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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

Brent Thill - UBS Investment Bank, Research Division

Bhavan Suri - William Blair & Company L.L.C., Research Division

Walter H. Pritchard - Citigroup Inc, Research Division

Abhey Lamba - Mizuho Securities USA Inc., Research Division

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

Heather Bellini - Goldman Sachs Group Inc., Research Division

Israel Hernandez - MKM Partners LLC, Research Division

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

Philip Winslow - Crédit Suisse AG, Research Division

Kash G. Rangan - BofA Merrill Lynch, Research Division

Raimo Lenschow - Barclays Capital, Research Division

Edward Maguire - Credit Agricole Securities (USA) Inc., Research Division

Stewart Materne - Evercore Partners Inc., Research Division

Daniel H. Ives - FBR Capital Markets & Co., Research Division

Citrix Systems (CTXS) Q2 2013 Earnings Call July 24, 2013 4:45 PM ET

Operator

Good afternoon. My name is Rachel, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Citrix Systems Second Quarter 2013 Financial Results Conference Call. [Operator Instructions] I would now like to introduce Mr. Eduardo Fleites, Vice President, Investor Relations. Mr. Fleites, you may begin your conference.

Eduardo Fleites

Thank you, Rachel. Good afternoon, everyone, and thank you for joining us for today's Second Quarter 2013 Earnings Presentation. Participating on 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 Systems' Investor Relations website. The webcast will be posted immediately following the call.

Before we begin, I want to state that we have posted product specification and historical revenue trends related to our product grouping 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 Law. These statements are based on current expectations and assumptions that are subject to risks and uncertainty. 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'd 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, overall results were very solid in Q2, including $730 million in total revenue, up 19% year-on-year; $227 million in product license, up 21%; 24% annual growth in deferred revenue; cash flow from ops of 25%; and adjusted EPS of $0.66 a share.

In Q2, we closed 46 transactions greater than $1 million each compared to 39 a year ago, with relative strength coming from customers in the financial services, telco, healthcare and retail sectors. Geographically, we are continuing to see uneven capital spending across our various markets. Business in the Americas was generally solid throughout the quarter, with balanced execution across the product areas. In total, 2/3 of the strategic multimillion dollar orders were from this geo, leading to total revenue growth to 24% year-on-year.

In EMEA, revenue is up 16%, led by strong expansion in the networking business as private investments to expand market coverage are delivering good returns. And finally, revenue from the Pacific and Japan regions increased 10% from a year ago, impacted by tough comps from Q2 2012.

Next, I'd like to highlight the results within our 3 primary markets. First, in our Mobile & Desktop business, revenue grew 11% from last year to $382 million, including a 2% increase in product license. In Q1, we introduced XenMobile MDM, providing CIOs with a solution to enable mobile work styles with device and app management.

Last month, we expanded the solution with the release of XenMobile Enterprise Edition, which delivers an integrated product that addresses mobile devices, app and data management, along with secure e-mail, Web and other productivity tools, really a differentiated solution.

The business is in a transition right now as mobile has quickly become a top priority for CIOs. The topic is leading to a lot of strategic conversations with brand new customers where engagements will most likely start with XenMobile and then pull through after desktop virtualization as the customer addresses the broader requirements of enabling mobile work styles, BYO, workshifting, data security and other initiatives.

We're seeing significant XenMobile pipeline developing, up over 40% sequentially, and we're very comfortable with our full year goals for this solution. However, this ramp is having a near-term impact on the standalone desktop virtualization sales and sales productivity as we've shifted focus to building up this business. We do believe that the impact should moderate over the next few quarters as our sales teams and partners get more comfortable selling the combined solutions.

In the Mobile & Desktop business, in total, there were 19 $1 million-plus transactions in Q2, representing customers in financial services, telco, technology, healthcare and other verticals. Additionally, more than $20 million of the sequential increase in deferred revenue was related to these solutions.

Some good examples of how customers, during the quarter, are utilizing these technologies as a way to accelerate their business imperatives included a financial services firm that purchased over 50,000 desktop virtualization seats to reduce their application delivery costs, increase the flexibility of their infrastructure and enable mobile options. Or a pharmaceutical company, enabling over 10,000 salespeople to migrate to tablets to access several lines of business apps. Or a leading energy company utilizing XenMobile and NetScaler SDX together to secure personal and corporate devices for employees in the field while delivering apps securely through a single app store. Or finally, a major retail chain in the Pacific that is part of a project to adopt web-based productivity tools, purchased 20,000 DV licenses to deliver their traditional Windows applications across different devices. We're increasingly talking to customers about business enablement, reducing the cost of their app and desktop infrastructure and increasing productivity by enabling enterprise mobility options.

Next, in our Networking & Cloud business. We really performed well in Q2, with total revenue increasing 46% to $165 million, including product license revenue that was up 54%. The NetScaler products were again the major driver of growth in the quarter. In addition to very strong growth from the buildout of public clouds in cloud services, we continue to leverage NetScaler as part of delivering integrated solution to our enterprise accounts. For example, the cross-sell and attach initiatives led to more than 550 desktop virtualization orders that included NetScaler as part of their solution, and this is up about 20% from a year ago. We transacted with over 2,000 different customers in the period compared with only 1,500 last year as we worked to expand the base. This includes 1,000 net new networking customers, many of which adopted VPX virtual appliances. And from a mix perspective, the NetScaler SDX platform really stood out in Q2, representing 20% of NetScaler license sales and increasing well over 100% year-on-year. SDX is differentiated in the market, running up to 40 independent instances, including third-party services on a single appliance, delivering real customer benefits like multi-tenancy and consolidation within the datacenter.

And finally in emerging products. Bytemobile continues to ramp. While it contributed less than 10% of networking product in the period, we're focused on expanding the customer base which drives long-term revenue growth. An example of this included a new multiyear, multimillion dollar contract with a large mobile network operator in the Pacific region. But consistent with many opportunities in this business, the revenue from this specific contract will be billed and recognized over an extended period of time, so very little impact in the actual Q2 results.

So next, with our collaboration and data business. SaaS revenue was up 15%. The GoToMeeting family continues to be the primary driver, growing 21% in Q2. Additionally, ShareFile, our data sharing platform, is ramping well, up 75% from last year.

