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Executives

Eduardo Fleites - Director of Investor Relations

David James Henshall - Chief Financial Officer, Principal Accounting Officer, Executive Vice President of Operations and Treasurer

Mark B. Templeton - Chief Executive Officer, President and Director

Analysts

Rob D. Owens - Pacific Crest Securities, Inc., Research Division

Steven M. Ashley - Robert W. Baird & Co. Incorporated, Research Division

Sonya Banerjee - Goldman Sachs Group Inc., Research Division

Adam H. Holt - Morgan Stanley, Research Division

Philip Winslow - Crédit Suisse AG, Research Division

Stewart Materne - Evercore Partners Inc., Research Division

Kenneth Wong

Raimo Lenschow - Barclays Capital, Research Division

Michael Turits - Raymond James & Associates, Inc., Research Division

Kash G. Rangan - BofA Merrill Lynch, Research Division

Gregg Moskowitz - Cowen and Company, LLC, Research Division

Matthew Hedberg - RBC Capital Markets, LLC, Research Division

Joel P. Fishbein - Lazard Capital Markets LLC, Research Division

Ian Song - International Data Corporation

Kevin M. Buttigieg - Longbow Research LLC

Ross MacMillan - Jefferies & Company, Inc., Research Division

Patrick D. Walravens - JMP Securities LLC, Research Division

John S. DiFucci - JP Morgan Chase & Co, Research Division

Citrix Systems (CTXS) Q4 2012 Earnings Call January 30, 2013 4:45 PM ET

Operator

Good afternoon. My name is Jamaira, and I will be your conference operator today. At this time, I would like to welcome everyone to the Citrix Systems Fourth Quarter and Fiscal Year 2012 Financial Results Conference Call. [Operator Instructions] I will now turn the call over to Mr. Eduardo Fleites, Vice President of Investor Relations. Mr. Fleites, you may begin your conference.

Eduardo Fleites

Thank you, Jamaira. Good afternoon, everyone, and thank you for joining us for today's fourth quarter and fiscal year 2012 earnings presentation. Participating in the call will be Mark Templeton, President and Chief Executive Officer; and David Henshall, Executive Vice President Operations and Chief Financial Officer.

This call is being webcast on Citrix System's Investor Relations website. The webcast will be posted immediately following the call.

Before we begin, I want to state that we have posted product classification and historical revenue trends related to our product groupings to our Investor Relations website. I'd like to remind you that today's conversation will contain forward-looking statements made under the Safe Harbor provision of the U.S. Securities laws. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Obviously, these risks could cause actual results to differ from those anticipated. Additional information concerning these and other factors is highlighted in today's press release and in the company's filings with the SEC. Copies are available from the SEC or on the company's Investor Relations website. Furthermore, we will discuss various non-GAAP financial measures as defined by SEC's Reg G. A reconciliation of the differences between GAAP and non-GAAP financial measures discussed on today's call can be found at the end of today's press release and on the Investor Relations page of our website.

Now I would like to turn it over to David Henshall, our Executive Vice President Operations and Chief Financial Officer. David?

David James Henshall

Thanks, Eduardo, and welcome to everyone joining us today. As you can see from the release, we finished off the year with a strong Q4 and great momentum across our businesses, delivering $740 million in total revenue, up 19%; a 17% growth in product and license; $227 million in cash flow from ops; and adjusted EPS of $0.90 a share.

I'd like to take this opportunity to thank all of our customers, partners and teams around the world for all the great work and continued support throughout 2012.

Operationally, we've been very focused on driving leadership across desktop virtualization, cloud infrastructure and collaboration, giving customers the tools they need to manage rapidly changing work style. These trends can be clearly seen in our results.

In Q4, we closed 55 transactions greater than $1 million each, with strength coming from businesses in the healthcare and financial services sectors.

Strategically important to us is the fact that 30% of these orders included multiple products, demonstrating the value of the integrated solutions that we can uniquely deliver to customers. Also, several of these orders included additional years of license updates and maintenance contributing to the growth we saw in the long-term deferred revenue balance.

Geographically, Q4 demand patterns were fairly stable around the world. The Americas grew 14%, EMEA was up 19% and the Pacific/Japan region increased 52% from last year. So overall a very strong close across the board and a great way to finish the year.

Before we move on, I'd like to remind everyone that we closed the acquisition of Zenprise in early January. We expect our new mobile platforms business will add about $30 million of total revenue in 2013 and be dilutive to EPS by about $0.09, largely in the first half of the year.

Beginning in Q1, we'll be combining these results and the current Desktop Solutions grouping into a new category simply called Mobile & Desktop. This closely aligns to our go-to-market motion, and we are strategically positioning the products and how customers are currently thinking about enterprise mobility.

So let's look at the Q4 results within our 3 primary businesses. First, our Desktop business grew 11% to over $411 million, including license growth of 2% off a tough comp from a year ago.

For context on the business in Q4, there's a few metrics that really demonstrate the breadth of adoption we're seeing and the strategic value that customers are placing on desktop virtualization within their infrastructure.

In Q4, there were 42 transactions greater than $1 million for the Desktop products, representing customers in healthcare, Federal government, financial services, education and others.

In total, nearly 4,000 different customers bought XenDesktop in Q4, including more than 240 individual transactions for more than 1,000 seats; 48 orders greater than 5,000 seats; and 18 that were over 10,000 seats. And over $100 million of the sequential increase in deferred revenue was due to software license updates and maintenance for the Desktop products.

Customers are looking at desktop transformation as a way to accelerate their business imperatives. For example, a global health services provider leveraging XenDesktop to enable thousands of employees with any device access to apps and desktops as part of their flex-working and home-sourcing initiatives. Or a financial services firm in Japan, purchasing over 20,000 XD licenses as a key component of their Windows XP migration project, allowing them to manage application compatibility while reducing costs. Or European bank selecting XenDesktop, NetScaler SDX and CloudGateway to help the company mobilize our workforce and support a broad BYOD program.

We're increasingly talking to customers about business enable-ment, reducing the cost of their desktop infrastructure and increasing productivity by enabling enterprise mobility options.

With our unique FlexCast delivery technology, we've moved the conversation far beyond simple VDI to one where customers can choose the ideal solution tailored to different user groups, business needs and IT strategy.

Next, in our Networking & Cloud business, total revenue increased by 51% in the quarter to $156 million, with product and license revenue increasing 57%.

The NetScaler product family was again the major driver of growth in the quarter, with new licenses up 38% year-on-year. We're continuing to execute against our strategies to leverage NetScaler as part of delivering integrated solutions to customers, as well as broadening our go-to-market coverage. For example, in the enterprise, the cross-sell and attach motions drove over 700 desktop orders during Q4 that included NetScaler as part of the solution. Our NetScaler VPX virtual appliances were up nearly 80% year-on-year, contributing about 8% of NetScaler license revenue. And the NetScaler SDX platform, designed to enable full multi-tenancy and consolidation within the Data Center, continues to gain momentum with both service providers and large enterprise, growing more than 200% from last year and now representing more than 15% of NetScaler sales.

