MicroStrategy Incorporated

MicroStrategy Announces Third Quarter 2009 Financial Results

10-29-09

39% Increase in License Revenue Year-Over-Year
Diluted Earnings Per Share of $1.73

MCLEAN, Va., Oct 29, 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 September 30, 2009 (the third quarter of its 2009 fiscal year).

Third quarter 2009 revenues were $104.0 million versus $90.6 million for the third quarter of 2008, a 15% increase. Product licenses revenues for the third quarter of 2009 were $34.4 million versus $24.8 million for the third quarter of 2008, a 39% increase. Product support and other services revenues for MicroStrategy's core business intelligence (BI) business in the third quarter of 2009 were $65.7 million versus $63.2 million for the third quarter of 2008, a 4% increase.

Operating expenses for the third quarter of 2009 were $57.1 million versus $56.6 million for the third quarter of 2008, a 1% increase. During the third quarter of 2008, MicroStrategy capitalized $5.2 million in research and development costs associated with the development of its MicroStrategy 9(TM) software, while no software development costs have been capitalized since the general release of MicroStrategy 9 in March 2009.

Income from continuing operations before financing and other income and income taxes for the third quarter of 2009 was $30.4 million, or 29% of revenue, versus $17.3 million, or 19% of revenue, for the third quarter of 2008, a 75% increase. Net income for the third quarter of 2009 was $21.4 million, or $1.73 per share on a diluted basis, compared to $11.1 million, or $0.90 per share on a diluted basis, for the third quarter of 2008, a 92% increase.

As of September 30, 2009, MicroStrategy had cash and cash equivalents of approximately $200.7 million versus $122.9 million as of December 31, 2008, an increase of $77.8 million. As of September 30, 2009, MicroStrategy had 9,144,581 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 Q3 2009 Included:

Aeropostale; Air National Guard; Amica Mutual Insurance; Bell Canada; The Bon-Ton Stores; Burlington Coat Factory; Centers for Medicare and Medicaid Services; Charming Shoppes; Chevron Products Company; DineEquity; Discovery Communications; Electronic Arts; The First American Corporation; Foresters; Franklin Templeton Companies; Fraser Health Authority; Freddie Mac; Grange Insurance; GUESS?; Harris Teeter; JC Penney; Kohl's Department Stores; Limited Brands; McAfee; Merkle; Michaels Stores; National Institutes of Health (NIH); Netflix; NTT America; Nu Skin Enterprises; Payless ShoeSource; PHI Service Company; PPL Services Corporation; Ross Stores; SDI; Tesco Group; Transportation Security Administration; Universal Music Group; Urban Outfitters; US Department of State; Warner Bros. Entertainment; The William Carter Company; Yum! Brands

Examples of Customer Deals from Q3 2009:

Grange Insurance

Grange Insurance, with $2 billion in assets and $1.3 billion in annual revenue, is an insurance provider based in Columbus, Ohio, and has been a MicroStrategy customer since 2001. MicroStrategy supports 15 BI applications at Grange for various operational functions, including agency analysis and risk pool business analysis. Grange will be expanding its use of MicroStrategy to leverage Distribution Services, a new product introduced in the MicroStrategy 9 BI platform, to provide high-volume, high-performance, automated report distribution. With the new capabilities, Grange expects to notify adjusters with critical information in order to reduce claim cycle time and better monitor their business.

NTT America, Inc.

NTT America, Inc., the U.S. subsidiary of NTT Communications Corporation, recently expanded its deployment of MicroStrategy to enhance its financial reporting and provide visibility throughout the enterprise. NTT America executives and managers use MicroStrategy information dashboards for at-a-glance insights into financial reports to help the company improve budget allocations, utilize resources more efficiently, and address other critical financial metrics to improve their business.

