MicroStrategy Incorporated

MicroStrategy Announces First Quarter 2009 Financial Results

05-06-09

--Diluted Earnings Per Share of $1.88

MCLEAN, Va., May 6, 2009 /PRNewswire-FirstCall via COMTEX News Network/ -- MicroStrategy(R) Incorporated (Nasdaq: MSTR), a leading worldwide provider of business intelligence software, today announced financial results for the three-month period ended March 31, 2009 (the first quarter of its 2009 fiscal year).

First quarter 2009 revenues were $80.2 million versus $85.9 million for the first quarter of 2008. Product licenses revenues for the first quarter of 2009 were $17.0 million versus $22.1 million for the first quarter of 2008. Product support and other services revenues for MicroStrategy's core business intelligence (BI) business in the first quarter of 2009 were $60.6 million versus $61.4 million for the first quarter of 2008.

Operating expenses for the first quarter of 2009 were $52.7 million versus $57.3 million for the first quarter of 2008. Contributing to the decrease was the capitalization of $4.2 million in software development costs associated with the release of the Company's MicroStrategy 9(TM) software, which was made generally available in March 2009. MicroStrategy did not capitalize any software development costs during the first quarter of 2008.

Net income for the first quarter of 2009 was $23.0 million, or $1.88 per share on a diluted basis. Income from continuing operations before financing and other income and income taxes for the first quarter of 2009 was $12.9 million, or 16% of revenue, versus $14.1 million, or 16% of revenue for the first quarter of 2008. Income from continuing operations for the first quarter of 2009 was $8.7 million, or $0.71 per share on a diluted basis, compared to $9.0 million, or $0.72 per share on a diluted basis, for the first quarter of 2008.

Income from discontinued operations, net of tax, for the first quarter of 2009 was $14.3 million, or $1.17 per share on a diluted basis. On February 13, 2009, MicroStrategy completed the sale of its majority-owned subsidiary, Alarm.com Incorporated, which was classified as a discontinued operation, resulting in a gain of $14.4 million net of tax during the first quarter of 2009.

As of March 31, 2009, MicroStrategy had cash and cash equivalents of approximately $162.2 million versus $122.9 million as of December 31, 2008, an increase of $39.3 million. As of March 31, 2009, MicroStrategy had 9,120,452 shares of class A common stock and 2,770,244 shares of class B common stock outstanding.

New Customers and New Deals with Existing Customers in Q1 2009 Included:

AIM Healthcare Services, Inc.; AutoTrader.com, LLC; Bank of America; BC Ministry of Health; Capital Group Companies; CCC Information Services Inc.; Charming Shoppes of Delaware, Inc.; Classmates Online, Inc.; Coca Cola Enterprises; Dana-Farber Cancer Institute; Department of the Army; Department of Veterans Affairs; eBay Inc.; Electronic Arts; Elementis Worldwide, Inc.; Focus Technology Group; GE Healthcare; Government Employees Insurance Company; Limited Stores, LLC; Lund Food Holdings; Marvin's Inc.; McDonald's Corporation; Michelin North America; Montgomery County Public Schools; National Aeronautics and Space Administration; Nordstrom, Inc.; PMSI, Inc.; Premier, Inc.; Republic National Distributing Company, LLC; Ross Stores, Inc.; Southern California Edison; Shoppers Drug Mart Inc.; Spartan Stores; Starbucks Corporation; Time Warner Cable; Universal Studios, Inc.; VHA Inc.; Wawanesa; Wells Fargo Bank, N.A.; and Wilbur-Ellis Company

Examples of Customer Deals from Q1 2009:

AIM Healthcare Services, Inc.

A national leader in healthcare business solutions, AIM recently expanded its use of MicroStrategy by providing enhanced reporting capabilities to business users. MicroStrategy is AIM's business intelligence standard, and AIM relies on the technology for multiple business intelligence applications across the organization. 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.

