- 6,067 bitcoins acquired since the end of Q2 for $167.0 million,
or $27,531 per bitcoin
- 158,400 bitcoin holdings at a total cost of $4.69 billion, or
$29,586 per bitcoin, as of October 31, 2023
- Total Revenues of $129.5 million, up 3% year-over-year
- Software Licenses Revenues of $45.0 million, up 16%
year-over-year
- Subscription Services Revenues of $21.0 million, up 28%
year-over-year
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, 2023 (the third quarter of
its 2023 fiscal year).
“The business intelligence industry stands at the forefront of
innovation with the integration of AI-capabilities, and
MicroStrategy was first-to-market with our inaugural MicroStrategy
AI software released in the third quarter, which leverages
Microsoft Azure OpenAI. Total revenue also grew in the third
quarter off the continued growth in cloud as well as a strong
quarter in product license revenues. We believe MicroStrategy is
well situated to capitalize on both the tailwinds in bitcoin and
growth in our BI business,” said Phong Le, President and Chief
Executive Officer, MicroStrategy.
“We further increased our total bitcoin holdings to 158,400
bitcoins, adding 6,067 bitcoins since the end of the second
quarter. Our commitment to acquire and hold bitcoin remains strong,
especially with the promising backdrop of potential increased
institutional adoption. And while we continue to grow our strong
balance sheet, our Q3 operating results and growth in total
revenues reflect the resiliency of our software business and
establish a solid foundation to capitalize on AI in BI,” said
Andrew Kang, Chief Financial Officer, MicroStrategy.
Third Quarter 2023 Financial Highlights
- Revenues: Total revenues for the third quarter of 2023
were $129.5 million, a 3.3% increase, or a 1.1% increase on a
non-GAAP constant currency basis, compared to the third quarter of
2022. Product licenses and subscription services revenues for the
third quarter of 2023 were $45.0 million, a 16.3% increase, or a
14.3% increase on a non-GAAP constant currency basis, compared to
the third quarter of 2022. Product support revenues for the third
quarter of 2023 were $66.9 million, a 1.3% increase, or a 1.0%
decrease on a non-GAAP constant currency basis, compared to the
third quarter of 2022. Other services revenues for the third
quarter of 2023 were $17.6 million, a 14.9% decrease, or a 17.0%
decrease on a non-GAAP constant currency basis, compared to the
third quarter of 2022.
- Gross Profit: Gross profit for the third quarter of 2023
was $102.8 million, representing a 79.4% gross margin, compared to
a gross profit of $100.0 million, representing a gross margin of
79.8%, for the third quarter of 2022.
- Operating Expenses: Operating expenses for the third
quarter of 2023 were $128.0 million, a 36.3% increase compared to
the third quarter of 2022. Operating expenses include impairment
losses on the Company’s digital assets, which were $33.6 million
during the third quarter of 2023, compared to $0.7 million in the
third quarter of 2022.
- (Loss) Income from Operations and Net Loss: Loss from
operations for the third quarter of 2023 was $25.2 million,
compared to income from operations of $6.1 million for the third
quarter of 2022. Net loss for the third quarter of 2023 was $143.4
million, or $10.09 per share on a diluted basis, as compared to a
net loss of $27.1 million, or $2.39 per share on a diluted basis,
for the third quarter of 2022. Digital asset impairment losses of
$33.6 million and $0.7 million for the third quarter of 2023 and
2022, respectively, were reflected in these amounts. Provision for
income taxes of $109.6 million and $24.0 million for the third
quarter of 2023 and 2022, respectively, were reflected in net loss,
principally reflecting changes in the valuation allowance on the
Company’s deferred tax asset related to the impairment on its
bitcoin holdings.
- Cash and Cash Equivalents: As of September 30, 2023, the
Company had cash and cash equivalents of $45.0 million, as compared
to $43.8 million as of December 31, 2022, an increase of $1.2
million.
- Digital Assets: As of September 30, 2023, the carrying
value of the Company’s digital assets (comprised of approximately
158,245 bitcoins) was $2.451 billion, which reflects cumulative
impairment losses of $2.230 billion since acquisition and an
average carrying amount per bitcoin of approximately $15,491. As of
September 30, 2023, the original cost basis and market value of the
Company’s bitcoin were $4.681 billion and $4.277 billion,
respectively, which reflects an average cost per bitcoin of
approximately $29,582 and a market price per bitcoin of $27,030.47,
respectively.