And finally, our business in mobile carrier networks contributed over $20 million in revenue, primarily driven by the Bytemobile solutions and the pull-through of NetScalers into these accounts.

Within our Collaboration & Sharing business, SaaS revenue was up 18% to $135 million. And the GoToMeeting family continues to be the primary driver here, growing 26% in Q4.

Geographically, the investments we've been making to expand our SaaS business internationally are delivering good results, with revenue from International markets now accounting for over 15% of the total.

And also in Q4, we launched ShareFile with StorageZones, giving users the convenience of cloud-based data sharing across all devices while providing IT with the ability to choose where data is stored, including on-premises within their own secure data centers.

So turning to operations. Adjusted gross margin in the quarter was 87%, down from 89% a year ago. So as we've forecasted, we've seen a slow but steady increase in cost of goods sold as a percent of revenue. And the driver behind this is simply the mix of revenue as we've been very successful diversifying the business into Networking & Cloud and SaaS solutions. This trend will continue through 2013 as we continue to grow these businesses.

But despite the reduction in gross margin, adjusted operating margins were 30% in Q4, up more than 500 basis points sequentially due primarily to the increase in total revenue.

Our investments in headcount growth continued to be in 2 primary areas: First, expanding go-to-market reach and customer direct touch through enterprise account managers, consulting capacity and tech support; and second, in product innovation, to bring to market new technologies, as well as improving the integration of solutions to drive simplicity and better end-user experience.

In total, we added 121 new people in the fourth quarter and, for the full year, added over 1,200 people across the company, bringing year-end headcount to about 8,200.

And finally, the adjusted tax rate was 24%, up from 21.5% last year, reflecting the relative mix of domestic versus International results, partially offset by year-end adjustments to our annual tax provision.

And looking at the balance sheet, cash and investments increased to $1.5 billion due to cash flow from operations of $227 million, up 34% year-on-year.

For the full year, we generated $818 million from ops an increase of 21% compared to 2011.

In Q4, we bought back 1.2 million shares of stock, bringing the full year total to almost 4 million repurchased.

The other item to note on the balance sheet is deferred revenue. The total balance at the end of the year was $1.2 billion, an increase of $145 million sequentially. And while the total was up 25% last year, the long-term deferred increased by 65%, reflecting the evolution in customer relationship to a more strategic level.

And as I mentioned earlier, we had a larger number of orders in Q4 where customers initiated multiyear commitments that are generally recognized ratably over the term of the agreement.

So overall, we executed well in Q4 and throughout 2012. We're driving growth in all of our primary businesses, and we're making the investments necessary to extend our leadership position in the future.

Finally, I'd like to discuss our current outlook and expectations for 2013. As we entered the year, customer activity metrics and pipeline remains strong in all geos. We're focused on delivering financial results while expanding our long-term capacity across our 3 main businesses.

Including the dilution from the Zenprise acquisition, we're currently forecasting a business model with 25% adjusted operating margins for the full year. This allows us to invest in 2 main areas. First, go-to-market coverage to increase our market position around the world with a much stronger emphasis on networking; and second, in the adjacent market opportunities in mobile carrier networks and enterprise mobility management. This will include development, integration and the product specialist teams necessary to bring these products to market.

So for the full year 2013, we're increasing our current expectations to include total revenue in the range of $2.95 billion to $2.98 billion, an adjusted tax rate of 20% to 22% and adjusted EPS of $3.12 to $3.15 per share.

And for the first quarter of 2013, we currently expect total revenue to be in a range of $670 million to $680 million and adjusted EPS of between $0.62 and $0.63 a share.

Included in the first quarter guidance is $0.06 of EPS dilution related to the Zenprise acquisition and a net tax benefit of approximately $9 million due to the extension of the 2012 Federal R&D tax credit.

So now I'd like to turn it over to Mark to give you additional details on the quarter's performance and discuss our ongoing businesses. Mark?

Mark B. Templeton

Thanks a lot, David. We're pleased to report record results for the quarter today and for 2012, both financially and strategically.

Steadfast execution across core markets and diverse routes to market is 2012 story, with strength in key measures including large deals with High Touch accounts, new customer acquisition and retention, subscription and maintenance renewals and technical services growth. I'm also quite pleased with how we performed in our new product lines like ShareFile, CloudPlatform and Bytemobile.

I'm really extremely proud of the Citrix team and our partners whose hard work and perseverance were tested by a tenuous macro environment throughout the year. I think this says something special about the Citrix culture and why once again we were recognized by Glassdoor as a Top 50 best place to work.

The speed of transformation is accelerating across all our key businesses. Nothing, however, is dominating CIO mindshare more than mobility and the drive to enable a more mobile work style for employees.

As I talked with CIOs around the world, the message is clear. They're looking for better ways to embrace the challenges and opportunities of IT consumerization, generational changes, business consolidation and geophysical disruptions.

At the same time, it's equally clear that IT is no longer in the driver seat. The agenda is increasingly being driven by the forces of BYO, personal cloud services and a born digital workforce.

Consumer innovation is driving the shift from Windows PCs as the singular platform for work to a vast array of devices, apps and data that includes Windows. That's why we're completely focused on cloud computing technologies that enable mobile work styles, mobilizing apps, data, workloads, networks and people, and helping customers drive true business value.

As we look into 2013 and beyond, we're in great position to benefit from these trends in the way we work, the devices and apps we use and the way services are delivered to us.

So next I'd like to address each of these market opportunities beginning with Mobile and Desktop. I'm pleased with the Q4 momentum we saw at Desktop Virtualization and our strong finish across the board. Our pipeline is at record levels, fueled by Desktop TCO, data security and business transformation, as well as the need to deliver Windows apps to a broader range of mobile and BYO devices.

The next generation of XenDesktop and XenApp, now in tech preview, will further accelerate this momentum with a focus on simplification, on mobility and on building on the strength of Windows Server 2012. The feedback we've heard from customers and partners so far has been fantastic.

We're also extending our reach beyond Windows, with solutions for native mobile platforms like iOS, Android and HTML 5, addressing the highly adjacent enterprise mobility market. We took another major step in January with the acquisition of Zenprise, a Gartner Magic Quadrant leader in the rapidly growing mobile device management market. Zenprise gives Citrix an outstanding team of mobility experts, a great solution for managing mobile devices and impressive market momentum with over 1,400 customers across every industry segment.

The Zenprise MDM product is a perfect complement to CloudGateway, our solution for mobile app management.

The new CloudGateway 2.5 announced at Synergy Barcelona adds support for native mobile apps with our new MDX technology and has a natural adjacency to XenApp and XenDesktop. It's already creating great add-on and upsell opportunities.

