- Acquired 12,800 bitcoins since Q1 for $361.4 million, or
$28,233 per bitcoin
- As of July 31, 2023, held 152,800 bitcoins acquired for total
cost of $4.53 billion, or $29,672 per bitcoin
- Total Revenues of $120.4 million, 1% decrease year-over-year,
flat at constant currency
- Software Licenses Revenues of $35.4 million, 4% increase
year-over-year, 7% on a constant currency basis
- Subscription Services Revenues of $19.9 million, 42% increase
year-over-year, 44% on a constant currency basis
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 June 30, 2023 (the second quarter of its
2023 fiscal year).
“Our new MicroStrategy ONE platform is the most important
product innovation in the history of our company because it
represents a fundamental shift in our industry to harness the power
of business intelligence and artificial intelligence together to
upgrade the way organizations do business. The growth in our
recurring revenue this quarter illustrated the strength of our
enterprise cloud platform, despite ongoing macroeconomic
headwinds,” said Phong Le, President and Chief Executive Officer,
MicroStrategy.
“Our bitcoin holdings increased to 152,800 bitcoins as of July
31, 2023, with the addition in the second quarter of 12,333
bitcoins being the largest increase in a single quarter since Q2
2021. We efficiently raised capital through our at-the-market
equity program and used cash from operations to continue to
increase bitcoins on our balance sheet. And we did so against the
promising backdrop of increasing institutional interest, progress
on accounting transparency, and ongoing regulatory clarity for
bitcoin,” said Andrew Kang, Chief Financial Officer,
MicroStrategy.
Second Quarter 2023 Financial Highlights
- Revenues: Total revenues for the second quarter of 2023
were $120.4 million, a 1.4% decrease, or a 0.5% decrease on a
non-GAAP constant currency basis, compared to the second quarter of
2022. Product licenses and subscription services revenues for the
second quarter of 2023 were $35.4 million, a 3.7% increase, or a
6.6% increase on a non-GAAP constant currency basis, compared to
the second quarter of 2022. Product support revenues for the second
quarter of 2023 were $66.1 million, a 0.7% decrease on both a GAAP
basis and non-GAAP constant currency basis, compared to the second
quarter of 2022. Other services revenues for the second quarter of
2023 were $18.9 million, an 11.6% decrease, or a 10.9% decrease on
a non-GAAP constant currency basis, compared to the second quarter
of 2022.
- Gross Profit: Gross profit for the second quarter of
2023 was $93.3 million, representing a 77.5% gross margin, compared
to a gross profit of $96.9 million, representing a gross margin of
79.4%, for the second quarter of 2022.
- Operating Expenses: Operating expenses for the second
quarter of 2023 were $120.0 million, an 88.2% decrease compared to
the second quarter of 2022. Operating expenses include impairment
losses on the Company’s digital assets, which were $24.1 million
during the second quarter of 2023, compared to $917.8 million in
the second quarter of 2022.
- Loss from Operations and Net Income (Loss): Loss from
operations for the second quarter of 2023 was $26.7 million,
compared to $918.1 million for the second quarter of 2022. Net
income for the second quarter of 2023 was $22.2 million, or $1.52
per share on a diluted basis, as compared to a net loss of $1.062
billion, or $94.01 per share on a diluted basis, for the second
quarter of 2022. Digital asset impairment losses of $24.1 million
and $917.8 million for the second quarter of 2023 and 2022,
respectively, were reflected in these amounts. Benefit from income
taxes of $60.3 million and provision for income taxes of $136.1
million for the second quarter of 2023 and 2022, respectively, were
reflected in net income (loss).
- Cash and Cash Equivalents: As of June 30, 2023, the
Company had cash and cash equivalents of $66.0 million, as compared
to $43.8 million as of December 31, 2022, an increase of $22.1
million.
- Digital Assets: As of June 30, 2023, the carrying value
of the Company’s digital assets (comprised of approximately 152,333
bitcoins) was $2.323 billion, which reflects cumulative impairment
losses of $2.196 billion since acquisition and an average carrying
amount per bitcoin of approximately $15,251. As of June 30, 2023,
the original cost basis and market value of the Company’s bitcoin
were $4.519 billion and $4.625 billion, respectively, which
reflects an average cost per bitcoin of approximately $29,668 and a
market price per bitcoin of $30,361.51, respectively.
