MicroStrategy Incorporated

MicroStrategy Announces Third Quarter 2010 Financial Results

11-01-10

Record $114.5 Million in Total Revenues

VIENNA, Va., Nov. 1, 2010 /PRNewswire 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, 2010 (the third quarter of its 2010 fiscal year).

Third quarter 2010 revenues were $114.5 million, the highest quarterly total revenues in Company history, versus $104.0 million for the third quarter of 2009, a 10% increase. Product licenses revenues for the third quarter of 2010 were $32.2 million versus $34.4 million for the third quarter of 2009, a 7% decrease. Product support and other services revenues for MicroStrategy's core business intelligence (BI) business in the third quarter of 2010 were $77.8 million versus $65.7 million for the third quarter of 2009, an 18% increase.

Operating expenses for the third quarter of 2010 were $77.5 million versus $57.1 million for the third quarter of 2009, a 36% increase. The increase in operating expenses was primarily due to an increase in the Company's worldwide employee headcount and related expenses.

Net income for the third quarter of 2010 was $7.4 million, or $0.63 per share on a diluted basis, compared to $21.4 million, or $1.73 per share on a diluted basis, for the third quarter of 2009.

For the third quarter of 2010, MicroStrategy's effective tax rate was 10% compared to 29% for the third quarter of 2009. The lower effective tax rate in the third quarter of 2010 was primarily attributable to stronger results outside the U.S. and a benefit recorded due to certain tax provision adjustments.

During the third quarter of 2010, MicroStrategy repurchased 510,733 shares of its class A common stock at an average price per share of $78.21 and an aggregate cost of $39.9 million. As of September 30, 2010, MicroStrategy had 8,218,640 shares of class A common stock and 2,694,362 shares of class B common stock outstanding.

MicroStrategy Receives Highest Overall Ranking in The BI Survey 9:

MicroStrategy achieved the highest overall ranking of the 23 products analyzed in The BI Survey 9, a comprehensive survey of companies using business intelligence software products. The BI Survey 9, conducted by Business Application Research Center (BARC), is the world's largest independent survey of business intelligence users, with more than 3,000 respondents. The 23 products analyzed were MicroStrategy, QlikTech, Microsoft SSAS, SAP BW / BEx Suite, Cubeware, Board, SAP BusinessObjects WebIntelligence, Bissantz, IBM Cognos Reporting, Information Builders, arcplan, TARGIT, Jedox PALO, Microsoft SSRS, MIK, Oracle BIEE, SAS, IBM Cognos Analysis, Pentaho, Infor PM, Oracle Hyperion, SAP BusinessObjects Desk Intelligence, and IBM Cognos TM1.

MicroStrategy Rated #1 in 16 Key Performance Areas in Peer Group Analysis of Largest BI Product Suites:

In addition to comparing all 23 products, The BI Survey 9 separately analyzed the product suites of the seven largest BI vendors: MicroStrategy, SAP BusinessObjects, SAP BW / BEx, Oracle BIEE, IBM Cognos, SAS, and Microsoft. Within this group, MicroStrategy received the highest ratings in 16 of the 32 key performance indicators ("KPIs") analyzed, which is more than any other product suite. Some of the areas in which MicroStrategy was rated #1 include:

MicroStrategy Offers Free Software Package to Develop Mobile Business Intelligence Applications:

In July 2010, MicroStrategy announced the general availability of MicroStrategy Mobile(TM), a platform that easily extends business intelligence applications to the Apple iPhone(R) and iPad(TM). Using a point-and-click interface, mobile BI applications can be built using an intuitive array of iPhone and iPad-optimized displays and controls.

MicroStrategy recently announced the availability of MicroStrategy Mobile Suite, an easy-to-access, no cost software package that allows companies to get started using MicroStrategy Mobile. The MicroStrategy Mobile Suite includes:

To learn more about the free software, visit the MicroStrategy Mobile Suite website, http://www.microstrategy.com/freemobilebi.

