MicroStrategy® (Nasdaq: MSTR), the largest independent
publicly-traded business intelligence company, today announced
financial results for the three-month period ended March 31, 2021
(the first quarter of its 2021 fiscal year).
“MicroStrategy’s first quarter results were a
clear example that our two-pronged corporate strategy to grow our
enterprise analytics software business and acquire and hold bitcoin
is generating substantial shareholder value. We had one of our
strongest operational quarters in our software business in years,
highlighted by 10% revenue growth and continued improvement in
non-GAAP profitability. The investments we have made in our
platform in recent years are driving greater customer adoption of
MicroStrategy, particularly in the cloud,” said Michael J. Saylor,
CEO, MicroStrategy Incorporated.
“We continue
to be pleased with our bitcoin strategy. We successfully raised
more than $1 billion of additional capital in the quarter to expand
our bitcoin holdings, which now exceed 91,000 bitcoins. We also
hosted a very successful ‘Bitcoin for Corporations’ track at
MicroStrategy World™ where we utilized our thought leadership in
the cryptocurrency market to show how organizations can incorporate
digital assets into their balance sheet management. We will
continue to acquire and hold additional bitcoin as we seek to
create additional value for shareholders.”
First Quarter 2021 Financial
Highlights
- Revenues: Total revenues for the first quarter of 2021
were $122.9 million, a 10.3% increase, or a 7.6% increase on a
non-GAAP constant currency basis, compared to the first quarter of
2020. Product licenses and subscription services revenues for the
first quarter of 2021 were $31.3 million, a 52.3% increase, or a
49.8% increase on a non-GAAP constant currency basis, compared to
the first quarter of 2020. Product support revenues for the first
quarter of 2021 were $70.6 million, a 0.7% decrease, or a 3.4%
decrease on a non-GAAP constant currency basis, compared to the
first quarter of 2020. Other services revenues for the first
quarter of 2021 were $20.9 million, a 6.3% increase, or a 3.1%
increase on a non-GAAP constant currency basis, compared to the
first quarter of 2020.
- Gross Profit: Gross profit for the first quarter of 2021
was $100.4 million, representing an 81.7% gross margin, compared to
a gross margin of 78.0% in the first quarter of 2020.
- Operating Expenses: Operating expenses for the first
quarter of 2021 were $283.5 million, a 226.1% increase compared to
the first quarter of 2020. Beginning in the third quarter of 2020,
operating expenses included impairment losses on MicroStrategy’s
digital assets, which were $194.1 million during the first quarter
of 2021.
- Loss from Operations: Loss from operations for the first
quarter of 2021 was $183.2 million versus $0.1 million for the
first quarter of 2020. 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 $18.7 million for the first quarter of 2021 versus $3.0 million
for the first quarter of 2020.
- Net (Loss) Income: Net loss for the first quarter of
2021 was $110.0 million, or $11.40 per share on a diluted basis, as
compared to net income of $0.7 million, or $0.07 per share on a
diluted basis, for the first quarter of 2020. Non-GAAP net income,
which excludes share-based compensation expense, impairment losses
and gains on sale from intangible assets, which include digital
assets, interest expense arising from the amortization of debt
issuance costs, and related income tax effects, was $14.9 million,
or $1.54 per share on a non-GAAP diluted basis, for the first
quarter of 2021, as compared to non-GAAP net income of $3.9
million, or $0.39 per share on a non-GAAP diluted basis, for the
first quarter of 2020.
- Cash and Cash Equivalents: As of March 31, 2021,
MicroStrategy had cash and cash equivalents of $82.5 million, as
compared to $59.7 million as of December 31, 2020, an increase of
$22.9 million.
