Press release

MicroStrategy Announces Fourth Quarter 2023 Financial Results; Now Holds 190,000 BTC

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Sponsored by Businesswire

MicroStrategy® Incorporated (Nasdaq: MSTR) (“MicroStrategy” or the “Company”), the largest corporate holder of bitcoin and the largest independent publicly-traded business intelligence company, today announced financial results for the three-month period ended December 31, 2023 (the fourth quarter of its 2023 fiscal year).

“2023 was an extraordinary year for MicroStrategy as we strategically raised capital to significantly increase our bitcoin holdings, and continued to innovate, including by developing and launching MicroStrategy AI, our first to market AI-based BI tool. We achieved double-digit subscription services revenue growth for both the fourth quarter and full year, demonstrating our ongoing commitment to transition our business to the cloud. We believe that the combination of our operating structure, bitcoin strategy, and focus on technology innovation provides a unique opportunity for value creation for our shareholders,” said Phong Le, President and Chief Executive Officer, MicroStrategy.

“We acquired 31,755 additional bitcoins since the end of the third quarter, marking the largest quarterly bitcoin holding increase in the last 3 years and the 13th consecutive quarter of adding more bitcoin on our balance sheet. We benefited from the significant increase in bitcoin prices in Q4 and we also continued to leverage our strategic capital markets activities and cash on hand to accumulate more bitcoin and accrete incremental value for our shareholders. It is through our unique bitcoin strategy and solid track record that we now hold 190,000 bitcoins at an aggregate purchase price of $31,224,” said Andrew Kang, Chief Financial Officer, MicroStrategy.

Fourth Quarter 2023 Financial Highlights

  • Revenues: Total revenues for the fourth quarter of 2023 were $124.5 million, a 6.1% decrease, or a 7.8% decrease on a non-GAAP constant currency basis, compared to the fourth quarter of 2022. Product licenses and subscription services revenues for the fourth quarter of 2023 were $39.9 million, an 11.4% decrease, or a 13.1% decrease on a non-GAAP constant currency basis, compared to the fourth quarter of 2022. Product support revenues for the fourth quarter of 2023 were $65.5 million, a 2.1% decrease, or a 3.8% decrease on a non-GAAP constant currency basis, compared to the fourth quarter of 2022. Other services revenues for the fourth quarter of 2023 were $19.1 million, a 7.5% decrease, or a 9.4% decrease on a non-GAAP constant currency basis, compared to the fourth quarter of 2022.

  • Gross Profit: Gross profit for the fourth quarter of 2023 was $96.3 million, representing a 77.3% gross margin, compared to a gross profit of $105.8 million, representing a gross margin of 79.8%, for the fourth quarter of 2022.

  • Operating Expenses: Operating expenses for the fourth quarter of 2023 were $139.0 million, a 53.6% decrease compared to the fourth quarter of 2022. Operating expenses include impairment losses, net of gains on sale, on the Company’s digital assets, which were $39.2 million during the fourth quarter of 2023, compared to $197.6 million in the fourth quarter of 2022.

  • Loss from Operations and Net Income (Loss): Loss from operations for the fourth quarter of 2023 was $42.8 million, compared to a loss from operations of $193.7 million for the fourth quarter of 2022. Net income for the fourth quarter of 2023 was $89.1 million, or $4.96 per share on a diluted basis, as compared to a net loss $249.7 million, or $21.93 per share on a diluted basis, for the fourth quarter of 2022. Digital asset impairment losses, net of gains on sale, of $39.2 million and $197.6 million for the fourth quarter of 2023 and 2022, respectively, were reflected in these amounts. Benefit from income taxes of $149.8 million and provision for income taxes of $35.3 million for the fourth quarter of 2023 and 2022, respectively, were reflected in net income (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 December 31, 2023, the Company had cash and cash equivalents of $46.8 million, as compared to $43.8 million as of December 31, 2022, an increase of $3.0 million.

  • Digital Assets: As of December 31, 2023, the carrying value of the Company’s digital assets (comprised of approximately 189,150 bitcoins) was $3.626 billion, which reflects cumulative impairment losses of $2.269 billion since acquisition and an average carrying amount per bitcoin of approximately $19,172. As of December 31, 2023, the original cost basis and market value of the Company’s bitcoin were $5.895 billion and $8.045 billion, respectively, which reflects an average cost per bitcoin of approximately $31,168 and a market price per bitcoin of $42,531.41, respectively.

