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Citrix profits skyrocket; is free XenServer strategy working?

Citrix profits increased by 47% in the fourth quarter of 2009, driving profits for the year up 7% compared to 2008.

Citrix attributed its record profits to an increased interest in desktop virtualization and the launch of XenDesktop 4. But its quarterly revenue grew by only 8% compared to Q4 in 2008, and revenue from product licenses and license renewals grew 4% and 6%, respectively.

The really big growth came from technical services and online services, which saw revenues increase by 18% and 20%, respectively.

Citrix’s press release did not mention XenServer at all. Skeptics would point to that as just another indicator that Citrix is giving up on XenServer. But the company has said all along that, by making XenServer free and open source, one of the goals is to drive more services business. Judging by these financial results, that strategy is working.

Citrix’s results come just days after VMware reported that its fourth-quarter profits fell by 49% — although VMware earnings for the quarter did beat Wall Street expectations by more than $50 million.

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