MicroStrategy Incorporated
01-30-12

MicroStrategy Announces Fourth Quarter 2011 Financial Results

Record $160.3 Million in Total Revenues

TYSONS CORNER, Va., Jan. 30, 2012 /PRNewswire/ -- MicroStrategy® Incorporated (Nasdaq: MSTR), a leading worldwide provider of business intelligence software, today announced financial results for the three-month period ended December 31, 2011 (the fourth quarter of its 2011 fiscal year).

Fourth quarter 2011 revenues were $160.3 million, the highest quarterly total revenues in company history, versus $139.1 million for the fourth quarter of 2010, a 15% increase.  Product licenses revenues for the fourth quarter of 2011 were $54.5 million versus $47.7 million for the fourth quarter of 2010, a 14% increase.  Product support and other services revenues for MicroStrategy's core business intelligence (BI) business for the fourth quarter of 2011 were $99.5 million versus $85.8 million for the fourth quarter of 2010, a 16% increase.  

Operating expenses for the fourth quarter of 2011 were $113.7 million versus $87.4 million for the fourth quarter of 2010, a 30% increase.  The increase in operating expenses was primarily due to increased headcount and related expenses, particularly for engineering and sales personnel.  

Net income for the fourth quarter of 2011 was $9.0 million, or $0.81 per share on a diluted basis, compared to $17.9 million, or $1.60 per share on a diluted basis, for the fourth quarter of 2010.

As of December 31, 2011, MicroStrategy had cash and cash equivalents of $199.6 million versus $174.1 million as of December 31, 2010, an increase of $25.5 million.  As of December 31, 2011, MicroStrategy had 8,404,761 shares of class A common stock and 2,377,830 shares of class B common stock outstanding.

MicroStrategy Continues to Innovate in the Areas of Big Data, Mobile, Cloud and Social Intelligence Technologies:

In November 2011, MicroStrategy announced the general availability of Usher™, a free consumer friendly event management app linked to Facebook Events. Usher, available for the iPhone® on the Apple® iTunes® App Store, allows users to easily set up and manage an event from beginning to end with seamless integration with Facebook Events.

In addition, MicroStrategy upgraded Wisdom™ for Facebook.  The new Wisdom application leverages Facebook profiles of Wisdom users and millions of their Facebook friends to deliver extraordinary insights derived from their Likes, interests, and preferences.  Available at www.wisdom.com, or on iTunes at http://itunes.apple.com/us/app/wisdom-for-facebook/id455088890?ls=1&mt=8#, or through a user's Facebook log in at: http://apps.facebook.com/wisdomapp, the free Wisdom for Facebook app allows users to segment Facebook information in a myriad of ways and discover an almanac of information on millions of topics. 

Wisdom offers a new way for users to gain insights and discover trends derived from the wisdom of the masses.  Pooled and anonymized, personal information is never revealed, but the knowledge is captured and available for all Wisdom users.  Does Mitt Romney appeal more to people who live in urban or rural areas?  What are key differences between Target and Walmart fans, or the Coke and Pepsi crowds?  What books do people who like Fox News read, or those who like CNN? Now, putting the collective knowledge of millions to work for users, Wisdom has answers to these questions and so much more in the recently updated Wisdom for Facebook application.

According to Michael Saylor, MicroStrategy founder and CEO, "Wisdom for Facebook is a collective intelligence application that gives users a level of insight never before possible — powered by the Likes of millions of fellow Facebook users."

For the consumer, Wisdom serves as a personal tool for actionable insight. Tap into the Wisdom Network and discover what's hot, and what's not. Single? Use Wisdom's filtering capability to find the most popular single spots in your town. Looking for new music?  Match your tastes with others to see which bands you might enjoy. Much more than a recommendation engine, Wisdom allows users to glean insights based on people with similar demographic, psychographic, and geographic attributes.

On the mobile front, MicroStrategy was rated the top Mobile BI offering out of 24 product offerings in the Howard Dresner Mobile BI Survey.  According to the survey data, MicroStrategy ranks #1 overall among vendors offering Mobile BI, based on 25 criteria platform and feature capabilities. MicroStrategy's mobile customers include such leading brands as GUESS?, Whole Foods Market, Herbalife, MetLife, Edmunds.com, eHarmony, and Sonic Automotive.

