MicroStrategy Incorporated

MicroStrategy Announces Third Quarter 2007 Financial Results

10-30-07

Operating Income Increased 24% and Total Revenue Up 23%, Year-Over-Yea

MCLEAN, Va., Oct. 30 /PRNewswire-FirstCall/ -- MicroStrategy® Incorporated (Nasdaq: MSTR), a leading worldwide provider of business intelligence software, today announced financial results for the three-month period ended September 30, 2007 (the third quarter of its 2007 fiscal year).

Third quarter 2007 revenue was $95.8 million versus $77.7 million for the third quarter of 2006, a 23% increase. This marked the nineteenth consecutive quarter of year-over-year revenue growth. Product licenses revenue for the third quarter of 2007 was $30.2 million versus $24.5 million for the third quarter of 2006, a 23% increase. Product support, services and other revenues for the third quarter of 2007 was $65.6 million versus $53.2 million for the third quarter of 2006, a 23% increase. Revenues from non-core operations, which consist of Alarm.com and MicroStrategy's Angel.com business unit, were $6.4 million for the third quarter of 2007 compared to $2.1 million for the third quarter of 2006. The cost of revenues attributable to these non-core operations was $4.0 million for the third quarter of 2007 compared to $1.0 million for the third quarter of 2006.

Operating expenses for the third quarter of 2007 were $51.2 million versus $42.8 million for the third quarter of 2006, a 20% increase. The increase in third quarter operating expenses was primarily due to an increase in the worldwide employee headcount of our core business intelligence (BI) business and reflects the continued expansion in the third quarter of 2007 of our worldwide sales and services organization and administrative and IT support functions. Operating expenses related to Alarm.com and Angel.com were $3.5 million in the third quarter of 2007 compared to $2.7 million in the third quarter of 2006, a 30% increase. Third quarter 2007 consolidated income from operations increased by 24% to $28.6 million, or 30% of revenue, versus $23.2 million, or 30% of revenue, for the third quarter of 2006. Net income for the third quarter of 2007 increased to $19.3 million, or $1.51 per share on a diluted basis, compared to $17.0 million, or $1.27 per share on a diluted basis, for the third quarter of 2006.

During the third quarter of 2007, MicroStrategy repurchased 264,157 shares of its class A common stock for $17.9 million at an average price per share of $67.74, including broker commissions. As of September 30, 2007, MicroStrategy had 9,384,497 shares of class A common stock and 2,775,244 shares of class B common stock outstanding.

"We are very pleased with our third quarter results, as we generated solid revenue growth across all lines of business and an operating margin of 30% while continuing to enhance our global business capacity," said Arthur S. Locke, III, MicroStrategy's Vice President, Finance & Chief Financial Officer. "We believe that these results reflect the benefits of a focused and disciplined investment strategy, aimed at increasing our capacity to drive new business, maintaining strong relationships with our customers, expanding product development, and strengthening our corporate infrastructure."

New Customers and New Deals with Existing Customers in Q3 2007 Included:

AIM Healthcare Services, Inc., American Signature, Inc., Boscov's Department Stores, Canadian Institute for Health Information, Capitol Indemnity Corporation, Cascade Corporation, Classic Residence by Hyatt, Countrywide Home Loan, Einstein Noah Restaurant Group, Inc., First Franklin Financial Corporation, Guitar Center, Interstate Batteries, KB Toys, Inc., La Capitale Assurances Generales, Liz Claiborne, Inc., Meredith Corporation, Micro Electronics, Inc., Nationwide Mutual Insurance Company, Northwest Evaluation Association, Nygard International, Reitmans Canada Limited, Rheem Manufacturing, Ross Stores, Inc., Saint-Gobain Abrasives Inc., Spansion, TSA Corporate Services, Inc., Unified Western Grocers, Verisign, VHP, Weil-McLain Company, and Yahoo!

Examples of Customer Deals from Q3 2007:

AIM Healthcare Services, Inc.