Looking forward, the opportunity with ShareFile is expanding as we address enterprise requirements through new innovations like StorageZone Connectors for SharePoint, network drives, Microsoft Azure, as well as tight integration across our mobility solutions.

Turning to operations. Adjusted gross margin in the quarter was 86%, down 1.5% from a year ago as the mix of new product revenue reflects the success we're having in the Networking business. We do expect this trend to continue over the next few quarters, leading to adjusted gross margin for the full year between 86% and 86.5%.

During Q2, we added 228 new people to Citrix as we focus on expanding go-to-market reach and customer direct touch primarily to drive our opportunity in networking. Additionally, we've been investing to expand the data sharing and the mobile platform teams.

And finally, the adjusted tax rate was 22%, up from 8% a year ago. And as a reminder, last year, the tax calculation included benefits of approximately $22 million or $0.11 a share, primarily related to the closing of IRS audits for certain tax years.

Looking at the balance sheet. Cash and investments increased to $1.5 billion at the end of June. We repurchased over 600,000 shares of stock in Q2, bringing the first half buyback to nearly 2 million shares. Cash flow from ops was more than $200 million, up 25% from last year, and deferred revenue increased $40 million sequentially and 24% year-on-year.

So turning to our current outlook and expectations for the second half of 2013. Overall, we executed really well in Q2. Though it's reasonable to expect demand levels to remain mixed across our various markets, activity metrics like pipeline and POC have remained strong. We're very confident in our core business strategies and the investments we're making in enterprise mobility, collaboration, cloud and networking. We'll continue to focus on delivering financial results while investing to expand our long-term capacity and differentiation across these areas.

So for the full year 2013, we're modestly increasing expectations for total revenue and EPS based on the strength of Q2. For 2013, expectations are now for total revenue to be in the range of $2.96 billion to $2.98 billion, adjusted gross margin of approximately 86% and adjusted EPS between $3.09 and $3.11 per share. And for the third quarter 2013, we currently expect total revenue to be in the range of $730 million to $740 million and adjusted EPS of $0.72 to $0.73 a share.

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, David, and good afternoon, everyone. I'm pleased with our overall Q2 performance and proud of our strategic and financial results. We're executing well on product, go-to-market and partnership investments to drive growth in business mobility and cloud infrastructure.

In the bigger picture, Q2 was a continuation of the Q1 environment, with uneven capital spending, especially in European markets. And just like in Q1, we accelerated our focus on leading the market for mobile work styles. We felt solid metrics in opportunity pipeline growth, especially for mobility solutions, in the growth of strategic consulting services that support large and multiproduct deals and in share gains across cloud networking, data sharing and collaboration markets. These elements are critical to the success of our segment-specific and overall business strategy, serving markets that are estimated to grow to $16 billion by 2015.

A huge highlight for Q2 included the unveiling of important new products and partnerships at our Synergy Conference in Los Angeles, all designed to support our trust in solutions for mobility, cloud networks and SaaS services.

So next, I'd like to highlight how we're continuing to evolve our innovation, go-to-market and partnerships going forward. First, let's focus on our mobility business. XenMobile and XenDesktop 7, released in late Q2, uniquely position Citrix to provide a complete mobility solution across any type of app, any type of data, any type of device. Our enterprise sales teams and partners are focusing on the whole solution, introducing XenMobile into our XenDesktop customer base and doing a really effective job of depositioning competitive endpoint solutions. This is resulting in record pipeline built, larger scale customer engagements and initiating new account relationships.

The introduction of XenMobile Enterprise Edition is the catalyst of these conversations, establishing the bar in the enterprise mobility market with MDM, mobile apps, virtual desktops, secured docks and mobile support as the standard. More than 2/3 of our customers are opting for the Enterprise Edition, which also connects beautifully to XenDesktop and XenApp. It also includes secure mail, browsing and documents powered by our WorxMail, WorxWeb and ShareFile apps. The Worx-enabled app ecosystem is also a powerful differentiator, enabling over 100 third-party mobile business apps to be securely delivered by XenMobile.

We're getting important early recognition for our innovations and thought leadership. Recently, Citrix received the top ranking by Gartner on the critical capability survey for MDM, where Citrix led in all 5 categories. And Gartner ranked Citrix as the market leader in the MDM Magic Quadrant. So with a fast-growing opportunity pipeline, technology leadership, industry momentum and go-to-market intensity, we like our position in enterprise mobility going into the second half of the year.

Now let's shift to the desktop business. David mentioned earlier, we saw a continued momentum in a number of large deals, reflecting our ongoing strategic presence with enterprise customers. The announcement and release of XenDesktop 7 was not only a Q2 highlight, it represents the reimagining of Windows desktop and app virtualization, reimagined for the mobile-centric, cloud-driven enterprise. This major new release brings virtual desktops and apps under a single infrastructure, optimized for private, public and hybrid cloud environments. It includes new HDX mobile technologies that provide a native style multitouch mobile user experience over any network, including less capable networks like 3G. HDX mobile also radically improves mobile video performance and reduces network utilization. XenDesktop 7 delivers a cloud-ready infrastructure for delivering Windows apps and desktops as a service from a single, easy-to-use console. We've dramatically reduced installation time, accelerated app migrations, streamlined operations management and reduced the cost of ownership. And XenDesktop 7 takes advantage of performance, cost saving and platform innovation in Microsoft's newest releases of Windows Server and System Center. We think it's a solid multiyear product cycle ahead as customers refresh their datacenter infrastructure, leverage hybrid clouds and build bridges to public clouds. We also think XenDesktop 7 further solidifies our position in key verticals, like health care and financial services, while opening new opportunities in more specialized app markets such as CAD, engineering, PON and multimedia design.

Customers will really appreciate new cost efficiencies we're achieving with Cisco, Dell, HP, IBM and NetApp, reducing datacenter hardware for VDI below $200 a user for the first time; and Synergy, NetApp and our solutions that can actually drop storage cost to as low as $30 per VDI user. With continued innovation and partnering, we're reducing virtual desktop cost to new levels, past the tipping point where enterprises can more easily see both business enabling benefits of mobilizing Windows apps and desktops, as well as the financial benefits of centralizing them. We're incredibly excited about this release, and the initial response from partners and customers has been phenomenal.

So we're delivering a complete enterprise mobility solution, allowing customers to bridge between the worlds of the Windows and mobility and to do it all within the integrated experience that sets Citrix apart.

