Executives
Eduardo Fleites - Director of Investor Relations
David James Henshall - Acting Chief Executive Officer, Chief Financial Officer, Executive Vice President of Operations, Principal Accounting Officer and Treasurer
Sudhakar Ramakrishna - Senior Vice President and General Manager of Desktop & Cloud
Analysts
Abhey Lamba - Mizuho Securities USA Inc., Research Division
Philip Winslow - Crédit Suisse AG, Research Division
Jonathan Parker - Morgan Stanley, Research Division
Sonya Banerjee - Goldman Sachs Group Inc., Research Division
Kenneth Wong - Citigroup Inc, Research Division
Chaitanya Yaramada - Robert W. Baird & Co. Incorporated, Research Division
Edward Maguire - CLSA Limited, Research Division
Raimo Lenschow - Barclays Capital, Research Division
Kash G. Rangan - BofA Merrill Lynch, Research Division
Stewart Materne - Evercore Partners Inc., Research Division
Ross MacMillan - Jefferies LLC, Research Division
Darren R. Jue - JP Morgan Chase & Co, Research Division
Gregg S. Moskowitz - Cowen and Company, LLC, Research Division
Richard G. Sherlund - Nomura Securities Co. Ltd., Research Division
Michael Turits - Raymond James & Associates, Inc., Research Division
Karl Keirstead - Deutsche Bank AG, Research Division
James Moore - FBR Capital Markets & Co., Research Division
Rakesh Kumar - Susquehanna Financial Group, LLLP, Research Division
Mark L. Moerdler - Sanford C. Bernstein & Co., LLC., Research Division
Robert Scott Zeller - Needham & Company, LLC, Research Division
Citrix Systems (CTXS) Q4 2013 Earnings Call January 29, 2014 4:45 PM ET
Operator
Good afternoon. My name is Catena, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Citrix Systems' Q4 Quarter Earnings Conference Call. [Operator Instructions] I would now like to introduce Mr. Eduardo Fleites, Vice President of Investor Relations. Mr. Fleites, you may begin your conference.
Eduardo Fleites
Thank you, Catena. Good afternoon, everyone, and thank you for joining us for today's fourth quarter and fiscal year 2013 earnings presentation. Participating on the call will be David Henshall, acting Chief Executive Officer and Chief Financial Officer; and Sudhakar Ramakrishna, Senior Vice President and GM of Desktop and Globalization.
This call is being webcast on Citrix Systems' Investor Relations website. The webcast replay will be posted immediately following the call.
Before we begin, I want to state that we have posted product specifications and historical revenue trends related to our product groupings to our Investor Relations website. I'd like to remind you that today's conversation will contain forward-looking statements made under the Safe Harbor provisions of the U.S. securities law. These statements are based on current expectations and assumptions that are subject to risks and uncertainty. Obviously, these risks can cause actual results to differ from those anticipated.
Additional information concerning these and other factors is highlighted in today's press release and in the company's filings with the SEC. Copies are available from the SEC or on the company's Investor Relations website. Furthermore, we will discuss non-GAAP financial measures as defined by SEC's Reg G. A reconciliation of the differences between GAAP and non-GAAP financial measures discussed on today's call can be found at the end of today's press release and on the Investor Relations page of our website.
Now I would like to turn it over to David Henshall, our acting CEO and Chief Financial Officer. David?
David James Henshall
Thank you, Eduardo, and welcome to everyone joining us today. While we ended 2013 with record aggregate results, this is a year of transition for the company. Entering the year, we initiated a strong pivot towards mobile, recognizing that customers were looking for better ways to embrace mobility, the cloud, IT consumerization and BYOD.
For years, we've been focused on connecting people to apps and information from any location over any device, simplifying IT and driving down costs. Today, we're a leading provider of infrastructure and cloud services, helping customers to deliver secure, managed mobile workspaces, mobilizing apps, data and people and helping them a true -- achieve true business value and productivity by embracing mobile workstyles.
At the same time, we're driving innovation in the data center with our unique technology across physical and virtual networking platforms, powering some of the world's largest clouds and giving enterprises the capabilities to combine best-in-class app networking services in a single consolidated footprint. I'm extremely proud of the Citrix team and our partners, whose hard work and perseverance have been critical as we continue to pivot to mobile and cloud.
So let's review the specifics from the fourth quarter. As you can see from the release, total revenue increased 8% year-over-year to $802 million. Product license revenue was flat year-on-year, which I'll discuss later in a little bit more detail. Deferred revenue grew to $1.4 billion, up $142 million sequentially and 18% year-on-year. And adjusted EPS was $1.04, an increase of 16%. In Q4, we closed 82 transactions greater than $1 million each, a nearly 50% increase over the 55 large deals from last year and importantly, 20 of these transactions came from the Networking and Cloud business.
Geographically, we saw uneven results across our markets in Q4. From a license revenue perspective, the EMEA region had a solid close to what had been a very challenging year, growing license 12% year-on-year and driving $38 million plus transactions. In the Americas, there were 35 large transactions but license revenue was only up 3%. And finally, in the Pacific Japan region, license declined 27% despite a record $9 million plus deals. But contributing to the year-over-year decline in this region was that most of these large contracts were from multiyear arrangements that are going to be recognized as revenue over an extended period of time.
So next, let's look at the Q4 results in our 3 primary businesses. First, our Mobile and Desktop business grew 4% from last year to $428 million, including an 8% decrease in license revenue. The Mobile and Desktop business continues to be in transition as we've been driving a broader conversation with customers about transforming their business to enable mobile workstyles. The latest release of XenMobile in Q4 has provided and really proven to be a catalyst for these conversations, allowing improved pipeline closure, more than 150% sequential increase in license revenue and enabling us to exceed our 2013 goals. We continue to set the bar in the enterprise mobility market with MDM, mobile apps, virtual apps in desktops and data, all at an integrated secured solution.
In Q4, 80% of our mobile platform customers opted for this complete edition, demonstrating the value of our integrated enterprise mobility offering versus just MDM. In the aggregate, we continue to see significant XenMobile pipeline developing, and we're very pleased with our momentum going into 2014.
But as we mentioned on our Q3 earnings call, there's been a few issues that have been impacting overall results in the desktop and apps business. First, the pivot to mobile. It's impacted our midsized transactional business for standalone desktop opportunities. And to address this, we'll refocus on driving more project-specific items, highlighting key attributes that have made our app and desktop solutions market leaders, areas like data security, compliance, cost savings and secure access.
The second factor has been the major platform transition with XenDesktop 7 and now 7.5. This platform is a cloud-ready infrastructure for delivering Windows apps and desktops as a service from a single, easy-to-use console. By significantly reducing installation complexity, accelerating app migrations, streamlining ops management and reducing total cost of ownership, we believe there's a solid multiyear product cycle ahead as customers refresh their data center infrastructure and begin to leverage hybrid clouds. We'll drive this actively with enhanced migration tools, architectural guidance and services.
