MicroStrategy® Incorporated (Nasdaq: MSTR) (“MicroStrategy” or
the “Company”), the largest independent publicly-traded business
intelligence company, today announced financial results for the
three-month period ended September 30, 2022 (the third quarter of
its 2022 fiscal year).
“For the third quarter, MicroStrategy achieved strong 51% growth
year-over-year in subscription services revenues, record growth
year-over-year in current subscription billings, and total revenue
growth year-over-year on a constant currency basis. We are
continuing to see the global adoption of our cloud platform by both
domestic and international customers, and to benefit from the
longstanding durability of our enterprise analytics business, with
a third quarter renewal rate of 95%, despite the ongoing
macroeconomic headwinds,” said Phong Le, President and Chief
Executive Officer, MicroStrategy.
“Furthering the commitment to our bitcoin strategy,
MicroStrategy acquired approximately 301 additional bitcoins this
quarter and remains the world’s largest publicly traded corporate
owner of bitcoin, with total holdings of 130,000 bitcoins. We
incurred a minimal bitcoin impairment charge as bitcoin prices were
stable during the third quarter, and were encouraged by FASB’s
recent announcement of its support for fair value accounting for
bitcoin. If finally adopted and implemented, we believe fair value
accounting will improve upon the current, unfavorable intangible
accounting treatment applicable to bitcoin holdings and will
promote additional institutional adoption of bitcoin as an asset
class,” said Andrew Kang, Chief Financial Officer,
MicroStrategy.
Third Quarter 2022 Financial Highlights
- Revenues: Total revenues for the third quarter of 2022
were $125.4 million, a 2.1% decrease, or a 3.9% increase on a
non-GAAP constant currency basis, compared to the third quarter of
2021. Product licenses and subscription services revenues for the
third quarter of 2022 were $38.7 million, a 5.5% increase, or an
11.1% increase on a non-GAAP constant currency basis, compared to
the third quarter of 2021. Product support revenues for the third
quarter of 2022 were $66.0 million, a 6.2% decrease, or a 0.8%
decrease on a non-GAAP constant currency basis, compared to the
third quarter of 2021. Other services revenues for the third
quarter of 2022 were $20.7 million, a 1.3% decrease, or a 7.0%
increase on a non-GAAP constant currency basis, compared to the
third quarter of 2021.
- Gross Profit: Gross profit for the third quarter of 2022
was $100.0 million, representing a 79.8% gross margin, compared to
a gross profit of $105.7 million, representing a gross margin of
82.6%, for the third quarter of 2021.
- Operating Expenses: Operating expenses for the third
quarter of 2022 were $93.9 million, a 39.5% decrease compared to
the third quarter of 2021. Operating expenses include impairment
losses on MicroStrategy’s digital assets, which were $0.7 million
during the third quarter of 2022, compared to $65.2 million in the
third quarter of 2021.
- Income (Loss) from Operations and Net Loss: Income from
operations for the third quarter of 2022 was $6.1 million, compared
to loss from operations of $49.7 million for the third quarter of
2021. Net loss for the third quarter of 2022 was $27.1 million, or
$2.39 per share on a diluted basis, as compared to $36.1 million,
or $3.61 per share on a diluted basis, for the third quarter of
2021. Digital asset impairment charges of $0.7 million and $65.2
million for the third quarter of 2022 and 2021, respectively, were
reflected in these amounts.
- Cash and Cash Equivalents: As of September 30, 2022,
MicroStrategy had cash and cash equivalents of $60.4 million, as
compared to $63.4 million as of December 31, 2021, a decrease of
$3.0 million.
- Digital Assets: As of September 30, 2022, the carrying
value of MicroStrategy’s digital assets (comprised of approximately
130,000 bitcoins) was $1.993 billion, which reflects cumulative
impairment losses of $1.990 billion since acquisition and an
average carrying amount per bitcoin of approximately $15,331. As of
September 30, 2022, the original cost basis and market value of
MicroStrategy’s bitcoin were $3.983 billion and $2.532 billion,
respectively, which reflects an average cost per bitcoin of
approximately $30,639 and a market price per bitcoin of $19,480.51,
respectively. Additional information on MicroStrategy’s digital
asset holdings is included in the “Digital Assets – Additional
Information” tables at the end of this press release.