MicroStrategy Mobile iPad and iPhone Apps Featured on Apple's iTunes App Store:

The MicroStrategy Mobile iPad App was recently listed on the iTunes Best Seller list of Free Business iPad Apps and the MicroStrategy Mobile iPhone App was featured on Apple's "What's Hot" List on the iTunes App Store. From the App Store, users can download these apps, which include numerous data-rich reports and interactive dashboards to sample the functionality of MicroStrategy Mobile. To download the MicroStrategy Mobile iPad App, visit http://itunes.apple.com/us/app/microstrategy-mobile-for-ipad/id382821025?mt=8 and to download the MicroStrategy Mobile iPhone App, visit http://itunes.apple.com/us/app/microstrategy-mobile/id376256699?mt=8.

New Customers and New Deals with Existing Customers in Q3 2010 Included:

ABN AMRO Bank; Ahold USA Holdings; AT&T Services; Bank of Montreal; Bank of the West; Branch Banking & Trust Company; Bayer HealthCare; Buena Vista Home Entertainment; CBS Interactive; Centers for Medicare & Medicaid Services; Charming Shoppes of Delaware; Classic Residence by Hyatt; Dell Computer Corporation; Department of Homeland Security; DFW International Airport; Dick's Sporting Goods; Disney Consumer Products; General Motors Corporation; Gregg Appliances; Guitar Center; Hachette Book Group; HE Butt Grocery Company; Kaiser Permanente; La Capitale Assurances Generales; McAfee; McDonald's Corporation; MySpace; National Institutes of Health; New York Life Retirement Plan Services; Payless ShoeSource Worldwide; PepsiCo; QVC; Philips Electronics Nederland; Royal & Sun Alliance Insurance Company of Canada; Ryder System; Sanmina SCI Corporation; Sears Canada; Siemens IT Solutions and Services; Sensormatic Electronics Corporation; Sony Network Entertainment International; Sterling Jewelers; TACA International Airlines; The Disney Store; The Interpublic Group of Companies; Things Remembered; Time Warner; US Department of Education; Valpak Direct Marketing Systems; Verizon Wireless; and Whole Foods Market Services.

Examples of Customer Deals from Q3 2010:

Bayer HealthCare

Bayer HealthCare, a business area of Bayer, selected MicroStrategy as its global enterprise BI standard. Approximately 10,000 end users across Bayer HealthCare's Global Operations and R&D business areas will use MicroStrategy for reporting and analysis of business data. Bayer HealthCare selected MicroStrategy for its self-service capabilities, ability to drill easily into data for detailed insights, and its data and user scalability to support a global enterprise.

Dallas/Fort Worth (DFW) International Airport

DFW International Airport, the world's third busiest airport, selected MicroStrategy software for enterprise-wide reporting. A new MicroStrategy customer, DFW Airport will use MicroStrategy to analyze its business operations and gain insights into the airport's operational performance and costs. MicroStrategy will provide executives and managers with information dashboards that display volumes of data in a highly visual and interactive manner. With MicroStrategy dashboards, DFW International Airport personnel will have easy access to actionable data that supports informed decision making, strategic planning and analysis, and tactical responses to changing conditions.

Siemens IT Solutions and Services GmbH

Siemens AG is a leader in electronics and electrical engineering, operating in the industry, energy, and healthcare sectors. Siemens IT Solutions and Services GmbH, a subsidiary of Siemens AG, uses MicroStrategy to analyze quality standards in service deliverables. A recent expansion of MicroStrategy products and services now allows 2,000 Siemens users to receive reports via BlackBerry(R), iPad, iPhone, email, and Web. Siemens selected MicroStrategy for its ease-of-use, integrated platform, and its ability to accommodate a global enterprise and growing support platform.

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 ease-of-use, sophisticated analytics, and superior data and user scalability. MicroStrategy offers free reporting software that can be downloaded from its website, http://www.microstrategy.com/freereportingsoftware. More information about MicroStrategy (Nasdaq: MSTR) is available at www.microstrategy.com.

