8-K
MICROSTRATEGY Inc false 0001050446 0001050446 2020-01-28 2020-01-28

 

 

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 28, 2020

 

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))

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

 

Trading

Symbol

 

Name of Each Exchange

on which Registered

Class A common stock, par value $0.001 per share

 

MSTR

 

The Nasdaq Global Select Market

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 28, 2020, MicroStrategy Incorporated (the “Company”) issued a press release announcing the Company’s financial results for the quarter ended December 31, 2019. 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 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.

   

Description

         
 

99.1

   

Press release, dated January 28, 2020, regarding the Company’s financial results for the quarter ended December 31, 2019.

         
 

104

   

Cover Page Interactive Data File (embedded within the Inline XBRL document).


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 28, 2020

 

 

MicroStrategy Incorporated

 

 

(Registrant)

             

 

 

By:

 

/s/ Lisa Mayr

 

 

Name:

 

Lisa Mayr

 

 

Title:

 

Senior Executive Vice President & Chief Financial Officer

EX-99.1

Exhibit 99.1

Contact:

MicroStrategy Incorporated

Investor Relations

ir@microstrategy.com

(703) 848-8600

MicroStrategy Announces

Fourth Quarter 2019 Financial Results

TYSONS CORNER, Va., January 28, 2020 — MicroStrategy® (Nasdaq: MSTR), a global leader in enterprise analytics software and services, today announced financial results for the three-month period ended December 31, 2019 (the fourth quarter of its 2019 fiscal year).

“Our fourth quarter performance highlights increased customer adoption of our cloud offerings and our breakthrough HyperIntelligence® product. We’re seeing customers deploy an impressive variety and scale of HyperIntelligence use cases, reflecting the product’s ability to bring intelligence to more users, making them significantly faster and smarter,” said Michael J. Saylor, CEO, MicroStrategy Incorporated.

Mr. Saylor continued, “Optimized for the cloud, our open, comprehensive enterprise analytics platform, combined with our expert services, has been resonating in the market. As we look at the year ahead, we will remain focused on driving new and existing customer adoption of our latest platform – MicroStrategy 2020 – leading with our HyperIntelligence and cloud offerings.”

Fourth Quarter 2019 Financial Highlights

 

   

Revenues: Total revenues for the fourth quarter of 2019 were $133.5 million, a 1.2% increase, or a 2.7% increase on a non-GAAP constant currency basis, compared to the fourth quarter of 2018. Product licenses and subscription services revenues for the fourth quarter of 2019 were $37.3 million, a 2.5% decrease, or a 0.4% decrease on a non-GAAP constant currency basis, compared to the fourth quarter of 2018. Product support revenues for the fourth quarter of 2019 were $74.7 million, a 1.4% increase, or a 2.7% increase on a non-GAAP constant currency basis, compared to the fourth quarter of 2018. Other services revenues for the fourth quarter of 2019 were $21.5 million, a 7.5% increase, or an 8.6% increase on a non-GAAP constant currency basis, compared to the fourth quarter of 2018.

 

   

Gross Profit: Gross profit for the fourth quarter of 2019 was $108.9 million, representing an 81.6% gross margin, compared to a gross margin of 80.4% in the fourth quarter of 2018.

 

   

Operating Expenses: Operating expenses for the fourth quarter of 2019 were $99.3 million, an 8.2% decrease compared to the fourth quarter of 2018.

 

   

Income (Loss) from Operations: Income from operations for the fourth quarter of 2019 was $9.6 million versus loss from operations of $2.2 million for the fourth quarter of 2018. Non-GAAP income from operations, which excludes share-based compensation expense, was $12.0 million for the fourth quarter of 2019 versus $1.3 million for the fourth quarter of 2018.

 

   

Net Income: Net income for the fourth quarter of 2019 was $12.2 million, or $1.18 per share on a diluted basis, as compared to net income of $3.3 million, or $0.30 per share on a diluted basis, for the fourth quarter of 2018.

 

   

Cash and Short-term Investments: As of December 31, 2019, MicroStrategy had cash and cash equivalents and short-term investments of $565.6 million, as compared to $576.1 million as of December 31, 2018, a decrease of $10.5 million. During the fourth quarter of 2019, MicroStrategy repurchased 159,695 shares of


 

its class A common stock for an aggregate purchase price of approximately $24.5 million. As of December 31, 2019, MicroStrategy had 8.1 million shares of class A common stock and 2.0 million shares of class B common stock outstanding.

