EX-99.1 2 d92691dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

Contact:

MicroStrategy Incorporated

Investor Relations

ir@microstrategy.com

(703) 848-8600

MicroStrategy Announces

Fourth Quarter 2020 Financial Results

TYSONS CORNER, Va., January 28, 2021 - MicroStrategy® (Nasdaq: MSTR), the largest independent publicly-traded business intelligence company, today announced financial results for the three-month period ended December 31, 2020 (the fourth quarter of its 2020 fiscal year).

“2020 was a transformational year for MicroStrategy. In our enterprise intelligence business, we continue to embrace the virtual wave. We are successfully shifting our prospects and customers to our enterprise cloud platform, and also launched our new SaaS offering, Hyper.now. We also dramatically improved the efficiency and profitability of our business,” said Michael J. Saylor, CEO, MicroStrategy Incorporated.

“Regarding our bitcoin strategy, our pioneering decision to make bitcoin our primary treasury reserve asset has made MicroStrategy a thought leader in the cryptocurrency market and generated great interest in MicroStrategy as a corporation. Going forward, we continue to plan to hold our bitcoin and invest additional excess cash flows in bitcoin. Additionally, we will explore various approaches to acquire additional bitcoin as part of our overall corporate strategy.”

Fourth Quarter 2020 Financial Highlights

 

   

Revenues: Total revenues for the fourth quarter of 2020 were $131.3 million, a 1.7% decrease, or a 3.4% decrease on a non-GAAP constant currency basis, compared to the fourth quarter of 2019. Product licenses and subscription services revenues for the fourth quarter of 2020 were $38.6 million, a 3.3% increase, or a 2.1% increase on a non-GAAP constant currency basis, compared to the fourth quarter of 2019. Product support revenues for the fourth quarter of 2020 were $71.9 million, a 3.8% decrease, or a 5.6% decrease on a non-GAAP constant currency basis, compared to the fourth quarter of 2019. Other services revenues for the fourth quarter of 2020 were $20.9 million, a 2.8% decrease, or an 5.3% decrease on a non-GAAP constant currency basis, compared to the fourth quarter of 2019.

 

   

Gross Profit: Gross profit for the fourth quarter of 2020 was $110.5 million, representing an 84.2% gross margin, compared to a gross margin of 81.6% in the fourth quarter of 2019.

 

   

Operating Expenses: Operating expenses for the fourth quarter of 2020 were $110.1 million, an 11.0% increase compared to the fourth quarter of 2019. Beginning in the third quarter of 2020, operating expenses included impairment losses on our digital assets, which were $26.5 million during the fourth quarter of 2020.

 

   

Income from Operations: Income from operations for the fourth quarter of 2020 was $0.4 million versus income from operations of $9.6 million for the fourth quarter of 2019. Non-GAAP income from operations, which excludes share-based compensation expense and impairment losses and gains on sale from intangible assets, which include digital assets, was $30.1 million for the fourth quarter of 2020 versus $12.0 million for the fourth quarter of 2019.

 

   

Net Income: Net income for the fourth quarter of 2020 was $2.7 million, or $0.27 per share on a diluted basis, as compared to net income of $12.2 million, or $1.18 per share on a diluted basis, for the fourth quarter of 2019. Non-GAAP net income, which excludes share-based compensation expense, impairment losses and gains on sale from intangible assets, which include digital assets, and interest expense arising from the amortization of debt discount and issuance costs was $20.4 million, or $2.07 per share on a non-GAAP diluted basis, for the fourth quarter of 2020, as compared to non-GAAP net income of $14.3 million, or $1.39 per share on a non-GAAP diluted basis, for the fourth quarter of 2019.


   

Cash and Short-term Investments: As of December 31, 2020, MicroStrategy had cash and cash equivalents and short-term investments of $59.7 million, as compared to $565.6 million as of December 31, 2019, a decrease of $506.0 million.

