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spk10: Good morning, everyone, and welcome to the Citrix Q3 2021 conference call. All participants will be in a 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 and one. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the conference call over to Tracy Tucci-Gucci. Please go ahead.
spk01: Good morning, and thank you for joining us for today's third quarter 2021 earnings call. Participating on the call will be Bob Calderoni, Chairman and Interim Chief Executive Officer, and Arlen Shankman, Executive Vice President and Chief Financial Officer. Please note that we have posted our third quarter earnings letter to our investor relations websites. 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 will discuss various non-GAAP financial measures as defined by SEC's Regulation 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 our earnings letter found on the Investor Relations page of our website. Now I'd like to turn it over to Bob Calderoni, our Chairman and Interim Chief Executive Officer. Bob?
spk05: Thanks, Tracy. Good morning, and thank you for joining us. For those of you whom I've not yet met, I'm Bob Calderoni, Chairman of the Board and Interim CEO. And as you know, I stepped into this new role just a few weeks ago. And while I will need some time before I can share with you my views on 2022 and beyond, I thought I would give you some of my early observations on the business. Today, I see a business with very strong assets and a solid foundation. Citrix, as you know, is a leader in its markets. We're number one in the VDI DAS market, and we're number two in the ADC market, and those market positions are supported by strong technology advantages. The markets we participate in are healthy and growing, and our important VDI DAS business has some strong secular tailwinds with trends supporting secure remote hybrid work. We have a strong and loyal customer base across the globe, and we have a strong presence in every industry vertical. And from a business perspective, we've proven success in our transition to the cloud with over $1 billion of SaaS ARR, and we have largely transitioned our model to recurring revenues with over $3 billion of ARR. I believe the overall health and velocity of our business is best demonstrated by the fact that we expect our total AR to grow nearly 10% this year on an organic basis. And I remind you, this growth is following a rather extraordinary year in 2020 that benefited from an unusual COVID demand. Another important metric signaling the health of any recurring revenue business is renewal rates. And while we do not disclose our renewal rates, I can say the rates are both strong and improving. There's lots of points on the positive side, but I think it's fair to say there have also been some missteps along the way, which is clearly overshadowing our success. These missteps are largely in our go-to-market motion and in our own forecasting, and I'm confident they're all fixable. We need to shore up our channel programs and put in place the right incentives for our channel partners. and we need to focus sales investments on direct selling quota-carrying individuals and eliminate excess investments in overlays and shared commissions. We're going to address all of these issues as part of our planning for 2022, and I will share more of that with you as part of our Q4 earnings call. Much of this work is underway, but not yet complete. I can say, however, the objectives for this work are very clear. we strive to be more predictable, delivering solid growth again in our total AR, along with better margins and cash flow. My priority is to set us on a course that deliver the long-term sustainable growth and profitability I know we are capable of achieving. I'm very happy to be in this role. I look forward to working with the rest of the management team to achieve these objectives, and I look forward to talking with many of you over the coming months. With that said, let me now open the call for your questions.
spk10: Ladies and gentlemen, at this time, we'll begin the question and answer session. To ask a question, you may press star and then 1. To withdraw your questions, you may press star and 2. If you are using a speakerphone, we do ask that you please pick up your handset before pressing the keys. To withdraw your questions, you may press star and 2. We'll pause momentarily to assemble the roster. And our first question comes from Kirk Metier from Evercore ISI. Please go ahead with your question.
spk09: Okay, yeah, thanks very much. Bob, just a couple things, maybe as you settle in. I assume by your comments, there's not going to be any changes to the go-to-market motion for the fourth quarter. Anything that would be changed would be in the beginning of next year. And then I guess, secondly, on the go-to-market side, can you just talk a little bit more about the channel, kind of what's gone on this year that hasn't worked? Meaning, is it the visibility into the channel pipeline isn't there? It's just an execution between sort of your expectations and what the channel's delivered. I'm trying to get a little bit better sense of what's maybe gone wrong on that front, and how do you think about correcting it? Again, you're just getting an early view on this.