Next, I'd like to talk about our collaboration and data sharing business. We're continuing to see excellent adoption of our mobile collaboration products. GoToMeeting is top-ranked among Web conferencing products and consistently ranks in the top 10 mobile apps for business across iOS and Android. GoToMeeting mobile apps have been downloaded nearly 5 million times.

Scheduling meetings directly from mobile devices now allows our users to have a completely mobile experience, confirming our mobile first strategy is working effectively. And in Q2, we launched a new "all you can speak" toll-free audio feature. It's an industry first and a valuable upsell feature for existing GoToMeeting customers.

We're also driving strong year-over-year growth in international markets where e-commerce is becoming a more pervasive route to market and a growth driver for us. In Q2, we announced a partnership with China Unicom, our second partner in China. We're an aggressive early entrant in that emerging market with the right partners to capture growth.

ShareFile had another amazing quarter of growth in both SMB and enterprise segments. We've closed some large ShareFile enterprise deals in Q2, including 7 that were 6-figure transactions. In Q2, we significantly enhanced ShareFile mobile apps with simple document editing and annotation. Now you can easily annotate and sign PDF files and even edit Word, Excel and PowerPoint docs right inside the ShareFile app on your iPad. The new release also supports secure mobile access to SharePoint and file server documents based on our new StorageZone's Connector Technology.

We're continuing to scale and drive ShareFile as a premier solution for secure business data sharing across both SMB and enterprise segments and as a core feature in our XenMobile product line.

Finally, I'd like to turn to our Networking & Cloud businesses. As David noted, the strongest business segment in the quarter was in cloud networking, where NetScaler grew over 50%. We're getting early payback from the significant investments we're making in our go-to-market capacity. In addition, we're benefiting from solid market drivers and NetScaler's unique software-defined architecture. This architecture is giving us great competitive advantage, product line breadth and market velocity. In fact, almost 1/3 of the Q2 business was driven by customers adopting software-based, virtualized and multitenant form factors, like NetScaler VPX and SDX. Additionally, NetScaler continues to be a core component in XenDesktop and XenApp architectures, with a similar opportunity emerging as a de facto gateway for XenMobile ahead. And Bytemobile continues to bring us good growth and gives us a powerful base in the core network of mobile operators, many of whom are now also considering and adopting NetScaler.

Just a few weeks ago at the Cisco Live event, we reached the second milestone in our strategic relationship with Cisco: The announcement of Citrix NetScaler 1000V, available only from Cisco. With this, Cisco is leveraging NetScaler to seamlessly integrate into their overall datacenter services portfolio. Customers will get best-in-class capabilities of NetScaler fused into Cisco's virtual and datacenter Nexus fabrics. We're already driving new opportunities, as partners and customers proactively approach both companies on next-generation datacenter refreshes and new buildouts. We have some great Q2 joint wins with Cisco, and we expect the NetScaler 1000V to drive expanded partnering opportunity going into the second half of the year.

With the rapid growth and the understanding of software-defined networking, NetScaler is poised to continue to take share in this rapidly transforming market, driven by the edge we have in our core architecture.

Next, let's shift to CloudPlatforms. In the CloudPlatforms business, we continue to see both design wins and production scale-ups, especially in enterprise, education and telco market segments. Today, Citrix CloudPlatform, powered by Apache CloudStack, is in production in almost 200 clouds across the globe. Recently, the University of São Paulo created the largest IT cloud project in Latin America, filled with Citrix CloudPlatform and CloudPortal along with tight integrations to NetScaler and XenDesktop. The solution was the result of close collaboration between Cisco, Citrix, Microsoft and NetApp and emblematic of the kind of large-scale production-ready solutions our CloudPlatform is enabling.

In Q2, we also announced the release of XenServer 6.2 as a full-featured open source project. This significantly extends our open source strategy and brings cloud-ready features, openness and simplicity to XenServer. The new release dramatically increases scale and performance, with huge step-ups in DM density and support for platform enhancements in Windows 8 and Windows Server 2012. XenServer 6.2 also includes new optimizations for XenDesktop, with features like IntelliCache, Desktop Director alerts and Dynamic Memory Control to drive lower TCO and best-in-class performance. So overall, I'm really pleased with the execution in our Networking & Cloud businesses.

Looking forward, we really like the trends that are fueling our business. IT, as we've known, it is being reshaped by new definitions of work and computing: work is going mobile, computing is going cloud. This is the future of IT. This is how we'll capitalize on these better ways for people and IT to work. This is why we're confident in our fiscal and strategic plans, and this is precisely how we'll continue to increase our relative market position.

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

Question-and-Answer Session

Operator

[Operator Instructions] And your first question comes from the line of Rob Owens.

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

Wanted to drill down a little bit into the desktop license line. If I look at the first half of the year, I think it's down about 5% on a year-over-year basis. Initially, when you guys kind of shape the year, I think you talked about flat to slightly up in the desktop biz for 2013, then you added on the XenMobile component. So maybe just help us understand, I think, there's some confidence towards the back half. But just what gives you that confidence, and if you're still kind of holding to that more organic flattish type of number for XenApp and XenDesktop this year.

David James Henshall

Sure, Rob, this is David. Let me take that question. Couple of things going on there. First, as we think about the mobile and desktop business, we know -- we are going to continue to report this as an aggregate number like we talked about last quarter. We're doing that simply because that's the way we're going to market, that's the way we're thinking about it and that's how the customer conversation is really happening right now. So we don't plan on breaking out the various components. So as we think about the entire business, there's a couple of things going on. Externally, Europe has been tough. That's probably the hardest area. Macro is certainly impacting that to a degree. But probably more specific than that, all the success and focus we were having around mobile as a topic has certainly impacted productivity of our sales teams and the focus on standalone desktop virtualization. More so than we would have anticipated, I'd say. So it's a double-edged sword. The good news is that these conversations are generating a tremendous amount of pipeline for mobile and desktop right now, and we expect that to moderate as a pressure over the balance of the year. So in terms of the actual guidance, as we look at the overall business, I think it does continue to accelerate as we get into the back half of the year. We're not going to be giving specific guidance at the product level, but I feel that -- I feel much better about the second half going forward. And certainly as the teams get more comfortable with the combined solution, then again, those pressures ought to moderate.

