uploads///CTXS_Networking revs

Citrix’s NetScaler Driving Networking Business

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Feb. 15 2018, Updated 9:02 a.m. ET

Reason for Networking business growth

Citrix’s (CTXS) Networking product business is the second-highest revenue contributor after its Workspace service product. Citrix’s Networking segment reported growth of 6.7% YoY (year-over-year) to $215.0 million in 4Q17. 

This growth in Networking revenues was primarily triggered by low double-digit growth in its NetScaler ADC and SD-WAN products. In fiscal 2017, Citrix’s Networking revenues rose 1.0% YoY to $790.0 million.

In the graph above, we can see the revenue growth of Citrix’s Networking product business in the last five quarters. During this period, it grew at a CAGR[1. compound annual growth rate] of 1.6%.

The demand for secure networking is significant, as detailed by research firm Gartner, which provided guidance on global IT spending. Gartner expects global IT expenditures to increase 3.5% to ~$3.6 trillion in 2018.

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New product launch to drive business

In order to enhance its networking product portfolio as well as to target the global market, Citrix (CTXS) has been upgrading its product features. The company launched its new TLS security and cryptography options for NetScaler ADC solutions.

Citrix also released new licensing models to share capacity across hybrid environments. It also shipped tech previews on the new analytics platform, which are related to behavioral security analytics and application performance analytics.

The NetScaler ADC solutions realized double-digit growth from new license fees. NetScaler ADC and SD-WAN are helping the Networking business thrive via increased deployments. NetScaler ADC’s integration with XenApp and XenDesktop offers a good combination to clients that are already using these products.

However, the growing market presence of Amazon Web Services (AMZN) and strong competition from F5 Networks (FFIV) have acted as headwinds for Citrix.

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