spk05: Yeah, Kirk, certainly. Look, the company talked about, I think in an earlier conference call, about some of the changes that were made to the channel over the past year or two that reduced the profitability of some of our channel partners' business as it related to Citrix, and really some changes in our compensation program, which I think need to be tweaked. The issue really was about how we're compensating and incenting our channel partners. The channel is still there. The channel hasn't gone away. They're not selling somebody else's products. They're just focusing on other parts of their business. And like any part of a sales organization, and the channel is part of our sales organization, We want to make it more profitable for them to do business with us. So there are a few actions we've taken. We've already started to take with our channel partners in order to make the business more attractive to them. You know, the first was we've recently moved over some of our stalled and uncovered pipeline, and we're sharing that with them to give them, you know, leads and opportunities for new business. We've also modified some of our compensation programs. Think of it as like a SPF program. in the short term here to encourage more focus on the Citrix business. We're going to do things in a more structured way for 2022, like compensation plans. You typically start them out at the beginning of the year, so they'll be more structured in our approach in 2022, but we didn't want to wait before we put some incentives in place. And then lastly, we're really working with them around educating them on the transition motion, of transitioning existing customers to the cloud and giving them financial incentives. So we think that's not only good business for us, but we think there's really good opportunities for them to expand their business and add more value to their customers if they help them move to our cloud as well. So, you know, more to be done. Clearly we just have to reverse some of the things that we did over the last year or two and make the business more attractive. And just like a sales force, if you make it more attractive to sell something, you'll get more of it sold, and it's fixable. You know, it might take a little bit of time before we see the uptick, but I'm pretty confident we will.
spk09: That's great. Thanks for all that, Collar. And if I could just ask one quick one to Arlen. You know, Arlen, I realize there's a lot of moving parts on the income statement, but EMEA was down, you know, again this quarter. You know, is that masking, I guess, what's going on from an ARR basis as we go through this perpetual cloud shift? Or is EMEA just a little bit behind kind of where you'd want it to be? It might be a bit of both. I was just wondering if you could add some color on that front. Thanks.
spk07: Yeah, thanks, Kurt. I think that it's really just the transition. And we've consistently seen that the U.S. is ahead of Europe in terms of moving to the cloud, and that fast transition is, you know, what's causing that headwind in terms of where they're headed. And I think, you know, we've seen that the last couple quarters, and we'll continue to see it as we go through the transition, but nothing more than that.
spk10: Thank you all. Our next question comes from Tyler Radke from Citi. Please go ahead with your question.
spk06: Hey, good morning and welcome back, Bob. I wanted to just ask you, you know, kind of some initial thoughts on the restructuring actions that you announced here for Q4. Obviously, the company's been through a lot in terms of realignment over the years and just kind of curious where you see the biggest areas of low-hanging fruit and just kind of what your initial take on the cost actions are. Thank you.
spk05: Yeah. Well, the first thing I'd say is, you know, everything we're doing in terms of restructuring is first and foremost focused on growth. And I think this is something I've long believed, that any business that is focused does a better job on execution, and that includes not only margins, but that includes growth. So we are looking to ensure that we're making all of the necessary investments that support our growth, and we're looking to remove distractions that not only depress margins but distract us from growth. So I think focus is an important part of it. I think the other thing I would say about it is we are going to keep or increase our direct quota-carrying individuals, and we're going to increase, I mentioned earlier, we're going to be making some changes and are making changes that will increase the compensation that we're providing to our channel partners. So This is, again, in support of growth. There will be more investment into the front line and revenue-generating aspects of our business. And then with that said, I think we're going to get more efficient in other parts of the business. I think one of the things I found early on, and I'm saying with the go-to-market organization, is we introduced far too many overlays over the last 12 to 18 months. And we've got too many instances where we have too many people getting compensated on the same deal. I don't think that's a good thing. I think that not only adds more cost, I think it also takes away sales capacity at the same time. So we're looking to drive a lot of those changes in the organization. And then in other parts of the organization, in R&D, it really is the product portfolio. Again, the things that are most important to us that are closely tied to our growth in DDI-DAS, ADC, and in our content solutions, we're going to show up and make sure we're making all of the investments needed in those areas and anything else that we don't have a lot of confidence in that's going to be a material driver of growth. We're going to remove those. So I'm confident at the end of it we'll have an organization better positioned to grow, and I think one that will also see margins improve and drive significantly more cash flow. I definitely see 2021 as a trough year for both margins and cash flow. So I think we're going to come out of this a much stronger company and one that can deliver and create more value.