The third area has been the perception that XenApp was going away, as this product has been deemphasized in messaging and in go-to market. But based on feedback from customers and partners, we are relaunching XenApp this quarter with the next-gen 7.5 edition. This is built on the new FlexCast Management Architecture and provides -- or allows simple secure delivery of individual Windows apps to mobile devices with demonstrable ROI.
Additionally, with 7.5, IT can now burst and grow their virtual applications to the cloud in realtime with hybrid cloud provisioning and out-of-the-box support for CloudPlatform, Amazon Web Services and soon, Microsoft Azure. XenApp has been a key technology leveraged by our service provider partners, driving the cloud delivery of apps and desktops. In fact, this subscription business was up about 50% year-on-year in Q4.
So we're delivering a complete enterprise mobility solution, allowing customers to bridge between the worlds of Windows and mobility and to do it all with the integrated experience that only Citrix can provide.
So next, in our Networking and Cloud business, total revenue increased by 13% in the quarter with product license revenue also up 13%. The NetScaler products were again the major driver for this business, up more than 40% from last year with balanced growth between the enterprise customers and Internet and cloud providers.
So a little bit more context on the networking business. Let me touch on a few metrics from Q4. First, the cross-sell and desktop attach initiatives led to 800 virtualization orders that included NetScaler as part of the solution. This number is up about 20% from a year ago. Also, we transacted with over 2,500 different customers in the period compared with about 2,000 last year as we continue to expand the base.
From a mix perspective, the NetScaler SDX platform represented nearly 20% of NetScaler sales and increased over 45% year-on-year. And the investments we made in go-to market coverage, specifically in EMEA, continue to bear fruit, leading to more than 50% growth year-over-year in that geo. And finally, in our ByteMobile business showed good traction in Q4, signing multiyear contracts with large telcos in Japan, Pacific and EMEA. Although revenue for these contracts is going to be recognized over extended periods of time, we still beat our revenue goal for the year.
Within our SaaS businesses, revenue was up 13%. The collaboration services, like GoToMeeting, remain the primary driver, growing 18% year-on-year. Additionally, ShareFile, our data sharing platform, is continuing to scale up nicely, up 65% from last year and now approaching 10% of the overall mix in SaaS.
By integrating data into our emerging mobile solutions, we're also expanding the reach into enterprise accounts, giving them the option of leveraging ShareFile connectors in their own data centers or on cloud storage platforms like Microsoft Azure. Impacting overall growth in SaaS, however, have been declines in the remote access solutions as these are addressing very mature market segments.
So turning to operations. Adjusted op margin in the quarter was just over 30%. Adjusted gross margin in the quarter was 86%, down 129 basis points from a year ago as the mix of revenue reflects the higher growth in networking and SaaS. We expect this trend to continue through 2014 but level off in 2015.
During Q4, we added 200 people to Citrix as we continue to focus on expanding go-to-market reach and customer direct touch, primarily around networking. And additionally, we've been investing to expand our data sharing in mobile platforms teams. We do expect growth in headcount will be modest in 2014. And finally, the adjusted tax rate in the period was 20% due to the strength of the EMEA results relative to the U.S.
Turning to the balance sheet. Deferred revenue ended the year at $1.41 billion, an increase of $142 million sequentially. And included in this is strong growth in long-term deferred, up 31% year-on-year due to the number of large multiyear contracts. Cash and investments ended December at $1.6 billion. And as we indicated last quarter, we increased our repurchase program in Q4, buying back 4.4 million shares of stock and bringing the year-to-date total to over 7 million shares. Offsetting this investment was $230 million in cash flow from ops, bringing the full year total to over $930 million, up about 13% year-on-year.
So turning to our current outlook and expectations for 2014. I'd like to first provide some additional context around our guidance. So first, while we expect to see continued strong growth in networking, mobile platforms and our data sharing business, we're assuming uneven pipeline closure in desktop virtualization due to the factors that I discussed earlier.
Second, the strength in networking will likely compress gross margins by 1.5 to 2 percentage points from last year, ultimately impacting op margin. And finally, that the adjusted tax rate will increase from 20% to 24%, largely due to the federal R&D tax credit not having been extended yet by Congress. So if and when that happens, we would expect to see a lower tax rate. So we'll continue to focus on execution and delivering financial results by investing to expand our long-term capacity, innovation and competitive differentiation across our businesses.
So for fiscal year '14, our expectations are for total revenue growth to be in the range of 8% to 10%, adjusted gross margin to be in the range of 84% to 85%, adjusted tax rate of 24% and adjusted EPS of $2.85 to $2.95 a share. And with respect to Q1, we expect total revenue to increase 8% to 10% from last year, adjusted gross margin in the range of 84% to 85% and adjusted EPS of between $0.57 and $0.60 a share.
And finally, as you saw on the release, Mark will be returning to Citrix at the beginning of February as full-time CEO, but with the intent of retiring within the next year.
So as we open up the call for questions, I want to let you know that I'm joined again today by Sudhakar Ramakrishna, SVP and General Manager of our Enterprise and Service Provider division, who is also available to address your questions.
So operator, we'll now open it up and take questions.
Question-and-Answer Session
Operator
[Operator Instructions] Your first question comes from the line of Abhey Lamba with Mizuho Securities.
Abhey Lamba - Mizuho Securities USA Inc., Research Division
I can [ph] look at 2013, can you talk about the desktop and mobility business, the dynamics in that business? Was it -- was there anything on the competitive front or market front, or was it just getting the product ready? And also, it's interesting to see your emphasis on XenApp. So how quickly can you restart that business? And does that create any opportunity of disruption as you're engaging in customer conversations?
David James Henshall
Sure, Abhey. Let me take the first part of that question and ask Sudhakar to add color as well. We sat back and looked at the overall business. We talked about it over this call and over the last call that we initiated a broad pivot to mobile in the beginning of the year. And that was not without some level of distraction and both in terms of our go-to-market engine, our messaging, et cetera. And so we've been addressing those things over the last 6 months, let's say, focused on helping customers scale and manage the new platform, which once they get on it will allow them to go faster, driving down complexity and some of the issues that we've highlighted in the past. That's a big one. The tools and messaging and demand gen and those types of activities that we're focused on with our sales kickoffs that we just completed a couple of weeks ago, really helping get our teams reengaged on customers, the types of problems that we're addressing, the needs that they have in connecting solution with budget much more directly. And then XenMobile is really starting to ramp, and we've completed building out our mobile team. And so the core teams can really go back and refocus on apps and desktops. With respect to XenApp, I mean, it's been a great technology for many years. It's truly fundamental and one that only Citrix can provide. And as I mentioned in my prepared remarks, we've had really just an overwhelming requests from partners and customers to reassert that technology and demonstrate the road map that we're delivering. And so we're really excited to bring forth 7.5. It's not a brand-new solution because customers already understand the value prop. There's certainly a lot of new features and value add that we're bringing in this new release, and we're all excited about it. I think that it may be a back half story for 2014, but we're bringing it to market later this quarter and we'll go from there. Sudhakar, would you like to add about that?