In Q4, for example, we closed a large enterprise mobility deal with a global financial services team. The solution included CloudGateway, XenDesktop and NetScaler to service the mobility needs of nearly 10,000 users, supporting BYO, custom mobile apps and workplace mobility. This is our opportunity to deliver a complete enterprise mobility solution across devices, apps and data, to leverage our base as they bridge between the worlds of Windows and mobility and to do it all with a beautiful consumer-like experience that sets Citrix apart.

We'll have a number of exciting announcements in this space throughout 2013, so stay tuned.

Next, I'd like to discuss our Networking & Cloud business. Powering mobile work styles requires a new approach to building and delivering services for end users. Our business here is focused in 2 key areas: CloudPlatform solutions designed from the ground up to let anyone build true anything as a service cloud, and cloud networking solutions, allowing enterprisers and providers to deliver these services to any device with the best performance, security and reliability.

At the platform level, our strategy is focused on Apache CloudStack, the most widely deployed open source platform in this emerging market, with hundreds of customers in production including some of the biggest brands in the world. We've monetized this business through Citrix CloudPlatform, our commercial implementation of CloudStack. Last quarter, we saw a continued momentum in this space with significant deployments across the enterprise, university and telco segments. While others talk about the cloud, we're building it.

Next is cloud networking, led by our NetScaler platform. NetScaler continues to outpace the market, gaining ground in all key segments and taking share. We're doing this by out-innovating the competition. First is our TriScale technology, making it really easy to scale delivery networks up, in and out for customers of any size. This innovation lets NetScaler deliver a stunning 1.4 terabytes of throughput in a single cluster, that's more than 8x the capacity of our largest competitor.

We're also driving innovation in form factor with NetScaler MPX and VPX, making it easy to deploy any mix of virtual and physical appliances and also making it easy to consolidate and simplify with our SDX platform, which runs up to 40 independent NetScaler instances on a single appliance.

Best of all, SDX is now open to third-party vendors. So for the first time ever, customers can consolidate best-in-class app networking services in a single consolidated footprint with a single integrated way to apply app-driven policies company-wide.

As industry momentum shifts up stack to more strategic software-defined networks, we're in a great position to continue taking share.

In Q4, we also unveiled an exciting new alliance with Cisco focused on networking, cloud and mobility. We're working together to integrate NetScaler into a broad range of Cisco networking, security and data center solutions. As part of this agreement, Cisco is recommending NetScaler to customers who want to migrate from Cisco ACE to a next-generation app delivery controller. We've already closed several significant deals just 2 short months after the announcement. It's an exciting partnership we believe will have a positive impact, especially as we introduce new integrated solutions in the months ahead.

The final piece of our cloud networking strategy is Bytemobile, which extends our reach into the mobile carrier network for the first time. Q4 was our first full quarter selling Bytemobile, and I'm extremely pleased with the results. This market is still very new for us, but we are encouraged by the early signs and excited about the additional market reach it gives us.

Finally, I'd like to address how we're bringing in all together for end users with cloud-based services for Collaboration & Sharing. No matter how you look at it, the way people work is changing, driven by an unprecedented convergence of mobile, social and generational forces. Employees today want to move seamlessly across a diverse mix of devices and locations throughout the day, collaborating with others, sharing information as they go. Enabling this transformation is a central part of our mobile work style strategy and a key differentiator for us in the market. Our relentless focus on simplicity, and user experience has allowed products like GoToMeeting to outpace the rest of the collaboration market, taking share from competitors and giving us great market region brand visibility with end users. It's also given us a strong head start with new products like ShareFile as we bring that same focus and mindset to the world of data sharing.

I'm very pleased with our progress in these markets and our potential to drive even faster growth as we introduce them to a wider audience of enterprise customers through our mobile work styles' message and strategy.

In closing, we feel good about the momentum we're carrying into 2013. We're confident in our core business strategies and our new investments in enterprise mobility, data sharing and cloud platforms. Workforce and technology transformations are driving a broad range of new business initiatives, IT strategies and business model innovations.

Most transitions like this take longer than we think. For IT, however, this one is different. The forces of consumerization are dictating the pace, driving an urgency to move fast. No one is better positioned to help customers with these transitions than Citrix.

And now, I'd like to open it up for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question will come from Rob Owens with Pacific Crest Securities.

Rob D. Owens - Pacific Crest Securities, Inc., Research Division

Looking at your guidance for Q1 and for the year, the midpoint of growth is roughly the same, I think, for Q1 as it is for all of 2013. And given the ramp in the Bytemobile business, the Cisco relationship and even inorganic contribution from Zenprise, why would growth not improve in the second half? Or is there something else that's weighing against that growth rate?

Mark B. Templeton

Yes, Rob. It's David. Let me try to characterize it for you. I mean first off, it's early in 2013. We're not prepared to give too much granular guidance around the individual lines of business at this point in time. But I'd say at a high level, the way to think about the guidance in total for 2013 is this: total new product license growth in the mid -- the kind of low to mid teens, that would include Networking & Cloud, license up about 30% year-on-year; Mobile and Desktop business with new licenses in kind of a mid- single-digit range; and then the other line items are ratable and those will flow from there. So again, don't want to get too granular at this point in time in individual products partially because of the time in the year, and frankly partially because we're more often going to market and selling strategic solutions that include multiple technologies together. And so as we go through the year, we'll update these numbers and we'll give a lot more context around each quarter's business, how customers are consuming and what they're actually purchasing, et cetera. So that's the way I think about that at this point.

Rob D. Owens - Pacific Crest Securities, Inc., Research Division

And then for Mark, you mentioned how mobility is definitely top of mind for CIOs. As you look across your portfolio of capabilities, and now you have the addition of Zenprise, any missing holes there or do you think you have the complete solution at this point?

Mark B. Templeton

Rob, I think there are always things that we're doing on the innovation front to fill gaps, but they'll tend to be smaller ones at this point because I think right now we're lined up to be, I think, in the lead in terms of offering the most complete solution from the mobile OS all the way through the kinds of apps that you need to actually go mobile when it comes to collaboration, when it comes to communication, access to Internet apps, and the wide variety of not only native apps but also the Windows apps and desktops that are so important to a full mobility strategy. So we really like where we are in terms of completeness. And a huge priority for the year will be to get to greater and greater levels of integration so that the user experience, the customer experience, the admin experience gets better, better, better, easier and easier. That will be in conjunction with what we believe will be greater and greater number of devices and users under management.

Operator

Our next question comes from Steve Ashley with Robert W. Baird.

Steven M. Ashley - Robert W. Baird & Co. Incorporated, Research Division

I just like to drill down on the Networking business and the kind of eye-opening growth here, we're seeing 57% growth in license. So I just want to get some color on were there any inordinately large deals, the status of the pipeline, did we drain the pipeline? And if -- maybe if any of the new products got particular traction?

