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MicroStrategy Announces Second Quarter 2012 Financial Results

Diluted Earnings Per Share of $0.65

TYSONS CORNER, Va., July 30, 2012 /PRNewswire/ -- MicroStrategy® Incorporated (Nasdaq: MSTR), a leading global provider of business intelligence (BI) software, today announced financial results for the three-month period ended June 30, 2012 (the second quarter of its 2012 fiscal year).

Second quarter 2012 revenues were $141.8 million versus $138.2 million for the second quarter of 2011, a 3% increase.  Product licenses revenues for the second quarter of 2012 were $31.9 million versus $33.4 million for the second quarter of 2011, a 5% decrease.  Product support and other services revenues for MicroStrategy's core BI business for the second quarter of 2012 were $103.4 million versus $98.7 million for the second quarter of 2011, a 5% increase. 

Operating expenses for the second quarter of 2012 were $95.7 million versus $100.1 million for the second quarter of 2011, a 4% decrease.  The decrease in operating expenses was primarily driven by a reduction in sales and marketing expense.  In addition, during the second quarter of 2012, MicroStrategy capitalized $5.1 million in costs associated with the development of its MicroStrategy 9.3 software versus $1.7 million in costs capitalized during the second quarter of 2011 associated with the development of its MicroStrategy 9.2.1 software.

Net income for the second quarter of 2012 was $7.3 million, or $0.65 per share on a diluted basis, compared to $2.9 million, or $0.26 per share on a diluted basis, for the second quarter of 2011.

As of June 30, 2012, MicroStrategy had cash and cash equivalents of $195.5 million versus $199.6 million as of December 31, 2011, a decrease of $4.1 million.  As of June 30, 2012, MicroStrategy had 8,706,545 shares of class A common stock and 2,227,327 shares of class B common stock outstanding.

Innovations in Business Intelligence, Mobile Applications, Cloud-based BI, and Social Intelligence Technologies Continue to Set the Agenda for MicroStrategy

In the second quarter of 2012, MicroStrategy worked to provide visionary thought leadership, innovative new products, and superior service to its customers as they grappled with the challenges and opportunities posed by Big Data, Mobile Applications, Cloud-based BI, and Social Intelligence. In the second quarter, MicroStrategy unveiled the following new technologies:

  • MicroStrategy announced that it released a new version of MicroStrategy Mobile™ that delivers enhanced integration with Apple's AirPlay® feature. This new capability extends MicroStrategy Mobile wirelessly onto conference room screens, encouraging spontaneous conversations rather than static slide presentations. When MicroStrategy Mobile users "mirror" their business apps onto screens, the device becomes a data remote-control, letting the user discuss the data on the screen while controlling it wirelessly from an Apple device. For more information, view the product feature video: www.microstrategy.com/bettermeetings.

  • MicroStrategy announced the worldwide availability of Usher™ 1.1, a free event management app linked to Facebook events and groups.  Users can download the app by going to http://www.usher.com and clicking on the link to Apple's App Store™.  A user with the Usher app deployed on the user's iPhone can easily manage an event from beginning to end and invite guests from the user's Facebook network.

Gartner Gives MicroStrategy an "Outstanding" Product Viability Rating in its 2012 "Critical Capabilities for Mobile BI" report

MicroStrategy announced that it had received an "Outstanding" product viability rating by Gartner in its "Critical Capabilities for Mobile BI" report, published April 10, 2012. According to Gartner, "Mobile business intelligence is growing fast in the corporate landscape, with many companies piloting or planning deployment initiatives. This research will help BI leaders understand the disparate capabilities available in the market and facilitate the selection of a mobile BI solution."  A copy of the Gartner report is available, compliments of MicroStrategy, at www.microstrategy.com/mobile/analyst-reviews.