Sudhakar Ramakrishna
Things, David. First of all, I want to highlight on that XenApp, as we are releasing from a conceptual standpoint is not new. We have established our leadership in this segment, and we have [ph] characterized our effort right now is continuing to innovate, continuing to expand the possibilities. As you know, we released XenDesktop 7 last year and a follow-on release, and we've been unifying essentially our desktop and application delivery architectures and focusing a lot more on application delivery in the context of enabling users to be more mobile and also be able to leverage the cloud. So a lot of the work that we've done in XenApp centers around delivering superior experiences to end users for mobile applications, specifically Windows mobile devices. Extending the capabilities to support cloud has been an increasingly important request from our customers to support both from an enterprise premise into the cloud, and we support a variety of cloud form factors out there. Also, a key emphasis of what we have done with both our XenDesktop and XenApp is significantly reducing complexity, enhancing user experiences and delivering superior fully [ph] cost of ownership. In fact, one data point I would give is that our information is about half -- takes half the step as our nearest competitor. And with some of the additions that we've made to our HDX platform, we significantly expand the experiences of end users from consuming Windows applications on mobile devices. This is part of an integrated strategy as it relates to enabling mobile workstyles and delivering mobile workspaces of unifying mobile apps for Windows and native mobile apps through a common storefront and a common architecture. That tends to be our single biggest differentiator, and it seems to resonate very effectively to customers.
Operator
Your next question comes from Phil Winslow with Crédit Suisse.
Philip Winslow - Crédit Suisse AG, Research Division
I just wanted to dig in a little bit on your commentary about your expectations for desktop virtualization in '14. Obviously, you guys have commented that the release of XenDesktop 7 and because of the back-end infrastructure upgrades required, that, that may have paused or slowed down some incremental rollouts following that release. Are you -- how much of that are you sort of factoring into this '14 guidance? And then obviously, as you mentioned, XenDesktop 7 is an important release. But when do you think that starts to transition from sort of being headwind to rollouts as people upgrade the infrastructure to actually potentially become a tailwind at some point?
David James Henshall
Sure, Phil. It's David. Let me talk just a little bit about the financial side of it, and then Rama can talk specifically about what we're seeing in terms of XenApp 7 -- or XenDesktop 7 mix and what expectations are there. In the aggregate, we are very optimistic about the space long term. We haven't lost that conviction in any way. In fact, as you think about the way customers, IT organizations, are going to need to consume Windows applications over time, virtualization is one of the great ways to do it in a managed, simple, secure way and really transform them into a service so that they can be consumed and optimized alongside apps of all other types. And this is probably more pronounced over time. We really have the tools to address that. As we bring together mobile and mobile Windows apps, I think we'll have more and more unique capabilities to bring. As far as numbers and expectations, built into the guidance, of course, is just conservative assumptions around pipeline closure. Or while we're addressing all of the factors that I mentioned earlier, we want to maintain the right posture going into the year. And as these things start to take effect, then we'll come back and update it at that point in time. Rama?
Sudhakar Ramakrishna
Just to add to David's comments, the initial feedback has been extremely positive on a XenDesktop 7 and beyond releases. Common themes that we hear from customers is that it's incredibly simple as it relates to the deployment and operations as compared to anything out there in the marketplace. And there's an increasingly important significance being placed to our cloud capabilities, as well as the end user capabilities in mobile [indiscernible]. So the continued integration of our architecture and innovation around that is really what's driving the adoption and the traction. And as you know, in the past, the point against XenDesktop and XenApp or broadly speaking VDI and the virtualization industry was that it was complex, and we've essentially eliminated that barrier through internal innovations.
Philip Winslow - Crédit Suisse AG, Research Division
Got it. And then David, I know you guys have an important release of XenMobile during Q4. Wonder if you could provide us just an update on that, and maybe if you could talk about sort of what feedback was from customers and also just maybe close rates kind of before and after the 8.6 release and how you think that actually affects business on '14.
David James Henshall
Yes, the 8.6 release was actually I believe the fifth release of that product family in the year. So we're on really rapid innovation cycles and obviously a call out to the team for what they're delivering. I think we addressed a lot of the major, call it, blockers that we had in place earlier in the year in terms of integration across the solution. And it is fairly challenging to bring together MDM plus the other capabilities, and it took the better part of the year. Fortunately, 8.6 knocked out a lot of those issues. And I mentioned in my prepared remarks that we had more than 150% sequential ramp in product revenue between Q3 and Q4 and obviously closed as much business after the release of 8.6 as we did, frankly, in the first half of the year combined. So it's a great proof point. We're not done, we're continuing to innovate really rapidly, and I think it sets us up well for unique differentiated solutions going into '14. And the pipeline we've created and our outlook would certainly support that.
Operator
Your next question comes from Keith Weiss with Morgan Stanley.
Jonathan Parker - Morgan Stanley, Research Division
It's actually Jon Parker calling in for Keith. I just wanted to dig in to the gross margin commentary a little bit. I think you sort of highlighted that most of it -- that the sort of degradation that we'll see next year is a result of the networking strength. But I also want to see how much of that is networking and how much might be coming from maybe competition on the mobile side. I guess, one of the things that we've heard quite frequently and people are wondering about are some of the pricing pressures that results to the enterprise mobility space. You guys obviously put out some interesting promotions over the last couple of days on the MDM, but also on the enterprise front. And so I was wondering if you could talk about longer term how we should think about the margin structure at that part of the business and how that evolves competitively and if that has an impact on margins in the near term as well.
David James Henshall
Sure. Let me start at the top actually. When we think about gross margin, the single biggest impact is related to just the strength of networking. As you imagine, our networking products have gross margins in the mid- to high-70s, which is great for networking because we are software-based solution and we sell software license upgrades instead of simply new boxes. So that is where it is today, and it is improving. It's getting better all the time. So when we look at the aggregate mix of revenue across the company, it does start to plateau at about 84%. So I think that as we look into the end of next year and into '15, that's going to be a -- that will be a conversation that I think will be off the table looking forward and frankly, stop being a headwind to overall leverage and allow us to start driving more kind of gross operational leverage at that point. In terms of the pricing, the pure MDM space is incredibly competitive and it always has been. There's nothing new there. There are certain vendors that are very, very aggressive in kind of a land and expand or to be generous strategy, and so that impacts that. Of course, our strategy has been to drive a more holistic enterprise edition. I mentioned 80% of our revenue is coming from that, and that allows us to differentiate not get into the very price-sensitive segment. So our overall ASPs have been relatively stable throughout the year, except in the MDM-only area where they have been coming down.