MicroStrategy, MicroStrategy 9, MicroStrategy Intelligence Server, MicroStrategy Mobile, MicroStrategy OLAP Services and MicroStrategy Report 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 extent and timing of acceptance in the market of the MicroStrategy Mobile application platform; the Company's ability to recognize revenue or deferred revenue through delivery of products or satisfactory performance of services; continued acceptance of the Company's other products in the marketplace; the timing of significant orders; delays in the Company's ability to develop or ship new products, such as new or modified products the Company may seek to develop as a result of its high performance initiatives; 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; impairment charges that may be required with respect to the Company's damaged corporate aircraft 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.

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


                                               Three Months Ended
                                                  September 30,
                                                  -------------
                                                  2010              2009
                                                  ----              ----
                                           (unaudited)       (unaudited)
    Revenues
    Product licenses                           $32,180           $34,443
    Product support and other services          82,350            69,574
      Total revenues                           114,530           104,017
                                               -------           -------

    Cost of Revenues
    Product licenses                             1,966             1,947
    Product support and other services          25,274            14,592
      Total cost of revenues                    27,240            16,539
                                                ------            ------

    Gross profit                                87,290            87,478
                                                ------            ------

    Operating Expenses
    Sales and marketing                         42,002            31,489
    Research and development                    13,675            11,400
    General and administrative                  21,816            14,204
      Total operating expenses                  77,493            57,093
                                                ------            ------

    Income from continuing operations
     before
    financing and other income and
     income taxes                                9,797            30,385
                                                 -----            ------

    Financing and Other (Expense) Income
    Interest income, net                           192               121
    Other (expense) income, net                 (1,817)             (422)
      Total financing and other (expense)
       income                                   (1,625)             (301)
                                                ------              ----

    Income from continuing operations
     before income taxes                         8,172            30,084
      Provision for income taxes                   821             8,730
                                                   ---             -----
    Income from continuing operations            7,351            21,354

    Discontinued operations:
      Gain from sale of discontinued
       operations, net of tax provision of
       $11,190                                       -                 -
      Loss from discontinued operations,
       net of tax benefit of $54                     -                 -
    Discontinued operations, net of tax              -                 -


    Net Income                                  $7,351           $21,354
                                                ======           =======

    Basic earnings per share (1):
      From continuing operations                 $0.66             $1.79
      From discontinued operations                  $-                $-
                                                   ---               ---
         Basic earnings per share                $0.66             $1.79
                                                 =====             =====
    Weighted average shares outstanding
     used in computing basic
         earnings per share                     11,206            11,909
                                                ======            ======

    Diluted earnings per share (1):
      From continuing operations                 $0.63             $1.73
      From discontinued operations                  $-                $-
                                                   ---               ---
         Diluted earnings per share              $0.63             $1.73
                                                 =====             =====
    Weighted average shares outstanding
     used in computing diluted
         earnings per share                     11,603            12,311
                                                ======            ======





                                                Nine Months Ended
                                                  September 30,
                                                  -------------
                                                  2010              2009
                                                  ----              ----
                                           (unaudited)       (unaudited)
    Revenues
    Product licenses                           $79,064           $71,897
    Product support and other services         236,393           200,120
      Total revenues                           315,457           272,017
                                               -------           -------

    Cost of Revenues
    Product licenses                             5,741             4,523
    Product support and other services          67,472            42,614
      Total cost of revenues                    73,213            47,137
                                                ------            ------

    Gross profit                               242,244           224,880
                                               -------           -------

    Operating Expenses
    Sales and marketing                        114,750            93,376
    Research and development                    36,818            30,407
    General and administrative                  58,950            41,348
      Total operating expenses                 210,518           165,131
                                               -------           -------

    Income from continuing operations
     before
    financing and other income and
     income taxes                               31,726            59,749
                                                ------            ------

    Financing and Other (Expense) Income
    Interest income, net                           309               516
    Other (expense) income, net                  3,176            (1,626)
      Total financing and other (expense)
       income                                    3,485            (1,110)
                                                 -----            ------