The tables at the end of this press release include a reconciliation of GAAP to non-GAAP financial measures for the three and twelve months ended December 31, 2019 and 2018. An explanation of non-GAAP financial measures is also included under the heading “Non-GAAP Financial Measures” below.

MicroStrategy adopted Accounting Standards Update No. 2016-02, Leases (Topic 842), and its subsequent amendments (“ASU 2016-02”), effective January 1, 2019. Comparative prior period consolidated financial statements have not been restated and are not directly comparable to the current period consolidated financial statements.

MicroStrategy uses its Intelligent Enterprise platform across the enterprise and has created an interactive dossier with quarterly financial performance data. Anyone can access the MSTR Financials dossier via a web browser, or by downloading the MicroStrategy Library app on an iOS or Android device. To download the native apps, visit MicroStrategy Library for iPad, MicroStrategy Library for iPhone, or MicroStrategy Library for Android tablet and smartphone.

Recent Business Highlights

The following are some key business highlights from the fourth quarter of 2019:

 

   

A number of Fortune Global 500 companies, as well as numerous leading brands such as The Co-operators, Saint-Gobain, and Swiss Medical, purchased HyperIntelligence and are moving to empower their front-line employees with actionable insights.

 

   

MicroStrategy announced that it will host its 23rd annual user conference, MicroStrategy World 2020, from February 4 to February 6, 2020 in Orlando, Fla. Attendees will get a first look at the newest features and capabilities of MicroStrategy 2020, including new ways to experience HyperIntelligence, try new Dossier® authoring tools for content creators, learn about the federated analytics connectors to Jupyter and RStudio for data scientists, and more. Attendees will learn how MicroStrategy 2020 together with innovative uses of artificial intelligence (“AI”), mobility, and cloud technologies can be deployed to significantly boost productivity and drive greater analytics adoption across the enterprise.

 

   

MicroStrategy released the results of its “2020 Global State of Enterprise Analytics” report revealing that, despite 94% of organizations believing data and analytics is important to their digital transformation and business growth, most are not enabling a data-driven culture. Among the many findings, the report revealed that for 60% of employees, it takes hours or days to get the information they need, while only 3% can find information in seconds.

 

   

MicroStrategy published its “10 Enterprise Analytics Trends to Watch in 2020” report. In collaboration with leading analysts and influencers from Forrester, IDC, Constellation Research, Ventana Research and others, the annual MicroStrategy compilation highlights trends and insights that range from AI and mobile intelligence, to the explosion of data and data sources, to some very human factors including a predicted shortage of data and analytics talent.

 

   

MicroStrategy launched a new technology partnership with DataRobot, a leader in enterprise AI, designed to make it easier for businesses to integrate AI into their most popular applications and core processes by leveraging HyperIntelligence cards to deliver AI-driven insights and recommendations. HyperIntelligence seamlessly injects trusted and predictive analytics directly into popular business applications on both web and mobile – including Google’s G Suite, Microsoft Office 365, and SaaS applications such as Salesforce, Workday, and Confluence – making it possible to instantly reveal insights to users without interrupting their existing workflows.


   

MicroStrategy introduced innovations that aim to significantly boost productivity and drive analytics adoption to 100%. HyperIntelligence for Mobile is designed to provide the speed and agility that users need to make important decisions and take action quickly outside of the office.

 

   

MicroStrategy announced that 94% of survey respondents in The BI Survey 19, the industry’s largest independent global survey of BI users, recommend MicroStrategy. Conducted by the Business Application Research Center, The BI Survey 19 ranked MicroStrategy first in self-service, visual analysis, and location intelligence among the large global enterprise BI platforms peer group. In addition, MicroStrategy was rated a leader in its peer groups for business value, business benefits, mobile BI, innovation, functionality, dashboards, query performance, and distribution of reports.

Conference Call

MicroStrategy will be discussing its fourth quarter 2019 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 6574498. A live and archived webcast will be available under the “Events” section on MicroStrategy’s investor relations website at https://ir.microstrategy.com/events-presentations. A replay of the conference call will be available beginning approximately two hours after the call concludes until February 4, 2020 at (855) 859-2056 (domestically) or (404) 537-3406 (internationally) using the passcode 6574498.

