Citrix Systems Inc saw another period of rapid revenue growth for its third quarter, announced yesterday, but income stayed flat on $13.1m after a one time charge for acquisitions of $7.2m was taken into account. Revenues were up 94% over the same period last time to $67.6m. Without the one-time charge, profits would have been up 55% to $20.3m compared with last year’s $13.1m, a (coincidentally?) $7.2m rise. Last quarter, Citrix reported a $4.4m loss after $33.8m in charges on revenues of $56.2m. The charges this quarter related to a little publicized acquisition of certain software technology and assets of the Israeli streaming video company VDOnet Corp, including the company’s VDOLive video/audio server technology and eleven engineers. Citrix wrote off all but $0.8m of the $8m purchase price, saying that the write-off involved work which had not reached technological feasibility and had no alternative future use. Citrix is now benefiting from the increased availability of Microsoft Corp’s Windows Terminal Server, the basis for its newer MetaFrame product line. Terminal Server turns NT into a multi- user system supporting thin clients, and MetaFrame adds some of the necessary systems software on top. The older product, WinFrame, needed a customized version of NT to operate. Microsoft itself is helping to publicize Citrix product, although Citrix itself, which now has 4,000 resellers, thinks it, and not Microsoft, is the main force behind Terminal Server sales. Citrix CEO, Roger Roberts, soon to step down in favor of company president Mark Templeton, says he believed that the economic slowdown, year 2000 uncertainties, and the fall in enterprise resource planning software license take up were all helping increase business for Citrix’s server-based thin-client computing model. It’s counter-cyclical, he claimed. Centralized server systems based around Windows NT and thin clients are more cost- effective than traditional client-server set-ups, the company argues, and customers are moving away from more expensive alternatives to support it. MetaFrame shipments accounted for 30% of Citrix’s revenues in the quarter, up from 13% the previous quarter, while WinFrame sales were down to 15% from 30%. The company says that next year it will release a version of WinFrame that is compatible with Microsoft Terminal Server for existing users, so that existing users can make the jump to MetaFrame. A large proportion of revenues came from bump pack licenses that up the number of users supported by a Citrix server, in increments of five. Most entry-level Citrix servers support 15 users, at around $200 per user. Citrix now has 580 staff, and claims to have shipped 100,000 servers, with 8 million clients using its ICA networking architecture. During the quarter, that number topped the X-Windows alternative for the first time, something the company counts as an important milestone.