Jonathan Parker - Morgan Stanley, Research Division
Okay. Great. And then also on mobility, I mean, clearly the sort of 150% sequential increase you alluded to is quite favorable. Did that help you to sort of hit that initial $30 million target that you're talking about for the year? And how should we think about the rapid growth of that business heading into next year?
David James Henshall
Yes, it certainly did help us, allow us to exceed those goals. And we haven't broken out specific products into next year, but certainly believe that the ramp is very, very strong and it's certainly not out of expectation to double next year.
Operator
Your next question comes from Heather Bellini with Goldman Sachs.
Sonya Banerjee - Goldman Sachs Group Inc., Research Division
This is Sonya Banerjee on for Heather Bellini. I guess one more on NetScaler as well or even just the data center business. What impact did the Cisco relationship have in 2013? And how are you thinking about contribution in 2014 or even longer term?
David James Henshall
Well, it's a broad question. I mean, the Cisco relationship is very broad at this point in time. So when I talk specific dollars, the Cisco relationship is a contribution of us selling together; Cisco as an SI, as a partner in other dimensions, and that includes everything from networking to desktop virtualization to now mobility. I mean, we did over, I believe, over 15 transactions together with them for more than $1 million each last year. We have -- and that business is up well over 100%. We've got pipeline -- combined pipeline that's measured over $100 million for 2014. We have, I believe, more than 10 Cisco-validated designs right now for Citrix products. And then new initiatives like the Cisco (sic) [Citrix] NetScaler 1000V, which is an OEM product that Cisco is selling. That one went live in Q3. So we'll recognize revenue for that quarter in arrears. So there's no impact in '13, and that will be fairly modest but start to contribute in Q1 and moving forward. So there's a lot going on in the relationship. I think it's very positive right now. As we start looking into the, like, the 7000 platform and some of the more future 9000 platform, I think we've got some other interesting things to talk about throughout the year.
Sonya Banerjee - Goldman Sachs Group Inc., Research Division
Okay. And then just in terms of organic business investment, what are the key areas of focus for 2014? I know that you said that headcount would be up modestly for the year. But when you're thinking about just growing the business and core areas in terms of sales in other areas, where are you investing?
David James Henshall
In sales, we're predominantly investing in networking coverage. Coverage is one of those that we are underserved in many markets, and EMEA is a great proof point where we made that investment in 2013 and you saw 50% growth in that business exiting the year. So I think we can still replicate that in many places. On the innovation front R&D, we'll invest in the mobile platforms team. We're investing in data sharing and a few other components of our SaaS business. Those are the largest areas.
Operator
Your next question comes from Walter Pritchard with Citigroup.
Kenneth Wong - Citigroup Inc, Research Division
This is Ken Wong for Walter. When we think about that 8% to 10% growth for '14, some of that is due to the shift to longer-term ratable contract. I mean, do you have a sense for what that 8% to 10% would've been if you guys were -- if you guys had contract terms that were consistent with the past?
David James Henshall
No, Ken, we're not really going to break that out at this point. I mean, the way to think about it is just at this point of the year, we're comfortable with 8% to 10% total revenue growth. The one area you should look at would be license updates and revenue. That's a line item that has decelerated over the course of the year, just reflecting lower growth in new licenses for app and desktop virtualization. So that's one that we're doing a couple of things beyond just, of course, growing new licenses. We've got strategic initiatives to drive what we call a more holistic software maintenance offering, which will allow us to uplift revenue per customer -- or recurring revenue per customer as much as 25%. We have a low attach rate right now. So that's one of the areas of focus in 2014, as well as just providing support, something that we haven't provided in the past, to customers. And these are areas that we'll be looking at from an ASP of that business standpoint. And then of course, as we layer in higher license sales over the course of this year, that will help turn that number around.
Kenneth Wong - Citigroup Inc, Research Division
Okay. Got it. And then I guess another question just around -- about spending, so right now you guys are waiting for the pipe to start close and hopefully that those start to convert. I mean, if you guys start to -- if you guys don't see the pipe closing any sooner in '14, I mean, should we expect that you guys could dial back spending a little bit to keep profitability where you guys have guided?
David James Henshall
I think right now we're focused on driving growth over the long term. I mentioned the areas that are producing strong growth: networking, data sharing, mobility, et cetera, and some of the areas that are, frankly, in transition, like desktop virtualization. So we're not looking to optimize for short term, but we're certainly aware of the overall profitability of the business. And if the environment or other factors don't contribute to growth, then we would address that in realtime.
Operator
Your next question comes from Steve Ashley with Robert W. Baird.
Chaitanya Yaramada - Robert W. Baird & Co. Incorporated, Research Division
This is Chaitanya Yaramada in for Steve Ashley. I wanted to ask on APAC. License was soft this quarter. Was that essentially a function of the macro environment in those regions, or are there opportunities to improve execution? And also, what are you assuming for APAC for 2014 guidance?
David James Henshall
I'd say within APAC, there were -- APAC and Japan as kind of combined region, there were 2 factors. One, most of the pressure came from emerging markets for various reasons. And then second, a lot of the large transactions, as I mentioned in my prepared remarks, were multiyear in nature. So limited recognized revenue upfront, but they'll flow in over the course of the next 1, 2, 3 years. As far as what's included in our expectation, we really haven't broken out guidance necessarily by region, but we certainly have expectations around things that we need to do to improve execution in every market. I mean, that's true, not just one specific geo.
Chaitanya Yaramada - Robert W. Baird & Co. Incorporated, Research Division
Great. And then for -- as a follow-up, you had mentioned last quarter that in the Networking and Cloud business, a number of large deals had slipped in the cloud provider sector. Did you have success closing those deals in the quarter and now there are more that remain in the pipeline?
David James Henshall
Sure. There's a lot in the pipeline, as there always is though. I mean, pipelines remain robust in that business. So we did close -- a couple of the deals had slipped. Those were more specifically in the what we call Internet and cloud service provider segment. That business did well, rebounded in growth rate. We actually had a nice balanced growth across both the what we call enterprise customers as well as more cloud-centric. So everything that we've talked about over the course of the year in that business, whether it's increased coverage or at the product, up leveling the -- from the technology and the way customers think about it to the SDX platform. They're all working really well right now, so we're very happy with the networking business.
Operator
Your next question comes from Ed Maguire with Quest.
Edward Maguire - CLSA Limited, Research Division
CLSA. I wanted to turn the question towards service providers. You'd mentioned that you've seen some good momentum there. What are your plans for investment on the service provider side, in what areas specifically? And with the entry of Amazon and more competition in the desktop of the service market, could you comment on what the competitive environment is like and what your conversations may be focused on there?
