Citrix Systems Annual Report 2020

Plain-text annual report

2020 Annual Report + Notice of 2021 Annual Meeting of Shareholders and Proxy Statement Financial highlights Year ended December 31 (In thousands, except per share data) 2020 2019 2018 Revenues: Subscription Product and license Support and services Total net revenues Cost of net revenues Gross margin Operating expenses 1,114,798 650,810 455,276 444,437 583,474 734,495 1,677,465 1,776,280 1,784,132 3,236,700 3,010,564 2,973,903 498,546 464,047 433,803 2,738,154 2,546,517 2,540,100 2,129,346 2,010,399 1,862,140 Income from operations 608,808 536,118 677,960 Other expense, net (53,928) (26,618) (48,505) Income from operations before income taxes 554,880 509,500 629,455 Income tax expense (beneﬁt) 50,434 (172,313) 53,788 Net income 504,446 681,813 575,667 Net earnings per share—diluted 4.00 5.03 3.94 Weighted average shares outstanding—diluted 126,152 135,495 145,934 Revenue (millions) SaaS revenue (millions) Operating cash ﬂow (millions) Subscription bookings mix $3,237 $541 $1,035 $3,011 $2,974 $391 $274 $936 $783 75% 62% 42% 2018 2019 2020 2018 2019 2020 2018 2019 2020 2018 2019 2020 In 2020, Citrix revenue grew by 8%. To our stakeholders: The year 2020 was one of transformation, as people and organizations around the world faced unparalleled challenges on a variety of fronts—from public health and social justice to the ongoing threat of climate change. Following the wildﬁres that began the year—reminding us of the devastating effects of climate change—a pandemic invoked a global crisis, forcing millions of people to shift to working from home in a matter of weeks. Then, in the wake of the onset of the pandemic, we saw the human toll of systemic racial inequality spark mass protests calling for long overdue action. A year later, we are still grappling with these issues. Although it has taken a concerted effort, I am extremely proud of how quickly we were able to respond and help our employees, customers, and partners drive meaningful change during these times. In response to the pandemic, we took decisive actions aimed at making an impact in the most pressing areas: keeping employees safe, helping our customers ensure business continuity, and supporting the communities in which we live and work. Early last March, Citrix employees shifted to remote work seamlessly. We put measures in place to help our teams and neighborhoods by extending beneﬁts for employees directly affected by COVID-19, establishing a relief fund for nonproﬁts in our local communities, and doubling our match limit for employees’ charitable donations. For our customers, there’s no doubt that the pandemic accelerated their digital transformation roadmaps, move to the cloud, and adoption of ﬂexible and hybrid workstyles. Citrix solutions help organizations deliver a consistent and secure work experience to all users, across all devices in any location. This value proposition became increasingly important—particularly for our customers in the healthcare, supply chain, and public sector verticals. Through the pandemic, we have proudly helped customers around the world and across industries transition to remote work and maintain business operations with minimal disruption. In response to the racial and social injustices experienced in the past year and through the course of time, Citrix remains committed to working toward an equitable future for all. This starts with our own organization—our racial demographics should reﬂect the world in which we live and the customers we serve. We have implemented a racial equity strategy to David J. Henshall President and CEO I believe more than ever in our ability to change the way the world works. Our strong core values and customer-centric culture have positioned us to deliver innovative solutions to an increasing base of users. Shareholder letter increase Black and African American representation within Citrix and to assess our internal processes to eliminate biases and ensure equality. We are steadfast in our commitment to create lasting impact. In addition, we are investing in STEM programs, scholarships, and youth mentoring to support a diverse talent pipeline for our future and reﬂect our commitment to long-term systemic change. And ﬁnally, as organizations evaluate their future work environments, they are increasingly committed to sustainability—a trend accelerated by the pandemic as we see how widespread remote work and reduced commuting and travel can quickly reduce environmental impacts. Because Citrix solutions increase employee engagement and productivity while working remotely, we can support our customers’ sustainability goals by decreasing energy consumption and greenhouse gas (GHG) emissions—through both the use of energy efﬁcient devices and, longer term, the reduction of real estate needs. In 2020, we also accelerated our environmental, social, and governance (ESG) initiatives—evaluating our own global operations to identify opportunities for improvement—and have set targets tied to executive compensation to further encourage achievement. Moving forward, we are committed to continuing to increase transparency through our ESG-related disclosures. Annualized recurring revenue (millions) (cid:132) SaaS (cid:132) Subscription $1,205 $743 $725 $528 $520 $350 2018 2019 2020 2020 business performance While 2020 was a challenging year in many ways, our ﬁnancial performance exceeded expectations, and we made considerable progress in our subscription model transition. In 2020, subscription revenue increased 71 percent year over year, and our future committed revenue, or the combination of deferred and unbilled revenue1, increased 18 percent, to $2.9 billion. Our subscription ARR2 balance reached over $1.2 billion, up 62 percent year over year, and the SaaS component of ARR increased 39 percent, with an ending balance of $725 million. We exited the year with subscription bookings representing 85 percent of our total product bookings, and 95 percent of our Workspace product bookings in the fourth quarter of 2020, up from 69 percent and 73 percent respectively in the fourth quarter of 2019. We are continuing to grow our recurring, predictable, sustainable revenue and cash ﬂow by delivering both Workspace and Application Delivery and Security solutions through subscription offerings. 1. Unbilled revenue primarily represents future billings under our subscription agreements that have not been invoiced and, accordingly, are not recorded in accounts receivable or deferred revenue within our consolidated ﬁnancial statements. 2. Annualized Recurring Revenue, or ARR, is an operating metric that represents the contracted recurring value of all termed subscriptions normalized to a one-year period. It is calculated at the end of a reporting period by taking each contract’s recurring total contract value and dividing by the length of the contract. ARR includes only active contractually committed, ﬁxed subscription fees. Our deﬁnition of ARR includes contracts expected to recur and therefore excludes contracts with durations of 12 months or less where licenses were issued to address extraordinary business continuity events for our customers. All contracts are annualized, including 30-day offerings where we take monthly recurring revenue multiplied by 12 to annualize. ARR should be viewed independently of U.S. GAAP revenue, deferred revenue, and unbilled revenue and is not intended to be combined with or to replace those items. ARR is not a forecast of future revenue. The onset of COVID-19 in early 2020 resulted in a rapid shift to remote work and a broad realization of hybrid workstyle beneﬁts. We saw customers who already had an established cloud footprint quickly and easily scale capacity as needed with Citrix solutions. Speciﬁcally, Citrix Cloud enabled customers to deploy workloads signiﬁcantly faster than those who ran workloads on-premises. Due to the urgency of remote work, the majority of on-premises customers chose to expand their seats with our on-premises subscription offering, rather than migrating workloads to the cloud. Our Application Delivery and Security business reﬂects the secular shift to software from hardware- based solutions, and we expect this trend to continue over the longer term. Software accounted for 44 percent of total Application Delivery and Security revenue, up from 29 percent in 2019, with many customers utilizing our Application Delivery and Security solutions to optimize delivery of Citrix Workspace. Customers are seeing the value in our pooled-capacity subscription offering, which allows them to utilize capacity across various deployment models—whether on-premises, in the cloud, or in a hybrid infrastructure. Our solutions enable full visibility with an optimized user experience, while offering maximum protection to our customers’ ecosystems. I’m extremely proud of our team’s performance and how we came together to support our customers. Whether operating in multiple clouds or on-premises, our customers were able to provide their employees a safe and productive work experience through Citrix Workspace, with optimized performance provided by Citrix Application Delivery and Security solutions. Looking ahead With our subscription licensing model transition largely complete, our focus is now on: 1) migrating our large installed customer base from on-premises to the cloud; 2) expanding our existing footprint with general purpose Workspace, Analytics, and Security solutions to reach more users within our customer base; and 3) successfully executing on our opportunity to accelerate growth with our recent acquisition of Wrike. Shareholder letter ODOT supports a mobile workforce and COVID-19 volunteers with Citrix Workspace The Ohio Department of Transportation (ODOT) maintains one of the nation’s largest transportation systems, with infrastructure assets valued at over $116 billion. To improve remote access to applications across a wide range of devices, ODOT uses Citrix Workspace to deliver a secure and unified experience for various employees, from roadway construction crews to bridge inspectors and highway maintenance workers. When the global pandemic was declared in early 2020, ODOT did not have a formal work-from-home policy in place. Within four days, Citrix solutions enabled 1,800 employees to work securely and productively at home. ODOT was also able to support neighboring state agencies during the crisis. As Ohio saw unemployment numbers dramatically increase due to COVID-19, the Ohio Department of Jobs and Family Services did not have the capacity to handle the volume of calls and requested assistance from other state agencies. With a modernized workspace architecture powered by Citrix, ODOT quickly took action, and in three days supported more than 1,100 volunteers with the applications they needed, delivering vital support to Ohio citizens through Citrix Workspace. Shareholder letter Citrix Workspace unifies, secures, and simplifies work Unify work Reliable access to SaaS, web and mobile apps, virtual desktops, content, business services, and other resources needed to be productive wherever work needs to get done—in an office, on the road, or at home Secure work Contextual access security and app protection gives IT and organizations confidence that their information and applications will remain secure in today’s distributed and hybrid work and IT environments Simplify work Intelligent experience with machine learning, micro-apps and workflows, virtual assistants, and search capabilities to guide, automate, and streamline work execution and collaboration Accelerating the cloud migration: Organizations are looking to modernize their application infrastructure by both adopting SaaS applications and transitioning on-premises workloads to public clouds. As customers work through various stages of their cloud journey, Citrix solutions simplify their management of applications while offering a ﬂexible, secure, and seamless experience to end users. That said, we know that a customer’s decision to move an on-premises Citrix workload to the cloud is not made in a vacuum, and is often made in conjunction with other IT-related infrastructure decisions. This is one of the reasons why our partnerships with major cloud providers, like the expansion of our engagements with Microsoft, Google, and AWS last year, are so meaningful. One of our top priorities is accelerating the move of our installed base to the cloud, and our evolving partnerships play an important part in our customers’ transition and ability to manage application delivery in a hybrid-cloud environment. Increasing seat penetration: Historically, application and desktop virtualization has been a primary driver of our business. While this continues to be an opportunity for us to grow, we are conﬁdent that Citrix Workspace can beneﬁt a broader base of users beyond virtualization, by increasing employee productivity with a uniﬁed, secure, and customized experience for all employees. Citrix Workspace streamlines workﬂows and connects users to the apps they need to get work done with less effort. And, Citrix’s Secure Internet Access solutions ensure that enterprise applications and data are accessed securely, with high performance and reliability across all employees and devices types. Seat expansion across the enterprise provides us the opportunity to continue to innovate and create additional value on top of our seats with new modules, like analytics. Accelerating growth with the acquisition of Wrike: The addition of Wrike’s Collaborative Work Management solutions advances our general purpose workspace strategy, and enhances and further differentiates the Citrix Workspace platform. It automates and simpliﬁes work execution and team-based collaboration on top of where employees go to access and organize their work in Citrix Workspace. We expect this acquisition to further drive our SaaS transition by providing an opportunity to cross-sell to our large customer base. I believe more than ever in our ability to change the way the world works. Our strong core values and customer-centric culture have positioned us to deliver innovative solutions to an increasing base of users. We have invested in the long-term growth of the business Shareholder letter while continuing to return capital to shareholders. We will continue to run the business for long-term sustainable growth to beneﬁt all of our core constituents—our customers, partners, employees, and shareholders. Consistent with this priority, we are setting long-term corporate sustainability goals, including our intention to reduce our total greenhouse gas emissions by 30 percent and reduce our emissions per unit of revenue by 50 percent by 2030, compared to our 2019 baseline year. Importantly, we are linking actions to reduce our carbon footprint—as well as diversity, inclusion, and belonging metrics—to our executive variable compensation incentive plan in 2021. On behalf of the Board and our employees, thank you for your continued support and interest in Citrix. David J. Henshall President and CEO For detailed information about our ESG strategy and programs, please review our sustainability report at citrix.com/about/ sustainability/2019-report/ Environmental, Social, and Governance (ESG) Sustainability and business strategy Sustainability at Citrix goes beyond the inherent environmental and social benefits that our products enable. ESG factors also influence our products, how we develop new solutions, and how we operate overall. Our business strategy is informed by our key stakeholders—including our employees—to ensure that ESG factors influence how we operate. In July 2020, more than 3,000 Citrix employees (approximately 33 percent of our workforce) responded to a company-wide sustainability survey. Respondents overwhelmingly support Citrix’s efforts to actively pursue improving environmental, social, and governance-related impact. Ninety percent of respondents agreed that working for an environmentally responsible company is important to them. We view these results as a mandate to further our strong commitment to sustainability throughout the company. Material ESG topics In 2020, we engaged in a full materiality assessment to help identify, assess, and prioritize the relevant ESG risks and opportunities that are most important to our stakeholders and Citrix’s business overall. This assessment, which informs our ESG strategy, targets, and reporting, resulted in the following core areas of focus: Environmental • • Carbon emissions Climate change adaptation and resilience Social • Diversity and inclusion • Health and wellness Governance • • Board composition Business continuity • • • • • • Energy consumption Product sustainability Supply chain sustainability Training and education Data security and privacy Ethics and compliance Enabling energy and emissions reduction At Citrix, our role in reducing energy consumption starts with our products, which enable anyone to work from anywhere—reducing transportation emissions from commuting and enabling a shift to more energy-efficient devices. For example, Citrix Workspace eliminates the need for applications and data to reside on endpoint devices. This puts product sustainability into practice, allowing customers to transition Citrix submits corporate climate data and strategy information to CDP, the voluntary global environmental disclosure platform. Environmental, Social, and Governance (ESG) away from more energy-intensive desktops with large screen displays and high-performance processors toward more energy-efficient laptops. And because no data is required to live on these devices, it can extend the useful life of an individual device by up to 40 percent. This can significantly decrease an organization’s energy demand and reduce waste. Citrix Workspace—combined with flexible remote work policies—can drive down corporate office space needs and reduce employee commuting, further reducing a company’s carbon footprint. When organizations deploy Citrix Workspace and manage client devices to optimize for energy efficiency, they can—depending on the size of their employee base— dramatically decrease the greenhouse gas emissions (GHG) associated with client computing. Talent Citrix solutions enable a better way to work and embrace the power of human difference. We provide a distributed and flexible work environment for our approximately 9,000 employees, aiding the recruitment and retention of a broader base of diverse talent. Our own diverse workforce spans multiple generations and lives and operates in more than 40 countries. In strong support of the world’s urgent 2019 GHG intensity transition to a low-carbon economy, Citrix has initiated targets to reduce our total absolute GHG emissions by 30% by 2030 and reduce our emissions per unit of revenue by 50% by 2030. These goals will use our 2019 emissions as a baseline for factors included and cover scopes 1, 2, and 3. We expect to refine these targets over the next 1 to 2 years to receive approval from the Science Based Target initiative (SBTi) to ensure our targets are consistent with Citrix doing its part to keep global warming well below 2°C. Total GHGs (Scope 1 and 2 MT CO2e) Revenue GHG intensity (MT CO2/revenue) 25,557 $3.01 billion .000009 2019 emissions by scope (metric tonnes CO²e) 5.5% 48.5% 45.9% Scope 1 2,736 Scope 2 (location-based) 22,821 Scope 3 (business travel; employee commuting) 24,099 Total emissions: 49,656 Environmental, Social, and Governance (ESG) Central to our long-term strategy is attracting, developing, and retaining the best talent globally, with the right skills to drive our success. During the COVID-19 pandemic, our primary focus has been on the safety and well-being of our employees and their families. A large majority of our workforce worked remotely and successfully throughout most of 2020. We provided our employees with a variety of tools, resources, and training to support effective remote working and employee well-being during this stressful and unprecedented time. We are taking what we’ve learned from being highly distributed teams during the pandemic and optimizing it for the future. For offices that reopened, we leveraged the advice and recommendations of medical experts to implement new protocols to ensure the safety of our employees, including face coverings, temperature checks, health certifications, social distancing, and capacity limits. Diversity and inclusion Diversity, inclusion, and belonging have long been a part of our culture, and we work to continually expand our diversity, inclusion, and belonging initiatives. In the area of human capital management, we have launched a number of diversity and inclusion (D&I) efforts, including an employee- run committee focused on D&I initiatives, which are supported by our executive leadership team. We recently expanded global parental leave benefits, gender pay equity initiatives, diversity-focused scholarships, and programs to support underrepresented minorities, veterans, and disabled workers. In addition, we asked all employees to complete unconscious bias training. The training helps Citrix employees to uncover biases that result in prejudices and stereotypes. We have also continued to build bias mitigation practices into our people processes. For example, removing gendered language from job postings, giving managers tools to mitigate bias before a performance review, and encouraging diverse interview panels to make objective decisions on candidates. Additionally, a cross-functional team worked together to remove biased language from our lexicon. In 2020, we launched a racial equity strategy with the objectives of supporting black students and businesses, modifying our people processes to promote racial equity, and sharing data as we advance our journey and personal learning about systemic racism. We are committed to listening, learning, and making sustainable change to stand against racism, bias, and injustice. Our employee resource groups (ERGs) support underrepresented groups of employees and build safe spaces for members, educate allies, and attract and retain talent. ERGs are an important component of our D&I efforts, addressing topics like career development, mentoring, advocacy, networking, and recruiting and interviewing candidates. To support the needs of parents and caregivers during the pandemic, we launched an ERG specifically focused on these employees; the group now has 600-plus members offering support and advice. Environmental, Social, and Governance (ESG) More than 2,300 employees are engaged with Citrix ERGs—approximately 25 percent of our employee base. We have ten ERGs with 29 chapters across nine offices in seven countries. Each ERG has the support of an Executive Leadership Team champion and a senior vice president or vice president–level sponsor to provide guidance, visibility, and support to the ERG’s chair and broader membership. ERGs benefit Citrix by connecting us around the globe, improving our work- force representation, and providing awareness and feedback that make us better as a company and as a steward in the communities we serve. 2020 global gender headcount Overall Leadership People managers 26% 25% 74% 75% 30% 70% 2020 U.S. race and ethnicity headcount Overall 3% 5% 19% 16% 56% Leadership People managers 1% 20% 9% 70% 3% 5% 14% 16% 61% (cid:132) Female (cid:132) Male (cid:132) Multiracial (cid:132) Black or African American (cid:132) Asian (cid:132) Hispanic or Latino (cid:132) White Total rewards, beneﬁts, and wellness We offer competitive benefits and compensation programs that meet the diverse needs of our employees. To attract, motivate, and retain top-performing employees, globally, Citrix offers a market-competitive compensation program, with the ability to increase compensation through performance-based incentives and career opportunities. Environmental, Social, and Governance (ESG) We provide health benefits and wellness programs for employees and their families. Due to COVID-19, we were unable to conduct our annual health fairs in person, but we continue to hold events virtually, including healthy cooking classes, wellness classes, and parenting information sessions. In addition to a competitive base salary or hourly wage, Citrix offers a company-matched 401(k), a performance-based bonus program, recognition awards, equity compensation, an employee stock purchase program, and appreciation events for employees. We also offer benefits to support our employees’ physical and mental health by providing tools and resources to help them improve or maintain their health status and encourage engagement in healthy behaviors. During 2020, we grew our mindfulness community. Practicing mindfulness can help employees strengthen their ability to focus, improve resilience, and navigate conflict. Giving back to our communities is a vital part of our culture, and we do this through a combination of employee and Citrix donations. Employees receive paid time off to support the charitable organizations of their choice, and personal donations are matched through our charitable matching program. In 2020, we doubled our charitable match cap to support COVID-19 relief and social justice donations. Further, we support a number of community programs by donating meals, supporting education programs, and providing scholarships, among other important initiatives. Growth, development, and engagement At Citrix, we place a strong focus on career development and building the capabilities of our team members. We invest in our employees by offering a wide range of development opportunities that promote learning and growth. These include highly interactive core leadership programs geared toward different career stages; various mentoring and coaching programs; a large library of on-demand, virtual, and in-person courses that support professional and technical skills development; and our tuition reimbursement program. We also believe in building organizational capability by practicing a growth mindset and by continuously listening to our employees to create a phenomenal employee experience. We survey our employees frequently, providing managers and teams with highly actionable data that allows them to focus on making improvements in areas that have the largest impact on engagement and team success. Notice of 2021 Annual Meeting of Shareholders and Proxy Statement P r o x y Letter from our CEO Dear Shareholder, April 16, 2021 On behalf of Citrix, thank you for your continued investment. We value your support, which is essential to the success of our efforts to deliver long-term value to our shareholders. Citrix solutions help organizations deliver a consistent and secure work experience to all users, across all devices in any location. This value proposition became increasingly important in the wake of the COVID-19 pandemic. Through the pandemic, we have proudly helped customers around the world and across industries transition to remote work and maintain business operations with minimal disruption. I am proud of how quickly we were able to respond and help our employees, customers, and partners drive meaningful change during this most difficult time for our global community. You can read more about how we helped customers ensure business continuity, kept employees safe, and supported the communities in which we live and work in this year’s Annual Report available at investors.citrix.com/financial-information/annual-reports. I also direct you to my CEO letter in this year’s Annual Report where I summarize our 2020 results — a year of strong financial performance and considerable progress in our subscription model transition. Further, I also discuss our opportunities to migrate our customers to the cloud, expand our existing footprint to reach more users within our customer base and execute on our opportunity to accelerate growth with our recent acquisition of Wrike. At Citrix, we take corporate responsibility seriously and work together with all of our stakeholders — shareholders, employees, customers, partners and members of the communities in which we live and work — to provide a better tomorrow for the next generation. Citrix solutions aim to increase employee engagement and productivity while working remotely and as a result, we can support our customers’ sustainability goals by decreasing energy consumption and greenhouse gas emissions with the use of energy efficient devices, and longer-term, reducing real estate needs. We strive to build a diverse and inclusive culture, operate responsibly, and conduct our business in an ethical, transparent and accountable way. As discussed in my CEO letter, in 2020, we accelerated our own environmental, social and governance (ESG) initiatives. We evaluated our global operations to identify opportunities for improvement and set targets tied to executive compensation for 2021 to further encourage achievement. Further, we are committed to continuing to increase transparency through our ESG-related disclosures. Please see ways you can vote your shares beginning on page 1 in this year’s Proxy Statement. We appreciate your continued support of Citrix and encourage you to vote your shares in advance of the meeting. Very truly yours, DAVID J. HENSHALL Chief Executive Officer, President and Director P r o x y Letter from our Chairman Dear Shareholder, April 16, 2021 As Chairman, I would like to take the opportunity to share my perspective on several topics that I believe are important to Citrix’s ability to create long-term sustainable value. These include Citrix’s executive compensation practices, our diverse and experienced Board of Directors, our approach to cybersecurity risk management, as well as our focus on sustainable business practices and commitment to engaging with our shareholders. Commitment to pay-for-performance. The Compensation Committee of the Board of Directors and the full Board continually reevaluate and take a thoughtful approach to aligning the metrics of performance-based awards with those that have driven and will continue to drive Citrix’s business transformation. We are committed to pay-for-performance. For example: ‰ Beginning in 2018 and for 2019, the Compensation Committee linked performance-based equity awards with subscription bookings as a percentage of total subscription and product bookings to directly align performance-based awards to Citrix’s multi-year strategic business transition to a cloud-based subscription business. During the second quarter of 2019, and as discussed in the company’s earnings announcement in July 2019, Citrix gained significant momentum in its business transition to a subscription-based business. ‰ Given this increased momentum, the Compensation Committee determined that the company had a unique opportunity to increase the acceleration of its transition, which, if successful, would advance long-term value creation for shareholders. Accordingly, beginning in 2020, the Compensation Committee moved away from subscription bookings as a percentage of total subscription and product bookings and decided to link performance-based equity awards with annualized recurring revenue, or ARR,(1) growth, which, as we have discussed on our earnings calls, is the metric that we believe is best aligned with the company’s business transition and strategy. In our view, ARR, in short, is the best indicator of the overall health and trajectory of the business because it captures the pace of Citrix’s transition and is a forward-looking indicator of top line trends. ‰ As we enter fiscal year 2021 with a portion of our subscription model transition complete, we continue to focus on transitioning our customers to the cloud. As a result, the Compensation Committee decided to link performance-based equity awards granted during fiscal year 2021 with Software-as-a-Service ARR, or SaaS ARR, growth, rather than ARR growth, to further drive our business model transition to the cloud. Prioritizing diversity and refreshment of the Citrix Board. We believe that diversity of perspectives and breadth of experience are important attributes of a well-functioning board. As such, our Board of Director nominees are a diverse group of individuals who possess a wide range of backgrounds and experience, including diversity of knowledge, skills and expertise, as well as diversity of personal characteristics, including gender, ethnicity, culture, thought and geography. The attributes of our directors help the Board of Directors to effectively oversee risks and provide guidance, positioning Citrix to continue to drive shareholder value and long-term sustainable growth. We have added a board skills matrix on page 22 of this Proxy Statement to highlight the breadth of experience of our Board of Directors and have included diversity characteristics. We believe that a diverse board is an effective board. Racially, ethnically or gender diverse directors currently comprise 36% of the total Board of Directors. Mr. Bob Knowling identifies as Black, Dr. Ajei Gopal identifies as Asian and Mses. Nanci Caldwell and Moira Kilcoyne identify as women. Each time we evaluate our leadership structure, add a new director, or change the composition of our Board committees, we do so in a thoughtful manner to ensure that the right skills, experiences, and perspectives are brought to our meetings and discussions. Over the past five years, we have added five new independent directors. We are pleased that JD Sherman joined our Board of Directors in March 2020, bringing a strong technology focus and expertise in finance and operations and Bob Knowling joined our Board of Directors in October 2020, bringing (1) See page 5 of this Proxy Statement for the definition of annualized recurring revenue, or ARR. extensive leadership and management experience. As announced in April 2021, Robert D. Daleo will not be standing for re-election at the 2021 Annual Meeting. We thank Bob for his service on our Board of Directors over the last seven years. His many contributions as a Board member were valuable and appreciated as the company executed a significant shift in our strategy and business model. Further enhancing cybersecurity risk management. Citrix solutions empower customers to do their best work — securely and efficiently, on any device, across any network, anywhere in the world. Effectively managing risks associated with cybersecurity and privacy is essential to our ability to deliver for our customers and our shareholders. We continue to be focused on cybersecurity risk management in light of the rapidly evolving threat landscape and an increasingly complex regulatory environment. As discussed in greater depth on page 32 in this year’s Proxy Statement, the Technology, Data and Information Security Committee of the Board oversees information technology policies, plans and programs relating to enterprise cybersecurity and data protection risks, including risks associated with our products, services, and information technology infrastructure. This Committee works in coordination with the Audit Committee to oversee our management of risks related to information technology systems and processes, including any audits of our systems and processes. A management-level cross-functional internal committee chaired by our Chief Legal Officer is charged with security governance, coordination and monitoring of cyber risks, potential cyber incidents, and key mitigation initiatives. This internal management committee consolidates relevant information for the Board’s Technology, Data and Information Security Committee and regularly meets with the Technology, Data and Information Security Committee. Additionally, findings from our internal audits of security controls are reported directly to the Technology, Data and Information Security Committee on a quarterly basis. Commitment to environmental, social and governance oversight and disclosures. The Board continues to focus on oversight of Citrix’s environmental and social practices and their impact on our business and key stakeholders. We believe that effective oversight of these matters is critical to Citrix’s long-term success. Formal oversight of Citrix’s policies and practices regarding corporate social responsibility and environmental, social and governance (ESG) is through the Nominating and Corporate Governance Committee. Our management team regularly updates the Nominating and Corporate Governance Committee regarding its expanded ESG program. Citrix is committed to continuing to increase transparency through ESG-related disclosures. I encourage you to read Citrix’s most recent Sustainability Report available at https://www.citrix.com/content/dam/citrix/en_us/documents/about/sustainability- report.pdf and David Henshall’s CEO letter in this year’s Annual Report under the section titled Environmental, Social and Governance (ESG) for more details regarding Citrix’s ESG program. Ongoing commitment to shareholder engagement. Each year, members of the Board of Directors and senior management conduct outreach to a broad group of shareholders to better understand their perspectives on our strategy, as well as on our governance, compensation, and sustainability practices. We greatly value the feedback received through these conversations and the insights gained are shared with the Board of Directors on an ongoing basis. Members of the Board of Directors and senior management engaged with investors representing nearly 21% of shares outstanding in 2020. As detailed on page 41 of this Proxy Statement, these discussions covered a range of topics and the Board continues to use shareholder input to inform our practices and policies. We look forward to our continued engagement with you and I encourage you to read this year’s Proxy Statement and Annual Report. On behalf of the Board of Directors, thank you for your investment in, and continued support of, Citrix. Very truly yours, ROBERT M. CALDERONI Chairman of the Board of Directors P r o x y Table of contents Proxy highlights Part 1 Corporate governance Corporate governance cycle Independence of members of our Board Board leadership structure Executive sessions of independent directors Executive succession Considerations governing director nominations Policy governing director attendance at annual meetings of shareholders Code of ethics Risk oversight Enterprise risk management Information security and privacy risk oversight Compensation-related risk Environmental, social and governance (ESG) program Policy governing shareholder communications with our Board Part 2 Board of Directors Our directors Meetings and meeting attendance Our Board committees Director compensation Part 3 Executive management Our leadership team Part 4 Executive compensation Compensation discussion and analysis Purpose of compensation discussion and analysis Shareholder engagement Objectives and elements of our executive compensation programs How executive pay decisions are made Components of compensation Individual executive compensation decisions President and Chief Executive Officer Compensation Other Named Executive Officers cash compensation – base salary and variable cash compensation Other Named Executive Officers equity – long-term incentive compensation Other compensation policies and information Summary of executive compensation Grants of plan-based awards Outstanding equity awards Stock vested Nonqualified deferred compensation Potential payments upon termination or change in control Compensation Committee report Compensation Committee interlocks and insider participation Pay ratio disclosure Related party transactions policies and procedures and transactions with related persons Security ownership of certain beneficial owners and management Delinquent section 16(a) reports Securities authorized for issuance under equity compensation plans Equity compensation plans Part 5 Audit Committee matters Report of the Audit Committee Fees paid to Ernst & Young Annual evaluation Audit partner rotation Policy on Audit Committee pre-approval of audit and permissible non-audit services of independent auditor Part 6 Proposals to be voted on at the meeting Proposal 1: Election of director nominees Proposal 2: Ratification of appointment of independent registered public accounting firm Proposal 3: Advisory vote to approve the compensation of our Named Executive Officers Proposal 4: Shareholder proposal Part 7 Additional information Other matters Shareholder proposals Expenses and solicitation Delivery of documents to shareholders sharing an address Note regarding forward-looking statements Note regarding references to Citrix website 4 12 12 12 12 13 13 13 16 16 16 17 17 18 19 19 21 21 29 29 33 36 36 39 39 39 41 42 46 51 62 62 63 64 66 68 70 71 73 74 75 80 80 80 82 83 84 85 85 86 86 87 87 88 88 89 89 90 91 92 94 94 94 94 95 95 96 20 21 Proxy Statement CITRIX SYSTEMS, INC. 851 West Cypress Creek Road Fort Lauderdale, Florida 33309 NOTICE OF 2021 ANNUAL MEETING OF SHAREHOLDERS To Be Held at 5:00 p.m. Eastern Time on Friday, June 4, 2021 P r o x y To the shareholders of Citrix Systems, Inc.: The 2021 Annual Meeting of Shareholders of Citrix Systems, Inc., a Delaware corporation, will be held virtually on Friday, June 4, 2021, at 5:00 p.m. Eastern time, for the following purposes: 1. 2. 3. 4. 5. to elect ten members to the Board of Directors, each to serve for a one-year term and until his or her successor has been duly elected and qualified or until his or her earlier death, resignation or removal; to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2021; to hold an advisory vote on the compensation of our Named Executive Officers; to consider a shareholder proposal regarding simple majority voting provisions, if properly presented at the meeting; and to transact such other business as may properly come before the 2021 Annual Meeting or any adjournments or postponements thereof. The proposal for the election of directors relates solely to the election of ten directors nominated by our Board of Directors and does not include any other matters relating to the election of directors, including, without limitation, the election of directors nominated by any shareholder. Only shareholders of record at the close of business on April 6, 2021 are entitled to notice of and to vote at the 2021 Annual Meeting and at any adjournment or postponement thereof. All shareholders are cordially invited to attend the 2021 Annual Meeting. We are pleased this year to again conduct the 2021 Annual Meeting solely online via the Internet through a live webcast and online shareholder tools. We continue to use the virtual annual meeting format to facilitate shareholder attendance and participation by leveraging technology to communicate more effectively and efficiently with our shareholders. This format empowers shareholders to participate fully from any location around the world, at no cost. You will be able to attend the meeting by visiting www.virtualshareholdermeeting.com/CTXS2021 by using the 16-digit control number included in your proxy materials. To ensure your representation at the 2021 Annual Meeting, we urge you to vote via the Internet at www.proxyvote.com or by telephone by following the instructions on the Notice of Internet Availability of Proxy Materials you received in the mail and which instructions are also provided on that website, or, if you have requested a proxy card by mail, by signing, voting and returning your proxy card to Vote Processing, c/o Broadridge Financial Solutions, 51 Mercedes Way, Edgewood, New York 11717. For specific instructions on how to vote your shares, please review the instructions for each of these voting options as detailed in your Notice of Internet Availability and in this Proxy Statement. If you attend the 2021 Annual Meeting, you may vote electronically at the meeting even if you have previously returned your proxy card or have voted via the Internet or by telephone. In addition to their availability at www.proxyvote.com, this Proxy Statement and our Annual Report to Shareholders are available for viewing, printing and downloading at investors.citrix.com/financial-information/annual-reports. By Order of the Board of Directors, ANTONIO G. GOMES Executive Vice President, Chief Legal Officer and Secretary Fort Lauderdale, Florida April 16, 2021 WHETHER OR NOT YOU PLAN TO ATTEND THE 2021 ANNUAL MEETING, PLEASE PROMPTLY COMPLETE YOUR PROXY AS INDICATED ABOVE IN ORDER TO ENSURE REPRESENTATION OF YOUR SHARES. PLEASE REVIEW THE INSTRUCTIONS FOR EACH OF YOUR VOTING OPTIONS DESCRIBED IN THIS PROXY STATEMENT AND THE NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS YOU RECEIVED IN THE MAIL. CITRIX SYSTEMS, INC. 851 West Cypress Creek Road Fort Lauderdale, Florida 33309 PROXY STATEMENT For the 2021 Annual Meeting of Shareholders To Be Held on June 4, 2021 April 16, 2021 P r o x y This Proxy Statement is being furnished in connection with the solicitation of proxies by the Board of Directors of Citrix Systems, Inc., a Delaware corporation, for use at the 2021 Annual Meeting of Shareholders to be held virtually on Friday, June 4, 2021 at 5:00 p.m. Eastern time, or at any adjournments or postponements thereof. We are pleased this year to again conduct the 2021 Annual Meeting solely online via the Internet through a live webcast and online shareholder tools. We continue to use the virtual annual meeting format to facilitate shareholder attendance and participation by leveraging technology to communicate more effectively and efficiently with our shareholders. This format empowers shareholders to participate fully from any location around the world, at no cost. An Annual Report to Shareholders, containing financial statements for the year ended December 31, 2020, and this Proxy Statement are being made available to all shareholders entitled to vote at the 2021 Annual Meeting. The Notice of Internet Availability was mailed, and this Proxy Statement and the form of proxy were first made available, to shareholders on or about April 16, 2021. The purposes of the 2021 Annual Meeting are to: ‰ elect ten directors for one-year terms; ‰ ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2021; ‰ hold an advisory vote to approve the compensation of our Named Executive Officers; ‰ consider a shareholder proposal regarding simple majority voting provisions, if properly presented at the meeting; and ‰ transact such other business as may properly come before the 2021 Annual Meeting or any adjournments or postponements thereof. Only shareholders of record at the close of business on April 6, 2021, which we refer to as the record date, will be entitled to receive notice of and to vote at the 2021 Annual Meeting. As of that date, 124,164,115 shares of our common stock, $0.001 par value per share, were issued and outstanding. Shareholders are entitled to one vote per share on any proposal presented at the 2021 Annual Meeting. Shareholders will be able to attend the 2021 Annual Meeting by visiting www.virtualshareholdermeeting.com/CTXS2021 by using the 16-digit control number included in their proxy materials. We have designed the virtual format to enhance shareholder access and participation and protect shareholder rights by providing the same rights to participants that they would have at an in-person meeting. During the 2021 Annual Meeting, shareholders may ask questions and will be able to vote their shares electronically. Although the live webcast is available only to shareholders at the time of the meeting, following completion of the 2021 Annual Meeting, a webcast replay and answers to all valid questions not answered on the live call will be posted after the meeting on our website at www.investors.citrix.com and will remain for at least one year. ‰ Shareholders of record: If you are a shareholder of record, in order to participate in the 2021 Annual Meeting, please log onto the meeting platform at www.virtualshareholdermeeting.com/CTXS2021. You will need your 16-digit control number included on the proxy notice, proxy card or the voting instruction form previously distributed to you. ‰ Shareholders holding shares in “street” name: If your shares are held in “street name” through a brokerage firm, bank, trust or other similar organization and you do not have a 16-digit control number, in order to participate in the 2021 Annual Meeting, you must first obtain a legal proxy from your broker, bank or other nominee reflecting the number of shares of Citrix common stock you held as of the record date, your name and email address. 2021 Proxy Statement 1 Those without a control number may attend as guests of the 2021 Annual Meeting. If you are a guest, you will need to register by entering your name and email address. Guests will not have the option to vote or ask questions during the meeting. You should ensure that you have a strong Internet connection and allow plenty of time to log in and ensure that you can hear streaming audio prior to the start of the 2021 Annual Meeting. We offer live technical support for all shareholders attending the meeting. Technical support phone numbers will be available on the virtual-only meeting platform at www.virtualshareholdermeeting.com/CTXS2021. If you are a shareholder of record, you may vote electronically during the 2021 Annual Meeting by following the instructions available on www.virtualshareholdermeeting.com/CTXS2021. Whether or not you plan to attend the 2021 Annual Meeting online, we urge you to vote via the Internet at www.proxyvote.com or by telephone at 1-800-690-6903 by following the instructions on the Notice of Internet Availability of Proxy Materials or physical proxy card you received in the mail and which are also provided on that website; or, if you have requested a proxy card by mail, by signing, voting and returning your proxy card. If you are a shareholder who holds shares through a brokerage firm, bank, trust or other similar organization (that is, in “street name”), please refer to the instructions from the broker or organization holding your shares. Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before it is voted. Proxies may be revoked by: ‰ filing with our Secretary, before the taking of the vote at the 2021 Annual Meeting, a written notice of revocation bearing a later date than the proxy; ‰ properly casting a new vote via the Internet or by telephone at any time before the closure of the Internet or telephone voting facilities; ‰ duly completing a later-dated proxy relating to the same shares and delivering it to our Secretary before the taking of the vote at the 2021 Annual Meeting; or ‰ attending the 2021 Annual Meeting online and voting electronically during the meeting (although attendance at the 2021 Annual Meeting will not in and of itself constitute a revocation of a proxy). Any written notice of revocation or subsequent proxy should be sent so as to be delivered to our principal executive offices at Citrix Systems, Inc., 851 West Cypress Creek Road, Fort Lauderdale, Florida 33309, Attention: Secretary, before the taking of the vote at the 2021 Annual Meeting. If a broker, bank or other nominee holds your shares, you must contact them in order to find out how to revoke or change your vote. The representation in person or by proxy of at least a majority of the outstanding shares of our common stock entitled to vote at the 2021 Annual Meeting is necessary to constitute a quorum for the transaction of business. Abstentions and broker non-votes (discussed below) will be counted as present or represented for purposes of determining the presence or absence of a quorum for the 2021 Annual Meeting. When a quorum is present at any meeting of shareholders, the holders of a majority of the stock present or represented and voting on a matter shall decide any matter to be voted upon by the shareholders at such meeting, except when a different vote is required by express provision of law, our amended and restated certificate of incorporation (as currently in effect, our “Certificate of Incorporation”) or our amended and restated bylaws (as currently in effect, our “Bylaws”). For Proposal 1 (the election of ten directors), each nominee shall be elected as a director if the votes cast for such nominee’s election exceed the votes cast against such nominee’s election. Any director who fails to receive the required number of votes for his or her re-election is required to submit his or her resignation to the Board of Directors. Our Nominating and Corporate Governance Committee (excluding any director nominee who failed to receive the required number of votes) will promptly consider any such director’s resignation and make a recommendation to the Board of Directors as to whether such resignation should be accepted. The Board of Directors is required to act on the Nominating and Corporate Governance Committee’s recommendation within 90 days of the certification of the shareholder vote for the 2021 Annual Meeting. 2 For each of Proposal 2 (the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2021), Proposal 3 (the advisory vote to approve the compensation of our Named Executive Officers) and Proposal 4 (shareholder proposal if properly presented), an affirmative vote of a majority of the stock present, in person or represented by proxy, and voting on such matter is required for approval. P r o x y Broadridge Financial Solutions will tabulate the votes at the 2021 Annual Meeting. The vote on each matter submitted to shareholders will be tabulated separately. Broker non-votes are shares held by a nominee (such as a bank or brokerage firm) which, although counted for purposes of determining a quorum, are not voted on a particular matter because voting instructions have not been received from the nominees’ clients (who are the beneficial owners of such shares). Under national securities exchange rules, nominees who hold shares of common stock in street name for, and have transmitted our proxy solicitation materials to, their customers but do not receive voting instructions from such customers, are not permitted to vote such customers’ shares on non-routine matters. Proposal 3 is considered a routine matter under such rules and nominees therefore have discretionary voting power as to Proposal 3. For non-routine matters, these broker non-votes shall not be counted as votes cast and therefore will have no effect on Proposals 1, 2 and 4. Similarly, abstentions are not counted as votes cast and thus will have no effect on any proposal. The persons named as attorneys-in-fact in the proxies, David J. Henshall and Arlen R. Shenkman, were selected by the Board of Directors and are officers of Citrix. All properly executed proxies submitted in time to be counted at the 2021 Annual Meeting will be voted by such persons at the 2021 Annual Meeting. Where a choice has been specified on the proxy with respect to the foregoing matters, the shares represented by the proxy will be voted in accordance with the specifications. If no such specifications are indicated, such proxies will be voted FOR Proposal 1 (the election of each of the director nominees), FOR Proposal 2 (the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2021), and FOR Proposal 3 (the advisory vote to approve the compensation of our Named Executive Officers). If no specification is indicated on the proxy with respect to Proposal 4 (shareholder proposal regarding simple majority voting provisions), then the proxy holder will vote the shares represented by that proxy AGAINST such proposal. Aside from the proposals included in this Proxy Statement, our Board of Directors knows of no other matters to be presented at the 2021 Annual Meeting. If any other matter should be presented at the 2021 Annual Meeting upon which a vote may properly be taken, shares represented by all proxies received by the Board of Directors will be voted with respect to such matter in accordance with the judgment of the persons named as attorneys-in-fact in the proxies. No dissenters’ rights are available under the General Corporation Law of the State of Delaware, our Certificate of Incorporation or our Bylaws to any shareholder with respect to any of the matters proposed to be voted on at the 2021 Annual Meeting. Unless otherwise indicated, references in this Proxy Statement to “Citrix,” the “company,” “we” and “us” refer to Citrix Systems, Inc., a Delaware corporation and its consolidated subsidiaries. 2021 Proxy Statement 3 Proxy highlights This summary should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2020 and the entire Proxy Statement. 2021 Annual Meeting of Shareholders Date and time: June 4, 2021, 5:00 p.m. Eastern time Location: virtualshareholdermeeting.com/CTXS2021 Record date: April 6, 2021 Date of ﬁrst distribution of proxy materials: April 16, 2021 Accelerating our transformation Citrix is an enterprise software company focused on helping organizations deliver a consistent and secure work experience no matter where work needs to get done — in the office, at home, or in the field. We do this by delivering a digital workspace solution that gives each employee the resources and space they need to do their best work. Our Workspace solutions are complemented by our App Delivery and Security (formerly Networking) solutions, by delivering the applications and data employees need across any network with security, reliability and speed. Citrix believes that work is not a place — work is about business outcomes. We have helped organizations with digital transformation for many years. The challenges and complexities created by the proliferation of Software-as-a-Service (SaaS)-based applications and the emergence of hybrid multi-cloud infrastructure environments are now combined with the realities brought upon by the global COVID-19 pandemic — realities such as long-term remote and flexible work models and an increased need for risk mitigation and business continuity. As a result, we believe organizations are accelerating their cloud and digital transformation plans to better position themselves to address these new challenges and embrace the opportunities that will arise from flexible work models. To do this, organizations rely on Citrix solutions for business agility, employee productivity, security and compliance, as well as cost and efficiency. Citrix solutions are focused on employee productivity and are designed to provide end-users with the simplicity of a common user experience while ensuring information technology, or IT, administrators are able to deliver applications and data with the security and controls necessary to protect the enterprise and its customers. As an organization, we continue to evolve our business in three distinct and interrelated ways: ‰ Perpetual to Subscription: Our business model has shifted away from selling perpetual licenses towards subscription, or recurring contracts in the form of SaaS, on-premise term, and consumption-based agreements; ‰ On-Premise to Cloud: As the share of applications and data continues to move rapidly from on-premise data centers to the cloud, our product development and engineering has increasingly focused on delivering cloud- based solutions; and ‰ Point Products to Platform: Our offerings and our go-to-market activities are shifting away from selling individual point products towards a platform solution, in a tiered offering that provides us the ability to deliver a variety of value-enhancing modules to our customers in the future. 4 We believe execution of our strategic priorities will continue to drive results for our stakeholders. Exiting 2020, progress in our business transformation to a cloud-based subscription business was evidenced by: ‰ Subscription ARR(1) accelerated to $1.20 billion at the end of 2020, a 62% year-over-year increase, and SaaS P r o x y ARR of $725 million at the end of 2020, up 39% year-over-year; ‰ Subscription revenue grew 71% year-over-year in 2020; and ‰ Subscription bookings as a percent of total product bookings increased to 75% in 2020, up from 62% in 2019. Further accelerating our business model transformation, in March 2021, we announced that we completed our acquisition of Wrike, a leading provider of SaaS collaborative work management solutions, for approximately $2.25 billion in cash. Through the acquisition, we expect to deliver the industry’s most comprehensive cloud-based work platform to empower all employees and teams to securely access, collaborate and execute all work types in the most efficient and effective way possible — across any work channel, device, or location. (1) Annualized recurring revenue, or ARR, is an operating metric that represents the contracted recurring value of all termed subscriptions normalized to a one-year period. It is calculated at the end of a reporting period by taking each contract’s recurring total contract value and dividing by the length of the contract. ARR includes only active contractually committed, fixed subscription fees. Our definition of ARR includes contracts expected to recur and therefore excludes contracts with durations of 12 months or less where licenses were issued to address extraordinary business continuity events for our customers. All contracts are annualized, including 30-day offerings where we take monthly recurring revenue multiplied by 12 to annualize. ARR should be viewed independently of U.S. GAAP revenue, deferred revenue and unbilled revenue and is not intended to be combined with or to replace those items. ARR is not a forecast of future revenue. 2021 Proxy Statement 5 2020 highlights: Reported 2019 performance that reﬂected an accelerated subscription model transition and strong demands across our solutions Announced $1 billion accelerated share repurchase Reported strong demand primarily driven by the COVID-19 outbreak as we focused to ensure business continuity and employee productivity at the beginning of the pandemic Announced our $17 million commitment to help employees and the communities in which we operate during a time of global crisis Announced plan to acquire Wrike, a market-leading born-in- the-cloud Collaborative Work Management Platform, accelerating our business model transition to the cloud Reported strong 2020 revenue and an acceleration in our year-over-year SaaS ARR growth Announced increasing our quarterly dividend to $0.37 per share January 2020 April 2020 January 2021 2020 Highlights March 2020 October 2020 March 2021 Appointed JD Sherman to the Board of Directors Appointed Bob Knowling to the Board of Directors Announced the closing of the Wrike acquisition As illustrated in the graph below, our total shareholder return (assuming reinvestment of dividends)(1)(2), or TSR, over the five-year period ended on December 31, 2020 was approximately 123%, outpacing the S&P 500 Index. $300 $250 $200 $150 $100 $50 $0 2015 2016 2017 2018 2019 2020 Citrix Systems, Inc. S&P 500 Index Nasdaq Index (2) (1) For purposes of this graph, the reinvestment of Citrix’s $0.35 per share cash dividend paid during the fourth quarter of 2018 and each quarter during both 2019 and 2020 was calculated using the closing price on Nasdaq on each quarterly dividend payment date. In January 2017, we completed the separation of our GoTo business and its subsequent merger with LogMeIn, Inc. For the purpose of this graph, the distribution of LogMeIn common stock to our shareholders in connection with such separation and merger is treated as a non-taxable cash dividend of $18.59 (equal to the opening price of LogMeIn common stock on February 1, 2017 multiplied by 0.1718 of a share of LogMeIn common stock). Such amount was deemed reinvested in Citrix common stock at the closing price on February 1, 2017 using the daily dividend reinvestment methodology. Other financial data providers may use different methodologies to adjust for the GoTo separation, which may produce different results. 6 Executive compensation highlights The following table details the concepts guiding our compensation plan design and how we put them into practice, including actions taken by the Compensation Committee to reflect our compensation plan design and the company’s accelerated transformation this past year to a cloud-based subscription business: Concept Link executive target compensation directly with company performance Implementation ‰ To provide direct alignment with company performance and key drivers of shareholder value, target compensation(1) for our Named Executive Officers(2) was: • 66%, on average, performance-based(3) • 92%, on average, at risk(4) P r o x y Payout opportunity levels for our executive variable cash compensation plan should motivate performance that meets or exceeds our financial plan objectives ‰ In 2020, each executive officer’s variable cash compensation plan award was based 100% on the achievement of financial operating targets consistent with our corporate operating plan ‰ Based on 2020 company performance, executive variable cash compensation plan awards for 2020 paid out at 161.16% of the target amount ‰ Over the past ten years, our variable cash compensation plan awards have paid out between 58.8% and 170.9% of target and paid above 100% less than half of the time Our executives should be incentivized to achieve financial goals that are directly tied to our multi-year business strategy and drivers of growth and value creation for our shareholders ‰ At least 60% of annual equity awards to our Named Executive Officers are awarded as performance-based restricted stock units; and for 2020, these annual awards vest based on ARR growth to further align executive compensation with what we believe is the best indicator of the overall health and trajectory of our subscription business transition because it captures the pace of our transition and is a forward-looking indicator of top line trends Our compensation program should be flexible to account for the specific challenges facing the company and the company’s strategic initiatives at any given time while also maintaining a long- term focus on shareholder value and creation ‰ Each year, the Compensation Committee reviews our variable cash compensation plan and performance-based equity awards granted to executive officers to ensure that they fit our strategic and operational initiatives and reflect feedback we receive from our shareholders (1) Includes 2020 base salary and target variable cash compensation, both in effect at the end of 2020, and the grant date fair value of equity compensation granted in 2020. Does not include the performance-based awards granted in April 2020 for retention purposes and that are included in the Summary Compensation Table, Grants of Plan-Based Awards Table and Outstanding Equity Awards at Year End Table as described herein. (2) Excludes Woong Joseph Kim, who joined Citrix as Executive Vice President of Engineering and Chief Technology Officer on December 1, 2020. (3) Performance-based compensation includes target variable cash compensation and the grant date fair value of performance-based restricted stock units granted in 2020, other than the performance-based awards granted in April 2020 for retention purposes. See Equity-based long-term incentives beginning on page 55. (4) At risk compensation includes target variable cash compensation and the grant date fair value of equity compensation that was granted in 2020, other than the April 2020 retention awards. See Individual executive compensation decisions beginning on page 62 for further details regarding our Named Executive Officers’ compensation. 2021 Proxy Statement 7 Governance highlights The following summary of our governance policies and facts highlights our commitment to governance practices that protect shareholder rights: ✓ Proxy access ✓ Annual elections of all directors ✓ Majority voting for director elections ✓ Lead independent director ✓ Active shareholder engagement ✓ Commitment to corporate responsibility and forward-looking ESG programs ✓ Stock ownership guidelines for executive officers and directors ✓ Policies prohibiting hedging, short selling and pledging of our common stock ✓ Commitment to Board refreshment and diversity of our Board of Directors ✓ Independent directors regularly meet without management present ✓ Annual Board self-assessment process ✓ Board oversight of risk management ✓ Executive compensation recovery policy ✓ Annual say-on-pay vote Shareholder engagement Our executives regularly engage with shareholders to better understand their perspectives on a wide range of strategy, business and governance issues. Our Board of Directors and senior management team welcomes and values the views and insights of our shareholders and conducts an annual outreach effort to connect with our larger shareholders in order to ensure open lines of communication. In 2020, we reached out to our largest shareholders and proxy advisory firms to understand their perspectives and discuss our business strategy, governance, sustainability and executive compensation policies with a goal of using feedback received during these meetings to inform our policies and practices. Over the course of the year, we held meetings with institutional shareholders representing nearly 21% of Citrix’s outstanding common stock as well as proxy advisory firms. These shareholder meetings covered a wide range of topics, including: our business model transition and strategy; corporate governance practices such as Board composition; our diversity and inclusion programs; our response to the COVID-19 pandemic and its impact on our business; cybersecurity and data privacy; succession planning; shareholder views regarding equity plan preferences and administration; and other matters of shareholder interest. Peter J. Sacripanti, the Chairperson of our Compensation Committee and a member of our Nominating and Corporate Governance Committee, participated in the majority of meetings along with senior executives of the company. Members of the leadership team, the Chairperson of our Compensation Committee, and other members of our Board of Directors who participate in shareholder engagement meetings regularly discuss shareholder feedback with relevant Board committees and the full Board of Directors. In general, feedback from our shareholders regarding our compensation programs and corporate governance practices has been positive. The Board of Directors carefully considers the feedback from shareholders in assessing and updating our executive compensation and corporate governance practices. 8 P r o x y Examples of how this feedback has informed our governance practices are shown below. What we heard How we responded Investors shared their feedback on preferences with respect to burn rate, dilution and equity incentive plan duration and design as well as their desire to see robust disclosure of the company’s overall equity compensation philosophy, including the impact of share repurchases and buybacks in prior years Investors wanted to ensure that our executive compensation metrics closely align with long-term shareholder interests and business transition goals Investors were interested in understanding the Board of Director’s and management’s approach to oversight of cybersecurity risk Investors were interested in understanding Citrix’s ESG practices and how the Board of Directors exercises oversight of ESG topics including diversity, human capital management and corporate social responsibility Thoughtfully addressed shareholder feedback when considering and approving the Second Amended and Restated 2014 Equity Incentive Plan in March 2020 and recommending its approval to shareholders in June 2020, which permits Citrix to use equity compensation to recruit and retain talent which we believe will continue to accelerate our business transition Incorporated an annualized recurring revenue (ARR) metric for our performance-based restricted stock awards in 2020 and then SaaS ARR in 2021, aligning long-term executive compensation with a key indicator of the overall health and trajectory of our subscription business transition and our focus on transitioning our customers to the cloud Enhanced Board oversight of cybersecurity through the Technology, Data and Information Security Committee to oversee policies, plans and programs relating to enterprise cybersecurity and data protection risks and enhanced cybersecurity disclosure beginning on page 17 Increased our focus on ESG initiatives and Board-level oversight of our ESG program, including our diversity, belonging and inclusion programs. Further, we added an ESG component to our executive officer’s variable cash compensation plan for 2021 that includes sustainability and diversity and inclusion objectives, among others We believe it is important to continue to engage with our shareholders on a regular basis to understand their perspectives and to give them a voice in shaping our governance and executive compensation policies and practices. We also consider the shareholder advisory (say-on-pay) vote of our Named Executive Officer compensation when evaluating our compensation program. For more information, see Evaluation process beginning on page 46. 2021 Proxy Statement 9 Our Board of Directors The following table provides summary information about each director and the standing committees on which they currently serve. In April 2021, we announced that Mr. Robert D. Daleo would not be standing for re-election at the 2021 Annual Meeting. Mr. Daleo advised the company that his decision not to stand for re-election did not involve any disagreement with the company. All remaining directors have been nominated for re-election at the 2021 Annual Meeting to serve for a one-year term. Committee memberships Other public company boards Nominating and Corporate Governance Audit Compensation Technology, Data and Information Security 2 2 0 0 1 1 0 2 2 0 0 • • • • • • • • • • • • • • • Name Experience Robert M. Calderoni Former Executive Chairman, Citrix Chairman Former Chairman & CEO, Ariba Nanci E. Caldwell Lead Independent Former EVP & CMO, PeopleSoft Director Robert D. Daleo Former Vice Chairman, EVP & CFO, Independent Thomson Reuters Murray J. Demo Independent Ajei S. Gopal Independent David J. Henshall President & CEO Former EVP & CFO, Rubrik CEO, ANSYS Former EVP, CFO & COO, Citrix Thomas E. Hogan Managing Director, Vista Equity Independent Partners Moira A. Kilcoyne Independent Founder. MAK Management Consulting Former Managing Director/Chief Information Ofﬁcer, Morgan Stanley Robert E. Knowling, Jr. Independent Chairman, Eagles Landing Partners Peter J. Sacripanti Chairman Emeritus and Partner, Independent McDermott Will & Emery CEO, Dashlane J. Donald Sherman Independent • Chair• Member 10 P r o x y Director independence Tenure Age Diversity 2 9 2 7 2 5 1 5 • Independent directors • Non–independent directors • 0–5 years • 6–9 years • 10–16 years • 50–59 years old • 60–69 years old • 70+ years old Voting matters The proposals to be considered at the 2021 Annual Meeting are as follows: PROPOSAL 1 Election of directors PROPOSAL 2 PROPOSAL 3 Ratification of appointment of independent registered public accounting firm for 2021 Advisory vote to approve the compensation of our Named Executive Officers (say-on-pay) Board recommendation FOR each Nominee FOR FOR PROPOSAL 4 Shareholder proposal (if properly presented) NO RECOMMENDATION 2 7 2 • Female—white • Male—underrepresented • Male—white minority See page number for more detail 89 90 91 92 2021 Proxy Statement 11 Part 1 Corporate governance Corporate governance cycle Our annual corporate governance cycle is shown below: • We review input we’ve received through our shareholder outreach and communicate that input to the Board. Winter S p r i n g • We review key regulatory updates. • The Board begins its self- assessment and evaluation focused on structure, process and culture. • During the fall and winter, we reach out to and speak with our largest shareholders about our governance and com- pensation practices and solicit input on topics that are important to them. F a ll S m er m u • • • The Board discusses its evaluation results and reviews Board and Committee composition planning. We publish our annual communications to our shareholders, including our annual report and proxy statement. We hold our annual shareholders meeting. • We review governance best practices and our key corporate governance policies and procedures considering shareholder feedback received during the year. Independence of members of our Board Our Board of Directors has determined that nine of our directors (Ms. Caldwell, Mr. Daleo, Mr. Demo, Dr. Gopal, Mr. Hogan, Ms. Kilcoyne, Mr. Knowling, Mr. Sacripanti, and Mr. Sherman) are independent within the meaning of the director independence standards of The Nasdaq Stock Market LLC, or Nasdaq, and the Securities and Exchange Commission, or the SEC, including Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended. Furthermore, our Board of Directors has determined that each member of each of our regular standing committees of the Board of Directors is independent within the meaning of Nasdaq’s and the SEC’s director independence standards. In making this determination, our Board of Directors solicited information from each of our directors regarding whether such director, or any member of his or her immediate family, had a direct or indirect material interest in any transactions involving Citrix, was involved in a debt relationship with Citrix or received personal benefits outside the scope of such person’s normal compensation. The Board of Directors determined that each of Mr. Calderoni, who served as our Executive Chairman through December 31, 2018 and currently serves as our Chairman but no longer as an employee of the company, and Mr. Henshall, who is currently serving as our President and Chief Executive Officer, is not independent within these definitions. Board leadership structure Our Corporate Governance Guidelines provide our Board of Directors with flexibility to select the appropriate leadership structure based on the specific needs of our business and the best interests of our shareholders. Our Corporate Governance Guidelines set forth our general policy that the positions of Chairperson of the Board of Directors and Chief Executive Officer will be held by different persons. In certain circumstances, however, our Board of Directors may determine that it is in our best interests for the same person to hold the positions of Chairperson and Chief Executive Officer, or, in the case of Mr. Calderoni’s appointment as Executive Chairman in July 2015, for the position of Chairperson to also be an executive role. In such event or if the Chair is otherwise held by a director who is not independent under the applicable Nasdaq and SEC rules, our Corporate Governance Guidelines provide that the 12 Board of Directors will appoint an independent member of our Board of Directors as the Lead Independent Director, who is currently Nanci E. Caldwell. While Mr. Calderoni ceased to be Executive Chairman on January 1, 2019, he continues as Chairman in a non-employee capacity, and Ms. Caldwell continues in the position of Lead Independent Director. The Chairperson or Lead Independent Director, as the case may be, will preside at executive sessions of the independent directors and will have such further responsibilities as the full Board of Directors may designate from P r o x y time to time. Executive sessions of independent directors Executive sessions of the independent directors are held at least four times a year following regularly scheduled in-person meetings of our Board of Directors. Executive sessions do not include Messrs. Calderoni and Henshall, and the Lead Independent Director of our Board of Directors, Ms. Caldwell, is responsible for chairing the executive sessions. Executive succession Executive succession is regularly reviewed and discussed by our Board of Directors in Board meetings and in executive sessions of the Board of Directors. At least one Board meeting each year is focused on human capital, including formal reviews of executive talent, organizational structure and succession planning for the role of Chief Executive Officer and other senior executive roles. In these sessions, among other discussion topics, our Board of Directors reviews the assumptions, processes and strategy for various succession events and reviews potential internal and external successor candidates. The Board of Directors’ goal is to have a long-term and continuing program for effective executive development and succession and to be prepared for both short-term unexpected loss of a key leader and permanent transitions. Considerations governing director nominations Director qualifications The Nominating and Corporate Governance Committee of our Board of Directors is responsible for reviewing with the Board of Directors from time to time the appropriate qualities, skills and characteristics desired of members of the Board of Directors in the context of the needs of the business and in light of the current make-up of our Board of Directors. This assessment includes consideration of the following minimum qualifications that the Nominating and Corporate Governance Committee believes must be met by all directors: Highest ethical character Reputation consistent with our image Commitment to enhancing shareholder value, and representing the long-term interests of our shareholders as a whole Ability to exercise sound business judgment based on an objective perspective Substantial business or professional experience in areas that are relevant to our business Bachelor’s degree from a qualiﬁed institution 2021 Proxy Statement 13 The Nominating and Corporate Governance Committee may also consider numerous other qualities, skills and characteristics when evaluating director nominees, such as: ‰ an understanding of and experience in software, hardware or services, technology, accounting, governance, finance and/or marketing; ‰ leadership experience with public companies or other major complex organizations; ‰ experience on another public company board; and ‰ the specific needs of our Board of Directors and the committees of our Board of Directors at that time. Our Board of Directors believes that a diverse membership with varying perspectives and breadth of experience is an important attribute of a well-functioning Board and will enhance the quality of our directors’ deliberations and decisions. As a result, the Nominating and Corporate Governance Committee will consider the diversity of background and experience of a director nominee (such as diversity of knowledge, skills, experience and expertise) as well as diversity of personal characteristics (such as diversity of gender, race, ethnicity, culture, thought and geography) among its members in the overall context of the composition of the Board of Directors. The Nominating and Corporate Governance Committee and the Board of Directors discuss the composition of our Board of Directors, including diversity of background and experience, as part of the annual Board of Directors evaluation process. Process for identifying and evaluating director nominees Our Board of Directors delegates the director selection and nomination process to the Nominating and Corporate Governance Committee, with the expectation that other members of the Board of Directors, and of management, will be requested to take part in the process as appropriate. Generally, the Nominating and Corporate Governance Committee identifies candidates for director nominees, in consultation with management and the other directors, through the use of search firms or other advisers, through the recommendations submitted by shareholders or through such other methods as the Nominating and Corporate Governance Committee deems to be helpful to identify candidates. Once candidates have been identified, the Nominating and Corporate Governance Committee confirms that the candidates meet all of the minimum qualifications for director nominees established by the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee gathers information about the candidates through interviews, detailed questionnaires, comprehensive background checks or any other means that the Nominating and Corporate Governance Committee deems to be helpful in the evaluation process. The Nominating and Corporate Governance Committee then meets as a group to discuss and evaluate the qualities and skills of each candidate, both on an individual basis and taking into account the overall composition and needs of our Board of Directors. Based on the results of the evaluation process, the Nominating and Corporate Governance Committee recommends candidates for the Board of Directors’ approval as director nominees for election to our Board of Directors. The Nominating and Corporate Governance Committee also recommends candidates to the Board of Directors for appointment to the committees of the Board of Directors. The Chairman of the Board of Directors assists the Nominating and Corporate Governance Committee with Board composition and evolution planning, including review of committee memberships. Board evaluation program Our Board of Directors undertakes an evaluation process each year. In early 2021, our Board of Directors, with the assistance of an outside adviser, conducted one-on-one interview discussions to assess the Board’s performance and how to best serve the interests of our shareholders in the future. These one-on-one interview discussions focused on an assessment of the structure, composition, processes, roles, relationships and culture of our Board of Directors and its committees. The interview discussions also addressed Board composition and effectiveness, Board and committee leadership, the conduct of meetings, and perspectives on long-term corporate strategy. The results of the evaluation were shared with the Chairman of the Board of Directors and Lead Independent Director, and discussed in executive session with the full Board of Directors present. 14 P r o x y Procedures for recommendation of director nominees by shareholders The Nominating and Corporate Governance Committee will consider director nominee candidates who are recommended by our shareholders. Shareholders, in submitting recommendations to the Nominating and Corporate Governance Committee for director nominee candidates, shall follow the procedures described below. Generally, the Secretary of the company must receive any such recommendation for nomination not later than the close of business on the 120th day, nor earlier than the close of business on the 150th day, prior to the first anniversary of the date the Proxy Statement was sent to shareholders in connection with our preceding year’s annual meeting. All recommendations for nomination must comply with the requirements for shareholder nominations set forth in our Bylaws, including that any such recommendation must be in writing and include the following: ‰ name and address of the shareholder making the recommendation, as they appear on our books and records, and of such record holder’s beneficial owner; ‰ number of shares of our capital stock that are owned beneficially and held of record by such shareholder and such beneficial owner; ‰ name of the individual recommended for consideration as a director nominee; ‰ all other information relating to the recommended candidate that would be required to be disclosed in solicitations of proxies for the election of directors or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, including the recommended candidate’s written consent to being named in the Proxy Statement as a nominee and to serving as a director if approved by our Board of Directors and elected; and ‰ a written statement from the shareholder making the recommendation stating why such recommended candidate meets Citrix’s criteria and would be able to fulfill the duties of a director. Nominations must be sent to the attention of our Secretary by one of the two methods listed below: By U.S. mail (including courier or expedited delivery service) to: Citrix Systems, Inc. 851 West Cypress Creek Road Fort Lauderdale, FL 33309 Attn: Secretary of Citrix Systems, Inc. By facsimile to: (954) 337-4607 Attn: Secretary of Citrix Systems, Inc. Our Secretary will promptly forward any such nominations to the Nominating and Corporate Governance Committee. As a requirement for being considered for nomination to our Board of Directors, a candidate will need to comply with the following minimum procedural requirements: ‰ a candidate must undergo a comprehensive private investigation background check by a qualified firm of our choosing; ‰ a candidate must complete a detailed questionnaire regarding his or her experience, background and independence; ‰ a candidate must submit to the Board of Directors his or her written consent to serve as director if elected; and ‰ a candidate must submit to our Board of Directors a statement to the effect that (1) if elected, he or she will tender promptly following his or her election an irrevocable resignation effective upon his or her failure to receive the required vote for re-election at the next meeting at which he or she would face re-election, and (2) upon acceptance of his or her resignation by our Board of Directors, in accordance with our Corporate Governance Guidelines, he or she shall resign as a member of the Board of Directors. 2021 Proxy Statement 15 Once the Nominating and Corporate Governance Committee receives the nomination of a candidate and the candidate has complied with the minimum procedural requirements above, such candidacy will be evaluated and a recommendation with respect to such candidate will be delivered to our Board of Directors. Our Bylaws also provide that shareholders satisfying certain requirements, including ownership and holding period requirements with respect to our common stock, may nominate directors for potential inclusion in our Proxy Statement. In general, a shareholder, or a group of up to twenty shareholders, owning three percent or more of our outstanding common stock continuously for at least three years may nominate and include in our proxy materials director nominees constituting up to two individuals, or 20% of the Board of Directors, whichever is greater, provided that the shareholder(s) and the nominee(s) satisfy the requirements specified in our Bylaws. See Additional information—shareholderproposalson page 94 for further information. Policy governing director attendance at annual meetings of shareholders All directors are invited to attend our Annual Meeting of Shareholders. Messrs. Calderoni and Henshall attended our Annual Meeting of Shareholders held in June 2020. Code of ethics We have adopted a “code of ethics,” as defined by regulations promulgated under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, which we refer to as our Code of Business Conduct and which applies to all of our directors and employees worldwide, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A current copy of our Code of Business Conduct is available in the Corporate Governance section of our website at https://www.citrix.com/about/governance.html. A copy of our Code of Business Conduct may also be obtained, free of charge, upon a request directed to: Citrix Systems, Inc., 851 West Cypress Creek Road, Fort Lauderdale, Florida 33309, Attention: Investor Relations. We intend to disclose any amendment to or waiver of a provision of our Code of Business Conduct, to the extent required by rules and regulations, that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, by posting such information on our website, available at https://www.citrix.com/about/governance.html. For more corporate governance information, you are invited to access the Corporate Governance section of our website available at https://www.citrix.com/about/governance.html. Risk oversight We view risk assessment and oversight as a primary component of our governance and management framework. To that end, our Board of Directors plays an active role in reviewing Citrix’s corporate strategy and priorities, and holds management accountable for creating a culture that actively manages risk. Our Board of Directors, directly and through committees (as described below and as set forth in the relevant committee charters), is involved in risk oversight through direct decision-making authority with respect to significant matters as well as the ongoing oversight of management. Among other areas, the Board of Directors is directly involved in overseeing risks related to our corporate strategy, including product strategy, corporate development, and mergers and acquisitions, executive officer succession, business continuity, crisis preparedness and competitive and reputational risks. In addition, each committee of the Board of Directors oversees certain aspects of risk management and periodically reports and makes recommendations back to the full Board of Directors. The committees of the Board of Directors execute their oversight responsibility for risk management as follows: ‰ The Audit Committee is responsible for overseeing our internal financial and accounting controls, work performed by our independent registered public accounting firm and our internal audit function, overseeing our enterprise risk management (ERM) program, and overseeing risks related to our investments, financing activities, capital allocation strategies and insurance programs. As part of its oversight function, the Audit Committee regularly reviews the compliance policies and processes by which our exposure to certain significant areas of risk is assessed and 16 managed. The Audit Committee also regularly discusses with management and our independent registered public accounting firm our major financial and controls-related risk exposures and steps that management has taken to monitor and control such exposures. In addition, under the supervision of the Audit Committee, Citrix established a P r o x y Helpline available to all employees for the anonymous and confidential submission of complaints relating to any matter to encourage employees to report questionable activities directly to our Audit Committee. ‰ The Compensation Committee is responsible for overseeing our executive compensation practices within the context of our overall compensation philosophy, overseeing risks related to our cash and equity-based compensation programs and practices, and evaluating whether our compensation plans encourage participants to take excessive risks that are reasonably likely to have a material adverse effect on Citrix. For a detailed discussion of our efforts to manage compensation-related risks, see Compensation-relatedriskassessmentbelow. ‰ The Nominating and Corporate Governance Committee is responsible for overseeing risks related to the composition and structure of our Board of Directors and its committees, our corporate governance, and certain areas of regulatory compliance. In this regard, the Nominating and Corporate Governance Committee conducts an annual evaluation of the Board of Directors and its committees, plans for director and executive officer succession, reviews transactions between Citrix and our officers, directors, affiliates of officers and directors, or other related parties for conflicts of interest, and annually reviews our most significant governance policies. The Nominating and Corporate Governance Committee also periodically reviews reputational, and environmental, social and governance (ESG)-related risks with management. ‰ The Technology, Data and Information Security Committee is responsible for overseeing information technology policies, plans and programs relating to enterprise cybersecurity and data protection risks, including risks associated with our products, services, and information technology infrastructure. For a detailed discussion of our efforts to manage cybersecurity-related risks, see Informationsecurityandprivacyriskoversightbelow. Enterprise risk management (ERM) As described above, the Audit Committee oversees our ERM program. ERM is a company-wide initiative that, with the oversight of the Audit Committee, involves Citrix management, including our Chief Legal Officer and our internal audit function, including our Vice President, Internal Audit in an integrated effort to (1) identify, assess, prioritize and monitor a broad range of risks and (2) formulate and execute plans to monitor and, to the extent possible, mitigate the effect of those risks. Periodically throughout the year, the Audit Committee receives a report concerning our enterprise risk management efforts, with a full report out to the Board of Directors annually. These reports are designed to provide visibility to the Audit Committee and Board of Directors about the identification, assessment and management of critical risks and management’s risk mitigation strategies. The reports address strategic, operational, financial reporting, talent, succession, cybersecurity, compliance, reputational, governance and other risks, as appropriate. Information security and privacy risk oversight Our Board of Directors is committed to protecting information belonging to the company, its customers, partners and employees. We continue to advance our information security oversight, risk management and governance programs, through organization, technical and operational investments, and internal and third-party validations. In 2019, our Board of Directors formed a Technology, Data and Information Security Committee, chaired by Moira A. Kilcoyne, an experienced former Chief Information Officer. The primary purpose of the Technology, Data and Information Security Committee is to assist the Board in fulfilling its oversight responsibilities with respect to our information technology use and protection, including review and oversight of our policies, plans and programs relating to enterprise information and data protection risks. The Technology, Data and Information Security Committee is currently comprised of four independent directors, and meets at least quarterly to receive updates from management and outside experts concerning information security risk related to our infrastructure, products and services. In 2020, the Technology, Data and Information Security Committee held six meetings. The Technology, Data and Information Security Committee works in coordination with the Audit Committee to oversee our management of risks related to 2021 Proxy Statement 17 information technology systems and processes, including any audits of our systems and processes. For more information regarding our Technology, Data and Information Security Committee, please see the discussion beginning on page 32. A management-level cross-functional internal committee chaired by our Chief Legal Officer is charged with security governance, coordination and monitoring of cyber risks, potential cyber incidents, and key mitigation initiatives. This committee meets monthly and, among other things, coordinates disclosure controls and procedures related to information security and privacy risk and consolidates relevant information for the Board’s Technology, Data and Information Security Committee. Additionally, our internal audit team works with our security, IT and engineering functions to execute cyber risk governance initiatives, supported by regular independent auditing and testing of security controls. Findings from these internal audits of security controls are reported directly to the Technology, Data and Information Security Committee on a quarterly basis. We maintain a comprehensive online Trust Center (https://www.citrix.com/about/trust-center/) to provide our customers, partners and other third parties with transparent information on our approach to managing and responding to information security, privacy, and data compliance risk. Included in the information available on our Trust Center are details concerning certifications for certain of our products and services, including Service and Organization Controls (“SOC”) 2, Type 2, International Organization for Standardization/International Electrotechnical Commission (“ISO/ IEC”) 27001, Health Insurance Portability and Accountability Act (“HIPAA”), and Federal and Authorization Management Program (“FedRAMP”) Ready, as well as other relevant privacy frameworks. In 2020, we continued our practice of companywide annual security and privacy training for all employees, with more intensive training for our engineering and information technology teams. Additionally, in an effort to mitigate information security risk, we have secured insurance coverage intended to respond to certain network, cyber, and privacy risk events, and to defray the cost of data security incidents. Compensation-related risk We believe that our executive officer and employee compensation plans are appropriately structured so as not to incent excessive risk taking that would be reasonably likely to have a material adverse effect on our business. In particular, the Compensation Committee considered the following aspects of our compensation plans and policies when evaluating these areas: ‰ Our Board of Directors annually approves a corporate operating plan with goals that it believes are appropriate and reasonable in light of past performance and current market opportunities. Our corporate operating plan is the basis for the performance targets in our annual variable cash compensation plans. ‰ For our variable cash compensation plans, awards are based on the achievement of at least two objective performance measures, thus diversifying the risk associated with any single indicator of performance. ‰ For our variable cash compensation plans, we select performance measures that we believe are less susceptible to manipulation (for example, non-GAAP corporate operating expense) than other performance measures that we could select (for example, non-GAAP earnings per share). ‰ All of our executive and corporate variable cash compensation plans are capped at 200% of payout awards so as to prevent award payments in excess of specific returns to the business and our shareholders, even if we dramatically exceed our performance or financial targets. ‰ Payouts under our performance-based plans, if target performance metrics are not achieved, result in compensation at levels below full target payout, rather than an “all-or-nothing” approach, which could engender excessive risk taking. ‰ We implemented a performance-based restricted stock unit program for 2020, which awards our executive officers with restricted stock units based on annualized recurring revenue (ARR) growth during the relevant performance period, which we believe is an indicator of the success of our business transformation and a driver of value creation for our shareholders. This program has been capped at 200% of target awards to prevent excessive compensation even if we dramatically outperform our goals. 