Citrix announces Q2 2010 earnings, only 1/3 of XenDesktop customers use ESX now

Posted by virtualization.info Staff   |   Friday, July 30th, 2010   |  

Earlier this week Citrix announced its Q2 2010 financial results.

The company announced $458M in total revenue, with more than $100M in cash flow.

New license sales were $149 million, up 15% from last yearLicense updates increased 13%.
Tech services grew 35%, online SaaS revenue (from the GoTo business unit) was $89 million, up 18% year-on-year.

In the Americas region Citrix revenue grew 17% from last year, in EMEA 11% year-on-year, and in APAC 31%.

Easy to expect the company reports a major growth for the XenDesktop business: in Q2 Citrix closed 18 transactions for over $1M each, 13 for over $18M and some for $5M. Some of these deals have more than 25,000 seats. 
During the quarter 3,500 customers purchased XenDesktop: 1,000 are new customers, the others are XenApp customers that used the XenDesktop Trade-up program.

This conversion of existing XenApp customers is especially interesting: Citrix reports that 20% of renewable XenApp licenses in Q2 were instead converted in XenDesktop licenses. In Q1 2010 the conversion rate of renewable XenApp licenses was 10% only. Plus, the average XenDesktop deals are 3x bigger than the XenApp ones. 
If the trend continues one may envision a future where XenApp as a stand-alone product doesn’t exist anymore.

Another very interesting point is that only 1/3 of the XenDesktop customers now use VMware ESX as the backend hypervisor. Unfortunately Citrix doesn’t specify the XenServer and Hyper-V breakdown.

Overall, The XenDesktop revenew is equal to $290M, 15% more than last year.

For Q3 Citrix expects total revenue to be in the range of $450M to $460M.
For full year 2010 the company instead expects total revenue will be in a range of $1.81B to $1.83B.

During the call Mark Templeton, Citrix CEO, claimed that Xen is now powering 2/3 of all public clouds worldwide, including of course Amazon EC2.
Of course he also mentioned how part of these Xen installations are being converted in XenServer installations, including the one that powers The Rackspace Cloud.

Templeton also reports that Citrix has now more than 460 cloud providers that signed up to deliver the Citrix Cloud Solutions framework.

During the Q&A session Templeton also provided a juicy comment on competition, specifically about Quest:

Question from Bhavan Suri – William Blair & Company L.L.C.
And then just one quick question on competition on the desktop virtualization side — and I’m not even going to talk about [indiscernible] (1:09:21) anymore – but have you seen Quest at all and do you know they’ve also been highlighted quite effectively as a big Microsoft partner in the VDI space, and how should we think about Microsoft’s relationship with them vis a vis you, and how you guys, whether you run into them or not competitively?

Answer from Mark Templeton
Well, first of all, I don’t have total visibility, and with that as a caveat, I’d say anecdotally, Quest gets considered in some cases but they get eliminated very early on. And I’d say when it comes to the strategic conversations, as they go up to the executive suite and these conversations are really about the kinds of business initiatives I talked about, technology things and some of the things I said in the prepared comments. Quickly, everyone drops out because this full range of virtual app models and virtual desktop models are really required to end up with a strategic kind of engagement with the customer. So that’s how the competitives look and our win-loss rate is remarkable on the win side, in the high-90s, 90 percentile, and the losses are miniscule.

Thanks to Seeking Alpha for the earnings call transcript.


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