Sudhakar Ramakrishna
Okay. Let me address it in 2 dimensions here. One is, broadly speaking, the communication service providers, the large telcos, the traditional service providers. We are seeing significant traction there, as David alluded to in the prepared comments, with regards to our ByteMobile product, as well as some early traction with NetScaler. And we've also been doing very well with our CloudPlatform in that segment. So it's a broad segment. It's early days from a Citrix investment standpoint, but our competitiveness as well as early indicators are very, very strong in the broader communication service provider segment. Looking ahead, we plan to leverage these capabilities, whether it be on ByteMobile, CloudPlatform or NetScaler to support service providers' needs as it relates to network function virtualization, but that's more of a future investment that we will be making. Specific to desktop as a service, in our case, we've been delivering a lot of applications as a service through XenApp. It's our Citrix service provider. So we don't have a native service platform as much as the Citrix service provider partners have been accelerating our growth in that segment and we are seeing some very healthy, call it, growth rates. In terms of investments, we are building specific functionality for that particular segment because we believe in the opportunity and the size of that market. In fact, last quarter, I indicated that market itself will be about a $600 million plus market for us. And last but not least is we are also creating tools for the enterprise segment from the standpoint of with the most recent XenApp and XenDesktop release, we have included Cloud Burst capabilities. By that, what we mean is providing the enterprise ability to leverage the cloud for business continuity or build capacity needs. And therefore, by working with service providers on one hand and providing the capabilities to the enterprise on the other hand, we are providing them many more flexible options leveraging the cloud.
Operator
Your next question comes from Raimo Lenschow with Barclays.
Raimo Lenschow - Barclays Capital, Research Division
Three questions. First, David, just to -- can you talk me through again why that 84% is the platform level for gross margins if the -- and so basically, are we assuming that the desktop mobile part of the business will take up revenue growth in '15 again and hence you don't have that mix effect -- negative mix effect? And then I have a quick follow-up.
David James Henshall
Yes, Raimo, in terms of 2014, it's just a function of networking as the fastest part -- fastest-growing part of the business right now. So that's pressuring gross margins. And even with a strong growth rate in '15, the: a, we're starting to reach down to the levels of where the aggregate gross margin is for our networking business, so you just have compression there; and then second, other solutions like the stuff Rama was just talking about, cloud service providers, the strength in mobile and other software-based solutions providing near 100% gross margins. So as those balance each other out, that's why it's approaching a plateau and also providing potential for growth in the future.
Raimo Lenschow - Barclays Capital, Research Division
Okay. And then the -- that really helps. And then on your desktop business, obviously like this quarter -- it seems like everyone kind of doesn't like you anymore. Like, we had the Amazon announcement. We had VMware trying to take some people off you. Can you just talk a little bit about your desktop business there, especially the people that you lost and how we kind of try to backfill that?
David James Henshall
Yes, let me address the people issue. Beginning in 2013, we had a specific focus on our R&D: increasing innovation, increasing product integrations. And to this end, we brought in highly-experienced, relevant leadership in both of our product divisions: Chris Hylen in SaaS and Sudhakar in the enterprise and service provider division. So as they've been building out their teams and looking for specific skill sets, I'd say it's not unexpected to see and expect, frankly, a turnover. However, it's not appropriate for us to talk about the specific circumstances surrounding the departure of any one individual. In terms of the overall business, I mean, Citrix is the market leader in app and desktop virtualization. I mean, we have the largest and broadest product portfolio. We have the largest account base. And when we look at the largest, most strategic customers in the world, they all, frankly, depend on XenDesktop or XenApp to virtualize their infrastructure. And so we're continuing to drive that. You see that with the strength of large transactions in the quarter. We had, by far and away, a record number of large deals this period, and that's where we've been focused.
Sudhakar Ramakrishna
And David, I just want to add that we've also been incredibly successful at attracting very key talent into the organization throughout the year, both organic and inorganic. And I feel incredibly positive about the talent that we currently have to be able to execute on our mission and strategy compared to when we started 2013.
Operator
Your next question comes from Kash Rangan with Merrill Lynch.
Kash G. Rangan - BofA Merrill Lynch, Research Division
VMware has been talking about gaining share relative to you guys. I'm sure that you would like to think that you have a better shot at regaining your market share. Why would -- what are some good reasons to believe that you should be able to regain your market share in desktop virtualization in 2014? And secondly, with respect to the VDI business, David, hearing you over the past several years talk about the recurring nature of the business, would you be completely closed or would you be somewhat open to a business model transition towards reorganizing that business into more of a recurring subscription-oriented business asset? You have the vast majority of that business, and it's a little hard to live with the quarter-to-quarter volatility. And you notice companies like Adobe and Autodesk, which sell into relatively not the super high growth end markets, that have successfully managed to transition their businesses or at least seem to be working in that direction. It would occur to me that this is the one obvious lever that you have in your model. It simplifies the end customer purchasing. It increases the visibility for your revenue stream. And also -- sorry for the long list here, but it's Q4, so hopefully that's okay -- any leverage you contemplate in your business model by reducing operating expenses to be more closely aligned with the 8% to 10% growth rate? It would occur to me that you have significant margin leverage if you chose to exercise that.
David James Henshall
Sure, Kash. Let me parse out your 3 questions. In terms of -- let me start with the VDI question. Absolutely open to evolving the business model. In fact, we have been, as a company, actively driving towards more recurring revenue over the last many years, and we've done that through: our SaaS business where we now run north of $600 million, SaaS business inside of Citrix; our recurring elements of desktop and app virtualization; the longer-term contracts; our CSP, which is our cloud service provider business, which is growing, as I mentioned earlier, 50% plus. And now in the aggregate, more than 2/3 of our revenue was coming from recurring sources. So I like the model. And as we look at the app and desktop business, yes, we're open to that, but we want to do it in the right way. We want to do it in a way that isn't just changing the pricing mechanism but is delivering some element of continuing value to customers so that you can engage on a constant basis so that you're focused on usage and you're focused on customer retention and expansion. We're working on that as we speak, so that it's not purely a perpetual sale always. In terms of your VMware question, I mean, it's hard for us to talk specifically about that. I mean, I don't think any other vendor besides Citrix really quantify results in these areas. So we can't know in detail really what size of the base that anyone is coming off of when we talk about growth rates, how much is simple allocation of larger ELA, et cetera. So...
Kash G. Rangan - BofA Merrill Lynch, Research Division
They said it's 13% or so of their billings and was up 30%. So there's some legitimacy to their claims. But I'm sure that you have a rebuttal, and I wanted to hear how you -- what your game plan is to restore the company back to the glory days of growth.
