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MicroStrategy Announces Fourth Quarter 2020 Financial Results

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MicroStrategy® (NASDAQ:MSTR), the largest independent publicly-traded business intelligence company, today announced financial results for the three-month period ended December 31, 2020 (the fourth quarter of its 2020 fiscal year).

"2020 was a transformational year for MicroStrategy. In our enterprise intelligence business, we continue to embrace the virtual wave. We are successfully shifting our prospects and customers to our enterprise cloud platform, and also launched our new SaaS offering, Hyper.now. We also dramatically improved the efficiency and profitability of our business," said Michael J. Saylor, CEO, MicroStrategy Incorporated.

"Regarding our bitcoin strategy, our pioneering decision to make bitcoin our primary treasury reserve asset has made MicroStrategy a thought leader in the cryptocurrency market and generated great interest in MicroStrategy as a corporation. Going forward, we continue to plan to hold our bitcoin and invest additional excess cash flows in bitcoin. Additionally, we will explore various approaches to acquire additional bitcoin as part of our overall corporate strategy."

Fourth Quarter 2020 Financial Highlights

  • Revenues: Total revenues for the fourth quarter of 2020 were $131.3 million, a 1.7% decrease, or a 3.4% decrease on a non-GAAP constant currency basis, compared to the fourth quarter of 2019. Product licenses and subscription services revenues for the fourth quarter of 2020 were $38.6 million, a 3.3% increase, or a 2.1% increase on a non-GAAP constant currency basis, compared to the fourth quarter of 2019. Product support revenues for the fourth quarter of 2020 were $71.9 million, a 3.8% decrease, or a 5.6% decrease on a non-GAAP constant currency basis, compared to the fourth quarter of 2019. Other services revenues for the fourth quarter of 2020 were $20.9 million, a 2.8% decrease, or an 5.3% decrease on a non-GAAP constant currency basis, compared to the fourth quarter of 2019.
  • Gross Profit: Gross profit for the fourth quarter of 2020 was $110.5 million, representing an 84.2% gross margin, compared to a gross margin of 81.6% in the fourth quarter of 2019.
  • Operating Expenses: Operating expenses for the fourth quarter of 2020 were $110.1 million, an 11.0% increase compared to the fourth quarter of 2019. Beginning in the third quarter of 2020, operating expenses included impairment losses on our digital assets, which were $26.5 million during the fourth quarter of 2020.
  • Income from Operations: Income from operations for the fourth quarter of 2020 was $0.4 million versus income from operations of $9.6 million for the fourth quarter of 2019. Non-GAAP income from operations, which excludes share-based compensation expense and impairment losses and gains on sale from intangible assets, which include digital assets, was $30.1 million for the fourth quarter of 2020 versus $12.0 million for the fourth quarter of 2019.
  • Net Income: Net income for the fourth quarter of 2020 was $2.7 million, or $0.27 per share on a diluted basis, as compared to net income of $12.2 million, or $1.18 per share on a diluted basis, for the fourth quarter of 2019. Non-GAAP net income, which excludes share-based compensation expense, impairment losses and gains on sale from intangible assets, which include digital assets, and interest expense arising from the amortization of debt discount and issuance costs was $20.4 million, or $2.07 per share on a non-GAAP diluted basis, for the fourth quarter of 2020, as compared to non-GAAP net income of $14.3 million, or $1.39 per share on a non-GAAP diluted basis, for the fourth quarter of 2019.
  • Cash and Short-term Investments: As of December 31, 2020, MicroStrategy had cash and cash equivalents and short-term investments of $59.7 million, as compared to $565.6 million as of December 31, 2019, a decrease of $506.0 million.
  • Digital Assets: As of December 31, 2020, the carrying value of MicroStrategy's digital assets (comprised solely of bitcoin) was $1.054 billion, which reflects cumulative impairment charges of $70.7 million since acquisition. MicroStrategy accounts for its digital assets as indefinite-lived intangible assets, which are initially recorded at cost. Subsequently, they are measured at cost, net of any impairment losses incurred since acquisition. MicroStrategy determines the fair value of its bitcoin based on quoted (unadjusted) prices on the active exchange that MicroStrategy has determined is its principal market for bitcoin. MicroStrategy considers the lowest price of one bitcoin quoted on the active exchange at any time since acquiring the specific bitcoin. If the carrying value of a bitcoin exceeds that lowest price, an impairment loss has occurred with respect to that bitcoin in the amount equal to the difference between its carrying value and such lowest price. Impairment losses are recognized as "Digital asset impairment losses" in MicroStrategy's Consolidated Statements of Operations. As of December 31, 2020, the average cost and average carrying value of MicroStrategy's bitcoin were approximately $15,964 and $14,961, respectively. As of January 27, 2021, at 4:00 p.m. EST, MicroStrategy had 70,784 bitcoins and the market price of one bitcoin in the principal market was approximately $31,784.
  • Convertible Senior Notes: In December 2020, MicroStrategy issued $650 million aggregate principal amount of 0.75% Convertible Senior Notes due 2025 (the "Notes"). The Notes are convertible into shares of MicroStrategy's class A common stock at an initial conversion price of $397.99 per share. As of December 31, 2020, the carrying value of the Notes classified as a long-term liability in the "Convertible senior notes, net" line item was $486.4 million, net of unamortized debt discount and issuance costs. As of December 31, 2020, the carrying value of the Notes classified as equity in the "Additional paid-in capital" line item was $107.8 million, which reflects the debt discount, less issuance costs allocated to the equity component and related net deferred tax liabilities. The initial carrying amount of the liability component was determined by measuring the fair value of a similar debt instrument without any associated conversion features. The carrying amount of the equity component (representing the conversion option) was determined by deducting the fair value of the liability component from the principal value of the notes. The excess of the principal amount of the liability component over its carrying amount (i.e., the debt discount), along with any issuance costs allocated to the liability component, are amortized to interest expense over the term of the notes.

