Technology, Taxes and Transition: Citrix Systems In The Sunshine Economy

Feb 13, 2018

One out of every 100 open jobs advertised in Broward County today is at a single address: the Fort Lauderdale headquarters of the software company Citrix Systems. Citrix CEO David Henshall says the company has postings for 277 positions out of the 21,500 open jobs county-wide, according to Career Source Broward.

Citrix's hiring hopes come as the company tries to shift its software business to the cloud and take advantage of the short-term benefits of the new corporate tax law, and as South Florida as a region looks for ways to keep growing the local tech industry.

WLRN spoke with Henshall in his Fort Lauderdale office.

Taxes

Before the new tax law, companies doing a lot of business overseas didn’t have to pay U.S. taxes on those profits as long as the money stayed offshore. If the money was brought back, it could face a tax rate as high as 35 percent.  The new tax law requires those companies to bring back the cash, but offers a much lower tax rate when they do—15.5 percent on cash. That's a huge savings even if the companies have no choice. Fort Lauderdale-based Citrix Systems is bringing back $2 billion.

"That will help fund continuing merger and acquisition opportunities," said CEO David Henshall. "That will fund capital return for shareholders.  That will fund reinvestment back in the business."

Read more: Amazon's HQ2 And The Sunshine Economy

But Henshall said the company's hiring ambitions shouldn't be linked to the repatriated profits. "I wouldn't directly connect them one for one. It just happens to be in the ordinary course of how we're running the business. Having access to overseas capital will just give us more flexibility," he said.

Companies have already faced criticism for how they've decided to use the cash. U.S. Sen. Ron Wyden, D-Ore.,  finds corporations have announced $100 billion of stock buybacks this year. Earlier this month, Citrix said it would speed up its plan to buy $750 million of its own stock, part of a larger buyback plan announced in November for a total of $2 billion of Citrix stock.

Citrix Systems is a $13 billion publicly traded software company with headquarters in Fort Lauderdale and Silicon Valley.

  Transition

By one measure, Citrix is a smaller company than it was a year ago. The company's total revenue is down after the sale of its most recognizable business outside of technology circles—GoToMeeting and associated products, spun off as an independent brand 18 months ago.

The result has led to a smaller, more profitable company overall. In the fourth quarter, Citrix's operating profit margin was the highest it had been in 15 years.

Citrix traces its roots back to IBM's early personal computer days. But it is now transitioning from being a traditional business software provider to one operating mostly in the cloud. As Citrix wrote in a strategy briefing, "We are witnessing how upstarts and established firms in nearly every industry—from transportation to hospitality to financial services—are using digital technologies to challenge centuries-old beliefs, operating models and even regulations."

The rise of complex cloud computing and subscription-based software sales (as opposed to one-time purchases) have created opportunities where Citrix sees its future. The company expects to get 40 percent of software sales through subscriptions by 2020.

Henshall calls that shift the "most fundamental part of the transformation" at Citrix. 

Local Technology Industry

Measured in technology time, Citrix is a veteran in South Florida. It was founded in 1989 by Ed Iacobucci. David Henshall came to Citrix 15 years ago, moving to South Florida from Silicon Valley, where Citrix maintains a second headquarters. 

"Living in Silicon Valley, especially during the rise of the internet, you do believe that that is the center of the technology world. And in many ways, it's still the center of a lot of innovation," Henshall said.

 The Kauffman Foundation has ranked Miami No. 1 in the country for start-ups formation, but the city lags in scale-up, or companies that get bigger fast. And the ranking doesn’t concentrate solely on tech firms.

The region has also experienced some big tech wins. E-Builder, a construction software company based in Plantation, was recently sold for $500 million.  The Fort Lauderdale-based online pet store Chewy was bought for more than $3 billion. And Magic Leap, which developed its ultra-secret augmented reality technology in Plantation, has raised close to $2 billion from investors like Google, Fidelity and China’s Alibaba .

"The more we can expand the size of the talent pool, the more companies like Citrix and others will expand here," said Henshall.

If Miami wins the contest to host Amazon's second corporate headquarters, that could become a reality quickly. Amazon's HQ2 project has promised up to 50,000 new full-time jobs in management, software development and other administrative positions.

"It would mean a tremendous demand on local hiring" if Amazon ultimately chooses South Florida, Henshall said. He is not part of the regional effort to attract Amazon's second headquarters to the region.

Citrix shares two locations with Amazon's 20-city shortlist: South Florida and Raleigh, North Carolina.