David James Henshall
Yes, we're not going to get into a rebuttal on an open conference call. But I can assure you that when we look at our product, the breadth of our product solution, the value that we're bringing to customers, the new platforms and unique capabilities like XenApp, I mean, we're going to be driving very hard right now. Rama talked about just the side-by-side comparison on complexity in all of the areas that we've addressed over the course of the last years. So happy to take head-to-head product comparisons any day, and we'll be focused going forward. Rama?
Sudhakar Ramakrishna
So a couple of additional comments here, Kash. One is to your point about business model shift. We are making a lot of product investments, be it in XenMobile, XenDesktop or XenApp, to allow us to deliver these services on a consumption model. So that investment claim, so to speak, is already well underway, and we are preparing aggressively towards supporting that. And to the competitive question [indiscernible], one key area of focus for us going forward will be enhanced focus on our talent as it relates to engaging with the talents, training them and becoming more competitive, so to speak, in the small, medium enterprise segment.
David James Henshall
Yes, and Kash, on your last question about op margin, we're investing in the areas that I talked about, areas that we're very happy to drive growth in the future, areas around networking and mobile, the long-term growth possibilities there. I think the majority of the operating compression that you're asking about is simply just the gross margin segment, and that's a reflection of the success we're having. We will be driving all of these areas that both Sudhakar and I have been talking about to improve our execution, to improve our productivity over time and that's what's going to drive a broader expansion on operating leverage.
Operator
Your next question comes from Kirk Materne with Evercore.
Stewart Materne - Evercore Partners Inc., Research Division
Just a couple of really quick ones. David, I get the idea that the mix shifts towards networking hits gross margins. I guess the -- I would think there would be some offset though given that license as a percentage of revenue is actually going down and maintenance is going up. And maintenance, for the most part, is usually a very high margin business for you guys. So I guess, why wouldn't there be an offset there? I get that you guys are investing to a degree. But you would -- you also had margins that are going to be roughly flat after having a pretty big acquisition last year. So I guess I'm just wondering -- you guys have talked historically that high 20% margins is a reasonable goal for the business. Is that just off the table now, or do we just have to sort of wade through the next 12 months? And then my second question, just so you can answer it quickly, is it -- in your EPS guidance for '14, is there any assumption of buyback activity?
David James Henshall
Sure. In terms of EPS, there really isn't any broader assumption on buyback. However, we will continue to be aggressive in our buyback. We haven't talked about the timing or amount, but we do have currently about $400 million remaining in our existing authorization. In terms of just gross margin, the components there, it's not only the networking, although that is the larger component of it, but also elements of our SaaS business and our professional services business that have been growing faster than other elements of license, and all of those have been putting some pressure on gross margin. So it's accommodation of those factors with obviously the strength in networking being the largest factor. And finally, the question about long-term operating margin, our long-term goal is unchanged, mid- to upper-20s is where we expect to operate this business, and we certainly have the potential to do that over a period of time.
Operator
Your next question comes from Ross MacMillan with Jefferies.
Ross MacMillan - Jefferies LLC, Research Division
David, I just wanted to be clear. So the desktop business and mobility business have obviously gone through some transition in the last year. But as you think about what happened in Q3 and Q4, did you see anything that suggests a change in win rates or anything fundamentally changed competitively? And then my second question was, as we think about cash flow from operations in 2014, for each of the last 3 years, you've actually seen an incremental increase in the delta between cash flow from operations and non-GAAP operating income. How should we think about that relationship, if you will, between cash flow from ops and non-GAAP operating income in 2014?
David James Henshall
Sure. I think in terms of cash flow from ops, it should continue to grow faster than non-GAAP operating income into '14. In terms of your first question around win rates and competition, it's really a competitive market at this point. Obviously, our primary competitor is investing very aggressively in this area and talking about it a lot more. And so this is -- they've been successful in some areas. A lot of the areas are in the kind of the small-medium enterprise, places where we don't have as much coverage. In terms of win rates at the high end, for the big strategic customers, those are really unchanged. The things that we're doing to address that, and we've talked about a few times on this call, focusing on the channel, focusing on XenApp, focusing on the messaging that has really differentiated these products in the past. And so that's the game plan for '14 right now.
Operator
Your next question comes from John DiFucci with JPMorgan.
Darren R. Jue - JP Morgan Chase & Co, Research Division
It's Darren Jue on for John. I guess just to follow up on the last question, is there anything particular in the quarter that sort of caused cash flow to sort of not track operating income? It looks like cash flow grew about 1%, but non-GAAP operating profit grew about 10%.
David James Henshall
Nothing specific. I mean, there's always a movement with the 2 biggest line items, being accounts receivable and deferred revenue. And then given it's a Q4, whatever true ups there are for some of the annualized accounts, but nothing really unique.
Darren R. Jue - JP Morgan Chase & Co, Research Division
Okay. And one more, I think you mentioned that the pivot to mobile was primarily impacting the midsized market within desktop. I'm just wondering if there's something specific about the midsized market as opposed to the enterprise, why that's having an effect there?
Sudhakar Ramakrishna
So the midsized segment, the strength or lack thereof there is a function of coverage, as David alluded to, and that's really going to be one of our focus areas from an execution standpoint in 2014 as it relates to channel program, channel training and basically engaging the channels of the new products that we have come out because historically, XenApp has been a channel-lead product and basically, as part of our reinvigoration efforts, that's our focus. It's got nothing to do with the pivoting to mobile as much as coverage and channel and focus on XenApp.
Operator
Your next question comes from Gregg Moskowitz with Cowen and Company.
Gregg S. Moskowitz - Cowen and Company, LLC, Research Division
David, within your 8% to 10% revenue guidance for the year, what product revenue growth assumptions are contained within that?
David James Henshall
Yes, we really haven't broken it out in terms of individual line items. But I'll say at least for Q1, the expectation ought to be for product license to be in the mid-single-digit range.
Gregg S. Moskowitz - Cowen and Company, LLC, Research Division
Okay. And then on NetScaler, you mentioned that it did have good balance this quarter between enterprise and cloud. Realizing that cloud-based deals are inherently lumpy on a quarter-to-quarter basis, just wondering if you could talk about your confidence level in getting large cloud deals done over the course of a full year, whether it be a function of data center expansion, new applications or something else.
David James Henshall
Yes, there's a lot of data centers that are being built right now and a lot of capacity that's going on as new cloud services are coming online. And so when we look back at last year, I mean, it was really only -- well, over the last, let's say, 6 quarters, it was really only Q3 that, that segment of the business was on a relative basis a little bit weaker. I mean, in most quarters, what we call cloud, SP and telco will contribute about 25% to 40% of the mix. So it will be within that range would be my expectation. There's certainly opportunities in the pipeline as we look at Q1 and into the rest of 2014.