    Income from continuing operations
     before income taxes                        35,211            58,639
      Provision for income taxes                 9,341            18,673
                                                 -----            ------
    Income from continuing operations           25,870            39,966

    Discontinued operations:
      Gain from sale of discontinued
       operations, net of tax provision of
       $11,190                                       -            14,437
      Loss from discontinued operations,
       net of tax benefit of $54                     -              (107)
    Discontinued operations, net of tax              -            14,330


    Net Income                                 $25,870           $54,296
                                               =======           =======

    Basic earnings per share (1):
      From continuing operations                 $2.24             $3.36
      From discontinued operations                  $-             $1.20
                                                   ---             -----
         Basic earnings per share                $2.24             $4.56
                                                 =====             =====
    Weighted average shares outstanding
     used in computing basic
         earnings per share                     11,572            11,898
                                                ======            ======

    Diluted earnings per share (1):
      From continuing operations                 $2.16             $3.26
      From discontinued operations                  $-             $1.17
                                                   ---             -----
         Diluted earnings per share              $2.16             $4.43
                                                 =====             =====
    Weighted average shares outstanding
     used in computing diluted
         earnings per share                     11,976            12,262
                                                ======            ======



    (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
                                    ----------------           ---------
                                       Three Months           Three Months
                                          Ended                  Ended
                                      September 30,          September 30,
                                      -------------          -------------
                                    2010         2009     2010         2009
                                    ----         ----     ----         ----


    Revenues
    Product licenses             $32,180      $34,443       $-           $-
    Product support and
     other services               77,753       65,721        -            -
    Angel.com services                 -            -    4,597        3,853
                                     ---          ---    -----        -----
      Total revenues             109,933      100,164    4,597        3,853
                                 -------      -------    -----        -----

    Cost of Revenues
    Product licenses               1,966        1,947        -            -
    Product support and
     other services               23,162       13,048        -            -
    Angel.com services                 -            -    2,112        1,544
                                     ---          ---    -----        -----
      Total cost of revenues      25,128       14,995    2,112        1,544
                                  ------       ------    -----        -----
    Gross profit                  84,805       85,169    2,485        2,309
                                  ------       ------    -----        -----

    Operating Expenses
    Sales and marketing           39,979       30,364    2,023        1,125
    Research and
     development                  12,773       10,443      902          957
    General and
     administrative               21,223       13,817      593          387
                                  ------       ------      ---          ---
      Total operating
       expenses                   73,975       54,624    3,518        2,469
                                  ------       ------    -----        -----

    Income (loss) from
     continuing operations
     before
    financing and other
     income and income
     taxes                        10,830       30,545   (1,033)        (160)
                                  ------       ------   ------         ----

    Financing and Other
     (Expense) Income
    Interest income, net             192          121        -            -
    Other (expense) income,
     net                         (1,785)         (422)     (32)           -
                                  ------         ----      ---          ---
      Total financing and
       other (expense) income    (1,593)         (301)     (32)           -
                                  ------         ----      ---          ---
    Income (loss) from
     continuing operations
     before income taxes          $9,237      $30,244  $(1,065)       $(160)
      Provision for income
       taxes
    Income from continuing
     operations

    Discontinued
     operations:
      Gain from sale of
       discontinued
       operations, net of tax
      Income from
       discontinued
       operations, net of tax
    Discontinued
     operations, net of tax

    Net income

    Basic earnings per
     share:
        From continuing
         operations
        From discontinued
         operations
            Basic earnings per
             share

    Diluted earnings per
     share:
        From continuing
         operations
        From discontinued
         operations
            Diluted earnings per
             share

         Basic weighted average
          shares outstanding
         Diluted weighted
          average shares
          outstanding




                                                           Consolidated
                                                           ------------
                                                            Three Months
                                                               Ended
                                                           September 30,
                                                           -------------
                                                         2010         2009
                                                         ----         ----


    Revenues
    Product licenses                                  $32,180      $34,443
    Product support and other services                 77,753       65,721
    Angel.com services                                  4,597        3,853
                                                        -----        -----
      Total revenues                                  114,530      104,017
                                                      -------      -------

