Net revenues include the following categories: Product and licenses, Software as a Service (SaaS), License updates and maintenance and Professional services. Product and licenses revenues primarily represent fees related to the licensing of the Company’s software and hardware appliances. These revenues are reflected net of sales allowances, cooperative advertising agreements, partner incentive programs and provisions for returns. SaaS revenues consist primarily of fees related to online service agreements, which are recognized ratably over the contract term. Should the Company charge set-up fees, they would be recognized ratably over the contract term or the expected customer life, whichever is longer. License updates and maintenance revenues consist of fees related to maintenance and support fees, which include technical support and hardware and software maintenance. Maintenance and support fees are recognized ratably over the term of the contract, which is typically 12 to 24 months. The Company capitalizes certain third-party commissions related to maintenance and support renewals. The capitalized commissions are amortized to Sales, marketing and services expense at the time the related deferred revenue is recognized as revenue. Hardware and software maintenance and support contracts are typically sold separately. Hardware maintenance includes technical support, the latest software upgrades when and if they become available, and replacement of malfunctioning appliances. Dedicated account management is available as an add-on to the program for a higher level of service. Software maintenance, including the new Customer Success Services, includes unlimited technical support, immediate access to software upgrades, enhancements and maintenance releases when and if they become available during the term of the contract and configuration and installation support along with acceleration and automation tools. Professional services revenues are comprised of fees from consulting services related to the implementation of the Company’s products and fees from product training and certification, which are recognized as the services are provided.

The Company recognizes revenue when it is earned and when all of the following criteria are met: (1) persuasive evidence of the arrangement exists; (2) delivery has occurred or the service has been provided and the Company has no remaining obligations; (3) the fee is fixed or determinable; and (4) collectability is probable.

The majority of the Company’s product and license revenue consists of revenue from the sale of software products. Software sales generally include a perpetual license to the Company’s software and is subject to the industry specific software revenue recognition guidance. In accordance with this guidance, the Company allocates revenue to license updates related to its stand-alone software and any other undelivered elements of the arrangement based on vendor specific objective evidence (“VSOE”) of fair value of each element and such amounts are deferred until the applicable delivery criteria and other revenue recognition criteria described above have been met. The balance of the revenues, net of any discounts inherent in the

arrangement, is recognized at the outset of the arrangement using the residual method as the product licenses are delivered. If management cannot objectively determine the fair value of each undelivered element based on VSOE of fair value, revenue recognition is deferred until all elements are delivered, all services have been performed, or until fair value can be objectively determined.

For hardware appliance and software transactions, the arrangement consideration is allocated to stand-alone software deliverables as a group and the non-software deliverables based on the relative selling prices using the selling price hierarchy in the revenue recognition guidance. The selling price hierarchy for a deliverable is based on its VSOE if available, third-party evidence of selling price ("TPE") if VSOE is not available, or estimated selling price ("ESP") if neither VSOE nor TPE is available. The Company then recognizes revenue on each deliverable in accordance with its policies for product and service revenue recognition. VSOE of selling price is based on the price charged when the element is sold separately. In determining VSOE, the Company requires that a substantial majority of the selling prices fall within a reasonable range based on historical discounting trends for specific products and services. TPE of selling price is established by evaluating competitor products or services in stand-alone sales to similarly situated customers. However, as the Company’s products contain a significant element of proprietary technology and its solutions offer substantially different features and functionality, the comparable pricing of products with similar functionality typically cannot be obtained. Additionally, as the Company is unable to reliably determine what competitors products’ selling prices are on a stand-alone basis, the Company is not typically able to determine TPE. The estimate of selling price is established considering multiple factors including, but not limited to, pricing practices in different geographies and through different sales channels and competitor pricing strategies.

The Citrix Service Provider ("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.

For the Company’s non-software transactions, it allocates the arrangement consideration based on the relative selling price of the deliverables. For the Company’s hardware appliances, it uses ESP as its selling price. For the Company’s support and services, it generally uses VSOE as its selling price. When the Company is unable to establish selling price using VSOE for its support and services, the Company uses ESP in its allocation of arrangement consideration.

~~The majority of the Company's SaaS offerings are considered hosted service arrangements per the authoritative guidance.~~

In the normal course of business, the Company is not obligated to accept product returns from its resellers or end customers under any conditions, unless the product item is defective in manufacture. The Company establishes provisions for estimated returns, as well as other sales allowances, concurrently with the recognition of revenue. The provisions are established based upon consideration of a variety of factors, including, among other things, recent and historical return rates for both specific products and distributors and the impact of any new product releases and projected economic conditions. Product returns are provided for in the condensed consolidated financial statements and have historically been within management’s expectations. Allowances for estimated product returns amounted to $0.8 million and $2.0 million at September 30, 2017 and December 31, 2016, respectively. The Company also records estimated reductions to revenue for customer programs and incentive offerings, including volume-based incentives. The Company could take actions to increase its customer incentive offerings, which could result in an incremental reduction to revenue at the time the incentive is offered.

Foreign 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, including U.S. dollars. The remeasurement of those foreign currency transactions is included in determining net income or loss for the period of exchange. Prior to January 1, 2015, the functional currency of the Company’s wholly-owned foreign subsidiaries of its former GoTo Business was the currency of the country in which each subsidiary is located. The Company translated assets and liabilities of these foreign subsidiaries at exchange rates in effect at the balance sheet date and included accumulated net translation adjustments in equity as a component of Accumulated other comprehensive loss. As a result of the change in functional currency, the ~~gains and losses that were previously recorded in Accumulated other comprehensive loss prior to January 1, 2015 were kept constant. As a result of the Spin-off, accumulated net translation adjustments~~ associated with the GoTo Business recorded in Accumulated other comprehensive loss of $13.4 million were reclassified to Retained earnings during the period ended September 30, 2017. See Note 3 for additional information regarding discontinued operations.

Accounting for Stock-Based Compensation 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 record compensation expense in its condensed consolidated financial statements using a fair value method. See Note 8 for further information regarding the Company’s stock-based compensation plans.

~~Reclassifications~~3. REVENUE

~~Certain reclassifications~~The following is a description of the ~~prior years' amounts have been~~principal activities from which the Company generates revenue.

Subscription

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 Citrix Service Provider ("CSP") program and on-premise subscription software licenses. 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 ~~to conform~~available to the ~~current year's presentation.~~

~~3. DISCONTINUED OPERATIONS~~

~~On January 31, 2017,~~customer, as the Company ~~completed~~continuously provides online access to the ~~Spin-off of~~web-based software that the ~~GoTo Business. Refer~~customer can use at any time. The CSP program provides subscription-based services in which the CSP partners host software services to ~~Note 1 for additional information regarding the Spin-off. The financial results of the GoTo Business~~their end users.

Product and license

Product and license revenues are ~~presented as Income (loss)~~primarily derived from discontinued operations, net of income taxes in the condensed consolidated statements of income. The following table presents the financial results of the GoTo Business through the date of the Spin-off for the indicated periods and do not include corporate overhead allocations:

~~Major classes of line items constituting Income (loss) from discontinued operations~~perpetual offerings related to the ~~GoTo Business~~Company’s Workspace solutions and Networking products. For performance obligations related to perpetual software license agreements, the Company determined that its licenses are functional intellectual property that are distinct as the user can benefit from the software on its own.

Support and services

Support and services revenues include license updates, maintenance and professional services which are primarily related to the Company's perpetual offerings. License updates and maintenance revenues are primarily comprised of software and hardware maintenance, when and if-available updates and technical support. For performance obligations related to license 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-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.

Three Months Ended September 30, Nine Months Ended September 30,
2016 2017 2016
(in thousands)
Net revenues $ 172,515
$ 58,215
$ 508,413
Cost of net revenues 39,804
15,456
116,216
Gross margin 132,711
42,759
392,197
Operating expenses:
Research and development 25,146
9,108
70,983
Sales, marketing and services 47,353
20,881
158,702
General and administrative 14,986
7,636
46,572
Amortization of other intangible assets 3,480
1,176
10,618
Restructuring (115 ) 3,189
830
Separation 16,663
40,573
44,444
Total operating expenses 107,513
82,563
332,149
Income (loss) from discontinued operations before income taxes

25,198
(39,804 ) 60,048
Income tax expense 5,034
2,900
15,066
Income (loss) from discontinued operations, net of income tax $ 20,164
$ (42,704 ) $ 44,982
The Company’s typical performance obligations include the following:


Performance Obligation			When Performance Obligation is Typically Satisfied
Subscription
Cloud-hosted offerings			Over the contract term, beginning on the date that service is made available to the customer (over time)
CSP			As the usage occurs (over time)
On-premise subscription software licenses			When software activation keys have been made available for download (point in time)
Product and license
Software licenses			When software activation keys have been made available for download (point in time)
Hardware			When control of the product passes to the customer; typically upon shipment (point in time)
Support and services
License updates and maintenance			Ratably over the course of the service term (over time)
Professional services			As the services are provided (over time)

Significant Judgments

The Company ~~incurred significant costs in connection with the separation~~generates all of its ~~GoTo Business. These costs relate primarily~~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 ~~third-party advisory~~identify each performance obligation within the contract, and ~~consulting~~then evaluates whether the performance obligations are capable of being distinct and distinct within the context of the contract. Solutions and services ~~retention payments to certain employees, incremental stock-based compensation~~that are not both capable of being distinct and ~~other costs directly related~~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 standalone selling price is the price at which the Company would sell a promised product or service separately to the ~~separation~~customer. For the majority of the ~~GoTo Business.~~Company's software licenses and hardware, CSP and on-premise subscription software licenses, the Company uses the observable price in transactions with multiple performance obligations. For the majority of the Company’s support and services, and cloud-hosted subscription offerings, the Company uses the observable price when the Company sells that support and service or cloud-hosted subscription separately to similar customers. If the standalone selling price for a performance obligation is not directly observable, the Company estimates it. The Company estimates a standalone 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.

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.

Sales tax

The Company records revenue net of sales tax.

Timing of revenue recognition


	Three Months Ended March 31,
	2020		2019
	(In thousands)
Products and services transferred at a point in time	$	279,411	$	162,964
Products and services transferred over time	581,534		556,179
Total net revenues	$	860,945	$	719,143

Contract balances

The Company's short-term and long-term contract assets, net of allowance for credit losses, were $15.1 million and $23.1 million, respectively, as of March 31, 2020. The Company's short-term and long-term contract assets were $12.2 million and $20.5 million, respectively, as of December 31, 2019. The Current portion of deferred revenues and the Long-term portion of deferred revenues were $1.34 billion and $414.3 million, respectively, as of March 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 liabilities primarily results from the timing difference between the Company’s performance and the customer’s payment. During the three months ended ~~September 30, 2016,~~March 31, 2020, the Company ~~incurred $0.9~~recognized $453.2 million of ~~separation costs which are~~revenue that was included in ~~General~~the deferred revenue balance as of December 31, 2019.

The Company performs its obligations under a contract with a customer by transferring solutions and ~~administrative~~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 often differs from the timing of the customer’s payment, which results in the recognition of a contract asset or a contract liability. The Company recognizes a contract asset when the Company transfers products or 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 the Company has a future obligation to transfer products or services. The Company had 0 material asset impairment charges related to contract assets for either the three months ended March 31, 2020 or March 31, 2019.

For the Company’s software and hardware products, the timing of payment is typically upfront for its perpetual offerings 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 created as these services are provided over time.

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 table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period (in thousands):


	<1-3 years		3-5 years		5 years or more		Total
Subscription	$	908,868	$	100,613	$	1,308	$	1,010,789
Support and services	1,482,290		39,371		1,599		1,523,260
Total net revenues	$	2,391,158	$	139,984	$	2,907	$	2,534,049

Contract acquisition costs

The Company is required to capitalize certain contract acquisition costs consisting primarily of commissions paid and related payroll taxes when contracts are signed. The asset recognized from capitalized incremental and recoverable acquisition costs is amortized on a basis consistent with the pattern of transfer of the products or services to which the asset relates.

The Company’s typical contracts include performance obligations related to product and licenses and support. In these contracts, incremental costs of obtaining a contract are allocated to the performance obligations based on the relative estimated standalone selling prices and then recognized on a basis that is consistent with the transfer of the goods or services to which the asset relates. The commissions paid on annual renewals of support for product and licenses are not commensurate with the initial commission. The costs allocated to product and licenses are expensed at the time of sale, when revenue for the product and functional software licenses is recognized. The costs allocated to customer support for product and licenses are amortized ratably over a period of the greater of the contract term or the average customer life, the expected period of benefit of the asset capitalized. The Company currently 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. Amortization of contract acquisition costs related to support are limited to the contractual period of the arrangement as the Company intends to pay a commensurate commission upon renewal of the related support. For contracts that contain multi-year services or subscriptions, the amortization period of the capitalized costs is the expected period of benefit, which is the greater of the contractual term or the expected customer life.

The Company elects to apply a practical expedient to expense ~~from continuing operations~~contract acquisition costs as incurred where the expected period of benefit is one year or less.

For the three months ended March 31, 2020 and March 31, 2019, the Company recorded amortization of capitalized contract acquisition costs of $13.1 million and $10.7 million, respectively, which is recorded in Sales, marketing and services expense in the accompanying condensed consolidated statements of income. ~~No separation~~The Company's short-term and long-term contract acquisition costs were ~~incurred in continuing operations during the three months ended September 30, 2017. During the nine months ended September 30, 2017 and 2016, the Company incurred $0.5~~$52.9 million and ~~$1.7~~$89.3 million, respectively, as of ~~separation costs,~~March 31, 2020, and $50.4 million and $81.0 million, respectively, ~~which~~as of December 31, 2019, and are included in ~~General~~Prepaid and ~~administrative expense from continuing operations~~other current assets and Other assets, respectively, in the accompanying condensed consolidated ~~statements of income.~~

~~The assets and liabilities of the GoTo Business were re-classified as discontinued operations as of December 31, 2016.~~

~~Carrying amounts of major classes of assets and liabilities included as part of discontinued operations related~~balance sheets. There was 0 impairment loss in relation to ~~the GoTo Business~~

December 31, 2016
(in thousands)
Assets
Current assets:
Cash $ 120,861
Accounts receivable, net 44,734
Prepaid expenses and other current assets 14,094
Total current assets of discontinued operations 179,689
Property and equipment, net 81,866
Goodwill 380,917
Other intangible assets, net 54,312
Deferred tax assets, net 18,496
Other assets 3,340
Long-term assets of discontinued operations $ 538,931
Total major classes of assets of discontinued operations

$ 718,620

Liabilities
Current liabilities:
Accounts payable $ 11,333
Accrued expenses and other current liabilities 46,088
Current portion of deferred revenues 115,249
Total current liabilities of discontinued operations 172,670
Long-term portion of deferred revenues 4,224
Other liabilities 3,484
Long-term liabilities of discontinued operations $ 7,708
Total major classes of liabilities of discontinued operations

$ 180,378

As a result of the Spin-off, the Company recorded a $478.2 million reduction in retained earnings which included net assets of $464.8 million. Of this amount, $28.5 million represents cash transferred to the GoTo Business, with the remainder considered a non-cash activity in the condensed consolidated statements of cash flows. The Spin-off also resulted in a reduction of Accumulated other comprehensive loss associated with foreign currency translation adjustments of $13.4 million, which was reclassified to Retained earnings.

