2008.

[Michael Turits:]

It looks like you had a nice uptake in renewals on SA, anything particular in that context going back in the right direction.

[Mark Templeton:]

SA’s have continued to be very strong for the entire year and we had renewal rates of broader subscription advantage in the mid-80s which is a rate that we are able to reach last quarter, and probably the bigger story there in the underlying is the underlying primary issue is the number of customers that are using this opportunity to either get on to SA that have lapsed or the ones that are using us to upgrade to the Platinum technologies as they see the broader benefit to their business by expanding to the adjacent products inside the broader platinum products.

[Operator:]

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

[Philip Winslow:]

Good quarter! I just want to dig in a little bit on to see your expectations for Platinum going forward. I mean, you said it was going to be potentially 30% of license sales next year. How do you see that affecting your top line expectations for this license growth when you look at the Presentation Server, but also how does that impact the margins of this business just given the higher ASP, but not necessarily making an X-amount of incremental cost?

[David Henshall:]

We are extremely happy with the success we saw in Platinum in Q4 and really for 2007, the full year, we are exiting the year with over 20% contribution and that is certainly at the top end if not above the original range that we had talked about as frankly a stretch goal. As we go into 2008, we talked about up to 30% contribution across that product family and that is one of the things that is going to help really keep all of app virtualization license growing in this range that is moved from last year, I would call it low single digits up through kind of a mid single digit range as far as our forward outlook. We are not quite in a position yet to increase the range up to the mid teens that we have seen over the last couple of quarters. I think we have got a lot of things going on in the app virtualization business throughout 2008 which Mark alluded to in his comments and we will continue to work through those, but we are very happy with the contribution. I think it is going to be one of the things to really help drive this business with this kind of growth into the future.

[Philip Winslow:]

When you guys do look at investments for 2008, you talked about on the incentive side, but when you do look at sort of the quarter spending, where would you expect to focus, on the sales and marketing side or more so in R&D?

[David Henshall:]

I would say largely, we would be leveraging the go-to market side. We have got a lot of things that we are doing around Xen, obviously, XenServers, XenDesktops and we are still a work in process across the whole app networking business. I mean, there are so many geographies that we are really undermanned. We need to continue to make these investments and probably the last thing is investment in the channel. I mean a lot of the heavy lifting is still being done by Citrix across the app networking business and we will really see the leverage when we can drive it into the channel the way we have with some of other products.

[Operator:]

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

[Adam Holt:]

My first question is a follow up on the Presentation Server outlook for next year. You talked a little bit about the impact of Platinum on a going forward basis, how does your mid single digit growth expectation reflect any impact from either the Windows 2008 release or the impact of Delaware, how should we be thinking about that.

[David Henshall:]

I think there is nothing explicit. It is all implicit in there right now. We have had great success with this business over the last several quarters. We have got some real tough comps going into 2008 and we still think that we will be able to grow this business faster than we have historically. The upcoming launch of our Delaware product which is really leveraging all the strength around Server 2008, very excited about that. That is coming later this year and we think we have got some new things coming down the pipe.

[Adam Holt:]

If I could just shift it to the online business, also maybe to get a little bit more granularity on the growth trajectory for the year, obviously, another good quarter in Q4, the guidance would imply another strong growth quarter in the first quarter, how should we be thinking about sort of the sustainable growth in the online business?

[David Henshall:]

Probably a couple of things going on there. If you look at the underlying markets and just kind of take in really in the aggregates, across the board, they are probably be growing about 20% to 25% and so obviously, we have been continuing to take share for a number of years and we will continue to throughout 2008. The sub segments of those markets, as Mark mentioned, remote desktop access, more of a share market, slower growth. The bigger opportunity going forward is we are going to be around in the real time app collaboration. The extensions of the GoToMeeting product family in particular helping drive that business, so I think you will start to see different things across the products as far as growth rates and then we will continue to out pace the market. We will obviously have a slow in growth rate that we have seen for quite some time and we have been talking about it pretty consistently just the pure law of large numbers, but think of it as a little bit faster than the overall markets as we continue to take shares.