The tables provided at the end of this press release include a
reconciliation of the most directly comparable financial measures
prepared in accordance with generally accepted accounting
principles in the United States (“GAAP”) to non-GAAP financial
measures for the three and nine months ended September 30, 2022 and
2021. 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
MicroStrategy’s “Q3 2022 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.
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 expense, (ii) non-GAAP net loss and
non-GAAP diluted loss per share that exclude the impacts of
share-based compensation expense, interest expense arising from the
amortization of debt issuance costs related to MicroStrategy’s
long-term debt, 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 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 impacts of (i) share-based compensation expense, (ii)
non-cash interest expense arising from the amortization of debt
issuance costs related to MicroStrategy’s long-term debt, and (iii)
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 third quarter 2022
financial results on a live Video Webinar today beginning at
approximately 5:00 p.m. ET. 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, 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,” “will,” 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: fluctuations in 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 of bitcoin below the value
at which the Company’s bitcoins are carried on its balance sheet;
gains or losses on any sales of bitcoins; changes in the accounting
treatment relating to the Company’s bitcoin holdings; changes in
securities laws or other laws or regulations, or the adoption of
new laws or regulations, relating to bitcoin that adversely affect
the price of bitcoin or the Company’s ability to transact in or own
bitcoin; a decrease in liquidity in the markets in which bitcoin is
traded; security breaches, cyberattacks, unauthorized access, loss
of private keys, fraud or other circumstances or events that result
in the loss of the Company’s bitcoins; the level and terms of the
Company’s substantial indebtedness and its ability to service such
debt; the extent and timing of market acceptance of the Company’s
new product 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, including high levels of inflation and
increased interest rates; currency fluctuations; and other risks
detailed in MicroStrategy’s registration statements and periodic
reports filed with the Securities and Exchange Commission (“SEC”).
The Company undertakes no obligation to update these
forward-looking statements for revisions or changes after the date
of this release.
MICROSTRATEGY
INCORPORATED
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per
share data)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Revenues
Product licenses
$
22,286
$
25,830
$
58,928
$
69,261
Subscription services
16,414
10,853
43,276
31,221
Total product licenses and subscription
services
38,700
36,683
102,204
100,482
Product support
66,010
70,387
199,682
212,063
Other services
20,650
20,924
64,824
63,702
Total revenues
125,360
127,994
366,710
376,247
Cost of revenues
Product licenses
406
383
1,314
1,290
Subscription services
6,395
4,282
17,303
11,720
Total product licenses and subscription
services
6,801
4,665
18,617
13,010
Product support
5,224
4,679
15,542
14,353
Other services
13,360
12,975
42,107
40,543
Total cost of revenues
25,385
22,319
76,266
67,906
Gross profit
99,975
105,675
290,444
308,341
Operating expenses
Sales and marketing
35,409
38,209
105,511
116,728
Research and development
30,498
28,211
95,811
86,242
General and administrative
27,283
23,751
82,491
68,397
Digital asset impairment losses
727
65,165
1,088,656
684,034
Total operating expenses
93,917
155,336
1,372,469
955,401
Income (loss) from operations
6,058
(49,661
)
(1,082,025
)
(647,060
)
Interest expense, net
(14,073
)
(10,723
)
(38,299
)
(17,520
)
Other income, net
4,897
1,264
12,242
1,631
Loss before income taxes
(3,118
)
(59,120
)
(1,108,082
)
(662,949
)
Provision for (benefit from) income
taxes
23,961
(22,984
)
112,046
(217,446
)
Net loss
$
(27,079
)
$
(36,136
)
$
(1,220,128
)
$
(445,503
)
Basic loss per share (1):
$
(2.39
)
$
(3.61
)
$
(107.99
)
$
(45.47
)
Weighted average shares outstanding used
in computing basic loss per share
11,308
9,999
11,299
9,798
Diluted loss per share (1):
$
(2.39
)
$
(3.61
)
$
(107.99
)
$
(45.47
)
Weighted average shares outstanding used
in computing diluted loss per share
11,308
9,999
11,299
9,798
(1) Basic and fully diluted loss per share
for class A and class B common stock are the same.