Tesco Group

UK-based retailer Tesco Group, with over 465,000 employees and 4,226 stores operating in 14 markets across Europe, Asia, and North America, has invested in the MicroStrategy Business Intelligence Platform(TM) to deliver enterprise-wide BI across their operations. Tesco plans to use MicroStrategy to deliver head office analytics and self-service BI, including in-store dashboards across its enterprise. Following a rigorous selection process, Tesco chose MicroStrategy for its lower total cost of ownership and reduced carbon foot-print compared to previous solutions, as MicroStrategy demonstrated that it was able to run on fewer servers and make more efficient use of Tesco's existing data warehouse platform.

Gartner Publishes MicroStrategy SWOT Report:

Gartner, Inc. recently published the report, "SWOT: MicroStrategy, Business Intelligence Platforms, Worldwide."( )According to Gartner, MicroStrategy is one of the leading business intelligence (BI) platform vendors. This document offers a strength, weakness, opportunity, and threat (SWOT) framework for assessing the MicroStrategy 9 BI Platform and related offerings. A copy of the Gartner report is available, compliments of MicroStrategy, at http://www.microstrategy.com/gartnerswot.

MicroStrategy 9 Certified on VMware Virtualization Platform:

MicroStrategy announced that customers can now deploy MicroStrategy 9 BI applications on VMware-based virtual machines, enabling BI applications to achieve the hardware efficiencies, streamlined operations, and low cost of operation available through virtualization. Virtual machine technology allows companies to increase processing capacity from their servers by pooling that capacity across multiple applications and operating systems. Large BI applications that have varying usage throughout the day will benefit from a virtual environment where processing power can be fully utilized during peak times and directed to other applications when BI demand is low.

By running MicroStrategy in a virtual environment, companies will be able to use less server hardware and require fewer IT personnel to manage and maintain their BI systems, leading to overall lower capital costs and reduced operating expenses. To try MicroStrategy 9 Evaluation software on VMware, visit http://www.microstrategy.com/freeevalcd.asp.

MicroStrategy Augments OEM Program with New Product Capabilities for SaaS Companies:

MicroStrategy has enhanced its OEM program with new product capabilities for Software-as-a-Service (SaaS) companies. MicroStrategy 9 offers new capabilities specifically for SaaS companies, including enhanced end user design features, in-memory BI enabling higher data scalability to support larger multi-tenant systems, improved security integration with third-party tools, a plug-in architecture for simpler customization, and the ability for different companies to use their own reporting terminology, even across multiple languages within the same multi-tenant application.

MicroStrategy's business intelligence platform provides integrated reporting and analytics, allowing software companies and technology providers to easily add reporting, dashboarding, and analytical and alerting applications to their existing product offerings with minimal development costs and resources. MicroStrategy's portfolio of OEM partners has continued to expand, and companies choosing MicroStrategy for SaaS BI deployments have represented the largest area of growth within the Company's OEM program.

MicroStrategy Events:

On October 28, 2009, MicroStrategy hosted a live Webcast, "Top 5 Strategies for Business Intelligence Success in Today's Economic Environment." The Webcast featured best practices for rapid BI reporting for small to mid-sized businesses, along with a live demo of MicroStrategy Reporting Suite(TM) and insights from leading industry analyst Cindi Howson. Launched earlier this year, MicroStrategy Reporting Suite enables companies to use MicroStrategy's integrated BI platform to develop and deploy premium, Web-based reporting applications, at no cost. MicroStrategy Reporting Suite has eliminated cost and time impediments for departments and workgroups to initiate new reporting applications. More information is available at http://www.microstrategy.com/freereportingsoftware.

MicroStrategy held numerous Business Intelligence Symposia during the third quarter, and has several more planned in the fourth quarter at various locations including the following: Lisbon, Sydney, Paris, Melbourne, Milan, and Johannesburg.

The Company's 13th annual user conference, MicroStrategy World 2010, will be held January 25-28, 2010 at the Wynn Las Vegas in Las Vegas, Nevada. The event will feature more than 100 educational sessions, dozens of customer speakers from industry-leading organizations, and an exhibit hall showcasing MicroStrategy partners. MicroStrategy World 2010 will also include an update on the Company's latest technology advances, insightful keynote presentations, and networking opportunities.