  • At-the-Market Equity Offering Programs: During the three months ended December 31, 2023, the Company issued and sold 2,266,503 shares of its class A common stock pursuant to our at-the-market equity offering programs for aggregate net proceeds (less sales commissions and expenses) of approximately $1.2 billion. As of December 31, 2023, approximately $137.8 million of the Company’s class A common stock remained available for issuance and sale pursuant to our current at-the-market equity offering program.

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 twelve months ended December 31, 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 “Q4 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 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 fourth 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) considers itself the world’s first Bitcoin development company. We are a publicly-traded operating company committed to the continued development of the bitcoin network through our activities in the financial markets, advocacy and technology innovation. As an operating business, we are able to use cashflows as well as proceeds from equity and debt financings to accumulate bitcoin, which serves as our primary treasury reserve asset. We also develop and provide industry-leading AI-powered enterprise analytics software that promotes our vision of Intelligence Everywhere, and are using our software development capabilities to develop bitcoin applications. We believe that the combination of our operating structure, bitcoin strategy and focus on technology innovation provides a unique opportunity for value creation. For more information about MicroStrategy, visit www.microstrategy.com.

MicroStrategy, MicroStrategy AI, Intelligence Everywhere, 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 continuing to shift 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; 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

 

 

Twelve Months Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022*

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Product licenses

 

$

18,372

 

 

$

27,570

 

 

$

75,351

 

 

$

86,498

 

Subscription services

 

 

21,517

 

 

 

17,470

 

 

 

81,179

 

 

 

60,746

 

Total product licenses and subscription services

 

 

39,889

 

 

 

45,040

 

 

 

156,530

 

 

 

147,244

 

Product support

 

 

65,466

 

 

 

66,839

 

 

 

263,888

 

 

 

266,521

 

Other services

 

 

19,129

 

 

 

20,675

 

 

 

75,843

 

 

 

85,499

 

Total revenues

 

 

124,484

 

 

 

132,554

 

 

 

496,261

 

 

 

499,264

 

Cost of revenues

 

 

 

 

 

 

 

 

 

 

 

 

Product licenses

 

 

609

 

 

 

358

 

 

 

1,929

 

 

 

1,672

 

Subscription services

 

 

8,676

 

 

 

7,467

 

 

 

31,776

 

 

 

24,770

 

Total product licenses and subscription services

 

 

9,285

 

 

 

7,825

 

 

 

33,705

 

 

 

26,442

 

Product support

 

 

5,319

 

 

 

5,722

 

 

 

22,434

 

 

 

21,264

 

Other services

 

 

13,617

 

 

 

13,176

 

 

 

53,805

 

 

 

55,283

 

Total cost of revenues

 

 

28,221

 

 

 

26,723

 

 

 

109,944

 

 

 

102,989

 

Gross profit

 

 

96,263

 

 

 

105,831

 

 

 

386,317

 

 

 

396,275

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

40,299

 

 

 

41,371

 

 

 

149,671

 

 

 

146,882

 

Research and development

 

 

30,158

 

 

 

31,617

 

 

 

120,530

 

 

 

127,428

 

General and administrative

 

 

29,353

 

 

 

28,930

 

 

 

115,312

 

 

 

111,421

 

Digital asset impairment losses (gains on sale), net

 

 

39,238

 

 

 

197,630

 

 

 

115,851

 

 

 

1,286,286

 

Total operating expenses

 

 

139,048

 

 

 

299,548

 

 

 

501,364

 

 

 

1,672,017

 

Loss from operations

 

 

(42,785

)

 

 

(193,717

)

 

 

(115,047

)

 

 

(1,275,742

)

Interest expense, net

 

 

(11,929

)

 

 

(14,837

)

 

 

(48,960

)

 

 

(53,136

)

Gain on debt extinguishment

 

 

0

 

 

 

0

 

 

 

44,686

 

 

 

0

 

Other (expense) income, net

 

 

(5,930

)

 

 

(5,829

)

 

 

(5,204

)

 

 

6,413

 

Loss before income taxes

 

 

(60,644

)

 

 

(214,383

)

 

 

(124,525

)

 

 

(1,322,465

)

(Benefit from) provision for income taxes

 

 

(149,770

)

 

 

35,286

 

 

 

(553,646

)

 

 

147,332

 

Net income (loss)

 

$

89,126

 

 

$

(249,669

)

 

$

429,121

 

 

$

(1,469,797

)

Basic earnings (loss) per share (1):

 

$

5.81

 

 

$

(21.93

)

 

$

31.39

 