In addition, MicroStrategy attained AT&T Certified Solution status to deliver Mobile BI solutions. MicroStrategy passed a comprehensive suite of tests to become an official AT&T Industry and Mobility Alliance Program Partner.  AT&T performed a full array of functionality, interoperability, performance, and usability tests on MicroStrategy's software platform in granting MicroStrategy certification. MicroStrategy is the only business intelligence company in the AT&T partner eco-system to pass AT&T's rigorous testing and partner vetting process.

New Customers and New Deals with Existing Customers in Q4 2011 Included:

AARP; ABN AMRO Bank N.V.; Aeroplan; AIG Global Asset Management Holdings Corp.; Amlin Plc; AutoTrader.com; Axfood IT AB; Banco Bilbao Vizcaya Argentaria, S.A. (BBVA); Bank of America; Bestway (Holdings) Limited; Biffa Waste Services; Bundesagentur fur Arbeit; Cabela's; Catalina Marketing Corporation; Centros Comerciales Carrefour S.A.; Citibank N.A.; Coca-Cola Refreshments USA, Inc.; Danone; Datacom Corporation; Delhaize America Shared Services Group; Dick's Sporting Goods; DirecTV; Disney Consumer Products; Facebook; Forever 21; Gulf States Toyota, Inc.; Hallmark Cards; Heartland Payment Systems; Hewlett Packard Company; Hilton Worldwide; International Game Technology; J. A. Russell Ltd.; Japan Post Network, Ltd.; Kinross Gold Corporation; Korea Power Exchange; Kuwait National Petroleum Company; McAfee; McCain Foods; Motion Picture Industry Pension and Health Plans; Nagase & Co., Ltd.; NBCUniversal Media, LLC; Netflix; New York Life Retirement Plan Services; OptumRx — a UnitedHealth Group Company; PepsiCo; Pfizer Global Manufacturing; Polo Ralph Lauren Corporation; QVC Deutschland Inc. & Co.KG Rhein Studios; Ross Stores; Safeway; Sanofi Pasteur; Sony Online Entertainment, LLC; Standard & Poor's Corporation; Standard Chartered Bank; Starwood Hotels & Resorts Worldwide; SWIFT; Swisscom AG; Target Corporation; Telenor Hungary; The Container Store; The Fresh Market; The Gap; Time Warner Cable; Tokai Kiosk Company; T-Systems International; UGIS Austria GmbH; Warner Bros. Technical Operations Inc.; and Yahoo!.

Examples of Customer Deals from Q4 2011:

Aeroplan

Aeroplan, Canada's premier coalition loyalty program, is owned by Groupe Aeroplan Inc., doing business as Aimia, a global leader in loyalty management. Aeroplan has chosen to expand its MicroStrategy deployment to enable its personnel to analyze member information, track purchasing patterns, identify profiles of loyal members, and ensure that its loyalty program is closely aligned with members' preferences. Aeroplan managers across various business areas, including marketing, partnership, finance, member services, analytics, and compliance, rely on MicroStrategy's highly visual dashboards, scorecards, and content-rich reports to gain valuable insights into its customers. Aeroplan selected MicroStrategy for its ease of use, platform integration, and its ad hoc and user-friendly dashboard capabilities.

Forever 21

Forever 21, headquartered in Los Angeles, is a specialty retailer of women's, men's and children's clothing and accessories, known for offering the hottest and most current fashion trends at a great value to consumers.  Forever 21 selected MicroStrategy to perform financial analysis, store operations reporting, and merchandising analytics.  The MicroStrategy-based reports and dashboards as well as its ad-hoc capabilities will enable end users to perform drill-down analyses, eliminating the reliance on IT to support the end user community with reporting needs.  Forever 21 selected MicroStrategy for its ease of use, superior visualizations, mobile platform, and its depth of knowledge and leadership in the retail industry.  

International Game Technology

International Game Technology is a global leader in the design, development and manufacture of gaming machines and systems products, as well as online and mobile gaming solutions for regulated markets. A new MicroStrategy customer, IGT has chosen MicroStrategy to build a secure extranet for its gaming clients that will provide casino managers with the ability to analyze live gaming machine data and make real-time decisions to adjust floor operations.  IGT selected MicroStrategy for its ease of use, integrated architecture platform, and leadership in business intelligence and mobile technologies.