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

Great. And then I guess for Mark, on the strategic levels, you look at that combined solution, do you think you have all the components at this point? Is there other tuck-ins that you'd like to do as we look at that moving forward?

Mark B. Templeton

Rob, I think we feel really good about the end-to-end and the complete solution that we have. I think where we have a lot of intensity is in better integrations, smoother integrations and improving the user experience consistently. So we're on a pretty fast pace roadmap with a couple of releases between here and the end of January. So it's much more a focus on execution, integration and less on kind of pieces that are missing.

Operator

[Operator Instructions] And your next question comes from the line of Brent Thill from UBS.

Brent Thill - UBS Investment Bank, Research Division

I'm curious if you could give us a sense of -- is there an easy way to frame the mobile impact to revenue or bookings for '13 given the excitement around the new product line? Or is this something that we're just going to have to kind of wait till '14 to get a little more granular on?

Mark B. Templeton

Yes, Brent. As far as the standalone revenue, I think that it's one of those things that, like I said, we won't break it out. When we did the acquisition, we talked about a number of $30 million of total revenue and we're extremely comfortable with that at this point. It's going to get harder and harder for us to segment that out in a way that actually adds value to the conversation, because, as I mentioned earlier, it really is a unified go-to-market and a unified conversation with our customer. In many cases, what's going on is that the excitement around mobile is starting with the devices or apps. And then as the customer gets more strategic in the conversation, they start looking at how do I deliver all of my app infrastructure. And in most cases, that means Win 32, and that brings in app and desktop virtualization. So I think it's going to be a continuum. We did see right out of the gate a handful of transactions, big in our top -- call them our top 25 transactions that included both XenMobile, XenDesktop and NetScaler as individual products and as part of the same project. So I think that's what we're going to see more and more going forward.

Operator

And your next question comes from the line of Bhavan Suri.

Bhavan Suri - William Blair & Company L.L.C., Research Division

Just on the sales process here around XenMobile and XenDesktop. XenMobile, at least my understanding is that the ROI conversations that people might have had around XenDesktop don't occur, and it's a faster implementation, a faster sale. And despite sort of the current bump, say, in execution, is it fair to start thinking of this as that XenMobile could accelerate some of the growth in XenDesktop? Or are we being -- are we thinking too aggressively about that opportunity?

David James Henshall

Yes, Bhavan, I think you're absolutely right. The degree of which is to be determined. We'll talk about it over the next few quarters. But from a conversation standpoint, I mean the demonstrable ROI is right there. It's easy. It's a quick conversation and it's top of mind for CIOs. Probably mobile and security I'd say are the top 2 priorities right now. And so therefore, it's a really easy way to initiate a dialogue. A lot of transactions that I expect to open and close in -- even in the same quarters. So sales cycles are much, much lower and it's way -- as I said a couple of times, as you start that, the easy, simple conversation around devices or mobile apps, native mobile apps and then you can get those transactions done and initiate a longer-term relationship that brings in things like app and desktop virtualization, networking, et cetera. So it's a terrific entry point right now and we certainly feel good about it at the back half of the year and going into '14.

Bhavan Suri - William Blair & Company L.L.C., Research Division

And then, David, are you seeing similar interest for XenMobile in Europe? Because it feels like it's very North American-centric today. And sort of could it help the European business maybe gain some more traction given the challenges in that region?

David James Henshall

Yes, I think it's global right now, in fact. We're seeing great traction, and it's early, but great traction in every geo. And so I think the same dynamics are in play certainly in the U.S. and EMEA when it comes to -- as we think about mobile and desktop as a broader business. And we'll work through that over the next couple of quarters.

Bhavan Suri - William Blair & Company L.L.C., Research Division

Okay. And then one quick one. Just as we get to the -- closer to the end of life of Windows XP, obviously, we've talked about this in the past, it wasn't a huge driver for XenDesktop. But are you seeing any conversations of CIOs not just about sort of that transition but that sort of accelerating XenDesktop growth as we get to the end of life in -- next year for XP?

David James Henshall

I think, it's one of many conversations that we're having with CIOs right now. I'd say it's not the top of the list. The top of the list continues to be around topics like mobility, like data security. The end of life of XP is not new, and that's probably the biggest point. As we get closer, I'm sure it's an opportunity to have more conversations as the customers start thinking about that. As you'd imagine, we're talking to -- we're at a much more strategic level and much more urgent priorities, I'd say, in most accounts.

Operator

And your next question comes from the line of Walter Pritchard from Citigroup.

Walter H. Pritchard - Citigroup Inc, Research Division

Just wondering, 2 product questions for you. On XenDesktop 7, which you're launching -- you launched here. I'm wondering how you're thinking about that impact the conversations that you're having in the second half particularly around some of the cost benefits that, that platform brings. And then on the NetScaler side, just wondering if you could quantify any of the impact that you're starting to get at this point from Cisco. I know it is early and you mentioned Cisco Live was after the quarter ended, but just trying to get a sense if you're starting to see some sort of halo benefit from the endorsement of Cisco for that product.

David James Henshall

Sure. Walter, I'd say, on the first part, XenDesktop 7 is a really important release and it's important for a couple of reasons. Probably the biggest of which is that it's bringing down complexity materially, and we've talked a lot about that over the last few quarters of one of the barriers to adoption or expansion in many accounts is the fact that desktop virtualization is fairly complex. And so this release was really focused on making it more accessible, so that customers can get through POCs faster, ramped and managed at scale. And so I think we've made big steps forward on that front. Secondarily, it is the first platform that's going to support Windows 2012. We've made a whole bunch of enhancements that Mark and I both talked about around performance and driving down costs. And so it's got -- it's, by far, the most powerful release we've ever had for XenDesktop. And, of course, unifying the architectures between app and desktop into, really, a single solution. So -- but I think it helps. There's no such thing as a hockey stick in these types of businesses. But for new conversations, it will certainly allow them to move faster and will help customers migrate on a pace that is right for whatever their business initiatives are. As far as Cisco is concerned, great early-stage partnership. In terms of the announcements that we made around cloud networking in June, NetScaler 1000V, that will start to have an impact in Q4, so there's really no impact at this time. I'd say that the overall relationship is extremely positive really across networking, what we're doing in mobile workstyles, which include XenDesktop and UCS, as well as some of the cloud services work. A minor amount of business that I would attribute to ACE, and we've had that question a few times in the past, but we're doing a lot more, I'd say, with Cisco influence in the field or accounts that we're managing together and we're able to solve larger problems by integrating various parts of the stack. So it's great, it's early stage and we're optimistic about it going forward.