[Adam Holt:]

If I could ask just one more question, sorry to nickel and dime on the expenses for the fourth quarter, but is it possible to get to the level of detail to call out what was commission expense. It was sort of one time oriented towards the fourth quarter versus sort of operating expenses in the fourth quarter that might set the table for the first half?

[David Henshall:]

Yes. I will give you a ball park. I mean, variable stuff related to people exceeding plan and being into an acceleration and I think it is pretty unique to Q4, I would peg at in the north of $5 million.

[Operator:]

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

[Todd Raker:]

Nice quarter! Mark, can you give us a little bit of oversight in terms of Microsoft, I was wondering if you could dig in economic wise, how is the relationship evolving, do you see a day when Microsoft potentially resells part of the product portfolio?

[Mark Templeton:]

I think either company’s game plan, I mean at this point, we see too many opportunities to work together technical and product level and go-to market level in complementary ways for that to really make any business sense, and I think that our role in the partnership is obviously to create solutions certainly around market segments and we believe large scale niches and market segments and Microsoft’s role is to build a really more and more robust platform for us to build on top of and I think that is where the symbiotic relationship comes from as long as we are doing our job in solutions and obviously with innovation and so forth and driving market adoption and Microsoft doing their job platform where they can pay licensing when we are successful and I think that it is really a simple formula and I do not see any economic reason to change it.

[Todd Raker:]

Given that response, what is the risk that you lose if you missed the window with them, meaning, Microsoft got Meridian in out in the market and pushing it seriously and it emerges as the major player in the space and then never just hits critical mass that is taken seriously.

[Mark Templeton:]

I think your question is about XenServer and server virtualization specifically. With XenDesktop and obviously there is a tremendous amount of the XenServer technology that is inside of XenDesktop, it is really a separate business and we think a completely green field type marketplace, but when it comes to server virtualization, I think that as we see the size of the market, the number of servers and the value add opportunity kind of as we engage with customers and partners, we think that we can build in the server virtualization market a similar kind of symbiotic relationship with Microsoft that we have with Presentation Server, which then puts them notionally in every sale that we make or many, many sales that we make at least in the future and that is how the economics and the relationship works. In that kind of model, we will be in a great ouPCOme. We will be the third player in server virtualization and we think that is great role for us given that our focus is not in the silo of server virtualization, our focus is in how we tie all of this together, virtual servers, virtual apps and virtual desktops into an infrastructure that actually can be married to business initiatives that are measurable, so it is a very different focus and it is what allows us to work very nicely with Microsoft, I think in server virtualization, and in a complimentary way even in many ways to VM ware, so that is our game plan and we are sticking to it.

[Todd Raker:]

Is it fair to assume that the $50 million this year and the $200 million next year around Xen is predominantly server driven?

[David Henshall:]

I think you need to assume that for this year, when we provided the guidance, we were providing guidance as it related to the acquisition and we did not really try to separate out desktop and server, but I mean, this year, we still believe that it is a year for piloting and trials et cetera when it comes to virtual desktops and that there will not be significant revenue this year from that part of the market and that most of it will be coming from server virtualization.

[Operator:]

Your next question comes from the line of Katherine Egbert with Jefferies.

[Katherine Egbert:]

I have got a couple of more questions on Xen, so you laid out some milestones when you announced that acquisition, can you tell us where you ought to see those milestones like signing up a certain number of channel partners for instance?

[David Henshall:]

When we made the announcement, I think, we just talked about a few metrics and the first one was the one we just talked about and that is the $50 million in revenue for 2008, secondly, metrics around our partnerships on the channel side and when we made the acquisition and closed the deal, the Xen Source team had about 400 partners that have been authorized to train and what we said was that our goal was to exit 2007 with 1000, so adding 600 for the stub period between November 1st and the end of the year and then to exit Q1 of this year with 2000 and then to finish this year with 3000 authorized resellers and I do not think we really had any other metrics or any other metrics. Certainly, we talked about building the team and how we would do the integration on the sale side to incubate server virtualization in our overall sales of services organization. But in all of those metrics, I think we have so far exceeded the goals we set out which I think at the time everyone thought we were pretty lofty, so we completed the year instead of that 1000 resellers authorized, we exited with 1600 resellers authorized and that really sets us up to be I think in good shape exiting Q2 to probably exceed our goal of 2000 authorized resellers and then puts us in good stance for the year, so we are feeling really good about the metrics.