SWIFT

SWIFT, the Society for Worldwide Interbank Financial Telecommunication, is a member-owned cooperative that provides the communications platform, products and services to connect more than 9,700 financial institutions and corporations in 209 countries. SWIFT has chosen MicroStrategy as its enterprise business intelligence and analytics standard. MicroStrategy will anchor SWIFT's BI service offering that is used by participating banking organizations, securities institutions, and corporate customers worldwide. At SWIFT headquarters, MicroStrategy will power the company's BI system, allowing the global financial community to track and analyze interbank payment message traffic flowing through the SWIFT network. With MicroStrategy, banks and corporations will be able to monitor underlying value and currency flows, and better understand their position in the market, track sales performance, manage counterparty risk, and enhance operational efficiencies by identifying targets for cost savings.  In selecting MicroStrategy over other business intelligence products, SWIFT cited superior platform architecture and product capabilities, as well as reliability, availability, high performance, and security.

T-Systems International

T-Systems International, based in Germany with over 47,600 employees worldwide and 2010 revenues at approximately EUR 9.1 billion,  operates information and communication technology (ICT) systems for multinational corporations and public sector institutions.  Following a competitive tender, T-Systems was awarded a contract to establish a BI front end at Bundesagentur fur Arbeit, the Federal Employment Agency in Germany. Together with MicroStrategy, T-Systems will lay the BI foundation at Bundesagentur fur Arbeit and empower up to 100,000 internal and external end users with the ability to run 230,000 MicroStrategy-based reports and analytics against a 100-Terabyte data warehouse. The MicroStrategy BI platform will be leveraged by the Agency's broad user community to build a unified portal, thereby increasing efficiencies and reducing operating costs. 

About MicroStrategy Incorporated

Founded in 1989, MicroStrategy is a leading provider of enterprise software platforms for business intelligence (BI), mobile intelligence, and social intelligence applications.  MicroStrategy's BI platform enables leading organizations worldwide to analyze the vast amounts of data stored across their enterprises to make better business decisions.  Companies choose MicroStrategy BI for its ease-of-use, sophisticated analytics, and superior data and user scalability.  The MicroStrategy BI platform delivers actionable information to business users via the web and mobile devices.  MicroStrategy's mobile intelligence platform helps companies and organizations build, deploy, and maintain mobile apps across a range of solutions by embedding intelligence, transactions, and multimedia into apps.  MicroStrategy's social intelligence platform includes a number of applications that help enterprises harness the power of social networks for marketing and e-commerce, as well as a suite of free consumer friendly apps that use MicroStrategy's enterprise technologies.  MicroStrategy's social intelligence platform helps companies leverage the value of social networks to better understand and engage their customers and fans.  The MicroStrategy Cloud offering combines MicroStrategy and third-party software, hardware, and services to enable rapid, cost-effective development of hosted BI, mobile, and social applications.  To learn more about MicroStrategy (Nasdaq: MSTR), visit www.microstrategy.com and follow us on Facebook (http://www.facebook.com/microstrategy) and Twitter (http://www.twitter.com/microstrategy).

MicroStrategy, MicroStrategy Business Intelligence Platform, MicroStrategy Cloud, MicroStrategy Mobile, Cloud Personal, Wisdom, and Usher 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 market acceptance of MicroStrategy's new offerings, including MicroStrategy 9.2.1, MicroStrategy Cloud, Gateway for Facebook, Alert, Cloud Personal, Wisdom for Facebook, MicroStrategy Wisdom, Emma and Usher; 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; 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.

MSTR-F

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

 

Twelve Months Ended

 
   

December 31,

 

December 31,

 
   

2011

 

2010

 

2011

 

2010

 
   

(unaudited)

 

(unaudited)

 

(unaudited)

 

(audited)

 

Revenues

                 

Product licenses

 

$    54,502

 

$    47,653

 

$  154,574

 

$ 126,717

 

Product support and other services

 

105,764

 

91,467

 

407,576

 

327,860

 

 Total revenues

 

160,266

 

139,120

 

562,150

 

454,577

 
                   

Cost of revenues

                 

Product licenses

 

2,260

 

1,896

 

8,774

 

7,637

 

Product support and other services

 

35,392

 

30,982

 

133,246

 

98,454

 

 Total cost of revenues

 

37,652

 

32,878

 

142,020

 

106,091

 
                   

Gross profit

 

122,614

 

106,242

 

420,130

 

348,486

 
                   

Operating expenses

                 

