This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk04: Good morning and welcome to the Citrix Q1 2021 conference call. All participants will be in the listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a telephone keypad. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Ms. Tracy Sushiguchi, Vice President of Investor Relations.
spk01: Thank you, Rayo. Great. Thank you, Rayo, and good morning, and thank you for joining us today for today's first quarter 2021 earnings call. Participating on the call will be David Henshaw, President and Chief Executive Officer, and Arlen Shankman, Executive Vice President and Chief Financial Officer. Please note that we have posted our first quarter earnings letter 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 uncertainties. Actual results could differ materially from those anticipated. Additional information concerning these and other factors is highlighted in today's earnings letter and in the company's filings with the SEC. Copies are available from the SEC or on our investor relations website. On this call, we'll discuss various non-GAAP financial measures as defined by SEC's Regulation G. The reconciliation of the differences between GAAP and non-GAAP financial measures discussed on today's call can be found at the end of our earnings letter found on the investor relations page of our website. Now, I'd like to turn the call over to David, our President and Chief Executive Officer. David?
spk09: Thanks, Tracy. Good morning, everybody, and welcome. Thanks for joining us today. I'm pleased with the momentum in the business, especially around our cloud adoption and the migration of our installed base. Our transition to the cloud is progressing well, and we expect our first quarter results to mark the trough in terms of the impact on the business model, the income statement. So beginning the second quarter and then continuing throughout the year, we expect to see top line acceleration or income statement metrics as these headwinds that we've been dealing with on the model transition turn and become a tailwind. To provide insights into the transitioning business model, we've been reporting ARR metrics for subscription and SAS. And then beginning today, we're also disclosing total ARR, which includes perpetual license maintenance contracts. In Q1, the organic performance of these metrics, excluding any contribution from the REIC acquisition, showed continuing strength. In fact, SAS ARR accelerated to 43% year-on-year growth, and total ARR was up 15% from last year. So overall, the fundamentalists in Q1 were actually quite strong. I'd like to note that this quarter involved, uh, really included three unique items that impacted recognized revenue. And I want to cover those briefly here in detail before we open up the call for Q and a, the first is the right acquisition, which closed at the end of February. Second item is we experienced supply chain constraints and our hardware business impacting over $10 million worth of product. So we expect these issues may persist for several quarters. So we're adjusting our full year expectations accordingly. And the third issue was the duration of on-premise term-based subscriptions, really influenced by the limited use licenses we sold to customers at the beginning of the COVID pandemic. So as a reminder, in Q1 2020, it benefited by $47 million related to this license type. So far, we've either converted to cloud subscriptions or issued new term-based licenses for about $50 million of total bookings value against this group. We have ongoing conversations with many more about Citrus Cloud migration. So the limited use business continuity licenses really generally fell into three categories. First one, project specific use cases, like a U.S. government agency that planned on building field hospitals to treat COVID patients. Obviously, those licenses would have no use beyond the project term. Second group would be companies that are adopting a hybrid work style post-pandemic. Many of these customers are either evaluating or they're already beginning to migrate these licenses and their overall Citrix infrastructure to Citrix Cloud. And then the third group are employers that are supporting temporary work from home, and they're really still assessing their long-term work and their real estate plans. The customers in this third cohort tended to opt for shorter duration on-prem term contracts versus multi-year subscriptions in Q1. So let me just give you a little context here. We estimate that recognized revenue in the quarter would be about $25 million higher if it wasn't for this shorter on-prem term license duration. In hindsight, of course, these dynamics are really not surprising, but they are different than what our guidance had called for. In the aggregate, business continuity licenses expand our install base and, of course, our subsequent opportunity for these to move to the cloud over time through migration. Going forward, we continue to encourage investors to focus on annualized recognized revenue, of course, which we believe provides the most accurate measure of the underlying business performance. So, operator, with that, let's go ahead and open up the call for questions now.
spk04: Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To draw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. The first question is from the line of Raimo Lenshaw from Barclays. Please go ahead.
spk03: Hey, thanks for taking my question. David, can you talk, like, you know, let's double-click a little bit more on the limited licenses and the renewals here. Like, in terms of what were you able to do in terms of kind of convincing clients to go one way or the other? And, you know, like, and how did that play out then in reality? And then the follow-on is then a little bit, like, if you think about the – On the networking side, you talked about the component shortage. How will that play through for the rest of the year? Thank you.
