MicroStrategy Incorporated
MICROSTRATEGY INC (Form: 8-K, Received: 01/25/2018 16:12:55)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): January 19, 2018

 

 

MICROSTRATEGY INCORPORATED

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   0-24435   51-0323571

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

1850 Towers Crescent Plaza

Tysons Corner, Virginia

  22182
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (703) 848-8600

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

 

  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 2.02. Results of Operations and Financial Condition.

On January 25, 2018, MicroStrategy Incorporated (the “Company”) issued a press release announcing the Company’s financial results for the quarter ended December 31, 2017. A copy of this press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.

The information disclosed pursuant to Item 2.02 in this Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

 

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

2017 Cash Bonus Determinations for Executive Officers

On January 19, 2018, the Chief Executive Officer of the Company (the “CEO”) (i) determined a cash bonus award to Timothy E. Lang, the Company’s Senior Executive Vice President & Chief Technology Officer, in the amount of $500,000, (ii) determined a cash bonus award to Phong Q. Le, the Company’s Senior Executive Vice President & Chief Financial Officer, in the amount of $600,000, and (iii) determined a cash bonus award to W. Ming Shao, the Company’s Senior Executive Vice President & General Counsel, in the amount of $420,000, in each case with respect to the executive’s performance in 2017. The CEO determined these awards based on a subjective evaluation of the applicable executive’s performance in the context of general economic and industry conditions and Company performance during 2017.

 

Item 9.01. Financial Statements and Exhibits.

 

  (d) Exhibits

 

Exhibit No.

  

Description

99.1    Press release, dated January 25, 2018, regarding the Company’s financial results for the quarter ended December 31, 2017


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: January 25, 2018     MicroStrategy Incorporated
    (Registrant)
    By:  

/s/ Phong Le

    Name:   Phong Le
    Title:   Senior Executive Vice President & Chief Financial Officer

Exhibit 99.1

Contact:

MicroStrategy Incorporated

Investor Relations

ir@microstrategy.com

(703) 848-8600

MicroStrategy Announces

Fourth Quarter 2017 Financial Results

TYSONS CORNER, Va., January 25, 2018 - MicroStrategy ® Incorporated (Nasdaq: MSTR), a leading worldwide provider of enterprise analytics and mobility software, today announced financial results for the three-month period ended December 31, 2017 (the fourth quarter of its 2017 fiscal year).

Fourth quarter 2017 revenues were $138.1 million versus $140.1 million for the fourth quarter of 2016, a 1.4% decrease. Product licenses and subscription services revenues for the fourth quarter of 2017 were $40.8 million versus $45.8 million for the fourth quarter of 2016, a 10.9% decrease. Product support revenues for the fourth quarter of 2017 were $75.0 million versus $72.7 million for the fourth quarter of 2016, a 3.2% increase. Other services revenues for the fourth quarter of 2017 were $22.3 million versus $21.6 million for the fourth quarter of 2016, a 3.1% increase. Foreign currency effects had a favorable impact on revenues for the fourth quarter of 2017.

Operating expenses for the fourth quarter of 2017 were $94.6 million versus $80.1 million for the fourth quarter of 2016, an 18.2% increase. MicroStrategy did not capitalize any software development costs during the fourth quarter of 2017 or 2016.

Income from operations for the fourth quarter of 2017 was $18.8 million versus $36.7 million for the fourth quarter of 2016. Net loss for the fourth quarter of 2017 was $26.2 million, or $(2.29) per share on a diluted basis, as compared to net income of $31.1 million, or $2.69 per share on a diluted basis, for the fourth quarter of 2016. This net loss included an estimated one-time tax charge of $44.0 million resulting from the recent enactment of U.S. corporate tax reform legislation. This charge is comprised of a $40.3 million tax expense related to the mandatory deemed repatriation of certain foreign earnings and profits, which we intend to elect to pay over an eight-year period beginning in 2018, and $3.7 million related to the re-measurement of net deferred tax assets arising from the new lower corporate tax rate effected by the legislation. Excluding the impact of this legislation, non-GAAP net income for the fourth quarter of 2017 was $17.8 million, or $1.55 per share on a diluted basis.

Additionally, non-GAAP income from operations, which excludes share-based compensation expense and restructuring costs, was $22.5 million for the fourth quarter of 2017 versus $40.1 million for the fourth quarter of 2016. The tables at the end of this press release include a reconciliation of GAAP to non-GAAP financial measures for the three months ended December 31, 2017 and 2016. An explanation of non-GAAP financial measures is also included under the heading “Non-GAAP Financial Measures” below.