Sales and marketing

 

69,125

 

50,982

 

243,029

 

165,732

 

Research and development

 

22,312

 

13,748

 

72,618

 

50,566

 

General and administrative

 

22,223

 

22,649

 

89,441

 

81,599

 

 Total operating expenses

 

113,660

 

87,379

 

405,088

 

297,897

 
                   

Income from operations before

                 

financing and other income and income taxes

 

8,954

 

18,863

 

15,042

 

50,589

 
                   

Financing and other income

                 

Interest income, net

 

60

 

80

 

199

 

389

 

Gain on sale of investment

 

-

 

-

 

3,371

 

-

 

Other income, net

 

666

 

806

 

688

 

3,982

 

 Total financing and other income

 

726

 

886

 

4,258

 

4,371

 
                   

Income from operations before income taxes

 

9,680

 

19,749

 

19,300

 

54,960

 

 Provision for income taxes

 

680

 

1,827

 

1,360

 

11,168

 
                   

 Net income

 

$      9,000

 

$    17,922

 

$    17,940

 

$   43,792

 
                   

 Basic earnings per share (1)

 

$        0.84

 

$        1.66

 

$        1.67

 

$       3.85

 

 Weighted average shares outstanding used in computing basic earnings per share

 

10,767

 

10,802

 

10,719

 

11,378

 
                   

 Diluted earnings per share (1)

 

$        0.81

 

$        1.60

 

$        1.62

 

$       3.72

 

 Weighted average shares outstanding used in computing diluted earnings per share

 

11,078

 

11,196

 

11,066

 

11,779

 
                   

 (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 Ended

 

Three Months Ended

 

Three Months Ended

 
   

December 31,

 

December 31,

 

December 31,

 
   

2011

 

2010

 

2011

 

2010

 

2011

 

2010

 
                           
                           

Revenues

                         

Product licenses

 

$   54,502

 

$   47,653

 

$        -

 

$        -

 

$   54,502

 

$   47,653

 

Product support and other services

 

99,467

 

85,753

 

-

 

-

 

99,467

 

85,753

 

Angel.com services

 

-

 

-

 

6,297

 

5,714

 

6,297

 

5,714

 

 Total revenues

 

153,969

 

133,406

 

6,297

 

5,714

 

160,266

 

139,120

 
                           

Cost of revenues

                         

Product licenses

 

2,260

 

1,896

 

-

 

-

 

2,260

 

1,896

 

Product support and other services

 

32,539

 

28,002

 

-

 

-

 

32,539

 

28,002

 

Angel.com services

 

-

 

-

 

2,853

 

2,980

 

2,853

 

2,980

 

 Total cost of revenues

 

34,799

 

29,898

 

2,853

 

2,980

 

37,652

 

32,878

 

Gross profit

 

119,170

 

103,508

 

3,444

 

2,734

 

122,614

 

106,242

 
                           

Operating expenses

                         

Sales and marketing

 

66,628

 

47,817

 

2,497

 

3,165

 

69,125

 

50,982

 

Research and development

 

20,946

 

12,823

 

1,366

 

925

 

22,312

 

13,748

 

General and administrative

 

21,288

 

21,975

 

935

 

674

 

22,223

 

22,649

 

 Total operating expenses

 

108,862

 

82,615

 

4,798

 

4,764

 

113,660

 

87,379

 
                           

Income (loss) from operations before

                         

financing and other income and income taxes

 

10,308

 

20,893

 

(1,354)

 

(2,030)

 

8,954

 

18,863

 
                           

Financing and other income (expense)

                         

Interest income, net

 

60

 

80

 

-

 

-

 

60

 

80

 

Gain on sale of investment

 

-

 

-

 

-

 

-

 

-

 

-

 

Other income (expense), net

 

709

 

771

 

(43)

 

35

 

666

 

806

 

 Total financing and other income (expense)

 

769

 

851

 

(43)

 

35

 

726

 

886

 

Income (loss) from operations before income taxes

 

$   11,077

 

$   21,744

 

$ (1,397)

 

$ (1,995)

 

$     9,680

 

$   19,749

 

 Provision for income taxes

                 

680

 

1,827

 
                           

 Net income

                 

$     9,000

 

$   17,922

 
                           

 Basic earnings per share

                 

$       0.84

 

$       1.66

 

 Weighted average shares outstanding used in computing basic earnings per share

                 