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 Reporting Suite, MicroStrategy Business Intelligence Platform and MicroStrategy Distribution Services 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 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

MSTR-F

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

                                 Three Months Ended       Nine Months Ended
                                    September 30,            September 30,
                                  2009         2008        2009         2008
                                  ----         ----        ----         ----
                           (unaudited)  (unaudited) (unaudited)  (unaudited)
    Revenues
    Product licenses           $34,443      $24,787     $71,897      $67,966
    Product support and
     other services             69,574       65,841     200,120      197,422
                                ------       ------     -------      -------
      Total revenues           104,017       90,628     272,017      265,388
                               -------       ------     -------      -------

    Cost of Revenues
    Product licenses             1,947          422       4,523        1,442
    Product support and
     other services             14,592       16,304      42,614       45,898
                                ------       ------      ------       ------
      Total cost of
       revenues                 16,539       16,726      47,137       47,340
                                ------       ------      ------       ------

    Gross profit                87,478       73,902     224,880      218,048
                                ------       ------     -------      -------

    Operating Expenses
    Sales and marketing         31,489       35,888      93,376      100,060
    Research and
     development                11,400        5,922      30,407       24,449
    General and
     administrative             14,204       14,744      41,348       47,055
                                ------       ------      ------       ------
      Total operating
       expenses                 57,093       56,554     165,131      171,564
                                ------       ------     -------      -------

    Income from continuing
     operations before
     financing and other
     income and income
     taxes                      30,385       17,348      59,749       46,484
                                ------       ------      ------       ------

    Financing and Other
     (Expense) Income
    Interest income, net           121          623         516        2,081
    Other (expense)
     income, net                  (422)         694      (1,626)        (269)
                                  ----          ---      ------         ----
      Total financing and
       other (expense)
       income                     (301)       1,317      (1,110)       1,812
                                  ----        -----      ------        -----

    Income from continuing
     operations before
     income taxes               30,084       18,665      58,639       48,296
      Provision for income
       taxes                     8,730        7,593      18,673       20,365
                                 -----        -----      ------       ------
    Income from
     continuing operations      21,354       11,072      39,966       27,931

    Discontinued operations:
      Gain from sale of
       discontinued
       operations, net of
       tax provision
       ($11,190 and $0,
       respectively)                 -            -      14,437            -
      Income (loss) from
       discontinued
       operations, net of
       tax provision
       (benefit) ($0 and $53,
       for the three months
       ended, respectively,
       and ($54) and $176 for
       the nine months ended,
       respectively)                 -           52        (107)        (383)
                                   ---           --        ----         ----
    Discontinued operations,
     net of tax                      -           52      14,330         (383)
                                   ---           --      ------         ----

                               -------      -------     -------      -------
    Net Income                 $21,354      $11,124     $54,296      $27,548
                               -------      -------     -------      -------

    Basic earnings (loss)
     per share (1):
      From continuing
       operations                $1.79        $0.93       $3.36        $2.35
      From discontinued
       operations                   $-        $0.01       $1.20       $(0.03)
                                    --        -----       -----       ------
         Basic earnings per
          share                  $1.79        $0.94       $4.56        $2.32
                                 -----        -----       -----        -----
    Weighted average shares
     outstanding used in
     computing basic earnings
     per share                  11,909       11,887      11,898       11,890
                                ------       ------      ------       ------

    Diluted earnings (loss)
     per share (1):
      From continuing
       operations                $1.73        $0.90       $3.26        $2.26
      From discontinued
       operations                   $-           $-       $1.17       $(0.03)
                                    --           --       -----       ------
         Diluted earnings per
          share                  $1.73        $0.90       $4.43        $2.23
                                 -----        -----       -----        -----
    Weighted average shares
     outstanding used in
     computing diluted
     earnings per share         12,311       12,306      12,262       12,332
                                ------       ------      ------       ------

    (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
                            September 30,     September 30,    September 30,
                            -------------     -------------    -------------
                            2009     2008     2009    2008     2009     2008
                            ----     ----     ----    ----     ----     ----