Operator

And your next question comes from the line of Abhey Lamba with Mizuho Securities.

Abhey Lamba - Mizuho Securities USA Inc., Research Division

David, can you talk a little bit about dynamics between the split of revenue that goes into license bucket and license updates when you sign a desktop deal? Has there been any change in the last few quarters as those growth rates are diverging? And as part of that, do you think we should focus more on your license plus maintenance growth rate as a better metric to analyze that segment instead of just focusing on the license?

David James Henshall

Yes, it's a good question. I mean it's how we think about the business internally and how we measure our sales teams. It's a tough one for us to call out because every quarter is unique and different. And so therefore, we try to keep you focused on the aggregate license and then the aggregate deferred growth. I will say in Q2, for example, I mean the second largest desktop virtualization transaction in the quarter actually had no recognized revenue. We're -- based on a customer request to deliver some things on the back end, that transaction will be recognized over a 3-year period of time. So that's one where a large part of the growth in deferred, in this case, more than half in Q2, is going to be attributed to desktop virtualization. So we'll talk about it at a high level, but probably the best way to think about the business in general is that the aggregate product license line, the aggregate revenue line and then EPS because there really are a lot of moving parts. And strategically, we're having a conversation with a customer that brings together multiple products across the domain.

Abhey Lamba - Mizuho Securities USA Inc., Research Division

Got it. And one quick one. Your third quarter guidance indicates a very modest sequential uptick, but you just launched Project Avalon and mobility solutions. So qualitatively, if you can talk about what are you baking in from these new products in the third quarter or is it primarily a fourth quarter phenomenon? That's it for me.

David James Henshall

The way we think about guidance is we had a great Q2. We're feeling very good about the business in what is still a fairly uneven environment. We're raising the full year expectations for the business, and we're going into the second half with what I hope to be conservative assumptions downstream but what I think is prudent right now. There's still a number of unknowns in the market. I'd say EMEA is probably the most uncertain of the geos and no expectation for that to get better anytime soon. Public sector in the U.S. continues to be more volatile than it would be historically. And therefore, I want to maintain this posture in the back half of the year.

Operator

And your next question comes from the line of Steve Ashley from Robert W Baird.

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

Great. I was just going to ask a question on the mobility offering. Is -- what is a more likely scenario going forward that a customer makes the initial kind of core XenMobile purchase and then later, maybe quarters later, adds in the desktop, XenDesktop, XenApp kind of -- to fill out? Or do you expect them to make a complete purchase and pull the desktop products kind of on the initial deal?

David James Henshall

Steve, I think there's great potential for the future sale of desktop virtualization to XenMobile customers. If for no other reason, than the -- all the things we've done, XenDesktop 7 and the roadmap there, that makes it lower cost, faster and easier to implement at the margin. So migrating a set of apps from physical to virtual, migrating a set of desktops from physical to virtual. We make that easier and easier and easier, lower, lower cost to implement and to own. And so as mobility and the mobility solution that -- within XenMobile itself or our mobile -- native mobile apps, et cetera, device management take root, customers will find it very easy to add on the XenDesktop or XenApp capability to then bring Windows into the same total mobile context as everything else. So we're optimistic about that.

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

Perfect. And then just on the NetScaler business, obviously, you guys just continue to kill it. I was wondering if you felt that it was a normal quarter just in terms of not pulling business forward and the third quarter seasonally strong from NetScaler. Are you expecting to just have a normal seasonal third quarter for the NetScaler business?

David James Henshall

Yes, Steve, I think the NetScaler seasonality has been evolving over time, and the primary reason is there are a number of large vendors out there that are doing big scale datacenter buildouts, either support new cloud services or infrastructure-as-a-service type of thing. And because of that, we're -- we don't see the Q3 bump as much as we would have 3 or 4 years ago. So I mean, we just posted our third quarter in a row north of 50% year-on-year growth. So I certainly don't expect those types of growth rates to continue. The numbers are just too big at this point. But the diversification of business, I think, is the real story here. And that is we're getting good pull-through as I mentioned from cloud service buildouts. We're continuing to participate strongly in what I call e-commerce or Internet-centric accounts. And then on the enterprise side of the house, all the initiatives that we've talked about over the last several quarters, including the expansion of coverage which every one of our geos posted really good growth in networking, I think there's still some opportunities there. The expansion of products, as -- we mentioned how many people are adopting both the virtual appliances as well as the SDX platform, and I'd say SDX continues to be probably the biggest story where it just really differentiated in the market. And what you can do from a consolidation standpoint, from a multi-tenancy standpoint and do it in software is really unique. And because of that, we had nearly 150 customers per SDX in the quarter, and 85% of those were enterprise customers. So I mean, this is getting great adoption across the board and I think it's a combination of all of those that makes us feel very good about continuing to take share across the category. But in terms of the overall growth rates, those -- we still measure those year-on-year. And our guidance would point to a deceleration in the second half back to closer to normal levels because of just how strong it's been [indiscernible] .

Operator

And your next question comes from the line of Heather Bellini from Goldman Sachs.

Heather Bellini - Goldman Sachs Group Inc., Research Division

Great. I was wondering if you could talk a little bit about the leverage you all think you can get out of your desktop installed base as you go into accounts with your MDM solutions. And I'm also wondering how you see that product set evolving over time. We've talked to a lot of people about the market in some cases moving to mobile application management. I'm just wondering how do you think you're positioned as the market continues to evolve there given your strength in the streaming of applications to people's desktops already?

David James Henshall

Heather, I'd say that the opportunity is huge there. And, in fact, over 2/3 of the business for XenMobile in Q2 was for the Enterprise Edition, which actually is -- has all the MDM, all the mobile apps, all the mobile app management embedded in and included with it and also integrates smoothly with XenApp and XenDesktop. And if you look at the customers that are in that mix, many of them are the strategic customers for XenApp and XenDesktop, where we've got -- already got an entrée with the account and opened up a broader conversation with their mobility or their mobile team. So we're already starting to see that in the business and I think as we execute across a pretty aggressive roadmap that you'll see in the second half of the year, it'll actually encourage the installed base to actually check off the box, come to Citrix because it's really a -- it'll be a very easy extension from a XenDesktop or a XenApp installation to add XenMobile installed on top of it.

