Q3 2021 Earnings Letter

2021 | Q3 Financials

November 4, 2021

To Our Stakeholders

In the third quarter of 2021, Citrix made significant progress on its transition to the cloud. This quarter, Total ARR1 grew organically 13% year-over-year, excluding Wrike, despite tough comparisons due to strong demand tailwinds from COVID-related purchases in the prior year. Total ARR also grew faster year-over-year than the prior quarter, demonstrating a continued acceleration of our subscription transition. SaaS ARR is now greater than $1 billion. Organic SaaS ARR grew 48% year-over-year, and the third quarter was the fourth consecutive quarter of accelerating organic SaaS ARR growth - a clear sign that our SaaS offerings are resonating with customers.

Key takeaways include:

• SaaS ARR of $1.1 billion, up 75% year-over-year. Excluding Wrike, third quarter SaaS ARR accelerated to $934 million, up 48% year-over-year.
• The number of Citrix Cloud Paid Subscribers increased 47% year-over-year, to 12.2 million.
• Total ARR, which captures the value of all subscription sources as well as perpetual license maintenance contracts, was $3.1 billion and grew 20% year-over-year, and 13% year-over-year excluding Wrike, in line with expectations provided during second quarter 2021 earnings.
• Reaffirming our prior guidance of nearly 10% organic Total ARR growth, excluding Wrike, for 2021.
• SaaS mix of subscription bookings was 64%, towards the high-end of our guidance range of 60-65% and up from 48% at the beginning of the year.
• Reported revenue, including Wrike, was $778 million. GAAP diluted EPS was $0.41, and non-GAAP diluted EPS2 was $1.20.
• Board of Directors declared a quarterly dividend of $0.37 per share to be paid on December 21, 2021, to shareholders of record on December 7, 2021.

1. Please see Glossary of Terms at the end of this letter for definitions of key metrics.
2. A reconciliation of GAAP to non-GAAP measures has been provided in the financial statement tables included in this letter. An explanation of these measures is also included below under the heading "Reconciliation of Non-GAAP Financial Measures to Comparable U.S. GAAP Measures."

2021 Q3 Financials

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The Cloud Transition Opportunity

Despite achieving more than $1 billion in SaaS ARR in the third quarter of 2021, we are still in the early innings of our cloud transition with less than 15% of our current installed base having transitioned to cloud products. This continues to represent an enormous opportunity and provides a strong tailwind to support our SaaS ARR growth for years. Customers making the transition are realizing greater value as they shift to our cloud solutions, and we consistently see an uplift in price that exceeds our target 33% premium as customers derive added value, greater agility, and reduced total cost of ownership (TCO) as they migrate to SaaS from our on-premise perpetual Workspace offerings. Finally, the revenue headwinds from declining perpetual licenses are now largely behind us in our Workspace business as we reach the anniversary of the end of broad availability of perpetual Citrix Workspace licenses. We believe Total ARR is the best metric to measure the underlying health of our business. Over time, as we emerge from our cloud transition, we would expect to see reported revenues grow more in line with Total ARR.

	3Q19		3Q20		3Q21
SaaS ARR excluding Wrike (in millions)	$463		$630		$934
Y/Y Growth	52%		36%		48%
Sequential Growth	11%		7%		8%
Sequential Change (in millions)	$45		$40		$66
	1Q21			2Q21			3Q21
Total ARR excluding Wrike (in millions)	$2,789			$2,863			$2,911
Y/Y Growth	15%			13%			13%
Sequential Growth	4%			3%			2%
Sequential Change (in millions)	$94			$74			$48

Organic SaaS ARR
Y/Y Growth
		47%	48%
	43%
39%
36%
3Q'20 4Q'20	1Q'21	2Q'21	3Q'21

Our leadership position in the VDI market puts us in pole position to capture share in the fast-growing and emerging Desktop-as-a-Service (DaaS) market. Our App Delivery and Security and collaboration products further allow us to capture additional wallet share as we serve our customers' needs in increasingly hybrid, multi-cloud and remote work environments.

Competitively, I feel encouraged with where we are. Our established brand, large and loyal customer base and market leading position in our core businesses position us well in healthy, growing markets and to partner with the largest cloud providers. Last month, we announced that we are expanding our strategic partnership with Google Cloud to deliver the future of hybrid work for enterprise customers. As part of this, we will launch a new DaaS offering on Google Cloud that will leverage our management plane and market- leading HDX protocol to enable seamless delivery of virtualized applications and desktops on Google Cloud. Expanding partnerships like this, combined with our expanded partnership with Microsoft, highlight our compelling market opportunity. Further, retention rates remain strong across our strategic products and continue to improve, and our win rates are unchanged, both of which are clear signs of a healthy business.