- Digital Assets: As part of MicroStrategy’s previously
announced treasury reserve policy and bitcoin acquisition strategy,
a total of approximately 20,857 bitcoins were purchased at an
aggregate purchase price of $1.086 billion in the first quarter of
2021 for an average purchase price of approximately $52,087 per
bitcoin. As of March 31, 2021, the carrying value of
MicroStrategy’s digital assets (comprised solely of bitcoin) was
$1.947 billion, which reflects cumulative impairment charges of
$264.8 million since acquisition. As of March 31, 2021, the average
cost and average carrying value of MicroStrategy’s bitcoin were
approximately $24,214 and $21,315, respectively. Further, in the second quarter of 2021 to
date, MicroStrategy has purchased approximately 253 bitcoins at an
aggregate purchase price of $15.0 million for an average purchase
price for such additional bitcoins of approximately $59,339 per
bitcoin. As of April 28, 2021, at 4:00 p.m. EDT, MicroStrategy held
approximately 91,579 bitcoins and the market price of one bitcoin
in MicroStrategy’s principal market was approximately $55,492. 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 February 2021,
MicroStrategy issued $1.050 billion aggregate principal amount of
0% Convertible Senior Notes due 2027 (the “2027 Notes”). The 2027
Notes are senior unsecured obligations of MicroStrategy and do not
bear regular interest. However, holders of the 2027 Notes may
receive special interest under specified circumstances as outlined
in the indenture for the 2027 Notes. Any special interest is
payable semiannually in arrears on February 15 and August 15 of
each year, beginning on August 15, 2021. The 2027 Notes are
convertible into shares of MicroStrategy’s class A common stock at
an initial conversion price of $1,432.46 per share. The 2027 Notes
will mature on February 15, 2027, unless earlier converted,
redeemed, or repurchased in accordance with their terms. Total net
proceeds from the offering, after deducting initial purchaser
discounts and issuance costs, were approximately $1.026 billion.
As of March 31, 2021, the
carrying value of the 2027 Notes was $1.026 billion, net of
unamortized issuance costs, and was classified as a long-term
liability in the “Convertible senior notes, net” line item in
MicroStrategy’s Consolidated Balance Sheet. MicroStrategy early
adopted Accounting Standards Update No. 2020-06, Debt – Debt with
Conversion and Other Options (Subtopic 470-20) and Derivatives and
Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40):
Accounting for Convertible Instruments and Contracts in an Entity’s
Own Equity (“ASU 2020-06”), effective January 1, 2021. ASU 2020-06
simplifies the accounting for convertible instruments and, as a
result, MicroStrategy no longer separates the debt or issuance
costs into liability and equity components. Upon adoption,
MicroStrategy recorded a cumulative-effect adjustment related to
the previously issued 0.750% Convertible Senior Notes due 2025 and
increased its opening retained earnings balance by approximately
$1.0 million.
The tables at
the end of this press release include a reconciliation of GAAP to
non-GAAP financial measures for the three months ended March 31,
2021 and 2020. 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
“Q1 2021 Earnings Presentation,” which will be available under the
“Events and Presentations” section of 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, interest expense arising from the amortization of debt
issuance costs related to MicroStrategy’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, (iii) non-cash interest expense arising from the
amortization of debt issuance costs related to MicroStrategy’s
convertible senior notes, and (iv) related income tax effects. 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.
Conference Call
MicroStrategy will be discussing its first quarter 2021
financial results on a live Video Webinar today beginning at
approximately 5:00 p.m. EDT. The live Video Webinar and
accompanying presentation materials will be available under the
“Events and Presentations” section of MicroStrategy’s investor
relations website at
https://www.microstrategy.com/en/investor-relations. Log-in
instructions will be available after registering for the event. An
archived replay of the event will be available beginning
approximately two hours after the call concludes.
About MicroStrategy Incorporated
MicroStrategy (Nasdaq: MSTR) is the largest independent
publicly-traded analytics and business intelligence company. The
MicroStrategy analytics platform is consistently rated as the best
in enterprise analytics and is used by many of the world’s most
admired brands in the Fortune Global 500. We pursue two corporate
strategies: (1) grow our enterprise analytics software business to
promote our vision of Intelligence Everywhere and (2) acquire and
hold bitcoin, which we view as a dependable store of value
supported by a robust, public, open-source architecture untethered
to sovereign monetary policy. For more information about
MicroStrategy, visit www.microstrategy.com.