As of December 31, 2017, MicroStrategy had cash and cash equivalents and short-term investments of $675.2 million, as compared to $589.4 million as of December 31, 2016, an increase of $85.8 million. As of December 31, 2017, MicroStrategy had 9.4 million shares of class A common stock and 2.0 million shares of class B common stock outstanding.


Conference Call

MicroStrategy will be discussing its fourth quarter 2017 financial results on a conference call today beginning at approximately 5:00 p.m. EST. To access the conference call, dial (844) 824-7425 (domestically) or (716) 220-9429 (internationally) and use conference ID 2991359. A live webcast and replay of the conference call will be available under the “Events” section on MicroStrategy’s investor relations website at http://ir.microstrategy.com/events.cfm . The replay will be available beginning approximately two hours after the call concludes until February 1, 2018 at (855) 859-2056 (domestically) or (404) 537-3406 (internationally) using the passcode 2991359. An archived webcast will also be available under the “Events” section on MicroStrategy’s investor relations website at http://ir.microstrategy.com/events.cfm .

MicroStrategy 10.10™ Empowers Individuals, Departments and Enterprises with Massive Update to Data Discovery & Dossier Authoring

In December 2017, MicroStrategy announced the general availability of MicroStrategy 10.10, the newest feature release to the company’s MicroStrategy 10™ platform. This feature release empowers business teams to confidently embrace an enterprise-wide, data-driven culture by introducing two exciting products — a completely redesigned and more powerful MicroStrategy Desktop™ and the new MicroStrategy Workstation.

“We are incredibly excited to release MicroStrategy 10.10, which empowers business teams to confidently author, promote and certify analytics content, operationalize dossiers, and deliver the agility a business needs, along with the governance that IT requires,” said Tim Lang, Senior Executive Vice President and Chief Technology Officer, MicroStrategy Incorporated. “The latest capabilities in MicroStrategy 10.10 are part of MicroStrategy’s commitment to deliver the next generation of enterprise analytics to our customers so they can discover growth opportunities, solve complex business problems, and drive real results.”

MicroStrategy 10.10 Takes Data Discovery & Dossier Authoring to New Levels

MicroStrategy 10.10 builds on the game-changing release of MicroStrategy 10.9™, which introduced the Dossier™ feature and MicroStrategy Library™. Dossier and MicroStrategy Library deliver a new storybook experience for everyone across the enterprise and make it easy to consume, share, and collaborate around analytics. MicroStrategy 10.10 builds on these features by empowering analysts, developers and administrators to author, promote and operationalize the Dossier and MicroStrategy Library functionalities via MicroStrategy Desktop and MicroStrategy Workstation, in addition to web interfaces.

Redesigned MicroStrategy Desktop Promotes Data-Driven Culture

The newest generation of MicroStrategy Desktop, MicroStrategy’s free data discovery tool, delivers a completely redesigned interface and significant enhancements to the previous version. Available for both PC and Mac, the client allows users to connect to more than 80 data sources and easily build powerful dossiers to visually tell stories with data. For the first time, analysts and data scientists are able to work in a secure, collaborative environment either offline or online by connecting to the MicroStrategy Server™, on-premise or in the cloud. By connecting to and working directly on the MicroStrategy Server, MicroStrategy Desktop users can more easily leverage the platform capabilities, such as discussion threads and alerts and notifications, to drive adoption across the workforce. Download MicroStrategy Desktop for free today.

New MicroStrategy Workstation Turbocharges Administration & Content Development

MicroStrategy 10.10 introduces MicroStrategy Workstation, a new addition to the MicroStrategy product line. This powerful tool gives administrators and content developers the ability to quickly and easily build and maintain scalable enterprise content, create users and groups, assign security roles, schedule and publish data mashups for business teams, and do much more. MicroStrategy Workstation delivers these administrative capabilities to both the PC and Mac via a powerful client.

New Certification Capability Operationalizes Governed Data Discovery

MicroStrategy Desktop and MicroStrategy Workstation allow analysts, data stewards and administrators who have the “certifier” privilege to watermark dossiers and analytics content with a “certified stamp.” With this capability, business teams can identify and highlight trusted dossiers that are built on certified and approved data, and can confidently broadcast that to a larger audience. This helps teams boldly deploy self-service capabilities, while facilitating governance and confident access to trusted data at the departmental level.