Heather Bellini - Goldman Sachs Group Inc., Research Division

Great. And one follow-up question. In terms of -- you mentioned the sales force being somewhat preoccupied with -- on the XenMobile side, maybe taking away from some time they might spend on traditional XenDesktop sales. Is this an area where you think eventually you'll need a specialized sales force? Or do you see them kind of coming up to speed on the product and selling them all together?

David James Henshall

Well, I think the answer is both. In fact, we already have both. We have a specialized team and we obviously have our general enterprise sales force. And part of the -- working through this process is that the bandwidth in the specialist team is limited and outstripping the demand, the supply is not up to the demand. So a lot of the enterprise reps are having to learn the product and do a lot more than they probably need to do in the future when it comes to a very XenMobile-centric and mobile device-centric kind of conversation. So I think that's part of what we're working through this year, and we're looking to see better results in terms of the productivity in Q4. And then as we do a number of things at the start of next year around go-to-market, around the roadmap, around partnerships, et cetera, that productivity should increase significantly next year.

Operator

And your next question comes from the line of Israel Hernandez from MKM Partners.

Israel Hernandez - MKM Partners LLC, Research Division

Just wanted to drill down a little bit on Europe in the desktop business and the weakness that you've been seeing, it's been ongoing. How is the pipeline looking? Are deals still there or are they evaporating? Is it the transaction business that's suffering? Any particular vertical? Just want to get some more color there as to what you guys are seeing. You're indicating you're not expecting any improvements, certainly over the near term, but just kind of curious about the longer-term outlooks there.

David James Henshall

Sure, Israel. It's David. I'd say that consistent with what I said earlier, it's a mixed bag in EMEA. We had, we think -- you mentioned large transactions. There were, let's see -- I forgot the exact amount. I think there were 10 in the EMEA region, that compares to about 10 last year. So not a lot of change from an enlarged deal point of view. The aggregate value of those was down a bit year-on-year, and I think that's just reflective of the macro environment. As we step back and we look at the individual markets, you're going to have some that are performing well one quarter and some that aren't. And it's been a long time since the majority of them were executing well based on the environment. So last period, Central was challenging as was the North region and we had relative strength in what we call Western Europe. So it'll be a mixed bag, but we're doing the things that we can control and helping customers through the environments where it makes sense. I'd say, as it relates to the overall pipeline though, things aren't going away. I mean the conversations are still there. The ability for customers to pull the trigger with capital is what's been harder to predict, but we're still having active conversations at the same level we have been in the past. So the one unique thing similar to what is happening in the U.S., of course, is around mobile. And it's the same dynamics of customers looking at this and saying, "I can do it quickly. It's a simpler, smaller opportunity," and so we can get those done. And similar to Mark's comments, those will pull through the broader strategic conversation, make it easier downstream. So we're executing, we've got good leadership there and we'll keep focusing on the things that we can control.

Operator

And your next question comes from the line of Michael Turits from Raymond James.

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

Last quarter, you did say that -- I know you're not breaking out [indiscernible] , but if possible, you would say that desktop and mobile combined would grow license at low single digits. And now you've got -- you did 2% instead of the double digit this quarter. Does it look like that will be probably more like negative or flat, or what will that be? What's the update to that? And then secondly, what do you need to do in terms of OpEx? What's the plan in terms of spend to start to get both sales force and channel more effectively selling mobile and combined mobile/desktop?

David James Henshall

Yes, Michael, on the overall business, you're right. We're not going to give micro guidance at this point in time. There's too much -- there's too many moving parts going on in the organization. And since we have a general team -- a generalist team to a large degree, they can focus on different parts of the business, and we'll keep guidance at the overall product license line. I will say, though, regarding mobile and desktop, I believe that the growth will accelerate as we look into Q3 and Q4. And that's a function largely of productivity starting to flatten out and mobile starting to ramp. As far as the individual products within that, that will be determined based on the types of projects that customers are engaging with in that period. As far as OpEx, we're doing a lot of training right now. We've spent the first part of this year getting the new teams up to speed and getting integrations underway, getting systems put together. Lot of activity trading in both channel partners, as well as core team on mobile and how mobile and desktop fit together into a larger solution. How to position those both as independent problem-solving tools, as well as a strategic solution. So not a huge amount of incremental investment on the go-to-market side. Consistent with the last couple of quarters, the majority of investments we're making on go-to-market are around networking, and that's been an area that is fairly unique and fairly complex, and therefore, requires more direct investment. And you see the results there, I mean we're having terrific growth across every geo because we can just get in that many more conversations. And so we're doing very well there. And that's going to continue. There's definitely some places where we are opportunity, excuse me, capacity constraint in networking around the globe.

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

So is the total license guide that was low double digits since the last quarter, that's still in place?

David James Henshall

In terms of total license for the year, it's basically unchanged. It's low teens with what would be implied in our guidance. And then the total revenue number would be roughly 15%. And that's how we're thinking about the business right now.

Operator

And your next question comes from the line of Phil Winslow from Credit Suisse.

Philip Winslow - Crédit Suisse AG, Research Division

Most of my questions have been asked. But just wanted to focus back in on XenMobile and just sort of a broad industry question. Mark, just curious what you're seeing from a pricing perspective out there? Obviously, you're sort of uniquely across both mobile application management and mobile device management. Just what are you seeing out there and any sort of specifics between MDM versus MAM?

Mark B. Templeton

Phil, I think what we see is that basic MDM is a very low price, low value kind of technology and solution for most customers. And the more they understand about kind of how to manage the mobile environment and enable mobile workstyle, the less incremental value they have for MDM. And I think we see that in MDM, sort of, specific deals and why we've packaged XenMobile in a way that allows us to sit on top of someone else's MDM if a customer wants to almost get it for free from somewhere else, because the real value in terms of the security of data, the delivery and provisioning dynamically of apps and the availability of sort of core mobile apps as a suite, including mail and browsing and data -- mobile data, et cetera, is really where the value is and the value proposition is. And so I think as the market gets more educated on mobile -- enterprise mobility, in general, it really has everyone concluding the MDM is not where the value is. It's really in the whole stack that XenMobile enterprise represents. And so the pricing there we've been delighted with. And when it comes to sort of a shootout on MDM, we try not to do bad business there and we can sell customers value add on top of other MDM in those cases.