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, 2020 and 2019. An explanation of non-GAAP financial measures is also included under the heading "Non-GAAP Financial Measures" below. Additional non-GAAP financial measures are included in our "Q4 2020 Earnings Presentation", which will be available under the "Events and Presentation" section on MicroStrategy's investor relations website at https://www.microstrategy.com/en/investor-relations. 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 iOS or MicroStrategy Library for Android.

Non-GAAP Financial Measures

MicroStrategy is providing supplemental financial measures for (i) non-GAAP income from operations that excludes the impact of share-based compensation expense and impairment losses and gains on sale from intangible assets, which include its digital assets, (ii) non-GAAP net income and non-GAAP diluted earnings per share that exclude the impact of share-based compensation expense, impairment losses and gains on sale from intangible assets, which include its digital assets and the sale of its Voice.com domain name in the second quarter of 2019 (the "Domain Name Sale"), interest expense arising from the amortization of the debt discount and issuance costs on the Company's convertible senior notes, and related income tax effects, 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 (i) 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 and (ii) significant impairment losses and gains on sale from intangible assets, which include MicroStrategy's bitcoin. The second set of supplemental financial measures excludes the impact of (i) share-based compensation expense, (ii) impairment losses and gains on sale from intangible assets, which include MicroStrategy's bitcoin and the Domain Name Sale, which was outside of MicroStrategy's normal business operations, (iii) non-cash interest expense arising from the amortization of the debt discount and issuance costs related to MicroStrategy's convertible senior notes, and (iv) related income tax effects. Although the portion of non-cash interest expense related to the amortization of the debt discount will be eliminated upon our planned adoption of ASU 2020-06 on January 1, 2021, excluding the current year non-cash interest expense related to both the amortization of the debt discount and the issuance costs will allow for greater comparability of our results after we adopt the new accounting rules. 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.

Bitcoin Acquisitions

As part of MicroStrategy's previously announced treasury management and capital allocation strategies, MicroStrategy purchased a total of approximately 32,220 bitcoins at an aggregate purchase price of $700.0 million in the fourth quarter of 2020 for an average purchase price of approximately $21,726 per bitcoin. Further, in the first quarter of 2021 to date, MicroStrategy has purchased approximately 314 bitcoins at an aggregate purchase price of $10.0 million for an average purchase price for such additional bitcoins of approximately $31,808 per bitcoin. In future periods, MicroStrategy may purchase additional bitcoins and increase its overall holdings of bitcoin or sell its bitcoins and decrease its overall holdings of bitcoin.