[Mark Templeton:]

Let me just add to that the only other metric that we talked about was around employees and we had said that we were about 85 people coming on board as part of the acquisition looking to grow that to about 350 by the end of 2008. I will say as part of the hiring numbers I talked about before, about 60 of those were related to new people on Xen, so we have had tremendous success in the early days bringing people on board particularly in the go-to market area so we are really happy with the strength there.

[Katherine Egbert:]

One other metric actually was dilution, can you tell us the quarterly revenue run rate when Xen Source breaks even?

[David Henshall:]

It is a two-sided metric. It depends on the investment level obviously, but I think at this point in time that we are expecting break even probably right about early 2009.

[Katherine Egbert:]

In what revenue run rate would that be?

[David Henshall:]

From a loading standpoint, probably 70% will be back end loaded this year, so we will give you north of 20.

[Katherine Egbert:]

And then just last if I can, can you just comment on Microsoft buying Calista? What would you make of that?

[David Henshall:]

Technology acquisition that Microsoft intends to include in the core Windows platform to improve the remote graphics experience for desktop virtualization especially, I think, and a platform in technologies that ISV like most things in the Microsoft platform become things you can build on top of and innovate on top of, so overall, a good announcement, the timing of when it becomes part of the Windows platform, the specific features and value add interfaces et cetera, way too early for Microsoft to be announcing that, but good, a stronger Windows platform means better value-added products that we could build.

[Operator:]

Your next question comes from the line of Brian Essex with Morgan Stanley.

[Brian Essex:]

I was wondering if you could dig in a little bit more to the Presentation Server results and fantastic results for the quarter, what is your sense in terms of upside to your original numbers, how much of that was faster than anticipated adoption or larger than anticipated installed base and then kind of the partner two to that question, what are you seeing in terms of economic impact to your forecast, were there concerns you had last quarter that you just did not see materialize and then going into Q1, do you have those same concerns or do you still not expect to see as much of an impact as maybe some of the other segments of the industry we see?

[David Henshall:]

Let me talk about the Presentation Server business first, specifically, I mean we exited as I mentioned a minute ago with about 15% year over year growth to that business, which is as strong as we have seen any time in the last many years. A lot of that was driven by just outside with the Platinum addition. We are having great traction there. It carries a higher ASP and it is driving obviously from a mixed standpoint, a higher ASP for the whole business and larger deal size so we are getting good traction there. I would say we are also seeing good upgrade activity about 28% of total Platinum came from upgrades in the quarter. People upgrading their prior versions of Presentation Server to take advantage of the broader solution which is great. I think going forward, similar to what I said a few minutes ago, we are now in a position to say that it is not a single digit growth license business, it is now a mid single digit growth business with some potential to go faster. We are pretty excited about what we can do with Platinum over time. As far trying to dig in to what is embedded implicitly or explicitly regarding the broader economy, I would say that there is nothing that is specific in there. We continue to look at the same metrics that we always do, pipeline, coverage ratios, deal size, channel leverage et cetera, and I would say nothing really unique popped out in Q4 whether it was on a specific geography, or a specific industry vertical.

[Brian Essex:]

Kind of as a follow up to that, is there a particular vertical that has changed over the last year, I mean, not as much financial services impact you may have thought and then do you go get the feeling that you have the same visibility or same degree of visibility from the channels this year as you did last year.

[David Henshell:]

I would say on the vertical question, really no change, I mean we continue to have strength from our traditional verticals, but if you recall, our business is extremely diversified, so we never had more than 10% or 15% coming from one particular vertical in any quarter, the one thing that we did see was actual, a lot of new strength in financial services across our app networking business in certain places which is good, so I do not think I would expect to see much of a change going into 2008.

[Operator:]

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

[Israel Hernandez:]

Can you talk about your hiring plan for 2008? How that compares with 2007? What particular areas are you going to be making the most investment and are you making any changes to that plan in light of the macro environment that we are all facing?