Lund Food Holdings

Lund Food Holdings expanded its deployment of MicroStrategy for enhanced sales and financial reporting at its upscale supermarkets in the Minneapolis-St. Paul region. Store general managers and merchandising personnel at Lund Food Holdings use MicroStrategy for detailed insights into product sales at Lund Food Holdings' 21 locations. MicroStrategy-based BI applications also provide Lund Food Holdings' financial analysts with visibility into the company's business and financial operations. MicroStrategy's strong expertise in retail business intelligence and its integration with Teradata were key factors in Lund Food Holdings' selection of MicroStrategy.

Spartan Stores

Spartan Stores, the nation's tenth largest grocery distributor, has expanded its deployment of MicroStrategy to provide enhanced reporting capabilities for its retail operations and distribution network. Spartan Stores uses MicroStrategy's software across the company for a broad range of BI applications, including sales and profitability reports to monitor business performance, merchandising reports for detailed insights into gross margins and category management, marketing reports to evaluate sales promotion trends and opportunities, and supply chain reports to manage supplier delivery performance. Spartan Stores recently expanded its deployment of MicroStrategy to enable Store Directors and Department Managers to evaluate and manage individual store and department performance.

Wawanesa

Wawanesa is one of the largest property and casualty insurers in Canada. After a thorough evaluation of leading BI products, Wawanesa selected MicroStrategy as its enterprise BI platform. Wawanesa plans to use MicroStrategy as the single view into its multiple lines of business. MicroStrategy-based reports and dashboards will provide Wawanesa management with detailed insights into key business areas, including customer relationship management, underwriting and policy management, claims, and human resources. Wawanesa selected MicroStrategy because of its integrated platform, ease-of-use, and low total cost of ownership.

General Availability of MicroStrategy 9 Announced:

MicroStrategy 9 was introduced in January 2009 at the Company's annual user conference and was made generally available on March 20, 2009. MicroStrategy's most significant release in nearly a decade, MicroStrategy 9 delivers new technology and features designed to extend enterprise BI with enhancements for greater scalability, performance and efficiency; enable rapid development and deployment of departmental BI applications; and provide a seamless consolidation path from departmental BI to enterprise BI.

MicroStrategy's Report Services Product Rated by Gartner, Inc.:

MicroStrategy's Report Services product was rated 4.4 overall by Gartner, Inc. in its recent report, Critical Capabilities for Business Intelligence Reporting. The rating was based on a scale of 1 to 5, with 5 representing the highest score in each critical capability. The overall ranking is a weighted average of the critical capabilities defined by Gartner. The Critical Capabilities report rates the reporting capabilities of nine business intelligence platforms across three common use cases. To view the entire Gartner report, compliments of MicroStrategy, visit www.microstrategy.com/GartnerBIReporting2009.

MicroStrategy Develops Information Dashboard for Tracking U.S. Recovery Act Funds:

MicroStrategy has developed an information dashboard that can help citizens track American Recovery and Reinvestment Act expenditures. MicroStrategy submitted its dashboard to Recovery.gov as a tool that government agencies can also utilize to provide greater transparency into their use of the recovery funds.

MicroStrategy's Recovery.gov dashboard provides at-a-glance insights into current data available on the Recovery.gov Web site. The dashboard can be viewed at http://www.microstrategy.com/recovery-act-data/. Government agencies receiving Recovery Act funds will be charged with providing regular updates to government officials, Congress, and the public on how much money is being spent and on what programs. MicroStrategy created this dashboard as an example of how agencies can streamline their own reporting of this information.

MicroStrategy Recognized in Consumer Goods Technology 2009 Readers' Choice Survey:

MicroStrategy was recognized by Consumer Goods Technology (CGT) in its ninth annual Readers' Choice survey. Each year, CGT asks its subscribers to identify their most valued solution and service providers across multiple categories. MicroStrategy was recognized in the Business Intelligence category. Survey results are derived from feedback from consumer goods business and IT executives.

