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Citrix Systems, Inc. (NASDAQ:CTXS)

February 25, 2013 11:00 am ET

Executives

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

Adam H. Holt - Morgan Stanley, Research Division

Adam H. Holt - Morgan Stanley, Research Division

All right, everyone, I will go ahead and get started. For those of you that I don't know, my name is Adam Holt and I run the Software group on the research side of Morgan Stanley. I'm a little disappointed. I don't see any of the mimosas or champagne that I was offered this morning out in the audience. So if you need one of those, there's a tray back there and we'll try and keep the good times rolling throughout the week.

So we're going to start off today with David Henshall, the Chief Financial Officer from Citrix. A terrific way to start our week, because Citrix has just put up a terrific fourth quarter number and is really at the precipice of a variety of changes in terms of how they are positioning to address a number of the most interesting growth opportunities around data center regeneration, mobility and virtualization of any of the companies that we follow. So thrilled to have David here. Thank you so much.

David James Henshall

Thank you.

Adam H. Holt - Morgan Stanley, Research Division

What we're going to do is as normally our practice, I will lead some Q&A and then we'll leave some time at the end for any questions that you all might have. Please raise your hand and I'll recognize you and we'll get a microphone to you to get your questions answered. So with that, why don't we start with a little bit thematically with I was just touching on, which is how the company has effectively evolved over the last 2 years really to reposition itself to benefit and address new opportunities around mobility and data center regeneration and some of those areas?

David James Henshall

Sure. If you think about Citrix and kind of what we've been doing over the last -- you can go back as much as 20 years, and the fundamental premise of our business is about helping people access kind of business-critical information, applications, data, desktops, et cetera, on -- really, on demand wherever you need it, whenever you need it, independent of device, network, et cetera. And that overall strategy hasn't changed. It's really evolved as customer needs have evolved -- excuse me, and as customer needs have evolved. And so where we are a couple of years ago was helping them deliver desktops and apps because customers were starting to look at different ways of consuming information whether those are virtual desktops, other types of virtual end points, et cetera, and that's what led toward desktop virtualization. And today the problem is just being driven by the proliferation of mobile options, whether it's devices, smartphones, tablets, you name it. And -- but the fundamental premise hasn't changed. It's about making it easier to receive information, any, any, any. And with mobile, it just becomes a much more pronounced problem. Every CIO we talked to is trying to figure out how do I grapple with the changing endpoint evolution, and really, how do I make it so that employees have the level of choice that they want but it still falls into the lockdown IT model that they require. So I mean that's really what we've been doing, and all the other pieces have supported this evolution of strategy.

Adam H. Holt - Morgan Stanley, Research Division

If you look at -- why don't I start with the most recent results and then we'll drill into the data center and then the desktop a little bit. If you look at the quarter that you just reported, you had a big uptick in large deals, you had an acceleration in license growth and billings. Can you talk about sort of what came together in your mind in the fourth quarter and what's behind some of those good metrics?

David James Henshall

That's a lot of the trends we have just been talking about. It's becoming more and more pronounced for customers to deal with these challenges. And for us, we had a fairly tough Q3 where a number of our different products were impacted by either a volatile macroenvironment or just prioritization across the different landscape. And so as we've kind of marched through the year, we've been very focused on staying closer to customers on a strategy level, helping them understand where the project was in relative to the organization, what problems we're trying to solve, just your normal blocking and tackling. And a lot of those things that were more challenges in Q2 and Q3 came together in Q4. So as you mentioned, we had a record number of large deals really across all of our different product technologies whether it's desktop or some of the Data Center and Cloud businesses. All around the same general thematic ideas helping customers solve that type of problem that we're talking about.

Adam H. Holt - Morgan Stanley, Research Division

And you all called out the macro in the third quarter, it sounded like in the commentary in Q4 that things may be had settled down a little bit. What's your current view and what do you -- and what have you reflected in your 2013 guidance from a macro perspective?

