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, statements contained in this Quarterly Report on
Form 10-Q that are not historical facts, including, but not limited to,
statements concerning our pending acquisition by affiliates of Vista Equity
Partners and Evergreen Coast Capital Corp., our strategy and operational and
growth initiatives, our expansion of cloud-based solutions (as opposed to
traditional on-premise delivery of our products) and our efforts to transition
our customers from on-premise to the cloud, including the pace of the
transition, our transition to a subscription-based business model, changes in
our product and service offerings and features, financial information and
results of operations for future periods, revenue trends, the impacts of the
novel coronavirus (COVID-19) pandemic and related market and economic conditions
on our business, results of operations and financial condition, expectations
regarding remote work, customer demand, seasonal factors or ordering patterns,
stock-based compensation, international operations, investment transactions and
valuations of investments and derivative instruments, restructuring charges,
reinvestment or repatriation of foreign earnings, fluctuations in foreign
exchange rates, tax estimates and other tax matters, liquidity, our debt,
changes in accounting rules or guidance, acquisitions (including our acquisition
of Wrike, Inc.), litigation matters, and the security of our network, 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 statements
are neither promises nor guarantees. Readers are directed to the risks and
uncertainties identified in Part I, Item 1A, "Risk Factors", in our Annual
Report on Form 10-K for the year ended December 31, 2021, for additional detail
regarding factors that may cause actual results to be different than those
expressed in our forward-looking statements. Such factors, among others, could
cause actual results to differ materially from those contained in
forward-looking statements made in this Quarterly Report on Form 10-Q or
presented elsewhere by our management from time to time. 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.

Pending Merger



On January 31, 2022, we entered into an Agreement and Plan of Merger (the
"Merger Agreement"), with Picard Parent, Inc. ("Parent"), Picard Merger Sub,
Inc., a wholly owned subsidiary of Parent ("Merger Sub") and, for certain
limited purposes detailed in the Merger Agreement, TIBCO Software, Inc.
("TIBCO"), pursuant to which Merger Sub will merge with and into the Company
(the "Merger"), with the Company surviving the Merger as a wholly-owned
subsidiary of Parent. Parent and Merger Sub were formed by affiliates of Vista
Equity Partners ("Vista"). Vista is partnering with Evergreen Coast Capital
Corp. ("Evergreen"), an affiliate of Elliott Investment Management L.P.
("Elliott"), to acquire all of the Company's outstanding shares of common stock
(the "Company Common Stock") for $104.00 per share in cash. At a Special Meeting
of Stockholders held on April 21, 2022, the Company's stockholders approved the
Merger Agreement. The Merger is expected to close mid-year 2022, subject to
customary closing conditions, including receipt of regulatory approvals.

Overview



Management's discussion and analysis of financial condition and results of
operations is intended to help the reader understand our financial condition and
results of operations. This section is provided as a supplement to, and should
be read in conjunction with, our financial statements and the accompanying notes
to our condensed consolidated financial statements included in this Quarterly
Report on Form 10-Q for the three months ended March 31, 2022. The results of
operations for the periods presented in this report are not necessarily
indicative of the results expected for the full year or for any future period,
due in part to the seasonality of our business. Historically, our revenue for
the fourth quarter of any year is typically higher than our revenue for the
first quarter of the subsequent year.

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 provides unified, reliable and secure access to
all work resources (apps, content, etc.) and simplifies work execution and
collaboration across every work channel, device, and location. Our Workspace
solutions are complemented by our general work solutions, such as content
collaboration and collaborative work management solutions, and our App Delivery
and Security solutions, which deliver the applications and data employees need
across any network with security, reliability and speed.

We market and license our solutions through multiple channels worldwide, including selling through resellers and direct over the Web. Our partner community comprises thousands of value-added resellers, or VARs, known as Citrix Solution


                                       32
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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.

