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MicroStrategy(MSTR) - 2022 Q4 - Earnings Call Transcript
MSTRMicroStrategy(MSTR)2023-02-03 01:35
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Financial Data and Key Metrics Changes - Total revenue for 2022 was 499.3million,a2499.3 million, a 2% increase year-over-year on a constant currency basis [12] - Total revenue for Q4 2022 was 132.6 million, down 2millionorapproximately12 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 198million[99]BusinessLineDataandKeyMetricsChanges−Totalsoftwarelicensesrevenuefor2022was198 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 17.5million,anincreaseof4717.5 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 1.8billion,downfromapproximately1.8 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 3.1billion[67]CompanyStrategyandDevelopmentDirection−ThecompanyaimstolaunchMicroStrategyOne,acoreanalyticsplatformdesignedtomeetallanalyticsneeds[15]−Focusareasfor2023includecloudgrowth,employeedevelopment,andinnovationinbusinessintelligenceandBitcoinacquisitionstrategies[49][53]−ThecompanyremainscommittedtoitsdualstrategyofgrowingitsbusinessintelligenceandacquiringandholdingBitcoin[105]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedcautiousoptimismfor2023,anticipatingmacroeconomicvolatilitybutrecognizingtheongoingneedforactionabledataandanalytics[72]−Themacroeconomicenvironmentin2022wasdescribedaschallenging,butmanagementbelievesnormalizationwilloccurin2023and2024[80]−ThecompanyisoptimisticaboutregulatorydevelopmentsregardingfairvalueaccountingforBitcoin,whichcouldenhancecorporateadoption[100][117]OtherImportantInformation−Thecompanysoldapproximately704BitcoinsinQ4,generatingcapitallossesexpectedtocarrybackagainstpreviouscapitalgains[69][123]−Thecompanyactivateda3.1 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]