MicroStrategy's software is used by a wide array of global consumer goods companies, including Avon Products, Chiquita Brands, The Estee Lauder Companies, Inc., Giorgio Armani Corporation, Groupe Danone, Gucci, Herbalife, and Levi Strauss & Co. Using MicroStrategy's BI platform, consumer goods companies can analyze vast amounts of data to gain greater insight into their operations and make more strategic and proactive decisions.

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 9, MicroStrategy Report Services, and MicroStrategy Dynamic Enterprise Dashboards 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 9 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, including significant downturns in industries, including the financial services and retail industries, in which we have a significant number of customers; 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
                                                            March 31,
                                                            ---------
                                                           2009         2008
                                                           ----         ----
                                                     (unaudited)  (unaudited)
    Revenues
    Product licenses                                    $16,971      $22,127
    Product support and other services                   63,269       63,777
                                                         ------       ------
      Total revenues                                     80,240       85,904
                                                         ------       ------

    Cost of Revenues
    Product licenses                                        596          559
    Product support and other services                   14,065       13,947
                                                         ------       ------
      Total cost of revenues                             14,661       14,506
                                                         ------       ------

    Gross profit                                         65,579       71,398
                                                         ------       ------

    Operating Expenses
    Sales and marketing                                  30,530       29,688
    Research and development                              7,839       10,324
    General and administrative                           14,344       17,310
                                                         ------       ------
      Total operating expenses                           52,713       57,322
                                                         ------       ------

    Income from continuing operations before
     financing and other income and income taxes         12,866       14,076
                                                         ------       ------

    Financing and Other Income (Expense)
    Interest income, net                                    145          800
    Other income (expense)                                  536         (861)
                                                            ---         ----
      Total financing and other income (expense)            681          (61)
                                                            ---          ---

    Income from continuing operations before
     income taxes                                        13,547       14,015
      Provision for income taxes                          4,888        5,054
                                                          -----        -----
    Income from continuing operations                     8,659        8,961
                                                          -----        -----

    Discontinued operations:
      Gain from sale of discontinued operations, net
       of tax provision of $11,121                       14,422            -
      Loss from discontinued operations, net of tax
       benefit ($54 and $74, respectively)                 (106)        (663)
                                                           ----         ----
    Discontinued operations, net of tax                  14,316         (663)

                                                        -------       ------
    Net Income                                          $22,975       $8,298
                                                        =======       ======

    Basic earnings (loss) per share (1):
      From continuing operations                          $0.73        $0.75
      From discontinued operations                        $1.20       $(0.05)
                                                          -----       ------
         Basic earnings per share                         $1.93        $0.70
                                                          =====        =====
    Weighted average shares outstanding used in
     computing basic earnings per share                  11,890       11,927
                                                         ======       ======

    Diluted earnings (loss) per share (1):
      From continuing operations                          $0.71        $0.72
      From discontinued operations                        $1.17       $(0.05)
                                                          -----       ------
         Diluted earnings per share                       $1.88        $0.67
                                                          =====        =====
    Weighted average shares outstanding used in
     computing diluted earnings per share                12,219       12,381
                                                         ======       ======

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



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

                         Core BI Business    Angel.com        Consolidated
                         ----------------    ---------        ------------
                           Three Months    Three Months       Three Months
                               Ended           Ended             Ended
                             March 31,       March 31,          March 31,
                             ---------       ---------          ---------
                            2009    2008     2009   2008       2009     2008
                            ----    ----     ----   ----       ----     ----


    Revenues
    Product licenses     $16,971 $22,127       $-     $-    $16,971  $22,127
    Product support and
     other services       60,610  61,412        -      -     60,610   61,412
    Angel.com telephony
     services                  -       -    2,659  2,365      2,659    2,365
                             ---     ---    -----  -----      -----    -----
      Total revenues      77,581  83,539    2,659  2,365     80,240   85,904
                          ------  ------    -----  -----     ------   ------