    Cost of Revenues
    Product licenses                                    1,966        1,947
    Product support and other services                 23,162       13,048
    Angel.com services                                  2,112        1,544
                                                        -----        -----
      Total cost of revenues                           27,240       16,539
                                                       ------       ------
    Gross profit                                       87,290       87,478
                                                       ------       ------

    Operating Expenses
    Sales and marketing                                42,002       31,489
    Research and development                           13,675       11,400
    General and administrative                         21,816       14,204
                                                       ------       ------
      Total operating expenses                         77,493       57,093
                                                       ------       ------

    Income (loss) from continuing operations
     before
    financing and other income and income taxes         9,797       30,385
                                                        -----       ------

    Financing and Other (Expense) Income
    Interest income, net                                  192          121
    Other (expense) income, net                       (1,817)         (422)
                                                       ------         ----
      Total financing and other (expense) income      (1,625)         (301)
                                                       ------         ----
    Income (loss) from continuing operations
     before income taxes                               $8,172      $30,084
      Provision for income taxes                          821        8,730
                                                          ---        -----
    Income from continuing operations                   7,351       21,354

    Discontinued operations:
      Gain from sale of discontinued operations, net
       of tax                                               -            -
      Income from discontinued operations, net of
       tax                                                  -            -
                                                          ---          ---
    Discontinued operations, net of tax                     -            -


    Net income                                         $7,351      $21,354
                                                       ======      =======

    Basic earnings per share:
        From continuing operations                      $0.66        $1.79
        From discontinued operations                       $-           $-
                                                          ---          ---
            Basic earnings per share                    $0.66        $1.79
                                                        =====        =====

    Diluted earnings per share:
        From continuing operations                      $0.63        $1.73
        From discontinued operations                       $-           $-
                                                          ---          ---
            Diluted earnings per share                  $0.63        $1.73
                                                        =====        =====

         Basic weighted average shares outstanding     11,206       11,909
                                                       ======       ======
         Diluted weighted average shares outstanding   11,603       12,311
                                                       ======       ======


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


                                    Core BI Business          Angel.com
                                    ----------------          ---------
                                       Nine  Months
                                          Ended           Nine Months Ended
                                      September 30,         September 30,
                                      -------------         -------------
                                    2010         2009    2010          2009
                                    ----         ----    ----          ----


    Revenues
    Product licenses             $79,064      $71,897      $-            $-
    Product support and
     other services              223,618      190,451       -             -
    Angel.com services                 -            -  12,775         9,669
      Total revenues             302,682      262,348  12,775         9,669
                                 -------      -------  ------         -----

    Cost of Revenues
    Product licenses               5,741        4,523       -             -
    Product support and
     services revenues            61,716       38,780       -             -
    Angel.com services                 -            -   5,756         3,834
      Total cost of revenues      67,457       43,303   5,756         3,834
                                  ------       ------   -----         -----
    Gross profit                 235,225      219,045   7,019         5,835
                                 -------      -------   -----         -----

    Operating Expenses
    Sales and marketing          109,642       90,012   5,108         3,364
    Research and
     development                  34,416       27,582   2,402         2,825
    General and
     administrative               57,415       40,077   1,535         1,271
      Total operating
       expenses                  201,473      157,671   9,045         7,460
                                 -------      -------   -----         -----

    Income (loss) from
     continuing operations
     before
    financing and other
     income and income
     taxes                        33,752       61,374  (2,026)       (1,625)
                                  ------       ------  ------        ------

    Financing and Other
     Income (Expense)
    Interest income, net             309          516       -             -
    Other income (expense),
     net                           3,186      (1,626)     (10)            -
      Total financing and
       other income (expense)      3,495      (1,110)     (10)            -
                                   -----       ------     ---           ---
    Income (loss) from
     continuing operations
     before income taxes         $37,247      $60,264 $(2,036)      $(1,625)
      Provision for income
       taxes
    Income from continuing
     operations

