Citrix Channel, Sales Orgs Under Fire, Missed Revenue Targets Again

…causing execution, as well as forecasting inaccuracies. A lot of this is about how do we land new customers very cleanly? And how do we do that with our channel? How do we make sure that incentives line up in the field, for example, and in the channel to support that?”

Good News from Morgan Stanley

A research report on Friday by Morgan Stanley pointed to some good news for Citrix. It noted that annual recurring revenues (ARR) for SaaS has grown for the third consecutive quarter. Renewal rates are rebounding, and Citrix reports having 11.4 million paid cloud customers, up from 10.3 million in Q1 and 7.5 million year-over-year.

However, because of the bad news, Morgan Stanley changed its share price target for Citrix to $90. The research note raised the following concerns:

“Perhaps more central to the challenge that Citrix has been facing is: 1) a tougher competitive environment given the efforts of rivals such as Windows 365, VMware and Zscaler and 2) less financial flexibility as management has been operating under a rigid financial framework that calls on the company to accelerate revenue growth, expand operating margins and significantly grow [free cash flow] in the midst of a cloud transition – the exact reverse of what is typically seen in model transition stories.”

Henshall believes Citrix can overcome these concerns. In his blog post, Henshall said: “As we move into the second half of 2021, I am more confident than ever in our strategy, our market-leading integrated workspace platform, and our ability to make working with Citrix the best possible experience for our customers and our partners.”