A leader in healthcare business solutions, AIM exists to reduce the cost of healthcare and simplify healthcare information management. AIM recently selected MicroStrategy as its business intelligence standard, using MicroStrategy for multiple business intelligence applications across the organization. Currently, AIM users produce more than 10,000 MicroStrategy- based reports each month for enhanced insights into key areas of the business, including accounting, operations, and client management.

Interstate Batteries

Interstate Batteries, the leading automotive replacement battery brand in North America, has expanded its deployment of MicroStrategy. MicroStrategy's dashboards will enable Interstate Batteries' management to monitor key financial metrics and seamlessly drill into detailed reports to view underlying data on the company's full line of battery products, including batteries for cars, boats, commercial vehicles, and motorcycles. Interstate Batteries currently uses MicroStrategy for enhanced visibility into sales performance and historical sales trends.

Meredith Corporation

Meredith Corporation is one of the nation's leading media and marketing companies, with businesses focused on magazine and book publishing, television broadcasting, integrated marketing, and interactive media. Meredith Corporation's business users depend on MicroStrategy to track the performance of marketing campaigns and use the information across all of the company's publications and campaign types. Meredith Corporation has identified numerous advantages of its MicroStrategy projects, citing reduced charges with fulfillment vendors, higher employee productivity, and greater focus on planning and implementing marketing campaigns. Meredith cited ease-of-use and scalability as reasons it recently expanded its use of MicroStrategy.

Reitmans Canada Limited

Reitmans, Canada's largest women's specialty retailer, has expanded its MicroStrategy implementation. A MicroStrategy customer for more than five years, Reitmans relies on MicroStrategy as the reporting solution for their assortment and planning applications. Reitmans chose MicroStrategy for its integrated architecture, self-service, and scalability to support a growing user base and increasing data sizes. Founded in 1926, Reitmans operates over 950 stores under seven divisions.

General Availability of MicroStrategy Mobile and MicroStrategy Integrity Manager:

MicroStrategy Mobile, which was included in MicroStrategy's September 2007 software release, enables business users to receive the same reports on their BlackBerry® smartphone that they receive on their desktop, without the need for reformatting or retrofitting existing reports. Each user can design and save his own personal report preferences to create optimal viewing of even the largest reports on his BlackBerry smartphone. Saved reports can also be accessed offline or when the BlackBerry smartphone is not within connectivity range.

"After evaluating building our own mobile solutions as well as other commercially available products, we found MicroStrategy Mobile to be intuitive and feature rich, and we plan to use it for a large deployment all the way up to our CEO," said Len Nicolas, COO and CTO at Nygard International. "The fact that Nygard's existing reports can be viewed on a mobile device without modification is a major advantage for both our Business Intelligence team and, more importantly, for the users. We are working on several different mobile applications for BlackBerry smartphones, and we anticipate that this will save us time and money. MicroStrategy has really set the standard on this one."

"Today's workers are on the go but they don't want to leave their data behind," said Wayne Eckerson, Director of Research at The Data Warehousing Institute. "Mobile BI technology is the next wave in advancing the delivery of analytical information to business users via wireless devices. Delivering interactive reports to BlackBerry smartphones and other mobile devices is the next step in making BI truly pervasive. MicroStrategy is on the forefront of this new wave with its latest release."

To find out more about MicroStrategy Mobile, visit http://www.microstrategy.com/Software/Products/User_Interfaces/Mobile/

MicroStrategy Integrity Manager, which also was introduced as part of MicroStrategy's September 2007 software release, tests the accuracy of BI applications by validating data and report integrity. MicroStrategy Integrity Manager automates the report comparison process and verifies the consistency of reports as changes are made to the BI ecosystem.

Despite the increasing importance of BI applications, BI support teams may fail to validate report and data integrity if the validation process is too labor intensive and time consuming. MicroStrategy Integrity Manager automates this process and identifies inconsistencies and errors, enabling business people to rely on the accuracy of their BI reports and analyses.