- Sales Agreement: On August 1, 2023, MicroStrategy
entered into a Sales Agreement (the “August 2023 Sales Agreement”)
with Cowen and Company, LLC, Canaccord Genuity LLC, and Berenberg
Capital Markets LLC, as agents (collectively, the “August 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 $750.0 million from time to time through the August
2023 Sales Agents. During the three months ended September 30,
2023, the Company issued and sold 403,362 shares of its class A
common stock under the August 2023 Sales Agreement for aggregate
net proceeds (less sales commissions and expenses) of approximately
$147.2 million. As of September 30, 2023, approximately $602.1
million of the Company’s class A common stock remained available
for issuance and sale pursuant to the August 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 and nine months ended September 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 “Q3 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) 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 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 certain 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 certain 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 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 and other potentially
adverse tax consequences; 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
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Revenues:
Product licenses
$
24,045
$
22,286
$
56,979
$
58,928
Subscription services
20,974
16,414
59,662
43,276
Total product licenses and subscription
services
45,019
38,700
116,641
102,204
Product support
66,860
66,010
198,422
199,682
Other services
17,583
20,650
56,714
64,824
Total revenues
129,462
125,360
371,777
366,710
Cost of revenues:
Product licenses
342
406
1,320
1,314
Subscription services
8,028
6,395
23,100
17,303
Total product licenses and subscription
services
8,370
6,801
24,420
18,617
Product support
5,531
5,224
17,115
15,542
Other services
12,760
13,360
40,188
42,107
Total cost of revenues
26,661
25,385
81,723
76,266
Gross profit
102,801
99,975
290,054
290,444
Operating expenses:
Sales and marketing
35,606
35,409
109,372
105,511
Research and development
29,660
30,498
90,372
95,811
General and administrative
29,223
27,283
85,959
82,491
Digital asset impairment losses
33,559
727
76,613
1,088,656
Total operating expenses
128,048
93,917
362,316
1,372,469
(Loss) income from operations
(25,247
)
6,058
(72,262
)
(1,082,025
)
Interest expense, net
(11,006
)
(14,073
)
(37,031
)
(38,299
)
Gain on debt extinguishment
0
0
44,686
0
Other income, net
2,419
4,897
726
12,242
Loss before income taxes
(33,834
)
(3,118
)
(63,881
)
(1,108,082
)
Provision for (benefit from) income
taxes
109,607
23,961
(403,876
)
112,046
Net (loss) income
$
(143,441
)
$
(27,079
)
$
339,995
$
(1,220,128
)
Basic (loss) earnings per share
(1)
$
(10.09
)
$
(2.39
)
$
29.15
$
(107.99
)
Weighted average shares outstanding used
in computing basic (loss) earnings per share
14,221
11,308
11,665
11,299
Diluted (loss) earnings per share
(1)
$
(10.09
)
$
(2.39
)
$
23.87
$
(107.99
)
Weighted average shares outstanding used
in computing diluted (loss) earnings per share
14,221
11,308
14,512
11,299
(1)
Basic and fully diluted (loss) earnings
per share for class A and class B common stock are the same.