Convertible Senior Notes

In December 2020, the Company issued $650.0 million aggregate principal amount of Notes. The Notes are senior unsecured obligations of the Company and bear interest at a fixed rate of 0.75% per annum, payable semiannually in arrears on June 15 and December 15 of each year, beginning on June 15, 2021. Holders of the Notes may receive additional interest under specified circumstances as outlined in the indenture relating to the issuance of the Notes. The Notes are convertible into shares of MicroStrategy's class A common stock at an initial conversion price of $397.99 per share. The Notes will mature on December 15, 2025, unless earlier converted, redeemed or repurchased in accordance with their terms. The total net proceeds from the offering, after deducting initial purchaser discounts and issuance costs, were approximately $634.7 million.

Conference Call

MicroStrategy will be discussing its fourth quarter 2020 financial results on a live Video Webinar today beginning at approximately 5:00 p.m. EST. The live Video Webinar and accompanying presentation materials will be available under the "Events and Presentation" section on MicroStrategy's investor relations website at https://www.microstrategy.com/en/investor-relations. Dial-in instructions will be available after registering for the event. An archived replay will be available beginning approximately two hours after the call concludes.

About MicroStrategy Incorporated

MicroStrategy (NASDAQ:MSTR) is the largest independent publicly-traded business intelligence company, with the leading enterprise analytics platform. 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, Intelligent Enterprise, MicroStrategy Library, Intelligence Everywhere, HyperIntelligence, and MicroStrategy 2020 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; impacts of the COVID-19 pandemic; the market price of bitcoin and any associated impairment charges that the Company may incur as a result of a decrease in the market price below the value at which the Company's bitcoins are carried on its balance sheet; gains or losses on sales of bitcoins that the Company would incur upon any sale of any of its bitcoins; changes in the accounting treatment of the Company's holding of bitcoins; changes in securities laws or other laws or regulations relating to bitcoin which could adversely affect the price of bitcoin or the Company's ability to own bitcoin; a decrease in liquidity in the markets in which bitcoins are traded; security breaches, cyberattacks, unauthorized access, loss of private keys or fraud that causes us to lose any of our bitcoin; 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; customers shifting from a product license model to a cloud subscription model, which may delay our ability to recognize revenue; competitive factors; general economic conditions; currency fluctuations; and other risks detailed in MicroStrategy'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,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019*

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product licenses

 

$

29,770

 

 

$

30,087

 

 

$

86,743

 

 

$

87,471

 

Subscription services

 

 

8,788

 

 

 

7,252

 

 

 

33,082

 

 

 

29,394

 

Total product licenses and subscription services

 

 

38,558

 

 

 

37,339

 

 

 

119,825

 

 

 

116,865

 

Product support

 

 

71,886

 

 

 

74,722

 

 

 

284,434

 

 

 

292,035

 

Other services

 

 

20,875

 

 

 

21,470

 

 

 

76,476

 

 

 

77,427

 

Total revenues

 

 

131,319

 

 

 

133,531

 

 

 

480,735

 

 

 

486,327

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product licenses

 

 

564

 

 

 

534

 

 

 

2,293

 

 

 

2,131

 

Subscription services

 

 

3,321

 

 

 

4,185

 

 

 

14,833

 

 

 

15,161

 

Total product licenses and subscription services

 

 

3,885

 

 

 

4,719

 

 

 

17,126

 

 

 

17,292

 

Product support

 

 

4,743

 

 

 

6,607

 

 

 

23,977

 

 

 

28,317

 

Other services

 

 

12,157

 

 

 

13,310

 

 

 

49,952

 

 

 

54,365

 

Total cost of revenues

 

 

20,785

 

 

 

24,636

 

 

 

91,055

 

 

 

99,974

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

110,534

 

 

 

108,895

 

 

 

389,680

 

 

 

386,353

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

39,111

 

 

 

50,267

 

 

 

148,910

 

 

 

191,235

 

Research and development

 

 

24,955

 

 

 

25,987

 

 

 

103,561

 

 

 

109,423

 

General and administrative

 

 

19,622

 

 

 

23,013

 

 

 

80,136

 

 

 

86,697

 

Digital asset impairment losses

 

 

26,456

 

 

 

0

 

 

 

70,698

 

 

 

0

 

Total operating expenses

 

 

110,144

 

 

 

99,267

 

 

 

403,305

 

 

 

387,355

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

 

390

 

 

 

9,628

 

 

 

(13,625

)

 

 

(1,002

)

Interest (expense) income, net

 

 

(1,917

)

