By Emon Reiser – Digital Editor, South Florida Business Journal

One of South Florida’s biggest success stories, Citrix Systems, is celebrating 30 years in business.

And, in many ways, Citrix’s gains and setbacks over the years mirror the region’s struggles and wins toward becoming an international tech hub for cutting-edge enterprises.

The Fort Lauderdale-based company (Nasdaq: CTXS) began as a scrappy startup that ballooned into a global software juggernaut just north of Miami’s headline-making ventures, and south of Boca Raton’s IBM-influenced technology boom. Today, the publicly traded company reports nearly $3 billion in revenue and over 100 million users. That’s a giant leap from the $3 million in venture capital it launched with in 1989.

Its founders defied the expectations of technologists who thought it would be impossible to scale a formidable technology business in South Florida.

“Citrix proved to folks that you could build a technology company and not live in Silicon Valley,” Greater Fort Lauderdale Alliance President and CEO Bob Swindell said.

Over the decades, the company’s wins and growth meant added economic prosperity for the region. And, despite some hiccups along the way, Citrix once again sees rapid advances on its horizon. As it transitions to new business strategies, the company continues to bet on South Florida, home to 2,000 employees and most of its patent holders.

Citrix’s stock has rebounded nearly 100% since 2015, when the company announced hundreds of layoffs and sold part of its business. It shuffled in three new CEOs over a two-year span.

Now, with 8,200 total employees, the company’s headcount is still short of the 9,500 workers it employed before its latest restructuring efforts.

But Citrix’s full rebound – expected to be strong by many investors’ and analysts’ estimates – will further bolster the South Florida economy as the company creates local jobs. Citrix is betting on its digital workspace technology to lead it into a new era of profitability.

That is, if competitors don’t dominate the market first.

“The last years have been about cost cutting and selling off nonstrategic assets,” said analyst Daniel Ives, of Los Angeles-based Wedbush Securities. “Right now, the company has a major uphill battle as it tries to reignite growth back into the model. Citrix is a strong brand, and I think [it has] done a great job to get it to this point, but there’s a lot of heavy lifting ahead.”

Ones and zeros

Citrix is up against a roster of competitors that have continually expanded since the day the software company launched.

“Technology is moving at a pace I’ve never seen before,” Citrix CEO David Henshall said. “The waves of disruption are coming closer together, and they’re higher and deeper than they ever were.”

To counter that, the company invests heavily in research and development. In 2018, Citrix spent $440 million on R&D, an 11% increase from two years prior. At the start of 2019, the company had a worldwide portfolio of 2,725 patents and over 1,000 patent applications pending.

“In the last 18 months, we have added about 500 engineers in R&D and cloud to speed the pace with which we can bring innovations to the market,” said Jeroen van Rotterdam, Citrix’s executive VP of engineering.

Along with its in-house investments, Citrix actively seeks acquisition deals to advance its tech.

Last year, Citrix acquired San Bruno, California-based startup Sapho for $200 million. The deal brought in a crucial artificial intelligence (AI) component for Citrix Workspace, a platform Henshall said is fundamental to the company’s growth goals.

Citrix Workspace is a digital workspace software that combines multiple Citrix products into one platform and can be accessed across many devices. The technology aims to facilitate collaboration between remote teams. It taps AI to predict what employees and managers need to make their workdays more productive.

The platform creates a feed of tasks that can be used to complete objectives, like approving an expense report, in fewer steps. As the technology learns more about each user’s workflow, it would bring tasks and information needed to complete jobs to the forefront “before they know they need it,” Henshall said.

Despite competitors such as VMware and numerous entrants to the market, Citrix Workspace led the company’s growth for fiscal year 2018, and is expected to do so again in 2019. Users include eBay, which has 4,000 employees on the digital workspace platform. With the AI component, Citrix says the platform can boost a company’s productivity by as much as 20%.

While the evolution of Citrix Workspace is central to the company’s long-term goals, even more pertinent to its strategy is how customers pay for its technologies.

Last year, Citrix accelerated its transition to a subscription payment model. The strategy was made a top priority with Henshall’s arrival as CEO in 2017.

As more of its products become software-as-a-service (SaaS) paid for by subscribers, as opposed to one-time licensing agreement payments, the steady revenue flow should make the company stronger in the long term, Citrix CFO Arlen Shenkman said.

“We will exit a subscription model transition as a more solid company,” he said.