MicroStrategy, MicroStrategy World, Intelligent Enterprise, and
MicroStrategy Library 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 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 its bitcoins; changes in the accounting treatment
of the Company’s bitcoin holdings; changes in securities laws or
other laws or regulations relating to bitcoin that 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 results in the Company’s loss
of its bitcoins; the extent and timing of market acceptance of the
Company’s new offerings; continued acceptance of the Company’s
other products in the marketplace; the Company’s ability to
recognize revenue or deferred revenue through delivery of products
or satisfactory performance of services; 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 the Company’s
ability to recognize revenue; fluctuations in tax benefits or
provisions; impacts of the COVID-19 pandemic; 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
March 31,
2021
2020
(unaudited)
(unaudited)
Revenues
Product licenses
$
21,280
$
12,584
Subscription services
10,026
7,968
Total product licenses and subscription
services
31,306
20,552
Product support
70,649
71,158
Other services
20,947
19,714
Total revenues
122,902
111,424
Cost of revenues
Product licenses
488
670
Subscription services
3,628
4,064
Total product licenses and subscription
services
4,116
4,734
Product support
4,812
6,718
Other services
13,621
13,093
Total cost of revenues
22,549
24,545
Gross profit
100,353
86,879
Operating expenses
Sales and marketing
38,198
39,518
Research and development
29,483
26,101
General and administrative
21,729
21,332
Digital asset impairment losses
194,095
0
Total operating expenses
283,505
86,951
Loss from operations
(183,152
)
(72
)
Interest (expense) income, net
(2,396
)
1,855
Other income, net
1,264
434
(Loss) income before income
taxes
(184,284
)
2,217
(Benefit from) provision for income
taxes
(74,264
)
1,560
Net (loss) income
$
(110,020
)
$
657
Basic (loss) earnings per share
(1):
$
(11.40
)
$
0.07
Weighted average shares outstanding used
in computing basic (loss) earnings per share
9,647
9,976
Diluted (loss) earnings per share
(1):
$
(11.40
)
$
0.07
Weighted average shares outstanding used
in computing diluted (loss) earnings per share
9,647
10,031
(1) Basic and fully diluted (loss) earnings per share for class
A and class B common stock are the same.
MICROSTRATEGY
INCORPORATED
CONSOLIDATED BALANCE
SHEETS
(in thousands, except per
share data)
March 31,
December 31,
2021
2020*
(unaudited)
Assets
Current assets
Cash and cash equivalents
$
82,544
$
59,675
Restricted cash
1,194
1,084
Accounts receivable, net
150,626
197,461
Prepaid expenses and other current
assets
16,390
14,400
Total current assets
250,754
272,620
Digital assets
1,946,582
1,054,302
Property and equipment, net
41,091
42,975
Right-of-use assets
71,367
73,597
Deposits and other assets
15,013
15,615
Deferred tax assets, net
118,272
6,503
Total Assets
$
2,443,079
$
1,465,612
Liabilities and Stockholders’
Equity
Current liabilities
Accounts payable, accrued expenses, and
operating lease liabilities
$
39,816
$
45,119
Accrued compensation and employee
benefits
44,824
49,249
Deferred revenue and advance payments
198,980
191,250
Total current liabilities
283,620
285,618
Convertible senior notes, net
1,661,914
486,366
Deferred revenue and advance payments
14,517
14,662
Operating lease liabilities
81,849
84,328
Other long-term liabilities
34,329
33,382
Deferred tax liabilities
1,812
8,211
Total Liabilities
2,078,041
912,567
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; 16,466 shares issued and 7,782 shares
outstanding, and 16,307 shares issued and 7,623 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 1,964 shares issued and outstanding,
respectively
2
2
Additional paid-in capital
685,943
763,051
Treasury stock, at cost; 8,684 shares and
8,684 shares, respectively
(782,104
)
(782,104
)
Accumulated other comprehensive loss
(5,721
)
(3,885
)
Retained earnings
466,902
575,965
Total Stockholders’ Equity
365,038
553,045
Total Liabilities and Stockholders’
Equity
$
2,443,079
$
1,465,612
* Derived from audited financial statements.
