MicroStrategy Incorporated

MicroStrategy Announces Second Quarter 2007 Financial Results

07-27-07

Year-Over-Year Revenue Increases by 14%

MCLEAN, Va., July 27 -- MicroStrategy(R) Incorporated (Nasdaq: MSTR), a leading worldwide provider of business intelligence software, today announced financial results for the three-month period ended June 30, 2007 (the second quarter of its 2007 fiscal year).

Second quarter 2007 revenue was $84.8 million versus $74.1 million for the second quarter of 2006, a 14% increase. Product licenses revenue for the second quarter of 2007 was $21.7 million versus $23.1 million for the second quarter of 2006, a 6% decrease. Product support and other services revenue for the second quarter of 2007 was $63.1 million versus $51.0 million for the second quarter of 2006, a 24% increase. Product support and other services revenue increased primarily due to an increase in technical support revenue and an increase in the hardware and services revenue generated by MicroStrategy's Alarm.com subsidiary, which provides wireless and web-enabled security system technology to residential and commercial customers. Revenues from non-core operations, which consist of MicroStrategy's Alarm.com subsidiary and Angel.com business unit, were $8.3 million for the second quarter of 2007 compared to $2.0 million for the second quarter of 2006. The cost of revenues attributable to these non-core operations was $6.0 million for the second quarter of 2007 compared to $0.8 million for the second quarter of 2006.

Operating expenses for the second quarter of 2007 were $48.3 million versus $39.8 million for the second quarter of 2006, a 22% increase. The increase in second 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 second 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 $3.3 million in the second quarter of 2007 compared to $2.2 million in the second quarter of 2006, a 53% increase. Consolidated income from operations for the second quarter of 2007 was $18.4 million, or 22% of revenue, versus $23.7 million, or 32% of revenue, for the second quarter of 2006.

"The results of our core BI business in the second quarter continued to be mixed with a year-over-year increase in product support and other services revenue offset in part by a decline in product license revenues," said Arthur S. Locke, III, MicroStrategy's Vice President, Finance & Chief Financial Officer. "In the second quarter, we continued efforts to enhance our global sales and services organization although we slowed the headcount growth in that organization in order to focus on integrating and leveraging the additional capacity that we now have in place. We are also considering strategic alternatives relating to our Alarm.com and Angel.com businesses."

For the second quarter of 2007, MicroStrategy's effective tax rate was 39.6% compared to 30.5% in the second quarter of 2006. The increase in the effective tax rate was primarily caused by net losses of certain foreign subsidiaries for which the company was not able to recognize a tax benefit for financial reporting purposes and the establishment of valuation allowances on certain foreign deferred tax assets. Net income for the second quarter of 2007 was $11.6 million, or $0.90 per share on a diluted basis, versus $16.6 million, or $1.21 per share on a diluted basis, for the second quarter of 2006.

As of June 30, 2007, MicroStrategy had $76.1 million in cash and cash equivalents and 9,638,150 shares of class A common stock and 2,775,244 shares of class B common stock outstanding.

New Customers and New Deals with Existing Customers in Q2 2007 Included:

Capital Group Companies; Classic Residence by Hyatt; The Container Store, Inc.; Cryptologic, Inc.; David's Bridal; Dick's Sporting Goods Inc.; The First American Financial Corporation; First Franklin Financial Corporation; Focus Technology Group; Gander Mountain; GE Healthcare; Goal Financial; Grange Insurance; IQ Solutions; KeyBank National Association; La Capitale Assurances Generales; LowerMyBills; Netflix; The NPD Group; Porsche Cars North America, Inc.; Ross Stores, Inc.; Sanmina SCI Corporation; SchoolNet; Starwood Hotels & Resorts, Inc.; TRX Data Services Inc.; US Department of State; Verisign; VSM Group; and Wells Fargo Bank, N.A.