Citrix and GetGo entered into several agreements in connection with the Spin-off, including a transition services agreement ("TSA"), separation and distribution agreement, tax matters agreement, intellectual property matters agreement, and an employee matters agreement. Pursuant to the TSA, Citrix, GetGo and their respective subsidiaries are providing various services to each other on an interim, transitional basis. Services being provided by Citrix include, among others, finance, information technology and certain other administrative services. The services generally commenced on February 1, 2017 and are generally expected to terminate within 12 months of that date. Billings by Citrix under the TSA were not material forcosts capitalized during either the three ~~or nine~~ months ended ~~September 30, 2017.~~March 31, 2020 or March 31, 2019.

4. EARNINGS PER SHARE

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.~~

outstanding and potential dilutive common shares from the conversion spread on the Company’s 0.500% Convertible Notes due 2019 (the “Convertible Notes”) during the period they were outstanding and the Company's warrants.

The following table sets forth the computation of basic and diluted net income per share (in thousands, except per share information):


	Three Months Ended
	March 31,
	2020		2019
Numerator:


Net income	$	181,222	$	110,348
Denominator:
Denominator for basic earnings per share - weighted-average shares outstanding	124,737		131,483
Effect of dilutive employee stock awards	2,840		2,834

Effect of dilutive Convertible Notes	—		5,016
Effect of dilutive warrants	—		1,692
Denominator for diluted earnings per share - weighted-average shares outstanding	127,577		141,025




Basic earnings per share	$	1.45	$	0.84




Diluted earnings per share	$	1.42	$	0.78

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Numerator:
Income from continuing operations $ 126,720
$ 111,737
$ 305,874
$ 291,280
Income (loss) from discontinued operations, net of income taxes

—
20,164
(42,704 ) 44,982
Net income $ 126,720
$ 131,901
$ 263,170
$ 336,262
Denominator:
Denominator for basic net earnings per share - weighted-average shares outstanding 151,156
155,525
151,896
154,847
Effect of dilutive employee stock awards 1,987
2,007
2,538
1,850
Effect of dilutive Convertible Notes 1,484
—
1,950
—
Denominator for diluted net earnings per share - weighted-average shares outstanding 154,627
157,532
156,384
156,697

Basic earnings (loss) per share:
Income from continuing operations $ 0.84
$ 0.72
$ 2.01
$ 1.88
Income (loss) from discontinued operations —
0.13
(0.28 ) 0.29
Basic net earnings per share $ 0.84
$ 0.85
$ 1.73
$ 2.17
Diluted earnings (loss) per share:
Income from continuing operations $ 0.82
$ 0.71
$ 1.96
$ 1.86
Income (loss) from discontinued operations —
0.13
(0.28 ) 0.29
Diluted net earnings per share: $ 0.82
$ 0.84
$ 1.68
$ 2.15
Anti-dilutive weighted-average shares from stock awards 393
60
225
460

~~The~~For the three months ended March 31, 2020, there were 0 weighted-average number of shares outstanding used in the computation of ~~basic and~~ diluted earnings per share ~~does not include common stock issuable upon the exercise of~~for the Company's ~~warrants. The effects~~warrants, as they expired on November 18, 2019. For the three months ended March 31, 2019, the weighted-average number of ~~these potentially issuable~~ shares ~~were not included~~outstanding used in the ~~calculation~~computation of diluted earnings per share ~~because~~includes the dilutive effect ~~would have been anti-dilutive.~~of the Company's warrants, as the average stock price during the quarter was above the weighted-average warrant strike price of $94.62 per share. Anti-dilutive stock-based awards excluded from the calculations of diluted earnings per share were immaterial during the periods presented. The Company used the treasury stock method to consider the dilutive effect of the forward sale contract related to the accelerated share repurchase transactions ("ASR") entered into in January 2020, and determined that the forward sale contract was anti-dilutive in calculating dilutive EPS.

The Company ~~uses~~used the treasury stock method for calculating any potential dilutive effect of the conversion spread on its Convertible Notes on diluted earnings per share ~~if applicable,~~ because upon conversion the Company ~~will pay~~paid cash up to the aggregate principal amount of the Convertible Notes ~~to be~~ converted and ~~pay or deliver, as the case may be, cash,~~delivered shares of common stock ~~or a combination of cash and shares of common stock, at the Company’s election,~~ in respect of the remainder ~~if any,~~ of the Company’s conversion obligation in excess of the aggregate principal amount of the Convertible Notes ~~being~~ converted. The conversion spread ~~will have~~had a dilutive impact on diluted earnings per share when the average market price of the Company’s common stock for a given period ~~exceeds~~exceeded the conversion price. ~~Prior to~~For the ~~separation of the GoTo Business on January~~three months ended March 31, ~~2017, the conversion price~~2020, there was ~~$90.00 per share. As a result of the Spin-off, the conversion rate for~~0 dilution as the Convertible Notes ~~was re-set as of the opening of business~~matured on February 1, 2017 to 13.9061 shares of the Company’s common stock per $1,000 principal amount of Convertible Notes, which corresponds to a conversion price of $71.91 per share of common stock. Similar adjustments were made to the conversion rates for the Convertible Note Hedge and Warrant Transactions as of the opening of business on February 1, 2017.April 15, 2019. For the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2019, the average market price of the Company's common stock exceeded the ~~new~~ conversion price; therefore, the dilutive effect of the Convertible Notes was included in the denominator of diluted earnings per share. ~~For the three~~

5. CREDIT LOSSES

The Company is exposed to credit losses primarily through its accounts receivable, contract assets and nine months ended September 30, 2016, the Convertible Notes have been excluded from the computation of diluted earnings per share as the effect would be anti-dilutive since the prior conversion price of the Convertible Notes exceeded the average market price of the Company’s common stock. In addition, the Company uses the treasury stock methodinvestments in available-for-sale debt securities. See Note 3 for ~~calculating any potential dilutive effect~~additional information related to the ~~warrants.~~Company's contract assets. See Note 116 for ~~detailed~~additional information onrelated to the ~~Convertible Notes offering.~~

Company's available-for-sale debt securities.

~~5. ACQUISITIONS AND DIVESTITURES~~Accounts receivable, net

~~2017 Business Combination~~

~~On January 3, 2017, the Company acquired all~~The Company's accounts receivable, which are typically due within one year, consist of the ~~issued~~following (in thousands):


	March 31, 2020
Accounts receivable, gross	$	718,400
Less: allowance for returns	(5,052)
Less: allowance for credit losses	(13,322)
Accounts receivable, net	$	700,026

The allowance for credit losses on accounts receivable is determined using a combination of specific reserves for accounts that are deemed to exhibit credit loss indicators and ~~outstanding securities~~general reserves that are judgmentally determined using loss rates based on historical write-offs by geography and customer accounts subject to credit check versus non-credit check status and consideration of ~~Unidesk Corporation (“Unidesk” or~~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 ~~“2017 Business Combination"). Citrix acquired Unidesk~~first quarter of 2020 included consideration of the current and expected future economic and market conditions 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 ~~enhance its application management and delivery offerings.~~adjust the allowance for current expected credit losses. The ~~total cash consideration for this transaction was $60.4 million, net of $2.7~~Company recorded $6.2 million of ~~cash acquired. Transaction costs associated with the acquisition were $0.4 million. No transaction costs were incurred~~credit loss expense during the three months ended ~~September 30, 2017. The Company expensed $0.1 million of transaction costs during the nine months ended September 30, 2017,~~March 31, 2020, which ~~were~~is included inwithin General and administrative ~~expense~~expenses in the accompanying condensed consolidated statements of income.

~~Purchase Accounting~~The activity in the Company's allowance for credit losses for the ~~2017 Business Combination~~

The purchase price for Unidesk was allocated to the acquired net tangible and intangible assets based on estimated fair values as of the date of the acquisition. The allocation of the total purchase pricethree months ended March 31, 2020 is summarized ~~below~~as follows (in thousands):


	Total
Balance of allowance for credit losses at January 1, 2020	$	6,161
Adjustment for ASC 326 adoption	1,245
Current period provision for expected losses	6,232
Write-offs charged against allowance	(316)

Balance of allowance for credit losses at March 31, 2020	$	13,322

As of March 31, 2020, one distributor, the Arrow Group, accounted for 16% of the Company's total gross accounts receivable.

Available-for-sale Investments

Unidesk
Purchase Price Allocation Asset Life
Current assets $ 5,321

Property and equipment 131

Intangible assets 39,470
4 years
Goodwill 31,231
Indefinite
Other assets 90

Assets acquired 76,243

Other current liabilities assumed 2,290

Current portion of deferred revenues 3,042

Long term portion of deferred revenues 2,412

Long-term liabilities assumed 4,086

Deferred taxes 1,266

Net assets acquired $ 63,147

The allowance for credit losses on the Company's investment in available-for-sale debt securities is determined using a quantitative discounted cash flow analysis if impairment triggers exist after a qualitative screen is 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 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, net in the accompanying condensed consolidated statement of income. If management does not intend to sell the security, nor will it more-likely-than-not be required to sell the security before the security recovers its value, management must then determine whether the loss is due to credit loss or other factors. For impairment indicators due to credit loss factors, management establishes an allowance for credit losses with a charge to Other income, net. On the contrary, for impairment indicators due to other factors, management records the loss with a charge to Other comprehensive loss.

~~Current assets acquired in connection with~~Upon adoption of the ~~Unidesk acquisition consisted primarily of cash, accounts receivable~~credit loss standard, the Company established an allowance for credit losses and ~~other short term assets. Current liabilities assumed in connection with~~did 0t have any credit loss expense recorded for the acquisition consisted primarily of accounts payable and other accrued expenses. Long-term liabilities assumed in connection with the acquisition consisted primarily of long-term debt, which was paid in full subsequent to the acquisition date. The Company continues to evaluate certain income tax assets and liabilitiesthree months ended March 31, 2020. See Note 6 for more information on allowances for credit losses related to ~~the Unidesk acquisition.~~available-for-sale debt securities.

The goodwill related to the Unidesk acquisition is not deductible for tax purposes and is comprised primarily of expected synergies from combining operations and other intangible assets that do not qualify for separate recognition.

The Company has ~~included~~available-for-sale debt securities that have fair values below amortized cost; however, the ~~effect~~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 ~~Unidesk acquisition in its results of operations prospectively from~~amortized cost basis, and (iii) the ~~date of acquisition. The effect of the acquisition was not material~~unrealized losses are due to ~~the Company's consolidated results for the periods presented; accordingly, pro forma financial disclosures have not been presented.~~market factors rather than credit loss factors.

~~Identifiable intangible assets acquired in connection with the Unidesk acquisition (in thousands) and the weighted-average lives are as follows:~~

Unidesk Asset Life
Developed technology $ 35,230
4 years
Customer contracts 4,240
4 years
Total $ 39,470

~~2016 Business Combination~~

On September 7, 2016, the Company acquired all of the issued and outstanding securities of a privately held company. The acquisition provides a software solution that cuts the cost of desktop and application virtualization and delivers workspace performance by accelerating desktop logon and application response times for any Microsoft Windows-based environment. The total cash consideration for this transaction was $11.5 million, net of $0.8 million cash acquired. Transaction costs were $0.4 million, none of which were incurred during the three and nine months ended September 30, 2017. The Company expensed $0.3 million of transaction costs during the three months ended September 30, 2016 and $0.4 million of transaction costs during the nine months ended September 30, 2016. The assets related to this acquisition relate primarily to $8.2 million of product technology identifiable intangible assets with a 4 year life and goodwill of $4.7 million.

~~2016 Asset Acquisition~~

On January 8, 2016, the Company acquired certain monitoring technology assets from a privately-held company for total cash consideration of $23.6 million. The acquisition provides a monitoring solution for Citrix's products as it relates to Microsoft Windows applications and desktop delivery. The identifiable intangible assets acquired related primarily to product technologies.

~~2016 Divestiture~~

On February 29, 2016, the Company sold its CloudPlatform and CloudPortal Business Manager products to Persistent Telecom Solutions, Inc. The agreement included contingent consideration in the form of an earnout provision based on revenue for a period of five years following the closing date. Any income associated with the contingent consideration will be recognized if the earnout provisions are met. No earnout provisions were met during the three and nine months ended September 30, 2017. Therefore, no income was recognized during the three and nine months ended September 30, 2017.

6. INVESTMENTS

Available-for-sale Investments

Investments in available-for-sale securities at fair value were as follows for the periods ended (in thousands):


	March 31, 2020
Description of the Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
Agency securities	$	811	$	3	$	—	$	—	$	814
Corporate securities	37,697		12		(11)		(147)		37,551


Total	$	38,508	$	15	$	(11)	$	(147)	$	38,365


	September 30, 2017									December 31, 2016										December 31, 2019
Description of the Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Description of the Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Agency securities	$	483,398	$	557	$	(1,297	)	$	482,658	$	411,963	$	699	$	(1,169	)	$	411,493	Agency securities	$	1,681	$	1	$	—	$	1,682
Corporate securities	802,969		576		(1,065		)	802,480		842,887		193		(2,114		)	840,966		Corporate securities	49,027		6		(149)		48,884
Municipal securities	3,965		12		—			3,977		9,989		3		(4		)	9,988

Government securities	329,245		55		(570		)	328,730		445,083		135		(600		)	444,618		Government securities	9,124		5		—		9,129
Total	$	1,619,577	$	1,200	$	(2,932	)	$	1,617,845	$	1,709,922	$	1,030	$	(3,887	)	$	1,707,065	Total	$	59,832	$	12	$	(149)	$	59,695

Revenues

Net revenues include Product and licenses, License updates and maintenance, Professional services and SaaS revenues related to our Data offerings. Product and licenses primarily represent fees related to the licensing of the following major products:

Workspace Services is primarily comprised of our Application Virtualization products which include XenDesktop and XenApp, our Enterprise Mobility Management products which include XenMobile products and Workspace Suite; and

~~Networking primarily includes NetScaler ADC and NetScaler SD-WAN.~~

~~We offer incentive programs to our VADs and VARs to stimulate demand for our products.~~Subscription, Product and license ~~revenues associated with these programs~~and Support and services revenues.

Subscription revenue relates to fees which are ~~partially offset by these incentives to our VADs~~generally recognized ratably over the contractual term. Our subscription revenue includes SaaS, which primarily consists of subscriptions delivered via a cloud hosted service whereby the customer does not take possession of the software and ~~VARs.~~hybrid subscription offerings and the related support; and non-SaaS, which 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, which are generally recognized at a point in time. 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.

~~License updates~~Product and ~~maintenance~~license revenue primarily represents fees related to the perpetual licensing of the following major solutions:

•Workspace is primarily comprised of our Application Virtualization solutions, which include Citrix Virtual Apps and Desktops, our unified endpoint management solutions, which include Citrix Endpoint Management, Citrix Content Collaboration, and Citrix Workspace; and

•Networking 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 offerings and include the ~~following offerings:~~following:

•Customer Success Services, which gives customers a choice of tiered support offerings that combine the elements of product version upgrades, guidance, enablement, support 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

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

Subscription Advantage program, which has been retired and reached end of sale and end of renewal for existing customers. Fees associated with these offerings are being recognized ratably over the remaining term of existing contracts, which was typically 12 to 24 months.