18 ‰ Our base salary component of compensation does not encourage risk taking because it is a fixed amount. ‰ No opportunities for non-qualified deferrals of compensation were offered to our executive officers in 2020, and none will be offered in 2021. P r o x y ‰ The Compensation Committee, or in the case of our President and Chief Executive Officer, the entire Board of Directors, determines achievement levels under our variable cash compensation plan and performance-based restricted stock unit awards after reviewing the company’s performance. ‰ Our executive stock ownership policy requires executives to hold significant levels of stock, which aligns an appropriate portion of their personal wealth to our long-term performance. ‰ Our executive officers are subject to a formal executive compensation recovery policy, or “clawback” policy, which allows us to recoup from our executive officers excess proceeds from certain incentive compensation received by such executive due to a material restatement of Citrix’s financial results due to an executive officer engaging in an act of embezzlement, fraud, willful misconduct or breach of fiduciary duty. Environmental, social and governance (ESG) program At Citrix, we are committed to improving the lives of our employees, customers, partners, shareholders, and the communities in which we live and work. We believe that a strong focus on corporate social responsibility and conducting our business in an ethical, transparent and accountable way generates value for all our stakeholders. Please refer to our Annual Report under the heading Environmental, social and governance (ESG) available at https://investors.citrix.com/financial-information/annual-reports and our most recent Sustainability Report available at https://www.citrix.com/content/dam/citrix/en_us/documents/about/sustainability-report.pdf, each of which describe our commitment to sustainability and corporate social responsibility efforts. Further, as discussed on page 55 under the heading ESGcomponentaddedto2021variablecashcompensationplan, for 2021, the Compensation Committee introduced an operational metrics-focused modifier to our variable cash compensation plan for executives intended to further focus our executive officers on our multi-year initiatives related to sustainability and diversity, inclusion and belonging. Policy governing shareholder communications with our Board Our Board of Directors provides to every security holder the ability to communicate with the Board of Directors as a whole and with individual directors on the Board of Directors through an established process for security holder communication as follows: ‰ For communications directed to our Board of Directors as a whole, security holders may send such communications to the attention of the Chairperson of the Board of Directors by one of the two methods listed below: By U.S. mail (including courier or expedited delivery service) to: Citrix Systems, Inc. 851 West Cypress Creek Road Fort Lauderdale, FL 33309 Attn: Chairperson of the Board of Directors, c/o Secretary By facsimile to: (954) 337-4607 Attn: Chairperson of the Board of Directors, c/o Secretary 2021 Proxy Statement 19 ‰ For security holder communications directed to an individual director in his or her capacity as a member of our Board of Directors, security holders may send such communications to the attention of the individual director by one of the two methods listed below: By U.S. mail (including courier or expedited delivery service) to: Citrix Systems, Inc. 851 West Cypress Creek Road Fort Lauderdale, FL 33309 Attn: Secretary of Citrix Systems, Inc. By facsimile to: (954) 337-4607 Attn: Secretary of Citrix Systems, Inc. We will forward any such security holder communication to the Chairperson of the Board of Directors, as a representative of the Board of Directors, or to the director to whom the communication is addressed, on a periodic basis. We will forward such communications by certified U.S. mail to an address specified by each director and the Chairperson of the Board of Directors for such purposes or by secure electronic transmission. 20 Part 2 Board of Directors Our directors P r o x y The following table sets forth our current directors, ten of whom are being nominated for re-election at the 2021 Annual Meeting. In April 2021, we announced that Robert D. Daleo would not stand for re-election at the 2021 Annual Meeting, and therefore, our Board of Directors has nominated all directors other than Robert D. Daleo for re-election to one-year terms at the 2021 Annual Meeting. Name Robert M. Calderoni Nanci E. Caldwell Robert D. Daleo Murray J. Demo Ajei S. Gopal David J. Henshall Thomas E. Hogan Moira A. Kilcoyne Robert E. Knowling, Jr. Peter J. Sacripanti J. Donald Sherman Position(s) with Citrix Chairman of the Board of Directors Lead Independent Director Director Director Director Director, President and Chief Executive Officer Director Director Director Director Director The following charts provide information about our current directors’ independence, tenure, age and diversity. Director independence Tenure Age Diversity 2 9 2 7 2 5 1 5 • Independent directors • Non–independent directors • 0–5 years • 6–9 years • 10–16 years • 50–59 years old • 60–69 years old • 70+ years old 2 7 2 • Female—white • Male—underrepresented • Male—white minority 2021 Proxy Statement 21 Summary of director nominee experience and qualifications All our directors have significant strategic, operational and risk management leadership experience and technology industry experience in global, complex organizations. Moreover, the matrix below summarizes what our Board of Directors believes are additional desirable qualifications, attributes and skills possessed by one or more of Citrix’s directors, because of their particular relevance to our business. While all of these were considered by the Board of Directors in connection with this year’s director nomination process, the following matrix does not encompass all experience, qualifications, attributes or skills of our directors. We consider experience in the identified functional areas as overseeing or serving in a senior management role for multiple years at a public company or other major complex organization. While a mark indicates an area of focus or expertise specifically identified by the Board, not having a mark does not mean the director does not possess that experience, qualification, attribute or skill. i n o r e d l a C • • • • • l l e w d l a C • • o m e D • • • PRODUCT/ENGINEERING Experience in product development management or engineering FINANCIAL REPORTING/ACCOUNTING Experience in ﬁnance and accounting CYBERSECURITY Cybersecurity operational or oversight experience HUMAN CAPITAL Experience overseeing human capital and executive compensation SALES/MARKETING/BRAND MANAGEMENT Experience overseeing go-to-market, sales, marketing, or brand management initiatives LAW/PUBLIC POLICY/REGULATORY Legal, public policy, and regulatory experience PUBLIC COMPANY BOARDS Number of other public company boards 2 2 n a g o H • • • • l a p o G • • • • 1 l l a h s n e H • • • • • • 1 e n y o c l i K • • 2 g n i l w o n K • • • • • 2 n a m r e h S • • • • • i t n a p i r c a S • • BOARD DIVERSITY Underrepresented group Female Asian Female Black 22 Further, the biographical description below for each director nominee includes the specific experience, qualifications, attributes and skills that led to the conclusion by our Board of Directors that such person should serve as a director of Citrix. Director nominees Robert M. Calderoni P r o x y Chairman of Citrix; Former Executive Chairman of Citrix; Former Interim Chief Executive Officer and President of Citrix; Former Chairman and Chief Executive Officer of Ariba, Sunnyvale, CA (Software and IT services company) Age: 61 Director Since: June 2014 Chairman Since: July 2015 Other boards: Since 2007, Mr. Calderoni has served on the Board of Directors of KLA-Tencor, a publicly-traded semiconductor equipment company; and since March 2020, Mr. Calderoni has served on the Board of Directors of ANSYS, Inc., a publicly-traded engineering simulation software provider. Key director qualifications: Mr. Calderoni served as Chairman and Chief Executive Officer of Ariba, Inc., a cloud applications and business network company, from October 2001 until it was acquired by SAP, a publicly-traded software and IT services company, in October 2012, and then continued as Chief Executive Officer of Ariba following the acquisition until January 2014. Mr. Calderoni also served as a member of the global managing board at SAP AG between November 2012 and January 2014 and as President SAP Cloud at SAP AG from June 2013 to January 2014. Mr. Calderoni has also held senior finance roles at Apple and IBM and served as Chief Financial Officer of Avery Dennison Corporation. From October 2015 to January 2016, Mr. Calderoni served as the Interim Chief Executive Officer and President of Citrix. Mr. Calderoni served as Executive Chairman of Citrix from July 2015 through December 2018. Mr. Calderoni currently serves as Chairman of the Board of Citrix. Mr. Calderoni previously served on the Boards of Directors of Juniper Networks, Inc., a publicly-traded networking company from 2003 to 2019, and LogMeIn, Inc., a then publicly-traded remote access and remote software company, from 2017 to 2020. The Board believes Mr. Calderoni’s qualifications to sit on our Board of Directors include his extensive leadership and business development experience as the leader of a publicly-traded Software-as-a-Service company and his deep financial, accounting, corporate finance and operations expertise, including business transition situations, gleaned through his experience in managing large-scale global enterprises. 2021 Proxy Statement 23 Nanci E. Caldwell Lead Independent Director, Citrix; former Executive Vice President and Chief Marketing Officer, PeopleSoft, Inc., Pleasanton, CA (Human resources management software company) Age: 63 Director Since: July 2008 Committees: Compensation; Nominating and Corporate Governance (Chair) Other boards: Since December 2015, Ms. Caldwell has served on the Board of Directors of Equinix, Inc., a publicly- traded IT data center company, and on the Board of Directors of Canadian Imperial Bank of Commerce, a publicly- traded financial institution. Key director qualifications: Since 2005, Ms. Caldwell has served as a member of a number of boards of both public and private technology companies, including Donnelley Financial Solutions, Inc., a publicly-traded financial communications and data services company from 2016 to 2020; Talend SA, a publicly-traded data integration company from 2017 to 2020; Deltek, Inc., a publicly-traded enterprise management software company from 2005 to 2012; Network General, now NetScout Inc., a publicly-traded provider of integrated network performance management solutions from 2005 to 2007; and Hyperion Solutions Corporation, a publicly-traded provider of performance management software acquired by Oracle in 2007, from 2006 to 2007. From April 2001 until it was acquired by Oracle in December 2004, Ms. Caldwell served as Executive Vice President and Chief Marketing Officer for PeopleSoft, Inc., a publicly-traded human resources management software company. In addition, from June 2009 to December 2014, Ms. Caldwell served as a member of the board of Tibco Software Inc., a publicly-traded business integration and process management software company. The Board believes Ms. Caldwell’s qualifications to sit on our Board of Directors include her extensive experience with technology and software companies in the areas of sales and marketing, and her executive leadership and management expertise with publicly-traded companies. Murray J. Demo Former Executive Vice President and Chief Financial Officer, Rubrik, Inc., Palo Alto, CA (Cloud data management company) Age: 59 Director Since: February 2005 Committees: Audit (Chair); Technology Data and Information Security Key director qualifications: From January 2018 to October 2020, Mr. Demo served as Executive Vice President and Chief Financial Officer of Rubrik, Inc., a privately-held cloud data management company. From October 2015 to January 2018, Mr. Demo served as Chief Financial Officer of Atlassian Corporation, a publicly-traded enterprise software company. Previously, Mr. Demo served as Executive Vice President and Chief Financial Officer of Dolby Laboratories, a publicly-traded global leader in entertainment technologies, from May 2009 until June 2012. Mr. Demo has also served as Executive Vice President and Chief Financial Officer of LiveOps, a privately-held virtual call center company, and as Executive Vice President and Chief Financial Officer of Postini, Inc., a security software company, which was acquired by Google in September 2007. Mr. Demo also held various executive-level finance roles at Adobe Systems, including Executive Vice President and Chief Financial Officer. Mr. Demo previously served on the board of Xoom Corporation, a formerly publicly-traded global online money transfer provider that was acquired by PayPal in November 2015, from May 2012 to November 2015; and from December 2011 to December 2015, Mr. Demo served on the Board of Directors of Atlassian Corporation. The Board believes Mr. Demo’s qualifications to sit on our Board of Directors include his extensive experience with finance and accounting matters for global organizations in the technology industry, including the experience that he has gained in his roles as Chief Financial Officer of publicly-traded companies. 24 Ajei S. Gopal President and Chief Executive Officer, ANSYS, Inc., Canonsburg, PA (Engineering simulation software provider) Age: 59 Director Since: September 2017 Committees: Nominating and Corporate Governance; Technology, Data and Information Security P r o x y Other boards: Since February 2011, Dr. Gopal has served on the Board of Directors of ANSYS, Inc., a publicly-traded provider of engineering simulation software. Key director qualifications: Since January 2017, Dr. Gopal has served as President and Chief Executive Officer of ANSYS, Inc., a publicly-traded provider of engineering simulation software. Dr. Gopal served as President and Chief Operating Officer of ANSYS from August 2016 through December 2016. Prior to joining ANSYS, Dr. Gopal served as an Operating Partner at Silver Lake Partners, a technology investment equity firm, from April 2013 to August 2016, including a secondment to serve as Interim President and Chief Operating Officer of Symantec Corporation from April 2016 to August 2016. Dr. Gopal has also served as Senior Vice President at Hewlett-Packard Company, a publicly- traded hardware, software and IT services company, from May 2011 to April 2013. Dr. Gopal has also served as Executive Vice President at CA Technologies, a publicly-traded business software company, from July 2006 to May 2011 and as Executive Vice President and Chief Technology Officer at Symantec Corporation, a publicly-traded cybersecurity software and services organization, from September 2004 to July 2006. The Board believes Dr. Gopal’s qualifications to sit on our Board of Directors include his experience in global operations, business growth strategies and investment discipline, as well as product development and innovation in large software and technology companies. David J. Henshall President and Chief Executive Officer, Citrix Age: 52 Director Since: July 2017 Other boards: Since August 2020, Mr. Henshall has served on the Board of Directors of New Relic, Inc., a publicly- traded cloud-based performance tracking software development company. Key director qualifications: Mr. Henshall has served as our President and Chief Executive Officer and as a member of our Board of Directors since July 2017. Mr. Henshall served as our Executive Vice President and Chief Financial Officer beginning in September 2011 and as our Chief Operating Officer beginning in February 2014. Mr. Henshall was appointed Acting Chief Executive Officer and President from October 2013 to February 2014. From January 2006 to September 2011, Mr. Henshall served as our Senior Vice President and Chief Financial Officer, and from April 2003 to January 2006, he served as our Vice President and Chief Financial Officer. Mr. Henshall previously served on the Board of Directors of LogMeIn, Inc. a then publicly-traded remote access and remote software company, from 2017 to 2020. The Board believes Mr. Henshall’s qualifications to sit on our Board of Directors include his decades of experience in the software industry, including his 18 years as an executive at Citrix, and his deep understanding of our historical and current business strategies, objectives, markets and products. 2021 Proxy Statement 25 Thomas E. Hogan Managing Director, Vista Equity Partners, Austin, TX (Private equity company) Age: 61 Director Since: December 2018 Committees: Audit; Nominating and Corporate Governance Key director qualifications: Since January 2021, Mr. Hogan has served as Managing Director of Vista Equity Partners, a private equity company. From September 2019 through February 2020, Mr. Hogan served as President of North America and a member of the Executive Committee of Temenos AG, a publicly-traded banking solutions software company. Prior to the acquisition of Kony, Inc., in September 2019 by Temenos, Mr. Hogan served as Chief Executive Officer of Kony, Inc., a privately-held digital strategy company since 2014. He served as Chairman of the board of Kony, Inc. from 2017 through its acquisition in 2019. Prior to joining Kony, Mr. Hogan served as Senior Vice President of Software at Hewlett Packard, a publicly-traded hardware, software and IT services company, from January 2006 to November 2009 and as Executive Vice President of Sales, Marketing, and Strategy from November 2009 to March 2011. Mr. Hogan has also served as President and Chief Executive Officer of Vignette, a publicly-traded enterprise content management company, from 2002 to 2006 and as Senior Vice President of Global Sales and Operations at Siebel Software, a publicly-traded customer relationship management application software company from January 1999 to January 2001. Mr. Hogan began his career at IBM in January 1982, where he held a variety of executive positions. The Board believes Mr. Hogan’s qualifications to sit on our Board of Directors include his decades of executive and operational experience with technology and software companies. Moira A. Kilcoyne Founder MAK Management Consulting, New York, NY (strategic management consulting company) and Former Managing Director/Chief Information Officer, Morgan Stanley, New York, NY (American multinational investment bank and financial services company) Age: 59 Director Since: June 2018 Committees: Technology, Data and Information Security (Chair) Other boards: Since December 2016, Ms. Kilcoyne has served on the Board of Directors of Quilter plc, a publicly- traded advice, investments and wealth management provider. Since November 2019, Ms. Kilcoyne has served on the Board of Directors of Arch Capital Group Ltd., a publicly-traded insurance, reinsurance and mortgage insurance writer. Key director qualifications: Ms. Kilcoyne held various senior management roles at Morgan Stanley between 1989 and 2016, including most recently serving as Global Co-Chief Information Officer and Managing Director and Co-Head of Global Technology and Data from 2013 until 2016, and as the Chief Information Officer of Brokerage Venture, Wealth and Investment Management and as a Managing Director from 2010 until 2013. During 2007, Ms. Kilcoyne served as Managing Director and Head of Corporate Systems at Merrill Lynch before returning to Morgan Stanley. Ms. Kilcoyne began her career at IBM, where she served in multiple technical roles before moving on to Morgan Stanley. The Board believes Ms. Kilcoyne’s qualifications to sit on our Board of Directors include her extensive global technology and operations experience, especially related to the financial industry. 26 Robert E. Knowling, Jr. Chairman, Eagles Landing Partners, Glennville, GA (Strategic management consulting firm) P r o x y Age: 65 Director Since: October 2020 Committees: Compensation Other boards: Since January 2018, Mr. Knowling has served on the Board of Directors of Stride, Inc., a publicly-traded for profit education company. Since October 2018, Mr. Knowling has served on the Board of Directors of Rite Aid Corporation., a publicly-traded drug store chain. Key director qualifications: Mr. Knowling currently serves as the Chairman of Eagles Landing Partners, a private strategic management consulting company. Mr. Knowling also serves as an advisor-coach to chief executive officers. Mr. Knowling previously served as Chief Executive Officer of Telwares, a private provider of telecommunications expense management solutions, from 2005 to 2009. Mr. Knowling served as Chief Executive Officer of the New York City Leadership Academy, an independent nonprofit corporation created by Chancellor Joel I. Klein and Mayor Michael R. Bloomberg that is chartered with developing the next generation of principals in the New York City public school system from 2001 to 2005. Mr. Knowling served as Chairman and Chief Executive Officer of SimDesk Technologies, Inc. from 2001 to 2003. Prior to this, Mr. Knowling served as Chairman, President and Chief Executive Officer of Covad Communications, a Warburg Pincus private equity-backed start-up company. The Board believes Mr. Knowling’s qualifications to sit on our Board of Directors include his extensive experience in executive management and leadership roles, including service on other board of directors of a number of publicly- traded companies. Peter J. Sacripanti Chairman Emeritus and Partner, McDermott Will & Emery, New York, NY (International law firm) Age: 65 Director Since: December 2015 Committees: Compensation (Chair); Nominating and Corporate Governance Key director qualifications: Since 1996, Mr. Sacripanti has served as a Partner at McDermott Will & Emery, an international law firm with 2,000 full-time employees in North America, Europe and Asia. In this position, he represents and defends major corporations and industry groups, including Fortune 500 companies. From 2009 to 2016, Mr. Sacripanti served as co-chairman of the firm’s Executive Committee. Mr. Sacripanti previously served on the Board of Directors of LogMeIn, Inc. a then publicly-traded remote access and remote software company, from 2017 to 2020. The Board believes Mr. Sacripanti’s qualifications to sit on our Board of Directors include his management of an international business organization and his years of experience representing large corporations on a variety of legal matters. 2021 Proxy Statement 27 J. Donald Sherman Chief Executive Officer, Dashlane, Inc., New York, NY (Password management security provider) Age: 55 Director Since: March 2020 Committees: Audit Key director qualifications: Mr. Sherman has served as Chief Executive Officer of Dashlane, Inc., a provider of password management and security solutions since February 2021. From March 2012 to July 2020, Mr. Sherman served as President and Chief Operating Officer of HubSpot, Inc., a publicly-traded developer and marketer of software products for inbound marketing and sales. Prior to joining HubSpot, Mr. Sherman served as Chief Financial Officer of Akamai Technologies, a publicly-traded intelligent edge platform for securing and delivering digital experiences from 2005 to 2012. From1990 to 2005, Mr. Sherman served in various positions at IBM including as Vice President of Financial Planning and Assistant Controller of Corporate Financial Strategy and Budgets. Mr. Sherman previously served on the board of Fiserv, Inc., a publicly-traded global provider of financial services technology from November 2015 to August 2019. The Board believes Mr. Sherman’s qualifications to sit on our Board of Directors include his extensive experience with finance and operational matters for global organizations in the technology industry, including the experience that he has gained in his roles as Chief Executive Officer, Chief Operating Officer and Chief Financial Officer of publicly- traded companies. 28 Meetings and meeting attendance Our Board of Directors met nine times during the year ended December 31, 2020. Each of the directors attended at least 75% of the aggregate of the total number of meetings of our Board of Directors and the total number of meetings of all committees of our Board of Directors on which he or she served during fiscal year 2020. P r o x y Our Board committees Our Board of Directors has standing Audit, Compensation, Nominating and Corporate Governance, and Technology, Data and Information Security Committees. Each of the Audit, Compensation, Nominating and Corporate Governance, and Technology, Data and Information Security Committees has a written charter that has been approved by the Board of Directors. Each committee reviews the appropriateness of its charter at least annually. The table below provides current membership for each standing Board committee. Name Audit Compensation Nominating and Corporate Governance Technology, Data and Information Security Robert M. Calderoni Nanci E. Caldwell ‹ Robert D. Daleo Murray J. Demo Ajei S. Gopal David J. Henshall Thomas E. Hogan Moira A. Kilcoyne ‹ ‹ ‹ Robert E. Knowling Jr. Peter J. Sacripanti ‹ ‹ J. Donald Sherman ‹ ‹ Chair ‹ Member ‹ ‹ ‹ ‹ ‹ ‹ ‹ ‹ From time to time, our Board of Directors may form committees in addition to our standing committees. Audit Committee Our Board of Directors has determined that each member of the Audit Committee meets the independence requirements promulgated by Nasdaq and the SEC, including Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended. In addition, our Board of Directors has determined that each member of the Audit Committee is financially literate and that Messrs. Daleo, Demo and Sherman each qualify as an “audit committee financial expert” under the rules of the SEC. The Audit Committee met nine times during the year ended December 31, 2020. The Audit Committee operates under a written charter adopted by our Board of Directors, a current copy of which is available in the Corporate Governance section of our website at https://www.citrix.com/about/governance.html. 2021 Proxy Statement 29 As described more fully in its charter, the Audit Committee oversees our accounting and financial reporting processes, internal controls and audit functions. In fulfilling its role, the Audit Committee: ‰ reviews the financial reports and related disclosure provided by us to the SEC, our shareholders or the general public; ‰ reviews our internal financial and accounting controls; ‰ oversees the appointment, compensation, retention and work performed by any independent registered public accounting firms we engage; ‰ oversees procedures designed to improve the quality and reliability of the disclosure of our financial condition and results of operations; ‰ oversees our internal audit function; ‰ serves as the Qualified Legal Compliance Committee of Citrix in accordance with Section 307 of the Sarbanes- Oxley Act of 2002, and the related rules and regulations promulgated by the SEC; ‰ recommends, establishes and monitors procedures designed to facilitate (1) the receipt, retention and treatment of complaints relating to accounting, internal accounting controls or auditing matters, and (2) the receipt of confidential, anonymous submissions by employees of concerns regarding questionable accounting or auditing matters; ‰ advises the Board of Directors on matters relating to our investment policies, financing activities and worldwide insurance program; ‰ engages advisers as necessary; and ‰ determines the funding from us that is necessary or appropriate to carry out the Audit Committee’s duties. Compensation Committee Our Board of Directors has determined that each of the members of the Compensation Committee is independent as defined by the Nasdaq rules. In addition, each member of the Compensation Committee is a “non-employee” director as defined under Section 16 of the Securities Exchange Act of 1934, as amended. The Compensation Committee met eight times during the year ended December 31, 2020. The Compensation Committee operates under a written charter adopted by our Board of Directors, a current copy of which is available in the Corporate Governance section of our website at https://www.citrix.com/about/governance.html. As described more fully in its charter, the Compensation Committee is responsible for determining and making recommendations with respect to all forms of compensation to be granted to our executive officers and preparing an annual report on executive compensation for inclusion in the Proxy Statement for our Annual Meeting of Shareholders in accordance with applicable rules and regulations. In fulfilling its role, the Compensation Committee also: ‰ reviews and makes recommendations to our management on company-wide compensation programs and practices; ‰ approves the salary, variable cash compensation, equity-based and other compensation arrangements of our executive officers reporting directly to our President and Chief Executive Officer; ‰ recommends, subject to approval by the entire Board of Directors, the salary, variable cash compensation, equity- based and other compensation arrangements of our President and Chief Executive Officer; ‰ selects a peer group to conduct a competitive analysis of the compensation paid to our executive officers and considers the composition of such peer group on an annual basis; ‰ appoints, retains, compensates, terminates and oversees the work of any independent experts, consultants and other advisers, reviews and approves the fees and retention terms for such experts, consultants and other advisers and considers at least annually the independence of such consultants; 30 ‰ considers the independence of and potential conflicts of interests with compensation consultants, legal counsel or other advisers, including based on factors required to be considered by the SEC or Nasdaq; ‰ evaluates director compensation and recommends to the full Board of Directors appropriate levels of director P r o x y compensation; ‰ establishes policies and procedures for the grant of equity-based awards and periodically reviews our equity award grant policy; ‰ recommends, subject to approval by the entire Board of Directors, any equity-based plans and any material amendments to those plans; ‰ evaluates whether our compensation plans encourage participants to take excessive risks that are reasonably likely to have a material adverse effect on Citrix; ‰ evaluates our compensation philosophy and reviews actual compensation for consistency with our compensation philosophy; ‰ reviews and recommends for inclusion in our annual Proxy Statement the Compensation Discussion and Analysis section; and ‰ reviews and evaluates, on a periodic basis, our stock ownership guidelines for directors and executive officers and recommends any modifications to such guidelines to the Board of Directors for its approval. The Compensation Committee has the authority to engage its own outside advisers, including experts in particular areas of compensation, as it determines appropriate, apart from counsel or advisers hired by management. For 2020, the Compensation Committee retained Semler Brossy Consulting Group, LLC, which we refer to as Semler Brossy, as its independent compensation consultant to assist the Compensation Committee in evaluating the compensation of our executive officers and directors. Our Corporate Governance Guidelines and the charter of the Compensation Committee provide that any independent compensation consultant, such as Semler Brossy, engaged by the Compensation Committee works for the Compensation Committee, not our management, with respect to executive officer and director compensation matters. Please read the CompensationDiscussionandAnalysisincluded in this Proxy Statement for additional information on the role of Semler Brossy in the compensation review process for 2020. Nominating and Corporate Governance Committee Our Board of Directors has determined that each member of the Nominating and Corporate Governance Committee meets the independence requirements promulgated by Nasdaq. The Nominating and Corporate Governance Committee met six times during the year ended December 31, 2020. The Nominating and Corporate Governance Committee operates under a written charter adopted by our Board of Directors, a current copy of which is available in the Corporate Governance section of our website at https://www.citrix.com/about/governance.html. As described more fully in its charter, the Nominating and Corporate Governance Committee: ‰ reviews and makes recommendations to our Board of Directors regarding the Board’s composition and structure; ‰ establishes criteria for membership on the Board of Directors and evaluates corporate policies relating to the recruitment of members of the Board of Directors; ‰ recommends to our Board of Directors the nominees for election or re-election as directors at our Annual Meeting of Shareholders; ‰ reviews and assesses our policies and practices regarding corporate social responsibility and ESG; ‰ reviews policies and procedures with respect to transactions between Citrix and our officers, directors, affiliates of officers and directors, or other related parties; and ‰ establishes, implements and monitors policies and processes regarding principles of corporate governance in order to assist the Board of Directors in complying with its fiduciary duties to us and our shareholders. As described above in the section entitled Proceduresforrecommendationofdirectornomineesbyshareholders, the Nominating and Corporate Governance Committee will consider nominees recommended by shareholders. 2021 Proxy Statement 31 Technology, Data and Information Security Committee In September 2019, our Board of Directors formed the Technology, Data and Information Security Committee. Our Board of Directors has determined that each member of the Technology, Data and Information Security Committee meets the independence requirements promulgated by Nasdaq. The Technology, Data and Information Security Committee met six times during the year ended December 31, 2020. The Technology, Data and Information Security Committee operates under a written charter adopted by our Board of Directors, a current copy of which is available in the Corporate Governance section of our website at https://www.citrix.com/about/governance.html. As described more fully in its charter, the Technology, Data and Information Security Committee: ‰ oversees and assesses the quality and effectiveness of our cybersecurity team, technology, policies and procedures protecting our information technology systems, data, products and services across all business functions; ‰ oversees and reviews periodically our controls to prevent, detect and respond to cyber attacks or data breaches involving our information technology systems, data, products and services, taking into account the potential for external and internal threats to the company and its customers, partners, vendors and employees; ‰ reviews and approves our incident response plans, policies and frameworks, including policies for the escalation and reporting of significant security incidents to our Board of Directors, regulatory agencies and law enforcement, as appropriate; ‰ oversees our compliance with global data privacy and security regulations and requirements applicable to the data we receive, collect, create, use, process and maintain (including personal information and information regarding customers, partners and vendors) and assesses the effectiveness of the systems, controls and procedures used to ensure compliance with applicable global data privacy and security regulations and requirements; ‰ reviews with management our business continuity and disaster recovery capabilities, our business continuity and disaster recovery plans, policies and frameworks; ‰ in coordination with the Audit Committee, oversees the company’s management of risks related to its information technology systems and processes, including privacy, network security and data security, and any audits of such systems and processes; ‰ reviews our strategies and operational plans relating to the development, deployment, integration and servicing of products, services, applications and systems (including policies, procedures and controls related thereto) to identify and mitigate data security and privacy risks in such strategies and programs; ‰ oversees the company’s funding and resourcing of its information technology and security functions; and ‰ monitors and discusses, with management, emerging security, data protection and privacy trends in the technology landscape. 32 Director compensation Non-employee director cash compensation P r o x y It is our policy that any employee directors do not receive cash or equity compensation for their service as members of our Board of Directors. The Compensation Committee, with assistance from its independent compensation consultant, Semler Brossy, oversees director compensation and reviews the appropriateness of our non-employee directors’ compensation on a regular basis. In January 2020, after review and discussion of comprehensive market analysis of our non-employee director cash compensation program against the compensation programs offered by our peer companies with the Compensation Committee’s independent compensation consultant and consideration of the amount of work required by our directors and applicable committee members, our Compensation Committee approved, effective January 1, 2020, the non-employee director cash compensation program indicated in the tables below. Most recently, in December 2020, Semler Brossy prepared updated market analysis of our non-employee director cash compensation program against the compensation programs offered by our peer companies and reviewed this market analysis in detail with the Compensation Committee. Under our non-employee director cash compensation program, non-employee members of our Board of Directors receive retainer fees, which are paid in cash in semi-annual installments (pro-rated if a director joins mid-year). Each non-employee director was entitled to receive the retainers detailed in the tables below (provided that committee Chairpersons were only entitled to receive a retainer as committee chair and were not entitled to the non-chair membership retainer for the committee(s) he or she chairs). In addition, non-employee directors are reimbursed for their reasonable out-of-pocket expenses incurred in attending meetings of our Board of Directors or any of its committees that are conducted in person. The following table summarizes our 2020 non-employee director cash compensation program: Board retainers Compensation element Annual Board member retainer 2020 annual cash compensation $70,000 Annual retainer for Chairman of the Board $100,000 (in addition to annual Board member retainer) Annual retainer for Lead Independent Director $40,000 (in addition to annual Board member retainer) Committee retainers Committee Audit Committee Compensation Committee Nominating and Corporate Governance Committee Technology, Data and Information Security Committee 2020 annual cash compensation chair member $42,500 $17,500 $32,500 $15,000 $25,000 $10,000 $42,500 $17,500 In connection with adhoccommittees that may be formed from time to time, committee fees, if any, are determined by the Board of Directors upon the recommendation of the Compensation Committee with advice from its independent compensation consultant. 2021 Proxy Statement 33 Non-employee director equity-based compensation Equity awards to our non-employee directors The Compensation Committee, with assistance from its independent compensation consultant, reviews the appropriateness of equity awards granted to our non-employee directors under the company’s Second Amended and Restated 2014 Equity Incentive Plan, which we refer to as the Second Amended and Restated 2014 Plan or the 2014 Plan, on a regular basis. In December 2020, Semler Brossy prepared a comprehensive market analysis of our non-employee director equity awards against the equity awards offered by our peer companies and reviewed this market analysis in detail with the Compensation Committee. For 2020, each non-employee director was eligible to receive an annual grant on the first business day of the month following our annual shareholders’ meeting consisting of restricted stock units valued at $250,000 that vest annually on the earlier of the first anniversary of the award date or the day immediately prior to the company’s next regular meeting of shareholders following the award date. Each newly appointed director (i.e., directors appointed prior to the annual shareholders’ meeting) is entitled to a pro-rated annual grant upon election to the Board of Directors. Such grant will be an award valued at $250,000 and pro-rated based on the director’s date of appointment and the current annual vesting period. Such pro-rated grant will vest at the conclusion of the current annual vesting period. Outside directors’ deferred compensation program for non-employee directors We offer our non-employee directors an outside directors’ deferred compensation program to defer restricted stock units awarded to them under the Second Amended and Restated 2014 Plan and cash compensation. In advance of payment of cash compensation or a restricted stock unit award and in compliance with the program’s requirements, a non-employee director may elect to defer the receipt of all of his or her cash compensation and/or restricted stock units until ninety days after such director’s separation from service from us or upon a change in control. Deferred cash compensation is converted into a number of deferred stock units on the date that the cash compensation would otherwise be paid and upon the vesting of deferred awards of restricted stock units, any amounts that would otherwise have been paid in shares of common stock are converted to deferred stock units on a one-to-one basis. In each case, the deferred stock units are credited to the director’s deferred account. Matching gifts program Our non-employee directors are eligible to participate in the company’s charitable matching gifts program pursuant to which we match donations made to qualifying tax-exempt 501(c)(3) charitable and non-governmental organizations on a one-for-one basis. In 2020, we increased our match up to $20,000 per year for executives and non-employee directors under this program. Director stock ownership guidelines To further align the interests of members of our Board of Directors with our shareholders, our Board of Directors adopted stock ownership guidelines for our non-employee directors. Pursuant to these guidelines, each non-employee director is required to own shares of our common stock (which includes vested but deferred restricted stock units) equal in value to at least five times the Board member’s annual cash retainer. New directors are expected to meet the standards set forth in the guidelines within five years after the date of his or her election to our Board of Directors. Shares owned by directors are valued at the current market value. Director compensation limits The Second Amended and Restated 2014 Plan provides for a limitation of $795,000 with respect to the value of the annual equity compensation grant that may be awarded to any non-employee director and a limitation of $500,000 with respect to the value of any annual cash compensation that may be paid to any non-employee director. 34 P r o x y The following table sets forth a summary of the compensation earned by, or paid to, our non-employee directors in 2020: DIRECTOR COMPENSATION TABLE FOR FISCAL YEAR 2020 Name Robert M. Calderoni Nanci E. Caldwell Jesse A. Cohn(5) Robert D. Daleo Murray J. Demo Ajei S. Gopal Thomas E. Hogan Moira A. Kilcoyne Robert E. Knowling, Jr.(8) Peter J. Sacripanti J. Donald Sherman(9) Fees earned or paid in cash ($) Stock awards ($) (1)(2)(3) All other compensation ($)(4) 170,000 150,000 34,252(6) 115,403(7) 101,933 102,500 93,265 115,512 16,721 112,500 72,439 261,266 261,266 — 261,266 261,266 261,266 261,266 261,266 152,878 261,266 353,377 40,877 66,209 18,870 80,040 1,599 37,478 21,599 1,599 20,468 38,453 21,226 Total ($) 472,143 477,475 53,122 456,709 364,798 401,244 376,130 378,377 190,067 412,219 447,042 (1) These amounts represent the aggregate grant date fair value of the stock awards in the year in which the grant was made. The assumptions we used for calculating the grant date fair value are set forth in Note 8 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on February 8, 2021. These amounts do not represent the actual amounts paid to or realized by our directors for these awards during fiscal year 2020. (2) Consists solely of restricted stock units. During 2020, each continuing non-employee director was entitled to an annual grant consisting of a number of restricted stock units equaling $250,000 in value vesting annually on the earlier of the first anniversary of the award date or the day immediately prior to the company’s next regular meeting of shareholders following the award date. Such value of restricted stock units is converted into a number of restricted stock units on the grant date using the 20-day trailing average price of Citrix common stock. Pursuant to our outside directors’ deferred compensation program for non-employee directors, each of Messrs. Daleo and Knowling and Dr. Gopal elected to defer settlement of his 2020 annual restricted stock unit award. Please see the discussion above under the heading Outside directors’deferredcompensationprogramfornon-employeedirectorsfor additional details on our deferral program. (3) As of December 31, 2020, our non-employee directors held the following number of unvested restricted stock units: Mr. Calderoni, 1,758.121 restricted stock units; Ms. Caldwell, 1,758.121 restricted stock units; Mr. Daleo, 1,758.121 restricted stock units; Mr. Demo, 1,758.121 restricted stock units; Dr. Gopal, 1,758.121 restricted stock units; Mr. Hogan, 1,758.121 restricted stock units; Ms. Kilcoyne, 1,758.121 restricted stock units; Mr. Knowling, 1,339.523 restricted stock units, Mr. Sacripanti, 1,758.121 restricted stock units, and Mr. Sherman 1,758.121 restricted stock units. As of December 31, 2020, our non-employee directors held the following number of vested deferred restricted stock units: Mr. Calderoni, 17,454.600 restricted stock units; Ms. Caldwell, 32,072.581 restricted stock units; Mr. Daleo, 42,900.173 restricted stock units; Dr. Gopal, 11,684.303 restricted stock units; and Mr. Sacripanti, 12,117.564 restricted stock units (4) Reflects the total value of restricted stock units issued as a result of the quarterly dividends paid on March 20, 2020, June 19, 2020, September 25, 2020 and December 22, 2020 ($25,877 for Mr. Calderoni; $46,209 for Ms. Caldwell; $18,870 for Mr. Cohn; $60,040 for Mr. Daleo; $1,599 for Mr. Demo; $17,478 for Dr. Gopal; $1,599 for Mr. Hogan; $1,599 for Ms. Kilcoyne; $468 for Mr. Knowling; $18,453 for Mr. Sacripanti; and $1,226 for Mr. Sherman) and the company’s 2020 matching charitable donations made under our matching charitable gift program that is available to our employees, executives and directors ($15,000 for Mr. Calderoni; $20,000 for Ms. Caldwell; $20,000 for Mr. Daleo; $20,000 for Dr. Gopal; $20,000 for Mr. Hogan; $20,000 for Mr. Knowling; $20,000 for Mr. Sacripanti; and $20,000 for Mr. Sherman). (5) Mr. Cohn was not nominated for re-election at the Annual Meeting held in June 2020. (6) Pursuant to our outside directors’ deferred compensation program for non-employee directors, Mr. Cohn elected to defer his cash fees in 2020. Mr. Cohn received 229 deferred stock units based on fees of $33,880 foregone, with no matching or premium given in calculating the number of stock units awarded and an amount of $8.38 was held in a deferred cash account in lieu of fractional shares. In September 2020, Mr. Cohn received 27,189 shares of Citrix common stock upon vesting of his deferred stock units and $372 in cash, which represented the total amount of deferred cash that was held in his deferred cash account in lieu of fractional shares during his tenure on the Citrix Board of Directors. (7) Pursuant to our outside directors’ deferred compensation program for non-employee directors, Mr. Daleo elected to defer his cash fees in 2020. Mr. Daleo received 828 deferred stock units based on fees of $115,403 foregone, with no matching or premium given in calculating the number of stock units awarded and an amount of $111 is held in a deferred cash account in lieu of fractional shares. (8) Mr. Knowling was elected to the Board of Directors on October 21, 2020. In connection with his appointment, on November 2, 2020, Mr. Knowling received a pro-rated annual grant of restricted stock units valued at $173,973, which was converted into a number of restricted stock units using the 20-day trailing average price of Citrix common stock on the date of grant. (9) Mr. Sherman was elected to the Board of Directors on March 4, 2020. In connection with his appointment, on April 1, 2020, Mr. Sherman received a pro-rated annual grant of restricted stock units valued at $82,192, which was converted into a number of restricted stock units using the 20-day trailing average price of Citrix common stock on the date of grant. Mr. Sherman also received an annual grant on July 1, 2020. 2021 Proxy Statement 35 Part 3 Executive management Our leadership team The following table sets forth our executive officers and the positions currently held by each such person within Citrix. The biographical descriptions below outline the relevant experience, qualifications, attributes and skills of each executive officer. Name Position David J. Henshall President, Chief Executive Officer and Director Arlen R. Shenkman Executive Vice President and Chief Financial Officer Mark J. Ferrer Executive Vice President and Chief Revenue Officer Antonio G. Gomes Executive Vice President, Chief Legal Officer and Secretary Paul J. Hough Executive Vice President and Chief Product Officer Woong Joseph Kim Executive Vice President of Engineering and Chief Technology Officer Donna N. Kimmel Executive Vice President and Chief People Officer Hector M. Lima Executive Vice President of Customer Experience Sridhar Mullapudi Executive Vice President of Product Management Timothy A. Minahan Executive Vice President, Business Strategy and Chief Marketing Officer Mark J. Schmitz Executive Vice President and Chief Operating Officer David J. Henshall Age: 52 Mr. Henshall has served as our President and Chief Executive Officer and as a member of our Board of Directors since July 2017. Mr. Henshall served as our Executive Vice President and Chief Financial Officer from September 2011 until July 2017 and as our Chief Operating Officer from February 2014 until July 2017. Mr. Henshall was appointed Acting Chief Executive Officer and President from October 2013 to February 2014. From January 2006 to September 2011, Mr. Henshall served as our Senior Vice President and Chief Financial Officer, and from April 2003 to January 2006, he served as our Vice President and Chief Financial Officer. Arlen R. Shenkman Age: 50 Mr. Shenkman has served as our Executive Vice President and Chief Financial Officer since September 2019. Prior to joining Citrix, Mr. Shenkman served as Executive Vice President and Global Head of Business Development and Ecosystems of SAP from May 2017 to August 2019, where he was responsible for driving business development by building new ecosystems, fostering strategic partnerships, incubating new business models, and overseeing investments and mergers and acquisitions. Prior to that role from January 2015 to May 2017, Mr. Shenkman served as Chief Financial Officer of SAP North America, SAP’s largest business unit, responsible for all finance functions in North America, including forecasting and planning, identifying efficiencies, and ensuring the region’s overall financial health. Mr. Shenkman previously served as SAP’s Global Head of Corporate Development from January 2012 to January 2015 and was a principal architect of SAP’s rapid transformation into a cloud company. 36 Mark J. Ferrer Age: 61 Mr. Ferrer has served as our Executive Vice President and Chief Revenue Officer since October 2017. Prior to joining Citrix, Mr. Ferrer served as Chief Operating Officer and Executive Vice President of Global Customer Operations of SAP from August 2011 to September 2017, where he led the go-to market and customer engagement initiatives for one of the largest sales forces in the technology industry. P r o x y Antonio G. Gomes Age: 55 Mr. Gomes has served as our Executive Vice President, Chief Legal Officer and Secretary since October 2019. Mr. Gomes served as our Executive Vice President, General Counsel, Secretary and Chief Legal Compliance Officer from April 2015 to September 2019, and as our Vice President and Deputy General Counsel, Secretary and Chief Legal Compliance Officer from February 2008 to March 2015. Prior to joining Citrix, Mr. Gomes was a Partner in the corporate practice of Goodwin Procter LLP, an international law firm, from February 2005 to January 2008. Paul J. Hough Age: 56 Mr. Hough has served as our Executive Vice President and Chief Product Officer since October 2016. Prior to joining Citrix, Mr. Hough served as Corporate Vice President, Developer Division at Microsoft from September 2012 to August 2015. Prior to that, Mr. Hough served in a variety of roles in the Microsoft Office Division driving vision and execution for the program management of Office suite culminating with the introduction of Office365. Mr. Hough holds 11 patents. Woong Joseph Kim Age: 42 Mr. Kim has served as our Executive Vice President of Engineering and Chief Technology Officer since December 2020. Prior to joining Citrix, Mr. Kim served as Executive Vice President, Engineering and Chief Technology Officer at SolarWinds, Inc., a publicly-traded IT infrastructure management software company, from July 2017 to November 2020. From February 2016 to July 2017, Mr. Kim served as Senior Vice President and Chief Technology Officer at SolarWinds. Mr. Kim was the General Manager of Hewlett Packard Enterprise Company’s Transform business unit from November 2014 to February 2016, and the Chief Technology Officer for HP Software’s Application Delivery Management (ADM) and IT operations management businesses from April 2013 to November 2014. 2021 Proxy Statement 37 Donna N. Kimmel Age: 58 Ms. Kimmel has served as our Executive Vice President and Chief People Officer since November 2015. Prior to joining Citrix, Ms. Kimmel served as Senior Vice President, Human Resources at GTECH and IGT from February 2014 to November 2015. Prior to that, Ms. Kimmel served as Senior Vice President and Chief Human Resources Officer of Sensata Technologies, a private-to-public spinoff from Texas Instruments from April 2006 to December 2012. Hector M. Lima Age: 46 Mr. Lima has served as our Executive Vice President of Customer Experience since December 2020. Mr. Lima served as our Senior Vice President of Customer Success from January 2019 to December 2020 and as our Vice President, Americas Consulting and Education from August 2013 to January 2019. Mr. Lima has been with Citrix for more than 20 years and during his tenure he has held a number of leadership roles in our professional services, consulting and education organizations. Timothy A. Minahan Age: 51 Mr. Minahan has served as our Executive Vice President, Business Strategy and Chief Marketing Officer since July 2017. Mr. Minahan served as our Senior Vice President and Chief Marketing Officer from November 2015 to July 2017. Prior to joining Citrix, Mr. Minahan served as Senior Vice President and Chief Marketing Officer of SAP Cloud from June 2013 to July 2015, where he led their effort to transition to the cloud. Sridhar Mullapudi Age: 43 Mr. Mullapudi has served as our Executive Vice President of Product Management since December 2020. Mr. Mullapudi served as our Senior Vice President of Product Management from August 2018 to December 2020. In his more than 20 years at Citrix, Mr. Mullapudi has held a variety of leadership roles across both product management and engineering. Mark J. Schmitz Age: 46 Mr. Schmitz has served as our Executive Vice President and Chief Operating Officer since July 2019. Mr. Schmitz served as our Senior Vice President of Business Operations from September 2016 to July 2019. Prior to joining Citrix, from January 2015 to September 2016, Mr. Schmitz served as Chief Operating Officer for SAP SucessFactors, and from January 2014 to January 2015, Mr. Schmitz served as Chief Operating Officer, SAP Cloud, where he led business operations and was responsible for the deployment of SAP’s cloud vision. From October 2012 to December 2013, Mr. Schmitz served as Senior Vice President and Chief Operating Officer, SAP Ariba. Our executive officers are appointed by the Board of Directors on an annual basis. 38 Part 4 Executive compensation P r o x y Compensation Discussion and Analysis Purpose of Compensation Discussion and Analysis This Compensation Discussion and Analysis provides comprehensive information about the 2020 compensation for the following executive officers (who we refer to as our Named Executive Officers): ‰ David J. Henshall, President and Chief Executive Officer ‰ Arlen R. Shenkman, Executive Vice President and Chief Financial Officer ‰ Antonio G. Gomes, Executive Vice President, Chief Legal Officer and Secretary ‰ Paul J. Hough, Executive Vice President and Chief Product Officer ‰ Woong Joseph Kim, Executive Vice President of Engineering and Chief Technology Officer NAVIGATING THE COMPENSATION DISCUSSION AND ANALYSIS 2020 highlights Objectives and elements of our executive compensation programs How executive pay decisions are made Components of compensation Individual executive compensation decisions Other compensation policies and information 2020 highlights Accelerating our transformation Page 39 42 46 51 62 66 Citrix is an enterprise software company focused on helping organizations deliver a consistent and secure work experience no matter where work needs to get done—in the office, at home, or in the field. We do this by delivering a digital workspace solution that gives each employee the resources and space they need to do their best work. Our Workspace solutions are complemented by our App Delivery and Security (formerly Networking) solutions, by delivering the applications and data employees need across any network with security, reliability and speed. Citrix believes that work is not a place—work is about business outcomes. We have helped organizations with digital transformation for many years. The challenges and complexities created by the proliferation of Software-as-a-Service (SaaS)-based applications and the emergence of hybrid multi-cloud infrastructure environments are now combined with the realities brought upon by the global COVID-19 pandemic—realities such as long-term remote and flexible work models and an increased need for risk mitigation and business continuity. As a result, we believe organizations are accelerating their cloud and digital transformation plans to better position themselves to address these new challenges and embrace the opportunities that will arise from flexible work models. To do this, organizations may rely on Citrix solutions for business agility, employee productivity, security and compliance, as well as cost and efficiency. Citrix solutions are focused on employee productivity and are designed to provide end-users with the simplicity of a common user experience while ensuring information technology, or IT, administrators are able to deliver applications and data with the security and controls necessary to protect the enterprise and its customers. As an organization, we continue to evolve our business in three distinct and interrelated ways: ‰ Perpetual to Subscription: Our business model has shifted away from selling perpetual licenses towards subscription, or recurring contracts in the form of SaaS, on-premise term, and consumption-based agreements; 2021 Proxy Statement 39 ‰ On-Premise to Cloud: As the share of applications and data continues to move rapidly from on-premise data centers to the cloud, our product development and engineering has increasingly focused on delivering cloud- based solutions; and ‰ Point Products to Platform: Our offerings and our go-to-market activities are shifting away from selling individual point products towards a platform solution, in a tiered offering that provides us the ability to deliver a variety of value-enhancing modules to our customers in the future. We believe execution of our strategic priorities will continue to drive results for our stakeholders. Exiting 2020, progress in our business transformation to a cloud-based subscription business was evidenced by: ‰ Subscription ARR(1) accelerated to $1.20 billion at the end of 2020, a 62% year-over-year increase, and SaaS ARR of $725 million at the end of 2020, up 39% year-over-year; ‰ Subscription revenue grew 71% year-over-year in 2020; and ‰ Subscription bookings as a percent of total product bookings increased to 75% in 2020, up from 62% in 2019. Further accelerating our business model transformation, in March 2021, we announced that we completed our acquisition of Wrike, a leading provider of SaaS collaborative work management solutions, for approximately $2.25 billion in cash. Through the acquisition, we expect to deliver the industry’s most comprehensive cloud-based work platform to empower all employees and teams to securely access, collaborate and execute all work types in the most efficient and effective way possible—across any work channel, device, or location. 2020 highlights: Reported 2019 performance that reﬂected an accelerated subscription model transition and strong demands across our solutions Announced $1 billion accelerated share repurchase Reported strong demand primarily driven by the COVID-19 outbreak as we focused to ensure business continuity and employee productivity at the beginning of the pandemic Announced our $17 million commitment to help employees and the communities in which we operate during a time of global crisis Announced plan to acquire Wrike, a market-leading born-in- the-cloud Collaborative Work Management Platform, accelerating our business model transition to the cloud Reported strong 2020 revenue and an acceleration in our year-over-year SaaS ARR growth Announced increasing our quarterly dividend to $0.37 per share January 2020 April 2020 January 2021 2020 Highlights March 2020 October 2020 March 2021 Appointed JD Sherman to the Board of Directors Appointed Bob Knowling to the Board of Directors Announced the closing of the Wrike acquisition (1) Annualized recurring revenue, or ARR, is an operating metric that represents the contracted recurring value of all termed subscriptions normalized to a one-year period. It is calculated at the end of a reporting period by taking each contract’s recurring total contract value and dividing by the length of the contract. ARR includes only active contractually committed, fixed subscription fees. Our definition of ARR includes contracts expected to recur and therefore excludes contracts with durations of 12 months or less where licenses were issued to address extraordinary business continuity events for our customers. All contracts are annualized, including 30-day offerings where we take monthly recurring revenue multiplied by 12 to annualize. ARR should be viewed independently of U.S. GAAP revenue, deferred revenue and unbilled revenue and is not intended to be combined with or to replace those items. ARR is not a forecast of future revenue. 40 P r o x y As illustrated in the graph below, our total shareholder return (assuming reinvestment of dividends)(1)(2), or TSR, over the five-year period ended on December 31, 2020 was approximately 123%, outpacing the S&P 500 index. $300 $250 $200 $150 $100 $50 $0 2015 2016 2017 2018 2019 2020 Citrix Systems, Inc. S&P 500 Index Nasdaq Index (1) For purposes of this graph, the reinvestment of Citrix’s $0.35 per share cash dividend paid during the (2) fourth quarter of 2018 and each quarter during both 2019 and 2020 was calculated using the closing price on Nasdaq on each quarterly dividend payment date. In January 2017, we completed the separation of our GoTo business and its subsequent merger with LogMeIn, Inc. For the purpose of this graph, the distribution of LogMeIn common stock to our shareholders in connection with such separation and merger is treated as a non-taxable cash dividend of $18.59 (equal to the opening price of LogMeIn common stock on February 1, 2017 multiplied by 0.1718 of a share of LogMeIn common stock). Such amount was deemed reinvested in Citrix common stock at the closing price on February 1, 2017 using the daily dividend reinvestment methodology. Other financial data providers may use different methodologies to adjust for the GoTo separation, which may produce different results. Shareholder engagement Our executives regularly engage with shareholders to better understand their perspectives on a wide range of strategy, business and governance issues. Our Board of Directors and senior management team welcomes and values the views and insights of our shareholders and conducts an annual outreach effort to connect with our larger shareholders in order to ensure open lines of communication. In 2020, we reached out to our largest shareholders and proxy advisory firms to understand their perspectives and discuss our business strategy, governance, sustainability and executive compensation policies with a goal of using feedback received during these meetings to inform our policies and practices. Over the course of the year, we held meetings with institutional shareholders representing nearly 21% of Citrix’s outstanding common stock as well as proxy advisory firms. These shareholder meetings covered a wide range of topics, including: our business model transition and strategy; corporate governance practices such as Board composition; our diversity and inclusion programs; our response to the COVID-19 pandemic and its impact on our business; cybersecurity and data privacy; succession planning; shareholder views regarding equity plan preferences and administration; and other matters of shareholder interest. Peter J. Sacripanti, the Chairperson of our Compensation Committee and a member of our Nominating and Corporate Governance Committee, participated in the majority of meetings along with senior executives of the company. Members of the leadership team, the Chairperson of our Compensation Committee, and other members of our Board of Directors who participate in shareholder engagement meetings regularly discuss shareholder feedback with relevant Board committees and the full Board of Directors. In general, feedback from our shareholders regarding our compensation programs and corporate governance practices has been positive. The Board of Directors carefully considers the feedback from shareholders in assessing and updating our executive compensation and corporate governance practices. 2021 Proxy Statement 41 Examples of how this feedback has informed our governance practices are shown below. What we heard How we responded Investors shared their feedback on preferences with respect to burn rate, dilution and equity incentive plan duration and design as well as their desire to see robust disclosure of the company’s overall equity compensation philosophy, including the impact of share repurchases and buybacks in prior years Investors wanted to ensure that our executive compensation metrics closely align with long-term shareholder interests and business transition goals Investors were interested in understanding the Board of Director’s and management’s approach to oversight of cybersecurity risk Investors were interested in understanding Citrix’s ESG practices and how the Board of Directors exercises oversight of ESG topics including diversity, human capital management and corporate social responsibility Thoughtfully addressed shareholder feedback when considering and approving the Second Amended and Restated 2014 Equity Incentive Plan in March 2020 and recommending its approval to shareholders in June 2020, which permits Citrix to use equity compensation to recruit and retain talent which we believe will continue to accelerate our business transition Incorporated an annualized recurring revenue (ARR) metric for our performance-based restricted stock awards in 2020 and then SaaS ARR in 2021, aligning long-term executive compensation with a key indicator of the overall health and trajectory of our subscription business transition and our focus on transitioning our customers to the cloud Enhanced Board oversight of cybersecurity through the Technology, Data and Information Security Committee to oversee policies, plans and programs relating to enterprise cybersecurity and data protection risks and enhanced cybersecurity disclosure beginning on page 17 Increased our focus on ESG initiatives and Board-level oversight of our ESG program, including our diversity, belonging and inclusion program. Further, we added an ESG component to our executive officer’s variable cash compensation plan for 2021 that includes sustainability and diversity and inclusion objectives, among others We believe it is important to continue to engage with our shareholders on a regular basis to understand their perspectives and to give them a voice in shaping our governance and executive compensation policies and practices. We also consider the shareholder advisory (say-on-pay) vote of our Named Executive Officer compensation when evaluating our compensation program. For more information, see Evaluation process beginning on page 46. Objectives and elements of our executive compensation programs The compensation that we offer our executive officers is designed to reflect our principles of integrity, fairness and transparency—concepts that have continually underscored the design and delivery of compensation opportunities at Citrix. We believe our compensation programs should emphasize sustainable corporate growth through a pay-for-performance orientation and a commitment to both operational and organizational effectiveness. We also believe that lavish perquisites, excessive severance and bonuses unrelated to performance or recruitment are inconsistent with our executive compensation principles. Furthermore, while the establishment of variable cash compensation targets for our executive officers necessarily involves judgment, the actual payouts against those targets are based on pre-determined, objective financial criteria reflective of our corporate operating plan. For more than a decade, the objectives of our executive compensation programs have been to: ‰ ‰ provide competitive compensation that attracts, retains and engages high-performing talent; and align the long-term interests of executive officers with those of our shareholders by linking a significant portion of total cash and equity compensation to company performance and value creation. These objectives have guided the Compensation Committee’s decision-making around compensation decisions over the past several years. The Compensation Committee has taken a thoughtful approach to aligning the metrics of performance-based awards with those that have driven and will continue to drive our transformation. For example: ‰ Beginning in 2018 and for 2019, the Compensation Committee linked performance-based equity awards with subscription bookings as a percentage of total subscription and product bookings to directly align performance-based awards to Citrix’s multi-year strategic business transition to a cloud-based subscription business. During the second quarter of 2019, and as discussed in the company’s earnings announcement in July 2019, Citrix gained significant momentum in its business transition to a subscription-based business. 42 ‰ Given this increased momentum, the Compensation Committee determined that the company had a unique opportunity to increase the acceleration of its transition, which, if successful, would advance long-term value creation for shareholders. Accordingly, beginning in 2020, the Compensation Committee moved away from subscription bookings as a percentage of total subscription and product bookings and other operational metrics and decided to link performance-based equity awards with ARR(1) growth, which, as we have discussed on our earning calls, is the metric best aligned with the company’s business transition and strategy. ARR, in short, is the best indicator of the overall health and trajectory of the business because it captures the pace of Citrix’s transition and is a forward-looking indicator of top line trends. ‰ As we enter fiscal year 2021 with a portion of our subscription model transition complete, we continue to focus on transitioning our installed base to the cloud. As a result, the Compensation Committee decided to link performance-based equity awards granted during fiscal year 2021 with SaaS ARR growth, rather than ARR growth, to further drive our business model transition to the cloud. P r o x y (1) See page 40 of this Proxy Statement for the definition of annualized recurring revenue, or ARR. 2021 Proxy Statement 43 The following table details the concepts guiding our compensation plan design and how we put them into practice, including actions taken by the Compensation Committee to reflect in our compensation plan design the company’s accelerated transformation this past year to a cloud-based subscription business: Concept Link executive target compensation directly with company performance Implementation ‰ To provide direct alignment with company performance and key drivers of shareholder value, target compensation(1) for our Named Executive Officers(2) was: • 66%, on average, performance-based(3) • 92%, on average, at risk(4) Payout opportunity levels for our executive variable cash compensation plan should motivate performance that meets or exceeds our financial plan objectives ‰ In 2020, each executive officer’s variable cash compensation plan award was based 100% on the achievement of financial operating targets consistent with our corporate operating plan ‰ Based on 2020 company performance, executive variable cash compensation plan awards for 2020 paid out at 161.16% of the target amount ‰ Over the past ten years, our variable cash compensation plan awards have paid out between 58.8% and 170.9% of target and paid above 100% less than half of the time Our executives should be incentivized to achieve financial goals that are directly tied to our multi-year business strategy and drivers of growth and value creation for our shareholders ‰ At least 60% of annual equity awards to our Named Executive Officers are awarded as performance-based restricted stock units; and for 2020, these annual awards vest based on ARR growth to further align executive compensation with what we believe is the best indicator of the overall health and trajectory of our subscription business transition because it captures the pace of our transition and is a forward-looking indicator of top line trends Our compensation program should be flexible to account for the specific challenges facing the company and the company’s strategic initiatives at any given time while also maintaining a long- term focus on shareholder value and creation ‰ Each year, the Compensation Committee reviews our variable cash compensation plan and performance-based equity awards granted to executive officers to ensure that they fit our strategic and operational initiatives and reflect feedback we receive from our shareholders (1) Includes 2020 base salary and target variable cash compensation, both in effect at the end of 2020, and the grant date fair value of equity compensation granted in 2020. Does not include the performance-based awards granted in April 2020 for retention purposes and that are included in the Summary Compensation Table, Grants of Plan-Based Awards Table and Outstanding Equity Awards at Year End Table as described herein. (2) Excludes Woong Joseph Kim, who joined Citrix as Executive Vice President of Engineering and Chief Technology Officer on December 1, 2020. (3) Performance-based compensation includes target variable cash compensation and the grant date fair value of performance-based restricted stock units granted in 2020, other than the performance-based awards granted in April 2020 for retention purposes. See Equity-basedlong-termincentivesbeginning on page 55. (4) At risk compensation includes target variable cash compensation and the grant date fair value of equity compensation that was granted in 2020, other than the April 2020 retention awards. See Individualexecutivecompensationdecisionsbeginning on page 62 for further details regarding our Named Executive Officers’ compensation. 44 Further, we engage in the following practices to ensure our executive compensation program achieves our objectives and is aligned with shareholders’ interests. P r o x y What we do What we don’t do • Review compensation practices of • No discretion applied to measuring peers aligned with Citrix’s business and those with whom we regularly compete for executive, managerial and technical talent performance under our variable cash compensation plans or performance-based awards • Use equity awards for long-term incentive • No re-pricing of stock options and retention • Design compensation programs to align at least 60% of Named Executive Ofﬁcer’s annual target compensation with company performance • Conduct annual executive ofﬁcer evaluations and self-evaluation process • Provide for compensation clawbacks pursuant to an executive compensation recovery policy • Require signiﬁcant share ownership by executive ofﬁcers • No guaranteed bonuses • No hedging, short selling or pledging of equity awards • No single-trigger or modiﬁed single-trigger change in control agreements • No excessive perquisites The elements of compensation that we use to accomplish our objectives, with the details of each for fiscal year 2020, are as follows: Element Base Salary Component Cash Variable cash compensation Cash Long-term equity incentives Performance-based restricted stock units (PRSUs) Description ‰ Evaluated on an annual basis For 2020, variable cash compensation was based on: ‰ 70% product and subscription bookings on an annual contract value (ACV) basis ‰ 30% non-GAAP corporate operating expense ‰ Based on annualized recurring revenue (ARR) growth from January 1, 2020 to December 31, 2022 ‰ Cliff vest after a three-year period based on achievement of performance criteria ‰ No vesting for performance below threshold and maximum vesting of 200% Time-based restricted stock units (TRSUs) ‰ Vests in three equal annual installments over a three-year period We also provide benefits as part of our compensation program. 2021 Proxy Statement 45 How executive pay decisions are made Compensation process and criteria Evaluationprocess The compensation packages for our executive officers are reviewed by our Compensation Committee and include an analysis of all elements of compensation separately and in the aggregate. In 2020, the Compensation Committee continued its engagement of Semler Brossy as its independent compensation consultant to assist with its oversight of executive compensation during the annual executive compensation cycle. In addition, our legal, finance and human resources departments support the Compensation Committee in its work and act in accordance with the direction given to them to administer our compensation programs. During early 2020, the Compensation Committee held meetings with management, our human resources department and representatives of Semler Brossy to: ‰ review our compensation objectives; ‰ evaluate and develop our executive compensation peer group; ‰ review the actual and target compensation of our executive officers and compensation packages for new executive officers for consistency with our objectives; ‰ analyze trends in executive compensation; ‰ assess our variable cash compensation structure, as well as the plan components and mechanics, to ensure an appropriate correlation between pay and performance with resulting compensation opportunities that balance returns to the business and our shareholders (this included, among other things, modeling amounts payable under proposed plan structures against various scenarios); ‰ assess our equity-based awards programs against our objectives of executive engagement, retention and alignment with shareholder interests; ‰ review market analysis for our executive cash compensation and equity-based awards programs; ‰ review recommendations for 2020 target direct compensation for appropriateness relative to our compensation objectives; and ‰ review retention incentive levels for our executive officers to support our strategic and operational initiatives. At several meetings throughout the first quarter of 2020, the Compensation Committee reviewed proposed compensation programs and packages for our executive officers for 2020, which were prepared by management working in conjunction with our human resources department and Semler Brossy and evaluated by our finance department for alignment with our corporate operating plan. In March 2020, the Compensation Committee approved the proposed 2020 executive variable cash compensation plan, which we refer to as the variable cash compensation plan. Also, in March 2020, the Compensation Committee approved individual compensation packages for our executive officers. Our Board of Directors approved the 2020 compensation of our President and Chief Executive Officer, upon the recommendation of the Compensation Committee. In evaluating our 2020 executive compensation program in the first quarter of 2020, the Compensation Committee considered several factors when determining compensation packages for our executive officers as discussed elsewhere in the Compensation Discussion and Analysis section of this Proxy Statement, including the shareholder advisory (“say-on-pay”) vote on our Named Executive Officer compensation for 2018, which reflects our shareholders’ support for our executive officer compensation packages. The 2018 say-on-pay vote was approved by over 89% of the votes cast at our Annual Meeting of Shareholders held in June 2019, which was the most recent shareholder advisory vote on executive compensation available to the Compensation Committee at the time. 46 Evaluationcriteria In determining the amount and mix of the target compensation elements, the Compensation Committee relies upon its judgment regarding the scope and strategic impact of each individual executive officer’s role. In setting final compensation targets for our executive officers in 2020, the Compensation Committee considered many factors, including: P r o x y ‰ the performance and experience of each individual; ‰ the scope and strategic impact of the executive officer’s role; ‰ our past business and financial performance and future expectations; ‰ our long-term goals and strategies; ‰ difficulty in, and the cost of, replacing high performing leaders with in-demand skills; ‰ past compensation levels of each individual and of our executive officers as a group; ‰ relative levels of compensation among our executive officers; ‰ the amount of each compensation component in the context of the executive officer’s target total compensation and other benefits; ‰ the retention levels and holding power for each of our executive officers based on outstanding equity awards and recommended equity awards; ‰ for each executive officer, other than our President and Chief Executive Officer, the evaluation and recommendation of our President and Chief Executive Officer; ‰ for our President and Chief Executive Officer, the evaluation of our Board of Directors, a self-evaluation by our President and Chief Executive Officer and feedback from his direct reports; and ‰ the competitiveness of the compensation packages relative to the selected market data as highlighted by the independent compensation consultant’s analysis. PresidentandChiefExecutiveOfficerevaluation As discussed above, one of the factors the Compensation Committee considers when determining compensation targets for our President and Chief Executive Officer is the performance evaluation of our President and Chief Executive Officer. Our President and Chief Executive Officer completes a self-evaluation, and our Board of Directors and each of our President and Chief Executive Officer’s direct reports provides written feedback assessing our President and Chief Executive Officer’s contributions to our company. Aligned with the objectives of our multi-year transition to a cloud-based subscription business and the importance of fostering an innovative, collaborative and inclusive culture, our President and Chief Executive Officer’s performance for 2019 was evaluated on the following: ‰ drives and ensures financial results; ‰ establishes near-term and long-term strategy with employee engagement that drives the needs of customers, partners and shareholders; ‰ leads and inspires the organization, ensures Citrix employees live our core values, and drives a diverse and inclusive culture; ‰ builds effective external stakeholder relationships; and ‰ drives a collaborative relationship with our Board of Directors. The Compensation Committee considered our President and Chief Executive Officer’s evaluation results for 2019 in a holistic manner, in addition to other factors, including those listed above under the section titled Evaluationcriteria, when setting our President and Chief Executive Officer’s amount and mix of target compensation for 2020. 2021 Proxy Statement 47 Role of the independent compensation consultant During 2020, Semler Brossy reported directly to the Compensation Committee for purposes of advising the Compensation Committee on executive compensation matters. The Compensation Committee provided Semler Brossy with preliminary instructions regarding the goals of our compensation program and the parameters of the competitive review of executive officer total direct compensation packages to be conducted by Semler Brossy. Semler Brossy was instructed to review and provide guidance on our peer group development. Semler Brossy was then instructed to provide a market analysis of all components of compensation for all executive officer positions, including base salary, target total cash (base salary plus target variable cash compensation) and equity-based long-term incentive awards. The Compensation Committee also instructed Semler Brossy to review the public disclosure by our peer companies concerning their executive compensation practices and to review our internal compensation model and guidelines and compare them to our peer companies and to our actual compensation practices. During the first quarter of 2020, Semler Brossy attended meetings of the Compensation Committee, both with and without members of management present, and interacted with members of our human resources department with respect to its assessment of the compensation packages of our executive officers. Once Semler Brossy, working in conjunction with our human resources department, completed its preliminary analysis of our executive officer compensation, their analysis was presented to the Compensation Committee, which was discussed at the Compensation Committee’s March 2020 meeting. Similarly, the Compensation Committee provided Semler Brossy with instructions regarding compensation packages for new and promoted executive officers during 2020, as well as retention and incentive programs to support our strategic and operational initiatives. Semler Brossy was instructed to provide a market analysis of the relevant compensation components for these items and also advise the Compensation Committee on market practices in similar circumstances. Semler Brossy attended meetings of the Compensation Committee, with executive sessions being held at most meetings, and interacted with members of our human resources, legal and finance departments with respect to certain of these matters. Independence of compensation consultant In connection with Semler Brossy’s continued appointment in 2020, the Compensation Committee evaluated Semler Brossy’s independence and considered our policy on independence of the Compensation Committee’s consultant and other advisers, contained in our Corporate Governance Guidelines and the Compensation Committee’s charter. The Compensation Committee also considered the six independence factors as required by Nasdaq and the SEC, which are specified in the following table. After analyzing each of these factors indicated in the following table, information provided by Semler Brossy, and our policy on independence relative to Semler Brossy’s engagement, the Compensation Committee concluded that Semler Brossy is independent and that there were no conflicts of interest. 48 Independence factor Information considered Other services provided to Citrix by Semler Brossy None Citrix fees received by Semler Brossy, as a percentage of Semler Brossy’s total revenue Modest and represents less than 2% of Semler Brossy’s total revenue Semler Brossy’s policies and procedures that are designed to prevent conflicts of interest Semler Brossy maintains a number of internal mechanisms and policies designed to prevent conflicts of interest P r o x y Business or personal relationships between the Compensation Committee’s individual compensation adviser and members of the Compensation Committee Citrix stock owned by the Compensation Committee’s individual compensation adviser The Compensation Committee’s individual compensation adviser has no direct business or personal relationships with any member of the Compensation Committee. Semler Brossy has provided consulting services to one company that is affiliated with members of the Compensation Committee The Compensation Committee’s individual compensation adviser does not directly own any Citrix stock, and the practice is prohibited under Semler Brossy’s policies Business or personal relationships between the Compensation Committee’s individual compensation adviser, or Semler Brossy, with a Citrix executive officer No compensation adviser to Citrix has any other relationships to the Compensation Committee or Citrix executive officers Our use of market and peer group analysis Each year, we conduct a competitive analysis of the compensation paid to our executive officers and review the compensation practices of our peer group. As in prior years, the analysis for 2020 measured our compensation opportunities for executive officers against information from the following sources: ‰ independent, commercially available surveys on executive compensation within the software industry, tailored to reflect our relative market capitalization and revenue, including the Radford Global Technology Survey and the Radford Global Sales Survey; and ‰ market analysis prepared by Semler Brossy using commercially available survey data and information from publicly filed reports from a group of peer technology companies, or the peer group, specifically identified by the Compensation Committee. Each year, we evaluate the composition of our peer group and adjust the composition of our peer group for factors such as recent acquisitions of peer companies, new markets that we have entered or changes in the technology market landscape. For 2020, with assistance from Semler Brossy, we again focused on developing a peer group to address the dynamics in the markets for talent in which we compete. Based on this assessment, in the third quarter of 2019, our Compensation Committee revised our compensation peer group for 2020 to include Open Text Corporation and PTC Inc., which each have an increased focus on subscription-based revenue and are appropriate from a size and scope perspective, and to remove CA, Inc. and Red Hat, Inc., which each have been acquired. Our peer group includes: ‰ publicly-traded companies that represent an appropriate range from a size and scope perspective; ‰ innovative companies that operate in virtualization, cloud, Software-as-a-Service and networking markets; and ‰ companies with whom we compete for talent. 2021 Proxy Statement 49 We believe that our peer group continues to be aligned with our strategic vision and positions us to attract, retain and engage high performing leaders. Moreover, our peer group, with its inclusion of a full array of companies with whom we compete for talent, maintains Citrix’s position at approximately the group median across revenue and other key financial metrics we view as important in selecting a peer group. The table below lists the companies in our 2020 peer group indicating the peers with whom we regularly compete for executive, managerial and technical talent. We believe that our 2020 peer group is composed of innovative, software-focused businesses operating on a global scale, like Citrix, and are the companies with whom we look to align our executive compensation practices. Peer Group Comparison Revenues ($ in millions)(1) Net Income (loss) ($ in millions)(1) Approx. No. of Employees(1) Software-Focused Global Business Compete for Talent 3,198.2 3,790.4 2,682.9 1,913.9 2,350.8 7,679 4,445.1 5,412 2,490 3,109.7 3,408.4 1,458.4 4,519.5 3,685.3 11,767 4,318 3,236.7 557.1 8,368 1,208.2 11,500 590.6 -256.3 307.4 1,826 257.8 819 3,887 234.2 -267 130.7 118.5 663.5 2,058 -282.4 504.4 8,800 2,760 6,109 10,600 9,950 10,800 3,600 14,400 8,014 6,243 13,000 15,036 34,000 12,500 9,000 (Dropbox) (Workday) Trademarks are property of their respective owners. (1) Fiscal year end data presented in the table is for fiscal year ending in 2020, other than Autodesk, Inc., VMware, Inc, and Workday, Inc. each of whose fiscal year end data is for its fiscal year ended in January 2021. We use peer group analysis as one of several factors that inform our judgment of appropriate compensation parameters for base salary, variable cash compensation and equity-based, long-term incentives. Our executive compensation decisions are made on a case-by-case basis, and market analysis is just one consideration within our holistic approach to executive compensation. Based on a regular review of our peer group, in September 2020 in connection with discussions regarding 2021 compensation, our Compensation Committee, after consultation with Semler Brossy determined to make no changes to the peer group for fiscal year 2021. 