 

$

(129.83

)

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

 

 

15,336

 

 

 

11,386

 

 

 

13,671

 

 

 

11,321

 

Diluted earnings (loss) per share (1):

 

$

4.96

 

 

$

(21.93

)

 

$

26.42

 

 

$

(129.83

)

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

 

 

18,376

 

 

 

11,386

 

 

 

16,566

 

 

 

11,321

 

 

(1) Basic and fully diluted earnings (loss) 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,

 

 

 

2023

 

 

2022*

 

 

 

(unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

46,817

 

 

$

43,835

 

Restricted cash

 

 

1,856

 

 

 

7,033

 

Accounts receivable, net

 

 

183,815

 

 

 

189,280

 

Prepaid expenses and other current assets

 

 

35,407

 

 

 

24,418

 

Total current assets

 

 

267,895

 

 

 

264,566

 

 

 

 

 

 

 

 

Digital assets

 

 

3,626,476

 

 

 

1,840,028

 

Property and equipment, net

 

 

28,941

 

 

 

32,311

 

Right-of-use assets

 

 

57,343

 

 

 

61,299

 

Deposits and other assets

 

 

24,300

 

 

 

23,916

 

Deferred tax assets, net

 

 

757,573

 

 

 

188,152

 

Total assets

 

$

4,762,528

 

 

$

2,410,272

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity (Deficit)

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable, accrued expenses, and operating lease liabilities

 

$

43,090

 

 

$

42,976

 

Accrued compensation and employee benefits

 

 

50,045

 

 

 

53,716

 

Accrued interest

 

 

1,493

 

 

 

2,829

 

Current portion of long-term debt, net

 

 

483

 

 

 

454

 

Deferred revenue and advance payments

 

 

228,162

 

 

 

217,428

 

Total current liabilities

 

 

323,273

 

 

 

317,403

 

 

 

 

 

 

 

 

Long-term debt, net

 

 

2,182,108

 

 

 

2,378,560

 

Deferred revenue and advance payments

 

 

8,524

 

 

 

12,763

 

Operating lease liabilities

 

 

61,086

 

 

 

67,344

 

Other long-term liabilities

 

 

22,208

 

 

 

17,124

 

Deferred tax liabilities

 

 

357

 

 

 

198

 

Total liabilities

 

 

2,597,556

 

 

 

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; 23,588 shares issued and 14,904 shares outstanding, and 18,269 shares issued and 9,585 shares outstanding, respectively

 

 

24

 

 

 

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

 

 

3,957,728

 

 

 

1,841,120

 

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

 

 

(782,104

)

 

 

(782,104

)

Accumulated other comprehensive loss

 

 

(11,444

)

 

 

(13,801

)

Accumulated deficit

 

 

(999,234

)

 

 

(1,428,355

)

Total stockholders’ equity (deficit)

 

 

2,164,972

 

 

 

(383,120

)

Total liabilities and stockholders’ equity (deficit)

 

$

4,762,528

 

 

$

2,410,272

 

 

* Derived from audited financial statements.

MICROSTRATEGY INCORPORATED

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

 

Twelve Months Ended

 

 

 

December 31,

 

 

 

2023

 

 

2022*

 

 

 

(unaudited)

 

 

 

 

Net cash provided by operating activities

 

$

12,712

 

 

$

3,211

 

Net cash used in investing activities

 

 

(1,905,237

)

 

 

(278,590

)

Net cash provided by financing activities

 

 

1,889,886

 

 

 

265,188

 

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

 

 

444

 

 

 

(3,375

)

Net decrease in cash, cash equivalents, and restricted cash

 

 

(2,195

)

 

 

(13,566

)

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

 

 

50,868

 

 

 

64,434

 

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

 

$

48,673

 

 

$

50,868

 

 

* 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,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022*

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Product licenses and subscription services:

 

 

 

 

 

 

 

 

 

 

 

 

Product licenses

 

$

18,372

 

 

$

27,570

 

 

$

75,351

 

 

$

86,498

 

Subscription services

 

 

21,517

 

 

 

17,470

 

 

 

81,179

 

 

 

60,746

 

Total product licenses and subscription services

 

 

39,889

 

 

 

45,040

 

 

 

156,530

 

 

 

147,244

 

Product support

 

 

65,466

 

 

 

66,839

 

 

 

263,888

 

 

 

266,521

 

Other services:

 

 

 

 

 

 

 

 

 

 

 

 

Consulting

 

 

18,082

 

 

 