MicroStrategy Unveils Innovations in Business Intelligence at MicroStrategy World 2012 Amsterdam

In July 2012, MicroStrategy unveiled innovations in business intelligence at MicroStrategy World 2012 Amsterdam, the Company's global conference. The conference, which brought together some of the world's foremost technology visionaries, featured the latest advances in self-service business intelligence and hosted the worldwide launch of "The Mobile Wave," a book authored by MicroStrategy Chairman and CEO Michael Saylor and published June 26, 2012 by Perseus Books.

At MicroStrategy World Amsterdam, the Company unveiled MicroStrategy 9.3™, the latest version of its core business intelligence platform. MicroStrategy 9.3, which is expected to be generally available in Q3 2012, contains powerful new capabilities that enhance MicroStrategy Visual Insight for data exploration and dashboard creation, allow businesses to gain insights from Big Data, and incorporate advanced analytics from "R" — an open source programming language for statistical computing. MicroStrategy 9.3 empowers business people by providing them with the information they need to make better decisions and be consistently more productive. 

Also at MicroStrategy World Amsterdam, MicroStrategy announced the beta release of MicroStrategy Cloud Express™, a SaaS-based BI solution that enables anyone — regardless of organizational size or technical skill — to automate publication of personalized, pixel-perfect reports and dashboards to any size group. The addition of MicroStrategy Cloud Express adds a new service level to the MicroStrategy Cloud™, which first became available in 2011 with Personal and Platform service options.

In addition, the Company announced the availability of MicroStrategy Wisdom Professional™ at MicroStrategy World Amsterdam. MicroStrategy Wisdom Professional is an analytical application that can explore a wide spectrum of data contained in Facebook about consumers, including their demographics, interests, activities, and preferences. MicroStrategy Wisdom Professional provides businesses with unique intelligence on the demographics, interests, and social graph of more than 12 million anonymous Facebook users. Businesses using MicroStrategy Wisdom Professional can uncover details about their fans as well as those of their competitors. To sign up for a one-month free trial of MicroStrategy Wisdom Professional, visit: www.microstrategy.com/wisdompro/.

In July 2012, MicroStrategy also held its second annual Social Media iCommerce Summit (SMICS) at Amsterdam's RAI International Convention Center, running adjacent to MicroStrategy World 2012 Amsterdam. SMICS attendees were able to learn about innovative technologies from MicroStrategy in Social Intelligence and hear the views and experiences of industry luminaries at the cutting-edge of social media monetization. Digital strategists shared their perspectives on the future of social media and commerce, with a focus on how companies can best compete for consumer attention and relevance.

MicroStrategy Signs Multi-Year Global Brand Ambassador Partnership with Young Golfing Sensation Patrick Cantlay

Also in the second quarter of 2012, MicroStrategy announced that 20 year-old Patrick Cantlay, the world's #1 ranked amateur golfer when he turned professional in mid-June 2012, became MicroStrategy's first Global Brand Ambassador. Under the terms of the multi-year marketing partnership, Cantlay will represent MicroStrategy in a wide range of marketing and customer activities, and will wear MicroStrategy logos in premier locations on the front of his headwear and apparel during all professional tournament play and appearances.

Examples of Customer Deals from Q2 2012

Buenos Aires Department of the Treasury

The Buenos Aires Department of the Treasury (Ministerio de Hacienda de la Ciudad de Buenos Aires) has recently chosen to expand its deployment of the MicroStrategy Business Intelligence Platform™.  The municipal department has been working with MicroStrategy to oversee the collection of revenues from various sources, including taxes, licenses, fees, and permits, which pay for numerous essential municipal services to Buenos Aires residents and businesses. The Department of the Treasury will integrate MicroStrategy with Sysphera's Enterprise Management Suite to develop Web-based budgeting, planning, and forecasting processes that replace manual spreadsheet consolidations and also provide its user community with the reporting and analytical capabilities needed to deliver budget plans to the Buenos Aires City Congress.