Examples of Customer Deals from Q2 2007:

Dick's Sporting Goods, Inc

Dick's Sporting Goods, Inc. is an authentic full-line sporting goods retailer offering a broad assortment of brand name sporting goods equipment, apparel, and footwear in a specialty store environment, operating 309 stores in 34 states. Dick's uses the MicroStrategy platform as its enterprise reporting standard to track product sales and inventory levels across its network of retail stores. With MicroStrategy, Dick's employees perform sales, category, and inventory analyses enabling them to make analytically-based decisions that can improve business performance and customer service. Given the success of the MicroStrategy projects, Dick's recently expanded its use of the MicroStrategy platform with the purchase of additional licenses to facilitate the fast-paced growth of the Dick's store base.

Netflix Inc.

Netflix Inc., the world's largest online movie rental service, has selected MicroStrategy as its enterprise reporting and analysis standard. Netflix will utilize MicroStrategy for reporting and analysis of financial data, marketing campaigns, and movie recommendations. With MicroStrategy, Netflix users will gain valuable insight into critical marketing data to evaluate marketing campaigns and personalized movie recommendation data, enhance its marketing programs, and better serve its subscriber base of 6.8 million members. MicroStrategy was selected by Netflix for its ease-of-use, robust reporting and analytical capabilities, and scalability for large databases.

Porsche Cars North America, Inc.

Porsche Cars North America, Inc. (PCNA), based in Atlanta, GA, and its subsidiary, Porsche Cars Canada, Ltd., are the exclusive importers of Porsche sports cars and Cayenne sport utility vehicles for the United States and Canada, Ltd, and is a wholly owned, indirect subsidiary of Dr. Ing. h.c. F. Porsche AG. PCNA uses the MicroStrategy Business Intelligence Platform to report on, analyze, and monitor marketing and sales performance information. With MicroStrategy, PCNA personnel can make analytically-based decisions that help Porsche dealerships enhance customer service and help the company achieve its business objectives. PCNA recently expanded its deployment of MicroStrategy to support its growing business intelligence requirements.

Launch of MicroStrategy Mobile and MicroStrategy Integrity Manager:

MicroStrategy recently announced its plans to launch MicroStrategy Mobile(TM), a new product that delivers timely BI information directly to BlackBerry(R) smartphones from Research In Motion. With MicroStrategy Mobile, business users will receive the same reports on their BlackBerry smartphone as they receive on their desktop, without the need for reformatting or retrofitting existing reports. The report manipulation features available in MicroStrategy Mobile allow users to view even the largest reports within the compact screen size of the BlackBerry smartphone.

MicroStrategy Mobile was engineered to work cooperatively with other BlackBerry applications, including phone, e-mail, and text messages. Designed for all levels of users, MicroStrategy Mobile reports are displayed in an easy-to-view and easy-to-navigate format, enabling users to review, analyze, and interact with important data at their convenience. Users can also access reports while they are offline, or when their BlackBerry smartphone is not within connectivity range.

MicroStrategy Mobile is well-suited to meet the BI needs of a broad range of mobile workers:

    -- An executive from a large financial services company can monitor the
       organization's top financial metrics and make time-sensitive decisions
       that impact the company's bottom line while out of the country.
    -- A retail buyer can access merchandise sales data to determine what is
       selling and not selling in specific stores to support purchasing and
       inventory reallocation discussions with store managers.
    -- A pharmaceutical salesperson can review the latest market share
       reports, prescription sales, and inventory data to prepare for sales
       calls.
    -- A manufacturer's field technician can provide enhanced customer service
       on-site by checking the customer's historical service record and
       product availability before scheduling a follow-up service call.
    -- A marketing executive from a Fortune 500 company can evaluate the
       latest marketing campaign analytics while meeting with the advertising
       agency to make key decisions on future expenditures.

MicroStrategy also announced its plans to launch MicroStrategy Integrity Manager(TM), a new product that tests the accuracy of BI applications by validating data and report integrity. MicroStrategy Integrity Manager automatically compares and verifies the consistency of reports as changes are made to the BI ecosystem, and then highlights issues and discrepancies to monitor the overall reliability of the BI content used by business decision makers.

MicroStrategy Integrity Manager reduces the need for resource-intensive manual testing by comparing versions of reports after data updates and throughout the BI development cycle, thereby automating report regression testing. Data inconsistencies can be captured much sooner in the development cycle, saving time in report testing, end user support, and issue resolution.

Every day, there are changes made in a company's BI environment, and data can be corrupted or compromised, causing reports that are used by business decision-makers to become inaccurate.