MICROSTRATEGY
INCORPORATED
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(in thousands)
Three Months Ended
March 31,
2021
2020
(unaudited)
(unaudited)
Operating activities:
Net (loss) income
$
(110,020
)
$
657
Adjustments to reconcile net (loss) income
to net cash provided by operating activities:
Depreciation and amortization
2,782
2,756
Reduction in carrying amount of
right-of-use assets
2,086
2,053
Credit losses and sales allowances
(172
)
828
Deferred taxes
(76,759
)
957
Share-based compensation expense
7,711
3,111
Digital asset impairment losses
194,095
0
Amortization of issuance costs on
convertible senior notes
1,172
0
Changes in operating assets and
liabilities:
Accounts receivable
6,774
14,406
Prepaid expenses and other current
assets
(2,919
)
(3,295
)
Deposits and other assets
(62
)
84
Accounts payable and accrued expenses
(3,413
)
(154
)
Accrued compensation and employee
benefits
(3,810
)
(13,031
)
Deferred revenue and advance payments
47,606
22,001
Operating lease liabilities
(2,458
)
(2,238
)
Other long-term liabilities
90
934
Net cash provided by operating
activities
62,703
29,069
Investing activities:
Purchases of digital assets
(1,086,375
)
0
Proceeds from redemption of short-term
investments
0
10,000
Purchases of property and equipment
(447
)
(661
)
Purchases of short-term investments
0
(9,928
)
Net cash used in investing activities
(1,086,822
)
(589
)
Financing activities:
Proceeds from convertible senior notes
1,050,000
0
Issuance costs paid for convertible senior
notes
(24,596
)
0
Proceeds from sale of class A common stock
under exercise of employee stock options
23,854
340
Purchases of treasury stock
0
(50,747
)
Net cash provided by (used in) financing
activities
1,049,258
(50,407
)
Effect of foreign exchange rate changes
on cash, cash equivalents, and restricted cash
(2,160
)
(3,871
)
Net increase (decrease) in cash, cash
equivalents, and restricted cash
22,979
(25,798
)
Cash, cash equivalents, and restricted
cash, beginning of period
60,759
457,816
Cash, cash equivalents, and restricted
cash, end of period
$
83,738
$
432,018
MICROSTRATEGY
INCORPORATED
REVENUE AND COST OF REVENUE
DETAIL
(in thousands)
Three Months Ended
March 31,
2021
2020
(unaudited)
(unaudited)
Revenues
Product licenses and subscription
services:
Product licenses
$
21,280
$
12,584
Subscription services
10,026
7,968
Total product licenses and subscription
services
31,306
20,552
Product support
70,649
71,158
Other services:
Consulting
19,711
18,441
Education
1,236
1,273
Total other services
20,947
19,714
Total revenues
122,902
111,424
Cost of revenues
Product licenses and subscription
services:
Product licenses
488
670
Subscription services
3,628
4,064
Total product licenses and subscription
services
4,116
4,734
Product support
4,812
6,718
Other services:
Consulting
12,332
11,428
Education
1,289
1,665
Total other services
13,621
13,093
Total cost of revenues
22,549
24,545
Gross profit
$
100,353
$
86,879
MICROSTRATEGY
INCORPORATED
RECONCILIATION OF GAAP TO
NON-GAAP MEASURES
LOSS FROM OPERATIONS
(in thousands)
Three Months Ended
March 31,
2021
2020
(unaudited)
(unaudited)
Reconciliation of non-GAAP income from
operations:
Loss from operations
$
(183,152
)
$
(72
)
Share-based compensation expense
7,711