 

 

2,389

 

 

 

710

 

 

 

10,909

 

Other (expense) income, net

 

 

(2,506

)

 

 

(2,361

)

 

 

(7,038

)

 

 

28,356

 

(Loss) income before income taxes

 

 

(4,033

)

 

 

9,656

 

 

 

(19,953

)

 

 

38,263

 

(Benefit from) provision for income taxes

 

 

(6,694

)

 

 

(2,511

)

 

 

(12,429

)

 

 

3,908

 

Net income (loss)

 

$

2,661

 

 

$

12,167

 

 

$

(7,524

)

 

$

34,355

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per share (1):

 

$

0.28

 

 

$

1.19

 

 

$

(0.78

)

 

$

3.35

 

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

 

 

9,408

 

 

 

10,208

 

 

 

9,684

 

 

 

10,256

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share (1):

 

$

0.27

 

 

$

1.18

 

 

$

(0.78

)

 

$

3.33

 

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

 

 

9,849

 

 

 

10,301

 

 

 

9,684

 

 

 

10,328

 

(1)

Basic and fully diluted earnings (loss) 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,

 

 

 

2020

 

 

2019*

 

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

59,675

 

 

$

456,727

 

Restricted cash

 

 

1,084

 

 

 

1,089

 

Short-term investments

 

 

0

 

 

 

108,919

 

Accounts receivable, net

 

 

197,461

 

 

 

163,516

 

Prepaid expenses and other current assets

 

 

14,400

 

 

 

23,195

 

Total current assets

 

 

272,620

 

 

 

753,446

 

 

 

 

 

 

 

 

 

 

Digital assets

 

 

1,054,302

 

 

 

0

 

Property and equipment, net

 

 

42,975

 

 

 

50,154

 

Right-of-use assets

 

 

73,597

 

 

 

85,538

 

Deposits and other assets

 

 

15,615

 

 

 

8,024

 

Deferred tax assets, net

 

 

6,503

 

 

 

19,409

 

Total Assets

 

$

1,465,612

 

 

$

916,571

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable, accrued expenses, and operating lease liabilities

 

$

45,119

 

 

$

33,919

 

Accrued compensation and employee benefits

 

 

49,249

 

 

 

48,792

 

Deferred revenue and advance payments

 

 

191,250

 

 

 

187,107

 

Total current liabilities

 

 

285,618

 

 

 

269,818

 

 

 

 

 

 

 

 

 

 

Convertible senior notes, net

 

 

486,366

 

 

 

0

 

Deferred revenue and advance payments

 

 

14,662

 

 

 

4,344

 

Operating lease liabilities

 

 

84,328

 

 

 

103,424

 

Other long-term liabilities

 

 

33,382

 

 

 

30,400

 

Deferred tax liabilities

 

 

8,211

 

 

 

26

 

Total Liabilities

 

 

912,567

 

 

 

408,012

 

 

 

 

 

 

 

 

 

 

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; 16,307 shares issued and 7,623 shares outstanding, and 15,888 shares issued and 8,081 shares outstanding, respectively

 

 

16

 

 

 

16

 

Class B convertible common stock, $0.001 par value; 165,000 shares authorized; 1,964 shares issued and outstanding, and 2,035 shares issued and outstanding, respectively

 

 

2

 

 

 

2

 

Additional paid-in capital

 

 

763,051

 

 

 

593,583

 

Treasury stock, at cost; 8,684 shares and 7,807 shares, respectively

 

 

(782,104

)

 

 

(658,880

)

Accumulated other comprehensive loss

 

 

(3,885

)

 

 

(9,651

)

Retained earnings

 

 

575,965

 

 

 

583,489

 

Total Stockholders' Equity

 

 

553,045

 

 

 

508,559

 

Total Liabilities and Stockholders' Equity

 

$

1,465,612

 

 

$

916,571

 

*

Derived from audited financial statements.