50 Components of compensation Commitment to performance-based cash and equity compensation Our key executive compensation guiding principle continues to be closely aligning the compensation of our executive officers with the creation of long-term value for our shareholders by tying a significant portion of target total direct compensation opportunity to our performance. The following pie charts show the 2020 target total direct compensation mix for our President and Chief Executive Officer, Mr. Henshall, and the average target total direct compensation mix for our other Named Executive Officers, other than Mr. Kim, who joined Citrix as Executive Vice President of Engineering and Chief Technology Officer on December 1, 2020. For 2020, our President and Chief Executive Officer’s target total direct compensation was 67% performance-based and 94% at risk as shown below. Also as shown below, approximately 65% of the target total direct compensation of our other Named Executive Officers, on average, was performance-based and 91% was at risk. We consider compensation to be “at risk” if vesting or payout is subject to achievement of performance targets or the value received is dependent on our stock price. P r o x y CEO Other NEOs(2) Compensation Mix(1) 6% Base Salary 8% Variable Cash Compensation 9% Base Salary 8% Variable Cash Compensation 27% TRSUs 59% PRSUs 94% At-Risk Compensation 26% TRSUs 57% PRSUs 91% At-Risk Compensation 67% Performance-Based Compensation 65% Performance-Based Compensation (1) Target total direct compensation includes: (a) 2020 base salary in effect at the end of fiscal year 2020, (b) target 2020 annual variable cash compensation in effect at the end of fiscal year 2020, and (c) grant date fair value of TRSUs and PRSUs granted during fiscal year 2020 as part of the annual compensation cycle. Does not include the performance-based awards granted in April 2020 for retention purposes that were granted in connection with the February 2019 performance-based awards that were forfeited by executives in January 2020 that are included in the Summary Compensation Table, Grants of Plan-Based Awards Table and Outstanding Equity Awards at Year End Table as described herein. (2) Excludes Woong Joseph Kim, who joined Citrix as Executive Vice President of Engineering and Chief Technology Officer on December 1, 2020. 2021 Proxy Statement 51 Base salary Salary levels for our executive officers are based on several factors, including individual performance and experience, the scope of the role and competitive ranges informed by compensation data reported for similar roles at companies in our peer group. In 2020, based on the objectives of our executive compensation program, our evaluation criteria for individual performance, Citrix’s overall performance and other factors described above, the base salaries of our Named Executive Officers as noted below became effective April 1, 2020, unless otherwise indicated: David J. Henshall President and Chief Executive Officer Arlen R. Shenkman Executive Vice President and Chief Financial Officer Antonio G. Gomes Executive Vice President, Chief Legal Officer and Secretary Paul J. Hough Executive Vice President and Chief Product Officer Woong Joseph Kim(1) Executive Vice President of Engineering and Chief Technology Officer (1) Mr. Kim joined Citrix effective December 1, 2020. Variable cash compensation 2019 base salary ($) 2020 base salary ($) Increase/ decrease (%) 1,000,000 1,000,000 575,000 575,000 500,000 500,000 500,000 513,000 — 500,000 — — — 2.6 — Our Compensation Committee oversees our variable cash compensation plan, with administrative tasks delegated to the leadership team. We believe that for an annual cash compensation plan to be effective, it should be easy to understand. Accordingly, we use a limited number of financial targets that focus our executive officers on the key metrics underlying our strategic plan and align performance pay strictly with financial results. Over the past ten years, our variable cash compensation plan has paid between 58.8% and 170.9% and has paid above 100% four times, as shown below: Achievement of variable cash compensation 160.9% 170.9% 161.2% 97.7% 92.1% 89.4% 98.3% 80.7% 118.4% 58.8% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 As discussed below, we tailor our variable cash compensation plan to our strategic and business objectives and our results vary based on achievement of those objectives. The Compensation Committee and our Board of Directors retain the discretion to decrease or increase payout of our variable cash compensation plan to account for extraordinary circumstances and to balance the interests of the plan participants with the interests of our shareholders. Over the ten years summarized in the graph above, we did not apply discretion to increase or decrease plan payouts, and no bonuses or awards were granted to make-up for forfeited variable cash awards. 52 Target total cash compensation For 2020, our compensation evaluation processes during our annual cycle and in connection with any promotions or executive hires during the year resulted in target awards for our Named Executive Officers under our variable cash compensation plan that ranged from 90% to 150% of base salary, based on the factors discussed above. Our Named Executive Officer compensation packages had the following target cash compensation in 2020, with the target variable cash portion expressed both as a percentage of base salary and in dollars. The base salaries and target variable cash percentage of our Named Executive Officers included in the table below reflect the increased base salaries and any increases in variable cash percentage, effective April 1, 2020, unless otherwise indicated below: P r o x y Name David J. Henshall President and Chief Executive Officer Arlen R. Shenkman Executive Vice President and Chief Financial Officer Antonio G. Gomes Executive Vice President, Chief Legal Officer and Secretary Paul J. Hough Executive Vice President and Chief Product Officer Woong Joseph Kim Executive Vice President of Engineering and Chief Technology Officer(1) (1) Mr. Kim joined Citrix on December 1, 2020. 2020 variable cash compensation plan Target variable cash As a % of base salary Target variable cash amount ($) Base salary ($) Total ($) 1,000,000 150% 1,500,000 2,500,000 575,000 100% 575,000 1,150,000 500,000 90% 450,000 950,000 513,000 90% 461,700 974,700 500,000 90% 450,000 950,000 For 2020, each executive officer’s variable cash compensation plan award was based 100% on the achievement of financial targets established by the Compensation Committee. For 2020, as discussed below, our Compensation Committee determined to align achievement with product and subscription bookings on an annual contract value (ACV) basis (excluding cloud renewals and ACV bookings acquired in merger and acquisition activity) and non-GAAP corporate operating expense. To ensure the integrity of our operating plan, and to safeguard shareholder value, the payout levels under our variable cash compensation plan are designed to motivate performance that meets or exceeds our financial plan objectives. Our program is designed to provide incentives to our executive officers aligned to our business strategy and our financial performance. We rigorously test our plan design to ensure that the structure and possible outcomes do not incentivize our executive officers to take unnecessary or excessive risks that could negatively impact the company’s long-term value. During 2020, we focused heavily on new growth to drive long-term value creation. This is reflected in our 2020 executive variable cash compensation plan that applies a 70% weighting to product and subscription bookings on an annual contract value (ACV) basis (excluding cloud renewals and ACV bookings acquired in merger and acquisition activity). ACV is an operating metric, which represents the annualized value of a customer contract. There were no ACV bookings as a result of merger and acquisition activity during 2020. Cloud renewals occur when a customer of our cloud-based solutions reaches the end of their contract term and elects to continue consuming the service of our cloud-based solutions by renewing their contract. We also focused on expense management, reflected by a 30% weighting on non-GAAP corporate operating expense excluding any transaction costs and expenses in connection with merger and acquisition activity. Our Compensation Committee moved from non-GAAP operating margin in the 2020 variable cash compensation plan, which was used in prior years, to focus on a metric that is controllable by all employees and incentivizes employees to reduce corporate operating expense. 2021 Proxy Statement 53 Our variable cash compensation plan provided for a premium in the event of overachievement of targets, capped at 200% of the target payout amount, and a reduction in the event of underachievement of targets, depending on actual results. The following chart shows the maximum performance amounts that would have resulted in a payout of 200% of the target amount, the performance amounts that would have resulted in a payout of 100% of the target amount and the minimum performance requirements that needed to be met before any award could be earned. Weighting Minimum performance (0% payout) Target performance (100% payout) Maximum performance (200% payout) Product and subscription bookings (ACV) (excluding cloud renewals) Non-GAAP corporate operating expense 70% 30% $760 million $886 million $913 million $1,893 million $1,762 million $1,705 million When actual performance falls between the threshold and the target performance levels or between the target and maximum performance levels, payouts are calculated using a graduated slope. This payout structure recognizes that, in a business of this scale, while overachievement merits a greater reward, any underachievement should result in a reduced award. Determination of awards Early in the first quarter of 2021, our finance team reviewed and approved the calculations of financial target attainment levels, which were based on and consistent with our publicly reported financial results for 2020, and the 2020 award amounts payable to executive officers that were generated by members of our human resources department in accordance with the terms of our variable cash compensation plan. At meetings held in January 2021, our Compensation Committee approved (or, in the case of our President and Chief Executive Officer, recommended to the Board of Directors for approval) the payouts to our executive officers under our 2020 variable cash compensation plan. As in the past, we did not adjust the resulting payouts under our variable cash compensation plan for 2020. The results of the 2020 variable cash compensation plan resulted in a total weighted payout of 161.16%, based on the achievement of the metrics as described below. Product and subscription bookings (ACV) (excluding cloud renewals) Non-GAAP corporate operating expense Total weighted payout % Target Actual Attainment (pre-weighting) Weighting (amounts are approximate due to rounding) Payout Weighted payout $886 million $1,021 million 115.21% 200% 70% 140.00% $1,762 million $1,820 million 96.82% 71% 30% 21.16% 161.16% Consistent with the way we calculate and publicly report our financial results, the financial targets and attainment levels for corporate operating expense are adjusted to exclude certain GAAP measurements in accordance with Citrix’s past practices, including amortization of intangible assets primarily related to business combinations, non-cash charges associated with the expensing of equity-based compensation, charges or benefits related to patent litigation, charges related to restructuring programs, charges related to separation activities, the tax effects related to these items and any other items adjusted from our GAAP results in Citrix’s reported earnings as approved by our Audit Committee. There were no transaction costs and expenses excluded in connection with merger and acquisition activity in fiscal year 2020. 54 The table below summarizes the payments approved by our Compensation Committee (or, in the case of our President and Chief Executive Officer, approved by the Board of Directors) under our variable cash compensation plan compared to each executive officer’s target award for 2020. Each Named Executive Officer listed below received 161.16% of his target award for 2020, except as noted. P r o x y David J. Henshall President and Chief Executive Officer Arlen R. Shenkman Executive Vice President and Chief Financial Officer Antonio G. Gomes Executive Vice President, Chief Legal Officer and Secretary Paul J. Hough Executive Vice President and Chief Product Officer Woong Joseph Kim(2) Executive Vice President of Engineering and Chief Technology Officer Target variable cash compensation award ($)(1) Actual variable cash compensation award paid ($) Percentage of target award paid (%) 1,500,000 2,417,400 575,000 926,670 450,000 725,220 458,791 739,388 161.16 161.16 161.16 161.16 38,115 61,426 161.16 (1) All target variable cash compensation awards are pro-rated to reflect changes in compensation during 2020, if applicable, and are based on the actual base salary paid to the Named Executive Officer in 2020. (2) Mr. Kim’s target variable cash compensation and his actual variable cash compensation award are pro-rated to reflect less than a full year of service. Mr. Kim joined Citrix as Executive Vice President of Engineering and Chief Technology Officer as of December 1, 2020. ESG component added to 2021 variable cash compensation plan Each year, the Compensation Committee reviews our variable cash compensation plan to ensure that it fits our strategic and operational initiatives and to reflect feedback we receive from our shareholders. For 2021, the Compensation Committee introduced an operational metrics-focused modifier to our variable cash compensation plan intended to further focus our executive officers on our multi-year initiatives related to sustainability and diversity, inclusion and belonging. These initiatives are designed, among other things, to: ‰ Reduce our greenhouse gases (GHGs) by 30% by2030 (from a baseline level in 2019); ‰ Decrease our carbon intensity per unit of revenue by 50% by2030 (from a baseline level in 2019); ‰ Achieve a diverse workforce made up of 45% underrepresented groups(1) globally by the end of 2025; and ‰ Sustain our strong year-over-year engagement and inclusivity scores and pay equity ratios. The modifier could result in up to a 10% increase or decrease in our executive officers’ variable cash compensation for 2021 based on the Compensation Committee’s assessment of our progress toward sustainability goals (including those related to implementation of an environmental management process, remote work opportunities, and solar panel installations) and diversity, inclusion and belonging goals (including those related to diversity in our workforce, employee engagement and inclusivity, and pay equity) established by our Compensation Committee. Details regarding our 2021 variable cash compensation plan will be included in the Proxy Statement for our 2022 Annual Meeting of Shareholders. Equity-based long-term incentives The purpose of our equity-based long-term incentives is to attract, retain and engage high performing leaders, further align employee and shareholder interests, and continue to closely link executive compensation with company performance. Our equity-based long-term incentive program is an essential component of the total compensation package offered to our executive officers, reflecting the importance that we place on motivating and rewarding superior results with long-term and performance-based incentives. (1) Includes woman on a global basis and African-American/Black, Asian/Pacific Islander, American Indian/Alaskan Native and Latino in the U.S. 2021 Proxy Statement 55 Approach to equity-based awards Since 2017, our annual equity grant program for executives has consisted entirely of restricted stock units. Our portfolio of equity awards granted to executive officers on an annual basis has been a mix of just two equity elements, at least half of which has been tied to long-term performance. Our Compensation Committee regularly reviews our equity compensation program. Based on feedback from our shareholders and with the assistance and guidance of its independent compensation consultant, our Compensation Committee has for the past several years approved awards with an operating metric for our performance-based restricted stock units that incentivize our executives to achieve a financial goal that is directly tied to our multi-year business transition that is described further below. Further, beginning in 2019 for our President and Chief Executive Officer, and in 2020 for our other executive officers, at least 60% of the equity awards granted to executive officers as part of our annual grant cycle is tied to long-term performance operating metrics to continue to shift a greater proportion of executive officer compensation to performance-based compensation. The exclusive use of restricted stock units, rather than stock options or other equity awards, granted to our executive officers furthers our goals of reducing dilution, burn rate and overhang by reducing the number of shares of our common stock subject to equity-based awards while continuing to provide incentives for our high performers to remain with us and continue to perform at a high level. Also, the inclusion of performance-based restricted stock units based on the achievement of an operational metric that is directly tied to our multi-year business transition is designed to drive success of our transition and be a driver of value creation for our shareholders. Equity-based award grant levels When establishing equity-based award grant levels for our executive officers, our Compensation Committee considers the existing value of unvested equity-based awards held by the executive officers relative to each other and to our employees as a whole, previous grants of equity-based awards to our executive officers, our overhang and targeted burn rates for equity-based awards, and the vesting schedules of previously granted equity-based awards, as well as the various other factors described above. In addition, our Compensation Committee considers the market competitive value of an executive officer’s role leveraging current market analysis information as previously described, the relative level of impact the executive officer has or is expected to have on company performance, and the current and prospective performance of the executive officer in his or her role. During each annual compensation cycle, our Compensation Committee meets during the first quarter to review these factors for each of our executive officers and discusses proposed annual compensation, including equity-based award grant levels, with the Compensation Committee’s independent compensation consultant. Based on the reviewed factors, including market analysis compensation data, an assessment of the executive’s performance, and retention priorities, our Compensation Committee determines a targeted economic value for equity-based awards to be granted to each executive officer and approves a dollar value for such awards. The Compensation Committee also reviews the approximate number of Citrix shares expected to be granted as part of the annual compensation cycle to manage to our burn rate. At the time of grant, the approved dollar value for each executive officer is converted into a number of Citrix shares using the 20-day trailing average price of Citrix common stock to ensure executive officers are being granted equity awards that represent the previously-approved economic value based on Citrix’s current stock price. For equity-based promotion and new-hire awards, the Compensation Committee also considers market practices for such awards and the difficulty in recruiting high performing leaders with in-demand skills. Adjustments to outstanding equity awards in connection with our quarterly dividend In connection with our payment of a cash dividend in each quarter of 2020, we adjusted the number of our unvested outstanding restricted stock units to provide each holder thereof with additional restricted stock units reflecting the value of such dividend. The number of additional restricted stock units was determined by dividing (1) the product obtained by multiplying the cash dividend per share declared by our Board by the number of unvested restricted stock units, by (2) the closing price of Citrix common stock on the dividend payment date. These additional restricted stock units are subject to the same conditions regarding vesting and settlement as the underlying restricted stock units to which they relate. The value of these additional restricted stock units is reflected in the “All other compensation” column of the Summary Compensation Table, and the number of such additional restricted stock units is reflected in the Outstanding Equity Awards at Year End Table. Upon the final vesting date, any fractional unit will be rounded up to a whole share. 56 P r o x y Restricted stock unit awards Pursuant to the Second Amended and Restated 2014 Plan, we may grant executive officers various types of awards, including market performance-based restricted stock units, performance-based restricted stock units, and time-based restricted stock units. Once vested, each restricted stock unit represents the right to receive one share of our common stock. Achievementof2018performance-basedawardsbasedon2020performance As disclosed in our Proxy Statement for our 2019 Annual Meeting of Shareholders, our Compensation Committee tied vesting of our annual 2018 performance-based restricted stock units to subscription bookings as a percentage of total product and subscription bookings (excluding transition and trade-up bookings) measured from January 1, 2020 to December 31, 2020. Our executive officers received these performance-based restricted stock units having this performance metric in March 2018 as part of our annual grant cycle. Our Compensation Committee determined to tie vesting of these performance-based restricted stock unit awards to subscription bookings as a percentage of total product and subscription bookings (excluding transition and trade-up bookings) to further incentivize our executives to achieve this financial goal that was directly tied to the multi-year business transition strategy at the time, which we reviewed with our shareholders in October 2017 and January 2018. The acceleration of moving our bookings mix significantly towards ratable subscriptions (that is, subscription bookings as a percentage of total product and subscription bookings) was a key indicator of our success in transitioning to a subscription business. The Compensation Committee set performance goals at definitive, rigorous and objective levels so as to require significant effort and achievement by our executive team. Specifically, the Compensation Committee set the payout curve for these performance-based awards to provide a maximum payout for subscription bookings as a percentage of product bookings that would exceed our internal operating plan. The payout curve for the portion of these performance-based awards was as follows (utilizing straight-line interpolation between percentages): Subscription bookings as a percentage of total product and subscription bookings 30% (threshold) 60% (target) 90% (maximum) Percentage of target award vested 0% 100% 200% No restricted stock units would vest if subscription bookings as a percentage of total product and subscription bookings was less than the threshold. For this purpose, “subscription bookings as a percentage of total product and subscription bookings” was calculated as Citrix’s total term, cloud (SaaS), hybrid-cloud and Citrix Service Provider product subscription bookings or any other product bookings from subscription offerings, including subscription renewals, expansions, extensions, upgrades, updates, initial and add-on or multiple year terms of any of the foregoing, but excluding transition and trade-up bookings, over Citrix’s total product and subscription bookings, excluding transition and trade-up bookings, in each case excluding ShareFile SMB bookings, measured as of the last fiscal year of the performance period (fiscal year 2020). Early in the first quarter of 2021, our finance team reviewed and approved the calculations of financial target attainment levels. At a meeting held in January 2021, our Compensation Committee approved the payouts to our executive officers, and the Board of Directors with respect to our President and Chief Executive Officer, under our 2018 performance-based awards and determined that we achieved subscription bookings as a percentage of total product and subscription bookings (excluding transition and trade-up bookings) of 70.8%, resulting in a payout of 135.9% based on the payout curve described above. Retentionperformance-basedawardsgrantedtoalignwithacceleratedtransformation In February 2019, in addition to our annual equity grant program, Mr. Henshall and certain of our other executive officers were awarded performance-based restricted stock units to promote retention of our leadership team and drive the achievement of company operational goals. These performance-based restricted stock units were granted 2021 Proxy Statement 57 with a free cash flow per share year-over-year growth metric measured over a performance period ending on December 31, 2020. We refer to such awards as the “February 2019 Awards.” The Compensation Committee carefully monitored the February 2019 Awards through the course of 2019. During the second quarter of 2019 and as discussed in our earnings announcement in July 2019, we gained significant momentum in our business transition to a cloud-based subscription business. Given this increased momentum, we had a unique opportunity to drive our transition at an accelerated pace, which would advance long-term value creation for shareholders. Since the announcement in July 2019 of our decision to accelerate our subscription transition, our stock price increased nearly 41% through April 6, 2021, which is our record date for the 2021 Annual Meeting. Given the accelerated pace of the transition, in the third quarter of 2019, the Compensation Committee recognized that the February 2019 Awards were no longer aligned with our go-forward business strategy. At that point in our transition, free cash flow decreased in the short-term when subscription bookings accelerated. As a result, the free cash flow per share year-over-year growth metric that had been set in early 2019 no longer aligned our executive leadership with, nor incentivized execution of, the strategic business decisions made by our Board of Directors and management coming out of the second quarter of 2019. As a result, the Compensation Committee asked our executive officers to forfeit their February 2019 Awards so that a better aligned performance-based award could be put in place — one that would incentivize our executive officers to drive our strategy and the transition to a subscription-based business. The forfeiture of the February 2019 Awards occurred in January 2020 and totaled $12.2 million, including restricted stock units earned as a result of the payment of our quarterly cash dividend, at the time of forfeiture. In April 2020, Mr. Henshall and the executive officers who had previously received and subsequently forfeited the February 2019 Awards were granted performance-based awards that the Compensation Committee viewed as aligned with our business transition and strategy. We refer to these awards as the “April 2020 Awards.” The Compensation Committee determined annualized recurring revenue (ARR) growth to be the metric most aligned with our business transition and strategy at the time. As we have discussed in our earnings announcements beginning in the second quarter of 2019, we believe ARR is the best indicator of the overall health and trajectory of our business because it captures the pace of our transition and is a forward-looking indicator of top line trends. To ensure that the performance period is aligned with our long-term strategy and to incentivize executives over a longer period, the Compensation Committee granted the April 2020 Awards with a performance period ending at the end of fiscal year 2021 rather than the original performance period of the February 2019 Awards, which had a performance period ending in 2020. The Committee determined to cap performance of the April 2020 Awards at 125% to limit the degree of overachievement so as to prevent excessive compensation even if we dramatically outperform our goals. The Compensation Committee further decided that because the February 2019 Awards would have vested at the end of 2020, the Committee implemented an interim performance period for the April 2020 Awards based on ARR growth over 2020. The Compensation Committee determined that 50% of the April 2020 Awards would be eligible to vest following an interim one-year performance period and 50% would be eligible to vest at the end of the full two-year performance period. The interim performance period payout was also capped at 125%. The interim payout curve for these performance-based awards that could be earned at the end of the one-year interim performance period based on annual ARR growth is as follows (utilizing straight-line interpolation between percentages). Annualized recurring revenue growth % Percentage of interim target award vested 32% (threshold) 34% (target) 36% (maximum) 75% 100% 125% 58 No restricted stock units would have vested following the interim payout period if ARR growth had been less than the threshold. For this purpose, ARR growth was calculated using an annual growth formula with ARR representing the contracted recurring value for all term subscriptions normalized to a one-year period as reported in Citrix’s quarterly P r o x y earnings releases. Early in the first quarter of 2021, our finance team reviewed and approved the calculations of financial target attainment levels. At meetings held in January 2021, our Compensation Committee approved the interim payouts to our executive officers under the April 2020 Awards and determined that we achieved ARR growth of 62.1%, resulting in an interim payout of 125% based on the payout curve described above. This payout was applied to the first 50% of the awards. This significant overachievement during the interim one-year period was due to Subscription ARR growth driven by increased customer demand for our subscription offerings for Citrix Workspace and pooled capacity App Delivery and Security offerings, and our decision to end broad availability of perpetual Citrix Workspace licenses during the third quarter of 2020. The remaining 50% of these performance-based awards may be earned at the end of the two-year performance period based on compounded ARR growth as follows (utilizing straight-line interpolation between percentages). Annualized recurring revenue growth %(1) Percentage of target award vested Threshold (94% of target) Target Maximum (106% of target) 75% 100% 125% (1) Disclosing ARR growth targets for future periods would cause competitive harm without adding meaningfully to the understanding of our business. Disclosing such metrics would reveal specifics regarding our transition to a cloud-based subscription business that a competitor may use against us. However, like performance targets for all metrics, the Compensation Committee sets performance goals at definitive, rigorous and objective levels so as to require significant effort and achievement by our executive team. We will disclose these metrics and actual achievement against these metrics at the end of the performance period once performance has been determined. None of the remaining restricted stock units will vest if compounded ARR growth is less than the threshold. For this purpose, ARR growth is calculated using a compounded annual growth formula with ARR representing the contracted recurring value for all term subscriptions normalized to a one-year period as reported in Citrix’s quarterly earnings releases. 2020performance-basedawards When designing the 2020 performance-based awards to be granted to our executive officers in April 2020 as part of our annual grant cycle, our Compensation Committee considered the following objectives: ‰ providing an incentive that has clear performance measures; ‰ directly aligning performance-based awards to our multi-year business transition strategy to a cloud-based subscription business; and ‰ responding to shareholder feedback. To achieve the objectives described above, our Compensation Committee tied vesting of the 2020 performance-based restricted stock units awarded in April 2020 to ARR growth measured over the performance period of January 1, 2020 to December 31, 2022. Our Compensation Committee determined to award performance-based restricted stock units tied to this operational metric to further incentivize our executives to achieve this financial goal that is directly tied to our multi-year business transition strategy. At the beginning of 2020 when the Compensation Committee set the metrics for the 2020 performance-based restricted stock units, like the April 2020 Awards, the Compensation Committee determined annualized recurring revenue (ARR) growth to be the metric most aligned with our business transition and strategy at the time and a key indicator of the success of our strategy. 2021 Proxy Statement 59 The payout curve for these performance-based awards that may be earned at the end of the performance period based on compounded ARR growth is as follows (utilizing straight-line interpolation between percentages). Annualized recurring revenue growth %(1) Percentage of target award vested Threshold (83% of target) Target Maximum (117% of target) 50% 100% 200% (1) Disclosing ARR growth targets for future periods would cause competitive harm without adding meaningfully to the understanding of our business. Disclosing such metrics would reveal specifics regarding our transition to a cloud-based subscription business that a competitor may use against us. However, like performance targets for all metrics, the Compensation Committee set performance goals at definitive, rigorous and objective levels so as to require significant effort and achievement by our executive team. Specifically, the Compensation Committee set the payout curve for these performance-based awards to provide a maximum payout for ARR growth that would exceed our internal operating plan. We will disclose these metrics and actual achievement against these metrics at the end of the performance period once performance has been determined. No restricted stock units will vest if ARR growth is less than the threshold. For this purpose, ARR growth is calculated using a compound annual growth formula with ARR representing the contracted recurring value for all term subscriptions normalized to a one-year period as reported in Citrix’s quarterly earnings releases. These performance-based awards are intended to ensure that a meaningful share of our executives’ equity compensation is contingent upon a successful transition to a cloud-based subscription business. The restricted stock units underlying these awards cliff vest after a three-year period based on the performance of Citrix over the performance period, with no opportunity for any interim period payout. Our executive officers received these performance-based restricted stock units having this performance metric in April 2020 as part of our annual grant cycle. 2020time-basedawards Consistent with our past practice, in April 2020, we also entered into restricted stock unit agreements with our executive officers with respect to time-based restricted stock unit awards that were not subject to performance criteria and that vest over three years, with one-third of the units vesting on the first, second and third anniversaries of the date of the award agreement. These restricted stock unit awards represented 40% of the equity grants under the annual equity grant program for our executive officers, including our President and Chief Executive Officer. Vesting of these time-based restricted stock units is subject to the continued employment of the executive officer with Citrix through the applicable vesting date. The equity-based awards indicated in the table below that were granted as part of our annual equity award program reflect an equity portfolio mix with respect to such annual awards for our Named Executive Officers, including our President and Chief Executive Officer, of 60% performance-based and 40% time-based restricted stock units. The table below includes the April 2020 Awards, as applicable. In addition, Mr. Kim received a grant of time-based restricted stock units upon joining the company. For further details regarding these equity awards, see Individual executivecompensationdecisionsbeginning on page 62. 60 The following tables summarize our 2020 equity-based awards granted to our Named Executive Officers, including the total targeted economic value approved by the Compensation Committee for each executive. The first table summarizes our annual equity-based awards and the second table summarizes the retention performance-based P r o x y restricted stock units as described above. Name and principal position David J. Henshall President and Chief Executive Officer Arlen R. Shenkman Executive Vice President and Chief Financial Officer Antonio G. Gomes Executive Vice President, Chief Legal Officer and Secretary Paul J. Hough Executive Vice President and Chief Product Officer Woong Joseph Kim(1) Executive Vice President of Engineering and Chief Technology Officer Total targeted economic value of annual restricted stock unit awards($) Time-based restricted stock units granted Target performance-based restricted stock units granted 10,500,000 33,779 50,668 3,850,000 12,386 3,250,000 10,456 3,200,000 10,295 18,579 15,683 15,442 8,000,000 67,154 — (1) In connection with joining Citrix on December 1, 2020, Mr. Kim was granted a new-hire equity award on December 1, 2020 with a value of $8,000,000 consisting of 67,154 time-based restricted stock units that vest over three years, with one-third of the units vesting on the first, second and third anniversaries of the date of the award agreement. Name and principal position David J. Henshall President and Chief Executive Officer Antonio G. Gomes Executive Vice President, Chief Legal Officer and Secretary Paul J. Hough Executive Vice President and Chief Product Officer Benefits Total targeted economic value of retention restricted stock unit awards($) Target performance-based restricted stock units granted 2,400,000 1,850,000 18,696 14,412 1,850,000 14,412 Our executive officers participate in our broad-based employee benefit plans on the same terms as eligible, non-executive employees, subject to any legal limits on the amounts that may be contributed or paid by executive officers under these plans. We offer a stock purchase plan, under which our employees may purchase shares of our common stock at a 15% discount from the fair market value of our common stock on the first or last business day of the purchase period, whichever is lower (determined by reference to the closing price of our common stock on each such date). Further, we offer a 401(k) plan that includes a Roth feature. The 401(k) plan allows our employees to invest in a wide array of funds and provides for matching contributions by our company. We also maintain insurance and other benefit plans for our employees. Our executive officers receive higher life, accidental death and dismemberment and disability insurance benefits than other employees, which reflects industry standards and their relative base salary levels. Our executive officers also receive reimbursement for annual health physicals, are eligible for relocation assistance upon joining our company and have access to financial counseling and tax services benefits. Our executive officers are eligible to participate in our charitable matching gifts program pursuant to which we match donations made to qualifying tax-exempt 501(c)(3) charitable and non-governmental organizations on a one-for-one basis. We match up to $20,000 per year for executives under this program. During 2020, we did not offer any non-qualified deferred compensation plans or supplemental retirement plans to our executive officers. For more information, please refer to the Summary Compensation Table and the Nonqualified Deferred Compensation Table below. We have always limited the perquisites that are generally made available to our executive officers. 2021 Proxy Statement 61 Individual executive compensation decisions Next, we discuss how we apply the policies and practices described above and the resulting compensation paid or awarded to each of our Named Executive Officers for the year ended December 31, 2020 as set forth in the Summary Compensation Table and the Grants of Plan-Based Awards Table. President and Chief Executive Officer compensation ChiefExecutiveOfficercompensation Our President and Chief Executive Officer is responsible for overseeing all of our corporate functions, product strategy and development, go-to-market activities and the attainment of our strategic, operational and financial goals. Working in concert with the leadership team and our Board of Directors, our President and Chief Executive Officer formulates current and long-term strategic plans and objectives and is our chief spokesperson to our employees, customers, partners and shareholders. Based on a recommendation of the Compensation Committee, our Board of Directors determines compensation for our President and Chief Executive Officer using the same factors it uses for other executive officers, placing less emphasis on base salary and, instead, driving greater performance-based alignment through equity-based long-term and variable cash compensation. In assessing the compensation paid to our President and Chief Executive Officer, the Compensation Committee relies on the advice of its independent compensation consultant, market analysis and its judgment with respect to the factors described above and specific factors described below. Mr. Henshall’s employment agreement provides for a minimum base salary of $1,000,000, which is subject to annual review and may be increased but not decreased. In addition, Mr. Henshall is eligible to receive variable cash incentive compensation as determined by performance goals established by the Board of Directors upon consultation with Mr. Henshall, with a maximum variable cash compensation payment of 200% of his base salary. The actual amount is determined in the discretion of the Compensation Committee based on Citrix’s performance and the individual performance of Mr. Henshall. In March 2020, as part of our annual compensation review process, our Board of Directors met in executive session to review Mr. Henshall’s annual compensation, including the minimum compensation provided for by his employment agreement, and to assess his performance for 2019. Our Board of Directors considered Mr. Henshall’s performance and the demands on, and responsibilities of, a leader of a global organization of the scale and complexity of Citrix, especially given that our company is going through a significant business transition. Further, our Compensation Committee, with assistance from its independent compensation consultant, conducted a comprehensive review of compensation for Chief Executive Officers at our peer companies. As a result of that review, our Board of Directors approved a 2020 target compensation package for Mr. Henshall that was competitive with target total direct compensation for Chief Executive Officers at peer companies. Target total direct compensation includes base salary, target variable cash compensation and the value of time-based restricted stock units and performance-based restricted stock units. Our Board of Directors maintained Mr. Henshall’s base salary of $1,000,000 for 2020. As a result, Mr. Henshall received base salary compensation of $1,000,000 in 2020. Mr. Henshall’s target variable cash compensation award as a percentage of base salary was set at 150% of his base salary, consistent with the rate in effect at the end of 2019. For 2020, Mr. Henshall was awarded variable cash compensation of $2,417,400, in accordance with our 2020 executive variable cash compensation plan. Our Board of Directors approved annual equity-based awards valued at $10,500,000 for 2020, of which 60% were to be granted as performance-based restricted stock units and 40% were granted as time-based restricted stock units. At the time of grant on April 1, 2020, the approved dollar value for Mr. Henshall was converted into a number of Citrix shares using the 20-day trailing average price of Citrix common stock to ensure Mr. Henshall was being granted equity awards that represent the previously-approved economic value based on Citrix’s then-current stock price. As a result, Mr. Henshall was granted 33,779 time-based restricted stock units and 50,668 performance-based restricted 62 stock units. Also, Mr. Henshall was granted 18,696 performance-based restricted stock units on April 6, 2020, which are described under the heading Retentionperformance-basedawardsgrantedtoalignwithaccelerated transformationbeginning on page 57. P r o x y Our Board of Directors approved Mr. Henshall’s 2020 compensation package, including his equity awards as described above, upon the recommendation of the Compensation Committee. Other Named Executive Officers’ cash compensation – base salary and variable cash compensation ExecutiveVicePresidentandChiefFinancialOfficer As Chief Financial Officer, Mr. Shenkman is responsible for all of our financial and capital management strategies, budgeting and planning, financial accounting, tax and treasury, and investor relations, as well as our strategic alliances and mergers and acquisitions functions. Mr. Shenkman’s annual base salary was set at $575,000, and he received base salary compensation of $575,000 in 2020. Mr. Shenkman’s 2020 target variable cash compensation award as a percentage of base salary was set at 100% of his base salary, consistent with the rate in effect at the end of 2019. For 2020, Mr. Shenkman was awarded variable cash compensation of $926,670 in accordance with our 2020 executive variable cash compensation plan. In connection with joining our company, Mr. Shenkman was awarded a sign-on bonus of $500,000 to be paid 180 days following the commencement of his employment as Executive Vice President and Chief Financial Officer. The sign-on bonus was paid on March 13, 2020. In March 2020, the Compensation Committee approved a $15,000 per month stipend to cover Mr. Shenkman’s housing, commuting and other related costs associated with traveling to our headquarters in Florida. For 2020, Mr. Shenkman received $15,000 per month from January to April, and then such stipend was reduced to $13,300 for May through August, and then it was suspended for the remainder of the year as a result of the reduced traveling costs associated with the COVID-19 pandemic. For 2020, Mr. Shenkman received monthly stipends totaling $113,200. ExecutiveVicePresident,ChiefLegalOfficerandSecretary As our Executive Vice President, Chief Legal Officer and Secretary, Mr. Gomes is responsible for leading a multidisciplinary team and oversees our global legal, compliance, digital risk, and internal audit functions to advance our objectives while managing risk. For 2020, Mr. Gomes’ annual base salary was $500,000. As a result, Mr. Gomes received base salary compensation of $500,000 in 2020. For 2020, Mr. Gomes’ target variable cash compensation opportunity was 90% of his base salary, consistent with the rate in effect at the end of 2019. For 2020, Mr. Gomes was awarded variable cash compensation of $725,220 in accordance with our 2020 executive variable cash compensation plan. ExecutiveVicePresidentandChiefProductOfficer As Executive Vice President and Chief Product Officer, Mr. Hough was responsible for providing direction for the company’s current and future technology, including driving product alignment, innovation and growth across our product portfolio. Effective December 1, 2020, Mr. Hough transitioned his role from the day-to-day operations of the product function to an externally-focused product strategy role. In this capacity, he continues to drive the company’s product strategy with a focus on working with our strategic customers and expanding key technology partnerships of the company. Effective April 1, 2020, Mr. Hough’s annual base salary was increased from $500,000 to $513,000. As a result, Mr. Hough received base salary compensation of $509,750 in 2020. Mr. Hough’s target variable cash compensation award as a percentage of base salary was set at 90% of his base salary, consistent with the rate in effect at the end of 2019. For 2020, Mr. Hough was awarded variable cash compensation of $739,388, in accordance with our 2020 executive variable cash compensation plan. 2021 Proxy Statement 63 In July 2017, the Compensation Committee approved a $15,000 per month stipend for up to three years, ending July 2020, to cover Mr. Hough’s housing, commuting and other related costs. Mr. Hough received $15,000 per month from January to April, and then such stipend was reduced to $7,900 per month from May through July in light of the reduced traveling costs associated with the COVID-19 pandemic. For 2020, Mr. Hough received monthly stipends totaling $83,700. ExecutiveVicePresidentofEngineeringandChiefTechnologyOfficer Mr. Kim joined Citrix on December 1, 2020 as our Executive Vice President of Engineering and Chief Technology Officer. As Executive Vice President of Engineering and Chief Technology Officer, Mr. Kim is responsible for the development and delivery of all Citrix technology solutions. Mr. Kim’s initial annual base salary was set at $500,000, and he received base salary compensation of $41,667 in 2020. Mr. Kim’s 2020 target variable cash compensation award as a percentage of his base salary was set at 90% of his base salary. For 2020, Mr. Kim was awarded variable cash compensation of $61,426 in accordance with our 2020 executive variable cash compensation plan and pro-rated for his start date on December 1, 2020. In connection with joining our company, Mr. Kim was awarded a sign-on bonus of $400,000 payable upon commencement of his employment as Executive Vice President of Engineering and Chief Technology Officer. The sign-on bonus was paid in December 2020. Other Named Executive Officers’ equity – long-term incentive compensation As previously discussed, our Compensation Committee considers the market competitive value of an executive officer’s role leveraging current market analysis information, the relative level of impact the executive officer has or is expected to have on company performance, and the current and prospective performance of the executive officer in his or her role, among other things. Our Compensation Committee met during the first quarter of 2020 to review these factors for each of our executive officers and discussed proposed annual compensation, including equity-based award grant levels, with the Compensation Committee’s independent compensation consultant. Based on the reviewed factors, including market analysis compensation data, an assessment of the executive’s performance, and retention priorities, our Compensation Committee determined a targeted economic value for equity-based awards to be granted to each executive officer and approved a dollar value for such awards, which is reflected in the table below. In April 2020, at the time of grant, the approved dollar value for each executive officer is converted into a number of restricted stock units using the 20-day trailing average price of Citrix common stock to ensure the executive officers were being granted equity awards that represent the previously-approved economic value based on Citrix’s current stock price. For Mr. Kim’s new hire equity-based awards, the Compensation Committee considered market practices for such awards and the difficulty in recruiting Mr. Kim. The Compensation Committee awarded time-based restricted stock units valued at $8,000,000, to replace the majority of the amount of equity Mr. Kim was forfeiting by leaving his former employer. At the time of grant on December 1, 2020, the approved dollar value for Mr. Kim’s equity award was converted into a number of Citrix shares using the 20-day trailing average price of Citrix common stock to ensure Mr. Kim was being granted an equity award that represents the previously-approved economic value based on Citrix’s then-current stock price. 64 The table below shows the total targeted economic value approved by the Compensation Committee for each executive, other than Mr. Kim who joined Citrix in December 2020, of which 60% was awarded in performance-based restricted stock units and 40% was awarded in time-based restricted stock units. For the performance-based restricted stock units, attainment levels will be determined within 60 days of the end of the performance period (i.e., within 60 days of December 31, 2022). The time-based restricted stock units vest in three equal annual installments. P r o x y Name and principal position Arlen R. Shenkman Executive Vice President and Chief Financial Officer Antonio G. Gomes Executive Vice President, Chief Legal Officer and Secretary Paul J. Hough Executive Vice President and Chief Product Officer Woong Joseph Kim(1) Executive Vice President of Engineering and Chief Technology Officer Total targeted economic value of annual restricted stock unit awards($) Time-based restricted stock units granted Target performance-based restricted stock units granted 3,850,000 12,386 3,250,000 10,456 3,200,000 10,295 18,579 15,683 15,442 8,000,000 67,154 — (1) In connection with joining Citrix on December 1, 2020, Mr. Kim was granted a new-hire equity award on December 1, 2020 with a value of $8,000,000 consisting of 67,154 time-based restricted stock units that vest over three years, with one-third of the units vesting on the first, second and third anniversaries of the date of the award agreement. Also, on April 6, 2020 Messrs. Gomes and Hough were granted retention performance-based restricted stock units. See section titled Retention performance-based awards granted to align with accelerated transformation for more information. Name and principal position Antonio G. Gomes Executive Vice President, Chief Legal Officer and Secretary Paul J. Hough Executive Vice President and Chief Product Officer Total targeted economic value of retention restricted stock unit awards($) Target performance-based restricted stock units granted 1,850,000 1,850,000 14,412 14,412 2021 Proxy Statement 65 Other compensation policies and information Executive agreements We have entered into executive agreements with certain members of our senior leadership team, including the Named Executive Officers (other than Mr. Henshall). The Compensation Committee believes that it is in the best interests of our shareholders to extend these severance benefits to our executives to reinforce and encourage retention and focus on shareholder value creation without distraction. Mr. Henshall has an individual employment agreement with Citrix that provides for similar benefits in the event of the termination of his employment under certain circumstances. See Potentialpaymentsuponterminationorchangeincontrolbeginning on page 75 for further information. Equity award grant policy In 2007, the Compensation Committee adopted the Citrix Equity Award Grant Policy, or the Awards Policy. The Awards Policy enhances our controls with respect to grants of equity awards by establishing procedures for approving and pre-determining the dates on which awards will be made. The Awards Policy establishes the date on which annual grants are made and provides guidelines for grant dates for new hire and performance grants. Such new hire and performance grants will be made on the first trading day of the month following the month in which all processing and approvals for such equity awards are timely completed in accordance with the stock grant processing timeline as set by our Executive Vice President and Chief People Officer. A copy of our Awards Policy is available on the Corporate Governance section of our website at https://www.citrix.com/about/governance.html under Governance Documents. Executive stock ownership guidelines To align the interests of our executive officers with the interests of our shareholders, our Board of Directors has established stock ownership guidelines for our executive officers. Under our current guidelines, our executive officers are expected to own shares of our common stock equal in value to a multiple of base salary as indicated in the table below Position President and Chief Executive Officer Other Executive Officers who report to the President and Chief Executive Officer Stock ownership value (multiple of base salary) 6 times 4 times To comply with these guidelines, each executive officer is required to retain an amount equal to one-third (1/3) of the net shares (those shares remaining after shares are deducted or withheld to cover any exercise price or tax obligations arising in connection with the exercise, vesting or payment of an equity award) received as a result of the exercise, vesting or payment of any equity-based award granted to the executive officer by the company unless such executive officer holds the applicable guideline value of shares. Each of our executive officers is expected to hold such shares for so long as he or she is one of our executive officers. Failure to satisfy the stock ownership guidelines when required to do so will result in suspension of an executive officer’s ability to sell shares of our common stock until the requisite ownership levels are reached. Our executive officers may accumulate shares of our common stock through stock option exercises, settlement of restricted stock units or other awards and open market purchases made in compliance with applicable securities laws, our policies or any other equity plans we may adopt from time to time. Shares of our common stock beneficially owned (unless the executive officer disclaims beneficial ownership of the shares) and vested restricted stock units (including vested but deferred restricted stock units) count towards the satisfaction of the stock ownership guidelines. Policy concerning hedging and pledging transactions Certain transactions in Citrix securities (such as buying or selling puts, calls or other derivative securities of Citrix securities, or any derivative securities that provide the economic equivalent of ownership of any Citrix securities or an opportunity, direct or indirect, to profit from any change in the value of Citrix securities, or engaging in any other hedging transactions with respect to Citrix securities) create a heightened compliance risk or could create the appearance of misalignment between management and shareholders. As a result, our insider trading policy prohibits 66 our employees, including our executive officers and directors, from engaging in hedging transactions, such as short sales and/or other derivative transactions, purchasing Citrix securities on margin, holding Citrix securities in an account that is, or is linked to, a margin account, and pledging Citrix securities as collateral for a loan. P r o x y Policy regarding change in control arrangements It is our policy that we will not enter into any agreements with our executive officers that provide the executive officer with payments following a change in control unless such agreements provide for a double-trigger termination event (that is, upon the termination of the executive officer’s employment without cause or for good reason following a change in control). Policy regarding recovery of executive compensation Citrix executive officers are subject to a formal executive compensation recovery policy, or “clawback” policy, which allows Citrix to recoup from its executive officers excess proceeds from certain incentive compensation received by such executive due to a material restatement of Citrix’s financial results due to an executive officer engaging in an act of embezzlement, fraud, willful misconduct or breach of fiduciary duty. Excess compensation includes any cash or equity-based compensation if the payment, grant or vesting of such compensation is predicated on the achievement of financial performance goals or financial metrics (excluding any incentive-based compensation based on total shareholder return or any similar stock price-based metric). The Compensation Committee intends to periodically review this policy and, as appropriate, conform it to any applicable final rules adopted pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act. 2021 Proxy Statement 67 Summary of executive compensation The following table sets forth certain information with respect to compensation for the years ended December 31, 2020, 2019 and 2018 earned by or paid to our President and Chief Executive Officer, Executive Vice President and Chief Financial Officer, and our three other most highly-compensated executive officers, collectively referred to as our Named Executive Officers, as determined in accordance with applicable SEC rules. SUMMARY COMPENSATION TABLE FOR THE 2020, 2019 AND 2018 FISCAL YEARS Year Salary ($)* Bonus ($) Stock awards ($)(1)(2)(3) Non-equity incentive plan compensation ($) All other compensation ($) Total ($) Name and principal position David J. Henshall President and Chief Executive Officer Arlen R. Shenkman(5) Executive Vice President and Chief Financial Officer 2020 1,000,000 2019 1,000,000 2018 1,000,000 — 18,685,309 — 11,482,590 — 15,648,049 2020 575,000 500,000(6) 5,590,607 2019 179,688 Antonio G. Gomes Executive Vice President, Chief Legal Officer and Secretary 2020 500,000 2019 500,000 2018 492,500 Paul J. Hough Executive Vice President and Chief Product Officer 2020 509,750 2019 487,500 2018 445,000 2,417,400 1,474,500 2,458,726 926,670 176,536 725,220 442,350 728,134 739,388 431,443 684,720 493,789(4) 22,596,498 14,513,856 556,766 19,258,102 151,327 270,880(7) 7,863,157 78,773 6,435,047 178,138(8) 8,773,421 194,487 5,046,527 73,062 6,158,955 252,764(9) 8,799,399 368,720 5,197,353 237,050 6,232,029 — — — — — — — 6,000,050 7,370,063 3,909,690 4,865,259 7,297,497 3,909,690 4,865,259 Woong Joseph Kim(10) Executive Vice President of Engineering and Chief Technology Officer 2020 41,667 400,000(11) 8,433,871 61,426(12) 23,608(13) 8,960,572 * Each year, our salary levels are determined during our first fiscal quarter and become effective April 1, except in connection with promotions and new hires. The amounts represented in this table reflect salary actually paid during the fiscal year. (1) These amounts represent the aggregate grant date fair value of restricted stock unit awards in the year in which the grant was made. The assumptions we used for calculating the grant date fair value are set forth in Note 8 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020, which was filed with the SEC on February 8, 2021. These amounts do not represent the actual amounts paid to or realized by the executive officer for these awards during fiscal years 2020, 2019 or 2018. The value as of the grant date for restricted stock unit awards is recognized over the number of days of service required for the grant to become vested. In the case of performance-based restricted stock units, the fair value is reported for the probable outcome, which for this purpose is estimated using the company’s financial projections as of the grant date. The fair value of awards at the maximum level of achievement for performance-based restricted stock units included in this table for 2020 is as follows: Mr. Henshall, $25,391,533; Mr. Shenkman, $7,734,438; Mr. Gomes, $9,842,332; and Mr. Hough, $9,742,004. For details regarding how restricted stock units are valued as part of our Compensation Committee’s executive compensation planning process, see section titled Equity-basedawardgrantlevelson page 56. Includes performance-based restricted stock units awarded to Messrs. Henshall, Gomes and Hough in April 2020 having performance-based vesting based on annualized recurring revenue (ARR) growth. For a description of these awards, see section titled Retentionperformance-basedawardsgrantedtoalignwithacceleratedtransformation. (2) (3) For a detailed description of Mr. Henshall’s equity awards and how such stock awards were valued in connection with our Compensation Committee’s CEO compensation planning process, see PresidentandChiefExecutiveOfficer compensationon page 62. For a detailed description of equity awards granted to the Named Executive Officers, other than Mr. Henshall, and how such stock awards were valued in connection with our Compensation Committee’s executive compensation planning process, see OtherNamedExecutiveOfficers’equity—long-termincentivecompensationon page 64. Includes restricted stock units issued as a result of the quarterly dividends paid during fiscal year 2020 ($428,917), the value of company-covered financial services available to each executive officer ($16,400), 401(k) matching contributions made by our company ($8,550), the value of a company-covered physical examination available to each executive officer ($5,000), premiums for split-dollar life insurance and disability policies ($34,822), and compensation in connection with the forfeiture of performance-based restricted stock units granted in February 2019 ($100). (4) 68 P r o x y (7) (8) (5) Mr. Shenkman joined Citrix in September 2019. (6) Reflects a $500,000 cash bonus award to Mr. Shenkman in connection with his joining Citrix which was paid on March 13, 2020 (180 days following the commencement of his employment as Executive Vice President and Chief Financial Officer). Includes restricted stock units issued as a result of the quarterly dividends paid during fiscal year 2020 ($113,329), a $15,000 per month stipend from January 2020 through April 2020 and a $13,300 per month stipend from May 2020 through August 2020 to cover housing and commuter expenses in 2020 ($113,200), the value of company-covered financial services available to each executive officer ($16,101), 401(k) matching contributions made by our company ($7,354), the value of a company-covered physical examination available to each executive officer ($5,000), premiums for split-dollar life insurance and disability policies ($13,896) and charitable donations made under the company’s matching gift program ($2,000). Includes restricted stock units issued as a result of the quarterly dividends paid in fiscal year 2020 ($112,969), the value of company-covered financial services available to each executive officer ($16,400), 401(k) matching contributions made by our company ($8,550), the value of a company-covered physical examination available to each executive officer ($5,000), premiums for split-dollar life insurance and disability policies ($15,119), charitable donations made under the company’s matching gift program ($20,000), and compensation in connection with the forfeiture of performance-based restricted stock units granted in February 2019 ($100). Includes restricted stock units issued as a result of the quarterly dividends paid in fiscal year 2020 ($112,546), a $15,000 per month stipend from January 2020 through April 2020 and a $7,900 per month stipend from May 2020 through July 2020 to cover housing and commuter expenses in 2020 ($83,700), the value of company-covered financial services available to each executive officer ($16,373), 401(k) matching contributions made by our company ($1,500), the value of a company-covered physical examination available to each executive officer ($5,000), premiums for split-dollar life insurance and disability policies ($13,545), charitable donations made under the company’s matching gift program ($20,000), and compensation in connection with the forfeiture of performance-based restricted stock units granted in February 2019 ($100). (9) (10) Mr. Kim joined Citrix on December 1, 2020. (11) Reflects a $400,000 cash bonus award to Mr. Kim upon joining Citrix. (12) Mr. Kim’s non-equity incentive award was pro-rated to reflect less than one year of service as Executive Vice President of Engineering and Chief Technology Officer in 2020. (13) Includes restricted stock units issued as a result of the quarterly dividends paid in fiscal year 2020 ($23,504), and premiums for split-dollar life insurance and disability policies ($104). 2021 Proxy Statement 69 Grants of plan-based awards The following table sets forth certain information with respect to grants of plan-based awards for the year ended December 31, 2020 to the Named Executive Officers. Grants of equity awards to each Named Executive Officer were made pursuant to our Amended and Restated 2014 Plan or our Second Amended and Restated 2014 Plan, as applicable. There can be no assurance that the Grant Date Fair Value of the Stock Awards listed below will ever be realized. GRANTS OF PLAN-BASED AWARDS TABLE FOR THE 2020 FISCAL YEAR Name David J. Henshall Arlen R. Shenkman Antonio G. Gomes Paul J. Hough Woong Joseph Kim(6) Comp. Comm. action date Grant date 4/1/20 4/1/20 4/6/20 3/4/20 3/4/20 4/6/20 — 3/4/20 4/1/20 4/1/20 3/31/20 3/31/20 — 3/31/20 4/1/20 4/1/20 4/6/20 3/31/20 3/31/20 2/17/20 — 3/31/20 4/1/20 4/1/20 4/6/20 3/31/20 3/31/20 2/17/20 — 3/31/20 12/1/20 10/22/20 — 10/22/20 Estimated future payouts under non-equity incentive plan awards Estimated future payouts under equity incentive plan awards Threshold ($) Target ($)(1) Maximum ($) Threshold (#) Target (#)(2) Maximum (#) All other stock awards: number of shares of stock or units (#) Grant date fair value of stock awards ($)(3) — — — — — — — — — 0 1,500,000 3,000,000 — — 0 — — — 0 — — — 0 — 0 — — 575,000 — — — 450,000 — — — 461,700 — 450,000 — — 1,150,000 — — — 900,000 — — — 923,400 — 900,000 25,334 50,668(4) 101,336 — 14,022 — 9,290 — — 7,842 — 10,809 — 7,721 — 10,809 — — — — 18,696(5) — 18,579(4) — — 15,683(4) — 14,412(5) — — 14,412(5) — — — — 33,779 — 10,546,544 4,700,010 — 3,438,755 — — — 12,386 — — — 3,867,219 1,723,388 — — 10,456 — 3,264,416 1,454,848 — 2,650,799 — — — 3,214,252 1,432,446 — 2,650,799 — — 23,370 — 37,158 31,366 18,015 — 18,015 — — 67,154 — — 8,433,871 — 15,442(4) 30,884 — 10,295 (1) Reflects target variable cash compensation awards in effect at December 31, 2020. On January 27, 2021, the Compensation Committee determined that the reported ACV Bookings (excluding cloud extensions) target was 140% attained and the non-GAAP corporate operating expense target was 21.16% attained, resulting in a payout of 161.16% and in the following variable cash compensation awards: Mr. Henshall received $2,417,400; Mr. Shenkman received $926,670; Mr. Gomes received $725,220; Mr. Hough received $739,388; and Mr. Kim received $61,426. See the column labelled “Non-equity incentive plan compensation” in the Summary Compensation Table included in this Proxy Statement. Mr. Kim’s variable cash compensation was pro-rated based on the date he began service as Executive Vice President of Engineering and Chief Technology Officer. Mr. Hough’s variable cash compensation award was pro-rated to reflect the increase in his base salary effective April 1, 2020 through December 31, 2020. (2) The “Estimated future payouts under equity incentive plan awards” columns represent the minimum, target, and maximum number of restricted stock units that may vest pursuant to the applicable performance-based restricted stock unit agreements. (3) The “Grant date fair value of stock awards” in this column reflects the fair value of such stock awards, excluding estimated forfeitures. The assumptions we used for calculating the grant date fair value are set forth in Note 8 to the financial statements filed with our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, which was filed with the SEC on February 8, 2021. In the case of performance-based restricted stock units, the fair value is reported for the probable outcome after the performance period, which for this purpose is based on the company’s financial projections as of the grant date. (4) The number of restricted stock units vested as a percentage of the target award shall be determined based on compounded annualized recurring revenue (ARR) growth for the three-year performance period ending on December 31, 2022. (5) The number of restricted stock units vested as a percentage of the target award shall be determined based on annualized recurring revenue (ARR) growth. 50% of the target award was determined based on ARR growth for the one-year performance period ending December 31, 2020 and 50% of the target award will be determined based on compounded ARR growth for the two-year performance period ending December 31, 2021. (6) Mr. Kim joined our company on December 1, 2020. His target and maximum variable cash compensation were pro-rated to $38,115 and $76,230, respectively, to reflect less than a full year of service. 70 Outstanding equity awards The following table sets forth certain information with respect to the outstanding equity awards at December 31, 2020 for each of the Named Executive Officers. P r o x y OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END 2020 TABLE Stock awards Number of shares or units of stock that have not vested (#)(1) Market value of shares or units of stock that have not vested ($)(2) Equity incentive plan awards; number of unearned shares, units or other rights that have not vested (#)(1) Equity incentive plan awards; market or payout value of unearned or other rights that have not vested ($)(2) 19,039.497(3) 27,329.068(4) 34,037.344(5) 2,477,039 3,555,512 4,428,258 Name David J. Henshall Arlen R. Shenkman 42,228.981(10) 12,480.729(5) 5,493,990 1,623,743 Antonio G. Gomes 5,235.287(3) 10,419.152(4) 10,535.968(5) 681,111 1,355,532 1,370,729 Paul J. Hough 5,235.287(3) 10,419.152(4) 10,373.737(5) 681,111 1,355,532 1,349,623 77,624.000(6) 61,488.654(7) 51,055.512(8) 21,194.493(9) 10,098,882 7,999,674 6,642,322 2,757,404 18,721.094(8) 2,435,614 21,347.000(6) 15,628.694(7) 15,802.945(8) 16,338.112(9) 21,347.000(6) 15,628.694(7) 15,560.102(8) 16,338.112(9) 2,777,245 2,033,293 2,055,963 2,125,588 2,777,245 2,033,293 2,024,369 2,125,588 Woong Joseph Kim(11) 67,331.094(12) 8,759,775 (1) Includes restricted stock units issued as a result of the quarterly dividends paid during the fourth quarter of fiscal year 2018 and each quarter during fiscal year 2019 and fiscal year 2020, as applicable. The shares reported in this table are reported on a post-adjusted basis as of December 31, 2020. Upon final vesting, any fractional unit will be rounded to a whole share. (2) Based on a per share price of $130.10, which was the closing price per share of our common stock on the last business day of the 2020 fiscal year (December 31, 2020). Values have been rounded to the nearest whole dollar. (3) Restricted stock units that vest in three annual installments, with 33.4% having vested on March 29, 2019, 33.3% having vested on March 29, 2020, and 33.3% having vested on March 29, 2021. (4) Restricted stock units that vest in three annual installments, with 33.4% having vested on April 1, 2020, 33.3% having vested on April 1, 2021, and 33.3% vesting on April 1, 2022. (5) Restricted stock units that vest in three annual installments, with 33.4% having vested on April 1, 2021, 33.3% vesting on April 1, 2022, and 33.3% vesting on April 1, 2023. (6) Represents the actual number of restricted stock units that vested on December 31, 2020 based on the company’s subscription bookings as a percentage of total product and subscription bookings. On January 27, 2021, it was determined that a 135.90% payout was achieved. (7) Represents the target number of restricted stock units that will vest based on subscription bookings as a percentage of total product and subscription bookings for the last year of the performance period ending on December 31, 2021. (8) Represents the number of restricted stock units that will vest based on annualized recurring revenue (ARR) growth over the three-year performance period ending on December 31, 2022. 2021 Proxy Statement 71 (9) Represents 50% of the target number of restricted stock units that will vest based on ARR growth over a two-year performance period ending on December 31, 2021 and the actual number of restricted stock units that vested on December 31, 2020 based on ARR growth over a one-year interim performance period with respect to the other 50% of the target number of restricted stock units. On January 27, 2021, it was determined that 125% payout for the first 50% of the target restricted stock units vested based on ARR growth over the interim performance period. (10) Restricted stock units that vest in three annual installments, with 33.4% having vested on October 1, 2020, 33.3% vesting on October 1, 2021, and 33.3% vesting on October 1, 2022. (11) Mr. Kim joined our company on December 1, 2020. (12) Restricted stock units that vest in three annual installments, with 33.4% vesting on December 1, 2021, 33.3% vesting on December 1, 2022, and 33.3% vesting on December 1, 2023. 72 Stock vested The following table sets forth certain information regarding restricted stock unit vesting, during the year ended December 31, 2020 under our equity incentive plans for our Named Executive Officers. P r o x y STOCK VESTED TABLE FOR THE 2020 FISCAL YEAR Name David J. Henshall Arlen R. Shenkman Antonio G. Gomes Paul J. Hough Woong Joseph Kim Stock awards Number of shares acquired on vesting (#)(1) Value realized on vesting ($)(2) 107,277 14,171,585 21,058 2,931,274 35,823 4,782,952 35,823 4,782,952 — — (1) Includes additional restricted stock units vested during 2020 that were acquired in connection with the company’s quarterly cash dividends. See Adjustments to outstanding equity awards in connection with our quarterly dividend on page 56 for more information. (2) Based on the closing price per share of our common stock on the date upon which the restricted stock units vested or, if the vesting date is not a trading day, based on the closing price on the last trading day immediately preceding the vesting date. 2021 Proxy Statement 73 Nonqualified deferred compensation The following table sets forth certain information regarding non-tax qualified compensation deferred during the year ended December 31, 2020, under our equity incentive plans for our Named Executive Officers. The deferred compensation consists of shares of our common stock that will be issued with respect to vested restricted stock units under a long-term incentive program, or LTIP, that we instituted in 2009. The LTIP’s design and structure were intended to, and ultimately did, reward executive officers for generating both relative and absolute shareholder returns. The number of vested restricted stock units was determined after the conclusion of a three-year period ending December 31, 2011, subject to employment of the executive officer by us throughout the three-year period. The number of shares of common stock issuable upon settlement of the LTIP restricted stock units was determined by comparing the performance of our common stock to the performance of the specified market indices over the same three-year period. Although the LTIP stock units have vested, the units will not be settled in shares of our common stock until the earliest of six months and one day following termination of the executive officer’s employment for any reason other than cause, the executive officer’s death, or the effective date of a change in control of our company. NONQUALIFIED DEFERRED COMPENSATION TABLE FOR THE 2020 FISCAL YEAR Name David J. Henshall Arlen R. Shenkman Antonio G. Gomes Paul J. Hough Woong Joseph Kim Executive contributions in last FY ($) Registrant contributions in last FY ($) Aggregate earnings in last FY ($) Aggregate withdrawals/ distributions ($) Aggregate balance at last FYE ($) — — — — — — — — — — — — — — — — 6,428,640(1) — — — — — — — — (1) Based on a per share price of $130.10, which was the closing price per share of our common stock on December 31, 2020, the last business day of the 2020 fiscal year, and reflects the balance of restricted stock units currently outstanding that were issued under the LTIP that vested on December 31, 2011, net of any underlying shares that were withheld to satisfy minimum tax withholding obligations that arose upon vesting. The number of restricted stock units on a net basis for each of the Named Executive Officers is as follows: Mr. Henshall, 49,413.064 units which includes additional restricted stock units received as a result of adjustments made to outstanding equity awards in connection with our quarterly cash dividends paid in the fourth quarter of 2018 and each of fiscal years 2019 and 2020. None of Messrs. Shenkman, Gomes, Hough, or Kim participated in the LTIP program. The grant date fair value of the LTIP awards was included in the “Stock awards” column of the Summary Compensation Table for 2009. 74 P r o x y Potential payments upon termination or change in control We have change in control and severance arrangements with our Named Executive Officers that provide severance and other benefits to our Named Executive Officers in the event of the termination of their employment under certain circumstances. Set forth below is a summary of these arrangements. President and Chief Executive Officer In July 2017, we entered into an employment agreement with Mr. Henshall in connection with his appointment as our President and Chief Executive Officer. The employment agreement has a term of three years, with one-year extensions thereafter unless written notice of non-renewal is given by either party not less than 180 days prior to the end of the then current term. The employment agreement was amended, effective as of March 1, 2021, in connection with the Compensation Committee’s annual review of our executive officers’ compensation to reflect the change in Mr. Henshall’s target variable cash compensation since the date of such agreement. Mr. Henshall’s employment agreement provides for a minimum base salary of $1,000,000, which is subject to annual review and may be increased but not decreased. In addition, Mr. Henshall is eligible to receive variable cash incentive compensation as determined by performance goals established by the Board of Directors upon consultation with Mr. Henshall, with a maximum variable cash compensation payment of 200% of his base salary. The actual amount is determined in the discretion of the Compensation Committee based on Citrix’s performance and the individual performance of Mr. Henshall. Mr. Henshall also is eligible to receive annual equity awards with a minimum target value of $8,000,000, and to participate in all of our employee benefit plans and programs that are generally available to our senior executive employees. Upon a termination of Mr. Henshall’s employment without cause or for good reason before a change in control, Mr. Henshall will be entitled to severance pay and benefits as follows: ‰ salary continuation in an amount equal to two times the sum of (a) Mr. Henshall’s base salary and (b) his target variable cash compensation; ‰ continued health insurance coverage for 18 months; and ‰ acceleration of unvested equity awards with time-based vesting then scheduled to vest over 24 months. In such event, his performance-based equity awards will remain outstanding and may be earned on a pro-rata basis at the end of the relevant performance period based on actual performance. The definitions of “cause”, “good reason” and “change in control” included in Mr. Henshall’s employment agreement are substantially the same as the definitions included in the executive agreements for the other Named Executive Officers described below, except that it will be considered a substantial reduction in Mr. Henshall’s duties or responsibilities for purposes of the definition of “good reason” if he is not nominated for re-election to the Board or, in the event of a change in control, if he is no longer serving as President and Chief Executive Officer for the ultimate parent of the resulting company or such parent is not a publicly-traded company. In the event Mr. Henshall’s employment is terminated without cause or if he resigns his position for good reason in the 18-month period following a change in control, he will be entitled to receive: ‰ a lump sum payment equal to 300% of the sum of (a) his annual base salary and (b) his target variable cash compensation; ‰ continued health insurance coverage for 18 months; and ‰ accelerated vesting of all unvested equity awards with time-based vesting. Mr. Henshall’s currently outstanding equity awards with performance-based vesting provide that they will be deemed earned at the time of a change in control based on maximum achievement of 200% (or 125% with respect to his April 2020 Award), subject to time-based vesting over the remaining measurement period, with full vesting if Mr. Henshall is terminated without cause or resigns for good reason following a change in control. 2021 Proxy Statement 75 Upon Mr. Henshall’s death or disability, all unvested equity awards with time-based vesting held by Mr. Henshall will immediately vest, and any equity awards with performance-based vesting will remain outstanding and may be earned on a pro-rata basis at the end of the relevant performance period based on actual performance. Mr. Henshall (or his estate, if applicable) also will be entitled to receive his target variable cash compensation on a pro-rata basis for such year. For purposes of his employment agreement, “disability” means that he is unable to perform the essential functions of his then existing position or positions under the agreement (or is expected, based on a reasonable degree of medical certainty, to be unable to perform such functions) with or without reasonable accommodation for a period of 180 days (which need not be consecutive) in any 12-month period. All severance payments and benefits under Mr. Henshall’s employment agreement are subject to the execution of a separation and release agreement by Mr. Henshall containing, among other provisions, a general release of claims in favor of Citrix. In the event that any payments made to Mr. Henshall in connection with a change in control or termination would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, the payments to Mr. Henshall would be reduced to the maximum amount that can be paid without the imposition of an excise tax under Section 4999 of the Internal Revenue Code of 1986, but only if such reduction provides a higher benefit on an after-tax basis to Mr. Henshall. The employment agreement does not provide for any tax gross-up payments. Other Named Executive Officers We have entered into executive agreements with the members of our senior leadership team, including Messrs. Shenkman, Gomes, Hough and Kim. The executive agreements have a term of three years and automatically renew for one-year periods, unless written notice of non-renewal is given by either party at least 180 days prior to the end of the term. In the event of a change in control, the term will be automatically extended until 12 months after the change in control. Under the executive agreements, if an executive’s employment is terminated by Citrix without cause or by the executive for good reason, in either case before a change in control, he or she will be entitled to receive: ‰ a lump sum payment equal to the sum of his or her then-current annual base salary plus the higher of (a) a percentage of his or her then-current annual base salary (100% for Mr. Shenkman and 90% for each of Mr. Hough, Mr. Gomes and Mr. Kim) or (b) the amount of variable cash compensation paid to him or her for the fiscal year prior to termination; ‰ continued health insurance coverage for 12 months; ‰ accelerated vesting of the unvested portion of his or her equity awards with time-based vesting that would have vested within the 12-month period following his or her date of termination; and ‰ 12 months of executive-level outplacement services. In addition, the executive agreements provide for certain benefits in the event that the executive’s employment is terminated following a change in control of Citrix. In the event that an executive’s employment is terminated without “cause” or if he or she resigns his or her position for “good reason”, in either case, within the 12-month period following a “change in control”, he or she will be entitled to receive: ‰ a lump sum payment equal to 150% of the sum of (a) his or her annual base salary and (b) his or her variable cash compensation target for the then-current fiscal year; ‰ continued health insurance coverage for 18 months; ‰ accelerated vesting of the unvested portion of any equity awards with time-based vesting; and ‰ 18 months of executive-level outplacement services. The company’s currently outstanding equity awards with performance-based vesting provide that they will be deemed earned at the time of a change in control based on maximum achievement of 200% (or 125% with respect to the April 2020 Awards), subject to time-based vesting over the remaining measurement period, with full vesting if the executive is terminated without cause or resigns for good reason following the change in control as described above. 76 Under the executive agreements, a “change in control” would include any of the following events: ‰ any “person,” as defined in the Securities Exchange Act of 1934, as amended, acquires 30% or more of our voting securities; P r o x y ‰ the consummation of a consolidation, merger or sale or other disposition of all or substantially all of our assets in which our shareholders would beneficially own less than 50% of the voting securities of the resulting entity or its ultimate parent after such transaction; ‰ our incumbent directors cease to constitute a majority of our Board of Directors; ‰ any other acquisition of the business of Citrix in which a majority of our Board of Directors votes in favor of a decision that a change in control has occurred; or ‰ our shareholders approve a plan or proposal for our liquidation or dissolution. Termination of the executive’s employment by Citrix for “cause” includes a termination of the executive’s employment as a result of: ‰ an indictment for the commission of any felony or a misdemeanor involving deceit, material dishonesty or fraud, or any willful conduct that would reasonably be expected to result in material injury or reputational harm to Citrix if the executive were retained in his or her position; ‰ willful disclosure of material trade secrets or other material confidential information related to our business; ‰ willful and continued failure substantially to perform the executive’s duties with Citrix, other than any such failure resulting from the executive’s incapacity due to physical or mental illness (subject to notice and a period for the executive to cure such failure); ‰ willful and knowing participation in releasing false or materially misleading financial statements or submission of a false certification to the Securities and Exchange Commission; or ‰ failure to cooperate with a bona fide internal investigation by regulatory or law enforcement authorities. Termination of the executive’s employment by the executive for “good reason” includes a termination of the executive’s employment as a result of: ‰ a substantial reduction, not consented to by the executive, in the nature or scope of the executive’s responsibilities, authorities, powers, functions or duties; ‰ a reduction in the executive’s annual base salary or target variable cash compensation; ‰ failure to provide the executive with any payments, rights and other entitlements under the applicable agreement, including upon a change in control; ‰ following a change in control, a material breach by Citrix of any agreements, plans, policies and practices relating to the executive’s employment with Citrix; ‰ the relocation of our offices at which the executive is principally employed by more than 35 miles; or ‰ Citrix’s issuance to the executive of a notice of non-renewal of the agreement (as applicable). In addition, it will be considered a substantial reduction in Mr. Shenkman’s or Mr. Gomes’ duties or responsibilities for purposes of the definition of “good reason” if, in the event of a change in control, he is no longer serving as Chief Financial Officer or General Counsel, respectively, for the ultimate parent of the resulting company or such parent is not a publicly-traded company. The severance payments and benefits described above are subject to the execution of a separation and release agreement containing, among other provisions, a general release of claims in favor of Citrix. In the event that any payments made in connection with a change in control or termination would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986 (or, the Code), the payments to these 2021 Proxy Statement 77 executives would be reduced to the maximum amount that can be paid without the imposition of an excise tax under Section 4999 of the Code, but only if such reduction provides a higher benefit on an after-tax basis to the executives. The executive agreements do not provide any “gross-up” payments in connection with a change in control. With respect to the performance-based equity awards granted to these Named Executive Officers, the award agreements provide that if the executive’s employment with our company terminates as a result of the executive’s death, disability (defined under our long-term disability plan) or retirement (defined as termination of employment after attainment of age 65 and provided that the executive officer has at least four years of service with our company), the executive will remain eligible to earn such performance-based awards on a pro-rata basis at the end of the performance period based on our achievement of the applicable performance metrics. As of December 31, 2020, none of our Named Executive Officers were eligible for retirement under our policy. In addition, our Compensation Committee adopted a policy applicable to these Named Executive Officers providing for the acceleration of vesting of outstanding time-based restricted stock units upon death or disability. Each of our Named Executive Officers is also subject to the terms of a non-solicitation, non-compete and confidentiality and employee non-disclosure agreement with us. The non-solicitation and non-compete obligations, where enforceable, survive the termination of the executive’s employment for a period of one year. Potential payments The following table shows potential payments and benefits that would have been provided to each of Messrs. Henshall, Shenkman, Gomes, Hough and Kim upon the occurrence of a change in control and/or certain termination triggering events, assuming such change in control and/or termination event occurred on December 31, 2020. The amounts shown in this table do not include payments and benefits to the extent they have been earned prior to the termination of employment or are provided on a non-discriminatory basis to employees upon termination of employment. These include: ‰ accrued salary and vacation pay; ‰ distribution of plan balances under our 401(k) plan and the non-qualified deferred compensation plan (see Nonqualified deferred compensation on page 74 for the balances, if any, of each Named Executive Officer); and ‰ life insurance proceeds in the event of death. 78 The closing market price of our common stock on December 31, 2020 was $130.10 per share. Involuntary not for cause termination / good reason termination ($) Involuntary not for cause termination / good reason termination following change in control ($)(1) P r o x y Death or disability ($)(2) 1,500,000(3) Benefit David J. Henshall Severance Unvested Equity Awards Benefits Continuation Outplacement Services Total Arlen R. Shenkman Severance Unvested Equity Awards Benefits Continuation Outplacement Services Total Antonio G. Gomes Severance Unvested Equity Awards Benefits Continuation Outplacement Services Total Paul J. Hough Severance Unvested Equity Awards Benefits Continuation Outplacement Services Total Woong Joseph Kim Severance Unvested Equity Awards Benefits Continuation Outplacement Services Total 5,000,000 28,775,908(2) 24,823 — 33,800,731 1,150,000 3,288,408 24,409 21,250 4,484,067 950,000 1,815,936 25,131 21,250 2,812,317 974,700 1,808,910 25,131 21,250 2,829,991 950,000 2,919,964 14,480 21,250 3,905,694 7,500,000 57,671,118 24,823 — 30,252,023 — — 65,195,941 31,752,023 1,725,000 11,989,105 36,613 21,250 13,771,968 — 7,929,725 — — 7,929,725 1,425,000 17,972,014 37,697 21,250 19,455,961 — 9,868,605 — — 9,868,605 1,462,050 17,950,938 37,697 21,250 19,471,935 1,425,000 8,759,893 21,720 21,250 10,227,863 — 9,847,529 — — 9,847,529 — 8,759,893 — — 8,759,893 (1) The value of any performance-based awards included in this column was calculated using maximum achievement of 200% (or 125% with respect to the April 2020 Awards). (2) The value of any performance-based awards was calculated using the target award level except for performance awards where the performance period ended December 31, 2020, in which case the value was calculated using actual performance achieved. For each performance-based award for which the performance period is not complete as of termination, the number of shares earned will be calculated based on actual performance during the performance period and pro-rated for the number of months that elapsed in the performance period prior to such termination. (3) Mr. Henshall (or his estate, if applicable) would be entitled to receive his target variable cash compensation on a pro-rata basis for such year. 2021 Proxy Statement 79 Compensation Committee report This report is submitted by the Compensation Committee of the Board of Directors. The Compensation Committee has reviewed the Compensation Discussion and Analysis included in this Proxy Statement and discussed it with management. Based on its review of the Compensation Discussion and Analysis and its discussions with management, the Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement. No portion of this Compensation Committee report shall be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, through any general statement incorporating by reference in its entirety the Proxy Statement in which this report appears, except to the extent that Citrix specifically incorporates this report or a portion of it by reference. In addition, this report shall not be deemed filed under either the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended. Respectfully submitted by the Compensation Committee, Nanci E. Caldwell Ajei S. Gopal (served on Compensation Committee until April 2021) Robert E. Knowling, Jr. Peter J. Sacripanti Compensation Committee interlocks and insider participation From January through December 2020, Ms. Caldwell, Dr. Gopal and Mr. Sacripanti served as members of the Compensation Committee. Mr. Knowling joined the Compensation Committee in October 2020. No member of our Compensation Committee was an employee or former employee of our company or any of our subsidiaries. During the past year, none of our executive officers served as: (1) a member of the Compensation Committee (or other committee of the Board of Directors performing equivalent functions or, in the absence of any such committee, the entire Board of Directors) of another entity, one of whose executive officers served on our Compensation Committee; (2) a director of another entity, one of whose executive officers served on our Compensation Committee; or (3) a member of the Compensation Committee (or other committee of the Board of Directors performing equivalent functions or, in the absence of any such committee, the entire Board of Directors) of another entity, one of whose executive officers served as a director on our Board of Directors. Pay ratio disclosure Payratiodisclosure We strive to provide competitive benefits and compensation programs that meet the diverse needs of our employees. Our compensation and benefits philosophy and the overall structure of our compensation and benefit programs are broadly similar across the organization to encourage and reward all employees who contribute to our success. We strive to ensure that the compensation of every Citrix employee reflects the level of their job responsibilities and is competitive with our peer group. Our team is global, with over half our workforce located outside of the United States, and we believe it is important to be consistent in how employees are rewarded. We have differences in our programs to meet competitive needs and comply with local customs and laws, and strive to provide offerings that reflect local market practices. Compensation rates are benchmarked and set to be market-competitive in the country in which the jobs are performed. Each part of our compensation program encourages and rewards both individual performance and the company’s results and can include base salary, variable cash compensation, commissions, equity awards and other benefits. 