    Revenues
    Product licenses     $34,443  $24,787       $-      $-   $34,443  $24,787
    Product support and
     other services       65,721   63,153        -       -    65,721   63,153
    Angel.com services         -        -    3,853   2,688     3,853    2,688
                             ---      ---    -----   -----     -----    -----
      Total revenues     100,164   87,940    3,853   2,688   104,017   90,628
                         -------   ------    -----   -----   -------   ------

    Cost of Revenues
    Product licenses       1,947      422        -       -     1,947      422
    Product support and
     other services       13,048   15,908        -       -    13,048   15,908
    Angel.com services         -        -    1,544     396     1,544      396
                             ---      ---    -----     ---     -----      ---
      Total cost of
       revenues           14,995   16,330    1,544     396    16,539   16,726
                          ------   ------    -----     ---    ------   ------
    Gross profit          85,169   71,610    2,309   2,292    87,478   73,902
                          ------   ------    -----   -----    ------   ------

    Operating Expenses
    Sales and marketing   30,364   33,767    1,125   2,121    31,489   35,888
    Research and
     development          10,443    5,234      957     688    11,400    5,922
    General and
     administrative       13,817   14,679      387      65(a) 14,204   14,744
                          ------   ------      ---      --    ------   ------
      Total operating
       expenses           54,624   53,680    2,469   2,874    57,093   56,554
                          ------   ------    -----   -----    ------   ------

    Income (loss) from
     continuing operations
     before financing and
     other income and
     income taxes         30,545   17,930     (160)   (582)   30,385   17,348
                          ------   ------     ----    ----    ------   ------

    Financing and Other
     (Expense) Income
    Interest income, net     121      623        -       -       121      623
    Other (expense)
     income, net            (422)     694        -       -      (422)     694
                            ----      ---      ---     ---      ----      ---
      Total financing and
       other (expense)
       income               (301)   1,317        -       -      (301)   1,317
                            ----    -----      ---     ---      ----    -----
    Income (loss) from
     continuing
     operations before
     income taxes        $30,244  $19,247    $(160)  $(582)  $30,084  $18,665
      Provision for
       income taxes                                            8,730    7,593
                                                               -----    -----
    Income from
     continuing
     operations                                               21,354   11,072

    Discontinued
     operations:
      Income from
       discontinued
       operations,
       net of tax                                                  -       52
                                                                 ---       --
    Discontinued
     operations,
     net of tax                                                    -       52

                                                             -------  -------
    Net income                                               $21,354  $11,124
                                                             =======  =======

    Basic earnings
     per share:
        From
         continuing
         operations                                           $1.79    $0.93
        From
         discontinued
         operations                                              $-    $0.01
                                                                 --    -----
            Basic
             earnings
             per share                                        $1.79    $0.94
                                                              -----    -----

    Diluted earnings
     per share:
        From
         continuing
         operations                                           $1.73    $0.90
        From
         discontinued
         operations                                              $-       $-
                                                                 --       --
            Diluted
             earnings
             per share                                        $1.73    $0.90
                                                              -----    -----

         Basic weighted
          average shares
          outstanding                                        11,909   11,887
                                                             ======   ======
         Diluted weighted
          average shares
          outstanding                                        12,311   12,306
                                                             ======   ======

    (a) An insignificant amount of general and administrative services was
        provided to the Angel.com business unit by MicroStrategy's core
        business operations during the three months ended September 30, 2008.



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

                          Core BI Business      Angel.com        Consolidated
                          ----------------      ---------        ------------
                            Nine  Months      Nine  Months       Nine  Months
                                Ended             Ended             Ended
                            September 30,     September 30,      September 30,
                           -------------     -------------       -------------
                            2009     2008     2009     2008      2009    2008
                            ----     ----     ----     ----      ----    ----


    Revenues
    Product licenses     $71,897  $67,966       $-       $-   $71,897 $67,966
    Product support and
     other services      190,451  189,629        -        -   190,451 189,629
    Angel.com services         -        -    9,669    7,793     9,669   7,793
                             ---      ---    -----    -----     -----   -----
      Total revenues     262,348  257,595    9,669    7,793   272,017 265,388
                         -------  -------    -----    -----   ------- -------