Operator

And your next question comes from the line of Kash Rangan from Merrill Lynch.

Kash G. Rangan - BofA Merrill Lynch, Research Division

It's like a lot of the call was focused on the very mournful, sorrowful piece. But I want to just stand here and congratulate you guys on putting up a 21% license growth rate number, which compared to some of the other companies that reported, stands out, so a very nice job on that and also on the margin front and EPS front and the balance sheet and cash flow. So just to keep it a little bit more balanced. I wanted to understand more about what's going on, on the NetScaler side. Do you think these gains are sustainable? Is it market share that's really driving the gains in that business? And also secondly, I wanted to hear, Mark, you on what do you think is the total available market for XenMobile? It would intuitively seem to me that anybody that is a XenDesktop user -- more XenDesktop users or XenApp users, probably going to be likely candidates for something like this. I just want to understand how you look at the TAM and how you view your ability to be more differentiated and so-called locked in to the customer over a long period of time, so we can view this business much like a XenDesktop, XenApp business with a long tail and trajectory.

David James Henshall

Kash, this is David. Let me take the NetScaler question. Actually, let me first say, thank you, I appreciate the comments on the overall business. Yes, you're right, we're really happy with the total quarter, being up 21% in product and the mix environment is great. So the strategies are all coming together and the product sets feel good for the second half of the year. Regarding NetScaler, maybe I'll just reiterate a couple of things that I said earlier around the -- where the business is coming from. And it's balanced, and that's a good thing. We're getting good participation, growing business out of the international markets. I think we've had a couple of quarters in a row with EMEA up 40%, 50%, which is great. And a lot of that is just due to expanded capacity. And we're getting strong growth in Japan and Pacific as well. So we're going to continue to invest in that area so that we've got coverage enabled to actually have these conversations. But on the product front, I think we're taking share from a market standpoint simply because of the breadth and performance of our product. The software-based approach to networking, I think, is proven to be something that customers are really gravitated towards -- gravitating towards and that's because it works. It works for them. It allows them flexibility to scale up and scale down as they need to, and making it easier for customers to do what's right for their business is a good long-term proposition. So I think from a market share standpoint, when the numbers come out, I'm assuming we will take pretty good share in some places. But right now, we're really just focused on those different segments and trying to be successful there. The one place I didn't mention yet is around telco, and that's a new market for us. And we're still lightly penetrated there. And most of the time, we're entering telco space through Bytemobile where we're getting attached with pretty much every new transaction for Bytemobile. We'll include a pull-through of some NetScalers as well. So just another thing to keep an eye on as we go into 2014.

Mark B. Templeton

And, Kash, regarding your question about TAM, around desktop and mobile. First of all, TAMs and -- when you look at TAMs, it's a little bit of black magic and it's based upon how you slice and dice the market place. And what we do, like most companies, we take all the external data from industry analysts, et cetera, plug -- and add [ph] that to our own view. Now in the case of desktop and mobile, we're a huge player in the market. So a lot of kind of the number you get to is the combination of the external view that when analysts look at us and then when we look at what might be possible through execution and value proposition. So we put them together, which is how we believe customers over the long term, let's say, the next 2, 3 years are looking at this marketplace. We look at about $6 billion TAM in 2015. And that takes into consideration the various segments of enterprise mobile, which does include MDM, it does include MAM. It does include some segments of core mobile apps. It does include certain segments of mobile analytics. It does include certain dimensions of mobile security. And then on the desktop side, obviously, we look much more purely at desktop virtualization and exclude things like classic desktop management and really focusing on virtual desktops and apps. And obviously, a big influence there over the next few years is based upon our view on our product execution in the product roadmap. But also how this kind of technology will get deployed in the cloud context, not only by customers, but also by service providers. And we haven't talked much about service providers today, but that part of our business in -- on the desktop side continues to be pretty exciting. We think that they're great potential routes to market for XenMobile. And as the roadmap evolves here, it'll be easier and easier for service providers to actually be out there in the marketplace with the complete solution. So probably a little bit longer answer than you expected. So think $6 billion, 2015, a combination of both the desktop and mobile markets and a lot of segments within, especially the mobile space.

Operator

And your next question comes from the line of Raimo Lenschow from Barclays Capital.

Raimo Lenschow - Barclays Capital, Research Division

Kash made a great comment there, and I would kind of echo that congratulation there. And just a question on the Software-as-a-Service part of the business. If I look at the last 2 quarters, the growth rate has -- it looks like it has changed somewhat. This used to be like 18%, 20% grower. We're now kind of more in the 13%, 14%, 15% range. Can you talk a little bit about the drivers that we should be thinking about if we model the business going forward? Because obviously, the law of large numbers that what are the other drivers to kind of come up with the growth rates in the future?

David James Henshall

Sure, Raimo. This is David. There's really 4 segments within the SaaS business that I think are important to point out. The first is remote access. That's our GoToMyPC product; remote support, which is largely GoToAssist; collaboration, which we talked about as the GoToMeeting family; and data sharing, which is ShareFile. And each one of those 4 are addressing different segments and they're growing at different rates. I'd say the remote access market is one that is very mature at this point in time, and so therefore, it's been slowly shrinking. That business has been declining and pulling down the overall growth rates. The 2, call them most strategic that we've focused on certainly around collaboration, which is still growing north of 20%. We're doing really well with the GoToMeeting family there. And then ShareFile, which -- our data business is new, so it's still a relatively small percent of the overall total. But I mentioned it was growing 75% or so. The way to think about those is not only standalone products, but also part of a larger solution or a platform, if you will, for how we're thinking about mobility and ShareFile, for example, integrated with the XenMobile products. We've done integrations with receiver, therefore, desktop and app virtualization. And so it's truly a platform. Reported revenue, I think this range where we are right now is a pretty good modeling range for the balance of the year. And then as the faster growing businesses become a larger component of the total, we'll talk about that as we get into 2014.

Operator

And your next question comes from the line of Ed Maguire at CLSA.

Edward Maguire - Credit Agricole Securities (USA) Inc., Research Division

I was wondering if you could address your plans around Apache CloudStack. It's nice to see that is in production around in 200 clouds right now. But what are your plans in terms of investing around that and expectations for potentially a pull-through or expansion of your products into some of those production sites and customers?