spk06: Yeah, and maybe to follow up on the free cash flow, and I don't know if this would make sense for Arlen, but obviously, just from the looks of the performance year to date and kind of initial comments for Q4, it looks like free cash flows can be down pretty significantly this year. And I'm just wondering if you could unpack kind of the drivers of that, you know, how much is related to the restructuring kind of one-time items. And if we can kind of think about the 2020 as the kind of a more of a normalized growth rate, just any comments you can kind of bridge between what's implied in free cash flow for 2021, what can be driven by one-time items, you know, relative to what you saw last year? Thank you.
spk07: Tyler, I would think of it, first of all, as you know, there's a lot of moving parts of free cash flow. And for us to kind of normalize it, it's very complicated. So, one of the reasons we highlighted in the letter was the fact that we had an increase in compensation expense in 21. We should try to help drive the conversation towards where we're going, which is what does normalized free cash flow year look like? I think if you look at it on a multi-year basis and think about how we're going to drive the company, I think it's fair to think of it as much more stabilized and, as Bob said, at a trough because there are factors that go into that. That being said, when we have it included, obviously, as free cash flow guidance for the year, And we haven't taken into account anything that might happen as a result of a restructure. So that's not included in anything we might do. But I think that your concept of thinking about free cash flow on a more normalized basis, if you were to look at the last two years, is probably an accurate way to think about it conceptually.
spk05: Yeah, I think this year, again, being a Trump, we do have some cash flow headwinds this year that were spillover, as Arlen said, from last year. You know, last year's revenue growth, the surge in COVID, I think, drove a lot of, you know, added commissions and bonuses, and that largely gets paid out in the first quarter of the following year. So that spillover, you know, so at least $100 million, I think, from last year into this year. And then, as you can see, our margins are down this year. So that's, you know, we shouldn't have that spillover effect next year. And, you know, I won't quantify the margin improvement yet. It's premature, but we'll reverse the headwind on margin. So I expect cash flows to be an inflection point here off of 2021 and get back on the right track and have much higher levels in the coming year or two. Thank you.
spk10: Our next question comes from Mark Modler from Bernstein Research. Please go ahead with your question.
spk02: Thank you very much for taking my question. I know it's a lot you have going on and getting up to speed on. Two questions, if you don't mind. A big portion of the complexity, the problems of Citrix, was the fact that you were selling both perpetual licenses and term licenses in cloud, and you've now gotten rid of perpetual licenses for workspace, which is a good step. But what are your plans for term licenses? Can you modify them to make them ratably recognized? Are you going to disincent to sell term licenses? And then I have a follow-up to Arlen.