~~Professional services are comprised of:~~

•Fees from consulting services related to the implementation of our ~~products,~~solutions, which are recognized as the services are provided; and

•Fees from product training and certification, which are recognized as the services are provided.

~~Our SaaS revenues, which are recognized ratably over~~


	Three Months Ended						Three Months Ended
	March 31,						March 31, 2020
	2020		2019		vs. March 31, 2019
	(in thousands)
Subscription	$	268,236	$	141,606	$	126,630
Product and license	172,858		135,022		37,836
Support and services	419,851		442,515		(22,664)
Total net revenues	$	860,945	$	719,143	$	141,802

Subscription

Subscription revenue increased for the ~~contractual term,~~three months ended March 31, 2020 compared to the three months ended March 31, 2019 primarily ~~consist~~due to an increase in on-premise license demand of ~~fees related to our Data offerings, primarily ShareFile, as well as fees related to~~$89.5 million, mostly from our Workspace ~~Services~~offerings of $61.0 million driven by ongoing business continuity sales in response to the COVID-19 pandemic and our Networking offerings of $28.5 million, primarily from pooled capacity. Also contributing to the increase is continued customer adoption of our solutions delivered via the ~~cloud.~~cloud of $37.1 million, primarily from our Workspace offerings.

Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended
September 30, September 30, September 30, 2017 September 30, 2017
2017 2016 2017 2016 vs. September 30, 2016 vs. September 30, 2016
(in thousands)
Product and licenses $ 192,102
$ 206,041
$ 594,708
$ 627,581
$ (13,939 ) $ (32,873 )
Software as a service 45,810
34,673
126,053
98,552
11,137
27,501
License updates and maintenance 420,951
398,171
1,232,734
1,178,053
22,780
54,681
Professional services 32,062
29,851
93,334
97,310
2,211
(3,976 )
Total net revenues $ 690,925
$ 668,736
$ 2,046,829
$ 2,001,496
$ 22,189
$ 45,333

Product and ~~Licenses~~license

Product and ~~licenses~~license revenue increased when comparing the three months ended March 31, 2020 to the three months ended March 31, 2019 primarily due to higher sales of our perpetual Workspace offerings from ongoing business continuity sales in

response to the COVID-19 pandemic of $52.5 million, partially offset by lower sales of our perpetual Networking products of $14.6 million.

Support and services

Support and services revenue decreased for the three months ended ~~September 30, 2017~~March 31, 2020 compared to the three months ended September 30, 2016 primarily due to lower sales of our Networking products of $17.2 million, partially offset by an increase in sales of our Workspace Services products of $3.0 million. Product and licenses revenue decreased for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 primarily due to lower sales of our Networking products. We currently expect Product and licenses revenue to increase when comparing the fourth quarter of 2017 to the fourth quarter of 2016.

~~Software as a Service~~

Software as a service revenue increased for the three months ended September 30, 2017 compared to the three months ended September 30, 2016 primarily due to increased sales of our Data offerings of $5.6 million and Workspace Services offerings delivered via the cloud of $5.2 million. Software as a service revenue increased for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 primarily due to increased sales of our Data offerings of $17.8 million and our Workspace Services offerings delivered via the cloud of $9.1 million. We currently expect Software as a service revenue to increase when comparing the fourth quarter of 2017 to the fourth quarter of 2016.

~~License Updates and Maintenance~~

In October 2016, we announced the launch of Customer Success Services, which replaced Software Maintenance and provides a higher standard of service that empowers customer success whether in the cloud, on-premises or in a hybrid environment through additional services providing expert guidance, proactive monitoring and enablement. In connection with this launch, beginning in 2017, our customers began migrating from the Subscription Advantage and Software Maintenance programs to this new offering.

License updates and maintenance revenue increased for the three months ended September 30, 2017 compared to the three months ended September 30, 2016 primarily due to an increase in software and hardware maintenance revenues of $101.0 million, primarily driven by increased sales of maintenance revenues across our Workspace Services products, partially offset by a decrease in our Subscription Advantage product of $71.7 million and technical support of $7.8 million. License updates and maintenance revenue increased for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 primarily due to an increase in software and hardware maintenance revenues of $245.3 million, primarily driven by increased sales of maintenance revenues across our Workspace Services products, partially offset by a decrease in our Subscription Advantage product of $168.8 million and our technical support of $22.1 million. These results are due to our new Customer Success Services offering discussed above. We currently expect License updates and maintenance revenue to increase when comparing the fourth quarter of 2017 to the fourth quarter of 2016.

~~Professional Services~~

The increase in Professional services revenue when comparing the three months ended September 30, 2017 to the three months ended September 30, 2016 were primarily due to increased product training and certification and implementation services related to our Workspace Services solutions. The decrease in Professional services revenue when comparing the nine months ended September 30, 2017 to the nine months ended September 30, 2016 wasMarch 31, 2019 primarily due to decreased ~~product training and certification and implementation~~sales of maintenance services ~~related to~~across our Workspace ~~Services solutions. We currently expect Professional~~perpetual offerings of $12.1 million and a decrease from professional services of $5.9 million, as more of the revenue ~~to remain relatively consistent when comparing~~is reported in the ~~fourth quarter of 2017 to the fourth quarter of 2016.~~Subscription revenue line commensurate with our subscription model transition.

Deferred Revenue, Unbilled Revenue and Backlog

Deferred ~~revenues are~~revenue is primarily comprised of ~~License updates~~Support and ~~maintenance~~services revenue from maintenance fees, which include software and hardware maintenance, technical support related to our ~~Subscription Advantage product and technical support. Deferred revenues also include SaaS revenue primarily from our Data~~perpetual offerings and ~~Professional~~ services revenue ~~primarily~~ related to our consulting contracts. Deferred revenue also includes Subscription revenue from our Content Collaboration and cloud-based subscription offerings.

Deferred ~~revenues~~revenue primarily 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 deferred and 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 revenue and unbilled revenue (in thousands):


	March 31, 2020		December 31, 2019		2020 compared to 2019
Deferred revenue	$	1,754,803	$	1,795,791	$	(40,988)
Unbilled revenue	779,246		704,829		74,417

Deferred revenue decreased ~~$5.3~~$41.0 million as of ~~September 30, 2017~~March 31, 2020 compared to December 31, ~~2016~~2019 primarily due to a decrease in ~~sales~~maintenance and support of ~~our Subscription Advantage product~~$55.5 million, mostly from Workspace perpetual software maintenance of ~~$244.3~~$35.8 million and Networking perpetual hardware maintenance of $14.0 million, partially offset by an increase from subscription of $17.1 million. Unbilled revenue as of March 31, 2020 increased $74.4 million from December 31, 2019 primarily due to an increase in ~~sales~~multi-year subscription agreements as a result of an increase in customer adoption of our cloud-based subscription offerings.

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 ~~maintenance offerings~~licenses, as well as confirmed product license orders that have not shipped and are wholly unfulfilled. As of ~~$239.6 million.~~March 31, 2020, we had backlog of $48.3 million, which is expected to be recognized as revenue primarily during the second quarter of 2020. As of March 31, 2019, the amount of backlog was not material. We ~~currently expect deferred revenue to increase throughout the remainder~~do not believe that backlog, as of ~~2017.~~any particular date, is a reliable indicator of future performance.

International Revenues

International revenues (sales outside the United States) accounted for ~~45.9%~~48.9% and ~~45.7%~~49.1% of our net revenues for the three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2020, and ~~43.8% and 45.4% of our net revenues for the three and nine months ended September 30, 2016.~~ March 31, 2019, respectively. The ~~increase~~change in our international revenues as a percentage of our net revenues for three months ended September 30, 2017 compared to the three months ended September 30, 2016 was mostly due to an increase in revenue in the EMEA region, primarily due to higher sales of our Workspace Services solutions of $9.8 million and Networking products of $2.2 million. The increase in our international revenues as a percentage of our net revenues for nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 is not significant. See Note 10 to our condensed consolidated financial statements for detailed information on net revenues by geography.

Cost of Net Revenues


	Three Months Ended						Three Months Ended
	March 31,						March 31, 2020
	2020		2019		vs. March 31, 2019
	(In thousands)
Cost of subscription, support and services revenues	$	86,040	$	71,428	$	14,612
Cost of product and license revenues	21,256		25,744		(4,488)
Amortization of product related intangible assets	8,281		10,301		(2,020)

Total cost of net revenues	$	115,577	$	107,473	$	8,104

Three Months Ended Nine Months Ended Three Months Ended Nine Months Ended
September 30, September 30, September 30, 2017 September 30, 2017
2017 2016 2017 2016 vs. September 30, 2016 vs. September 30, 2016
(In thousands)
Cost of product and license revenues $ 27,277
$ 28,059
$ 89,723
$ 93,077
$ (782 ) $ (3,354 )
Cost of services and maintenance revenues 61,096
55,337
184,922
168,874
5,759
16,048
Amortization of product related intangible assets 17,564
14,775
43,062
43,222
2,789
(160 )
Total cost of net revenues $ 105,937
$ 98,171
$ 317,707
$ 305,173
$ 7,766
$ 12,534

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. Cost of product and license revenues consists primarily of hardware, shipping expense, royalties, product media and duplication, manuals and packaging materials. Cost of services and maintenance revenues consists primarily of compensation and other personnel-related costs of providing technical support, consulting, cloud capacity costs, as well as the costs related to providing our SaaS offerings. Also included in ~~Cost~~cost of net revenues is amortization of product related intangible assets.

Cost of subscription, support and services revenues increased for the three months ended March 31, 2020 compared to the three months ended March 31, 2019 primarily due to an increase in costs related to providing our subscription offerings.

Cost of product and license revenues decreased for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 compared to the three ~~and nine~~ months ended ~~September 30, 2016~~March 31, 2019 primarily due to lower overall sales of our perpetual Networking products, which ~~contains~~contain hardware components that have a higher cost than our software products. ~~We currently expect an increase in Cost~~

Amortization of product ~~and license revenues when comparing the fourth quarter of 2017 to the fourth quarter of 2016, consistent with the expected increase in Product and licenses revenue.~~

~~Cost of services and maintenance revenues increased~~related intangible assets decreased for the three months ended ~~September 30, 2017~~March 31, 2020 compared to the three months ended ~~September 30, 2016~~March 31, 2019 primarily due to ~~an increase in sales~~lower amortization of our software maintenance from our new Customer Success Services offering. Cost of services and maintenance revenues increased for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 primarily due to an increase in sales of our software maintenance of $10.5 million from our new Customer Success Services offering, an increase in sales of our Data offerings of $3.6 million and an increase in sales of our Workspace Services offerings delivered via the cloud of $3.4 million. These increases are partially offset by a decrease of $2.5 million driven by lower sales of our professional services. We currently expect Cost of services and maintenance revenues to increase when comparing the fourth quarter of 2017 to the fourth quarter of 2016, consistent with the expected increases in SaaS revenue and License updates and maintenance revenue as discussed above.certain intangible assets becoming fully amortized.

Gross Margin

Gross margin as a percentage of revenue was ~~84.7% and 84.5%~~86.6% for the three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2020, and ~~85.3% and 84.8%~~85.1% for the three ~~and nine~~ months ended ~~September 30, 2016,~~March 31, 2019, respectively. The ~~change~~increase in gross margin when comparing the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 to ~~September 30, 2016~~March 31, 2019 was ~~not significant.~~primarily due to an increase in sales which exceeded the increase in cost of sales.

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. ~~When~~Generally, when the dollar is weak, ~~the resulting increase to~~ foreign currency denominated expenses will be higher, and these higher expenses will be partially offset by the ~~gain in~~gains realized from our hedging contracts. ~~When~~Conversely, if the dollar is strong, ~~the resulting decrease to~~ foreign currency denominated expenses will be lower. These lower expenses will in turn be partially offset by the ~~loss in~~losses incurred from our hedging contracts. There is a risk that there will be fluctuations in foreign currency exchange rates beyond the ~~timeframe~~time frame for which we hedge our risk.

Research and Development Expenses


	Three Months Ended						Three Months Ended
	March 31,						March 31, 2020
	2020		2019		vs. March 31, 2019
	(In thousands)
Research and development	$	134,458	$	130,263	$	4,195

Research and development expenses ~~consisted~~consist primarily of personnel related costs and facility and equipment ~~costs and cloud capacity~~ costs directly related to our research and ~~development~~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 ~~September 30, 2017~~March 31, 2020 compared to the three months ended ~~September 30, 2016~~March 31, 2019 primarily due to ~~an increase in stock-based compensation of $3.9 million and an increase in~~ compensation and other employee-related costs of ~~$3.7~~$7.1 million ~~primarily~~ related to a net ~~increase in headcount. These increases are partially offset by a decrease in facility and equipment costs of $1.1 million and a decrease in cloud capacity costs of $0.5 million.~~

Research and development expenses increased during the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 primarily due to an increase in compensation and other employee-related costs of $11.9 million primarily related to a net

increase in headcount and an increase in ~~stock-based compensation~~cloud capacity costs of ~~$7.8 million. These increases are~~$2.6 million, partially offset by a decrease in ~~facility and equipment costs~~stock-based compensation of ~~$6.5 million and consulting fees of $2.2~~$6.2 million.

Sales, Marketing and Services Expenses


	Three Months Ended						Three Months Ended
	March 31,						March 31, 2020
	2020		2019		vs. March 31, 2019
	(In thousands)
Sales, marketing and services	$	326,109	$	274,655	$	51,454

Sales, marketing and services expenses ~~consisted~~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.

Sales, marketing and services expenses increased during the three months ended ~~September 30, 2017~~March 31, 2020 compared to the three months ended ~~September 30, 2016~~March 31, 2019 primarily due to the impact from the COVID-19 pandemic, which included an increase in variable compensation of $35.8 million driven by an increase in demand of limited use licenses and ongoing business continuity sales and an increase in compensation and other employee-related costs ~~including variable compensation~~ of ~~$7.1 million, partially offset by a decrease in certain facility and depreciation costs of $2.9~~$11.2 million.

Sales, marketing and services expenses increased during the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 primarily due to an increase in compensation and other employee-related costs, including variable compensation of $37.4 million resulting from a net increase in headcount related to go-to market investments to drive growth, an increase in marketing programs of $7.5 million and an increase in cloud capacity costs of $7.4 million. These increases are partially offset by a decrease in certain facility and depreciation costs of $15.2 million.

General and Administrative Expenses


	Three Months Ended						Three Months Ended
	March 31,						March 31, 2020
	2020		2019		vs. March 31, 2019
	(In thousands)
General and administrative	$	80,099	$	77,547	$	2,552

General and administrative expenses ~~consisted~~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 ~~remained consistent for~~increased during the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 compared to the three ~~and nine~~ months ended ~~September 30, 2016.~~

~~Restructuring Expenses~~

During the three and nine months ended September 30, 2017, we incurred costs of $1.7 million and $9.2 million, respectively, related to operational initiatives designed to improve infrastructure scalability and cost saving efficiencies. The chargesMarch 31, 2019 primarily ~~related to employee severance. As of September 30, 2017, total charges incurred since inception were $9.2 million.~~

All remaining costs for the three and nine months ended September 30, 2017 and 2016 relate to other restructuring plans, wherein the majority of the activities related to these previous programs are substantially complete.