    Cost of Revenues
    Product licenses       4,523    1,442        -        -     4,523   1,442
    Product support and
     services revenues    38,780   44,602        -        -    38,780  44,602
    Angel.com services         -        -    3,834    1,296     3,834   1,296
                             ---      ---    -----    -----     -----   -----
      Total cost of
       revenues           43,303   46,044    3,834    1,296    47,137  47,340
                          ------   ------    -----    -----    ------  ------
    Gross profit         219,045  211,551    5,835    6,497   224,880 218,048
                         -------  -------    -----    -----   ------- -------

    Operating Expenses
    Sales and marketing   90,012   93,962    3,364    6,098    93,376 100,060
    Research and
     development          27,582   22,229    2,825    2,220    30,407  24,449
    General and
     administrative       40,077   46,840    1,271      215(a) 41,348  47,055
                          ------   ------    -----      ---    ------  ------
      Total operating
       expenses          157,671  163,031    7,460    8,533   165,131 171,564
                         -------  -------    -----    -----   ------- -------

    Income (loss) from
     continuing operations
     before financing
     and other income
     and income taxes     61,374   48,520   (1,625)  (2,036)   59,749  46,484
                          ------   ------   ------   ------    ------  ------

    Financing and Other
     (Expense) Income
    Interest income, net     516    2,081        -        -       516   2,081
    Other expense, net    (1,626)    (269)       -        -    (1,626)   (269)
                          ------     ----      ---      ---    ------    ----
      Total financing and
       other (expense)
       income             (1,110)   1,812        -        -    (1,110)  1,812
                          ------    -----      ---      ---    ------   -----
    Income (loss) from
     continuing
     operations before
     income taxes        $60,264  $50,332  $(1,625) $(2,036)  $58,639 $48,296
      Provision for
       income taxes                                            18,673  20,365
                                                               ------  ------
    Income from
     continuing
     operations                                                39,966  27,931

    Discontinued
     operations:
      Gain from sale
       of discontinued
       operations,
       net of tax                                              14,437       -
      Loss from
       discontinued
       operations,
       net of tax                                                (107)   (383)
                                                                 ----    ----
    Discontinued
     operations,
     net of tax                                                14,330    (383)

                                                              ------- -------
    Net income                                                $54,296 $27,548
                                                              ======= =======

    Basic earnings
     (loss) per share:
        From
         continuing
         operations                                             $3.36   $2.35
        From
         discontinued
         operations                                             $1.20  $(0.03)
                                                                -----  ------
            Basic
             earnings
             per share                                          $4.56   $2.32
                                                                -----   -----

    Diluted earnings
     (loss) per share:
        From
         continuing
         operations                                             $3.26   $2.26
        From
         discontinued
         operations                                             $1.17  $(0.03)
                                                                -----   ------
            Diluted
             earnings
             per share                                          $4.43   $2.23
                                                                -----   -----

         Basic weighted
          average shares
          outstanding                                          11,898  11,890
                                                               ======  ======
         Diluted weighted
          average shares
          outstanding                                          12,262  12,332
                                                               ======  ======

    (a) An insignificant amount of general and administrative services was
        provided to the Angel.com business unit by MicroStrategy's core
        business operations during the nine months ended September 30, 2008.




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

                                                  September 30,  December 31,
                                                          2009          2008
                                                          ----          ----
    Assets                                          (unaudited)     (audited)
    Current assets
      Cash and cash equivalents                       $200,670      $122,915
      Restricted cash and investments                      321           619
      Accounts receivable, net                          56,010        49,670
      Prepaid expenses and other current assets         10,145         9,518
      Deferred tax assets, net                          14,857        26,743
      Assets held-for-sale                                   -         4,964
                                                           ---         -----
    Total current assets                               282,003       214,429

    Property and equipment, net                          7,220         8,978
    Capitalized software development cost, net          15,161        14,823
    Deposits and other assets                           36,414        36,804
    Deferred tax assets, net                             5,767        17,105
                                                         -----        ------
    Total Assets                                      $346,565      $292,139
                                                      --------      --------

