Citrix Systems, Inc.

A securities class action has been filed against Citrix Systems, Inc. (CTXS) on behalf of investors in Citrix common stock between January 22, 2020 through October 6, 2021.  This case has been filed in the USDC – S.D.FL.

Headquartered in Fort Lauderdale, Florida, Citrix is a software company that provides users with secure remote access to computer networks.  Historically, Citrix’s technology was located “on-premise,” installed directly onto computer servers owned and operated by its customers.  Customers purchased licenses through a perpetual license model, meaning a purchaser would pay upfront for lifetime access and support, with the cost of the licenses based on the number of users each customer supported.  In 2019, Citrix began a two-pronged transition of its business model.  First, the Company began to transfer its software platform from the on-premise model to a cloud-based model.  In the cloud model, Citrix hosts its software on servers owned and maintained by Citrix, rather than on customers’ servers.  Second, Citrix transitioned to a subscription-based payment system: instead of paying once per user for a license, Citrix’s subscription model required customers to pay a yearly subscription cost.

The complaint alleges that, throughout the Class Period, Defendants repeatedly, falsely assured investors that the transition from on-premise to the cloud product was going smoothly.  In addition, in response to the COVID-19 pandemic and the shift to remote work, Citrix created a shorter duration, on-premise subscription license (the “Business Continuity Licenses”) that the Company offered at a discounted rate, and which Defendants claimed would transition to cloud accounts after the one-year license expired.  As a result of Defendants’ misrepresentations, Citrix common stock traded at artificially inflated prices during the Class Period.

The truth about Citrix’s difficulties transitioning to the cloud was revealed through a series of disclosures.  First, on April 29, 2021, Citrix announced lower than expected license conversions of the Business Continuity Licenses.  Specifically, the Company explained that the Business Continuity Licenses did not transition to long-term cloud contracts as expected.  Instead, many customers “rolled to another short-term” on-premise license, citing the ongoing COVID-19 pandemic.

Then, on July 29, 2021, the Company announced that the transition to cloud was not as successful as the Company had led investors to believe.  Further, Citrix announced a major restructuring of its sales leadership in order to “enhance their focus on” cloud migration.  According to the Company, these changes were “significant and may cause short-term disruption before yielding tangible results.”  Finally, on October 6, 2021, the Company announced that David Henshall had stepped down as President and CEO of Citrix.  As a result of these disclosures, Citrix’s share price declined precipitously.