MICROSTRATEGY
INCORPORATED
CONSOLIDATED BALANCE
SHEETS
(in thousands, except per
share data)
September 30,
December 31,
2022
2021*
(unaudited)
Assets
Current assets
Cash and cash equivalents
$
60,390
$
63,356
Restricted cash
6,578
1,078
Accounts receivable, net
109,926
189,280
Prepaid expenses and other current
assets
25,399
14,251
Total current assets
202,293
267,965
Digital assets
1,993,032
2,850,210
Property and equipment, net
33,033
36,587
Right-of-use assets
62,902
66,760
Deposits and other assets
20,992
15,820
Deferred tax assets, net
233,034
319,782
Total Assets
$
2,545,286
$
3,557,124
Liabilities and Stockholders’ (Deficit)
Equity
Current liabilities
Accounts payable, accrued expenses, and
operating lease liabilities
$
36,846
$
46,084
Accrued compensation and employee
benefits
46,346
54,548
Accrued interest
11,394
1,493
Deferred revenue and advance payments
165,934
209,860
Total current liabilities
260,520
311,985
Long-term debt, net
2,376,935
2,155,151
Deferred revenue and advance payments
8,754
8,089
Operating lease liabilities
69,278
76,608
Other long-term liabilities
30,088
26,224
Deferred tax liabilities
0
109
Total liabilities
2,745,575
2,578,166
Stockholders’ (Deficit) 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; 18,038 shares issued and 9,354 shares
outstanding, and 18,006 shares issued and 9,322 shares outstanding,
respectively
18
18
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
1,778,660
1,727,143
Treasury stock, at cost; 8,684 shares
(782,104
)
(782,104
)
Accumulated other comprehensive loss
(18,179
)
(7,543
)
(Accumulated deficit) retained
earnings
(1,178,686
)
41,442
Total Stockholders’ (Deficit)
Equity
(200,289
)
978,958
Total Liabilities and Stockholders’
(Deficit) Equity
$
2,545,286
$
3,557,124
* Derived from audited financial
statements.
MICROSTRATEGY
INCORPORATED
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(in thousands)
Nine Months Ended
September 30,
2022
2021
(unaudited)
(unaudited)
Operating activities:
Net loss
$
(1,220,128
)
$
(445,503
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
6,917
8,639
Reduction in carrying amount of
right-of-use assets
6,020
6,190
Credit losses and sales allowances
1,189
748
Deferred taxes
90,166
(221,328
)
Release of liabilities for unrecognized
tax benefits
0
(152
)
Share-based compensation expense
46,587
30,973
Digital asset impairment losses
1,088,656
684,034
Amortization of issuance costs on
long-term debt
6,490
5,084
Changes in operating assets and
liabilities:
Accounts receivable
5,586
10,634
Prepaid expenses and other current
assets
(7,837
)
(1,693
)
Deposits and other assets
(8,314
)
(594
)
Accounts payable and accrued expenses
(8,880
)
(10,788
)
Accrued compensation and employee
benefits
(13,105
)
(1,698
)
Accrued interest
9,901
10,182
Deferred revenue and advance payments
25,401
24,385
Operating lease liabilities
(7,390
)
(7,714
)
Other long-term liabilities
150
(813
)
Net cash provided by operating
activities
21,409
90,586
Investing activities:
Purchases of digital assets
(231,478
)
(2,035,471
)
Purchases of property and equipment
(1,851
)
(1,882
)
Net cash used in investing activities
(233,329
)
(2,037,353
)
Financing activities:
Proceeds from convertible senior notes
0
1,050,000
Issuance costs paid for convertible senior
notes
0
(24,742
)
Proceeds from senior secured notes
0
500,000
Issuance costs paid for senior secured
notes
0
(12,792
)
Proceeds from secured term loan, net of
lender fees
204,693
0
Issuance costs paid for secured term loan,
excluding lender fees
(107
)
0
Proceeds from other long-term secured
debt
11,100
0
Issuance costs paid for other long-term
secured debt
(214
)
0
Repayments of other long-term secured
debt
(121
)
0
Proceeds from sale of common stock under
public offerings
0
403,970
Issuance costs paid related to sale of