[David Henshell:]

We hired about 900 people in 2007, and as we look forward, a nice round number for 2008 is about 200 people per quarter and that would be largely focused on the XenServer and XenDesktop business, both in go-to market and development capacity and the next area would probably be in go-to market activities for the app networking business. As far as how we adjust that based on broader economic climate, probably the simpler answer is that we always look at hiring as probably our largest variable expense that we have going into a new quarter and we base that largely on what we are seeing in real time in our business and again we are looking at the same metrics that we are looking at across doing our other forecasting whether it is coverage et cetera, so if we are faced with a broader economic decline, we would address that in real time, so at this point, continue to focus on the things that will drive the strategy and allow us to service more customers.

[Operator:]

Your next question comes from the line of Rob Owens with Pacific Crest.

[Rob Owens:]

Could you maybe talk a little about your key points of differentiation with NetScaler versus the competition, what you are seeing on pricing, are you finding that you are winning because of functionality or are you getting more aggressive on prices, and lastly with the new Montreal release from F5 today, is that something that you will follow suit with or are you more focused on the midrange of the market?

[David Hershell:]

So first of all on Montreal, obviously rumored that it would appear and I understand it has been announced this afternoon. I do not know a lot about it myself, and we have been obviously doing a lot of work on our next generation platform to prepare for when Montreal will show up. I think Montreal in the way it has been built, however is really driving more toward the service provider segment and the focus that we have had with the NetScaler platform as I have mentioned in the commentary is basically the internet-centric segment and the enterprise segment. And so that will continue to be our game plan from a product point of view and take service provider opportunities with partnerships as they occur. And we think there is more opportunity there with partners than to try to go after the service provider segment on a front kind of way. So, with the NetScaler platform, the feature capabilities are really designed more for the enterprise to be a complete, integrated, advanced web app delivery controller that frees enterprise customers from the kind of complexities that they end up having to design into web applications in order to make them secure at higher performance and more scalable. And that is our message and that is what differentiates NetScaler. As you saw last year, when we announced NetScaler Platinum, the addition of the app expert policies and really bring in a visual kind of capability to that putting in firewall capabilities that are futuristically driven that are way, way superior with what anyone else has. Putting the SSL VPN in the box. And then even adding our click to call capabilities, these are all sorts of differentiating factors that allow NetScaler to be the front end of the web application designed into the architecture ahead of time providing, yes, all of the load balancing and all of the things that second generation load balancers do, but going way beyond that and really being a permanent front end for a web app, and I think that is what differentiates the NetScaler product and strategy and you will see that continue to play out in 2008 as we step up the underlying platform to handle more capacity in a way that actually will save customers money, as well as delivering a lot more capabilities of Web 20 apps et cetera and then in terms of what we have seen in the market place. I have mentioned that we had a great net add of new customers especially in the enterprise segment in Q4, which has been a big focus for us and we really have not had to do types of pricing or any of that, in fact as a software company, we really sort of do not speak that language, we speak the language of value, demonstrate and defend our value, demonstrate and defend our value and then hopefully the customer then decides in our favor and when it gets down to just a price and so forth, we are just not hardware guys that are good at doing that. And we think that when you do that, you may lose a deal, but with the differentiation we are building around software and the strategy and how this play forward, we think that those deals are not permanently lost, so we will just get them on the next cycle. So that is how we look at the NetScaler business and working with customers in that market sector.

[Operator:]

Our next question comes from the Sara Fier- Goldman Sachs .

[Sara Fier- Goldman Sachs:]

Two quick questions, David. Great performance on the top line, but you effectively took and dispensed it away and I know you walked through some of that with just sales kickers kicking in obviously, but to what extent were you able to at least pull forward some of the planned investments for 08 in terms of hiring that could then allow us to see a little bit more leverage in the back end of the year, I mean, is that a fair way to think about the model?

[David Henshell:]

Well, let me take the first question first, I think from a sales commission standpoint, in Q4 there is always the point where a lot of people hit their annual number and they start moving into acceleration and then some specific incentives around Platinum that help drive that number into more of an exponential curve, and so that pops in and I think I addressed it when Adam asked the question the variable impact of that and it was north of $5 million in the quarter, that was certainly one of the items that was driven by the big, big upside you saw, not only in the revenue performance, but in the deferred revenue performance as well because bookings were just tremendous in Q4.

