Citrix 2006 Annual Report Download - page 37

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
Citrix Systems, Inc.  Annual Report
Revenues.
Net revenues include the following categories: Product
Licenses, License Updates, Online Services and Technical
Services. Product Licenses primarily represent fees related
to the licensing of our Application Virtualization products,
which primarily consists of our Access Suite products,
including Presentation Server, Access Essentials and
Password Manager; our Application Networking products,
which are comprised of NetScaler products, SSL Access
Gateway products, Application Firewall products and
WANScaler products; and our other products, which
include our EdgeSight, Application Gateway and in 2007
our Ardence products. In addition, we offer incentive
programs to our channel distributors and value-added
resellers to stimulate demand for our products. Revenues
associated with these programs are partially offset by
these incentives to our channel distributors and value-
added resellers. Our Application Virtualization Product
License revenue accounted for approximately 81.0% of our
Product License revenue for the year ended December 31,
2006, 93.2% of our Product License revenue for the year
ended December 31, 2005 and 99.9% of our Product
License revenue for the year ended December 31, 2004.
The decrease in our Application Virtualization Product
License revenue as a percent of our total Product License
revenue when comparing the year ended December 31,
2006 to the year ended December 31, 2005 is primarily
due to the full year impact and increased sales of our
Application Networking products, including the addition of
our WANScaler products in 2006, and to a lesser extent,
the addition of our EdgeSight products in 2006. During
2007, we expect our Application Virtualization Product
License revenue to continue to decrease as a percent
of our total Product License revenue due to expected
increases in sales of our Application Networking products,
EdgeSight products and our newly acquired Ardence
products. License Updates consist of fees related to our
Subscription Advantage program that are recognized
ratably over the term of the contract, which is typically 12 to
24 months. Subscription Advantage is an annual renewable
program that provides subscribers with automatic delivery
of software upgrades, enhancements and maintenance
releases when and if they become available during the
term of the subscription. We anticipate that Subscription
Advantage will continue to be of strategic importance to
our business throughout 2007 because it fosters long-term
customer relationships and gives us improved visibility and
predictability due to the recurring nature of this revenue
stream. 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, 2006
Compared to
2005
2005
Compared to
2004(In thousands) 2006 2005 2004
Revenues:
Product licenses $ 488,487 $ 409,435 $ 369,826 $ 79,052 $ 39,609
License updates 405,756 331,102 271,547 74,654 59,555
Online services 148,795 99,097 44,101 49,698 54,996
Technical services 91,281 69,088 55,683 22,193 13,405
Total net revenues $ 1,134,319 $ 908,722 $ 741,157 $ 225,597 $ 167,565