Chipotle Mexican Grill 

Chipotle Mexican Grill, Inc. (NYSE: CMG), the national chain of burrito restaurants known for serving Food With Integrity, has selected MicroStrategy as its enterprise BI solution.  Chipotle plans to deploy the MicroStrategy Business Intelligence Platform to its over 1,250 US-based restaurant locations and to its corporate staff of 500 users.  Representative user groups will include Finance, Field Controllers, Marketing, Operations, Human Resources, Restaurant Management, and Field Management.  Once deployed, Chipotle will use the platform to analyze and provide its field leaders with easy access to key performance metrics such as throughput, daily sales trends, and the impact of marketing campaigns.  After an evaluation of other business intelligence products, Chipotle chose MicroStrategy for its platform's ease-of-use, BI self-service approach, scalability, low total cost of ownership, and strong mobile BI offering.  Chipotle also cited its strong business relationship with MicroStrategy as a key factor in their selection. 

MassDiscounters (Game & Dion Wired)

Masstores, with headquarters in Durban, South Africa, is the second-largest distributor of consumer goods in Africa.  Masstores has chosen to expand its MicroStrategy deployment to its employees in Finance, Marketing, Supply Chain, Merchandising, Logistics, and Store Operations.  While MicroStrategy-based dashboards will provide high-level analytical insight to company executives, its operational reports will allow store managers and analysts to analyze company performance. MicroStrategy Visual Insight will empower Masstores' employees to quickly and easily spot outliers, discover patterns, and uncover problem areas in the data using compelling visualizations.  Masstores has chosen MicroStrategy for its powerful visualization capabilities, ease of use, and integrated business intelligence platform.

Novation 

Novation is the leading health care supply chain expertise and contracting company for the more than 65,000 members of VHA Inc. and UHC, two national health care alliances, Children's Hospital Association, an alliance of the nation's leading pediatric facilities, and Provista, LLC.  Novation chose to expand its MicroStrategy deployment to provide its alliance members with powerful new visualization capabilities. With MicroStrategy Visual Insight, executives, purchasing analysts, and buyers are able to build their own dashboards without help from IT to answer their business questions in minutes. Novation cited MicroStrategy's ease-of-use, speed, superior visualizations, scalability to handle big data, and analytical reporting capabilities as reasons for its continued deployment of MicroStrategy's business intelligence platform.

About MicroStrategy Incorporated

Founded in 1989, MicroStrategy is a leading global 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 9.3, MicroStrategy Cloud, MicroStrategy Cloud Express, MicroStrategy Mobile, MicroStrategy Wisdom Professional, 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 9.3, MicroStrategy Cloud Express, and MicroStrategy Wisdom Professional; 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; 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


Six Months Ended



June 30,


June 30,



2012


2011


2012


2011



(unaudited)


(unaudited)


(unaudited)


(unaudited)

Revenues









Product licenses


$      31,890


$      33,430


$      69,343


$      60,810

Product support and other services


109,948


104,721


217,580


199,370

  Total revenues


141,838


138,151


286,923


260,180










Cost of revenues









Product licenses


982


2,322


3,128


4,230

Product support and other services


35,654


32,221


72,497


63,474

  Total cost of revenues


36,636


34,543


75,625


67,704










Gross profit


105,202


103,608


211,298


192,476










Operating expenses









Sales and marketing


51,117


60,942


108,546


112,453

Research and development


20,657


16,874


44,392


29,872

General and administrative


23,939


22,319


48,413


45,600

  Total operating expenses


95,713


100,135


201,351


187,925










Income from operations before









financing and other income and income taxes


9,489


3,473


9,947


4,551










Financing and other income (expense)









Interest income, net


35


39


50


121

Other income (expense), net


1,011


(316)


851


(947)

  Total financing and other income (expense)


1,046


(277)


901


(826)










Income from operations before income taxes


10,535


3,196


10,848


3,725

  Provision (benefit) for income taxes


3,264


311


3,305


(294)










Net income


$       7,271


$       2,885


$       7,543


$       4,019










Basic earnings per share (1)