    Cost of Revenues
    Product licenses         596     559        -      -        596      559
    Product support and
     services revenues    13,027  13,487        -      -     13,027   13,487
    Angel.com telephony
     services                  -       -    1,038    460      1,038      460
                             ---     ---    -----    ---      -----      ---
      Total cost of
       revenues           13,623  14,046    1,038    460     14,661   14,506
                          ------  ------    -----    ---     ------   ------
    Gross profit          63,958  69,493    1,621  1,905     65,579   71,398
                          ------  ------    -----  -----     ------   ------

    Operating Expenses
    Sales and marketing   29,358  28,132    1,172  1,556     30,530   29,688
    Research and
     development           6,827   9,736    1,012    588      7,839   10,324
    General and
     administrative       13,907  17,250      437     60(a)  14,344   17,310
                          ------  ------      ---     --     ------   ------
      Total operating
       expenses           50,092  55,118    2,621  2,204     52,713   57,322
                          ------  ------    -----  -----     ------   ------
    Income (loss) from
     continuing
     operations           13,866  14,375   (1,000)  (299)    12,866   14,076
                          ------  ------   ------   ----     ------   ------

    Financing and Other
     Income (Expense)
    Interest income, net     145     800        -      -        145      800
    Other income
     (expense), net          536    (861)       -      -        536     (861)
                             ---    ----      ---    ---        ---     ----
      Total financing and
       other income
       (expense)             681     (61)       -      -        681      (61)
                             ---     ---      ---    ---        ---      ---
    Income (loss) from
     continuing
     operations before
     income taxes        $14,547 $14,314  $(1,000) $(299)   $13,547  $14,015
      Provision for
       income taxes                                           4,888    5,054
                                                              -----    -----
    Income from
     continuing
     operations                                               8,659    8,961
                                                              -----    -----

    Discontinued
     operations:
      Gain from sale
       of discontinued
       operations, net
       of tax                                                14,422        -
      Loss from
       discontinued
       operations, net
       of tax                                                  (106)    (663)
                                                               ----     ----
    Discontinued
     operations, net
     of tax                                                  14,316     (663)

                                                            -------   ------
    Net income                                              $22,975   $8,298
                                                            =======   ======

    Basic earnings
     (loss) per share:
        From continuing
         operations                                           $0.73    $0.75
        From discontinued
         operations                                           $1.20   $(0.05)
                                                              -----   ------
            Basic
             earnings
             per share                                        $1.93    $0.70
                                                              =====    =====

    Diluted earnings
     (loss) per share:
        From continuing
         operations                                           $0.71    $0.72
        From discontinued
         operations                                           $1.17   $(0.05)
                                                              -----   ------
            Diluted
             earnings
             per share                                        $1.88    $0.67
                                                              =====    =====

         Basic weighted
          average shares
          outstanding                                        11,890   11,927
                                                             ======   ======
         Diluted weighted
          average shares
          outstanding                                        12,219   12,381
                                                             ======   ======

    (a) An insignificant amount of general and administrative services was
        allocated to the Angel.com business unit by MicroStrategy's core
        business operations.



                           MICROSTRATEGY INCORPORATED
                          CONSOLIDATED BALANCE SHEETS
                     (in thousands, except per share data)

                                                    March 31,  December 31,
                                                        2009          2008
                                                        ----          ----
    Assets                                        (unaudited)     (audited)
    Current assets
      Cash and cash equivalents                     $162,193      $122,915
      Restricted cash and investments                    542           619
      Accounts receivable, net                        37,971        49,670
      Prepaid expenses and other current assets        9,881         9,518
      Deferred tax assets, net                        14,442        26,743
      Assets held-for-sale                                 -         4,964
                                                         ---         -----
    Total current assets                             225,029       214,429

    Property and equipment, net                        8,611         8,978
    Capitalized software development cost, net        18,619        14,823
    Deposits and other assets                         36,288        36,804
    Deferred tax assets, net                          15,368        17,105
                                                      ------        ------
    Total Assets                                    $303,915      $292,139
                                                    ========      ========