 

MICROSTRATEGY INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

 

Twelve Months Ended

 

 

 

December 31,

 

 

 

2020

 

 

2019*

 

 

 

(unaudited)

 

 

 

 

 

Operating activities:

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(7,524

)

 

$

34,355

 

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

13,332

 

 

 

8,594

 

Reduction in carrying amount of right-of-use assets

 

 

8,210

 

 

 

8,105

 

Credit losses and sales allowances

 

 

2,732

 

 

 

124

 

Net realized (gain) loss on short-term investments

 

 

(94

)

 

 

41

 

Deferred taxes

 

 

(20,830

)

 

 

(2,614

)

Release of liabilities for unrecognized tax benefits

 

 

0

 

 

 

(2,837

)

Share-based compensation expense

 

 

11,153

 

 

 

10,209

 

Digital asset impairment losses

 

 

70,698

 

 

 

0

 

Gain on partial lease termination

 

 

(2,820

)

 

 

0

 

Amortization of debt discount and issuance costs on convertible senior notes

 

 

1,543

 

 

 

0

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(774

)

 

 

(3,672

)

Prepaid expenses and other current assets

 

 

2,346

 

 

 

6,415

 

Deposits and other assets

 

 

416

 

 

 

761

 

Accounts payable and accrued expenses

 

 

9,445

 

 

 

(7,321

)

Accrued compensation and employee benefits

 

 

(6,827

)

 

 

(2,658

)

Deferred revenue and advance payments

 

 

(20,223

)

 

 

20,836

 

Operating lease liabilities

 

 

(11,171

)

 

 

(8,620

)

Other long-term liabilities

 

 

4,007

 

 

 

(851

)

Net cash provided by operating activities

 

 

53,619

 

 

 

60,867

 

 

 

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

 

 

Purchases of digital assets

 

 

(1,125,000

)

 

 

0

 

Proceeds from redemption of short-term investments

 

 

119,886

 

 

 

684,356

 

Purchases of property and equipment

 

 

(3,651

)

 

 

(10,182

)

Purchases of short-term investments

 

 

(9,928

)

 

 

(320,487

)

Net cash (used in) provided by investing activities

 

 

(1,018,693

)

 

 

353,687

 

 

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

 

 

Proceeds from convertible senior notes classified as debt

 

 

496,473

 

 

 

0

 

Proceeds from convertible senior notes classified as equity

 

 

153,527

 

 

 

0

 

Issuance costs paid for convertible senior notes

 

 

(14,625

)

 

 

0

 

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

 

 

51,082

 

 

 

6,569

 

Purchases of treasury stock

 

 

(123,224

)

 

 

(72,719

)

Net cash provided by (used in) financing activities

 

 

563,233

 

 

 

(66,150

)

 

 

 

 

 

 

 

 

 

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

 

 

4,784

 

 

 

(1,374

)

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

 

 

(397,057

)

 

 

347,030

 

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

 

 

457,816

 

 

 

110,786

 

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

 

$

60,759

 

 

$

457,816

 

*

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,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019*

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product licenses and subscription services:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product licenses

 

$

29,770

 

 

$

30,087

 

 

$

86,743

 

 

$

87,471

 

Subscription services

 

 

8,788

 

 

 

7,252

 

 

 

33,082

 

 

 

29,394

 

Total product licenses and subscription services

 

 

38,558

 

 

 

37,339

 

 

 

119,825

 

 

 

116,865

 

Product support

 

 

71,886

 

 

 

74,722

 

 

 

284,434

 

 

 

292,035

 

Other services:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consulting

 

 

19,372

 

 

 

19,524

 

 

 

71,345

 

 

 

69,659

 

Education

 

 

1,503

 

 

 

1,946

 

 

 

5,131

 

 

 

7,768

 

Total other services

 

 

20,875

 

 

 

21,470

 

 

 

76,476

 

 

 

77,427

 

Total revenues

 

 

131,319

 

 

 

133,531

 

 

 

480,735

 

 

 

486,327

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product licenses and subscription services:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product licenses

 

 

564

 

 

 

534

 

 

 

2,293

 

 

 

2,131

 

Subscription services

 

 

3,321

 

 

 

4,185

 

 

 

14,833

 

 

 

15,161

 

Total product licenses and subscription services

 

 

3,885

 

 

 

4,719

 

 

 

17,126

 

 

 

17,292

 

Product support

 

 

4,743

 

 

 

6,607

 

 

 

23,977

 

 

 

28,317

 

Other services:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consulting

 

 

10,996

 

 

 

11,668

 

 

 

42,923

 

 

 

47,664

 

Education

 

 

1,161

 

 

 

1,642

 

 

 

7,029

 

 

 

6,701

 

Total other services

 

 

12,157

 

 

 

13,310

 

 

 

49,952

 

 

 

54,365

 

Total cost of revenues

 

 

20,785

 

 

 

24,636

 

 

 

91,055

 

 

 

99,974

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

$

110,534

 

 

$

108,895

 

 

$

389,680

 

 

$

386,353

 

*

Derived from audited financial statements.