19,591

 

 

 

72,075

 

 

 

80,844

 

Education

 

 

1,047

 

 

 

1,084

 

 

 

3,768

 

 

 

4,655

 

Total other services

 

 

19,129

 

 

 

20,675

 

 

 

75,843

 

 

 

85,499

 

Total revenues

 

 

124,484

 

 

 

132,554

 

 

 

496,261

 

 

 

499,264

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues

 

 

 

 

 

 

 

 

 

 

 

 

Product licenses and subscription services:

 

 

 

 

 

 

 

 

 

 

 

 

Product licenses

 

 

609

 

 

 

358

 

 

 

1,929

 

 

 

1,672

 

Subscription services

 

 

8,676

 

 

 

7,467

 

 

 

31,776

 

 

 

24,770

 

Total product licenses and subscription services

 

 

9,285

 

 

 

7,825

 

 

 

33,705

 

 

 

26,442

 

Product support

 

 

5,319

 

 

 

5,722

 

 

 

22,434

 

 

 

21,264

 

Other services:

 

 

 

 

 

 

 

 

 

 

 

 

Consulting

 

 

12,985

 

 

 

12,416

 

 

 

51,311

 

 

 

50,820

 

Education

 

 

632

 

 

 

760

 

 

 

2,494

 

 

 

4,463

 

Total other services

 

 

13,617

 

 

 

13,176

 

 

 

53,805

 

 

 

55,283

 

Total cost of revenues

 

 

28,221

 

 

 

26,723

 

 

 

109,944

 

 

 

102,989

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

$

96,263

 

 

$

105,831

 

 

$

386,317

 

 

$

396,275

 

 

* 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 (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

 

Digital asset purchases

 

(h)

 

 

1,214,340

 

 

 

 

 

 

1,214,340

 

 

 

30,905

 

 

 

39,293

 

Digital asset impairment losses

 

 

 

 

 

 

 

(39,238

)

 

 

(39,238

)

 

 

 

 

 

 

Balance at December 31, 2023

 

 

 

$

5,895,489

 

 

$

(2,269,013

)

 

$

3,626,476

 

 

 

189,150

 

 

$

31,168

 

*

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 equity 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 equity 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 equity 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 equity offering program, and Excess Cash.

(h)

In the fourth quarter of 2023, MicroStrategy purchased bitcoin using $1.201 billion of the net proceeds from its sale of class A common stock under its at-the-market equity 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

 

December 31, 2023

 

 

189,150

 

 

$

26,521.32

 

 

$

5,016,508

 

 

$

45,000.00

 

 

$

8,511,750

 

 

$

42,531.41

 

 

$

8,044,816

 

*

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. Bitcoin and bitcoin markets may be subject to manipulation and the spot price of bitcoin may be subject to fraud and manipulation. 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

 

 

Twelve Months Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

Reconciliation of non-GAAP loss from operations:

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

$

(42,785

)

 

$

(193,717

)

 

$

(115,047

)

 

$

(1,275,742

)

Share-based compensation expense

 

 

19,716

 

 

 

17,032

 

 

 

69,571

 

 

 

63,619

 

Non-GAAP loss from operations

 

$

(23,069

)

 

$

(176,685

)

 

$

(45,476

)

 

$

(1,212,123

)

 

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

 

 

Twelve Months Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

Reconciliation of non-GAAP net income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

89,126

 

 

$

(249,669

)

 

$

429,121

 

 

$

(1,469,797

)

Share-based compensation expense

 

 

19,716

 

 

 

17,032

 

 

 

69,571

 

 

 

63,619

 

Interest expense arising from amortization of debt issuance costs

 

 

2,209

 

 

 

2,204

 

 

 

8,808

 

 

 

8,694

 

Gain on debt extinguishment

 

 

0

 

 

 

0

 

 

 

(44,686

)

 

 

0

 

Income tax effects (1)

 

 

(8,600

)

 

 

(3,064

)

 

 

(6,062

)

 

 

(13,250

)

Non-GAAP net income (loss)

 

$

102,451

 

 

$

(233,497

)

 

$

456,752

 

 

$

(1,410,734

)

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share

 

$

4.96

 

 

$

(21.93

)

 

$

26.42

 

 

$

(129.83

)

Share-based compensation expense (per diluted share)

 

 

1.07

 

 

 

1.50

 

 

 

4.20

 

 

 

5.62

 

Interest expense arising from amortization of debt issuance costs (per diluted share) (3)

 

 

0.02

 

 

 

0.19

 

 

 

0.10

 

 

 

0.77

 

Gain on debt extinguishment (per diluted share)

 

 

0.00

 

 

 

0.00

 

 

 

(2.70

)

 

 

0.00

 

Income tax effects (per diluted share) (3)

 

 

(0.43

)

 

 

(0.27

)

 

 

(0.24

)

 

 

(1.17

)

Non-GAAP diluted earnings (loss) per share

 

$

5.62

 

 

$

(20.51

)

 

$

27.78

 

 

$

(124.61

)

(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 twelve months ended December 31, 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 twelve months ending December 31, 2023.