David James Henshall

Yes, Ed, so the number I cited, almost 200 production clouds, those are actually CloudPlatform implementations, which is our product that has Apache CloudStack embedded in it. There are many more than 200 production clouds on Apache CloudStack in that it's a production-ready environment far beyond anything else that's available in the market, that's open source. And then secondly, we're not -- we're a participant in that community. We're going to -- we're continuing to invest as we have all along, and we've seen a lot more momentum come to the CloudStack community over the last year in terms of the number of companies that are contributing and the number of net total contributors which is making CloudStack more and more and more robust, which then obviously helps us on the CloudPlatform side. Part of what we do in the commercial availability of CloudPlatform is we add tight integrations with XenServer, tight integrations with NetScaler and then we add on top of all of that, a product line we call CloudPortal that actually makes it easy for service providers to publish and sell the finished goods that live underneath on top of CloudPlatform. So we're continuing to invest and we're seeing that more and more of this is there are segments that are richer than others right now, and we're -- we've learned a lot about where that opportunity is. And the segments are where there's a high urgency for production, for a platform that's reliable, secure, that will scale. And there's less urgency where people are still crafting strategies and talking about it. So we've seen great uptake in telco, what we like to think of as the enlightened enterprise and which is a smaller slice of the overall enterprise market and education as well. All have been good segments for CloudPlatform. So hopefully that gives you a little bit more color around that segment of the business.

Operator

And your next question comes from the line of Kirk Materne from Evercore.

Stewart Materne - Evercore Partners Inc., Research Division

David, I just want to, I guess, circle back around on some of your comments around the distraction around mobile versus, say, some of the older products. I get there's always sort of a shiny new toy syndrome that can come in when there's a really exciting product. But your salespeople are also pretty -- they're pretty -- they only do that if there's a real opportunity for them to exceed quota with those products and do even better than they were thinking. So should we think about this as salespeople are taking a step back or integrating XenMobile into their -- I guess, some of their pipeline, but the pipeline is just going to be -- gets pushed back? And along with that, if you sort of reset, meaning you have a deal but you want to start bringing XenMobile into the deal because you see an opportunity, I guess how long does that take, how long does that set you back? Meaning when you see salespeople potentially expanding their pipeline but pushing out the conversion on that, is it a 3-month sort of pushout? Is it a 6-month? I guess, what are you seeing? Any, I guess, color around that would be really helpful.

David James Henshall

Sure, Kirk. The best way to think about it is the fact that most of our ERMs or sales teams are on annual quotas. So they think about the business in the context of a calendar, fiscal for us, year. And therefore, the quarter-to-quarter boundaries are not as important as you'd think. And so it's really about building up the business within that context of that timeframe. And so there's -- it's not surprising that there is a productivity hit when we bring in a new market that every customer wants to talk about. Some of it is our teams actively driving that, of course, as they're really out there building pipeline and doing things like that. And the other, frankly, is from customers. As customers understand the breadth of the portfolio and whether they were at Synergy or just heard press -- announcements, and they want to understand what our capabilities are. So they may be trying to upsize a deal or reprioritize individual projects. So it'll come from both angles. And it's one of those things where -- pipeline is about planting seeds and you harvest those as you get later in the year, and confident that our teams are very focused on that. And so they're not going to let it get away from very long. We have really solid sales orgs around the world.

Stewart Materne - Evercore Partners Inc., Research Division

And then just one follow-up, if I could. We've heard sort of mixed data points out of the Asia-Pac region this quarter. You guys obviously price in dollars, so for your Japanese customers, your products are unfortunately getting more expensive. Can you just talk about what you guys are seeing -- it's actually a lot of different territories in Asia- Pac, but what you're seeing if there has been any sort of impact from the macro gain slowing down a little bit in China?

David James Henshall

Yes, I think, similar to Europe, it's hard to call specifics in markets. There's a whole bunch of individual market dynamics at play. We do price in dollars in a lot of areas, and so there's some pressure from an exchange rate point of view. And the flip side of that is we also price in local currency in a lot of our SaaS businesses, so we've got some headwinds there as well. So mixed bag for us. I'd say, from an attainment point of view, both our attainment against plans, both of our Pacific and Japan teams are doing really well. There's a lot of opportunity and actually I think a record number of large strategic transactions coming out of the broader regions, certainly a record for Q2. So we're having the right level of conversation and we'll power through. Nothing that I would call out as a -- beyond ordinary there. Certainly not as volatile as, I would say, the European continent is.

Eduardo Fleites

Operator, I think we have time for one more question.

Operator

Your next question comes from the line of Daniel Ives from FBR Capital Markets.

Daniel H. Ives - FBR Capital Markets & Co., Research Division

Guys, after some of those questions [indiscernible] I checked the press release to make sure it was being raised when you look at it. My question is more around -- with NetScaler. Are you starting to see some competitive displacements out there in terms of just given the strength that you're seeing across the board?

David James Henshall

Yes, I'd say, we're -- we focus less on competitive displacements and more of just, on a customer-by-customer basis, what problems we're trying to solve. If that means we're displacing a specific vendor, great. But really looking at everything from TDC, refresh cycles to incremental opportunities with virtual appliances to datacenter consolidation with SDX. So it's across the board, and I said earlier that from a product portfolio standpoint, we feel very good about the breadth of what we're delivering right now. We think we've got a really good combination of tools and it's unique in the market right now. So it's execution for us to continue to add capacity where we can. And the volatile part of this business, of course, will be around big datacenter build outs, cloud services. Those come and go from period to period, it's not steady state. So it's one of the reasons why year-on-year growth rates will bounce around a little bit. But in the aggregate, I feel very good about our ability to take a lot of share this year.

Operator

Ladies and gentlemen, we have reached the 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

Thank you very much, and I'd just like to say thank you for the kind comments and the great questions and discussion this afternoon. Obviously, it's a tough environment. I feel good about how we're executing in the face of that. And obviously, our -- as a team, we're feeling very confident in both the strategic plan and the physical plans we have in context with the kind of environment that we're seeing. So thanks again for joining the call today, and we look forward to talking with you 3 months from now. Thank you.

Operator

Ladies and gentlemen, thank you for participating in today's Citrix conference call. You may now disconnect.

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