10,767

 

10,802

 
                           

 Diluted earnings per share

                 

$       0.81

 

$       1.60

 

 Weighted average shares outstanding used in computing diluted earnings per share

                 

11,078

 

11,196

 
                         

 

MICROSTRATEGY INCORPORATED

 

CONSOLIDATED STATEMENTS OF OPERATIONS

 

(in thousands, except per share data)

 

(unaudited)

 
                           
   

Core BI Business

 

Angel.com

 

Consolidated

 
   

Twelve Months Ended

 

Twelve Months Ended

 

Twelve Months Ended

 
   

December 31,

 

December 31,

 

December 31,

 
   

2011

 

2010

 

2011

 

2010

 

2011

 

2010

 
                           
                           

Revenues

                         

Product licenses

 

$  154,574

 

$  126,717

 

$            -

 

$            -

 

$  154,574

 

$  126,717

 

Product support and other services

 

382,594

 

309,371

 

-

 

-

 

382,594

 

309,371

 

Angel.com services

 

-

 

-

 

24,982

 

18,489

 

24,982

 

18,489

 

 Total revenues

 

537,168

 

436,088

 

24,982

 

18,489

 

562,150

 

454,577

 
                           

Cost of revenues

                         

Product licenses

 

8,774

 

7,637

 

-

 

-

 

8,774

 

7,637

 

Product support and other services

 

121,924

 

89,718

 

-

 

-

 

121,924

 

89,718

 

Angel.com services

 

-

 

-

 

11,322

 

8,736

 

11,322

 

8,736

 

 Total cost of revenues

 

130,698

 

97,355

 

11,322

 

8,736

 

142,020

 

106,091

 

Gross profit

 

406,470

 

338,733

 

13,660

 

9,753

 

420,130

 

348,486

 
                           

Operating expenses

                         

Sales and marketing

 

231,504

 

157,459

 

11,525

 

8,273

 

243,029

 

165,732

 

Research and development

 

67,863

 

47,239

 

4,755

 

3,327

 

72,618

 

50,566

 

General and administrative

 

86,237

 

79,390

 

3,204

 

2,209

 

89,441

 

81,599

 

 Total operating expenses

 

385,604

 

284,088

 

19,484

 

13,809

 

405,088

 

297,897

 
                           

Income (loss) from operations before

                         

financing and other income and income taxes

 

20,866

 

54,645

 

(5,824)

 

(4,056)

 

15,042

 

50,589

 
                           

Financing and other income (expense)

                         

Interest income, net

 

199

 

389

 

-

 

-

 

199

 

389

 

Gain on sale of investment

 

3,371

 

-

 

-

 

-

 

3,371

 

-

 

Other income (expense), net

 

764

 

3,956

 

(76)

 

26

 

688

 

3,982

 

 Total financing and other income (expense)

 

4,334

 

4,345

 

(76)

 

26

 

4,258

 

4,371

 

Income (loss) from operations before income taxes

 

$    25,200

 

$    58,990

 

$     (5,900)

 

$     (4,030)

 

$    19,300

 

$    54,960

 

 Provision for income taxes

                 

1,360

 

11,168

 
                           

 Net income

                 

$    17,940

 

$    43,792

 
                           

 Basic earnings per share

                 

$        1.67

 

$        3.85

 

 Weighted average shares outstanding used in computing basic earnings per share

                 

10,719

 

11,378

 
                           

 Diluted earnings per share

                 

$        1.62

 

$        3.72

 

 Weighted average shares outstanding used in computing diluted earnings per share

                 

11,066

 

11,779

 
                         

 

MICROSTRATEGY INCORPORATED

 

CONSOLIDATED BALANCE SHEETS

 

(in thousands, except per share data)

 
           
   

December 31,

 

December 31,

 
   

2011

 

2010

 

Assets

 

(unaudited)

 

(audited)

 

Current assets

         

 Cash and cash equivalents

 

$        199,634

 

$        174,097

 

 Restricted cash and short-term investments

 

289

 

284

 

 Accounts receivable, net

 

94,723

 

82,056

 

 Prepaid expenses and other current assets

 

17,043

 

26,751

 

 Deferred tax assets, net

 

31,516

 

13,670

 

Total current assets

 

343,205

 

296,858

 
           

Property and equipment, net

 

95,311

 

65,033

 