"MicroStrategy Integrity Manager reduces the need for resource-intensive manual testing, and automates regression tests for all planned changes in the entire BI ecosystem," said Natalie Pikouliak, Business Intelligence Manager at Katz Group Canada.

"Integrity Manager goes beyond simple impact analysis, providing full regression testing for any number of potential system changes," said Cindi Howson, founder of BIScorecard and author of Successful Business Intelligence: Secrets to Making BI a Killer App. "Integrity Manager will do before-and-after report comparisons to tell an administrator the impact of the change, warning if there are differences in the data values, if the SQL generated is different, or if the output format is affected. Not only will Integrity Manager tell you that there is a difference, it also highlights the differences in the numeric values, SQL, or display. Of leading BI vendors, MicroStrategy is first to market in providing such an important capability to managing enterprise-class BI."

To find out more about MicroStrategy Integrity Manager, visit http://www.microstrategy.com/integritylaunch

OEM Partner Update:

In the third quarter, MicroStrategy announced that it had entered into agreements with 50 OEM Partners since 2004. These OEM Partners are leveraging the MicroStrategy platform to augment their own products and solutions with dashboards, reporting, and analysis capabilities. By enhancing their product capabilities with business intelligence, OEM Partners can differentiate their products from competitors, increase customer satisfaction, and create new revenue streams. MicroStrategy's OEM Partners include a broad range of companies across many different vertical industries.

MicroStrategy's business intelligence platform provides integrated reporting and analytics, allowing OEM Partners to easily add reporting, dashboarding, analytical, and alerting applications to their existing software solutions. These new reporting and analytic components can be added with minimal development costs or resources. The MicroStrategy platform is engineered using an open standards-based architecture for reliability, scalability, security, and central administration, enabling seamless integration into an OEM Partner's application. MicroStrategy provides a Software Development Kit to its OEM Partners to allow them to deeply embed and white-label MicroStrategy within their own interfaces.

MicroStrategy 2007 Events:

MicroStrategy hosted a one-hour Webcast on October 3, 2007 entitled "8 New Dashboard Breakthroughs." The Webcast featured advances in dashboards and demonstrations of MicroStrategy's highly intuitive Dynamic Enterprise Dashboards, along with commentary from Wayne Eckerson, Director of Research at The Data Warehousing Institute and insights from MicroStrategy customers Corporate Express and Hallmark. Approximately 800 people participated in the Webcast, from more than 45 countries.

On October 18, 2007, MicroStrategy hosted a Webcast featuring BI analyst Cindi Howson and demonstrations of MicroStrategy Mobile and MicroStrategy Integrity Manager. MicroStrategy plans to host a Webcast entitled "Introducing MicroStrategy Mobile: Supporting the Data Needs of a Mobile Workforce" on November 15, 2007. This Webcast will showcase MicroStrategy Mobile and include product demonstrations, insights from MicroStrategy customer Nygard, and commentary from a Research in Motion representative. For more information on the Webcast, visit http://www.microstrategy.com/IntroToMobile.

The MicroStrategy Fall Symposium was held in Chicago, October 16-17, 2007. The event featured demonstrations of the latest advances in the MicroStrategy platform, including MicroStrategy Dynamic Enterprise Dashboards, MicroStrategy Mobile, and MicroStrategy Integrity Manager. In addition, MicroStrategy customers shared best practices in deploying business intelligence applications in their organizations. The Fall Symposium customer speakers included McDonald's, Classic Residence by Hyatt, Hallmark, Things Remembered, Payless ShoeSource, Spartan Stores, and Quixtar.

The final MicroStrategy Symposium of the year will be held in Paris, November 13-14, 2007. Some of the companies scheduled to present in Paris include Cetelem, SFR, Groupe Danone, Alcatel-Lucent, DIM Branded Apparel, Carrefour, Fnac, and COFEL.

MicroStrategy recently held a Technology Day in Milan, Italy and is planning four Technology Day events in November, with venues in Charlotte, Washington DC, Zurich, and Toronto. These one-day events offer a technical and a business track, with practical tools to enhance business intelligence initiatives.

