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MicroStrategy Announces Fourth Quarter 2021 Financial Results

MicroStrategy® Incorporated (Nasdaq: MSTR) (“MicroStrategy”), the largest independent publicly-traded business intelligence company, today announced financial results for the three-month period ended December 31, 2021 (the fourth quarter of its 2021 fiscal year).

“2021 was another transformational year for MicroStrategy. Our software business returned to positive revenue growth for the first time since 2014, highlighted by our enterprise analytics business delivering another strong quarter as we saw a growing adoption of the MicroStrategy platform, especially in the Cloud,” said Michael J. Saylor, CEO, MicroStrategy.

“We also significantly expanded our bitcoin holdings in the quarter, adding over 10,300 bitcoins to our holdings after successfully raising capital in the quarter through our at-the-market equity offering. Today, MicroStrategy is the world’s largest publicly traded corporate owner of bitcoin with over 125,000 bitcoins. We will continue to evaluate opportunities to raise additional capital to execute on our bitcoin acquisition strategy.”

Fourth Quarter 2021 Financial Highlights

  • Revenues: Total revenues for the fourth quarter of 2021 were $134.5 million, a 2.4% increase, or a 4.4% increase on a non-GAAP constant currency basis, compared to the fourth quarter of 2020. Product licenses and subscription services revenues for the fourth quarter of 2021 were $44.4 million, a 15.1% increase, or an 18.3% increase on a non-GAAP constant currency basis, compared to the fourth quarter of 2020. Product support revenues for the fourth quarter of 2021 were $69.1 million, a 3.8% decrease, or a 2.5% decrease on a non-GAAP constant currency basis, compared to the fourth quarter of 2020. Other services revenues for the fourth quarter of 2021 were $21.0 million, an immaterial change, or a 2.4% increase on a non-GAAP constant currency basis, compared to the fourth quarter of 2020.
  • Gross Profit: Gross profit for the fourth quarter of 2021 was $110.5 million, representing an 82.2% gross margin, compared to a gross margin of 84.2% in the fourth quarter of 2020.
  • Operating Expenses: Operating expenses for the fourth quarter of 2021 were $248.0 million, a 125.1% increase compared to the fourth quarter of 2020. Operating expenses include impairment losses on MicroStrategy’s digital assets, which were $146.6 million during the fourth quarter of 2021, compared to $26.5 million in the fourth quarter of 2020.
  • (Loss) Income from Operations and Net (Loss) Income: Loss from operations for the fourth quarter of 2021 was $137.5 million versus income from operations of $0.4 million for the fourth quarter of 2020. Net loss for the fourth quarter of 2021 was $90.0 million, or $8.43 per share on a diluted basis, as compared to net income of $2.7 million, or $0.27 per share on a diluted basis, for the fourth quarter of 2020. Digital asset impairment charges of $146.6 million and $26.5 million for the fourth quarter of 2021 and 2020, respectively, were reflected in these amounts.
  • Cash and Cash Equivalents: As of December 31, 2021, MicroStrategy had cash and cash equivalents of $63.4 million, as compared to $59.7 million as of December 31, 2020, an increase of $3.7 million.
  • Digital Assets: As of December 31, 2021, the carrying value of MicroStrategy’s digital assets (comprised of approximately 124,391 bitcoins) was $2.850 billion, which reflects cumulative impairment losses of $901.3 million since acquisition and an average carrying amount per bitcoin of approximately $22,913. As of December 31, 2021, the original cost basis and market value of MicroStrategy’s bitcoin were $3.752 billion and $5.707 billion, respectively, which reflects an average cost per bitcoin of approximately $30,159 and a market price per bitcoin of $45,879.97, 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.
  • Open Market Sale Agreement: On June 14, 2021, MicroStrategy entered into an Open Market Sale Agreement (the “Open Market Sale Agreement”) with Jefferies LLC, as agent (“Jefferies”), pursuant to which MicroStrategy issued and sold shares of its class A common stock having an aggregate offering price of approximately $1.0 billion from time to time through Jefferies. During the three months ended December 31, 2021 the Company sold 858,588 shares of its class A common stock under the Open Market Sale Agreement, at an average gross price per share of approximately $694.20, for aggregate net proceeds (less $5.0 million in sales commissions and expenses) of approximately $591.0 million. As of December 31, 2021, the cumulative aggregate offering price of the shares of class A common stock sold under the Open Market Sale Agreement was approximately $1.0 billion, inclusive of sales commissions, constituting the maximum program amount under the Open Market Sale Agreement.