David James Henshall

Sure, Steve. It's David. Thanks by the way. We're really happy with the results for Q4. Specifically to the Networking business, let me take it up a click a little bit and talk about it more broadly because at a high level, we believe like others that the data center network is going through a pretty big transition currently and over the next few years, driven by cloud architecture, SaaS, mobility, et cetera. And this is the lens that we've been thinking about this for some time. And so when you look at the initiatives that I talked about in my prepared remarks and some of the individual results, you're seeing greater penetration into our traditional enterprise accounts, fastest-growing part of the business in Q4. This is true from both a cross-sell motion, as well as attach motion. I called out 700 individual desktop orders that included NetScaler as part of the solution, and this compares to about just 400 last quarter. We're talking about increasing the flexibility of architectural deployments with the virtual appliances, giving customers a lot more flexibility in how they look at their own infrastructure. That part of the business, new in the last, say, 6 quarters is up about 80% year-on-year. And then the big driver being the XDX platform, which really helps effectively consolidate Layers 4-7 services in the Data Center. And that's been up over 200% year-on-year. So you see all those things in what I call the core network business doing really, really well, and of course continued strong business from dot-coms and [indiscernible] providers. And then the last piece that I mentioned is our business in mobile carrier networks. We're starting to see what I'll call a Bytemobile effect, okay? So we did about $20 million in this segment, with more than $15 million coming from Bytemobile products, as well as a pull-through related to NetScalers. So really just opening up a brand new market opportunity that we hadn't participated in the past. So you put all these things together and we're very optimistic about the business, really happy with the execution. And specific to Cisco, as you mentioned, Mark talked about a few individual transactions, we're getting good, good traction there right out of the gate. But we're in the really early stages of working with Cisco on a long-term strategic partnership. It's going to include go-to-market, joint development, joint selling, et cetera. So stay tuned on that front.

Operator

Our next question comes from Heather Bellini with Goldman Sachs.

Sonya Banerjee - Goldman Sachs Group Inc., Research Division

This is Sonya Banerjee on for Heather Bellini. Well, just in terms of the Desktop solution business, I guess we're curious. What impact did shelfware related to XenDesktop licenses have on the growth rate in 2012, and how far has this been worked down? I guess in other words, did you guys start 2013 with a chance for accelerating growth if that shelfware issue was worked through in 2012?

David James Henshall

Yes, it's David. Let met talk about this. So I'm not sure we've ever described the shelfware issue, and we certainly don't look at the business that way. I mean, if you look at what is going on from individual quarters, and I talked about some very specific statistics within just Q4 in terms of like the types of business or the types of initiatives that customers are looking at when they're deploying virtualization of the desktop and some stats around new customers about 4,000 customers in total, purchasing new licenses of XenDesktop, 240 buying more than 1,000 seats and almost 20 with 10,000 seats. So these are new deployments, new initiatives and new customers. And so everybody is going to adopt and deploy at a -- at their own pace depending on their own capabilities, business initiatives, funding, et cetera. But we're not aware of like a broad shelfware issue certainly in the market at all. I will say that as we look into 2013, we are doing a number of things to address the area of complexity, ease of adoption, ease of management, ease of scale, and that's where the releases under the Avalon umbrella come in to really transforming desktop virtualization into a delivered service, making it much, much easier for customers to adopt and scale. So number of new initiatives on that front.

Operator

Our next question comes from Adam Holt with Morgan Stanley.

Adam H. Holt - Morgan Stanley, Research Division

Maybe just to start on that point, the tone around linearity in the demand environment seems to have changed quite a bit from the last conference call. Do you think that has to do with year-end spend? Does it have to do with better execution on your part, more conservative assumptions? How would you contrast sort of what you saw in the market quarter-on-quarter?

David James Henshall

Yes, Adam. I'd say there's nothing new on the economic front. In general, there continues to be some level of volatility in the timing of closing business. And that's true just in pockets throughout the world. But all geos had a good performance in Q4, very focused on execution, continuing to work with customers on opportunities from earlier in the year, really understanding their priorities and relative -- really relatively how we think about wallet share. So the key verticals in Q4, I mentioned earlier included pretty much across the board: healthcare, [indiscernible] services, cloud service providers, education, government. So good balance. The key is going to be trying to understand customers' priorities, make sure we've got the right solutions to make their initiatives successful and then just stay very, very close to them and help get these transactions over the line.

Adam H. Holt - Morgan Stanley, Research Division

If I could just ask a follow-up on the Desktop business, there was a point this year where we were talking about double-digit license growth in the Desktop business. And now it looks like you're guiding to sort of a flat to up slightly organic Desktop number for calendar '13. What do you see is the difference between those 2 growth rates and if there's still the opportunity to get back to double-digit organic license growth in that business?

Mark B. Templeton

Sure, Adam. And if we think about the Desktop business as a whole, I mean it's actually a fairly large business for us right now. It's about -- well, it's a little over $0.5 billion [ph] in new product license last year and about nearly $1.5 billion in total revenue. And so as we think about next year, the mid-single digits is kind of where we want to be right now. The market is still we believe in its early phase. It is transitioning a little bit from a customer conversation to look at DV in the context of broader enterprise mobility, and we're obviously doing a number of things on that front. And then what I mentioned earlier on Sonya's question about just continuing to make it easier for customers to adopt and scale and manage by bringing down the complexity, which I think has been a barrier to adoption in the past. And so as Avalon technologies come out in the latter parts of this year, we'll be really, really focused on that. So that's our current thinking. It's early in the year, and we do remain very optimistic.

Operator

Our next question comes from Phil Winslow with Crédit Suisse.

Philip Winslow - Crédit Suisse AG, Research Division

Mark, just wanted to focus in actually on the Zenprise deal. Wonder if you could talk about just the early feedback you've had from customers, especially when you think of Zenprise in the context of CloudGateway that you've been talking about plus just Citrix Receiver, obviously.

Mark B. Templeton

Well, thanks for the kind comments, Phil. We're pretty excited about the deal and what it means to our ability to assert not only our strategy in enterprise mobility, but also how to actually incorporate our desktop virtualization technologies and business in leveraging that phase. So it really feels good. That's sort of the glue that's going to bring all these together. The -- it turns out we have shared partners and customers that stepped up during the due diligence and really confirms what we were thinking, and that was pretty exciting and continues to be that way. So the businesses continued to grow both on the CloudGateway side and on the Zenprise side, where customers are saying this is good, this can only be synergistic. And I'd say that of many, many adjacent technology transactions that we have done over the years, this one has the least amount of duplication and the most, I'd say, synergistic possibilities. And that's really what we'll be, in the marketplace, talking about is how Zenprise MDM will allow us to configure and provision devices and manage all the settings and security and so forth from the mobile OS and then hand off and push apps and then hand off to CloudGateway for all of the SSL, Single Sign-On, app store and mobile app capabilities that we talked about at Synergy, Barcelona, that we're calling our Me@Work mobile apps family. So it really is sort of the key sum that brings it all together. And then, obviously, every customer that already is running the XenApp and XenDesktop will be able to snap right into this infrastructure from a technical point of view, but also we're making it really easy for them to add on to a desktop virtualization solution and add this mobility capability as well. So I'd say in our outlook, this is what we see now. We are going to be a little bit cautious of how fast the synergies actually are manifested in our revenue, but we're pretty excited about it and you can be sure that we're going to be extremely aggressive and run at a very high velocity here. So as I said in my comments, stay tuned.