Executive Summary



As described above, on January 31, 2022, we entered into a definitive Merger
Agreement under which affiliates of Vista, a leading global investment firm
focused exclusively on enterprise software, data and technology-enabled
businesses, and Evergreen, an affiliate of Elliott that focuses on making
investments exclusively in technology and technology-enabled services
businesses, have agreed to acquire Citrix in an all-cash transaction valued at
approximately $16.5 billion, including the assumption of Citrix debt.

Impact of COVID-19 Pandemic

The COVID-19 pandemic did not have a significant impact on our results of operations for the three months ended March 31, 2022. However, we continue to monitor our supply chain for disruptions and evaluate steps to avoid future impacts that may arise from delays.



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, the effectiveness
and availability of existing or new vaccines, future and ongoing actions that
may be taken by governmental authorities, including the implementation of
vaccine mandates, the impact on the businesses of our customers and partners,
and the length of its impact on the global economy, which remain uncertain and
are difficult to predict at this time. We are conducting business with
substantial modifications to employee travel, employee work locations, and
virtualization or cancellation of certain sales and marketing events, among
other modifications. We will continue to actively monitor the situation and may
take further actions that alter our business operations as required by federal,
state or local authorities, or that we determine are in the best interests of
our employees, customers, partners, suppliers and stockholders. The potential
effects of any such alterations or modifications could have an impact on our
business, including our customers and prospects, or on our financial results.

Cash from operations, accounts receivable and revenues could also be affected by
various risks and uncertainties, including, but not limited to, the effects of
the COVID-19 pandemic and other risks detailed in Part 1, Item 1A, "Risk
Factors" of our Annual Report on Form 10-K for the fiscal year ended December
31, 2021. While the pandemic has not materially impacted our liquidity and
capital resources to date, it has led to increased disruption and volatility in
capital markets and credit markets which could adversely affect our liquidity
and capital resources in the future.

Summary of Results

For the three months ended March 31, 2022 compared to the three months ended March 31, 2021, a summary of our results included:

•Total net revenue increased 6.4% to $825.3 million;

•Subscription revenue increased 35.5% to $463.6 million;

•SaaS revenue increased 58.7% to $271.5 million;

•Product and license revenue decreased 24.7% to $33.3 million;

•Support and services revenue decreased 15.7% to $328.4 million;

•Gross margin as a percentage of revenue increased from 81.5% to 82.8%;

•Operating income increased 4.2% to $96.2 million;

•Diluted net income per share decreased from $0.71 to $0.47;

•Deferred and unbilled revenue increased $222.0 million to $3.26 billion;

Also, operating cash flows increased $62.1 million to $274.9 million when comparing the three months ended March 31, 2022 to the three months ended March 31, 2021.



Our Subscription revenue increased primarily due to continued customer cloud
adoption of our solutions delivered via the cloud and an increase in on-premise
license demand, mostly from our App Delivery and Security offerings. Our Product
and license revenue decreased primarily due to lower sales of our perpetual App
Delivery and Security solutions as well as our perpetual Workspace solutions, as
customers continue to shift toward our subscription offerings. The decrease in
Support and services revenue was primarily due to decreased sales of maintenance
services, primarily across our Workspace perpetual offerings, as more of the
revenue is reported in the Subscription revenue line commensurate with our
subscription model transition. The increase in gross margin as a percentage of
revenue was not significant. The increase in operating income was
                                       33
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primarily due to an increase in gross margin. The decrease in diluted net income
per share was primarily due to an increase in income taxes due to the first
quarter of 2021 including a tax benefit, as well as a decrease in recognized
gains on our strategic investments.

2021 Business Combination



On February 26, 2021 (the "Closing Date"), we completed the acquisition of
Wrangler Topco, LLC ("Wrangler"), the parent entity of Wrike, a leader in the
SaaS collaborative work management space, for approximately $2.07 billion (the
"Purchase Consideration"). The Purchase Consideration consists of a base
purchase price of $2.25 billion and was subject to certain adjustments as
provided for under the related Agreement and Plan of Merger dated January 16,
2021 (the "Wrike Agreement"). The addition of Wrike's cloud-delivered
capabilities was intended to expand our collaborative work management
capabilities. Under the Wrike Agreement, we acquired all of the issued and
outstanding equity securities of Wrangler. Wrike revenue is included in our
Workspace product grouping.