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, 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 MicroStrategy’s “Q4 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 (loss) income from operations that excludes the impact of share-based compensation expense, (ii) non-GAAP net (loss) income and non-GAAP diluted (loss) earnings per share that exclude the impact of share-based compensation expense, interest expense arising from the amortization of debt issuance costs and (in 2020, before the adoption of 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”)) the debt discount 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 generally accepted accounting principles in the United States (“GAAP”) and, as a result, these supplemental financial measures may not be comparable to similarly titled measures of other companies. Management uses these non-GAAP financial measures internally to help understand, manage, and evaluate business performance and to help make operating decisions.

MicroStrategy believes that these non-GAAP financial measures are also useful to investors and analysts in comparing its performance across reporting periods on a consistent basis. The first supplemental financial measure excludes a significant non-cash expense that MicroStrategy believes is not reflective of its general business performance, and for which the accounting requires management judgment and the resulting share-based compensation expense could vary significantly in comparison to other companies. The second set of supplemental financial measures excludes the impact of (i) share-based compensation expense, (ii) non-cash interest expense arising from the amortization of debt issuance costs and (in 2020, before the adoption of ASU 2020-06) the debt discount 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 fourth quarter 2021 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 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,” 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 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 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.

MICROSTRATEGY INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

 

 

 

Three Months Ended

 

 

Twelve Months Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020*

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product licenses

 

$

32,543

 

 

$

29,770

 

 

$

101,804

 

 

$

86,743

 

Subscription services

 

 

11,848

 

 

 

8,788

 

 

 

43,069

 

 

 

33,082

 

Total product licenses and subscription services

 

 

44,391

 

 

 

38,558

 

 

 

144,873

 

 

 

119,825

 

Product support

 

 

69,146

 

 

 

71,886

 

 

 

281,209

 

 

 

284,434

 

Other services

 

 

20,978

 

 

 

20,875

 

 

 

84,680

 

 

 

76,476

 

Total revenues

 

 

134,515

 

 

 

131,319

 

 

 

510,762

 

 

 

480,735

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product licenses

 

 

431

 

 

 

564

 

 

 

1,721

 

 

 

2,293

 

Subscription services

 

 

5,181

 

 

 

3,321

 

 

 

16,901

 

 

 

14,833

 

Total product licenses and subscription services

 

 

5,612

 

 

 

3,885

 

 

 

18,622

 

 

 

17,126

 

Product support

 

 

4,901

 

 

 

4,743

 

 

 

19,254

 

 

 

23,977

 

Other services

 

 

13,490

 

 

 

12,157

 

 

 

54,033

 

 

 

49,952

 

Total cost of revenues

 

 

24,003

 

 

 

20,785

 

 

 

91,909

 

 

 

91,055

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

110,512

 

 

 

110,534

 

 

 

418,853

 

 

 

389,680

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

43,413

 

 

 

39,111

 

 

 

160,141

 

 

 

148,910

 

Research and development

 

 

30,875

 

 

 

24,955

 

 

 

117,117

 

 

 

103,561

 

General and administrative

 

 

27,104

 

 

 

19,622

 

 

 

95,501

 

 

 

80,136

 

Digital asset impairment losses

 

 

146,587

 

 

 

26,456

 

 

 

830,621

 

 

 

70,698

 

Total operating expenses

 

 

247,979

 

 

 

110,144

 

 

 

1,203,380

 

 

 

403,305

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) income from operations

 

 

(137,467

)

 

 

390

 

 

 

(784,527

)

 

 

(13,625

)

Interest (expense) income, net

 

 

(11,629

)

 

 

(1,917

)

 

 

(29,149

)

 

 

710

 

Other income (expense), net

 

 

656

 

 

 

(2,506

)

 

 

2,287

 

 

 

(7,038

)

Loss before income taxes

 

 

(148,440

)

 

 

(4,033

)

 

 

(811,389

)

 

 

(19,953

)

Benefit from income taxes

 

 

(58,463

)

 

 

(6,694

)

 

 

(275,909

)

 

 

(12,429

)

Net (loss) income

 

$

(89,977

)

 

$

2,661

 

 

$

(535,480

)

 

$

(7,524

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic (loss) earnings per share (1):

 

$

(8.43

)

 

$

0.28

 

 

$

(53.44

)

 

$

(0.78

)

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

 

 

10,679

 

 

 

9,408

 

 

 

10,020

 

 

 

9,684

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted (loss) earnings per share (1):

 

$

(8.43

)

 

$

0.27

 

 

$

(53.44

)

 

$

(0.78

)

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

 

 

10,679

 

 

 

9,849

 

 

 

10,020

 

 

 

9,684

 

(1)

 

Basic and fully diluted (loss) earnings per share for class A and class B common stock are the same.