    Discontinued
     operations:
      Gain from sale of
       discontinued
       operations, net of tax
      Loss from discontinued
       operations, net of tax
    Discontinued
     operations, net of tax

    Net income

    Basic earnings per
     share:
        From continuing
         operations
        From discontinued
         operations
            Basic earnings per
             share

    Diluted earnings per
     share:
        From continuing
         operations
        From discontinued
         operations
            Diluted earnings per
             share

         Basic weighted average
          shares outstanding
         Diluted weighted
          average shares
          outstanding




                                                           Consolidated
                                                           ------------
                                                            Nine  Months
                                                               Ended
                                                           September 30,
                                                           -------------
                                                         2010         2009
                                                         ----         ----


    Revenues
    Product licenses                                  $79,064      $71,897
    Product support and other services                223,618      190,451
    Angel.com services                                 12,775        9,669
      Total revenues                                  315,457      272,017
                                                      -------      -------

    Cost of Revenues
    Product licenses                                    5,741        4,523
    Product support and services revenues              61,716       38,780
    Angel.com services                                  5,756        3,834
      Total cost of revenues                           73,213       47,137
                                                       ------       ------
    Gross profit                                      242,244      224,880
                                                      -------      -------

    Operating Expenses
    Sales and marketing                               114,750       93,376
    Research and development                           36,818       30,407
    General and administrative                         58,950       41,348
      Total operating expenses                        210,518      165,131
                                                      -------      -------

    Income (loss) from continuing operations
     before
    financing and other income and income taxes        31,726       59,749
                                                       ------       ------

    Financing and Other Income (Expense)
    Interest income, net                                  309          516
    Other income (expense), net                         3,176      (1,626)
      Total financing and other income (expense)        3,485      (1,110)
                                                        -----       ------
    Income (loss) from continuing operations
     before income taxes                              $35,211      $58,639
      Provision for income taxes                        9,341       18,673
                                                        -----       ------
    Income from continuing operations                  25,870       39,966

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

    Net income                                        $25,870      $54,296
                                                      =======      =======

    Basic earnings per share:
        From continuing operations                      $2.24        $3.36
        From discontinued operations                       $-        $1.20
                                                          ---        -----
            Basic earnings per share                    $2.24        $4.56
                                                        =====        =====

    Diluted earnings per share:
        From continuing operations                      $2.16        $3.26
        From discontinued operations                       $-        $1.17
                                                          ---        -----
            Diluted earnings per share                  $2.16        $4.43
                                                        =====        =====

         Basic weighted average shares outstanding     11,572       11,898
                                                       ======       ======
         Diluted weighted average shares outstanding   11,976       12,262
                                                       ======       ======


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


                                                     September    December
                                                         30,         31,
                                                           2010        2009
                                                           ----        ----
    Assets                                          (unaudited)  (audited)
    Current assets
      Cash and cash equivalents                        $184,302    $224,769
      Restricted cash and investments                     1,061         549
      Accounts receivable, net                           57,729      56,399
      Prepaid expenses and other current assets          14,562      10,861
      Deferred tax assets, net                           18,113      12,642
                                                         ------      ------
    Total current assets                                275,767     305,220

    Property and equipment, net                          63,732      54,906
    Capitalized software development costs, net          10,723      13,431
    Deposits and other assets                             3,979       3,283
    Deferred tax assets, net                              1,765       6,490
                                                                      -----
    Total Assets                                       $355,966    $383,330
                                                       ========    ========

    Liabilities and Stockholders' Equity
    Current liabilities
      Accounts payable and accrued expenses             $33,307     $28,460
      Accrued compensation and employee benefits         47,507      46,277
      Deferred revenue and advance payments              85,802      77,783
      Deferred tax liabilities                              254         115
                                                                        ---
    Total current liabilities                           166,870     152,635

    Deferred revenue and advance payments                 8,429       3,845
    Other long-term liabilities                          23,427      12,622
                                                         ------      ------

    Total Liabilities                                   198,726     169,102
                                                        -------     -------