[Mark Templeton:]

And I think as far as point end hiring, things like that, we never make a practice of pulling stuff in or pushing it out per se. I think that when we find the best candidates and the right candidates that we are looking for in certain areas, we will be aggressive against them and we were in Q4. Obviously, we saw a lot of strength in the business, felt good about doing that and wanted to make sure that we did not lose those people. I think they are going to pay off nicely in 2008.

[Sara Fier- Goldman Sachs:]

Just thinking about how you planned for it, does that give us a little bit more leverage towards the back half of 08 assuming that is kind of the top line coming in the way you thought about it?

[David Henshell:]

I think that next year, and I think most of the models are reflecting this right now, there is surely much more leverage in next year, but the largest issue being just the Xen business really coming online, it is pretty dilutive obviously in the first couple of quarters, and then showing less and less dilution obviously as you move into the back end of the year and also seeing just the productivity of a lot of the investments coming online, be it people focused on the channel or for application networking specifically. So I do think there is more leverage in the back half of next year and certainly into 2009 as we go accretive with Xen to start moving forward there.

[Sara Fier- Goldman Sachs:]

And then just a second question on kind of your view from customers on spending, it does not sound like you guys are really seeing anything slowing yet, but as you get in the conversation about budget and we were definitely hearing from CIOs that budgets are kind of being cut back, how does Citrix fit in the extensive budgets starting to get cut, what is the cost reduction story that you guys can tell?

[Mark Templeton:]

I think that of all infrastructure vendors, Citrix has one of the best reputation for measurable, tangible ROI and FAS pay back, whether it is reduction in network utilization and communications cost or whether it is utilization of administrative resources more broadly or if it is sort of the speed to a particular application deployment, whether it is SAP or Oracle, we are very tied into so many of those projects in an ROI kind of way. So as we look at 2008 and when we look at the list of CIO priorities and imagine where they would be drawing lines, I think that we feel really good about the place we are in, both as a reputation and the defined value in Presentation Server, in NetScaler, there is a big PCO story in NetScaler in terms of how you grow a web app at a lower cost, there is a great PCO story obviously in XenServer and there is a tremendous potential PCO story in XenDesktop that has probably more. It may actually accelerate the desktop virtualization market as CIOs look for places to get material cost savings and clearly, the difference between building out a virtual desktop infrastructure versus a broad sort of desktop refresh for office workers, there will be a huge difference there from a cost perspective. So that is how we are feeling and obviously all of our online services have a PCO model as well either like GoToMeeting obviously, a strong PCO model related to travel cost, with GoToAssist, a strong PCO model related to first call closing of a problem in a customer care situation, so we sort of obviously lean into more of these cost reduction operational efficiency messages and at that is a marketing statement and at the same time in selling, what I think we have been able to demonstrate with a lot of customers in that, not only do you get the cost savings, you get this strategic, more agile kind of infrastructure that has been more purposeful in a changing kind of business environment, so you sort of get your sort of cake and eat it too.

[David Henshell:]

I just have one point on top of that and it is that our average transaction value is still relatively modest given most infrastructure software companies, and because of that, we are just not selling a lot of mega deals out there, ones that are very easy to defer from quarter to quarter based on budgets, and so hopefully we will continue to keep the deal count up and focus there.

[Operator:]

Your next question comes from the line of Steve Freitas.

[Steven Freitas:]

I am just wondering, there has been a lot of M&A activity in the first initial states obviously, and so as you build your stack worth both on the service side and desktop side, I am wondering what is your disposition regarding M&A or did you feel that a lot of the tools that you need for some of the dynamic versus Asian services that you talked about are available in house?