   

*

 

Derived from audited financial statements.

MICROSTRATEGY INCORPORATED

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

 

 

 

December 31,

 

 

December 31,

 

 

 

2021

 

 

2020*

 

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

63,356

 

 

$

59,675

 

Restricted cash

 

 

1,078

 

 

 

1,084

 

Accounts receivable, net

 

 

189,280

 

 

 

197,461

 

Prepaid expenses and other current assets

 

 

14,251

 

 

 

14,400

 

Total current assets

 

 

267,965

 

 

 

272,620

 

 

 

 

 

 

 

 

 

 

Digital assets

 

 

2,850,210

 

 

 

1,054,302

 

Property and equipment, net

 

 

36,587

 

 

 

42,975

 

Right-of-use assets

 

 

66,760

 

 

 

73,597

 

Deposits and other assets

 

 

15,820

 

 

 

15,615

 

Deferred tax assets, net

 

 

319,782

 

 

 

6,503

 

Total Assets

 

$

3,557,124

 

 

$

1,465,612

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable, accrued expenses, and operating lease liabilities

 

$

46,084

 

 

$

44,848

 

Accrued compensation and employee benefits

 

 

54,548

 

 

 

49,249

 

Accrued interest

 

 

1,493

 

 

 

271

 

Deferred revenue and advance payments

 

 

209,860

 

 

 

191,250

 

Total current liabilities

 

 

311,985

 

 

 

285,618

 

 

 

 

 

 

 

 

 

 

Long-term debt, net

 

 

2,155,151

 

 

 

486,366

 

Deferred revenue and advance payments

 

 

8,089

 

 

 

14,662

 

Operating lease liabilities

 

 

76,608

 

 

 

84,328

 

Other long-term liabilities

 

 

26,224

 

 

 

33,382

 

Deferred tax liabilities

 

 

109

 

 

 

8,211

 

Total Liabilities

 

 

2,578,166

 

 

 

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; 18,006 shares issued and 9,322 shares outstanding, and 16,307 shares issued and 7,623 shares outstanding, respectively

 

 

18

 

 

 

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

 

 

1,727,143

 

 

 

763,051

 

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

 

 

(782,104

)

 

 

(782,104

)

Accumulated other comprehensive loss

 

 

(7,543

)

 

 

(3,885

)

Retained earnings

 

 

41,442

 

 

 

575,965

 

Total Stockholders’ Equity

 

 

978,958

 

 

 

553,045

 

Total Liabilities and Stockholders’ Equity

 

$

3,557,124

 

 

$

1,465,612

 

*

 

Derived from audited financial statements.

MICROSTRATEGY INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

 

Twelve Months Ended

 

 

 

December 31,

 

 

 

2021

 

 

2020*

 

 

 

(unaudited)

 

 

 

 

 

Operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(535,480

)

 

$

(7,524

)

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

11,358

 

 

 

13,332

 

Reduction in carrying amount of right-of-use assets

 

 

8,189

 

 

 

8,210

 

Credit losses and sales allowances

 

 

1,509

 

 

 

2,732

 

Net realized gain on short-term investments

 

 

0

 

 

 

(94

)

Deferred taxes

 

 

(284,221

)

 

 

(20,830

)

Release of liabilities for unrecognized tax benefits

 

 

(561

)

 

 

0

 

Share-based compensation expense

 

 

44,126

 

 

 

11,153

 

Digital asset impairment losses

 

 

830,621

 

 

 

70,698

 

Gain on partial lease termination

 

 

0

 

 

 

(2,820

)

Amortization of issuance costs and debt discount on long-term debt

 

 

7,201

 

 

 

1,543

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

2,618

 

 

 

(774

)

Prepaid expenses and other current assets

 