MicroStrategy Workstation Administrators Can Provision New Cloud Servers with AWS in a Matter of Minutes

MicroStrategy Workstation’s intuitive visual interface allows administrators to easily spin up and manage an enterprise analytics environment in the cloud in a matter of minutes. Administrators can accomplish this without leaving the interface. Administrators can create multiple MicroStrategy on AWS connections from MicroStrategy Workstation and control the environments by being able to start, stop, restart and terminate the cloud server directly from MicroStrategy Workstation. Further management of the cloud server can be performed from the administrative portal.

New User Management Capabilities on MicroStrategy Workstation Facilitate Personalization

MicroStrategy Workstation simplifies the process of creating and managing users and user groups, assigning security roles, and managing access permissions. By bringing these powerful administrative capabilities to a user-friendly and modern interface, version 10.10 makes it easier to organize teams for secure and personalized sharing and collaboration – all with the necessary governance in place. Administrators can access a user-friendly interface to easily change the security role of users or user groups and control their ability to browse, read, use, execute, write, delete and control dossiers, documents or reports. With version 10.10, the most commonly used roles are readily available to be assigned to users: Administrator, Certifier, Analyst and Consumer. Beyond that, administrators can customize and restrict security access (ACLs) as needed.

Organizations Can Leverage Many More Data Connectors with MicroStrategy Web™, MicroStrategy Desktop & MicroStrategy Workstation

With MicroStrategy 10.10, new data connectors, such as data.world, Neo4j, TapClicks, Microsoft Azure Cosmos DC and SurveyMonkey, are available in the Connector Gallery of the MicroStrategy Community . With version 10.10, organizations can add custom connectors to all MicroStrategy authoring interfaces, including MicroStrategy Workstation and MicroStrategy Desktop, via the Data Connector API. With the ability to leverage new and unique connectors, organizations can use all MicroStrategy authoring interfaces to easily build analytics and mobility applications.

100+ Enhancements Available Across the MicroStrategy Platform

In addition to the newest generation of MicroStrategy Desktop and the release of MicroStrategy Workstation, version 10.10 delivers dozens of new features across MicroStrategy Web, MicroStrategy Mobile™, MicroStrategy on AWS, APIs, MicroStrategy Server, and Usher ® , along with several performance and reliability enhancements across the platform. New enhancements include:

 

    Conditional metrics for dossier authoring in MicroStrategy Web, MicroStrategy Desktop and MicroStrategy Workstation, allowing analysts to add filters on specific metrics to create more powerful dossiers;

 

    Enhanced PDF export properties offering analysts the ability to deliver highly formatted PDFs;

 

    Improvements in hierarchy reporting with optimized filtering performance to handle large hierarchies more efficiently;

 

    iOS11 certification for the MicroStrategy Mobile and MicroStrategy Library apps for iPads;

 

    Ability to deploy MicroStrategy on AWS on Amazon Linux; and

 

    Significant enhancements to Usher Professional™, making it a more robust enterprise directory and communications tool.

MicroStrategy 10.4™ Hotfix 6 Generally Available to Customers

Alongside the MicroStrategy 10.10 feature release, MicroStrategy 10.4 hotfix 6 became generally available to customers. This hotfix improves overall product stability, includes over 150 customer-reported enhancements and fixes across the platform, and introduces several stability, performance, and security enhancements to the MicroStrategy 10.4 platform release.


Customers can apply the 10.4.6 hotfix directly on top of their existing 10.4 deployments since it already includes the earlier hotfixes. The 10.4.6 hotfix is available on Windows, Linux, AIX and Solaris and can be downloaded here . This hotfix does not require a metadata update, but rather lays down the patches on top of your existing environment.

MicroStrategy Recognized as a Leader in 2017 Dresner Advisory Services Embedded Business Intelligence Market Study

In December 2017, MicroStrategy announced that Dresner Advisory Services named MicroStrategy a leader in the “2017 Wisdom of Crowds ® Embedded Business Intelligence Market Study” report. Twenty-four business intelligence (BI) and analytics providers offering embedded analytics solutions were evaluated based on a set of criteria in two categories of functionality: “features” and “architecture.” MicroStrategy was a top vendor for product features.

“We congratulate MicroStrategy on their performance in this year’s study,” said Howard Dresner, President, Founder and Chief Research Officer of Dresner Advisory Services. “Our research shows that embedded BI is in the top third of all technologies and initiatives strategic to business intelligence, behind the most mainstream BI practices (reporting, dashboards, and end-user self-services), but ahead of other widely discussed initiatives including cloud, Big Data, and IoT. This reflects the growing demand for embedded technologies, and the overall expansion of business intelligence and analytics in the world today.”