 

   

Digital Assets: As of December 31, 2020, the carrying value of MicroStrategy’s digital assets (comprised solely of bitcoin) was $1.054 billion, which reflects cumulative impairment charges of $70.7 million since acquisition. MicroStrategy accounts for its digital assets as indefinite-lived intangible assets, which are initially recorded at cost. Subsequently, they are measured at cost, net of any impairment losses incurred since acquisition. MicroStrategy determines the fair value of its bitcoin based on quoted (unadjusted) prices on the active exchange that MicroStrategy has determined is its principal market for bitcoin. MicroStrategy considers the lowest price of one bitcoin quoted on the active exchange at any time since acquiring the specific bitcoin. If the carrying value of a bitcoin exceeds that lowest price, an impairment loss has occurred with respect to that bitcoin in the amount equal to the difference between its carrying value and such lowest price. Impairment losses are recognized as “Digital asset impairment losses” in MicroStrategy’s Consolidated Statements of Operations. As of December 31, 2020, the average cost and average carrying value of MicroStrategy’s bitcoin were approximately $15,964 and $14,961, respectively. As of January 27, 2021, at 4:00 p.m. EST, MicroStrategy had 70,784 bitcoins and the market price of one bitcoin in the principal market was approximately $31,784.

 

   

Convertible Senior Notes: In December 2020, MicroStrategy issued $650 million aggregate principal amount of 0.75% Convertible Senior Notes due 2025 (the “Notes”). The Notes are convertible into shares of MicroStrategy’s class A common stock at an initial conversion price of $397.99 per share. As of December 31, 2020, the carrying value of the Notes classified as a long-term liability in the “Convertible senior notes, net” line item was $486.4 million, net of unamortized debt discount and issuance costs. As of December 31, 2020, the carrying value of the Notes classified as equity in the “Additional paid-in capital” line item was $107.8 million, which reflects the debt discount, less issuance costs allocated to the equity component and related net deferred tax liabilities. The initial carrying amount of the liability component was determined by measuring the fair value of a similar debt instrument without any associated conversion features. The carrying amount of the equity component (representing the conversion option) was determined by deducting the fair value of the liability component from the principal value of the notes. The excess of the principal amount of the liability component over its carrying amount (i.e., the debt discount), along with any issuance costs allocated to the liability component, are amortized to interest expense over the term of the notes.

The tables at the end of this press release include a reconciliation of GAAP to non-GAAP financial measures for the three and twelve months ended December 31, 2020 and 2019. An explanation of non-GAAP financial measures is also included under the heading “Non-GAAP Financial Measures” below. Additional non-GAAP financial measures are included in our “Q4 2020 Earnings Presentation”, which will be available under the “Events and Presentation” section on MicroStrategy’s investor relations website at https://www.microstrategy.com/en/investor-relations.

MicroStrategy uses its Intelligent Enterprise™ platform across the enterprise and has created an interactive dossier with quarterly financial performance data. Anyone can access the MSTR Financials dossier via a web browser, or by downloading the MicroStrategy Library™ app on an iOS or Android device. To download the native apps, visit MicroStrategy Library for iOS or MicroStrategy Library for Android.

Non-GAAP Financial Measures

MicroStrategy is providing supplemental financial measures for (i) non-GAAP income from operations that excludes the impact of share-based compensation expense and impairment losses and gains on sale from intangible assets, which include its digital assets, (ii) non-GAAP net income and non-GAAP diluted earnings per share that exclude the impact of share-based compensation expense, impairment losses and gains on sale from intangible assets, which include its digital assets and the sale of its Voice.com domain name in the second quarter of 2019 (the “Domain Name Sale”), interest expense arising from the amortization of the debt discount and issuance costs on the Company’s convertible senior notes, and related income tax effects, and (iii) non-GAAP constant currency revenues that exclude foreign currency exchange rate fluctuations. These supplemental financial measures are not measurements of financial performance under generally accepted accounting principles in the United States (“GAAP”) and, as a result, these supplemental financial measures may not be comparable to similarly titled measures of other companies. Management uses these non-GAAP financial measures internally to help understand, manage, and evaluate business performance and to help make operating decisions.