 

(25

)

 

 

2,346

 

Deposits and other assets

 

 

(1,713

)

 

 

416

 

Accounts payable and accrued expenses

 

 

3,749

 

 

 

9,174

 

Accrued compensation and employee benefits

 

 

2,374

 

 

 

(6,827

)

Accrued interest

 

 

1,222

 

 

271

 

Deferred revenue and advance payments

 

 

14,710

 

 

 

(20,223

)

Operating lease liabilities

 

 

(10,222

)

 

 

(11,171

)

Other long-term liabilities

 

 

(1,622

)

 

 

4,007

 

Net cash provided by operating activities

 

 

93,833

 

 

 

53,619

 

 

 

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

 

 

Purchases of digital assets

 

 

(2,626,529

)

 

 

(1,125,000

)

Proceeds from redemption of short-term investments

 

 

0

 

 

 

119,886

 

Purchases of property and equipment

 

 

(2,706

)

 

 

(3,651

)

Purchases of short-term investments

 

 

0

 

 

 

(9,928

)

Net cash used in investing activities

 

 

(2,629,235

)

 

 

(1,018,693

)

 

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

 

 

Proceeds from convertible senior notes classified as debt

 

 

1,050,000

 

 

 

496,473

 

Proceeds from convertible senior notes classified as equity

 

 

0

 

 

 

153,527

 

Issuance costs paid for convertible senior notes

 

 

(24,796

)

 

 

(14,625

)

Proceeds from senior secured notes

 

 

500,000

 

 

 

0

 

Issuance costs paid for senior secured notes

 

 

(12,792

)

 

 

0

 

Proceeds from sale of class A common stock under public offerings

 

 

1,000,000

 

 

 

0

 

Issuance costs paid related to sale of class A common stock under public offerings

 

 

(9,537

)

 

 

0

 

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

 

 

40,651

 

 

 

51,082

 

Proceeds from issuance of class A common stock under employee stock purchase plan

 

 

2,854

 

 

 

0

 

Payment of withholding tax on vesting of restricted stock units

 

 

(4,695

)

 

 

0

 

Purchases of treasury stock

 

 

0

 

 

 

(123,224

)

Net cash provided by financing activities

 

 

2,541,685

 

 

 

563,233

 

 

 

 

 

 

 

 

 

 

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

 

 

(2,608

)

 

 

4,784

 

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

 

 

3,675

 

 

 

(397,057

)

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

 

 

60,759

 

 

 

457,816

 

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

 

$

64,434

 

 

$

60,759

 

*

 

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,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020*

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product licenses and subscription services:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product licenses

 

$

32,543

 

 

$

29,770

 

 

$

101,804

 

 

$

86,743

 

Subscription services

 

 

11,848

 

 

 

8,788

 

 

 

43,069

 

 

 

33,082

 

Total product licenses and subscription services

 

 

44,391

 

 

 

38,558

 

 

 

144,873

 

 

 

119,825

 

Product support

 

 

69,146

 

 

 

71,886

 

 

 

281,209

 

 

 

284,434

 

Other services:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consulting

 

 

19,661

 

 

 

19,372

 

 

 

79,732

 

 

 

71,345

 

Education

 

 

1,317

 

 

 

1,503

 

 

 

4,948

 

 

 

5,131

 

Total other services

 

 

20,978

 

 

 

20,875

 

 

 

84,680

 

 

 

76,476

 

Total revenues

 

 

134,515

 

 

 

131,319

 

 

 

510,762

 

 

 

480,735

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product licenses and subscription services:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product licenses

 

 

431

 

 

 

564

 

 

 

1,721

 

 

 

2,293

 

Subscription services

 

 

5,181

 

 

 

3,321

 

 

 

16,901

 

 

 

14,833

 

Total product licenses and subscription services

 

 

5,612

 

 

 

3,885

 

 

 

18,622

 

 

 

17,126

 

Product support

 

 

4,901

 

 

 

4,743

 

 

 

19,254

 

 

 

23,977

 

Other services:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consulting

 

 

12,258

 

 

 

10,996

 

 

 

48,773

 

 

 

42,923

 

Education

 

 

1,232

 

 

 

1,161

 

 

 

5,260

 

 

 

7,029

 

Total other services

 

 

13,490

 

 

 

12,157

 

 

 

54,033

 

 

 

49,952

 

Total cost of revenues

 

 

24,003

 

 

 

20,785

 

 

 

91,909

 

 

 

91,055

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

$

110,512

 

 

$

110,534

 

 

$

418,853

 

 

$

389,680

 

*

 

Derived from audited financial statements.