- Sales Agreement: On May 1, 2023, MicroStrategy entered
into a Sales Agreement (the “2023 Sales Agreement”) with Cowen and
Company, LLC and Canaccord Genuity LLC as agents (collectively, the
“2023 Sales Agents”), pursuant to which MicroStrategy may issue and
sell shares of its class A common stock having an aggregate
offering price of up to $625.0 million from time to time through
the 2023 Sales Agents. During the three months ended June 30, 2023,
the Company issued and sold 1,079,170 shares of its class A common
stock under the 2023 Sales Agreement for aggregate net proceeds
(less sales commissions and expenses) of approximately $333.5
million. As of June 30, 2023, approximately $290.0 million of the
Company’s class A common stock remained available for issuance and
sale pursuant to the 2023 Sales Agreement.
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 months ended June 30, 2023 and 2022. 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 “Q2
2023 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 loss from operations that excludes the impact of
share-based compensation expense, (ii) non-GAAP net income (loss)
and non-GAAP diluted earnings (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, gain on debt extinguishment, 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, (iii) a
gain on debt extinguishment, 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 second quarter 2023
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) 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
and (2) grow our enterprise analytics software business to promote
our vision of Intelligence Everywhere. 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; impacts to the price and
rate of adoption of bitcoin associated with financial difficulties
and bankruptcies of various participants in the digital asset
industry; 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; changes in the market
price of bitcoin as of period-end and their effect on our deferred
tax assets and related valuation allowance; competitive factors;
general economic conditions, including levels of inflation and
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
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Revenues:
Product licenses
$
15,522
$
20,129
$
32,934
$
36,642
Subscription services
19,878
14,017
38,688
26,862
Total product licenses and subscription
services
35,400
34,146
71,622
63,504
Product support
66,081
66,521
131,562
133,672
Other services
18,919
21,406
39,131
44,174
Total revenues
120,400
122,073
242,315
241,350
Cost of revenues:
Product licenses
444
431
978
908
Subscription services
7,216
5,498
15,072
10,908
Total product licenses and subscription
services
7,660
5,929
16,050
11,816
Product support
5,816
5,127
11,584
10,318
Other services
13,645
14,148
27,428
28,747
Total cost of revenues
27,121
25,204
55,062
50,881
Gross profit
93,279
96,869
187,253
190,469
Operating expenses:
Sales and marketing
37,660
36,862
73,766
70,102
Research and development
29,354
31,790
60,712
65,313
General and administrative
28,830
28,502
56,736
55,208
Digital asset impairment losses
24,143
917,838
43,054
1,087,929
Total operating expenses
119,987
1,014,992
234,268
1,278,552
Loss from operations
(26,708
)
(918,123
)
(47,015
)
(1,088,083
)
Interest expense, net
(11,095
)
(13,187
)
(26,025
)
(24,226
)
Gain on debt extinguishment
0
0
44,686
0
Other (expense) income, net
(250
)
5,120
(1,693
)
7,345
Loss before income taxes
(38,053
)
(926,190
)
(30,047
)
(1,104,964
)
(Benefit from) provision for income
taxes
(60,296
)
136,108
(513,483
)
88,085
Net income (loss)
$
22,243
$
(1,062,298
)
$
483,436
$
(1,193,049
)
Basic earnings (loss) per share
(1)
$
1.68
$
(94.01
)
$
41.18
$
(105.64
)
Weighted average shares outstanding used
in computing basic earnings (loss) per share
13,247
11,300
11,739
11,294
Diluted earnings (loss) per share
(1)
$
1.52
$
(94.01
)
$
33.56
$
(105.64
)
Weighted average shares outstanding used
in computing diluted earnings (loss) per share
16,095
11,300
14,534
11,294
(1) Basic and fully diluted earnings
(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)
June 30,
December 31,
2023
2022*
(unaudited)
Assets
Current assets
Cash and cash equivalents
$
65,968
$
43,835
Restricted cash
2,085
7,033
Accounts receivable, net
121,901
189,280
Prepaid expenses and other current
assets
19,680
24,418
Total current assets
209,634
264,566
Digital assets
2,323,252
1,840,028
Property and equipment, net
30,507
32,311
Right-of-use assets
58,264
61,299
Deposits and other assets
22,421
23,916
Deferred tax assets, net
719,026
188,152
Total Assets
$
3,363,104
$
2,410,272
Liabilities and Stockholders’ Equity
(Deficit)
Current liabilities
Accounts payable, accrued expenses, and
operating lease liabilities
$
33,660
$
42,976
Accrued compensation and employee
benefits
41,492
53,716
Accrued interest
1,493
2,829
Current portion of long-term debt, net
468
454
Deferred revenue and advance payments
195,817
217,428
Total current liabilities
272,930
317,403
Long-term debt, net
2,177,974
2,378,560
Deferred revenue and advance payments
11,244
12,763
Operating lease liabilities
63,814
67,344
Other long-term liabilities
17,826
17,124
Deferred tax liabilities
198
198
Total liabilities
2,543,986
2,793,392
Stockholders’ Equity (Deficit)
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; 20,803 shares issued and 12,119 shares
outstanding, and 18,269 shares issued and 9,585 shares outstanding,
respectively
21
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
2,559,268
1,841,120
Treasury stock, at cost; 8,684 shares and
8,684 shares, respectively
(782,104
)
(782,104
)
Accumulated other comprehensive loss
(13,150
)
(13,801
)
Accumulated deficit
(944,919
)
(1,428,355
)
Total Stockholders’ Equity
(Deficit)
819,118
(383,120
)
Total Liabilities and Stockholders’
Equity (Deficit)
$
3,363,104
$
2,410,272
* Derived from audited financial
statements.