MicroStrategy believes that these non-GAAP financial measures are also useful to investors and analysts in comparing its performance across reporting periods on a consistent basis. The first supplemental financial measure excludes (i) a significant non-cash expense that MicroStrategy believes is not reflective of its general business performance, and for which the accounting requires management judgment and the resulting share-based compensation expense could vary significantly in comparison to other companies and (ii) significant impairment losses and gains on sale from intangible assets, which include MicroStrategy’s bitcoin. The second set of supplemental financial measures excludes the impact of (i) share-based compensation expense, (ii) impairment losses and gains on sale from intangible assets, which include MicroStrategy’s bitcoin and the Domain Name Sale, which was outside of MicroStrategy’s normal business operations, (iii) non-cash interest expense arising from the amortization of the debt discount and issuance costs related to MicroStrategy’s convertible senior notes, and (iv) related income tax effects. Although the portion of non-cash interest expense related to the amortization of the debt discount will be eliminated upon our planned adoption of ASU 2020-06 on January 1, 2021, excluding the current year non-cash interest expense related to both the amortization of the debt discount and the issuance costs will allow for greater comparability of our results after we adopt the new accounting rules. The third set of supplemental financial measures excludes changes resulting from fluctuations in foreign currency exchange rates so that results may be compared to the same period in the prior year on a non-GAAP constant currency basis. MicroStrategy believes the use of these non-GAAP financial measures can also facilitate comparison of MicroStrategy’s operating results to those of its competitors.

Bitcoin Acquisitions

As part of MicroStrategy’s previously announced treasury management and capital allocation strategies, MicroStrategy purchased a total of approximately 32,220 bitcoins at an aggregate purchase price of $700.0 million in the fourth quarter of 2020 for an average purchase price of approximately $21,726 per bitcoin. Further, in the first quarter of 2021 to date, MicroStrategy has purchased approximately 314 bitcoins at an aggregate purchase price of $10.0 million for an average purchase price for such additional bitcoins of approximately $31,808 per bitcoin. In future periods, MicroStrategy may purchase additional bitcoins and increase its overall holdings of bitcoin or sell its bitcoins and decrease its overall holdings of bitcoin.

Convertible Senior Notes

In December 2020, the Company issued $650.0 million aggregate principal amount of Notes. The Notes are senior unsecured obligations of the Company and bear interest at a fixed rate of 0.75% per annum, payable semiannually in arrears on June 15 and December 15 of each year, beginning on June 15, 2021. Holders of the Notes may receive additional interest under specified circumstances as outlined in the indenture relating to the issuance of the Notes. The Notes are convertible into shares of MicroStrategy’s class A common stock at an initial conversion price of $397.99 per share. The Notes will mature on December 15, 2025, unless earlier converted, redeemed or repurchased in accordance with their terms. The total net proceeds from the offering, after deducting initial purchaser discounts and issuance costs, were approximately $634.7 million.

Conference Call

MicroStrategy will be discussing its fourth quarter 2020 financial results on a live Video Webinar today beginning at approximately 5:00 p.m. EST. The live Video Webinar and accompanying presentation materials will be available under the “Events and Presentation” section on MicroStrategy’s investor relations website at https://www.microstrategy.com/en/investor-relations. Dial-in instructions will be available after registering for the event. An archived replay will be available beginning approximately two hours after the call concludes.

About MicroStrategy Incorporated

MicroStrategy (Nasdaq: MSTR) is the largest independent publicly-traded business intelligence company, with the leading enterprise analytics platform. Our vision is to enable Intelligence Everywhere™. MicroStrategy provides modern analytics on an open, comprehensive enterprise platform used by many of the world’s most admired brands in the Fortune Global 500. Optimized for cloud and on-premises deployments, the platform features HyperIntelligence®, a breakthrough technology that overlays actionable enterprise data on popular business applications to help users make smarter, faster decisions. For more information about MicroStrategy, visit www.microstrategy.com.


MicroStrategy, Intelligent Enterprise, MicroStrategy Library, Intelligence Everywhere, HyperIntelligence, and MicroStrategy 2020 are either trademarks or registered trademarks of MicroStrategy Incorporated in the United States and certain other countries. Other product and company names mentioned herein may be the trademarks of their respective owners.

