Citrix showed plenty of momentum in Q1 2012, resulting in a 20% lift in total revenue. Growth came at a cost, with weaker margins and high costs taking net profit down by c7%. Its numbers were down sequentially too. But despite these stats, its underlying performance is strong and more importantly it is well positioned in the market.
The company is reaping the benefits from acquisitions and an early move to cloud technologies, plus desktop virtualization and collaboration technology adoption, and there is more to come. Citrix certainly thinks so and has raised its full year guidance (revenue up to $2.56bn from $2.53bn).
The 20% revenue increase brought Q1 revenue to $589.5m, but higher costs to deliver sales and an increased headcount meant net profit was down from $75.3m to $68.2m. Further hiring is expected in Q2 so the profit line is likely to fluctuate.
With 40% revenue growth, Japan and Asia Pacific was the prime growth area for the company but EMEA did not do too badly with 20% growth, which beat the 16% of the America’s region. What was reassuring was the amount of new business and licence revenue flowing into the company, not just across the regions but also across the various divisions: desktop solutions (which includes desktop virtualization technology, the data centre and cloud business, and SaaS (which is where its collaboration products reside and provide half of the SaaS revenue). SaaS revenue rose 20% to $120.1m and it was good to see international momentum here. International markets grew 50% and now represent 15% of SaaS revenues.
Separately to the results announcement, we spoke with Kineon Walker, international product director of the Citrix Online Division (essentially the SaaS part of the business), who told us that the UK was outperforming the rest of the business in some areas. For example, while collaboration has been showing growth levels of c29% across the business, UK growth is apparently higher than that. Evidently, the UK is an early adopter in this area, which is good news for Citrix and other players in this space and proves that organisations are still spending where they can see potential for business benefits.
With its interests in the cloud, virtualization and network technologies, Citrix is well placed to benefit from the trends for remote and flexible working and BYOT, which is why we think there is more to come from this supplier, although it could do with more emphasis on its enterprise profile.