common stock under public offerings
0
(4,501
)
Proceeds from exercise of stock
options
1,332
31,380
Proceeds from sales under employee stock
purchase plan
4,473
2,854
Payment of withholding tax on vesting of
restricted stock units
(1,105
)
0
Net cash provided by financing
activities
220,051
1,946,169
Effect of foreign exchange rate changes
on cash, cash equivalents, and restricted cash
(5,597
)
(2,037
)
Net increase (decrease) in cash, cash
equivalents, and restricted cash
2,534
(2,635
)
Cash, cash equivalents, and restricted
cash, beginning of period
64,434
60,759
Cash, cash equivalents, and restricted
cash, end of period
$
66,968
$
58,124
MICROSTRATEGY
INCORPORATED
REVENUE AND COST OF REVENUE
DETAIL
(in thousands)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Revenues
Product licenses and subscription
services:
Product licenses
$
22,286
$
25,830
$
58,928
$
69,261
Subscription services
16,414
10,853
43,276
31,221
Total product licenses and subscription
services
38,700
36,683
102,204
100,482
Product support
66,010
70,387
199,682
212,063
Other services:
Consulting
19,545
19,738
61,253
60,071
Education
1,105
1,186
3,571
3,631
Total other services
20,650
20,924
64,824
63,702
Total revenues
125,360
127,994
366,710
376,247
Cost of revenues
Product licenses and subscription
services:
Product licenses
406
383
1,314
1,290
Subscription services
6,395
4,282
17,303
11,720
Total product licenses and subscription
services
6,801
4,665
18,617
13,010
Product support
5,224
4,679
15,542
14,353
Other services:
Consulting
12,267
11,745
38,404
36,515
Education
1,093
1,230
3,703
4,028
Total other services
13,360
12,975
42,107
40,543
Total cost of revenues
25,385
22,319
76,266
67,906
Gross profit
$
99,975
$
105,675
$
290,444
$
308,341
MICROSTRATEGY
INCORPORATED
DIGITAL ASSETS – ADDITIONAL
INFORMATION
ROLLFORWARD OF BITCOIN
HOLDINGS
(unaudited)
Source of
Capital Used to
Purchase
Bitcoin
Digital Asset
Original Cost
Basis
(in thousands)
Digital Asset
Impairment
Losses
(in thousands)
Digital Asset
Carrying Value
(in thousands)
Approximate
Number of
Bitcoins Held *
Approximate
Average
Purchase Price
Per Bitcoin
Balance at December 31, 2020
$
1,125,000
$
(70,698
)
$
1,054,302
70,469
$
15,964
Digital asset purchases
(a)
1,086,375
1,086,375
20,857
52,087
Digital asset impairment losses
(194,095
)
(194,095
)
Balance at March 31, 2021
$
2,211,375
$
(264,793
)
$
1,946,582
91,326
$
24,214
Digital asset purchases
(b)
529,231
529,231
13,759
38,464
Digital asset impairment losses
(424,774
)
(424,774
)
Balance at June 30, 2021
$
2,740,606
$
(689,567
)
$
2,051,039
105,085
$
26,080
Digital asset purchases
(c)
419,865
419,865
8,957
46,876
Digital asset impairment losses
(65,165
)
(65,165
)
Balance at September 30, 2021
$
3,160,471
$
(754,732
)
$
2,405,739
114,042
$
27,713
Digital asset purchases
(d)
591,058
591,058
10,349
57,113
Digital asset impairment losses
(146,587
)
(146,587
)
Balance at December 31, 2021
$
3,751,529
$
(901,319
)
$
2,850,210
124,391
$
30,159
Digital asset purchases
(e)
215,500
215,500
4,827
44,645
Digital asset impairment losses
(170,091
)
(170,091
)
Balance at March 31, 2022
$
3,967,029
$
(1,071,410
)
$
2,895,619
129,218
$
30,700
Digital asset purchases
(f)
10,000
10,000
481
20,790
Digital asset impairment losses
(917,838
)
(917,838
)
Balance at June 30, 2022
$
3,977,029
$
(1,989,248
)
$
1,987,781
129,699
$
30,664
Digital asset purchases
(g)
5,978
5,978
301
19,860
Digital asset impairment losses
(727
)
(727
)
Balance at September 30, 2022
$
3,983,007
$
(1,989,975
)
$
1,993,032
130,000
$
30,639
*MicroStrategy owns and has
purchased bitcoins both directly and indirectly through its
wholly-owned subsidiary, MacroStrategy. References to MicroStrategy
below refer to MicroStrategy and its subsidiaries on a consolidated
basis.
