The coronavirus plague has seen plenty of vendors tell investors they just can’t predict what’s going to happen this year, but Citrix has not just issued new guidance but increased the ceiling of its revenue expectations.
The company on Thursday posted [PDF] its Q1 2020 results and revenue hit US$861 million, up 20 percent year-over-year. Net income was $181m.
Perhaps the most interesting set of numbers in the letter to stakeholders was the full-year guidance of $3.10bn to $3.16bn annual revenue. That’s a slight jump from the $3.10bn to $3.13bn guidance the company offered in its FY19 results announcement [PDF]. The company also predicted slightly higher earnings-per-share.
With the likes of IBM, Dell, VMware, Wipro and IBM all deciding not to offer future guidance, it’s notable that the far-smaller Citrix is willing to commit to a number.
CEO David Henshall told investors the company was ideally poised to help customers as the coronavirus struck, telling a results call “the ability to just give somebody a video chat app or connection to email is really the basics.” Citrix, naturally, has the stuff businesses really need right now, namely access to applications, digital workspaces, and the networking tools to make them available securely.
Henshall argued that businesses were already heading in Citrix’s direction and that coronavirus accelerated a secular trend to remote work. He acknowledged that a surge in Citrix use represents “burst” buying, but said Citrix is pushing to ensure that plenty of those emergency purchases turn into longer-term usage.
“The expectation is that we will land in a place that is somewhere between where we are and where we were when it comes to remote work,” he said. “Most of the customers that I talked to are realizing a level of productivity benefits and cost savings and employee engagement that they hadn't expected. And so they're going back and questioning some of their original assumptions, whether that is real estate footprint, travel, attendance at major conferences.
Henshall had mixed news about the state of the economy. On the one hand he said Citrix hasn’t seen unusual requests for discounts or extended payment terms. But his letter to shareholders said “Customers are putting on hold discretionary projects and are less inclined to ‘trade-up’ from existing solutions as the economic environment continues to weaken.” He also had some bad news for the transport industry: Citrix has cancelled “internal travel” for the remainder of 2020.
The CEO also told investors that April activity suggests another good quarter, in part because the more remote work customers perform the more they need other parts of the Citrix portfolio, especially its SD-WAN.
Even competitors like Windows Virtual Desktop didn’t bother Citrix this quarter, because Henshall said his company’s wares turns Microsoft’s offering into a full managed desktop service. Customers who want a good VDI experience need both!
Another emphasis in the results was that Citrix’s subscription numbers and revenue have surged, making its future cashflow pleasingly more predictable.
Henshall made many mentions of the coronavirus plague having given businesses a swift and harsh lesson in the need for both strong business continuity tools and the benefits of remote working. But the CEO did admit that “There are a few roles that just can't be performed as efficiently remotely as they can in person and even though that's a very limited number for us, it is more pronounced than other industries.”
He added: “There is certainly in-person meetings with customers and other things that are going to need to happen, but I think building up the skill sets to be as efficient digitally as you are in person is something that Citrix as well as a lot of other companies are going to focus on going forward.” ®
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