Common types of BI ecosystem changes that require report and data validation include:

    -- Software upgrades - MicroStrategy Integrity Manager ensures that
       database and BI software upgrades designed to address defect fixes and
       enhancements do not impact report integrity, and that inconsistencies
       are identified so they can be corrected prior to being viewed by
       business users.
    -- BI project migrations - As part of the normal BI development life
       cycle, developers continuously migrate entire BI projects or project
       objects across the development, test, and production environments.
       Administrators need to confirm that migrated objects perform as
       expected and do not negatively impact existing BI reports.
    -- Data warehouse ETL processes - Data loads and ETL scripts can modify or
       even corrupt existing information within the data warehouse. Database
       administrators require certainty that the ETL processes are
       successfully completed, without altering previously loaded data and
       introducing inconsistencies to BI reports and content.
    -- Database optimizations - System tuners can alter existing database
       objects and report parameters, or add new objects such as indexes and
       aggregate tables to improve report performance and system throughput.
       Developers need to ensure that subtle SQL changes and database
       alterations made for performance do not alter query results.
    -- User profile modifications - As BI applications are modified to provide
       richer capabilities or as end users move roles within companies,
       administrators must modify user and user groups' application privileges
       and data security profiles. Validation testing ensures that user
       profile changes do not improperly alter users' BI reports.

MicroStrategy Mobile and MicroStrategy Integrity Manager are currently in beta-testing and expected to be generally available in the second half of 2007, as part of the MicroStrategy 8.1.1 release.

MicroStrategy 2007 Events:

In May, MicroStrategy hosted a one-hour webcast, "Using Dashboards to Improve Corporate Performance: Top 10 Best Practices." More than 1,000 people participated in the webcast, which included demonstrations of MicroStrategy's new Dynamic Enterprise Dashboards; commentary from Wayne Eckerson, Director of TDWI Research; and speakers from Lowe's Companies and Classic Residence by Hyatt.

The MicroStrategy Symposia series continued with events in London and New York City. Each Symposium featured technical sessions as well as presentations from MicroStrategy customers sharing best practices in deploying business intelligence applications in their organization. The MicroStrategy Symposium in London included customer presentations from Virgin Retail, Yahoo! Inc., Highways Agency, Amlin plc, and Cork County Council. Customer speakers at the MicroStrategy Symposium in New York City included Liz Claiborne Inc., Massachusetts General Hospital, Herbalife, Guy Carpenter & Company, Rite-Hite Corporation, Forest Laboratories, and Aperity.

Additional 2007 Symposia are scheduled in Sao Paulo, Chicago, and Paris. MicroStrategy also plans to hold Technology Day events in locations including Milan, Johannesburg, Zurich, San Francisco, Toronto, and Washington DC. These one-day events offer a technical and a business track, with practical tools to enhance business intelligence initiatives.

MicroStrategy plans to hold its biggest event next year, MicroStrategy World 2008, on 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.

Industry Awards:

In June, Corporate Express US received the 2007 Best Practices Award from The Data Warehousing Institute (TDWI) for a MicroStrategy-based business intelligence application. TDWI's Best Practices Awards program is designed to identify and honor companies that have demonstrated excellence in developing, deploying, and maintaining BI and Data Warehouse (DW) applications.

Corporate Express built a market basket application, leveraging MicroStrategy's business intelligence technology to improve its online business. The application looks at each item purchased online and determines a list of complementary items to recommend to purchasers. The Corporate Express market basket application uncovered insightful new data about the items that customers typically purchase together, enabling Corporate Express to present these items as complementary offerings to online customers. As a result, the average order size for orders with the market basket pairings is more than twice the average order size for orders without pairings. In addition, the information has helped Corporate Express to better serve its customers, with a deeper understanding of purchasing preferences.