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 June 30, 2020

 

 

 

$

0

 

 

$

0

 

 

$

0

 

 

 

0

 

 

n/a

 

Digital asset purchases

 

(a)

 

 

425,000

 

 

 

 

 

 

 

425,000

 

 

 

38,250

 

 

 

11,111

 

Digital asset impairment losses

 

 

 

 

 

 

 

 

(44,242

)

 

 

(44,242

)

 

 

 

 

 

 

 

 

Balance at September 30, 2020

 

 

 

$

425,000

 

 

$

(44,242

)

 

$

380,758

 

 

 

38,250

 

 

$

11,111

 

Digital asset purchases

 

(b)

 

 

700,000

 

 

 

 

 

 

 

700,000

 

 

 

32,219

 

 

 

21,726

 

Digital asset impairment losses

 

 

 

 

 

 

 

 

(26,456

)

 

 

(26,456

)

 

 

 

 

 

 

 

 

Balance at December 31, 2020

 

 

 

$

1,125,000

 

 

$

(70,698

)

 

$

1,054,302

 

 

 

70,469

 

 

$

15,964

 

Digital asset purchases

 

(c)

 

 

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

 

(d)

 

 

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

 

(e)

 

 

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

 

(f)

 

 

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

 

(a)

 

In the third quarter of 2020, MicroStrategy purchased bitcoin using excess cash, including cash from the liquidation of short-term investments.

 

(b)

 

In the fourth quarter of 2020, MicroStrategy purchased bitcoin using $634.7 million in net proceeds from its issuance of its 0.750% Convertible Senior Notes due 2025 (the “2025 Convertible Notes”) and excess cash.

 

(c)

 

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 (the “2027 Convertible Notes” and together with the 2025 Convertible Notes, the “Convertible Notes”) and excess cash.

 

(d)

 

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.

 

(e)

 

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 the Open Market Sale Agreement and excess cash.

 

(f)

 

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.

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)

 

June 30, 2020

 

 

0

 

 

n/a

 

 

n/a

 

 

n/a

 

 

n/a

 

 

n/a

 

 

n/a

 

September 30, 2020

 

 

38,250

 

 

$

8,905.84

 

 

$

340,648

 

 

$

12,486.61

 

 

$

477,613

 

 

$

10,706.00

 

 

$

409,505

 

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

 

(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 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 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) in each scenario defined above multiplied by the number of bitcoins held by MicroStrategy at the end of the applicable period. The Securities and Exchange Commission 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

(LOSS) INCOME FROM OPERATIONS

(in thousands)

 

 

 

Three Months Ended

 

 

Twelve Months Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) income from operations

 

$

(137,467

)

 

$

390

 

 

$

(784,527

)

 

$

(13,625

)

Share-based compensation expense

 

 

13,153

 

 

 

3,256

 

 

 

44,126

 

 

 

11,153

 

Non-GAAP (loss) income from operations

 

$

(124,314

)

 

$

3,646

 

 

$

(740,401

)

 

$

(2,472

)

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

 

 

Twelve Months Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

Reconciliation of non-GAAP net (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(89,977

)

 

$

2,661

 

 

$

(535,480

)

 

$

(7,524

)

Share-based compensation expense

 

 

13,153

 

 

 

3,256

 

 

 

44,126

 

 

 

11,153

 

Interest expense arising from amortization of debt issuance costs and debt discount

 

 

2,117

 

 

 

1,543

 

 

 

7,201

 

 

 

1,543

 

Income tax effects (1)

 

 

(15,099

)

 

 

(6,140

)

 

 

(47,976

)

 

 

(5,656

)

Non-GAAP net (loss) income

 

$

(89,806

)

 

$

1,320

 

 

$

(532,129

)

 

$

(484

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of non-GAAP diluted (loss) earnings per share (2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted (loss) earnings per share

 

$

(8.43

)

 

$

0.27

 

 

$

(53.44

)

 

$

(0.78

)

Share-based compensation expense (per diluted share)

 

 

1.23

 

 

 

0.33

 

 

 

4.40

 

 

 

1.15

 

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

 

 

0.20

 

 

 

0.16

 

 

 

0.72

 

 

 

0.16

 

Income tax effects (per diluted share)

 

 

(1.41

)

 

 

(0.63

)

 

 

(4.79

)

 

 

(0.58

)

Non-GAAP diluted (loss) earnings per share

 

$

(8.41

)

 

$

0.13

 

 

$

(53.11

)

 

$

(0.05

)

(1)

 

Income tax effects reflect the net tax effects of share-based compensation expense and interest expense for amortization of debt issuance costs and debt discount.