This press release may include statements that may constitute “forward-looking statements,” including estimates of future business prospects or financial results and statements containing the words “believe,” “estimate,” “project,” “expect” or similar expressions. Forward-looking statements inherently involve risks and uncertainties that could cause actual results of MicroStrategy Incorporated and its subsidiaries (collectively, the “Company”) to differ materially from the forward-looking statements. Factors that could contribute to such differences include: the extent and timing of market acceptance of MicroStrategy’s new offerings; impacts of the COVID-19 pandemic; the market price of bitcoin and any associated impairment charges that the Company may incur as a result of a decrease in the market price below the value at which the Company’s bitcoins are carried on its balance sheet; gains or losses on sales of bitcoins that the Company would incur upon any sale of any of its bitcoins; changes in the accounting treatment of the Company’s holding of bitcoins; changes in securities laws or other laws or regulations relating to bitcoin which could adversely affect the price of bitcoin or the Company’s ability to own bitcoin; a decrease in liquidity in the markets in which bitcoins are traded; security breaches, cyberattacks, unauthorized access, loss of private keys or fraud that causes us to lose any of our bitcoin; the Company’s ability to recognize revenue or deferred revenue through delivery of products or satisfactory performance of services; continued acceptance of the Company’s other products in the marketplace; fluctuations in tax benefits or provisions; the timing of significant orders; delays in or the inability of the Company to develop or ship new products; customers shifting from a product license model to a cloud subscription model, which may delay our ability to recognize revenue; competitive factors; general economic conditions; currency fluctuations; and other risks detailed in MicroStrategy’s registration statements and periodic reports filed with the Securities and Exchange Commission. The Company undertakes no obligation to update these forward-looking statements for revisions or changes after the date of this release.

MSTR-F


MICROSTRATEGY INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

 

     Three Months Ended
December 31,
    Twelve Months Ended
December 31,
 
     2020     2019     2020     2019*  
     (unaudited     (unaudited     (unaudited  

Revenues

        

Product licenses

   $ 29,770     $ 30,087     $ 86,743     $ 87,471  

Subscription services

     8,788       7,252       33,082       29,394  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total product licenses and subscription services

     38,558       37,339       119,825       116,865  

Product support

     71,886       74,722       284,434       292,035  

Other services

     20,875       21,470       76,476       77,427  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     131,319       133,531       480,735       486,327  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues

        

Product licenses

     564       534       2,293       2,131  

Subscription services

     3,321       4,185       14,833       15,161  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total product licenses and subscription services

     3,885       4,719       17,126       17,292  

Product support

     4,743       6,607       23,977       28,317  

Other services

     12,157       13,310       49,952       54,365  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     20,785       24,636       91,055       99,974  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     110,534       108,895       389,680       386,353  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

        

Sales and marketing

     39,111       50,267       148,910       191,235  

Research and development

     24,955       25,987       103,561       109,423  

General and administrative

     19,622       23,013       80,136       86,697  

Digital asset impairment losses

     26,456       0       70,698       0  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     110,144       99,267       403,305       387,355  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations

     390       9,628       (13,625     (1,002

Interest (expense) income, net

     (1,917     2,389       710       10,909  

Other (expense) income, net

     (2,506     (2,361     (7,038     28,356  
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income before income taxes

     (4,033     9,656       (19,953     38,263  

(Benefit from) provision for income taxes

     (6,694     (2,511     (12,429     3,908  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 2,661     $ 12,167     $ (7,524   $ 34,355  
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic earnings (loss) per share (1):

   $ 0.28     $ 1.19     $ (0.78   $ 3.35  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding used in computing basic earnings (loss) per share

     9,408       10,208       9,684       10,256  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings (loss) per share (1):

   $ 0.27     $ 1.18     $ (0.78   $ 3.33  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding used in computing diluted earnings (loss) per share

     9,849       10,301       9,684       10,328  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

Basic and fully diluted earnings (loss) per share for class A and class B common stock are the same.

*

Derived from audited financial statements.


MICROSTRATEGY INCORPORATED

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

 

     December 31,
2020
    December 31,
2019*
 
     (unaudited  

Assets

    

Current assets

    

Cash and cash equivalents

   $ 59,675     $ 456,727  

Restricted cash

     1,084       1,089  

Short-term investments

     0       108,919  

Accounts receivable, net

     197,461       163,516  

Prepaid expenses and other current assets

     14,400       23,195  
  

 

 

   

 

 

 

Total current assets

     272,620       753,446  

Digital assets

     1,054,302       0  

Property and equipment, net

     42,975       50,154  

Right-of-use assets

     73,597       85,538  

Deposits and other assets

     15,615       8,024  

Deferred tax assets, net

     6,503       19,409  
  

 

 

   

 

 

 

Total Assets

   $ 1,465,612     $ 916,571  
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Current liabilities

    

Accounts payable, accrued expenses, and operating lease liabilities

   $ 45,119     $ 33,919  

Accrued compensation and employee benefits

     49,249       48,792  

Deferred revenue and advance payments

     191,250       187,107  
  

 

 

   

 

 

 