spk09: Sure, Remo. Let me start with networking and work backwards. There's definitely some component shortages, and I think supply chain constraints shouldn't be a surprise to anyone. It impacted our ability to ship over $10 million worth of revenue in the quarter. So there's two things going on there. When you read through our earnings letter, you'll see that the networking business actually is very heavily weighted towards subscription. In fact, 89% of bookings in Q1 were subscription. Underlying that is an increasing run rate of hardware appliances to support these pooled capacity licenses. So while we don't disclose it externally, the ARR of that business has been accelerating over the last several quarters. And so with that, you know, you see a little pressure on COGS, you know, given the increasing component prices, but also, you know, in a unique item in this quarter. The boxes out of Q1 will ship in Q2, but we're assuming that, you know, this is going to be a sliding problem. So there could be some issue moving out of Q2 into Q3, et cetera, et cetera. So we just adjusted our full year to account for that. We don't think the issue is more broad than that. You know, the fortunate thing is that, you know, it is a reflection of just the underlying strength and our overall app delivering security business. Second question, actually your first question regarding the limited use licenses. So as I said just a minute ago in my remarks, reminding everybody, we had about 47 million of impact a year ago. And, you know, we had put in place, you know, programs to really help customers through business continuity in the time of need. And that was for all kinds of different use cases. Like I highlighted there, the focus over the last, uh, quarter or two has been on, you know, getting those customers to think about longer term subscriptions, mostly Citrix cloud. So those companies that have already adopted, uh, go forward plans around hybrid work around real estate and around whatnot. Those are the ones that have been successfully migrated towards Citrus Cloud or are part of an ongoing conversation right now. The third group were the ones that are really still thinking about this in the context of business continuity. And so our underlying assumption had been that we'd be able to convert those to much longer-term subscriptions. But in reality, what came back was one year in general, one year term. because they're business continuity. And so we're going to approach those going forward as just opportunities to, you know, help the customer think through their long-term plans and ultimately migrate those to Citrus Cloud. Okay, perfect. And as I said a minute ago, last point I said a minute ago, is that in the aggregate, we've booked about $50 million worth of commitments against this overall pool. Okay. Okay, makes sense. Thank you.
spk04: Thank you. The next question is from the line of Brent Till from Jefferies. Please go ahead.
spk05: Good morning, David. I think there are a lot of questions around the expected duration shrinking, and it's kind of counterintuitive to what you did in helping companies during the pandemic that they would come back and actually be shorter versus longer. Can you just explain a little more what you think is going on there?
spk09: Well, it's three things, Brent. Similar answer to Ramo's question. And so those customers that have already adopted longer-term use cases, like those that are adopting a hybrid work model, those contracts are longer in nature. If you look at the duration in our SaaS business, unchanged. It's still targeting a three-year duration for our typical contract. Actual duration is just a little bit shorter than that. in this group of licenses that are truly business continuity. And people are looking at those as business continuity. They're still related to the pandemic. Those customers haven't worked their way through yet. And so it would be natural for them to opt for a shorter-term license as they figure out what their long-term plans are. Net-net, this has just allowed us to increase our installed base. It increases our pool and our opportunity going forward for conversions.
spk05: And the $10 number you gave in cash flow, does that change in your view or are you still committed to that number?
spk09: Yeah, we haven't changed that. I mean, the 22 numbers are unchanged at this point in time. And I think the most important takeaway is that, you know, the duration is a limited impact item related to these, you know, unique one-off licenses that we created a year ago to help customers in need. That's not an ongoing phenomenon. The business model is transitioning nicely. You see the success across all of our ARR metrics, which have continued to accelerate. And, you know, we believe that Q1 was the trough in terms of that, you know, business model evolution headwind. We're going to start re-accelerating here in Q2 and beyond, and that will pull through the rest of the P&L metrics as well as cash flow.
spk05: Great. Thank you.
spk04: Thank you. The next question is from the line of Matt Hedberg from RBC Capital Markets. Go ahead.
spk08: Hey, thanks. Good morning, David. You know, I don't think you've actually disclosed the mix of hardware and software on app delivery and security, but in your letter you noted that you expect the software mix to increase. I'm wondering if you could just sort of give us general terms on maybe where that sits today and where that might go in the future. Sure.