Our Recent Performance and Next Steps

Looking back on the last few quarters, it is clear we have underperformed our expectations as we faced execution challenges which have overshadowed the excellent performance in our ARR metrics and cloud transition. As I look ahead, I am taking a deep dive into all aspects of the company's operations to determine what actions we need to take to improve performance. I have already spent significant time with our team, and I appreciate the insight and feedback from all our stakeholders.

2021 Q3 Financials

2

Customer Highlight: Improving Agility with Citrix and Google Cloud

Telecom Italia (TIM) is the leading group in Italy and Brazil in the ICT sector, supporting the development of digital skills necessary for the country's growth. To keep up with evolving innovation and market demands, TIM partnered with Citrix to migrate their virtual desktop on- premises infrastructure to the cloud. With Citrix's seamless integration with Google Cloud, TIM was able to quickly migrate their Citrix Virtual Apps and Desktop services while having the flexibility to scale capacity up or down accordingly, improving their total cost of ownership while also meeting their sustainability goals with optimized energy consumption.

First, however, we need to sharpen our focus in terms of innovation and go-to-market investments to drive further growth and improve our margins and cash flow. Focusing our investments will free up the resources to invest more in our channel and sales organization and in the fastest-growing segments of our core markets, such as DaaS and ADCaaS. I see opportunity for growth to come from running an efficient organization. One that is focused on fewer things, and one that channels resources to the most important drivers of growth. I am working with our Sales leadership to put in place the right incentive systems for our salespeople, reinvesting in our channel partners so they are incentivized to share in our SaaS transformation success, and making sure sales investments are more focused on direct front line sellers. We are working through the details now and expect to complete this work in the fourth quarter.

As I look at the business today, while it's too early to discuss details, I expect that we will announce a margin improvement program and related restructuring charges in the fourth quarter with information on the expected run-rate savings benefits and when we expect to realize those benefits shared when we report fourth quarter 2021 earnings results. Overall, my expectation is for 2021 to be a trough in terms of both operating margin and cash flow.

Financial Analyst Meeting and Context for Third Quarter Results and Fourth Quarter Outlook

As previously disclosed in our announcement of the leadership change on October 6th, we are postponing our previously scheduled Financial Analyst Meeting. My review of our businesses is currently underway and requires time. We look forward to providing an update on the expected timing of our next Financial Analyst Meeting when my analysis is complete.

Between now and then, I will be working with the Citrix leadership team on our plan to address the challenges we face this year so we can continue to build on the momentum of our cloud transition and restore the confidence of our employees and investors. While we believe the go-to-market challenges facing us are all fixable, the headwinds will continue to impact our results in the near term relative to our prior expectations. However, while we are moderating our fourth quarter reported revenue growth expectations, we are reaffirming our guidance for nearly 10% organic Total ARR growth, excluding Wrike, for 2021, demonstrating the continued progress of our subscription transition. We will provide our initial outlook for 2022 when we report our fourth quarter 2021 results. My objectives, however, are clear: to build on our success in growing Total ARR, increasing predictability, and driving higher margins and an inflection in free cash flow.

Bob Calderoni

Chairman & Interim Chief Executive Officer

2021 Q3 Financials

3

Financial Overview

Citrix Cloud

Paid Subscriber Growth

(millions)

11.4M 12.2M

9.4M 10.3M

8.3M

3Q'20 4Q'20 1Q'21 2Q'21 3Q'21

Bookings

• SaaS bookings as a percentage of subscription bookings were 64%, up from 53% in the third quarter of 2020
• Workspace SaaS bookings as a percentage of Workspace subscription bookings were 71% in the third quarter
• Citrix Cloud Paid Subscriber count was 12.2 million in the third quarter, up from 8.3 million in the third quarter of 2020
• App Delivery and Security subscription bookings as a percentage of total App Delivery and Security product bookings were 80% in the third quarter

Third quarter SaaS bookings metrics are inclusive of Wrike. SaaS bookings as a percentage of subscription bookings and Workspace SaaS bookings as a percentage of Workspace subscription bookings are metrics that reflect the mix of business based on annualized bookings. The transition of our App Delivery and Security business trails that of our Workspace business, and as such the mix of SaaS bookings in that business is nascent. As a result, we are continuing to provide the App Delivery and Security subscription mix as a percentage of App Delivery and Security product bookings.