    Liabilities and Stockholders' Equity
    Current liabilities
      Accounts payable and accrued expenses            $26,191       $27,697
      Accrued compensation and employee benefits        39,607        42,634
      Deferred revenue and advance payments             73,045        66,495
      Deferred tax liabilities                             556             -
      Liabilities held-for-sale                              -         6,325
                                                           ---         -----
    Total current liabilities                          139,399       143,151

    Deferred revenue and advance payments                3,848         1,679
    Other long-term liabilities                         10,869         9,268
                                                        ------         -----

    Total Liabilities                                  154,116       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; 14,192 shares
       issued and 9,145 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                       451,705       450,953
      Treasury stock, at cost; 5,047 shares           (366,191)     (366,191)
      Accumulated other comprehensive income               831         1,471
    Retained earnings                                  106,087        51,791
                                                       -------        ------
    Total Stockholders' Equity                         192,449       138,041
                                                       -------       -------
    Total Liabilities and Stockholders' Equity        $346,565      $292,139
                                                      --------      --------




                            MICROSTRATEGY INCORPORATED
                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (in thousands)
                                    (unaudited)
                                                            Nine Months Ended
                                                               September 30,
                                                              2009      2008
                                                              ----      ----

    Operating activities:
      Net income                                            $54,296   $27,548
      Plus:  (Income) loss from discontinued operations,
       net                                                  (14,330)      383
                                                            -------       ---
          Income from continuing operations                  39,966    27,931
      Adjustments to reconcile net income to net cash
       provided by operating activities:
        Depreciation and amortization                         7,681     4,825
        Bad debt expense                                      1,153     1,074
        Deferred taxes                                       14,294    13,655
        Stock-based compensation                                  -        45
        Excess tax benefits from stock-based payment
         arrangements                                          (200)     (241)
        Other, net                                              (10)       49
      Changes in operating assets and liabilities:
        Accounts receivable                                  (7,900)    3,617
        Prepaid expenses and other current assets              (445)      176
        Deposits and other assets                               254      (218)
        Accounts payable and accrued expenses                (1,948)    2,034
        Accrued compensation and employee benefits           (4,224)   (1,740)
        Deferred revenue and advance payments                 7,085     6,071
        Other long-term liabilities                           1,572       568
                                                              -----       ---
          Net cash provided by operating activities from
           continuing operations                             57,278    57,846
          Net cash (used in) provided by operating
           activities from discontinued operations             (472)    1,399
                                                               ----     -----
              Net cash provided by operating activities      56,806    59,245
                                                             ------    ------
    Investing activities:
      Purchases of property and equipment                    (1,860)   (2,972)
      Capitalized software development costs                 (4,218)   (8,078)
      Decrease in restricted cash and investments               504     1,062
                                                                ---     -----
          Net cash used in investing activities from
           continuing operations                             (5,574)   (9,988)
          Net cash provided by (used in) investing
           activities from discontinued operations           24,546      (158)
                                                             ------      ----
               Net cash provided by (used in) investing
                activities                                   18,972   (10,146)
                                                             ------   -------
    Financing activities:
      Distribution to Alarm.com minority shareholders           (60)        -
      Proceeds from sale of class A common stock under
       exercise of employee stock options                       565     2,073
      Excess tax benefits from stock-based payment
       arrangements                                             200       241
      Purchases of treasury stock                                 -    (8,387)
                                                                ---    ------
          Net cash provided by (used in) financing
           activities from continuing operations                705    (6,073)
          Net cash provided by financing activities from
           discontinued operations                                -         -
                                                                ---       ---
              Net cash provided by (used in) financing
               activities                                       705    (6,073)
          Effect of foreign exchange rate changes on cash
           and cash equivalents                               1,272      (933)
                                                              -----      ----
    Net increase in cash and cash equivalents                77,755    42,093
    Cash and cash equivalents, beginning of period          122,915    85,194
                                                            -------    ------
    Cash and cash equivalents, end of period               $200,670  $127,287
                                                           ========  ========


SOURCE MicroStrategy Incorporated

http://www.microstrategy.com

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