$         0.67


$         0.27


$         0.70


$         0.38

Weighted average shares outstanding used in computing basic earnings per share


10,875


10,709


10,841


10,690










Diluted earnings per share (1)


$         0.65


$         0.26


$         0.68


$         0.36

Weighted average shares outstanding used in computing diluted earnings per share


11,121


11,068


11,107


11,056










(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



June 30,


June 30,


June 30,



2012


2011


2012


2011


2012


2011



























Revenues













Product licenses


$   31,890


$   33,430


$           -


$          -


$   31,890


$   33,430

Product support and other services


103,434


98,717


-


-


103,434


98,717

Angel.com services


-


-


6,514


6,004


6,514


6,004

  Total revenues


135,324


132,147


6,514


6,004


141,838


138,151














Cost of revenues













Product licenses


982


2,322


-


-


982


2,322

Product support and other services


33,078


29,409


-


-


33,078


29,409

Angel.com services


-


-


2,576


2,812


2,576


2,812

  Total cost of revenues


34,060


31,731


2,576


2,812


36,636


34,543

Gross profit


101,264


100,416


3,938


3,192


105,202


103,608














Operating expenses













Sales and marketing


48,693


57,807


2,424


3,135


51,117


60,942

Research and development


19,017


15,779


1,640


1,095


20,657


16,874

General and administrative


23,067


21,617


872


702


23,939


22,319

  Total operating expenses


90,777


95,203


4,936


4,932


95,713


100,135














Income (loss) from operations before













financing and other income and income taxes


10,487


5,213


(998)


(1,740)


9,489


3,473














Financing and other income (expense)













Interest income (expense), net


37


39


(2)


-


35


39

Other income (expense), net


1,000


(277)


11


(39)


1,011


(316)

  Total financing and other income (expense)


1,037


(238)


9


(39)


1,046


(277)

Income (loss) from operations before income taxes


$   11,524


$     4,975


$     (989)


$   (1,779)


$    10,535


$      3,196

  Provision for income taxes










3,264


311














Net income










$      7,271


$      2,885














Basic earnings per share










$        0.67


$        0.27

Weighted average shares outstanding used in computing basic earnings per share








10,875


10,709














Diluted earnings per share










$        0.65


$        0.26

Weighted average shares outstanding used in computing diluted earnings per share








11,121


11,068








































MICROSTRATEGY INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)
















Core BI Business


Angel.com


Consolidated



Six Months Ended


Six Months Ended


Six Months Ended



June 30,


June 30,


June 30,



2012


2011


2012


2011


2012


2011



























Revenues













Product licenses


$       69,343


$       60,810


$           -


$           -


$       69,343


$       60,810

Product support and other services


204,315


186,566


-


-


204,315


186,566

Angel.com services


-


-


13,265


12,804


13,265


12,804

  Total revenues


273,658


247,376


13,265


12,804


286,923


260,180














Cost of revenues













Product licenses


3,128


4,230


-


-


3,128


4,230

Product support and other services


66,662


57,907


-


-


66,662


57,907

Angel.com services


-


-


5,835


5,567


5,835


5,567

  Total cost of revenues


69,790


62,137


5,835


5,567


75,625


67,704

Gross profit


203,868


185,239


7,430


7,237


211,298


192,476














Operating expenses













Sales and marketing


103,834


106,382


4,712


6,071


108,546


112,453

Research and development


41,191


27,773


3,201


2,099


44,392


29,872

General and administrative


46,732


44,156


1,681


1,444


48,413


45,600

  Total operating expenses


191,757


178,311


9,594


9,614


201,351


187,925














Income (loss) from operations before













financing and other income and income taxes


12,111


6,928


(2,164)


(2,377)


9,947


4,551














Financing and other income (expense)













Interest income (expense), net


52


121


(2)


-


50


121

Other income (expense), net


876


(870)


(25)


(77)


851


(947)

  Total financing and other income (expense)


928


(749)


(27)


(77)


901


(826)