Non-GAAP Financial Measures

MicroStrategy is providing supplemental financial measures for (i) non-GAAP income (loss) from operations that excludes the impact of share-based compensation arrangements, (ii) non-GAAP net income and non-GAAP diluted earnings per share that exclude the impact from the U.S. Tax Cuts and Jobs Act (the “U.S. tax reform”) in the third quarter of 2018 and the sale of the Voice.com domain name (the “Domain Name Sale”) in the second quarter of 2019, and (iii) non-GAAP constant currency revenues that exclude foreign currency exchange rate fluctuations. 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. The first supplemental financial measure excludes a significant non-cash expense that MicroStrategy believes is not reflective of its general business performance, and for which the accounting requires management judgment and the resulting share-based compensation expense could vary significantly in comparison to other companies. The second set of supplemental financial measures excludes the impact from the U.S. tax reform, which was a one-time tax charge, and the Domain Name Sale, which is outside of MicroStrategy’s normal business operations. The third set of supplemental financial measures excludes changes resulting from fluctuations in foreign currency exchange rates so that results may be compared to the same period in the prior year on a non-GAAP “constant currency” basis. 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 global leader in enterprise analytics software and services. Our vision is to enable Intelligence Everywhere. MicroStrategy provides modern analytics on an open, comprehensive enterprise platform used by many of the world’s most admired brands in the Fortune Global 500. Optimized for cloud and on-premises deployments, the platform features HyperIntelligence, a breakthrough technology that overlays actionable enterprise data on popular business applications to help users make smarter, faster decisions. For more information about MicroStrategy, visit www.microstrategy.com.

MicroStrategy, HyperIntelligence, MicroStrategy 2020, Intelligent Enterprise, MicroStrategy Library, MicroStrategy World, Dossier, and Intelligence Everywhere 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 2020; 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; the timing of significant orders; delays in or the inability of the Company to develop or ship new products; a substantial customer shift from a product license model to a cloud-based subscription model; competitive factors; general economic conditions; currency fluctuations; and other risks detailed in the Company’s registration statements and periodic reports filed with the Securities and Exchange Commission. The Company undertakes no obligation to update these forward-looking statements for revisions or changes after the date of this release.

MSTR - F


MICROSTRATEGY INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

 

     Three Months Ended     Twelve Months Ended  
     December 31,     December 31,  
     2019     2018     2019     2018*  
     (unaudited)     (unaudited)     (unaudited)        

Revenues

        

Product licenses

   $ 30,087     $ 31,200     $ 87,471     $ 88,057  

Subscription services

     7,252       7,084       29,394       29,570  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total product licenses and subscription services

     37,339       38,284       116,865       117,627  

Product support

     74,722       73,662       292,035       296,216  

Other services

     21,470       19,971       77,427       83,795  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     133,531       131,917       486,327       497,638  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenues

        

Product licenses

     534       609       2,131       4,864  

Subscription services

     4,185       3,667       15,161       13,620  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total product licenses and subscription services

     4,719       4,276       17,292       18,484  

Product support

     6,607       5,557       28,317       20,242  

Other services

     13,310       16,052       54,365       60,773  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenues

     24,636       25,885       99,974       99,499  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     108,895       106,032       386,353       398,139  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

        

Sales and marketing

     50,267       57,783       191,235       205,525  

Research and development

     25,987       28,028       109,423       102,499  

General and administrative

     23,013       22,378       86,697       86,134  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     99,267       108,189       387,355       394,158  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations

     9,628       (2,157     (1,002     3,981  

Interest income, net

     2,389       3,157       10,909       11,855  

Other (expense) income, net

     (2,361     981       28,356       4,646  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     9,656       1,981       38,263       20,482  

(Benefit from) provision for income taxes

     (2,511     (1,320     3,908       (2,019
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 12,167     $ 3,301     $ 34,355     $ 22,501  
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic earnings per share (1):

   $ 1.19     $ 0.30     $ 3.35     $ 1.98  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding used in computing basic earnings per share

     10,208       11,129       10,256       11,375  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings per share (1):