We incurred $20.1 million of expenses related to the Wrike acquisition, of which
$0.3 million and $15.5 million were expensed during the three months ended
March 31, 2022 and 2021, respectively, and are included in General and
administrative expense in the accompanying condensed consolidated statements of
income.

See Note 6 to our condensed consolidated financial statements for additional details regarding our acquisition of Wrike.

Critical Accounting Policies and Estimates



Our discussion and analysis of financial condition and results of operations are
based upon our condensed 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 affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent liabilities. We base
these estimates on our historical 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 results significantly differ from our
estimates, our financial condition and results of operations could be materially
impacted.

For more information regarding our critical accounting policies and estimates,
please refer to "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Critical Accounting Policies and Estimates" contained in
our Annual Report on Form 10-K for the year ended December 31, 2021, or the
Annual Report, and Note 2 to our condensed consolidated financial statements
included in this Quarterly Report on Form 10-Q. There have been no material
changes to the critical accounting policies disclosed in the Annual Report.
                                       34
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Results of Operations

The following table sets forth our unaudited condensed consolidated statements of income data and presentation of that data as a percentage of change from period-to-period (in thousands other than percentages):



                                                                                                       Three
                                                                Three Months Ended                     Months
                                                                                                       Ended
                                                                                                       March
                                                                     March 31,                          31,
                                                              2022               2021                                  2022 vs. 2021
Revenues:
Subscription                                              $ 463,637          $ 342,129                                            35.5  %
Product and license                                          33,297             44,235                                           (24.7)
Support and services                                        328,404            389,402                                           (15.7)
Total net revenues                                          825,338            775,766                                             6.4
Cost of net revenues:
Cost of subscription, support and services                  107,026            110,745                                            (3.4)
Cost of product and license revenues                         17,527             21,715                                           (19.3)
Amortization of product related intangible assets            17,343             11,009                                            57.5

Total cost of net revenues                                  141,896            143,469                                            (1.1)
Gross profit                                                683,442            632,297                                             8.1
Operating expenses:
Research and development                                    147,905            144,158                                             2.6
Sales, marketing and services                               292,951            293,284                                            (0.1)
General and administrative                                  109,059             94,990                                            14.8
Amortization of other intangible assets                      19,221              7,532                                           155.2

Restructuring                                                18,078                  -                                                  *
Total operating expenses                                    587,214            539,964                                             8.8
Income from operations                                       96,228             92,333                                             4.2
Interest income                                                 442                321                                            37.7
Interest expense                                            (22,076)           (24,360)                                           (9.4)
Other (expense) income, net                                  (1,077)            12,896                                          (108.4)
Income before income taxes                                   73,517             81,190                                            (9.5)
Income tax expense (benefit)                                 13,285             (8,858)                                         (250.0)

Net income                                                $  60,232          $  90,048                                           (33.1) %


*Not meaningful
                                       35

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Revenues

We generate revenue from sales of our Subscription, Product and license and Support and services offerings.



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 from the CSP program are recognized based on usage and
as the CSP services are provided to their end users.

Product and license revenue represents fees related to the perpetual licensing
of our solutions, primarily our App Delivery and Security products, which are
recognized at a point in time. In October 2020, we discontinued broad
availability of perpetual licenses for Citrix Workspace.

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 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 ratably over the term of the contract; and

•Hardware maintenance fees for our perpetual App Delivery and Security products, which include technical support and hardware and software maintenance, are recognized ratably over the contract term; and

•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.