    Liabilities and Stockholders' Equity
    Current liabilities
      Accounts payable and accrued expenses          $24,187       $27,697
      Accrued compensation and employee benefits      27,761        42,634
      Deferred revenue and advance payments           78,690        66,495
      Liabilities held-for-sale                            -         6,325
                                                         ---         -----
    Total current liabilities                        130,638       143,151

    Deferred revenue and advance payments              3,467         1,679
    Other long-term liabilities                        9,246         9,268
                                                       -----         -----

    Total Liabilities                                143,351       154,098
                                                     -------       -------

    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; 14,168 shares
       issued and 9,121 shares outstanding, and
       14,167 shares issued and 9,120 shares
       outstanding, respectively                          14            14
      Class B common stock, $0.001 par value;
       165,000 shares authorized; 2,770 issued
        and outstanding                                    3             3
      Additional paid-in capital                     450,919       450,953
      Treasury stock, at cost; 5,047 shares         (366,191)     (366,191)
      Accumulated other comprehensive income           1,053         1,471
    Retained earnings                                 74,766        51,791
                                                      ------        ------
    Total Stockholders' Equity                       160,564       138,041
                                                     -------       -------
    Total Liabilities and Stockholders' Equity      $303,915      $292,139
                                                    ========      ========



                           MICROSTRATEGY INCORPORATED
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)
                                                           Three Months Ended
                                                                March 31,
                                                                ---------
                                                              2009     2008
                                                              ----     ----

    Operating activities:
      Net income                                           $22,975   $8,298
      Plus: (Income) loss from discontinued operations,
       net of tax                                          (14,316)     663
                                                           -------      ---
        Income from continuing operations                    8,659    8,961
      Adjustments to reconcile net income to net cash
       provided by operating activities:
        Depreciation and amortization                        1,770    1,642
        Bad debt expense                                       222      632
        Deferred taxes                                       2,823    2,753
        Stock-based compensation                                 -       44
        Excess tax benefits from stock-based payment
         arrangements                                            -      (56)
        Other, net                                               -       10
      Changes in operating assets and liabilities:
        Accounts receivable                                  9,281    4,485
        Prepaid expenses and other current assets             (609)  (1,301)
        Deposits and other assets                              354      191
        Accounts payable and accrued expenses,
         compensation and employee benefits                (16,328) (13,239)
        Deferred revenue and advance payments               16,960   13,283
        Other long-term liabilities                            (23)     890
                                                               ---      ---
          Net cash provided by operating activities from
           continuing operations                            23,109   18,295
          Net cash used in operating activities from
           discontinued operations                            (472)    (206)
                                                              ----     ----
               Net cash provided by operating activities    22,637   18,089
                                                            ------   ------
    Investing activities:
      Purchases of property and equipment, net              (1,131)    (699)
      Capitalized software development costs                (4,218)       -
      Decrease in restricted cash and investments               23       56
                                                                --       --
          Net cash used in investing activities from
           continuing operations                            (5,326)    (643)
          Net cash provided by (used in) investing
           activities from discontinued operations          24,546      (24)
                                                            ------      ---
               Net cash provided by (used in) investing
                activities                                  19,220     (667)
                                                            ------     ----
    Financing activities:
      Distribution to Alarm.com minority shareholders          (60)       -
      Proceeds from sale of class A common stock under
       exercise of employee stock options                       19      124
      Excess tax benefits from stock-based payment
       arrangements                                              -       56
      Purchases of treasury stock                                -   (5,366)
                                                               ---   ------
          Net cash used in financing activities from
           continuing activities                               (41)  (5,186)
          Net cash used in financing activities from
           discontinued activities                               -        -
                                                               ---      ---
               Net cash used in financing activities           (41)  (5,186)
          Effect of foreign exchange rate changes on
           cash and cash equivalents                        (2,538)   2,447
                                                            ------    -----
    Net increase in cash and cash equivalents               39,278   14,683
    Cash and cash equivalents, beginning of period         122,915   85,194
                                                           -------   ------
    Cash and cash equivalents, end of period              $162,193  $99,877
                                                          ========  =======




SOURCE MicroStrategy Incorporated

http://www.microstrategy.com

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