Sudhakar Ramakrishna
But the 3 primary, call it, drivers if it's in the enterprise, one, as customers modernize their data centers, getting to software-defined data centers, obviously there's a significant NetScaler play there. Equally, there's been intense focus on our part to attach NetScaler that's on XenApp and desktop motion, and that's bearing significant fruit as well. Last but not least is the attach of NetScaler with our XenMobile product line to, as you know, to deliver scalable enterprise management, mobility management that is secure. You need very strong networking capabilities as well, and that's where NetScaler comes into play and that's a significant differentiation -- differentiator against the competition for us. So as XenMobile expects -- or expands, you should see additional progress from us on NetScaler as well.
Gregg S. Moskowitz - Cowen and Company, LLC, Research Division
Okay. And then just one last one, obviously, XenMobile closed out the year pretty strongly. You have a lot of optimism for 2014. If you could just address how your largest competitor's acquisition of AirWatch might change things competitively.
Sudhakar Ramakrishna
So the first thing I would say is that their acquisition validates in more than one way the strategy that we've laid out well over a year ago and have been executing various parts of it for the better part of 2 years. What we are noticing, and as you saw from our results as well, is that customers are not focusing on just deploying MDM solutions, but rather secure productivity enhancing applications, content management and basically doing it in a very scalable fashion. And they are also expecting consistent experiences as an unified storefront for native mobile apps, as well as Windows apps rather than deploying discrete and [indiscernible] architecture. And that's really whether we have made a mark for us by not only setting the agenda from an enterprise mobility management for -- it's not just about MDM but about applications, secure, productivity enhancing applications, content management, high-end networking, all with a common, consistent experience. So we feel very good about our competitive position there. And the competition, notwithstanding the acquisition, is largely focused on MDM. And I believe they have to either acquire or integrate or otherwise invent multiple pieces of the solution to be close to the capabilities that we currently have and are available.
Operator
Your next question comes from Rick Sherlund with Nomura.
Richard G. Sherlund - Nomura Securities Co. Ltd., Research Division
It's Rick Sherlund. A couple questions. First, this mix of professional services, it looks like the growth rate accelerated quite a bit in Q4. I'm curious if that's something that will continue. I think you mentioned that might be one of the factors in margins. And then just on the XenMobile side, I'm curious what it is that you think for the next year or so your focus is going to be. Is it integration so that you're able to cross-sell more effectively? What is it you think gives you real sustainable advantage in that segment of the market?
David James Henshall
Yes, Rick, let me answer the professional services question, and Sudhakar will talk about XenMobile. In terms of professional services, I mean, that does tend to be tied to large transactions. So we had a big jump in Q4. So I think next year, it will still move around from a year-over-year percentage point. But from a growth rate standpoint, think about it in -- more aligned with overall revenue guidance at this point.
Sudhakar Ramakrishna
And on the XenMobile side, the way I would characterize it is we have already established and delivered on our architectural superiority and completeness of solution as it relates to application and content management. The focus in 2014 is to continue to focus on adding additional applications, integrating our solutions much more completely and effectively, as well as relentlessly focusing on end-user experiences and administrative experience. So those are the 3 main areas of focus for our team even as we expand our ecosystem and our application portfolio.
Richard G. Sherlund - Nomura Securities Co. Ltd., Research Division
And Sudhakar, if I could just follow up on desktop virtualization, that part of the business. The ROI is getting better. It seems like it's always kind of a seductive proposition. What are the customers telling you right now? I mean, they're obviously not saying, well, it depends how you sell it and where your focus is. But are you sensing -- is this just not a high priority for them right now? What are they -- what kind of pushback do you hear from customers?
Sudhakar Ramakrishna
So we're hearing a few things. As you mentioned, the ROI is actually becoming more and more compelling from the standpoint of their infrastructure costs and so on and so forth. But historically, one of the points that customers have already made -- have always made is that it's complex to deploy and leverage. Therefore, adoption was largely restricted to customers that focus intensely on security compliance or otherwise had a need for hosted applications and desktops. So with the changes that we've made to the product where we have greatly simplified the product, as I mentioned, we are at least half -- we take half the step of the nearest competitor in terms of getting our product installed and usable. So we've essentially eliminated the complexity value as well, which we expect will drive greater adoption because as you know, user experiences drive adoption. But increasingly, what we're also seeing is specific verticals that are showing interest in our XenDesktop and XenApp product lines. I mentioned our HDX capabilities. We have enhanced our HDX capabilities as well as on the back-end infrastructure capabilities to participate in design and engineering verticals: verticals that care about data security; verticals that care about large files, for instance; and at the same time, significant compute capacity. These are verticals that will pay a premium for application and desktop virtualization. And through our product innovation that no other company has, we're able to address some fairly large chunks of the workstation and desktop markets. So on one hand, we are simplifying the product to have a very broad horizontal appeal. On the other hand, we are innovating to create new vertical markets.
Operator
Your next question comes from Michael Turits with Raymond James.
Michael Turits - Raymond James & Associates, Inc., Research Division
Michael Turits. Dave, I don't know if you can -- I was wondering if you could talk maybe a little bit more explicitly about operating margin into next year and what that compression might be. And also, if we could maybe talk a little bit about the desktop license line and the cloud license line into next year?
David James Henshall
Yes, Michael, we're not going to provide guidance at the product line level at this point in time. We've talked about a lot of the moving parts and what areas are doing really well and what area we want to maintain a more cautious position on. So I'd rather just keep it at the aggregate revenue line at this point. In terms of overall op margins, I mean, it's basically flow to gross margin compression down through the model and adjust the tax rate. And that's basically what the primary deltas are.
Michael Turits - Raymond James & Associates, Inc., Research Division
And so OpEx margin should be about the same in the next year?
David James Henshall
Yes, I mean, we're optimizing spending in all the places you'd expect. We're focused on a lot of the must-win strategic markets that Sudhakar has mentioned. And we're -- areas we're investing incrementally are around the things we've discussed: market coverage, go-to-market coverage around networking, innovation R&D around mobile platforms, data sharing and areas like that. And so that's what our focus will be for next year.
Michael Turits - Raymond James & Associates, Inc., Research Division
Okay. And lastly, I just want to make sure I got this straight. In the quarter, I think your networking was up 13%, NetScaler was up 40%. And I don't recall if that was your license number, I think it was. But what was the offset? What was down that much that NetScaler was up 40%?
David James Henshall
Yes, the primary offset was around ByteMobile. Q4 a year ago, we had one really large transaction that it was actually be -- we're able to recognize it all in that order. This quarter, we had strong bookings, but very little of that was recognized in the period. They were all -- well, not all, but the vast majority were multiyear transactions that will come in over the next 1 to 3 years. So that's the primary delta. If you look at that business as a standalone, the recognized license revenue would have been down 50% or so due to these rev recs that we talked about.
Operator
Your next question comes from Karl Keirstead with Deutsche Bank.