Additionally, as mentioned in the Overview section above, on October 4, 2017, we announced a restructuring program to support our initiatives intended to accelerate the transformation to a cloud-based subscription business, increase strategic focus, and improve operational efficiency. We currently expect to record in the aggregate approximately $60.0 million to $100.0 million in pre-tax restructuring charges associated with this program. We currently anticipate completing the majority of the activities related to this program during the fourth quarter of 2017 and during fiscal year 2018.

~~2017 Operating Expense Outlook~~

~~When comparing the fourth quarter of 2017~~due to the ~~fourth quarter of 2016, we currently expect an overall decrease in Operating expenses. Additionally, we expect~~impact from the COVID-19 pandemic, which included an increase in ~~restructuring~~credit loss expense of $6.4 million, an increase in compensation and other employee-related costs ~~when comparing the fourth quarter~~ of ~~2017 to the fourth quarter~~$4.9 million and an increase in charitable contributions of ~~2016.~~$4.0 million. These increases were partially offset by a decrease in professional fees of $10.3 million and a decrease in facilities costs of $3.2 million.

Interest Income


	Three Months Ended						Three Months Ended
	March 31,						March 31, 2020
	2020		2019		vs. March 31, 2019
	(In thousands)
Interest income	$	1,605	$	9,674	$	(8,069)

Interest income primarily consists of interest earned on our cash, cash equivalents and investment balances. Interest income ~~increased~~decreased for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 compared to the three ~~and nine~~ months ended ~~September 30, 2016~~March 31, 2019 primarily due to ~~overall~~lower cash, cash equivalents and investment balances ~~and higher yields~~as a result of the repayment of the outstanding principal balance of our Convertible Notes on ~~investments.~~April 15, 2019. See Note 6 to our condensed consolidated financial statements for additional details regarding ~~the Company’s~~our investments.

~~Other Income (Expense), Net~~

Interest Expense


	Three Months Ended						Three Months Ended
	March 31,						March 31, 2020
	2020		2019		vs. March 31, 2019
	(In thousands)
Interest expense	$	(14,611)	$	(18,033)	$	3,422

Interest expense primarily consists of interest paid on our 2027 and 2030 Notes and our credit facilities. Interest expense decreased for the three months ended March 31, 2020 compared to the three months ended March 31, 2019 primarily due to the repayment of the outstanding principal balance of our Convertible Notes on April 15, 2019, resulting in a decrease of $7.0 million, partially offset by an increase of $3.5 million from our outstanding 2030 Notes and Term Loan Credit Agreement. See Note 11 to our condensed consolidated financial statements for additional details regarding our debt.

Other income, ~~(expense),~~net


	Three Months Ended						Three Months Ended
	March 31,						March 31, 2020
	2020		2019		vs. March 31, 2019
	(In thousands)
Other income, net	$	2,098	$	3,699	$	(1,601)

Other income, net is primarily comprised of gains (losses) from remeasurement of foreign currency ~~transaction,~~transactions, sublease income, realized losses related to changes in the fair value of our investments that have a decline in fair value ~~considered other-than-temporary~~ and recognized gains (losses) related to our investments, which was not material for all periods presented.

The change in Other income, ~~(expense),~~ net during the three months ended ~~September 30, 2017~~March 31, 2020 compared to the three months ended ~~September 30, 2016 was not significant.~~

~~The change in Other income (expense), net during the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016~~March 31, 2019 is primarily driven by ~~an increase in net gains on~~a decrease related to our strategic investments of $0.9 million and a decrease from the remeasurement and ~~settlements~~settlement of foreign currency ~~transactions.~~transactions of $0.7 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. ~~We do not expect~~

Our effective tax rate generally differs from the U.S. federal statutory rate primarily due to ~~remit~~lower tax rates on earnings ~~from~~generated by our foreign ~~subsidiaries.~~

~~In March 2016, the Financial Accounting Standards Board issued an accounting standard update on the accounting of stock-based compensation to provide guidance~~operations that ~~changes the accounting for certain aspects of share-based payments to employees. The guidance requires, among other things, the recognition of the income tax effects of awards~~are taxed primarily in the income statement when the awards vest or are settled, thus eliminating additional paid-in capital pools. We adopted this standard in the first quarter of 2017. There was no material impact upon adoption of this guidance since the recognition of income tax effects of awards was not materially different from amounts previously recorded in our financial statements.Switzerland.

Our ~~continuing operations~~ effective tax rate was ~~5.3%~~4.9% and ~~8.5%~~6.6% for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, respectively. The decrease in the effective tax rate when comparing the three months ended ~~September 30, 2017~~March 31, 2020 to the three months ended September 30, 2016 was generally due to the recognition of a $7.9 million benefit from the release of uncertain tax positions due to expiration of statute of limitations in certain jurisdictions during the three months ended September 30, 2017. Our continuing operations effective tax rate was 16.9% and 13.2% for the nine months ended September 30, 2017 and September 30, 2016, respectively. The increase in the effective tax rate when comparing the nine months ended September 30, 2017 to the nine months ended September 30, 2016March 31, 2019 was primarily due to ~~certain transactions executed during~~tax items unique to the ~~nine months~~period ended ~~September 30, 2017.~~March 31, 2020. These amounts include a ~~$46.1 million~~tax benefit for the impact of the closure of a California audit during the three-month period ended March 31, 2020, as well as additional discrete tax benefits for share-based payments.

On May 19, 2019, Swiss voters approved the Federal Act on Tax Reform and AHV Financing (“TRAF”), which provides for broad changes to federal and cantonal taxation in Switzerland effective January 1, 2020. The TRAF requires the abolishment of certain favorable tax regimes, provides for certain transitional relief, and directs the cantons to implement certain mandatory measures while other provisions are at the discretion of the canton. During the period ended December 31, 2019, we recorded a deferred tax asset and a partial valuation allowance for the cantonal and federal impact of the TRAF. The income tax ~~charge to establish a valuation allowance due to a change in expectation of realizability of state R&D credits arising from the separation~~impact of the ~~GoTo Business. This charge was partially offset by a $20.9 million benefit~~TRAF may be subject to change due to the ~~adoption~~issuance of the accounting standard update requiring recognition of income tax effects related to stock-based compensation when the awards vest or settle. This charge was also partially offset by a $9.8 million net tax benefit primarily related to an international statutory tax transaction and a $7.9 million benefitfurther legislative guidance from the ~~release of uncertain tax positions due to the expiration of statute of limitations in certain jurisdictions.~~Swiss taxing authorities.

Our net unrecognized tax benefits totaled ~~$69.2~~$68.8 million and ~~$69.8~~$84.5 million as of ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016~~2019, respectively. ~~All amounts~~At March 31, 2020, $58.2 million included in the balance ~~at September 30, 2017~~ for tax positions would affect the annual effective tax rate if recognized. We ~~have $2.4~~had $3.2 million accrued for the payment of interest ~~and penalties~~ as of ~~September 30, 2017.~~March 31, 2020.

On June 7, 2019, the U.S. Court of Appeals for the Ninth Circuit reversed a previous decision of the U.S. Tax Court in Altera v. Commissioner, and held that the U.S. Treasury Department’s regulations that require participants in a cost-sharing arrangement to share stock-based compensation costs were valid. Since we began accruing amounts for this uncertain tax

position in 2018, there were no changes to our position or treatment of our cost-sharing arrangements in the current period. We will continue to monitor any ongoing developments, including the outcome of Altera Corporation’s February 10, 2020 petition for Writ of Certiorari to the U.S. Supreme Court, to determine if future changes are required. The case's final disposition may result in a benefit for us in the future if the case is reversed.

We and one or more of our subsidiaries are subject to U.S. federal income taxes in the United States, as well as income taxes of multiple state and foreign jurisdictions. We are not currently ~~not subject to a U.S. federal income tax examination.~~under examination by the United States Internal Revenue Service. With few exceptions, we are generally not ~~under~~subject to examination for state and local income tax, or in non-U.S. jurisdictions, by tax authorities for years prior to ~~2013.~~2016.

~~In the ordinary course of global business, there~~Our U.S. liquidity needs are ~~transactions for which the ultimate tax outcome is uncertain; thus, judgment is required in determining the worldwide provision for income taxes.~~currently satisfied using cash flows generated from our U.S. operations, borrowings, or both. We provide for income taxes on transactions based on our estimate of the probable liability. We adjust our provision as appropriate for changes that impact our underlying judgments. Changes that impact provision estimates include such items as jurisdictional interpretations on tax filing positions based on the resultsalso utilize a variety of tax ~~audits and general tax authority rulings. Due~~planning strategies in 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 ~~evolving nature of tax rules combined with~~extent that the ~~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~~foreign earnings are not restricted by local laws or result in ~~additional tax liabilities and adversely affect our results of operations, financial condition or cash flows.~~significant incremental costs associated with repatriating the foreign earnings.

At ~~September 30, 2017,~~March 31, 2020, we had ~~$194.5~~$365.1 million in net deferred tax ~~assets from continuing operations.~~assets. The authoritative guidance requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. We review deferred tax assets periodically for recoverability and make estimates and judgments regarding the expected geographic sources of taxable income and gains from investments, as well as tax planning strategies in assessing the need for a valuation allowance. If the estimates and assumptions used in our determination change in the future, we could be required to revise our estimates of the valuation allowances against our deferred tax assets and adjust our provisions for additional income taxes.

Our effective tax rate generally differs from the U.S. federal statutory rate of 35% due primarily to lower tax rates on earnings generated by our foreign operations that are taxed primarily in Switzerland. We have not provided for U.S. taxes for those earnings because we plan to reinvest all of those earnings indefinitely outside the United States. From time to time, there may be other items that impact our effective tax rate, such as the items specific to the current period discussed above.

Liquidity and Capital Resources

During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, we generated ~~continuing~~ operating cash flows of ~~$710.6~~$284.2 million. These ~~continuing~~ operating cash flows related primarily to net income ~~from continuing operations~~ of ~~$305.9~~$181.2 million, adjusted for, among other things, non-cash charges, stock-based compensation expense of ~~$127.2~~$58.3 million and depreciation and amortization expenses of $52.6 million. Partially offsetting these cash inflows was a change in operating assets and liabilities of $14.1 million. The change in our net operating assets and liabilities was primarily a result of an outflow in deferred revenue of $41.0 million and an outflow in other assets of $23.3 million, primarily due to an increase in capitalized commissions from higher subscription sales. These outflows are partially offset by an inflow from accounts payable of $20.5 million due to cloud hosting fees, an inflow from accrued expenses and current liabilities of $17.1 million due to an increase in commissions and an inflow from accounts receivable of $11.3 million. The inflow from accounts receivable is primarily due to an increase in collections from prior period sales, partially offset by increases in new accounts receivable balances during the first quarter of 2020 primarily from business continuity sales in response to COVID-19. For additional information, see Impact from COVID-19 within our Executive Summary. Our investing activities provided $10.0 million of cash consisting primarily of net proceeds from investments of $22.2 million, partially offset by cash paid for the purchase of property and equipment of $10.5 million. Our financing activities used cash of $310.0 million primarily for stock repurchases of $1.00 billion, amounts paid for but not settled under our accelerated stock repurchase program of $200.0 million, cash paid for tax withholding on vested stock awards of $54.2 million and cash dividends on our common stock of $42.8 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 the three months ended March 31, 2019, we generated operating cash flows of $267.6 million. These operating cash flows related primarily to net income of $110.3 million, adjusted for, among other things, non-cash charges, stock-based compensation expense of $65.2 million, depreciation and amortization expenses of ~~$121.3~~$54.4 million, and deferred income tax expense of ~~$32.4~~$24.0 million. Also contributing to these cash inflows was a change in operating assets and liabilities of ~~$93.8~~$6.6 million, net of effect of our acquisitions. The change in our net operating assets and liabilities was primarily a result of an inflow in accounts receivable of ~~$216.1~~$204.4 million driven by an increase in collections from higher prior period ~~bookings. This inflow is partially offset by changes in income taxes, net of $58.3 million mostly due to a decrease in income taxes payable~~bookings and an increase in prepaid taxes, changes in accrued expenses and other liabilities of $17.4 million primarily due to a decrease in employee-related accruals, changes in accounts payable of $17.0 million due to the timing of payments, changes ininflow from prepaid expenses and other current assets of ~~$15.8~~$17.5 million, ~~mostly~~primarily due to decreases from prepaid cloud commitment agreements. These inflows are partially offset by an ~~increase~~outflow in ~~prepaid licensing agreements~~accrued expenses and other current liabilities of $82.0 million, primarily due to decreases in employee-related accruals, changes in deferred revenue of ~~$10.7 million.~~$77.9 million, primarily maintenance and support, as well as an outflow in income taxes, net of $49.4 million due to decreases in income taxes payable. Our ~~continuing~~ investing activities ~~used $37.3~~provided $882.9 million of cash consisting primarily of cash ~~paid for the purchase of property and equipment of $61.7 million and cash paid for acquisitions of $60.4 million, partially offset by~~received from the net proceeds from the sale of investments of $90.7 million. Our financing activities used cash of $636.6 million primarily due to cash paid for stock repurchases of $575.0 million, repayments on our credit facility of $125.0 million, cash paid for tax withholding on vested stock awards of $71.2 million, and the transfer of cash to the GoTo Business resulting from the separation of $28.5 million, partially offset by proceeds from the credit facility of $165.0 million.

During the nine months ended September 30, 2016, we generated continuing operating cash flows of $739.6 million. These continuing operating cash flows related primarily to net income from continuing operations of $291.3 million, adjusted for, among other things, non-cash charges, depreciation and amortization expenses of $138.7 million and stock-based compensation expense of $115.3 million. Also contributing to these cash inflows was a change in operating assets and liabilities of $200.1 million, net of effect of our acquisitions. The change in our net operating assets and liabilities was primarily a result of changes in accounts receivable of $190.7 million driven by an increase in collections from higher bookings and changes in income taxes, net of $70.8 million mostly due to decreases in prepaid taxes and increase in income taxes payable. These inflows are partially offset by decreases in deferred revenue of $51.1 million and outflows in accounts payable of $19.3 million due to timing of payments. Our continuing investing activities provided $153.1 million of cash consisting primarily of net proceeds from the sale of investments of $256.3$900.8 million, partially offset by cash paid for the purchase of property and equipment of ~~$66.3 million, cash paid for licensing agreements and technology of $25.8 million, and cash paid for acquisitions of $11.5~~$17.3 million. Our financing activities used cash of ~~$32.3~~$157.5 million primarily due to cash paid for stock repurchases of $93.8 million, cash dividends on our common stock of $46.0 million and cash paid for tax withholding on vested stock awards of ~~$55.4 million and cash paid for stock repurchases of $28.7 million, partially offset by proceeds from the issuance of common stock under our employee stock-based compensation plans of $39.4~~$17.7 million.