80 Under the rules adopted by the SEC pursuant to the Dodd-Frank Act of 2010, Citrix is required to calculate and disclose the total compensation paid to its median paid employee, as well as the ratio of the total compensation paid to the median employee as compared to the total compensation paid to Citrix’s Chief Executive Officer. We describe P r o x y our methodology and the resulting CEO pay ratio below. The SEC rules for identifying the median paid employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratio reported by other companies may not be comparable to our Chief Executive Officer pay ratio, as other companies have offices in different countries, have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their CEO pay ratios. Payratiomethodology Median employee determination We determined that as of December 31, 2020, we had approximately 9,050 employees globally at Citrix, of which approximately 46% were in the United States and 54% were in our international locations. In determining the identity of our median employee, we excluded 447 employees based in China, which represents less than 5% of our workforce. After excluding China and our employees based there, we determined the identity of our median employee from a population of 8,603 employees. Under the relevant rules, we are required to identify the median employee using a “consistently applied compensation measure” (“CACM”). We chose a CACM that closely approximates the annual total direct cash compensation of our employees. Specifically, we identified the median employee using all elements of cash compensation. We excluded the value of benefits that were not paid in cash. We did not adjust the compensation paid to part-time employees to calculate what they would have been paid on a full-time basis. We did, however, annualize the compensation of all permanent full-time employees who were hired in 2020 but did not work for Citrix for the full year. We did not make any cost-of-living adjustments in identifying the median employee. For purposes of this calculation, we converted all local currency to U.S. dollars (USD) based on the average exchange rates over the twelve months ended December 31, 2020. Using this methodology, we determined that the median employee was a full-time salaried employee located in Ireland who was awarded variable cash compensation and equity awards during 2020. Calculating the total annual compensation of the median employee and the pay ratio for 2020 Using the 2020 median employee, we calculated that employee’s total annual compensation in the same manner we calculate our Chief Executive Officer’s total annual compensation in the 2020 Summary Compensation Table on page 68. We converted the median employee’s annual compensation from Euro to USD using the average exchange rate over the twelve months ended December 31, 2020. We determined that the median employee’s 2020 annual total compensation was $129,724. Our Chief Executive Officer’s annual total compensation as reported in the 2020 Summary Compensation Table was $22,596,499. As a result, the ratio of the annual total compensation of our Chief Executive Officer to the annual total compensation of the median employee was 174 to 1. Neither the Compensation Committee nor Citrix management used this pay ratio measure in making compensation decisions. Given the differences in calculation methodology, our pay ratio should not be used as a basis for comparison across companies. 2021 Proxy Statement 81 Related party transactions policies and procedures and transactions with related persons In accordance with its charter, the Nominating and Corporate Governance Committee reviews, approves and ratifies any related person transaction. The term “related person transaction” refers to any transaction required to be disclosed in our filings with the SEC pursuant to Item 404 of Regulation S-K. In considering any related person transaction, the Nominating and Corporate Governance Committee considers the facts and circumstances regarding such transaction, including, among other things, the amounts involved, the relationship of the related person (including those persons identified in the instructions to Item 404(a) of Regulation S-K) with our company and the terms that would be available in a similar transaction with an unaffiliated third-party. The Nominating and Corporate Governance Committee also considers its fiduciary duties, our obligations under applicable securities law, including disclosure obligations and director independence rules, and other applicable law in evaluating any related person transaction. The Nominating and Corporate Governance Committee reports its determination regarding any related person transaction to our full Board of Directors. Since the beginning of 2020, there were no related person transactions, and there are not currently any proposed related person transactions, that would require disclosure under SEC rules. 82 Security ownership of certain beneficial owners and management The following table sets forth certain information regarding beneficial ownership of our common stock as of P r o x y February 28, 2021: ‰ by each person who is known by Citrix to beneficially own more than 5% of our outstanding shares of common stock; ‰ by each of our directors and director nominees; ‰ by each of our Named Executive Officers; and ‰ by all of our directors and executive officers as a group. Name and address of beneficial owner(1) Shares beneficially owned(2)(3) Percentage of shares beneficially owned(4) The Vanguard Group(5) 100 Vanguard Boulevard Malvern, PA 19355 BlackRock, Inc.(6) 55 East 52nd Street New York, NY 10055 T. Rowe Price Associates, Inc.(7) 100 E. Pratt Street Baltimore, MD 21202 David J. Henshall(8) Antonio G. Gomes(9) Paul J. Hough(10) Robert M. Calderoni(11) Arlen R. Shenkman(12) Murray J. Demo Moira A. Kilcoyne Thomas E. Hogan J. Donald Sherman Nanci E. Caldwell(13) Robert D. Daleo(14) Peter J. Sacripanti(15) Ajei S. Gopal(16) Woong Joseph Kim(17) Robert E. Knowling, Jr.(18) All executive officers, directors and nominees as a group (21 persons)(19) 13,875,501 11.28% 12,836,128 10.43% 10,198,394 8.29% 274,341 108,097 70,337 30,718 12,935 11,336 4,908 3,934 662 426 181 10 — — — 751,122 * * * * * * * * * * * * * * * * Represents less than 1% of the outstanding common stock. * (1) The address of each of the directors and executive officers is 851 West Cypress Creek Road, Fort Lauderdale, Florida 33309. (2) Beneficial ownership is determined in accordance with the rules of the SEC and includes voting and investment power with respect to shares. Unless otherwise indicated below, to our knowledge, all persons listed in the table have sole voting and dispositive power with respect to their shares of common stock, except to the extent authority is shared by spouses under applicable law. Pursuant to the rules of the SEC, the number of shares of common stock deemed outstanding includes shares issuable upon settlement of restricted stock units held by the respective person or group that will vest within 60 days of February 28, 2021 and pursuant to options held by the respective person or group that are currently exercisable or may be exercised within 60 days of February 28, 2021. Pursuant to our outside directors’ deferred compensation program for non-employee directors, our non-employee directors may elect to defer their annual equity awards and cash fees and as a result, this table reflects no beneficial ownership for certain non-employee directors who have elected deferral. Please see the discussion above under the heading Outside directors’ deferred compensation program for non-employee directors for additional details on our deferral program. (3) Shares of common stock issuable upon settlement of restricted stock units that will vest within 60 days of February 28, 2021 as detailed in the footnotes to this table may vary slightly as a result of rounding of fractional shares upon vesting. (4) Applicable percentage of ownership is based upon 123,021,212 shares of common stock outstanding as of February 28, 2021. (5) With respect to information relating to The Vanguard Group, we have relied solely on information supplied by such entity on a Schedule 13G/A filed with the SEC on February 10, 2021. Per the Schedule 13G/A, Vanguard held shared voting power over 244,518 shares, sole dispositive power over 13,296,394 shares, and shared dispositive power over 579,107 shares. 2021 Proxy Statement 83 (6) With respect to information relating to BlackRock, Inc., we have relied solely on information supplied by such entity on a Schedule 13G/A filed with the SEC on January 27, 2021. Per the Schedule 13G/A, BlackRock held sole voting power over 11,378,243 shares and sole dispositive power over 12,836,128 shares. (7) With respect to information relating to T. Rowe Price Associates, Inc., we have relied solely on information supplied by such entity on a Schedule 13G filed with the SEC on February 16, 2021. Per the Schedule 13G, T. Rowe Price held sole voting power over 3,925,186 shares and sole dispositive power over 10,198,394 shares. Includes 44,170 shares of common stock issuable upon settlement of restricted stock units that will vest within 60 days of February 28, 2021. Includes 13,996 shares of common stock issuable upon settlement of restricted stock units that will vest within 60 days of February 28, 2021. (8) (9) (10) Includes 13,941 shares of common stock issuable upon settlement of restricted stock units that will vest within 60 days of February 28, 2021. (11) Includes 30,718 shares of common stock held in The 2019 Calderoni Family Trust. Mr. Calderoni disclaims beneficial ownership of all of the shares held by The 2019 Calderoni Family Trust, except to the extent of his pecuniary interest therein. In addition, as of February 28, 2021, Mr. Calderoni holds 17,454.600 vested restricted stock units pursuant to our outside directors’ deferred compensation program for non-employee directors. (12) Includes 4,172 shares of common stock issuable upon settlement of restricted stock units that will vest within 60 days of February 28, 2021. (13) In addition, as of February 28, 2021, Ms. Caldwell holds 32,072.581 vested deferred restricted stock units pursuant to our outside directors’ deferred compensation program for non-employee directors. (14) In addition, as of February 28, 2021, Mr. Daleo holds 42,900.173 vested deferred restricted stock units pursuant to our outside directors’ deferred compensation program for non-employee directors. (15) In addition, as of February 28, 2021, Mr. Sacripanti holds 12,117.564 vested deferred restricted stock units pursuant to our outside directors’ deferred compensation program for non-employee directors. (16) As of February 28, 2021, Dr. Gopal holds 11,684.303 deferred vested restricted stock units pursuant to our outside directors’ deferred compensation program for non-employee directors. (17) Mr. Kim joined the company on December 1, 2020 and does not own any company securities or have any restricted stock units vesting within 60 days of February 28, 2021. (18) Mr. Knowling was elected as a director of the company on October 21, 2020. He did not own any company securities as of February 28, 2021 or as of the date of his election. (19) Includes 141,131 shares of common stock issuable upon settlement of restricted stock units that will vest within 60 days of February 28, 2021. Delinquent section 16(a) reports Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors, and persons who own more than ten percent of a registered class of our equity securities, to file reports of ownership and changes in ownership with the SEC and the Nasdaq Stock Market. Our officers and directors and greater than ten percent beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. To our knowledge, based solely on our review of the copies of such reports furnished to us and written representations from our executive officers and directors that no other reports were required during the fiscal year ended December 31, 2020, all Section 16(a) filing requirements applicable to our executive officers, directors and greater than ten percent beneficial owners were satisfied on a timely basis. 84 Securities authorized for issuance under equity compensation plans The following table provides information as of December 31, 2020, with respect to the securities authorized for issuance to our employees and directors under our equity compensation plans, consisting of: ‰ Amended and Restated 2005 Equity Incentive Plan (which we refer to as the 2005 Stock Plan); P r o x y ‰ Second Amended and Restated 2014 Plan; and ‰ 2015 Employee Stock Purchase Plan. EQUITY COMPENSATION PLAN INFORMATION TABLE (A) Number of securities to be issued upon exercise of outstanding options, warrants and rights 5,234,457 — 5,234,457 (B) Weighted- average exercise price of outstanding options, warrants and rights $— $— $— (C) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (A)) 26,027,414 — 26,027,414 Plan category Equity compensation plans approved by security holders(1) Equity compensation plans not approved by security holders Total (1) Includes securities issuable upon rights that were granted pursuant to our 2005 Stock Plan. No additional awards will be granted under this plan. Additionally, balance includes securities issuable upon rights that have been issued pursuant to the Second Amended and Restated 2014 Plan, which is currently available for future grants. Also includes securities remaining available for future issuance under our 2015 Employee Stock Purchase Plan. In connection with Citrix’s acquisition of Wrike, which was completed on February 26, 2021, Citrix assumed (i) each outstanding option under the Wrike, Inc. Amended and Restated 2013 Stock Plan; (ii) each outstanding option under the Wrangler Topco, LLC Second Amended and Restated 2018 Equity Incentive Plan and (iii) shares reserved and authorized for issuance under the terms of the Wrangler Topco, LLC Second Amended and Restated 2018 Equity Incentive Plan. Also, in connection with Citrix’s acquisition of Wrike, on February 17, 2021, our Board of Directors approved the Citrix Systems, Inc. 2021 Inducement Plan and granted restricted stock units pursuant to such plan. Details regarding these plans will be included in the Proxy Statement for our 2022 Annual Meeting of Shareholders. Equity compensation plans We are currently granting stock-based awards from our Second Amended and Restated 2014 Plan, our Wrangler Topco, LLC Second Amended and Restated 2018 Equity Incentive Plan and our 2015 Employee Stock Purchase Plan, which are overseen by the Compensation Committee of our Board of Directors. Further, on March 1, 2021, we granted awards from the Citrix Systems, Inc. 2021 Inducement Plan in connection with our acquisition of Wrike. 2021 Proxy Statement 85 Part 5 Audit Committee matters Report of the Audit Committee The Audit Committee oversees the accounting and financial reporting processes of Citrix and the audits of the consolidated financial statements of Citrix on behalf of the Board of Directors. In fulfilling its oversight responsibilities, the Audit Committee reviewed with management the audited consolidated financial statements in Citrix’s Annual Report on Form 10-K for the year ended December 31, 2020, and discussed with management the quality, not just the acceptability, of the accounting principles, the reasonableness of significant estimates and judgments, critical accounting policies and accounting estimates resulting from the application of these policies, and the substance and clarity of disclosures in the financial statements, and reviewed Citrix’s disclosure controls and procedures and internal control over financial reporting. The Board of Directors has determined that each member of the Audit Committee meets the independence requirements promulgated by Nasdaq and the SEC, including Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended. Messrs. Daleo, Demo and Sherman (who was elected to our Board of Directors on March 4, 2020) each qualify as an “audit committee financial expert” under the rules of the SEC. The Audit Committee has reviewed Citrix’s audited consolidated financial statements at December 31, 2020 and 2019 and for each of the years in the three-year period ended December 31, 2020 and has discussed them with both management and Ernst & Young. The Audit Committee also discussed with Ernst & Young the overall scope and plan for their annual audit for 2020. The Audit Committee met separately with Ernst & Young in its capacity as Citrix’s independent registered public accounting firm, with and without management present, to discuss the results of Ernst & Young’s procedures, its evaluations of Citrix’s internal control over financial reporting, and the overall quality of its financial reporting, as applicable. The Audit Committee reviewed and discussed with Ernst & Young the matters required to be discussed by Auditing Standard No. 1301, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board, or PCAOB. In addition, the Audit Committee has reviewed the services provided by Ernst & Young and discussed with Ernst & Young its independence from management and Citrix, including the matters in the written disclosures and letter from independent accountants required by PCAOB Rule 3526 and considered the compatibility of non-audit services with the registered public accountants’ independence. Based on the Audit Committee’s review of the financial statements and the reviews and discussions referred to above, it concluded that it would be reasonable to recommend, and on that basis did recommend, to the Board of Directors that the audited consolidated financial statements be included in Citrix’s Annual Report on Form 10-K for the year ended December 31, 2020. No portion of this Audit Committee Report shall be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, through any general statement incorporating by reference in its entirety the Proxy Statement in which this report appears, except to the extent that Citrix specifically incorporates this report or a portion of it by reference. In addition, this report shall not be deemed filed under either the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended. Respectfully submitted by the Audit Committee, Robert D. Daleo Murray J. Demo Thomas E. Hogan J. Donald Sherman 86 Fees paid to Ernst & Young The following table shows the aggregate fees for professional services rendered to us by Ernst & Young during the fiscal years ended December 31, 2020 and December 31, 2019. P r o x y Audit fees Audit-related fees Tax fees All other fees Total Audit fees 2020 2019 $ 5,167,000 $ 5,914,360 $ 494,000 $ 50,500 $ 2,297,000 $ 2,949,710 $ 210,000 $ 10,000 $8,168,000 $8,924,570 Audit fees consist of fees for professional services associated with the annual consolidated financial statements audit, review of the interim financial statements included in our quarterly reports on Form 10-Q, and services in connection with international statutory audits, regulatory filings, and accounting consultations. Audit fees for both years also include fees for professional services rendered for the audit of the effectiveness of internal control over financial reporting as promulgated by Section 404 of the Sarbanes-Oxley Act. Audit-related fees Audit-related fees for 2020 and 2019 consist of fees for services for the annual audits of employee benefit plans and acquisition-related due diligence services for fiscal year 2020. Tax fees Tax fees consist of fees for professional services rendered for assistance with federal, state, local and international tax compliance and consulting. Tax compliance fees were $810,490 for 2020 and $833,230 for 2019. Tax fees also include fees of $1,486,510 for 2020 and $2,116,480 for 2019 for services rendered for tax examination assistance, tax research and tax planning services in the countries in which we do business. Other fees Other fees for 2020 and 2019 consist of fees for publications and on-line subscriptions and materials. Other fees for 2020 also include permissible advisory services, including consulting projects, other than those disclosed above. Annual evaluation The Audit Committee annually evaluates the performance of Citrix’s independent registered accounting firm and assessed Ernst & Young’s performance as independent auditor, including the performance of the Ernst & Young lead audit partner and the audit engagement team. As part of its assessment during fiscal year 2020, the Audit Committee considered several factors, including, among other things: ‰ Audit engagement team skills and responsiveness; ‰ Audit approach, including effectiveness of overall approach, identification and communication of risks and use of technology; ‰ Appropriateness and transparency of fees and hours worked; ‰ Complex accounting and auditing matters, including availability and use of national resources and subject matters experts; ‰ Nature and quality of communication with the Audit Committee; ‰ Quality of services provided by Ernst & Young; ‰ Appropriateness of internal audit reliance; 2021 Proxy Statement 87 ‰ An annual report from Ernst & Young describing the independent registered accounting firm’s internal quality control procedures; and ‰ Ernst & Young’s independence and integrity. Audit partner rotation In accordance with SEC rules and Ernst & Young policies, audit partners are subject to rotation requirements to limit the number of consecutive years an individual partner may provide service to Citrix. For lead and concurring audit partners, the maximum number of consecutive years of service in that capacity is five years. The process for selection of our lead audit partner pursuant to this rotation policy involves meetings among the Chair of the Audit Committee, our Chief Financial Officer and the candidate for the role, as well as discussion by the full Audit Committee and with other members of management. Policy on Audit Committee pre-approval of audit and permissible non-audit services of independent auditor The Audit Committee has implemented procedures under our Audit Committee Pre-Approval Policy for Audit and Non-Audit Services, which we refer to as the Pre-Approval Policy, to ensure that all audit and permitted non-audit services to be provided to Citrix have been pre-approved by the Audit Committee. Specifically, the Audit Committee pre-approves the use of our independent registered public accounting firm for specific audit and non-audit services, within approved monetary limits. If a proposed service has not been pre-approved pursuant to the Pre-Approval Policy, then it must be specifically pre-approved by the Audit Committee before the service may be provided by our independent registered public accounting firm. Any pre-approved services exceeding the pre-approved monetary limits require specific approval by the Audit Committee. All of the audit-related, tax and all other services provided to us by Ernst & Young in 2020 and 2019 were approved by the Audit Committee by means of specific pre-approvals or pursuant to the procedures contained in the Pre-Approval Policy. All non-audit services provided in 2020 and 2019 were reviewed with the Audit Committee, which concluded that the provision of such services by Ernst & Young was compatible with the maintenance of that firm’s independence in the conduct of its auditing functions. For additional information concerning the Audit Committee and its activities with Ernst & Young, see Our Board committees beginning on page 29. 88 Part 6 Proposals to be voted on at the meeting P r o x y Proposal 1 Election of director nominees Our Board of Directors currently consists of eleven members. In April 2021, we announced that Robert D. Daleo would not be standing for re-election at the 2021 Annual Meeting. As a result, the size of our Board of Directors is expected to decrease to ten members after the 2021 Annual Meeting. The table below sets forth the ten nominees for directors at the 2021 Annual Meeting. The Board of Directors, upon the recommendation of the Nominating and Corporate Governance Committee, has nominated the ten Board members, listed in the chart below, for re-election and has recommended that each be elected to the Board of Directors, each to hold office until the Annual Meeting of Shareholders to be held in the year 2022 and until his or her successor has been duly elected and qualified or until his or her earlier death, resignation or removal. All of the nominees are current directors whose terms expire at the 2021 Annual Meeting. The Board of Directors knows of no reason why any of the nominees would be unable or unwilling to serve, but if any nominee should for any reason be unable or unwilling to serve, the proxies will be voted for the election of such other person for the office of director as the Board of Directors may recommend in the place of such nominee. Unless otherwise instructed, the proxy holders will vote the proxies received by them for the nominees named below. This proposal for the election of directors relates solely to the election of ten directors nominated by our Board of Directors and does not include any other matters relating to the election of directors, including, without limitation, the election of directors nominated by any of our shareholders. Recommendation of the Board THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE FOLLOWING NOMINEES: Nominee’s or director’s name Director since Position(s) with Citrix Robert M. Calderoni Nanci E. Caldwell Murray J. Demo Ajei S. Gopal David J. Henshall Thomas E. Hogan Moira A. Kilcoyne Robert E. Knowling, Jr. Peter J. Sacripanti J. Donald Sherman 2014 2008 2005 2017 2017 2018 2018 2020 2015 2020 Chairman Lead Independent Director Director Director President, Chief Executive Officer and Director Director Director Director Director Director 2021 Proxy Statement 89 Proposal 2 Ratification of appointment of independent registered public accounting firm The Audit Committee has retained the firm of Ernst & Young LLP to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2021. Ernst & Young has served as our independent registered public accounting firm since 1989. The Audit Committee reviewed and discussed the prior performance of Ernst & Young and its selection of Ernst & Young for the fiscal year ending December 31, 2021. As a matter of good corporate governance, the Audit Committee has determined to submit its selection to our shareholders for ratification. Even if the selection of Ernst & Young is ratified, the Audit Committee, in its discretion, may select a different independent registered public accounting firm at any time during the year, if it determines that such a change would be in the best interests of Citrix and our shareholders. We expect that a representative of Ernst & Young will attend our 2021 Annual Meeting, and the representative will have an opportunity to make a statement if he or she so desires. The representative will also be available to respond to appropriate questions from shareholders. Recommendation of the Board THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG AS CITRIX’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2021. 90 Proposal 3 Advisory vote to approve the compensation of our Named Executive Officers P r o x y Pursuant to requirements under Section 14A of the Securities Exchange Act of 1934, as amended, put into place by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, known as the Dodd-Frank Act, this proposal, commonly known as a say-on-pay proposal, gives our shareholders the opportunity to vote to approve or not approve, on an advisory basis, the compensation of our Named Executive Officers. This vote is not intended to address any specific item of compensation or the compensation of any particular officer, but rather the overall compensation of our Named Executive Officers and our compensation philosophy, policies and practices. As discussed under the Compensation Discussion and Analysis beginning on page 39, we believe that our executive compensation programs emphasize sustainable growth through a pay-for-performance orientation and a commitment to both operational and organizational effectiveness. We believe that our compensation programs for our Named Executive Officers are instrumental in helping us achieve our strategic and financial performance and, during this transition period for our company, to retain our Named Executive Officers in order to drive execution of our strategic and operational initiatives. Accordingly, we are asking our shareholders to vote “FOR” the following resolution at our 2021 Annual Meeting: “RESOLVED, that Citrix’s shareholders approve, on an advisory basis, the compensation of Citrix’s Named Executive Officers, as disclosed pursuant to the SEC’s compensation disclosure rules (which disclosure includes the Compensation Discussion and Analysis, the compensation tables and the narrative disclosures that accompany the compensation tables).” The vote is advisory, and therefore not binding on Citrix, the Compensation Committee or our Board of Directors. However, our Board of Directors and our Compensation Committee value the opinions of our shareholders and will take into account the outcome of the vote when considering future compensation decisions for our Named Executive Officers. Recommendation of the Board THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL OF, ON AN ADVISORY BASIS, THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT. 2021 Proxy Statement 91 Proposal 4 Shareholder proposal In accordance with SEC rules, we have set forth below a shareholder proposal and supporting statement from John Chevedden, of 2215 Nelson Ave., No. 205, Redondo Beach, California 90278. Mr. Chevedden has notified us that he is the beneficial owner of 50 shares of our common stock since September 2019 and intends for the following proposal to be presented at the 2021 Annual Meeting. In accordance with Rule 14a-8(h) of the Exchange Act, the shareholder proposal is required to be voted on at the 2021 Annual Meeting only if properly presented by the shareholder proponent or his qualified representative at the meeting. The text of the shareholder’s resolution and the statement that the shareholder furnished to us in support thereof appear below, exactly as submitted, and we are not responsible for any inaccuracies or omissions therein. “Proposal 4—Simple Majority Vote RESOLVED, Shareholders request that our Board of Directors take each step necessary so that each voting requirement in our charter and bylaws (that is explicit or implicit due to default to state law) that calls for a greater than simple majority vote be eliminated, and replaced by a requirement for a majority of the votes cast for and against applicable proposals, or a simple majority in compliance with applicable laws. If necessary, this means the closest standard to a majority of the votes cast for and against such proposals consistent with applicable laws. Shareholders are willing to pay a premium for shares of companies that have excellent corporate governance. Supermajority voting requirements have been found to be one of 6 entrenching mechanisms that are negatively related to company performance according to “What Matters in Corporate Governance” by Lucien Bebchuk, Alma Cohen and Allen Ferrell of the Harvard Law School. Supermajority requirements are used to block initiatives supported by most shareowners but opposed by a status quo management. This proposal topic won from 74% to 88% support at Weyerhaeuser, Alcoa, Waste Management, Goldman Sachs and FirstEnergy. These votes would have been higher than 74% to 88% if more shareholders had access to independent proxy voting advice. The proponents of these proposals included Ray T. Chevedden and William Steiner. Adding simple majority vote can be another step to make the corporate governance of Citrix Systems, more competitive and unlock shareholder value. In anticipation of overwhelming shareholder support for this proposal topic an enlightened Governance Committee, chaired by Ms. Nanci Caldwell, could expedite adoption of this proposal topic by giving shareholders an opportunity to vote on a binding management proposal on this topic at our 2021 annual meeting. Hence adoption could take place in 2021 instead of 2022. The current supermajority vote requirement does not make sense. Our current 75% super supermajority rule means that 93% of the shares, that typically vote at our annual meeting, would have to approve certain modernization steps for our company. With our 75% super majority vote rule at an election calling for an 75% shareholder approval in which 80% of shares cast ballots (as was the case with CTXS in 2020) – then 6% of shares opposed to certain modernization proposal topics would prevail over the 74% of shares that vote in favor. It currently takes a 75% vote to remove a director under certain circumstances. A 51% vote rule might be more of an incentive for better performance by our directors. For instance, Mr. Robert Calderoni, Chairman, received the most negative votes of any CTXS director in 2020. Please vote yes: Simple Majority Vote—Proposal 4” 92 P r o x y Board of Director’s Response: We have considered the proposal set forth above relating to the removal of supermajority voting standards in our Certificate of Incorporation and Bylaws and have determined to make no voting recommendation to our shareholders. The proposal is advisory in nature only. Shareholders should note that approval of this proposal would not, by itself, implement a majority voting standard as described in the proposal, and our Board of Directors and shareholders would need to take subsequent action to amend our Certificate of Incorporation or our Bylaws. A majority of votes cast, or a simple majority, is already the voting standard for nearly all matters voted upon by our shareholders. Pursuant to our Bylaws, when a quorum is present at any meeting of shareholders, the holders of a majority of the stock present or represented and voting ‘for’ and ‘against’ a matter shall decide any matter to be voted upon by the shareholders at such meeting, except when a different vote is required by express provision of law, our Certificate of Incorporation or our Bylaws. Our use of supermajority voting standards, which apply only to a small number of fundamental corporate matters as set forth in our Certificate of Incorporation and our Bylaws (such as the removal of a director without cause, amendment of certain provisions of our Certificate of Incorporation, and amendment of our Bylaws), has been appropriately limited and has been approved by our shareholders on multiple occasions, most recently at our 2013 Annual Meeting when shareholders approved our current Amended and Restated Certificate of Incorporation by 93% of shares present at the meeting. We believe higher voting requirements are appropriate in limited circumstances because certain fundamental matters should require broad support and consensus from our shareholders. In addition, under a majority voting standard as proposed, holders of a significant minority of our outstanding shares could approve certain fundamental corporate changes without broad shareholder support, as a mere majority of the votes cast at a meeting could in many cases represent significantly less than a majority of our shares outstanding. However, we recognize that some shareholders prefer a universal majority voting standard. As such, we want to use this proposal as an opportunity for shareholders to express their views on this subject. We will consider the voting results on this proposal, together with additional shareholder input received in the course of our regular shareholder engagement program, in our future deliberations regarding the appropriate voting standards within our Certificate of Incorporation and our Bylaws. If a quorum is present at the 2021 Annual Meeting, approval of this proposal will require the affirmative vote of the holders of a majority of the stock present or represented by proxy and voting on the matter at the 2021 Annual Meeting. Recommendation of the Board THE BOARD TAKES NO POSITION AND MAKES NO RECOMMENDATION ON THIS PROPOSAL. PROXIES RETURNED WITHOUT VOTING INSTRUCTIONS WILL BE VOTED AGAINST THIS PROPOSAL. 2021 Proxy Statement 93 Part 7 Additional information Other matters The Board of Directors knows of no other matters to be brought before the 2021 Annual Meeting. If any other matters are properly brought before the 2021 Annual Meeting, the persons appointed in the accompanying proxy intend to vote the shares represented thereby in accordance with their best judgment on such matters, under applicable laws. Shareholder proposals Proposals of shareholders intended for inclusion in the Proxy Statement to be furnished to all shareholders entitled to vote at our 2021 Annual Meeting of Shareholders, pursuant to Rule 14a-8 promulgated under the Securities Exchange Act of 1934, as amended, must be received at our principal executive offices not later than December 17, 2021. All such proposals must comply with Rule 14a-8 under the Securities Exchange Act of 1934, as amended. In order to be properly brought before the 2022 Annual Meeting, a shareholder’s notice of (a) nomination of a director candidate to be included in our Proxy Statement and proxy pursuant to Section 1.11 of our Bylaws (a “proxy access nomination”) or (b) any proposal other than a matter brought pursuant to Rule 14a-8 or a proxy access nomination, must be received by our Secretary at our principal executive offices between November 17, 2021 and December 17, 2021. However, in the event that an annual meeting is called for a date that is more than 30 days before or more than 60 days after the first anniversary of the date of the Proxy Statement furnished to shareholders in connection with the preceding year’s annual meeting, then, in order to be timely, a shareholder’s notice must be received by our Secretary not earlier than the close of business on the 90th day prior to such annual meeting and not later than the close of business on the later of (1) the 60th day prior to such annual meeting or (2) the close of business on the 10th day following the day on which we first publicly announce the date of such annual meeting. A shareholder’s notice to our Secretary must set forth the information required by our Bylaws with respect to such proxy access nomination or proposal. If a shareholder makes a timely notification, discretionary voting authority with respect to the shareholder’s proposal may be conferred upon the persons selected by management to vote the proxies under circumstances consistent with the SEC’s proxy rules. Any proposal described above should be mailed to our principal executive offices at Citrix Systems, Inc., 851 West Cypress Creek Road, Fort Lauderdale, Florida 33309, Attention: Secretary. In order to curtail controversy as to the date on which a notice is received by Citrix, it is suggested that proponents submit their proposals by Certified Mail, Return Receipt Requested. Expenses and solicitation The cost of solicitation of proxies will be borne by Citrix and, in addition to soliciting shareholders by mail and via the Internet through our regular employees, we may request banks, brokers and other custodians, nominees and fiduciaries to solicit their customers who have stock of Citrix registered in the names of a nominee and, if so, will reimburse such banks, brokers and other custodians, nominees and fiduciaries for their reasonable out-of-pocket costs. Solicitation by our officers and employees may also be made of some shareholders in person or by mail, telephone, e-mail or telegraph following the original solicitation. We have retained MacKenzie Partners, a proxy solicitation firm, to assist in the solicitation of proxies for a fee not to exceed $20,000, plus reimbursement of expenses. 94 Delivery of documents to shareholders sharing an address If you share an address with any of our other shareholders, your household might receive only one copy of the Proxy Statement, Annual Report and Notice, as applicable. To request individual copies of any of these materials for each shareholder in your household, please contact Investor Relations, Citrix Systems, Inc., 851 West Cypress Creek Road, Fort Lauderdale, Florida 33309 (telephone: 954-229-5990) (email: investorrelations@citrix.com). We will deliver copies of the Proxy Statement, Annual Report and/or Notice promptly following your written or oral request. To ask that only one copy of any of these materials be mailed to your household, please contact your broker. P r o x y Note regarding forward-looking statements This Proxy Statement contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements in this Proxy Statement do not constitute guarantees of future performance. Investors are cautioned that statements in this Proxy Statement, which are not strictly historical statements, including, without limitation, statements regarding our plans, strategies, business initiatives, and goals and objectives, expectations regarding future performance or needs of our business, our transition to a subscription- based business model, our expansion of cloud-delivered services, changes in our product and service offerings and features, statements regarding the acquisition of Wrike and the potential benefits of the business combination, the impacts of the COVID-19 pandemic and related market and economic conditions on our business, results of operations and financial condition, expectations regarding remote work, and the expected benefits of acquisitions, constitute forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “goal,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “potential” and similar expressions intended to identify forward-looking statements. The forward-looking statements in this Proxy Statement are not guarantees of future performance. Such forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated by the forward-looking statements, including, without limitation: the ability of Citrix to realize the potential benefits of the acquisition of Wrike; customer acceptance of Citrix and Wrike offerings; potential disruptions to Citrix’s and Wrike’s operations, distraction of management and other risks related to Citrix’s integration of Wrike’s business, team, and technology; the ability of Citrix’s sales professionals and distribution partners to sell Wrike’s product and service offerings; the ability of Wrike to retain key customers post-transaction, and to achieve the anticipated rate of growth in annualized recurring revenue; risks related to Citrix’s additional debt in connection with the Wrike acquisition, which will increase the risks with respect to Citrix’s current debt; risks related to the expansion of cloud-delivered services, Citrix’s ability to advance our transition from on-premises to the cloud and effectiveness of Citrix’s transition and trade-up effort; Citrix’s ability to forecast future financial performance during its business model transition; the concentration of customers in Citrix’s App Delivery and Security business; the ability to continue to grow the company’s Workspace business, further develop Citrix Workspace and continued demand for Citrix Workspace; the introduction of new products by competitors or the entry of new competitors into the markets for Citrix’s products and services; maintaining the security of Citrix’s products, services, and networks, including securing data and cyber- related risks that are enhanced as a result of COVID-19; the potential impact of COVID-19 on Citrix’s business, the broader global economy, and the company’s ability to forecast future financial performance as a result of COVID-19; Citrix’s transition from a perpetual licenses to a subscription-based business model and ability of Citrix to further advance its transformation from perpetual to subscription; conditions affecting the IT market, including uncertainty in IT spending, including as a result of COVID-19 and changes in the markets for Citrix’s products, including the Workspace market; regulation of privacy and data security; changes in Citrix’s pricing and licensing models, including its short-term license program, promotional programs and product mix, all of which may impact Citrix’s revenue recognition; unpredictability of sales cycles and seasonal fluctuations in Citrix’s business; reliance on indirect distribution channels and major distributors; failure to successfully partner with key distributors, resellers, system integrators, service providers and strategic and technology partners; transitions in key personnel and succession risk; reliance on third party hardware providers; the impact of the global economic and political environment on Citrix’s 2021 Proxy Statement 95 business, volatility in global stock markets and foreign exchange rate volatility; Citrix’s ability to expand our customer base and attract more users within our customer base; Citrix’s ability to protect innovations and intellectual property, including in higher-risk markets; the company’s ability to innovate and develop new products and services; changes in revenue mix towards products and services with lower gross margins; the ability of Citrix to make suitable acquisitions on favorable terms in the future; Citrix’s acquisitions and divestitures, including failure to further develop and successfully market the technology and products of acquired companies, failure to achieve or maintain anticipated revenues and operating performance contributions from acquisitions, which could dilute earnings, and risks related to financing necessary to complete acquisitions; bankruptcies, insolvencies or other economic conditions that limit Citrix’s customers’ ability to pay for our services or limit the ability for us to collect payments, including unbilled revenue, which may be enhanced as a result of the COVID-19 pandemic; ability to effectively manage our capital structure and the impact of related changes on our operating results and financial condition; the effect of new accounting pronouncements on revenue and expense recognition; failure to comply with federal, state and international regulations; risks related to Citrix’s international presence; litigation and disputes, including challenges to intellectual property rights or allegations of infringement of the intellectual property rights of others; the ability to maintain and protect Citrix’s collection of brands; risks related to use of open source software; risks related to access to third-party licenses; charges in the event of a write-off or impairment of acquired assets, underperforming businesses, investments or licenses; risks related to servicing debt; tax rates fluctuation and uncertainty; political uncertainty and social turmoil, natural disasters and pandemics, including COVID-19; and other risks detailed in Citrix’s filings with the Securities and Exchange Commission. Citrix assumes no obligation to update any forward- looking information contained in this Proxy Statement. Note regarding references to Citrix website Information contained on or connected to our website is not incorporated by reference into this Proxy Statement and should not be considered a part of this Proxy Statement or any other filing or submission that we make with the SEC. 96 Form 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 F o r m 1 0 - K Form 10-K (Mark One) ☒ ☐ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File Number 0-27084 CITRIX SYSTEMS, INC. (Exact name of registrant as specified s in its charter) Delaware (State or other jurisdiction of incorporation or organization) 851 West Cypress Creek Road Fort Lauderdale Florida ff (Address of principal executive offices) 75-2275152 (IRS Employer Identification No.) 33309 (Zip Code) Registrant’s Telephone Number, Including Area Code: (954) 267-3000 Securities registered pursuant to Section 12(b) of the Act: Title of each class Common Stock, par value $.001 per share Trading symbol(s) CTXS Name of each exchange on which registered The NASDAQ Global Select Market Securities registered pursuant to Section 12(g) of the Act: NONE Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No ¨ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in 12b-2 of the Exchange Act. 1 ☒ ☐ Large accelerated filer Non-accelerated filer ☐ ☐ ☐ Accelerated filer Smaller reporting company Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act. o Indicate by check mark whether the registrant has filed ff a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ The aggregate market value of Common Stock held by non-affiliates of the registrant computed by reference to the price of the registrant’s Common Stock as of the last business day of the registrant’s most recently completed second fiscal quarter (based on the last reported sale price on The Nasdaq Global Select Market as of such date) was $18,003,842,231. As of February 1, 2021, there were 122,963,727 shares of the registrant’s Common Stock, $.001 par value per share, outstanding. DOCUMENTS INCORPORATED BY REFERENCE The registrant intends to file a definitive proxy statement pursuant to Regulation 14A within 120 days of the end of the fiscal year ended December 31, 2020. Portions of such definitive proxy statement are incorporated by reference into Part III of this Annual Report on Form 10-K. 2 CITRIX SYSTEMS, INC. TABLE OF CONTENTS F o r m 1 0 - K Part I: Part II: Item 1 Item 1A. Item 1B. Item 2 Item 3 Item 4 Business Risk Factors Unresolved Staff Comments Properties Legal Proceedings Mine Safety Disclosures Item 5 Item 6 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Selected Financial Data Management’s Discussion and Analysis of Financial Condition and Results of Operations Item 7 Item 7A. Quantitative and Qualitative Disclosures About Market Risk Financial Statements and Supplementary Data Item 8 m 9 Item 9A. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure Controls and Procedures Item 9B. Other Information Part III: Item 10 Item 11 Item 12 Item 13 Item 14 Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions and Director Independence Principal Accounting Fees and Services Part IV: Item 15 Item 16 Exhibits, Financial Statement Schedules Form 10-K Summary 6 14 32 32 32 32 33 34 35 51 52 52 52 54 55 55 55 55 55 56 59 3 NOTE REGARDING FORWARD-LOOKING STATEMENTS ff l i ff e ii x ation ion and expex e ctations regarding rr ical facts,tt d by reference into this Annual Repor t on Form 10-K for the year t remote work, the resiliencyc of our solutions and business model, t and economic conditions on our business, resultstt of operations and financial condition, business ion provided by us or statements madedd by our empm loyees contain “forward-looking” informn statements contained in thisii Annual Report on Form 10-K for the year e From time to time, informat that involves risks and uncertainties. In particular, ended December 31, 2020, and in the documents incorporate and including, but not limited to, statements concerning our strategy ended December 31, 2020, that are not histor operational and growth initiatives, our expansion of cloud-based solutions (as opposed to traditional on-premises delivery of our products) and our effoff rts to transition our customersrr from on-premises to the cloud, including the pace of the transition, our transition to a subscription-based business model, changes in our product and service offeff rings and features, financial informat ion and resultstt of operations for future periods, revenue trends, the impactstt of the novel coronavirus (COVID-19) pandemic and related markerr continuity,yy risk mitigat customer demand, seasonal factors or ordering patterns, stock-base ion of transactions and valuations of investmentstt and derivative instrume stock repurchases and foreign earnings, fluctuations in foreign exchange rates, tax estimates and other tax matters, liquidity,tt ted debt in connection with the acquisition of Wrike, Inc., changes in accounting rules dividends, our debt, including our expec or guidance, acquisiti ,kk on matters, and the security of our network on of Wrike,kk products and services, constitute forward-looking statements and are made under the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statementstt are neither promises nor guarantees. Readers are directed to the risks and uncertainties identifieff d below under “Risk Factors” and elsewll expresse x those contained in forward-looking statements made in this Annual Report 2020, in the documents incorporated by reference into thisii Annual Report management from time to time. Such factors, among others, could have a material adverse effeff ct upon our business, results of operations and financial condition. We caution readersrr not to place undue reliance on any forward-looking statements, which only speak as of the date made. We undertakekk no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made. for additional detail regarding factors that may cause actual resultstt ooking statements. Such factors, among others, could cause actual resultstt on Formr 10-K for the year ended December 31, on Form 10-K or presented elsewll d compensm nts, restructuring charges ation, international operations, investment here in thisii report r ons (including our pending acquisiti , reinvestment or repatriat to diffeff r materially from d in our forward-l to be diffi erent Inc.), litigati here by our than those e e kk tt VV x e r tt ii i t ii ii ff References in this Annual Report on Form 10-K to "Citrix," the "Company, "we," "our" or "us" refer to Citrix Systems, Inc., including as the context requires, its direct and indirect subsidiaries. SUMMARY OF RISK FACTORS The following is a summary of the principal risks described below in Part I, Item 1A “Risk Factors” in this Annual Report on Form 10-K. We believe that the risks described in the “Risk Factors” section are material to investors, but other factors not t us. The following summary should presently known to us or that we currently believe are immaterial may also adversely affecff not be considered an exhaustive summary of the material risks facing us, and it should be read in conjunction with the “Risk Factors” section and the other information contained in this Annual Report on Form 10-K. Risks Related to our Business and Industry • • • • The expansion of cloud-based solutions (as opposed to traditional on-premises delivery of our products) and our efforts to transition our customers from on-premises to the cloud, including the pace of the transition, has and will introduce a number of risks and uncertainties unique to such a shift in delivery. Our multi-year transition from a perpetual licenses to a subscription-based business model is subject to numerous risks and uncertainties that could have a negative impact on our business, results of operations and financial condition. A significant portion of our revenues historically has come from our Application Virtualization and Virtual Infrastructure, or VDI, solutions and our App Delivery and Security products, and decreases in sales for these solutions could adversely affecff t our results of operations and financial condition. Desktop t If our Workspace strategy is not successful in addressing our customers’ evolving needs beyond traditional Application Virtual our Workspace offerings, we may be unablea ization and VDI solutions or we face substantial technological or implementation challenges with to expand our user base. t • We face intense competition, which could result in customer loss, fewer customer orders and reduced revenues and margins. 4 • • • • • • Actual or perceived security vulnerabilities in our products and services or cyberattacks on our services infrastruct rr or corporate networks could have a material adverse impact on our business, results of operations and financial condition. uret The effecff ts of the COVID-19 pandemic are uncertain, and such effects will depend on future developments. Our business could be adversely impacted by conditions affecff operate. ting the information technology market in which we F o r m 1 0 - K Regulation of privacy and data security may adversely affecff compliance costs. t sales of our products and services and result in increased Our solutions could contain errors that could delay the release of new products or otherwise adversely impact our products and services. Certain of our offerings have long and/or unpredictable sales cycles, which could cause significant variability and unpredictability in our revenue and operating results for any particular period, and changes to our licensing or subscription renewal programs, or bundling of our solutions, could negatively impact the timing of our recognition of revenue. • Sales and renewals of our support solutions constitutet a large portion of our deferred revenue. • We rely on indirect distribution channels and majoa r distributors that we do not control. • • • • Our App Delivery and Security business could suffer if there are any interruptions or delays in the supply of hardware or hardware components from our third-party sources. In order to be successful, we must attract, engage, retain and integrate key employees and have adequate succession plans in place. Our international presence subjects us to additional risks that could harm our business, including our exposure to fluctuations in foreign currency exchange rates. Adverse changes in global economic conditions could adversely affect our operating results. Risks Related to Acquisitions, Strategic Relationships and Divestitures • • • Acquisitions and divestitures present many risks, and we may not realize the financial and strategic goals we anticipate. If we determine that any of our goodwill or intangible assets, including technology purchased in acquisitions, are impaired, we would be required to take a charge to earnings. Our inabila ity to maintain or develop our strategic and technology relationships could adversely affecff t our business. Risks Related to Intellectual Property and Brand Recognition • • • • • Our efforts to protect our intellectual property may not be successful. Our solutions and services, including solutions obtained through acquisitions, could infringe third-party intellectual property rights, which could result in material litigation costs. Our use of “open source” software could negatively impact our ability to sell our solutions and subject us to possible litigation. If we lose access to third-party licenses, releases of our solutions could be delayed. Our business depends on maintaining and protecting the strength of our collection of brands. Risks Related to our Liquidity, Taxation and Capital Return • Servicing our debt will require a significant amount of cash. We may not have sufficient cash flow from our business to make payments on our debt or repurchase our outstanding notes upon certain events. 5 • • • Our portfolios of liquid securities and other investments may lose value or become impaired. Changes in our tax rates or our exposure to additional income tax liabilities could affect our operating results and financial condition. There can be no assurance that we will continue to returnt dividends and/or the repurchase of our stock. capita al to our stockholders through the payment of cash General Risks • We are involved in litigation, investigations and regulatory inquiries and proceedings. • • • Our stock price could be volatile, and you could lose the value of your investment. Changes or modifications in financial accounting standards may have a material adverse impacm t on our reported results of operations or financial condition. Natural disasters, climate-related impacts, or other unanticipated catastrophes may negatively impact our operations. This section contains forward-looking statements. You should refer to the explanation of the qualifications and limitations on forward-looking statements described above. PART I ITEM 1. BUSINE UU SSEE Business Overview What We Do Citrix is an enterprise software company focused on helping organizations deliver a consistent and secure work experience no matter where work needs to get done — in the office, at home, or in the field. We do this by delivering a digital workspace solution that gives each employee the resources and space they need to do their best work. Our Workspace solutions are complemented by our App Delivery and Security (formerly Networking) solutions, by delivering the applications and data employees need across any network with security, reliabila ity and speed. Citrix believes that work is not a place —work is about business outcomes. We have helped organizations with digital transformation for many years. The challenges and complem xities created by the proliferation of Software-as-a-Service (SaaS)- based applications and the emergence of hybrid multi-cloud infrastructure environments are now combined with the realities brought upon by the global COVID-19 pandemic—realities such as long-term remote and flexible work models and an increased need for risk mitigation and business continuity. As a result, we believe organizations are accelerating their cloud and digital transformation plans to better position themselves to address these new challenges and embrace the opportunity that may arise from flexible work models. To do this, organizations may rely on Citrix solutions for business agility, employee productivity, security and compliance, as well as cost and efficff iency. Citrix solutions are focused on employee empowerment and are designed to provide end-users with the simplicity of a common user experience while ensuring information technology, or IT, administrators are able to deliver applications and data with the security and controls necessary to protect the enterprise and its customers. Our Business Transformation Citrix's business is evolving in three distinct and interrelated ways: • • • to Subscription: Our business model has shifted away from selling perpetual t Perpet ual rr or recurring contracts in the form of SaaS, on-premise term, and consumption-based agreements; t licenses towards subscription, On-Premise to Cloud: As the share of applications and data continues to move rapidly from on-premise data centers to the cloud, our product development and engineering resources have increasingly focused on delivering cloud-based solutions; and Point Products to Platform: Our offerings and our go-to-market activities are shifting away from selling individual point products towards our platform solution, in a tiered offering that provides us the ability to deliver a variety of value-enhancing modules to our customers in the future. 6 F o r m 1 0 - K Citrix was incorporated in Delaware on April 17, 1989. Proposed Acquisit ii ion of Wrike On January 16, 2021, we entered into a definitive agreement to acquire Wrike, Inc. (“Wrike”), a leader in the SaaS ive work management space, for $2.25 billion in cash. The transaction, which has been unanimously approved by the collaborat a board of directors of both Citrix and Wrike, is expected to close in the first half of 2021, subjecb other customary closing conditions. We believe this acquisition will allow us to accelerate our strategy to build on and expand beyond the growing virtualization market by delivering a cloud-based digital workspace experience empowering all employees to securely access, collabora te, and execute work in the most effective way across any work channel, device or location. t to regulatory approvals and a Solutions and Services We offer digital workspace solutions and services that enable companies to deliver a consistent work experience by providing secure and reliable access to the systems and information employees need to do their best work, no matter where organizations to accelerate business work needs to get done — in the office, at home, or in the field. Our offerings empower performance by harnessing technology to enhance employee engagement, boost productivity, and drive innovation. m Workspace The Citrix Workspace platform encompasses a broad range of features t and functionalities that tie together the myriad of applications that reside within enterprises. Citrix Workspace helps employees minimize distractions and focus, enabling them to do their best work, elevating employee productivity and employee engagement, and improving an enterprise’s security profile. Citrix Workspace delivers a unified, secure and intelligent workspace with single sign-on access to all the applications and s IT administrators to proactively manage security content employees use in one unified platform. Citrix Workspace enablea threats in complem x, distributed, hybrid, multi-cloud and multi-device environments, and it empowers IT administrators to deliver applications to end users more securely than operating them natively. Intelligent analytics and user behavior insights are derived to enablea enhanced security, management, orchestration, and automation of workspaces and application delivery. Citrix Workspace comes with ready integrations with widely-used business applications, including Salesforce, Workday, SAP Ariba and SAP Concur, ServiceNow, Microsoft Outlook and Google Workspace (formerly G Suite) and is compatible with identity and access management providers, including Okta, Ping, Radius, and GoogleID. Citrix Workspace can be delivered on-premise, running in a customers’ datacenter, or in the cloud. Pricing for the Citrix Workspace platform is tiered based on the level of functionalities provided. Capaa bila ities offered as part of the platform include: • • • • • • Citrix Workspace - delivers an intelligent experience that customizes and streamlines user workflows by creating microapps a functions, and allows end users to perform actions across various applications directly within the Citrix Workspace. through low-code tooling, enabling organizations to organize, guide and automate work, tasks and Citrix Virtual Apps and Desktops - gives employe costs and securely delivering Windows, Linux, Web and SaaS apps, and full virtual desktops. Citrix Virtual Apps and Desktops offers a choice of deployment options ranging from a turnkey desktop-as-a-service solution running on the Microsoft Azure cloud to a host of premium options running in the cloud, hybrid, or on-premises. es the freedom to work anywhere on any device while cutting IT m t Citrix Analytics for Security - continuously assesses the behavior of Citrix Virtual Workspace users and applies actions to protect sensitive corporate information. The aggregation and correlation of data across networks, virtualized applications and desktops, and content collaborat valuable insights and more focused actions to address user security threats. Apps and Desktops users and Citrix s the generation of ion tools enablea a t iCi dand en blablinging capaa itrix Analytlytiics for Performance - uses ma hichine llearningning to quantifyify user expe irience, providi gng idi dend-t o-end ivi ibil d sibiliityy ici yty lpl anni gng i dand proactiive response to performance degra degraddatiion. Citrix Content Collaboration - provides a secure, cloud-based file sharing, digital transaction and storage solution built to give users enterprise-class data services across all corporate and personal devices. Citrix Endpoint Management - provides unified endpoint management allowing IT administrators to adhere to security and compliance requirements for "bring your own device" programs and corporate devices while enablia productivity. Centralizes the management of mobile devices, traditional desktops, lapta ops and Internet of Things, or IoT, through a single platform, directly integrating with Microsoft EMS/Intune to extend mobility and device management capaa bila ng user ities. 7 • • principles (i.e., required Citrix Secure Workspace Access - provides an end-to-end solution to implement Zero Trust left from relying on assorted point verification of all users whether inside or outside of a network), avoiding the gapsa solutions. It reduces the attack surface by protecting the user and the apps inside the workspace, where work actually gets done. r Citrix Secure Internet Access - provides a solution that protects direct internet access for branch and remote workers using unsanctioned apps. App Delivery and Securityii Our App Delivery and Security solutions optimize the performance of Citrix Workspace. They enablea organizations to deliver applications and data with security, reliabila perpetual license or under pooled licensing agreements that give customers flexibility to consume in either a hardware form factor or as software, over the term of the agreement. Our App Delivery and Security capaa bila ity, and speed. Our App Delivery and Security products can be consumed via ities include: • • Citrix ADC - an application delivery controller and load balancing solution for web, traditional and cloud-based applications regardless of where they are hosted. Citrix SD-WAN and Secure Access Service Edge (SASE) - a next-generation WAN Edge solution that delivers flexible, automated, secure connectivity and performance for the workspace. Customer Success We offer support and services to help our customers and business partners get more value, achieve their business outcomes, minimize risk, and keep their solutions running at peak performance: • • • • • Customer Success Man gagement ((C CSM team, com iprisedd of Customer Success Man gagers andd Customer Success EngiEngineers, guide outcomes. Through Through success l customers accellerate hth ieir iim lplementa ition b onboardi gng guida di imize hthe guidance, lvalue of hth ieir chnicall andd dand ma ixi iwithh a valilidd SaaS or bsubsc iriptiion en iti ltlement. hThe guides b ibusiness andd te h i chnicall rnal dadvocacyy, hthe CSM team hhellps l lsolutiions. dand iinte itrix iCi planni gng, te h i to lalll customers )SM) - av iaillablblea i choice of itieredd ff guidance, enablblea ment, andd proac itive mo initoring Customer Success Ser ivices - features a h i upgrade upgrades, guida goalgoals andd ma iximiize hth ieir from a d didedicatedd team lledd byby an assigned itrix iinvestments. ddiAddi iti signed account managger. iCi offeri gngs combi ibini gng te h i i oring to h lhelp customers lonally,ly, customers mayy upgrade chnicall support, dand partners fully upgrade to receiive pers dproduct ve irsion fully re laliize hth ieir b ibusiness lonaliiz ded support iMaintenance - features Ha drdware replacement of malflfunc itioning availil blable as adddd-ons. l t a hch ioice of itier ded offerings rings iin lcluding uding te hch inic lal support, software gupgraddes, dand oning ap lipliances to kkeep iCitriix hha drdware runni gng i ioptimallllyy. Pre imium support se irvices are itrix Cons lultinging - guiguiddes hthe succe f l iCi ddesiiredd b ibusiness outcomes. Our in-house consultants bring technical expertise with proven methodologies, tools and leading practices to improve adoption and enhance security. ssful ddesignign andd iim lplementa ition of lsolutiions, removingving hthe bba irriers to itrix iCi Product Training & Certification - enablea maximize product capaa bila certifications to validate knowledge and skills. s customers and partners to attain self-sufficiency, increase productivity, ities, and advance their career with flexible training options to suit all learners and CCustomers Our customers are b ibusinesses of iinddustryyrr vertiic lal, iincl di dand iin lcl dude hthe lla grgest ente ludi gng hheallthhcare, fifinanciiall se irvices, te hchnology, isizes lalll rprises i t uring, nology, manufacturing, dand iin istitutiions iin hthe worlldd spa consumer, dand ggovernment inni gng eve yry majorjora gage incies. Our lla grgest customers are often our longe longest tenuredd customers. Technology Relationships We have a number of technology relationships in place to accelerate the development of existing and future solutions and our go-to-market initiatives. These relationships include cross-licensing, original equipment manufacturer (OEM), resell, joint reference architectures , and other arrangements that result in better solutions for our customers. t 8 Microsoftff For over 30 years, Citrix and Microsoft have maintained a strategic partnership spanning product development, go-to- market initiatives and partner development, enabling our mutual customers’ secure, high-performance delivery of applications, desktops and data to their employees. Together, Citrix and Microsoft offer solutions and services that aid and accelerate the transition from on-premises IT infrastructuret full breadth of legacy and modern applications. and practices to emerging hybrid-cloud and multi-cloud delivery models for the Citrix and Microsoft provide joint tools and services to simplify and speed the transition of on-premises Citrix customers to Microsoft Azure. The companies have a connected roadmapa to enable a consistent and optimal flexible work experience that includes joint solutions sold through their direct sales forces via the Azure Marketplace and a robust community of channel partners. F o r m 1 0 - K Google Citrix and Google Cloud have been strategic partners for over eight years. We offer end-to-end user experience solutions for Citrix Workspace with Google Cloud Platform, Chrome Enterprise, and Google Workspace (formerly G Suite), as well as complementary App Delivery and Security. These solutions enablea employees need and prefer to use on Google devices and operating systems. companies to deliver unified access to all of the apps Global Systemyy Integrators e We continue to invest in partnerships with Global System Integrators who provide solutions and services that build on a mini, Deloitte, DXC, Fujitsu, Hewlett Packard Enterprises, IBM and Wipro. These partnerships help our customers Citrix Workspace and Citrix App Delivery and Security solutions to improve employee experience and engagement, including Capge develop effecff and locations. tive digital workspace strategies that enable them to deliver a consistent work experience across work channels Citrix Ready We continue to provide an easy way for our customers to locate compatible solutions and our channel partners to evaluate and deploy joint offerings through our Citrix Ready program. The Citrix Ready Program is a technology partner program that helps software and hardware vendors of all types develop and integrate their products with Citrix technology. It includes partners like AWS, Cisco, Google, and Microsoft and hundreds of other technology companies. With work happening on a proliferation of devices, companies have a whole new set of security concerns they must address. To help them do it, we expanded the Citrix Ready Workspace Security Program to include Zero Trust solutions from trusted expansion will allow companim security framework that delivers Zero Trust and verified partners. This es to simplify the selection of vendors and leverage their existing investments to design a modern outcomes. r r Research and Development ff Our research and development efforts focus on developing new functionalities across our solutions, while continuing to invest in purposeful improvements to our core technologies. We solicit extensive feedback concerning product development from customers and through our channel distributors and partners, as well as our alliance partners. We believe that our global software development teams and our core technologies represent a significant competitive advantage for us. As of Dece bmber 31, 2020, we h lheldd a worllddwidide ppatent appliicatiions pending. and $440.0 million in 2018. proximat lelyy 3,500 patents andd h dhad ap nding. We incurred research and development expenses of $538.1 million in 2020, $518.9 million in 2019 proximat lelyy 1,800 ddi portfoliio of ap addi iti lonal f l l i i Sales, Marketing and Services We market and license our solutions through multiple channels worldwide, including selling through resellers, direct and over the Web. Our partner community comprises thousands of value-added resellers, or VARs, known as Citrix Solution Advisors, value-added distributors, or VADs, system integrators, or SIs, independent software vendors, or ISVs, OEMs, and Citrix Service Providers, or CSPs. Distribution channels are managed by our worldwide sales and services organization. u Partners receive training and certification opportunities to support our portfolio of solutions and services. We reward our partners that identify new business, and provide sales expertise, services delivery, customer education, technical implementation and support of our portfolio of solutions through our incentive program. We continue to focus on increasing the productivity of our existing partners, while also adding new transacting partners, building capaa city through 9 targeted recruitment, and introducing programs to increase partner mindshare, limit channel conflict, and increase partner loyalty to us. As our customers shift workloads to the cloud, we have been cultivating a global base of technology partners within our CSP program. Our CSP program provides subscription-based services in which the CSP partners host software services to their end users. Our CSP partners, consisting of managed service providers, ISVs, Citrix Solution Advisors, hosting providers and telcos, among others, license certain of our offerings on a monthly consumption basis. With our software, these partners then create differentiated offerings of their own, consisting of cloud-hosted applications and cloud-hosted desktops, which they manage for various customers, ranging from SMBs to enterprise IT. Besides supplying technology, we are actively engaged in assisting these partners in developing their hosted businesses either within their respective data centers or leveraging public cloud infrastructuret by supplying business and marketing assistance. Online marketplat ces, including Cloud Marketplaces and Cloud Service Brokers have become a strategic channel for customers to streamline the discovery, acquisition, deployment, and operations of services enablia changing market conditions. Growth in the use of online marketplat and the increase in demand for work-at-home, business continuity, and remote access to services and data. ces has been driven by the increased focus on cloud services ng them to adapta quickly to We are present in three key cloud marketplaces, Amazon Web Services ("AWS"), Azure and Google, that enablea customers to easily deploy licenses acquired through multiple channels, quickly acquire new services and software, and expand as their needs grow. We provide both public and private options to drive customer and partner success. Engagement with SIs and ISVs continues to be a substantial part of our strategic roadmap within large enterprise and government markets. Our integrator partnerships include organizations such as DXC, Fujitsu, IBM, Wipro and others, who all deliver consultancy or global offerings powered by the Citrix Workspace. The ISV program maintains a strong representation across targeted industry verticals including healthcare, financial services and telecommunications. Members in the ISV program include Allscripts, Cerner Corporation and Epic Systems Corporat improve the effecff pperforminging partners, dand na iti ion. For all of our channels, we regularly take actions to hi i lrelati lsellili gng iinto new ma krkets andd f tiveness of our partner programs and further strengthen our hcha through ma gnagement of non- addi iti ionships through formi gng ddi recruitment of partners lonal strategiegic glgl b lobal lonal partnershihips. iwithh expe irtise iin lnnel r i Our corporate marketing organization provides an integrated global approach to sales and industry event support, digital and social marketing, sales enablement tools and collateral, advertising, direct mail, industry analyst relations and public relations coverage to market our solutions. Our efforts and our indirect channels to acquire net new accounts and expand our presence with existing customers, as well as building general brand awareness in the market. Our partner development organization actively supports our partners to improve commitment and capaa bila ities with Citrix solutions. Our customer sales organization consists of field-based sales engineers and corporate sales professionals who work directly with our largest customers, and coordinate integration services provided by our partners. Additional sales personnel, working in central locations and in the field, provide support including recruitment of prospective partners and technical training with respect to our solutions. in marketing are focused on generating leads for our sales organization their m ff In fiscal year 2020, 2019 and 2018, one distributor accounted for 17%, 15% and 14% respectively, of our total net revenues. The Company's arrangements with the distributor consist of several non-exclusive, independently negotiated agreements with its respective subsidiaries, each of which covers different countries or regions. See “Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Estimates” and Note 2 to our consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2020 for information regarding our revenue recognition policy. International revenues (sales outside the United States) accounted for 50.5% of our net revenues for the year ended December 31, 2020, 48.2% of our net revenues for the year ended December 31, 2019, and 47.0% of our net revenues for the year ended December 31, 2018. For detailed information on our international revenues, please refer to Note 12 to our consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2020. Segment Revenue We operate under one reportable segment. For additional information, see Note 12 to our consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2020. Operations For our cloud-based solutions, we use a combination of co-located hosting facilities and increasingly use Microsoft Azure and AWS as well as other infrastructure-a t s-a-service providers. For our App Delivery and Security products, we use 10 F o r m 1 0 - K t a and assembly capabi lities. Independent contractors also provide final test, warehousing and shipping services. This subcontracting activity extends from independent contractors to provide a redundant source of manufacturet provide us with the flexibility needed to meet our product quality and delivery requirements. We have manufacturing relationships that we enter into in the ordinary course of business, primarily with Flextronics, under which we have subcontracted the majoa rity of our hardware manufacturing activity, generally on a purchase order basis. These third-party contract manufacturers prototypes to full production and includes activities such as material procurement, final assembly, test, control, shipment to our customers and repairs. Together with our contract manufacturers , we design, specify and monitor the tests that are required to meet internal and external quality standards. Our contract manufacturers produce our products based on forecasted demand for our solutions. Each of the contract manufacturers procures components necessary to assemble the products in our forecast and test the products according to our specifications. We dual-source our components; however, in some instances, those sources may be located in the same geographic area. Accordingly, if a natural disaster occurs in one of those areas, we may need to seek additional sources. Products are then shipped to our distributors, VARs or end-users. If the products go unsold for specified periods of time, we may incur carrying charges or obsolete material charges for products ordered to meet our forecast or customer orders. In 2020, we did not experience any material difficulties or significant delays in the manufacture and assembly of our products. t t While it is generally our practice to promptly ship our products upon receipt of properly finalized orders, at any given time, we have confirmed product license orders that have not shipped and are unfulfilled. Backlog includes the aggregate amounts we expect to recognize as point-in-time revenue in the following quarter associated with contractual ly committed amounts for on-premise subscript are unfulfilled. As of December 31, 2020 and 2019, the amount of backlog was not material. We do not believe that backlog, as of any particular date, is a reliable indicator of future performance. ion software licenses, as well as confirmed product license orders that have not shipped and u t We believe that our fourth quarter revenues and expenses are affected by a number of seasonal factors, including the lapsea of many corporations' fiscal year budgets and an increase in amounts paid pursuant to our sales compensation plans due to compensation plan accelerators that are often triggered in the fourth quarter. We believe that these seasonal factors are common within our industry. Historically, our revenue for the fourth quarter of any year is typically higher than the revenue for the first quarter of the subsequent year. We expect this trend to continue through the first quarter of 2021. However, during the three months ended March 31, 2020, this trend was impacm ted by the COVID-19 pandemic, and our revenues in the first quarter of 2020 were higher than in the fourth quarter of 2019 due to our decision to make limited use Workspace licenses of Citrix Workspace availablea their immediate business needs. In addition, our European operations usually generate lower revenues in the summer months because of the generally reduced economic activity in Europe during the summer. This seasonal factor also typically results in higher fourth quarter revenues on a sequential basis. in the form of shorter-duration, discounted on-premises term offerings to quickly help our customers with Competition We sell our solutions in intensely competitive markets. Some of our competitors and potential competitors have significantly greater financial, technical, sales and marketing and other resources than we do. As the markets for our solutions and services continue to develop, additional companies, including those with significant market presence in the computer appliances, software, cloud services and App Delivery and Security industries, could enter the markets in which we compete and further intensify competition. In addition, we believe price competition could become a more significant competitive factor in the future. business, results of operations and financial condition. See our “Technology Relationships” discussion above and “Risk Factors” below. As a result, we may not be able to maintain our historic prices and margins, which could adversely affecff t our t Workspace Our primary competitors for various components of and services delivered through our Workspace offering include VMware, Okta, Box, Dropbox, AWS, Nutanix, MobileIron and Microsoft. We believe Citrix Workspace and our services, including Citrix Virtual differentiated by the completeness of the offerings, and the advanced technology and end-user experience, as compared to competitive offerings by VMware, AWS, Microsoft, Nutanix, AirWatch by VMware, MobileIron, Blackberry, Dropbox, Box, and others. Apps and Desktops, Citrix Endpoint Management and Citrix Content and Collaborat ion, are a t App Delivery and Securityii Our Citrix ADC hardware products competm e in traditional data-center-deployed application environments against other established competitors, including F5 Networks, Radware, A10 Networks and Cisco. In addition, for cloud-integrated and software-centric use cases, large cloud providers, such as AWS and Microsoft Azure, provide customers with competitive ADC 11 solutions built into their public cloud platforms. We continue to expand our open source integrations with leading companies to enhance feature capabi potential customers. lity and invest in go-to-market resources to market Citrix ADC to our existing customer base and new a Technology and Intellectual Property t We believe that innovation is a core Citrix competency. Our success is dependent upon our solutions, which are based on property and core proprietary and open source technologies. These technologies include innovations that optimize intellectual the end-to-end user experience, through cloud-managed workspaces and analytics, in virtual desktop and virtual environments, and enhance App Delivery and Security capabi a mobile computing experience. application lities to deliver a holistic and secure content collaboration and t We have been awarded numerous domestic and foreign patents and have numerous pending patent applications in the United States and foreign countries. Certain of our technology is also protected under copyright laws. Additionally, we rely on trade secret protection and confidentiality and proprietary information agreements to protect our proprietary technology. We shed proprietary trademark rights in markets across the globe, and own hundreds of U.S. and foreign trademark have establia registrations and pending registration applications for marks comprised of or incorporating the Citrix name. See our "Research and Development" discussion above and “Risk Factors” below. Our People Citrix solutions enablea a better way to work and embrace the power of human difference, and we are guided by our core values of Integrity, Respect, Curiosity, Courage and Unity. As of December 31, 2020, we had approximately 9,000 employees, of which approximately 46% were in the United States and 54% were in our international locations. We have a broad base of diverse talent in more than 40 countries and we believe that attracting, developing and retaining the best talent is critical to our success and achievement of our strategic objectives. Our voluntary attrition rate was approximately 8% during fiscal year 2020, which is lower than our historical attrition rate. This lower attrition rate is in part due to the COVID-19 pandemic, which we believe has led to fewer people leaving their jobs during 2020. We encourage you to review our Sustainability Report under the headings “Talent” and “Social Equality” for more al programs and initiatives. Nothing in our Sustainability Report shall be detailed information regarding our human capita deemed incorporated by reference into this Annual Report on Form 10-K. rr Leadership and Governance Our Executive Vice President and Chief People Officer is responsible for developing and executing the company’s human capita al strategy. This includes directing our global policies and programs for leadership and talent development, compensation, benefits, staffing and workforce planning, human resources systems, skills training and organizational development, workplace strategies, and global sourcing and indirect procurement, and ensuring effective and efficff ient internal company operations. Our Chief People Officer is responsible for developing and integrating our diversity, inclusion and belonging priorities and strategy, and we have a dedicated team of people with executive leadership participation to implement such strategies. Our Compensation Committee oversees our company-wide compensation programs and practices, and our Chief Executive Officer and President and Chief People Officer regularly update our Board of Directors and the Compensation Committee on human capia tal matters. Compm ensation and Benefie ts Our team is global, and we offer competitive and meaningful compensation and benefits programs that meet the diverse needs of our employees, while also reflecting local market practices. In addition to competitive salaries and bonuses, we offer a robust employm ent total rewards package that promotes employee well-being and includes retirement planning, health care, m extended parental leave, paid time off, and appreciation events for employees. For example, we offer paid leave of up to 18 weeks for all new parents (moms, dads and partners) to care for a newborn or newly adopted child. This paid leave is in addition to the nine paid holidays and other paid time-off from Citrix for family-focused time. Equity-based compensat m m equity-based compensat through our employee stock purchase plan. ion is also a key component in attracting, retaining and motivating our employees. We grant ion to a significant portion of our employees. We also provide the opportunity for equity ownership Additionally, we offer ff benefits to support our employees’ physical and mental health by providing tools and resources to help them improve or maintain their health and encourage healthy behaviors. 12 F o r m 1 0 - K Growth, Development and Engagement At Citrix, we have a strong focus on career development and building the capabi lities of our team members. We invest in our employees by offering a wide range of development opportunities that promote learning and growth, including five highly interactive core leadership programs geared towards different career stages, various mentoring and coaching programs, a large library of on-demand, virtual and in-person courses that support professional and technical skills development and our tuition reimbursement program. We also believe in building organizational capabi continuously listening to our employees in order to create desirablea frequently, providing managers and teams with highly actionablea that have the largest impacm t on engagement and team success. data that allows us to focus on making improvements in areas employee experiences. We survey our employe lity through practicing a growth mindset and es m a a t Diversity,yy Inclusion and Belonging Diversity, inclusion and belonging have long been a part of our culture, t and we work to continually expand our diversity, inclusion and belonging initiatives. We have an employee-run committee focused on diversity, inclusion and belonging initiatives, and our diversity, inclusion and belonging initiatives are supporte we recently expanded global parental leave benefits, gender pay equity initiatives and diversity-focused scholarships and programs to support underrepresented minorities, veterans and disabled workers. In 2019, we launched “Cultivating a Culturet of Belonging” for our employees, a learning series to explore our own identities, share best practices and offer support as we champion inclusiveness and belonging across the enterprise. The program helps employe environment and learn which factors foster diversity in the workplace. d by our executive leadership team. For examplem , es encourage an inclusive work m u u Our employee resource groups (ERGs) support underrepresented groups of employe es and are an important component of our diversity, inclusion and belonging efforts, addressing topics like career development, mentoring, recruiting and interviewing candidates, advocacy and networking. As of December 31, 2020, we had ten ERGs with 29 chapters across nine offices in seven countries. m Also, in 2020, we launched a racial equity strategy with the objectives of supporting black students and businesses, modifying our people processes to promote racial equity, transparently sharing data as we progress on our journey, and personal learning about systemic racism. We are committed to listening, learning, and making sustainable change to stand against racism, bias and violence. II COVID-19 Response s a During the COVID-19 pandemic, our primary focus has been on the safety and well-being of our employees and their ty of our workforce worked remotely and successfully throughout most of 2020. For offices that re- families. A large majori opened, we leveraged the advice and recommendations of medical experts to implem ment new protocols to ensure the safety of our employees, including face coverings, temperam supported our employees through programs and benefits provided throughout the year, pivoting all of our people programs and practices to enablea business continuity in the current environment. For example, we provided a $1,000 stipend to all employees, globally, below the vice president level to support them as they transitioned to a work-from-home environment. We also extended paid time-off and sick leave benefits for employe ture checks, health certifications, social distancing and capac es directly impacted by COVID-19. ity limits. We m a Importantly, our response to the COVID-19 pandemic reflects our belief that work is a measure of output and tt accomplishment—not a place—and flexible work means people are most productive when they match their work environment to the outcomes they are trying to deliver. Our success in implementing this work philosophy during the pandemic has driven an evolution in our flexible work approach. Starting in 2021, time in the office will no longer be prescribed, and individuals and teams are empowered to determine how they work best, based on their role, while being accountablea and team outcomes. for achieving individual Available Information Our Internet address is http://www.citrix.com. We make available, free of charge, on or through our website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act as soon as reasonably r such material is electronically filed with or furnished to the Securities and Exchange Commission. The practicable afteff information on our website is not part of this Annual Report on Form 10-K for the year ended December 31, 2020. 