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MicroStrategy Announces Fourth Quarter 2021 Financial Results

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TYSONS CORNER, Va., February 01, 2022--(BUSINESS WIRE)--MicroStrategy® Incorporated (Nasdaq: MSTR) ("MicroStrategy"), the largest independent publicly-traded business intelligence company, today announced financial results for the three-month period ended December 31, 2021 (the fourth quarter of its 2021 fiscal year).

"2021 was another transformational year for MicroStrategy. Our software business returned to positive revenue growth for the first time since 2014, highlighted by our enterprise analytics business delivering another strong quarter as we saw a growing adoption of the MicroStrategy platform, especially in the Cloud," said Michael J. Saylor, CEO, MicroStrategy.

"We also significantly expanded our bitcoin holdings in the quarter, adding over 10,300 bitcoins to our holdings after successfully raising capital in the quarter through our at-the-market equity offering. Today, MicroStrategy is the world’s largest publicly traded corporate owner of bitcoin with over 125,000 bitcoins. We will continue to evaluate opportunities to raise additional capital to execute on our bitcoin acquisition strategy."

Fourth Quarter 2021 Financial Highlights

  • Revenues: Total revenues for the fourth quarter of 2021 were $134.5 million, a 2.4% increase, or a 4.4% increase on a non-GAAP constant currency basis, compared to the fourth quarter of 2020. Product licenses and subscription services revenues for the fourth quarter of 2021 were $44.4 million, a 15.1% increase, or an 18.3% increase on a non-GAAP constant currency basis, compared to the fourth quarter of 2020. Product support revenues for the fourth quarter of 2021 were $69.1 million, a 3.8% decrease, or a 2.5% decrease on a non-GAAP constant currency basis, compared to the fourth quarter of 2020. Other services revenues for the fourth quarter of 2021 were $21.0 million, an immaterial change, or a 2.4% increase on a non-GAAP constant currency basis, compared to the fourth quarter of 2020.

  • Gross Profit: Gross profit for the fourth quarter of 2021 was $110.5 million, representing an 82.2% gross margin, compared to a gross margin of 84.2% in the fourth quarter of 2020.

  • Operating Expenses: Operating expenses for the fourth quarter of 2021 were $248.0 million, a 125.1% increase compared to the fourth quarter of 2020. Operating expenses include impairment losses on MicroStrategy’s digital assets, which were $146.6 million during the fourth quarter of 2021, compared to $26.5 million in the fourth quarter of 2020.

  • (Loss) Income from Operations and Net (Loss) Income: Loss from operations for the fourth quarter of 2021 was $137.5 million versus income from operations of $0.4 million for the fourth quarter of 2020. Net loss for the fourth quarter of 2021 was $90.0 million, or $8.43 per share on a diluted basis, as compared to net income of $2.7 million, or $0.27 per share on a diluted basis, for the fourth quarter of 2020. Digital asset impairment charges of $146.6 million and $26.5 million for the fourth quarter of 2021 and 2020, respectively, were reflected in these amounts.

  • Cash and Cash Equivalents: As of December 31, 2021, MicroStrategy had cash and cash equivalents of $63.4 million, as compared to $59.7 million as of December 31, 2020, an increase of $3.7 million.

  • Digital Assets: As of December 31, 2021, the carrying value of MicroStrategy’s digital assets (comprised of approximately 124,391 bitcoins) was $2.850 billion, which reflects cumulative impairment losses of $901.3 million since acquisition and an average carrying amount per bitcoin of approximately $22,913. As of December 31, 2021, the original cost basis and market value of MicroStrategy’s bitcoin were $3.752 billion and $5.707 billion, respectively, which reflects an average cost per bitcoin of approximately $30,159 and a market price per bitcoin of $45,879.97, respectively. Additional information on MicroStrategy’s digital asset holdings is included in the "Digital Assets – Additional Information" tables at the end of this press release.

  • Open Market Sale Agreement: On June 14, 2021, MicroStrategy entered into an Open Market Sale Agreement (the "Open Market Sale Agreement") with Jefferies LLC, as agent ("Jefferies"), pursuant to which MicroStrategy issued and sold shares of its class A common stock having an aggregate offering price of approximately $1.0 billion from time to time through Jefferies. During the three months ended December 31, 2021 the Company sold 858,588 shares of its class A common stock under the Open Market Sale Agreement, at an average gross price per share of approximately $694.20, for aggregate net proceeds (less $5.0 million in sales commissions and expenses) of approximately $591.0 million. As of December 31, 2021, the cumulative aggregate offering price of the shares of class A common stock sold under the Open Market Sale Agreement was approximately $1.0 billion, inclusive of sales commissions, constituting the maximum program amount under the Open Market Sale Agreement.

The tables at the end of this press release include a reconciliation of GAAP to non-GAAP financial measures for the three and twelve months ended December 31, 2021 and 2020. 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 2021 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.

MicroStrategy uses its Intelligent Enterprise platform across the enterprise and has created an interactive dossier with quarterly financial performance data. Anyone can access the MSTR Financials dossier via a web browser, or by downloading the MicroStrategy Library app on an iOS or Android device. To download the native apps, visit MicroStrategy Library for iOS or MicroStrategy Library for Android.