According to the report, the most important objective for embedded BI today is “in-context insights and analysis,” followed closely by broadening the access to data throughout an organization internally. Specific to the functionality criteria, user respondents stated that today’s BI users prefer lightweight, embedded-BI architecture, most often through HTML and web services. The report also discusses how users look for embedded-BI features to support manipulation of non-static BI objects through drill-down and filtering, as well as functionality such as single sign-on.

The Dresner study is the latest in a line of increasing industry recognition for MicroStrategy, which was named a leader in “ The Forrester Wave : Enterprise BI Platforms With Majority On-Premises Deployments, Q3 2017 ” report, and named a market leader and ranked first in data discovery product capabilities in the BARC Score Data Discovery Report, published in July 2017. To download a copy of the “2017 Wisdom of Crowds Embedded Business Intelligence Market Study,” click here .

MicroStrategy Held 21 st Annual World Conference in Las Vegas

In January 2018, MicroStrategy hosted its 21 st annual user conference, MicroStrategy World™ 2018, at The Cosmopolitan of Las Vegas. MicroStrategy World 2018 brought thousands of product experts, thought leaders and MicroStrategy users together for a full three-day conference of technology-focused discussion, with over 200 sessions and 70 customer speakers. The conference showcased MicroStrategy advancements that are shaping the future of enterprise analytics.

MicroStrategy 10.10, the newest feature release on the MicroStrategy 10 platform, took center stage at MicroStrategy World. Attendees saw demos of the latest capabilities in MicroStrategy 10.10 and got hands-on experience with the next generation of enterprise analytics so they can discover growth opportunities, solve complex business problems, and drive real results.

More than 200 presentations explored innovative uses of enterprise analytics and mobility and how these technologies can be applied to drive business success. Topics included AI and machine learning, AWS, Big Data and Hadoop technologies, including Spark and Cloudera, custom and D3 visualizations, enterprise adoption, IoT, mobile analytics apps for iPad and Android devices, Natural Language Generation, R and advanced analytics, and security. Sessions also showcased key analytics and mobility business solutions for a wide range of industries and functions, including retail, finance and healthcare.


Leading Experts Discussed the Future of Analytics

Attendees heard inspirational stories from industry leaders, visionary voices, change agents and expert practitioners on how MicroStrategy and the power of analytics, Big Data, mobile, IoT and AI applications has helped them to deliver the best and most innovative solutions to the enterprise.

 

    MicroStrategy World featured speakers included Billy Beane, Executive Vice President of Baseball Operations, Oakland Athletics; Boris Evelson, Vice President, Principal Analyst at Forrester; Congresswoman Jacky Rosen representing the 3rd District of Nevada; and Julian Franklin-Jones, Executive Director at UBS.

 

    Interactive panel discussions with MicroStrategy’s Customer Award winners offered attendees the opportunity to learn about the innovative analytics and mobility apps developed by these visionary leaders.

 

    MicroStrategy keynote speakers included Michael J. Saylor, Chairman, President & CEO; Tim Lang, Senior Executive Vice President & CTO; David Rennyson, Senior Executive Vice President, Worldwide Sales; Steve Holdridge, Senior Executive Vice President, Worldwide Services; and Susan Cook, Executive Vice President, North America Sales.

First Ever MicroStrategy World Datathon Kicked Off Conference

MicroStrategy’s inaugural Datathon kicked off the conference, where teams of up to five people had the opportunity to face off and compete to create innovative applications, leveraging capabilities including predictive analytics, mobile apps, hundreds of powerful APIs and much more, all of which are available with the MicroStrategy platform. Teams presented their applications and the winning team received a $10,000 prize.

New Channel Partner Program Unveiled at Partner Day

At Partner Day, MicroStrategy channel partners learned about new sales and marketing tools and programs designed to support channel partner success. Channel partner organizations also got facetime with MicroStrategy’s senior leadership and met their peers from around the world at this exclusive channel partner event.

Attendees Participated in Hands-on Workshops

MicroStrategy World 2018 offered 16 instructor-led different workshops to develop tangible skills and training using the latest capabilities of MicroStrategy 10. These interactive sessions provided a great opportunity to get hands-on experience building next-generation analytics and mobility applications.

Inspiring Women Leaders at the Women’s Networking Event

World attendees converged at the Women’s Networking Event, where MicroStrategy customers, partners, and employees had the opportunity to meet with and hear from inspiring women leaders and savvy female executives and learn about their great work across the world of analytics.