spk09: Yeah, we really haven't. I mean, it is migrating more towards subscription and software right now. And then over a longer period of time, it'll be migrating to SaaS. So if I step back a little bit and just provide a bit of context in that overall business, you know, a couple of years ago, it was largely, you know, hardware based. And we have a software heritage that underlies our business. We were able to deliver those technologies across a number of different form factors, virtual appliances, you know, as a container and coming soon as a service. And so what that has afforded us is the opportunity to start transitioning customers to what we call a pooled capacity. It just gives them incredible flexibility for delivering their network infrastructure across all types of hybrid cloud deployment models. And that's really resonating. That's one of the reasons why the volume of hardware and subscriptions is up as much as it is. Going forward, it's going to continue to migrate towards more of a cloud-delivered platform for app delivery and security, being able to give customers a much more friction-free way to adopt different technology bundles based on their own network architecture and help modernize IT. Overall, I think that this quarter being 89% subscription bookings was probably a bit of a high mark. but it's definitely been trending up and to the right. So I think it's going to bounce around a little bit. We're still going to always have a hardware component so long as customers are focused on a hybrid multi-cloud model. So I would expect that part of it to continue for the next several years, but gradually moving towards more complete subscription and then ultimately SaaS. Got it.
spk08: Okay. And then in terms of just sort of the geographic performance, total ARR was up, I believe, mid-15% organically, which was great to see. Total revenue down 10%. And when I look at it on a geographic basis, obviously based on revenue, so all geos are down from a revenue perspective. I assume that's not necessarily the trend that you're seeing relative to ARR. I'm wondering if you can give us a bit more granularity from a geographic perspective, maybe based on ARR, what you saw, maybe which geos did better.
spk09: Yeah, not a whole lot of change on a geo basis. In the aggregate, our sales teams exceeded their plans for Q1, the way that they're measured on ACV bookings. The geos have all been executing well. I mean, EMEA has been one that has done particularly well over the course of the last year or so. The Americas being our largest business was kind of leading the transition early in the business model evolution. And I think that really throughout all three geos, you're going to see their business re-accelerate as we go into Q2 and beyond. And as I've said a couple of times, these headwinds from the model transition become tailwinds. But we didn't necessarily have any problem geos whatsoever.
spk08: Got it. Thanks a lot, David.
spk04: Thank you. The next question is from the line of Mark Moldler from Bernstein Research. Please go ahead.
spk06: Thank you very much. I appreciate the additional color. I'm going to stay on the workspace side of the business, starting first on. Can you give us more color on those term licenses, any sense of how much of the term licenses converted to SAS versus term licenses as some sort of percentage? And as a follow-up, and then I got one more after it, I apologize, but how much is still remaining of that $47 million that could convert? Is it meaningful that it could convert in Q2?
spk09: Mark, I mean, most of the unique program for limited use business continuity was contained in Q1. I mean, that's where the vast, vast majority of it, if you remember last year. And so, given that there's a lot of permutations in terms of license type, in terms of what they bought and also where they're migrating, we've been trying to just aggregate it up into bookings dollars. And that way, we just don't confuse people. And so, the way I look at it is, You know, we had a special set of circumstances a year ago. We generated about 47 million of revenue. We've already booked, you know, 50 million of revenue commitments against that. And we probably have a, you know, a large pool, you know, an eight-figure pool of licenses that we're continuing to, you know, discuss about cloud migration. And then, you know, those that are on short-term, you know, short-term on-prem terms, We'll continue to work with those customers, obviously, as we do. A lot of those are existing customers today, so we have ongoing conversations about their longer-term plans. And as they work those out, of course, the goal would be to just continue to roll those into Citrus Cloud migrations, which I mentioned a couple of times, and you see that in the investor letter. I mean, we've just seen great progress with our transition and trade-up motion, good momentum coming out of the second half of last year. continued into first quarter of this year, and we expected that to continue throughout the year. So all the things that we had talked about over the last nine months are really clicking and doing well, and we're seeing an acceleration of installed-based migrations to Citrus Cloud.
spk06: And as a quick follow-up to that, if you put aside the limited-use licenses, how did the team deliver otherwise on SaaS? Did you hit your numbers? Did you beat your numbers? putting the term, the one term, special terms to the side?
spk09: Well, it's hard to put it aside when we talk about the overall business. And so, you know, because our teams are gold in the aggregate. So, you know, when I look at it on what they are measured on, our teams exceeded their plans.
spk06: Thank you. I appreciate it.