Total current liabilities

     285,618       269,818  

Convertible senior notes, net

     486,366       0  

Deferred revenue and advance payments

     14,662       4,344  

Operating lease liabilities

     84,328       103,424  

Other long-term liabilities

     33,382       30,400  

Deferred tax liabilities

     8,211       26  
  

 

 

   

 

 

 

Total Liabilities

     912,567       408,012  
  

 

 

   

 

 

 

Stockholders’ Equity

    

Preferred stock undesignated, $0.001 par value; 5,000 shares authorized; no shares issued or outstanding

     0       0  

Class A common stock, $0.001 par value; 330,000 shares authorized; 16,307 shares issued and 7,623 shares outstanding, and 15,888 shares issued and 8,081 shares outstanding, respectively

     16       16  

Class B convertible common stock, $0.001 par value; 165,000 shares authorized; 1,964 shares issued and outstanding, and 2,035 shares issued and outstanding, respectively

     2       2  

Additional paid-in capital

     763,051       593,583  

Treasury stock, at cost; 8,684 shares and 7,807 shares, respectively

     (782,104     (658,880

Accumulated other comprehensive loss

     (3,885     (9,651

Retained earnings

     575,965       583,489  
  

 

 

   

 

 

 

Total Stockholders’ Equity

     553,045       508,559  
  

 

 

   

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 1,465,612     $ 916,571  
  

 

 

   

 

 

 

 

*

Derived from audited financial statements.


MICROSTRATEGY INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

     Twelve Months Ended
December 31,
 
     2020     2019*  
     (unaudited  

Operating activities:

    

Net (loss) income

   $ (7,524   $ 34,355  

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

    

Depreciation and amortization

     13,332       8,594  

Reduction in carrying amount of right-of-use assets

     8,210       8,105  

Credit losses and sales allowances

     2,732       124  

Net realized (gain) loss on short-term investments

     (94     41  

Deferred taxes

     (20,830     (2,614

Release of liabilities for unrecognized tax benefits

     0       (2,837

Share-based compensation expense

     11,153       10,209  

Digital asset impairment losses

     70,698       0  

Gain on partial lease termination

     (2,820     0  

Amortization of debt discount and issuance costs on convertible senior notes

     1,543       0  

Changes in operating assets and liabilities:

    

Accounts receivable

     (774     (3,672

Prepaid expenses and other current assets

     2,346       6,415  

Deposits and other assets

     416       761  

Accounts payable and accrued expenses

     9,445       (7,321

Accrued compensation and employee benefits

     (6,827     (2,658

Deferred revenue and advance payments

     (20,223     20,836  

Operating lease liabilities

     (11,171     (8,620

Other long-term liabilities

     4,007       (851
  

 

 

   

 

 

 

Net cash provided by operating activities

     53,619       60,867  
  

 

 

   

 

 

 

Investing activities:

    

Purchases of digital assets

     (1,125,000     0  

Proceeds from redemption of short-term investments

     119,886       684,356  

Purchases of property and equipment

     (3,651     (10,182

Purchases of short-term investments

     (9,928     (320,487
  

 

 

   

 

 

 

Net cash (used in) provided by investing activities

     (1,018,693     353,687  
  

 

 

   

 

 

 

Financing activities:

    

Proceeds from convertible senior notes classified as debt

     496,473       0  

Proceeds from convertible senior notes classified as equity

     153,527       0  

Issuance costs paid for convertible senior notes

     (14,625     0  

Proceeds from sale of class A common stock under exercise of employee stock options

     51,082       6,569  

Purchases of treasury stock

     (123,224     (72,719
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     563,233       (66,150
  

 

 

   

 

 

 

Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash

     4,784       (1,374
  

 

 

   

 

 

 

Net (decrease) increase in cash, cash equivalents, and restricted cash

     (397,057     347,030  

Cash, cash equivalents, and restricted cash, beginning of year

     457,816       110,786  
  

 

 

   

 

 

 

Cash, cash equivalents, and restricted cash, end of year

   $ 60,759     $ 457,816  
  

 

 

   

 

 

 

 

*

Derived from audited financial statements.