By the end of 2022, the company aims to generate at least 50% of its revenue from subscriptions. At the end of 2018, subscriptions accounted for 15% of its revenue, or $455 million.

Subscription conversions of current customers and new subscribers continue to grow at a rapid clip. In the third quarter, the company increased its subscription revenue 43%, year-over-year.

Investors are taking note. Investment giants – including The Vanguard Group, Citrix’s largest shareholder – have responded by increasing their holdings in the company.

“As we move from being a perpetual license company to a service-based, subscription-only entity … we create much tighter partnerships that way,” Henshall told the Business Journal.

A turbulent past

Citrix’s newly renovated, multi-building campus in Fort Lauderdale looks nothing like its first office, with orange shag carpets, in Richardson, Texas.

In 1989, Argentine immigrant Ed Iacobucci co-founded the company as Citrus Systems with Roger Roberts and Randy Wood. Iacobucci had left IBM and aimed to continue the OS/2 computing system project, which IBM had dropped from development. When Roberts and Wood heard Iacobucci’s pitch to investors, they left jobs at Texas Instruments and Data General, respectively, to join the new venture.

The founders relocated the company’s headquarters to Coral Springs that year and began scaling the startup.

Fast-forward to Dec. 8, 1995, when Citrix’s initial public offering opened at $15 a share and closed at $30.

While there were many major milestones between its founding and its IPO, Citrix’s explosive first years weren’t without complications.

In 1993, it was clear the OS/2 project wasn’t going to dominate the technology world as the founding team had expected, said Roberts, the company’s CEO from 1990 to 1998.

“We thought, this dog’s not going to hunt,” he said at a TechLauderdale event that brought together the company’s past CEOs. They considered shutting the company down as they ran out of money.

Instead, they secured investor funds to rebuild the product for Windows. Roberts and the executive team managed to forge a strategic agreement with software company Novell, which made Citrix a preferred partner.

The early partnership was the start of a model Citrix continues to use to fuel its profits. It remains bullish on strategic partnerships as a mainstay of its future profitability.

“I mean, with partnerships, the company just grew like mad,” said Mark Templeton, who joined Citrix in 1995.

But when the dot-com bubble burst, Citrix’s momentum slowed. Templeton, the CEO from 2001 to 2015, considered selling the company. But, once again, Citrix chose to innovate, rather than take a buyout deal.

Media reports swirl nearly every year about the company potentially being acquired. Many times, the rumored buyer is one of its largest long-standing partners: Microsoft.

Despite the constant acquisition rumors, the plan is for Citrix to remain its own entity, Henshall said.

South Florida grown

Fort Lauderdale has been Citrix’s home since 1997, and the company’s leadership says that’s where they company intends to stay.

"South Florida is critical," Henshall said. “We are a global organization with offices in 26 countries, but our largest office is in South Florida.”

In 2007, Citrix opened a second headquarters in Santa Clara, California. But most of its leadership team, including Henshall, live in South Florida.

The company’s presence in tri-county region amounts to more than just a big name on a local building.

“One of the reasons headquarters are targets for us is because of the investments HQ companies [like Citrix] tend to make in their community,” the Alliance’s Swindell said.

Citrix helps local nonprofits including the South Florida Institute on Aging (SoFIA) and Girls Who Code to boost the number of tech workers in vulnerable populations. It also works with local colleges – including Broward College, Nova Southeastern University and Florida Atlantic University – to address the region’s shortage of tech talent.

What’s more, Swindell and, the South Florida Technology Alliance uses Citrix’s local headquarters as a way to lure more tech talent and headquarters to the region. Its presence directly and indirectly aids in the growth of the rising technology sector sprouting up across the tri-county area, Swindell said.

"Citrix is a classic wealth-building company,” he said. “It imports intellectual property and ships it all over the world, bringing new dollars into Broward County, rather than just circulating its wealth. It’s an important quality we look for when diversifying our economy."

CITRIX TIMELINE

1989: Incorporates in Delaware in April

1994: Marks fifth anniversary with $10 million in net revenue

1995: Launches IPO with stock priced at $15 a share

1999: Company has offices in 11 countries, 1,000 employees worldwide, and nets $404.4 million in revenue

2004: Company has 2,550 employees and posts revenue of $741 million

2009: Reaches 230,000 customers

2019: Serves 400,000 customers, employs 8,200 workers globally, and records annual revenue of $2.97 billion

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