As expected, Citrix Systems Inc. today announced that it has entered a $2.25 billion deal to acquire Wrike Inc., the provider of a popular project management platform used by Google LLC and tens of thousands of other companies. 

The deal, Citrix says, will enable it to expand in markets where it currently has a limited presence. The company also sees the deal unlocking new upselling opportunities by enabling its salespeople to promote Wrike’s platform to existing customers. 

Publicly traded Citrix is best known as a maker of virtual desktop software that enables employees to access work  applications remotely. It also provides tools for managing cloud and network infrastructure, as well as collaboration products. Citrix’s offerings are used by all of the companies on the Fortune 500 list along with hundreds of thousands of others. 

Wrike, in turn, provides a popular software-as-a-service platform that enables teams to track the progress of projects they’re working on. The company also provides various productivity features, such as file sharing tools, to help workers perform the projects they’re tracking using its platform more efficiently.

Citrix sees the acquisition of Wrike boosting its top line in multiple ways. The most immediate impact will be the addition of Wrike’s more than $140 million in annual recurring revenue, which rose at a compound annual growth rate of about 30% over the last two years. Its sales are expected to reach $180 million to $190 million this year. 

In the longer term, Citrix believes the deal will put it in a stronger position to target certain vertical industry segments that historically haven’t been major buyers of its software. Citrix Chief Executive Dave Henshall detailed in a letter to shareholders today that the company’s desktop virtualization and infrastructure management tools are mainly bought by information technology departments.

Wrike’s platform, in turn, is used mainly by other departments such as sales and marketing organizations. The acquisition will create opportunities for Citrix’s salesforce to cross-sell Wrike’s platform to the business teams of firms whose IT departments use its desktop virtualization products. Likewise, Citrix can pitch its IT software to customers of Wrike’s project management platform.

The company in the process hopes to grow the part of its client base that consists of smaller organizations. Most of Citrix’s revenue comes from enterprises while Wrike generates the bulk of its revenue from businesses and the mid-market, Henshall’s letter points out.

The recurring nature of Wrike’s revenue is also an important part of the story. Citrix has been working to shift its business model from on-premises licenses to subscriptions and reached a major milestone in the effort last quarter, when subscriptions reached 85% of total product bookings. Wrike’s software-as-a-service business model aligns well with Citrix’s focus on boosting recurring revenues.

Indeed, Constellation Research Inc. analyst Holger Mueller told SiliconANGLE earlier this week that Wrike’s platform would be complementary to some of its existing offerings and expand its wallet share in the collaboration market too.

“It’s also possible Citrix wants to emulate the ServiceNow strategy of expanding into the related space of project management,” Mueller added. “It’s perhaps also a sign that the application virtualization market, as dynamic it may be, is getting commoditized quickly.”

Citrix will pay the $2.25 billion value of the acquisition in cash using a combination of existing assets and new debt it has taken on to finance the deal. Henshall told shareholders that the company expects to return to its historical leverage levels within 24 months. As for the time frame of the acquisition itself, it’s expected to complete in the first half of 2021. 

Citrix’s shares are up more than 3% in trading today.

Photo: Citrix