The “Urban Fun Run” Benefitted D.C.-based Non-profit STEM for Her

MicroStrategy sponsored and co-hosted an Urban Fun Run with Datastrong, a BI and data warehousing solutions provider. All proceeds from the event benefitted STEM for Her , a non-profit foundation that supports young women and girls in the Washington, D.C. region who are interested in pursuing careers in science, technology, engineering and math fields of study.

Many Visionary Voices in a New TED Talks-style Track

MicroStrategy debuted “Visionary Voices,” a new TED Talks-style track to engage and inspire all of our conference attendees. A wide range of innovative speakers and industry leaders, including our day two keynote headliner Billy Beane, a fascinating former NASA astronaut and veteran of four space flights, and many more influential speakers offered their perspectives and stories on data, analytics, business, and the impact of technology on everyday life.

MicroStrategy Professional Services™ Hosted its “TechTalk” Series

MicroStrategy Professional Services hosted its annual “TechTalk” series, a great opportunity for conference attendees to meet one-on-one with an experienced MicroStrategy consultant ready to share a wealth of expertise about their MicroStrategy implementations.


Non-GAAP Financial Measures

MicroStrategy is providing supplemental financial measures for income from continuing operations that excludes the impact of share-based compensation arrangements and restructuring activities, and for net income and diluted earnings per share that exclude the impact from the recent enactment of U.S. corporate tax reform legislation. These supplemental financial measures are not measurements of financial performance under generally accepted accounting principles in the United States (“GAAP”) and, as a result, these supplemental financial measures may not be comparable to similarly titled measures of other companies. Management uses these non-GAAP financial measures internally to help understand, manage and evaluate business performance and to help make operating decisions. MicroStrategy believes that these non-GAAP financial measures are also useful to investors and analysts in comparing its performance across reporting periods on a consistent basis because in the case of the supplemental measure for income from continuing operations, it excludes a significant non-cash expense that MicroStrategy believes is not reflective of its general business performance and restructuring charges that we believe are not reflective of ongoing operating results, and in the case of the supplemental measures for net income and diluted earnings per share, they exclude one-time tax charges from the recent enactment of U.S. corporate tax reform legislation. In addition, accounting for share-based compensation arrangements requires significant management judgment and the resulting expense could vary significantly in comparison to other companies. Therefore, MicroStrategy believes the use of these non-GAAP financial measures can also facilitate comparison of MicroStrategy’s operating results to those of its competitors.

About MicroStrategy Incorporated

MicroStrategy (Nasdaq: MSTR) is a worldwide leader in enterprise analytics and mobility software. A pioneer in the BI and analytics space, MicroStrategy delivers innovative software that empowers people to make better decisions and transform the way they do business. We provide our enterprise customers with world-class software and expert services so they can deploy unique intelligence applications. To learn more, visit MicroStrategy online, and follow us on LinkedIn , Twitter and Facebook .

MicroStrategy, MicroStrategy 10, MicroStrategy 10.4, MicroStrategy 10.9, MicroStrategy 10.10, MicroStrategy Desktop, MicroStrategy Web, MicroStrategy Mobile, MicroStrategy Library, MicroStrategy Server, MicroStrategy World, MicroStrategy Professional Services, Usher, Usher Professional and Dossier 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 10.10; 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; fluctuations in tax benefits or provisions, including changes to U.S. federal tax laws; the timing of significant orders; delays in or the inability of the Company to develop or ship new products; competitive factors; general economic conditions, including economic uncertainty in the retail industry, in which the Company has 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
December 31,
     Twelve Months Ended
December 31,
 
     2017     2016      2017     2016*  
     (unaudited)     (unaudited)      (unaudited)        

Revenues

         

Product licenses

   $ 32,286     $ 38,013      $ 93,969     $ 113,503  

Subscription services

     8,525       7,799        32,368       30,574  
  

 

 

   

 

 

    

 

 

   

 

 

 

Total product licenses and subscription services

     40,811       45,812        126,337       144,077  

Product support

     75,032       72,671        289,174       285,079  

Other services

     22,302       21,625        89,032       83,005  
  

 

 

   

 

 

    

 

 

   

 

 

 

Total revenues

     138,145       140,108        504,543       512,161  
  

 

 

   

 

 

    

 

 

   

 

 

 

Cost of revenues

         

Product licenses

     1,994       1,745        7,176       8,573  

Subscription services

     3,404       3,098        13,435       12,765  
  

 