spk05: Look, I think there's a ratable model and then there's a delivery model. On the ratable model or recurring basis, we've largely moved all of our revenues to a recurring revenue. It's not all ratable, but it's all recurring. And I think that's the most important thing because I think we will increase the lifetime revenue from our customers by doing that. As far as driving the delivery model, I think it's wrong to try to force a customer to a delivery model that doesn't work for them. We can incent them. We can encourage them. I think we've largely done that. You see the growth in our SaaS business. We're over a billion dollars now. and SAS revenue is growing nicely. But I think any company that tries to force customers to do something that's not in their best interest is probably not a good thing to do. So I feel really good that we've got the business recurring. And while it would be easier to follow us if it was all ratable, I think the best metric now to look at is the annualized recurring revenue on a total basis. I think that sorts out all the noise. of the business model transition. It also sorts out the noise of having different licensing models. And if we look at that, I'm very encouraged by the results. We have, you know, 13% growth in that metric, you know, through three quarters of this year. We're saying for the full year, we'll be approximately 10% for the full year. And I feel really good about that. And I think that is a metric that's most important to me in understanding the health and velocity of the business. And I think we can provide that transparency for investors, being that it is all recurring revenue. And that's something you'll see an increasing focus on both us internally and I think in our marketing messages out to you and to other investors as well. So that's really good. Now, I do think customers are naturally going to migrate. to the cloud delivery model. We just want them to do that on a rate and pace that makes sense for them because, you know, Citrix infrastructure is oftentimes tied to a much bigger decision around the cloud, not just about Citrix. And I think we've got to recognize that reality.
spk02: Lower than we've seen for many other companies in the industry. What pulls it down to 1.7 years? Is it the term licenses? Is it networking software? Any color would be appreciated.
spk07: Yeah, I think you cut out there for a second, Martha, but I think your question was about duration. We're at 1.7. And I think the way to think about it is, look, first of all, we're happy. 1.7 is, as you recognize if you compare it to the fourth quarter, a high, is a high for us. And obviously, as we continue to sell SaaS, licenses, we expect that will continue to go up. That being said, the combination of the transition of the ABC business, which is its own transition, as well as the SaaS business puts us in a position where we're going to have modifications for that duration. Some of those things are termination of contracts. Some of those are going to be the transition to business. But where we are, we're happy with where we are in terms of our threshold. We expect that will continue to go up. but we're not going to do anything to push that out faster other than the transition itself, which will continue over time.
spk02: That makes sense. I appreciate it.
spk07: Thank you, guys.
spk05: Yeah, this is a great example of my earlier point about why the focus has to be on ARR, because if duration goes up or down, I mean, obviously duration, I'd rather sign longer-term deals than shorter-term deals, but if duration goes up or down, it creates noise in reported revenues, And, you know, we could be having a good quarter but have less duration, and that could be a misleading indicator and vice versa. So I'm going to increasingly point everybody to ARR as the metric that normalizes all of that, and I think that's going to be a better indicator of our, you know, underlying health and velocity.
spk02: Thank you. I appreciate that. Makes sense.
spk10: Our next question comes from Brent Thill from Jefferies. Please go ahead with your question.
spk03: Thanks. Bob, I want to talk through when you talk about the confidence of the trough in the margin of cash flow. Most companies that are less than 15% penetrated the cloud and have a number of the items that you listed on your to-do list, it seems like there's quite a bit of investment that you have to put in. What gives you confidence given all those investments that you can manage through this being the trough here?
spk05: Look, I'm a firm believer that a business like Citrix, a software business at our scale, could do both. I think that we can grow at reasonable levels, and I think we can have respectable profitability. Our margins went down this year largely because we set unrealistic expectations at the beginning of the year for a level of bookings that were greater than what was a surge in 2020. I think everyone would, I don't think it would be a surprise that booking levels would be lower this year than 2020, but they're higher than the trend line. If we look past 2020, I'm looking at the pre-COVID trend line, they're higher. And I think we would have felt a lot differently about the year if we had a better, I think better internal forecasting what this year look like. But, you know, a lot of negative things happen when you're not realistic. You know, the first thing is you wind up setting quotas too high. That's not good for your sales force. You also allow spending to come into the company for revenue that you're not going to get. And you saw the margins of the business come down from 30% last year to 26%, maybe thereabouts for 2021. I think this is a margin restoration program. These are all, you know, very fixable operating things that we have to work on. As I said in my comments earlier, this is not about limiting growth. This is about funding growth. But anything that isn't funding growth, I think, is a distraction, and we're going to walk into them. I think we can do both, and this organization can do it.