David James Henshall

Yes, I think as we look forward, we're still taking a fairly cautious position. There's a level of volatility that's out there in a number of different markets, so no real change on that front. But I think we've been more comfortable operating in this level of ambiguity, many of our customers have as well in terms of just how we stay close to customers, how we get deals done, get them over the line and increase closer rates. So as we think about 2013 guidance, I think it will be modestly better and that's just because the level of unknowns seem to be coming down a little bit, but more importantly, people are just more comfortable operating in this type of environment. They know what the expectations need to be.

Adam H. Holt - Morgan Stanley, Research Division

Why don't we dive into some of the product categories? In my mind, part of the story that really kind of broke out or inflected in the most recent quarter was on the data center front. First of all, the question that I've gotten quite a bit is, was there anything unusual in the fourth quarter around either pent-up demand or things that wouldn't occur on a going-forward basis around the Data Center business?

David James Henshall

Our Data Center business, which is largely the NetScaler family, has -- it's got a great track record the last few years. It's been growing pretty dramatically for a number of reasons. One of them is just we continue to do very well with Internet-centric or Cloud service providers. It's been a core part of our market for many, many years. We continue to do very well there. But the bigger story has really been in the enterprise as we've expanded into a couple of different areas. One of them is cross-sell, just giving us credibility to sell and see other networking opportunities inside of our installed base, that's one. The other has been around just a tap sell, where we have several hundred of our desktop deals in any given quarter that have a NetScaler element attached to them. And then, kind of a third big area is just product breadth, product portfolio. So if I -- if you look at MPX, it's a platform name, really focused on kind of our bread-and-butter, the NetScaler product line. What we've done in the last couple of years is gone towards VPX, which is a virtual appliances, giving customers much more flexibility in terms of deployment options where they can take a virtual appliance and put it at other elements of the stack, just predicated on whatever their deployment requirements are, think about it as more of a kind of an app-delivery fabric. And then on the other end of the wire it's our SPX platform, which is a highly virtualized box where you can run as many as 40 different instances of NetScaler on a single appliance. It's also open to third parties and so, what customers can do is effectively consolidate a number of different services that exist at the upper ends of the kind of layers 4 through 7 of the stack onto a single appliance for manageability, consolidation, et cetera. It's a really strong play on that front. And just from a contribution point of view, VPX is now just under about 10% of the overall mix, growing very, very rapidly. And the SPX platform, which I called out in Q4, growing a couple of 100% year-on-year and be more than 10% of the mix. So we're really expanding both breadth and our ability to go to market. And I'd say the last thing is kind of a new market area for us, which we opened up through the acquisition of Bytemobile. Bytemobile is a technology that effectively allows core cellular carrier networks to optimize video traffic. That's the bulk of what it does. It's a huge opportunity going forward if you think about where the bottlenecks are going to be across most carrier networks, it's this kind of traffic. And so that opened up that element which has been an end market that, frankly, we hadn't participated in the past. And so not only selling Bytemobile, but we're seeing a strategic pull-through of core NetScaler business. It's really early days, but kind of the ratio that we've seen in the first -- really the first couple of quarters is about 10% or 15%. So for every dollar of Byte, we're pulling through about $0.10 or $0.15 of NetScaler. Again, just an incremental open market opportunity for us. That's overall what's going on in that space.

Adam H. Holt - Morgan Stanley, Research Division

And is that attach -- is that attach story, is that sustainable, do you think? Or do you think you could actually can see that improve? Because you've only been in the market with Byte for one quarter, maybe that even gets better over the next several quarters?

David James Henshall

Yes, it's early. I mean, it's going to depend on exactly where the customer is and what type of deployment they're rolling out. But the need for everything from kind of commodity-core load balancing all the way up through a more ADC-type functionality is a need in those markets. And because it's been something that we haven't participated in the past, then it's all greenfield for us. So right now, 10% to 15% is probably the way to think about it until we have a couple more quarters of actual data to pull back on. But it's great and we're really happy with what we have seen so far.