   $ 1.18     $ 0.30     $ 3.33     $ 1.97  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding used in computing diluted earnings per share

     10,301       11,151       10,328       11,412  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(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,     December 31,  
     2019     2018*  
     (unaudited)        

Assets

    

Current assets

    

Cash and cash equivalents

   $ 456,727     $ 109,924  

Restricted cash

     1,089       862  

Short-term investments

     108,919       466,186  

Accounts receivable, net

     163,516       171,359  

Prepaid expenses and other current assets

     23,195       30,068  
  

 

 

   

 

 

 

Total current assets

     753,446       778,399  

Property and equipment, net

     50,154       51,919  

Right-of-use assets

     85,538       0  

Deposits and other assets

     8,024       8,134  

Deferred tax assets, net

     19,409       17,316  
  

 

 

   

 

 

 

Total Assets

   $ 916,571     $ 855,768  
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Current liabilities

    

Accounts payable, accrued expenses, and operating lease liabilities

   $ 33,919     $ 33,684  

Accrued compensation and employee benefits

     48,792       48,045  

Deferred revenue and advance payments

     187,107       176,540  
  

 

 

   

 

 

 

Total current liabilities

     269,818       258,269  

Deferred revenue and advance payments

     4,344       6,469  

Operating lease liabilities

     103,424       0  

Other long-term liabilities

     30,400       61,262  

Deferred tax liabilities

     26       37  
  

 

 

   

 

 

 

Total Liabilities

     408,012       326,037  
  

 

 

   

 

 

 

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; 15,888 shares issued and 8,081 shares outstanding, and 15,837 shares issued and 8,552 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

     593,583       576,957  

Treasury stock, at cost; 7,807 shares and 7,285 shares, respectively

     (658,880     (586,161

Accumulated other comprehensive loss

     (9,651     (10,217

Retained earnings

     583,489       549,134  
  

 

 

   

 

 

 

Total Stockholders’ Equity

     508,559       529,731  
  

 

 

   

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 916,571     $ 855,768  
  

 

 

   

 

 

 

 

*

Derived from audited financial statements.


MICROSTRATEGY INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

     Twelve Months Ended  
     December 31,  
     2019     2018*  
     (unaudited)        

Operating activities:

    

Net income

   $ 34,355     $ 22,501  

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

    

Depreciation and amortization

     16,699       3,701  

Sales allowances and bad debt

     124       1,912  

Net realized loss on short-term investments

     41       153  

Deferred taxes

     (2,614     (8,274

Release of liabilities for unrecognized tax benefits

     (2,837     0  

Share-based compensation expense

     10,209       14,636  

Changes in operating assets and liabilities:

    

Accounts receivable

     (3,672     (8,357

Prepaid expenses and other current assets

     6,415       (6,561

Deposits and other assets

     761       (1,201

Accounts payable and accrued expenses

     (7,321     3,378  

Accrued compensation and employee benefits

     (2,658     5,116  

Deferred revenue and advance payments

     20,836       (22,126

Operating lease liabilities

     (8,620     0  

Other long-term liabilities

     (851     5,749  
  

 

 

   

 

 

 

Net cash provided by operating activities

     60,867       10,627  
  

 

 

   

 

 

 

Investing activities:

    

Proceeds from redemption of short-term investments

     684,356       491,800  

Purchases of property and equipment

     (10,182     (6,846

Purchases of short-term investments

     (320,487     (694,018
  

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     353,687       (209,064
  

 

 

   

 

 

 

Financing activities:

    

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

     6,569       2,471  

Purchases of treasury stock

     (72,719     (110,977

Payments on capital lease obligations and other financing arrangements prior to the adoption of ASU 2016-02

     0       (9
  

 

 

   

 

 

 

Net cash used in financing activities

     (66,150     (108,515
  

 

 

   

 

 

 

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

     (1,374     (3,444
  

 

 

   

 

 

 

Net increase (decrease) in cash, cash equivalents, and restricted cash

     347,030       (310,396

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

     110,786       421,182  
  

 

 

   

 

 

 

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

   $ 457,816     $ 110,786  
  

 

 

   

 

 

 

 

*

Derived from audited financial statements.