MicroStrategy will hold its 11th Annual User Conference, MicroStrategy World 2008, January 14-17, 2008 at the InterContinental Miami in Miami, Florida. The conference will feature dozens of customer speakers from industry-leading organizations, more than 100 educational sessions, and an exhibit hall showcasing MicroStrategy partners. MicroStrategy World 2008 will also include an update on the company's latest technology advances, insightful keynote presentations, and networking opportunities.

MicroStrategy Recognized by Forbes:

MicroStrategy was recently named to the Forbes 200 Best Small Companies in America list. The candidates for Forbes 200 Best Small Companies all had revenue of $5 million to $750 million and share prices above $5, as of October 1, 2007. Forbes judged the companies according to return on equity, as well as sustained sales and net profit growth over 12-month and five-year periods. MicroStrategy was ranked #63 on the list.

About MicroStrategy Incorporated

Founded in 1989, MicroStrategy is a global leader in business intelligence (BI) technology. MicroStrategy provides integrated reporting, analysis, and monitoring software that helps leading organizations worldwide make better business decisions every day. Companies choose MicroStrategy for its advanced technical capabilities, sophisticated analytics, and superior data and user scalability. More information about MicroStrategy (Nasdaq: MSTR) is available at www.microstrategy.com.

MicroStrategy, MicroStrategy 8, MicroStrategy Business Intelligence Platform, MicroStrategy Dynamic Enterprise Dashboards, MicroStrategy Mobile, and MicroStrategy Integrity Manager 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 ability of the Company to implement and achieve widespread customer acceptance of its MicroStrategy 8 software on a timely basis; the Company's ability to recognize deferred revenue through delivery of products or satisfactory performance of services; continued acceptance of the Company's products in the marketplace; the timing of significant orders; delays in the Company's ability to develop or ship new products; market acceptance of new products; competitive factors; general economic conditions; currency fluctuations; and other risks detailed in the Company's registration statements and periodic reports filed with the Securities and Exchange Commission. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release.

Contact:
MicroStrategy Incorporated
Investor Relations
ir@microstrategy.com
(703) 848-8600
                            MICROSTRATEGY INCORPORATED
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (in thousands, except per share data)
                                     Three Months Ended    Nine Months Ended
                                        September 30,        September 30,
                                      2007      2006       2007       2006                               (unaudited)(unaudited)(unaudited)(unaudited)
    Revenues
    Product licenses                 $30,210   $24,494    $68,608    $70,738
    Product support, services and
     other revenues                   65,634    53,171    184,470    150,531
      Total revenues                  95,844    77,665    253,078    221,269

    Cost of Revenues
    Product licenses                     713       826      2,156      2,122
    Product support, services and
     other revenues                   15,294    10,883     44,284     29,752
      Total cost of revenues          16,007    11,709     46,440     31,874
    Gross profit                      79,837    65,956    206,638    189,395