 

(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

 

 

 

December 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

 

$

32,543

 

 

$

(1,169

)

 

$

33,712

 

 

$

29,770

 

 

 

9.3

%

 

 

13.2

%

Subscription services

 

 

11,848

 

 

 

(45

)

 

 

11,893

 

 

 

8,788

 

 

 

34.8

%

 

 

35.3

%

Total product licenses and subscription services

 

 

44,391

 

 

 

(1,214

)

 

 

45,605

 

 

 

38,558

 

 

 

15.1

%

 

 

18.3

%

Product support

 

 

69,146

 

 

 

(976

)

 

 

70,122

 

 

 

71,886

 

 

 

-3.8

%

 

 

-2.5

%

Other services

 

 

20,978

 

 

 

(406

)

 

 

21,384

 

 

 

20,875

 

 

 

0.5

%

 

 

2.4

%

Total revenues

 

 

134,515

 

 

 

(2,596

)

 

 

137,111

 

 

 

131,319

 

 

 

2.4

%

 

 

4.4

%

 

 

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)

 

 

 

2021

 

 

2021

 

 

2021

 

 

2020

 

 

2021

 

 

2021

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product licenses

 

$

101,804

 

 

$

(858

)

 

$

102,662

 

 

$

86,743

 

 

 

17.4

%

 

 

18.4

%

Subscription services

 

 

43,069

 

 

 

519

 

 

 

42,550

 

 

 

33,082

 

 

 

30.2

%

 

 

28.6

%

Total product licenses and subscription services

 

 

144,873

 

 

 

(339

)

 

 

145,212

 

 

 

119,825

 

 

 

20.9

%

 

 

21.2

%

Product support

 

 

281,209

 

 

 

3,816

 

 

 

277,393

 

 

 

284,434

 

 

 

-1.1

%

 

 

-2.5

%

Other services

 

 

84,680

 

 

 

1,118

 

 

 

83,562

 

 

 

76,476

 

 

 

10.7

%

 

 

9.3

%

Total revenues

 

 

510,762

 

 

 

4,595

 

 

 

506,167

 

 

 

480,735

 

 

 

6.2

%

 

 

5.3

%

(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,

 

 

 

2021

 

 

2020*

 

 

 

(unaudited)

 

 

 

 

 

Current:

 

 

 

 

 

 

 

 

Deferred product licenses revenue

 

$

993

 

 

$

1,495

 

Deferred subscription services revenue

 

 

35,589

 

 

 

26,258

 

Deferred product support revenue

 

 

166,477

 

 

 

156,216

 

Deferred other services revenue

 

 

6,801

 

 

 

7,281

 

Total current deferred revenue and advance payments

 

$

209,860

 

 

$

191,250

 

 

 

 

 

 

 

 

 

 

Non-current:

 

 

 

 

 

 

 

 

Deferred product licenses revenue

 

$

68

 

 

$

139

 

Deferred subscription services revenue

 

 

1,064

 

 

 

8,758

 

Deferred product support revenue

 

 

6,203

 

 

 

5,055

 

Deferred other services revenue

 

 

754

 

 

 

710

 

Total non-current deferred revenue and advance payments

 

$

8,089

 

 

$

14,662

 

 

 

 

 

 

 

 

 

 

Total current and non-current:

 

 

 

 

 

 

 

 

Deferred product licenses revenue

 

$

1,061

 

 

$

1,634

 

Deferred subscription services revenue

 

 

36,653

 

 

 

35,016

 

Deferred product support revenue

 

 

172,680

 

 

 

161,271

 

Deferred other services revenue

 

 

7,555

 

 

 

7,991

 

Total current and non-current deferred revenue and advance payments

 

$

217,949

 

 

$

205,912

 

*

 

Derived from audited financial statements.

 

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