                                                                                                     Three
                                                              Three Months Ended                     Months
                                                                                                     Ended
                                                                                                     March
                                                                   March 31,                          31,
                                                            2022               2021                               2022 vs. 2021
                                                                     (in thousands)
Subscription                                            $ 463,637          $ 342,129                            $      121,508
Product and license                                        33,297             44,235                                   (10,938)
Support and services                                      328,404            389,402                                   (60,998)
Total net revenues                                      $ 825,338          $ 775,766                            $       49,572



Subscription

Subscription revenue increased during the three months ended March 31, 2022
compared to the three months ended March 31, 2021 primarily due to continued
customer adoption of our solutions delivered via the cloud of $100.4 million,
primarily from our Workspace offerings, which includes the Wrike acquisition.
There was also an increase in on-premise subscription license revenue of $21.1
million, primarily from our App Delivery and Security offerings, mainly from
pooled capacity.

Product and license

Product and license revenue decreased when comparing the three months ended
March 31, 2022 to the three months ended March 31, 2021 primarily from lower
sales of our perpetual App Delivery and Security solutions of $6.2 million and
perpetual Workspace offerings of $4.8 million, as customers continue to shift
toward our subscription offerings.
                                       36
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Support and services



Support and services revenue decreased during the three months ended March 31,
2022 compared to the three months ended March 31, 2021 primarily due to a
decrease in sales of maintenance services across our Workspace perpetual
offerings, as more of the revenue is reported in the Subscription revenue line
commensurate with our subscription model transition.

Deferred Revenue, Unbilled Revenue and Backlog



Deferred revenue is primarily comprised of Support 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 cloud-based subscription offerings and our on-premise subscription
offerings.

Deferred revenue consists of billings or payments received in advance of revenue
recognition and is recognized in our condensed 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 accounts
receivable or deferred revenue within our condensed consolidated financial
statements. Deferred revenue and unbilled revenue 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 reliable indicator of future performance and the related
revenue associated with these contractual commitments.

The following table presents the amounts of deferred and unbilled revenue (in
thousands):
                                                                                                           March 31,
                                                                                                             2022
                                                                                                          compared to
                                                                                                           December
                                                  March 31, 2022       December 31, 2021                   31, 2021
Deferred revenue                                $     1,938,081                            $ 2,037,593                $       (99,512)
Unbilled revenue                                      1,324,105                              1,300,048                         24,057


Deferred revenues decreased $99.5 million as of March 31, 2022 compared to
December 31, 2021 primarily due to decreases in deferred maintenance and support
revenue of $63.6 million, mostly from Workspace perpetual software maintenance,
and deferred subscription revenue of $35.9 million. Unbilled revenue remained
consistent when comparing March 31, 2022 to December 31, 2021.

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 contractually committed amounts for on-premise subscription
software licenses, as well as confirmed product license orders that have not
shipped and are wholly unfulfilled. As of March 31, 2022, 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.

International Revenues



International revenues (sales outside the United States) accounted for 48.7% and
50.4% of our net revenues for the three months ended March 31, 2022 and 2021,
respectively. The decrease in our international revenues as a percentage of our
net revenues for the three months ended March 31, 2022 compared to the three
months ended March 31, 2021 was primarily due to a decrease in the EMEA region
as it shifts away from perpetual licenses and related support offerings toward
subscription offerings. See Note 10 to our condensed consolidated financial
statements for detailed information on net revenues by geography.
                                       37
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Cost of Net Revenues

                                                                                                      Three
                                                               Three Months Ended                     Months
                                                                                                      Ended
                                                                                                      March
                                                                    March 31,                          31,
                                                             2022               2021                               2022 vs. 2021
                                                                      (In thousands)

Cost of subscription, support and services revenues $ 107,026 $ 110,745

$       (3,719)
Cost of product and license revenues                        17,527             21,715                                    (4,188)
Amortization of product related intangible assets           17,343             11,009                                     6,334

Total cost of net revenues                               $ 141,896          $ 143,469                            $       (1,573)


Cost of subscription, support and services revenues consists primarily of
compensation and other personnel-related costs of providing technical support,
consulting and cloud capacity costs, as well as the costs related to providing
our offerings 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.