 

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)

 

 

 

2023

 

 

2023

 

 

2023

 

 

2022

 

 

2023

 

 

2023

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product licenses

 

$

18,372

 

 

$

427

 

 

$

17,945

 

 

$

27,570

 

 

 

-33.4

%

 

 

-34.9

%

Subscription services

 

 

21,517

 

 

 

303

 

 

 

21,214

 

 

 

17,470

 

 

 

23.2

%

 

 

21.4

%

Total product licenses and subscription services

 

 

39,889

 

 

 

730

 

 

 

39,159

 

 

 

45,040

 

 

 

-11.4

%

 

 

-13.1

%

Product support

 

 

65,466

 

 

 

1,137

 

 

 

64,329

 

 

 

66,839

 

 

 

-2.1

%

 

 

-3.8

%

Other services

 

 

19,129

 

 

 

388

 

 

 

18,741

 

 

 

20,675

 

 

 

-7.5

%

 

 

-9.4

%

Total revenues

 

 

124,484

 

 

 

2,255

 

 

 

122,229

 

 

 

132,554

 

 

 

-6.1

%

 

 

-7.8

%

 

 

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)

 

 

 

2023

 

 

2023

 

 

2023

 

 

2022

 

 

2023

 

 

2023

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product licenses

 

$

75,351

 

 

$

300

 

 

$

75,051

 

 

$

86,498

 

 

 

-12.9

%

 

 

-13.2

%

Subscription services

 

 

81,179

 

 

 

296

 

 

 

80,883

 

 

 

60,746

 

 

 

33.6

%

 

 

33.1

%

Total product licenses and subscription services

 

 

156,530

 

 

 

596

 

 

 

155,934

 

 

 

147,244

 

 

 

6.3

%

 

 

5.9

%

Product support

 

 

263,888

 

 

 

1,514

 

 

 

262,374

 

 

 

266,521

 

 

 

-1.0

%

 

 

-1.6

%

Other services

 

 

75,843

 

 

 

186

 

 

 

75,657

 

 

 

85,499

 

 

 

-11.3

%

 

 

-11.5

%

Total revenues

 

 

496,261

 

 

 

2,296

 

 

 

493,965

 

 

 

499,264

 

 

 

-0.6

%

 

 

-1.1

%

(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)

 

 

 

December 31,

 

 

December 31,

 

 

 

2023

 

 

2022*

 

 

 

(unaudited)

 

 

 

 

Current:

 

 

 

 

 

 

Deferred product licenses revenue

 

$

3,579

 

 

$

2,825

 

Deferred subscription services revenue

 

 

65,512

 

 

 

51,861

 

Deferred product support revenue

 

 

152,012

 

 

 

155,366

 

Deferred other services revenue

 

 

7,059

 

 

 

7,376

 

Total current deferred revenue and advance payments

 

$

228,162

 

 

$

217,428

 

 

 

 

 

 

 

 

Non-current:

 

 

 

 

 

 

Deferred product licenses revenue

 

$

0

 

 

$

2,742

 

Deferred subscription services revenue

 

 

3,097

 

 

 

3,030

 

Deferred product support revenue

 

 

4,984

 

 

 

6,387

 

Deferred other services revenue

 

 

443

 

 

 

604

 

Total non-current deferred revenue and advance payments

 

$

8,524

 

 

$

12,763

 

 

 

 

 

 

 

 

Total current and non-current:

 

 

 

 

 

 

Deferred product licenses revenue

 

$

3,579

 

 

$

5,567

 

Deferred subscription services revenue

 

 

68,609

 

 

 

54,891

 

Deferred product support revenue

 

 

156,996

 

 

 

161,753

 

Deferred other services revenue

 

 

7,502

 

 

 

7,980

 

Total current and non-current deferred revenue and advance payments

 

$

236,686

 

 

$

230,191

 

 

* Derived from audited financial statements.