spk04: Thank you. The next question is from the line of Carl Kirsten from UBS. Please go ahead.
spk10: Oh, thank you. Two for me. One, David, just to clarify, just curious whether the shorter duration issue on on-prem term contracts was really a phenomenon from this pool of customers signing limited duration deals or Or did you also see that phenomenon of shorter-term commitments more broadly as your normal renewals came up in the quarter? So that's my first question. And then maybe I'll just ask my second question right away, and it's for Arlan. Just on free cash flow, I know you've reaffirmed the comfort with the $10 in 2022, but I think most investors and analysts are around $8 a share for this year. So I just wanted to just ask whether that's still a reasonable assumption for this year. And if it is, then it requires a pretty decent improvement in your operating income to cash flow conversion in 2022 to get to $10 per share. So this is probably the kind of bridge you'll offer at the next analyst day you do. But maybe you could sort of tease it out a little bit with us on this call to give us comfort in that $10 number. Thank you so much.
spk09: Sure, Carl. Let me take your first question. So just to be clear, we did not see changes in duration in our SaaS business or our strategic contracts. The duration item was simply a reflection of the renewal of these limited use business continuity things from a year ago. And that's where this is isolated. This is not a broader scope issue whatsoever. They In hindsight, it was a bad planning assumption on our part. We thought that these would extend from their short-term duration originally to a long-term contract. In reality, they rolled into another short-term duration because they are business continuity related. Again, it's a very isolated item. It's a little messy in Q1 versus our anticipation, but it's not a broader issue.
spk11: And then, Carl, on cash flow, you're absolutely right. I mean, as we noted in the letter, we'll be holding an analyst day in the third quarter. We'll be providing some additional details. In terms of your comment, we had commented in our year-end letter that cash flow will be up modestly from 20 to 21. Obviously, and again, we'll walk you through this when we get together, there'll be an impact from the REIC acquisition. So we expect 21 to be a transition, but to go into 22 strongly, and our guidance means unchanged.
spk10: Okay. Thank you both.
spk09: Thanks, Carl.
spk04: Thank you. Next question is from the line of Sanjit Singh from Morgan Stanley. Please go ahead.
spk07: Thank you for taking the questions. And thank you, David and Arlen, for the ARR disclosure. And sort of related to that, if I sort of just back into the maintenance ARR piece, it's about $1.4 billion. And so two questions there. Of the $1.4 million, could you give us a rough sense of what the split between workspace and networking looks like on the maintenance AR side? And then the second piece of that would be, you know, we're seeing the SaaS mix of subscription bookings continue to move up and to the right. I think you guys are targeting 50% to 60% of the year. As customers migrate over, are you seeing the type of uplift that you initially outlined, you know, a year or so ago in terms of seeing that 30 to 40% uplift. Thank you.
spk09: Sure, Sanjeev. This is David. So, yes, we are seeing the uplift. It's actually been very, very consistent. And so, we're very happy with the progress we're making on the install base. And like I just said on an earlier question, I mean, that's been accelerating over the last few quarters, and I expect that to continue through the balance of the year. I mean, all the programs and the plans that we had talked about in the last nine months, they are delivering as expected. So, Happy with that progress. And, yeah, directionally, we're, of course, trying to increase the mix around SaaS. You know, obviously, on-prem term licenses, there's an accounting impact, like we saw in Q1, that just creates more noise than it's worth. And, obviously, the long-term goal is to, you know, get everybody on our SaaS platform. Could you repeat the first part of your question?
spk07: Yeah, just is AR the mix between workspace and networking?
spk09: Oh, sure. The large, large majority of it is workspace. I mean, if you look at recognized revenue, it's probably an 80-20 split, and maintenance would follow generally in that same direction.
spk07: And then one more, if I could just sneak in, and this is just a higher level one. In terms of what you've seen your user base grow, I think you're up to 10 million cloud subs. We talked about 100 million overall users. I think some of them are concurrent. But, I mean, broadly, since the pandemic, any sort of view on how much the base has grown since the pandemic has started?
spk09: Yeah, it's definitely grown. I mean, I think the most important thing for us strategically is to be looking at, you know, how many of those are paid subscribers on Citrus Cloud. And, you know, you just mentioned that it was well over 10 million. In the aggregate, the number's up over 30% year on year. Interestingly, in Q1, the absolute rate of additions is you know, twice what it was a year ago, you know, when we entered in the pandemic. So, you know, we're seeing great progress there. So I'm very happy with that overall migration. And, you know, this was supposed to be the year where we start to accelerate installed-based migration. That was absolutely true in Q1, and we expect that to, you know, continue to be the case. So as far as I'm concerned, we're on track to ahead of plan in that aspect. I appreciate it. Thank you very much, David.
