Early this week, Citrix (NASDAQ:CTXS), a leader in virtualization with annual revenue of $1.58 billion, announced its plans to acquire VMLogix, a leading provider of virtualization management for private and public clouds. The VMLogix acquisition is expected to close in the third quarter, and Citrix plans to use the technology from VMLogix to extend the Citrix OpenCloud platform and add an intuitive self-service interface to to its popular XenServer virtualization platform. Gartner expects the market for server virtualization management to reach $2 billion in 2014, growing at a compound annual rate of 39.2%. Let’s take a closer look.
Mike Vizard of CTO Edge says Citrix is attempting to promote the proprietary approaches to virtual switching and cloud computing management that have been taken by VMware and Cisco. According to Wes Wasson, chief marketing officer for Citrix, as cloud computing continues to rapidly evolve, the need for open standards that promote interoperability is quickly becoming a major industry issue affecting the rate of cloud computing adoption.
In July, Citrix reported second quarter revenue of $458 million, up 12%. Net income was $48 million or $0.25 per share versus $43 million or $0.23 per share last year. The company repurchased shares for $101 million and ended the quarter with $1.41 billion in cash and marketable securities. Q1 coverage is available here.
During the quarter, Citrix closed eighteen customer transactions of over $1 million each, including several deals over $5 million. New license sales were $149 million, up 15% from last year, driven by growth in both the Desktop and Data Center businesses. Revenue from license updates increased 13% due to strong customer interest in the XenDesktop Trade-up program. Tech Services grew 35% and Online SaaS revenue was $89 million, up 18% driven by 35% growth in Web Collaboration.
The Desktop business, which includes both Application and Desktop Virtualization solutions, generated revenue of $290 million, up 15%, with revenue from XenDesktop, a desktop virtualization tool at $60 million. During the earnings call, CEO Mark Templeton said demand for XenDesktop was driven by the unstoppable wave of new iPads, Macs, and smartphones often with the client’s CIO leading the charge.
The Data Center and Cloud Computing business, which provides Application Networking and Server Virtualization solutions, generated revenue of $74 million, up 20%, with the NetScaler customer base increasing 50% mainly in the enterprise market.
Citrix expects third quarter revenue of $450 million to $460 million and EPS of $0.31 to $0.32. It raised its fiscal 2010 revenue guidance to $1.81 billion to $1.83 billion from $1.765 billion to $1.78 billion. It expects EPS of 1.27 to $1.31 versus earlier guidance of $1.29 to $1.34. The stock is trading around $58 with market cap of about $10.85 billion. It hit a 52-week high of $59.53 on August 20.