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News Item

Citrix's Desktop Virtualization Strategy Pays Off

The company’s Q1 profits fly high as XenDesktop outperforms

Citrix Systems, Inc. reported financial results for the first quarter of fiscal 2010 ended March 31, 2010. In the first quarter of fiscal 2010, Citrix amassed revenue of $414 million, compared to $369 million in the first quarter of fiscal 2009. This translates to 12 percent revenue growth.

"I'm pleased with our results for the first quarter," said Mark Templeton, president and chief executive officer for Citrix. "We saw strong traction across our strategic markets - virtualization, networking and collaboration - and showed good discipline in our operations, leading to solid increases in revenue and profitability.  As the IT world moves away from distributed computing into the virtual computing era, Citrix is becoming more strategic with customers everyday."

The company's Desktop business grew 9% over last year to $264 million. XenDesktop contributed $32 million of recognized revenue, with trade-up products adding another $14 million to the deferred revenue balance. In fact four out of the five largest transactions across the company included XenDesktop and more than 10% of existing XenApp customers up for renewal in Q1 have opted to trade up to XenDesktop.

What started off as a networking software story, Citrix has become better known for its server virtualization platform after its purchase of virtualization vendor XenSource in 2007. Since then Citrix has continued to invest in virtual desktop infrastructure (VDI ) through startups like start-up called Virtual Computer and Kaviza. XenDesktop , its flagship product line has been quite successful with some of the largest, most demanding online services including Amazon EC2 cloud computing service being powered by machines from Citrix. It recently updated many of its virtualization and networking wares and released Citrix XenDesktop 4 and Citrix XenApp 6. Citrix was also able to take advantage of the jump in virtual desktop deployments after Windows 7 release and its tight team work with Microsoft has payed off. Last month saw Citrix and Microsoft joining forces again with promotional VDI offerings . While "VDI Kick Start" gives select Microsoft customers competitive discounts, "Rescue for VMware VDI" attempts to ensnare VMware clients with special migration deals. Whether it has managed to grab the market share from VMware or it has benefitted from all the buzz in the growing cloud computing market, Citrix certainly seems to be in the right place at the right time. The impending launch of the free XenClient client hypervisor promising an isolated environment for multiple virtual machines should keep the momentum going for Citrix this year as it would no doubt open the door for the company to put forth complementary paid services.