MICROSTRATEGY
INCORPORATED
CONSOLIDATED CONDENSED
STATEMENTS OF CASH FLOWS
(in thousands)
Six Months Ended
June 30,
2023
2022
(unaudited)
(unaudited)
Net cash provided by operating
activities
$
18,925
$
22,863
Net cash used in investing activities
(527,416
)
(227,019
)
Net cash provided by financing
activities
525,911
218,487
Effect of foreign exchange rate changes on
cash, cash equivalents, and restricted cash
(235
)
(3,224
)
Net increase in cash, cash equivalents,
and restricted cash
17,185
11,107
Cash, cash equivalents, and restricted
cash, beginning of period
50,868
64,434
Cash, cash equivalents, and restricted
cash, end of period
$
68,053
$
75,541
MICROSTRATEGY
INCORPORATED
REVENUE AND COST OF REVENUE
DETAIL
(in thousands)
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Revenues
Product licenses and subscription
services:
Product licenses
$
15,522
$
20,129
$
32,934
$
36,642
Subscription services
19,878
14,017
38,688
26,862
Total product licenses and subscription
services
35,400
34,146
71,622
63,504
Product support
66,081
66,521
131,562
133,672
Other services:
Consulting
17,980
20,273
37,317
41,708
Education
939
1,133
1,814
2,466
Total other services
18,919
21,406
39,131
44,174
Total revenues
120,400
122,073
242,315
241,350
Cost of revenues
Product licenses and subscription
services:
Product licenses
444
431
978
908
Subscription services
7,216
5,498
15,072
10,908
Total product licenses and subscription
services
7,660
5,929
16,050
11,816
Product support
5,816
5,127
11,584
10,318
Other services:
Consulting
13,180
12,837
26,192
26,137
Education
465
1,311
1,236
2,610
Total other services
13,645
14,148
27,428
28,747
Total cost of revenues
27,121
25,204
55,062
50,881
Gross profit
$
93,279
$
96,869
$
187,253
$
190,469
MICROSTRATEGY
INCORPORATED
DIGITAL ASSETS – ADDITIONAL
INFORMATION
ROLLFORWARD OF BITCOIN
HOLDINGS
(unaudited)
Approximate
Digital Asset
Digital Asset
Digital Asset
Approximate
Average
Source of Capital
Original Cost
Impairment
Carrying
Number of
Purchase or
Used to Purchase
Basis
Losses
Value
Bitcoins Held
Sale Price Per
Bitcoin
(in thousands)
(in thousands)
(in thousands)
(Disposed) *
Bitcoin
Balance at December 31, 2021
$
3,751,529
$
(901,319
)
$
2,850,210
124,391
$
30,159
Digital asset purchases
(a)
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
(b)
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
(c)
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
Digital asset purchases
(d)
56,443
56,443
3,204
17,616
Digital asset impairment losses
(198,557
)
(198,557
)
Digital asset sales **
(46,260
)
35,370
(10,890
)
(704
)
16,786
Balance at December 31, 2022
$
3,993,190
$
(2,153,162
)
$
1,840,028
132,500
$
30,137
Digital asset purchases
(e)
179,275
179,275
7,500
23,903
Digital asset impairment losses
(18,911
)
(18,911
)
Balance at March 31, 2023
$
4,172,465
$
(2,172,073
)
$
2,000,392
140,000
$
29,803
Digital asset purchases
(f)
347,003
347,003
12,333
28,136
Digital asset impairment losses
(24,143
)
(24,143
)
Balance at June 30, 2023
$
4,519,468
$
(2,196,216
)
$
2,323,252
152,333
$
29,668
*
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.
