Good evening, everyone. I'm Jeremy Price, MicroStrategy's Senior Vice President of Financial Planning and Analysis and Head of Investor Relations. I'll be your moderator for MicroStrategy's 2021 Second Quarter Earnings Webinar. Before we proceed, I will read the safe harbor statement. Some of the information we provide during today's call 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 risk factors discussed in our most recent 10-Q filed with the SEC. We assume no obligation to update these forward-looking statements, which speak only as of today.

Thank you, Jeremy. I'm Michael Saylor. I'm the Chairman and CEO of MicroStrategy. I'd like to welcome all of you to today's webinar regarding our 2021 second quarter financial results. I'm here with Phong Le, our President and Chief Financial Officer. First, I'd like to pass the floor to Phong, who is going to provide an update on our operations and finance for the quarter.

Thank you, Michael. I'll start with some highlights from our second quarter performance. MicroStrategy performed well across the board, demonstrating continued momentum in our business analytics software business, while also completing another successful capital raise that expanded our digital asset holdings. We built upon our strong first quarter performance and now delivered to the strongest quarters of operational performance in years. We are pleased with the strength and consistency of our execution as we continue to benefit from the numerous product introductions we've made since 2019 and the operational changes we undertook in the first half of 2020. Total revenue in the quarter grew 13% year-over-year or 10% on a constant currency basis and it was up 6% versus Q2 2019, which is our strongest Q2 quarterly performance in six years. Our cloud offerings continue to gain traction for both new and existing customers. While we once again, got some benefit from our favorable comparison against the COVID-19 impacts during Q2 2020, our performance shows clear momentum across our entire business. License revenue grew 50% year-over-year, but more impressively grew 10% versus the second quarter of 2019. Subscription revenue in the quarter was up 29% compared to Q2 2020. Current subscription billings grew 13%, our fifth straight quarter of double-digit growth. Our Q2 subscription billings were impacted by a decrease in short-term deferred subscription revenue as we no longer include contract values that are invoiced in the future. Without this decrease, Q2 subscription billings would have grown 42%.