 

   

 

 

    

 

 

   

 

 

 

Total product licenses and subscription services

     5,398       4,843        20,611       21,338  

Product support

     4,387       4,082        17,481       15,001  

Other services

     14,968       14,363        58,557       56,808  
  

 

 

   

 

 

    

 

 

   

 

 

 

Total cost of revenues

     24,753       23,288        96,649       93,147  
  

 

 

   

 

 

    

 

 

   

 

 

 

Gross profit

     113,392       116,820        407,894       419,014  
  

 

 

   

 

 

    

 

 

   

 

 

 

Operating expenses

         

Sales and marketing

     51,977       45,292        174,612       158,740  

Research and development

     21,419       18,338        78,766       73,142  

General and administrative

     21,240       16,448        80,161       79,462  

Restructuring costs

     0       0        0       45  
  

 

 

   

 

 

    

 

 

   

 

 

 

Total operating expenses

     94,636       80,078        333,539       311,389  
  

 

 

   

 

 

    

 

 

   

 

 

 

Income from operations

     18,756       36,742        74,355       107,625  

Interest income, net

     1,756       754        5,205       2,203  

Other (expense) income, net

     (576     3,604        (6,953     3,218  
  

 

 

   

 

 

    

 

 

   

 

 

 

Income before income taxes

     19,936       41,100        72,607       113,046  

Provision for income taxes

     46,160       9,976        54,964       22,138  
  

 

 

   

 

 

    

 

 

   

 

 

 

Net (loss) income

   $ (26,224   $ 31,124      $ 17,643     $ 90,908  
  

 

 

   

 

 

    

 

 

   

 

 

 

Basic (loss) earnings per share (1):

   $ (2.29   $ 2.72      $ 1.54     $ 7.96  
  

 

 

   

 

 

    

 

 

   

 

 

 

Weighted average shares outstanding used in computing basic (loss) earnings per share

     11,447       11,433        11,444       11,425  
  

 

 

   

 

 

    

 

 

   

 

 

 

Diluted (loss) earnings per share (1):

   $ (2.29   $ 2.69      $ 1.53     $ 7.89  
  

 

 

   

 

 

    

 

 

   

 

 

 

Weighted average shares outstanding used in computing diluted (loss) earnings per share

     11,447       11,558        11,547       11,516  
  

 

 

   

 

 

    

 

 

   

 

 

 

 

(1) Basic and fully diluted earnings per share for class A and class B common stock are the same.
* Derived from audited financial statements.


MICROSTRATEGY INCORPORATED

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

 

     December 31
2017
    December 31,
2016*
 
     (unaudited)        

Assets

    

Current assets

    

Cash and cash equivalents

   $ 420,244     $ 401,975  

Restricted cash

     938       737  

Short-term investments

     254,927       187,408  

Accounts receivable, net

     69,500       83,319  

Prepaid expenses and other current assets

     18,002       11,548  
  

 

 

   

 

 

 

Total current assets

     763,611       684,987  

Property and equipment, net

     53,359       57,436  

Capitalized software development costs, net

     2,499       8,497  

Deposits and other assets

     2,868       5,695  

Deferred tax assets, net

     13,391       11,704  
  

 

 

   

 

 

 

Total Assets

   $ 835,728     $ 768,319  
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Current liabilities

    

Accounts payable and accrued expenses

   $ 30,711     $ 36,628  

Accrued compensation and employee benefits

     41,498       43,323  

Deferred revenue and advance payments, net

     112,649       105,535  
  

 

 

   

 

 

 

Total current liabilities

     184,858       185,486  

Deferred revenue and advance payments, net

     10,181       13,915  

Other long-term liabilities

     50,146       16,447  

Deferred tax liabilities

     4       294  
  

 

 

   

 

 

 

Total Liabilities

     245,189       216,142  
  

 

 

   

 

 

 

Stockholders’ Equity

    

Preferred stock undesignated, $0.001 par value; 5,000 shares authorized; no shares issued or outstanding

     0       0  

Class A common stock, $0.001 par value; 330,000 shares authorized; 15,817 shares issued and 9,412 shares outstanding, and 15,805 shares issued and 9,400 shares outstanding, respectively

     16       16  

Class B convertible common stock, $0.001 par value; 165,000 shares authorized; 2,035 shares issued and outstanding, and 2,035 shares issued and outstanding, respectively

     2       2  

Additional paid-in capital

     559,918       543,974  

Treasury stock, at cost; 6,405 shares

     (475,184     (475,184

Accumulated other comprehensive loss

     (5,968     (10,743

Retained earnings

     511,755       494,112  
  

 

 

   

 

 

 

Total Stockholders’ Equity

     590,539       552,177  
  

 

 

   

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 835,728     $ 768,319  
  

 

 

   

 

 

 

 

* Derived from audited financial statements.