3,111
Digital asset impairment losses
194,095
0
Non-GAAP income from operations
$
18,654
$
3,039
MICROSTRATEGY
INCORPORATED
RECONCILIATION OF GAAP TO
NON-GAAP MEASURES
NET (LOSS) INCOME AND (LOSS)
EARNINGS PER SHARE
(in thousands, except per
share data)
Three Months Ended
March 31,
2021
2020
(unaudited)
(unaudited)
Reconciliation of non-GAAP net
income:
Net (loss) income
$
(110,020
)
$
657
Share-based compensation expense
7,711
3,111
Digital asset impairment losses
194,095
0
Interest expense arising from amortization
of debt issuance costs
1,172
0
Income tax effects (1)
(78,084
)
162
Non-GAAP net income
$
14,874
$
3,930
Reconciliation of non-GAAP diluted
earnings per share:
Diluted (loss) earnings per share
$
(11.40
)
$
0.07
Share-based compensation expense (per
diluted share)
0.80
0.30
Digital asset impairment losses (per
diluted share)
20.11
0.00
Interest expense arising from amortization
of debt issuance costs (per diluted share)
0.12
0.00
Income tax effects (per diluted share)
(8.09
)
0.02
Non-GAAP diluted earnings per share
$
1.54
$
0.39
(1) Income tax effects reflect the net tax
effects of stock-based compensation expense, digital asset
impairment losses, and interest expense for amortization of debt
issuance costs.
MICROSTRATEGY
INCORPORATED
RECONCILIATION OF GAAP TO
NON-GAAP MEASURES
CONSTANT CURRENCY
(in thousands)
Three Months Ended
March 31,
(unaudited)
GAAP
Foreign
Currency
Exchange
Rate Impact (1)
Non-GAAP
Constant
Currency (2)
GAAP
GAAP %
Change
Non-GAAP
Constant
Currency
% Change (3)
2021
2021
2021
2020
2021
2021
Revenues
Product licenses
$
21,280
$
325
$
20,955
$
12,584
69.1
%
66.5
%
Subscription services
10,026
190
9,836
7,968
25.8
%
23.4
%
Total product licenses and subscription
services
31,306
515
30,791
20,552
52.3
%
49.8
%
Product support
70,649
1,917
68,732
71,158
-0.7
%
-3.4
%
Other services
20,947
618
20,329
19,714
6.3
%
3.1
%
Total revenues
122,902
3,050
119,852
111,424
10.3
%
7.6
%
(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)
March 31,
December 31,
March 31,
2021
2020*
2020
(unaudited)
(unaudited)
Current:
Deferred product licenses revenue
$
195
$
1,495
$
131
Deferred subscription services revenue
25,689
26,258
16,567
Deferred product support revenue
167,282
156,216
161,135
Deferred other services revenue
5,814
7,281
7,058
Total current deferred revenue and advance
payments
$
198,980
$
191,250
$
184,891
Non-current:
Deferred product licenses revenue
$
67
$
139
$
262
Deferred subscription services revenue
8,317
8,758
84
Deferred product support revenue
5,401
5,055
2,789
Deferred other services revenue
732
710
525
Total non-current deferred revenue and
advance payments
$
14,517
$
14,662
$
3,660
Total current and non-current:
Deferred product licenses revenue
$
262
$
1,634
$
393
Deferred subscription services revenue
34,006
35,016
16,651
Deferred product support revenue
172,683
161,271
163,924
Deferred other services revenue
6,546
7,991
7,583
Total current and non-current deferred
revenue and advance payments
$
213,497
$
205,912
$
188,551
* Derived from audited financial statements.
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MicroStrategy Incorporated Investor Relations
ir@microstrategy.com (703) 848-8600
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