Karl Keirstead - Deutsche Bank AG, Research Division
I just got a question on free cash. A number of your investors value your shares on a free cash flow multiple. So just in light of the guidance for a non-GAAP EPS decline in '14, I just wanted to push a little bit, understanding that you're not going to give precise free cash flow guide. But would you expect free cash flow to be at least up in 2014? And any other parameters you could give us might be helpful.
David James Henshall
Sure. You're right. I mean, it's tough to give a cash flow guidance in -- at a high level. I look back into 2013 cash flow was about -- cash flow from ops was about $5 a share, growing in the low teens. As we look into '14, certainly our goal is to grow cash at a rate in excess of non-GAAP net income. So we'll talk about it more as the year progresses, but that's certainly the goal and what should be expected.
Operator
Your next question comes from Daniel Ives with FB (sic) [FBR] Capital Markets.
James Moore - FBR Capital Markets & Co., Research Division
It's Jim Moore in for Dan Ives. Just with respect to your guidance, it looks like your updates are coming out of a faster clip. I'm just wondering if there's any change to typical seasonality that we might see throughout the year?
David James Henshall
No real change to seasonality. I mean, that business is more impacted by the items that I talked about a few minutes ago and the things that we're doing to address that both in terms of individual, call it, ASP or revenue per customer, as well as just growing top line. I mean, the expectation for that in the first quarter would be about roughly 10% growth year-on-year.
Operator
Your next question comes from Derrick Wood with Susquehanna Financial.
Rakesh Kumar - Susquehanna Financial Group, LLLP, Research Division
This is Rakesh Kumar for Derrick Wood. I wanted to ask about XenDesktop 7. How far along are you in the upgrade cycle? Or what percentage of customers have upgraded to the new release?
Sudhakar Ramakrishna
So I can't speak the percentage of customers that have upgraded to the new release, but we are seeing traction both with the new customers that are adopting XenDesktop 7, as well as existing customers on previous versions of XenDesktop upgrading to XenDesktop 7. Like I alluded to earlier, the feedback that we've received in terms of all of the value drivers that we came up with, which is enhanced mobility, enhanced security, simplicity of the product, those have all been validated. But frankly speaking, it's still fairly early in the cycle. We just came out with XenDesktop 7.1 in the fall, and we're going through the upgrade cycle at this point in time.
Rakesh Kumar - Susquehanna Financial Group, LLLP, Research Division
And then a quick follow-up, I wanted to ask about ASPs. As you push with XenApp and project-specific sales and you'll be with the mobile strategy, how should we think about ASPs going forward?
David James Henshall
I think the actual ASP proceeds is really not changed. I mean, ASPs, in the aggregate, will have come down just due to the concentration of large transactions. As you'd imagine, larger transaction, the higher the discount. So as we spread the base out, ASPs may actually increase in the aggregate. So not expecting much change on the byproduct ASP.
Operator
Your next question comes from Mark Moerdler with Sanford Bernstein.
Mark L. Moerdler - Sanford C. Bernstein & Co., LLC., Research Division
Two quick questions. You have a very tough compare on networking comp in Q1, and desktop is slightly decelerated -- or decelerating. What will drive the year-over-year growth in Q1? Does desktop reaccelerate? Do you expect networking to grow even faster? How should we think about it? And then another follow-up, quick follow-up.
David James Henshall
Sure, Mark. Yes, like I said earlier, I don't want to start getting into granular guidance. I mean, at this point in time, were -- we talked about overall product license being in the mid-single digits and revenue being in the 8% to 10% range. And I think it's appropriate to leave it at that. I will say that even with the tough comp in Q1, the factors that I talked about are on the networking business: the breadth of what we're doing in the enterprise just expanding the customer base, the fact that we added several hundred new customers net new to Citrix in that business just keeps reducing that dependency that people have called out on large enterprise and Internet-centric accounts over time. So good pipeline, strong growth and we're continuing to increase market footprint and go-to-market coverage. So those are the things to keep in mind around that business specifically.
Mark L. Moerdler - Sanford C. Bernstein & Co., LLC., Research Division
Okay. And as a follow-up specifically on pipeline, how should we think about NetScaler in terms of your visibility into pipeline as compared to the other sides of the business, especially as that grows and as you have Cisco involved in channel, et cetera? Do you still have the same sense of comfort in the detail into the pipeline in the longer-term numbers?
David James Henshall
Yes, in fact, I think we have better visibility into closure around NetScaler pipeline because those transactions tend to be very specific and based on capacity requirements to customers and/or security projects or things that are, I hate to call them must-dos, but ones that are certainly more visible. When you get into larger transformational desktop virtualization or that type of pipeline, those tend to be harder to specifically measure and time as to when those are going to close because transformation is one of those areas that customers do have some flexibility on, moving in from quarter-to-quarter. That's really been a problem over the last couple of quarters to nail down specific transactions. So the cycle times and the pipeline closure rates are, I'd say, shorter and more visible in the networking business than really anything else, frankly.
Operator
Your next question comes from Scott Zeller with Needham & Company.
Robert Scott Zeller - Needham & Company, LLC, Research Division
Needham & Company. I wanted to ask about the performance in Europe. Can you give us an update on your confidence with the field organization over there? The results have been inconsistent, but positive this quarter. Could you just tell us your comfort level with the field organization?
David James Henshall
Yes, Europe had a tough year. I mean, there's been a fair bit of rebuilding of the team. Carlos is doing a great job of getting his new team in place and getting everybody focused on the long term. I'd say in Q4, looking at it by region, Middle East had a strong quarter, growing somewhere around 50% year-on-year. We saw good business in places like Russia. Germany, U.K., we're good. I'd say Southern Europe is the place that we've had the most volatility, and that's just more of a macro statement than anything else. That was one that becomes fairly challenging. Also, as I mentioned a couple of times today, the networking strength that we have seen is really just a result of the investments that we've laid out and talked about all year. I mean, we're seeing networking growing on that 40% to 50% range over the last couple of quarters because we just have coverage now. We have the ability to interact with customers that we didn't have before. So we're not done. We got a lot of investments to still make there in coverage and a lot more opportunity. So of all of our regions, that's one that will continue to have a little choppiness from a market standpoint -- just a macro standpoint, excuse me, and we'll deal with that in the ordinary course.
Operator
At this time, there are no further questions. Do you have any closing remarks?
David James Henshall
Yes, thank you, and thanks everyone for joining us. I mean, as we've talked about today, we're helping customers embrace mobile workstyles. We're mobilizing apps, data and people. It's all powered by Citrix cloud infrastructure and services. So we're really encouraged by the momentum we're seeing in several parts of our business, and we're confident that we have the right strategies, solutions and focus going into 2014. So thanks, again, for everyone joining us on the call today and look forward to speaking with you again in 3 months. Thank you.
Operator
Thank you for participating in today's Citrix conference call. You may now disconnect.
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