Citrix 2007 Annual Report Download - page 51

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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 the following products:
• Our Application Virtualization products, including XenApp (formerly Presentation Server) and
Access Essentials;
• Our Application Networking products, including our NetScaler, Access Gateway and WANScaler
products;
• Our Application Performance Monitoring products, including EdgeSight; and
• Our Server Virtualization products, including Provisioning Server (formerly Ardence) and
XenServer, both acquired in our 2007 Acquisitions.
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 76.3% of our Product
License revenue for the year ended December 31, 2007, 81.0% of our Product License revenue for the year ended
December 31, 2006 and 93.2% of our Product License revenue for the year ended December 31, 2005. 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, 2007 to the year ended December 31, 2006 is primarily
due to increased sales of our Application Networking products, including the full year impact of the addition of
our WANScaler products, and to a lesser extent, the addition of our Provisioning Server products in 2007 and the
full year impact of our EdgeSight products. During 2008, we expect our Application Virtualization Product
License revenue to continue to decrease as a percent of our total Product License revenue primarily due to
expected increases in sales of our newly acquired XenServer product and our Application Networking 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 2008 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, 2007
Compared to
2006
2006
Compared to
20052007 2006 2005
(In thousands)
Revenues:
Product licenses .................... $ 577,144 $ 488,487 $409,435 $ 88,657 $ 79,052
License updates .................... 484,669 405,756 331,102 78,913 74,654
Online services ..................... 213,744 148,795 99,097 64,949 49,698
Technical services .................. 116,385 91,281 69,088 25,104 22,193
Total net revenues .............. $1,391,942 $1,134,319 $908,722 $257,623 $225,597
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