(a)
In the first quarter of 2021,
MicroStrategy purchased bitcoin using $1.026 billion in net
proceeds from its issuance of its 0% Convertible Senior Notes due
2027 (together with the 0.750% Convertible Senior Notes due 2025,
the “Convertible Notes”) and Excess Cash.
(b)
In the second quarter of 2021,
MicroStrategy purchased bitcoin using $487.2 million in net
proceeds from its issuance of its 6.125% Senior Secured Notes due
2028 and Excess Cash.
(c)
In the third quarter of 2021,
MicroStrategy purchased bitcoin using $399.5 million in net
proceeds from its sale of 555,179 shares of class A common stock
offered under an Open Market Sale Agreement (the “Open Market Sale
Agreement”) with Jefferies LLC, as agent, and Excess Cash.
(d)
In the fourth quarter of 2021,
MicroStrategy purchased bitcoin using $591.0 million in net
proceeds from its sale of 858,588 shares of class A common stock
offered under the Open Market Sale Agreement and Excess Cash.
(e)
In the first quarter of 2022,
MicroStrategy purchased bitcoin using $190.5 million of the net
proceeds from the issuance of the 2025 Secured Term Loan and Excess
Cash.
(f)
In the second quarter of 2022,
MicroStrategy purchased bitcoin using Excess Cash.
(g)
In the third quarter of 2022,
MicroStrategy purchased bitcoin using Excess Cash.
Excess Cash refers to cash in excess of the minimum Cash Assets
that MicroStrategy is required to hold under its Treasury Reserve
Policy, which may include cash generated by operating activities
and cash from the proceeds of financing activities. Cash Assets
refers to cash and cash equivalents and short-term investments.
MICROSTRATEGY INCORPORATED
DIGITAL ASSETS – ADDITIONAL
INFORMATION
MARKET VALUE OF BITCOIN
HOLDINGS
(unaudited)
Approximate
Number of
Bitcoins Held
at End of
Quarter *
Lowest
Market Price
Per Bitcoin
During
Quarter
(a)
Market Value
of Bitcoin
Held at End of
Quarter Using
Lowest
Market Price
(in thousands)
(b)
Highest
Market Price
Per Bitcoin
During
Quarter
(c)
Market Value
of Bitcoin
Held at End of
Quarter Using
Highest
Market Price
(in thousands)
(d)
Market Price
Per Bitcoin at
End of
Quarter
(e)
Market Value
of Bitcoin
Held at End of
Quarter Using
Ending
Market Price
(in thousands)
(f)
December 31, 2020
70,469
$
10,363.76
$
730,324
$
29,321.90
$
2,066,285
$
29,181.00
$
2,056,356
March 31, 2021
91,326
$
27,678.00
$
2,527,721
$
61,788.45
$
5,642,892
$
58,601.28
$
5,351,820
June 30, 2021
105,085
$
28,800.00
$
3,026,448
$
64,899.00
$
6,819,911
$
34,763.47
$
3,653,119
September 30, 2021
114,042
$
29,301.56
$
3,341,609
$
52,944.96
$
6,037,949
$
43,534.56
$
4,964,768
December 31, 2021
124,391
$
42,333.00
$
5,265,844
$
69,000.00
$
8,582,979
$
45,879.97
$
5,707,055
March 31, 2022
129,218
$
32,933.33
$
4,255,579
$
48,240.00
$
6,233,476
$
45,602.79
$
5,892,701
June 30, 2022
129,699
$
17,567.45
$
2,278,481
$
47,469.40
$
6,156,734
$
18,895.02
$
2,450,665
September 30, 2022
130,000
$
18,153.13
$
2,359,907
$
25,214.57
$
3,277,894
$
19,480.51
$
2,532,466
*MicroStrategy owns and has
purchased bitcoins both directly and indirectly through its
wholly-owned subsidiary, MacroStrategy. References to MicroStrategy
below refer to MicroStrategy and its subsidiaries on a consolidated
basis.
(a)
The "Lowest Market Price Per Bitcoin
During Quarter" represents the lowest market price for one bitcoin
reported on the Coinbase exchange during the respective quarter,
without regard to when MicroStrategy purchased any of its
bitcoin.