    Operating Expenses
    Sales and marketing               28,843    21,518     80,050     61,800
    Research and development           9,626     8,794     26,260     25,776
    General and administrative        12,748    12,469     38,616     33,935
    Amortization of intangible
     assets                               18        18         54         53
      Total operating expenses        51,235    42,799    144,980    121,564
    Income from operations            28,602    23,157     61,658     67,831
    Financing and Other Income
    Interest income, net                 927       583      2,782      2,062
    Gain on investments                    -        14          -         14
    Other expense, net                  (809)     (208)      (804)      (876)
      Total financing and other
       income                            118       389      1,978      1,200
    Income before income taxes        28,720    23,546     63,636     69,031
      Provision for income taxes       9,385     6,574     22,843     20,508
    Net income                       $19,335   $16,972    $40,793    $48,523
    Basic earnings per share           $1.57     $1.34      $3.29      $3.70
    Diluted earnings per share         $1.51     $1.27      $3.15      $3.52
    Basic weighted average shares
     outstanding                      12,286    12,707     12,416     13,097
    Diluted weighted average shares
     outstanding                      12,771    13,325     12,953     13,766
                          MICROSTRATEGY INCORPORATED
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                     (in thousands, except per share data)
                                  (unaudited)
                                           Core BI Business     Alarm.com
                                                               Three Months
                                          Three Months Ended      Ended
                                            September 30,     September 30,
                                            2007      2006     2007    2006
    Revenues
    Product licenses                       $30,210   $24,494      $-      $-
    Product support and services            59,196    51,115       -       -
    Alarm.com hardware and services
     revenue                                     -         -   4,613     850
    Angel.com telephony services                 -         -       -       -
      Total revenues                        89,406    75,609   4,613     850
    Cost of Revenues
    Product licenses                           713       830       -       -
    Product support and services            11,276     9,901       -       -
    Alarm.com hardware and services              -         -   3,511     701
    Angel.com telephony services                 -         -       -       -
      Total cost of revenues                11,989    10,731   3,511     701
    Gross profit                            77,417    64,878   1,102     149
    Operating Expenses
    Sales and marketing                     26,931    20,042     300     311
    Research and development                 8,615     7,963     347     280
    General and administrative              12,147    12,060     594     409
    Amortization of intangible assets           18        18       -       -
      Total operating expenses              47,711    40,083   1,241   1,000
    Income (loss) from operations           29,706    24,795    (139)   (851)
    Financing and Other Income
    Interest income, net                       927       583       -       -
    Gain on investments                          -        14       -       -
    Other expense, net                        (809)     (208)      -       -
      Total financing and other income         118       389       -       -
    Income (loss) before income taxes      $29,824   $25,184   $(139)  $(851)
      Provision for income taxes
    Net income
                                            Angel.com          Consolidated
                                       Three Months Ended   Three Months Ended
                                          September 30,       September 30,
                                         2007      2006       2007     2006
    Revenues
    Product licenses                        $-        $-     $30,210  $24,494
    Product support and services             -         -      59,196   51,115
    Alarm.com hardware and services
     revenue                                 -         -       4,613      850
    Angel.com telephony services         1,825     1,206       1,825    1,206
      Total revenues                     1,825     1,206      95,844   77,665
    Cost of Revenues
    Product licenses                         -        (4)        713      826
    Product support and services             -         -      11,276    9,901
    Alarm.com hardware and services          -         -       3,511      701
    Angel.com telephony services           507       281         507      281
      Total cost of revenues               507       277      16,007   11,709
    Gross profit                         1,318       929      79,837   65,956
    Operating Expenses
    Sales and marketing                  1,612     1,165      28,843   21,518
    Research and development               664       551       9,626    8,794
    General and administrative               7 (a)     - (a)  12,748   12,469
    Amortization of intangible assets        -         -          18       18
      Total operating expenses           2,283     1,716      51,235   42,799
    Income (loss) from operations         (965)     (787)     28,602   23,157
    Financing and Other Income
    Interest income, net                     -         -         927      583
    Gain on investments                      -         -           -       14
    Other expense, net                       -         -        (809)    (208)
      Total financing and other income       -         -         118      389
    Income (loss) before income taxes    $(965)    $(787)     28,720   23,546
      Provision for income taxes                               9,385    6,574
    Net income                                               $19,335  $16,972
         Basic earnings per share                              $1.57    $1.34
         Diluted earnings per share                            $1.51    $1.27
         Basic weighted average shares
          outstanding                                         12,286   12,707
         Diluted weighted average shares
          outstanding                                         12,771   13,325

    (a)  An insignificant amount of general and administrative services is
         provided to the Angel.com business unit by MicroStrategy's core
         business operations.
                                            Core BI Business     Alarm.com
                                           Nine Months Ended Nine Months Ended
                                             September 30,     September 30,
                                             2007     2006     2007    2006
    Revenues
    Product licenses                        $68,608  $70,738      $-       $-
    Product support and services            166,621  144,781       -        -
    Alarm.com hardware and services revenue       -        -  12,932    2,308
    Angel.com telephony services                  -        -       -        -
      Total revenues                        235,229  215,519  12,932    2,308