13 ITEM 1A. RISKSS FACTORS RISKS RELATED TO OUR BUSINESS AND INDUSTRY ll The expansion of cloud-base transitiontt number of risks and uncertainti tt condition. tt operations our customers from on-premiseii ii es unique and financialii ii d solutions (as opposed to traditional tt to the cloud, ll to such a shifti on-premiseii includingn the pace of that transition, tt in delivll ery,r which could adverserr s delivery of our products) and our effort stt has and willii ly affect our busineii ff uce a ss, resultsll of introdtt to Expansion of our cloud-based solutions has required, and may continue to require, a considerable investment in resources, including technical, financial, legal, sales, information technology and operational systems. Additionally, market acceptance of such offerings is affecff ted by a variety of factors, including but not limited to: security, service availabila availability of tools to automate cloud migration, scalability, integration with public cloud platforms, customization, availabila ity of qualified third-party service providers to assist customers in transitioning to our cloud-based solutions, performance, current license terms, customer preference, customer concerns with entrusting a third party to store and manage their data, public concerns regarding privacy and the enactment of restrictive laws or regulations. ity, reliabila ity, We may not meet our financial and strategic objectives if the pace that our customers transition to cloud-based solutions is slower than predicted. For instance, the transition of customers from our on-premises subscriptions to cloud-based offerings did not progress during the first half of 2020 at the rate we had anticipated at the beginning of the year, as many of our customers chose our on-premises subscriptions rather than migrating their Citrix Workspace deployments to our cloud-based offerings. To address the challenges in transitioning our customers to the cloud, we continue to invest in innovation and feature development, simplified cloud migration, and performance and reliability, as well as other cloud customer success and sales initiatives. There can be no assurance, however, that these initiatives will result in an increase in the transition of our customers from on-premises to our cloud-based solutions. If we are unable to transition our customers to cloud-based solutions at the pace we expect, we may experience a negative impact on our overall financial performance. In addition, our cloud-based solutions are primarily operated through third-party cloud service providers, which we do not ities and other cyber-related risks. ity of this infrastructure could be due to a number of potential causes including control and which may be subject to actual or perceived damage, interruption, vulnerabila Customers of our cloud-based solutions need to be able to access our platform at any time, without interruption or degradation of performance, and we provide them with service level commitments with respect to uptime. Third-party cloud providers run their own platforms that we access, and therefore, we are, vulnerable to their service interruptions. We may experience interruptions, delays and outages in service and availability from time to time as a result of problems with our third-party cloud providers’ infrastructure. Lack of availabila technical failures, natural disasters, fraud or security attacks that we cannot predict or prevent. Such outages could lead to the t triggering of our service level agreements and the issuance of credits to our cloud offering customers, which may impact our business, results of operations and financial condition. In addition, if our security, or that of any of these third-party cloud providers, is compromised, our software is unavailable or our customers are unablea amount of time or at all, then our business, results of operations and financial condition could be adversely affecff instances, we may not be able to identify the cause or causes of these performance problems within a period of time acceptablea to our customers. It is possible that our customers and potential customers would hold us accountable for any breach of security affecting a third-party cloud provider’s infrastructuret third parties with respect to any breach affecting these systems. We may not be able to recover a material portion of our liabilities to our customers and third parties from a third-party cloud provider. It may also become increasingly difficult to maintain and improve our performance, especially during peak usage times, as our software becomes more complex and the usage of our software increases. and we may incur significant liability from those customers and from to use our software within a reasonablea ted. In some Our cloud-based solutions provide customers with increased visibility into the level of active use of such solutions by the customers’ employees or other end users. This enhanced visibility may adversely impact renewal rates, if enough users in a customer organization do not actively engage with our solutions. In addition, the pace of adoption by our customers of cloud-based solutions as opposed to on-premises delivery of our products has and will introduce a number of risks unique to such a shift, including: • • • • we may not be able to meet customer demand or solution requirements for cloud-based solutions; we may incur costs at a higher than forecasted rate as we expand our cloud-based solutions thereby decreasing our gross margins; we may encounter customer concerns regarding changes to pricing, service availability, and security; and we may experience unpredictabila business. ity in revenue as a result of usage fluctuations within our cloud service provider 14 Further, the success in transitioning our customers to our cloud-based solutions is dependent on our ability to effecff tively align, prioritize and allocate our engineering and other resources to balance the needs of maintaining our existing products, products and features, and ensuring security and resiliency. while also innovating in futuret Any of the above circumstances or events may harm our business, results of operations and financial condition. F o r m 1 0 - K Our multi-ll yea- ii uncertainti r transitiontt es which could have a negative impactm tt from a perpetual licenses to a subscriptii ion-bas s, resultsll of operations and financial condition. on our busines ed business model is subject to numerous risks ii ii tt and We have been transitioning to a subscription-based business model over the past several years. We discontinued broad t licenses for Citrix Workspace in October 2020 and a large portion of our new business has transitioned availability of perpetual to the subscription-based model. We offer our customers the option to acquire new Citrix Workspace licenses in the form of an on-premises subscription or cloud-based subscriptions. However, we will continue to support and renew existing maintenance contracts for the foreseeable future. t As we continue to transition our customers from perpetual t licenses to subscriptions, we expect an impact on the timing of revenue recognition and potential reductions in operating margin and cash flows. Because subscription revenue related to our cloud-based solutions is typically recognized over time, we expect to continue to experience a near-term reduction in revenue and revenue growth as more customers move away from perpetual licenses to subscriptions. We also expect the mix shift within our App Delivery and Security business away from hardware towards software-based solutions will create pressure on reported App Delivery and Security revenue over time. Further, while many of our subscription-based offerings involve multi-year commitments, ultimately our subscription customers may decide not to renew their subscriptions for our solutions after the expiration of the subscription term, or to renew only for a portion of our solutions or on pricing terms that are less favorable to us. Our customers’ renewal rates may decline, fluctuate, or not improve as a result of a number of factors, including their level of satisfaction with our solutions, their ability to continue their operations and spending levels, the pricing of our solutions and the availabila ity of competing solutions. If our customers do not renew their subscriptions for our solutions, demand pricing or other concessions prior to renewal, or if our renewal rates fluctuat results will be negatively affecff e or decline, our total bookings and revenue will fluctuate or decline, and our business and financial ted. t In addition, the metrics we use to gauge the status of our business may evolve over the course of the transition as significant trends emerge. For examplem , we began reporting annualized recurring revenue in the second quarter of 2019 as a key performance indicator of the health and trajectory of our business. We believe that annualized recurring revenue represents the pace of our transition and serves as a leading indicator of revenue trends. Further, we continue to evaluate the metrics and key performance indicators that we use to measure our business internally and those that we provide as external disclosures, and there can be no guarantees that the metrics and key performance indicators that we use internally or disclose externally will prove successful in helping us manage our business or understand important trends. The transition to a subscription-based business model also means that our historical results, especially those achieved before we began the transition, may be difficult to compare to our future results. As a result, investors and financial analysts may have difficulty understanding the shift in our business model, resulting in changes in financial estimates or failure to meet investor expectations. Moreover, we forecast our future revenue and operating results and provide financial projections based on a number of assumptim ons, including a forecasted rate of subscription bookings, as well as the mix within subscription of on-premise versus cloud. If any of our assumptim ons about our business model transition or the estimated mix within subscription of on-premise versus cloud are incorrect, our revenue and operating results may be impacted and could vary materially from those we provide as guidance or from those anticipated by investors and analysts. If we are unable to navigate our transition in light of the foregoing risks and uncertainties, our business, results of operations and financial condition could be negatively impacted. icff ant portion of our revenues histori A signifgg App Delivery and Securityii products, and decreases in sales for these solutions couldll adversely affect our resultsll of operations and financial condition. callyll has come from our Applipp alization cationtt Virtuii ii ii tt and VDI solutions and our A significant portion of our revenues has historically come from our Application Virtualization and VDI solutions and App Delivery and Security products. We continue to anticipate that sales of these solutions and products and related enhancements and upgrades will constitute a majori certain of these solutions and products could occur as a result of: ty of our revenue for the near future. Declines and variability in sales of a • • • new competitive product releases and updates to existing products delivered as on premises solutions, especially cloud-based products; industry trend to focus on the secure delivery of applications on mobile devices; introduction of new or alternative technologies, products or service offerings by third parties; 15 • • • • • • • • • • re to enter new markets; termination or reduction of our product offerings and enhancements; potential market saturation; failuff price and product competition resulting from rapid and frequent technological changes and customer needs; general economic conditions; complexities and cost in implementation; failuff failuff dissatisfied customers; or lack of commercial success of our technology relationships. re to deliver satisfactory technical support; re of our technology to advance our customers’ energy efficiency and greenhouse gas emissions goals; We have experienced increased competition in the Application Virtualization and VDI business from directly competing solutions, alternative products and products on new platforms. For example, AWS and VMware both provide offerings that compete with our solutions, among numerous other competitors. Also, there continues to be an increase in the number of alternatives to Windows operating system powered desktops, in particular mobile devices such as Chromebooks, smartphones and tabla ets. Users may increasingly turn to these devices to perform functions that would have been traditionally performed on desktops and lapta ops, which in turn may reduce the market for our Application Virtual increased use of certain SaaS applications may result in customers relying less on Windows applications. If sales of our Application Virtual results of operations and financial condition would be adversely affecff ization and VDI solutions decline as a result of these or other factors, our revenue would decrease and our ted. ization and VDI solutions. Further, t t t Similarly, we have experienced increased competition for our App Delivery and Security products, including our core Citrix ADC solution. For examplem , there are an increasing number of alternatives to traditional ADC hardware solutions, ng our customers to build internal solutions, rely on open source technology or leverage software and cloud-based enablia offerings. In addition, our App Delivery and Security business generates a substantial portion of its revenues from a limited number of customers with uneven and declining purchasing patterns. As a result, the potential for declining sales within our App Delivery and Security business may not be offset by gains in our other businesses, which could result in our operations and financial condition being adversely affecff ted. If our Workspace strategy Virtua offerings,n we may be unablell ii tt is not successful in addressingii our customers’ evolvill ngii needs beyond traditiii onal Applipp cationtt lizii ation and VDI solutions or we face substantial our Workspace tt to expand our user base and our financial performance could be adversely impactm ed. al or implem mentation challell nges withii technologic tt ll Our success depends on customer and user adoption of our newer products and services. Increased adoption will depend on our ability to deliver a Workspace platform that provides value and use cases beyond traditional Application Virtualization and VDI solutions. The market for solutions that meet our customers’ needs in accessing and organizing their work in a secure way is evolving and dynamic. Further, our growth strategy with respect to our Workspace offerings includes expanding the use of our platform through integrations with a variety of network, hardware and software systems, including human resource information and enterprise resource planning and customer relationship management systems, including through the interaction of application programming interfaces (APIs). While we have established relationships with providers of complem mentary technology offerings and software integrations, we may be unsuccessful in maintaining relationships with these providers or establia relationships with new providers. Third-party providers of complementary technology offerings and software integrations may decline to enter into, or may later terminate, relationships with us; change their features or platforms; restrict our access to their applications and platforms; or alter the terms governing use of and access to their applications and APIs in an adverse manner. Such changes could functionally limit or terminate our ability to use these third-party technology offerings and software integrations with our platform, which could negatively impact our offerings and harm our business. Further, we recently have undertaken efforts to build a developer community around our Workspace platform. However, our developer community is new and it remains unclear if it will successfully generate third-party developer interest in creating new integrations or additional uses for our services. shing t Delivering our new solutions and our Workspace vision presents technological and implementation challenges, and may fail to meet our customers' needs. Significant investments continue to be required to develop or acquire solutions to address those challenges. To the extent that our newer products and services are adopted more slowly or are displaced by competitive solutions offered by other companies, our revenue growth rates may slow materially or our revenue may decline substantially, we may fail to realize returns affected. on our investments in new initiatives and our operating results could be materially adversely t 16 F o r m 1 0 - K We face intens tt e competitiii on, which could resultll in customer loss, fewer customer orders and reduced revenues and margins. ii t We sell our solutions and services in intensely competitive markets. Some of our competitors and potential competitors have significantly greater financial, technical, sales and marketing and other resources than we do. We compete based on our ability to offer to our customers the most current and desired solution and services features. We expect that competition will continue to be intense, and there is a risk that our competitors’ products may be less costly, more heavily discounted or free, provide better performance or include additional features solutions may become outdated or that our market share may erode. Further, the announcement of the release, and the actual release, of new solutions incorporating similar features to our solutions could cause our existing and potential customers to postpone or cancel plans to license certain of our existing and futuret and services that provide alternatives to our solutions and services could materially impact our ability to compete in these markets. As the markets for our solutions and services, especially those solutions in early stages of development, continue to develop, additional companies, including companies with significant market presence in the computer hardware, software, cloud, networking, mobile, data sharing and related industries, could enter, or increase their footprint in, the markets in which we competm e and further intensify competition. In addition, we believe price competition will remain a significant competitive factor in the future. As a result, we may not be able to maintain our historic prices and margins, which could adversely affect our business, results of operations and financial condition. solution and service offerings. Existing or new solutions when compared to our solutions. Additionally, there is a risk that our We expect to continue to face additional competition as new participants enter our markets and as our current competitors seek to increase market share. Further, we may see new and increased competm ition in different geographic generally low barriers to entry in certain of our businesses increase the potential for challenges from new industry competitors, whether small and medium-sized businesses or larger, more establia es. Smaller companies new to our market may have more flexibility to develop on more agile platforms and have greater ability to adapt their strategies and cost structures, which may give them a competitive advantage with our current or prospective customers. We may also experience increased competition from new types of solutions as the options for Workspace and App Delivery and Security offerings increase. Further, as our industry evolves and if our company grows, companies with which we have strategic alliances may become competitors in other product areas, or our current competitors may enter into new strategic relationships with new or existing competitors, all of which may further increase the competitive pressures we face. shed companim regions. The a In addition, the industry has been volatile and there has been a trend toward industry consolidation in our markets for es continue to seek to deliver comprehensive IT solutions to end users and combine enterprise-level hardware and several years. We expect companies will attempt to strengthen or hold their market positions in an evolving and volatile industry. For example, some of our competitors have made acquisitions or entered into partnerships or other strategic relationships to offer a more comprehensive solution than they had previously offered. Additionally, as IT companies attempt to strengthen or maintain their market positions in the evolving digital workspace services, networking and data sharing markets, these companim software solutions that may compete with our Workspace and App Delivery and Security solutions. These consolidators or potential consolidators may have significantly greater financial, technical and other resources and brand loyalty than we do, and may be better positioned to acquire and offer complementary solutions and services. The companies resulting from these possible combinations may create more compelling solution and service offerings and be able to offer greater pricing flexibility or sales and marketing support for such offerings than we can. These heightened competitive pressures could result in a loss of customers or a reduction in our revenues or revenue growth rates, all of which could adversely affecff operations and financial condition. t our business, results of Refer to Part I, Item 1 “Business” included in this Annual Report on Form 10-K for the year ended December 31, 2020 for a description of our competition. ruc Actual or perceived security vulnerabilitll iett s in our products and services or cyberattacks on our services infrast ture or tt ial conditiii on. corporate networks could have a material adverse impactm n ii and financ results of operations on our business, rr ii tt Use of our products and services has and may involve the transmission and/or storage of data, including in certain instances our own and our customers' and other parties’ business, financial and personal data. As we continue to evolve our products and features, we expect to host, transmit or otherwise have access to increasing amounts of potentially sensitive data. For examplem , we have recently added, and expect to continue to add, intelligence features to our Workspace offering that involve connections into a customer’s systems and applications, including enterprise resource planning and human resource management tools. Maintaining the security of our products, computer networks and data storage resources is important and service vulnerabilities could result in loss of and/or unauthorized access to confidential information. We have in the past, and may in the future, operations and our customers to risk. In addition, to the extent we are diverting our resources to address and mitigate these vulnerabilities, it may hinder our ability to deliver and support our products and customers in a timely manner. For example, in December 2019, we discovered a vulnerability in our Citrix Application Delivery Controller, Citrix Gateway and certain ities in our products or underlying technology, which could expose our reputation, our discover vulnerabila t 17 deployments of Citrix SD-WANAA that would have allowed an unauthenticated attacker to perform arbit response, we published a security advisory with detailed mitigations designed to stop a potential attack across all known scenarios and also developed and made available fixes to address this vulnerability, and such efforts required significant investment of resources across the company. r rary code execution. In a As a more general matter, unauthorized parties may attempt to misappropria te, alter, disclose, delete or otherwise compromise our confidential information or that of our employees, partners, customers or their end users, create system disruptions, product or service vulnerabilities or cause shutdowns. These unauthorized parties are becoming increasingly sophisticated, particularly those funded by or acting as formal or informal representatives of, or acting in conjunction with, nation states. Perpetrators of cyberattacks also may be able to develop and deploy viruses, worms, malware and other malicious software programs that directly or indirectly attack our products, services, infrastructuret providers - such as Microsoft Azure, AWS and Google Cloud Platform - upon which we rely), third-party software and a applications that we deploy in our internal network. Because techniques used by these perpetrators to sabot age or obtain unauthorized access to our systems change frequently and sometimes are not recognized until long afteff r being launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. Despite our efforts to build secure services, we can make no assurance that we will be able to detect, prevent, timely and adequately address, or mitigate the negative effects of cyberattacks or other security compromises. Like many enterprises, we experience attempted attacks on our network and services, and certain of those attacks have resulted in successful unauthorized access to our networks and services, including a “password spraying” attack in 2019 and a “credential stuffing” attack in 2018. (including third-party cloud service These misappropriations, cyberattacks or any other compromises of our security measures (or those of one of our customers) as a result of third-party action, malware, employee error, vulnerabila result in (among other consequences): ities, theft, malfeasance or otherwise could • • • • • • • • • ons in the operation of our business, such as interruption in the delivery of our cloud and other services; loss or destruction of customer, employee, partner and other Citrix intellectual property or business data; disrupti r costs associated with investigating, responding to and remediating the root cause, including additional monitoring of systems for unauthorized activity; negative publicity and harm to our reputation or brand, which could result in lost trust from our customers, partners and employees and could lead some customers to seek to cancel subscriptions, stop using certain of our products or services, reduce or delay future purchases of our products or services, or use competing products or services; individual and/or class action lawsuits, due to, among other things, the compromise of sensitive employee or customer information, which could result in financial judgments against us or the payment of settlement amounts and cause us to incur legal fees and costs; regulatory enforcement action in the United States at both the federal and state level (such as by the Federal Trade Commission and/or state attorneys general) or globally under the growing number of data protection legal regimes, including without limitation the General Data Protection Regulation, or GDPR, and the California Consumer Privacy Act, or CCPA, or other similar federal, state or local laws, which could result in significant fines and/or penalties or other sanctions and which would cause us to incur legal fees and costs; costs associated with responding to those impacm ted by such issues, such as: costs of providing data owners, consumers or others with notice; legal fees; costs of any additional fraud detection activities required by such customers' credit card issuers; and costs incurred by credit card issuers associated with the compromise; disputes with our insurance carriers concerning coverage for the costs associated with responding to, and mitigating an incident; and/or longer-term remediation and security enhancement expenses. Any of these actions could materially and adversely impact our business, results of operations and financial condition. Further, while we maintain multiple layers of oversight over enterprise cybersecurity and data protection risks associated with our products, services, information technology infrastructuret cybersecurity risk oversight committee comprised of senior executives across core functions, as well as our Technology, Data and Information Security Committee of the Board – there is no guarantee that this oversight framework will be successful in providing the necessary governance to prevent or adequately respond to the actions described above. and related operations – including our management-level The effects of the COVID-19 pandemic are uncertainii and couldll adversely affect our business, financial conditiii on and cash flows, ii on future developments.tt and such effects willll depend ee ll results of operations, tt The COVID-19 pandemic has created significant worldwide uncertainty, volatility and economic disruption. The ultimate impact of the COVID-19 pandemic on our business, results of operations, financial condition and cash flows is dependent on future developments, including the duration of the pandemic, the severity of the disease and outbreak, the impact of new strains of the virus, effect iveness and availability of a vaccine, future and ongoing actions that may be taken by governmental ff 18 F o r m 1 0 - K authorities, the impact on the businesses of our customers and partners, and the length of its impacm t on the global economy, ts of the COVID-19 pandemic, each of which which are uncertain and are difficult to predict at this time. The potential effecff could adversely affecff t our business, results of operations, financial condition and cash flows, include: • • • • • • • • • al to shareholders. Further, our ability to obtain outside financing or raise additional capita to collect amounts due on billed and unbilled revenue if our customers or partners delay payment the rate of IT spending and the ability of our customers to purchase our offerings could be adversely impacted. Further, the impact of the COVID-19 pandemic could delay prospective customers’ purchasing decisions and cause them to become less inclined to trade-up from existing solutions, impact customers’ pricing expectations for our offerings, lengthen payment terms, reduce the value or duration of their subscription contracts, or adversely impact renewal rates; we could experience disruptions in our operations as a result of continued office closures, risks associated with our employees working remotely, a significant portion of our workforce suffering illness and travel restrictions. Starting in early 2020, we temporarily closed Citrix offices, institutet d d a global remote work mandate and institutet significant travel restrictions. While we have begun to re-open some of our offices, the vast majoa rity of our employees continue to work remotely and for our offices that have begun to re-open, we have implemented significant new safety protocols, which may limit the effectiveness and productivity of our employees; we may be unablea or fail to pay us under the terms of our agreements as a result of the impact of the COVID-19 pandemic on their businesses, including their seeking bankruptcy protection or other similar relief. As a result, our cash flows could be adversely impacted, which could affect our ability to fund future product development and acquisitions or return capita result of volatility in the financial markets during and following the COVID-19 pandemic; if we do not generate sufficient cash flow or our financial condition deteriorates, we may be unablea debt arrangements or comply with the covenants set forth in our debt arrangements; we may experience disruptions or delays to our supply chain or fulfillment and delivery operations as a result of the COVID-19 pandemic. For examplem , we rely on a concentrated number of third-party suppliers and delivery vendors for our App Delivery and Security products, and may experience disruptions from the temporary closure of third- party supplier and manufacturer disruptions in product fulfillment due to closure or delays of our delivery vendors; our marketing effectiveness and demand generation efforts may be impacted due to the cancelling of customer events or shifting events to virtual-only experiences. For example, we made the decision to replace our largest annual customer and partner event, Synergy, with a series of virtual -only events. We may need to postpone or cancel other customer, employee or industry events or other marketing initiatives in the future; our business is dependent on attracting and retaining highly skilled employees, and our ability to attract and retain such employees may be adversely impacted by intensified restrictions on travel, immigration, or the availability of work visas during the COVID-19 pandemic; increased cyber incidents during the COVID-19 pandemic and our increased reliance on a remote workforce could increase our exposure to potential cybersecurity breaches and attacks; and/or our results of operations are subject to fluctuations in foreign currency exchange rates, which risks may be heightened due to increased volatility of foreign currency exchange rates as a result of COVID-19. facilities, interruptions in product supply, restrictions on export or shipment or al may be limited as a to service our t t Further, our forecasted revenue, operating results and cash flows could vary materially from those we provide as guidance or from those anticipated by investors and analysts if the assumptions on which we base our financial projections are inaccurate as a result of the unpredictabila ity of the impact that the COVID-19 pandemic will have on our businesses, our customers’ and partners’ businesses and the global markets and economy or we make changes to our licensing programs or payment terms in connection with COVID-19. For example, we experienced increased demand for our solutions in the first half of 2020 primarily as a result of our decision to make limited use Workspace licenses of Citrix Workspace available in the form of shorter- duration, discounted on-premises term offerings in response to the COVID-19 pandemic. However, the transition of customers from on-premises subscriptions to cloud-based offerings did not progress during the first half of 2020 at the rate we had anticipated at the beginning of the year, as many of our customers chose on-premises subscriptions rather than migrating their Citrix Workspace deployments to cloud-based subscriptions, which we believe was primarily a consequence of our customers’ priorities in light of the early phases of the pandemic. While this global health crisis may cause companies and their employees to change the way they think about remote work over the longer-term, demand for our products may decrease as a vaccine becomes widely available and social distancing restrictions abate. As a result, the revenue growth of any prior quarterly or annual period is not an indication of our futuret performance. In the aftermath of the pandemic, we are preparing for the likelihood that an increasing number of our employees may continue to work remotely, and may not require physical office space in order to perform their work. If so, we may reduce our physical officff e space requirements resulting in the possibility of additional near-term expense and accounting charges. 19 To the extent the COVID-19 pandemic adversely affects our business, results of operations, financial condition and cash flows, it may also heighten many of the other risks described in this “Risk Factor” Section. Our business ii could be adversely impactm edtt by conditions tt affectingii the informn ation technology market in which we operate. The markets for our solutions and services are characterized by: • • • • • rapid technological change; evolving industry standards; fluff ctuations in customer demand; changing customer business models and increasingly sophisticated customer needs; and ff freque nt new solution and service introductions and enhancements. The demand for our solutions and services depends substantially upon the general demand for business-related computer appliances and software, which fluctuates based on numerous factors, including capia tal spending levels, the spending levels and growth of our current and prospective customers, and general economic conditions. As we continue to grow our subscription service offerings, we must continue to innovate and develop new solutions and features to meet changing customer needs. Our failure to respond quickly to technological developments or customers’ increasing technological requirements could lower the demand for any solutions and services and/or make our solutions uncompetm itive and obsolete. Moreover, the purchase of our solutions and services is often discretionary and may involve a significant commitment of capia tal and other resources. We need lities to capia talize on existing and emerging technologies, which will require to continue to develop our skills, tools and capabi us to devote significant resources. a U.S. economic forecasts for the IT sector are uncertain and continue to highlight an industry in transition from legacy platforms to mobile, cloud, data analytics and social solutions. If our current and prospective customers cut costs, they may significantly reduce their IT expenditures. Additionally, if our current and prospective customers shift their IT spending more rapidly towards newer technologies and solutions as mobile, cloud, data analytics and social platforms evolve, the demand for our solutions and services most aligned with legacy platforms (such as our desktop virtualization solutions) could decrease. Fluctuat t operations and financial condition. ions in the demand for our solutions and services could have a material adverse effect on our business, results of lationtt Regue ii complim ance vacyc and data securityii may adversely affect sales of our products and services and resultll in increased of pri ff costs. There has been, and we believe that there will continue to be, increased regulation with respect to the collection, use and handling of personal, financial, government and other information. An increasing number of regulatory authorities in the United States and around the world have recently passed or are currently considering a number of legislative and regulatory proposals concerning data protection, privacy and data security. This includes the California Consumer Privacy Act, or CCPA, which came into effect in January 2020, the GDPR, which is a European Union-wide legal framework to govern data collection, use and sharing and related consumer privacy rights that became effective in May 2018, and the U.S. Department of Defense Cybersecurity Maturity Model Certification framework. The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that may increase data breach litigation. The GDPR provides significant penalties for non-compliance (up to 4% of global revenue). European data protection authorities have already imposed fines for GDPR violations up to, in some cases, hundreds of millions of Euros. Many states in the United States are also considering their own privacy laws that, in the absence of a preemptive Federal privacy law, could impose burdensome and conflicting requirements. The interpretation and application of consumer and data protection laws, as well as cybersecurity requirements, and industry standards in the United States, Europe and elsewhere can be uncertain and currently is in flux. Cloud-based solutions may be subject to further regulation, including data localization requirements and other restrictions concerning international transfer of data, the operational and cost impact of which cannot be fully known at this time. In addition to the possibility of fines, application of these existing laws in a manner inconsistent with our data and privacy practices could result in an order requiring that we change our data and privacy practices, which could have an adverse effect Complying with these various laws could cause us to incur substantial implementation and compliance costs and/or require us to change our business practices in a manner adverse to our business. Also, any new law or regulation, or interpretation of existing law or regulation, imposing greater fees or taxes or restriction on the collection, use or transfer of information or data internationally or over the Web, could result in a decline in the use and adversely affecff t sales of our solutions and our results of operations. Finally, as a technology vendor, our customers and regulators will expect that we can demonstrate compliance with current data privacy and security regulations as well as our privacy policies and the information we make availablea customers and the public about our data handling practices, and our inabila solutions and services to certain customers, particularly customers in highly-regulated industries, and could result in regulatory actions, fines, legal proceedings and negatively impact our brand, reputation and our business. ity to do so may adversely impact sales of our on our business and results of operations. to our ff 20 Our solutions couldll containii errors that could delay the release of new products or otherwise adversely impactm and services. our products r commercial shipments or deployments have been made. Errors in our products or services could delay Despite significant testing by us and by current and potential customers, our products and services, especially new products and services or releases or acquired products or services, do contain errors or "bugs". In some cases, these errors are not discovered until afteff the development or release of new products or services and could adversely affect market acceptance of our products and services. Additionally, our products and services use, integrate with and otherwise depend on third-party products, which third- party products could contain defects and could reduce the performance of our products or render them useless. Because our products and services are often used in mission-critical applications, errors in our products or services or the products or services of third parties upon which our products or services rely could give rise to warranty or other claims by our customers, which could have a material adverse effecff t on our business, financial condition and results of operations. F o r m 1 0 - K Certain of our offerings have sales cycles which are longn and/or unpredictablell which could cause significi unpredictabiliii tyii in our revenue and operatingtt for any particular period. resultsll ant variabiliii tyii and Generally, a substantial portion of our large and medium-sized customers implement our solutions on a departmental or enterprise-wide basis. We have a long sales cycle for these departmental or enterprise-wide sales because: • • • • our sales force generally needs to explain and demonstrate the benefits of a large-scale deployment of our solution to potential and existing customers prior to sale; our service personnel typically spend a significant amount of time assisting potential customers in their testing and evaluation of our solutions and services; our customers are typically large and medium-sized organizations that carefully research their technology needs and the many potential projects prior to making capita beforeff making a purchase, our potential customers usually must get approvals from various levels of decision makers within their organizations, and this process can be lengthy. for software infrastructure; and al expenditures t Our long sales cycle for these solutions makes it difficult to predict when these sales will occur, and we may not be able to sustain these sales on a predictable basis. In addition, the long sales cycle for these solutions makes it difficult to predict the quarter in which sales will occur. Delays in sales could cause significant variability in our bookings, revenue and/or operating results for any particular period, and large projects with significant IT components may fail to meet our customers’ business requirements or be canceled before delivery, which likewise could adversely affecff t our revenue and operating results for any particular period. Overall, the timing of our revenue is difficult to predict. Our quarterly sales have historically reflected an uneven pattern in which a disproportionate percentage of a quarter’s total sales occur in the last month, weeks and days of each quarter. In addition, our business is subject to seasonal fluctuations and such fluctuations are generally most significant in our fourth fiscal quarter, which we believe is due to the impact on revenue from the availability (or lack thereof) in our customers’ fiscal year budgets and an increase in expenses resulting from amounts paid pursuant to our sales compensat milestones are often triggered in the fourth quarter. We believe that these seasonal factors are common within our industry. In addition, our European operations generally generate lower sales in the summer months because of the generally reduced economic activity in Europe during the summer. ion plans as performance m Changes to our licensing or subscription renewal programs, or bundlingll of our recognitiontt of revenue.ee of our solutions, couldll negatively impactm the timi ii ngii We continually re-evaluate our licensing programs and subscript ion renewal programs, including specific license models, u delivery methods, and terms and conditions, to market our current and future solutions and services. We could implement new licensing programs and subscription renewal programs, including promotional trade-up programs or offering specified enhancements to our current and futuret until the specified enhancement is delivered or at the end of the contract term as opposed to upon the initial shipment or licensing of our software solution. We could implement different licensing models in certain circumstances, for which we would recognize licensing fees over a longer period, including offering additional solutions in a SaaS model. Changes to our licensing programs and subscript maintenance releases, the term of the contract, discounts, promotions, auto-renewals and other factors, could impact the timing of the recognition of revenue for our solutions, related enhancements and services and could adversely affect results and financial condition. ion renewal programs, including the timing of the release of enhancements, upgrades, solution and service lines. Such changes could result in deferring revenue recognition our operating u ff 21 Sales and renewals of our support solutions constitut ett a large portion of our deferred revenue.ee ii We anticipate that sales and renewals of our support solutions will continue to constitute a substantial portion of our deferred revenue. Our ability to continue to generate both recognized and deferred revenue from our support solutions will depend on our customers continuing to perceive value in automatic delivery of our softff ware upgrades and enhancements. The discontinued broad availabila opportunities to sell support solutions. Additionally, a decrease in demand for our support solutions could occur as a result of a decrease in demand for our Workspace and App Delivery and Security solutions or transition to our subscription-based solutions. If our customers do not continue to purchase our support and our results of operations and financial condition would be adversely affected. ity of perpetual licenses for Citrix Workspace in October 2020 resulted in the loss of future solutions, our deferred revenue would decrease significantly u ii We rely on indirect distri buti ii on channels and majora distributors tt that we do not control.ll We rely significantly on independent distributors and resellers to market and distribute our solutions and services. Our distributors generally sell through resellers. Our distributor and reseller base is relatively concentrated. We maintain and periodically revise our sales incentive programs for our independent distributors and resellers, and such program revisions may adversely impact our results of operations. Changes to our sales incentive programs can result from a number of factors, including our transition to a subscription-based business model. Our competitors may in some cases be effective in providing incentives to current or potential distributors and resellers to favor their products or to prevent or reduce sales of our solutions. The loss of or reduction in sales to our distributors or resellers could materially reduce our revenues. Further, we could maintain individually significant accounts receivable balances with certain distributors. The financial condition of our distributors could deteriorate and distributors could significantly delay or default on their payment obligations. Any significant delays, defaults or terminations could have a material adverse effect on our business, results of operations and financial condition. We are in the process of diversifying our base of channel relationships by adding and training more channel partners with abilities to reach larger enterprise customers and additional mid-market customers and to sell our newer solutions and services. We are also in the process of building relationships with new types of channel partners, such as systems integrators and service providers. In addition to this diversification of our partner base, we will need to maintain a healthy mix of channel members who service smaller customers. We may need to add and remove distribution partners to maintain customer satisfaction, support a steady adoption rate of our solutions, and align with our transition to a subscription-based business model, which could increase our operating expenses, credit risk, and adversely impact our go-to-market effecff tiveness. In addition, our newer iently implement our solutions, and there is no Workspace offerings may require additional technical capabi ff guarantee we will be able to find a sufficient number of capabl that our existing or newer channel partners will fail to comply with US or international anti-corruption or anti-competition laws, in which case we might be fined or otherwise penalized as a result of the agency relationship with such partners. We are currently investing, and intend to continue to invest, significant resources to develop these channel relationships, which could adversely impact our results of operations if such channels do not result in increased revenues. e partners who can support these efforts. We also bear the risk lities to efficff a a Our App Delivery and Securityii business hardware component dd stt from our thirdi m ii -part could suffer if there are any interruptions ytt sources. tt or delaysyy in the supplyll of hardware or We rely on a concentrated number of third-party suppliers, who provide hardware or hardware components for our App Delivery and Security products, and contract manufacturers. If we are required to change suppliers, there could be a delay in the supply of our hardware or hardware components and our ability to meet the demands of our customers could be adversely affected, which could cause the loss of App Delivery and Security sales and existing or potential customers and delayed revenue recognition all of which could adversely affect material difficulties or delays in the manufacturet encounter problems during manufacturing procedures, failure to comply with applicablea comply with applicablea and environmental factors, any of which could delay or impede their ability to meet our demand. our results of operations. While we have not, to date, experienced any and assembly of our App Delivery and Security products, our suppliers may regulations (including regulations related to conflict minerals), equipment malfunction, natural due to a variety of reasons, including failure to follow specificff protocols and regulations, or the need to implement costly or time-consuming protocols to disasters ff t t In order to be successful,ll we must attract, place, and failure to do so could have an adverserr engage, retainii and integrat t on our abiliii tyii effecff ett keye emplm oye to manage our business. tt tt ii ll es and have adequate succession plans in Our success depends, in large part, on our ability to attract, engage, retain, and integrate qualified executives and other key employees throughout all areas of our business. Identifying, developing internally or hiring externally, training and retaining a diverse, global population of highly-skilled engineering, technical and security professionals, and managerial, sales and services, finance and marketing personnel are critical to our future, and global competition for experienced and diverse t employees can be intense. In order to attract and retain executives and other key employees in a competitive marketplace, we 22 must provide a competitive compensation package, including cash and equity-based compensation. If we do not obtain the stockholder approval needed to continue granting equity compensation in a competitive manner, our ability to attract, retain, and motivate executives and key employees could be weakened or we would otherwise need to increase our use of cash-based compensation and awards to achieve the same attraction, retention and motivation benefits. In order to attract and retain executives and other key employees in a competitive marketplace, we must also provide a diverse and inclusive environment, tiveness in and offer benefits to support our employees’ physical and mental health. Our inabila attracting, retaining and motivating our executives and key employees. Failure to successfully hire executives and key employees or the loss of any executives and key employees could have a significant impact on our operations. Competition for qualified personnel in our industry is intense because of the limited number of people available with the necessary technical skills and understanding of solutions in our industry. The loss of services of any key personnel, the inabila qualified personnel in the future or delays in hiring may harm our business and results of operations. ity to do so may limit our effecff ity to retain and attract Effective succession planning is also important to our long-term success. We have experienced significant changes in our F o r m 1 0 - K a senior management team over the past several years, including the appointments of Mark Schmitz as our Executive Vice President and Chief Operating Officer in 2019, Arlen R. Shenkman as our Executive Vice President and Chief Financial Officer in 2019, Sridhar Mullapudi as our Executive Vice President, Product Management in 2020, Hector Lima as our Executive Vice President, Customer Experience in 2020, and Woong Joseph Kim as our Executive Vice President and Chief Technology Officer in 2020. Failure to ensure effective transfer of knowledge and smooth transitions involving key employees could hinder our strategic planning and execution. Further, changes in our management team may be disruptive to our business, and any failure to successfully integrate key new hires or promoted employees could adversely affecff operations. t our business and results of rr Our intertt nation al presence subjects us to additional tt ii risks that could harm our business. ii We conduct significant sales and customer support, development and engineering operations in countries outside of the United States. During the year ended December 31, 2020, we derived 50.5% of our net revenues from sales outside the United States. Potential growth and profitability could require us to further expand our international operations. To successfully maintain and expand international sales, we may need to establish additional foreign operations, hire additional personnel and recruit additional international resellers. Our international operations are subject to a variety of risks, which could adversely affect the results of our international operations. These risks include: • • • • • • • • • • • • • • • • a payment cycles; conditions and global policy uncertainty, including re-locating lties in enforcing and protecting intellectual property rights, including increased difficff compliance with foreign regulatory and market requirements, including the requirement to submit additional technical information for product registration in order to sell in certain countries; variability of foreign economic, political, labor operations internationally; changing restrictions imposed by regulatory requirements, tariffs or other trade barriers or by U.S. export laws; regional data privacy, security, secrecy and related laws that apply to the transmission of and protection of our and our customers’ data across international borders; health or similar issues such as pandemic or epidemic; diffiff culties in staffing and managing international operations; longer accounts receivablea potentially adverse tax consequences; difficuff in those international locations; providing technical information in order to obtain foreign filing licenses for filing our patent applications in certain countries; increased risk of non-compliance by foreign employees, partners, distributors, resellers and agents or other intermediaries with both U.S. and foreign laws, including antitrust regulations, the Foreign Corrupt Practices Act, the U.K. Bribery Act, U.S. or foreign sanctions regimes and export or import control laws and any trade regulations ensuring fair trade practices; burdens of complying with a wide variety of foreign laws; the impacm t of the COVID-19 pandemic internationally and related legal restrictions imposed in foreign nations; expansion of cloud-based products and services may increase risk in countries where cloud computing infrastructures are more susceptible to data intrusions or may be controlled directly or indirectly by foreign governments; our software and data of our customers being stored in foreign jurisdictions, which could lead to us being required to disclose or provide access to data or intellectual other laws of such foreign jurisdiction; and as we generate cash flow in non-U.S. jurisdictions, if required, we may experience difficulty transferring such funds to the U.S. in a tax efficient manner. property to a foreign government pursuant to national security or ulty as a foreign entity t 23 Additionally, an increasing number of jurisdictions are imposing data localization laws, which require personal information, or certain subcategories of personal information, to be stored in the jurisdiction of origin. These regulations may deter customers from using cloud-based services such as ours, and may inhibit our ability to expand into those markets or prohibit us from continuing to offer services in those markets without significant additional costs. Specifically, we operate in Russia where there is a local residency requirement for personal data. We do not own or operate servers in Russia. As such, to- date, we have not offered our cloud-based offerings in Russia. Further, if we complete our acquisition of Wrike, our employee presence in Russia will increase, thereby adding to our exposure to certain of the risks identified herein, including risks related to the political, security and policy uncertainty between the United States and Russia. We operate and do business in China. Under the China Cyber Security Law, or CSL, network operators are required to provide technical support and assistance to public and state security authorities in national security and criminal investigations. The law does not provide details on the extent of technical support and assistance that may be required. There is the possibility that network operators may be required to disclose or provide access to information or data communicated or transmitted through the network owned, utilized or managed by the network operator to comply with the support and assistance requirement of the CSL. While we do not consider Citrix to be a network operator, there is the possibility that China could decide to treat Citrix as a network operator, and we would need to comply with this law. We have had and may, from time to time, enter into strategic partnerships, joint ventures, OEM or similar business relationships with entities in foreign jurisdictions, including governmental or quasi-governmental entities, pursuant to which we property rights to such entities. Such relationships could expose may be required to license or transfer certain of our intellectual us to increased risks inherent in such activities, such as protection of our intellectual property, economic and political risks, and contractual enforcement issues. t We are also monitoring developments related to the decision by the British government to leave the European Union (EU) following a referendum in June 2016 in which voters in the United Kingdom approved an exit from the EU (often referred to as “Brexit”), which could have implications for our business. The United Kingdom ceased to be a member state of the EU on January 31, 2020, and the transition period provided for in the withdrawal agreement entered into by the United Kingdom and the EU ended on December 31, 2020. Brexit could lead to economic and legal uncertainty, including volatility in global stock markets and currency exchange rates, and increasingly divergent laws, regulations and licensing requirements. Any of these effects of Brexit, among others, could adversely affecff t our operations and financial results. Our success depends, in part, on our ability to anticipate and address these risks. We cannot guarantee that these or other factors will not adversely affect our business or results of operations. Adverse changes in global ll economic conditions couldll adversely affect our operatingn results. ll a As a globally operated company, we are subject to the risks arising from adverse changes in global economic and market locations, including the potential impact resulting conditions. Economic uncertainty and volatility in our significant geographic from "Brexit", a US-China trade war or other international trade disputes, or military conflict may adversely affect sales of our solutions and services and may result in longer sales cycles, slower adoption of technologies and increased price competition. For examplem , if the U.S. or the European Union countries were to experience an economic downturn, these adverse economic conditions could contribute to a decline in our customers’ spending on our solutions and services. Additionally, in response to economic uncertainty, we expect that many governmental organizations that are current or prospective customers for our solutions and services would cutbac and demand for our solutions and services from government organizations. Adverse economic conditions also may negatively impact our ability to obtain payment for outstanding debts owed to us by our customers or other parties with whom we do business. k spending significantly, which would reduce the amount of government spending on IT ff t RISKS RELATED TO ACQUISITIONS, STRATEGIC RELATIONSHIPS AND DIVESTITURES Acquisitions tt and divestitures present many risks, ii and we maya not realizell the financial and strategi tt c goalsll we anticipate.tt We have in the past addressed, and may continue to address, the development of new solutions and services and enhancements to existing solutions and services through acquisitions of other companies, product lines and/or technologies. For example, on January 16, 2021, we entered into a definitive agreement to acquire Wrike, a SaaS collaborative work management solution company. Completion of the acquisition of Wrike is subject to various regulatory approvals and closing conditions. No assurance can be given that the required approvals will be obtained or that the required conditions to closing will be satisfied. Any delay in completing the merger could cause the combined company not to realize, or to be delayed in realizing, some or all of the benefits of the merger. Refer to Part I, Item 1 “Business” and Note 19 to our consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2020 for a description of our pending acquisition of Wrike. 24 F o r m 1 0 - K Acquisitions, including those of high-technology companies, such as Wrike, are inherently risky. We cannot provide any assurance that any of our acquisitions or future acquisitions will be successful in helping us reach our financial and strategic goals. The risks we commonly encounter in undertaking, managing and integrating acquisitions, including Wrike, are: • • • • • • • • • • • • • • • • • • • an uncertain revenue and earnings stream from the acquired company, which could dilute our earnings; diffiff culties and delays integrating the personnel, operations, technologies, solutions and systems of the acquired companies; diffiff culties operating acquired companies as a stand-alone business, if desired, to further our objectives and strategy; undetected errors or unauthorized use of a third-party’s code in solutions of the acquired companies; our ongoing business may be disrupted and our management’s attention may be diverted by acquisition, transition or integration activities; challenges with implementing adequate and appropriate controls, procedures and policies in the acquired business; diffiff culties managing or integrating an acquired company’s technologies or lines of business; potential difficulties in completing projects associated with purchased in-process research and development; entry into markets in which we have no or limited direct prior experience and where competitors have stronger market positions and which are highly competitive; the potential loss of key employees of the acquired company; potential difficulties integrating the acquired solutions and services into our sales channel or challenges selling acquired products; assuming pre-existing contractual into, the termination or modification of which may be costly or disruptive to our business; being subject to unfavorablea practices; potential difficulties securing financing necessary to consummate substantial acquisitions; incurring a significant amount of debt to finance an acquisition, which would increase our debt service requirements, expense and leverage; issuing shares of our stock, which may be dilutive to our stockholders; y issuing equity awards to, or assuming existing equity awards of, acquired employees, which may more rapidl deplete share reserves availablea intellectual property claims or disputes; and litigation arising from the transaction. relationships of an acquired company that we would not have otherwise entered under our shareholder-approved equity incentive plans; revenue recognition or other accounting treatment as a result of an acquired company’s a t t Our failure to successfully integrate acquired companies due to these or other factors could have a material adverse effecff on our business, results of operations and financial condition. In addition, if we fail to identify and successfully complete and integrate transactions, or successfully operate acquired companies on a stand-alone basis, that further our strategic objectives, we may be required to expend resources to develop products, services and technology internally, which may put us at a competitive disadvantage. For example, with respect to the pending acquisition of Wrike, we may not be able to accelerate our strategy and cloud transition, enhance our growth or accelerate Wrike’s growth expectations, provide complementary solutions that are purchased by our or Wrike’s customers, reach new users and expand our customer base, competm e effect ively in Wrike's markets, or realize other expected benefits of the merger if we are unablea acquisition is completed. to successfully integrate and operate Wrike if the ff Any future divestitures we make may also involve risks and uncertainties. Any such divestitures could result in disruption to other parts of our business, potential loss of employees or customers, exposure to unanticipated liabilities or result in ongoing obligations and liabilities to us following any such divestiture. we may enter into transition services agreements or other strategic relationships, including long-term services arrangements, or agree to provide certain indemnities to the purchaser in any such transaction, which may result in additional expense. Further, if we do not realize the expected benefits or synergies of such transactions, our operating results and financial conditions could be adversely affected. For example, in connection with a divestiture, t t t If we determine that any of our goodwillll or intangiblell assets, including technology purchased in acquisitiii ons, are impaire d, adverse effect on our resultsll of operations. we would be required to take a charge to earnings, which could have a material m tt We have a significant amount of goodwill and other intangible assets, such as product related intangible assets, from our acquisitions. We do not amortize goodwill and intangible assets that are deemed to have indefinite lives. However, we do amortize certain product related technologies, trademarks, patents and other intangibles and we periodically evaluate them for impairment. We review goodwill for impairment annually, or sooner if events or changes in circumstances indicate that the carrying amount could exceed fair value, at the reporting unit level, which for us also represents our operating segments. Significant judgments are required to estimate the fair value of our goodwill and intangible assets, including estimating futuret 25 t could materially affecff industry trends and market conditions, and making other assumptions. Although we believe the cash flows, determining appropriate discount rates, estimating the applicable tax rates, foreign exchange rates and interest rates, projecting the futuret assumptim ons, judgments and estimates we have made have been reasonable and appropriate, different assumptions, judgments and estimates, materially affect our results of operations. Changes in these estimates and assumptions, including changes in our t our determinations of fair value. In addition, due to uncertain market conditions and reporting structure, our goodwill and other potential changes in our strategy and product portfolio, it is possible that the forecasts we use to support intangible assets could change in the future, which could result in non-cash charges that would adversely affecff t our results of operations and financial condition. Also, we may make divestitures of businesses in the future. If we determine that any of the intangible assets associated with our acquisitions is impaired or goodwill is impaim red, then we would be required to reduce the value of those assets or to write them off completely by taking a charge to current earnings. If we are required to write down or write off all or a portion of those assets, or if financial analysts or investors believe we may need to take such action in the future, our stock price and operating results could be materially and adversely affecff ted. u Our inabilityii to maintainii or develop our strategi tt c and technology ll ll relati onshipsii couldll adversely affect our business. ii We have several strategic and technology relationships with large and complex organizations, such as Microsoft, Google and other companies with which we work to offer complementary solutions and services. We depend on the companies with which we have strategic relationships to successfully test our solutions, to incorporate our technology into their products and to market and sell those solutions. There can be no assurance we will realize the expected benefits from these strategic relationships or that they will continue in the future. If successful, these relationships may be mutually beneficial and result in industry growth. However, such relationships carry an element of risk because, in most cases, we must compete in some business areas with a company with which we have a strategic relationship and, at the same time, cooperate with that company in other business areas. Also, if these companim could suffer delays in product development, reduced sales or other operational difficulties and our business, results of operations and financial condition could be materially adversely affected. es fail to perform or if these relationships fail to materialize as expected, we RISKS RELATED TO INTELLECTUAL PROPERTY AND BRAND RR RECOGNITION ff Our efforts ii business. to protect our intellell ctual property maya not be successful,ll which could materiallyll and adversely affect our We rely primarily on a combination of copyright, trademark, patent and trade secret laws, confidentiality procedures and contractual provisions to protect our source code, innovations and other intellectual property, all of which offer protection. The loss of any material trade secret, trademark, tradename, patent or copyright could have a material adverse effect on our business. Despite our precautions, it could be possible for unauthorized third parties to infringe our intellectual property rights or steal, or misappropriate, copy, disclose or reverse engineer our proprietary information, including certain portions of our solutions or to otherwise obtain and use our proprietary source code. We have sought to protect our intellectual on our investment in our patent portfoli through offensive litigation and may seek other avenues for enforcement or for returnt which may be costly and unsuccessful and/or subject us to successful counterclaims or challenges to our intellectual property rights. In addition, our ability to monitor and control theft, misappropriation or infringement is uncertain, particularly in countries outside of the United States. If we cannot protect our intellectual property from infringement and our proprietary source code against unauthorized theft, copying, disclosure or use, we could lose market share, including as a result of unauthorized third parties’ development of solutions and technologies similar to or better than ours. property ff only limited o, ff t The scope of our patent protection may be affect ff ed by changes in legal precedent and patent office interpretation of these precedents. Software-based patents are difficult to obtain and enforce in many jurisdictions and there may also be limits on recovery for damages in those jurisdictions. Further, any patents owned by us could be invalidated, circumvented or challenged. Any of our pending or future patent applications, whether or not being currently challenged, may not be issued with the scope of protection we seek, if at all; and if issued, may not provide any meaningful protection or competitive advantage. Our ability to protect our proprietary rights could be affected by differences in international law and the enforceabila ity of licenses. The laws of some foreign countries do not protect our intellectual property to the same extent as do the laws of the United States and Canada. For example, we derive a significant portion of our sales from licensing our solutions under “click- to-accept” license agreements that are not signed by licensees and through electronic enterprise customer licensing arrangements that are delivered electronically, all of which could be unenforceablea in which we license our solutions. Moreover, with respect to the various confideff ntiality, license or other agreements we utilize with third parties related to their use of our solutions and technologies, there is no guarantee that such parties will abide by the terms of such agreements. under the laws of many foreign jurisdictions 26 F o r m 1 0 - K Our solutions and services,s includingii property rights, which could result in material litiii gati solutions obtained through acquisitions on costs. tt i ,s could infrin nge ii ytt third-part ii intellecll tual We are routinely subject to patent infringement claims and may in the future be subject to an increased number of claims, including claims alleging the unauthorized use of a third-party’s code in our solutions. This may occur for a variety of reasons, including: • • • • • • the expansion of our product lines through product development and acquisitions; the volume of patent infringement litigation commenced by non-practicing entities; an increase in the number of competitors in our industry segments and the resulting increase in the number of related solutions and services and the overlap in the functionality of those solutions and services; an increase in the number of our competitors and third parties that use their own intellectual property rights to limit our freedom to operate and exploit our solutions, or to otherwise block us from taking full advantage of our markets; our reliance on the technology of others and, therefore, the requirement to obtain intellectual property licenses from third parties in order for us to commercialize our solutions or services, which licenses we may not be able to obtain or continue to obtain from these third parties on reasonable terms; and the unauthorized or improperly licensed use of third-party code in our solutions. t Further, responding to any infringement claim, regardless of its validity or merit, could result in costly litigation. Intellectual property litigation could compel us to do one or more of the following: • • • • pay damages (including the potential for treble damages), license fees or royalties (including royalties for past periods) to the party claiming infringement; cease selling solutions or services that use the challenged intellectual property; obtain a license from the owner of the asserted intellectual license may not be available on reasonable terms, or at all; or redesign the challenged technology, which could be time consuming and costly, or not be accomplished. property to sell or use the relevant technology, which t If we were compelled to take any of these actions, our business, results of operations or financial condition may be adversely impacted. Our use of “open source” software could negativtt elyll i litiii gati on. impacm t our abiliii tyii to sellll our solutions and subject us to possibleii The solutions or technologies acquired, licensed or developed by us may incorporate so-called “open source” software, t Such open source software is generally licensed and we may incorporate open source software into other solutions in the future. by its authors or other third parties under open source licenses, including, for example, the GNU General Public License, the GNU Lesser General Public License, the Apache license (version 2), “BSD-style” licenses, "MIT-style" licenses and other open cting our source licenses. Even though we attempt to monitor our use of open source software in an effort to avoid subjeu solutions to conditions we do not intend, it is possible that not all instances of our open source code usage are properly reviewed. Additionally, software purchased through the supply chain may contain open source software of which we are unaware that could present license rights and/or security risk. Further, although we believe that we have complied with our licenses for open source software that we use such that we have not triggered any of obligations under the various applicablea these conditions, there is little or no legal precedent governing the interpretation or enforcement of many of the terms of these types of licenses. If an author or other third party that distributes open source software were to allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur significant legal expenses defending against ned from the distribution such allegations. If our defenses were not successful, we could be subject to significant damages, enjoin of our solutions that contained open source software, and required to comply with the terms of the applicablea could disrupt the distribution and sale of some of our solutions. In addition, if we combine our proprietary software with open source software in an unintended manner, under some open source licenses we could be required to publicly release the source code of our proprietary software, offer our solutions that use the open source software for no cost, make available source code for modifications or derivative works we create based upon incorporating or using the open source software, and/or license such modifications or derivative works under the terms of the particular open source license. license, which In addition to risks related to license requirements, usage of open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide technology support, maintenance, warranties or assurance of title or controls on the origin of the software. Open source software may also present risks of unforeseen or unmanaged security vulnerabilities that could potentially unintentionally be introduced into our solutions. 27 If we lose access to third-party licenses,s releases of our solutions couldll be delaye ll d. We believe that we will continue to rely, in part, on third-party licenses to enhance and differentiate our solutions. Third- party licensing arrangements are subjecb t to a number of risks and uncertainties, including: • • • • • undetected errors or unauthorized use of another person’s code in the third party’s software; disagreement over the scope of the license and other key terms, such as royalties payable and indemnification protection; infringement actions brought by third-parties; the creation of solutions by third parties that directly compete with our solutions; and termination or expiration of the license. If we lose or are unablea to maintain any of these third-party licenses or are required to modify software obtained under third-party licenses, it could delay the release of our solutions. Any delays could have a material adverse effecff results of operations and financial condition. t on our business, Our business ii ee depends on maintaining ii and protectt tingii the strength of our collection of brands. ff The Citrix solution and service brands that we have developed have significantly contributed to the success of our business. Maintaining and enhancing the Citrix solution and service brands is critical to expanding our base of customers and partners. We may be subject to reputational risks and our brand loyalty may decline if others adopt the same or confusingly to misappropriate and profit on our brand name and do not provide the same level of quality as is similar marks in an effort delivered by our solutions and services. Also, others may rely on false comparam tive advertising and customers or potential customers could be influenced by false advertising. Additionally, we may be unable to use some of our brands in certain countries or unable to secure trademark rights in certain jurisdictions where we do business. In order to police, maintain, enhance and protect our brands, we may be required to make substantial investments that may not be successful. If we fail to police, maintain, enhance and protect the Citrix brands, if we incur excessive expenses in this effort or if customers or potential customers are confused by others’ trademarks, our business, operating results, and financial condition may be materially and adversely affecff ted. RISKS RELATED TO OUR LIQUIDITY, TAXATION AND CAPITAL RETURN SeServiicinging our d bdebt dand re ee repurc lsultsll ofof oper iations. We hhase our 2027 Notestt iwilllliii re iquire a sigsignifnifggg iifff cant amount ofof cashh, hwhii hch coullddlll dadverserr ii ent cashh flowflow fromfrom our b ibusines lyly affec s to makke ffici ymay not hhave suffici u or 2030 Notes upon certaiin events.tt affect our b ibusiness, ii financi lial financ conditiiontt di ypayments on our d bdebt or As of Dece bmber 31, 2020, we h dhad gagg ggregate i dindebbteddness of $$1.73 bilbillilion hthat we hhave iincurredd iin connec ition iwi hth hthe dured seniior notes volvi gng credidit facililiityy enteredd iinto iin dured seniior notes ddue Dece bmber 1, 2027 ( h(the “2027 Not dunder hthe cr diedit gagreement for our unsec )es”), thhe iissuance of our unsec dured re dunder hthe credidit gagreement for our term lloan cr diedit fa icilili yty ente dred iinto iin redit gAgreement”)), )es”), dand l i iissuance of our unsec ddue Mar hch 1, 2030 ( h(the “2030 Not NNove bmber 2019 ( h(the “C di February bruary 2020 ((thhe “Term Loan Cr diedit gAgreement”)). ipri kmake hsch d l . If we are Our babiliili yty to lal expe dinditures unable to ggenerate suchh ca hsh flflow, we edul ded payyments of hthe bsubjecjecbb inci t to ggenerall economiic, fifina on our future performance, hiwhi hch iis Our b ibusiness mayy not ggenerate ca hsh flflow from operatiions iin hthe future bl ca ipita t sellllinging assets, red iduci gng ca ipita lal expe dinditures mayy bbe onerous or highly dand our fifinanciiall co dinditiion at suchh itime. We mayy not bbe blable to equi yty or ddebbt fifinancinging on terms hthat are accept blable to us or at “Managgement's Condi ition di iDisc dand Note 13 to our co Dece bmber 31, 2020 for i finformatiion regardi gAgreement. dand Analyslysiis of inci lal i lpal of, to payy iinterest on or to refifinance our i dindebbteddness, d d depends lrol. inci lal, competiitiive dand othher factors beyond i beyond our cont dand to makke necessa yry ffi ymay bbe service our d bdebt suffi icient to i requi dred to dadopt one or more lalterna itives, suchh as lonal addi iti equi yty or ddebbt fifinancinging on terms hthat lselll assets, restructure our i dindebbteddness or b i llall, hiwhichh dand Resullts of Operati couldd res lult iin a d fdefa lult on our d bdebt bliobliggatiions. See quidi yty andd ions-Li i iCapitall Resources” obtain ddi addi iti l iwillll ddepe dnd on hthe ca ipita lal ma krkets lonal iussion nsoliddat ded fifinanciiall statements iincl dludedd iin hthiis Ann lual Report on Form 10-K for hthe yyear end dded li iFina idi gardi gng our 2030 Notes, 2027 Notes, our Cr diedit gAgreement andd our Term Loan Cr diedit i i , highly didillutiive. Our babiilitylity to refifinance our i dindebbteddness, as ap liplicablblea turi gng d bdebt or bobtai iini gng ddi , restruc t In ddi addi ition, ifif a hcha gnge iin cont bsubjjbb ect to cer lrol re purchase event occurs h iwithh respect to hthe 2027 Notes or hthe 2030 Notes, we illwill bbe requi dred, i equall to 101% of hthe iinterest, ifif repurchhase of hthe 2027 Notes or 2030 Notes, as iprinciipall amount of hthe 2027 Notes or 2030 Notes, as itain exceptiions, to offer to repurchhase hthe 2027 Notes or 2030 Notes, as l h purchasedd, inci gng to f ough availil blable ca hsh or bbe bablle to bobt iain fifina lplus accruedd fund hthe re d ypayments co lduld dadvers lelyy affect our lili yany. In suchh event, we mayy not hhave enough appliic blable, re l dand unpaidid iquiredd quidi yty. Our idi appliic blable at a repurchhase iprice appliic blable, or makiki gng suchh l 28 babilityility to re our hother i dindebbteddness. purchase hthe 2027 Notes or 2030 Notes mayy bbe lili h imitedd byby llaw, byby regul governing regulat yory auth ihorityy or byby gagreements governing forth iin hthe i dindentures governing governing hthe 2027 Notes andd 2030 h dand hthe Term Loan Credidit gAgreement. In partiic lular, ea hch fof hthe Cr diedit gAgreement andd Term Loan requires us to maiintaiin cert iain lleveragge andd iinterest ra itios andd cont iains imit or res itrict our biabilili yty to ggrant liliens, me grge or co ivarious ffiaffirma itive andd nsoliddate, didispose fof ggoverning li lalll or gnega itive bsubsiididi yary iind bdebt dedness. hThe iinddenturet rning our 2027 Notes dand hthe babililiityy of our iwithh, or sellll, assign, b i subsididia iries to create certaiin liliens, enter iinto rwise i ynvey, llease, tra fnsfer or sign, co hothe bsubstantiiallllyy lalll of our assets, takken as a hwholle, to, ano hther person. If we f ifaill to complyply i hwith thhese covenants or i i ludi gng covenants hthat lili requi dred to complyply iwi hth hthe covenants set f hFurther, we are NNotes, hthe Credidit gAgreement Credidit gAgreement covenants, iincl di bsubstantiiallllyy lalll of our assets, hch gange our b ibusiness or iincur dand 2030 Notes contaiins covenants lili certaiin salle didispose of yany othher hthen, subje ddiAdditiionallllyy, a ddef hthe accellerat ded, we dand lleasebbackk transactiions, andd cons lioliddate or me grge lalll or provi ision of hthe gagreements ggoverning i cure subject to ap liplicablblea l dunder an iinddenture, fault governing our current hother gagreements governing iperi dods, our outstanding ymay not hhave enough imi iti gng our babililiityy enough av iaillablblea t rning our iind bdebt dedness andd ddo not bobt iain a iwaiver from hthe lle dnders or noteh ldholders, nding iind bdebt dedness mayy bbe ddeclla dred iimmedidiat lelyy ddue andd . ypayablblea hthe Cr diedit gAgreement or Term Loan dand anyy future i dindebbteddness. If hthe re ypayment of hthe diCredit gAgreement co lduld lle dad to a d fdefa lult dunder lrelat ded iind bdebt dedness were to bbe ca hsh or bbe blable to bobtaiin fifinancinging to repayy hthe i dindebbteddness. Our iind bdebt dedness, co bimbi dned i hwith our inci lal bliobliggatiions andd contractuall commiitments, couldd hhave l hother iimportant consequences. For exam lple, iit hother fifina couldd: l F o r m 1 0 - K lvulne bl rable to dadverse hcha gnges iin ggenerall U.S. dand worllddwidide ec onomic, iinddustryyr i dand compe iti itive • makke us more di • • • condi itions andd dadverse hcha gnges iin ggovernment regulagula ition; limit our flexibility in planning for, or reacting to, changes in our business and our industry; place us at a disadvantage compared to our competitors who have less debt; and limit our ability to borrow additional amounts to fund acquisitions, for working capita corporate purposes. al and for other general Any of these factors could materially and adversely affecff t our business, financial condition and results of operations. In addition, if we incur additional indebtedness, the risks related to our business and our ability to service or repay our indebtedness would increase. Also, changes by any rating agency to our credit rating may negatively impact the value and liquidity of both our debt and equity securities, as well as the potential costs associated with any potential refinancing of our indebtedness. Downgrades in our credit rating could also restrict our ability to obtain additional financing in the futuret could affect the terms of any such financing. and On January 16, 2021, we obtained a commitment for a senior unsecured 364-day term loan facility in an aggregate principal amount of $1.45 billion to finance the cash consideration for the acquisition of Wrike in the event that the permanent debt financing is not availablea on or prior to the closing of the acquisition of Wrike (the “Bridge Facility”), which Bridge Facility is subject to customary conditions in connection with the pending acquisition of Wrike. We expect to replace the Bridge Facility prior to the closing of the acquisition of Wrike with permanent financing, which may include the issuance of debt securities and/or one or more senior term loan facilities, including the 2021 Term Loan Credit Agreement, as defined below; however such permanent financing may not be available in the timeframe expected or on favorablea terms. On February 5, 2021, we entered into a term loan credit agreement (the “2021 Term Loan Credit Agreement”), which provides us with a facility to borrow a term loan on an unsecured basis in an aggregate principal amount of up to $1.00 billion (the “2021 Term Loan”). The proceeds of borrowings under the 2021 Term Loan Credit Agreement will be used to finance a portion of the purchase price to be paid in connection with the acquisition of Wrike. Taking on additional indebtedness in connection with the Wrike acquisition, as a result of the Bridge Facility, the 2021 Term Loan Credit Agreement and/or other permanent financing, will increase the risks we now face with our current indebtedness. For example, in January 2021, we committed to a goal of maintaining our investment grade credit rating and indicated that we plan to returnt a result of the additional indebtedness we are expecting to incur in connection with the Wrike acquisition or otherwise, our ability to obtain additional financing or to re-finance our existing indebtedness in the future, and the terms of any such financing, could be adversely affected. to historical leverage levels within 24 months. If we are unable to achieve these commitments as To the extent the COVID-19 pandemic adversely affecff ts our business, results of operations, financial condition and cash flows as described elsewhere in this “Risk Factors” section, it may also heighten these risks related to servicing our debt. 29 Our portfolios of liquidii securitiett s and other investmentstt may lose value or become impaire m d. Our investment portfolio consists of agency securities, corporate securities, money market funds, government securities a Although we follow an establia and commercial paper. with investments by investing primarily in investment grade, highly liquid securities and by limiting exposure to any one issuer depending on credit quality, we cannot give assurances that the assets in our investment portfolio will not lose value, become impaired, or suffer from illiquidity. shed investment policy and seek to minimize the credit risk associated Changes in our taxaa rates or our exposure tt condition. xx to additiii onal income taxaa liabil itll iett s couldll affect our operatingn resultsll and financ ii ii ial Our future effecff tive tax rates could be favorablya or unfavorably affected by changes in the valuation of our deferred tax assets and liabilities, the geographic mix of our revenue, or by changes in tax laws, including changes proposed by the new Presidential administration, or their interpretation. Significant judgment is required in determining our worldwide provision for income taxes. In addition, we are subject to the continuous examination of our income tax returns by tax authorities, including the IRS. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. There can be no assurance, however, that the outcomes from these continuous examinations will not have an adverse effect on our operating results and financial condition. Evolving or revised tax laws and regulations globally, including the 2017 Tax Cuts and Jobs Act (the “2017 Tax Act”)) and the 2019 Swiss Fedderall Act on Tax Reform dand AHV iFinancinging ((“TRAF”RR Swiss federal and cantonal authorities, and other U.S. federal and legislative bodies of these regulations may have an adverse effect on our business or on our results of operations. ),) as well as any changes in the application or interpretation by the U.S. Treasury Department, the There can be no assurance that we willii continue and/or the repurc hase of our stock. ee ii tt to returnrr capital ii to our stockholders through the payment of cash dividenii ds From time to time, our Board of Directors authorizes the payment of cash dividends or additional share repurchase authority under our ongoing stock repurchase program as part of our capia tal return to stockholders. The amount and timing of t to capital availability and our determination that such cash dividends or stock cash dividends and stock repurchases are subjecb repurchases are in the best interest of our stockholders and are in compliance with all respective laws and our applicable agreements. Our ability to pay cash dividends or repurchase stock will depend upon, among other factors, our cash balances and potential future capita general corporate purposes, as well as our results of operations, financial condition and other factors that we may deem relevant. Moreover, a reduction in, or the completion of, our stock repurchase program could have a negative effect on our stock price. We can provide no assurance that we will continue to pay cash dividends or repurchase stock at favorablea at all. al requirements for strategic transactions, debt service, capita al expenditures, working capita al and other prices, if t GENERAL RISKS We are exposed to fluctuations in foreign currency exchange rates,s which could adversely affect our future operatingii ll results. t t Our results of operations are subjeu ions in exchange rates, which could adversely affect our future revenue and ct to fluctuat overall operating results. In order to minimize volatility in earnings associated with fluctuat ions in the value of foreign currency relative to the U.S. dollar, we use financial instruments to hedge our exposure to foreign currencies as we deem appropriate for a portion of our expenses, which are denominated in the local currency of our foreign subsidiaries. We generally initiate our hedging of currency exchange risks one year in advance of anticipated foreign currency expenses for those currencies to which we have the greatest exposure. When the dollar is weak, foreign currency denominated expenses will be higher, and these higher expenses will be partially offset by the gains realized from our hedging contracts. If the dollar is strong, foreign currency denominated expenses will be lower. These lower expenses will in turn be partially offset by the losses incurred from our hedging contracts. There is a risk that there will be fluctuat timeframe for which we hedge our risk and there is no guarantee that we will accurately forecast the expenses we are hedging. Further, a substantial portion of our overseas assets and liabilities are denominated in local currencies. To protect against fluctuations in earnings caused by changes in currency exchange rates when remeasuring our balance sheet, we utilize foreign exchange forward contracts to hedge our exposure to this potential volatility. There is no assurance that our hedging strategies tive. In addition, as a result of entering into these contracts with counterparties who are unrelated to us, the risk of a will be effecff counterparty default exists in fulfilling the hedge contract. Should there be a counterparty default, we could be unable to recover anticipated net gains from the transactions. ions in foreign currency exchange rates beyond the one year t 30 We are involved in litiii gati i on, investigati i ons and regulat e orytt inquiries and proceedings that could negati e vely affect us. From time to time, we are involved in various legal, administrative and regulatory proceedings, claims, demands and investigations relating to our business, which may include claims with respect to commercial, product liability, intellectual property, cybersecurity, privacy, data protection, antitrust, breach of contract, employment, class action, whistleblower, mergers and acquisitions and other matters. In the ordinary course of business, we also receive inquiries from and have discussions with government entities regarding the compliance of our contracting and sales practices with laws and regulations. These matters can be time-consuming, divert management’s attention and resources and cause us to incur significant expenses. Allegations made in the course of regulatory or legal proceedings may also harm our reputation, regardless of whether there is merit to such claims. Furthermore, because litigation and the outcome of regulatory proceedings are inherently unpredictable, our business, financial condition or operating results could be materially affected by an unfavorablea proceedings, claims, demands or investigations. resolution of one or more of these t Refer to Note 10 to our consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2020 for a description of our legal proceedings and contingencies. F o r m 1 0 - K Our stocktt tt international price could be volatiltt e,ll particularly duringii times of economic uncertaintyii and volati liii tyii ll in domestic and stoctt k markets,tt and you couldll lose the value of you ff r investment. Our stock price has been volatile and has fluctuat t ed significantly in the past. The trading price of our stock is likely to continue to be volatile and subject to fluctuat Some of the factors that could significantly affect the market price of our stock include: ions in the future. t t Your investment in our stock could lose some or all of its value. • • • • actual or anticipated variations in operating and financial results, including the failure to meet key operational metrics; analyst reports or recommendations; rumors, r financial condition, or financial statements; and other events or factors, many of which are beyond our control. announcements, or press articles regarding our or our competitors’ operations, management, organization, The stock market in general, The Nasdaq Global Select Market, and the market for software companies and technology companies in particular, have experienced extreme price and volume fluctuat ions. We believe that these fluctuations have often been unrelated or disproportionate to operating performance. These fluctuations may continue in the future and could materially and adversely affect the market price of our stock, regardless of operating performance. t Changes or modifications operations or financial condition. tt tt in financial accountingtt tt standards maya have a material tt adverse impactm ee on our reported resultsll of A change or modification in accounting policies can have a significant effecff t on our reported results and may even affect our reporting of transactions completed before the change is effective. New pronouncements and varying interpretations of existing pronouncements have occurred with frequency and may occur in the future. Changes to existing rules, or changes to the interpretations of existing rules, could lead to changes in our accounting practices, and such changes could materially adversely affecff t our reported financial results or the way we conduct our business. Natural disasters, e could negat tt ivtt elyll impacm t our resultsll of operations. climll tt ate-rel atell d impactm s,tt or other unantictt ipatedtt catastrophes that resultll in a disruptiontt of our operations Our worldwide operations are dependent on our network infrastructure, internal technology systems and website. r equipment, intellectual property resources and personnel, including critical resources a, an area of the country that is particularly prone to earthquakes and wildfires. We also have operations in various Significant portions of our computem dedicated to research and development and administrative support functions are presently located at our corporate headquarters in Fort Lauderdale, Florida, an area of the country that is particularly prone to hurricanes, and at our various locations in Californi ff domestic and international locations that expose us to additional diverse risks. The occurrence of natural disasters, such as extreme weather, hurricanes, floods or earthquakes; pandemics, such as the COVID-19 pandemic; or other unanticipated catastrophes, such as telecommunications failures, cyberattacks, fires or terrorist our key partners, suppliers and customers do business, could cause interruptions in our operations. For example, hurricanes have passed through southern Florida causing extensive damage to the region. In addition, even in the absence of direct damage to our operations, large disasters, terrorist attacks, pandemics or other casualty events could have a significff ant impact on our partners’, suppliers’ and customers’ businesses, which in turn could result in a negative impacm t on our results of operations. Extensive or multiple disruptions in our operations, or our partners’, suppliers’ or customers’ businesses, due to natural attacks, at any of the locations in which we or r 31 disasters, pandemics, such as the COVID-19 pandemic, or other unanticipated catastrophes could have a material adverse effect on our results of operations. ITEM 1B. UNRESOL RR VED SEE TAFF COMMENTMM STT We have received no written comments regarding our periodic or current reports fromff the staff of the Securities and Exchange Commission that were iissuedd 180 daysdays or orem preceding the end of our 2020 fiscal year that remain unresolved. ITEM 2. PROPERPP TIES We lease and sublease office space in the Americas, which is comprised of the United States, Canada and Latin America, EMEA, which is comprised of Europe, the Middle East and Africa, and APJ, which is comprised of Asia-Pacific and Japan. The following tablea presents the location and square footage of our leased office space as of December 31, 2020: a Americas EMEA APJ Total Square footage 777,064 265,696 599,620 1,642,380 In addition, we own land and buildings in Fort Lauderdale, Florida with approxi a mately 317,000 square feet of office space our corporate headquarters and approximately 41,000 square feet of office space in Chalfont St. Peter, United used forff Kingdom. We believe that our existing facilities are adequate forff our current needs. As additional space is needed in the future, t we believe that suitable space will be available in the required locations on commercially reasonable terms. ITEM 3. LLEGAGAL P OROPP DD CCEEDEE INGS INGS ff Informa ition i hwith respect to hthiis iitem may by be f iin Note 10, "Co is in Item 8 of Part II, hiwhi hch iis iincorporated hd hereiin byby reference. inge immitments a dnd Continge ound d cons lioliddat ded fifinanciiall statement incies-Legalgal Matters", to our ITEM 4. MINE SAFETY DISCLOCC SUROO ESR . Not applicablea 32 RR ITEM 5. MARKET FOR ROO OF EQUITYUU CC PURCHAS ESSS EGI STII RANT' TT SECURITIESEE S C' OMCC MOMM N EOO QUITYUU , RYY ELATED RR Market forff Common Stock and Dividend Policy PART II HH STOCKH TT OLDER TT MATTERS AND INN SSII UER F o r m 1 0 - K Our common stock is currently traded on The Nasdaq Global Select Market under the symbol CTXS. As of February rr 1, 2021, there were 477 holdders of cre ord of our common stock. We currently intend to retain any earnings for use in our business, forff investment in acquisitions to repurchase shares of dividends. On October 22, 2020, we announced that our Board of Directors approved a our common stock, and to pay futuret quarterly cash dividend of $0.35 per share which was paid on December 22, 2020 to all shareholders of record as of the close of business on December 8, 2020. Additionally, on January 19, 2021, we announced that our Board of Directors approved a quarterly cash dividend of $0.37 per share. This dividend is payablea close of business on March 12, 2021. Our ddetermiine hwhe hther to rep financial performance, business outlook and other considerations. hurchase hshares ofo our common stock and/or declare future dividends on a quarterly basis based on our on March 26, 2021 to all shareholders of record as of the iDirectors wililll contiinue to re iview our capitall alllloca ition strat gyegy andd wililll dBoard of i Recent Sales of Unregistered Securities None. Issuer Purchases of Equity Securities Our Board of Directors has authorized an ongoing stock repurchase program, of which $1.00 billion was approved a in January 2020. We may use the approved dollar authority to repurchase stock at any time until the approved amount is exhausted. The objective of our stock repurchase program is to improve stockholders’ returns and mitigate earnings per share dilution posed by the issuance of shares related to employee equity compensation awards. At December 31, 2020, $625.6 million was available to repurchase common stock pursuant to the stock repurchase program. All shares repurchased are recorded as treasury stock. We are authorized to make purchases of our common stock using general corporate funds open market purchases, pursuant to a RuleRR 10b5-1 plan or in privately negotiated transactions. through ff The following tablea shows the monthly activity related to our repurchases of common stock forff the quarter ended December 31, 2020. October 1, 2020 through October 31, 2020 November 1, 2020 through November 30, 2020 December 1, 2020 through December 31, 2020 Total Total Number of Shares Purchased (1) Average Price Paid per Share 310,561 508,194 56,241 874,996 $ $ $ $ 122.65 118.40 126.68 120.44 Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate dollar value of Shares that may yet be Purchased under the Plans or Programs (in thousands)(2) 227,526 507,425 11,992 746,943 $ $ $ $ 687,140 627,061 625,561 625,561 (1) Includes 128,053 shares withheld from restricted stock units that vested in the fourth quarter of 2020 to satisfy minimum tax withholding obligations that arose on the vesting of restricted stock units. (2) Shares withheld from restricted stock units that vested to satisfy minimum tax withholding obligations that arose on the vesting of such awards do not deplete the dollar amount available forff purchases under the repurchase program. Securities Authorized for Issuance Under Equity Compensation Plans Information about our equity compensation plans is incorporated herein by reference to Item 12 of Part III of this Annual Report on Form 10-K. 33 ITEM 6. SELEEE CTEDTT FINAII NCIACC L DATDD ATT The following selected consolidated financial data is derived fromff our consolidated financial statements. This data should be read in conjunction with the consolidated financial statements and notes thereto included in this Annual Report on Form 10- K forff the year ended December 31, 2020, and with Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations. Year Ended December 31, Consolidated Statements of Income Data: Net revenues Cost of net revenues(c) Gross margin Operating expenses(d) Income from operations Interest income Interest expense Other income (expense), net Income from continuing operations before income taxes Income tax expense (benefit) Income from continuing operations (Loss) income from discontinued operations, net of income tax expense Net income (loss) Diluted earnings (loss) per share: Income from continuing operations (Loss) income from discontinued operations 2020 2019 2018 (In thousands, except per share data) 2017(a)(b) 2016(a)(b) $ 3,236,700 $ 3,010,564 $ 2,973,903 $ 2,824,686 $ 2,736,080 498,546 2,738,154 2,129,346 608,808 3,108 (64,687) 7,651 554,880 50,434 504,446 464,047 2,546,517 2,010,399 536,118 18,280 (45,974) 1,076 509,500 (172,313) 681,813 433,803 2,540,100 1,862,140 439,646 2,385,040 1,814,043 404,889 2,331,191 1,771,027 677,960 40,030 (80,162) (8,373) 629,455 53,788 575,667 570,997 27,808 (51,609) 3,150 550,346 528,361 21,985 560,164 16,686 (44,949) (4,131) 527,770 57,915 469,855 — — — (42,704) 66,257 $ 504,446 $ 681,813 $ 575,667 $ (20,719) $ 536,112 4.00 — 5.03 — 3.94 — 0.14 (0.27) 2.99 0.42 3.41 Diluted net earnings (loss) per share $ 4.00 $ 5.03 $ 3.94 $ (0.13) $ Weighted average shares outstanding - diluted 126,152 135,495 145,934 155,503 157,084 Consolidated Balance Sheet Data(e)(f): Total assets Total equity 2020 2019 December 31, 2018 (In thousands) 2017 2016 $ 4,890,347 $ 4,388,926 $ 5,136,049 $ 5,820,176 $ 6,390,227 112,143 837,656 551,519 992,461 2,608,727 (a) (b) (c) (d) (e) (f) The selected financial data for fiscal years ended December 31, 2017 and 2016 has been adjusted to be presented on a continuing operations basis. The selected financial data for fiscal years ended December 31, 2017 and 2016 has not been adjusted under the modified retrospective method of adoption of the revenue recognition standard. Cost of net revenues includes amortization and impairment of product related intangible assets of $32.8 million, $51.3 million, $47.1 million, $65.7 million, and $55.4 million in 2020, 2019, 2018, 2017 and 2016, respectively. Operating expenses includes amortization and impairment of other intangible assets of $2.8 million, $15.9 million, $15.9 million, $17.2 million, and $15.1 million in 2020, 2019, 2018, 2017 and 2016, respectively. Operating expenses also include restructuring charges of $12.0 million, $22.2 million, $16.7 million, $72.4 million and $67.4 million in 2020, 2019, 2018, 2017 and 2016, respectively. Balance Sheet amounts prior to 2017 include amounts for the GoTo Business. Balance Sheet amounts prior to 2019 have not been adjusted under the modified retrospective method of adoption of the lease accounting standard. 34 F o r m 1 0 - K 7. MANAGEMEEE NTEE ’S DISCUSSION ANDNN ANALNN YSISII OF FINAII NCIACC L CONDIT OO IONTT ITEMTT TT OPERPP ATRR IONS EE AND RESULT STT OF ff tors. The following discussi Our operating resultstt and financial condition have varied in the past and could in the future varyrr signig fii cantly depending on a number of fac ooking statements that reflect our plans, estimates and beliefs.e Our actual results couldll diffeff r materially from those discussed in the forward-looking statements. See "NoteNN Forward-Looking Statements" and Part I, Item 1A "Risk Factors" in this Annual Report certain risks and uncertainties that maya cause these diffeff rences. on Formr 10-K for a discussion of on contains forward-l Regarding e e r ii ii Overview Citrix is an enterprise software company focused on helping organizations deliver a consistent and secure work experience no matter where work needs to get done — in the office, at home, or in the field. We do this by delivering a digital workspace solution that gives each employee the resources and space they need to do their best work. Our App Delivery and Security (formerly Networking) solutions, which can be consumed via hardware or software, complement our Workspace ity and speed. solutions by delivering the applications and data employees need across any network with security, reliabila Executive Summary Our 2020 results reflect continued execution against our strategy – including strong demand for the Citrix Workspace and an acceleration of our customers adopting our cloud offerings to manage their workspace environments. We believe that the COVID-19 pandemic has accelerated the trends driving distributed teams and hybrid-work, emphasizing the importance of an organization’s ability to securely deliver all of the work resources employees need in one unified experience. As we previously announced, we discontinued broad availability of perpetual licenses for Citrix Workspace beginning on October 1, 2020. Going forward, customers will have the option of acquiring new Citrix Workspace seats in the form of SaaS or on-premises subscription offerings. However, we will continue to support and renew existing maintenance contracts for the foreseeable future. t t d Through the first half of 2020, many customers focused on near-term business critical needs as their workforces adaptea to remote work precipitated by the pandemic. As such, these customers have often chosen on-premises subscriptions rather than immediately migrating their Citrix Workspace deployments directly to the cloud. Primarily as a result of this near-term focus of customers on business critical needs and other cloud migration challenges, the transition of customers from on-premise to our cloud offerings did not progress during the first half of 2020 at the rate we had anticipated at the beginning of the year. To address the challenges in transitioning our customers to the cloud, we continue to invest in innovation and feature development, simplified cloud migration, and performance and reliability, as well as other cloud customer success initiatives. As we exited 2020, the transition of our customers to our cloud offerings had regained momentum. Longer term, our subscription transition is expected to result in more sustainable, recurring revenue growth over time as less revenue comes from one-time product and licensing streams and more revenue comes from predictable, recurring streams that will be recognized in future periods. We believe that this dynamic is best capta ured Annualized Recurring Revenue, or ARR. in our Subscription and SaaS t This operating metric represents the contracted recurring value of all termed subscriptions normalized to a one-year total contract value and dividing by ly committed, fixed subscription fees. Our definition of ARR excludes contracts with durations of 12 months or less where licenses were period. It is calculated at the end of a reporting period by taking each contract’s recurring the length of the contract. ARR includes only active contractual includes contracts expected to recur and thereforeff issued to address extraordinary business continuity events for our customers. All contracts are annualized, including 30 day offerings where we take monthly recurring within the year. ARR should be viewed independently of U.S. GAAP revenue, deferredr intended to be combined with or to replace those items. ARR is not a forecast of future revenue. As we continue through this business model transition, we believe ARR is a key indicator of the overall health and trajectoryrr of our business. Management uses ARR to monitor the growth of our subscription business. revenue multiplied by 12 to annualize. ARR may be influenced by seasonality revenue and unbilled revenue and is not r r t On February 25, 2020, we issued $750.0 million of unsecured senior notes due March 1, 2030 (the “2030 Notes”). The net proceeds from this offering were approximately $738.1 million, afteff offering expenses payable by us. Net proceeds from this offering were primarily used to repay amounts outstanding under our $1.00 billion term loan credit facility (the “Term Loan Credit Agreement”). r deducting the underwriting discount and estimated On January 16, 2021, we entered into a definitive agreement to acquire Wrike, a leader in the SaaS collaborative work management space, for $2.25 billion in cash. We expect to fund the transaction with a combination of new debt and existing 35 cash and investments and have obtained a commitment from JPMorgan Chase Bank, N.A. for a $1.45 billion senior unsecured 364-day bridge loan facility (the “Bridge Facility”). We expect to replace the Bridge Facility prior to the closing of the acquisition of Wrike with permanent financing, which may include the issuance of debt securities and/or one or more senior term loan facilities, including the 2021 Term Loan Credit Agreement as described below. The transaction, which has been unanimously approved by the board of directors of both Citrix and Wrike, is expected to close in the first half of 2021, subject to regulatory approvals and other customary closing conditions. Upon closing of the transaction, we expect a favorable impact to fiscal year 2021 SaaS revenues and SaaS ARR, as well as increases in cost of net revenues and operating expenses. On February 5, 2021, we entered into a term loan credit agreement (the “2021 Term Loan Credit Agreement”), which provides us with a facility to borrow a term loan on an unsecured basis in an aggregate principal amount of up to $1.00 billion (the “2021 Term Loan”). The proceeds of borrowings under the 2021 Term Loan Credit Agreement will be used to finance a portion of the purchase price to be paid in connection with the acquisition of Wrike. On January 19, 2021, we announced that our Board of Directors d ldeclaredd a didi idvide dnd of $$0.37 per hshare, an iincrease of ypayablblea Ma hrch 26, 2021 to lalll hsha h l reholdders fof rec dord as fof hthe lclose fof b ibusiness on Ma hrch 12, 2021. $$0.02, Impact of the COVID-19 Pandemic In March 2020, the World Health Organization declared the outbreak of COVID-19 to be a pandemic, which continues to spread throughout the U.S. and the world. The impact from the rapidly changing market and economic conditions due to the COVID-19 pandemic remains uncertain. It has disrupted the business of our customers and partners, has and will likely continue to impact our business and consolidated results of operations and could impact our financial condition in the future. While we have not incurred significant disruptions thus far from the COVID-19 pandemic, we are unable to accurately predict the full impact that the COVID-19 pandemic will have due to numerous uncertainties, including the potential emergence of new variants of the disease, the duration of the outbreak, actions that may be taken by governmental authorities, the impact to the business of our customers and partners and other factors identified in Part I, Item 1A “Risk Factors” in this Annual Report on Form 10-K. We also believe that our financial resources will allow us to manage the anticipated impact of the COVID-19 pandemic on our business operations for the foreseeable future, payments from customers and partners. However, we are continuing to monitor the situat preparedness plans should we begin to experience material impacts. which could include reductions in revenue and delays in ion and are reviewing our t t IImpact ofof hthe COVID-19 dPandemic on our Re lsultstt i To lsolutiion to h lhelp our customers ma gnage through providde a flfle iblxible hshort-term on-pre imises term bsubs icri our customers ma gnage through at the end of April 2020. The contribution from this limited-use license program was not material for the remaining three quarters of 2020. through hthe hsho kck to hthe ysystem creat ded byby hthe pa dndemiic. We phased out this short-term license program through hthiis pe i driod, iin hthe fifirst quarter of 2020, we creat ded a gprogram was iint dendedd to hhellp iption lilicense at didiscount ded imitedd-use lilicense iprices. hiThis lili Impact of the COVID-19 Pandemic on our Outlook and Liquiditytt iWi hth respect to 2021, hthe bbroadder tollll hthe COVID-19 dpandemiic mayy takke on hthe glgl b lobal ec onomy andd hthe lslope of hthe y onomic recove yry iis i ec globall hhe lal hth cri iisis globa busine inuityy business co inti belbeliieve a ggreater sociiall didista number of employe b inci gng res itrictiions babate. kunknown. We bbelilieve hthat our dand our b ibusiness mod ldel are resililiient. L gonger term, we b lbeliieve hthiis iwillll cause com ipanies dand iri ksk imi itiggatiion to irise as areas of iimportance iin bboa drdroom didisc ilwilll expect to contiinue to bbe blable to ployees yway htheyy hthi kink babout remote workk. We expect iorityy lilists. We iussions andd on IT ipri kwork remot lelyy, at lleast some of hthe itime, even as dand hth ieir employe iutions lsol ployees to hcha gnge hthe Ca hsh from opera itions, accounts rec iei blvable andd revenues couldd lalso bbe affect ded byby va irious iriskks andd uncertaiintiies, l d i hwith f gtoge hther ludi gng, bbut not lili imitedd to, hthe effecff ts of hthe COVID-19 pa dndemiic dand othher iri ksks ddetailil ded iin Part I, Item 1A iti l dtled “Ri kisk funds ggenerat ded from opera itions andd amounts av iaillablblea iincl di Factors” of hithis Annuall Report on Form 10-K. However, bbasedd on our current revenue balbalances, suffi icient to fifinance our operatiions andd meet our foresee blable ca hsh req iuirements through ffi hhave availil ded ours lelves of certaiin tax ddeferralls lalllowedd pursuant to hthe Corona ivirus idAid, (("CARES")) Act iin hthe evallua iti gng hthe iimpact of glgl b lobal COVID-19-rellatedd llaws andd proposedd llaws, andd hilwhile hthere iis an iimpact on hthe iti flflow, no mate iriall iimpact to our fifinanciiall re lsults iis expect ded as a res lult of llegigi lsla ition enact ded to ddate. In daddiditiion, whilhile hthe pande pande imic hhas not mate iri lallyly iimpact ded our lili iin ca ipia tall ma krkets andd credidit ma krkets hi hwhich co lduld dadvers lelyy affect our lili iSwitz lerl dand, andd mayy contiinue to ddo so iin hthe future. We are imi gng of ca hsh volvi gng credidit facililiityy, dunder our re through at lleast hthe next twellve monthhs. We dand ca ipia tall resources to ddate, iit hhas lledd to iincreas ded didisruptiion andd iUnitedd States andd certaiin tax ddeferralls iin lal resources iin hthe future. loutl kook, we b lbeliieve hthat sting ca hsh iwillll bbe Relief & Economiic quidi yty andd ca ipita Securi yty iexisting iquididityy li f idi l i i lvola itilili yty 36 tt Othher Impacts ofof hthe COVID-19 dPandemic In Ma hrch 2020, we didirectedd our globa -off ipaidd itime ff lvel. We hhave ext dendedd our iVice Presidident llevell to cover expenses tra or caringring ffor hchililddren or a me bmber belbelow hthe lrelatedd to transiiti lloc lal restaurants andd smallll b ibusinesses or hch iari ities, or llesseningning anyy gprogram resources ifif need dded. Cert iain of our as isistance dand f lfolllow ma dndates as llo lcal llev lel fsaf yetyff ensure hthe requiredd byby llaw. For i ludi gng fface co fof our em lpl yoyees, iincl di globall workfkforce to workk from hhome andd severelyly lili imitedd lalll iinterna iti lonal dand ddomes itic fof htheiir hhouseh ldhold iimpact ded byby hthe COVID-19 pa dndemiic. We dand i ksick lleave bbenefifits ffor em lpl yoyees didirectlyly iimpact ded byby hthe COVID-19 pa dndemiic providedd $$1,000 per em lpl yoyee i environment, hhel ilpi gng support kwork from hhome ioni gng to a id i hother pote inti lal h dhardshihip. We lalso ffoffer llocall em lpl yoyee ffioffices hhave re-ope dned andd we contiinue to mo initor ddevellopments at hthe ffioffices hthat hhave re-openedd, we hhave iim lplementedd new protoc lols to iveri gngs, temperaturet hcheckks, sociiall didista inci gng dand capaa ici yty lili imits. F o r m 1 0 - K In response to hthe COVID-19 pa dndemiic, we h lheldd our lla grgest customer andd partner event, ySyne gyrgy, as a seriies of imillarlyrly lalter, postpone or cancell daddiditiionall customer, em lpl yoyee or industry t ivirt lual industry events iin to isi events, andd we mayy ddeem iit dad ivisablblea hthe future. We hhave lalso iincreasedd funding funding ffor corporate ici itizenshihip didirectedd ddonatiions andd creat ded a ployee ddona itions, contiinuedd to payy doubl ded our hch iaritablblea matchh for employe bl overy f lreliieff rec y longer dvendors no longe fund ffor hthe d providi gng on- idi COVID-19 pande isite ser ivices, andd set up ivirtuall ppande imic, d lvolunte ieri gng opportuni ities. i Summary of Resultstt For the year ended December 31, 2020 compared to the year ended December 31, 2019, we delivered the following financial performance: • • • • • • • • • • • Subscription revenue increased 71.3% to $1.11 billion; SaaS revenue increased 38.4% to $540.8 million; Product and license revenue decreased 23.8% to $444.4 million; Support and services revenue decreased 5.6% to $1.68 billion; Gross margin as a percentage of revenue remained consistent at 84.6%; Operating income increased 13.6% to $608.8 million; Diluted net income per share decreased from $5.03 to $4.00; Deferff red and unbilled revenue increased $438.0 million to $2.94 billion; Subscription ARR increased $461.6 million to $1.20 billion; SaaS ARR increased $204.9 million to $724.6 million; andd Operatinging ca hsh flflows iincreasedd $152.7 million to $935.8 million. Our Subscription revenue increased primarily due to an increase in on-premise license demand from our Workspace a ity. Also contributing to the increase is offerings and our App Delivery and Security offerings, mostly from pooled capac continued customer adoption of our solutions delivered via the cloud, mostly from our Workspace offerings. Our Product and license revenue decreased primarily due to lower sales of our perpetual App Delivery and Security products and Workspace and services revenue was solutions as customers continue to shift to our subscription offerings. The decrease in Support primarily due to decreased sales of maintenance services across our perpetual App Delivery and Security and Workspace offerings, as more of the revenue is reported in the Subscription revenue line commensurate with our subscription model transition. We currently expect total revenue to decrease when comparing the first quarter of 2021 to the first quarter of 2020, as the first quarter of 2020 included revenue directly attributablea pandemic. When comparing the 2021 fiscal year to the 2020 fiscal year, we currently expect total revenue to increase. Gross margin as a percentage of revenue remained consistent. The increase in operating income was primarily due to an increase in gross margin, partially offset by higher operating expenses. The decrease in diluted net income per share was primarily due to an increase in income tax expense as a result of a benefit related to Swiss tax reform in 2019, partially offset by a decrease in the number of weighted average shares outstanding due to share repurchases and an increase in operating income. Both Subscription and SaaS ARR increased due to an increase in subscription sales. to business continuity needs as a result of the COVID-19 u t Critical Accounting Policies and Estimates Our discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affecff liabilities, revenues and expenses, and related disclosure of contingent liabilities. We base these estimates on our historical t the reported amounts of assets, 37 experience and on various other assumptions that we believe to be reasonable under the circumstances, and these estimates form the basis for our judgments concerning the carrying values of assets and liabilities that are not readily apparent from other sources. We periodically evaluate these estimates and judgments based on available information and experience. Actual results could differ from our estimates under different assumptions and conditions. If actual estimates, our financial condition and results of operations could be materially impacted. results significantly differ from our t lpoliiciies ddesc ibribedd b lbelow are criitiic lal to involve more sigsig inifificant judgmjudgments andd es itimates usedd iin hthe prepara ition fof our nding our bbusiiness, dunderstanding results of operatiions l l lipoli ycy iis ddeem ded to bbe criitiic lal ifif iit re sumptions babout matters hthat are hihighlyghly uncert iain at hthe itime hthe es itimate iis madde, andd ifif didifffferent es itimates hthat iquires an accountinging es itimate to bbe madde nsoliddat ded fifinanciiall statements. We hhave didiscussedd hthe ddevellopment, sellectiion andd appliicatiion of our criitiic lal l iunti gng es itimates hthat are reas onablyy lilik lkelyy to occur pe i di riodicallllyy, bl couldd mate iriallllyy l i We b lbeliieve hthat hthe accountinging dand fifinanciiall co dinditiion bbecause htheyy i cons lioliddat ded fifinanciiall statements. An accou inti gng basbas ded on as couldd hhave bbeen usedd, or hcha gnges iin hthe acco iimpact our co accountinging Com imittee hhas iussion iDisc li lpoliiciies i dand Analyslysiis of review ded our didiscllosure Condi ition di dAudiit Co i hwith hthe inci lal iFina l immittee of our Bo dard of iDirectors andd our i dinde dpendent audiditors, andd our diAudit lrelatinging to our icri iticall acco dand Resullts of Operatiions.” iunti gng lipoli icies dand es itimates iin hithis “Man gagement’s NNote 2 to our cons lioliddat ded fifinanciiall statements iincl dludedd iin hthiis Annualu Report on Form 10-K for the year ended December 31, 2020 describes the significant accounting policies and methods used in the preparation of our consolidated financial statements. Revenue Recognition We generate all of our revenues from contracts with customers. At contract inception, we assess the solutions or services, or bundles of solutions and services, obligated in the contract with a customer to identify each performance obligation within the contract, and then evaluate whether the performance obligations are capaa blea of the contract. Solutions and services that are not both capabl are combined and treated as a single performance obligation in determining the allocation and recognition of revenue. e of being distinct and distinct within the context of the contract of being distinct and distinct within the context a The standalone selling price is the price at which we would sell a promised product or service separately to the customer. ion offerings, we use the observable price when we sell that support and service and cloud-hosted subscript For the majoa rity of our software licenses and hardware, CSP and on-premise subscript observable price in transactions with multiple performance obligations. For the majoa rity of our support and services, and cloud- hosted subscript ion u u separately to similar customers. If the standalone selling price for a performance obligation is not directly observablea estimate it. We estimate the standalone selling price by taking into consideration market conditions, economics of the offering and customers’ behavior. We maximize the use of observablea circumstances. We allocate the transaction price to each distinct performance obligation on a relative standalone selling price basis. inputs and apply estimation methods consistently in similar ion software licenses, we use the , we u Revenues are recognized when control of the promised products or services are transferred to customers, in an amount that reflects the consideration that we expect to receive in exchange for those products or services. See Note 2 and Note 3 to our consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2020 for further information on our revenue recognition. Valuation and Classification of Investments The authoritative guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Our available-for-sale debt investments are measured to fair value on a recurring basis. In addition, we hold direct investments in privately-held companies which are accounted for at cost, less impairment plus or minus adjustments resulting from observablea price changes in orderly transactions for an identical or a similar investment of the same issuer. These investments are periodically reviewed for impairment and when indicators of impaim rment exist, are measured to fair value as appropriate on a non-recurring basis. We also hold equity interests in certain private equity funds which are accounted for under the net asset value practical expedient. The net asset value of these investments is determined using quarterly capita contributions to the funds, allocation of profit and loss and changes in fair value of the underlying fund investments. In determining the fair value of our investments, we are sometimes required to use various alternative valuation techniques. The authoritative guidance establia inputs and minimizes the use of unobservable inputs by requiring that the most observablea shes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs be used when available. al statements from the funds which are based on our The authoritative guidance establia shes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1, observable inputs such as quoted prices in active markets for identical assets or liabilities, Level 2, 38 either directly or indirectly, and Level 3, unobservable inputs, other than quoted prices in active markets, that are observablea inputs in which there is little or no market data, which requires us to develop our own assumptions. Observable inputs are those that market participants would use in pricing the asset or liability that are based on market data obtained from independent sources, such as market quoted prices. When Level 1 observable inputs for our investments are not availablea to determine their fair value, we must then use other inputs which may include indicative pricing for securities from the same issuer with similar inputs that reflect our terms, yield curve information, benchmark data, prepayment speeds and credit quality or unobservablea estimates of the assumptions market participants would use in pricing the investments based on the best information availablea the circumstances. When valuation techniques, other than those described as Level 1 are utilized, management must make estimations and judgments in determining the fair value for its investments. The degree to which management’s estimation and judgment is required is generally dependent upon the market pricing availablea for the investments, the availability of observablea inputs, the frequency of trading in the investments and the investment’s complexity. If we make different judgments regarding unobservable inputs, we could potentially reach different conclusions regarding the fair value of our investments. in Effective January 1, 2020, we adopted the new credit losses standard which changed the impairment model for available- F o r m 1 0 - K for-sale debt securities, eliminating the concept of other than temporary impairment and requiring credit losses to be recorded through an allowance for credit losses. The allowance for credit losses on our investments in available-for-sale debt securities is determined using a quantitative discounted cash flow analysis if impairment triggers exist afteff completed. Impairment on available-for-sale debt securities is determined on an individual security basis and the security is subject to impairment when its fair value declines below its amortized cost basis. If the fair value is less than the amortized cost basis, management must then determine whether it intends to sell the security or whether it is more likely than not that it will be required to sell the security before it recovers its value. If we intend to sell the security or will more-likely-than-not be required to sell the impaired security before it recovers its value, a credit loss is recorded to Other income (expense), net in the accompanying consolidated statements of income. If we do not intend to sell the security, nor will we more-likely-than-not be to credit loss required to sell the security before the security recovers its value, we must then determine whether the loss is dued or other factors. For impairment indicators due to credit loss factors, we establia Other income (expense), net. For impaim rment indicators due to other factors, we record the loss with a charge to Other comprehensive income in the accompanying consolidated balance sheets. See Note 2 to our consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2020 for additional information on the new credit losses standard. sh an allowance for credit losses with a charge to r a qualitative screen is For our investments in privately-held companies accounted for at cost, less impairment plus or minus adjustments resulting from observable price changes in orderly transactions for an identical or a similar investment of the same issuer, we periodically review for impairment and observablea See Notes 4, 5 and 6 to our consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2020 for more information on our investments. price changes on a quarterly basis, and adjust the carrying value accordingly. d Intangible Assets We have product related technology assets and other intangible assets from acquisitions and other third party agreements. We allocate the purchase price of intangible assets acquired through third party agreements based on their estimated relative fair values. We allocate a portion of the purchase price of acquired companies to the product related technology assets and other intangible assets acquired based on their estimated fair values. We typically engage third party appraisal firms to assist us in determining the fair values and useful lives of product related technology assets and other intangible assets acquired. Such valuations and useful life determinations require us to make significant estimates and assumptions. These estimates are based on historical experience and information obtained from the management of the acquired companies and are inherently uncertain. Critical estimates in determining the fair value and usefulff are not limited to, futuret determining the present value of those cash flows. Critical estimates in valuing certain other intangible assets include, but are not limited to, futuret agreements, patents, brand awareness and market position, as well as discount rates. expected cash flows from customer contracts, customer retention rates, customer lists, distribution expected cash flows earned from the product related technology and discount rates applied in lives of the product related technology assets include, but Management's estimates of fair value are based upon assumptim ons believed to be reasonable. Unanticipated events and circumstances may occur which may affect the accuracy or validity of such assumptions, estimates or actual results. We monitor acquired intangible assets for impairment on a periodic basis by reviewing for indicators of impairment. If an value to the carrying value of the intangible asset as of the reporting indicator exists, we compare the estimated net realizablea period. The recoverabila ity of the intangible assets is primarily dependent upon our ability to commercialize solutions utilizing the acquired technologies, retain existing customers and customer contracts, and maintain brand awareness. The estimated net realizable value of the acquired intangible assets is based on the estimated undiscounted future cash flows derived from such intangible assets. Our assumptions about futuret revenues and expenses require significant judgment associated with the forecast 39 of the performance of our solutions, customer retention rates and ability to secure and maintain our market position. Actual revenues and costs could vary significantly from these forecasted amounts. If these solutions are not ultimately accepted by our customers and distributors, and there is no alternative futuret use for the technology; or if we fail to retain acquired customers or successfully market acquired brands, we could determine that some or all of the remaining $81.5 million carrying value of our acquired intangible assets is impaired. In the event of impairment, we would record an impairment charge to earnings that could have a material adverse effect on our results of operations. t Goodwill The excess of the fair value of the purchase price over the fair values of the identifiable assets and liabilities from our acquisitions is recorded as goodwill. At December 31, 2020, we had $1.80 billion in goodwill related to our acquisitions under one reportable unit. Our revenues are derived from sales of our Workspace solutions and App Delivery and Security products, and related support. See Note 12 to our consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2020 for additional information regarding our reportable segment. We account for goodwill in accordance with the Financial Accounting Standards Board's authoritative guidance, which requires that goodwill and certain intangible assets are not amortized, but are subject to an annual impairment test. We complete our goodwill and certain intangible assets impaim rment tests on an annual basis, during the fourth quarter of our fiscal year, or more frequently, if changes in facts and circumstances indicate that an impairment in the value of goodwill and certain intangible assets recorded on our balance sheet may exist. In the fourth quarter of 2020, we performed a qualitative assessment to determine whether further quantitative impairment t opportunit r ies in the markets in which it operates. If afteff testing for goodwill and certain intangible assets is necessary, and we refer to this assessment as the Qualitative Screen. In performing the Qualitative Screen, we are required to make assumptions and judgments including but not limited to the following: the evaluation of macroeconomic conditions as related to our business, industry and market trends, and the overall future financial performance of our reporting unit and futuret performing the Qualitative Screen impairment indicators are present, we would perform a quantitative impairment test to estimate the fair value of goodwill and certain intangible assets. In doing so, we would estimate future revenue, consider market cash flows. Based on these key assumptim ons, judgments and estimates, we determine whether we factors and estimate our futuret need to record an impairment charge to reduce the value of the goodwill and certain intangible assets carried on our balance sheet to their estimated fair value. Assumptim ons, judgments and estimates about future values are complex and often subjective and can be affected by a variety of factors, including external factors such as industry and economic trends, and internal factors such as changes in our business strategy or our internal forecasts. Although we believe the assumptim ons, judgments and estimates we have made have been reasonable and appropriate, different assumptim ons, judgments and estimates could materially affect our results of operations. As a result of the Qualitative Screen, no further quantitative impairment test was deemed necessary. There was no impairment of goodwill as a result of the annual impairment tests completed during the fourth quarters of 2020 and 2019. Income Taxes requi dred to es itimate our iincome taxes iin ea hch of hthe juri juri disdic itions iin hiwhi hch we operate as part of hthe process of nsoliddat ded fifinanciiall statements. At Dece bmber 31, 2020, we h dhad $$383.3 requires a vallua ition lalllowance to redduce hthe d fdefe drred tax assets reportedd ifif, bbasedd on hthe weight imilllliion iin net ddeferredd tax assets. hThe ight of hthe illwill not bbe re laliiz ded. We re iview d fdeferredd lalll of hthe ddeferredd tax assets dand makke estiimates andd judgmjudgments regardi i i li guidance We are ppreparingring our co auth ihoritatiive guida ieviddence, iit iis more lilik lkelyy hthan not hthat some tax assets pe i di ta blxable iincome andd gaigains from iinvestments, as wellll as tax lpl imilllliion At Dece bmber 31, 2020, we ddetermiinedd hthat a $$151.8 llosses bebe re addi iti ddi iquiredd to re ivise our es itimates of hthe lonal iincome taxes. riodicallllyy for recoverabilbila portion or i iityy regardi gng hthe expect ded ggeographi anni gng strategiegies iin asse issi gng hthe needd for a vallua ition lalllowance. lvaluatiion lalllowance ographic sources of lrelatinging to d fdefe i drred tax assets for net opera iti gng couldd l dand tax cr diedits was necessa yry. If hthe es itimates andd assumptiions us ded iin our ddetermiina ition hcha gnge iin hthe future, we lvaluatiion lalllowances gagaiinst our d fdefe drred tax assets andd adjadjust our pr ovisions for i i i In hthe rminingning hthe worllddwidide probable lili babililiityy. We adjadjust our pr diordina yry course of glgl b lobal b ibusiness, hthere are transac itions for hiwhi hch hthe lul itimate tax outcome iis uncertaiin; hthus provision for iincome taxes. We i i i judgmjudgment iis re iquiredd iin ddete basbas ded on our es itimate of hthe judgmjudgments. hCh ganges hthat iimpact basbas ded on hthe re lsults of tax audidits andd ggene lral tax auth ihorityy large number of jurisdictions in which we operate, it is possible that our estimates of our tax liability and the realizability of our deferred tax assets could change in the future, which may result in additional tax liabilities and adversely affecff operations, financial condition or cash flows. provide for iincome taxes on transactiions underlyingying d l ipositiions of tax rules combined with the b bl provision es itimates iincl dlude suchh iitems as jjuri di appropriate for hch ganges hthat iimpact our isdictiionall iinterpretatiions on tax filfilinging rulings.n Due to the evolving naturet t our results of ovision as i i i i id li 40 Results of Operations In this section, we discuss the results of our operations for the year ended December 31, 2020 compared to the year ended December 31, 2019. For a discussion of the year ended December 31, 2019 compared to the year ended December 31, 2018, please referff Annual Report on Form 10-K for the year ended December 31, 2019 which was fileff d with the SEC on February 14, 2020. to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our The following tablea sets forth our consolidated statements of income data and presentation of that data as a percentage of change from year-to-year (in thousands other than percentages): F o r m 1 0 - K Revenues: Subscription Product and license Support and services Total net revenues Cost of net revenues: Cost of subscription, support and services Cost of product and license revenues Amortization and impairment of product related intangible assets Total cost of net revenues Gross margin Operating expenses: Research and development Sales, marketing and services General and administrative Amortization of other intangible assets Restructuring Total operating expenses Income from operations Interest income Interest expense Other income (expense), net Income before income taxes Income tax (benefit) expense Net income * Not meaningful Revenues Year Ended December 31, 2020 2019 2018 2020 vs. 2019 2019 vs. 2018 $ 1,114,798 $ 650,810 $ 455,276 71.3 % 42.9 % 444,437 1,677,465 583,474 1,776,280 734,495 1,784,132 3,236,700 3,010,564 2,973,903 389,612 76,152 32,782 498,546 310,255 102,452 51,340 464,047 266,495 120,249 47,059 433,803 2,738,154 2,546,517 2,540,100 538,080 518,877 439,984 1,224,377 352,109 1,132,956 320,429 1,074,234 315,343 2,799 11,981 15,890 22,247 15,854 16,725 2,129,346 608,808 2,010,399 536,118 1,862,140 677,960 3,108 (64,687) 7,651 554,880 50,434 504,446 $ 18,280 (45,974) 1,076 509,500 (172,313) 681,813 $ $ 40,030 (80,162) (8,373) 629,455 53,788 575,667 (23.8) (5.6) 7.5 25.6 (25.7) (36.1) 7.4 7.5 3.7 8.1 9.9 (82.4) (46.1) 5.9 13.6 (83.0) 40.7 * 8.9 * (26.0)% (20.6) (0.4) 1.2 16.4 (14.8) 9.1 7.0 0.3 17.9 5.5 1.6 0.2 33.0 8.0 (20.9) (54.3) (42.6) * (19.1) * 18.4 % Net revenues include Subscription, Product and license and Support and services revenues. Subscription revenue relates to fees for SaaS, which are generally recognized ratably over the contractual term, and non- SaaS, which are generally recognized at a point in time. SaaS primarily consists of subscriptions delivered via a cloud-hosted service whereby the customer does not take possession of the software, hybrid subscription offerings and the related support. Non-SaaS consists primarily of on-premise licensing, hybrid subscription offerings, CSP services and the related support. Our hybrid subscription offerings are allocated between SaaS and non-SaaS. In addition, our CSP program provides subscription- based services in which the CSP partners host software services to their end users. The fees fromff recognized based on usage and as the CSP services are provided to their end users. the CSP program are t 41 Product and license revenue primarily represents fees related to the perpetual licensing of the folff lowing majoa r solutions: • Workspace is primarily comprised of our Application Virtual t Desktops, our unified endpoint management solutions, which include Citrix Endpoint Management, Citrix Content Collaboration, and Citrix Workspace; and ization solutions, which include Citrix Virtual Apps and • App Delivery and Security products, which primarily include Citrix ADC and Citrix SD-WAN. We offer incentive programs to our VADs and VARs to stimulate demand for our solutions. Product and license and Subscription revenues associated with these programs are partially offset by these incentives to our VADs and VARs. Support and services revenue consists of maintenance and support fees primarily related to our perpetual t offerings and include the following: • • • • Customer Success Services, which gives customers a choice of tiered support offerings that combine the elements of technical support, product version upgrades, guidance, enablement and proactive monitoring to help our customers and our partners fully realize their business goals. Fees associated with this offering are recognized ratablya over the term of the contract; and Hardware Maintenance feeff and hardware and software maintenance, are recognized ratably over the contract term; and our perpetual App Delivery and Security products, which include technical support s forff Fees from consulting services related to the implementation of our solutions, which are recognized as the services are provided; and Fees from product training and certification, which are recognized as the services are provided. Revenues: Subscription Product and license Support and services Total net revenues Subscription Year Ended December 31, 2020 2019 2018 2020 vs. 2019 2019 vs. 2018 (In thousands) $ 1,114,798 444,437 1,677,465 $ 3,236,700 $ $ 650,810 583,474 455,276 734,495 1,776,280 $ 3,010,564 1,784,132 $ 2,973,903 $ $ 463,988 (139,037) (98,815) 226,136 $ $ 195,534 (151,021) (7,852) 36,661 Subscription revenue increased during d 2020 compared to 2019 primarily due to an increase in on-premise license demand of $314.0 million, mostly fromff Workspace offerings of $191.7 million and our App Delivery and Security offerings of $122.3 million, mainly from pooled capacity. Also contributing to the increase is continued customer cloud adoption of our solutions delivered via the cloud of $150.0 million, primarily from Workspace offerings. We currently expect our Subscription revenue to increase when comparing the first quarter of 2021 to the firff st quarter of 2020 and the fiscal year 2021 to the fiscal year 2020 due to our continued transition to a subscription-based business model. Product and license Product and license revenue decreased during 2020 when compared to 2019 primarily dued perpetual App Delivery and Security products of $110.5 million and a decrease in sales of our perpetual $28.5 million as customers continue to shift to our subscription offerings. We currently expect Product and license revenue to decrease when comparing the first quarter of 2021 to the firff st quarter of 2020 and the fiscal year 2021 to the fiscal year 2020 as customers continue to shift to our subscription offerings and away frff om our App Delivery and Security hardware products, as t well as our decision to discontinue offering new perpet ual licenses for Citrix Workspace beginning on October 1, 2020. to a decrease in sales of our t Workspace solutions of r 42 Support and services Support u and services revenue decreased when comparing 2020 to 2019 primarily due to a decrease in sales of maintenance services across our App Delivery and Security perpetual offerings of $39.1 million, as more of the revenue is reported in the Subscription revenue line commensurate with our subscription model transition. We currently expect Support and services revenue to decrease when comparing the first quarter of 2021 to the firff st quarter of 2020 and the fiscal year 2021 to the fiscal year 2020 as customers continue to shift to our subscription offerings. offerings of $40.2 million and Workspace perpetual t F o r m 1 0 - K Deferred Revenue, Unbilled Revenue and Backlogkk Deferred revenue is primarily comprised of Support u and services revenue from maintenance fees, which include software and hardware maintenance, technical support related to our perpetual offerings and services revenue related to our consulting contracts. Deferred revenue also includes Subscription revenue from our Content Collaboration and cloud-based subscription offerings, as well as on-premise subscript ion offerings. u Deferred revenue consists of billings or payments received in advance of revenue recognition and is recognized in our consolidated balance sheets and statements of income as the revenue recognition criteria are met. Unbilled revenue primarily represents future billings under our subscription agreements that have not been invoiced and, accordingly, are not recorded in or deferred revenue within our consolidated financial statements. Deferred revenue and unbilled revenue accounts receivablea are influenced by several factors, including new business seasonality within the year, the specific timing, size and duration of customer subscription agreements, annual billing cycles of subscription agreements, and invoice timing. Fluctuations in unbilled revenue may not be a reliablea commitments. performance and the related revenue associated with these contractual indicator of futuret t The following tablea presents the amounts of deferred and unbilled revenue (in thousands): Deferred revenue Unbilled revenue December 31, 2020 December 31, 2019 2020 vs. 2019 $ 1,902,576 $ 1,795,791 $ 1,036,072 704,829 106,785 331,243 Deferred revenues increased approxi a mately $106.8 million as of December 31, 2020 compared to December 31, 2019 primarily due to an increase from subscription of $223.5 million, mostly from our cloud-based subscription offerings of $127.6 million and on-premise subscription license upda tes and maintenance of $125.3 million. These increases are partially offset by a decrease in maintenance and support of $117.6 million, mostly fromff Workspace perpetual software maintenance of $63.1 million and App Delivery and Security perpetual 2020 increased $331.2 million from December 31, 2019 primarily due to increased customer adoption of multi-year subscription agreements. hardware maintenance of $49.7 million. Unbilled revenue as of December 31, u t While it is generally our practice to promptly ship our products uponu receipt of properly finaff lized orders, at any given time, we have confirmed product license orders that have not shipped and are wholly unfulfilled. Backlog includes the aggregate amounts we expect to recognize as point in time revenue in the folff lowing quarter associated with contractual committed amounts forff shipped and are wholly unfulfilled. As of Dece bmber 31, 2020 indicator of futuret i di belbeliieve hthat bbacklog, on-premise subscription software licenses, as well as confirmed product license orders that have not dand 2019, thhe amount of bbacklogklog was not mate iri lal. We ddo not yany partiic lula dr date, iis a r leliiablblea performance. klog, as of ly t International Revenues International revenues (sales outside the United States) accounted for 50.5% dand 48.2% of our net revenues for hthe yyears lonal revenues as a percentagge of our net revenues higher revenues to Note 12 to dendedd Dece bmber 31, 2020 for hthe yyear e dndedd Dece bmber 31, 2020 as comparedd to thhe yyear endedded December 31, 2019 was p irima ilrily dy dued iin our EMEA regi our cons lioliddat ded fifinanciiall statement bSubs icri is incl dluded id in thish Annual Report on Form 10-K for the year ended December 31, 2020. iption. For ddetailil ded iinforma ition on iinterna iti lvelyy. hThe hcha gnge iin our iinterna iti lonal revenues, pllease referff region, mai linlyy fromff dand 2019, respec iti to highe 43 Cost of Net Revenues Year Ended December 31, 2020 2019 2018 2020 vs. 2019 2019 vs. 2018 (In thousands) Cost of subscription, support and services Cost of product and license revenues $ $ 389,612 76,152 $ 310,255 102,452 $ 266,495 120,249 $ 79,357 (26,300) 43,760 (17,797) Amortization and impairment of product related intangible assets 32,782 51,340 47,059 (18,558) 4,281 Total cost of net revenues $ 498,546 $ 464,047 $ 433,803 $ 34,499 $ 30,244 Cost of subscription, support and services revenues consists primarily of compensation and other personnel-related costs of providing technical support, consulting and cloud capac delivered via the cloud and hardware costs related to certain on-premise subscription offerings. Cost of product and license revenues consists primarily of hardware, shipping expense, royalties, product media and duplication, manuals and packaging materials. Also included in cost of net revenues is amortization and impairment of product related intangible assets. ity costs, as well as the costs related to providing our offerings a Cost of subscription, support and services revenues increased during 2020 when compared to 2019 primarily due to an increase in costs related to providing our subscription offerings. We currently expect cost of subscript ion, support and services revenues to increase when comparing the firff st quarter of 2021 to the first quarter of 2020 and the fisff cal year 2021 to the fisff cal year 2020, consistent with the expected increases in Subscription revenue as discussed above . u a Cost of product and license revenues decreased during 2020 when comparem d to 2019 primarily dued to lower overall sales of our perpetual App Delivery and Security products, which contain hardware components that have a higher cost than our software products. We currently expect cost of product and license revenues to decrease when comparing the firff st quarter of 2021 to the firff st quarter of 2020 and the fiscal year 2021 to the fiscal year 2020, consistent with the expected decrease in product and license revenue. Amortization and impairment of product related intangible assets decreased during 2020 as compared to 2019 primarily due to the impairments of certain acquired intangible assets, primarily developed technology, in 2019. Gross Margin Gross margimargin as a percent of revenue was 84.6% for 2020 dand 2019. Gross margin as a percent of revenue remained consistent during 2020 as compared to 2019. Operating Expens x es Foreign Currency Impact on OpeO rating Expens x es The functional currency forff all of our wholly-owned forei ff gn subsidiaries is the U.S. dollar. A substantial majority of our overseas operating expenses and capia tal purchasing activities are transacted in local currencies and are therefore subjeb ct to fluctuations in foreign currency exchange rates. In order to minimize the impact on our operating results, we generally initiate our hedging of currency exchange risks up to 12 months in advance of anticipated forei gn currency expenses. Generally, when the dollar is weak, foreign currency denominated expenses will be higher, and these higher expenses will be partially offset by the gains realized from our hedging contracts. Conversely, if the dollar is strong, foreign currency denominated expenses will be lower. These lower expenses will in turn be partially offset by the losses incurred fromff that there will be fluctuat ions in foreign currency exchange rates beyond the time fraff me for which we hedge our risk. our hedging contracts. There is a risk ff t Research and Development Expenses x Research and development $ 538,080 $ 518,877 $ 439,984 $ 19,203 $ 78,893 Year Ended December 31, 2020 2019 2018 2020 vs. 2019 2019 vs. 2018 (In thousands) Research and development expenses consist primarily of personnel related costs and facff ility and equipment costs directly related to our research and development ac iti ivi ities. We expensedd s bubstantiiallllyy allll dde dand dde lvelopment of our dproducts. lvelopment costs iincl dluded id in thhe researchh 44 Research and development expenses increased during 2020 as compared to 2019 primarily due to compensation and other employee-related costs of $12.2 million due to a net increase in headcount, and an increase in professional fees of $4.5 million. d Sales, Marketing and Services Expenses x Year Ended December 31, 2020 2019 2018 2020 vs. 2019 2019 vs. 2018 (In thousands) Sales, marketing and services $ 1,224,377 $ 1,132,956 $ 1,074,234 $ 91,421 $ 58,722 Sales, marketing and services expenses consist primarily of personnel related costs, including sales commissions, pre- sales support, the costs of marketing programs aimed at increasing revenue, such as brand development, advertising, trade shows, public relations and other market development programs and costs related to our facilities, equipment, information systems and pre-sale demonstration related cloud capaa activities. city costs that are directly related to our sales, marketing and services F o r m 1 0 - K Salles, ma krketinging andd ser ivices expenses iincreasedd during rease in variablea dpandemiic, whi hhich iin lcl d duded an inci COVID-19 limited use licenses and ongoing business continuity sales, and an increase in marketing programs of $23.1 million due to our new brand launch. These increases were partially offset by a decrease in costs of $12.6 million related to the cancellation of in- person events in response to the COVID-19 pandemic, including our largest customer and partner event, Synergy, and replacing them with virtual compensation of $80.0 million driven by an increase in demand of events or postponing to future periods. t t during 2020 comparedd to 2019 iprim iarilyly ddue to hth ie impact from hthe General and Adminis dd x trative Expenses Year Ended December 31, 2020 2019 2018 2020 vs. 2019 2019 vs. 2018 (In thousands) General and administrative $ 352,109 $ 320,429 $ 315,343 $ 31,680 $ 5,086 General and administrative expenses consist primarily of personnel related costs and expenses related to outside consultants assisting with information systems, as well as accounting and legal fees. General and administrative expenses increased during 2020 compared to 2019 primarily dued to increase is in compensa ition dand othher em lpl yoyee imilllliion, andd credidit lloss expense fof $$8.5 imilllliion. -relat ded costs of $$18.2 l imilllliion rellatedd to a net iincrease iin hhe dadcount, stock bk-bas ded compensa ition of $$15.8 imilllliion. hThes ie increases were pa irti lallyly ffoffset byby da decreas ie in p frofes i sional ffees of $f $7.2 l Amortizati ii on of Other tt Intangible Assets Year Ended December 31, 2020 2019 2018 2020 vs. 2019 2019 vs. 2018 (In thousands) Amortization of other intangible assets $ 2,799 $ 15,890 $ 15,854 $ (13,091) $ 36 Amortization of other intangible assets consists of amortization of customer relationships, trade names and covenants not to compete primarily related to our acquisitions. The decrease in Amortization of other intangible assets when comparing 2020 to 2019 was primarily dued to certain intangible assets becoming fully amortized in 2019. For more information regarding our intangible assets, see Note 2 to our consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2020. 45 Restructuring Expex nses Restructuring $ 11,981 $ 22,247 $ 16,725 $ (10,266) $ 5,522 Year Ended December 31, 2020 2019 2018 2020 vs. 2019 2019 vs. 2018 (In thousands) Restructuring expenses decreased during 2020 compared to 2019, primarily dued to a net decrease in employee severance and related costs of $16.5 million, as well as the consolidation of certain leased facilities of $2.7 million during 2019, partially offset by the impairment of a right-of-use asset related to a restructuring facility of $8.9 milillilion as a res lult of hthe COVID-19 pande imi dc d iuridd pande gng the year ended December 31, 2020. For more information regarding our restructuring, see Note 17 to our consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2020. 2021 Operating Expex nse Outlook When comparing the first quarter of 2021 to the firff st quarter of 2020 and the fiscal year 2021 to the fiscal year 2020, we currently expect operating expenses to slightly increase. Interest income Interest income $ 3,108 $ 18,280 $ 40,030 $ (15,172) $ (21,750) Year Ended December 31, 2020 2019 2018 2020 vs. 2019 2019 vs. 2018 (In thousands) Interes it income p irima ilrilyy consiists of if interest earnedd on our ca hsh, cashh e during 2020 comparedd to 2019 iincome ddecreasedd during iinvestments as a res lult of hthe repayyment of hthe outstanding nding “Convertiblible Notes”)) on A ilpril 15, 2019, as wellll as llowe yr yiieldlds on iinvestments, ddue to llowe ir interest ra information regarding our investments, see Note 5 to our consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2020. lpal b lbalance of our 0.500% Convertiblible Note ds dued tes For more lvalents a dnd 2019 ( h(the iqui iprim iarilyly ddue to llower ave grage b lbalances of ca hsh, cashh e lvalents a dnd iinvestment bballances. Interest iqui inci ipri . Interest ExpeEE nse Interest expense $ (64,687) $ (45,974) $ (80,162) $ (18,713) $ 34,188 Year Ended December 31, 2020 2019 2018 2020 vs. 2019 2019 vs. 2018 (In thousands) dand Term Loan Credidit gAgreement of $$29.5 Interest expense primarily consists of interest paid on our 2027 and 2030 Notes, Term Loan Credit Agreement and our nding 2030 credit facility. Whhen com ipari gng 2020 NNotes Conve irtiblble Notes of $f $10.8 expect interest expense to increase when comparing the first quarter of 2021 to the first quarter of 2020 and the fisff cal year 2021 to the fisff cal year 2020, in anticipation of financing related to the proposed acquisition of Wrike. dand 2019, thhe iincrease iis priim iarilyly ddue to iinterest expense fromff imilllliion, pa irti lallyly offset byby da decreas ie i in interest expense from our iAprill 15, imilllliion ddue to hthe rep yayment of hthe outst di iprinciipal bl b lalance on 2019 We currently our outstanding andi gng . For more information regarding our debt and proposed acquisition, see Note 13 and Note 19, respectively, to our consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2020. Other income (expense), x net Other income (expense), net $ 7,651 $ 1,076 $ (8,373) $ 6,575 $ 9,449 Year Ended December 31, 2020 2019 2018 2020 vs. 2019 2019 vs. 2018 (In thousands) 46 Other income (expense), net is primarily comprised of gains (losses) from remeasurement of foreign currency transactions, sublease income, realized losses related to changes in the fair value of our investments that have a decline in fair value and recognized gains (losses) related to our investments, which was not material for all periods presented. hThe hcha gnge iin hOther iincome ((expense)), net hwhen com ipari gng 2020 to 2019 iis priim iarilyly d idriven byby hthe remeasurement dand settllement of foreignign currencyy transactiions. IIncome Taxes F o r m 1 0 - K We are ppreparingring our co overseas requi dred to es itimate our iincome taxes iin ea hch of hthe juri i li subsididia iries andd our f nsoliddat ded fifinanciiall statements. We i foreiggn earnings b i imaint iain cer rnings are taxedd at rates hthat are ggene lrallyly llower hthan iin hthe juri disdic itions iin hiwhi hch we operate as part of hthe process of itain strategigic managgement dand operatiionall ac iti ivi ities iin iUni dted States. Our effecff tive tax rate generally differs from the U.S. federal statutory t rate primarily due to tax credits and lower tax rates on earnings generated by our foreign operations that are taxed primarily in Switzerland. Our effecff tive tax rate was approximately 9.1% for the year ended December 31, 2020 and (33.8)% for the year ended December 31, 2019. The increase in the effecff December 31, 2019 was primarily due to tax items unique to the year ended December 31, 2019. The 2019 unique tax items include tax benefits of $112.1 million and $99.9 million attributablea on Tax Reform and AHV Financing ("TRAF"), tive tax rate when comparim ng the year ended December 31, 2020 to the year ended to the cantonal and federal impact of the Swiss Federal Act respectively. RR We are subje subject to tax iin hthe U.S. andd iin mullti liple foreignign tax juju i di iquididityy needds are currentlyly sati fi isfiedd using ca hsh flflows ggeneratedd from our U.S. operatiions, bborrowings using bsubstantiiall lworld id ff an effort porti result iin l portion of our f signi signifificant iincrement lal costs associiatedd iwithh repa itriatinging hthe foreignign ea irni gngs. See Note 11 to our consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2020 for income tax information. ivarietyy of tax lplanning dwide ca hsh iis availil blable iin llocatiions iin hiwhichh iit iis ne dededd. We expect to repat iriate a rnings are not restriictedd byby lloc lal llaws or rnings over itime, to hthe extent hthat hthe f to ensure hthat our i foreiggn earnings foreiggn earnings nning strategiegies iin i risdictiions. Our U.S. lili owings, or b hboth. We lalso utililiize a Liquidityity and C iCapital Resources During 2020, we generated operating cash flows of $935.8 million. These operating cash flows related primarily to net d ed for, among other things, non-cash charges, including stock-based compensation expense of income of $504.4 million, adjust $307.7 million and depreciation and amortization expenses of $207.9 million. Partially offsetting these changes was a change in operating assets and liabilities of $88.7 million, net of effects of acquisitions. The change in our net operating assets and liabilities was primarily a result of an outflow in accounts receivablea of $151.8 million mostly due to an increase in sales, an outflow in other assets of $119.8 million mostly due to an increase in capia talized commissions from higher subscription sales expenses of and an outflow in income taxes, net of $51.5 million. These outflows were partially offset by an inflow in accruedrr $161.5 million, primarily due to increases in employee-related accruals and an inflow in deferred revenue of $106.8 million. Our investing activities used $138.3 million of cash consisting primarily of net purchases of investments of $88.3 million and cash paid for the purchase of property and equipment of $41.4 million. Our financing activities used cash of $595.2 million, primarily for stock repurchases of $1.29 billion, cash dividends paid on common stock of $172.0 million and cash paid for tax withholding on vested stock awards of $121.7 million. These outflows are partially offset by net proceeds from the issuance of our 2030 Notes of $738.1 million and net borrowings from our Term Loan Credit Agreement of $248.8 million. During 2019, we generated operating cash flows of $783.1 million. These operating cash flows related primarily to net d m d for, among other things, non-cash charges, including stock-based compensat income of $681.8 million, adjuste $278.9 million, depreciation and amortization expenses of $139.3 million and amortization of operating lease right-of-use assets of $50.2 million. Partially offsetting these changes was a deferred income tax benefit of $244.9 million and a change in operating assets and liabilities of $190.5 million, net of effects of acquisitions. The change in our net operating assets and liabilities was primarily a result of an outflow in other assets of $74.2 million mostly due to an increase in capia talized commissions from higher subscription sales, an outflow in accounts receivable of $39.0 million mostly due to an increase in sales and changes in deferred revenue of $38.8 million. Our investing activities provided $1.04 billion of cash consisting primarily of net proceeds from investments of $1.10 billion, partially offset by cash paid for the purchase of property and equipment of $63.5 million. Our financing activities used cash of $1.89 billion, primarily for the cash repayment of the outstanding principal balance of our Convertible Notes of $1.16 billion, stock repurchases of $453.9 million, repayment of borrowings under our credit facility of $200.0 million, cash dividends paid on common stock of $182.9 million and cash paid for tax withholding on vested stock awards of $89.2 million. These outflows are partially offset by borrowings from our credit facility of $200.0 million. ion expense of 47 Term Loan Credit Agreement On January 21, 2020, we entered into a $1.00 billion Term Loan Credit Agreement, consisting of a $500.0 million 364- day term loan facility (the “364-day Term Loan”), and a $500.0 million 3-year term loan facility (the “3-year Term Loan”). During the year ended Dece bmber 31, 2020, we usedd b aggregate $1.00 billion accelerated share repurchase transaction. borrowi gngs from hthe Term Loan Cr diedit gAgreement to enter into an i Senior Notes On February 25, 2020, we issued $750.0 million of unsecured senior notes due March 1, 2030, or the 2030 Notes. The 2030 Notes accrue interest at a rate of 3.300% per annum, which is due semi-annually on March 1 and September 1 of each year, beginning on September 1, 2020. The net proceeds from this offering were $738.1 million. During the year ended December 31, 2020, we used the net proceeds from the 2030 Notes and cash to repay $500.0 million under the 364-day Term Loan and $250.0 million under the 3-year Term Loan. As of December 31, 2020, $250.0 million was outstanding under the 3-year Term Loan. On November 15, 2017, we issued $750.0 million of unsecured senior notes due December 1, 2027, or the 2027 Notes. The 2027 Notes accrue interest at a rate of 4.500% per annum, which is due semi-annually on June 1 and December 1 of each year. Credit Facilitytt On November 26, 2019, we entered into a $250.0 million five-year unsecured revolving credit facility under an amended and restated credit agreement, or the Credit Agreement. We may elect to increase the revolving credit facility by up to $250.0 million if existing or new lenders provide additional revolving commitments in accordance with the terms of the Credit Agreement. As fof Dece bmber 31, 2020, no amounts were outst di dunder hthe cr diedit ffa icilili yty. andi gng BBridge idge Fac lilityy,tt kTake-Okk ut Facilli yty Commitmett nt Letter dand 2021 Cr dedit Facilli yty g nuary 16, 2021, we enteredd iinto a bridge y On Ja ppursuant to hiwhichh an gagg ggregate event hthat permanent ddebbt fifinancinging iis not av iaillablblea efforts to asse blmble a syndic expect to re lplace hthe bridge iissuance of ddebbt se ddes icrib dbed bbellow; hhowever, suchh permanent fifina bsubjecjecbb hThe com imitment iis Letter, iin lcluding, syndicate of lle dnders to pr bridge facililiityy t to custom yary terms andd icuri ities d/ JPMorgan hChase Ba knk, N.A., hhas ( )(1) commiittedd to dand takke-out fa icilili yty commiitment lletter ( h(the “Commiitment Letter )”) 364-dayy term lloan fa icilili yty iin dured iqui isitiion of Wrikike iin hthe iprinciipall amount of $$1.45 bilbillilion to fifinance hthe ca hsh co idnsideratiion for our pending nding ac onablyy bl osing andd ( )(2) gagre ded to use comme irci lallyly reas on or providde a se inior unsec iprior to hthe lclosing bridge facililiityy d i idovide hthe necessa yry com imitments for hthe seniior term lloan fa icilili yty. We currentlyly iprior to hthe lclosing osing of hthe ac iqui isitiion iwi hth permanent fifina inci gng, hi hwhich mayy iin lcl dude hthe and/or one or more seniior term lloan fa icilili ities, iincl di inci gng mayy not bbe availil blable iin hthe itimeframe expectedd or on favorablblea ludi gng hthe 2021 Term Loan Cr diedit gAgreement as terms. borrowi gng as set forthh iin hthe Commiitment i condi itions preceddent for suchh b di uding, am gong othhers, hthe executiion andd d ldeliive yry of d fidefi initiive ddocumentatiion co insistent i hwith hthe Commiitment Letter. On February bruary 5, 2021 ((thhe “Cllosingsing Date )”), we enteredd iinto hthe 2021 Term Loan Cr diedit gAgreement i hwith JPM gorgan hChase hother lle dnders partyy hthereto from itime to itime ( providdes us i Ba knk, N.A., as dad imi inistratiive gagent, andd hthe hThe 2021 Term Loan Cr diedit gAgreement princ princiipall amount of up to $$1.00 bibilllliion. hThe 2021 Term Loan iis av iaillablblea Date through through Credidit gAgreement. hThe 2021 Term Loan matures on hthe ddate hthat iis hthree yyears aftff er thhe 2021 Term Loan iis ddrawn. hThe iwillll bbe us ded to fifinance a portiion of hthe purchhase pproce deds of b bebe paidid iin connectiion iwithh hthe ac iwi hth a facililiityy to bborrow a term lloan on an unsec dunder hthe 2021 Term Loan Cr diedit gAgreement to bbe madde byby hthe 2021 Le dnders from hthe lJulyy 8, 2021, iin a isinglgle bborrowing, subject to sa itisfactiion of cert iain quisi ition of borrowi gngs ing, subj iWrikke. i i di i l condi itions set forthh iin hthe 2021 Term Loan (colllectiively,ly, hthe “2021 Le dnders )”). dured bba isis iin an gagg ggregate lClosinging iprice to See Notes 9, 13 and 19 to our consolidated financial statements included in this Annual Report on Form 10-K for the year ended Dece bmber 31, 2020 for ddi dand hthe 2021 Term Loan Credidit gAgreement, respec iti lonal ddet iaills on hthe accelleratedd hshare re lvelyy. addi iti purchase, d bdebt gagreements, hthe Com imitment Letter h Historically, significant portions of our cash inflows were generated by our operations. We currently expect this trend to continue in 2021. We believe that our existing cash and investments together with cash flows expected from operations will be sufficient to meet expected operating and capia tal expenditure requirements and service our debt obligations for the next 12 months. For additional information, see section titled Impactm acquisition candidates and could acquire or make investments in companies we believe are related to our strategic objectives. We could from time to time continue to seek to raise additional funds through the issuance of debt or equity securities for larger acquisitions and for general corporate purposes. Pandemic above. We continue to search for suitable VV of COVID-19 48 Cash, CasCC h Equivalents and Investmentstt Cash, cash equivalents and investments $ 891,373 $ 605,456 $ 285,917 December 31, 2020 2019 2020 vs. 2019 (In thousands) F o r m 1 0 - K The increase in cash, cash equivalents and investments at December 31, 2020 as compared to December 31, 2019, is operating stock repurchases of $1.29 billion, cash dividends paid on tax withholding on vested stock awards of $121.7 million and purchases of primarily due to cash received from debt offerings, net of repayments of $987.0 million and cash provided fromff activities of $935.8 million, partially offset by the cash paid forff common stock of $172.0 million, cash paid forff property and equipment of $41.4 million. As of December 31, 2020, $350.7 million of the $891.4 million of cash, cash equivalents and investments was held by our foreign subsidiaries. Under current U.S. federal tax law, the cash, cash equi dand iinvestment hs h leld bd byy our foreignign iaries ca bn be repat iriatedd wiithhout iin repa itriatiion of hthese f , we c ff taxes. Thhe amount of taxe ds dued hthe f se consiist of iintere bst-be iari gng se dand manner of thhe repa itriatiion, as wellll as hthe llocatiions from hwhiichh equivallents iin iinvestment grade lould bd be subjeubject to foreignign andd U.S. stat iis dde yany daddiditiionall U.S. f dfederall tax. Upon foreiggn i hh l funds are repat iriatedd a dnd receiivedd. We ggene lrallyly iinvest our ca hsh dneeds. Our hshort-term and ld l gong-term iinvestments flexibilbiliity iy in thhe event of iimmedidiate ca hsh fl ie income taxes, as wellll as ddi ighly ly liiq iduid iprim iarilyly dpendent on hthe amount icuri ities to lalllow forff grade h, highl dand ca hsh icuri ities. curri gng i bsubsidiidi lonal f addi iti dunds d i i i withholdingding lvalents Stockk Repur hchase P grogram Our Board of Directors authorized an ongoing stock repurchase program, of which $1.00 billion was approved in January 2020. We may use the approved dollar authority to repurchase stock at any time until the approved amounts are exhausted. The objective of the stock repurchase program is to improve stockholders’ returns and mitigate earnings per share dilution posed by the issuance of shares related to employee equity compensation awards. At December 31, 2020, $625.6 million was available to repurchase common stock pursuant to the stock repurchase program. All shares repurchased are recorded as treasury stock. On January 30, 2020, we used the proceeds from the Term Loan Credit Agreement and entered into accelerated share repurchase (“ASR”) transactions with a group of dealers for an aggregate amount of $1.00 billion. Under the ASR transactions, we received an initial share delivery of 6.5 million shares of its common stock in January 2020 and received delivery of an additional 0.8 million shares of its common stock in August 2020 in final settlement of the ASR Agreement. In addition to the ASR transactions, during the year ended December 31, 2020, we expended $288.5 million on open market purchases under the stock repurchase program, repurchasing 2.5 million shares of outstanding common stock at an average price of $116.40. We also withheld 893,479 shares fromff obligations that arose on the vesting of equity awards of $121.7 million. These shares are reflected as treasury stock in our consolidated balance sheets included in this Annual Report on Form 10-K for the year ended December 31, 2020. equity awards that vested to satisfy tax withholding See Note 9 to our consolidated finaff ncial statements included in this Annual Report on Form 10-K for the year ended Dece bmber 31, 2020 for ddi addi iti lonal ddet iaills on hthe ASR dand trea ysury stock. k Contractual Obligations and Off-Balance Sheet Arrangements Contractt tual Obligations The following tabla e summarizes our significant contractual t which such obligations are expected to be settled in cash. Additional details regarding these obligations are provided in the notes to our consolidated financial statements (in thousands): obligations at December 31, 2020 and the future periods in Operating lease obligations Total long-term debt(1) Purchase obligations(2) Transition tax payable(3) Total contractual t obligations(4) Payments due by period Total Less than 1 Year 1-3 Years 3-5 Years More than 5 Years $ 276,283 1,750,000 978,695 259,391 $ 3,264,369 $ $ 57,981 — 47,943 27,304 133,228 $ $ 98,210 250,000 — 78,500 426,710 $ $ 82,657 — — 153,587 236,244 $ $ 37,435 1,500,000 930,752 — 2,468,187 49 (1) The amount above represents the balances to be repaid under our 2027 Notes, 2030 Notes, and Term Loan Credit Agreement. See Note 13 to our consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2020 for further information. (2) Purchase obligations represent non-cancelablea imilllliion dand a continge approximat lelyy $$8.8 iincl dludes a rem iainingning purchhase blobligaiga ition for our use of certaiin lcl doud se irvices $$950.0 statements included in this Annual Report on Form 10-K for the year ended December 31, 2020 for further information. imilllliion. It providder of i imilllliion iis ddue iin lless hthan one yyear. See Note 10 to our consolidated financial i iwithh one hthi dird-pa yrty ingent blobligaiga ition to purchhase iinvent yory of imilllliion, of hi hwhich $$19.3 approximatelyly $$19.9 commitments to purchase inventory ordered before year-end 2021 of lalso (3) Represents transition tax payable on deemed repatriation of deferred foreign income incurred as a result of the 2017 Tax Act. See Note 11 to our consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2020 for further information. (4) Total contractual obligations do not include agreements where our commitment is variablea in nature or where cancellations without payment provisions exist and excludes $74.7 million of liabilities related to uncertain tax positions recorded in accordance with authoritative guidance, because we could not make reasonably reliablea of the period or amount of cash settlement with the respective taxing authorities. See Note 11 to our consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2020 for further information. estimates As of December 31, 2020, we did not have any individually material finance lease obligations or other material long-term commitments reflected on our consolidated balance sheets. Off-Balance Sheet Arrangements We do not have any special purpose entities or off-balance sheet financing arrangements. 50 F o r m 1 0 - K ITEM 7A. QUANTITATT TIVEVV ANDNN QUALITATIVE DISCLOCC SUROO ESRR ABOUT MARKETKK RISKII The following discussion about our market risk includes “forward-looking statements” that involve risks and uncertainties. Actual results could differ materially from those projected in the forward-looking statements. The analysis methods we used to assess and mitigate risk discussed below should not be considered projections of future events, gains or losses. We are exposed to financial market risks, including changes in foreign currency exchange rates and interest rates that t our results of operations or financial condition. To mitigate foreign currency risk, we utilize derivative could adversely affecff financial instruments. The counterparties to our derivative instruments are majoa r financial institutions. All of the potential changes noted below are based on sensitivity analyses performed on our financial position as of December 31, 2020. Actual results could differ materially. Discussions of our accounting policies for derivatives and hedging activities are included in Notes 2 and 14 to our consolidated financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2020. Exposure x to Exchange Rates A substantial majoa rity of our overseas expense and capita al purchasing activities are transacted in local currencies, including Euros, British pounds sterling, Japanese yen, Australian dollars, Swiss francs, Indian rupees, Hong Kong dollars, Canadian dollars, Singapore dollars and Chinese yuan renminbi. To reduce the volatility of future cash flows caused by changes in currency exchange rates, we have establia shed a hedging program. We use foreign currency forward contracts to hedge certain forecasted foreign currency expenditures. Our hedging program significantly reduces, but does not entirely eliminate, the impact of currency exchange rate movements. At December 31, 2020 and 2019, we had in place foreign currency forward sale contracts with a notional amount of $317.9 million and $285.9 million, respectively, and foreign currency forward purchase contracts with a notional amount of $149.7 million and $154.8 million, respectively. At December 31, 2020, these contracts had an aggregate fair value asset of $2.6 million and at December 31, 2019, these contracts had an aggregate fair value liability of $0.4 million. Based on a hypothetical 10% appreciation of the U.S. dollar from December 31, 2020 market rates, the fair value of our foreign currency forward contracts would increase by $14.0 million. Conversely, a hypothetical 10% depreciation of the U.S. dollar from December 31, 2020 market rates would decrease the fair value of our foreign currency forward contracts by $14.0 million. In these hypothetical movements, foreign operating costs would move in the opposite direction. This calculation assumes that each exchange rate would change in the same direction relative to the U.S. dollar. In addition to the direct effecff exchange rates quantified above, changes in exchange rates could also change the dollar value of sales and affect the volume of sales as the prices of our competitors’ products become more or less attractive. We do not anticipate any material adverse impact to our consolidated financial position, results of operations, or cash flows as a result of these foreign exchange forward contracts. ts of changes in Exposure x to Interest Rates - We have interest rate exposures resulting from our interest-based available-for-sale investments. We maintain availablea for-sale investments in debt securities and we limit the amount of credit exposure to any one issuer or type of instrument. The securities in our investment portfolio are not leveraged. The securities classified as available-for-sale are subjeu risk. The modeling technique used measures the change in fair values arising from an immediate hypothetical shiftff in market interest rates and assumes that ending fair values include principal plus accrued interest and reinvestment income. If market interest rates were to increase by 100 basis points from December 31, 2020 and 2019 levels, the fair value of the available-for- sale portfolio would decline by approximately $0.6 million and $0.4 million, respectively. If market interest rates were to decrease by 100 basis points from December 31, 2020 and 2019 levels, the fair value of the available-for-sale portfolio would increase by approximately $0.2 million and $0.4 million, respectively. These amounts are determined by considering the impact of the hypothetical interest rate movements on our available-for-sale investment portfolios. This analysis does not consider the effect of credit risk as a result of the changes in overall economic activity that could exist in such an environment. ct to interest rate We are also exposed to the impacm t of changes in interest rates as they affecff t our Term Loan Credit Agreement, which bears interest at a rate equal to either a customary base rate formula plus an applicablea margin or LIBOR plus an applicable margin. As of December 31, 2020, we had $250.0 million outstanding under the Term Loan Credit Agreement. Because interest rates applicablea , we are exposed to market risk from changes in the underlying index rates, which affects our interest expense. A hypothetical increase of 100 basis points in interest rates would result in an increase in interest expense of $2.5 million. to the Term Loan Credit Agreement are variablea 51 ITEM 8. FINAII NCIACC L STATTT EMTT ENMM TSNN ANDNN SUPPLPP EMENMM TANN RY DATA Our consolidated financial statements, together with the report of independent registered public accounting firm, appear at pages F-1 through F-44 of this Annual Report on Form 10-K for the year ended December 31, 2020. ITEM 9. CHANHH GENN SEE IN ANDNN DISAGREERR MEEE DISCLOSUR ERR CC NTEE STT WITHTT ACCOUNTANTT TSNN ON ACCOUNTINGTT ANDNN FINAII NCIACC L None. ITEM 9A. CONTRNN OLS ANDNN PROCEDUR CC ESRR Evaluation of Disclosure Controls and Procedures As of December 31, 2020, our management, with the participation of our President and Chief Executive Officer and our tiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) Chief Financial Officer, evaluated the effecff promulgated under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Based upon that evaluation, our President and Chief Executive Officer and our Chief Financial Officer concluded that, as of December 31, 2020, our disclosure controls and procedures were effecff tive in ensuring that material information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, including ensuring that such material information is accumulated and communicated to our management, including our President and Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Changes in Internal Control Over Financial Reporting During the quarter ended December 31, 2020, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affecff t, our internal control over financial reporting. Management’s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establia shing and maintaining adequate internal control over financial reporting as such term is defined in Exchange Act Rule 13a–15(f). Our internal control system was designed to provide reasonable assurance to our management and the Board of Directors regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2020. In making this assessment, our management used the criteria set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, or the COSO criteria. Based on our assessment we believe that, as of December 31, 2020, our internal control over financial reporting was effecff effectiveness of our internal control over financial reporting as of December 31, 2020 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which appears below. tive based on those criteria. The 52 Report fof Independent Registe gistered Public Accountingting iFirm i To hthe Sto khckh ldolders andd Boa drd fof iDirectors fof iCi itrix ySystems, Inc. O iOpi inion on Internal CControl Over iFinanciial Reportinging F o r m 1 0 - K di auditedd iCi We hhave establiblia Com imi mate iriall respects, effecff hshedd iin Internall Co ission ((2013 framew k)ork) ( h(the COSO criiteri )ia). In our itive iinte rnal cont l lrol over fifina itrix ySystems, Inc.’s iinternall co ntrol over fifinanciiall re l porti gng as of Dece bmber 31, 2020, bbas ded on criit i ieria nsoring ntrol-Integgrat ded Framew kork iiss dued byby hthe Commiittee fof Sponsoring l gOrga inizatiions fof hthe Tre dadw yay iopi inion, iCitriix ySystems, Inc. ((thhe Company)ny) maiint iai dned, iin lalll inci lal reportinging as of Dece bmber 31, 2020 bbas ded on hthe COSO criiteriia. dcordance We lalso hhave audidit ded, iin ac ((PCAOB)), hthe cons lioliddat ded bballance hsheets of hthe Com ypany as of Dece bmber 31, 2020 statements of iincome, comprehhensiive iincome, Dece bmber 31, 2020, February i inci lal statement sch d l bruary 8, 2021 expressedd an unqualilififiedd Public Compa yny Accountinging Oversight i (Unitedd States)) nsoliddat ded li equi yty andd ca hsh flflows for ea hch of hthe hthree yyears iin hthe pe i driod end dded dand hthe rellatedd notes andd fifina ight Boa drd ( lrelat ded co dIndex at Item ( ) 15(a) andd our report ddat ded hedule lilist ded iin hthe iwithh hthe sta d d opinion hthereon. dand 2019, hthe ndards of hthe i i bli Basiis ffor O iOpi inion i hThe Com ypany’s ma gnagement iis assessment of hthe effectiiveness of iinternall co Report on Internall Co inci lal Re cont lrol over fifina inci lal reportinging bbasedd on our requi dred to bbe iinddepe dndent i lrules andd regul responsiblble for maiint iainingning effecff l i di porti gng iincl dludedd iin hthe accompanying ntrol over fifinanciiall re porti gng. Our i bli public acco audit. We are a dcordance iwithh respect to hthe Com ypany iin ac ission hange Com imi responsibilbiliityy iis to express an iunti gng fifirm regi regulatiions of hthe Sec iuritiies andd Exchange iwithh hthe U.S. f dfederall se dand hthe PCAOB. lrol over fifina ntrol Over l rnal cont l itive iinte iFina i i i opinion on hthe Com ypany’s iinternall registe dred i hwith thhe PCAOB dand are appliic blable l icuri ities llaws andd hthe inci lal reportinging andd for iits nying Ma gnagement’s Annuall We dconductedd our audit to bobtaiin reas di mate iriall respects. di audit iin ac onable assurance babout hwhe hther effectiive iinternall co bl iwithh hthe sta d d dcordance ndards ndards fof hthe PCAOB. hThose sta d d require hthat we lplan i dand pe frform hthe ntrol over fifinanciiall re l porti gng was i imaintaiinedd iin lalll Our audidit iincl dludedd bobtai iini gng an we kakness exiists, testinging pperforminging suchh reasonablblea bbasiis for our opinion. i i dunderstanding rnal cont l dand ev laluatinging hthe ddesignsign andd opera iti gng effectiiveness of iintern lal cont ing, asse issi gng hthe iriskk hthat a mate iriall lrol bbasedd on hthe assessedd iriskk, inci lal reporting, nding of iinte lrol over fifina dand hother proceddures as we considide dred necessa yry iin hthe icircumstances. We bbelilieve hthat our audidit provides a id Defi fini ition and iLi i imi tations fof Internal CControl Over iFinanciial Reportinging i inci lal reportinging andd hthe preparatiion of fifinanciiall statements for extern lal purposes iin ac inci lal reportinging iis a process designe designedd to providde reasonablblea i assurance ipri iityy of fifina lrol over fifina A compa yny’s iintern lal cont lreliiabilbila acceptedd accountinging inci lples. A compa yny’s iinternall co hthat ( )(1) pertaiin to hthe maiintenance of rec dords hthat, iin rea didisposiitiions of hthe assets of hthe com ypany; ( )(2) ppreparatiion of fifinanciiall statements iin acco drdance expe dinditures com ypany; didisposiitiion of hthe compa yny’s assets hthat of hthe com ypany are bbeinging madde onlyonly iin ac bl onable assurance providde reas i dand ( )(3) t l ntrol over fifinanciiall re sonable ddetailil, accuratelyly andd f ifairlyrly reflflect hthe transactiions porti gng iincl dludes hthose l bl i provide reasonablblea id i hwith ggene lrallyly accept ded acco assurance hthat transac itions are re iunti gng iprinci liples, dcordedd as necessa yry to pe rmit i dand hthat rec ieipts dand dcordance iwithh auth ihorizatiions of ma gnagement andd didirectors of hthe gregarding rding preventiion or itimelyly ddetec ition of unauth ihoriz ded ac iqui i isition, use, or dcordance lipoli icies gregarding rding hthe iwi hth ggenerallllyy dand proc dedures dand couldd hhave a mate iri lal effect on hthe fifina inci lal statements. Because of iits i hinherent lili proje pe i driods are projectiions of anyy evallua ition of effectiiveness to futuret becbecause of hch ganges iin co dinditiions, or hthat hthe ddeggree of com lipliance imita itions, iinternall co ntrol over fifinanciiall re porti gng mayy not prevent or ddetect bsubjjbb ect to hthe iri ksk hthat co i hwith thhe lipoli icies or proceddures mayy ddet lAlso, imisstatements. ymay bbecome iin dadequate ieriorate. ntrols l l i / //s/ Ernst & Young LLP g Boca Raton, iFloridda l February bruary 8, 2021 53 ITEM 9B. OOTHETT REE OINFORMOO AATMM OIOTT NNOO RulRule b10b5-1 Tradingding lPlans hThe Com ypany's lipoli ycy ggoverning rning transac itions iin iCitriix se icuri ities byby hthe Compa yny's didirectors, hange Act. hThe Compa yny hhas bbeen d i er andd Hector ppermiits iits ffiofficers, didirectors andd certaiin othher persons to enter iinto tr diadi gng lplans co Exchange Ma krketinging Offificff iin hthe ffourthh quarter hThe Com ypany te iTim iMinahhan, iits Exec iutive iVice Pre idsident of Customer Ex b10b5-1 andd hthe Com ypany's i fof 2020 iin ac dcordance dundertakkes no bliobliggatiion to hshedd tradingding lplan. iwithh dupdate or re ivise hthe i finformatiion rminatiion fof an establiblia iLima, iits Executiive advisedd hthat lRule i lmplyingying i hwith R luleRR foffificfff ers b10b5-1 dand em lpl yoyees dunder hthe iVice Pre idsident, Busiiness Strat gyegy andd hiChief iperience, ea hch enteredd iinto a new tr diadi gng lplan icuri ities. lipoli ycy ggoverning provid dded hhe irein, iincl di rning transac itions iin iits se revi ision or ludi gng ffor i 2021 Term Loan Cr dedit gAgreeme tnt On February g bruary 5, 2021 ((thhe “Cllosingsing Date )”), thhe Com ypany ente dred iinto hthe 2021 Term Loan Cr diedit gAgreement iwithh hother lle dnders partyy hthereto from itime to itime, or hthe 2021 JPMorgan hChase Ba knk, N.A., as dad imi inistratiive gagent, andd hthe Le dnders. hThe 2021 Term Loan Cr diedit gAgreement basbasiis iin an gagg ggregate madde byby hthe 2021 Le dnders from hthe condi itions set fforthh iin hthe 2021 Term Loan Credidit gAgreement. hThe 2021 Term Loan matures on hthe ddate hthat iis hthree yyears fafter hthe 2021 Term Loan iis ddrawn. hThe proceedds of b illwill bbe usedd to fifinance a portiion of hthe purchhase dunder hthe 2021 Term Loan Cr diedit gAgreement iWrikke. iprinciipall amount of up to $$1.00 bibilllliion, or hthe 2021 Term Loan. hThe 2021 Term Loan iis a providdes hthe Compa yny iwithh a fa icilili yty to bborrow a term lloan on an unsecuredd ough JulyJuly 8, 2021, iin a isinglgle bborrowing, subject to sa itisfactiion of cert iain ipaidd iin connec ition iwithh hthe ac osing Date hthrough quisi ition of borrowi gngs iprice to bbe ing, subj ivaillablblea lClosing to bbe i i di i i Borr iowi gngs l dunder hthe 2021 Term Loan Cr diedit gAgreement iwillll bbear iinterest at a rate eq lual to ((a)) iei hther (i)(i) a custom yary formula or, upon a hphase-out of LIBOR, an lalterna itive bbe hnchm kark rate as id lplus (b)(b) hthe ap liplicablblea marginrgin i hwith respect hthereto, hiwhi hch ii ini iti lallyly illwill bbe providedd iin hthe 2021 Term Loan diCredit nsoliddat ded lleve grage ratiio bbut mayy, ifif so lelectedd byby hthe Compa yny, bbe bbasedd on hthe henhancedd, se inior unsecuredd long-t long-term d bdebt ratinging as ddete rmi dned byby Moody’sdy’s Investors Se irvice, Inc., i iFinanciiall Se irvices, LLC andd iFit hch Ra iti gngs Inc., iin ea hch case as set forthh iin hthe 2021 Term Loan diCredit LIBOR f gAgreement, or (ii(ii)) a custom yary bbase rate form lula, ddetermiinedd bbas ded on hthe Compa yny’s co Com ypany’s non-credidit ndard & Poor’s Sta d d gAgreement. li hThe 2021 Term Loan Cr diedit gAgreement iin lcl dudes a covenant lili imi iti gng hthe Com ypany’s cons lioliddat ded lleve grage ratiio to not d following owing suchh qualilififiedd ac r hthe ddate of hthe iiniitiiall bborrowinging of yany quarter on or after quisitiion iin ytory st further subje h lClosing osing Date, ifif so lel i i ected byby hthe Compa yny, a step-up to 4.25:1.0 for hthe four fifiscall imi iti gng hthe dep-down after hthe fifif hfth fifisc lal quarter endingding afteff subject to, upon hthe occurrence of a qualilififiedd ac more hthan 4.0:1.0, subj subject to a ma dnda hthe 2021 Term Loan to 3.75:1.0, andd f hthe fiffifthh fifisc lal quarter endingding afteff r hthe quarters f ll quisi ition. hThe 2021 Term Loan Cr diedit gAgreement Com ypany’s cons lioliddat ded iinterest coveragge ra itio to not lless hthan 3.0:1.0. hThe 2021 Term Loan Cr diedit gAgreement iin lcl dudes custom yary events of d f d fdefa lults, cr Le dnders are entiitlledd to accellerate repayyment of hthe lloans yany of hthe events of d f covenants, iincl di lalll or exceptiions. hThe 2021 Term Loan Credidit gAgreement fifina default. In daddiditiion, hthe 2021 Term Loan Credidit gAgreement cont iains customa yry ffiaffirma itive andd iwi hth corresponding faults, hthe occurrence of a hch gange of cont imit or res itrict hthe biabilili yty of hthe Compa yny to ggrant liliens, me grge or co bsubsta inti lallyly lalll of iits assets, hcha gnge iits b ibusiness andd iincur l ludi gng covenants hthat lili imita ition, iwi hthout lili faults. hThe 2021 l lalso contaiins representatiions andd warrantiies custom yary for an unsecuredd dunder hthe 2021 Term Loan Cr diedit gAgreement upon hthe occurrence of ludi gng, dand bba knkruptcy-rel subsididia yry i dindebbteddness, iin ea hch case subje iperi dods iin cert iain icircumstances, iincl di lalso iin lcl dudes a covenant lili subject to customa yry nsoliddate, didispose of lrol of hthe Compa yny inci gng of hithis ytype. default, l ponding ggrace y-relat ded ddef ypayment gnega itive oss-def d b i i i li l Certaiin 2021 Le dnders and/d/or hth ieir ffiaffililiates hhave provid dded andd mayy contiinue to i hother se irvices to hthe Compa yny, iits affilfilff iiates andd employe providde commerciiall bbanking, ployees, for hiwhi hch hth yey receiive custom yary fees nking, iinvestment dand i ma gnagement andd com imi issions. hThe foregoi foregoi gng ddes icri lqualifiifi ded iin iits en itiretyy by,by, hthe f ll iis iincorporatedd hhereiin byby reference. iption of hthe 2021 Term Loan Cr diedit gAgreement ddoes not purport to bbe co lmplete andd iis subj full text of hthe 2021 Term Loan Credidit gAgreement, hi hwhich iis attach dhed hhereto as subject to, hiExhibibit 10.34 dand dand AAm dendmentstt to Creddit gAgreement dand Term Loan Cr dedit gAgreement On February bruary 5, 2021 ((thhe “Ame dndment Date )”), hthe Compa yny enteredd iinto (i)(i) a fifirst amenddment to term lloan cr diedit gagreement ( h(the “Term Loan Ame dndment”)), hiwhi hch amendds hthe Com ypany’s Term Loan Cr diedit gAgreement andd (ii(ii)) a fifirst am dendment to cr diedit gagreement ((thhe “Rev lolver Ame dndment” redit i hwith thhe Term Loan Amenddment, hthe “C di gAgreement Ame dndments”)), hiwhi hch amendds hthe Com ypany’s Credidit gAgreement. Ea hch of hthe Cr diedit gAgreement Amenddments am dends, am gong consolididatedd lleveragge ra itio. After gigivingving effecff hother hithi gngs, hthe covenant lili imi iti gng hthe Com ypany’s dand toggethher t to hthe l diCredit 54 iwillll bbe co insistent imi iti gng hthe Compa yny’s co dand hthe Cr diedit gAgreement gAgreement Ame dndments, hthe covenant lili gAgreement cont iai dned iin hthe 2021 Term Loan Cr diedit gAgreement, andd ilwilll bbe lili ddown aftff er thhe fiffifthh fifiscall quarter gAgreement ((or suchh ea lirlier ddate as hthe Com ypany mayy lelect byby dadmi iinistra itive gagent to 3.75:1.0, bsubjecjecbb di endi gng after hthe Leve grage Ra itio Step-Down, ifif so lel iowi gng suchh foll f ll lqualifiifi ded ac dand furthher iqui isitiion. di nsoliddat ded lleve grage ratiio iin ea hch of hthe Term Loan li diCredit endi gng after hthe iiniitiiall bborrowinging of hthe 2021 Term Loan iwi hth hthe covenant lili imi iti gng hthe Compa yny’s co imitedd to not more hthan 4.0:1.0, subje lid nsolidatedd lleveragge ra itio subject to a ma dndat yory step- diCredit dunder hthe 2021 Term Loan iwritten notiice to kBank of Ameriica, N.A., iin iits capaa ici yty as F o r m 1 0 - K dunder ea hch of hthe Term Loan Cr diedit gAgreement andd Credidit gAgreement)) ( h(the “Leve grage Ratiio Step-Down”)) r hthe fiffifthh fifiscall quarter i i t to, upon hthe occurrence of a qualilififiedd ac quisi ition iin anyy quarter on or afteff ected byby hthe Compa yny, a step-up to 4.25:1.0 for hthe four fifiscall quarters d hThe foregoi foregoi gng ddes icri lqualifiifi ded iin iits en itiretyy by,by, hthe f ll as iption of hthe Credidit gAgreement Ame dndments ddoes not purport to bbe co d full text of hthe Term Loan Ame dndment andd hthe Re dand Exhibihibit 10.36, respectiively,ly, andd hiwhichh are iincorporat ded hhe irein byby reference. hiExhibibit 10.35 lvolver lmplete andd iis bsubjecjecbb t to, dand Amendment, hi hwhich are atta hch ded hhereto PART III ITEM 10. DIRECRR TORSOO ,SS EXECXX UTIVTT EVV OFFICERSEE ANDNN CORPOO ORATE GOVERVV NARR NCECC The information required under this item is incorporated herein by reference to the Company’s definitive proxy statement pursuant to Regulation 14A, which proxy statement will be filed with the Securities and Exchange Commission not later than 120 days after the close of the Company’s fiscal year ended December 31, 2020. ITEM 11. EXECUTIVTT EVV COMPENS MM ATSS IONTT The information required under this item is incorporated herein by reference to the Company’s definitive proxy statement pursuant to Regulation 14A, which proxy statement will be filed with the Securities and Exchange Commission not later than 120 days after the close of the Company’s fiscal year ended December 31, 2020. ITEM 12. SECURITY OWNEWW RSHEE STOCKHOCC REE MATTERTT LDEOO S IPHH OF CERTAEE IN BENEFNN ICFF IACC L OWNERSEE ANDNN MANAGEMEEE NTEE ANDNN RELATLL EDTT The information required under this item is incorporated herein by reference to the Company’s definitive proxy statement pursuant to Regulation 14A, which proxy statement will be filed with the Securities and Exchange Commission not later than 120 days after the close of the Company’s fiscal year ended December 31, 2020. ITEM 13. CERTAITT NII RELATION SHINN LL PSII ANDNN RELATLL EDTT TRANSA RR II CTIONS AND DIRECRR TOR INDEPEEE NDE EE NCEE ECC The information required under this item is incorporated herein by reference to the Company’s definitive proxy statement pursuant to Regulation 14A, which proxy statement will be filed with the Securities and Exchange Commission not later than 120 days after the close of the Company’s fiscal year ended December 31, 2020. ITEM 14. PRINCRR IPACC L ACCOUNTINGTT FEES AND SERVICE SEE SS The information required under this item is incorporated herein by reference to the Company’s definitive proxy statement pursuant to Regulation 14A, which proxy statement will be filed with the Securities and Exchange Commission not later than 120 days after the close of the Company’s fiscal year ended December 31, 2020. 