Cost of subscription, support and services revenues decreased during the three
months ended March 31, 2022 compared to the three months ended March 31, 2021
primarily due to a decrease in the cost of providing our support and services
offerings of $6.7 million, consistent with the related revenues, partially
offset by an increase in the cost of providing our subscription offerings of
$3.0 million, in line with related revenues.

Cost of product and license revenues decreased for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 consistent with the decrease in related revenues.



Amortization of product related intangible assets increased for the three months
ended March 31, 2022 compared to the three months ended March 31, 2021 primarily
due to acquired intangible assets in connection with the Wrike acquisition.

Gross Margin



Gross margin as a percentage of revenue was 82.8% for the three months ended
March 31, 2022, and 81.5% for the three months ended March 31, 2021. The change
in gross margin as a percentage of revenue was not significant.

Operating Expenses

Foreign Currency Impact on Operating Expenses



The functional currency for all of our wholly-owned foreign subsidiaries is the
U.S. dollar. A substantial majority of our overseas operating expenses and
capital purchasing activities are transacted in local currencies and are
therefore subject 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
foreign 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 from our
hedging contracts. There is a risk that there will be fluctuations in foreign
currency exchange rates beyond the time frame for which we hedge our risk.

Research and Development Expenses



                                                                                                    Three
                                                             Three Months Ended                     Months
                                                                                                    Ended
                                                                                                    March
                                                                  March 31,                          31,
                                                           2022               2021                               2022 vs. 2021
                                                                    (In thousands)
Research and development                               $ 147,905          $ 144,158                            $        3,747


Research and development expenses consist primarily of personnel related costs
and facility and equipment costs directly related to our research and
development activities. We expensed substantially all development costs included
in the research and development of our products.

Research and development expenses increased during the three months ended March 31, 2022 compared to the three months ended March 31, 2021 primarily due to increases in stock-based compensation of $2.4 million and compensation and


                                       38
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other employee-related costs of $2.2 million as a result of higher headcount, in
part due to the Wrike acquisition, partially offset by decreases in professional
fees of $1.1 million.

Sales, Marketing and Services Expenses



                                                                                                  Three
                                                           Three Months Ended                     Months
                                                                                                  Ended
                                                                                                  March
                                                                March 31,                          31,
                                                         2022               2021                               2022 vs. 2021
                                                                  (In thousands)
Sales, marketing and services                        $ 292,951          $ 293,284                            $         (333)


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 capacity costs that are directly related to our
sales, marketing and services activities.

The decrease in Sales, marketing and services expenses during the three months
ended March 31, 2022 compared to the three months ended March 31, 2021 was
primarily due to decreases in stock-based compensation of $5.6 million and
compensation and other employee-related costs of $4.8 million. These decreases
were partially offset by increases in variable compensation of $7.3 million and
marketing programs of $5.9 million, primarily demand generation.

General and Administrative Expenses



                                                                                                       Three
                                                                Three Months Ended                     Months
                                                                                                       Ended
                                                                                                       March
                                                                     March 31,                          31,
                                                              2022               2021                               2022 vs. 2021
                                                                       (In thousands)
General and administrative                                $  109,059          $ 94,990                            $       14,069


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 the three months ended
March 31, 2022 compared to the three months ended March 31, 2021 primarily due
to increases in professional fees of $15.6 million, primarily for the pending
merger transaction, credit loss expense of $11.3 million and compensation and
other employee-related costs of $3.0 million. These increases were partially
offset by a decrease of $15.5 million due to Wrike acquisition costs incurred in
the first quarter of 2021.

Amortization of Other Intangible Assets



                                                                                                      Three
                                                               Three Months Ended                     Months
                                                                                                      Ended
                                                                                                      March
                                                                   March 31,                           31,
                                                             2022               2021                               2022 vs. 2021
                                                                     (In thousands)
Amortization of other intangible assets                 $    19,221          $  7,532                            $       11,689


Amortization of other intangible assets consists of amortization of customer
relationships, trade names and covenants not to compete primarily related to our
acquisitions.