    Cost of Revenues
    Product licenses                          2,156    2,122       -        -
    Product support and services             33,481   27,132       -        -
    Alarm.com hardware and services               -        -   9,360    1,874
    Angel.com telephony services                  -        -       -        -
      Total cost of revenues                 35,637   29,254   9,360    1,874
    Gross profit                            199,592  186,265   3,572      434
    Operating Expenses
    Sales and marketing                      74,683   58,097     828      681
    Research and development                 23,048   23,721   1,134      774
    General and administrative               37,117   33,032   1,492      903
    Amortization of intangible assets            54       53       -        -
      Total operating expenses              134,902  114,903   3,454    2,358
    Income (loss) from operations            64,690   71,362     118   (1,924)

    Financing and Other Income
    Interest income, net                      2,782    2,062       -        -
    Gain on investments                           -       14       -        -
    Other expense, net                         (804)    (876)      -        -
      Total financing and other income        1,978    1,200       -        -
    Income (loss) before income taxes       $66,668  $72,562    $118  $(1,924)
      Provision for income taxes
    Net income
                                          Angel.com            Consolidated
                                      Nine Months Ended     Nine Months Ended
                                        September 30,         September 30,
                                       2007        2006        2007     2006
    Revenues
    Product licenses                      $-          $-     $68,608  $70,738
    Product support and services           -           -     166,621  144,781
    Alarm.com hardware and services
     revenue                               -           -      12,932    2,308
    Angel.com telephony services       4,917       3,442       4,917    3,442
      Total revenues                   4,917       3,442     253,078  221,269
    Cost of Revenues
    Product licenses                       -           -       2,156    2,122
    Product support and services           -           -      33,481   27,132
    Alarm.com hardware and services        -           -       9,360    1,874
    Angel.com telephony services       1,443         746       1,443      746
      Total cost of revenues           1,443         746      46,440   31,874
    Gross profit                       3,474       2,696     206,638  189,395
    Operating Expenses
    Sales and marketing                4,539       3,022      80,050   61,800
    Research and development           2,078       1,281      26,260   25,776
    General and administrative             7 (a)       - (a)  38,616   33,935
    Amortization of intangible
     assets                                -           -          54       53
      Total operating expenses         6,624       4,303     144,980  121,564
    Income (loss) from operations     (3,150)     (1,607)     61,658   67,831

    Financing and Other Income
    Interest income, net                   -           -       2,782    2,062
    Gain on investments                    -           -           -       14
    Other expense, net                     -           -        (804)    (876)
      Total financing and other
       income                              -           -       1,978    1,200
    Income (loss) before income
     taxes                           $(3,150)    $(1,607)     63,636   69,031
      Provision for income taxes                              22,843   20,508
    Net income                                               $40,793  $48,523

         Basic earnings per share                              $3.29    $3.70
         Diluted earnings per share                            $3.15    $3.52
         Basic weighted average
          shares outstanding                                  12,416   13,097
         Diluted weighted average
          shares outstanding                                  12,953   13,766

    (a)  An insignificant amount of general and administrative services is
         provided to the Angel.com business unit by MicroStrategy's core
         business operations.
                          MICROSTRATEGY INCORPORATED
                         CONSOLIDATED BALANCE SHEETS
                    (in thousands, except per share data)
                                               September 30,      December 31,
                                                   2007              2006
    Assets                                      (unaudited)        (audited)
    Current assets
      Cash and cash equivalents                    $75,725           $78,980
      Restricted cash and investments                2,875             3,799
      Accounts receivable, net                      52,782            54,468
      Prepaid expenses and other current assets      9,366             8,649
      Deferred tax assets, net                      29,038            29,510
    Total current assets                           169,786           175,406