Adam H. Holt - Morgan Stanley, Research Division

Can I drill into the SPX box a little bit? And maybe -- you touched on what that is, but maybe just spend another minute to make sure that everyone knows exactly what that product is. But up 200% year-on-year and over 10% of billings, I mean that's getting to be a big number, a, and b, it's still growing at a level that's well above the market. Why do think that is?

David James Henshall

First level, it's just a great appliance. It's really differentiated in the marketplace for what it does. It's a single box, as I mentioned earlier, that can run just multiple versions or multiple instances of NetScaler or a third-party like Palo Alto Networks or other people that we have gone to market with. And from a customer point of view, it gives large enterprise the ability to consolidate many different elements onto a single platform, which is great from a cost standpoint, manageability, et cetera. From a service provider standpoint, you can run full multi-tenancy across your end customers, which is a kind of a check-the-box requirement in many cases, and it's just an unprecedented level of flexibility. So I mean, at a high level, that's really what it is.

Adam H. Holt - Morgan Stanley, Research Division

And do you think the SPX box or the combination of SPX and Byte have really changed the competitive conversation?

David James Henshall

Yes, it still a very competitive market as you'd imagine. But it's -- we believe it's given us a very differentiated and unique set of technology so we can bring to bear across just what I'd considered to be our core cloud service provider, Internet, dot-coms, all the way through the enterprise and then service providers going forward. So we're very happy with our product portfolio at this point.

Adam H. Holt - Morgan Stanley, Research Division

Another sort of new addition to that story is the Cisco relationship. Could you talk a little bit about what you're doing with Cisco today and how you see that evolving over the next 3 to 4 quarters?

David James Henshall

Yes. It's early. That's probably the first thing I'd say. We're starting to work with Cisco on a more formal basis around network and cloud. And right now, it's on a reference sale, basically referral sale as we're working together and customers are looking for an ADC appliance with a long-term roadmap. There are some other things that have been speculated that we're working on, nothing that I can announce today. But as you'd imagine as the relationship goes forward, obviously looking to do much more on that front. On the other side, we've been working for a long time with our desktop virtualization solution because the UCS box, one of the core customer requirements has been to manage XenDesktop workloads. It's one of the biggest workloads out there. And so just by that very nature, we have a lot of opportunities on go-to-market on a joint basis, work together collaboratively and really a win-win. I think it's those types of elements that will help the partnership continue to move forward at a pretty good clip.

Adam H. Holt - Morgan Stanley, Research Division

Questions -- another couple of questions I get all the time were did it actually contribute to the NetScaler business in the fourth quarter? And is there anything baked into the plan for calendar '13?

David James Henshall

Yes. I'd say on a direct basis, not a lot in Q4, definitely some transactions that we work together with some customers that we're working with in real time, but nothing material that I would call out. I think it's more of a second half story for it to be truly incremental to the business. It's a general net positive right now, but I think incremental into second half in 2014.

Adam H. Holt - Morgan Stanley, Research Division

With the big deal in some of these newer boxes and priorities that you talked about, do you feel like you have a fairly well-rounded portfolio in this area now and now it's about making sure the channel and the execution is proper? Or do you think that you're going to continue to expand into ancillary markets?

David James Henshall

I think right now the priority would be around go-to-market. There's a number of things that we have talked about in places that we're just not served, frankly, I mean we have not enough capacity to effectively service customers across the kind of core enterprise networking area in a number of different geos. We've talked a little bit about expanding pretty broadly across EMEA and parts of the Pacific, which haven't had a lot of coverage because while we can do a very, very good job on an attached sale, like attach to virtualization, the broader opportunity is around kind of selling into those core ADC or even down in commodity and load-balancing type opportunities, we just need to have the a lot of -- the amount of coverage both direct and through partners to service those effectively. So I'd put that as the higher priority and then other areas in a related space, nothing more than just small technologies to accelerate time to market.

Adam H. Holt - Morgan Stanley, Research Division

Terrific. I'm going to shift to the Desktop business. So as we look at the desktop market, there's been periods of real acceleration in the desktop market, then there have been periods of the desktop market is slowing a little bit. How are you thinking about where we are from an adoption perspective? Do you think we're still in the early days or are we starting to see a leveling out from an end-user perspective?