Amortization of other intangible assets increased for the three months ended
March 31, 2022 compared to the three months ended March 31, 2021 primarily due
to acquired intangible assets in connection with the Wrike acquisition.
                                       39
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Restructuring Expenses


                                                                                                           Three
                                                                  Three Months Ended                       Months
                                                                                                           Ended
                                                                                                           March
                                                                      March 31,                             31,
                                                               2022                  2021                               2022 vs. 2021
                                                                        (In thousands)
Restructuring                                            $       18,078          $       -                            $       18,078


Restructuring expenses increased for the three months ended March 31, 2022
compared to the three months ended March 31, 2021 primarily due to the 2021
Restructuring Program, which resulted in increases in employee severance and
related costs of $11.6 million, right-of-use asset impairments of $3.4 million,
and other asset impairments of $3.1 million.

See Note 16 to our condensed consolidated financial statements for additional details regarding our restructuring programs.

Interest Expense


                       Three Months Ended
                           March 31,              Three Months Ended March 31,
                      2022           2021                2022 vs. 2021
                                          (In thousands)
Interest expense   $ (22,076)     $ (24,360)     $                      2,284


Interest expense primarily consists of interest paid on our 2026 Notes, 2027
Notes and 2030 Notes, 2021 Term Loan Credit Agreement, Term Loan Credit
Agreement and our credit facility. Interest expense decreased for the three
months ended March 31, 2022 compared to the three months ended March 31, 2021
primarily due to financing costs incurred in the first quarter of 2021 in
connection with the Wrike acquisition. See Note 11 to our condensed consolidated
financial statements for additional details regarding our debt.

Other (expense) income, net

                                                                                                  Three
                                                           Three Months Ended                     Months
                                                                                                  Ended
                                                                                                  March
                                                                March 31,                          31,
                                                         2022               2021                               2022 vs. 2021
                                                                  (In thousands)
Other (expense) income, net                          $   (1,077)         $ 12,896                            $      (13,973)

Other (expense) income, net is primarily comprised of gains (losses) from remeasurement of foreign currency transactions and non-designated hedges, 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.

The change in Other (expense) income, net during the three months ended March 31, 2022 compared to the three months ended March 31, 2021 is primarily attributable to decreases in gains recognized on our strategic investment activities of $10.6 million and losses from the remeasurement of foreign currency transactions of $3.8 million.

Income Taxes



We are required to estimate our income taxes in each of the jurisdictions in
which we operate as part of the process of preparing our condensed consolidated
financial statements. We maintain certain strategic management and operational
activities in overseas subsidiaries and our foreign earnings are taxed at rates
that are generally lower than in the United States.

Our effective tax rate generally differs from the U.S. federal statutory rate
primarily due to tax credits and lower tax rates on earnings generated by our
foreign operations that are taxed primarily in Switzerland.

Our effective tax rate was 18.1% and (10.9)% for the three months ended
March 31, 2022 and 2021, respectively. The increase in the effective tax rate
when comparing the three months ended March 31, 2022 to the three months ended
March 31, 2021, was primarily due to tax items unique to the period ended
March 31, 2021. These amounts included stock-based compensation deductions and a
tax benefit related to a favorable foreign tax ruling in the period ended
March 31, 2021.

We are subject to tax in the U.S. and in multiple foreign tax jurisdictions. Our
U.S. liquidity needs are currently satisfied using cash flows generated from our
U.S. operations, borrowings, or both. We also utilize a variety of tax planning
strategies in
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an effort to ensure that our worldwide cash is available in locations in which
it is needed. We expect to repatriate a substantial portion of our foreign
earnings over time, to the extent that the foreign earnings are not restricted
by local laws or result in significant incremental costs associated with
repatriating the foreign earnings. See Note 13 to our condensed consolidated
financial statements for additional details regarding our income taxes.

