MicroStrategy Incorporated (NASDAQ:MSTR) Q2 2023 Earnings Call Transcript August 1, 2023 5:00 PM ET Company Participants Shirish Jajodia - Vice President of Investor Relations and Treasury Phong Le - President & Chief Executive Officer Andrew Kang - Senior Executive Vice President & Chief Financial Officer Michael Saylor - Executive Chairman Conference Call Participants Operator Hello, everyone, and good evening. I'm Shirish Jajodia, Vice President of Investor Relations and Treasury at MicroStrategy. I'll b ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 000-24435 MICROSTRATEGY INCORPORATED Washington, D.C. 20549 (Address of Principal Executive Offices) 22182 (Zip Code) (703) 848-8600 (Registrant's telephone ...

Financial Data and Key Metrics - Total revenue for Q1 2023 was $121.9 million, representing a 2% year-over-year increase or 6% on a constant currency basis [7] - Total software licenses revenues were $36.2 million, up 23% year-over-year or 29% on a constant currency basis [3] - Subscription services revenue was $18.8 million, an increase of 46% year-over-year or 52% on a constant currency basis [8] - Product licenses revenues were $17.4 million, up 5% year-over-year, driven by strong international performance [35] - Product support revenues were $65.5 million, down $1.7 million year-over-year but flat at constant currency [36] - Other services revenues were $20.2 million, an 11% decrease year-over-year or 8% decrease at constant currency, primarily due to a decline in consulting revenues [36] Business Line Data and Key Metrics - Cloud subscription services revenue grew 46% year-over-year, reflecting strong demand for cloud-based solutions [8] - The company acquired 7,500 Bitcoin in Q1 2023, the most in a single quarter since Q4 2021, for a net aggregate purchase amount of $179 million [9] - As of March 31, 2023, the company held 140,000 Bitcoins at an aggregate cost of $4.2 billion, with an average cost of approximately $29,800 per Bitcoin [10] - The company repaid a $205 million Bitcoin-backed loan at a 22% discount, recognizing a $45 million gain on extinguishment of debt and eliminating annualized interest costs of over $15 million [12] Market Data and Key Metrics - The company's international business showed strong performance, contributing to a 5% increase in product licenses revenues [35] - Renewal rates for product support remained high at over 90% for the last six consecutive quarters [36] - The company's Bitcoin holdings are primarily in the U.S., with institutional-grade custodians and cold storage, ensuring compliance and minimizing risk [53] Company Strategy and Industry Competition - The company is focused on transitioning customers to its cloud solution, with 2/3 of total revenue being recurring in 2022, and expects this trend to improve in 2023 [38] - MicroStrategy One, the company's modern, open cloud-native BI platform, is designed to serve all analytics needs of large enterprises, with multi-cloud support and a focus on innovation in core analytics, augmented analytics, artificial intelligence, and the Lightning network [13][14][17] - The company is developing MicroStrategy Lightning, a product leveraging the Bitcoin Lightning network for e-commerce use cases and cybersecurity challenges, with a disciplined investment approach currently occupying less than 1% of R&D capability [25][27] Management Commentary on Operating Environment and Future Outlook - The company acknowledges the persistence of difficult macroeconomic conditions, which may impact revenue in the coming quarters [9] - Management remains optimistic about 2023, anticipating modest total revenue growth and continued growth in cloud subscriptions as a percentage of total revenue [54] - The company is committed to its dual strategy of growing its business intelligence software business and acquiring Bitcoin for the future [54] Other Important Information - The company raised approximately $339 million in net proceeds through the sale of Class A common shares in Q1 2023 [49] - As of March 31, 2023, 89% of the company's total Bitcoin holdings were unencumbered, compared to 63% at the end of 2022 [52] - The company's total non-GAAP operating loss in Q1 2023 was $3 million, primarily driven by a $19 million digital asset impairment charge [42] Q&A Session Summary Question: Update on cloud product progress and customer migrations - Cloud revenue grew nearly 50% year-over-year, with launches on AWS and Azure, and plans to offer Google Cloud Platform later in the year [83] - Cloud billings growth slowed to 19% year-over-year in Q1, attributed to macroeconomic conditions and delayed deals, but cloud is expected to remain a key growth driver [85] Question: Key catalysts for Bitcoin adoption by institutions - FASB fair value accounting and regulatory clarity on crypto exchanges and stable coins are seen as important catalysts for Bitcoin adoption [86][87] - Banking market volatility has increased awareness of Bitcoin's value proposition as a non-sovereign store of value [88][89] Question: Explanation of large swing in GAAP earnings related to Bitcoin - A $456 million valuation allowance release due to Bitcoin price increases drove a large tax benefit in Q1, reversing previous losses [96][97] Question: Expectations for new areas of innovation to contribute to revenue - It is too early to attribute revenue to new innovations in core BI, augmented analytics, AI, and Lightning, but more clarity is expected in the next 6-12 months [99] Question: Impact of FASB's decision on accounting rules and expected timeline - The company supports FASB's draft for fair value accounting, which could improve transparency and encourage Bitcoin adoption, with a potential implementation by the end of the year [104][105] Question: Difficulty in selling expansion deals in the current macro environment - Services revenue slowdown and delayed sales cycles indicate some belt-tightening by IT groups, but the full impact on the year remains uncertain [102][103]

(Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Commission File Number 000-24435 MICROSTRATEGY INCORPORATED (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of ...