 

MICROSTRATEGY INCORPORATED

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

INCOME (LOSS) FROM OPERATIONS

(in thousands)

 

 

 

Three Months Ended

 

 

Twelve Months Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

Reconciliation of non-GAAP income from operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

$

390

 

 

$

9,628

 

 

$

(13,625

)

 

$

(1,002

)

Share-based compensation expense

 

 

3,256

 

 

 

2,322

 

 

 

11,153

 

 

 

10,209

 

Digital asset impairment losses

 

 

26,456

 

 

 

0

 

 

 

70,698

 

 

 

0

 

Non-GAAP income from operations

 

$

30,102

 

 

$

11,950

 

 

$

68,226

 

 

$

9,207

 

 

MICROSTRATEGY INCORPORATED

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

NET INCOME (LOSS) AND EARNINGS (LOSS) PER SHARE

(in thousands, except per share data)

 

 

 

Three Months Ended

 

 

Twelve Months Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

Reconciliation of non-GAAP net income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

2,661

 

 

$

12,167

 

 

$

(7,524

)

 

$

34,355

 

Share-based compensation expense

 

 

3,256

 

 

 

2,322

 

 

 

11,153

 

 

 

10,209

 

Digital asset impairment losses

 

 

26,456

 

 

 

0

 

 

 

70,698

 

 

 

0

 

Gain from Domain Name Sale

 

 

0

 

 

 

0

 

 

 

0

 

 

 

(29,829

)

Interest expense arising from amortization of debt discount and issuance costs

 

 

1,543

 

 

 

0

 

 

 

1,543

 

 

 

0

 

Income tax effects (1)

 

 

(13,548

)

 

 

(142

)

 

 

(25,841

)

 

 

7,450

 

Non-GAAP net income

 

$

20,368

 

 

$

14,347

 

 

$

50,029

 

 

$

22,185

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of non-GAAP diluted earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share

 

$

0.27

 

 

$

1.18

 

 

$

(0.78

)

 

$

3.33

 

Share-based compensation expense (per diluted share)

 

 

0.33

 

 

 

0.22

 

 

 

1.15

 

 

 

0.99

 

Digital asset impairment losses (per diluted share)

 

 

2.69

 

 

 

0.00

 

 

 

7.31

 

 

 

0.00

 

Gain from Domain Name Sale (per diluted share)

 

 

0.00

 

 

 

0.00

 

 

 

0.00

 

 

 

(2.89

)

Interest expense arising from amortization of debt discount and issuance costs (per diluted share)

 

 

0.16

 

 

 

0.00

 

 

 

0.16

 

 

 

0.00

 

Income tax effects (per diluted share)

 

 

(1.38

)

 

 

(0.01

)

 

 

(2.67

)

 

 

0.72

 

Non-GAAP diluted earnings per share

 

$

2.07

 

 

$

1.39

 

 

$

5.17

 

 

$

2.15

 

(1) Income tax effects reflect the net tax effects of stock-based compensation expense, digital asset impairment losses, gain from the Domain Name Sale, and interest expense for amortization of debt discount and issuance costs.

 

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)

 

 

 

2020

 

 

2020

 

 

2020

 

 

2019

 

 

2020

 

 

2020

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product licenses

 

$

29,770

 

 

$

310

 

 

$

29,460

 

 

$

30,087

 

 

 

-1.1

%

 

 

-2.1

%

Subscription services

 

 

8,788

 

 

 

112

 

 

 

8,676

 

 

 

7,252

 

 

 

21.2

%

 

 

19.6

%

Total product licenses and subscription services

 

 

38,558

 

 

 

422

 

 

 

38,136

 

 

 

37,339

 

 

 

3.3

%

 

 

2.1

%

Product support

 

 

71,886

 

 

 

1,313

 

 

 

70,573

 

 

 

74,722

 

 

 

-3.8

%

 

 

-5.6

%

Other services

 

 

20,875

 

 

 

533

 

 

 

20,342

 

 

 

21,470

 

 

 

-2.8

%

 

 

-5.3

%

Total revenues

 