Total ARR

(billions)

$2.94B $3.02B$3.08B

$2.70B

$2.57B

3Q'20 4Q'20 1Q'21 2Q'21 3Q'21

Total Annualized Recurring Revenue

• Total ARR in the third quarter was $3.08 billion, up 20% year- over-year. Excluding the contribution of Wrike, Total ARR was up 13% year-over-year
• Subscription ARR in the third quarter was $1.76 billion, up 71% year-over-year. Excluding the contribution of Wrike, Subscription ARR was up 55% year-over-year
• SaaS ARR in the third quarter was $1.10 billion, up 75% year-over- year. Excluding the contribution of Wrike, organic SaaS ARR was up 48% year-over-year. As SaaS ARR grows in scale, we expect growth rates to moderate.

We believe ARR is a key performance indicator of the health and trajectory of our business and serves as a leading indicator of top line trends.

Total Annualized Recurring Revenue (in millions)

	3Q20	4Q20	1Q21	2Q21	3Q21
Total ARR	$2,566	$2,695	$2,939	$3,023	$3,077
Subscription ARR	$1,027	$1,205	$1,514	$1,650	$1,757
SaaS ARR	$630	$725	$943	$1,028	$1,100

Y/Y Growth3

	3Q20	4Q20	1Q21	2Q21	3Q21
Total ARR	-	-	22%	19%	20%
Subscription ARR	53%	62%	81%	74%	71%
SaaS ARR	36%	39%	70%	74%	75%

3 With Total ARR introduced in 1Q'21, quarterly year over year growth for 2020 is unavailable

Note: Financial summary tables are unaudited. This document should be read in conjunction with the Compan y's SEC Filings.

2021 Q3 Financials

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Future Committed Revenue

• Future committed revenue increased 15% year-over-year to approximately $2.99 billion in the third quarter
• Total average contract duration of transactions booked in the third quarter was 1.7 years, up from 1.6 years in both the third quarter of 2020 and the second quarter of 2021

Our transition to a subscription model, and ultimately a cloud-delivered model, focuses on growing higher value recurring revenue streams that result in more of the business booked in the current period being recognized in future periods. This subscription model transition creates variability in the individual components of future committed revenue (short-term deferred, long-term deferred and unbilled) due to the bookings mix within subscription and performance. Changes in future committed revenue are not duration- adjusted but can reflect the relative bookings performance in the quarter.

Future Committed Revenue (in millions)

	3Q20	4Q20	1Q21	2Q21	3Q21
Deferred Revenue	$1,692	$1,903	$1,844	$1,892	$1,778
Unbilled Revenue	916	1,036	1,197	1,155	1,210
Total Deferred and Unbilled Revenue*	$2,608	$2,939	$3,040	$3,047	$2,989
Y/Y Growth	20%	18%	20%	15%	15%
Total Average Contract Duration (years)	1.6	1.7	1.5	1.6	1.7

														Revenue
					SaaS Revenue
					∙ Total revenue of $778 million in the third quarter increased 1%
						(millions)	year-over-year which was impacted by the $62 million year-over-
										$229M	year decline in Product & License revenue as a result of
										discontinuing our Workspace perpetual license offering
								$210M
						$171M						∙ Subscription revenue of $383 million increased 46% year-over-
											year
		$138M $	150M								∙ SaaS revenue grew 66% year-over-year to $229 million and
														accounted for 60% of subscription revenue and 29% of total
														revenue in the third quarter
		3Q'20 4Q'20 1Q'21 2Q'21 3Q'21		∙ As SaaS revenue grows in scale, we expect growth rates to
														moderate
														∙ Wrike contributed $34 million to revenue in the third quarter
Revenue Summary (in millions)
															3Q20	4Q20	1Q21	2Q21	3Q21
	Subscription		$263	$341	$342	$374	$383
	SaaS		138	150	171	210	229
	Other Subscription		125	191	171	165	155
	Product & License		87	54	44	59	25
	Support & Services		417	415	389	379	370
	Total Revenue*		$767	$810	$776	$812	$778

*Amounts may not recalculate due to rounding.

Note: Financial summary tables are unaudited. This document should be read in conjunction with the Company's SEC Filing s.

2021 Q3 Financials

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