Bitcoin Holdings and Impairments - As of December 31, 2022, the company held approximately 132,500 bitcoins with a carrying value of $1.840 billion, reflecting cumulative impairments of $2.153 billion[358] - For the year ended December 31, 2022, the company incurred impairment losses, net of gains on sale, of $1.286 billion on its bitcoin holdings[358] - The company's bitcoin acquisition strategy exposes it to various risks, including price fluctuations and regulatory changes[12] International Revenues and Currency Risks - International revenues accounted for 40.2%, 44.0%, and 41.9% of total revenues for the years ended December 31, 2022, 2021, and 2020, respectively[359] - A 10% adverse change in foreign currency exchange rates would have decreased the company's reported cash and cash equivalents by 4.5% as of December 31, 2022[362] - If average exchange rates had changed unfavorably by 10% during the year ended December 31, 2022, revenues would have decreased by 3.7%[362] Interest Expense and Loan Risks - The annual interest expense on the 2025 Secured Term Loan, based on a floating rate of 7.76%, would be approximately $16.1 million[363] - If the floating rate increased by 100 basis points, the annual interest expense on the 2025 Secured Term Loan would rise to approximately $18.2 million[363] Operational Risks - The shift from a product license model to a cloud subscription model may lead to higher future attrition rates and affect revenue recognition timing[16] - The company faces significant risks related to cybersecurity, which could adversely impact its operations and reputation[16]

February 2, 2023 Safe Harbor Statement Also, in this presentation, we will refer to certain non-GAAP financial measures. Reconciliations showing GAAP versus non-GAAP results are available in our earnings release and the appendix of this presentation, which were issued today and are available on our website at www.microstrategy.com. ■■■ Copyright © 2022 MicroStrategy Incorporated. All Rights Reserved. Who are we: MicroStrategy is the largest independent publicly-traded business intelligence company with the ...

Financial Data and Key Metrics Changes - Total revenue for 2022 was $499.3 million, a 2% increase year-over-year on a constant currency basis [12] - Total revenue for Q4 2022 was $132.6 million, down $2 million or approximately 1% year-over-year, but up 4% at constant currency [62] - Non-GAAP operating loss in Q4 was $177 million, with a digital asset impairment charge of $198 million [99] Business Line Data and Key Metrics Changes - Total software licenses revenue for 2022 was $147.2 million, a 6% increase year-over-year on a constant currency basis [12] - Subscription service revenues for Q4 were $17.5 million, an increase of 47% year-over-year [95] - Current subscription billings were $31 million, an increase of 28% year-over-year, marking the 11th consecutive quarter of double-digit growth [96] Market Data and Key Metrics Changes - As of December 31, 2022, the carrying value of Bitcoin holdings was approximately $1.8 billion, down from approximately $2.2 billion [67] - The company held a total of 132,500 bitcoins, with 63% of these holdings unpledged and unencumbered [68] - Bitcoin prices have rallied significantly in early 2023, increasing the market value of Bitcoin holdings to approximately $3.1 billion [67] Company Strategy and Development Direction - The company aims to launch MicroStrategy One, a core analytics platform designed to meet all analytics needs [15] - Focus areas for 2023 include cloud growth, employee development, and innovation in business intelligence and Bitcoin acquisition strategies [49][53] - The company remains committed to its dual strategy of growing its business intelligence and acquiring and holding Bitcoin [105] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2023, anticipating macroeconomic volatility but recognizing the ongoing need for actionable data and analytics [72] - The macroeconomic environment in 2022 was described as challenging, but management believes normalization will occur in 2023 and 2024 [80] - The company is optimistic about regulatory developments regarding fair value accounting for Bitcoin, which could enhance corporate adoption [100][117] Other Important Information - The company sold approximately 704 Bitcoins in Q4, generating capital losses expected to carry back against previous capital gains [69][123] - The company activated a $500 million at-the-market equity offering, raising approximately $46.6 million in gross proceeds [103] - The company plans to continue evaluating opportunities to use Bitcoin to generate shareholder value [102] Q&A Session Summary Question: Can you provide more detail about your sale of Bitcoin in December? - The company sold 704 Bitcoin in December, generating a capital loss expected to carry back against capital gains from 2019 [91][123] Question: What do you think are the key catalysts for more adoption of Bitcoin by corporations? - Management believes that inefficient payment networks will drive adoption as companies seek to monetize applications and facilitate microtransactions [124] Question: How is the progress of your cloud product and customer migrations? - Approximately 20% of recurring revenue is now in the cloud, with expectations for continued growth, particularly with the new FedRAMP offering [133]

MicroStrategy Incorporated (NASDAQ:MSTR) Q3 2022 Earnings Conference Call November 1, 2022 5:00 PM ET Company Participants Shirish Jajodia - Vice President, Investor Relations & Treasury Phong Le - President & Chief Executive Officer Andrew Kang - Senior Executive Vice President & Chief Financial Officer Michael Saylor - Executive Chairman Conference Call Participants Shirish Jajodia Hello, everyone, and good evening. I am Shirish Jajodia, Vice President of Investor Relations and Treasury at MicroStrategy. ...

��� Q3 2022 Financial Results November 1, 2022 Copyright © 2022 MicroStrategy Incorporated. All Rights Reserved. MicroStrategy Q3 2022 Earnings Call Safe Harbor Statement FORWARD-LOOKING STATEMENTS Some of the information we provide in this presentation regarding our future expectations, plans, and prospects may constitute forward-looking statements. Actual results may differ materially from these forward-looking statements due to various important factors, including the risk factors discussed in our most r ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION FORM 10-Q Washington, D.C. 20549 (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 000-24435 MICROSTRATEGY INCORPORATED (Exact name of registrant as specified in its charter) Delaware (State or other jurisdictio ...