[Mark Templeton:]

As always, we cannot make statements about potential deals, but I would say that first of all our bias is to build and the Xen Source team that came over has great talent for building and our support for Microsoft Hyper V HyperVisor and the announcements we made, many of those things are really in the road map being built. At the same time, obviously Venture Capital has slowed very nicely to the virtualization space and it is really a rich environment we are looking at potential M&A, but what we would rather do is actually look closely at the field and try to partner in an ecosystem kind of model. I think that is where the biggest opportunity is, and yes there may be a small deal there, but the over arching opportunity is to try to actually build up the ecosystem and so we will be doing some things in 2008 that we will start talking about next week at the Summit that really empower that ecosystem further, and I think that is how to answer your question and our view on M&A at this point.

[Steven Freitas:]

And then, secondly, can you give us a total customer count for Xen Source, I know you gave us customer ads this quarter, but what are the totals?

[Mark Templeton:]

I do not have that off the top of my head. I do not think David does either.

[Operator:]

Your next question comes from the line of John Walsh with Citi.

[John Walsh:]

Just a couple of questions on Xen, what type of customers are adopting it that you have seen so far. I know it is a small number, but any color on the types of customer or the types of uses that you see in that $200 million of revenue that you saw in Q4?

[Mark Templeton:]

Obviously, we will segment out. We do have OEM licensees, mostly in that number on the software side and those tend to be very specialized and very enterprise oriented kinds of deals. And the other piece, obviously is more channel driven and that is kind of all shapes and sizes. I would say there are a lot of trials going on, mid-market type of customers, very much a sweet spot for us overall especially through our two-tier channels. It is very, very varied and so I would not be able to give you any more details on that.

[John Walsh:]

And then the $200 million 2009 number, any updates or color or higher or lower comfort in that number, I know it is only a couple of months later, but is that still a good number as far as you see it?

[David Henshell:]

Our point of view has not changed there, and the magic to 2009 is the take off velocity that we will reach in 08, and that is why so much energy investment and focus of the company including how we are incubating the sales and services team et cetera has been built and while the first half is really focused on getting that channel platform in place so that we can begin to see the uptake in the second half, and of course, the same thing goes for our OEM partners especially on the hardware side ramping them up as well.

[John Walsh:]

And any feedback from the channel as far as with the competition where you have been out there as the 800-pound gorilla, any feedback that you have gotten on where do you think you are going to maybe find some areas that they have an interest or do think a lot of it is going to be head to head competition, just any color there?

[Mark Templeton:]

I think that the feedback from our partners is fantastic. We would not have the kind of authorization rates that we have seen, if there was not a keen interest and view on really taking XenServer into the higher volume mid market where you got lots more sort of middle sized companies where you can make an impact with the XenServer ware, the simplicity, the performance on Windows workloads, the compatibility with existing storage infrastructure, things like this, the manageability kind of all of those things are much, much easier to own, and therefore on the uptake to put in place for one of our partners, and as I have said and we have said as a company before that, we do not expect our partners to leave their VM ware franchise. We think there is plenty of market for multiple grade companies and products in the server virtualization space, and we have not seen anything to change our point of view there.

[John Walsh:]

And just one quick one, Presentation Server, any update on the number of license users. I think they had given out $18 million to $20 million historically, any update on that number?

[David Henshell:]

It is still in the general ball park. We had somewhere between a half a million and a million per quarter and obviously have some that do not renew their subscription so we would let them fall off the list. It is still on the ball park roughly $20 million.

[Operator:]

Your next question comes from the line of Brent Williams with Benchmark Company.

[Brent Williams:]

I wanted to just build on Sara’s question earlier, as you suggested and as I recall from the last time that the world faced major economic head wins, the cost savings story is a really shining advantage that Citrix has, so how long, let us suppose that we woke up tomorrow and the head winds became a hurricane, how long would it take to really recast the marketing message to really got to market programs in place around just really pounding that message to people and to really refocus that especially with an eye towards helping the channel really reorient itself?