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 8.1 software and Dynamic Enterprise Dashboards 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, including any delays in shipping the MicroStrategy Mobile or MicroStrategy Integrity Manager products beyond the second half of 2007; 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       Six Months Ended
                                       June 30,                June 30,
                                   2007        2006        2007        2006
                               (unaudited) (unaudited) (unaudited) (unaudited)
    Revenues
    Product licenses             $21,699     $23,111     $38,398     $46,244
    Product support and other
     services                     63,107      50,995     118,836      97,360
      Total revenues              84,806      74,106     157,234     143,604

    Cost of Revenues
    Product licenses                 854         592       1,443       1,296
    Product support and other
     services                     17,260      10,039      28,990      18,869
      Total cost of revenues      18,114      10,631      30,433      20,165
    Gross profit                  66,692      63,475     126,801     123,439

    Operating Expenses
    Sales and marketing           26,410      20,313      51,207      40,282
    Research and development       9,621       8,732      16,634      16,981
    General and administrative    12,268      10,716      25,868      21,466
    Amortization of intangible
     assets                           18          18          36          36
      Total operating expenses    48,317      39,779      93,745      78,765
    Income from operations        18,375      23,696      33,056      44,674
    Financing and Other Income
    Interest income, net             874         648       1,855       1,479
    Other income (expense), net      (18)       (515)          5        (667)
      Total financing and other
       income                        856         133       1,860         812
    Income before
     income taxes                 19,231      23,829      34,916      45,486
      Provision for
       income taxes                7,618       7,271      13,458      13,935
    Net income                   $11,613     $16,558     $21,458     $31,551

    Basic earnings
     per share                     $0.94       $1.27       $1.72       $2.37
    Diluted earnings
     per share                     $0.90       $1.21       $1.64       $2.26
    Basic weighted average
     shares outstanding           12,404       13,024     12,484      13,295
    Diluted weighted average
     shares outstanding           12,940       13,678     13,048      13,990


                          MICROSTRATEGY INCORPORATED
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                     (in thousands, except per share data)
                                  (unaudited)

                                           Core BI Business     Alarm.com
                                         Three Months Ended Three Months Ended
                                                June 30,          June 30,
                                            2007      2006     2007    2006

    Revenues
    Product licenses                       $21,699   $23,111    $-      $-
    Product support and other services      54,771    49,030     -       -
    Angel.com telephony services               -         -       -       -
    Alarm.com hardware and services
     revenue                                   -         -     6,754     885

      Total revenues                        76,470    72,141   6,754     885

    Cost of Revenues
    Product licenses                           854       603     -       -
    Product support and other services      11,278     9,248     -       -
    Angel.com telephony services               -         -       -       -
    Alarm.com hardware and services            -         -     5,489     557
      Total cost of revenues                12,132     9,851   5,489     557
    Gross profit                            64,338    62,290   1,265     328

    Operating Expenses
    Sales and marketing                     24,587    19,026     314     227
    Research and development                 8,507     8,050     414     240
    General and administrative              11,869    10,499     399     217
    Amortization of intangible assets           18        18     -       -
      Total operating expenses              44,981    37,593   1,127     684
    Income (loss) from operations           19,357    24,697     138    (356)

    Financing and Other Income
    Interest income, net                       874       648     -       -
    Other expense, net                         (18)     (515)    -       -
      Total financing and other income         856       133     -       -
    Income (loss) before income taxes      $20,213   $24,830    $138   $(356)
      Provision for income taxes
    Net income

         Basic earnings per share
         Diluted earnings per share
         Basic weighted average shares
          outstanding
         Diluted weighted average shares
          outstanding


                                           Angel.com           Consolidated
                                      Three Months Ended    Three Months Ended
                                           June 30,              June 30,
                                        2007       2006       2007     2006

    Revenues
    Product licenses                      $-        $-       $21,699  $23,111
    Product support and other services     -         -        54,771   49,030
    Angel.com telephony services         1,582     1,080       1,582    1,080
    Alarm.com hardware and services
     revenue                               -         -         6,754      885

      Total revenues                     1,582     1,080      84,806   74,106

    Cost of Revenues
    Product licenses                       -         (11)        854      592
    Product support and other services     -         -        11,278    9,248
    Angel.com telephony services           493       234         493      234
    Alarm.com hardware and services        -         -         5,489      557
      Total cost of revenues               493       223      18,114   10,631
    Gross profit                         1,089       857      66,692   63,475