Operator

Next question comes from Kirk Materne with Evercore Partners.

Stewart Materne - Evercore Partners Inc., Research Division

I guess, Mark, this is a little bit more of a follow-on to Phil's question about Zenprise. I mean you guys have been talking to people about virtualizing apps and mobility from an app standpoint for a long time. I guess, just bringing the mobility factor in, I guess how critical is that in terms of gaining mindshare really with CIOs and really having almost a top-down approach to selling? And along those lines, is there anything you really need to do with the current sales motions with your sales guys to be able to bring in sort of the mobility piece of it? Is there anything you need to do from a marketing or go-to-market standpoint as you serve -- transition to even more of an enterprise mobility story?

Mark B. Templeton

Thanks, Kirk. So a few things. First, think about this as enabling 3 points -- 3 entry points into the customer around mobility now going forward. The first one is this add-on capability. So we've helped you mobilize Windows apps and desktops. Now we can help you move beyond that with native mobile apps, data and devices, and that's basically the combination of XenDesktop, XenApp, CloudGateway and Zenprise technologies in a seamless kind of package. So that's one -- that's very much a top-down where this is really a holistic approach to mobility that reaches beyond just lighting up a smartphone or tablet or a BYO initiative, et cetera. It really is a -- very much a top-down strategic offer. The second is the other end of the spectrum, and that is the mobility and the security sort of dimension where the buyers that are responsible for the existing mobile platforms very typically to support BlackBerry and so forth. They're looking at all the same issues that everyone is looking at, looking for management capabilities of devices from the OS up. So the Zenprise MDM gives us an entry point there, and the specialty sales force that comes over from Zenprise and manage that way as an overlay allows us to continue that momentum and that entry point with the -- obviously, the prospect of up-selling. Because as those buyers actually get more knowledgeable about these kinds of solutions, they naturally ask about, what about data, what about native mobile apps, what about the security of these apps and so forth. So that's the second one. And then the third one is really the new customer where the entry point is all around mobility, and that -- that's one where we'll spend time really building our brand, tying it to mobile work styles and stimulating customers that haven't yet considered Citrix in their overall mobility infrastructure. In that area, there's branding, there's messaging, there's a lot of demand-generation activities to do. And that will build over the course of the year. And you'll start to see that in the first half. And as I said earlier, we'll be aggressive about it. And as David mentioned, this is one of the key investment areas for us. So we need to have focus on making the products beautifully integrated. That'll be a 2-step process. Secondly, build capacity in the go-to-market starting with the specialty overlay sales force and training the rest of our field, as well as recruiting our partners into the go-to-market motion. And then the third area is obviously around demand generation and getting visibility for Citrix in mobile. And I think obviously, it's not a big stretch. The company is long stood for mobile, start going way back to the roots in remote access. So it's actually -- it's not a stretch at all, just something that -- it's about execution.

Operator

Our next question will come from the line of Walter Pritchard with Citigroup.

Kenneth Wong

David, this is Ken Wong from Citi in for Walter. I think earlier, you said you guys saw a $100 million in incremental deferred coming from Desktop. I'm just wondering if you could perhaps give us a sense for what that number was last year?

David James Henshall

From an incremental standpoint, I don't have that handy. It was definitely smaller than this year. I mean, that is the majority of the growth in deferred on a sequential basis. And the other components would be our longer-term SaaS business, support agreements and other types of maintenance.

Kenneth Wong

Yes, okay. And then also on Asia, I mean you guys saw 50% growth there. Was there something significant there in terms of big deals or something one-time in nature there or is it just you guys are getting better traction?

David James Henshall

Well, I think that in general, our Pacific and Japan regions have just done a really good job this year. I mean they are 2 smaller regions, and they've been having a much higher growth rates than the 2 larger markets. And they just continue to execute really well. Japan, in particular, had a really strong quarter in a number of different areas across both Desktop and Networking products, so very happy with the team there. And we continue to think about those as growth areas going forward, and we'll be investing behind that pretty heavily.

Operator

Our next question is from Raimo Lenschow with Barclays.

Raimo Lenschow - Barclays Capital, Research Division

Just a follow-on on the regions. And the one thing we see now so far in the companies that reported was that Europe is actually doing pretty decent despite all the fears that we had in there. Can you -- I mean VMware talked about the budget flush in Q4 and was nervous about '13. What's kind of your sense on what's going on there?

Mark B. Templeton

Well, I think Europe has been in a fairly stable pattern for the last few quarters now, and people are becoming more adjusted to the expectations, how to work with customers, how to think about backlog and the timing of getting individual transactions closed. And so we've done a lot of work across EMEA both in terms of our teams, where we've been very focused on it, and the fact that we're just, like I said, more comfortable working in this type of environment. So it's going to be -- it will continue to be volatile in certain periods of time. I think that's an appropriate assumption. However, the -- let's call it the degree of uncertainty in the economic environment across the world has probably come down a little bit and should in 2013 because many of the unknown events are known events, and that helps a lot. Because even if it's a somewhat negative outcome, you know how to plan for it and that's a big deal for customers.

Operator

Our next question comes from Michael Turits with Raymond James.

Michael Turits - Raymond James & Associates, Inc., Research Division

Two questions. One, are you still expecting $15 million for Bytemobile next year, and how much should we expect or is it built in for Zenprise? That's one question, and I have a follow-up.

David James Henshall

Sure, Michael. Let me -- I said in my earlier remarks that we expect the mobile platform business to be about $30 million of revenue in 2013, and we'll be delivering that product both in -- for those different solutions both in perpetual license form, as well as in a more ratable SaaS-type model. And so obviously, the mix will determine the exact amount of revenue, but plan on about $30 million for right now. As far as Byte, we had said last quarter that we'd expect it to contribute about $50 million in 2013 and will likely be ahead of that if we continue to see the success that we've had. But I think it will be somewhat uneven due to occasional large deals coming in, but certainly up and to the right. So we don't plan on breaking that out with a whole lot of granularity going forward simply because it is becoming more and more integrated with the broader NetScaler motion. So we'll give more qualitative comments in each quarter's results, but don't plan on guiding to that as an individual line item.