**
In the fourth quarter of 2022,
MicroStrategy sold approximately 704 bitcoins having an original
cost basis of $46.3 million and cumulative digital asset impairment
losses of $35.4 million, resulting in a carrying value of $10.9
million at the time of sale. The approximately 704 bitcoins were
sold for cash proceeds of $11.8 million, net of fees and expenses,
resulting in gains on sale of $0.9 million.
(a)
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.
(b)
In the second quarter of 2022,
MicroStrategy purchased bitcoin using Excess Cash.
(c)
In the third quarter of 2022,
MicroStrategy purchased bitcoin using Excess Cash.
(d)
In the fourth quarter of 2022,
MicroStrategy purchased bitcoin using $44.6 million of the net
proceeds from its sale of class A common stock under its
at-the-market offering program, and $11.8 million in proceeds from
sales of bitcoin.
(e)
In the first quarter of 2023,
MicroStrategy purchased bitcoin using $179.3 million of the net
proceeds from its sale of class A common stock under its
at-the-market offering program.
(f)
In the second quarter of 2023,
MicroStrategy purchased bitcoin using $336.9 million of the net
proceeds from its sale of class A common stock under its
at-the-market offering program, and 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)
Market Value
Market Value
Market Value
of Bitcoin
of Bitcoin
of Bitcoin
Held at End
Held at End
Held at End
Approximate
Lowest
of Quarter
Highest
of Quarter
of Quarter
Number of
Market Price
Using Lowest
Market Price
Using Highest
Market Price
Using Ending
Bitcoins Held
Per Bitcoin
Market Price
Per Bitcoin
Market Price
Per Bitcoin at
Market Price
at End of
During
(in thousands)
During
(in thousands)
End of Quarter
(in thousands)
Quarter *
Quarter (a)
(b)
Quarter (c)
(d)
(e)
(f)
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
December 31, 2022
132,500
$
15,460.00
$
2,048,450
$
21,478.80
$
2,845,941
$
16,556.32
$
2,193,712
March 31, 2023
140,000
$
16,490.00
$
2,308,600
$
29,190.04
$
4,086,606
$
28,468.44
$
3,985,582
June 30, 2023
152,333
$
24,750.00
$
3,770,242
$
31,443.67
$
4,789,909
$
30,361.51
$
4,625,060
*
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, compliance and
internal control failures at exchanges, 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 FROM OPERATIONS
(in thousands)
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Reconciliation of non-GAAP loss from
operations:
Loss from operations
$
(26,708
)
$
(918,123
)
$
(47,015
)
$
(1,088,083
)
Share-based compensation expense
15,494
15,294
33,049
29,688
Non-GAAP loss from operations
$
(11,214
)
$
(902,829
)
$
(13,966
)
$
(1,058,395
)
MICROSTRATEGY
INCORPORATED
RECONCILIATION OF GAAP TO
NON-GAAP MEASURES
NET INCOME (LOSS) AND DILUTED
EARNINGS (LOSS) PER SHARE
(in thousands, except per
share data)
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Reconciliation of non-GAAP net income
(loss):
Net income (loss)
$
22,243
$
(1,062,298
)
$
483,436
$
(1,193,049
)
Share-based compensation expense
15,494
15,294
33,049
29,688
Interest expense arising from amortization
of debt issuance costs
2,190
2,168
4,400
4,297
Gain on debt extinguishment
0
0
(44,686
)
0
Income tax effects (1)
(2,998
)
(3,898
)
5,768
(7,342
)
Non-GAAP net income (loss)
$
36,929
$
(1,048,734
)
$
481,967
$
(1,166,406
)
Reconciliation of non-GAAP diluted
earnings (loss) per share (2):
Diluted earnings (loss) per share
$
1.52
$
(94.01
)
$
33.56
$
(105.64
)
Share-based compensation expense (per
diluted share)
0.96
1.35
2.27
2.63
Interest expense arising from amortization
of debt issuance costs (per diluted share) (3)
0.03
0.19
0.06
0.38
Gain on debt extinguishment (per diluted
share)
0.00
0.00
(3.07
)
0.00
Income tax effects (per diluted share)
(3)
(0.16
)
(0.34
)
0.46
(0.65
)
Non-GAAP diluted earnings (loss) per
share
$
2.35
$
(92.81
)
$
33.28
$
(103.28
)
(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, interest expense for amortization of debt issuance
costs, and gain on debt extinguishment.