(b)
The "Market Value of Bitcoin Held at End
of Quarter Using Lowest Market Price" represents a mathematical
calculation consisting of the lowest market price for one bitcoin
reported on the Coinbase exchange during the respective quarter
multiplied by the number of bitcoins held by MicroStrategy at the
end of the applicable period.
(c)
The "Highest Market Price Per Bitcoin
During Quarter" represents the highest market price for one bitcoin
reported on the Coinbase exchange during the respective quarter,
without regard to when MicroStrategy purchased any of its
bitcoin.
(d)
The "Market Value of Bitcoin Held at End
of Quarter Using Highest Market Price" represents a mathematical
calculation consisting of the highest market price for one bitcoin
reported on the Coinbase exchange during the respective quarter
multiplied by the number of bitcoins held by MicroStrategy at the
end of the applicable period.
(e)
The "Market Price Per Bitcoin at End of
Quarter" represents the market price of one bitcoin on the Coinbase
exchange at 4:00 p.m. Eastern Time on the last day of the
respective quarter.
(f)
The "Market Value of Bitcoin Held at End
of Quarter Using Ending Market Price" represents a mathematical
calculation consisting of the market price of one bitcoin on the
Coinbase exchange at 4:00 p.m. Eastern Time on the last day of the
respective quarter multiplied by the number of bitcoins held by
MicroStrategy at the end of the applicable period.
The amounts reported as “Market Value” in the above table
represent only a mathematical calculation consisting of the price
for one bitcoin reported on the Coinbase exchange (MicroStrategy’s
principal market for bitcoin) in each scenario defined above
multiplied by the number of bitcoins held by MicroStrategy at the
end of the applicable period. The SEC has previously stated that
there has not been a demonstration that (i) bitcoin and bitcoin
markets are inherently resistant to manipulation or that the spot
price of bitcoin may not be subject to fraud and manipulation; and
(ii) adequate surveillance-sharing agreements with bitcoin-related
markets are in place, as bitcoin-related markets are either not
significant, not regulated, or both. Accordingly, the Market Value
amounts reported above may not accurately represent fair market
value, and the actual fair market value of MicroStrategy’s bitcoin
may be different from such amounts and such deviation may be
material. Moreover, (i) the bitcoin market historically has been
characterized by significant volatility in price, limited liquidity
and trading volumes compared to sovereign currencies markets,
relative anonymity, a developing regulatory landscape, potential
susceptibility to market abuse and manipulation, and various other
risks that are, or may be, inherent in its entirely electronic,
virtual form and decentralized network and (ii) MicroStrategy may
not be able to sell its bitcoins at the Market Value amounts
indicated above, at the market price as reported on the Coinbase
exchange (its principal market) on the date of sale, or at all.
MICROSTRATEGY
INCORPORATED
RECONCILIATION OF GAAP TO
NON-GAAP MEASURES
INCOME (LOSS) FROM
OPERATIONS
(in thousands)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Reconciliation of non-GAAP income
(loss) from operations:
Income (loss) from operations
$
6,058
$
(49,661
)
$
(1,082,025
)
$
(647,060
)
Share-based compensation expense
16,899
12,166
46,587
30,973
Non-GAAP income (loss) from operations
$
22,957
$
(37,495
)
$
(1,035,438
)
$
(616,087
)
MICROSTRATEGY
INCORPORATED
RECONCILIATION OF GAAP TO
NON-GAAP MEASURES
NET LOSS AND DILUTED LOSS PER
SHARE
(in thousands, except per
share data)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Reconciliation of non-GAAP net
loss:
Net loss
$
(27,079
)
$
(36,136
)
$
(1,220,128
)
$
(445,503
)
Share-based compensation expense
16,899
12,166
46,587
30,973
Interest expense arising from amortization
of debt issuance costs
2,193
2,107
6,490
5,084
Income tax effects (1)
(2,844
)
(6,489
)
(10,186
)
(32,877
)
Non-GAAP net loss
$
(10,831
)
$
(28,352
)
$
(1,177,237
)
$
(442,323
)
Reconciliation of non-GAAP diluted loss
per share (2):
Diluted loss per share
$
(2.39
)
$
(3.61
)
$
(107.99
)
$
(45.47
)
Share-based compensation expense (per
diluted share)
1.49
1.21
4.12
3.16
Interest expense arising from amortization
of debt issuance costs (per diluted share)
0.19
0.21
0.57
0.52
Income tax effects (per diluted share)
(0.25
)
(0.65
)
(0.89
)
(3.35
)
Non-GAAP diluted loss per share
$
(0.96
)
$
(2.84
)
$
(104.19
)
$
(45.14
)
(1)
Income tax effects reflect the net tax effects of share-based
compensation expense, which includes tax benefits and expenses on
exercises of stock options and vesting of share-settled restricted
stock units, and interest expense for amortization of debt issuance
costs.
