Citrix 2005 Annual Report Download - page 24

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Page฀22
delivery฀of฀software฀upgrades,฀enhancements฀and฀maintenance฀releases฀when฀and฀if฀they฀become฀available฀during฀the฀term฀of฀the฀
subscription.฀Online฀Services฀revenues฀consist฀primarily฀of฀fees฀related฀to฀online฀service฀agreements฀and฀are฀recognized฀ratably฀
over฀the฀contract฀term.฀Technical฀Services฀revenues฀are฀comprised฀of฀fees฀from฀technical฀support฀services฀which฀are฀recognized฀
ratably฀over฀the฀contract฀term,฀as฀well฀as,฀revenues฀from฀product฀training฀and฀certification,฀and฀consulting฀services฀revenue฀related฀
to฀implementation฀of฀our฀products,฀which฀is฀recognized฀as฀the฀services฀are฀provided.
Year฀Ended฀December฀31, 2005฀฀
Compared฀to
2004฀
Compared฀to
(In฀thousands) 2005 2004 2003 2004 2003
Revenues:
฀ Product฀licenses $฀409,435 $฀369,826 $฀374,403 $฀ 39,609 $฀ (4,577)
฀ License฀updates 331,102 271,547 168,793 59,555 102,754
฀ Online฀services 99,097 44,101 — 54,996 44,101
฀ Technical฀services 69,088 55,683 45,429 13,405 10,254
฀ ฀ Total฀net฀revenues $฀908,722 $฀741,157 $฀588,625 $฀167,565 $฀152,532
Net฀revenues฀increased฀$167.6฀million฀during฀2005฀compared฀to฀2004.฀Product฀License฀revenue฀increased฀$39.6฀million฀during฀2005฀
primarily฀due฀to฀increased฀sales฀of฀our฀new฀Citrix฀NetScaler฀products฀acquired฀in฀our฀2005฀Acquisitions,฀increased฀sales฀of฀our฀Access฀
Suite฀and฀increased฀sales฀of฀our฀Citrix฀Access฀Gateway฀products,฀acquired฀ in฀our฀2004฀Acquisitions.฀License฀Updates฀revenue฀
increased฀$59.6฀million฀during฀2005฀primarily฀due฀to฀a฀larger฀base฀of฀subscribers฀and฀increasing฀renewals฀related฀to฀our฀Subscription฀
Advantage฀program.฀Online฀Services฀revenue฀increased฀$55.0฀million฀during฀2005฀primarily฀due฀to฀continued฀acceptance฀of฀new฀and฀
existing฀products฀of฀our฀Online฀Services฀division.฀Technical฀Services฀revenue฀increased฀$13.4฀million฀during฀2005฀primarily฀due฀to฀
increased฀sales฀of฀consulting฀services฀related฀to฀implementation฀of฀our฀products฀and,฀to฀a฀lesser฀extent,฀services฀related฀to฀our฀new฀Citrix฀
NetScaler฀products.฀During฀2006,฀we฀currently฀expect฀Product฀License฀revenue฀to฀increase฀due฀to฀an฀expected฀increase฀in฀revenue฀from฀
sales฀of฀our฀Citrix฀NetScaler฀products฀and฀our฀Citrix฀Access฀Gateway฀products.฀We฀also฀currently฀expect฀modest฀revenue฀growth฀
from฀ our฀Access฀ Suite฀products฀in฀2006.฀In฀addition,฀we฀anticipate฀that฀Subscription฀Advantage฀ will฀continue฀ to฀be฀ of฀strategic฀
importance฀to฀our฀business฀in฀2006฀because฀it฀fosters฀long-term฀customer฀relationships฀and฀gives฀us฀improved฀visibility฀and฀predict-
ability฀due฀to฀the฀recurring฀nature฀of฀this฀revenue฀stream.฀Online฀Services฀revenues฀are฀also฀currently฀expected฀to฀increase฀in฀2006.
Net฀revenues฀increased฀$152.5฀million฀during฀2004฀compared฀to฀2003.฀Product฀License฀revenue฀decreased฀$4.6฀million฀during฀2004฀
primarily฀due฀to฀a฀weakness฀in฀our฀packaged฀product฀sales฀which฀are฀typically฀purchased฀by฀medium฀and฀small-sized฀businesses.฀
License฀Updates฀revenue฀increased฀$102.8฀million฀during฀2004฀primarily฀due฀to฀a฀larger฀base฀of฀subscribers฀and฀increasing฀renewal฀
rates฀related฀to฀our฀Subscription฀Advantage฀program.฀Online฀Services฀revenue฀increased฀$44.1฀million฀during฀2004฀primarily฀due฀to฀
the฀addition฀of฀the฀Online฀ Services฀division฀ resulting฀from฀our฀February฀2004฀ Expertcity฀acquisition.฀Technical฀services฀revenue฀
increased฀$10.2฀million฀during฀2004฀primarily฀due฀to฀increased฀sales฀of฀consulting฀services฀related฀to฀implementation฀of฀our฀products.
Deferred฀revenues฀are฀primarily฀comprised฀of฀License฀Updates฀revenue฀from฀our฀Subscription฀Advantage฀product,฀Online฀Services฀
revenues฀from฀annual฀service฀agreements฀for฀our฀Online฀Services฀division฀and฀Technical฀Services฀revenues฀related฀to฀our฀support฀
services฀and฀consulting฀contracts.฀Deferred฀revenues฀increased฀approximately฀$60.9฀million฀compared฀to฀December฀31,฀2004฀primarily฀
due฀to฀increased฀renewals฀of฀Subscription฀Advantage,฀and฀increased฀sales฀of฀our฀online฀service฀agreements฀and,฀to฀a฀lesser฀extent,฀
sales฀of฀services฀related฀to฀our฀new฀Citrix฀NetScaler฀Products.฀We฀expect฀deferred฀revenue฀to฀increase฀in฀2006฀due฀primarily฀to฀expected฀
increases฀in฀both฀annual฀contract฀adoptions฀for฀Online฀Services฀division’s฀products฀and฀increased฀Subscription฀Advantage฀renewals.
International฀ and฀ Segment฀ Revenues.฀ International฀ revenues฀ (sales฀ outside฀ of฀ the฀ United฀ States)฀ accounted฀ for฀ approximately฀
50.0%฀of฀our฀net฀revenues฀for฀the฀year฀ended฀December฀31,฀2005,฀53.2%฀of฀our฀net฀revenues฀for฀the฀year฀ended฀December฀31,฀
2004,฀and฀54.6%฀of฀our฀net฀revenues฀for฀the฀year฀ended฀December฀31,฀2003.฀The฀decrease฀in฀international฀revenue฀as฀a฀percent฀
of฀ net฀ revenues฀ for฀ the฀ year฀ ended฀ December฀ 31,฀ 2005฀ compared฀ to฀ the฀ year฀ ended฀ December฀ 31,฀ 2004฀ is฀ primarily฀ due฀ to฀
increased฀sales฀performance฀in฀the฀United฀States฀and฀increased฀sales฀performance฀and฀growth฀in฀our฀Online฀Services฀division,฀
which฀is฀comprised฀primarily฀of฀domestic฀revenues.
Citrix฀Systems,฀Inc.
Management’s฀Discussion฀and฀Analysis฀of฀Financial฀Condition฀and฀Results฀of฀Operations฀
(Continued)