MICROSTRATEGY
INCORPORATED
CONSOLIDATED BALANCE
SHEETS
(in thousands, except per
share data)
September 30,
December 31,
2023
2022*
(unaudited)
Assets
Current assets
Cash and cash equivalents
$
45,009
$
43,835
Restricted cash
1,865
7,033
Accounts receivable, net
128,650
189,280
Prepaid expenses and other current
assets
24,041
24,418
Total current assets
199,565
264,566
Digital assets
2,451,374
1,840,028
Property and equipment, net
30,192
32,311
Right-of-use assets
54,542
61,299
Deposits and other assets
24,156
23,916
Deferred tax assets, net
614,112
188,152
Total Assets
$
3,373,941
$
2,410,272
Liabilities and Stockholders’ Equity
(Deficit)
Current liabilities
Accounts payable, accrued expenses, and
operating lease liabilities
$
34,306
$
42,976
Accrued compensation and employee
benefits
43,405
53,716
Accrued interest
10,368
2,829
Current portion of long-term debt, net
475
454
Deferred revenue and advance payments
179,167
217,428
Total current liabilities
267,721
317,403
Long-term debt, net
2,180,038
2,378,560
Deferred revenue and advance payments
7,638
12,763
Operating lease liabilities
59,720
67,344
Other long-term liabilities
18,231
17,124
Deferred tax liabilities
198
198
Total liabilities
2,533,546
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; 21,227 shares issued and 12,543 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
2,726,191
1,841,120
Treasury stock, at cost; 8,684 shares and
8,684 shares, respectively
(782,104
)
(782,104
)
Accumulated other comprehensive loss
(15,355
)
(13,801
)
Accumulated deficit
(1,088,360
)
(1,428,355
)
Total Stockholders’ Equity
(Deficit)
840,395
(383,120
)
Total Liabilities and Stockholders’
Equity (Deficit)
$
3,373,941
$
2,410,272
* Derived from audited financial
statements.
MICROSTRATEGY
INCORPORATED
CONSOLIDATED CONDENSED
STATEMENTS OF CASH FLOWS
(in thousands)
Nine Months Ended
September 30,
2023
2022
(unaudited)
(unaudited)
Net cash provided by operating
activities
$
11,528
$
21,409
Net cash used in investing activities
(690,550
)
(233,329
)
Net cash provided by financing
activities
676,025
220,051
Effect of foreign exchange rate changes on
cash, cash equivalents, and restricted cash
(997
)
(5,597
)
Net (decrease) increase in cash, cash
equivalents, and restricted cash
(3,994
)
2,534
Cash, cash equivalents, and restricted
cash, beginning of period
50,868
64,434
Cash, cash equivalents, and restricted
cash, end of period
$
46,874
$
66,968
MICROSTRATEGY
INCORPORATED
REVENUE AND COST OF REVENUE
DETAIL
(in thousands)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Revenues
Product licenses and subscription
services:
Product licenses
$
24,045
$
22,286
$
56,979
$
58,928
Subscription services
20,974
16,414
59,662
43,276
Total product licenses and subscription
services
45,019
38,700
116,641
102,204
Product support
66,860
66,010
198,422
199,682
Other services:
Consulting
16,676
19,545
53,993
61,253
Education
907
1,105
2,721
3,571
Total other services
17,583
20,650
56,714
64,824
Total revenues
129,462
125,360
371,777
366,710
Cost of revenues
Product licenses and subscription
services:
Product licenses
342
406
1,320
1,314
Subscription services
8,028
6,395
23,100
17,303
Total product licenses and subscription
services
8,370
6,801
24,420
18,617
Product support
5,531
5,224
17,115
15,542
Other services:
Consulting
12,134
12,267
38,326
38,404
Education
626
1,093
1,862
3,703
Total other services
12,760
13,360
40,188
42,107
Total cost of revenues
26,661
25,385
81,723
76,266
Gross profit
$
102,801
$
99,975
$
290,054
$
290,444
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 (Disposed) *
Approximate Average Purchase
or Sale Price Per 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
Digital asset purchases
(g)
161,681
161,681
5,912
27,348
Digital asset impairment losses
(33,559
)
(33,559
)
Balance at September 30, 2023
$
4,681,149
$
(2,229,775
)
$
2,451,374
158,245
$
29,582
*
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.