 

131,319

 

 

 

2,268

 

 

 

129,051

 

 

 

133,531

 

 

 

-1.7

%

 

 

-3.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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)

 

 

 

2020

 

 

2020

 

 

2020

 

 

2019

 

 

2020

 

 

2020

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product licenses

 

$

86,743

 

 

$

(1,227

)

 

$

87,970

 

 

$

87,471

 

 

 

-0.8

%

 

 

0.6

%

Subscription services

 

 

33,082

 

 

 

121

 

 

 

32,961

 

 

 

29,394

 

 

 

12.5

%

 

 

12.1

%

Total product licenses and subscription services

 

 

119,825

 

 

 

(1,106

)

 

 

120,931

 

 

 

116,865

 

 

 

2.5

%

 

 

3.5

%

Product support

 

 

284,434

 

 

 

(358

)

 

 

284,792

 

 

 

292,035

 

 

 

-2.6

%

 

 

-2.5

%

Other services

 

 

76,476

 

 

 

304

 

 

 

76,172

 

 

 

77,427

 

 

 

-1.2

%

 

 

-1.6

%

Total revenues

 

 

480,735

 

 

 

(1,160

)

 

 

481,895

 

 

 

486,327

 

 

 

-1.1

%

 

 

-0.9

%

(1)

The "Foreign Currency Exchange Rate Impact" reflects the estimated impact of 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

DEFERRED REVENUE DETAIL

(in thousands)

 

 

 

December 31,

 

 

December 31,

 

 

 

2020

 

 

2019*

 

 

 

(unaudited)

 

 

 

 

 

Current:

 

 

 

 

 

 

 

 

Deferred product licenses revenue

 

$

1,495

 

 

$

481

 

Deferred subscription services revenue

 

 

26,258

 

 

 

16,561

 

Deferred product support revenue

 

 

156,216

 

 

 

161,670

 

Deferred other services revenue

 

 

7,281

 

 

 

8,395

 

Total current deferred revenue and advance payments

 

$

191,250

 

 

$

187,107

 

 

 

 

 

 

 

 

 

 

Non-current:

 

 

 

 

 

 

 

 

Deferred product licenses revenue

 

$

139

 

 

$

293

 

Deferred subscription services revenue

 

 

8,758

 

 

 

97

 

Deferred product support revenue

 

 

5,055

 

 

 

3,417

 

Deferred other services revenue

 

 

710

 

 

 

537

 

Total non-current deferred revenue and advance payments

 

$

14,662

 

 

$

4,344

 

 

 

 

 

 

 

 

 

 

Total current and non-current:

 

 

 

 

 

 

 

 

Deferred product licenses revenue

 

$

1,634

 

 

$

774

 

Deferred subscription services revenue

 

 

35,016

 

 

 

16,658

 

Deferred product support revenue

 

 

161,271

 

 

 

165,087

 

Deferred other services revenue

 

 

7,991

 

 

 

8,932

 

Total current and non-current deferred revenue and advance payments

 

$

205,912

 

 

$

191,451

 

*

Derived from audited financial statements.

 

MICROSTRATEGY INCORPORATED

WORLDWIDE EMPLOYEE HEADCOUNT

 

 

 

December 31,

 

 

September 30,

 

 

June 30,

 

 

March 31,

 

 

December 31,

 

 

 

2020

 

 

2020

 

 

2020

 

 

2020

 

 

2019

 

Subscription services

 

 

49

 

 

 

54

 

 

 

64

 

 

 

63

 

 

 

69

 

Product support

 

 

154

 

 

 

165

 

 

 

189

 

 

 

204

 

 

 

219

 

Consulting

 

 

393

 

 

 

397

 

 

 

421

 

 

 

425

 

 

 

392

 

Education

 

 

37

 

 

 

38

 

 

 

43

 

 

 

42

 

 

 

38

 

Sales and marketing

 

 

479

 

 

 

495

 

 

 

573

 

 

 

594

 

 

 

597

 

Research and development

 

 

642

 

 

 

666

 

 

 

684

 

 

 

721

 

 

 

743

 

General and administrative

 

 

243

 

 

 

258

 

 

 

285

 

 

 

314

 

 

 

338

 

Total headcount

 

 

1,997

 

 

 

2,073

 

 

 

2,259

 

 

 

2,363

 

 

 

2,396

 

 

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