spk03: And maybe, you know, anytime a new leader comes in, there's concern about, you know, how big the shakeup is going to be. When you think about kind of the fine-tune versus overhaul, how would you characterize the magnitude of changes you want to make?
spk05: Strategy's intact. This is a business that has a lot of tailwinds. I think remote hybrid work is here to stay. I think there's a lot of secular tailwinds in this business that should fuel growth for quite some time. I feel really good about that. I don't think the strategy needs to be overhauled at all. I think these are fixable operational things. You know, sometimes companies focus on growth and only growth. And I think it takes more than that to run a successful business. I think you can be operationally sound and you can grow a business. It is not an either or. It is a both. And I don't think we're choking off growth by having a little better margin than we have in this business.
spk03: Thank you.
spk10: Our next question comes from Carl Kierstad from UBS. Please go ahead with your question.
spk04: Thanks, Bob. Just to follow up on that last question, when you say that the strategy doesn't need an overhaul and these are fixable operational issues, that sends a signal that you're really not contemplating the outright exit or sale of any major Citrix businesses or product lines. And I noticed you did express a commitment to the ADC as a service. Is that the correct interpretation, Bob?
spk05: We're in three businesses largely today. We're in the VDI DAS business, we're in the ADC business, and we're in content solutions, largely the right business, those that might think about the business that we're in. And so I feel good about all three of those businesses. So, you know, we are investing in ADC as a service and we'll continue to do that. I see ADC as an important part of our BDI and DAS solution. So we're largely going to stay in those three businesses. But like every company, there's always investments that are being made around the edges of all of that stuff. And sometimes those investments are synergistic to what? what we're doing. And sometimes those investments are, I think, distractions. And so that's where we're doing the portfolio analysis right now. If it's going to have a meaningful contribution to the growth, it's going to get well-funded. And if it isn't, it's going to get defunded. And it's clear that we're doing that. So, you know, at a high level, no change. Obviously, at a detailed level, there has to be some change. But I think it's going to be something that will support growth, not limit growth. Companies that can put more wood behind fewer arrows are going to be more successful than companies that spread themselves too thin across too many priorities. Okay, that makes sense. I've been telling the organization since I got here, when everything is important, nothing is important. So we have to focus on what's important.
spk04: Got it. Makes sense. I guess one of the other things that I think is important that I haven't heard as much on on this call is around Reich. That was Citrix's largest acquisition by far over the last several years. I did notice that you trimmed your ARR guide a little bit for Reich. Bob Arlen, what's the plan to perhaps do a better job around driving synergies and reducing attrition around Reich such that that can be an important part of the growth story at Citrix?
spk05: Yeah, look, Reich, the company did change its forecast for the full year. ARR went from 180 to 90 million estimate to 170 or 180. So from that point of view, I think it slightly underperformed Citrix. earlier expectations. But it's still growing nicely. I think we've got mid-20s kind of growth in the ARR there, so it's still a good growth business. I see it as continuing to be accretive to our growth, and I think we can do better than that. The market is growing pretty strong in that business, and we have a good product. Like all acquisitions, I think there's always some – confusion that happens in an organization after an acquisition, and I think some of that is true here. But, again, I see that as temporary, and all of those things can get settled down and start driving to a higher level of growth.
spk04: Okay, terrific. Best of luck in these initiatives.
spk10: Great, thanks. Our next question comes from Sanjeev Singh from Morgan Stanley. Please go ahead with your question.