    Operating Expenses
    Sales and marketing                  1,509     1,060      26,410   20,313
    Research and development               700       442       9,621    8,732
    General and administrative             -   (a)   -   (a)  12,268   10,716
    Amortization of intangible assets      -         -            18       18
      Total operating expenses           2,209     1,502      48,317   39,779
    Income (loss) from operations       (1,120)     (645)     18,375   23,696

    Financing and Other Income
    Interest income, net                   -         -           874      648
    Other expense, net                     -         -           (18)    (515)
      Total financing and other income     -         -           856      133
    Income (loss) before income taxes  $(1,120)    $(645)     19,231   23,829
      Provision for income taxes                               7,618    7,271
    Net income                                               $11,613  $16,558

         Basic earnings per share                              $0.94    $1.27
         Diluted earnings per share                            $0.90    $1.21
         Basic weighted average shares
          outstanding                                         12,404   13,024
         Diluted weighted average
          shares outstanding                                  12,940   13,678

    (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
                                          Six Months Ended Six Months Ended
                                              June 30,         June 30,
                                           2007     2006    2007    2006

    Revenues
    Product licenses                      $38,398  $46,244   $-       $-
    Product support and other services    107,425   93,666    -        -
    Angel.com telephony services              -        -      -        -
    Alarm.com hardware and services
     revenue                                  -        -    8,319    1,458

      Total revenues                      145,823  139,910  8,319    1,458

    Cost of Revenues
    Product licenses                        1,443    1,292    -        -
    Product support and other services     22,205   17,231    -        -
    Angel.com telephony services              -        -      -        -
    Alarm.com hardware and services           -        -    5,849    1,173
      Total cost of revenues               23,648   18,523  5,849    1,173
    Gross profit                          122,175  121,387  2,470      285

    Operating Expenses
    Sales and marketing                    47,752   38,055    528      370
    Research and development               14,433   15,757    787      494
    General and administrative             24,970   20,972    898      494
    Amortization of intangible assets          36       36    -        -
      Total operating expenses             87,191   74,820  2,213    1,358
    Income (loss) from operations          34,984   46,567    257   (1,073)

    Financing and Other Income
    Interest income, net                    1,855    1,479    -        -
    Other income (expense), net                 5     (667)   -        -
      Total financing and other income      1,860      812    -        -
    Income (loss) before income taxes     $36,844  $47,379   $257  $(1,073)
      Provision for income taxes
    Net income

         Basic earnings per share
         Diluted earnings per share
         Basic weighted average shares
          outstanding
         Diluted weighted average shares
          outstanding


                                           Angel.com           Consolidated
                                       Six Months Ended      Six Months Ended
                                           June 30,              June 30,
                                        2007       2006       2007     2006

    Revenues
    Product licenses                      $-        $-       $38,398  $46,244
    Product support and other services     -         -       107,425   93,666
    Angel.com telephony services         3,092     2,236       3,092    2,236
    Alarm.com hardware and services
     revenue                               -         -         8,319    1,458

      Total revenues                     3,092     2,236     157,234  143,604

    Cost of Revenues
    Product licenses                       -           4       1,443    1,296
    Product support and other services     -         -        22,205   17,231
    Angel.com telephony services           936       465         936      465
    Alarm.com hardware and services        -         -         5,849    1,173
      Total cost of revenues               936       469      30,433   20,165
    Gross profit                         2,156     1,767     126,801  123,439

    Operating Expenses
    Sales and marketing                  2,927     1,857      51,207   40,282
    Research and development             1,414       730      16,634   16,981
    General and administrative             -   (a)   -   (a)  25,868   21,466
    Amortization of intangible assets      -         -            36       36
      Total operating expenses           4,341     2,587      93,745   78,765
    Income (loss) from operations       (2,185)     (820)     33,056   44,674

    Financing and Other Income
    Interest income, net                   -         -         1,855    1,479
    Other income (expense), net            -         -             5     (667)
      Total financing and other income     -         -         1,860      812
    Income (loss) before income taxes  $(2,185)    $(820)     34,916   45,486
      Provision for income taxes                              13,458   13,935
    Net income                                               $21,458  $31,551

         Basic earnings per share                              $1.72    $2.37
         Diluted earnings per share                            $1.64    $2.26
         Basic weighted average shares
          outstanding                                         12,484   13,295
         Diluted weighted average
          shares outstanding                                  13,048   13,990

