Citrix Partners: Go-Private Deal Hinges On Restoring ‘Heart Of True Innovation’

‘I hope that Vista and Elliott pay heed to the value of the Citrix channel partners and how essential they are to the ongoing growth and prosperity as it relates to the Citrix platform,’ says one Citrix partner.

Citrix channel partners tell CRN they are cautiously optimistic about the deal for private equity firms to take the virtualization vendor private and merge it with Tibco. Partners want to see Citrix’s actions back up executives’ words in recent months that the company is investing in its channel partner program – not to mention, investing in its technology to break out from the crowded market of vendors offering services aimed at remote workforces.

Mike Strohl, the president and CEO of Entisys360, a six-time Citrix partner of the year based in Concord, Calif., said that the private equity companies behind the deal – Vista Equity Partners and Evergreen Coast Capital, an affiliate of Elliott Investment Management – must restore the long-time software innovation that has been at the heart of the VDI powerhouse’s success.

“It is too early to tell whether this is going to be good for clients and partners, but the next step needed to be taken,” said Strohl. “I hope that Vista and Elliott pay heed to the value of the Citrix channel partners and how essential they are to the ongoing growth and prosperity as it relates to the Citrix platform. I hope with their investment power that the heart of true innovation is restored within Citrix.”

[RELATED: Citrix To Be Acquired, Taken Private And Merged With TIBCO In $16.5 Billion Deal]

Since its founding in 1989, Citrix has focused on software innovation that attracted partners and customers, Strohl said. “Innovation was part of their founding DNA,” he said. “That is what made them such a powerful company. Clients and partners wanted to work with Citrix.”

Strohl said he hopes that Vista Equity Partners and Elliott Investment Management take a page from the playbook of former Hewlett-Packard CEO Meg Whitman, who recommitted to partners and technology innovation when she took the helm of what was then a troubled company in 2011.

“The first thing Meg told partners and customers is that she was restoring the founder’s DNA, that it was all about partners and innovation,” he said. “That ignited HP from day one. As Citrix was built based on innovation and partnerships, hopefully they will take a lesson from Meg’s playbook and do what’s right in front of them.”

Spokespeople with Citrix, Elliott, Vista and Tibco did not grant CRN requests for interviews. Vista has owned Tibco since 2014.

The CEO of one Citrix partner, who did not want to be identified, said the combined company faces a big challenge in unifying the technology products of both companies. “We are selling big data solutions every single day and not once has Tibco been part of that conversation,” the CEO said. “If they are thinking they are going to make me into a Tibco reseller that is a different conversation.”

Ray Wolf, CEO of A2K Partners, a Southlake, Texas-based Citrix partner, told CRN in an interview that he’s glad to see the deal happen but he wants to see Citrix focus on business value looking ahead.

The company may have gotten a bump with the switch to remote work at the start of the pandemic, but competitors such as VMware and Microsoft have added new products and services to their offerings at a faster rate.

Citrix is “essentially trying to play catch up on cloud subscription – but the destination of catching up on cloud subscription is not exciting at all,” Wolf said. “It may financially be good for them, but from a partner and for existing customers or new customers, we’re like, ‘What are you going to do new with the technology? Why do I want to continue investing? What is the future-proof story for Citrix?’”

Wolf wants to see Citrix thinking about digital adoption platforms and simplifying the process for partners and customers to get to contracts.

“I need an innovation partner,” Wolf continued. “Citrix has every ability to be successful when there’s transformation. They have a solid base, a loyal customer base. Their technology works. They just now need to come out with meeting the current and the future requirements of the customer and give them confidence they can get it done.”

He continued: “We’ll just put the past challenges behind us and look forward.”

Michael Goldstein, president and CEO of Fort Lauderdale, Fla.-based Citrix partner LAN Infotech — which is also a member of CRN’s 2021 Security 100 — told CRN in an interview that he’s glad the long saga of Citrix possibly going private has come to an end.

Reports of a potential deal with Elliott, Vista and Tibco popped up in December. A deal with Elliott came up in the fall.

Elliott Management previously bought a stake in the company in 2015 and Elliott partner Jesse Cohn joined the board. He left in 2020, according to a Citrix statement from the time.

Citrix previously explored sales and spin-off strategies in 2017 and 2015.

Citrix partners at the time voiced displeasure with Elliott’s 2015 presence to CRN.

Goldstein said that he stands by Citrix’s technology and keeping up with innovation. But the company needs to focus on small business customers and its channel partners.

“It finally puts a period at the end of the sentence,” Goldstein said. “You’ve seen them change with the times. Their products are pretty amazing. Hopefully, they’ll be more for small business over time versus enterprises.”

He said he has faith in the current channel leaders making the right changes for go-to-market to better involve partners.

Citrix Acknowledges Channel ‘Missteps’

Citrix saw a new CEO and a new channel chief last year and copped to underusing its channel partners.

Bob Calderoni, Citrix’s interim president and CEO after David Henshall stepped down in the fall, said during the company’s most recent quarterly earnings call in November that Citrix had “some missteps” in its go-to-market strategy and forecasting, according to a transcript of the call. He said the company “ introduced far too many overlays over the last 12 to 18 months,” with “too many people getting compensated on the same deal.”

He promised “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.”

“The channel is still there. The channel hasn’t gone away,” Calderoni said on the call. “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.”

He said Citrix has invested in sharing stalled and uncovered pipelines with partners “to give them leads and opportunities for new business,” as well as increasing compensation for channel partners.

Citrix has also worked with partners to transition customers to the cloud. “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,” Calderoni said.

He continued: “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. It might take a little bit of time before we see the uptick, but I’m pretty confident we will.”

In September, Hector Lima, Citrix’s executive vice president and chief customer officer, told CRN in an interview about Citrix’s investments in revamping its channel program, including making interim channel chief Mark Palomba permanent. Palomba began handling channel chief duties after Bronwyn Hastings left Citrix in May for Google Cloud.

Lima promised investment in a revamped incentives program for partners to make benefits more predictable, help increase the partner role post sale and align partners with Citrix’s priorities, including moving customers to the cloud and packaging more Citrix offerings to create end-to-end digital workspace services.

“One of the things that I’ve heard the most from partners in the ecosystem is that it’s become operationally hard to do business with us,” Lima said. “Simple things like quoting — you’re getting the right price out the door, things of that nature. We have to make it much, much simpler so that partners can be more autonomous and they don’t have to rely on a Citrix partner manager or a Citrix seller to help them with that. That’s a whole operations piece around tooling, processes, licensing, packaging.”

Quarterly Earnings

Citrix also reported earnings for its fourth quarter – which ended Dec. 31 – on Monday along with news of the deal.

The company reported $851 million in revenue for the quarter, a 5 percent increase year over year. The company reported $3.22 billion for fiscal year 2021, a 1 percent increase year over year, according to the company.

For the quarter, subscription revenue was $454 million, a 33 percent increase year over year. Product and license revenue was $43 million, a 21 percent decrease year over year.

Support and services was $354 million, a 15 percent decrease year over year, according to Citrix.