Citrix 2014 Annual Report Download - page 27

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customers do not continue to purchase our license updates and maintenance products, our deferred revenue would decrease
significantly and our results of operations and financial condition would be adversely affected.
As we expand our international footprint, we could become subject to additional risks that could harm our business.
We conduct significant sales and customer support, development and engineering operations in countries outside of the
United States. During the year ended December 31, 2014, we derived approximately 45.2% of our revenues from sales outside
the United States. Our continued growth and profitability could require us to further expand our international operations. To
successfully maintain and expand international sales, we may need to establish additional foreign operations, hire additional
personnel and recruit additional international resellers. In addition, there is significant competition for entry into high growth
markets where we may seek to expand, such as China, the Middle East and Eastern Europe. Our international operations are
subject to a variety of risks, which could adversely affect the results of our international operations. These risks include:
• compliance with foreign regulatory and market requirements;
• variability of foreign economic, political and labor conditions;
• changing restrictions imposed by regulatory requirements, tariffs or other trade barriers or by U.S. export laws;
• regional data privacy laws that apply to the transmission of our customers’ data across international borders;
• health or similar issues such as pandemic or epidemic;
• difficulties in staffing and managing international operations;
• longer accounts receivable payment cycles;
• potentially adverse tax consequences;
• difficulties in enforcing and protecting intellectual property rights;
• burdens of complying with a wide variety of foreign laws; and
• as we generate cash flow in non-U.S. jurisdictions, if required, we may experience difficulty transferring such
funds to the U.S. in a tax efficient manner.
Our success depends, in part, on our ability to anticipate and address these risks. We cannot guarantee that these or other
factors will not adversely affect our business or results of operations.
We rely on indirect distribution channels and major distributors that we do not control.
We rely significantly on independent distributors and resellers to market and distribute our products and services. Our
distributors generally sell through resellers. Our distributor and reseller base is relatively concentrated. We maintain and
periodically revise our sales incentive programs for our independent distributors and resellers, and such program revisions may
adversely impact our results of operations. Our competitors may in some cases be effective in providing incentives to current or
potential distributors and resellers to favor their products or to prevent or reduce sales of our products. The loss of or reduction
in sales to our distributors or resellers could materially reduce our revenues. Further, we could maintain individually significant
accounts receivable balances with certain distributors. The financial condition of our distributors could deteriorate and
distributors could significantly delay or default on their payment obligations. Any significant delays, defaults or terminations
could have a material adverse effect on our business, results of operations and financial condition.
We are in the process of diversifying our base of channel relationships by adding and training more channel partners with
abilities to reach larger enterprise customers and to sell our newer products and services. We are also in the process of building
relationships with new types of channel partners, such as systems integrators, service providers and OEMs. In addition to this
diversification of our partner base, we will need to maintain a healthy mix of channel members who service smaller customers.
We may need to add and remove distribution partners to maintain customer satisfaction and a steady adoption rate of our
products, which could increase our operating expenses. Through our Citrix Partner Network and other programs, we are
currently investing, and intend to continue to invest, significant resources to develop these channels, which could reduce our
profits if such channels do not result in increased revenues.
Our Delivery Networking business could suffer if there are any interruptions or delays in the supply of hardware or
hardware components from our third-party sources.
We rely on a concentrated number of third-party suppliers, who provide hardware or hardware components for our
Delivery Networking products, and contract manufacturers. If we are required to change suppliers, there could be a delay in the
supply of our hardware or hardware components and our ability to meet the demands of our customers could be adversely
affected, which could cause the loss of Delivery Networking sales and existing or potential customers and delayed revenue
recognition and adversely affect our results of operations. While we have not, to date, experienced any material difficulties or
delays in the manufacture and assembly of our Delivery Networking products, our suppliers may encounter problems during
manufacturing due to a variety of reasons, including failure to follow specific protocols and procedures, failure to comply with