Liquidity and Capital Resources

Cash, Cash Equivalents and Investments



                                                                           December 31,            March 31, 2022
                                                   March 31, 2022              2021             compared to December
                                                                                                      31, 2021
                                                                            (In thousands)
Cash, cash equivalents and investments           $       750,992          $   541,933          $           209,059


Our principal sources of liquidity are our cash, cash equivalents and
investments. The increase in Cash, cash equivalents and investments when
comparing March 31, 2022 to December 31, 2021, is primarily due to cash provided
by operating activities of $274.9 million, partially offset by cash paid for tax
withholding on vested stock awards of $43.7 million and purchases of property
and equipment of $18.8 million.

As of March 31, 2022, $544.7 million of the $751.0 million of Cash, cash
equivalents and investments was held by our foreign subsidiaries. The Cash, cash
equivalents and investments held by our foreign subsidiaries can be repatriated
without incurring any additional U.S. federal tax. Upon repatriation of these
funds, we could be subject to foreign and U.S. state income taxes. The amount of
taxes due is dependent on the amount and manner of the repatriation, as well as
the locations from which the funds are repatriated and received. We generally
invest our cash and cash equivalents in investment grade, highly liquid
securities to allow for flexibility in the event of immediate cash needs. Our
short-term and long-term investments primarily consist of interest-bearing
securities.

Cash Flow Activities



During the three months ended March 31, 2022, we generated operating cash flows
of $274.9 million. These operating cash flows related primarily to net income of
$60.2 million, adjusted for, among other things, non-cash charges, including
depreciation and amortization expenses of $84.6 million, stock-based
compensation expense of $79.4 million, and a change in operating assets and
liabilities, net of acquisitions of $33.1 million. The change in our operating
assets and liabilities, net of acquisitions was primarily the result of inflows
from accounts receivable of $274.6 million, primarily due to collections from
prior period sales. These inflows were partially offset by outflows from
deferred revenue of $99.5 million, outflows from accrued expenses and other
current liabilities of $82.9 million, mostly from decreases in employee-related
accruals. Also contributing to the change in operating assets and liabilities,
net of acquisitions were outflows from accounts payable of $29.9 million,
primarily due to the timing of payments, and outflows from other assets of $21.2
million, primarily due to an increase in capitalized commissions. Our investing
activities used $17.3 million of cash consisting primarily of cash paid for the
purchase of property and equipment of $18.8 million, partially offset by net
proceeds from investments of $4.1 million. Our financing activities used cash of
$42.5 million, primarily due to cash paid for tax withholding on vested stock
awards.

During the three months ended March 31, 2021, we generated operating cash flows
of $212.9 million. These operating cash flows related primarily to net income of
$90.0 million, adjusted for, among other things, non-cash charges, including
stock-based compensation expense of $86.9 million, depreciation and amortization
expenses of $63.9 million and a change in operating assets and liabilities, net
of acquisitions of $38.8 million. The change in our operating assets and
liabilities, net of acquisitions, was mostly the result of an inflow from
accounts receivable of $302.8 million primarily due to collections from prior
period sales. These inflows were partially offset by outflows in accrued
expenses and other current liabilities of $190.8 million, mostly from
employee-related accruals of $133.6 million and payments on other accruals of
$27.1 million, primarily from acquisition-related costs. Also contributing to
operating outflows were changes in deferred revenue of $92.1 million, income
taxes, net of $38.0 million, primarily due to an increase in prepaid taxes, and
other assets of $27.5 million, primarily due to an increase in capitalized
commissions. Our investing activities used $1.94 billion of cash consisting
primarily of cash paid for the Wrike acquisition, net of cash acquired of
$2.02 billion and cash paid for the purchase of property and equipment of $23.9
million, partially offset by net proceeds from investments of $107.0 million.
Our financing activities provided cash of $1.46 billion, primarily net proceeds
from the 2021 Term Loan of $997.9 million and 2026 Notes of $741.4 million,
partially offset by the repayment of Wrike acquired debt of $190.0 million, cash
dividends on our common stock of $45.5 million and cash paid for tax withholding
on vested stock awards of $42.3 million.
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Historically, significant portions of our cash inflows were generated by our
operations. We currently expect this trend to continue for the remainder of
2022. Our 2022 operating cash flows could be impacted due to incremental cash
outlays related to the 2021 Restructuring Program and expected transaction costs
related to the pending Merger. We believe that our existing cash and investments
together with cash flows expected from operations will be sufficient to meet
expected operating and capital expenditure requirements and service our debt
obligations for the next 12 months.