David James Henshall

I think we're in the early days, but it depends on how you define the market. I mean there is -- there are people that talk about VDI a lot. You hear that a lot in the industry. And VDI, just for those of you that don't know, is more of a use-case of broader virtualization of the desktop. It's about serving up hosted virtual desktops kind of as a web service on demand. And there's a fragment of the market that I think that will be applicable to for long-term, and that's things like call centers and other places where static desktop makes sense, very cheap, easy, manageable way to distribute this type of technology. I think on a broader definition is where the conversation has evolved to. As I said earlier, CIOs are looking to manage mobile options and manage just the consumption of applications and desktops across a myriad of different devices and scenarios. I think that's where it's going. And so if you look back from a performance standpoint, all through last year -- actually 2011 and up through about Q1, the business was growing new licenses about 20%, just under 20%, and then our maintenance and subscription type businesses in the mid- to high-teens as well. In the mid part of the year, the growth rates dipped down pretty dramatically, yet we were still doing very well at the high strategic end. So we're still doing a lot of big deals, big, material customers in financial services, health care, government, et cetera. I think part of what was going on is that the breadth of technology is so powerful now that those customers that have that level of skill, that have that broad vision can extract a tremendous amount of value from desktop. But in a more challenging economic environment where people that don't have that level of, let me call it, IT sophistication and capabilities, that mid-market part was probably the most volatile going into last year. And I generally have bucketed that as, I call it, complexity. I've talked about this for a couple of years now and one of those areas that us and another vendors need to make sure that we're bringing that level of complexity down so that consumption can occur on a faster level. So our next kind of big theme around desktop virtualization, we've got an internal project name called, Avalon. But there's a release in the first half of the year focused on just that: complexity. Like how do you bring together disparate technologies so it's easier for customers to adopt, scale and manage this, and that's where kind of that first phase of Avalon is coming in. And then the second phase is really integrating into some of our cloud technologies, our CloudStack, to allow customers either in the enterprise to deliver apps in desktops as more of a -- think about it as more of an on-demand service. And in a service provider market, just putting out a broader desktop and app as a service to other end customers. So that's how we're thinking about it. Last quarter, we talked a about a lot of the statistics for big deals, we had a record number of large deals across a myriad of industries. And I think we're going to continue to do very, very well at that end of the spectrum, and then of course, just working on everything else.

Adam H. Holt - Morgan Stanley, Research Division

So if I could drill down on 2 elements that you touched on, one is complexity and then, two, is cost. How do you bring down or simplify the complexity? And specifically, when you're talking about that first half release -- is that the Excalibur release that you're talking about? So what is it, maybe for the audience, what is Excalibur and how does it sort of help with the complexity question?

David James Henshall

Yes, when you think about the complexity, and this is that kind of contrast between the power of XenDesktop as a product technology, a collection of different things to allow you to manage apps and desktops and WAN optimization, and other delivery elements that are required to make this seamless across all these different technologies. The challenge for us is bringing these together into a way that have very, very few management consults, can be packaged and delivered very easily that have the same level of performance across a tablet device as it does a hardwired desktop. These are broad challenges. While we've had a tremendous amount of success with desktop virtualization because it's so powerful, it's so differentiated in the marketplace, it's got to be easy. So that's what that first version is -- or that first release under the Avalon umbrella is going to be targeted towards. It's bringing a lot of these complexity points together so that the end-user, in this case, think about it as more IT administrator, a much easier process of managing and scaling this technology.

Adam H. Holt - Morgan Stanley, Research Division

Okay. And then on the cost side, the question that comes up a lot is how do you get cost down? And specifically, what are you doing about the storage piece of the cost equation? Because it seems like that's where the outsized expenditure exist.