    (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)

                                                   June 30,       December 31,
                                                     2007              2006
    Assets                                        (unaudited)       (audited)
    Current assets
      Cash and cash equivalents                    $76,140           $78,980
      Restricted cash and investments                3,787             3,799
      Short-term investments                            11                16
      Accounts receivable, net                      41,215            54,468
      Prepaid expenses and other current
       assets                                        9,698             8,633
      Deferred tax assets, net                      31,515            29,510
    Total current assets                           162,366           175,406

    Property and equipment, net                     10,486            11,102
    Capitalized software development
     cost, net                                       3,214             1,903
    Deposits and other assets                        8,963             2,461
    Deferred tax assets, net                        41,054            57,944
    Total Assets                                  $226,083          $248,816

    Liabilities and Stockholders' Equity
    Current liabilities
      Accounts payable and accrued
       expenses                                    $23,077           $24,378
      Accrued compensation and employee
       benefits                                     24,812            31,872
      Deferred revenue and advance
       payments                                     66,113            56,578
    Total current liabilities                      114,002           112,828

    Deferred revenue and advance payments            1,894             1,127
    Other long-term liabilities                      2,853             1,710

    Total Liabilities                              118,749           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;
       14,050 shares issued and 9,638
        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 for
         both periods                                    3                 3
      Additional paid-in capital                   445,257           440,768
      Treasury stock, at cost; 4,412 and
       4,054 shares, respectively                 (313,516)         (268,776)
      Accumulated other comprehensive
       income                                        2,628             3,123
      Accumulated deficit                          (27,052)          (41,981)
    Total Stockholders' Equity                     107,334           133,151
    Total Liabilities and Stockholders'
     Equity                                       $226,083          $248,816


                           MICROSTRATEGY INCORPORATED
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)

                                                       Six months ended
                                                            June 30,
                                                     2007              2006
                                                 (unaudited)       (unaudited)
    Operating activities:
       Net income                                  $21,458           $31,551
       Adjustments to reconcile net income
        from continuing operations to net
        cash
          provided by operating
           activities:
          Depreciation and amortization              3,855             3,886
          Bad debt provision                           626               656
          Deferred taxes                            10,647            11,981
          Share-based compensation                     307               821
          Excess tax benefits from share-
           based payment arrangements               (2,191)           (2,214)
          Other, net                                    70                50
       Changes in operating assets and
        liabilities:
          Accounts receivable                       12,954             9,444
          Prepaid expenses and other
           current assets                             (886)           (1,074)
          Deposits and other assets                 (6,512)              391
          Accounts payable and accrued
           expenses, compensation
             and employee benefits                  (9,329)           (8,055)
          Deferred revenue and advance
           payments                                  9,293            11,853
          Other long-term liabilities                1,336              (273)
             Net cash provided by
              operating activities                  41,628            59,017
    Investing activities:
       Proceeds from maturities of short-
        term investments                               -             106,691
       Purchases of short-term investments             -             (52,924)
       Purchases of property and
        equipment, net                              (2,112)           (1,622)
       Capitalized software development
        costs                                       (2,419)              -
       Increase in restricted cash and
        investments                                     39               (97)
             Net cash (used in) provided
              by investing activities               (4,492)           52,048
    Financing activities:
       Proceeds from sale of class A
        common stock under employee
          stock purchase plan and exercise
           of employee stock options                 1,816             2,758
       Excess tax benefits from share-
        based payment arrangements                   2,191             2,214
       Purchases of treasury stock                 (44,740)         (112,807)
             Net cash used in financing
              activities                           (40,733)         (107,835)
             Effect of foreign exchange
              rate changes on cash and
              cash equivalents                         757             1,392
    Net (decrease) increase in cash and
     cash equivalents                               (2,840)            4,622
    Cash and cash equivalents, beginning
     of period                                      78,980            42,318
    Cash and cash equivalents, end of
     period                                        $76,140           $46,940

SOURCE  MicroStrategy Incorporated

CONTACT:  MicroStrategy Incorporated Investor Relations, +1-703-848-8600,
ir@microstrategy.com