MICROSTRATEGY INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

     Twelve Months Ended
December 31,
 
     2017     2016*  
     (unaudited)        

Operating activities:

    

Net income

   $ 17,643     $ 90,908  

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

    

Depreciation and amortization

     12,572       17,195  

Bad debt expense

     2,269       224  

Deferred taxes

     (2,011     (4,983

Release of liabilities for unrecognized tax benefits

     0       (394

Share-based compensation expense

     14,267       11,817  

Excess tax benefits from share-based compensation arrangements

     0       (1,244

Changes in operating assets and liabilities:

    

Accounts receivable

     15,348       (16,878

Prepaid expenses and other current assets

     (4,279     (880

Deposits and other assets

     2,981       (4,059

Accounts payable and accrued expenses

     (9,093     6,981  

Accrued compensation and employee benefits

     (3,683     3,787  

Accrued restructuring costs

     0       (58

Deferred revenue and advance payments, net

     (1,609     11,238  

Other long-term liabilities

     33,917       (3,065
  

 

 

   

 

 

 

Net cash provided by operating activities

     78,322       110,589  
  

 

 

   

 

 

 

Investing activities:

    

Proceeds from redemption of short-term investments

     390,720       361,680  

Purchases of property and equipment

     (3,982     (2,337

Purchases of short-term investments

     (456,468     (354,999
  

 

 

   

 

 

 

Net cash (used in) provided by investing activities

     (69,730     4,344  
  

 

 

   

 

 

 

Financing activities:

    

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

     1,677       1,663  

Payment of taxes relating to net exercise of employee stock options

     0       (3,739

Excess tax benefits from share-based compensation arrangements

     0       1,244  

Payments on capital lease obligations and other financing arrangements

     (21     (172
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     1,656       (1,004
  

 

 

   

 

 

 

Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash

     8,222       (4,176
  

 

 

   

 

 

 

Net increase in cash, cash equivalents, and restricted cash

     18,470       109,753  

Cash, cash equivalents, and restricted cash, beginning of year

     402,712       292,959  
  

 

 

   

 

 

 

Cash, cash equivalents, and restricted cash, end of year

   $ 421,182     $ 402,712  
  

 

 

   

 

 

 

 

* Derived from audited financial statements.


MICROSTRATEGY INCORPORATED

REVENUE AND COST OF REVENUE DETAIL

(in thousands)

 

     Three Months Ended
December 31,
     Twelve Months Ended
December 31,
 
     2017      2016      2017      2016*  
     (unaudited)      (unaudited)      (unaudited)         

Revenues

           

Product licenses and subscription services:

           

Product licenses

   $ 32,286      $ 38,013      $ 93,969      $ 113,503  

Subscription services

     8,525        7,799        32,368        30,574  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total product licenses and subscription services

     40,811        45,812        126,337        144,077  
  

 

 

    

 

 

    

 

 

    

 

 

 

Product support

     75,032        72,671        289,174        285,079  

Other services:

           

Consulting

     20,336        19,103        79,818        73,400  

Education

     1,966        2,522        9,214        9,605  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total other services

     22,302        21,625        89,032        83,005  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenues

     138,145        140,108        504,543        512,161  
  

 

 

    

 

 

    

 

 

    

 

 

 

Cost of revenues

           

Product licenses and subscription services:

           

Product licenses

     1,994        1,745        7,176        8,573  

Subscription services

     3,404        3,098        13,435        12,765  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total product licenses and subscription services

     5,398        4,843        20,611        21,338  
  

 

 

    

 

 

    

 

 

    

 

 

 

Product support

     4,387        4,082        17,481        15,001  

Other services:

           

Consulting

     13,439        12,557        52,018        50,866  

Education

     1,529        1,806        6,539        5,942  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total other services

     14,968        14,363        58,557        56,808  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total cost of revenues

     24,753        23,288        96,649        93,147  
  

 

 

    

 

 

    

 

 

    

 

 

 

Gross profit

   $ 113,392      $ 116,820      $ 407,894      $ 419,014  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

* Derived from audited financial statements.