(2)
For reconciliation purposes, the non-GAAP
diluted earnings (loss) per share calculations use the same
weighted average shares outstanding as that used in the GAAP
diluted earnings (loss) per share calculations for the same period.
For example, in periods of GAAP net loss, otherwise dilutive
potential shares of common stock from MicroStrategy’s share-based
compensation arrangements and Convertible Notes are excluded from
the GAAP diluted loss per share calculation as they would be
antidilutive, and therefore are also excluded from the non-GAAP
diluted earnings or loss per share calculation.
MICROSTRATEGY
INCORPORATED
RECONCILIATION OF GAAP TO
NON-GAAP MEASURES
CONSTANT CURRENCY
(in thousands)
Three Months Ended
September 30,
(unaudited)
GAAP
Foreign
Currency
Exchange
Rate Impact (1)
Non-GAAP
Constant
Currency (2)
GAAP
GAAP %
Change
Non-GAAP
Constant
Currency
% Change (3)
2022
2022
2022
2021
2022
2022
Revenues
Product licenses
$
22,286
$
(1,219
)
$
23,505
$
25,830
-13.7
%
-9.0
%
Subscription services
16,414
(828
)
17,242
10,853
51.2
%
58.9
%
Total product licenses and subscription
services
38,700
(2,047
)
40,747
36,683
5.5
%
11.1
%
Product support
66,010
(3,848
)
69,858
70,387
-6.2
%
-0.8
%
Other services
20,650
(1,747
)
22,397
20,924
-1.3
%
7.0
%
Total revenues
125,360
(7,642
)
133,002
127,994
-2.1
%
3.9
%
Nine Months Ended
September 30,
(unaudited)
GAAP
Foreign
Currency
Exchange
Rate Impact (1)
Non-GAAP
Constant
Currency (2)
GAAP
GAAP %
Change
Non-GAAP
Constant
Currency
% Change (3)
2022
2022
2022
2021
2022
2022
Revenues
Product licenses
$
58,928
$
(2,315
)
$
61,243
$
69,261
-14.9
%
-11.6
%
Subscription services
43,276
(1,516
)
44,792
31,221
38.6
%
43.5
%
Total product licenses and subscription
services
102,204
(3,831
)
106,035
100,482
1.7
%
5.5
%
Product support
199,682
(8,547
)
208,229
212,063
-5.8
%
-1.8
%
Other services
64,824
(3,914
)
68,738
63,702
1.8
%
7.9
%
Total revenues
366,710
(16,292
)
383,002
376,247
-2.5
%
1.8
%
(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)
September 30,
December 31,
September 30,
2022
2021*
2021
(unaudited)
(unaudited)
Current:
Deferred product licenses revenue
$
442
$
993
$
2,315
Deferred subscription services revenue
38,272
35,589
23,089
Deferred product support revenue
123,203
166,477
130,339
Deferred other services revenue
4,017
6,801
4,954
Total current deferred revenue and advance
payments
$
165,934
$
209,860
$
160,697
Non-current:
Deferred product licenses revenue
$
70
$
68
$
74
Deferred subscription services revenue
2,943
1,064
590
Deferred product support revenue
5,172
6,203
6,973
Deferred other services revenue
569
754
665
Total non-current deferred revenue and
advance payments
$
8,754
$
8,089
$
8,302
Total current and non-current:
Deferred product licenses revenue
$
512
$
1,061
$
2,389
Deferred subscription services revenue
41,215
36,653
23,679
Deferred product support revenue
128,375
172,680
137,312
Deferred other services revenue
4,586
7,555
5,619
Total current and non-current deferred
revenue and advance payments
$
174,688
$
217,949
$
168,999
* Derived from audited financial
statements.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221101005104/en/
MicroStrategy Incorporated Shirish Jajodia Investor Relations
ir@microstrategy.com (703) 848-8600
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