MICROSTRATEGY INCORPORATED

REVENUE AND COST OF REVENUE DETAIL

(in thousands)

 

     Three Months Ended
December 31,
     Twelve Months Ended
December 31,
 
     2020      2019      2020      2019*  
     (unaudited)      (unaudited)      (unaudited)         

Revenues

           

Product licenses and subscription services:

           

Product licenses

   $ 29,770      $ 30,087      $ 86,743      $ 87,471  

Subscription services

     8,788        7,252        33,082        29,394  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total product licenses and subscription services

     38,558        37,339        119,825        116,865  
  

 

 

    

 

 

    

 

 

    

 

 

 

Product support

     71,886        74,722        284,434        292,035  

Other services:

           

Consulting

     19,372        19,524        71,345        69,659  

Education

     1,503        1,946        5,131        7,768  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total other services

     20,875        21,470        76,476        77,427  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenues

     131,319        133,531        480,735        486,327  
  

 

 

    

 

 

    

 

 

    

 

 

 

Cost of revenues

           

Product licenses and subscription services:

           

Product licenses

     564        534        2,293        2,131  

Subscription services

     3,321        4,185        14,833        15,161  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total product licenses and subscription services

     3,885        4,719        17,126        17,292  
  

 

 

    

 

 

    

 

 

    

 

 

 

Product support

     4,743        6,607        23,977        28,317  

Other services:

           

Consulting

     10,996        11,668        42,923        47,664  

Education

     1,161        1,642        7,029        6,701  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total other services

     12,157        13,310        49,952        54,365  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total cost of revenues

     20,785        24,636        91,055        99,974  
  

 

 

    

 

 

    

 

 

    

 

 

 

Gross profit

   $ 110,534      $ 108,895      $ 389,680      $ 386,353  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

*

Derived from audited financial statements.


MICROSTRATEGY INCORPORATED

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

INCOME (LOSS) FROM OPERATIONS

(in thousands)

 

     Three Months Ended
December 31,
     Twelve Months Ended
December 31,
 
     2020      2019      2020     2019  
     (unaudited)      (unaudited)      (unaudited)     (unaudited)  

Reconciliation of non-GAAP income from operations:

          

Income (loss) from operations

   $ 390      $ 9,628      $ (13,625   $ (1,002

Share-based compensation expense

     3,256        2,322        11,153       10,209  

Digital asset impairment losses

     26,456        0        70,698       0  
  

 

 

    

 

 

    

 

 

   

 

 

 

Non-GAAP income from operations

   $ 30,102      $ 11,950      $ 68,226     $ 9,207  
  

 

 

    

 

 

    

 

 

   

 

 

 


MICROSTRATEGY INCORPORATED

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

NET INCOME (LOSS) AND EARNINGS (LOSS) PER SHARE

(in thousands, except per share data)

 

     Three Months Ended
December 31,
    Twelve Months Ended
December 31,
 
     2020     2019     2020     2019  
     (unaudited)     (unaudited)     (unaudited)     (unaudited)  

Reconciliation of non-GAAP net income:

        

Net income (loss)

   $ 2,661     $ 12,167     $ (7,524   $ 34,355  

Share-based compensation expense

     3,256       2,322       11,153       10,209  

Digital asset impairment losses

     26,456       0       70,698       0  

Gain from Domain Name Sale

     0       0       0       (29,829

Interest expense arising from amortization of debt discount and issuance costs

     1,543       0       1,543       0  

Income tax effects (1)

     (13,548     (142     (25,841     7,450  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net income

   $ 20,368     $ 14,347     $ 50,029     $ 22,185  
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of non-GAAP diluted earnings per share:

        

Diluted earnings (loss) per share

   $ 0.27     $ 1.18     $ (0.78   $ 3.33  

Share-based compensation expense (per diluted share)

     0.33       0.22       1.15       0.99  

Digital asset impairment losses (per diluted share)

     2.69       0.00       7.31       0.00  

Gain from Domain Name Sale (per diluted share)

     0.00       0.00       0.00       (2.89

Interest expense arising from amortization of debt discount and issuance costs (per diluted share)

     0.16       0.00       0.16       0.00  

Income tax effects (per diluted share)

     (1.38     (0.01     (2.67     0.72  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP diluted earnings per share

   $ 2.07     $ 1.39     $ 5.17     $ 2.15  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

Income tax effects reflect the net tax effects of stock-based compensation expense, digital asset impairment losses, gain from the Domain Name Sale, and interest expense for amortization of debt discount and issuance costs.