MICROSTRATEGY INCORPORATED

REVENUE AND COST OF REVENUE DETAIL

(in thousands)

 

     Three Months Ended      Twelve Months Ended  
     December 31,      December 31,  
     2019      2018      2019      2018*  
     (unaudited)      (unaudited)      (unaudited)         

Revenues

           

Product licenses and subscription services:

           

Product licenses

   $ 30,087      $ 31,200      $ 87,471      $ 88,057  

Subscription services

     7,252        7,084        29,394        29,570  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total product licenses and subscription services

     37,339        38,284        116,865        117,627  
  

 

 

    

 

 

    

 

 

    

 

 

 

Product support

     74,722        73,662        292,035        296,216  

Other services:

           

Consulting

     19,524        17,611        69,659        74,609  

Education

     1,946        2,360        7,768        9,186  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total other services

     21,470        19,971        77,427        83,795  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenues

     133,531        131,917        486,327        497,638  
  

 

 

    

 

 

    

 

 

    

 

 

 

Cost of revenues

           

Product licenses and subscription services:

           

Product licenses

     534        609        2,131        4,864  

Subscription services

     4,185        3,667        15,161        13,620  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total product licenses and subscription services

     4,719        4,276        17,292        18,484  
  

 

 

    

 

 

    

 

 

    

 

 

 

Product support

     6,607        5,557        28,317        20,242  

Other services:

           

Consulting

     11,668        13,746        47,664        53,605  

Education

     1,642        2,306        6,701        7,168  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total other services

     13,310        16,052        54,365        60,773  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total cost of revenues

     24,636        25,885        99,974        99,499  
  

 

 

    

 

 

    

 

 

    

 

 

 

Gross profit

   $ 108,895      $ 106,032      $ 386,353      $ 398,139  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

*

Derived from audited financial statements.


MICROSTRATEGY INCORPORATED

DEFERRED REVENUE DETAIL

(in thousands)

 

     December 31,      December 31,  
     2019      2018*  
     (unaudited)         

Current:

     

Deferred product licenses revenue

   $ 481      $ 1,768  

Deferred subscription services revenue

     16,561        13,508  

Deferred product support revenue

     161,670        152,501  

Deferred other services revenue

     8,395        8,763  
  

 

 

    

 

 

 

Total current deferred revenue and advance payments

   $ 187,107      $ 176,540  
  

 

 

    

 

 

 

Non-current:

     

Deferred product licenses revenue

   $ 293      $ 542  

Deferred subscription services revenue

     97        2,384  

Deferred product support revenue

     3,417        3,091  

Deferred other services revenue

     537        452  
  

 

 

    

 

 

 

Total non-current deferred revenue and advance payments

   $ 4,344      $ 6,469  
  

 

 

    

 

 

 

Total current and non-current:

     

Deferred product licenses revenue

   $ 774      $ 2,310  

Deferred subscription services revenue

     16,658        15,892  

Deferred product support revenue

     165,087        155,592  

Deferred other services revenue

     8,932        9,215  
  

 

 

    

 

 

 

Total current and non-current deferred revenue and advance payments

   $ 191,451      $ 183,009  
  

 

 

    

 

 

 

 

*

Derived from audited financial statements.


MICROSTRATEGY INCORPORATED

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

EXCLUSION OF SHARE-BASED COMPENSATION EXPENSE

(in thousands)

 

     Three Months Ended     Twelve Months Ended  
     December 31,     December 31,  
     2019      2018     2019     2018  
     (unaudited)      (unaudited)     (unaudited)     (unaudited)  

Reconciliation of non-GAAP income (loss) from operations:

         

Income (loss) from operations

   $ 9,628      $ (2,157   $ (1,002   $ 3,981  

Share-based compensation expense

     2,322        3,504       10,209       14,636  
  

 

 

    

 

 

   

 

 

   

 

 

 

Non-GAAP income from operations

   $ 11,950      $ 1,347     $ 9,207     $ 18,617  
  

 

 

    

 

 

   

 

 

   

 

 

 


MICROSTRATEGY INCORPORATED

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

EXCLUSION OF U.S. TAX REFORM AND DOMAIN NAME SALE

(in thousands, except per share data)

 

     Three Months Ended      Twelve Months Ended  
     December 31,      December 31,  
     2019      2018      2019     2018  
     (unaudited)      (unaudited)      (unaudited)     (unaudited)  