spk08: Thank you for speaking to me, and thanks, Bob, for taking the question. The question really is around what you think the source of the issue is, and I sort of listened to the questions that have been given and your answers, and it seems to me that you're really pointing at kind of the efficiency of the business and the efficiency of operations rather than the pace of the cloud transition. I just want to make sure that I'm sort of interpreting that correctly. When you look at the ARR growth, and more importantly, the 15% of the base that has moved on the cloud. Are you happy with those metrics? I mean, we always want, you know, things to get better, but, you know, high level, do you think that pace that we've seen over the last, you know, four to six quarters, has that been the pace that you guys have been satisfied with? Is it just sort of the efficiency at which you're, you know, executing through the cloud transitions being more of the issue?
spk05: No, I don't think it's the right way to read this, that the focus is on efficiencies versus pace of transition. I think quite the contrary. You know, to me, velocity of the business is the number one focus, and there it's on total ARR. And, you know, with 13% growth across the board, I think that's been really good this year. at that level there. Clearly, we want to continue to drive the pace of transition. That's not only new sales to our cloud platform, but also moving existing customers off of on-prem and onto the cloud platform. And that's accelerating. And I think that's a continued focus of the company there. So don't mistake the comments that we want to have higher margins. That's priority over growth. Growth is a number one priority. But like I said earlier, we can both continue to fuel our growth and also be a more profitable company than we are in 2021. Our margins didn't come down this year because we were fueling too much growth. Our margins came down because we made a couple of mistakes. We need to go to market motion that we need to clean up, and we're going to clean them up.
spk08: Understood. And just to follow up on the broader margin question, I think if we take a step back philosophically and we talk about Citrix cloud transition over the last several years, I think you guys have been distinctive in sort of the messaging to the market that we're going to have a cloud transition and broadly margins, revenue growth, and cash flow are all going to improve during this transition to subscription and then ultimately to SaaS, which is distinctive, right, in most other software companies that are going through a cloud transition. The message to investors typically, hey, we have to digest a period of potentially slower growth, maybe lower margins, but the unit economics of our cloud transition are so compelling that you come out the other side looking really strong from a cash flow position. So understanding, like, you know, you're going to be investing in direct salespeople to drive that growth. But philosophically, the point around growing margins cash flow in concert with the SAS transition. Do you feel confident that's still the right path to go?
spk05: Yes. I think, again, we're not emphasizing margins over growth. I should maybe call this a margin restoration program that we're doing, but it will improve our margins. But the number one focus is on the growth and in supporting the transition. And I think the company's making good progress on that transition. And a lot of the changes that we're talking about here, I think, are going to be focused around. I said we're going to increase the direct quarter carrying individuals. We're going to increase the channel investments that are driving the front line. We're going to take away things that aren't adding to growth, just adding to expense. I mean, having a bunch of overlays, that are not directly accountable for delivering sales and having shared compensation doesn't add to growth. That investment would be better made somewhere else if you really focused on growth, and that's what we're looking to do. We haven't set the objectives yet for 2022. I'm really just giving a directional statement at this point. 2021 is a trough year for both margin and cash flow. I don't read that to think it's in lieu of growth. It is in support of growth. Growth is our number one objective.
spk08: I appreciate all the thoughts, Bob.
spk10: Thank you. And our next question comes from Dan Bergstrom from RBC Capital Markets. Please go ahead with your question.
spk09: Can you guys hear me?
spk10: Yes. Yes, sir. We can hear you now.
spk09: Okay. Okay, yeah, this is actually Matt Hedberg. So, yeah, I guess, Bob, first of all, it's good to hear your voice. You know, I was encouraged to hear, you know, that you noted renewal rates are strong and improving, which is really good to hear. And I guess when you sort of, you know, and I know you're sort of just kind of looking at a review process, but, you know, I guess what gives you confidence that that can continue, you know, into this, you know, period of change and focus on growth and margins?