[David Henshall:]

Not any time at all, honestly because this is a core property of the product. It is not a convenient property of our products in hard times. It is just a core property of the product that I think that has given us the kind of if you look at the last five years, I do not think we have had a year where we grew less than 23%, and a lot of that is really off the notion of a strong PCO, strong measurable ROI and payback kind of model because remember over the last five years, IT spending has been running growth rate, it has been running somewhere between 3% and 5%, so 3% and 5%, underlying in total spending and a company growing at 23-plus% over the last five or six years, that has to come from having that strong ROI as part of the core property. And then we have obviously laid on top of that necessarily to drive ourselves up the stack of the mainstream stack with enterprise, especially enterprise customers. Many of the more strategic kind of messages that relate to agility and the ability to kind of drive business change in a world that is very dynamic, but we should not sort of that instead of the ROI and operating efficiency message, it is in addition to and I think as I said and a couple of people here, when I said this to Sara, that is why an investment at Citrix infrastructure, you kind of get your take in either two because you get that operational efficiency across lot of dimensions and you get the kind of flexibility you need so that when things do change, you are not rebuilding all of these infrastructure. You are pointing it in a different direction.

[Brent Williams:]

On the large deal sort of activity in Q4,can you give us any sort of tangible indication of what the large deal in a million dollar in the out deal picture was?

[David Henshell:]

Overall, I think we had 11 transactions, 11 or 12, greater than a million dollars, which is obviously the biggest of the year. We usually have it in between three and five, so typical of a Q4, tends to be our largest. Of those, as I said before, a lot of them were PS Platinum transactions and the other being PS Enterprise. There were certain customers in the app networking business that totaled over a million dollars of total purchases, but we do not actually count them on that list because it was made up of multiple different POs throughout the period.

[Operator:]

Your next question comes from the line of Walter Pritchard with Cowen.

[Walter Pritchard:]

Just a couple of trailing questions here, in 2007, you were pretty aggressive on the sales promotion side and I am just wondering as you enter 2008, are you expecting to be as aggressive and drive a similar, I guess, you have got two things going on in the sales and marketing, you have got the Xen, so I am wondering more on you isolate the Xen investments on the other parts of the business or are you going to drive the same level of sales promotional activity this year as last.

[David Henshell:]

If you look at why you do promotional activities across the board, a lot of them are to really establish new business, generate traction and momentum, and really from a channel standpoint, encourage them to invest in the business, to broaden kind of the available pipe of leverage from a customer perspective, and I think we have pretty successful on that front, and similar for the internal sales teams to get them really focused on understanding the message, being able to help customers and feel very confident selling these brand new products, and I think that when you look at where some of the promotions were in 07 around Platinum and around the application networking products, I mean, we have really established those and had been very, very successful, so we are in a position where can really back off any time of special promotions. And from a channel perspective, I mean, there are still certain things that we want to do around additional investments for app networking and I think there are a lot of customer leverage that we can still drive there, by helping our channel partners get more comfortable selling these solutions and better trained and really investing in those incremental headcount inside their own organizations to drive Citrix solutions. And of course, Xen, new markets, XenDesktop and XenServer, we will do some things around that going forward as well.

[Walter Pritchard:]

And then just around Windows Server, it has been five years since a major Windows Server release and I guess, it may not be really a fair comparison to look back five years ago with your numbers and try to see how they impact, played out if any, so I am just wondering, Mark, maybe if you could take us back to that point and how does the market generally react to a Presentation Server purchasing around a Windows Server release or is there any meaningful impact.

[Mark Templeton:]

Well, historically there has never been any meaningful impact and I think a lot of it has to do with the really simple notion that a new Windows Server release always takes some time to go from the lab to actual deployments in the data center and so that is one piece, so there is no immediate impact and then secondly, because we have had a subscription model on license updates for such a long time, there is no connection between sort of where I am with Windows Server and where I am with Presentation Server, and so that gives customers, actually it is one of the core features of subscription. It virtualizes if you will the version where you are with Presentation Server from the version and where you are with Windows Server underneath. And we expect to see a similar kind of thing with Windows Server 2008, maybe with a little bit of a longer cycle given that it really is a radically new server infrastructure from Microsoft, we are really bullish on it. We love it, but we think it will take some time for customers to uptake it from the lab to the data center.

[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 Templeton:]

Well, thanks again for joining us today and once again, I would like to just thank the Citrix team, our fantastic partner community and especially our customers. Another tremendous year, tremendous quarter and really setting us up for what are the most exciting times in the world ahead of us. So thanks and we will see you in three months.

[Operator:]

Thank you for participating in today’s Citrix Conference call, you may now disconnect.