Michael Turits - Raymond James & Associates, Inc., Research Division

And then if I could just get one more little less quantitative. In the NetScaler business, outside of your traditional areas of strength there with cloud service providers and in attach to Desktop, are you making -- what kind -- how would you describe your progress in the just the -- let's call this the stand-alone load balance market where you might go more directly against [indiscernible]?

David James Henshall

Well, I think just in general when we think about NetScaler, we're doing extremely well across the board. When we talk about specific initiatives for cross-sell and attached sell, I mean the attached is obviously just -- when you're looking at Networking and Desktop as an integrated solution and the things that we can kind of uniquely deliver there to customers. On the cross sell motion, that's more about just competing in a broad enterprise account for either related projects or in just core networking opportunities. And so the broader coverage we have, the more partnerships we have, the breadth of products that we've been delivering over the last many quarters have really helped out on that front. In general, the enterprise is certainly by far the fastest-growing part of the business in Q4 results.

Operator

Our next question comes from Kash Rangan with Merrill Lynch.

Kash G. Rangan - BofA Merrill Lynch, Research Division

It looks like in the past 2 quarters, the non-Desktop Solutions business has been accelerating, and although a lot of people still think of Citrix on Wall Street at least as a, say, desktop virtualization company, the reality is that you guys are becoming more and more diversified. I guess where I'm going with this is that as a management team, where are the areas of investment as you look into 2013? Basically, the guidance, it feels like you're not expecting much of a turn in the Desktop Solutions business. But should we be giving up those wonderful growth rates of 15%, 20%, whatever that you did about a couple of years back? Or do you think that there is enough of an investment cycle that's going on and maybe certain internal factors specific to the industry, the cost of the virtualization starts needs to come down storage network and technology? Do you think there's a chance of that business coming back up into 2013 and surprising you, or is it going to be more of looking for the networking, the mobile and the cloud businesses really pick up the growth trend here? That's it for me.

Mark B. Templeton

Okay. Maybe I'll lead the discussion a little bit and then David can maybe add some more data to it. But I think the way we think about this as a management team is we're in the mobile work styles' business and what we're doing is offering the right mix of cloud computing infrastructure to actually enable mobile work styles. And if that requires a mix of SaaS and Premise and Windows or native mobile or whatever mix is required to do that and to really be the company that stands for that and delivers that in the marketplace, then that's what we do. And I think if you look at the last -- if you look back in, I suppose, 2004, we were 100% about virtualizing Windows apps and desktops. Last year, as to keep the numbers round and easy, I think 60% and 20% around the collaboration and data sharing and 20% around cloud networking and platforms. So -- and that's been a very natural evolution based upon our overall vision and goal to emerge as the company that delivers on the mobile work style promise in the context of how we define this with device, network, location, et cetera, independence, okay? So that's how we think about the business and how we're driving the growth. And then any particular segment then will have its own strategy, and we're obviously looking at all of those individually around share, share gains and what we do in each of the granular pieces as well.

David James Henshall

Yes. And, Kash, I'd just add that similar to what Mark said, it's hard to lump the business into one category. It's -- we're occasionally described as a virtualization company, which is interesting. But from our point of view, we're participating in a number of very different discrete markets that have different growth rates, like cloud networking, cloud platforms, mobile platforms, desktop virtualization and others and the strategy of bringing the unique technologies across some of these different areas to solve real problems for customers and doing it in a highly differentiated way that starts with a customer out point of view. And that's really been our focus. And one of the reasons why when we talk about the business, we do tend to talk about it in more aggregated terms because frankly, that's how we plan, that's how we think about it strategically and that's how we go to market.

Kash G. Rangan - BofA Merrill Lynch, Research Division

Great. That's a great explanation. If you could very quickly talk about what percentage of the sales force, David and Mark, is trained to sell the complete holistic solution and where do you see that going in the future?

David James Henshall

100% of the sales force is trained to talk to our overall strategy as a company and positioning around mobile work style. And then we have overlay groups that focus on various segments in terms of products, as well as market segments in terms of customers that then work with our ERMs that are leading the conversation, let's say, with enterprise-type accounts. So everyone tells the entire story, and then we'll have tiers of various specialist teams that actually can sell networking or sell a CloudPlatform solution or sell a collaboration or a data sharing solution. So -- and the same thing goes for mobility. And that's how we can leverage the base and leverage the brand and as well as to execute because it's really hard for teams to actually have the capability to sell multiples of things all the way through a sales cycle. So specialists are an important part of how our formula for doing this and how we've been able to grow the company around multiple products and multiple routes to market and serving multiple types of customers, for prosumers at one end through small business, through enterprise and service providers at the other end.

Operator

Our next question comes from Gregg Moskowitz with Cowen & Company.

Gregg Moskowitz - Cowen and Company, LLC, Research Division

Just a follow-up from a prior question. I'm wondering if you could give us some additional insight into your incremental go-to-market investments that you plan to make around networking and also with the mobile carriers in 2013?

David James Henshall

Sure, Gregg. Basically, it's in go-to-market coverage. These are -- it's one of the areas that tends to require a little bit more specialization from a go-to-market standpoint, and we need to hire up those unique skill sets. There are a number of markets that we're just frankly not covering or were underrepresented. And so the more we can bring this capacity to market, the faster we will be able to grow that business and serve customers.

Gregg Moskowitz - Cowen and Company, LLC, Research Division

Okay. And then it sounds, Mark, as though customer interest and adoption on CloudStack or CloudPlatform is picking up. How do you expect this to sort of play out in 2013? And also was curious if you had any comments on relative positioning vis-à-vis OpenStack?

Mark B. Templeton

Yes, Gregg. So our strategy investment there, you have to think of it as a multiyear program where we're in the front end, where design wins matter. And that's been the focus. Design wins in both service provider as well as enterprise segments, as these 2 types of customers build what we like to think of as anything as a service platforms that abstract away storage, compute and network. So the focus has been on getting those design wins. And as I've mentioned in the comments, we saw a continued traction with telcos, with service providers, with educational institutions and with what I'd like to think of as the enlightened enterprise, those that are thinking in the post-server virtualization world context. So that's the -- that's what we've been focused on, and the scorecard is really good. And so we like what we're doing there. Additionally, what happens this year is as we then bring the Merlin release of Avalon out, that will really enable CloudPlatform to sit underneath our Desktop Virtualization products like XenApp and XenDesktop. And we'll be able to offer to those same types of customers the Windows-as-a-Service capability that David mentioned, and that will give us additional leverage and additional solutions and revenue from those types of customers. So this is a multiyear investment that we're making on the bet that customers move beyond sort of the server virtualization, sort of notion of data center to actually more of anything-as-a-service type platform that you build in a very, very different way.

Operator

Our next question comes from Matt Hedberg with RBC.