spk04: Thank you. The next question is from the line of Tyler Radke from Citi. Please go ahead.
spk02: Hey, thanks, and good morning, David. Maybe we could start with just ARR, and again, appreciate the disclosure on total ARR. But if I look at the guide, it would seem to suggest that maybe there's a slight decel from where it grew in Q1 throughout the back half of the year. Maybe just help us. kind of your assumptions around the trajectory of that, kind of the puts and takes, and what, you know, what could potentially cause ARR to not decelerate in the back half of the year?
spk09: Yeah. Let me talk about the three ARRs just for a minute here. I mean, subscription ARR, and I'm going to speak exclusive of any contribution from Reich. I mean, It continued to accelerate for, I don't know, the fourth or fifth quarter in a row now, up 63% year on year. And that's, you know, that's clearly a reflection of the overall business model transition that we've been making. And so with that number now at around $1.4 billion, you know, that scale, you know, we're very happy with that performance. SAS ARR, again, continued to accelerate, which is good. Total ARR is an interesting one. I mean, we're just releasing that metric right now. As we go through the year, we'll continue to disclose subsequent quarters and provide more visibility into historicals. Right now, we think that that total ARR, pretty good reflection of the underlying growth rate in the overall business. We've said in our earnings letter that we think somewhere in that low teens range is probably a good plan for the balance of the year. And the only reason for a downtick of a point or two is just, you know, is if there was any uplift related to this, you know, one-off limited use license, you know, if that added a point or two, we just want to be a little bit careful there. So still think that's a double digit growth business. And then we'll work to, you know, we'll work to keep it in the top end of the range.
spk02: Thanks. That's helpful. And maybe just to follow up on the networking business. So, I understand that the component shortages, you're not the only ones kind of dealing with that. But what's your kind of expectation on when that gets resolved? And for the, you know, products that you weren't able to ship, do you think this revenue simply just gets deferred and you, like, kind of see a snapback in a future quarter once you kind of resolve the supply chain issues? Just help us understand how you're thinking about that impact longer term and how that gets resolved. Thanks.
spk09: Yeah, there's definitely component pressures in the supply chain right now. And you're right, we see that across a lot of people in the industry. You know, for us, it's not a huge number. You know, we wanted to call it out because it was a unique item. But that $10 million revenue will ship in Q2. But we're just assuming that it's a sliding problem. So there's some amount of revenue that slides out of Q2 into Q3, Q3 into Q4, etc., And so when it does snap back, I mean, we'll talk about it, and we'll talk about it openly. But, again, it's not a huge number in the overall exit. But, you know, our expectation is that it's going to continue through the balance of the year. If that changes again, we'll disclose that.
spk00: Thanks.
spk04: Thank you. The next question is from the line of Robert Mike.
spk12: from raymond james please go ahead great thanks on the 50 million of new term-based licenses from pandemic conversions can you just clarify whether the average duration was in fact around one year and you mentioned that you don't expect the impact from the lower term duration to recover in subsequent quarters i believe your comment was just in reference to 21 can you just help us understand whether we might see duration term duration recover in 22.
spk09: Yeah, just to be clear, I think the term duration that we have talked about in relation to these licenses is a Q1 phenomenon, not a 2021 phenomenon. As we look into the balance of, you know, the balance of the year, you know, pipeline and our deal-based forecast and others show a duration that is much, much more normalized. So this is a very, very isolated item. Those licenses did convert to Citrus Cloud, for example. You know, Citrus Cloud durations are unchanged. They're much longer because those tend to be much more strategic contracts. This is just an isolated issue related to people that are employing business continuity in the face of a pandemic. It's not a broader issue than that.
spk12: One more question, if I can. In my checks, I've been picking up a lot of momentum for desktop as a service offering. Can you just help explain the shortfalls of competing DAS solutions and why the growth of DAS won't negatively impact your VDI business?