    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;
       14,314 shares issued and 8,219 shares
        outstanding, and 14,302 shares
       issued and 9,255 shares outstanding,
        respectively                                         14          14
      Class B common stock, $0.001 par value;
       165,000 shares authorized;
        2,694 shares issued and outstanding                   3           3
      Additional paid-in capital                        453,548     453,170
      Treasury stock, at cost; 6,095 and 5,047
       shares, respectively                            (447,809)   (366,191)
      Accumulated other comprehensive (loss) income      (1,014)        604
    Retained earnings                                   152,498     126,628
    Total Stockholders' Equity                          157,240     214,228
                                                        -------     -------
    Total Liabilities and Stockholders' Equity         $355,966    $383,330
                                                       ========    ========


                                  MICROSTRATEGY INCORPORATED
                             CONSOLIDATED STATEMENTS OF CASH FLOWS
                                        (in thousands)
                                          (unaudited)

                                                      Nine Months Ended
                                                        September 30,
                                                        -------------
                                                      2010          2009
                                                      ----          ----

    Operating activities:
      Net income                                   $25,870       $54,296
      Less:  Income from discontinued
       operations, net                                   -      (14,330)
                                                       ---       -------
          Income from continuing operations         25,870        39,966
      Adjustments to reconcile net income to
       net cash provided by operating
       activities:
        Depreciation and amortization                9,313         7,681
        Bad debt expense                             2,429         1,153
        Deferred taxes                                (509)       14,294
        Excess tax benefits from stock-based
         payment arrangements                         (115)         (200)
        Other, net                                      26           (10)
      Changes in operating assets and
       liabilities:
        Accounts receivable                         (4,180)       (7,900)
        Prepaid expenses and other current
         assets                                     (2,615)         (445)
        Deposits and other assets                     (707)          254
        Accounts payable and accrued expenses        1,462        (1,948)
        Accrued compensation and employee
         benefits                                    1,243        (4,224)
        Deferred revenue and advance payments       12,922         7,085
        Other long-term liabilities                 10,799         1,572
                                                    ------         -----
          Net cash provided by operating
           activities from continuing operations    55,938        57,278
          Net cash used in operating activities
           from discontinued operations                  -          (472)
                                                       ---          ----
              Net cash provided by operating
               activities                           55,938        56,806
                                                    ------        ------
    Investing activities:
      Purchases of property and equipment         (11,817)        (1,860)
      Capitalized software development costs        (2,185)       (4,218)
      Decrease in restricted cash and
       investments                                     248           504
                                                       ---           ---
          Net cash used in investing activities
           from continuing operations             (13,754)        (5,574)
          Net cash provided by investing
           activities from discontinued
           operations                                    -        24,546
                                                       ---        ------
               Net cash (used in) provided by
                investing activities              (13,754)        18,972
                                                   -------        ------
    Financing activities:
      Proceeds from sale of class A common
       stock under exercise of employee stock
       options                                         240           565
      Excess tax benefits from stock-based
       payment arrangements                            115           200
      Purchases of treasury stock                 (81,618)             -
      Distribution to Alarm.com minority
       shareholders                                      -           (60)
                                                       ---           ---
          Net cash (used in) provided by
           financing activities from continuing
           operations                             (81,263)           705
          Net cash provided by financing
           activities from discontinued
           operations                                    -             -
                                                       ---           ---
              Net cash (used in) provided by
               financing activities               (81,263)           705
          Effect of foreign exchange rate changes
           on cash and cash equivalents             (1,388)        1,272
                                                    ------         -----
    Net (decrease) increase in cash and
     cash equivalents                             (40,467)        77,755
    Cash and cash equivalents, beginning of
     period                                        224,769       122,915
                                                   -------       -------
    Cash and cash equivalents, end of
     period                                       $184,302      $200,670
                                                  ========      ========



    Contact:
    MicroStrategy Incorporated
    Investor Relations
    ir@microstrategy.com
    (703) 848-8600


MSTR-F

SOURCE MicroStrategy Incorporated

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