Matthew Hedberg - RBC Capital Markets, LLC, Research Division

Mark, you mentioned you had some nice early wins in the Cisco relationship. I wonder if you could kind of characterize that. What sort of customers are interested and how might that change as the relationship continues to grow?

Mark B. Templeton

Yes, we had a couple of -- actually, the top 2 deals were with financial services companies and not bolts bracket, but known brands. And they were -- one was over 7 figures, one was approaching 7. Then a handful sort of in the mid-range in terms of size. And that's really early, Matt, because we made the announcement in Barcelona in October. And so if you think about sort of mid-October announcement and then kind of the end of the year process whether it's kind of holidays or traditional end of your close process, getting that much done that quickly actually gives us really good optimism for what's possible here, working together. And that's just on a reference and a recommendation sell. What's ahead is tighter integration on -- from a technology perspective where customers will see great leverage working with Cisco and Citrix in this area moving from the load balancing world, which we really don't like to compete in because it's a commodity role and moving into the -- at the app delivery controller and the application-defined network space. So that's really where our focus is here and certainly, working really technically in conjunction with Cisco.

Matthew Hedberg - RBC Capital Markets, LLC, Research Division

That's great. And then maybe a quick one for David. There's been a couple of questions with headcount. According to my math, it looks like headcount this year was up about 17%, which was pretty close to the revenue growth rate. Is that a safe assumption to use for next year's sort of headcount growing kind of in line with revenue?

David James Henshall

At this point, I think that we'd probably be using 1,000 people as a safe number, and then that's just a function of consumption. We'll be investing all the areas that we've talked about across the business. And then as the year progresses, depending on market conditions, we dial that up and -- or dial that down.

Operator

Our next question comes from Joel Fishbein with Lazard Capital Markets.

Joel P. Fishbein - Lazard Capital Markets LLC, Research Division

I just wanted to follow up on the Amazon relationship with NetScaler and CloudBridge. If you can just give us any color on that and see if you're getting any traction there, that would be helpful.

Mark B. Templeton

Joe, so I think everyone probably knows we just announced that capability in Q4 where NetScaler went on the AWS marketplace and we're one of the early product on the marketplace. And I mean the growth is great, but it's off of a 0 base. And I think what's ahead there is just the possibilities of promoting and selling more of an e-commerce and online way through the Amazon demand generation channels. We participated in their conference and with a standing-room-only crowd in our breakout. So lots of enthusiasm for NetScaler on that platform because it does actually help app developers with global scale, reliability, performance, and security. And those are all important things when you're building a cloud service anywhere including -- especially on Amazon. So we like what's happening early on, and yes, there's more -- lots more to do there to drive consumption of it.

Ian Song - International Data Corporation

Just to follow up, that was what I was trying to get to. So should we think of it as just an extension of a channel or could there be more to it in terms of deeper strategy?

David James Henshall

I think the way to think about it is a channel, and we've seen the incredible growth of NetScaler VPX, the virtual appliance version of NetScaler. And this is really a channel for delivering that to the AWS customer base. And then, obviously, as we do more and more with Amazon and certainly, we'd like to do more in the area of virtual desktops and apps and mobility and so forth, this component will be an important piece of an overall framework that customers will be able to use. Just like where David talked about the multi-profit customers and the number of customers that are buying a solution from us that includes multiple of our components, the same thing will go for our relationship on Amazon, but that's in the future.

Operator

Our next question comes from Kevin Buttigieg with Longbow Research.

Kevin M. Buttigieg - Longbow Research LLC

Just back to the Desktop business for a minute. Just wondering if you could characterize kind of the -- where the cycle is in terms of new customers versus upgrade customers. And with Avalon coming out at the end of the year, do you see that as having particular appeal towards either one of those 2 groups?

David James Henshall

Yes, Kevin, it's David. In terms of like new customers versus customers that are upgrading from an app virtualization solution, I mean the ratio is greater than 80-20. And that's really -- the upgrade motion was a little bit more of a 2011, maybe early 2012 story. So when we talk about this business, it's really largely for new customers and new license. A couple of interesting stats around that, that I've looked at recently, and that is when you look at the type of mix of the different versions and alternatives the customers have, we've seen a continued shift towards the platinum version of the product as customers are looking more and more at solving different problems depending upon the individual use cases, different user populations, et cetera. It's not a conversation about VDI, and that's probably a big misconception in the marketplace. And within the platinum version obviously giving you that full breadth of FlexCast delivery technology that's unique in the market, and that's helped to drive ASPs up a little bit too. So ASPs were actually up, believe it or not, 25% year-on-year. And again, the units move around depending on the versions. So as we think about this, we're having more strategic conversations. We're attacking more important business issues. And then with kind of new things coming out this year that we talked about a few times, it's focused on just making it easier, making it easier for customers to adopt, scale and manage, and that's why I think it'll apply to both existing customers but probably really open up that group that have found traditional desktop virtualization just too complex or too hard at this point in time. So it's early, but we're very excited about the opportunity.

Operator

Our next question is Macmillan Ross with Citrix.

Ross MacMillan - Jefferies & Company, Inc., Research Division

It's Ross Macmillan from Jefferies. I have 2 questions, the first on the networking business. I think in Q3, your license growth was obviously a little bit slower than normal. And I was curious as to whether any of the strength in Q4 was just a timing issue between deals that fell into Q3, or didn't fall in Q3 but fell in Q4 instead, and specifically I guess, around your typical e-commerce type customers that would typically buy in Q3.

David James Henshall

Sure, Ross. It's David. As far as Q3 and Q4. I mean there's always a few deals that slide between quarters, but I can't think of anything specific that is really of anything really large scale that moved from Q3 to Q4. I think the more pronounced issue was the year-over-year comps. Q3 2011 was just a monster quarter for NetScaler, I believe, up about 50% as there were some pretty public cloud services build-outs going on around that time. We participated well with that. They just weren't as many in Q3 2012. So the biggest volatility point last quarter was around e-com, or dot-com/cloud service providers. But overall, the big, big driver which I mentioned a couple of times in Q4 was the enterprise, even significantly more so than any of the other categories.

Ross MacMillan - Jefferies & Company, Inc., Research Division

That's great, that's helpful. And then just another one for you David on the sequential increase in deferred. You're obviously getting a benefit of the multiyear SA, but I wasn't clear as to whether you're also actually signing more deals that are including a higher percentage of some sort of ratable licensing element. Could you just maybe go into that and help us understand if there's any of that increase as a reflection of that latter reason?

David James Henshall

Ross, the majority of growth in deferred revenue continues to be around license updates, maintenance agreements and support agreements. There is some growth in Software-as-a-Service, longer term contracts, but the majority of our individual customer transactions are not ratable in terms of new license. They tend to be more perpetual-based with the multiple years of some level of update or maintenance.