MICROSTRATEGY INCORPORATED

DEFERRED REVENUE DETAIL

(in thousands)

 

     December 31
2017
    December 31,
2016*
 
     (unaudited)        

Current:

    

Deferred product licenses revenue

   $ 11,113     $ 13,023  

Deferred subscription services revenue

     17,324       18,303  

Deferred product support revenue

     168,043       162,781  

Deferred other services revenue

     9,465       10,015  
  

 

 

   

 

 

 

Gross current deferred revenue and advance payments

     205,945       204,122  

Less: unpaid deferred revenue

     (93,296     (98,587
  

 

 

   

 

 

 

Net current deferred revenue and advance payments

   $ 112,649     $ 105,535  
  

 

 

   

 

 

 

Non-current:

    

Deferred product licenses revenue

   $ 7,169     $ 9,118  

Deferred subscription services revenue

     126       1,307  

Deferred product support revenue

     4,826       5,751  

Deferred other services revenue

     628       690  
  

 

 

   

 

 

 

Gross non-current deferred revenue and advance payments

     12,749       16,866  

Less: unpaid deferred revenue

     (2,568     (2,951
  

 

 

   

 

 

 

Net non-current deferred revenue and advance payments

   $ 10,181     $ 13,915  
  

 

 

   

 

 

 

Total current and non-current:

    

Deferred product licenses revenue

   $ 18,282     $ 22,141  

Deferred subscription services revenue

     17,450       19,610  

Deferred product support revenue

     172,869       168,532  

Deferred other services revenue

     10,093       10,705  
  

 

 

   

 

 

 

Gross current and non-current deferred revenue and advance payments

     218,694       220,988  

Less: unpaid deferred revenue

     (95,864     (101,538
  

 

 

   

 

 

 

Net current and non-current deferred revenue and advance payments

   $ 122,830     $ 119,450  
  

 

 

   

 

 

 

 

* Derived from audited financial statements.


MICROSTRATEGY INCORPORATED

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

(in thousands, except per share data)

 

     Three Months Ended
December 31,
     Twelve Months Ended
December 31,
 
     2017     2016      2017      2016  
     (unaudited)     (unaudited)      (unaudited)      (unaudited)  

Reconciliation of non-GAAP income from operations:

          

Income from operations

   $ 18,756     $ 36,742      $ 74,355      $ 107,625  

Share-based compensation expense

     3,710       3,393        14,267        11,817  

Restructuring costs

     0       0        0        45  
  

 

 

   

 

 

    

 

 

    

 

 

 

Non-GAAP income from operations

   $ 22,466     $ 40,135      $ 88,622      $ 119,487  
  

 

 

   

 

 

    

 

 

    

 

 

 
          

Reconciliation of non-GAAP net income:

          

Net (loss) income

   $ (26,224   $ 31,124      $ 17,643      $ 90,908  

Tax charge due to the U.S. corporate tax reform legislation

     44,018       0        44,018        0  
  

 

 

   

 

 

    

 

 

    

 

 

 

Non-GAAP net income

   $ 17,794     $ 31,124      $ 61,661      $ 90,908  
  

 

 

   

 

 

    

 

 

    

 

 

 
          

Reconciliation of non-GAAP diluted earnings per share:

          

Non-GAAP net income

   $ 17,794     $ 31,124      $ 61,661      $ 90,908  

Weighted average shares outstanding used in computing diluted (loss) earnings per share

     11,447       11,558        11,547        11,516  

Effect of previously anti-dilutive securities

     26       0        0        0  
  

 

 

   

 

 

    

 

 

    

 

 

 

Non-GAAP weighted average shares outstanding used in computing diluted earnings per share

     11,473       11,558        11,547        11,516  
  

 

 

   

 

 

    

 

 

    

 

 

 

Non-GAAP diluted earnings per share

   $ 1.55     $ 2.69      $ 5.34      $ 7.89  
  

 

 

   

 

 

    

 

 

    

 

 

 


MICROSTRATEGY INCORPORATED

WORLDWIDE EMPLOYEE HEADCOUNT

 

     December 31,
2016
     March 31,
2017
     June 30,
2017
     September 30,
2017
     December 31,
2017
 

Subscription services

     48        41        49        50        53  

Product support

     171        185        176        163        172  

Consulting

     453        447        448        447        441  

Education

     39        41        42        41        41  

Sales and marketing

     587        620        642        635        652  

Research and development

     512        522        526        539        559  

General and administrative

     323        306        301        303        298  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total headcount

     2,133        2,162        2,184        2,178        2,216