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Citrix SaaS products gain traction, a sign of IT's push to modernize

Citrix's quarterly earnings show an uptick in Workspace and subscription-based revenue. But not all the news was good, as CEO David Henshall also announced the CFO's resignation.

Citrix's Workspace revenue is up 13% in the quarter of 2019 over the previous year, indicating that IT departments are continuing to look at modernizing, rather than get left behind. 

During an April 24 quarterly earnings call, Citrix CEO David Henshall called the 13% increase for Workspace -- a collection of applications that includes Citrix Virtual Apps and Desktops -- "the fastest growth we've seen in many, many years." He added that Citrix SaaS revenue was up 43%.

Eric Klein, director at VDC Research in Natick, Mass., said he sees the uptick in Citrix SaaS subscriptions as an example of how IT admins are willing to modernize to improve the overall user experience.

"Citrix sees this expectation on how IT will manage their environments moving forward," Klein said. "They see that IT will be open to a more modern way of managing that environment. IT is willing to do a little extra heavy lifting to get a better user experience, but it needs help from the vendors, too." 

Citrix sees itself as a player in building strategic partnerships with IT departments and with other vendors. During the earnings call, Henshall said Citrix doesn't compete with desktop as a service (DaaS) vendors like Microsoft or AWS. Rather, it provides tools for IT departments looking to transition to virtual desktops or DaaS technology.

"We're actually becoming a cloud service provider so that we can bundle certain capabilities in the infrastructure together with our solution. The idea [is to] really focus on customer simplicity and simplification," Henshall said.

Vendor partnerships can be helpful to IT, as it continues to look for ways to modernize legacy systems, according to Klein.

"Partner vendors are becoming more critical than ever, as IT departments chase modernization and better UX," Klein said. "How companies partner and compete with the likes of Microsoft is an interesting thing to keep an eye on."

More staff shake-ups at Citrix

In the last month, rumors have swirled around Citrix, with overblown reports of layoffs and whispers that the company might again be put up for sale.

IT is willing to do a little extra heavy lifting to get a better user experience, but it needs help from the vendors, too.
Eric KleinDirector, VDC Research

During this week's earnings call, Henshall gave listeners this news: CFO Andrew Del Matto has resigned to pursue an opportunity in California. Henshall promised investors the company wouldn't "miss a beat," with current Chief Accounting Officer Jessica Soisson acting as interim CFO and a search for a permanent replacement starting shortly.

Henshall said Del Matto would be "leaving immediately," a suddenness that Klein described as "questionable."

"It's very tough to say unless you're inside the organization, but it's certainly not a normal departure, and the abruptness is questionable," he said. "It's a senior position; it's a critical position."

Regardless, those on the earnings call seemed pleased with the continued increase in Citrix SaaS products. Mark Bowker, a senior analyst at Enterprise Strategy Group in Milford, Mass., called the uptick in investments a good sign for the long-term stability of the company.

"Getting [Citrix] customers to move faster has traditionally been a slow process for Citrix, as customers have taken the approach of, 'If it's not broke, let's not try to fix it,'" Bowker said in an email. "The strength in subscriptions could also indicate that customers have confidence in Citrix for their long-term strategies to securely deliver applications and data."

Continued trouble for Windows 10

Citrix wasn't the only end-user computing news-maker this week. News of another Windows 10 update problem also broke. Microsoft is blocking the upcoming May update to computers using external USB storage devices or SD cards, which could affect a lot of users.

"This can affect most computers," said William Warren, owner of Emmanuel Technology Consulting, an IT services company in Brunswick, Md. "It's poor software quality. [Microsoft] throws [something] out there and will fix it once it sees what goes wrong."

The USB concerns "come as a surprise" to Holger Mueller, analyst at Constellation Research Inc.

"Most likely, the USB drive assignment test had been dropped a few Windows versions ago, as it simply worked and hadn't broken," Mueller said. "Now, something must have changed, and Microsoft has a little egg on its face."

Mueller added that there may be more to the story, and that's why Microsoft is ultimately blocking the update.

"I also don't fully discount that there may be a security gap here, and we may not be getting the whole story -- probably for our own good," Mueller said.

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