Citrix 2013 Annual Report Download - page 36

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32
product that make it easier to manage and secure mobile devices, apps and data, while allowing users to embrace mobile
workstyles and access enterprise apps from virtually any device. We believe our Mobility products offer a comprehensive
approach that can transform organizations into mobile enterprises with the security and control IT requires, the ease of use and
flexibility users desire, and the productivity business demands.
Our Cloud Networking products power mobile workstyles while altering the traditional economics of the datacenter by
providing greater levels of flexibility of computing resources, especially with respect to servers, improving application
performance and thereby reducing the amount of processing power involved, and allowing easy reconfiguration of servers by
permitting storage and network infrastructure to be added-in virtually rather than physically. Our ByteMobile Smart Capacity
products combined with our Citrix NetScaler line of Cloud Networking products enhance our broader strategy of powering
mobile workstyles and cloud services and allow us to offer mobile operators combined solutions that deliver a high quality user
experience to mobile subscribers.
Our Cloud Platform products allow our customers to build scalable and reliable private and public cloud computing
environments where customers can quickly and easily build cloud services within their existing infrastructure and provision
hosted applications, desktops, services and infrastructure as a service, or IaaS, from the cloud.
As we enhance the feature set and interoperability of our Mobility and Cloud Networking products, we drive increased
customer interest around desktop and application virtualization and data sharing, because enterprises find leverage in deploying
these technologies together for an end-to-end mobile workstyles solution.
SaaS division
Our SaaS division is focused on developing and marketing Collaboration and Data products. These products are primarily
marketed via the web to enterprises, medium and small businesses, prosumers and individuals. Our SaaS segment's
Collaboration products offer secure and cost-effective solutions that allow users to host and actively participate in online
meetings, webinars and training sessions remotely and reduce costs associated with business travel. Our Data Sharing product,
ShareFile, makes it easy for businesses of all sizes to securely store, sync and share business documents and files, both inside
and outside the company. ShareFile's centralized cloud storage capability also allows users to share files across multiple
devices and access them from any location. In addition, through our Remote Access and IT Support solutions, we offer
products that provide users a secure, simple and cost efficient way to access their desktops remotely and provide support over
the Internet on-demand.
Summary of Results
For the year ended December 31, 2013 compared to the year ended December 31, 2012, we delivered the following
financial performance:
• Product and license revenue increased 7.3% to $891.6 million;
• Software as a service revenue increased 14.0% to $582.9 million;
• License updates and maintenance revenue increased 16.0% to $1,305.1 million;
• Professional services revenue increased 16.6% to $138.9 million;
• Gross margin as a percentage of revenue decreased 1.6% to 82.8%;
• Operating income decreased 2.6% to $380.7 million; and
• Diluted earnings per share decreased 3.2% to $1.80.
The increase in our Product and licenses revenue was primarily driven by sales of our Networking and Cloud products,
led by NetScaler, partially offset by a decrease in sales of our desktop and application virtualization products. Our Software as
a service revenue increased due to increased sales of our Collaboration products, led by GoToMeeting and our Data Sharing
product, ShareFile. The increase in License updates and maintenance revenue was primarily due to an increase in maintenance
revenues, primarily driven by increased sales of maintenance and support across all of our Enterprise and Service Provider
division's products and increased renewals of our Subscription Advantage product. The increase in Professional services
revenue was primarily due to increases in consulting revenues related to increased implementation sales of our Enterprise and
Service Provider division's products. We currently target total revenue to increase when comparing the first quarter of 2014 to
the first quarter of 2013. In addition, when comparing the 2014 fiscal year to the 2013 fiscal year we target total revenue to
increase. The decrease in 2013 in gross margin as a percentage of net revenue is primarily due to the increase in sales of our
Networking and Cloud products with a hardware component and increased sales of our services, both of which have a higher
cost than our software products. We currently target gross margin as a percentage of net revenue to decline slightly when
comparing the first quarter of 2014 to the first quarter of 2013, consistent with our targeted increase in sales of our hardware
products and services. The decrease in Operating income and diluted net income per share when comparing 2013 to 2012 was
primarily due to an increase in stock-based compensation costs primarily related to our retention-focused annual stock grant to