Term Loan Credit Agreements



On February 5, 2021, we entered into the 2021 Term Loan Credit Agreement,
consisting of a $1.00 billion 2021 Term Loan. We borrowed $1.00 billion on
February 26, 2021 under the 2021 Term Loan, and the loan matures on February 26,
2024. The proceeds under the 2021 Term Loan were used to finance a portion of
the purchase price for the Wrike acquisition.

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").
As of March 31, 2022, $100.0 million was outstanding under the 3-year Term Loan.
These amounts are due in January 2023 and included in Short-term debt in the
accompanying condensed consolidated balance sheet.

Senior Notes



On February 18, 2021, we issued $750.0 million of unsecured senior notes due
March 1, 2026 (the "2026 Notes"). The 2026 Notes accrue interest at a rate of
1.250% per annum, which is due semi-annually on March 1 and September 1 of each
year beginning on September 1, 2021. The net proceeds from this offering were
$741.4 million. The net proceeds from the 2026 Notes were used to fund a portion
of the purchase price for the Wrike acquisition.

Credit Facility



On November 26, 2019, we entered into a $250.0 million five-year unsecured
revolving credit facility under an amended and restated credit agreement (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 of
March 31, 2022, no amounts were outstanding under the credit facility.

See Note 11 to our condensed consolidated financial statements for additional details regarding our debt.



Stock Repurchase Program

Our Board of Directors authorized an ongoing stock repurchase program. The
objective of the stock repurchase program was to improve stockholders' returns
and mitigate earnings per share dilution posed by the issuance of shares related
to employee equity compensation awards. At March 31, 2022, $625.6 million was
available to repurchase common stock pursuant to the stock repurchase program.
All shares repurchased were recorded as treasury stock. While the Merger
Agreement is in effect, we are prohibited from repurchasing shares of our common
stock, including under the stock repurchase program.

During the three months ended March 31, 2022, we did not have any open market purchases under the stock repurchase program.

See Note 14 to our condensed consolidated financial statements for additional details on our share repurchase program.

Shares for Tax Withholding



During the three months ended March 31, 2022, we withheld 427,382 shares from
equity awards that vested, totaling $43.7 million to satisfy minimum tax
withholding obligations that arose on the vesting of such equity awards. These
shares are reflected as treasury stock in our condensed consolidated balance
sheets.

Other Purchase Commitments

In May 2020, we 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 amended agreement, we are committed to a purchase
of $1.00 billion throughout the term of the agreement. As of March 31, 2022, we
had $825.8 million of remaining obligations under the purchase agreement.

In May 2021, we entered into an amended agreement with a third-party provider, in the ordinary course of business, for the use of certain cloud services through May 2024. Under the amended agreement, we are committed to purchase services under this agreement totaling $100.0 million over the term, with commitments of $32.0 million in fiscal year beginning 2021,


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$24.0 million in fiscal year beginning 2022, $24.0 million in fiscal year
beginning 2023 and $20.0 million at any time over the three-year term. As of
March 31, 2022, we had $46.1 million of remaining obligations under the purchase
agreement.

Contractual Obligations

There have been no material changes, outside the ordinary course of business, to
our contractual obligations since December 31, 2021. For further information,
see "Contractual Obligations" in Part II, Item 7 of our Annual Report on Form
10-K for the fiscal year ended December 31, 2021.

Off-Balance Sheet Arrangements

We do not have any special purpose entities or off-balance sheet financing arrangements.


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