spk05: Well, I think it's an indication of the strength of our business. And I think, look, there's a narrative out there right now that's questioning the health and the strength of the business out there, and I think it's misinformed. I think we've got, you know, a business here that's very healthy. I think you can see that reflected in the growth in our ARR at 13%. I think you can see it in the fact that we have very strong renewal rates and they're getting better, that's a sign of a very healthy business and a very healthy competitive environment. And I think on the point of competition out there, I would point out that Microsoft is a big partner of ours and that, again, this is a little bit contrary to the narrative right now, but we partner with them because it's a symbiotic relationship to where they see a lot of value in and moving Citrix infrastructure to Azure. It drives a lot of Azure consumption, and it's good business for us. And in those deals that we're working on, Microsoft is a partner. We monitor the deals. We have a significant uptick in both the number of deals that we're working on jointly, and we also see a significant uptick in the size of those deals that we're working on with Microsoft. So I think there's a lot of metrics here that are very, very encouraging that are inconsistent with the narrative out there. And I think part of that narrative, I think, is of our own doing because we obviously stumbled in the first couple of quarters this year and missed our reported revenue objectives. And that's the reason why I'm pointing to ARR to say throughout all of that noise, we have really solid double-digit growth in our ARR and all the other metrics I would suggest strength in our business are there. oil rates, partnership with Microsoft, if I look at the SAS growth, if I look at the transition of our existing customers from on-prem to the cloud, these are all, to me, votes of confidence in the business. In making that transition to the Citrix cloud, some of our biggest and most complicated customers are making that move. To me, that's a tremendous vote of confidence in the Citrix business long term. And that, I think, is part of the reason why we see strong renewal rates. I see that. Got it. That's helpful.
spk09: That's helpful, Bob. And then, you know, obviously, you know, Citrix is really sort of built upon, you know, really enabling flexible work, hybrid work. You know, as you started talking to customers maybe more directly in your new role, How do you see that? You noted tailwinds across a lot of your businesses. How important is Citrix in that narrative of post-COVID hybrid work? It always struck me that you guys should be really well positioned to leverage a lot of the learnings since 2020.
spk05: I think it's very important. In fact, it might even be more important. Last year was a mad scramble for a lot of companies. Citrix got you know, a lot of benefit from that. And there was a lot of, you know, incremental business, the 10-hour way. But there was a lot of different ways companies solved this big problem last year. And I think over time, people are going to start to realize that remote work has a very big security aspect to it, a very big performance aspect to it, not just a connectivity aspect. aspect to it, and I think as remote hybrid work becomes more permanent and not reactive, I think it's going to move more towards the use cases where Citrix actually has strength. I mean, one of the big advantages of Citrix is our performance levels and the HDX technology that we have in our DDI. I mean, that's something that is, you know, orders of magnitude more performance than any other form of facilitating remote hybrid work. So I actually think, and as security becomes a bigger and bigger issue, I think it's going to move more towards complex use cases that require Citrix and also put some of the other alternatives at a disadvantage out there. So this is a secular tailwind that is real, that is going to be there forever, and I think some of the underlying currents also move in Citrix direction as well.
spk09: Thanks, Bob. Best of luck.
spk10: Great. Thank you. And ladies and gentlemen, with that, we'll be concluding today's question and answer session. I'd like to turn the floor back over to Bob Calderoni for any closing remarks.
spk05: Great. Thanks, everyone, for joining us today. I just want to leave you with a few final thoughts. As I mentioned in a number of my comments, I feel terrific about the strength of the underlying business or progress And the rate and pace of moving to the cloud is all good. It's also good at moving to recurring revenues. That's all going well. And we have good momentum in the overall health of the business reflected in our AR growth for 2021, growing at nearly 10%. Like every business, there are things we can get better at. I believe we've got an understanding of what they are. We're working on plans to deliver continued success in 2022 and beyond. And I look forward to sharing those plans with all of you at the next scheduled conference call. So until then, thank you very much.
spk10: Ladies and gentlemen, with that, we'll conclude today's conference call. We thank you for joining today's presentation. You may now disconnect your lines.
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