Ross MacMillan - Jefferies & Company, Inc., Research Division

That's helpful. Could I just squeeze one last one in for Mark? As we think forward toward Avalon Merlin and we think about Windows-as-a-Service, are we at a stage now today that the Windows licensing from Microsoft is amenable to this Windows-as-a-Service model? Or do you think we still need to work through some changes on Windows licensing from Microsoft before this becomes a real viable option for companies?

Mark B. Templeton

Ross, I'd say that for technologies like XenApp, I think all the licensing possibilities are in place already both for enterprises and for service providers. I think when it comes to more VDI like-solutions, that would come with a product like XenDesktop. I think that's where the life -- there's more work to do on licensing and to make that much easier for customers. The way it works today is you can actually do any of these things with Microsoft licensing as long as you bring your own licenses. But as soon as a service provider wants to offer this kind of capability proactively, then I think that's where -- there are some -- in use cases, there are some licensing changes that we would like to see, I think Microsoft would like to see as well. So we're obviously close partners with Microsoft, one of the conversations that is ongoing with them to try to drive growth in this marketplace as more and more customers want to make Windows much more of a service to support what's happening around mobility and device heterogeneity and all the things that we talked about.

Operator

Our next question comes from Pat Walravens with JMP Securities.

Patrick D. Walravens - JMP Securities LLC, Research Division

So with your acquisitions, you're entering 2 really hyper-growth markets, which is great: the online collaboration and mobile device management. But each of those markets has got a private vendor or 2 who has been gaining tremendous share over the last couple of years. So I'm just wondering how you compete with the likes of Box on one hand and how do you compete with the likes of MobileIron and AirWatch on the other?

Mark B. Templeton

Yes, Pat. So the answer is we compete very, very well. And the way you compete well is to make sure you differentiate in the marketplace and play to your strengths and competencies. And so when it comes to private vendors, the examples that you gave, we will tend to go to market with our strengths and that is understanding enterprise requirements, having top-down relationships, having relationships through great partners that are SIs, whether they are like HP, IBM, CSC and others. So we'll leverage all of those tools that we have. And then obviously, we have a tremendous amount of partner coverage around the world, a huge competency of ours. So whether it's our platinum, gold or silver partners around the world, we'll reach through them as well, so using all the levers that we have. And then obviously, a key piece of competing is in product innovation. And we're -- we go head to head there in many of the innovation areas we like what we -- where we are in the roadmap and the core IP. But one of the differentiators that we have is actually integrating these things together, so that when you buy more than one product from Citrix, you start to get a 1 plus 1 equals 3 kind of outcome. And you'll -- you see that in, for example, in Barcelona, we announced something called Citrix @WorkMail, which is our iOS and Android SecureMail app, and it comes with beautiful integration with ShareFile, with GoToMeeting. And so it really makes the experience of being mobile on these devices when it comes to communications very, very easy, et cetera. And when you compare that to private company that has only one solution, they don't have the kind -- they can't offer the kind of user experience. And in the long term here, I think that whether it's consumer markets or enterprise markets, more and more of the competitions and lines of competitions are drawn on user and customer experience because it's one of the effects of consumerization. So that's how we'll compete, and we're doing really well, by the way.

Operator

Our next question comes from John DiFucci with JPMorgan.

John S. DiFucci - JP Morgan Chase & Co, Research Division

Nice headlines here, guys. David, I have a question about the more strategic engagements with customers that are signing multiyear contracts and apparently paying multi-years upfront. And I guess, just 2 questions, how is that going to affect future cash flow if you're pulling in multi-years of maintenance upfront? And then secondly, we -- there's a lot of companies that sign multiyear deals for maintenance deals, but customers typically pay annually still in those deals. I assume to get the upfront payment, you have to entice them to do that. I mean why would -- I guess, can you kind of walk us through that and then just explain why you would do that?

David James Henshall

Sure, John. I mean really what we're doing is what the customer wants in most cases. As I've said many times over the years, we've never taken the approach of trying to drive like ELA style agreements and really focused on delivering what a customer needs in real-time. And then there's the budget issue or whether it's just them really wanting to lock something in over a period of time. We're providing no artificial incentives to drive this type of business. And it's still frankly is the minority of our transactions, and even the minority of large transactions. And so when I reference at them, I'm referencing the growth in long-term deferred, which is certainly influenced by this. So in that context, when you look at our total deferred revenue balance, long term only represents 19%. So it's a much smaller base, and that's one of the reasons why the growth rate is as high as it is. In terms of overall cash flow, I mean our cash flows have been certainly very strong over the last 4 quarters where we delivered nearly $820 million in cash flow from ops, which is up 21% year-on-year. While we don't guide the cash flow in forward quarters, I think it's certainly our expectation that we'll be able to continue to grow cash flow faster than net income, and that's the way we think about it. So I hope that helps.

John S. DiFucci - JP Morgan Chase & Co, Research Division

Yes, it does. But I guess, a quick follow-up to what you said. When customers come in and your -- I understand you want to satisfy the customers. But when they come in, do they say, "Hey, listen. We want to sign a multiyear deal and we want to pay it all upfront. And we wanted -- in order to do that, we want an extra, I don't know, 10% discount or something." Is that how the discussion goes or the just say, "Listen, we just want -- we got cash that's burning a hole in our pocket, and we just want to pay you 3 years upfront instead of 2 -- instead of 1 year for maintenance"?

David James Henshall

John, there's no one way the conversations happen. I will say that from a -- when you think about incentives and why customers move one way or the other, we actually don't pay our field organization on these out years of a subscription advantage or software maintenance when they come in. So there's certainly no incentive there for anyone to really drive that business. Again, it's just customer-focused. And if a customer is looking to give us cash upfront and support them for the next 2 or 3 years, we're certainly going to take it. I mean that's just a good piece of business, and it also allows us to, I wouldn't say lock in the customer for that period of time. But in effect, if that's what you do, you're talking about more infrastructure led sales. They tend to be more strategic, they tend to be stickier from a competitive dynamic. And so that's what drives that. There are other customers, of course, that are looking at locking in multiple years of whatever and then we'll bill that on an annual basis or whatever is part of the contractual arrangement. And in that case, we're not even going to talk about it. We won't show up anywhere because we don't refer to off balance sheet backlog for example. I mean this is just -- it's not a big part of our business. So again, minority of the business, and that's the way -- hopefully, again that helps out -- helps you think about it.

Operator

Ladies and gentlemen, we have reached the allotted -- end of the allotted time for questions and answers. I will now turn the call back over to management for closing comments.

Mark B. Templeton

Well, thanks, again, everyone. Obviously, we feel really good about the quarter and 2012, and how we're positioned for 2013. And so we look forward to another great quarter and seeing you in about 3 months. Thanks again for joining the call today and for your ongoing confidence in Citrix. Thank you.

Operator

Ladies and gentlemen, thank you for your participating in today's Citrix Conference Call. You may now disconnect.

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