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 impact of share-based compensation expense, interest expense arising from the amortization of debt issuance costs and (in 2020, before the adoption of Accounting Standards Update No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity ("ASU 2020-06")) the debt discount related to MicroStrategy’s long-term debt, and related income tax effects, and (iii) non-GAAP constant currency revenues that exclude foreign currency exchange rate fluctuations. These supplemental financial measures are not measurements of financial performance under generally accepted accounting principles in the United States ("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 impact of (i) share-based compensation expense, (ii) non-cash interest expense arising from the amortization of debt issuance costs and (in 2020, before the adoption of ASU 2020-06) the debt discount related to MicroStrategy’s long-term debt, and (iii) related income tax effects. The third set of supplemental financial measures excludes changes resulting from fluctuations in foreign currency exchange rates so that results may be compared to the same period in the prior year on a non-GAAP constant currency basis. MicroStrategy believes the use of these non-GAAP financial measures can also facilitate comparison of MicroStrategy’s operating results to those of its competitors.

Conference Call

MicroStrategy will be discussing its fourth quarter 2021 financial results on a live Video Webinar today beginning at approximately 5:00 p.m. EST. 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) grow our enterprise analytics software business to promote our vision of Intelligence Everywhere and (2) 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. 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," 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: 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 below the value at which the Company’s bitcoins are carried on its balance sheet; gains or losses on sales of bitcoins that the Company would incur upon any sale of its bitcoins; changes in the accounting treatment of the Company’s bitcoin holdings; changes in securities laws or other laws or regulations relating to bitcoin that could adversely affect the price of bitcoin or the Company’s ability to own bitcoin; a decrease in liquidity in the markets in which bitcoins are traded; security breaches, cyberattacks, unauthorized access, loss of private keys, or fraud that results in the Company’s loss of its bitcoins; 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 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; impacts of the COVID-19 pandemic; competitive factors; general economic conditions; currency fluctuations; and other risks detailed in MicroStrategy’s registration statements and periodic reports filed with the Securities and Exchange Commission. 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,

2021

2020

2021

2020*

(unaudited)

(unaudited)

(unaudited)

Revenues

Product licenses

$

32,543

$

29,770

$

101,804

$

86,743

Subscription services

11,848

8,788

43,069

33,082

Total product licenses and subscription services

44,391

38,558

144,873

119,825

Product support

69,146

71,886

281,209

284,434

Other services

20,978

20,875

84,680

76,476

Total revenues

134,515

131,319

510,762

480,735

Cost of revenues

Product licenses

431

564

1,721

2,293

Subscription services

5,181

3,321

16,901

14,833

Total product licenses and subscription services

5,612

3,885

18,622

17,126

Product support

4,901

4,743

19,254

23,977

Other services

13,490

12,157

54,033

49,952

Total cost of revenues

24,003

20,785

91,909

91,055

Gross profit

110,512

110,534

418,853

389,680

Operating expenses

Sales and marketing

43,413

39,111

160,141

148,910

Research and development

30,875

24,955

117,117

103,561

General and administrative

27,104

19,622

95,501

80,136

Digital asset impairment losses

146,587

26,456

830,621

70,698

Total operating expenses

247,979

110,144

1,203,380

403,305

(Loss) income from operations

(137,467

)

390

(784,527

)

(13,625

)

Interest (expense) income, net

(11,629

)

(1,917

)

(29,149

)

710

Other income (expense), net

656

(2,506

)

2,287

(7,038

)

Loss before income taxes

(148,440

)

(4,033

)

(811,389

)

(19,953

)

Benefit from income taxes

(58,463

)

(6,694

)

(275,909

)

(12,429

)

Net (loss) income

$

(89,977

)

$

2,661

$

(535,480

)

$

(7,524

)

Basic (loss) earnings per share (1):

$

(8.43

)

$

0.28

$

(53.44

)

$

(0.78

)

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

10,679

9,408

10,020

9,684

Diluted (loss) earnings per share (1):

$

(8.43

)

$

0.27

$

(53.44

)

$

(0.78

)

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

10,679

9,849

10,020

9,684

(1)

Basic and fully diluted (loss) earnings 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,

2021

2020*

(unaudited)

Assets

Current assets

Cash and cash equivalents

$

63,356

$

59,675

Restricted cash

1,078

1,084

Accounts receivable, net

189,280

197,461

Prepaid expenses and other current assets

14,251

14,400

Total current assets

267,965

272,620

Digital assets

2,850,210

1,054,302

Property and equipment, net

36,587

42,975

Right-of-use assets

66,760

73,597

Deposits and other assets

15,820

15,615

Deferred tax assets, net

319,782

6,503

Total Assets

$

3,557,124

$

1,465,612

Liabilities and Stockholders’ Equity

Current liabilities

Accounts payable, accrued expenses, and operating lease liabilities

$

46,084

$

44,848

Accrued compensation and employee benefits

54,548

49,249

Accrued interest

1,493

271

Deferred revenue and advance payments

209,860

191,250

Total current liabilities

311,985

285,618

...

Long-term debt, net

2,155,151

486,366

Deferred revenue and advance payments

8,089

14,662

Operating lease liabilities

76,608

...