Reconciliation of non-GAAP net income:

          

Net income

   $ 12,167      $ 3,301      $ 34,355     $ 22,501  

Measurement period adjustment related to U.S. tax reform

     0        0        0       (3,106

Gain from Domain Name Sale, net of tax

     0        0        (21,778     0  
  

 

 

    

 

 

    

 

 

   

 

 

 

Non-GAAP net income

   $ 12,167      $ 3,301      $ 12,577     $ 19,395  
  

 

 

    

 

 

    

 

 

   

 

 

 

Reconciliation of non-GAAP diluted earnings per share:

          

Diluted earnings per share

   $ 1.18      $ 0.30      $ 3.33     $ 1.97  

Measurement period adjustment related to U.S. tax reform (per diluted share)

     0.00        0.00        0.00       (0.27

Gain from Domain Name Sale, net of tax (per diluted share)

     0.00        0.00        (2.11     0.00  
  

 

 

    

 

 

    

 

 

   

 

 

 

Non-GAAP diluted earnings per share

   $ 1.18      $ 0.30      $ 1.22     $ 1.70  
  

 

 

    

 

 

    

 

 

   

 

 

 


MICROSTRATEGY INCORPORATED

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

CONSTANT CURRENCY

(in thousands)

 

     Three Months Ended  
     December 31,  
     (unaudited)  
     GAAP      Foreign
Currency
Exchange
Rate Impact (1)
    Non-GAAP
Constant
Currency (2)
     GAAP      GAAP %
Change
    Non-GAAP
Constant
Currency
% Change (3)
 
     2019      2019     2019      2018      2019     2019  

Revenues

               

Product licenses

   $ 30,087      $ (781   $ 30,868      $ 31,200        -3.6     -1.1

Subscription services

     7,252        (15     7,267        7,084        2.4     2.6

Total product licenses and subscription services

     37,339        (796     38,135        38,284        -2.5     -0.4

Product support

     74,722        (924     75,646        73,662        1.4     2.7

Other services

     21,470        (221     21,691        19,971        7.5     8.6

Total revenues

     133,531        (1,941     135,472        131,917        1.2     2.7

 

     Twelve Months Ended  
     December 31,  
     (unaudited)  
     GAAP      Foreign
Currency
Exchange
Rate Impact (1)
    Non-GAAP
Constant
Currency (2)
     GAAP      GAAP %
Change
    Non-GAAP
Constant
Currency
% Change (3)
 
     2019      2019     2019      2018      2019     2019  

Revenues

               

Product licenses

   $ 87,471      $ (3,642   $ 91,113      $ 88,057        -0.7     3.5

Subscription services

     29,394        (333     29,727        29,570        -0.6     0.5

Total product licenses and subscription services

     116,865        (3,975     120,840        117,627        -0.6     2.7

Product support

     292,035        (7,110     299,145        296,216        -1.4     1.0

Other services

     77,427        (2,091     79,518        83,795        -7.6     -5.1

Total revenues

     486,327        (13,176     499,503        497,638        -2.3     0.4

 

(1)

The “Foreign Currency Exchange Rate Impact” reflects the estimated impact from fluctuations in foreign currency exchange rates on international revenues. It shows the increase (decrease) in international revenues from the same period in the prior year, based on comparisons to the prior year quarterly average foreign currency exchange rates. The term “international” refers to operations outside of the United States and Canada.

(2)

The “Non-GAAP Constant Currency” reflects the current period GAAP amount, less the Foreign Currency Exchange Rate Impact.

(3)

The “Non-GAAP Constant Currency % Change” reflects the percentage change between the current period Non-GAAP Constant Currency amount and the GAAP amount for the same period in the prior year.


MICROSTRATEGY INCORPORATED

WORLDWIDE EMPLOYEE HEADCOUNT

 

     December 31,      September 30,      June 30,      March 31,      December 31,  
     2019      2019      2019      2019      2018  

Subscription services

     69        66        62        54        56  

Product support

     219        231        234        224        202  

Consulting

     392        390        404        429        452  

Education

     38        38        40        50        47  

Sales and marketing

     597        616        637        675        707  

Research and development

     743        775        764        733        716  

General and administrative

     338        337        336        329        348  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total headcount

     2,396        2,453        2,477        2,494        2,528