Mark B. Templeton

Yes. It's actually not that big of an issue. I mean, we've done a lot of things around storage in the past. We worked with all the major storage vendors. We've done things at the hypervisor level to optimize there. We've done some things on the technology level the pull out many of these elements around personalization, on the individuals that have contributed to cost sprawl over the years. So I think we've done a lot of those things to make it -- to make that a much smaller element. And I would come back to the fact that complexity and scalability and that is a much, much bigger issue than overall cost because the people that have the capabilities, like a Morgan Stanley, like many of these other big customers, have been able to figure out how to drive tremendous amounts of ROI out of broad virtualization of the desktop without ever talking about storage or any of the individual elements.

Adam H. Holt - Morgan Stanley, Research Division

If you look at the most recent quarter, I think you called out average selling prices being up over 20%. I think it was even 25%, which brings up 2 questions: One, how did you see -- how did you drive such an increase in average selling prices? And two, that would imply that units might have been down on a year-on-year basis. Is that principally the trade-up business that fell off?

David James Henshall

Yes. Two things: One is mix, that's the biggest issue about ASPs. So we've got more than 2/3 of our customers now buying the Platinum Edition, which is the addition that has all of these capabilities that I keep talking about, and that's the one that is really, really differentiated in the marketplace because of its breadth, right? But at the flip side of that is that's the complexity challenge that we've just been discussing and that's why we're trying to address everybody else in the market. So with everybody buying the Platinum Edition, that's been a great trend from an ASP standpoint. The flip side of that is units where they're impacted by everything from trade-up, as you mentioned. We've got a lot of trade-up where people -- historical customers that have been like app virtualization, have app options to trade up on kind of a 1-for-1 or 2-for-1 basis depending on their license type. And that's the element that was down year-on-year, actually, was a trade-up business. So new licenses were up just under 10% from a true license count on a year-on-year basis, but that's going to move around. That's one of the reasons why we don't give license counts out publicly anymore is because there's so many different elements that don't really tell the overall story.

Adam H. Holt - Morgan Stanley, Research Division

You went through a period there where trade up was strong for a long, long time. And now that you've sort of worked through at least a good part of your base, when you start to lap that strength so that trade up basically kind of neutralizes and then the new business can really come to the fore.

Mark B. Templeton

I think that's been the case for well over a year now. I mean, trade-up was big back in Q2 of 2010. It was the really big trade-up quarter and we put in place a number of different programs and things to incent customers to make that move. And so where we are now is more than 80% of license in any given quarter is new, with 20% or less being trade-up. So I think it's really made the transition over the past 6, 7 quarters.

Adam H. Holt - Morgan Stanley, Research Division

Okay. And if you look at the guide for this year, you're kind of -- you're looking for mid- single-digit growth in the desktop business. That would certainly seem like you're not expecting that ASP improvement to continue necessarily and the expectations around maybe the benefit from the Excalibur, the Merlin releases is pretty modest. It kind of seems like you're taking a pretty conservative view in terms of what's baked into the desktop numbers for the next year.

David James Henshall

Yes, I think that's fair. I mean, I think it's appropriate, especially given kind of the volatility we've seen in the environment in the last year or so to be conservative on this front. I think the overall story is going to be shifting more towards the mobile side of the equation and how desktops and apps become kind of an element of that. But the conversation is shifting overall and the primary reason why we're describing this business as mobile and desktop now is because that's how the conversation is initiating with the CIO. And so, the ability for us to bring together not only kind of mobile device management, mobile app management, data mobile apps and then bring in Win32 apps in desktops that need it, that's the overall conversation, and the way that we'll be describing it. As far as the individual releases, Avalon is 2 pieces, as I mentioned earlier, with Excalibur being first half of the year, the second release being second half of the year. So -- and I think those will build over time. But going into 2013, I want to maintain a fairly conservative posture on this business.

Adam H. Holt - Morgan Stanley, Research Division

Just one more question before I pivot to the mobility story. Just because I get this question all the time and I'm sure you love getting this question. But as long as I've the covered enterprise software, there's always a delta between seats sold and seats implemented, and there are ebbs and flows between those 2 numbers. Where do you think you sit now in terms of seats sold versus seats implemented? Does the breadth between those 2 endpoints impact customer decisions at all do you think?