55 ITEM 15. EXHIBXX ITSBB ,SS FINAII NCIACC L STATTT EMTT ENMM TNN SCHECC DUL EE ES PART IV (a) 1. Consolidated Financial Statements. For a list of the consolidated financial information included herein, see page F-1. 2. Financial Statement Schedules. All other schedules have been omitted as the required information is not applicable or the information is presented in the Consolidated Financial Statements or notes thereto under Item 8. The following consolidated financial statement schedule is included herein: Valuation and Qualifying Accounts 3. List of Exhibits. Exhibit No. 2.1 Description Separation and Distribution Agreement, dated as of July 26, 2016, by and among Citrix Systems, Inc., GetGo, Inc. and LogMeIn, Inc. (incorporated herein by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K filed on July 28, 2016)** 2.2 2.3 3.1 3.2 4.1 4.2 4.3 4.4 4.6 4.7 10.1* 10.2* 10.3* 10.4* Amended and Restated Tax Matters Agreement, dated as of September 13, 2016, by and among LogMeIn, Inc., Citrix Systems, Inc. and GetGo, Inc. (incorporated herein by reference to Exhibit 2.3 to the Company’s Annual Report on Form 10-K filed on February 16, 2017)** Agreement and Plan of Merger, dated as of January 16, 2021, by and among Citrix Systems, Inc., Wallaby Merger Sub, LLC, Wrangler Topco, LLC and Vista Equity Partners Management, LLC, as the representative (incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on January 19, 2021)** Amended and Restated Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 29, 2013) Amended and Restated By-laws of the Company (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on March 12, 2018) Specimen certificate representing Common Stock (incorporated herein by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-1 (File No. 33-98542), as amended) (P) Indenture, dated as of November 15, 2017, between Citrix Systems, Inc. and Wilmington Trust, National Association, as Trustee (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on November 15, 2017) Supplemental Indenture, dated as of November 15, 2017, between the Company and Wilmington Trust, National Association, as Trustee (incorporated herein by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on November 15, 2017) Form of 4.500% Senior Notes due 2027 (included in Exhibit 4.3) Second Supplemental Indenture dated as of February 25, 2020 between Citrix Systems, Inc. and Wilmington Trust, National Association, as trustee (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on February 25, 2020) Form of 3.300% Senior Note due 2030 (included in Exhibit 4.5) Description of Securities (incorporated herein by reference to Exhibit 4.5 to the Company’s Annual Report on Form 10-K filed on February 14, 2020) Amended and Restated 2005 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on May 5, 2010) First Amendment to Citrix Systems, Inc. Amended and Restated 2005 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 28, 2010) Second Amendment to the Citrix Systems, Inc. Amended and Restated 2005 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 2, 2011) Third Amendment to the Citrix Systems, Inc. Amended and Restated 2005 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on June 2, 2011) 56 F o r m 1 0 - K 10.5* 10.6* 10.7* 10.8* 10.9* 10.10* 10.11* 10.13* 10.14* 10.15* 10.16* 10.17* 10.18* 10.19* 10.21* 10.22* 10.23* 10.24* 10.25* Fourth Amendment to the Citrix Systems, Inc. Amended and Restated 2005 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 31, 2012) Fifth Amendment to the Citrix Systems, Inc. Amended and Restated 2005 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on August 6, 2013) Sixth Amendment to the Citrix Systems, Inc. Amended and Restated 2005 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 29, 2013) Form of Restricted Stock Unit Agreement For Non-Employee Directors under the Citrix Systems, Inc. Amended and Restated 2005 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on May 9, 2011) Form of Long Term Incentive Agreement under the Citrix Systems, Inc. Amended and Restated 2005 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K filed on February 19, 2015) Citrix Systems, Inc. Executive Bonus Plan (incorporated herein by reference to Exhibit 10.2 to the Company’s Annual Report on Form 10-K filed on February 20, 2014) Citrix Systems, Inc. Second Amended and Restated 2014 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 5, 2020) 2015 Employee Stock Purchase Plan (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 10-Q filed on August 7, 2015) Amendment to 2015 Employee Stock Purchase Plan, dated October 27, 2016 (incorporated herein by reference to Exhibit 10.39 to the Company’s Annual Report on Form 10-K filed on February 16, 2017) Amendment to Citrix Systems, Inc. 2015 Employee Stock Purchase Plan, dated December 10, 2018 (incorporated by reference to Exhibit 10.63 to the Company’s Annual Report on Form 10-K filed on February 15, 2019) Citrix Systems, Inc. Amended and Restated 2014 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 27, 2017) Amendment to Citrix Systems, Inc. 2014 Amended and Restated Equity Incentive Plan (incorporated herein by reference to Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q filed on May 4, 2018) Second Amendment to Amended and Restated 2014 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 6, 2019) Form of Indemnification Agreement by and between the Company and each of its Directors and executive officers (incorporated herein by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10- Q filed on August 8, 2011) Form of Executive Agreement of Citrix Systems, Inc. by and between the Company and each of its executive officers (other than CEO) (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on January 20, 2017) Benefits Continuation Agreement, dated as of April 30, 2019, between the Company and Robert M. Calderoni (incorporated herein by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed on August 6, 2019) Employment Agreement, dated July 10, 2017, by and between Citrix Systems, Inc. and David J. Henshall (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 10, 2017) Form of Global Restricted Stock Unit Agreement under the Citrix Systems, Inc. 2014 Equity Incentive Plan (Time Based Awards - 2018 Annual Awards) (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on May 4, 2018) Form of Global Restricted Stock Unit Agreement under the Citrix Systems, Inc. 2014 Equity Incentive Plan (Performance Based Awards - 2018 Annual Awards) (incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on May 4, 2018) Form of Global Restricted Stock Unit Agreement (Long Term Incentive) under the Citrix Systems, Inc. Amended and Restated 2014 Equity Incentive Plan (Interim Performance Period) (incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on July 31, 2020) Form of Global Restricted Stock Unit Agreement (Long Term Incentive) under the Citrix Systems, Inc. Amended and Restated 2014 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on July 31, 2020) 57 10.26* 10.27* 10.28* 10.29 10.31 10.32 10.33 10.34† 10.35† 10.36† 21.1† 23.1† 24.1 31.1† 31.2† 32.1†† 101.SCH† 101.CAL† 101.DEF† 101.LAB† 101.PRE† 104† Form of Global Restricted Stock Unit Agreement under the Citrix Systems, Inc. Amended and Restated 2014 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed on July 31, 2020) Contract of Employment, dated as of May 1, 2020, between Citrix Systems Netherlands B.V. and Jeroen Van Rotterdam (incorporated herein by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q filed on July 31, 2020) Form of Forfeiture Agreement between Citrix Systems, Inc. and each of David Henshall, Antonio Gomes, P.J. Hough, Jeroen van Rotterdam and Timothy Minahan (incorporated herein by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed on May 5, 2020) Amended and Restated Credit Agreement, dated as of November 26, 2019, by and among Citrix Systems, Inc., the initial lenders named therein, and Bank of America, N.A., as Administrative Agent. (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 27, 2019) Term Loan Credit Agreement, dated as of January 21, 2020, by and among Citrix Systems, Inc., the initial lenders named therein, and Bank of America, N.A., as Administrative Agent (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 22, 2020) Master Confirmation between Goldman Sachs & Co. LLC and Citrix Systems, Inc., dated January 30, 2020 (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 31, 2020) Master Confirmation between Wells Fargo Bank, National Association and Citrix Systems, Inc., dated January 30, 2020 (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on January 31, 2020) Bridge and Take-Out Facility Commitment Letter, dated January 16, 2021, between JPMorgan Chase Bank, N.A. and Citrix Systems, Inc. (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 19, 2021) Term Loan Credit Agreement, dated as of February 5, 2021, by and among Citrix Systems, Inc., the initial lenders named therein, and JPMorgan Chase Bank, N.A., as Administrative Agent ** First Amendment to Term Loan Credit Agreement, dated as of February 5, 2021, by and among Citrix Systems, Inc., the lenders named therein, and Bank of America, N.A., as Administrative Agent First Amendment to Credit Agreement, dated as of February 5, 2021, by and among Citrix Systems, Inc., the lenders named therein, and Bank of America, N.A., as Administrative Agent List of Subsidiaries Consent of Independent Registered Public Accounting Firm Power of Attorney (included in signature page) Rule 13a-14(a) / 15d-14(a) Certification of Principal Executive Officer Rule 13a-14(a) / 15d-14(a) Certification of Principal Financial Officer Section 1350 Certification of Principal Executive Officer and Principal Financial Officer Inline XBRL Taxonomy Extension Schema Document Inline XBRL Taxonomy Extension Calculation Linkbase Document Inline XBRL Taxonomy Extension Definition Linkbase Document Inline XBRL Taxonomy Extension Labea l Linkbase Document Inline XBRL Taxonomy Extension Presentation Linkbase Document Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*) * ** † †† (P) Indicates a management contract or a compensatory plan, contract or arrangement. Schedules (or similar attachments) have been omitted pursuant to Item 601 of Regulation S-K. The registrant hereby undertakes to furnish supplemental copies of any of the omitted schedules (or similar attachments) upon request by the SEC. Filed herewith. Furnished herewith. This exhibit has been paper K. a filed and is not subject to the hyperlinking requirements of Item 601 of Regulation S- 58 (b) Exhibits. The Company hereby files as part of this Annual Report on Form 10-K for the year ended December 31, 2020, the exhibits listed in Item 15(a)(3) above. Exhibits which are incorporated herein by reference can be accessed free of charge through the EDGAR database at the SEC’s website at www.sec.gov. (c) Financial Statement Schedule. The Company hereby files as part of this Annual Report on Form 10-K for the year ended December 31, 2020 the consolidated financial statement schedule listed in Item 15(a) above, which is attached hereto. ITEM 16. FORMOO 10-K SUMMMM ARMM Y None. F o r m 1 0 - K 59 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has dulyd caused authorized, in Fort Lauderdale, Florida on the 8th day of this report to be signed on its behalf by the undersigned, thereunto dulyd rr February, 2021. SIGNATURES CITRIX SYSTEMS, INC. By: /s/ DAVID J. HENSHALL David J. Henshall President and Chief Executive Offiff cer 60 POWER OF ATTORNEY AND SIGNATURES We, the undersigned officers and directors of Citrix Systems, Inc., hereby severally constitute and appoint David J. Henshall and Arlen R. Shenkman, and each of them singly, our true and lawfulff attorneys, with full power to them and each of them singly, to sign for us in our names in the capacities indicated below, all amendments to this report, and generally to do all things in our names and on our behalf in such capacities to enable Citrix Systems, Inc. to comply with the provisions of the Securities Exchange Act of 1934, as amended, and all requirements of the Securities and Exchange Commission. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following F o r m 1 0 - K persons on behalf of the registrant and in the capac a ities indicated below on the 8th day of February, 2021. Signature g Title(s)( ) /S/ DAVID J. HENSHALL David J. Henshall /S/ ARLEN R. SHENKMAN Arlen R. Shenkman /S/ JESSICA SOISSON Jessica Soisson President, Chief Executive Officer and Director (Principal Executive Officer) Executive Vice President and Chief Financial Officer (Principal Financial Officer) Vice President, Chief Accounting Officer and Corporate Controller (Principal Accounting Officer) /S/ ROBERT M. CALDERONI Chairman of the Board of Directors Robert M. Calderoni /S/ NANCI E. CALDWELL Director Nanci E. Caldwell /S/ ROBERT D. DALEO Director Robert D. Daleo /S/ MURRAY J. DEMO Director Murray J. Demo /S/ AJEI S. GOPAL Ajei S. Gopal Director /S/ THOMAS E. HOGAN Director Thomas E. Hogan /S/ MOIRA A. KILCOYNE Director Moira A. Kilcoyne /S/ ROBERT E. KNOWLING, JR. Director Robert E. Knowling, Jr. /S/ PETER J. SACRIPANTI Director Peter J. Sacripanti /S/ J. DONALD SHERMAN Director J. Donald Sherman 61 List of Financial Statements and Financial Statement Schedule CITRIX SYSTEMS, INC. The following consolidated financial statements of Citrix Systems, Inc. are included in Item 8: Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets — December 31, 2020 and 2019 Consolidated Statements of Income — Years ended December 31, 2020, 2019 and 2018 Consolidated Statements of Comprehensive Income — Years ended December 31, 2020, 2019 and 2018 Consolidated Statements of Equity — Years ended December 31, 2020, 2019 and 2018 Consolidated Statements of Cash Flows — Years ended December 31, 2020, 2019 and 2018 Notes to Consolidated Financial Statements The following consolidated financial statement schedule of Citrix Systems, Inc. is included in Item 15(a): Schedule II Valuation and Qualifying Accounts F o r m 1 0 - K F-2 F-4 F-5 F-6 F-7 F-8 F-9 All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted. F-1 Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors of Citrix Systems, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Citrix Systems, Inc. (the Company) as of December 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 8, 2021 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. F-2 F o r m 1 0 - K Revenue Recognition – Identification of distinct performan selling price ff ce obligations and standalone Description of the Matter As described in Note 2 to the consolidated financial statements, the Company recognizes revenue when control of the promised products or services are transferred to customers, in an amount that reflects the consideration that the Company expects to receive in exchange for those products or services. The Company primarily derives revenues from subscription-based arrangements for cloud-hosted offerings, as well as software license agreements that include bundled support and maintenance services for the term of the license period. The Company’s contracts with customers often contain bundles of solutions and services with multiple performance obligations or promises to transfer multiple products and services to a customer, including subscription, product and license, and support the Company evaluates whether the performance obligations are capaa blea distinct within the context of the contract. Solutions and services that are not both capabl being distinct and distinct within the context of the contract are combined and treated as a single performance obligation in determining the allocation and recognition of revenue. The Company allocates the transaction price to each distinct performance obligation on a relative standalone selling price basis and recognizes revenue when control of the distinct performance obligation is transferred to customers. of being distinct and e of a and services. At the contract inception, u Auditing the Company’s recognition of revenue was complex due to the effort required to analyze the accounting treatment for the Company’s various software products and service offerings. This involved assessing the impact of terms and conditions of new or amended contracts with customers or new product or service offerings, evaluating whether products and services are considered distinct performance obligations that should be accounted for separately versus together, and the determination of the relative standalone selling prices for each distinct performance obligation and the timing of recognition of revenue. We obtained an understanding, evaluated the design and tested the operating effecff Company's internal controls over the identification of distinct performance obligations and the determination of the stand-alone selling price for each distinct performance obligation, including the Company's controls over the review of product and service offerings, contracts and pricing information used to estimate standalone selling prices. tiveness of the To test the Company’s identification of distinct performance obligations and the Company’s determination of estimated standalone selling prices, our audit procedures included, among others, reviewing significant individual contracts based on size or risk as well as reviewing a randomly selected sample of contracts from the remaining population. For the selected samplem of customer agreements, we obtained and read contract source documents for each selection, tested the Company’s identification of significant terms for completeness, including the identification of distinct performance obligations, and assessed whether the terms included within the customer’s agreement were consistent with the Company’s accounting policies. We sent contract confirmations directly to customers to confirm the terms and conditions of the selected arrangements. To test management's determination of relative standalone selling price for performance obligations, we performed audit procedures that included, among others, assessing the appropriateness of the methodology applied, testing the mathematical accuracy of the underlying data and calculations, and testing selections to corroborate the data underlying the Company's calculations. We also evaluated the Company’s disclosures included in Note 2 to the consolidated financial statements. How We Addresse Matter in Our Audit dd d the /s/ Ernst & Young LLP We have served as the Company’s auditor since 1989. Boca Raton, Florida February 8, 2021 F-3 CITRIX SYSTEMS, INC. CONSOLIDATED BALANCE SHEETS Current assets: Cash and cash equivalents Short-term investments, available-for-sale Assets Accounts receivable, net of allowances of $25,868 and $9,557 at December 31, 2020 and 2019, respectively Inventories, net Prepaid expenses and other current assets Total current assets Long-term investments, available-for-sale Property and equipment, net Operating lease right-of-use assets, net Goodwill Other intangible assets, net Deferred tax assets, net Other assets Total assets Current liabilities: Accounts payable Liabilities and Stockholders' Equity Accrued expenses and other current liabilities Income taxes payable Current portion of deferred revenues Total current liabilities Long-term portion of deferred revenues Long-term debt Long-term income taxes payable Operating lease liabilities Other liabilities Commitments and contingencies Stockholders' equity: Preferred stock at $.01 par value: 5,000 shares authorized, none issued and outstanding Common stock at $.001 par value: 1,000,000 shares authorized; 321,964 and 318,760 shares issued and outstanding at December 31, 2020 and 2019, respectively Additional paid-in capital Retained earnings Accumulated other comprehensive loss Less - common stock in treasury, at cost (199,443 and 188,693 shares at December 31, 2020 and 2019, respectively) Total stockholders' equity Total liabilities and stockholders' equity See accompanying notes. F-4 December 31, 2020 December 31, 2019 (In thousands, except par value) $ 752,895 $ 124,113 858,009 20,089 236,000 545,761 43,055 720,359 15,898 187,659 $ $ 1,991,106 1,512,732 14,365 208,811 187,129 16,640 231,894 206,154 1,798,408 1,798,408 81,491 386,504 222,533 108,478 361,814 152,806 4,890,347 $ 4,388,926 92,266 $ 507,185 42,760 1,510,216 2,152,427 392,360 1,732,622 232,086 195,767 72,942 84,538 331,680 60,036 1,352,333 1,828,587 443,458 742,926 259,391 209,382 67,526 — 322 — 319 6,608,018 4,984,333 6,249,065 4,660,145 (3,649) (5,127) 11,589,024 10,904,402 (11,476,881) (10,066,746) 112,143 837,656 $ 4,890,347 $ 4,388,926 CITRIX SYSTEMS, INC. CONSOLIDATED STATEMENTS OF INCOME Year Ended December 31, 2020 2019 2018 (In thousands, except per share information) F o r m 1 0 - K $ 1,114,798 $ 650,810 $ 444,437 1,677,465 3,236,700 389,612 76,152 32,782 498,546 2,738,154 538,080 1,224,377 352,109 2,799 11,981 2,129,346 608,808 3,108 (64,687) 7,651 554,880 50,434 504,446 4.08 4.00 123,575 126,152 $ $ $ 583,474 1,776,280 3,010,564 310,255 102,452 51,340 464,047 2,546,517 518,877 1,132,956 320,429 15,890 22,247 2,010,399 536,118 18,280 (45,974) 1,076 509,500 (172,313) 681,813 5.21 5.03 130,853 135,495 $ $ $ 455,276 734,495 1,784,132 2,973,903 266,495 120,249 47,059 433,803 2,540,100 439,984 1,074,234 315,343 15,854 16,725 1,862,140 677,960 40,030 (80,162) (8,373) 629,455 53,788 575,667 4.23 3.94 136,030 145,934 Revenues: Subscription Product and license Support and services Total net revenues Cost of net revenues: Cost of subscription, support and services Cost of product and license revenues Amortization and impairment of product related intangible assets Total cost of net revenues Gross margin Operating expenses: Research and development Sales, marketing and services General and administrative Amortization of other intangible assets Restructuring Total operating expenses Income from operations Interest income Interest expense Other income (expense), net Income before income taxes Income tax expense (benefit) Net income Earnings per share: Basic Diluted Weighted average shares outstanding: Basic Diluted $ $ $ See accompanying notes. F-5 CITRIX SYSTEMS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Net income Other comprehensive income: Available forff sale securities: Year Ended December 31, 2020 2019 2018 (In thousands) $ 504,446 $ 681,813 $ 575,667 Change in net unrealized gains (losses) Less: reclassification adjust income d ment for net (gains) losses included in net Net change (net of tax effect) 128 (7) 121 2,881 (1,770) (580) 2,301 5,996 4,226 (Loss) gain on pension liability (1,337) (1,127) 1,569 Cash flow hedges: Change in unrealized gains (losses) Less: reclassification adjust d ment for net losses included in net income Net change (net of tax effecff t) 2,363 331 2,694 237 1,616 1,853 (3,842) 699 (3,143) Other comprehensive income 1,478 3,027 2,652 Comprehensive income $ 505,924 $ 684,840 $ 578,319 See accompanying notes. F-6 CITRIX SYSTEMS, INC. CONSOLIDATED STATEMENTS OF EQUITY (In thousands) Common Stock Shares Amount Additional Paid In Capital Retained Earnings Accumulated Other Comprehensive Loss Common Stock yy in Treasury Total Equity Shares Amount Balance at Decembem r 31, 2017 305,751 306 4,883,670 3,509,484 (10,806) (162,044) (7,390,193) 992,461 F o r m 1 0 - K Balance at December 31, 2018 309,761 310 5,404,500 4,169,019 (8,154) (178,327) (9,014,156) Shares issued under stock-based compensation plans Stock-based compensation expense Common stock issued under employee stock purchase plan Stock repurchases, net Restricted shares turned in forff tax withholding Cash dividends declared Other comprehensive income, net of tax 2,258 — 461 — — — — Settlement of convertible notes and hedges 1,291 Other Accelerated stock repurchase program Cumulative-effect adjustment from adoption of accounting standards Temporary equity reclassification Net income — — — — — 3 — — — — — — 1 — — — — — 161 203,619 33,462 — — — — 138,231 3,467 150,000 — — — — — (46,799) — — (2,111) — — 132,778 (8,110) — — 575,667 — — — — — — 2,652 — — — — — — Shares issued under stock-based compensation plans Stock-based compensation expense Common stock issued under employee stock purchase plan Temporary equity reclassification Stock repurchases, net Restricted shares turned in forff tax withholding Cash dividends declared Settlement of convertible notes and hedges Settlement of warrants Cumulative-effect adjustment from adoption of accounting standards Other Other comprehensive income, net of tax Net income 2,603 — 471 — — — — 4,950 975 — — — — 3 — — — — — — 5 1 — — — — (3) 278,892 39,469 8,110 — — — 509,519 — — — — — — — — (182,947) — — 838 8,578 (8,578) — — — 681,813 — — — — — — — — — — — 3,027 — Shares issued under stock-based compensation plans Stock-based compensation expense Common stock issued under employee stock purchase plan Stock repurchases, net Restricted shares turned in forff tax withholding Cash dividends declared Accelerated stock repurchase program Cumulative-effect adjustment from adoption of accounting standards Other Other comprehensive income, net of tax Net income 2,721 — 483 — — — — — — — — 3 — — — — — — — — — — (3) 307,710 44,635 — — — — — 6,611 — — — — — — — (172,006) — (1,641) (6,611) — 504,446 — — — — — — — — — 1,478 — — — — (4,731) (739) — — — — — 164 203,619 33,462 (511,153) (511,153) (71,593) (71,593) — — (1,291) (141,217) — — (9,522) (900,000) (750,000) (46,799) 2,652 (2,985) 1,356 132,778 (8,110) 575,667 551,519 — 278,892 39,469 8,110 — 1 838 — 3,027 681,813 837,656 — 307,710 44,635 (1,641) — 1,478 504,446 112,143 — — — — — — — — — — — — — — (4,534) (453,853) (453,853) (882) — (89,213) (89,213) — (182,947) (4,950) (509,524) — — — — — — — — — — — — — — — — (2,479) (893) — (288,483) (288,483) (121,652) (121,652) — (172,006) (7,378) (1,000,000) (1,000,000) — — — — — — — — Balance at December 31, 2019 318,760 319 6,249,065 4,660,145 (5,127) (188,693) (10,066,746) Balance at December 31, 2020 321,964 322 6,608,018 4,984,333 (3,649) (199,443) (11,476,881) See accompanying notes. F-7 CITRIX SYSTEMS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 2020 2019 2018 (In thousands) $ 504,446 $ 681,813 $ 575,667 Operating Activities Net income Adjustments to reconcile net income to net cash provided by operating activities: Amortization and impairment of intangible assets Depreciation and amortization of property and equipment Amortization of debt discount and transaction costs Amortization of deferred costs Amortization of operating lease right-of-use assets Stock-based compensation expense Deferred income tax benefit Effects of exchange rate changes on monetary assets and liabilities denominated in foreign currencies Other non-cash items Total adjustments to reconcile net income to net cash provided by operating activities Changes in operating assets and liabilities, a net of the effects of acquisitions: Accounts receivable Inventories Prepaid expenses and other current assets Other assets Income taxes, net Accounts payablea Accrued expenses and other current liabilities a Deferred revenues Other liabilities Total changes in operating assets and liabia lities, net of the effecff ts of acquisitions Net cash provided by operating activities Investing Activities Purchases of available-for-sale investments Proceeds from sales of available-for-sale investments Proceeds from maturities of available-for-sale investments Purchases of property and equipment Cash paid for acquisitions, net of cash acquired Cash paid for licensing agreements, patents and technology Other Net cash (used in) provided by investing activities Financing Activities Proceeds from issuance of common stock under stock-based compensation plans Proceeds from term loan credit agreement, net of issuance costs Repayment of term loan credit agreement Proceeds from 2030 Notes, net of issuance costs Proceeds from credit facility Repayment of credit facility Repayment of acquired debt Repayment on convertible notes Stock repurchases, net Cash paid for tax withholding on vested stock awards Cash paid for dividends Net cash used in financing ff activities Effect of exchange rate changes on cash and cash equivalents Change in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Supplemental Cash Flow Information Cash paid for income taxes Cash paid for interest See accompanying notes. F-8 35,581 65,125 2,905 57,539 49,704 307,710 (3,974) (20,796) 26,315 520,109 (151,830) (4,220) (44,447) (119,807) (51,505) 7,532 161,454 106,785 7,292 (88,746) 935,809 (513,608) 157,248 277,056 (41,438) — (8,581) (8,982) 67,230 72,079 10,219 44,829 50,163 278,892 (244,933) 2,631 10,630 291,740 (38,994) 3,046 (7,129) (74,152) (22,147) 8,994 (25,722) (38,780) 4,401 (190,483) 783,070 (20,003) 942,985 178,070 (63,454) — (3,500) 1,651 (138,305) 1,035,749 62,913 78,983 39,099 38,144 — 203,619 (13,156) 7,950 11,872 429,424 18,703 (8,239) (7,855) (33,638) (56,988) 6,804 36,967 69,499 5,001 30,254 1,035,345 (466,687) 455,417 468,145 (69,354) (248,929) (3,210) (3,202) 132,180 164 — — — — — (5,674) (272,986) (1,261,153) (71,593) (46,799) — — — — 200,000 (200,000) — (1,164,497) (453,853) (89,213) (182,947) — 998,846 (750,000) 738,107 — — — — (1,288,483) (121,652) (172,006) (595,188) 4,818 207,134 545,761 752,895 92,838 52,638 $ $ $ $ $ $ (1,890,510) (1,658,041) (1,314) (73,005) 618,766 545,761 86,460 37,667 $ $ $ (5,848) (496,364) 1,115,130 618,766 110,808 41,834 CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. BACKGROUND AND ORGANIZATION Citrix Systems, Inc. ("Citrix" or the "Company"), is a Delaware corporation incorporated on April 17, 1989. Citrix is an enterprise software company focused on helping organizations deliver a consistent and secure work experience no matter where work needs to get done - in the office, at home, or in the field. Citrix does this by delivering a digital workspace solution that gives each employee the resources and space they need to do their best work. Citrix markets and licenses its solutions through multiple channels worldwide, including selling through resellers, direct F o r m 1 0 - K and over the Web. Citrix's partner community comprises thousands of value-added resellers, or VARs known as Citrix Solution Advisors, value-added distributors, or VADs, systems integrators, or SIs, independent software vendors, or ISVs, original equipment manufacturers , or OEMs and Citrix Service Providers, or CSPs. t The Company's revenues are derived from sales of its Workspace solutions, App Delivery and Security (formerly Networking) products and related Support and services. The Company operates under one reportable segment. The Company's chief operating decision maker (“CODM”) reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. See Note 12 for more information on the Company's segment. 2. SIGNIFICANT ACCOUNTING POLICIES Consolidatdd ion Policy The consolidated financial statements of the Company include the accounts of its wholly-owned subsidiaries in the Americas; Europe, the Middle East and Africff balances between the Company and its subsidiaries have been eliminated in consolidation. a (“EMEA”); and Asia-Pacific and Japan ("APJ"). All significant transactions and Recent Accounting Pronouncements Current Expected CreCC dit Losses In June 2016, the Financial Accounting Standards Board (“FASB”) issued an accounting standard update on the measurement of credit losses on financial instruments. Previously, credit losses were measured using an incurred loss approach when it was probablea that a credit loss had been incurred. The new guidance changes the credit loss model from an incurred loss to an expected loss approach. It requires the application of a current expected credit loss (“CECL”) impairment model to financial assets measured at amortized cost (including trade accounts receivable) and certain off-balance-sheet credit exposures. Under the CECL model, lifetime expected credit losses on such financial assets are measured and recognized at each reporting date based on historical, current, and forecasted information. The standard also changes the impairment model for availablea sale debt securities, eliminating the concept of other than temporary impairment and requiring credit losses to be recorded through an allowance for credit losses. The amount of the allowance for credit losses for availablea limited to the amount by which fair value is below amortized cost. The Company adopted this standard as of January 1, 2020 using the required modified retrospective adoption method. Results for periods beginning afteff r January 1, 2020 are presented under the new guidance, while prior period amounts are not adjuste guidance. Adoption of the new standard did not have a material impact on the Company's consolidated financial position, results of operations and cash flows. See Note 4 for additional information regarding the Company’s allowance for credit losses. d and continue to be reported under the previous accounting -for-sale debt securities is -for- d Fair Value Measurements In August 2018, the FASB issued an accounting standard update on fair value measurements. The new guidance modifies the disclosure requirements on fair value measurements by removing certain disclosure requirements related to the fair value hierarchy, modifying existing disclosure requirements related to measurement uncertainty, and adding new disclosure requirements. The Company adopted this standard as of January 1, 2020, and it did not have a material impact on the Company's consolidated financial position, results of operations and cash flows. Income Taxeaa s In December 2019, the FASB issued an accounting standard update on income taxes. The new guidance eliminates certain exceptions related to the approach for intraperi period and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. The Company adopted this standard effective January 1, 2021. The adoption of this standard is not expected to have a material impact on the Company's consolidated financial position, results of operations and cash flows. od tax allocation, the methodology for calculating income taxes in an interim a F-9 CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Facilitation of the Effeff ctstt of Refee rence Rate Refoe rm on Financial Reporti e ng In March 2020, the FASB issued an accounting standard update to guidance applicable to contracts, hedging relationships, ts of) reference rate reform on financial reporting. An entity may elect to apply the amendments for and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. This update provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effecff contract modifications by topic or industry subtopi that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. The Company is currently evaluating the impact, but does not expect the standard to have a material impact on its consolidated financial position, results of operations and cash flows. c of the codification as of any date from the beginning of an interim period u l Reclassi fii cations Certain reclassifications of the prior years' amounts have been made to conform to the current year's presentation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States value, the provision for estimated returns, requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant estimates made by management include estimation for reserves for legal contingencies, the standalone selling price related to revenue recognition, the provision for credit losses related to accounts receivable, contract assets, and availablea -for-sale debt securities, the provision to reduce obsolete or excess inventory to net realizablea based awards and measurement of expense related to performance stock units, the assumptions used in the discounted cash flows to mark certain of its investments to market, the valuation of the Company’s goodwill, net realizablea value of product related and other intangible assets, the provision for income taxes, valuation allowance for deferred tax assets, uncertain tax positions, and the amortization and depreciation periods for contract acquisition costs, intangible and long-lived assets. While the Company believes that such estimates are fair when considered in conjunction with the consolidated financial position and results of operations taken as a whole, the actual amounts of such items, when known, will vary from these estimates. as well as sales allowances, the assumptions used in the valuation of stock- t Cash and Cash Equivalents Cash and cash equivalents at December 31, 2020 and 2019 include marketable securities, which are primarily money market funds, commercial paper, contractual maturities when purchased of three months or less. a agency, and government securities and corporate securities with initial or remaining l Available -for-sale Investmentstt Short-term and long-term available for sale investments in debt securities at December 31, 2020 and 2019 primarily consist of agency securities, corporate securities and government securities. Investments classified as available-for-sale debt securities are stated at fair value with unrealized gains and losses, net of taxes, reported in Accumulated other comprehensive loss. The Company classifies its available-for-sale investments as current and non-current based on their actual remaining time to maturity. The Company does not recognize unrealized changes in the fair value of its available-for-sale debt securities in income unless a security is deemed to be impaired. The Company’s investment policy is designed to limit exposure to any one issuer depending on credit quality. The Company uses information provided by third parties to adjust end of each period. Fair values are based on a variety of inputs and may include interest rates, known historical trades, yield curve information, benchmark data, prepayment speeds, credit quality and broker/dealer quotes. See Note 5 for additional information regarding the Company’s investments. the carrying value of certain of its investments to fair value at the d Inventory Inventories are stated at the lower of cost or net realizablea value on a standard cost basis, which approximates actual cost. The Company’s inventories primarily consist of finished goods as of December 31, 2020 and 2019. Contract acquisition costs The Company is required to capita alize certain contract acquisition costs, consisting primarily of commissions paid and related payroll taxes when contracts are signed. The asset recognized from capita costs is amortized over the expected period of benefit on a basis consistent with the pattern of transfer of the products or alized incremental and recoverable acquisition F-10 CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS services to which the asset relates. The Company elects to apply a practical expedient to expense contract acquisition costs as incurred where the pattern of transfer is one year or less. The Company’s typical contracts include performance obligations related to subscription, product and licenses, and support and services. Contract acquisition costs are allocated to performance obligations using a portfolio approach. The Company assesses its sales compensations plans at least annually to evaluate whether contract acquisition costs for renewals and extensions are commensurate with those related to initial contracts. If concluded to be commensurate, the contract acquisition costs are amortized over the contractual term on a basis consistent with the pattern of transfer of the products or services to which the asset relates. If concluded not to be commensurate, the contract acquisition costs are amortized over the greater of the contractual term or estimated customer life on a basis consistent with the pattern of transfer of the products or services to which the asset relates. The Company estimates an average customer life of three years to five years, which it believes is appropriate based on consideration of the historical average customer life and the estimated useful life of the underlying product and license sold as part of the transaction. For the years ended on December 31, 2020, 2019 and 2018, the Company recorded amortization of capia talized contract acquisition costs of $57.5 million, $44.8 million and $38.1 million, respectively, which are recorded in Sales, Marketing and Services expense in the accompanying consolidated statements of income. As of December 31, 2020 and 2019, the Company's short-term and long-term contract acquisition costs were $71.5 million and $124.7 million, and $50.4 million and $81.0 million respectively, and are included in Prepaid and other current assets and Other assets, respectively, in the accompanying consolidated balance sheets. There was no impairment loss in relation to costs capita 2020, 2019 and 2018. alized during the years ended December 31, Derivatives and Hedging Activities F o r m 1 0 - K In accordance with the authoritative guidance, the Company records derivatives at fair value as either assets or liabilities on the balance sheet. For derivatives that are designated as and qualify as cash flow hedges, the unrealized gain or loss on the derivative instrument is reported as a component operating expense, net, when the hedged transaction affecff adjusted to fair value through earnings as Other income (expense), net, in the period during which changes in fair value occur. The application of the authoritative guidance could impact the volatility of earnings. of Accumulated other comprehensive loss and reclassified into earnings as ts earnings. Derivatives not designated as hedging instruments are m The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk- management objective and strategy for undertaking various hedge transactions. This process includes attributing all derivatives that are designated as cash flow hedges of forecasted transactions. The Company also formally assesses, both at the inception of the hedge and on an ongoing basis, whether each derivative is highly effecff tive in offsetting changes in cash flows of the hedged item. Fluctuat ions in the value of the derivative instruments are generally offset by changes in the hedged item; however, if it is determined that a derivative is not highly effect ff Company will discontinue hedge accounting prospectively for the affected derivative. ive as a hedge or if a derivative ceases to be a highly effective hedge, the t The Company is exposed to risk of default by its hedging counterparties. Although this risk is concentrated among a limited number of counterparties, the Company’s foreign exchange hedging policy attempts to minimize this risk by placing limits on the amount of exposure that may exist with any single financial instituti on at a time. t Property and Equipment i Property and equipment is stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which is generally three years for computer equipment; the lesser of the lease term or ten years for leasehold improvements, which is the estimated useful life; seven years for office equipment and furniture and the Company’s r enterprise resource planning systems; and forty years for buildings. During 2020 and 2019, the Company retired $9.3 million and $10.9 million, respectively, in property and equipment that were no longer in use. At the time of retirement, the remaining net book value of the assets retired was not material and no material asset retirement obligations were associated with them. F-11 CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Property and equipment consisted of the following: Buildings Computer equipment Software Equipment and furnit uret Leasehold improvements ff Less: accumulated depreciation and amortization Assets under construction Land Total Long-Lived Assetstt December 31, 2020 2019 (In thousands) $ $ 76,152 209,605 467,553 88,019 201,645 1,042,974 (861,933) 11,001 16,769 208,811 $ $ 76,152 205,063 451,927 85,356 199,813 1,018,311 (806,099) 2,913 16,769 231,894 The Company reviews for impairment of long-lived assets and certain identifiable intangible assets to be held and used whenever events or changes in circumstances indicate that the carrying amount of such assets may not be fully recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement of an impairment loss is based on the fair value of the asset compared to its carrying value. Long-lived assets and certain identifiablea intangible assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. ff Goodwill The Company accounts forff goodwill in accordance with the authoritative guidance, which requires that goodwill and certain intangible assets are not amortized, but are subject to an annual impairment test. There was no impairment of goodwill or indefinite lived intangible assets as a result of the annual impairment analysis completed during the fourth quarters of 2020 and 2019. See Note 12 for more information regarding the Company's segment. The following tablea presents the change in goodwill durid ng 2020 and 2019 (in thousands): Balance at January 1, 2020 Additions Other Balance at December 31, 2020 Balance at January 1, 2019 Additions Other Balance at December 31, 2019 Goodwill $1,798,408 $ — $ — $ 1,798,408 $ 1,802,670 $ — $ (4,262) (1) $1,798,408 (1) Amounts relate to adjust d ments to the purchase price allocation associated with 2018 business combinations. Intangible Assets The Company has intangible assets which were primarily acquired in conjunction with business combinations and technology purchases. Intangible assets with fini computed over the estimated useful lives of the respective assets, generally three years to seven years, except for patents, which are amortized over the lesser of their remaining life or seven years to ten years. te lives are recorded at cost, less accumulated amortization. Amortization is ff Intangible assets consist of the following (in thousands): Product related intangible assets Other Total December 31, 2020 Gross Carrying Amount Accumulated Amortization $ $ 742,949 187,791 930,740 $ $ 665,798 183,451 849,249 Weighted- Average Life (Years) 6.06 6.22 6.09 F-12 CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Product related intangible assets Other Total December 31, 2019 Gross Carrying Amount Accumulated Amortization $ $ 734,973 187,173 922,146 $ $ 633,633 180,035 813,668 Weighted- Average Life (Years) 6.04 6.23 6.08 F o r m 1 0 - K Amortization and impairment of product related intangible assets, which consists primarily of product-related technologies and patents, was $32.8 million and $51.3 million for the year ended December 31, 2020 and 2019, respectively, and is classifieff d as a component of Cost of net revenues in the accompanying consolidated statements of income. Amortization of other intangible assets, which consist primarily of customer relationships, trade names and covenants not to compete was $2.8 million and $15.9 million for the year ended December 31, 2020 and 2019, respectively, and is classifieff d as a component of Operating expenses in the accompanying consolidated statements of income. The Company monitors its intangible assets for indicators of impaim rment. If the Company determines that impairment has r values, which are based on projected discounted future net cash flow, the Company measures the amount of the impairment by calculating the amount net cash flows. occurred, it writes-down the intangible asset to its fair value. For certain intangible assets where the unamortized balances exceed the undiscounted futuret by which the carrying values exceed the estimated faiff During the year ended December 31, 2019, the Company tested certain intangible assets for recoverabila identified certain definite-lived intangible assets, primarily technology developed by Cedexis Inc., which was acquired by the Company on February 6, 2018, that were impaired and recorded non-cash impairment charges of $13.2 million to write down the intangible assets to their estimated faiff impairment of product related intangible assets in the accompanying consolidated statements of income. These non-recurring fair value measurements were categorized as Level 3, as significant unobservablea inputs were used in the valuation analysis. Key assumptions used in the valuation include forecasts of revenue and expenses over an extended period of time, customer churn rates, rate of migration to future technology, tax rates, and estimated costs of debt and equity capia tal to discount the projected cash flows. Certain of these assumptions involve significant judgment, are based on management’s estimate of current and forecasted market conditions and are sensitive and susceptible to change; therefore, furthe r disruptions in the business could potentially result in additional amounts becoming impaired. r value of $4.1 million. The impairment charge is included in Amortization and ff ity and, as a result, ff Estimated future ff amortization expense of intangible assets with finite lives as of December 31, 2020 is as follows (in thousands): Year ending December 31, 2021 2022 2023 2024 2025 Thereafter Total tt Softwar e Development Costs $ $ 24,019 21,820 17,553 6,518 4,866 6,715 81,491 to be sold to be The authoritative guidance requires certain internal software development costs related to software alized upon the establia capita to achieving technological feasibility have not been significant and all software development costs have been expensed as incurred. sibility. The Company's software development costs incurred subsequent shment of technological feaff ff Internal Use Software tt In accordance with the authoritative guidance, the Company capita internal costs such as payroll and benefits of those employees directly associated with the development of new functi internal use software. The amount of costs capia talized during was $2.1 million and $3.4 million, respectively. These costs are being amortized over the estimated useful life of the software, which is generally three years to seven years, and are included in property and equipment in the accompanying consolidated the years ended 2020 and 2019 relating to internal use software d ff alizes external direct costs of materials and services and onality in F-13 CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS balance sheets. The total amounts charged to expense relating to internal use software was approximately $12.6 million, $19.7 million and $25.9 million, during the years ended December 31, 2020, 2019 and 2018, respectively. The Company capia talized costs related to internally developed computer software to be sold as a service related to its Workspace offerings, incurred during the application development stage, of $22.3 million and $10.6 million, during the years ended December 31, 2020 and 2019, respectively, and is amortizing these costs once the project is complem ted and placed in service over the expected lives of the related services, which is generally two years to five years, and are included in property and equipment in the accompanying consolidated balance sheets. The total amounts charged to expense relating to internally developed computer software to be sold as a service was approximately $11.8 million, $13.0 million and $14.4 million, during the years ended December 31, 2020, 2019 and 2018, respectively, which are included in Cost of subscription, support and services. Pension Liabilitytt The Company provides retirement benefits to certain employees who are not U.S. based. Generally, benefits under these programs are based on an employee’s length of service and level of compensation. The majoa rity of these programs are commonly referred to as termination indemnities, which provide retirement benefits in accordance with programs mandated by the governments of the countries in which such employe es work. m The Company had accruedr $14.0 million and $12.5 million for these pension liabilities at December 31, 2020 and 2019, respectively. Expenses for the programs for 2020, 2019 and 2018 amounted to $1.2 million, $1.6 million and $1.8 million, respectively. Revenue Signifii cant Judgmentstt The Company generates all of its revenues from contracts with customers. At contract inception, the Company assesses the solutions or services, or bundles of solutions and services, obligated in the contract with a customer to identify each performance obligation within the contract, and then evaluates whether the performance obligations are capaa blea distinct and distinct within the context of the contract. Solutions and services that are not both capaa blea distinct within the context of the contract are combined and treated as a single performance obligation in determining the allocation and recognition of revenue. of being of being distinct and The standalone selling price is the price at which the Company would sell a promised product or service separately to the ty of the Company's software licenses and hardware, CSP and on-premise subscript customer. For the majori a licenses, the Company uses the observablea Company’s support and services, and cloud-hosted subscript Company sells that support and service and cloud-hosted subscription separately to similar customers. If the standalone selling price for a performance obligation is not directly observablea selling price by taking into consideration market conditions, economics of the offering and customers’ behavior. The Company maximizes the use of observable inputs and applies estimation methods consistently in similar circumstances. The Company allocates the transaction price to each distinct performance obligation on a relative standalone selling price basis. price in transactions with multiple performance obligations. For the majoa rity of the ion offerings, the Company uses the observablea , the Company estimates it. The Company estimates standalone price when the ion software u u Revenues are recognized when control of the promised products or services are transferred to customers, in an amount that reflects the consideration that the Company expects to receive in exchange for those products or services. Product Concentration The Company derives a substantial portion of its revenues from its Workspace solutions, which include its Citrix Virtual t Apps and Desktops solutions and related services, and anticipates that these solutions and futuret product lines based upon this technology will continue to constitutet declines in demand for its Workspace solutions and other solutions, whether as a result of general economic conditions, including the impact of the novel coronavirusrr product releases, price competition, and lack of success of its strategic partners, technological change or other factors. Additionally, the Company's App Delivery and Security products generate revenues from a limited number of customers. As a result, if the App Delivery and Security product grouping loses certain customers or one or more such customers significantly decreases its orders, the Company's business, results of operations and financial condition could be adversely affected. ("COVID-19"), the delay or reduction in technology purchases, new competitive y of its revenue. The Company could experience derivative solutions and a a majorit F-14 CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Cost of Net Revenues Cost of subscription, support and services revenues consists primarily of compensation and other personnel-related costs of providing technical support, consulting and cloud capac offerings delivered via the cloud and hardware costs related to certain on-premise subscriptions offerings. ity costs, as well as the costs related to providing the Company's a F o r m 1 0 - K Cost of product and license revenues consists primarily of hardware, royalties, product media and duplication, manuals, shipping expense, and packaging materials. In addition, the Company is a party to licensing agreements with various entities, which give the Company the right to use certain software code in its solutions or in the development of future solutions in exchange for the payment of fixed fees or amounts based upon the sales of the related product. Costs related to these agreements are included in Cost of net revenues. Also included in Cost of net revenues is amortization and impairment of product related intangible assets. Foreigni Currency The functional currency for all of the Company’s wholly-owned foreign subsidiaries is the U.S. dollar. Monetary assets and liabilities of such subsidiaries are remeasured into U.S. dollars at exchange rates in effect at the balance sheet date, and revenues and expenses are remeasured at average rates prevailing during the year. Foreign currency transaction gains and losses are the result of exchange rate changes on transactions denominated in currencies other than the functional currency. The remeasurement of those foreign currency transactions is included in determining net income or loss for the period of exchange. ii Advertising Costs The Company expenses advertising costs as incurred. The Company has advertising agreements with, and purchases advertising from, online media providers to advertise its solutions. The Company also has strategic development funds and cooperative advertising agreements with certain distributors and resellers whereby the Company will reimburse distributors and resellers for qualified advertising of Company solutions. Reimbursement is made once the distributor, reseller or provider provides substantiation of qualified expenses. The Company estimates the impact of these expenses and recognizes them at the time of product sales as a reduction of net revenue in the accompanying consolidated statements of income. The total costs the Company recognized related to advertising were approximately $118.4 million, $90.4 million and $99.1 million, during the years ended December 31, 2020, 2019 and 2018, respectively. Income Taxeaa s hThe Com ypany andd one or more of iits lmul iti lple state bsubsiididi dand foreignign juju i di iaries are subje subject to U.S. f dfede lral iincome taxes iin hthe iUni dted States, as wellll as risdictiions. hThe Compa yny iis currentlyly dunder exa iminatiion byby hthe rnal Revenue Ser ivice for hthe 2017 andd 2018 tax yyears. iWi hth few exceptiions, hthe Compa yny iis ggenerallllyy not subje iUni dted States subject to dand llocall iincome tax, or iin non-U.S. juju i di risdictiions byby tax au h i thori ities for yyears iprior to 2017. iincome taxes of l Inte exa iminatiion for state In hthe diordina yry course of glgl b lobal b ibusiness, hthere are transac itions for hiwhi hch hthe lul itimate tax outcome iis uncertaiin; hthus, provides for iincome taxes on provision for iincome taxes. hThe Compa yny rminingning hthe worllddwidide i iquiredd iin ddete rlyi gng judgmjudgments. hCh ganges hthat iimpact judgmjudgment iis re transactiions bbasedd on iits estiimate of hthe iimpact iits tax filfilinging combibinedd iwithh hthe lla grge numbber of juju i di realilizabilbila affect hthe Com ypany’s res lults of operatiions, fifinanciiall co dinditiion andd ca hsh flflows. dunderlyi iposi itions bbasedd on hthe res lults of tax just probable lili babililiityy. hThe Com ypany dadjust i i iityy of iits d fdeferredd tax assets co lduld hch gange iin hthe future, audits andd ggene lral tax auth ihorityy b bl di t i i id te for hcha gnges hthat a ppropria i provisiion as a dd lonal iinterpreta itions on iurisdidic iti provision es itimates iincl dlude suchh iitems as jj of tax ruli gngs. Due to hthe ev l iolvi gng naturet lrules s iits li i risdictiions iin hiwhichh hthe Com ypany operates, es itimates of iits tax liliabibia lili yty andd hthe hiwhi hch mayy res lult iin daddiditiionall tax lili babililiitiies andd dadverselyly hThe Com ypany iis i requiredd to es itimate iits iincome taxes iin ea hch of hthe juju i di nsoliddat ded fifinanciiall statements. hThe auth ihoritatiive guida risdictiions iin hiwhichh iit operates as part of hthe guidance requires a vallua ition lalllowance to i drred tax assets report ded ifif,ff bbas ded on hthe weigweighht of hthe evididence, iit iis more lilikkelyly hthan not hthat some i regardi gng hthe expect ded ggeographi illwill not bbe re laliiz ded. hThe Compa yny reviews d fdeferredd tax assets pe i di riodicallllyy for recoverabilbila ographic sources of ta blxable iincome andd gaigains from iinvestments, as wellll as i portion or iityy dand makkes dreduce lalll of hthe li prepari gng iits co i pprocess of hthe d fdefe d fdefe es itimates andd judgmjudgments regardi tax lplanning drred tax assets nning strategiegies iin asse issi gng hthe needd for a vallua ition lalllowance. Accounting for Stock-Based Compensm ation Plans The Company has various stock-based compensation plans for its employees and outside directors and accounts for stock- based compensation arrangements in accordance with the authoritative guidance, which requires the Company to measure and F-15 record compensation expense in its consolidated financial statements using a fair value method. See Note 8 for further information regarding the Company’s stock-based compensat ion plans. m Earnings per Share Basic earnings per share is calculated by dividing income availablea to stockholders by the weighted-average number of upon the exercise or settlement of stock awards and shares issuablea common shares outstanding during each period. Diluted earnings per share is computed using the weighted-average number of common and dilutive common share equivalents outstanding during the period. Dilutive common share equivalents consist of shares issuablea under the employee stock purchase plan (calculated using the treasury stock method) during the period they were outstanding and potential dilutive common shares from the conversion spread on the Company’s 0.500% Convertible Notes due 2019 (the “Convertible Notes”) and the Company's warrants during the period they were outstanding. The reconciliation of the numerator and denominator of the earnings per share calculation is presented in Note 15. Leases The Company leases certain office space and equipment under various leases. In addition to rent, the leases require the Company to pay for taxes, insurance, maintenance and other operating expenses. The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use assets, accrued expenses and other current liabilities, and operating lease liabilities in the Company’s consolidated balance sheets. Finance leases are included in property and equipment, net, accrued expenses and other current liabilities and other long-term liabilities in the Company’s consolidated balance sheets. Finance leases were not material to the consolidated balance sheets as of December 31, 2020 and 2019, respectively. Right-of-use ("ROU") assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the later of the adoption date of the new standard or the commencement date. The lease liability is based on the present value of lease payments over the lease term (or the remaining term in the case of existing leases at time the Company adopted ASC 842). The Company uses the implicit rate when readily determinable. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information availablea commencement date in determining the present value of lease payments. The operating lease ROU asset is based on the lease liability, subject to adjustmd include options to extend or terminate the lease when it is reasonably certain that it will exercise that option. For most operating leases, expense for lease payments is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. ent, such as for initial direct costs, and excludes lease incentives. The Company’s lease terms at the The Company has lease agreements with lease components (e.g., fixed payments including rent, real estate taxes and insurance costs) and non-lease components (e.g., common-area maintenance costs), which are generally accounted for as a single lease component, such as for real estate leases. For certain equipment leases, such as colocation facilities, the Company accounts for the lease and non-lease components separately. 3. REVENUE The following is a description of the principal activities from which the Company generates revenue. Subscripti i on Subscription revenues primarily consist of cloud-hosted offerings which provide customers a right to access one or more of the Company’s cloud-hosted subscription offerings, with routine customer support, as well as revenues from the CSP program, on-premise subscription software licenses, and hybrid subscription offerings. For the Company’s cloud-hosted performance obligations, revenue is generally recognized on a ratable basis over the contract term beginning on the date that the Company's service is made available to the customer, as the Company continuously provides online access to the web-based software that the customer can use at any time. The CSP program provides subscription-based services in which the CSP partners host software services to their end users. Product and license Product and license revenues are primarily derived from perpetual offerings related to the Company’s Workspace solutions and App Delivery and Security products. For performance obligations related to perpetual agreements, the Company determined that its licenses are functional intellectual property that are distinct as the user can benefit software license t F-16 CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS from the software on its own. Support and services Support u and services revenues include license updates, maintenance and professional services which are primarily related t ff offerings. License updates and maintenance revenues are primarily comprised of software and tes and technical support. For performance obligations related to license to the Company's perpetual hardware maintenance, when and if-ava updates and maintenance, revenue is generally recognized on a straight-line basis over the period of service because the Company transfers control evenly by providing a stand-ready service. The Company is continuously working on improving its products and pushing those updates through to the customer, and stands ready to provide software updates on a when and if-ff available basis. Services revenues are comprised of fees from consulting services primarily related to the implementation of the Company’s products and fees from product training and certification. ilable upda u F o r m 1 0 - K The Company’s typical performance obligations include the folff lowing: Performance Obligation When Performance Obligation is Typically Satisfied Subscriptiontt Cloud-hosted offerings CSP On-premise subscription software licenses On-premise subscription license updates and maintenance Product and license Software Licenses Hardware Support and services License updates and maintenance forff perpetual software licenses Professional services Sales tax Over the contract term, beginning on the date that service is made availablea the customer (over time) to As the usage occurs (over time) When software activation keys have been made availablea in time) for download (point Ratably over the course of the service term (over time) When software activation keys have been made availablea in time) When control of the product passes to the customer; typically upon (point in time) u for download (point shipment Ratably over the course of the service term (over time) As the services are provided (over time) The Company records revenue net of sales tax. Timing of revenue recognition Products and services transferred at a point in time Products and services transferred over time Total net revenues Contractt s t balance l December 31, 2020 2019 2018 (In Thousands) $ 813,525 $ 722,324 $ 821,111 2,423,175 $ 3,236,700 2,288,240 2,152,792 $ 3,010,564 $ 2,973,903 The Company's short-term and long-term contract assets, net of allowance for credit losses, were $37.3 million and $41.7 million, respectively, as of December 31, 2020, and $12.2 million and $20.5 million, respectively, as of December 31, 2019, and are included in Prepaid expenses and other current assets and Other assets, respectively, in the accompanying consolidated balance sheets. The increase in the Company's contract asset balances is primarily the result of unbilled amounts fromff year on-premise licensing subscriptions where the revenue recognized exceeds the amount invoiced to the customer, and right to payment is not solely subju ect to the passage of time. multi- F-17 CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Current portion of deferred revenues and the Long-term portion of deferred revenues were $1.51 billion and $392.4 million, respectively, as of December 31, 2020 and $1.35 billion and $443.5 million, respectively, as of December 31, 2019. The difference in the opening and closing balances of the Company’s contract assets and liabia lities primarily results fromff the timing difference between the Company’s performance and the customer’s payment. During the year ended December 31, 2020, the Company recognized $1.33 billion of revenue that was included in the deferred revenue balance as of December 31, 2019. During the year ended December 31, 2019, the Company recognized $1.33 billion of revenue that was included in the deferred revenue balance as of December 31, 2018. The Company performs its obligations under a contract with a customer by transferring solutions and services in exchange for consideration from the customer. Accounts receivable are recorded when the right to consideration becomes unconditional. The timing of the Company’s performance differs from the timing of the customer’s payment, which results in the recognition of a contract asset or a contract liabila services to a customer and the right to consideration is conditional on something other than the passage of time. The Company recognizes a contract liability when it has received consideration or an amount of consideration is due from the customer and obligation to transfer products or services. The Company had no material asset impairment charges the Company has a futff uret related to contract assets for the years ended December 31, 2020 and 2019, respectively. ity. The Company recognizes a contract asset when the Company transfers products or For the Company’s software and hardware products, the timing of payment is typically upfront for its perpetual and the Company’s on-premise subscriptions. Therefore, deferred revenue is created when a contract includes performance obligations such as license updates and maintenance or certain professional services that are satisfied over time. For subscription contracts, the timing of payment is typically in advance of services, and deferred revenue is amortized as these services are provided over time. t offerings A significant portion of the Company’s contracts have an original duration of one year or less; therefore, the Company applies a practical expedient to determine whether a significant financing component exists and does not consider the effects of the time value of money. For multi-year contracts, the Company bills annually. Transaction price allocated to the remaining performance obligations The following tablea includes estimated revenue expected to be recognized in the futuret related to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period (in thousands): Subscription Support and services Total net revenues 4. CREDIT LOSSES <1-3 years 3-5 years 5 years or more Total $ $ 1,426,334 1,391,574 $ 84,728 33,367 2,817,908 $ 118,095 $ $ 714 1,931 $ 1,511,776 1,426,872 2,645 $ 2,938,648 The Company is exposed to credit losses primarily through its accounts receivablea , investments in available-for-sale debt securities, and contract assets. See Note 3 forff additional information related to the Company's contract assets. Accounts rtt eceivable, net The Company’s accounts receivable are attributable primarily to direct sales to end customers via the Web and through as Citrix Solution Advisors, VADs, SIs, ISVs, OEMs and CSPs. Collateral is generally not required. k VARs known The Company's accounts receivable, which are typically dued within one year, consist of the following (in thousands): Accounts receivable, gross Less: allowance for returns Less: allowance for credit losses t Accounts receivable, net December 31, 2020 $ $ 883,877 (10,449) (15,419) 858,009 The allowance for credit losses on accounts receivable is determined using a combination of specific reserves forff accounts that are deemed to exhibit credit loss indicators and general reserves that are judgmentally determined using loss rates based on historical write-offs by geography and customer accounts subjeb ct to credit check versus non-credit check statust and F-18 CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS consideration of recent forecasted information, including underlying economic expectations. The credit loss reserves are updated quarterly for most recent write-offs and collections information and underlying economic expectations, which for the year ended December 31, 2020 included consideration of the current and expected future surrounding the COVID-19 pandemic. The Company will compare its current estimate of expected credit losses with the estimate of credit losses from the prior period and will report in net income the amount necessary to adjust current expected credit losses. Credit loss expense is included within General and administrative expenses in the accompanying consolidated statements of income. economic and market conditions the allowance for d ff F o r m 1 0 - K The activity in the Company's allowance for credit losses forff the year ended December 31, 2020 is summarized as follows (in thousands): Balance of allowance for credit losses at January 1, 2020 Adjustment for credit losses standard adoption Current period provision for expected losses Write-offs charged against allowance Recoveries of any amounts previously written off Balance of allowance for credit losses at December 31, 2020 Total 6,161 1,245 10,094 (2,149) 68 15,419 $ $ If the financial condition of a significant customer were to deteriorate, the Company’s operating results could be adversely affected. As of December 31, 2020 and 2019, one distributor accounted forff gross accounts receivable. 19% and 14%, respectively, of the Company's total l Available -for-sale InvII estmentstt The allowance forff credit losses on the Company's investments in available-for-sale debt securities is determined using a quantitative discounted cash flow analysis if impairment triggers exist after a qualitative screen is complem ted. Impairment on available-for-sale debt securities is determined on an individual security basis and the security is subject to impairment when its fair value declines below its amortized cost basis. If the fair value is less than the amortized cost basis, management must then determine whether it intends to sell the security or whether it is more likely than not that it will be required to sell the security before it recovers its value. If management intends to sell the security or will more-likely-than-not be required to sell the impaired security before it recovers its value, a credit loss is recorded to Other income (expense), net in the accompanying consolidated statements of income. If man gagement ddoes not iinte dnd to sellll hthe se ly-thhan-not bbe requi dred to sellll hthe se credidit lloss or hother facff llosses lloss icuri yty bbefore hthe sec iurityy recovers iits v lalue, managgement must hthe dn determiine hwhe hther thhe lloss iis ddue to tors. For iim ipairment iindidicators ddue to cr diedi lt loss factors, ma gnagement es bl iwi hth a chha grge to Other income (expense), net. For iim ipairment iindidicators ddue to othher factors, managgement rec dords hthe iwi hth a chha grge to Accumulated other comprehensive loss iin hthe accompanying tabli hishes an lalllowance for credidit nsoliddat ded bballance hsheets. iwillll iit mor icuri yty, nor le-likikely-t nying co li i Upon d i adoption of hthe credidit lloss sta d d ndard, hthe Compa yny establiblia ivaillablblea orded rellatedd to a -for-salle d bdebt sec iuritiies forff hshedd an allllowance for credidit llosses a dnd diddid not ht ave anyy hthe yyear end dded December 31, 2020. See Note 5 for credidit lloss expense rec d d more i finformatiion on lalllowances forff credit losses related to availablea -for-sale debt securities. The Company has available-for-sale debt securities that have faiff r values below amortized cost; however, the Company does not consider a credit allowance necessary as (i) the Company does not intend to sell the securities, (ii) it is not more-likely- than-not that the Company will be required to sell the investments before recovery of the amortized cost basis, and (iii) the unrealized losses are due to market facff tors rather than credit loss factors. F-19 CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 5. INVESTMENTS l Available -for-sale InvII estmentstt Investments in availablea -for-sale debt securities at fair value were as foll ff ows for the periods ended (in thousands): p Description of the Securities Agency securities Corporate securities Government securities Total p Description of the Securities Agency securities Corporate securities Government securities Total Amortized Cost 3,300 70,829 64,494 138,623 $ $ Gross Unrealized Gains December 31, 2020 Gross Unrealized Losses Allowance for Credit Losses — $ 4 1 5 $ — (2) (1) (3) $ — $ (147) — (147) $ Fair Value 3,300 70,684 64,494 138,478 Amortized Cost 1,681 $ 49,027 9,124 December 31, 2019 Gross Unrealized Gains Gross Unrealized Losses 1 6 5 $ — $ (149) — 59,832 $ 12 $ (149) $ Fair Value 1,682 48,884 9,129 59,695 $ $ $ $ The change in net unrealized (losses) gains on availablea -for-sale securities recorded in Other comprehensive income includes unrealized (losses) gains that arose from changes in market value of specifically identified securities that were held to during the period, gains (losses) that were previously unrealized, but have been recognized in current period net income dued sales and other than temporary impairments, as well as prepayments of available-for-sale investments purchased at a premium. See Note 16 for more information related to comprehensive income. The average remaining maturities of the Company’s short-term and long-term available-for-sale investments at December 31, 2020 were approximately two months and two years, respectively. Realizedii and Unrealizedii Gains and Losses on Available-for-sal ff e InvII estmentstt For the year ended December 31, 2020, the Company had no realized gains on available-for-sale investments. For the year ended December 31, 2019, the Company had realized gains on the sales of availablea -for-sale investments of $1.5 million. Effective January 1, 2020, the new CECL guidance requires the recognition of an allowance for estimated credit losses on -for-sale debt securities. For the year ended December 31, 2020, the Company had no realized losses on investments in availablea -for-sale available-for-sale investments. For the year ended December 31, 2019, the Company had realized losses on availablea investments of $0.9 million. Realized losses primarily related to sales of these investments during the respective periods. All realized gains and losses related to the sales of available-for-sale investments are included in Other income (expense), net, in the accompanying consolidated statements of income. d As of December 31, 2019, the Company's gross unrealized losses on availablea -for-sale debt investments were $0.1 million and were not deemed to be other-than-temporarily impaired under the prior accounting guidance. s Equity Securities without Readily Determinable Fair Value VV The Company held direct investments in privately-held companies of approximately $22.5 million and $12.3 million as of December 31, 2020, and 2019, respectively, which are accounted for at cost, less impairment plus or minus adjustments resulting from observable price changes in orderly transactions for an identical or a similar investment of the same issuer. These investments are included in Other assets in the accompanying consolidated balance sheets. The Company periodically reviews these investments for impaim rment and observable price changes on a quarterly basis, and adjusts the carrying value accordingly. The fair value of these investments represents a Level 3 valuation as the assumptions used in valuing these investments are not directly or indirectly observablea detailed information on fair value measurements. . See Note 6 forff F-20 F o r m 1 0 - K CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Equitytt Securities Accounted for at Net Asset Value The Company held equity interests in certain private equity funds of $11.3 million and $11.2 million as of December 31, al statements from the funds, which are based on the Company’s contributions to the funds, 2020, and 2019, respectively, which are accounted for under the net asset value practical expedient. These investments are included in Other assets in the accompanying consolidated balance sheets. The net asset value of these investments is determined using quarterly capita allocation of profit and loss and changes in fair value of the underlying fund investments. These private equity funds focus on making venture capita al investments, principally by investing in equity securities of early and late stage privately held corporations. The funds’ general partner shall determine the amount, timing and form (whether cash or in kind) of all distributions made by the funds. The Company may only transfer its investments in private equity fund interests subject to the general partner’s written consent and cannot trade its fund interests in established securities markets, secondary markets or equivalents thereof. The Company has unfunded commitments of $0.4 million as of December 31, 2020. 6. FAIR VALUE MEASUREMENTS The authoritative guidance defines fair value as an exit price, representing the amount that would either be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market- based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: • • • Level 1. Observable inputs such as quoted prices in active markets for identical assets or liabilities; Level 2. Inputs, other than the quoted prices in active markets, that are observablea either directly or indirectly; and Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. Available-for-sale securities included in Level 2 are valued utilizing inputs obtained from an independent pricing service instruments rather than direct observations of (the “Service”) which uses quoted market prices for identical or comparablea quoted prices in active markets. The Service applies a four level hierarchical pricing methodology to all of the Company’s fixed income securities based on the circumstances. The hierarchy starts with the highest priority pricing source, then subsequently uses inputs obtained from other third-party sources and large custodial instituti ons. The Service’s providers utilize a variety of inputs to determine their quoted prices. These inputs may include interest rates, known historical trades, yield curve information, benchmark data, prepayment speeds, credit quality and broker/dealer quotes. Substantially all of the Company’s availaba le-for-sale investments are valued utilizing inputs obtained from the Service and accordingly are categorized as Level 2 below. The Company periodically independently assesses the pricing obtained from the Service and historically has in the tablea d the Service's pricing as a result of this assessment. Available-for-sale securities are included in Level 3 when d not adjuste relevant observablea inputs for a security are not available. t The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the classification of assets and liabilities within the fair value hierarchy. In certain instances, the inputs used to measure fair value may meet the definition of more than one level of the fair value hierarchy. The input with the lowest level priority is used to determine the applicablea level in the fair value hierarchy. F-21 CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Assets att nd Liabilities Measured at FairFF Value on a Recurring Basis Assets: Cash and cash equivalents: ff Cash Money market funds Corporate securities Government securities Available-for-sale securities: Agency securities Corporat r r Governme e securities nt securities Prepaid expenses and other current assets: Foreign currency derivatives Total assets Accrued expenses and other current liabilities: Foreign currency derivatives Total liabilities Assets: Cash and cash equivalents: Cash Money market funds Agency securities Corporr rate securities ff Available-for-sale securities: Agency securities Corporat r Government securities e securities Prepaid expenses and other current assets: Foreign currency derivatives Total assets Accrued expenses and other current liabilities: Foreign currency derivatives Total liabilities As of December 31, 2020 Quoted Prices In Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (in thousands) $ $ $ 375,874 23,089 166,436 187,496 3,300 70,684 64,494 4,012 895,385 1,447 1,447 $ $ $ $ 375,874 23,089 — — $ — 166,436 187,496 — — — 3,300 70,184 64,494 — 398,963 $ 4,012 495,922 — — $ 1,447 1,447 $ $ — — — — — 500 — — 500 — — As of December 31, 2019 Quoted Prices In Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (in thousands) $ $ $ 474,756 42,019 19,993 8,993 1,682 48,884 9,129 1,889 607,345 1,390 1,390 $ $ $ $ 474,756 42,019 — — — $ — 19,993 8,993 — — — — 516,775 $ — — $ 1,682 47,884 9,129 1,889 89,570 1,390 1,390 $ $ — — — — — 1,000 — — 1,000 — — The Company’s fixed income available-for-sale security portfolio generally consists of investment grade securities from diverse issuers with a minimum credit rating of A-/A3 and a weighted-average credit rating of AA-/Aa3. The Company values these securities based on pricing from the Service, whose sources may use quoted prices in active markets forff (Level 1 inputs) or inputs other than quoted prices that are observablea determining fair value, and accordingly, the Company classifies the majoa rity of its fixed income availablea Level 2. either directly or indirectly (Level 2 inputs) in -for-sale securities as identical assets F-22 F o r m 1 0 - K CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company measures its cash flowff hedges, which are classified as Prepaid expenses and other current assets and Accrued expenses and other current liabilities, at fair value based on indicative prices in active markets (Level 2 inputs). Assets Mtt eaMM sured at FairFF Value on a Non-rNN ecurring Basis Uii singUU Signifii cant Unobservable Inputs (Level 3)3 During the year ended December 31, 2020, certain direct investments in privately-held companies with a combined carrying value of $6.3 million were determined to be impaired and written down to their faiff impairment charges of $1.8 million. The impairment charges were included in Other income (expense), net in the accompanying consolidated statements of income. r values of $4.5 million, resulting in During the year ended December 31, 2019, certain direct investments in privately-held companies with a combined carrying value of $2.4 million were determined to be impaired and have been written down to their faiff r values of $0.4 million resulting in impairment charges of $2.0 million. The impairment charges were included in Other income (expense), net in the accompanying consolidated statements of income. In determining the fair value of the investments, the Company considers many factors including but not limited to ity to obtain additional operating performance of the investee, the amount of cash that the investee has on-hand, the abila financing and the overall market conditions in which the investee operates. During the year ended December 31, 2020, the Company determined there was an upward adjustmd ent of $1.8 million to one of the Company's investments in a privately-held company without a readily determinablea input, specifically its abia lity to obtain additional finff ancing at a favora ff the Company determined that there were no material adjustments resulting from observable price changes to the Company’s investments in privately-held companies without a readily determinable faiff valuation. During the year ended December 31, 2019, fair value based on an observablea r value. blea Additional Disclosures Regarding Fair Value Measurements The carrying value of accounts receivablea , accounts payable and accrued expenses approximate their faiff r value due to the short maturity of these items. As of December 31, 2020, the fair value of the $750.0 million unsecured senior notes due March 1, 2030 (the "2030 Notes") and $750.0 million of unsecured senior notes dued December 1, 2027 (the "2027 Notes") was determined based on inputs that are observable in the market (Level 2). Based on the closing trading price per $100 as of the last day of trading for the year ended December 31, 2020, the carrying value was as follows (in thousands): 2030 Notes 2027 Notes See Note 13 for more information on the 2030 Notes and 2027 Notes. 7. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses consist of the following: Accrued commissions Accrued compensation and employee benefits Other accruedrr expenses Total 8. EMPLOYEE STOCK-BASED COMPENSATION AND BENEFIT PLANS Plans Fair Value Carrying Value $ $ 828,278 881,430 $ $ 739,106 743,816 December 31, 2020 2019 (In thousands) $ $ 115,459 192,367 199,359 507,185 $ $ 57,079 139,767 134,834 331,680 The Company’s stock-based compensation program is a long-term retention program that is intended to attract and reward talented employees and align stockholder and employee interests. As of December 31, 2020, the Company had one stock-based compensation plan under which it was granting equity awards. The Company is currently granting stock-based awards from its Second Amended and Restated 2014 Equity Incentive Plan (the "2014 Plan"), which was approve d at the Company's Annual a F-23 CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Meeting of Stockholders on June 22, 2017. In March 2019, the Company's Board of Directors adopted an amendment to the 2014 Plan, which was approve Company's Board of Directors adopted a second amendment to the 2014 Plan, which was approved at the Company's Annual Meeting of Stockholders on June 3, 2020. The Company’s superseded stock plans with outstanding awards include the Amended and Restated 2005 Equity Incentive Plan. d at the Company's Annual Meeting of Stockholders on June 4, 2019. In April 2020, the a Under the terms of the 2014 Plan, the Company is authorized to grant incentive stock options (“ISOs”), non-qualified issuance were adjuste ent used to determine shares availablea stock options (“NSOs”), non-vested stock, non-vested stock units, stock appreciation rights (“SARs”), and performance units and to make stock-based awards to full and part-time employees of the Company and its subsidiaries or affiliates, where legally eligible to participate, as well as to consultants and non-employee directors of the Company. ISOs, NSOs, and SARs are not currently being granted. The June 2019 amendment removes the fungible share adjustmd for issuance, while prior to the June 2019 amendment, shares available forff factor. Beginning on June 4, 2019, each share award granted under the 2014 Plan will reduce the share reserve by one share and all share awards granted on June 4, 2019 and thereafter that are later forfe ited, canceled or terminated will be returned to the share reserve in the same manner. Pursuant to the June 2020 amendment, the maximum number of shares of common stock available forff 2014 Plan to June 3, 2030 and updated the vesting provisions from monthly to annual vesting for annual director awards, consistent with the Company's current compensation program forff non-employee directors. Under the 2014 Plan, NSOs must be granted at exercise prices no less than fair market value on the date of grant. Non-vested stock awards may be granted for such consideration in cash, other property or services, or a combination thereof, as determined by the Company’s Compensation Committee of its Board of Directors. Stock-based awards are generally exercisable or issuablea upon vesting. The Company’s policy is to recognize compensation cost for awards with only service conditions and a graded vesting schedule on a straight- line basis over the requisite service period for the entire award. As of December 31, 2020, there were 17,937,529 shares of issuance pursuant to the Company’s stock-based compensat common stock reserved forff its 2014 Plan to grant stock-based awards covering 12,703,071 shares of common stock. issuance under the 2014 Plan was increased to 51,300,000. In addition, the amendment extended the term of the ion plans including authorization under d by a 2.75 fungible share m d ff In December 2014, the Company’s Board of Directors approved the 2015 Employee Stock Purchase Plan (the “2015 a ff d by stockholders at the Company’s Annual Meeting of Stockholders held on May 28, 2015. Under -time and certain part-time employees of the Company are eligible to purchase common stock of the ESPP”), which was approve the 2015 ESPP, all full Company twice per year at the end of a six-month payment period (a “Payment Period”). During each Payment Period, eligible employees who so elect may authorize payroll deductions in an amount no less than 1% nor greater than 10% of his or her base pay for each payroll period in the Payment Period. At the end of each Payment Period, the accumulated deductions are used to purchase shares of common stock fromff Payment Period. Shares are purchased at a price equal to 85% of the fair either the first business day of the Payment Period or the last business day of the Payment Period, whichever is lower. Employees who, afteff r exercising their rights to purchase shares of common stock in the 2015 ESPP, would own shares representing 5% or more of the voting power of the Company’s common stock, are ineligible to continue to participate under the 2015 ESPP. The 2015 ESPP provides forff December 31, 2020, 2,675,657 shares have been issued under the 2015 ESPP. The Company recorded stock-based compem nsation costs related to its employee stock purchase plan of $12.6 million, $12.4 million and $9.8 million for the years ended December 31, 2020, 2019 and 2018, respectively. the Company up to a maximum of 12,000 shares for any one employee during a the issuance of a maximum of 16,000,000 shares of common stock. As of ff market value of the Company’s common stock, on The Company used the Black-Scholes model to estimate the fair value of the 2015 ESPP awards with the folff lowing weighted-average assumptions: Expected volatility facff Risk free interest rate tor Expected dividend yield Expected life (in years) Year Ended December 31, 2020 December 31, 2019 December 31, 2018 0.21 - 0.35 0.13% - 2.06% 0.92% - 1.39% 0.5 0.22 - 0.29 2.06% - 2.49% 1.27% - 1.39% 0.5 0.26 - 0.29 1.12% - 2.19% 0% - 1.27% 0.5 The Company determined the expected volatility factor by considering the implied volatility in six-month market-traded options of the Company's common stock based on third party volatility quotes. The Company's decision to use implied volatility was based upon the availabila implied volatility is more representative of futuret based on a U.S. Treasury instrument whose term is consistent with the expected term of the stock options. The current dividend ity of actively traded options on the Company's common stock and its assessment that stock price trends than historical volatility. The risk-free interest rate was F-24 F o r m 1 0 - K CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS yield has been upda u grants made under the ESPP. ted forff expected dividend yield payout. The expected term is based on the term of the purchase period for Expense x Informat ff ion The Company recorded stock-based compensation costs, related deferred tax assets and tax benefits of $307.7 million, $61.0 million and $83.4 million, respectively, in 2020, $278.9 million, $54.4 million and $59.5 million, respectively, in 2019 and $203.6 million, $39.7 million and $49.7 million, respectively, in 2018. The detail of the total stock-based compensation recognized by income statement classification is as follow ff s (in thousands): Income Statement Classifications Cost of subscription, support and services Research and development Sales, marketing and services General and administrative Total Non-vested StocS k UnitUU stt Service Based StocS k UnitUU stt 2020 2019 2018 $ $ 13,253 $ 10,921 $ 108,032 102,765 83,660 307,710 $ 104,553 95,535 67,883 278,892 $ 7,979 66,154 72,406 57,080 203,619 The Company also awards senior level employees, certain other employees and new non-employee directors, non-vested stock units granted under the 2014 Plan that vest based on service. The majority of these non-vested stock unit awards generally vest 33.33% on each of the first, second, and third anniversary sr ubsequent to the grant date of the award. Each non-vested stock vesting, represents the right to receive one share of the Company’s common stock. In addition, the Company awards u unit, upon non-vested stock units to all of its continuing non-employee directors, which represent the right to receive one share of the Company's common stock upon vesting. Previously, non-vested stock unit awards granted to the Company's continuing non- employee directors vested monthly in 12 equal installments. Beginning in 2020, new awards granted to non-employee directors will vest in full in one installment on the earlier of: (i) the first anniversary of the award date; or (ii) the day immediately prior to the Company’s next annual meeting of the stockholders following the award date. m Company Performance StoS ck Units On April 1, 2020, the Company awarded senior level employees 294,605 non-vested performance stock unit awards granted under the 2014 Plan. The number of non-vested performance stock units that ultimately vest will be determined within sixty days following completion of the performance period ending December 31, 2022 and will be based on the achievement of specific corporate financial performance goals related to the Company’s annualized recurring revenue (ARR) growth measured during the period from January 1, 2020 to December 31, 2022. The number of non-vested stock units issued will be based on a graduated slope, with the maximum number of non-vested stock units issuablea target number of non-vested stock units set fort h in the award agreement. The Company is required to estimate the attainment expected to be achieved related to the defined performance goals and the number of non-vested stock units that will ultimately be awarded in order to recognize compensation expense over the vesting period. Each non-vested stock unit, upon vesting, represents the right to receive one share of the Company’s common stock. Compensation expense is being recorded through the end of the performance period on December 31, 2022 if it is deemed probablea performance goals are not met, no compensation cost will be recognized and any previously recognized compensation cost will be reversed. that the performance goals will be met. If the pursuant to the award cappe d at 200% of the a ff On April 6, 2020, the Company awarded certain senior level employees 90,756 non-vested performance stock unit awards granted under the 2014 Plan that vest based on the Company’s ARR growth during span January 1, 2020 through December 31, 2021. The number of non-vested stock units issued upon the vesting of the award will be based on a graduated slope, with the maximum number of non-vested stock units issuable pursuant to the award cappe d h in the award agreement. The Company is required to estimate at 125% of the target number of non-vested stock units set fort the attainment expected to be achieved related to the defined performance goals and the number of non-vested stock units that will ultimately be awarded in order to recognize compensation expense over the vesting period. Each non-vested stock unit, upon vesting, represents the right to receive one share of the Company’s common stock. Compensation expense is being recorded through the end of the performance period on December 31, 2021 if it is deemed probablea the relevant performance periods, which that the performance goals d a ff F-25 CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS will be met. If the performance goals are not met, no compensation cost will be recognized and any previously recognized compensation cost will be reversed. Finally, half of these awards vested on December 31, 2020, which corresponds to the award’s interim performance period, and met the underlying performance metrics. The final payout approval related to these awards will be obtained within sixty days of the vesting date in accordance with the award provisions. The remaining unvested awards are subject to vesting by the end of the performance period on December 31, 2021. Accordingly, compensation expense on those unvested awards will be recorded through December 31, 2021. In April 2019, the Company awarded senior level employees 293,991 non-vested performance stock unit awards granted under the 2014 Plan. The number of non-vested stock units underlying the award will be determined within sixty days following complem tion of the performance period ending December 31, 2021 and will be based on the achievement of specific corporate financial performance goals related to subscription bookings as a percentage of total subscription and product bookings measured during the period from January 1, 2021 to December 31, 2021. The number of non-vested stock units issued will be based on a graduated slope, with the maximum number of non-vested stock units issuable pursuant to the award cappe d at 200% of the target number of non-vested stock units set forth in the award agreement. The Company is required to estimate the attainment expected to be achieved related to the defined performance goals and the number of non-vested stock units that will ultimately be awarded in order to recognize compensation expense over the vesting period. Each non-vested stock unit, upon vesting, represents the right to receive one share of the Company’s common stock. Compensation expense is being recorded through the end of the performance period on December 31, 2021 if it is deemed probablea will be met. If the performance goals are not met, no compensation cost will be recognized and any previously recognized compensation cost will be reversed. that the performance goals a In February 2019, the Company had awarded certain senior level employees 93,500 non-vested performance stock units granted under the 2014 Plan. The number of non-vested stock units underlying the award were to be determined within sixty days following the completion of the performance period ending December 31, 2020 and were based on the achievement of specific corporate financial performance goals between the fiscal years ended December 31, 2018 and December 31, 2020. The Company was required to estimate the attainment expected to be achieved related to the defined performance goals and the number of non-vested stock units that would have ultimately been awarded in order to recognize compensation expense over the vesting period. Each non-vested stock unit, upon vesting, represented the right to receive one share of the Company’s common stock. Compensation expense would have been recorded through the end of the performance period on December 31, 2020 if it was deemed probable that the performance goals would have been met. In January 2020, the non-vested performance stock units were cancelled pursuant to a forfeituret for nominal cash consideration. The impact of the cancellation was not material to the consolidated financial statements. agreement executed by each holder in returnt In March 2018, the Company awarded senior level employees 268,729 non-vested performance stock unit awards granted under the 2014 Plan. The number of non-vested stock units underlying the award will be determined within sixty days following complem tion of the performance period ending December 31, 2020 and will be based on the achievement of specific corporate financial performance goals related to subscription bookings as a percentage of total product bookings measured during the period from January 1, 2020 to December 31, 2020. As defined in the applicablea bookings includes subscription bookings. The number of non-vested stock units issued will be based on a graduated slope, with the maximum number of non-vested stock units issuablea vested stock units set forth in the award agreement. The Company is required to estimate the attainment expected to be achieved related to the defined performance goals and the number of non-vested stock units that will ultimately be awarded in order to recognize compensation expense over the vesting period. Each non-vested stock unit, upon vesting, represents the right to receive one share of the Company’s common stock. Finally, these awards vested on December 31, 2020 and met the underlying performance metrics. As a result, compensation expense was recorded through the end of the performance period. The final payout approval related to the awards will be obtained within sixty days of the vesting date in accordance with the award provisions. d at 200% of the target number of non- award agreements, total product pursuant to the award cappe a The Company recorded stock-based compensation costs related to its company performance stock units of $50.5 million, $40.2 million and $17.9 million for the years ended December 31, 2020, 2019 and 2018, respectively. Modificff ation of Market and Company Performance Stock Units On April 22, 2019, the change in control provisions of the unvested and outstanding February 2019 and March 2018 company performance stock unit awards were modified such that if a change in control were to occur prior to the end of the award’s performance period, the award would be deemed earned at 200% of the target award, subjeu the awardee’s continuous employm ent through the end of the award’s performance periods. Previously, the change in control provisions of these awards allowed for either pro rata vesting or vesting based on interim performance through the change in naturet control date. No incremental compensation expense was recorded as a result of this modification given the improbablea a change in control event. ct to time-based vesting and m of F-26 F o r m 1 0 - K CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Non VesVV ted StocS k UnitUU Activity for the YeaYY r The following tabla e summarizes the Company's non-vested stock unit activity forff the year ended December 31, 2020: Non-vested stock units at December 31, 2019 Granted Vested Forfeited Non-vested stock units at December 31, 2020 Number of Shares $ 5,688,534 2,728,869 (2,668,847) (563,511) 5,185,045 Weighted- Average Fair Value at Grant Date 96.68 137.95 97.41 108.62 116.86 For the years ended December 31, 2020, 2019 and 2018, the Company recognized stock-based compensation expense of $295.1 million, $266.5 million and $193.8 million, respectively, over the vesting period of the respective stock units. The fair value of the stock units vested in 2020, 2019, and 2018 was $260.0 million, $246.7 million and $149.3 million, respectively. As of December 31, 2020, there was $416.3 million of total unrecognized compensation cost related to non-vested stock units. The unrecognized cost is expected to be recognized over a weighted-average period of 1.58 years. Benefitff Plan The Company maintains a 401(k) benefit plan allowing eligible U.S.-based employees to contribute up to 90% of their annual eligible earnings to the plan on a pretax and afteff amount as set periodically by the IRS. The Company, at its discretion, may contribute up to $0.50 for each dollar of employee contribution. The Company’s total matching contribution to an employee is typically made at 3% of the employee’s annual compensation. The Company’s matching contributions were $15.4 million, $14.4 million and $13.0 million in 2020, 2019 and 2018, respectively. The Company’s matching contributions vest immediately. r-tax basis, including Roth contributions, limited to an annual maximum 9. CAPITAL STOCK Stock Repurchase Programs The Company’s Board of Directors has authorized an ongoing stock repurchase program, of which $1.00 billion was approved in January 2020. The Company may use the approved dollar authority to repurchase stock at any time until the approved amount is exhausted. The objective of the Company’s stock repurchase program is to improve stockholders’ returns and mitigate earnings per share dilution posed by the issuance of shares related to employee equity compensation awards. At December 31, 2020, $625.6 million was available to repurchase common stock pursuant to the stock repurchase program. All shares repurchased are recorded as treasury stock. A portion of the funds used to repurchase stock over the course of the program was provided by net proceeds from the Convertible Notes, the 2027 Notes and the term loan credit agreement (the “Term Loan Credit Agreement”), as well as proceeds from employee stock awards and the related tax benefit. The Company is authorized to make purchases of its common stock using general corporate funds through open market purchases, pursuant to a Rule 10b5-1 plan or in privately negotiated transactions. ff t In February 2018, the Company entered into an ASR transaction with a counterparty to pay an aggregate of $750.0 million in exchange for the delivery of approximately 6.5 million shares of its common stock based on current market prices. The purchase price per share under the ASR was based on the volume-weighted average price of the Company's common stock during the term of the ASR, less a discount. The ASR was entered into pursuant to the Company's existing share repurchase program. Final settlement of the ASR agreement was completed in April 2018 and the Company received delivery of an additional 1.6 million shares of its common stock. On January 30, 2020, the Company used the proceeds from its Term Loan Credit Agreement to enter into accelerated share repurchase transactions ("ASR") with each of Goldman Sachs & Co. LLC and Wells Fargo Bank, National Association (each, a "Dealer") for an aggregate of $1.00 billion. Under the ASR transactions, the Company received an initial share delivery of 6.5 million shares of its common stock, with the remainder delivered upon completion of the ASR transactions. The total number of shares of common stock that the Company repurchased under each ASR agreement was based on the average of the d daily volume-weighted average prices of its common stock during The Company received delivery of 0.8 million shares of its common stock in August 2020 in final settlement of the ASR Agreement. See Note 13 for detailed information on the Term Loan Credit Agreement. the term of the applicable ASR agreement, less a discount. F-27 CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In addition to the ASR, during d the year ended December 31, 2020, the Company expended $288.5 million on open market purchases under the stock repurchase program, repurchasing 2.5 million shares of outstanding common stock at an average price of $116.40. During the year ended December 31, 2019, the Company expended $453.9 million on open market purchases under the stock repurchase program, repurchasing 4.5 million shares of outstanding common stock at an average price of $100.11. During the year ended December 31, 2018, the Company expended $511.2 million on open market purchases under the stock repurchase program, repurchasing 4.7 million shares of outstanding common stock at an average price of $108.05. Shares for TaxTT Withholdi tt ng During the years ended December 31, 2020, 2019 and 2018, the Company withheld 893,479 shares, 882,078 shares and 739,522 shares, respectively, from equity awards that vested. Amounts withheld to satisfy minimum tax withholding obligations that arose on the vesting of equity awards was $121.7 million, $89.2 million and $71.6 million, for 2020, 2019 and 2018, respectively. These shares are reflected as treasury stock in the Company's consolidated balance sheets and the related cash outlays do not reduce the Company's total stock repurchase authority. ff Preferre k d StocS The Company is authorized to issue 5,000,000 shares of preferred stock, $0.01 par value per share. No shares of such preferred stock were issued and outstanding at December 31, 2020 or 2019. Cash Dividend The following tablea December 31, 2020 and 2019. provides information with respect to quarterly dividends on common stock during the years ended Declaration Date Fiscal Year 2020 January 22, 2020 April 23, 2020 July 23, 2020 October 22, 2020 Fiscal Year 2019 January 23, 2019 April 24, 2019 July 24, 2019 October 24, 2019 Subsequent Event Dividends per Share Record Date Payable Date $ $ $ $ $ $ $ $ 0.35 0.35 0.35 0.35 0.35 0.35 0.35 0.35 March 6, 2020 June 5, 2020 March 20, 2020 June 19, 2020 September 11, 2020 December 8, 2020 September 25, 2020 December 22, 2020 March 8, 2019 March 22, 2019 June 7, 2019 September 6, 2019 June 21, 2019 September 20, 2019 December 6, 2019 December 20, 2019 On January 19, 2021, the Company announced that its Board of Directors approved a a quarterly cash dividend of $0.37 per share. This dividend is payable on March 26, 2021 to all shareholders of record as of the close of business on March 12, 2021. Future dividends will be subjeb ct to Board approval. 10. COMMITMENTS AND CONTINGENCIES Legal Matters The Company accrues r a liabila ity forff legal contingencies when it believes that it is both probable that a liabila ity has been incurred and that it can reasonably estimate the amount of, or a range of, the loss. The Company reviews these accruals and adjusts them to reflect ongoing negotiations, settlements, rulings, advice of legal counsel and other relevant information. To the extent new information is obtained and the Company's views on the probablea assessments, regulatory investigations, or other legal proceedings change, changes in the Company's accrued liabilities would be recorded in the period in which such determination is made. In addition, in accordance with the relevant authoritative guidance, forff matters in which the likelihood of material loss is at least reasonably possible, the Company provides disclosure of the possible loss or range of loss. If a reasonable estimate cannot be made, however, the Company will provide disclosure to that effect. outcomes of any pending claims, suits, F-28 CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS fringement byby va irious Compa yny Due to the nature of the Company's business, the Company is subject to patent infringement claims, including current torious i imeri unable curre lntlyy bl yany. In daddiditiion, hthe Compa yny lsolutiions andd ser ivices. hThe Com ypany bbelilieves hthat iit hhas gorously ddef dfend iitselflf; hhowever, iit iis rmine hthe lul itimate outcome of hthese or isimililar matters or hthe potentiiall exposure to lloss, ifif uding dings, iin lcluding dand iinte dnds to ivigorously ytory ac itions andd iinve istiggatiions ggene lrallyly l hAlthoughugh iit iis diffidiffic lult to predidict hthe lul itimate outcomes of hthese matters, hthe regula isuits, assessments, regula litigation lalllegingging iinfringe d fdefenses to hthe lalllegga itions madde iin iits pending to ddete iis bsubjjbb ect to va irious othher lleggall proceedings, iarisingsing out of hthe normall course of b ibusiness. Com ypany bbelilieves hthat outcomes hthat or ca hsh flflows are reas dand dadvers lelyy ffaffect iits b ibusiness, fifina inci lal ipositiion, re lsults fof opera itions possiblble bbut not es itimablblea pending lili itigga ition iwillll mate iriallllyy at hithis itime. onablyy bl i i F o r m 1 0 - K On JulyJuly 25, 2019, a lclass ac ition llaws iuit was filfil ded gag iainst iCitriix, LoggMeIn, Inc. ((“ iCi h15th icuri ities llaws byby makiki gng lalllegedged iCirc iuit Court of hthe dand former didirectors andd ffiofficers iin hthe lalllegges hthat hthe ddef dfendants ivi lolatedd f dfede lral se Registgistratiion Statement dand bsubsequent me grger iAprill 28, 2020, hthe ddef dfendants fifilledd motiions to didismiiss hthe com lplaiint, hiwhi hch remaiin pending. ddam gages. On dand fformer didirectors namedd as d fdefe dndants hhave me iri belbeliieves hthat iCitriix andd iits current hhowever, hthe Compa yny iis unablblea to currentlyly ddete yany. filfil ded iin connectiion iwi hth hthe 2017 ispin-off of i hwith LoggMeIn. hThe com lplaiint se keks am gong l issions iin iCitriix’s GoTo famililyy of se irvice offerings rings hother hithi gngs hthe recove yry fof moneta yry nding. hThe Compa yny rmine hthe lul itimate outcome of hithis matter or hthe pote inti lal exposure or lloss, ifif torious d fdefenses to hthese lalllegga itions; iFloridda. hThe co i dand Prospectust fof hthat b ibusiness rcuit, Pallm Beachh Countyy, imisstatements gLogMeIn’s dand omi Judi ici lal di i i i dand cert iain fof htheiir current lmpl iaint gLogMeIn”)) Guarantees The authoritative guidance requires certain guarantees to be recorded at fair value and requires a guarantor to make disclosures, even when the likelihood of making any payments under the guarantee is remote. For those guarantees and indemnifications that do not fall within the initial recognition and measurement requirements of the authoritative guidance, the Company must continue to monitor the conditions that are subject to the guarantees and indemnifications, as required under existing generally accepted accounting principles, to identify if a loss has been incurred. If the Company determines that it is probable that a loss has been incurred, any such estimable loss would be recognized. The initial recognition and measurement requirements do not apply to the provisions contained in the majoa rity of the Company’s software license agreements that indemnify licensees of the Company’s software from damages and costs resulting from claims alleging that the Company’s software infringes the intellectual property rights of a third party. The Company has not made material payments pursuant to these provisions. The Company has not identified any losses that are probable under these provisions and, accordingly, the Company has not recorded a liability related to these indemnification provisions. Purchase Obligati i ons The Company has agreements with suppliers to purchase inventory and estimates its non-cancelable obligations under these agreements for the fiscal year ended December 31, 2021 to be $8.8 million. The Company also has contingent obligations to purchase inventory for the fiscal year ended December 31, 2021 of $19.9 million. The Company does not have any such purchase obligations beyond December 31, 2021. Other Purchase Commitmentstt In May 2020, the Company entered into an amended agreement with a third-party provider, in the ordinary course of business, for the use of certain cloud services through June 2029. Under the am dendedd gagreement, hthe Com ypany iis commiittedd to a purchhase of $$1.00 bilbillilion throughout of rem iainingning obligations under the purchase agreement. throughout hthe term of hthe gagreement. As of December 31, 2020, hthe Com ypany hhadd $$950.0 imilllliion 11. INCOME TAXES hThe Com ypany iis requiredd to es itimate iits iincome taxes iin ea hch of hthe juju i di i nsoliddat ded fifinanciiall statements. hThe Com ypany maiintaiins cert iain strategiegic managgement risdictiions iin hiwhichh iit operates as part of hthe dand li subsididia iries andd iits foreign foreign ea irni gngs are taxedd at rates hthat are ggenerallllyy llower hthan iin hthe b i prepari gng iits co i lonal ac iti ivitiies iin overseas pprocess of opera iti iUnitedd States. On May 19, 2019, Swiss voters approved the Federal Act on Tax Reform and AHV Financing (“TRAF”RR ), which provides for broad changes to federal and cantonal taxation in Switzerland effective January 1, 2020. The TRAFRR abolishment of certain favorable tax regimes, provides for certain transitional relief, and directs the cantons to implem ment certain mandatory measures while other provisions are at the discretion of the canton. During the period ended December 31, 2019, the cantonal authority provided its guidance for the cantonal tax implications of the TRAF.RR and As a result of the TRAFRR the accompanying guidance from the Swiss taxing authorities, the Company recorded a deferred tax asset and related tax benefits of $145.6 million and $99.9 million attributablea to the cantonal and federal impact of the TRAF,RR respectively. The requires the F-29 CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Company also recorded a valuation allowance of $33.5 million to reduce the cantonal deferred tax asset as it is not more likely than not the cantonal deferred tax asset will be full to the issuance of further legislative guidance from the Swiss taxing authorities. y realized. The income tax impact of the TRAFRR may be subject to change due ff The United States and foreign components of income beforeff income taxes are as follows: United States Foreign Total 2020 2019 (In thousands) $ $ 43,003 511,877 554,880 $ $ 31,932 477,568 509,500 $ $ The components of the provision for income taxes are as follows: Current: Federal Foreign State Total current Deferred: Federal Foreign State Total deferred Total provision 2020 2019 (In thousands) $ 5,513 49,862 (967) 54,408 (10,940) 4,160 2,806 (3,974) 50,434 $ $ 7,718 63,205 1,697 72,620 (35,932) (209,010) 9 (244,933) (172,313) $ $ $ 174,519 454,936 629,455 2018 2018 (19,461) 70,146 16,259 66,944 1,899 (14,804) (251) (13,156) 53,788 The following tablea presents the breakdown of net deferred tax assets: Deferred tax assets Deferred tax liabilities Total net deferred tax assets December 31, 2020 2019 $ $ (In thousands) 386,504 (3,185) 383,319 $ $ 361,814 (2,630) 359,184 F-30 F o r m 1 0 - K CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The significant components of the Company’s deferred tax assets and liabia lities consisted of the folff lowing: Deferred tax assets: Accruals and reserves Deferred revenue Tax credits Net operating losses Stock based compensation Swiss tax reform Acquired technology Valuation allowance Total deferred tax assets Deferred tax liabilities: Acquired technology Depreciation and amortization Prepaid expenses Other Total deferred tax liabila ities Total net deferred tax assets December 31, 2020 2019 (In thousands) $ 59,515 34,596 146,470 54,882 45,346 261,090 2,346 (151,791) 452,454 — (23,445) (42,717) (2,973) (69,135) 383,319 $ 53,465 58,977 107,046 56,156 40,182 245,554 — (128,388) 432,992 (3,521) (34,653) (29,775) (5,859) (73,808) 359,184 $ $ hThe auth ihoritatiive guida guidance requires a v lalua ition lalllowance to redduce hthe d fdefe i ight of hthe bember 31, 2020, thhe Com ypany ddete ieviddence, iit iis more lilikkelyly hthan not hthat some portiion or i net operating losses, tax credits and the cantonal deferre rmi dned a $$151.8 imilllliion weight Dec tax assets f rorff realized. lalll of thhe d fdefe drred tax assets reported id if, bbasedd on thhe iwillll not bbe re laliiz ded. At drred tax assets lvaluatiion lalllowance was necessaryy,r d tax asset recorded dued ff hi hwhich rellates t do deferre dd that may not be ff to the TRAFRR At December 31, 2020, the Company retained $136.9 million of remaining net operating loss carry forwards in the United acquisitions. The utilization of these net operating loss carry forwards are limited in any one year pursuant to States fromff Internal Revenue Code Section 382 and may begin to expire in 2022. At December 31, 2020, the Company held $134.3 million of remaining net operating loss carry forwards in foreign jurisdictions that begin to expire in 2022. At December 31, 2020, the Company held $181.0 million of fede portion of which may begin to expire in 2022. ral and state research and development tax credit carry forwards in the United States, a ff A reconciliation of the Company’s effective tax rate to the statutory federal rate is as follow ff s: Federal statutory taxes ff State income taxes, net of federal tax benefit Foreign operations Permanent differences The 2017 Tax Act - tax rate impact on deferre The 2017 Tax Act - transition tax Tax reform - Switzerland Change in valuation allowance reserve Change in deferred tax liabila Tax credits Stock-based compensation Change in accruals for uncertain tax positions Other d taxes ity related to acquired intangibles F-31 Year Ended December 31, 2020 2019 2018 21.0 % 0.3 (5.1) 2.2 — — — 3.4 — (8.1) (3.0) (2.5) 0.9 9.1 % 21.0 % 0.3 (5.8) 3.0 — — (48.2) 7.4 — (8.4) (1.9) (1.1) (0.1) (33.8)% 21.0 % 0.7 (5.4) 2.0 (0.7) (3.5) — 0.4 (0.1) (5.8) (1.9) 1.8 — 8.5 % CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company’s effective tax rate generally differs from the U.S. federal statutory rate primarily due to lower tax rates on earnings generated by the Company’s foreign operations that are taxed primarily in Switzerland. The Company's effective tax rate was approximately 9.1% and (33.8)% for the years ended December 31, 2020 and 2019, respectively. The increase in the effective tax rate when comparing the year ended December 31, 2020 to the year ended December 31, 2019, was primarily dued to tax items unique to the period ended December 31, 2019. These amounts include an estimated income tax benefit of $112.1 million and $99.9 million attributable to the cantonal and federal impact of the TRAF,RR respectively, during the year ended December 31, 2019. The Company's effective tax rate was approximately (33.8)% and 8.5% for the years ended December 31, 2019 and 2018, to tax items unique to each period including majoa r changes to the tax regime in respectively. The decrease in the effective tax rate when comparim ng the year ended December 31, 2019 to the year ended December 31, 2018 was primarily dued Switzerland and significant changes related to U.S. tax reform, Company’s U.S. and foreign operations. For the year ended December 31, 2019, unique tax items include tax benefits of $112.1 million and $99.9 million attributable to the cantonal and federal impact of the TRAF,RR $20.1 million attributable to the 2015 U.S. federal income tax return statute of limitations closing. The results fromff ended December 31, 2018 also included unique tax items due to U.S. tax reform legislative changes including a tax benefit of $21.9 million to true up the provisional transition tax on deemed repatriation of foreign income and a tax benefit of $4.4 million to truerr up the provisional benefit for the remeasurement of U.S. deferred tax assets and liabilities because of the maximum U.S. federal corporate rate reductd as well as a change in the combination of income between the respectively, and a tax benefit of ion from 35% to 21%. the year ff A reconciliation of the beginning and ending amount of unrecognized tax benefits forff the years ended December 31, 2020, 2019 and 2018 is as follows (in thousands): Balance at December 31, 2017 Additions based on tax positions related to the current year Additions for tax positions of prior years Reductions related to the expiration of statutes of limitations Balance at December 31, 2018 Additions based on tax positions related to the current year Additions for tax positions of prior years Reductions related to the expiration of statutes of limitations Balance at December 31, 2019 Additions based on tax positions related to the current year Additions for tax positions of prior years Reductions related to the expiration of statutes of limitations Reductions related to audit settlements Reductions for tax positions of prior years Balance at December 31, 2020 $ $ 77,849 10,168 10,325 (8,436) 89,906 11,244 3,414 (20,098) 84,466 15,182 13,765 (15,553) (19,975) (3,203) 74,682 As of Dece bmber 31, 2020 t, he Company's unrecognized tax benefits totaled approximately $74.7 million compared to $84.5 million as of Dece bmber 31, 2019. At Dece bmber 31, 2020, $, 62.3 million iincl dluded id in thhe bballance for tax p iositiions wouldld positions i i affect hthe annuall effec itive tax rat dand pe iinterest. lnal ities iin iincome tax expense. As of Dece bmber 31, 2020, thhe Com ypany hhas acc rellatedd to uncert iain tax imilllliion for hthe ognizedd. hThe Com ypany recogni cognize is interest accr duedr ie if recogni ypayment of drued $$6.4 lmul iti lple state rnal Revenue Ser ivice forff ubsidi hThe Com ypany andd one or more of iits s b idi risdictiions. hThe Compa yny iis currentlyly dand foreignign juju i di iWith fh fewff hthe 2017 andd 2018 ta yx years. jurisdictiions byby tax a h i dand llocal il income tax, or iin non-U.S. jurisdi iincome taxes of Inte l exa iminatiion for state subject to U.S. f dede iaries are subje ff exceptiions, hthe Compa yny iis ggenerallllyy not subje subject to uthori ities for yyears iprior to 2017. lral iincome taxes iin hthe U init ded States, as lwelll as dunder exa iminatiion byby hthe U init ded States On Ma hrch 27, 2020, hthe U init ded States enact ded hthe C oronavirus i idAid, Relilief & Eco ivarietyy of tax ted bd byy thhe COVID-19 CARES Act iincl dludes a widide dadverselyly affecff iincl di of measures to hhellp of global COVID-19-related laws and proposed laws, however, no material impact to the Company's financial results is b ibusinesses, rly, hthe S iwis gs government enactedd a numbber nom The Company is evaluating the impact iSimillarly, ts of COVID-19 on hthe S iwiss economy. dpandemiic. Thihi ll of p yayment of cert iain employe ls l gegi lislatiion iin lcl dudes an ar yray of ta bx ben fiefits and id incentiives forff ludi gng iin part, hth de deferra provi isions iaimedd to p rovidde relilief to i di dand bbusiinesses gnega itive effecff ayrolll taxes. loyer payrol dand non-tax imi itiggate hthe ff i i i i nomic Sec iurity (y (“CAR indi idvidualls )ES”) Act. hThe F-32 CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS expected as a result of legislation enacted to date. The Company will review any guidance issued in the future by applicable tax authorities and continue to evaluate the impact of any new developments or legislation. i hThe Com ypany's U.S. li liquididityy needds are currentlyly sa iti fisfiedd usingsing ca hsh flflow gs generated fd fromff ivarietyy of tax lplanning borrowi borrowi gngs, or b hboth. hThe Compa yny lalso iis av iaillablblea over itime, to thhe extent hthat thhe foreignign ea irni gngs are not res itrict ded byby llocal ll laws or resullt iin isignifi associiatedd wiithh repa itriatinging hth fe foreff iin lloca itions iin hiwhi hch iit iis ne dededd. hThe Com ypany expects to repa itriate a ignign ea irni gngs. iutililizes a nning strategiegies iin an effort to ensure htha it its ff bsubstantiiall portiion of iits f iorei gnificant iincrementall costs iits U.S. operatiions, lworld idwidde ca hsh rnings ggn earnings F o r m 1 0 - K 12. SEGMENT INFORMATION Citrix has one reportablea segment. The Company's CODM reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. The Company's CEO is the CODM. International revenues (sales outside of the United States) accounted forff revenues for the year ended December 31, 2020, 2019, and 2018, respectively. 50.5%, 48.2% and 47.0% of the Company’s net Long-lived assets consist of property and equipment, net, and are shown below. Property and equipment, net: United States United Kingdom Other countries Total property and equipment, net December 31, 2020 2019 (In thousands) $ $ 160,825 23,434 24,552 208,811 $ $ 178,956 24,681 28,257 231,894 In fiscal years 2020, 2019 and 2018, one distributor accounted for 17%, 15% and 14% respectively, of the Company’s total net revenues. The Company’s distributor arrangements with the distributor consist of several non-exclusive, independently negotiated agreements with its subsidiaries, each of which covers different countries or regions. Revenues by product grouping were as follow ff s forff Net revenues: Workspace (1) App Delivery and Security (2) Professional services (3) Total net revenues the years ended: 2020 December 31, 2019 (In thousands) 2018 $ $ 2,402,587 720,749 113,364 3,236,700 $ $ 2,127,350 750,268 132,946 3,010,564 $ $ 2,024,289 817,193 132,421 2,973,903 (1) Workspace revenues are primarily comprised of sales from the Company’s application virtualization solutions, which include Citrix Workspace, Citrix Virtual Apps and Desktops, the Company's unified endpoint management solutions, which include Citrix Endpoint Management and Citrix Content Collaborat ion. a (2) App Delivery and Security revenues primarily include Citrix ADC and Citrix SD-WAN (3) Professional services revenues are comprised of revenues fromff consulting services primarily related to the Company's perpetual offerings and product training and certification services. F-33 CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Revenues by Geographic Location The following tabla e presents revenues by geographic location, for the years ended: Net revenues: Americas EMEA APJ Total net revenues 2020 December 31, 2019 (In thousands) 2018 $ $ 1,766,419 $ 1,704,763 $ 1,716,876 1,147,731 322,550 991,216 314,585 956,365 300,662 3,236,700 $ 3,010,564 $ 2,973,903 Export revenue represents shipments of finished goods and services from the United States to international customers, primarily in Latin America and Canada. Shipments fromff were $199.3 million, $161.2 million and $141.9 million, respectively. the United States to international customers for 2020, 2019 and 2018 Strategice Service Providers The Company defines Strategic Service Providers (SSP) as its three historically largest hyperscale App Delivery and Security customers. The following tabla e summarizes SSP revenue for the years ended: Net revenues: SSP revenue Non-SSP revenue Total net revenues Subscription Revenue 2020 December 31, 2019 (In thousands) 2018 $ $ 90,800 3,145,900 3,236,700 $ $ 119,929 2,890,635 3,010,564 $ $ 152,995 2,820,908 2,973,903 The Company's subscription revenue includes Software as a Service (SaaS), which is generally recognized ratablya over time and non-SaaS, which is generally recognized at a point in time. The following tabla e presents subscription revenues by SaaS and non-SaaS components, for the years ended: Subscription: SaaS Non-SaaS Total Subscription revenue 2020 December 31, 2019 (In thousands) 2018 $ $ 540,807 573,991 1,114,798 $ $ 390,774 260,036 650,810 $ $ 273,771 181,505 455,276 F-34 F o r m 1 0 - K CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 13. DEBT The components of the Company's long-term debt were as follows (in thousands): Term Loan Credit Agreement 2027 Senior Notes 2030 Senior Notes Total face value Less: unamortized discount Less: unamortized issuance costs Total long-term debt Term Loan Credit Agreement December 31, 2020 December 31, 2019 $ $ 250,000 $ 750,000 750,000 1,750,000 (5,594) (11,784) 1,732,622 $ — 750,000 — 750,000 (1,291) (5,783) 742,926 On January 21, 2020, the Company entered into a Term Loan Credit Agreement with Bank of America, N.A., as administrative agent, and the other lenders party thereto fromff time to time (collectively, the “Lenders”). The Term Loan Credit Agreement provides the Company with facilities to borrow term loans on an unsecured basis in an aggregate principal amount of up to $1.00 billion, consisting of (i) a $500.0 million 364-day term loan facff $500.0 million 3-year term loan (the “3-year Term Loan”), in each case in a single borrowing, subject to satisfaction of certain conditions set forth in the Term Loan Credit Agreement. On January 30, 2020, the Company borrowed $1.00 billion under the term loans and used the proceeds to enter into the ASR with each Dealer for an aggregate of $1.00 billion. See Note 9 forff detailed information on the accelerated share repurchase. ility (the “364-day Term Loan”), and (ii) a Borrowings under the Term Loan Credit Agreement bear interest at a rate equal to (a) either (i) LIBOR or, upon a phase- out of LIBOR, an alternative benchmark rate as provided in the Term Loan Credit Agreement, or (ii) a customary base rate formula, plus (b) the applicablea margin with respect thereto, which initially will be determined based on the Company’s consolidated leverage ratio but may, if so elected by the Company, be based on the Company’s non-credit enhanced, senior unsecured long-term debt rating as determined by Moody’s Investors Service, Inc., Standard & Poor’s Financial Services, LLC and Fitch Ratings Inc., in each case as set forth in the Term Loan Credit Agreement. The Term Loan Credit Agreement includes a covenant limiting the Company’s consolidated leverage ratio to not more than 3.5:1.0, subject to, upon the occurrence of a qualified acquisition, if so elected by the Company, a step-up to 4.0:1.0 for the four fiscal quarters following such qualified acquisition, and a covenant limiting the Company’s consolidated interest coverage ratio to not less than 3.0:1.0. The Term Loan Credit Agreement includes customary events of default, with corresponding grace periods in certain circumstances, including, without limitation, payment defaults, cross-defaults, the occurrence of a change of control of the Company and bankruptcy-related defaults. The Lenders are entitled to accelerate repayment of the loans under the Term Loan Credit Agreement upon the occurrence of any of the events of default. In addition, the Term Loan Credit Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict the ability of the Company to grant liens, merge or consolidate, dispose of all or substantially all of its assets, change its business and incur subsidiary indebtedness, in each case subjeu Company to make prepayments of any net cash proceeds received in connection with the Company issuing or incurring debt or issuing equity, subject to certain ordinary course exceptions described in the Term Loan Credit Agreement. The Term Loan Credit Agreement also contains representations and warranties customary for an unsecured financing of this type. The Company was in compliance with these covenants as of December 31, 2020. ct to customary exceptions. In addition, the Term Loan Credit Agreement requires the Senior Notes On February 25, 2020, the Company issued $750.0 million of unsecured senior notes dued March 1, 2030. The 2030 Notes semi-annually on March 1 and September 1 of accrue interest at a rate of 3.300% per annum. Interest on the 2030 Notes is dued each year, beginning on September 1, 2020. The net proceeds from this offering were $738.1 million, after deducting the underwriting discount and estimated offering expenses payablea primarily used to repay amounts outstanding under the Company's unsecured Term Loan Credit Agreement. The 2030 Notes will mature on March 1, 2030, unless earlier redeemed in accordance with their terms prior to such date. The Company may redeem the 2030 Notes at its option at any time in whole or from time to time in part prior to December 1, 2029 at a redemption price equal to the greater of (i) 100% of the aggregate principal amount of the 2030 Notes to be redeemed and (ii) the sum of the present values of the remaining scheduled payments of such Notes under such 2030 Notes, plus in each case, accrued and unpaid interest to, but excluding, the redemptim on date. At any time on or after December 1, 2029, the redemption price shall be by the Company. Net proceeds from this offering were F-35 CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS equal to 100% of the aggregate principal amount of the 2030 Notes to be redeemed, plus accrued and unpaid interest to, but excluding the redemption date. Among other terms, under certain circumstances, holders of the 2030 Notes may require the Company to repurchase their 2030 Notes upon the occurrence of a change of control prior to maturity for cash at a repurchase price equal to 101% of the principal amount of the 2030 Notes to be repurchased plus accruedr excluding, the repurchase date. and unpaid interest to, but During the year ended December 31, 2020, the Company used the net proceeds from the 2030 Notes and cash to repay $500.0 million under the 364-day Term Loan and $250.0 million under the 3-year Term Loan. As of December 31, 2020, $250.0 million in principal amount was outstanding under the 3-year Term Loan. On November 15, 2017, the Company issued $750.0 million of unsecured senior notes due December 1, 2027. The 2027 Notes accrue interest at a rate of 4.500% per annum. Interest on the 2027 Notes is due semi-annually on June 1 and December 1 of each year, beginning on June 1, 2018. The net proceeds from this offering were approximately $741.0 million, afteff r deducting the underwriting discount and estimated offering expenses payable by the Company. Net proceeds from this offering were used to repurchase shares of the Company's common stock through an ASR transaction which the Company entered into with Citibank, N.A. (the "ASR Counterparty") on November 13, 2017. The 2027 Notes will mature on December 1, 2027, unless earlier redeemed in accordance with their terms prior to such date. The Company may redeem the 2027 Notes at its option at any time in whole or from time to time in part prior to September 1, 2027 at a redemption price equal to the greater of (i) 100% of the aggregate principal amount of the 2027 Notes to be redeemed and (ii) the sum of the present values of the remaining scheduled payments under such 2027 Notes, plus in each case, accrued and unpaid interest to, but excluding, the redemption date. Among other terms, under certain circumstances, holders of the 2027 Notes may require the Company to repurchase their 2027 Notes upon the occurrence of a change of control prior to maturity for cash at a repurchase price equal to 101% of the principal amount of the 2027 Notes to be repurchased plus accrued and unpaid interest to, but excluding, the repurchase date. Credit Facilitytt On November 26, 2019, the Company entered into an amended and restated credit agreement (the "Credit Agreement") with a group of financial institutions, which amends and restates the Company’s Credit Agreement, dated January 7, 2015. The Credit Agreement provides for a five year unsecured revolving credit facility in the aggregate amount of $250.0 million, subject to continued covenant compliance. The Company may elect to increase the revolving credit facility by up to $250.0 million if existing or new lenders provide additional revolving commitments in accordance with the terms of the Credit Agreement. A portion of the revolving line of credit (i) in the aggregate amount of $25.0 million may be available for issuances of letters of credit and (ii) in the aggregate amount of $10.0 million may be available for swing line loans, as part of, not in addition to, the aggregate revolving commitments. The credit facility bears interest at a rate equal to (a) either (i) a LIBOR or, upon a phase-out of LIBOR, an alternative benchmark rate as provided in the Credit Agreement, or (ii) a customary base rate formula, plus (b) the applicable margin with respect thereto, which initially will be determined based on the Company’s consolidated leverage ratio but may, if so elected by the Company, be based on the Company’s long-term debt rating as set forth in the Credit Agreement. In addition, the Company is required to pay a quarterly facility fee ranging from 0.11% to 0.20% of the aggregate revolving commitments under the credit facility and based on the ratio of the Company’s total debt to the Company’s consolidated EBITDA or long-term credit rating. During the year ended December 31, 2019, the Company borrowed and repaidid $$200.0 facililiityy. dunder hthe cr diedit fa icilili yty. As of Dece bmber 31, 2020 dand 2019, no amounts were outst di dunder hthe cr diedit imilllliion andi gng The Credit Agreement contains certain financial covenants that require the Company to maintain a consolidated leverage ratio of not more than 3.5:1.0, subject to, upon the occurrence of a qualified acquisition, if so elected by the Company, a step-up to 4.0:1.0 for the four fiscal quarters following such qualified acquisition, and a consolidated interest coverage ratio of not less than 3.0:1.0. In addition, the Credit Agreement contains customary affirmff limit or restrict the ability of the Company to grant liens, merge or consolidate, dispose of all or substantially all of its assets, change its business and incur subsidiary indebtedness, in each case subject to customary exceptions. The Company was in compliance with these covenants as of December 31, 2020. ative and negative covenants, including covenants that Convertible Senior Notes During 2014, the Company completed a private placement of approximately $1.44 billion principal amount of 0.500% Convertible Notes due 2019. All Convertible Notes were converted by their beneficial owners prior to their maturity on April 15, 2019. In accordance with the terms of the indenturet governing the Convertible Notes, on April 15, 2019 the Company paid $1.16 billion in the outstanding aggregate principal amount of the Convertible Notes and delivered 4.9 million newly issued shares of its common stock in respect of the remainder of the Company's conversion obligation in excess of the aggregate principal amount of the Convertible Notes being converted, in full satisfaction of such converted notes. The Company received F-36 CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS shares of its common stock under the Bond Hedges (as defined below) that offset the issuance of shares of common stock upon conversion of the Convertible Notes. u The following tablea includes total interest expense recognized related to the Term Loan Credit Agreement, the 2030 Notes, the 2027 Notes, and the Convertible Notes (in thousands): F o r m 1 0 - K Contractual interest expense Amortization of debt issuance costs Amortization of debt discount Year Ended December 31, 2020 2019 2018 $ $ 61,359 $ 35,383 $ 2,170 572 64,101 $ 1,670 8,272 45,325 $ 40,151 4,663 34,228 79,042 See Note 6 to the Company's consolidated financial statements forff fair value disclosures related to the Company's 2030 Notes and 2027 Notes. Convertible Note HedgeHH and Warrant Transactions To minimize the impact of potential dilution upon conversion of the Convertible Notes, the Company entered into convertible note hedge transactions relating to approximately 16.0 million shares of common stock (the "Bond Hedges") and also entered into separate warrant transactions (the "Warrant Transactions") with each of the Option Counterparties relating to approximately 16.0 million shares of common stock to offset any payments in cash or shares of common stock at the Company’s election. As a result of the spin-off of its GoTo Business in January 2017, the number of shares of the Company's common stock covered by the Bond Hedges and Warrant Transactions was adjusted to approxim ately 20.0 million shares. a As noted above, the Bond Hedges reduced the dilution upon conversion of the Convertible Notes, as the market price per share of common stock, as measured under the terms of the Bond Hedges, was greater than the strike price of the Bond Hedges, which initially corresponded to the conversion price of the Convertible Notes and was subject to anti-dilution adjustmd substantially similar to those applicable to the conversion rate of the Convertible Notes. The Warrant Transactions would have separately had a dilutive effect to the extent that the market value per share of common stock, as measured under the terms of the Warrant Transactions, exceeded the appli “Warrants”). strike price of the warrants issued pursuant to the Warrant Transactions (the cablea ents a The Warrants expired in ratable portions on a series of expiration dates that commenced on July 15, 2019 and concluded on November 18, 2019. During the year ended December 31, 2019, 14.9 million Warrants were exercised, and the Company delivered 1.0 million shares of its common stock as the volume weighted average stock price was above the Warrant strike price. Additionally, as of December 31, 2019, 5.4 million Warrants expired unexercised on various dates and no Warrants remain outstanding. The Warrants were not marked to market as the value of the Warrants were initially recorded in stockholders' equity and remained classified within stockholders' equity through their expiration. 14. DERIVATIVE FINANCIAL INSTRUMENTS Derivatives Designated as HedHH ging d Instruments As of December 31, 2020, the Company’s derivative assets and liabilities primarily resulted from cash flow hedges related to its forec asted operating expenses transacted in local currencies. A substantial portion of the Company’s overseas expenses ff are and will continue to be transacted in local currencies. To protect against fluctuat of future cash flows caused by changes in currency exchange rates, the Company has establia shed a program that uses foreign exchange forward contracts to hedge its exposure to these potential changes. The terms of these instruments, and the hedged transactions to which they relate, generally do not exceed 12 months. ions in operating expenses and the volatility t Generally, when the dollar is weak, foreign currency denominated expenses will be higher, and these higher expenses will be partially offset by the gains realized from the Company’s hedging contracts. Conversely, if the dollar is strong, foreign currency denominated expenses will be lower. These lower expenses will in turn be partially offff sff et by the losses incurred fromff the Company’s hedging contracts. Derivative instruments are recognized as either assets or liabia lities and are measured at fair r value of a derivative depends on the intended use of the derivative and the value. The accounting for changes in the faiff resulting designation. Gains and losses on derivatives that are designated as cash floff w hedges are initially reported as a component of Accumulated other comprehensive loss and are subsequently recognized in income when the hedged exposure is recognized in income. Gains and losses fromff recognized in Other income (expense), net. changes in fair values of derivatives that are not designated as hedges are F-37 CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The total cumulative unrealized gain on cash flowff derivative instruments was $3.6 million at December 31, 2020, and is included in Accumulated other comprehensive loss in the accompanying consolidated balance sheets. See Note 16 forff more information related to comprehensive income. The net unrealized gain as of December 31, 2020 is expected to be recognized in income over the next 12 months at the same time the hedged items are recognized in income. Derivatives not Designated as Hedging Instruments A substantial portion of the Company’s overseas assets and liabilities are and will continue to be denominated in local currencies. To protect against fluctuations in earnings caused by changes in currency exchange rates when remeasuring the Company’s balance sheet, it utilizes foreign exchange forward contracts to hedge its exposure to this potential volatility. ff These contracts are not designated for hedge accounting treatment under the authoritative guidance. Accordingly, changes in the faiff r value of these contracts are recorded in Other income (expense), net. VV Fair Value s of Do erivative Instr II uments Asset Derivatives Liability Derivatives (In thousands) December 31, 2020 December 31, 2019 December 31, 2020 December 31, 2019 Derivatives Designated as Hedging Instruments g g Foreign currency forward contracts Balance Sheet Location Prepaid expenses and other current assets Fair Value $3,945 Balance Sheet Location Prepaid expenses and other current assets Fair Value $1,335 Balance Sheet Location Accrued expenses and other current liabilities Fair Value $75 Balance Sheet Location Accrued expenses and other current liabilities Fair Value $371 Asset Derivatives Liability Derivatives (In thousands) December 31, 2020 December 31, 2019 December 31, 2020 December 31, 2019 Derivatives Not Designated as g g Hedging Instruments Foreign currency forward contracts Balance Sheet Location Prepaid expenses and other current assets Fair Value $67 Balance Sheet Location Prepaid expenses and other current assets Fair Value $554 Balance Sheet Location Accrued expenses and other current liabilities Fair Value $1,372 Balance Sheet Location Accrued expenses and other current liabilities Fair Value $1,019 The Effeff ct of Derivative Instruments on Financial Performance Derivatives in Cash Flow p Hedging Relationships g g Foreign currency forwa ff rd contracts For the Year ended December 31, (In thousands) Location of Loss Reclassified from Accumulated Other Comprehensive Loss into Income Amount of Loss Reclassified from Accumulated Other Comprehensive Loss 2020 2019 Amount of Gain Recognized in Other Comprehensive Income 2020 2019 $ 2,694 $ 1,853 Operating expenses $ (331) $ (1,616) There was no material ineffectiveness in the Company’s foreign currency hedging program in the periods presented. Derivatives Not Designated as Hedging g g Instruments g Location of Loss Recognized in Income on Derivative Amount of Loss Recognized in Income on Derivative 2020 2019 For the Year ended December 31, (In thousands) Foreign currency forwa ff rd contracts Other income (expense), net $ (18,069) $ (1,135) F-38 F o r m 1 0 - K CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Outstandi tt ng Foreign Currency Forward Contracts As of December 31, 2020, the Company had the following net notional foreff ign currency forwa ff rd contracts outstanding (in thousands): g Foreign Currency y Australian Dollar Brazilian Real British Pounds Sterling Canadian Dollar Chinese Yuan Renminbi Czech Koruna Danish Krone Euro Hong Kong Dollar e Indian RupeRR se Yen a Japane Korean Won Dollar Singapore a Swiss Franc 15. EARNINGS PER SHARE Currency Denomination AUD 20,000 BRL 3,500 GBP 13,000 CAD 750 CNY 41,692 CZK 14,600 DKK 1,150 EUR 1,664 HKD 12,600 INR 487,000 JPY 627,000 KRW 1,570,000 SGD 13,400 CHF 166,132 Basic earnings per share is calculated by dividing income available to stockholders by the weighted-average number of common shares outstanding during each period. Diluted earnings per share is computed using the weighted-average number of common and dilutive common share equivalents outstanding during the period. Dilutive common share equivalents consist of shares issuable upon the exercise or settlement of stock awards and shares issuable under the employee stock purchase plan (calculated using the treasury stock method) during the period they were outstanding and potential dilutive common shares from the conversion spread on the Convertible Notes and the Warrants during the period they were outstanding. u d The following tablea sets forth the computation of basic and diluted net income per share (in thousands, except per share information): Numerator: Net income Denominator: Year Ended December 31, 2020 2019 2018 $ 504,446 $ 681,813 $ 575,667 Denominator for basic earnings per share - weighted-average shares outstanding Effect of dilutive employee stock awards Effect of dilutive Convertible Notes Effect of dilutive warrants Denominator for diluted earnings per share - weighted-average shares outstanding 123,575 2,577 — — 130,853 2,196 1,422 1,024 136,030 2,653 5,769 1,482 126,152 135,495 145,934 Basic earnings per share Diluted earnings per share: $ $ 4.08 4.00 $ $ 5.21 5.03 $ $ 4.23 3.94 For the year ended December 31, 2020, there were no weighted-average number of shares outstanding used in the computation of diluted earnings per share for the Warrants, as they expired on November 18, 2019. For the years ended December 31, 2019 and 2018, the weighted-average number of shares outstanding used in the computation of diluted earnings per share includes the dilutive effect of the Warrants, as the average stock price durid ng the year was above the weighted-average F-39 CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS warrant strike price of $94.42 and $94.94 per share, respectively. Anti-dilutive stock-based awards excluded from the calculations of diluted earnings per share were immaterial durid ng the periods presented. The Company uses the treasury stock method for calculating any potential dilutive effect of the conversion spread on its o the aggregate principal Convertible Notes on diluted earnings per share because upon conversion the Company paid cash up tu amount of the Convertible Notes converted and delivered shares of common stock in respect of the remainder of the Company’s conversion obligation in excess of the aggregate principal amount of the Convertible Notes converted. The conversion spread had a dilutive impact on diluted earnings per share when the average market price of the Company’s common stock for a given period exceeded the conversion price. For the year ended December 31, 2020, there was no dilution as the Convertible Notes matured on April 15, 2019. For the years ended December 31, 2019 and 2018, the average market price of the Company's common stock exceeded the conversion price, therefore, the dilutive effecff denominator of diluted earnings per share. See Note 13 to for detailed information on the Convertible Notes offering. t of the Convertible Notes was included in the 16. COMPREHENSIVE INCOME The changes in Accumulated other comprehensive loss by component, net of tax, are as follow ff s: Foreign currency Unrealized loss on available- for-sale securities Other comprehensi ve loss on pension liability Unrealized gain on derivative instruments (In thousands) Total Balance at December 31, 2019 $ (2,946) $ (139) $ 868 $ (2,910) $ (5,127) Other comprehensive income (loss) before reclassifications Amounts reclassified fromff comprehensive loss accumulated other — — Net current period other comprehensive income (loss) Balance at December 31, 2020 — (2,946) $ $ 128 2,363 (1,337) 1,154 (7) 121 (18) $ 331 2,694 3,562 — (1,337) (4,247) $ $ 324 1,478 (3,649) Income tax expense or benefit allocated to each component of other comprehensive income (loss) is not material. Reclassifications out of Accumulated other comprehensive loss are as follows: For the Year Ended December 31, 2020 (In thousands) Details about accumulated other comprehensive loss components Unrealized net gains on availablea securities -for-sale Unrealized net losses on cash flowff hedges Amount reclassified from Accumulated other comprehensive loss, net of tax Affected line item in the Consolidated Statements of Income $ $ (7) 331 324 Other income (expense), net Operating expenses * * Operating expenses amounts allocated to Research and development, Sales, marketing and services, and General and administrative are not individually significant. 17. RESTRUCTURING The Company has implem mented multiple restructuring plans to reduce its cost structure, align resources with its product ilities. ions and the consolidation of certain leased facff iency, which has resulted in workforce reductd strategy and improve efficff All of the activities related to these restructuring plans are substa u ntially complete. F-40 CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31, 2020, 2019 and 2018, restructuring charges were comprised of the following (in thousands): Employee severance and related costs Consolidation of leased facilities Right-of-use asset impairment Total Restructuring charges Year Ended December 31, 2020 2019 2018 $ $ 3,100 — 8,881 11,981 $ $ 19,581 2,666 — 22,247 $ $ 2,507 14,218 — 16,725 F o r m 1 0 - K The Company reviews for impairment of its long-lived assets, including ROU assets, whenever events or changes in circumstances indicate that the carrying amount of such assets may be impaired. Measurement of an impairment loss is based on the fair value of the asset compared to its carrying value. The faiff present value of the estimated future connection with the COVID-19 pandemic, the Company determined that a vacant facff restructuring plan became fulff recorded impairment charges of $8.9 million. This non-recurring fair value measurement was categorized as Level 3, as significant unobservablea cash flows attributable to the assets. During the year ended December 31, 2020, in to a reassessment of the timing and fees of the assumed sublease rentals and r value of the ROU assets is determined by utilizing the ility partially impaired under a previous inputs were utilized. ly impaired dued ff Restructuring accruals The activity in the Company’s restructuring t rr accrual s forff the year ended December 31, 2020 is summarized as follows (in thousands): Balance at January 1, 2020 Employee severance and related costs Payments Balance at December 31, 2020 18. LEASES Leases Total 6,957 3,100 (8,766) 1,291 $ $ The Company leases certain office space and equipment under various operating leases. In addition to rent, the leases taxes, insurance, maintenance and other operating expenses. Certain of these leases contain require the Company to pay forff stated escalation clauses while others contain renewal options. The Company recognizes rent expense on a straight-line basis over the term of the lease, excluding renewal periods, unless renewal of the lease is reasonably assured. The components of lease expense were as follows (in thousands): Operating lease cost lease cost Variablea Sublease income Net lease cost Classification Operating expenses Operating expenses Other income (expense), net December 31, 2020 2019 $ $ 49,704 $ 50,163 11,988 (1,064) 9,448 (878) 60,628 $ 58,733 Operating lease expense for the year ended December 31, 2018 totaled approximately $73.8 million, of which $14.2 million related to charges forff the consolidation of leased facilities related to restructuring t activities. F-41 CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Supplemental cash flowff information related to leases was as foll ff ows (in thousands): Cash paid for amounts included in the measurement of lease liabila ities: Operating cash flows from operating leases Right-of-use assets obtained in exchange for lease obligations: Operating leases Supplemental balance sheet information related to leases was as foll ff ows (in thousands): Operating Leases Operating lease right-of-use assets Accrued expenses and other current liabilities Operating lease liabila ities Total operating lease liabilities Lease Term and Discount Rate Weighted-average remaining lease term (years) Weighted-average discount rate Maturities of lease liabila ities as of December 31, 2020 were as follows (in thousands): Year ending December 31, 2021 2022 2023 2024 2025 After 2025 Total lease payments Less: imputed interest Present value of lease liabila s itie 19. SUBSEQUENT EVENTS Proposed Acquisition of Wrikekk December 31, 2020 2019 55,514 $ 54,690 28,101 $ 49,264 December 31, 2020 2019 187,129 $ 206,154 48,359 $ 195,767 244,126 $ 47,025 209,382 256,407 $ $ $ $ $ December 31, 2020 2019 5.5 6.1 4.53 % 5.04 % Operating Leases 57,981 52,024 46,186 44,746 37,911 37,435 276,283 (32,157) 244,126 $ $ $ On January 16, 2021, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and ity company and a wholly-owned subsidiary of Citrix (“Merger Sub”), among Citrix, Wrangler Topco, LLC, a Delaware limited liabia lity company (“Wrangler”), Wallaby Merger Sub, LLC, a Delaware limited liabila and Vista Equity Partners Management, LLC (“Vista”), solely in its capacity as the representative of the equityholders of Wrangler, pursuant to which Merger Sub wu ill merge with and into Wrangler (the “Merger”), with Wrangler surviving the Merger and becoming a wholly- owned subsidiary of the Company. Wrangler is the parent entity of Wrike, Inc., a leader in the SaaS collaborative work management space. u Subject to the terms and conditions of the Merger Agreement, upon the consummation of the Merger, the Company will ents as set forth in the Merger acquire all of the equity interests of Wrangler for $2.25 billion in cash, subject to certain adjustmd F-42 CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Agreement (the “Merger Consideration”). Additionally, upon consummation of the Merger, $35.0 million of the Merger Consideration will be held in a third party escrow for up to one year following the consummation of the Merger to fund (1) potential payment obligations of the former equityholders of Wrangler with respect to post-closing adjustmd ents to the Merger Consideration and (2) potential post-closing indemnification obligations of the former equityholders of Wrangler, in each case in accordance with the terms of the Merger Agreement. F o r m 1 0 - K Completion of the Merger is subject to various closing conditions, including, among other things, the expiration or termination of required waiting periods under the Hart-Scott-Rodino Antitrust Improvem Merger Agreement contains certain customary termination rights for the Company and Wrangler, including the right to terminate if the Merger is not consummated on or before June 30, 2021. The Merger Agreement and the transactions contemplated thereby, including the Merger, have been approved by the Board of Directors of the Company and the Board of Managers of Wrangler, and subsequent to the execution of the Merger Agreement, by the requisite approval of Wrangler’s equityholders. ents Act of 1976, as amended. The m Bridge Facilitytt and Take-Out Facilitytt Commitment Letter On January 16, 2021, the Company entered into a bridge facility and take-out facility commitment letter (the ff “Commitment Letter”) pursuant to which JPMorgan Chase Bank, N.A., has (1) committed to provide a senior unsecured 364- day term loan facility in an aggregate principal amount of $1.45 billion to finance the cash consideration for the Merger in the event that the permanent debt financing is not available on or prior to the Closing and (2) agreed to use commercially reasonably efforts The Company currently expects to replace the bridge facility prior to the closing of the Merger with permanent financing, which may include the issuance of debt securities and/or one or more senior term loan facilities, including the 2021 Term Loan Credit Agreement described below. The commitment is subject to customary terms and conditions precedent for such borrowing as set forth in the Commitment Letter, including, among others, the execution and delivery by the Company of definitive documentation consistent with the Commitment Letter. to assemble a syndicate of lenders to provide the necessary commitments for the senior term loan facility. The facility bears interest at a rate equal to (a) either (i) a LIBOR or, upon a phase-out of LIBOR, an alternative benchmark rate as provided in the Commitment Letter, or (ii) a customary base rate formula, plus (b) the applicablea margin with respect thereto, which initially will be determined based on the Company’s consolidated leverage ratio but may, if so elected by the Company, be based on the Company’s long-term debt rating as set forth in the Commitment Letter. 2021 Term Loan Credit Agreement On February 5, 2021 (the “Closing Date”), the Company entered into a term loan credit agreement (the “2021 Term Loan Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent, and the other lenders party thereto from time to time (collectively, the “2021 Lenders”). The 2021 Term Loan Credit Agreement provides the Company with a facility to borrow a term loan on an unsecured basis in an aggregate principal amount of up to $1.00 billion, or the 2021 Term Loan. The 2021 Term Loan is availablea borrowing, subject to satisfaction of certain conditions set forth in the 2021 Term Loan Credit Agreement. The 2021 Term Loan matures on the date that is three years after the 2021 Term Loan is drawn. The proceeds of borrowings under the 2021 Term Loan Credit Agreement will be used to finance a portion of the purchase price to be paid in connection with the acquisition of Wrike. to be made by the 2021 Lenders from the Closing Date through July 8, 2021, in a single Borrowings under the 2021 Term Loan Credit Agreement will bear interest at a rate equal to (a) either (i) a customary LIBOR formula or, upon a phase-out of LIBOR, an alternative benchmark rate as provided in the 2021 Term Loan Credit Agreement, or (ii) a customary base rate formula, plus (b) the applicablea margin with respect thereto, which initially will be determined based on the Company’s consolidated leverage ratio but may, if so elected by the Company, be based on the Company’s non-credit enhanced, senior unsecured long-term debt rating as determined by Moody’s Investors Service, Inc., Standard & Poor’s Financial Services, LLC and Fitch Ratings Inc., in each case as set forth in the 2021 Term Loan Credit Agreement. The 2021 Term Loan Credit Agreement includes a covenant limiting the Company’s consolidated leverage ratio to not r the date of the initial borrowing more than 4.0:1.0, subject to a mandatory step-down after the fifth fiscal quarter ending afteff of the 2021 Term Loan to 3.75:1.0, and further subject to, upon the occurrence of a qualified acquisition in any quarter on or after r the Closing Date, if so elected by the Company, a step-up to 4.25:1.0 for the four fiscal the fifth fiscal quarter ending afteff quarters following such qualified acquisition. The 2021 Term Loan Credit Agreement also includes a covenant limiting the Company’s consolidated interest coverage ratio to not less than 3.0:1.0. The 2021 Term Loan Credit Agreement includes customaryrr events of default, with corresponding grace periods in certain circumstances, including, without limitation, payment defaults, cross-defaults, the occurrence of a change of control of the Company and bankruptcy-related defaults. The 2021 r F-43 CITRIX SYSTEMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Lenders are entitled to accelerate repayment of the loans under the 2021 Term Loan Credit Agreement upon the occurrence of any of the events of default. In addition, the 2021 Term Loan Credit Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict the ability of the Company to grant liens, merge or consolidate, dispose of all or substantially all of its assets, change its business and incur subsidiary indebtedness, in each case subjeu exceptions. The 2021 Term Loan Credit Agreement also contains representations and warranties customary for an unsecured financing of this type. ct to customary Certain 2021 Lenders and/or their affilff iates have provided and may continue to provide commercial banking, investment management and other services to the Company, its affiliates and employe commissions. m es, for which they receive customary fees and Amendmentstt to Credit Agreement and Term Loan Credit Agreement On February 5, 2021 (the “Amendment Date”), the Company entered into (i) a first amendment to term loan credit agreement (the “Term Loan Amendment”), which amends the Company’s Term Loan Credit Agreement and (ii) a first amendment to credit agreement (the “Revolver Amendment” and together with the Term Loan Amendment, the “Credit Agreement Amendments”), which amends the Company’s Credit Agreement. Each of the Credit Agreement Amendments amends, among other things, the covenant limiting the Company’s consolidated leverage ratio. After giving effecff Agreement Amendments, the covenant limiting the Company’s consolidated leverage ratio in each of the Term Loan Credit Agreement and the Credit Agreement will be consistent with the covenant limiting the Company’s consolidated leverage ratio contained in the 2021 Term Loan Credit Agreement, and will be limited to not more than 4.0:1.0, subject to a mandatory step- down after the fifth fiscal quarter ending after the initial borrowing of the 2021 Term Loan under the 2021 Term Loan Credit Agreement (or such earlier date as the Company may elect by written notice to Bank of America, N.A., in its capacity as administrative agent under each of the Term Loan Credit Agreement and Credit Agreement) (the “Leverage Ratio Step-Down”) to 3.75:1.0, and further subject to, upon the occurrence of a qualified acquisition in any quarter on or after the fifth fiscal quarter ending after the Leverage Ratio Step-Down, if so elected by the Company, a step-up to 4.25:1.0 for the four fiscal quarters following such qualified acquisition. t to the Credit F-44 F o r m 1 0 - K CITRIX SYSTEMS, INC. SUPPLEMENTAL FINANCIAL INFORMATION QUARTERLY FINANCIAL INFORMATION (UNAUDITE )D) 2020 Net revenues Gross margin Income from operations Net income Earnings per share - basic Earnings per share - diluted 2019 Net revenues Gross margin Income from operations Net income Earnings per share - basic Earnings per share - diluted First Quarter Second Quarter Third Quarter Fourth Quarter Total Year (In thousands, except per share amounts) $ 860,945 $ 798,929 $ 767,170 $ 809,656 $ 3,236,700 745,368 201,547 181,222 1.45 1.42 676,689 143,671 112,906 0.91 0.90 639,884 128,305 98,227 0.80 0.78 676,213 135,285 112,091 0.91 0.89 2,738,154 608,808 504,446 4.08 4.00 First Quarter Second Quarter Third Quarter Fourth Quarter Total Year (In thousands, except per share amounts) $ 719,143 $ 748,697 $ 732,901 $ 809,823 $ 3,010,564 611,670 122,844 110,348 0.84 0.78 638,218 117,082 93,495 0.71 0.70 605,983 110,831 270,857 2.08 2.04 690,646 185,361 207,113 1.59 1.56 2,546,517 536,118 681,813 5.21 5.03 The sum of the quarterly net income per share amounts may differ fromff weighting of common and common equivalent shares outstanding during each of the respective periods. the annual earnings per share amount due to the CITRIX SYSTEMS, INC. SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS 2020 Deducted from asset accounts: Allowance for credit losses Allowance for returns Valuation allowance for deferred tax assets t 2019 Deducted from asset accounts: Allowance for doubtful accounts Allowance for returns t Valuation allowance for deferred tax assets 2018 Deducted from asset accounts: Allowance for doubtful accounts t Allowance for returns Valuation allowance for deferred tax assets Beginning of Period Charged to Expense Charged to Other Accounts (In thousands) Deductions Balance at End of Period $ 6,161 3,396 128,388 $ 12,136 — — $ $ $ $ 3,634 896 85,400 3,420 1,225 76,789 3,626 — — 3,586 — — $ $ $ 2,184 11,249 23,403 — 5,307 42,988 457 1,561 8,611 $ $ $ (6) (1) (5) (1) (5) (3) (1) (5) 1,532 4,196 — (2) (4) $ 18,949 10,449 151,791 1,099 2,807 — 3,829 1,890 — $ (2) (4) 6,161 3,396 128,388 $ (2) (4) 3,634 896 85,400 (1) (2) (3) (4) (5) (6) Charged against revenues. Uncollectible accounts written off, net of recoveries. Adjustments fromff Credits issued for returns. ff Related to deferre d ment for adoption of credit loss standard. Transition adjust acquisitions. t d tax assets on foreign tax credits, net operating loss carryforwards, and depreciation. Note regarding forward-looking statements This Annual Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. From time to time, information provided by us or statements made by our employees contain “forward-looking” information that involves risks and uncertainties. In particular, investors are cautioned that statements contained in this Annual Report for the year ended December 31, 2020, and in the documents incorporated by reference into this Annual Report, which are not strictly historical statements, including, without limitation, statements concerning our strategy and operational initiatives, including long-term sustainable growth, our business transformation, including our subscription model transition, recurring revenue and cash ﬂow growth, the shift to software from hardware solutions, expectations regarding cloud migration and seat penetration, expectations with respect to the acquisition of Wrike, business continuity and impact of COVID-19 and associated business disruption, sustainability and ESG-related goals and activities, and other statements regarding management’s plans, business initiatives, objectives, expectations regarding future performance or needs of our business constitute forward-looking statements. In some cases, you can identify forward- looking statements by terms such as “may,” “will,” “should,” “could,” “goal,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “potential,” and similar expressions intended to identify forward-looking statements. The forward-looking statements in this Annual Report and in the documents incorporated by reference into this Annual Report or presented elsewhere by our management from time to time are not guarantees of future performance. Such forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated by the forward- looking statements, including, without limitation: risks related to the expansion of cloud-delivered services, our ability to advance our transition from on-premises to the cloud, and effectiveness of our transition and trade-up effort; the ability to forecast future ﬁnancial performance during our business model transition; the concentration of customers in Citrix’s App Delivery and Security business; the ability to continue to grow the Workspace business, further develop Citrix Workspace, and meet continued demand for Citrix Workspace; the introduction of new products by competitors or the entry of new competitors into the markets for our products and services; maintaining the security of our products, services, and networks, including securing data and cyber-related risks that are enhanced as a result of COVID-19; the potential impact of COVID-19 on our business, the broader global economy, and our ability to forecast future ﬁnancial performance as a result of COVID-19; Citrix’s transition from a perpetual licensing model to a subscription-based business model, and our ability to further advance its transformation from perpetual to subscription; conditions affecting the IT market, including uncertainty in IT spending, including as a result of COVID-19 and changes in the markets for our products, including the Workspace market; regulation of privacy and data security; the ability to realize the potential beneﬁts of the acquisition of Wrike; customer acceptance of Citrix and Wrike offerings; potential disruptions to operations, distraction of management, and other risks related to Citrix’s integration of Wrike’s business, team, and technology; Note regarding forward-looking statements the ability of our sales professionals and distribution partners to sell Wrike’s product and service offerings; the ability of Wrike to retain key customers post-transaction, and to achieve the anticipated rate of growth in annualized recurring revenue; risks related to our additional debt in connection with the Wrike acquisition, which will increase the risks with respect to our current debt; changes in our pricing and licensing models, including its short-term license program, promotional programs, and product mix, all of which may impact revenue recognition; unpredictability of sales cycles and seasonal ﬂuctuations in our business; reliance on indirect distribution channels and major distributors; failure to successfully partner with key distributors, resellers, system integrators, service providers, and strategic and technology partners; transitions in key personnel and succession risk; reliance on third-party hardware providers; the impact of the global economic and political environment on our business, volatility in global stock markets, and foreign exchange rate volatility; our ability to expand our customer base and attract more users within our customer base; our ability to protect innovations and intellectual property, including in higher-risk markets; our ability to innovate and develop new products and services; changes in revenue mix toward products and services with lower gross margins; our ability to make suitable acquisitions on favorable terms in the future; our acquisitions and divestitures, including failure to further develop and successfully market the technology and products of acquired companies, failure to achieve or maintain anticipated revenues and operating performance contributions from acquisitions, which could dilute earnings, and risks related to ﬁnancing necessary to complete acquisitions; bankruptcies, insolvencies, or other economic conditions that limit our customers’ ability to pay for our services or limit the ability for us to collect payments, including unbilled revenue, which may be enhanced as a result of the COVID-19 pandemic; ability to effectively manage our capital structure and the impact of related changes on our operating results and ﬁnancial condition; the effect of new accounting pronouncements on revenue and expense recognition; failure to comply with federal, state, and international regulations; risks related to our international presence; litigation and disputes, including challenges to intellectual property rights or allegations of infringement of the intellectual property rights of others; the ability to maintain and protect our collection of brands; risks related to use of open source software; risks related to access to third-party licenses; charges in the event of a write-off or impairment of acquired assets, underperforming businesses, investments, or licenses; risks related to servicing debt; tax rate ﬂuctuations and uncertainty; political uncertainty and social turmoil, natural disasters, and pandemics, including COVID-19; and other risks detailed in Citrix’s ﬁlings with the Securities and Exchange Commission. Such factors, among others, could have a material adverse effect upon our business, results of operations, and ﬁnancial condition. We caution readers not to place undue reliance on any forward-looking statements, which only speak as of the date made. We undertake no obligation to update any forward-looking statement to reﬂect events or circumstances after the date on which such statement is made. ©2021 Citrix Systems, Inc. All rights reserved. Citrix® is a registered trademark of Citrix Systems, Inc., and/ or one or more of its subsidiaries, and may be registered in the U.S. Patent and Trademark Ofﬁce and in other countries. All other trademarks and registered trademarks are property of their respective owners. Shareholder return Total return to shareholders (includes reinvestment of dividends1) Annual return percentage—year ended December 31 Company name/index Dec 16 Dec 17 Dec 18 Dec 19 Dec 20 Citrix Systems, Inc. S&P 500 Index Nasdaq Index Peer Group 18.06 11.96 8.87 11.53 24.25 21.83 29.64 41.33 16.81 -4.38 -2.84 14.77 9.76 31.49 36.69 47.68 18.59 18.40 44.92 45.86 Indexed returns—year ended December 31 Company name/index Citrix Systems, Inc. S&P 500 Index Nasdaq Index Peer Group Base period Dec 15 100 100 100 100 Dec 16 Dec 17 Dec 18 Dec 19 Dec 20 118.06 111.96 146.69 136.40 108.87 141.13 111.53 157.63 171.34 130.42 137.12 180.91 188.07 171.49 187.44 267.17 223.04 203.04 271.64 389.70 Comparison of cumulative ﬁve year total return2 $400 $350 $300 $250 $200 $150 $100 $50 $0 2015 2016 2017 2018 2019 2020 Citrix Systems, Inc. S&P 500 Index Nasdaq Index Peer Group Peer Group consists of companies with an SIC code of 7372. 1. For purposes of this graph, the reinvestment of Citrix’s $0.35 per share cash dividend paid during the fourth quarter of 2018 and each quarter during both 2019 and 2020 was calculated using the closing price on Nasdaq on each quarterly dividend payment date. 2. In January 2017, we completed the separation of our GoTo business and its subsequent merger with LogMeIn, Inc. For the purpose of this graph, the distribution of LogMeIn common stock to our shareholders in connection with such separation and merger is treated as a non-taxable cash dividend of $18.59 (equal to the opening price of LogMeIn common stock on February 1, 2017, multiplied by .1718 of a share of LogMeIn common stock). Such amount was deemed reinvested in Citrix common stock at the closing price on February 1, 2017, using the daily dividend reinvestment methodology. Other ﬁnancial data providers may use different methodologies to adjust for the GoTo separation, which may produce different results. Corporate information Citrix (NASDAQ:CTXS) is an enterprise software company focused on helping organizations deliver a consistent and secure work experience no matter where work needs to get done—in the ofﬁce, at home, or in the ﬁeld. We do this by delivering a digital workspace solution that gives each employee the resources and space they need to do their best work. Our App Delivery and Security solutions, which can be consumed via hardware or software, complement our Workspace solutions by delivering the applications and data employees need across any network with security, reliability, and speed. Executives Board of Directors Investor relations David J. Henshall President and Chief Executive Ofﬁcer; Director Arlen Shenkman Executive Vice President and Chief Financial Ofﬁcer Mark Ferrer Executive Vice President and Chief Revenue Ofﬁcer Tony Gomes Executive Vice President and Chief Legal Ofﬁcer PJ Hough Executive Vice President and Chief Product Ofﬁcer Joseph Kim Executive Vice President, Engineering, and Chief Technology Ofﬁcer Donna Kimmel Executive Vice President and Chief People Ofﬁcer Hector Lima Executive Vice President, Customer Experience Tim Minahan Executive Vice President, Business Strategy, and Chief Marketing Ofﬁcer Sridhar Mullapudi Executive Vice President, Product Management Mark Schmitz Executive Vice President and Chief Operating Ofﬁcer Bob Calderoni Chairman of the Board, Citrix Nanci E. Caldwell Lead Independent Director, Citrix Robert D. Daleo Former Vice Chairman, Thomson Reuters Murray J. Demo Former Executive Vice President and Chief Financial Ofﬁcer, Rubrik Dr. Ajei S. Gopal President and Chief Executive Ofﬁcer, ANSYS David J. Henshall President and Chief Executive Ofﬁcer, Citrix Thomas E. Hogan Managing Director, Vista Equity Partners Moira A. Kilcoyne Former Chief Operating Ofﬁcer, Global Operations, Technology, and Data, Morgan Stanley Robert E. Knowling, Jr. Chairman, Eagles Landing Partners Citrix’s stock trades on the NASDAQ Global Select Market under the ticker symbol CTXS. The Citrix Annual Report, Proxy, and Form 10-K are available electronically at investors.citrix.com/ﬁnancial- information/annual-reports. For further information about Citrix, additional copies of this report, Form 10-K, or other ﬁnancial information without charge, contact: Citrix Systems, Inc. Attn: Investor Relations 851 W. Cypress Creek Road Fort Lauderdale, FL 33309 United States Tel: +1 954 267 3000 Toll Free: +1 800 424 8749 investors.citrix.com Transfer agent and registrar Computershare Trust Company, N.A. P.O. Box 505000 Louisville, KY 40233-5000 Tel: +1 877 373 6374 computershare.com/investor Peter J. Sacripanti Partner, McDermott Will & Emery Independent registered public accountants JD Sherman Chief Executive Ofﬁcer, Dashlane, Inc. Ernst & Young LLP 5100 Town Center Circle, Suite 500 Boca Raton, FL 33486 Annual Meeting of Shareholders The Annual Meeting of Shareholders of Citrix Systems, Inc., will be held virtually on June 4, 2021, at 5:00 p.m. Eastern time. Shareholder materials Annual meeting voting Citrix Systems, Inc. 851 West Cypress Creek Road Fort Lauderdale, FL 33309 citrix.com

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