Term Loan Credit Agreement

~~Credit Facility~~

On January ~~7, 2015,~~21, 2020, we entered into ~~a credit agreement, or~~the Term Loan Credit Agreement with Bank of America, N.A., as ~~Administrative Agent,~~administrative agent, and the other lenders party thereto from time to time ~~collectively,~~(collectively, the ~~Lenders.~~“Lenders”).The Term Loan Credit Agreement provides us with facilities to borrow term loans on an unsecured basis in an aggregate principal amount of up to $1.00 billion, consisting of (1) a $500.0 million 364-day Term Loan, and (2) a $500.0 million 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, we borrowed $1.00 billion under the term loans and used the proceeds to enter into ASR transactions with each of the Dealers for an aggregate of $1.00 billion. See Notes 11 and 15 to our condensed consolidated financial statements for additional details on the Term Loan Credit Agreement and ASR.

Senior Notes

On February 25, 2020, we issued $750.0 million of unsecured senior notes due March 1, 2030. The 2030 Notes accrue interest at a rate of 3.300% per annum. Interest on the 2030 Notes 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 approximately $738.1 million, after deducting the underwriting discount and estimated offering expenses payable by us. Net proceeds from this offering were primarily used to repay amounts outstanding under our 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.

During the three months ended March 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 March 31, 2020, $250.0 million was outstanding under the 3-year Term Loan.

On November 15, 2017, we issued $750.0 million of the 2027 Notes. The 2027 Notes accrue interest at a rate of 4.5% 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, after deducting the underwriting discount and estimated offering expenses payable by us. Net proceeds from this offering were used to repurchase shares of our common stock through an ASR transaction which we entered into with the ASR counterparty on November 13, 2017. The 2027 Notes will mature on December 1, 2027, unless earlier redeemed or repurchased in accordance with their terms prior to such date. See Note 11 to our condensed consolidated financial statements for additional details on the 2030 Notes and the 2027 Notes.

Credit Facility

On November 26, 2019, we entered into an amended and restated credit agreement (the "Credit Agreement") with a group of financial institutions, which amended and restated our existing credit agreement, dated January 7, 2015. The Credit Agreement provides for a ~~$250.0 million~~five year unsecured revolving credit facility ~~for a term~~in the aggregate amount of ~~five years. During the nine months ended September 30, 2017, we drew $165.0~~$250.0 million, ~~of which we repaid $125.0 million as of as of September 30, 2017.~~subject to continued covenant compliance. 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. The proceeds of borrowings under the Credit Agreement may be used for working capital and general corporate purposes, including acquisitions. Borrowings under the Credit Agreement will bear interest at a rate equal to either (a) a customary London interbank offered rate formula or (b) a customary base rate formula, plus the applicable margin with respect thereto, in each case as set forth in the Credit Agreement. The weighted average interest rate for the period thatAs of March 31, 2020, no amounts were outstanding under the ~~Credit Facility was 1.57%. As of September 30, 2017, there was $40.0 million outstanding under the~~ credit facility.

The Credit Agreement requires us to maintain a consolidated leverage ratio of not more than 3.5:1.0 and a consolidated interest coverage ratio of not less than 3.0:1.0. The 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 and bankruptcy-related defaults. The Lenders are entitled to accelerate repayment of the loans under the Credit Agreement upon the occurrence of any of the events of default. In addition, the Credit Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict our ability to grant liens, merge or consolidate, dispose of all or substantially all of our assets, change our business and incur subsidiary indebtedness, in each case subject to customary exceptions for a credit facility of this size and type. We were in compliance with these covenants as of September 30, 2017. In addition, the Credit Agreement contains customary representations and warranties. Please see See Note 1211 to our condensed consolidated financial statements for additional details on ~~our~~the Credit ~~Agreement.~~Agreement.

Convertible ~~Senior~~ Notes

~~In April~~During 2014, we completed a private placement of approximately $1.44 billion principal amount of 0.500% Convertible ~~Senior~~ 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 indenture governing the Convertible Notes, on April 15, 2019 orwe paid $1.16 billion in the outstanding aggregate principal amount of the Convertible Notes and delivered 4.9 million newly issued shares of our common stock in respect of the remainder of our conversion obligation in excess of the aggregate principal amount of the Convertible Notes being converted, in full satisfaction of such converted notes. We received shares of our common stock under the Bond Hedges that offset the issuance of shares of common stock upon conversion of the Convertible Notes. The net proceeds from this offering were approximately $1.42 billion (including the proceeds from the Over-Allotment Option), after deducting the initial purchasers’ discounts and commissions and the offering expenses payable by us. We used approximately $82.6 million of the net proceeds to pay the cost of certain bond hedges entered into in connection with the offering (after such cost was partially offset by the proceeds to us from certain warrant transactions). Please see Note 11 to our condensed consolidated financial statements for additional details on ~~the~~our Convertible Notes ~~offering~~ and ~~the related bond hedges and warrant transactions.~~Bond Hedges.

We used the remainder of the net proceeds from the offering and a portion of our existing cash and investments to purchase an aggregate of approximately $1.5 billion of our common stock under our share repurchase program. We used approximately $101.0 million to purchase shares of our common stock from certain purchasers of the Convertible Notes in privately negotiated transactions concurrently with the closing of the offering, and the remaining $1.4 billion to purchase additional shares of our common stock through an accelerated share repurchase transaction, or the ASR, which we entered into with Citibank, N.A., or Citibank, on April 25, 2014.

As a result of the structure of the Reverse Morris Trust (RMT) transaction with LogMeIn, Inc., and the notification on October 10, 2016 to noteholders in accordance with the Indenture, the Convertible Notes became convertible until the earlier of (1) the close of business on the business day immediately preceding the ex-dividend date for the distribution of the outstanding shares of GetGo common stock to our stockholders by way of a pro rata dividend, and (2) our announcement that such distribution will not take place, even though the Convertible Notes were not otherwise convertible at December 31, 2016.

The conversion period for the Convertible Notes that commenced on October 10, 2016 in connection with the distribution terminated as of the close of business on January 31, 2017. As a result, the Convertible Notes were reclassified to Other liabilities from Current liabilities and the amount previously recorded as Temporary equity was reclassified to Stockholders' equity as of September 30, 2017. The distribution also resulted in an adjustment to the conversion rate for the Convertible Notes under the terms of the Indenture. As a result of this adjustment, the conversion rate for the Convertible Notes was re-set as of the opening of business on February 1, 2017 to 13.9061 shares of our common stock per $1,000 principal amount of Convertible Notes, which corresponds to a conversion price of $71.91 per share of common stock. Similar adjustments were made to the conversion rates for the convertible note hedge and warrant transactions as of the opening of business on February 1, 2017.

Historically, significant portions of our cash inflows were generated by our operations. We currently expect this trend to continue throughout ~~2017.~~2020. We believe that our existing cash and investments together with cash flows expected from ~~continuing~~ operations will be sufficient to meet expected operating and capital expenditure requirements and service our debt obligations for the next 12

months. For additional information, see section titled Impact of COVID-19 Pandemic above. We continue to search for suitable 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 ~~potential redemption of our Convertible Notes~~ and for general corporate purposes.

Cash, Cash Equivalents and Investments

September 30, 2017 December 31, 2016 2017 Compared to 2016
(In thousands)
Cash, cash equivalents and investments $ 2,558,714
$ 2,543,160
$ 15,554


	March 31, 2020		December 31, 2019		2020 Compared to 2019
	(In thousands)
Cash, cash equivalents and investments	$	563,246	$	605,456	$	(42,210)

The ~~increase~~decrease in Cash, cash equivalents and investments when comparing ~~September 30, 2017~~March 31, 2020 to December 31, ~~2016,~~2019, is primarily due to ~~cash provided by our continuing operating activities of $710.6 million and proceeds from our credit facility of $165.0 million, partially offset by~~the cash paid for ~~stock~~share repurchases of ~~$575.0 million, repayments on~~$1.00 billion, amounts paid for but not settled under our ~~credit facility~~accelerated stock repurchase program of ~~$125.0~~$200.0 million, cash paid for tax withholding on vested stock awards of ~~$71.2~~$54.2 million, cash dividends on our common stock of $42.8 million and cash paid for property and equipment of ~~$61.7~~$10.5 million, partially offset by cash received from debt offerings of $987.0 million and cash provided by operating activities of $284.2 million.

As of ~~September 30, 2017, $2.47 billion~~March 31, 2020, $367.9 million of the ~~$2.56 billion~~$563.2 million of Cash, cash equivalents and investments was held by our foreign subsidiaries. IfThe 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 ~~needed for our operations in the United States, we would be required to accrue~~repatriated and pay U.S. taxes to repatriate these funds. Our current plans are not expected to require repatriation of cash and investments to fund our U.S. operations and, as a result, we intend to permanently reinvest our foreign earnings.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.

~~Accounts Receivable, Net~~

September 30, 2017 December 31, 2016 2017 Compared to 2016
(In thousands)
Accounts receivable $ 468,309
$ 687,089
$ (218,780 )
Allowance for returns (778 ) (1,994 ) 1,216
Allowance for doubtful accounts (2,730 ) (3,889 ) 1,159
Accounts receivable, net $ 464,801
$ 681,206
$ (216,405 )

The decrease in Accounts receivable, net, when comparing September 30, 2017 to December 31, 2016 was primarily due to an increase in collections from prior period bookings. The activity in our Allowance for returns was comprised primarily of $2.9 million in credits issued for returns during the nine months ended September 30, 2017, partially offset by $1.7 million of provisions for returns recorded during the nine months ended September 30, 2017. The activity in our Allowance for doubtful accounts was comprised primarily of $5.4 million of uncollectible accounts written off, net of recoveries during the nine months ended September 30, 2017, partially offset by $4.2 million in provisions for doubtful accounts. From time to time, we could maintain individually significant accounts receivable balances from our distributors or customers, which are comprised of large business enterprises, governments and small and medium-sized businesses. If the financial condition of our distributors or customers deteriorates, our operating results could be adversely affected.

Stock Repurchase Programs

Our Board of Directors authorized an ongoing stock repurchase program, ~~with a total repurchase authority granted to us of $6.8 billion,~~ of which ~~$500.0 million~~$1.00 billion was approved in January ~~2017.~~2020. We may use the approved dollar authority to repurchase stock at any time until the approved amount is exhausted. The objective of ~~our~~the stock repurchase program is to improve stockholders’ returns. At ~~September 30, 2017, $329.0~~March 31, 2020, $914.1 million ($714.1 million after taking into consideration the contracted but undelivered shares under the ASR of $200.0 million) was available to repurchase common stock pursuant to the stock repurchase program. We may repurchase shares under this program in future periods depending on a variety of factors, including among other things, macroeconomic factors, market conditions and business priorities.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 as well as proceeds from employee stock ~~option exercises~~awards and the related tax benefit.

We are authorized to make ~~open market~~ purchases of our common stock using general corporate funds through open market purchases, or pursuant to a Rule 10b5-1 plan or in privately negotiated transactions.

On January 30, 2020, we used the proceeds from our Term Loan Credit Agreement to enter into an ASR with a group of Dealers for an aggregate of $1.00 billion. Under the ASR transactions, we received an initial share delivery of approximately 6.5 million shares of our common stock, with the remainder, if any, delivered upon completion of the ASR transactions. The total number of shares of common stock that we will repurchase under each ASR agreement will be based on the average of the daily volume-weighted average prices of our common stock during the term of the applicable ASR agreement, less a discount. At settlement, each Dealer may be required to deliver additional shares of common stock to us, under certain circumstances, we may be required to deliver shares of common stock, at our election, or make a cash payment to the applicable Dealer. Final settlement of the ASR agreement is expected to be completed by the end of the third quarter of 2020. See Note 15 to our condensed consolidated financial statements for detailed information on the ASR.

During the three months ended ~~September 30, 2017,~~March 31, 2020, we expended $75.0 million on open market purchases under the stock purchase program, repurchasing 984,869 shares of outstanding common stock at an average price of $76.11. During the nine months ended September 30, 2017, we expended $575.0approximately $199.9 million on open market purchases under the stock repurchase program, repurchasing ~~7,384,368~~1,731,500 shares of ~~outstanding~~ common stock at an average price of ~~$77.86.~~

$115.45.

During the three months ended ~~September 30, 2016, we had no open market purchases. During the nine months ended September 30, 2016,~~March 31, 2019, we expended ~~$28.7~~approximately $93.8 million on open market purchases under the stock repurchase program, repurchasing ~~426,300~~911,060 shares of ~~outstanding~~ common stock at an average price of ~~$67.30.~~$102.96.

Shares for Tax Withholding

During the three months ended ~~September 30, 2017,~~March 31, 2020, we withheld ~~135,003~~483,224 shares from equity awards that vested, totaling ~~$10.6~~$65.3 million, to satisfy minimum tax withholding obligations that arose on the vesting of such equity awards. During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2019, we withheld ~~870,656~~593,988 shares from ~~stock units~~equity awards that vested, totaling $71.2 million, to satisfy minimum tax withholding obligations that arose on the vesting of stock units. During the three months ended September 30, 2016, we withheld 134,782 shares from stock units that vested, totaling $12.0$60.1 million, to satisfy minimum tax withholding obligations that arose on the vesting of such equity awards. During the nine months ended September 30, 2016, we withheld 698,391 shares from stock units that vested, totaling $55.0 million, to satisfy minimum tax withholding obligations that arose on the vesting of stock units. These shares are reflected as treasury stock in our condensed consolidated balance sheets and the related cash outlays do not reduce our total stock repurchase authority.

Contractual Obligations

With the exception of the new Term Loan Credit Agreement entered into on January 21, 2020, consisting of a $500.0 million 364-day Term Loan, and a $500.0 million 3-year Term Loan, and the $750.0 million 2030 Senior Notes issued on February 25, 2020, as discussed above under the subheading “Liquidity and Capital Resources”, there have been no material changes, outside the ordinary course of business to our contractual obligations since December 31, 2019. As of March 31, 2020, $250.0 million in principal amount was outstanding under the 3-year Term Loan. For further information, see “Contractual Obligations and Off-Balance Sheet Arrangement” in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

Off-Balance Sheet Arrangements

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


~~ITEM 3.~~	~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There were no material changes during the quarter ended ~~September 30, 2017~~March 31, 2020 with respect to the information appearing in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” of our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019.


~~ITEM 4.~~	~~CONTROLS AND PROCEDURES~~

ITEM 4.CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of ~~September 30, 2017,~~March 31, 2020, our management, with the participation of our principal executive and principal financial officers, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon that evaluation, our principal executive officer and our principal financial officer concluded that, as of ~~September 30, 2017~~,March 31, 2020, our disclosure controls and procedures were effective in ensuring that material information required to be disclosed by us 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 by and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

During the ~~quarter~~three months ended ~~September 30, 2017,~~March 31, 2020, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION


~~ITEM 1.~~	~~LEGAL PROCEEDINGS~~

~~Due~~ITEM 1.LEGAL PROCEEDINGS

We are subject to various legal proceedings, including suits, assessments, regulatory actions and investigations. We believe that we have meritorious defenses in these matters; however, we are unable currently to determine the ultimate outcome of these or similar matters or the potential exposure to loss, if any. In addition, due to the nature of our business, we are subject to various litigation matters, including patent infringement claims alleging infringement by various Citrix products and services. We believe that we have meritorious defenses to the allegations made in our pending cases and intend to vigorously defend these lawsuits; however, we are unable currently to determine the ultimate outcome of these or similar matters or the potential exposure to loss, if any.