David James Henshall

I think with any enterprise technology, I mean, the deployment does take a period of time depending on the complexity of what they're trying to do. So if a customer buys 100 seats of XenDesktop for a very specific target and use case, they may have those up and rolling within a few week period of time, and that's kind of a nonissue. If a customer is buying 50,000 or 75,000 licenses to do a more broad enterprise and what we call wall-to-wall deployment, I mean that could take 1 year or more to get those all out because the way that most customers rollout technology is group by group. And so I know like Morgan Stanley, for example, went through that as deploying tens of thousands of licenses. But you do these in pieces because there's no such thing as kind of a big bang rollout when it comes to enterprise tech. So that's kind of the way I would think about it. I mean, one of our challenges is always working with customers to make sure that early deployments go very successfully, so that the pace of rolling out everything else happens on a schedule that brings them back for a repeat order to further expand. So our tech services business, if you look at that line item, it's been growing faster than any other. That's really just about knowledge transfer. It's our consulting services, it's up 30-plus percent last year. And now it's about how do we make customer successful? Not just early on in POCs but once they bought these licenses and get them deployed and get them to deliver on the promises of what they laid out in the initial -- kind of the initial POC.

Adam H. Holt - Morgan Stanley, Research Division

There used to be a pretty consistent reorder cadence that was if you get a certain amount of your customers to reorder in a certain period, and they would typically reorder at a level that was x number of seats versus the initial order. Are those metrics still largely the same, or are they starting to shift now that you've been in the market a few years?

David James Henshall

Yes, I think the metrics that he's were referring to, we used to talk a lot about reorder time and reorder rates. And so, generally what that means is that when a customer buys an initial order, how long does it take for them to come back and do an expansion? That number has bounced around between about 7 and 9 months, and that's the deployment timeframe we have talked about. I don't think that's changed much. Obviously, the larger, bigger, more complex deals tend to be longer from a deployment cycle. That's just a given, but on a smaller side, no change. As far as reorder size, the smaller deals, of course, have a higher reorder size because they tend to be people buying for a specific project initially and then they will expand into something much more material, and that can range from anywhere from 5x to 10x. But the base is so big now. Remember we're doing nearly $1.5 billion of total revenue in this area and so the metrics get a little -- they get a little skewed and so you have to start compartmentalizing in terms of whether we're talking about large strategic deals or more kind of run rate reorder business.

Adam H. Holt - Morgan Stanley, Research Division

Let's move to the mobile side. I want to drill down on a comment you made, which is that the dialogue has changed a little bit. When you're talking to customers now around the desktop business, is it really pivoting to more of a desktop-plus-mobile discussion? Or are folks actually coming to you for, I have a mobile problem and by the way, I also want that to include desktop?

David James Henshall

More of the latter. It's kind of one and the same right now. I mean, the conversation is starting with mobile in both cases, whether it's a BYO or whether -- it comes in from a number of different vectors. But right now, it is a function of, okay, I've got this issue where people need to access stuff across different devices, different locations. It's a message that we're -- we've been talking about for years so we kind of get that. And obviously the mobile aspect of it, when it comes to device management, data mobile apps and whatnot is an area that we filled in late last year with the Zenprise acquisition. And so our strategy is going to be differentiated because not only can we address the tactical problems like MDM, which I think is a very tactical problem, but a much broader strategic issue of you have to deal with all the different app times. And that's just becoming a given right now. And that's native mobile apps, fast apps, core web apps, Win32 applications. You can't have different solutions for different segments of this. And that's why as we bring out XenMobile and some of our related technologies, we're going to be able to do that in a nice, complete single-vendor integrated way. And that's going to be how we differentiate that going forward.

Adam H. Holt - Morgan Stanley, Research Division

So why don't we start with the mobile application management piece. So could you maybe drill down on what it is you're doing their and then shift to the MDM piece and talk about how those 2 relate?