Income (loss) from operations before income taxes


$     13,039


$       6,179


$    (2,191)


$     (2,454)


$      10,848


$         3,725

  Provision (benefit) for income taxes










3,305


(294)














Net income










$        7,543


$         4,019














Basic earnings per share










$          0.70


$          0.38

Weighted average shares outstanding used in computing basic earnings per share








10,841


10,690














Diluted earnings per share










$          0.68


$          0.36

Weighted average shares outstanding used in computing diluted earnings per share








11,107


11,056














 

MICROSTRATEGY INCORPORATED

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)








June 30,


December 31,



2012


2011*

Assets


(unaudited)



Current assets





  Cash and cash equivalents


$       195,540


$       199,634

  Restricted cash and short-term investments

247


289

  Accounts receivable, net


78,893


94,723

  Prepaid expenses and other current assets

18,476


17,043

  Deferred tax assets, net


21,740


31,516

Total current assets


314,896


343,205






Property and equipment, net


102,227


95,311

Capitalized software development costs, net

9,425


7,031

Deposits and other assets


5,038


5,306

Deferred tax assets, net


2,731


2,998

Total Assets


$       434,317


$       453,851






Liabilities and Stockholders' Equity




Current liabilities





  Accounts payable and accrued expenses

$          31,816


$         46,401

  Accrued compensation and employee benefits

56,293


68,308

  Deferred revenue and advance payments

105,523


103,199

  Deferred tax liabilities


184


485

Total current liabilities


193,816


218,393






Deferred revenue and advance payments

10,361


10,841

Other long-term liabilities


44,329


45,141

Deferred tax liabilities


6,572


10,498






Total Liabilities


255,078


284,873






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;




    15,112 shares issued and 8,707 shares outstanding, and 14,810 shares




     issued and 8,405 shares outstanding, respectively

15


15

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




     2,227 and 2,378 shares issued and outstanding, respectively

2


2

  Additional paid-in capital


460,784


457,837

  Treasury stock, at cost; 6,405 shares

(475,184)


(475,184)

  Accumulated other comprehensive loss

(2,281)


(2,052)

  Retained earnings


195,903


188,360

Total Stockholders' Equity


179,239


168,978

Total Liabilities and Stockholders' Equity

$       434,317


$       453,851






*Derived from audited financial statements.









 

MICROSTRATEGY INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)







Six Months Ended






June 30,






2012


2011






(unaudited)


(unaudited)

Operating activities:






Net income


$      7,543


$      4,019


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







Depreciation and amortization


11,812


7,851



Bad debt expense


3,075


266



Deferred taxes


5,612


(2,852)



Excess tax benefits from share-based compensation arrangements


-


(1,854)


Changes in operating assets and liabilities:







Accounts receivable


12,071


13,149



Prepaid expenses and other current assets


(4,460)


5,043



Deposits and other assets


214


62



Accounts payable and accrued expenses


(6,897)


(2,106)



Accrued compensation and employee benefits


(11,523)


(9,799)



Deferred revenue and advance payments


3,200


11,831



Other long-term liabilities


(798)


5,856




Net cash provided by operating activities


19,849


31,466









Investing activities:






Purchases of property and equipment


(23,942)


(18,806)


Capitalized software development costs


(5,050)


(5,432)


Insurance proceeds


3,206


5,675


Decrease (increase) in restricted cash and investments


42


(167)




Net cash used in investing activities


(25,744)


(18,730)









Financing activities:






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


2,947


1,554


Excess tax benefits from share-based compensation arrangements


-


1,854




Net cash provided by financing activities


2,947


3,408









Effect of foreign exchange rate changes on cash and cash equivalents


(1,146)


2,784

Net (decrease) increase in cash and cash equivalents


(4,094)


18,928

Cash and cash equivalents, beginning of period


199,634


174,097

Cash and cash equivalents, end of period


$  195,540


$  193,025









 

MSTR-F

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

SOURCE MicroStrategy Incorporated

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