In ~~addition,~~2019, three putative class action lawsuits have been filed against the Company in the United States District Court for the Southern District of Florida following a previously disclosed cyberattack during which international cyber criminals gained intermittent access to Citrix’s internal network and stole certain business files, including human resources and employee records, some of which contained sensitive and personal identification information of the Company's current and former employees and, in some cases, their beneficiaries, dependents and others. These matters, Howard v. Citrix, Jackson and Sargent v. Citrix, and Ramus, Young and Charles v. Citrix, were filed on May 24, 2019, May 30, 2019, and June 23, 2019, respectively, and have been consolidated. The plaintiffs, who purport to represent various classes of current and former employees (and their dependents) of the Company, generally claim to have been harmed by the Company’s alleged actions and/or omissions in connection with this incident and their personal data. They assert a variety of common law and statutory claims seeking monetary damages or other related relief. On March 30, 2020, the parties filed a Notice of Settlement informing the Court that the parties reached agreement to resolve the material terms required to settle all claims in this action. This agreement is subject to Court approval.

On July 25, 2019, a class action lawsuit was filed against Citrix, LogMeIn and certain of their directors and officers in the Circuit Court of the 15th Judicial Circuit, Palm Beach County, Florida. The complaint alleges that the defendants violated federal securities laws by making alleged misstatements and omissions in LogMeIn’s Registration Statement and Prospectus filed in connection with the 2017 spin-off of Citrix’s GoTo family of service offerings and subsequent merger of that business with LogMeIn. The complaint seeks among other things the recovery of monetary damages. On April 28, 2020, the defendants filed motions to dismiss the complaint. We believe that Citrix and our directors have meritorious defenses to these allegations; however, we are ~~a defendant in various litigation matters generally arising out of the normal course of business. Although it is difficult~~unable to ~~predict~~currently determine the ultimate ~~outcomes~~outcome of ~~these cases, we believe that it is not reasonably possible that~~this matter or the ~~ultimate outcomes will materially and adversely affect our business, financial position, results of operations~~potential exposure or ~~cash flows.~~loss, if any.


~~ITEM 1A.~~	~~RISK FACTORS~~ ITEM 1A.RISK FACTORS

The following information updates, and should be read in conjunction with, the information disclosed in Part 1, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016,~~2019, which was filed with the Securities and Exchange Commission on February ~~16, 2017.~~14, 2020.

The effects of the COVID-19 pandemic could adversely affect our business, results of operations, financial condition and cash flows, and such effects will depend on future developments.

The COVID-19 pandemic and the measures instituted to slow the spread of COVID-19, including travel bans and restrictions, quarantines, shelter in place or total lock-down orders and business limitations and restrictions, have been weighing on the macroeconomic environment, and the pandemic has significantly increased economic uncertainty and reduced economic activity. The COVID-19 pandemic could cause a global recession, depression, or other adverse economic conditions across the world. In the event of a recession, depression, or other downturn in the worldwide economy, our business could be adversely affected.

The effects of the COVID-19 pandemic on our business are uncertain and difficult to predict, but may include, the following, each of which could adversely affect our business, results of operations, financial condition and cash flows:

•The rate of IT spending and the ability of our customers to purchase our offerings could be adversely impacted. Further, the impact of COVID-19 could delay prospective customers’ purchasing decisions, impact customers’ pricing expectations for our offerings, lengthen payment terms, reduce the value or duration of their subscription contracts, or adversely impact renewal rates. For example, even though we experienced an increase in demand for shorter duration limited use on–premises term subscriptions during the first quarter of fiscal year 2020 to meet the immediate needs of our customers during the COVID-19 pandemic, which increased our reported revenue, we also experienced customers electing to postpone discretionary projects and becoming less inclined to trade-up from existing solutions as the economic environment continues to weaken.

•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. We have temporarily closed Citrix offices and have instituted a global remote work mandate and instituted significant travel restrictions, which may limit the effectiveness and productivity of our employees.

•We may be unable to collect amounts due on billed and unbilled revenue if our customers or partners delay payment or fail to pay us under the terms of our agreements as a result of the impact of COVID-19 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 repay or refinance our outstanding indebtedness, fund future product development and acquisitions or return capital to shareholders. Further, our ability to obtain outside financing or raise additional capital may be limited as a result of volatility in the financial markets during and following the COVID-19 pandemic.

•We may be unable to service our debt arrangements, including the 2027 Notes, the 2030 Notes, the Credit Agreement and Term Loan Credit Agreement if we do not generate sufficient cash flow as a result of the impact of COVID-19. Further, we are required to comply with the covenants set forth in the indenture governing the 2027 Notes and the 2030 Notes, the Credit Agreement and the Term Loan Credit Agreement and an adverse impact on our business, results of operations, financial condition or cash flows as a result of COVID-19 could adversely affect our ability to comply with these covenants.

•Our ~~transition~~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 ~~perpetual~~result of the unpredictability of the impact that COVID-19 will have on our businesses, our customers’ and partners’ businesses and the global markets and economy.

•We may experience disruptions or delays to our supply chain as a ~~subscription-based~~result of COVID-19. For example, we rely on a concentrated number of third-party suppliers for our Networking products, and may experience disruptions from the temporary closure of third-party supplier and manufacturer facilities, interruptions in product supply or restrictions on export or shipment.

•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 expect to hold our largest annual customer and partner event, Synergy, as a virtual event, or a series of events, which may prove less successful. We may need to postpone or cancel other customer, employee or industry events or other marketing initiatives in the future.

•Our business ~~model~~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.

•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.

The effect of COVID-19 may become more severe and remain prevalent for a significant period of time, and as a result could adversely affect our business, results of operations, financial condition and cash-flows even after the COVID-19 outbreak has subsided.

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 the “Risk Factors” section in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. The ultimate impact of COVID-19 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, future and ongoing actions that may be taken by governmental authorities, the impact on the businesses of our customers and partners, and the length of its impact on the global economy, which are uncertain and are difficult to predict at this time.

Servicing our debt will require a significant amount of cash, which could adversely affect our business, financial condition and results of operations. We may not have sufficient cash flow from our business to make payments on our debt or repurchase our 2027 Notes or 2030 Notes upon certain events.

As of March 31, 2020, we had aggregate indebtedness of $1.73 billion that we have incurred in connection with the issuance of our unsecured senior notes due December 1, 2027, or the 2027 Notes, the issuance of our unsecured senior notes due March 1, 2030, or the 2030 Notes, under the Credit Agreement and under the Term Loan Credit Agreement. Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness, depends on our future performance, which is subject to ~~numerous risks~~general economic, financial, competitive and ~~uncertainties.~~

~~The focus of~~other factors beyond our control. Our business ~~model is shifting away~~may not generate cash flow from ~~sales of perpetual software licenses for~~operations in the future sufficient to service our debt and to make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, reducing capital expenditures, restructuring debt or obtaining additional equity or debt financing on ~~premises deployment~~terms that may be onerous or highly dilutive. Our ability to ~~sales of subscriptions to~~refinance our ~~cloud-delivered solutions. Perpetual software licenses for~~indebtedness, as applicable, will depend on ~~premises deployment of~~the capital markets and our solutions will continue to be available to our customers, including through “hybrid” licenses permitting customers to transition from an on premises to a cloud-based deployment during the term of the license. This cloud-subscription strategy may give rise to a number of risks, including the following:

~~our cloud-subscription strategy may raise concerns among our customer base, including concerns regarding changes to pricing over time, service availability, and security of a cloud-delivered solution;~~

wefinancial condition at such time. We may not be able to ~~implement effective go-to-market strategies~~sell assets, restructure our indebtedness or obtain additional equity or debt financing on terms that are acceptable to us or at all, which could result in a default on our debt obligations. See “Management's Discussion and ~~train~~Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources” and Note 11 to our ~~sales team~~condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for the period ended March 31, 2020 for information regarding our 2030 Notes, 2027 Notes, our Credit Agreement and ~~channel partners~~our Term Loan Credit Agreement.

In addition, if a change in ~~order~~control repurchase event occurs with respect to ~~effectively market our subscription offerings;~~

the 2027 Notes or the 2030 Notes, we will be required, subject to certain exceptions, to offer to repurchase the 2027 Notes or 2030 Notes, as applicable at a repurchase price equal to 101% of the principal amount of the 2027 Notes or 2030 Notes, as applicable, repurchased, plus accrued and unpaid interest, if any. In such event, we may not have enough available cash or be ~~unsuccessful~~able to obtain financing to fund the required repurchase of the 2027 Notes or 2030 Notes, as applicable, or making such payments could adversely affect our liquidity. Our ability to repurchase the 2027 Notes or 2030 Notes may be limited by law, by regulatory authority or by agreements governing our other indebtedness.

Further, we are required to comply with the covenants set forth in ~~maintaining~~the indentures governing the 2027 Notes and 2030 Notes, the Credit Agreement and the Term Loan Credit Agreement. In particular, each of the Credit Agreement and Term Loan Credit Agreement requires us to maintain certain leverage and interest ratios and contains various affirmative and negative covenants, including covenants that limit or restrict our ~~target pricing, adoption~~ability to grant liens, merge or consolidate, dispose of all or substantially all of our assets, change our business or incur subsidiary indebtedness. The indenture governing our 2027 Notes and ~~projected renewal rates;~~

2030 Notes contains covenants limiting our ability and the ability of our subsidiaries to create certain liens, enter into certain sale and leaseback transactions, and consolidate or merge with, or sell, assign, convey, lease, transfer or otherwise dispose of all or substantially all of our assets, taken as a whole, to, another person. If we fail to comply with these covenants or any other provision of the agreements governing our indebtedness and do not obtain a waiver from the lenders or noteholders, then, subject to applicable cure periods, our outstanding indebtedness may be declared immediately due and payable. Additionally, a default under an indenture, the Credit Agreement or Term Loan Credit Agreement could lead to a default under the other agreements governing our current and any future indebtedness. If the repayment of the related indebtedness were to be accelerated, we may ~~select solution prices that are~~ not ~~optimal~~have enough available cash or be able to obtain financing to repay the indebtedness.

Our indebtedness, combined with our other financial obligations and contractual commitments, could ~~negatively affect our sales or earnings;~~have other important consequences. For example, it could:

~~we may incur costs at a higher than forecasted rate as we expand our cloud-delivered solutions;~~

~~our cloud-delivered solutions are primarily operated through third party data centers, which we do not control and which may be~~•make us more vulnerable to ~~damage, interruption~~adverse changes in general U.S. and ~~cyber-related risks;~~worldwide economic, industry and competitive conditions and adverse changes in government regulation;

•limit our ~~cloud-subscription strategy creates certain risks related~~flexibility in planning for, or reacting to, ~~the timing of revenue recognition and potential reductions~~changes in ~~cash flows in the near term.~~

Our cloud-subscription strategy may also require a considerable investment of technical, financial, legal and sales resources, and a scalable organization. Market acceptance of such offerings is affected by a variety of factors, including but not limited to: security, reliability, scalability, customization, 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. Whether our business model transition will prove successful and will accomplish our business and ~~financial objectives, including~~ our ~~fiscal year 2020 targets for revenue growth rate, operating margin, revenue from subscriptions as~~industry;

•place us at a ~~percentage of total revenue, Citrix Cloud bookings as a percentage of new bookings~~disadvantage compared to our competitors who have less debt; and ~~capital return, is subject to numerous uncertainties, including but not limited to: customer demand, the pace of our business model transition, renewal rates, channel acceptance,~~

•limit our ability to ~~further develop~~borrow additional amounts to fund acquisitions, for working capital and ~~scale infrastructure, our ability to include functionality~~for other general corporate purposes.

Any of these factors could materially and ~~usability in such solutions that address customer requirements, tax and accounting implications, pricing and our costs. In addition, the metrics we use to gauge the status of~~adversely affect our business, ~~may evolve over the course of the transition as significant trends emerge.~~

If we are unable to successfully establish our cloud-subscription strategy and navigate our business model transition in light of the foregoing risks and uncertainties, our results of operations could be negatively impacted.

In order to be successful, we must attract, engage, retain and integrate key employees and have adequate succession plans in place, and failure to do so could have an adverse effect on our ability to manage our business.

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 highly-skilled managerial, technical, sales and services, finance and marketing personnel are critical to our future, and

competition for experienced employees can be intense. In order to attract and retain executives and other key employees in a competitive marketplace, we 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. 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 products in our industry. The loss of services of any key personnel, the inability to retain and attract qualified personnel in the future or delays in hiring may harm our businessfinancial condition and results of operations.

~~Effective succession planning is also important to our long-term success. We recently experienced significant changes in our senior management team, including~~ In addition, if we incur additional indebtedness, the appointment of David J. Henshall as our President and Chief Executive Officer in July 2017 and Mark Ferrer as our Executive Vice President and Chief Revenue Officer in October 2017. Further, as previously announced in connection with Mr. Henshall’s appointment, we are conducting a search process to identify a permanent Chief Financial Officer. 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 disruptiverisks related to our business and ~~any failure to successfully integrate key new hires or promoted employees could adversely affect our business and results of operations.~~

~~We recently implemented a restructuring program, which we cannot guarantee will achieve its intended result.~~

In October 2017, we announced the implementation of a restructuring program designed to increase our strategic focus and operational efficiency. It is anticipated that the aggregate total pre-tax restructuring charges for this program, which primarily relate to employee severance arrangements and consolidation of leased facilities, will be in the range of $60.0 million to $100.0 million. We cannot guarantee that we will achieve or sustain the targeted benefits under this restructuring program, or that the benefits, even if achieved, will be adequate to meet our long-term profitability expectations. Risks associated with this restructuring program also include additional unexpected costs, adverse effects on employee morale and the failure to meet operational and growth targets due to the loss of employees, any of which may impair our ability to ~~achieve anticipated~~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 future and could affect the terms of any such financing.

To the extent the COVID-19 pandemic adversely affects our business, results ~~from~~of operations, ~~or otherwise harm~~financial condition and cash flows, it may also heighten these risks related to servicing our ~~business.~~debt.