David James Henshall

Okay. Let me actually start with the MDM piece, because that's the simplest area. I mean, MDM is mobile device management. That's just managing the devices. Who has it. What they're doing with it. What happens when they lose it or they leave the company. It's basically just the ability to take away company proprietary information. The challenge around the applications is where it gets much more complex because you can have, in our case, application stores where IT can manage and provision apps to be delivered or accessed across any of these endpoint devices. And we put those in more of a secure wrapper, a secure bubble, which gives IT a level of granular control so that the end user can pick and choose the apps that they're authorized to. They can have a certain number of policies attached to them, so that we can control what you do with that application, whether you're allowed to print or cut-and-paste to other apps. It's that level that IT needs to be able to manage kind of proprietary data. And then still giving you that end-user experience that you're used to with a mobile device, right? And then of course the hard tail is what you do about all these internal business applications, Win32 apps, et cetera. That's when virtualization comes in. And so we need to be able to treat those through a single kind of a single pane of glass approach, the same way you would with a coordinated mobile app and that's where XenApp and XenDesktop play.

Adam H. Holt - Morgan Stanley, Research Division

So how are the MAM and the MDM deals being priced and what's the go-to market strategy right now? Is it largely an attach to a desktop deal or are you actually independently out selling these products?

David James Henshall

We're independently out selling them. It's very, very early right now. So I mean, right now it's a conversation of -- it's kind of 2 different pieces, right? If you're a large desktop opportunity and there are -- there's a lot of those in the pipeline, obviously. We're coming out of Q4 with a record pipeline around app and desktop virtualization. Those we'll kind of attach mobile to and have that as an attached sale. The other conversation that starts with mobile, it's usually starting with a fairly tactical problem around MDM or MAM and we'll expand that into desktop. So it just depends on which vector you are approaching the problem from.

Adam H. Holt - Morgan Stanley, Research Division

And how meaningful do you think these businesses can be for you all over the next 12 to 18 months?

David James Henshall

Well I think it's going to be -- the overall, desktop and mobile business will, of course, be our largest business going forward. If you were to isolate the mobile piece, which we can do today because there's not that much integration, I mean we've talked about contributing about $30 million of new licenses in 2013 for -- on the MDM side. So I think that's reasonable for right now and then as we go forward and we start integrating the pieces a little bit more, we'll redefine that.

Adam H. Holt - Morgan Stanley, Research Division

If you look at the Zenprise deal, the Byte deal, you've done a number of other smaller deals over the last 18 months. You've been active on the acquisition side. How do you view the acquisition strategy going forward?

David James Henshall

Well, I think on a short-term basis, I mean, we have been more focused on just products that accelerate time-to-market so small technologies, just development-type areas. If you look back -- and we talked for a long time about mobile and mobile devices and the need to fill in that area, so that should be of no surprise when we did Zenprise, kind of expanding that. And the same time as we were talking about the Cloud networking business and the need to address carrier networks as an opportunity, frankly, that we've never participated in, that was another one we talked about for many quarters. I think where we're right now is there aren't really any holes in the overall portfolio as much as just integrations that need to happen internally that will always be just build-by conversations around certain product technologies, but no major holes at this point.

Adam H. Holt - Morgan Stanley, Research Division

One more product question and then I'll turn it over to the audience and I've got a couple of model questions too if we get to them. The SaaS business, the -- has really been, I think over the years, one of the better but also most underappreciated parts of the story, 4 years of a pie king's growth. We're starting to hear of more and more ShareFile popping up in customers. Can you talk a little bit about your 12- to 18-month forward view there? Is ShareFile going to be sort of the next real driver of growth there or does the collaboration business still have legs? How are you thinking about that?