Capitalized software development costs, net

 

7,031

 

9,059

 

Deposits and other assets

 

5,306

 

5,587

 

Deferred tax assets, net

 

2,998

 

5,029

 

Total Assets

 

$        453,851

 

$        381,566

 
           

Liabilities and Stockholders' Equity

         

Current liabilities

         

 Accounts payable and accrued expenses

 

$          46,401

 

$          36,683

 

 Accrued compensation and employee benefits

 

68,308

 

60,201

 

 Deferred revenue and advance payments

 

103,199

 

89,331

 

 Deferred tax liabilities

 

485

 

355

 

Total current liabilities

 

218,393

 

186,570

 
           

Deferred revenue and advance payments

 

10,841

 

7,878

 

Other long-term liabilities

 

45,141

 

37,946

 

Deferred tax liabilities

 

10,498

 

-

 
           

Total Liabilities

 

284,873

 

232,394

 
           

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;

         

   14,810 shares issued and 8,405 shares outstanding, and 14,351 shares

         

    issued and 7,946 shares outstanding, respectively

 

15

 

14

 

 Class B common stock, $0.001 par value; 165,000 shares authorized;

         

    2,378 and 2,694 shares issued and outstanding, respectively

 

2

 

3

 

 Additional paid-in capital

 

457,837

 

455,374

 

 Treasury stock, at cost; 6,405 shares

 

(475,184)

 

(475,184)

 

 Accumulated other comprehensive loss

 

(2,052)

 

(1,455)

 

 Retained earnings

 

188,360

 

170,420

 

Total Stockholders' Equity

 

168,978

 

149,172

 

Total Liabilities and Stockholders' Equity

 

$        453,851

 

$        381,566

 
         

 

MICROSTRATEGY INCORPORATED

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(in thousands)

 
   
         

Twelve Months Ended

 
         

December 31,

 
         

2011

 

2010

 
         

(unaudited)

 

(audited)

 

Operating activities:

         
 

Net income

 

$    17,940

 

$   43,792

 
 

Adjustments to reconcile net income to net cash provided by operating activities:

         
   

Depreciation and amortization

 

18,526

 

12,799

 
   

Bad debt expense

 

1,485

 

3,436

 
   

Deferred taxes

 

(5,403)

 

1,689

 
   

Excess tax benefits from share-based compensation arrangements

 

(4,507)

 

(741)

 
   

Gain on sale of investment

 

(3,371)

 

-

 
   

Other, net

 

-

 

70

 
 

Changes in operating assets and liabilities:

         
   

Accounts receivable

 

(15,141)

 

(30,134)

 
   

Prepaid expenses and other current assets

 

7,115

 

(13,159)

 
   

Deposits and other assets

 

85

 

(2,353)

 
   

Accounts payable and accrued expenses

 

4,775

 

4,651

 
   

Accrued compensation and employee benefits

 

9,061

 

14,178

 
   

Deferred revenue and advance payments

 

18,498

 

16,285

 
   

Other long-term liabilities

 

7,244

 

25,312

 
     

Net cash provided by operating activities

 

56,307

 

75,825

 

Investing activities:

         
 

Proceeds from sale of investment

 

3,371

 

-

 
 

Purchases of property and equipment

 

(40,660)

 

(16,289)

 
 

Capitalized software development costs

 

(5,907)

 

(2,185)

 
 

Insurance proceeds

 

7,065

 

-

 
 

(Increase) decrease in restricted cash and investments

 

(51)

 

1,047

 
     

Net cash used in investing activities

 

(36,182)

 

(17,427)

 

Financing activities:

         
 

Proceeds from sale of class A common stock under exercise of employee stock options

 

2,463

 

1,154

 
 

Excess tax benefits from share-based compensation arrangements

 

4,507

 

741

 
 

Purchases of treasury stock

 

-

 

(108,993)

 
     

Net cash provided by (used in) financing activities

 

6,970

 

(107,098)

 
   

Effect of foreign exchange rate changes on cash and cash equivalents

 

(1,558)

 

(1,972)

 

Net increase (decrease) in cash and cash equivalents

 

25,537

 

(50,672)

 

Cash and cash equivalents, beginning of period

 

174,097

 

224,769

 

Cash and cash equivalents, end of period

 

$  199,634

 

$ 174,097

 
               

 

SOURCE MicroStrategy Incorporated

 

 

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