spk09: Well, we have a DAS solution as well. I mean, the reason why customers adopt DAS is that it's just, you know, desktop as a service can be just a simple, easy way to turn on a handful of desktops in a fully managed, outsourced kind of manner. And I think, you know, broader trends that we've seen throughout the pandemic is, you know, an adoption of cloud that's accelerated across the board. You see that in just about every aspect of the industry. And so, you know, one of the reasons why our business has been accelerating the cloud is just that, gives customers more agility, more ability to manage, etc., So our strategy, of course, is, you know, focus on the idea of, you know, hybrid and multi-cloud, you know, and where a lot of our customers are somewhere in between. We want to give them the ability to run DAS, either Citrus DAS or one of the cloud platforms, manage it with the overall Citrus cloud, and still maintain, you know, on-premises licenses, running their workloads in public cloud, you name it. It's just that broad hybrid approach. And I think that's going to continue. I think you'll certainly see more and more infrastructure move to cloud over time. Thanks a lot.
spk04: Thank you. The next question is from the line of Burke Materne from Everco ISI. Please go ahead.
spk08: Okay, yeah, thanks, David. Just a quick question for you around sort of the technology strategy as it relates to sort of the broader conversion to the cloud. Obviously, one of the benefits customers get from moving to the cloud with any company is to be on the most updated version of the technology. And I was just kind of curious this year if there's any upcoming releases that are going to make the benefits of being on the cloud even more apparent potentially to your existing base that might still be on perpetual release And if you're, I guess, anticipating any kind of inflection because of that or that would be potential, I guess, upside in terms of a faster rate of conversion, just trying to get a sense of how you're thinking about sort of the technology releases in terms of being a little bit more of a, I guess, a carrot for clients to move at a faster pace potentially.
spk09: Yeah, Kirk, I can talk about inflections in terms of the actual underlying bookings because it's all subscription and SAS. You don't see the typical inflection in the P&L the way you would have back in the old days of perpetual licenses. We have seen an inflection in just the amount of customers migrating to the cloud. We talked about that beginning in the back half of last year and really continuing here with overall bookings up well into the triple figures on a year-over-year percentage basis. And the reason that's happening are just the same things we've talked about before. It's easier to manage. It's easier to stay current, stay updated. In fact, the business that we're doing with some of our major partners, like Microsoft, for example, is stronger than it's ever been. We can go in and demonstrate to a customer that, for example, Citrix Cloud plus Microsoft, Azure, and WVD, the three of them together is the cheapest alternative and the most flexibility for them to be able to manage and run their infrastructure. And so I think it's just a solid message, and that's the reason why it's been accelerating.
spk08: Okay, and just maybe put a finer point on it. I mean, are there things that are going into the cloud technology that won't be available to the on-prem customers at some point in time, meaning at some point there's a more explicit sort of strategy around that too? That works in their benefit ultimately, but I'm just kind of curious if there's anything accelerating in terms of the gap between the technologies just because cloud's going to innovate at a faster pace.
spk09: It really already is, Kirk. I mean, it's a really important point, though. I mean, most of our innovation is coming through the cloud, and all the things that we have delivered over the last year, I mean, the vast majority of that is cloud-related. You know, whether we're talking about, you know, automation and micro-app workflows, whether we're talking about DAS, you know, as a prior comment, whether we're talking about the ability to add secure Internet access, which is effectively, you know, think of that as you know, secure web gateway capabilities and do it all in the context of a, you know, a Citrus cloud management profile. We now have instrumentation across, you know, all of our cloud properties, including networking that allows you to aggregate up analytics and give visibility into performance and to security and to other use cases that you just can't get on-prem. And it's one of the reasons why the migration has been accelerating. It's just the value is there and more and more customers see it. Okay, that's helpful. Thanks, David.
spk04: Thank you very much. That was the last question. This concludes our question and answer session. I would now like to turn the conference back over to Mr. David Henshaw for any closing remarks.
spk09: All right. Thanks, operators. I just want to thank everybody again for joining us this morning. I'd like to leave you with a few closing thoughts. First is, you know, we are accelerating our transition to the installed base of the cloud as we've been forecasting and discussing this morning. We expect this to continue. Our acquisition of Wrike really extends our strategy, and it's expected to be neutral to 2022 non-gap earnings and cash flow, while obviously accelerating revenue pretty substantially. And finally, these secular trends, whether it's cloud or distributed hybrid work models, should provide a healthy tailwind to our organic and combined businesses in the future. So with that, look forward to speaking with many of you throughout the quarter. Thank you very much.
spk04: Thank you very much. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.
Disclaimer