(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.
(3)
For the three and six months ended June 30, 2023, interest
expense from the amortization of issuance costs of the Convertible
Notes has been added back to the numerator in the GAAP diluted
earnings per share calculation, and therefore the per diluted share
effects of the amortization of issuance costs of the Convertible
Notes have been excluded from the “Interest expense arising from
amortization of debt issuance costs (per diluted share)” and
“Income tax effects (per diluted share)” lines in the above
reconciliation for the three and six months ended June 30,
2023.
MICROSTRATEGY
INCORPORATED
RECONCILIATION OF GAAP TO
NON-GAAP MEASURES
CONSTANT CURRENCY
(in thousands)
Three Months Ended
June 30,
(unaudited)
Foreign
Non-GAAP
Currency
Non-GAAP
Constant
Exchange Rate
Constant
GAAP %
Currency %
GAAP
Impact (1)
Currency (2)
GAAP
Change
Change (3)
2023
2023
2023
2022
2023
2023
Revenues
Product licenses
$
15,522
$
(658
)
$
16,180
$
20,129
-22.9
%
-19.6
%
Subscription services
19,878
(328
)
20,206
14,017
41.8
%
44.2
%
Total product licenses and subscription
services
35,400
(986
)
36,386
34,146
3.7
%
6.6
%
Product support
66,081
34
66,047
66,521
-0.7
%
-0.7
%
Other services
18,919
(147
)
19,066
21,406
-11.6
%
-10.9
%
Total revenues
120,400
(1,099
)
121,499
122,073
-1.4
%
-0.5
%
Six Months Ended
June 30,
(unaudited)
Foreign
Non-GAAP
Currency
Non-GAAP
Constant
Exchange Rate
Constant
GAAP %
Currency %
GAAP
Impact (1)
Currency (2)
GAAP
Change
Change (3)
2023
2023
2023
2022
2023
2023
Revenues
Product licenses
$
32,934
$
(1,715
)
$
34,649
$
36,642
-10.1
%
-5.4
%
Subscription services
38,688
(1,062
)
39,750
26,862
44.0
%
48.0
%
Total product licenses and subscription
services
71,622
(2,777
)
74,399
63,504
12.8
%
17.2
%
Product support
131,562
(1,458
)
133,020
133,672
-1.6
%
-0.5
%
Other services
39,131
(986
)
40,117
44,174
-11.4
%
-9.2
%
Total revenues
242,315
(5,221
)
247,536
241,350
0.4
%
2.6
%
(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)
June 30,
December 31,
June 30,
2023
2022*
2022
(unaudited)
(unaudited)
Current:
Deferred product licenses revenue
$
974
$
2,825
$
754
Deferred subscription services revenue
49,898
51,861
40,295
Deferred product support revenue
141,605
155,366
143,524
Deferred other services revenue
3,340
7,376
3,525
Total current deferred revenue and advance
payments
$
195,817
$
217,428
$
188,098
Non-current:
Deferred product licenses revenue
$
2,493
$
2,742
$
0
Deferred subscription services revenue
2,888
3,030
2,639
Deferred product support revenue
5,340
6,387
5,272
Deferred other services revenue
523
604
586
Total non-current deferred revenue and
advance payments
$
11,244
$
12,763
$
8,497
Total current and non-current:
Deferred product licenses revenue
$
3,467
$
5,567
$
754
Deferred subscription services revenue
52,786
54,891
42,934
Deferred product support revenue
146,945
161,753
148,796
Deferred other services revenue
3,863
7,980
4,111
Total current and non-current deferred
revenue and advance payments
$
207,061
$
230,191
$
196,595
* Derived from audited financial
statements.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230801942986/en/
MicroStrategy Incorporated Shirish Jajodia Investor Relations
ir@microstrategy.com (703) 848-8600
MicroStrategy (NASDAQ:MSTR)
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