~~ITEM 2.~~	~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of Equity Securities by the Issuer

~~Our~~The Company's Board of Directors ~~has~~ authorized an ongoing stock repurchase program, ~~with a total repurchase authority granted to us of $6.8 billion,~~ of which ~~$500.0 million~~$1.00 billion was approved in January ~~2017.~~2020. The objective of the stock repurchase program is to improve stockholders’ returns. AsAt March 31, 2020, $914.1 million ($714.1 million after taking into consideration the contracted but undelivered shares under the ASR of ~~September 30, 2017~~, ~~$329.0 million~~$200.0 million) was available to repurchase common stock pursuant to the stock repurchase ~~program.~~program. All shares repurchased are recorded as treasury stock. The following table shows the monthly activity related to ~~our~~ stock ~~repurchase program~~repurchases for the quarter ended ~~September 30, 2017~~:March 31, 2020:


	Total Number of Shares (or Units) Purchased (1)	Average Price Paid per Share (or Unit)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (In thousands) (2)
January 1, 2020 through January 31, 2020	8,423,821	$	121.15	8,259,980	$	914,140
February 1, 2020 through February 29, 2020	19,713	$	105.22	—	$	914,140
March 1, 2020 through March 31, 2020	299,670	$	142.31	—	$	914,140
Total	8,743,204	$	121.84	8,259,980	$	914,140

(1)Includes approximately 483,224 shares withheld from restricted stock units that vested in the first 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 awards do not deplete the dollar amount available for purchases under the repurchase program.

ITEM 3.DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.MINE SAFETY DISCLOSURES

Not applicable.

Total Number
of Shares
(or Units)
Purchased
(1)

Average Price
Paid per Share
(or Unit)

Total Number of Shares
(or Units) Purchased as
Part of Publicly
Announced Plans or
Programs

Maximum Number (or Approximate Dollar Value)
of Shares (or Units) that
May Yet Be Purchased
Under the Plans or
Programs (In thousands) (2)
July 1, 2017 through July 31, 2017 52,355
$ 80.68
—
$ 404,006
August 1, 2017 through August 31, 2017 836,785
76.06
789,269
344,031
September 1, 2017 through September 30, 2017 230,732
76.79
195,600
329,049
Total 1,119,872
984,869
329,049

~~(1)~~

~~Includes~~ ~~135,003~~ shares withheld from restricted stock units and stock awards that vested in the third quarter of 2017 to satisfy minimum tax withholding obligations that arose on the vesting of such restricted stock units and stock awards. We expended approximately $75.0 million during the quarter ended September 30, 2017 for repurchases of our common stock. For more information see Note 16 to our condensed consolidated financial statements.


~~(2)~~	Shares withheld from equity awards that vested to satisfy minimum tax withholding obligations that arose on the vesting of awards do not deplete the dollar amount available for purchases under the repurchase program.


~~ITEM 5.~~	~~OTHER INFORMATION~~

ITEM 5.OTHER INFORMATION

~~On November 1, 2017,~~

Our policy governing transactions in Citrix securities by our directors, officers and employees permits our directors, officers and certain other persons to enter into trading plans complying with Rule 10b5-1 under the ~~Company~~Exchange Act. We have been advised that PJ Hough, our Executive Vice President and Chief Product Officer, and Jessica Soisson, our Vice President and Chief Accounting Officer and Corporate Controller, each entered into a letter agreement with Carlos Sartorius, former Executive Vice President, Worldwide Sales and Services, in connection with his retirement from the Company and in order to effect an orderly transition of leadership of the Worldwide Sales and Services function. Subject to Mr. Sartorius remaining with the Company through March 31, 2018, the letter agreement provides for Mr. Sartorius to receive the payments and benefits that he would have received under his existing Executive Agreement with the Company if his employment had been terminated without cause or terminated following a change in control of the Company. A summary of Mr. Sartorius’s Executive Agreement and the amounts payable thereunder is set forthnew trading plan in the ~~Company’s Current Report on Form 8-K filed~~first quarter of 2020 in accordance with Rule 10b5-1 and our policy governing transactions in our securities. We undertake no obligation to update or revise the ~~SEC on January 20, 2017 under the caption “Senior Executive Agreements,” which summary is incorporated~~information provided herein, ~~by reference. The form~~including for revision or termination of Executive Agreement was included as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on January 20, 2017. The 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 the Company.an established trading plan.

ITEM 6.EXHIBITS

(a)List of exhibits


~~ITEM 6.~~Exhibit No.			~~EXHIBITS~~


~~(a)~~	~~List of exhibits~~

Description

~~Exhibit No.~~4.1		~~Description~~

~~2.1†~~	~~Amendment No. 3,~~Second Supplemental Indenture dated as of ~~September 29, 2017, to Agreement and Plan of Merger, dated as of July 26, 2016, by and among Citrix Systems, Inc., GetGo, Inc. and LogMeIn, Inc.~~

10.1*	~~Employment Agreement, dated July 10, 2017, by and~~February 25, 2020 between Citrix Systems, Inc. and ~~David J. Henshall~~Wilmington Trust, National Association, as trustee (incorporated herein by reference to Exhibit ~~10.1 of~~4.1 to the Company’s Current Report on Form 8-K filed on ~~July 10, 2017)~~February 25, 2020).

10.2*4.2		~~Amended and Restated Employment~~Form of 3.300% Senior Note due 2030 (included in Exhibit 4.1).

10.1		Term Loan Credit Agreement, dated ~~July 7, 2017,~~as of January 21, 2020, by and ~~between~~among Citrix Systems, Inc., the initial lenders named therein, and ~~Robert M. Calderoni~~Bank of America, N.A., as Administrative Agent (incorporated herein by reference to Exhibit ~~10.2 of the Company’s Current Report on Form 8-K filed on July 10, 2017)~~

10.3†*	~~Separation Agreement and Release, dated July 7, 2017, by and between Citrix Systems, Inc. and Kirill Tatarinov~~

10.4*	~~Form of Executive Agreement by and between Citrix Systems, Inc. and each of its executive officers (other than David J. Henshall) (incorporated by reference~~10.1 to ~~Exhibit 10.2 of~~ the Company’s Current Report on Form 8-K filed on January ~~20, 2017)~~22, 2020).

10.5†*10.2		~~Restricted Stock Unit Agreement with David J. Henshall under the~~Master Confirmation between Goldman Sachs & Co. LLC and Citrix Systems, Inc. ~~2014 Equity Incentive Plan (Performance Based Awards - August 2017)~~, 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).

10.6†*10.3		~~Restricted Stock Unit Agreement with David J. Henshall under the~~Master Confirmation between Wells Fargo Bank, National Association and Citrix Systems, Inc. ~~2014 Equity Incentive Plan (Performance Based Awards - August 2017)~~, 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).

10.7†10.4†		~~Restricted Stock Unit~~Form of Forfeiture Agreement ~~with~~between Citrix System s , Inc. and each of David J. Henshall, ~~under the Citrix Systems, Inc. 2014 Equity Incentive Plan (Time Based Awards - August 2017)~~Antonio Gomes, P.J. Hough, Jeroen van Rotterdam and Timothy Minahan.

10.8†*31.1†		~~Form of Global Restricted Stock Unit Agreement under the Citrix Systems, Inc. 2014 Equity Incentive Plan (Performance Based Awards - August 2017)~~

10.9†*	~~Form of Global Restricted Stock Unit Agreement under the Citrix Systems, Inc. 2014 Equity Incentive Plan (Performance Based Awards - August 2017)~~

10.10†*	~~Form of Global Restricted Stock Unit Agreement under the Citrix Systems, Inc. 2014 Equity Incentive Plan (Time Based Awards - August 2017)~~

~~31.1†~~	Rule 13a-14(a) / 15d-14(a) Certification of Principal Executive Officer

31.2†		Rule 13a-14(a) / 15d-14(a) Certification of Principal Financial Officer

32.1††		Section 1350 Certification of Principal Executive Officer and Principal Financial Officer

~~101.INS~~101.SCH†		~~XBRL Instance Document~~

~~101.SCH~~	Inline XBRL Taxonomy Extension Schema Document

~~101.CAL~~101.CAL†		Inline XBRL Taxonomy Extension Calculation Linkbase Document

~~101.DEF~~101.DEF†		Inline XBRL Taxonomy Extension Definition Linkbase Document

~~101.LAB~~101.LAB†		Inline XBRL Taxonomy Extension Label Linkbase Document

~~101.PRE~~101.PRE†		Inline XBRL Taxonomy Extension Presentation Linkbase Document



*104†						Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.)


*			Indicates a management contract or a compensatory plan, contract, or arrangement.
†			Filed herewith.
††			Furnished herewith.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on this ~~2nd~~5th day of ~~November, 2017.~~May, 2020.




	CITRIX SYSTEMS, INC.

	~~By:~~	~~/s/ MARK M. COYLE~~
		~~Mark M. Coyle~~
		~~Interim Chief Financial Officer~~
		~~(Authorized Officer and Principal Financial Officer)~~

~~EXHIBIT INDEX~~



~~Exhibit No.~~		By:	~~Description~~/s/ ARLEN R. SHENKMAN
			Arlen R. Shenkman
~~2.1†~~			~~Amendment No. 3, dated as of September 29, 2017, to Agreement~~Executive Vice President and ~~Plan of Merger, dated as of July 26, 2016, by and among Citrix Systems, Inc., GetGo, Inc. and LogMeIn, Inc.~~ Chief Financial Officer

10.1*	Employment Agreement, dated July 10, 2017, by and between Citrix Systems, Inc. and David J. Henshall (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on July 10, 2017)

10.2*	Amended and Restated Employment Agreement, dated July 7, 2017, by and between Citrix Systems, Inc. and Robert M. Calderoni (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed on July 10, 2017)

10.3†*	~~Separation Agreement and Release, dated July 7, 2017, by and between Citrix Systems, Inc. and Kirill Tatarinov~~

10.4*	Form of Executive Agreement by and between Citrix Systems, Inc. and each of its executive officers (other than David J. Henshall) (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed on January 20, 2017)

10.5†*	~~Restricted Stock Unit Agreement with David J. Henshall under the Citrix Systems, Inc. 2014 Equity Incentive Plan (Performance Based Awards - August 2017)~~

10.6†*	~~Restricted Stock Unit Agreement with David J. Henshall under the Citrix Systems, Inc. 2014 Equity Incentive Plan (Performance Based Awards - August 2017)~~

10.7†*	~~Restricted Stock Unit Agreement with David J. Henshall under the Citrix Systems, Inc. 2014 Equity Incentive Plan (Time Based Awards - August 2017)~~

10.8†*	~~Form of Global Restricted Stock Unit Agreement under the Citrix Systems, Inc. 2014 Equity Incentive Plan (Performance Based Awards - August 2017)~~

10.9†*	~~Form of Global Restricted Stock Unit Agreement under the Citrix Systems, Inc. 2014 Equity Incentive Plan (Performance Based Awards - August 2017)~~

10.10†*	~~Form of Global Restricted Stock Unit Agreement under the Citrix Systems, Inc. 2014 Equity Incentive Plan (Time Based Awards - August 2017)~~

~~31.1†~~	~~Rule 13a-14(a) / 15d-14(a) Certification of Principal Executive Officer~~

~~31.2†~~	~~Rule 13a-14(a) / 15d-14(a) Certification of Principal Financial Officer~~

~~32.1††~~	~~Section 1350 Certification of Principal Executive~~(Authorized Officer and Principal Financial ~~Officer~~

~~101.INS~~	~~XBRL Instance Document~~

~~101.SCH~~	~~XBRL Taxonomy Extension Schema Document~~

~~101.CAL~~	~~XBRL Taxonomy Extension Calculation Linkbase Document~~

~~101.DEF~~	~~XBRL Taxonomy Extension Definition Linkbase Document~~

~~101.LAB~~	~~XBRL Taxonomy Extension Label Linkbase Document~~

~~101.PRE~~	~~XBRL Taxonomy Extension Presentation Linkbase Document~~
	Officer)



*	~~Indicates a management contract or a compensatory plan, contract or arrangement.~~
†	~~Filed herewith.~~
††	~~Furnished herewith.~~


Delaware						75-2275152
(State or other jurisdiction of incorporation or organization)						(IRS Employer Identification No.)



~~Delaware~~	~~75-2275152~~
~~(State or other jurisdiction of~~ ~~incorporation or organization)~~	~~(IRS Employer~~ ~~Identification No.)~~

851 West Cypress Creek Road ~~Fort Lauderdale, Florida~~		~~33309~~
Fort Lauderdale
Florida			33309
(Address of principal executive offices)			(Zip Code)


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $.001 per share	CTXS	The NASDAQ Global Select Market



x ☒	Large accelerated filer	☐	o Accelerated filer
o☐	Non-accelerated filer	☐	oSmaller reporting company
		o☐	Emerging growth company



				Page Number
		PART I:	~~Page~~ ~~Number~~
~~PART I:~~	FINANCIAL INFORMATION

Item 1.		Condensed Consolidated Financial Statements

		Condensed Consolidated Balance Sheets: ~~September 30, 2017~~March 31 , 20 20 (Unaudited) and December 31, ~~2016 (Unaudited)~~201 9 (Derived from audited financial statements)		3

		Condensed Consolidated Statements of Income: Three ~~and Nine~~ Months ended ~~September 30, 2017~~March 31 , 20 20 and ~~2016~~201 9 (Unaudited)		4

		Condensed Consolidated Statements of Comprehensive Income: Three ~~and Nine~~ Months ended ~~September 30, 2017~~March 31 , 20 20 and ~~2016~~201 9 (Unaudited)		5

		Condensed Consolidated Statements of Cash Flows: ~~Nine~~ Three Months ended ~~September 30, 2017~~March 31 , 20 20 and ~~2016~~201 9 (Unaudited)		6

		Notes to Condensed Consolidated Financial Statements (Unaudited)		7

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		35

Item 3.		Quantitative and Qualitative Disclosures About Market Risk		5049

Item 4.		Controls and Procedures		5049

PART II:		OTHER INFORMATION

Item 1.		Legal Proceedings		5150

Item 1A.		Risk Factors		5150

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		5354

Item 6.3.		~~Exhibits~~Defaults Upon Senior Securities		5554

Item 4.		Mine Safety Disclosures		54

Item 5.		Other Information		55

Item 6.		Exhibits		56

Signature				5657



x☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



o☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
	(In thousands, except per share information)
Revenues:
Product and licenses	$	192,102		$	206,041		$	594,708		$	627,581
Software as a service	45,810			34,673			126,053			98,552
License updates and maintenance	420,951			398,171			1,232,734			1,178,053
Professional services	32,062			29,851			93,334			97,310
Total net revenues	690,925			668,736			2,046,829			2,001,496
Cost of net revenues:
Cost of product and license revenues	27,277			28,059			89,723			93,077
Cost of services and maintenance revenues	61,096			55,337			184,922			168,874
Amortization of product related intangible assets	17,564			14,775			43,062			43,222
Total cost of net revenues	105,937			98,171			317,707			305,173
Gross margin	584,988			570,565			1,729,122			1,696,323
Operating expenses:
Research and development	107,113			101,741			316,478			304,624
Sales, marketing and services	249,499			244,495			764,564			724,343
General and administrative	79,378			79,617			237,033			236,775
Amortization of other intangible assets	3,733			3,907			11,071			11,449
Restructuring	8,552			12,176			18,678			61,312
Total operating expenses	448,275			441,936			1,347,824			1,338,503
Income from operations	136,713			128,629			381,298			357,820
Interest income	7,873			4,193			19,045			12,108
Interest expense	(11,726		)	(11,254		)	(35,286		)	(33,605		)
Other income (expense), net	981			494			3,166			(781		)
Income from continuing operations before income taxes	133,841			122,062			368,223			335,542
Income tax expense	7,121			10,325			62,349			44,262
Income from continuing operations	126,720			111,737			305,874			291,280
Income (loss) from discontinued operations, net of income taxes	—			20,164			$	(42,704	)	$	44,982
Net income	$	126,720		$	131,901		$	263,170		$	336,262
Basic earnings (loss) per share:
Income from continuing operations	$	0.84		$	0.72		$	2.01		$	1.88
Income (loss) from discontinued operations	—			0.13			(0.28		)	0.29
Basic net earnings per share	$	0.84		$	0.85		$	1.73		$	2.17