    Property and equipment, net                     10,136            11,102
    Capitalized software development cost, net       2,903             1,903
    Deposits and other assets                       11,417             2,461
    Deferred tax assets, net                        35,795            57,944
    Total Assets                                  $230,037          $248,816
    Liabilities and Stockholders' Equity
    Current liabilities
      Accounts payable and accrued expenses        $20,947           $24,378
      Accrued compensation and employee benefits    30,502            31,872
      Deferred revenue and advance payments         65,045            56,578
    Total current liabilities                      116,494           112,828
    Deferred revenue and advance payments            2,389             1,127
    Other long-term liabilities                      1,809             1,710
    Total Liabilities                              120,692           115,665
    Stockholders' Equity
      Preferred stock undesignated; $0.001 par
       value; 5,000 shares authorized; no
       shares issued or outstanding                      -                 -
      Class A common stock; $0.001 par
       value; 330,000 shares authorized;
       14,061 shares issued and 9,384 shares
       outstanding, and 13,972 shares issued
       and 9,918 shares outstanding, respectively       14                14
      Class B common stock; $0.001 par
       value; 165,000 shares authorized;
       2,775 issued and outstanding                      3                 3
      Additional paid-in capital                   445,678           440,768
      Treasury stock, at cost; 4,676 and
       4,054 shares, respectively                 (331,410)         (268,776)
      Accumulated other comprehensive income         2,777             3,123
      Accumulated deficit                           (7,717)          (41,981)
    Total Stockholders' Equity                     109,345           133,151
    Total Liabilities and Stockholders' Equity    $230,037          $248,816

                           MICROSTRATEGY INCORPORATED
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                                      Nine months ended
                                                         September 30,
                                                    2007              2006
                                                (unaudited)       (unaudited)
    Operating activities:
       Net income                                  $40,793           $48,523
       Adjustments to reconcile net income
        from continuing operations to net cash
        provided by operating activities:
          Depreciation and amortization              5,738             5,755
          Bad debt provision                         1,447               696
          Deferred taxes                            18,559            17,532
          Share-based compensation                     428             1,086
          Excess tax benefits from share-
           based payment arrangements               (2,269)           (2,208)
          Other, net                                   116               145
       Changes in operating assets and
        liabilities:
          Accounts receivable                        1,088             1,874
          Prepaid expenses and other
           current assets                             (486)           (1,401)
          Deposits and other assets                 (1,414)             (142)
          Accounts payable and accrued
           expenses, compensation
           and employee benefits                    (6,582)           (3,078)
          Deferred revenue and advance payments      7,279             9,504
          Other long-term liabilities                   37              (482)
             Net cash provided by
              operating activities                  64,734            77,804
    Investing activities:
       Proceeds from maturities of short-
        term investments                                 -           112,666
       Purchases of short-term investments               -           (58,900)
       Advance deposits on purchase of
        property and equipment                      (7,500)                -
       Purchases of property and
        equipment, net                              (2,868)           (2,671)
       Capitalized software development costs       (2,650)                -
       Decrease in restricted cash and investments     997             1,308
             Net cash (used in) provided
              by investing activities              (12,021)           52,403
    Financing activities:
       Proceeds from sale of class A
        common stock under employee
        stock purchase plan and exercise
        of employee stock options                    2,013             2,919
       Excess tax benefits from share-
        based payment arrangements                   2,269             2,208
       Purchases of treasury stock                 (62,634)         (131,959)
             Net cash used in financing
              activities                           (58,352)         (126,832)
             Effect of foreign exchange
              rate changes on cash and
              cash equivalents                       2,384             2,135
    Net (decrease) increase in cash and
     cash equivalents                               (3,255)            5,510
    Cash and cash equivalents, beginning
     of period                                      78,980            42,318
    Cash and cash equivalents, end of period       $75,725           $47,828
SOURCE MicroStrategy Incorporated
CONTACT: MicroStrategy Incorporated Investor Relations, +1-703-848-8600,
ir@microstrategy.com
Web site: http://www.microstrategy.com
(MSTR)