MICROSTRATEGY INCORPORATED

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

CONSTANT CURRENCY

(in thousands)

 

     Three Months Ended
December 31,
(unaudited)
 
     GAAP      Foreign
Currency
Exchange
Rate Impact (1)
     Non-GAAP
Constant
Currency (2)
     GAAP      GAAP %
Change
    Non-GAAP
Constant
Currency
% Change (3)
 
     2020      2020      2020      2019      2020     2020  

Revenues

                

Product licenses

   $ 29,770      $ 310      $ 29,460      $ 30,087        -1.1     -2.1

Subscription services

     8,788        112        8,676        7,252        21.2     19.6

Total product licenses and subscription services

     38,558        422        38,136        37,339        3.3     2.1

Product support

     71,886        1,313        70,573        74,722        -3.8     -5.6

Other services

     20,875        533        20,342        21,470        -2.8     -5.3

Total revenues

     131,319        2,268        129,051        133,531        -1.7     -3.4

 

     Twelve Months Ended
December 31,
(unaudited)
 
     GAAP      Foreign
Currency
Exchange
Rate Impact (1)
    Non-GAAP
Constant

Currency (2)
     GAAP      GAAP %
Change
    Non-GAAP
Constant
Currency
% Change (3)
 
     2020      2020     2020      2019      2020     2020  

Revenues

               

Product licenses

   $ 86,743      $ (1,227   $ 87,970      $ 87,471        -0.8     0.6

Subscription services

     33,082        121       32,961        29,394        12.5     12.1

Total product licenses and subscription services

     119,825        (1,106     120,931        116,865        2.5     3.5

Product support

     284,434        (358     284,792        292,035        -2.6     -2.5

Other services

     76,476        304       76,172        77,427        -1.2     -1.6

Total revenues

     480,735        (1,160     481,895        486,327        -1.1     -0.9

 

(1)

The “Foreign Currency Exchange Rate Impact” reflects the estimated impact of fluctuations in foreign currency exchange rates on international revenues. It shows the increase (decrease) in international revenues from the same period in the prior year, based on comparisons to the prior year quarterly average foreign currency exchange rates. The term “international” refers to operations outside of the United States and Canada.

(2)

The “Non-GAAP Constant Currency” reflects the current period GAAP amount, less the Foreign Currency Exchange Rate Impact.

(3)

The “Non-GAAP Constant Currency % Change” reflects the percentage change between the current period Non-GAAP Constant Currency amount and the GAAP amount for the same period in the prior year.


MICROSTRATEGY INCORPORATED

DEFERRED REVENUE DETAIL

(in thousands)

 

     December 31,
2020
     December 31,
2019*
 
     (unaudited)         

Current:

     

Deferred product licenses revenue

   $ 1,495      $ 481  

Deferred subscription services revenue

     26,258        16,561  

Deferred product support revenue

     156,216        161,670  

Deferred other services revenue

     7,281        8,395  
  

 

 

    

 

 

 

Total current deferred revenue and advance payments

   $ 191,250      $ 187,107  
  

 

 

    

 

 

 

Non-current:

     

Deferred product licenses revenue

   $ 139      $ 293  

Deferred subscription services revenue

     8,758        97  

Deferred product support revenue

     5,055        3,417  

Deferred other services revenue

     710        537  
  

 

 

    

 

 

 

Total non-current deferred revenue and advance payments

   $ 14,662      $ 4,344  
  

 

 

    

 

 

 

Total current and non-current:

     

Deferred product licenses revenue

   $ 1,634      $ 774  

Deferred subscription services revenue

     35,016        16,658  

Deferred product support revenue

     161,271        165,087  

Deferred other services revenue

     7,991        8,932  
  

 

 

    

 

 

 

Total current and non-current deferred revenue and advance payments

   $ 205,912      $ 191,451  
  

 

 

    

 

 

 

 

*

Derived from audited financial statements.


MICROSTRATEGY INCORPORATED

WORLDWIDE EMPLOYEE HEADCOUNT

 

     December 31,
2020
     September 30,
2020
     June 30,
2020
     March 31,
2020
     December 31,
2019
 

Subscription services

     49        54        64        63        69  

Product support

     154        165        189        204        219  

Consulting

     393        397        421        425        392  

Education

     37        38        43        42        38  

Sales and marketing

     479        495        573        594        597  

Research and development

     642        666        684        721        743  

General and administrative

     243        258        285        314        338  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total headcount

     1,997        2,073        2,259        2,363        2,396