Diluted earnings (loss) per share:
Income from continuing operations	$	0.82		$	0.71		$	1.96		$	1.86
Income (loss) from discontinued operations	—			0.13			(0.28		)	0.29
Diluted net earnings per share:	$	0.82		$	0.84		$	1.68		$	2.15

Weighted average shares outstanding:
Basic	151,156			155,525			151,896			154,847
Diluted	154,627			157,532			156,384			156,697



	December 31, 2016
	(in thousands)
Assets
Current assets:
Cash	$	120,861
Accounts receivable, net	44,734
Prepaid expenses and other current assets	14,094
Total current assets of discontinued operations	179,689
Property and equipment, net	81,866
Goodwill	380,917
Other intangible assets, net	54,312
Deferred tax assets, net	18,496
Other assets	3,340
Long-term assets of discontinued operations	$	538,931
Total major classes of assets of discontinued operations	$	718,620

Liabilities
Current liabilities:
Accounts payable	$	11,333
Accrued expenses and other current liabilities	46,088
Current portion of deferred revenues	115,249
Total current liabilities of discontinued operations	172,670
Long-term portion of deferred revenues	4,224
Other liabilities	3,484
Long-term liabilities of discontinued operations	$	7,708
Total major classes of liabilities of discontinued operations	$	180,378



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2017		2016		2017			2016
Numerator:
Income from continuing operations	$	126,720	$	111,737	$	305,874		$	291,280
Income (loss) from discontinued operations, net of income taxes	—		20,164		(42,704		)	44,982
Net income	$	126,720	$	131,901	$	263,170		$	336,262
Denominator:
Denominator for basic net earnings per share - weighted-average shares outstanding	151,156		155,525		151,896			154,847
Effect of dilutive employee stock awards	1,987		2,007		2,538			1,850
Effect of dilutive Convertible Notes	1,484		—		1,950			—
Denominator for diluted net earnings per share - weighted-average shares outstanding	154,627		157,532		156,384			156,697

Basic earnings (loss) per share:
Income from continuing operations	$	0.84	$	0.72	$	2.01		$	1.88
Income (loss) from discontinued operations	—		0.13		(0.28		)	0.29
Basic net earnings per share	$	0.84	$	0.85	$	1.73		$	2.17
Diluted earnings (loss) per share:
Income from continuing operations	$	0.82	$	0.71	$	1.96		$	1.86
Income (loss) from discontinued operations	—		0.13		(0.28		)	0.29
Diluted net earnings per share:	$	0.82	$	0.84	$	1.68		$	2.15
Anti-dilutive weighted-average shares from stock awards	393		60		225			460



	Unidesk
	Purchase Price Allocation		Asset Life
Current assets	$	5,321
Property and equipment	131
Intangible assets	39,470		4 years
Goodwill	31,231		Indefinite
Other assets	90
Assets acquired	76,243
Other current liabilities assumed	2,290
Current portion of deferred revenues	3,042
Long term portion of deferred revenues	2,412
Long-term liabilities assumed	4,086
Deferred taxes	1,266
Net assets acquired	$	63,147



	Unidesk		Asset Life
Developed technology	$	35,230	4 years
Customer contracts	4,240		4 years
Total	$	39,470


	As of March 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)
Assets:
Cash and cash equivalents:

Cash	$	390,789	$	390,789	$	—	$	—

Money market funds	132,421		132,421		—		—
Corporate securities	1,671		—		1,671		—
Available-for-sale securities:
Agency securities	814		—		814		—
Corporate securities	37,551		—		36,551		1,000

Prepaid expenses and other current assets:
Foreign currency derivatives	919		—		919		—
Total assets	$	564,165	$	523,210	$	39,955	$	1,000
Accrued expenses and other current liabilities:
Foreign currency derivatives	3,904		—		3,904		—
Total liabilities	$	3,904	$	—	$	3,904	$	—



	As of September 30, 2017		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
Assets:
Cash and cash equivalents:
Cash	$	869,770	$	869,770	$	—	$	—
Money market funds	66,245		66,245		—		—
Corporate securities	4,854		—		4,854		—
Available-for-sale securities:
Agency securities	482,658		—		482,658		—
Corporate securities	802,480		—		802,086		394
Municipal securities	3,977		—		3,977		—
Government securities	328,730		—		328,730		—
Prepaid expenses and other current assets:
Foreign currency derivatives	4,531		—		4,531		—
Total assets	$	2,563,245	$	936,015	$	1,626,836	$	394
Accrued expenses and other current liabilities:
Foreign currency derivatives	622		—		622		—
Total liabilities	$	622	$	—	$	622	$	—


	As of December 31, 2016		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			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)									(In thousands)
Assets:									Assets:
Cash and cash equivalents:									Cash and cash equivalents:
Cash	$	528,637	$	528,637	$	—	$	—	Cash	$	474,756	$	474,756	$	—	$	—
Money market funds	224,765		224,765		—		—		Money market funds	42,019		42,019		—		—
Agency securities									Agency securities	19,993		—		19,993		—
Corporate securities	82,693		—		82,693		—		Corporate securities	8,993		—		8,993		—

Available-for-sale securities:									Available-for-sale securities:
Agency securities	411,493		—		411,493		—		Agency securities	1,682		—		1,682		—
Corporate securities	840,966		—		839,968		998		Corporate securities	48,884		—		47,884		1,000
Municipal securities	9,988		—		9,988		—

Government securities	444,618		—		444,618		—		Government securities	9,129		—		9,129		—
Prepaid expenses and other current assets:									Prepaid expenses and other current assets:
Foreign currency derivatives	2,506		—		2,506		—		Foreign currency derivatives	1,889		—		1,889		—
Total assets	$	2,545,666	$	753,402	$	1,791,266	$	998	Total assets	$	607,345	$	516,775	$	89,570	$	1,000
Accrued expenses and other current liabilities:									Accrued expenses and other current liabilities:
Foreign currency derivatives	4,435		—		4,435		—		Foreign currency derivatives	1,390		—		1,390		—
Total liabilities	$	4,435	$	—	$	4,435	$	—	Total liabilities	$	1,390	$	—	$	1,390	$	—


	Three Months Ended				Nine Months Ended					Three Months Ended
	September 30, 2017		September 30, 2016		September 30, 2017		September 30, 2016			March 31, 2020	March 31, 2019
Expected volatility factor	0.27 - 0.29		0.27 - 0.41		0.27 - 0.29		0.27 - 0.41		Expected volatility factor	0.21 - 0.22	0.26 - 0.29
Risk free interest rate	0.60% - 1.12%		0.35% - 0.42%		0.60% - 1.12%		0.25% - 0.42%		Risk free interest rate	1.56% - 2.06%	2.19% - 2.49%
Expected dividend yield	0	%	0	%	0	%	0	%	Expected dividend yield	1.20% - 1.39%	1.27% - 1.31%
Expected life (in years)	0.5		0.5		0.5		0.5		Expected life (in years)	0.5	0.5



	March 2017 Grant		March 2016 Grant		January 2016 Grant
Expected volatility factor	0.27-0.32		0.29 - 0.39		0.29 - 0.37
Risk free interest rate	1.48	%	0.91	%	1.10	%
Expected dividend yield	0	%	0	%	0	%


	Fair Value		Carrying Value
2030 Notes	$	709,020	$	738,221
2027 Notes	$	767,333	$	743,149



	Fair Value		Carrying Value
Convertible Senior Notes	$	1,672,095	$	1,376,673


	Three Months Ended
Income Statement Classifications	March 31, 2020		March 31, 2019
Cost of subscription, support and services	$	2,762	$	2,202
Research and development	21,596		27,837
Sales, marketing and services	20,386		19,926
General and administrative	13,579		15,269
Total	$	58,323	$	65,234



	Balance at January 1, 2017		Additions			Other		Balance at September 30, 2017
Goodwill	$	1,585,893	$	31,231	(1)	$	—	$	1,617,124


~~(1)~~	~~Amount relates to preliminary purchase price allocation of goodwill associated with the 2017 Business Combination. See Note 5 for more information regarding the Company's acquisitions.~~


	March 31, 2020						December 31, 2019
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Product related intangible assets	$	736,610	$	641,914	$	734,973	$	633,633
Other	187,173		180,737		187,173		180,035
Total	$	923,783	$	822,651	$	922,146	$	813,668


Year ending December 31,
2020 (remaining nine months)	$	26,291
2021	23,033
2022	20,834
2023	16,567
2024	5,533
Thereafter	8,874
Total	$	101,132



Year ending December 31,	Amount
2017 (remaining three months)	$	15,664
2018	59,816
2019	39,191
2020	25,032
2021	9,070
Thereafter	19,320
Total	$	168,093


~~(1)~~	Workspace Services revenues are primarily comprised of sales from the Company’s application virtualization products, which include XenDesktop and XenApp, the Company's enterprise mobility management products, which include XenMobile and related license updates and maintenance and support, and related cloud offerings.


~~(2)~~	~~Networking revenues primarily include NetScaler ADC and NetScaler SD-WAN, related license updates and maintenance and support, and related cloud offerings.~~


~~(3)~~	~~Data revenues primarily include ShareFile, Podio, and related cloud offerings.~~


~~(4)~~	~~Professional services revenues are primarily comprised of revenues from consulting services and product training and certification services.~~



	September 30, 2017			December 31, 2016
Liability component
Principal	$	1,437,483		$	1,437,500
Less: note discount and issuance costs	(60,810		)	(89,344		)
Net carrying amount	$	1,376,673		$	1,348,156

Equity component
Temporary equity	$	—		$	79,495
Additional paid-in capital	162,869			83,374
Total equity (including temporary equity)	$	162,869		$	162,869



	For the Three Months Ended September 30, 2017
	(In thousands)
Derivatives in Cash Flow Hedging Relationships	Amount of (Loss) Gain Recognized in Other Comprehensive Income (Effective Portion)					Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)	Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss (Effective Portion)
	2017			2016			2017			2016
Foreign currency forward contracts	$	(340	)	$	1,023	Operating expenses	$	1,116		$	(641	)

	For the Nine Months Ended September 30, 2017
	(In thousands)
Derivatives in Cash Flow Hedging Relationships	Amount of Gain Recognized in Other Comprehensive Income (Effective Portion)					Location of Loss Reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion)	Amount of Loss Reclassified from Accumulated Other Comprehensive Loss (Effective Portion)
	2017			2016			2017			2016
Foreign currency forward contracts	$	5,214		$	2,049	Operating expenses	$	(551	)	$	(1,663	)


	For the Three Months Ended March 31,
	(In thousands)
Derivatives in Cash Flow Hedging Relationships	Amount of (Loss) Gain Recognized in Other Comprehensive Income					Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income		Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss
	2020		2019			2020		2019
Foreign currency forward contracts	$	(2,833)	$	1,041	Operating expenses	$	248	$	(894)


	For the Three Months Ended March 31,
	(In thousands)
Derivatives Not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in Income on Derivative	Amount of Gain (Loss) Recognized in Income on Derivative
		2020		2019
Foreign currency forward contracts	Other income, net	$	3,758	$	(1,396)


Foreign Currency		Currency Denomination
Australian Dollar		AUD 39,600
Brazilian Real		BRL 1,000
Pounds Sterling		GBP 9,000
Canadian Dollar		CAD 1,450
Chinese Yuan Renminbi		CNY 26,452
Czech Koruna		CZK 18,600
Danish Krone		DKK 3,400
Euro		EUR 6,802
Hong Kong Dollar		HKD 35,000
Indian Rupee		INR 1,203,000
Japanese Yen		JPY 400,999
Korean Won		KRW 1,682,000

~~Foreign Currency~~Singapore Dollar		~~Currency~~ ~~Denomination~~ SGD 17,100
~~Australian Dollar~~Swedish Krona		~~AUD 20,770~~SEK 800
~~Brazilian Real~~		~~BRL 11,870~~
~~Pounds Sterling~~	~~GBP 5,700~~
~~Canadian Dollar~~	~~CAD 2,640~~
~~Chinese Yuan Renminbi~~	~~CNY 53,279~~
~~Danish Krone~~	~~DKK 8,596~~
~~Euro~~	~~EUR 11,300~~
~~Hong Kong Dollar~~	~~HKD 26,000~~
~~Indian Rupee~~	~~INR 238,745~~
~~Japanese Yen~~	~~JPY 2,012,317~~
~~Singapore Dollar~~	~~SGD 10,400~~
Swiss Franc	CHF ~~2,030~~164,097



	Foreign currency			Unrealized loss on available-for-sale securities			Unrealized (loss) gain on derivative instruments			Other comprehensive loss on pension liability			Total
	(In thousands)
Balance at December 31, 2016	$	(16,346	)	$	(3,108	)	$	(3,130	)	$	(6,120	)	$	(28,704	)
Other comprehensive income before reclassifications	—			1,500			4,663			—			6,163
Amounts reclassified from accumulated other comprehensive loss	—			(340		)	551			263			474
Net current period other comprehensive income	—			1,160			5,214			263			6,637
Distribution of the GoTo Business	$	13,400		$	—		$	—		$	—		$	13,400
Balance at September 30, 2017	$	(2,946	)	$	(1,948	)	$	2,084		$	(5,857	)	$	(8,667	)


	Foreign currency		Unrealized (loss) gain on available-for-sale securities		Unrealized gain (loss) on derivative instruments		Other comprehensive loss on pension liability		Total
	(In thousands)
Balance at December 31, 2019	$	(2,946)	$	(139)	$	868	$	(2,910)	$	(5,127)
Other comprehensive income (loss) before reclassifications	—		155		(2,585)		8		(2,422)
Amounts reclassified from accumulated other comprehensive loss	—		(13)		(248)		—		(261)
Net current period other comprehensive income (loss)	—		142		(2,833)		8		(2,683)
Balance at March 31, 2020	$	(2,946)	$	3	$	(1,965)	$	(2,902)	$	(7,810)



	For the Three Months Ended September 30, 2017
	(In thousands)
Details about accumulated other comprehensive loss components	Amount reclassified from accumulated other comprehensive loss, net of tax			Affected line item in the Condensed Consolidated Statements of Income
Unrealized net losses on available-for-sale securities	$	120		Other income (expense), net
Unrealized net gains on cash flow hedges	(1,116		)	Operating expenses *
	$	(996	)


	For the Nine Months Ended September 30, 2017
	(In thousands)
Details about accumulated other comprehensive loss components	Amount reclassified from accumulated other comprehensive loss, net of tax			Affected line item in the Condensed Consolidated Statements of Income
Unrealized net gains on available-for-sale securities	$	(340	)	Other income (expense), net
Unrealized net losses on cash flow hedges	551			Operating expenses *
	$	211