David James Henshall

Yes, our SaaS business, as Adam mentioned,, I mean, our SaaS business is a little over $0.5 billion right now, growing just under 20% year-on-year. And there's 4 main components of that: data sharing, which is ShareFile; what we call social collaboration, which is largely the GoToMeeting and GoToWebinar family; remote access, which is GoToMyPC; and remote IT support, which is GoToAssist. It's really those first 2 businesses that are the primary drivers for us going forward. The other 2 are in relatively mature, slower growing markets so let's just talk about the first couple. Data sharing, our ShareFile product, is both an independent solution allowing customers to basically just manage, share, sync data across devices, but doing it in an enterprise context. So giving IT a level of control that you just don't get with consumer-facing products in general. We also have on-premise versions, so that not only can you store it in the cloud if that's what you choose to do, but also point it at something on your own network to deal with security issues and other governance type areas. But it's also a platform for us and we've used data as an element of desktop virtualization, an element of social collaboration and now an element for the broad mobile story. Because if you think about it more strategically, it's really interesting to manage devices and desktops, but you have to be able to deal with the data at the same time. And it has to be an integrated holistic solution to provide that end user experience that customers actually want. And that's why it's both a platform and an individual product technology. I think we have very high expectations for that going forward, both kind of tactically product-wise and strategically platform-wise. On other side around social collaboration, I mean this has been an evolving market over the years where it started with basically screen sharing and evolved into integrated audio, integrated video and now social capabilities, just focused on the way people work, right? Whether that's work groups or individuals and so that element of the business under social collaboration is still growing about 25-plus percent year-on-year. That's our big driver going forward as well. So I think between those 2, at least for 2013 where we've got a formal guidance number out there, we're still looking at mid- to high teens growth over that timeframe. So a very competitive market, as you know. Very fragmented with a number of different solutions on the web, but we really differentiate by being able to bring all of these elements together into something that makes sense from a customer point of view.

Adam H. Holt - Morgan Stanley, Research Division

We've got time for a couple in the audience. One right here in the back.

Unknown Analyst

I've seen a lot of reports from Mobile World Congress about the focus on mobile device management with AirWatch, Samsung Knox, maybe Blackberry, you want to throw in there. Have you guys explored partnerships or go-to-market strategies from that device-centric coming back to desktop or have you looked at that?

David James Henshall

The short answer is yes. I mean, we -- there's a few things we've thought about and we're working on from a partnership standpoint in this area. Mobile is going to be this broad topic that every vendor in the industry is kind of gravitating towards right now, and so separating out those into exactly where our competition is versus places to cooperate will be an evolving area. As far as actual device management, folks like AirWatch and others, we do have those capabilities through Zenprise, now known as the XenMobile, MDM Edition. And so we'll be competing in that area as well.

Unknown Analyst

Just on -- you were talking about macro -- pardon my voice, also, David. Where are the -- where are you being cautious? Are you being cautious on your close rate assumptions? Are you being cautious on certain growth categories? That's my first question. And just a second question, just a point of clarification, you were talking about license -- you were talking about the license numbers that are on ASP's Platinum Edition and you said new license was 10% year-over-year. Was that a license unit count? I just want to make sure I understood what that metric was.

David James Henshall

Yes, that was a unit count. As far as the overall macro, I think whether we're being cautious or prudent is just kind of shades of gray at this point. It's more of a continuation of what we saw last year, broader across the EMEA geographies and the individual markets within there. There's still going to be a level of volatility that happens from period to period as news flow comes out. I think the story there is that we've done a lot of things around the overall management of our business, channel partners incentives, just blocking and tackling, the things that we can control. I think the teams are better equipped to deal with that level of volatility now. They're more comfortable in it. They understand how to forecast that. And so the way it manifests itself is usually in close rate assumptions, but it's probably a little bit more complex than that operationally. So I think we're better equipped there. In the U.S., I think there's obviously the current budget discussions going on right now. There's going to continue to be some level of volatility. And I think everybody should expect that to be the case. But again it's not new at this point. It's an area that we've been operating in for a period of time. Customers are more comfortable with it. I think we have a better understanding of where customers are in kind of moving individual transactions through the pipeline and we've just got to stay close, stay very, very close to them and don't take anything for granted at this point.

Adam H. Holt - Morgan Stanley, Research Division

All right. We're about out of time. I don't think I asked you about margins. Thanks, everyone.

David James Henshall

Thank you.

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