(g)
In the third quarter of 2023,
MicroStrategy purchased bitcoin using $147.3 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)
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, 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
September 30, 2023
158,245
$
24,900.00
$
3,940,301
$
31,862.21
$
5,042,035
$
27,030.47
$
4,277,437
*
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 (INCOME) FROM
OPERATIONS
(in thousands)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Reconciliation of non-GAAP (loss)
income from operations:
(Loss) income from operations
$
(25,247
)
$
6,058
$
(72,262
)
$
(1,082,025
)
Share-based compensation expense
16,806
16,899
49,855
46,587
Non-GAAP (loss) income from operations
$
(8,441
)
$
22,957
$
(22,407
)
$
(1,035,438
)
MICROSTRATEGY
INCORPORATED
RECONCILIATION OF GAAP TO
NON-GAAP MEASURES
NET (LOSS) INCOME AND DILUTED
(LOSS) EARNINGS PER SHARE
(in thousands, except per
share data)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Reconciliation of non-GAAP net (loss)
income:
Net (loss) income
$
(143,441
)
$
(27,079
)
$
339,995
$
(1,220,128
)
Share-based compensation expense
16,806
16,899
49,855
46,587
Interest expense arising from amortization
of debt issuance costs
2,199
2,193
6,599
6,490
Gain on debt extinguishment
0
0
(44,686
)
0
Income tax effects (1)
(3,230
)
(2,844
)
2,538
(10,186
)
Non-GAAP net (loss) income
$
(127,666
)
$
(10,831
)
$
354,301
$
(1,177,237
)
Reconciliation of non-GAAP diluted
(loss) earnings per share (2):
Diluted (loss) earnings per share
$
(10.09
)
$
(2.39
)
$
23.87
$
(107.99
)
Share-based compensation expense (per
diluted share)
1.18
1.49
3.44
4.12
Interest expense arising from amortization
of debt issuance costs (per diluted share) (3)
0.15
0.19
0.09
0.57
Gain on debt extinguishment (per diluted
share)
0.00
0.00
(3.08
)
0.00
Income tax effects (per diluted share)
(3)
(0.22
)
(0.25
)
0.27
(0.89
)
Non-GAAP diluted (loss) earnings per
share
$
(8.98
)
$
(0.96
)
$
24.59
$
(104.19
)
(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 nine months ended September 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 nine months ended September 30,
2023.
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)
2023
2023
2023
2022
2023
2023
Revenues
Product licenses
$
24,045
$
368
$
23,677
$
22,286
7.9
%
6.2
%
Subscription services
20,974
410
20,564
16,414
27.8
%
25.3
%
Total product licenses and subscription
services
45,019
778
44,241
38,700
16.3
%
14.3
%
Product support
66,860
1,530
65,330
66,010
1.3
%
-1.0
%
Other services
17,583
446
17,137
20,650
-14.9
%
-17.0
%
Total revenues
129,462
2,754
126,708
125,360
3.3
%
1.1
%
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)
2023
2023
2023
2022
2023
2023
Revenues
Product licenses
$
56,979
$
(127
)
$
57,106
$
58,928
-3.3
%
-3.1
%
Subscription services
59,662
(7
)
59,669
43,276
37.9
%
37.9
%
Total product licenses and subscription
services
116,641
(134
)
116,775
102,204
14.1
%
14.3
%
Product support
198,422
377
198,045
199,682
-0.6
%
-0.8
%
Other services
56,714
(202
)
56,916
64,824
-12.5
%
-12.2
%
Total revenues
371,777
41
371,736
366,710
1.4
%
1.4
%
(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. Beginning in the third
quarter of 2023, the term “international” refers to operations
outside of the United States and Canada only where the functional
currency is the local currency (i.e., excluding any location whose
economy is considered highly inflationary).
(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,
2023
2022*
2022
(unaudited)
(unaudited)
Current:
Deferred product licenses revenue
$
2,814
$
2,825
$
442
Deferred subscription services revenue
45,737
51,861
38,272
Deferred product support revenue
126,087
155,366
123,203
Deferred other services revenue
4,529
7,376
4,017
Total current deferred revenue and advance
payments
$
179,167
$
217,428
$
165,934
Non-current:
Deferred product licenses revenue
$
9
$
2,742
$
70
Deferred subscription services revenue
2,845
3,030
2,943
Deferred product support revenue
4,304
6,387
5,172
Deferred other services revenue
480
604
569
Total non-current deferred revenue and
advance payments
$
7,638
$
12,763
$
8,754
Total current and non-current:
Deferred product licenses revenue
$
2,823
$
5,567
$
512
Deferred subscription services revenue
48,582
54,891
41,215
Deferred product support revenue
130,391
161,753
128,375
Deferred other services revenue
5,009
7,980
4,586
Total current and non-current deferred
revenue and advance payments
$
186,805
$
230,191
$
174,688
* Derived from audited financial
statements.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231101160672/en/
MicroStrategy Incorporated Shirish Jajodia Investor Relations
ir@microstrategy.com (703) 848-8600
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