Thanks, Phong. I’d just like to start by reiterating the company has two strategies. The MicroStrategy software mission is to make every enterprise the more intelligent enterprise via our business intelligence software platform. Our plan regarding that is to make all of our functionality available on demand via the cloud, making it easier for all of our customers to upgrade to the cloud and make our business intelligence software faster, better, smarter, and stronger. We are well positioned to do that because that's our singular operational focus. With the exception of just a few people in legal and finance, the entire company is focused on enterprise business intelligence. That is our MicroStrategy. Where the second strategy, as you know, is a MacroStrategy, and our MacroStrategy is to acquire and hold Bitcoin. Our plan is to continue to acquire Bitcoin and continue to hold Bitcoin. It's a very straightforward strategy. Along the way, we'll be educating the world regarding the benefits of digital property. We'll advocate Bitcoin and its benefits to corporations, institutional investors, regulators, the public, and the media. We believe MicroStrategy and our MacroStrategy will keep us busy. Pursuant to our MacroStrategy, this quarter, we did complete that $500 million senior secured debt offering. That was a significant achievement for us as it was a seven-year senior note bearing interest at 6% and 18% interest. We felt that was a very favorable interest rate for a favorable timeframe. We were able to purchase 13,005 Bitcoin using the proceeds of that debt offering and we did that around $37,617 per Bitcoin. We considered that a good price. The reason we executed that deal was we believed it would be accretive to the other classes of our security holders and it presented itself at that particular moment. As Phong noted, in the entire quarter, we were able to acquire more than that – we acquired 13,759 Bitcoin at a slightly higher average price, $38,467. We are very comfortable with that acquisition. I was pleased to see us make such good progress and end the quarter with 105,085 Bitcoin. At this point, we've now invested $2.741 billion in Bitcoin. For those of you who have followed me, I believe Bitcoin is digital property. It’s the equivalent of digital gold on a big tech network, but calling it digital gold really understates it. Digital property is a more accurate term. Its ability to convey billions of dollars of value at the speed of light and to program it, plus the fact that this digital property has an open protocol that any company can write to makes it a very special and disruptive technology for this decade. We think acquiring Bitcoin at this time is a wise strategic move. There will never be more than 21 million Bitcoin, and we feel like there's a land grab right now to acquire as much as possible because Bitcoin represents a macroeconomic solution for those that want a non-sovereign store of value and also a technological solution. Bitcoin is a compelling technical solution for the energy industry. It's a compelling technical solution for big tech. It's a compelling macroeconomic solution. Because it's so decentralized, you have millions and millions of people thinking about how they can add value to Bitcoin and how to use Bitcoin to add value to their own businesses. A few general views on the Bitcoin industry right now: The China Exodus dominated the news in Q2. I think the China Exodus was truly beneficial for Bitcoin. The result was a decentralization of Bitcoin mining worldwide. Bitcoin mining is critical to the Bitcoin security network. This decentralization made Bitcoin more secure and distributed its holdings from the east to the west. Long-term, I think the westernization of Bitcoin is good for Bitcoin and the U.S. dollar, and it's advantageous for U.S. and western technology. What we are seeing is Bitcoin aligning with big tech networks like Amazon, Apple, Google, and Facebook. These networks have grown to dominance by offering digital music, digital retail, digital books, and digital communications. Now we have something new: digital property aligning on the Bitcoin network with these western networks, which is highly beneficial. Capital has flowed into Bitcoin in the second quarter. We observed this through Bitcoin miners going public. Many Bitcoin miners are either public or planning to go public, which will be a continuing trend in the coming six months. This network of publicly traded companies securing the Bitcoin network will be beneficial for the asset class as they bring financial, political, technical, and human capital to Bitcoin, enhancing the credibility of the digital property network. We observed many constructive developments with Bitcoin investors in the second quarter. More large banks in the western world are supporting Bitcoin. Large exchanges are supporting Bitcoin, and we see an increase in on-ramps. More institutional investors are supporting Bitcoin, Bitcoin funds, and Bitcoin ETFs emerging for more adoption and acceptance of Bitcoin in mainstream finance and media. If we look at Bitcoin adoption at the individual level, the most exciting news piece I have encountered is from the crypto.com survey released today. It reported that there are 114 million individual holders of Bitcoin as of the end of May or June—around that timeframe—and we're adding approximately 2 million new Bitcoin holders each week. This rapid growth signifies that Bitcoin is becoming the most widely held financial asset in history, which is extraordinary. You can’t denote 114 million holders of any stock or bond in the same manner as seen with Bitcoin. I believe this trend will persist, leading to further beneficial outcomes for Bitcoin. Lastly, I think it's clear Bitcoin is here to stay, thanks to increased attention from mainstream media and regulators who are taking a growing interest in Bitcoin. This is interpreted as a positive shift, illustrating an enthusiasm and awareness that necessitates supporting crypto and Bitcoin and the regulatory frameworks throughout the western world. This dynamic will drive constructive activity and dialogue, institutionalizing the asset class further. As developments progress, institutional investors become more comfortable holding Bitcoin, which will positively impact the asset. With that, I’d like to shift to software industry trends. The major players in software with whom we have traditionally competed are now shifting their focus toward creating cloud platforms to offer open cloud services that may compete with AWS and Azure. This change has lessened their focus on their business intelligence divisions. Generally, they are pressured to grow given the macroeconomic environment. Due to this pressure, the full-stack software vendors need to make substantial investments in new, risky areas or consider dilutive acquisitions to grow their top line. Unlike them, we have the strategy of holding Bitcoin to bolster our balance sheet and do not require numerous acquisitions to maintain a 20% or 25% growth annually. Our emphasis remains on focusing on our core business, which is crucial to our success. I’m pleased with our Q2 performance: Topline growth of 13%, bottom line growth of 153% for our non-GAAP operating income year-over-year of 17%. Our non-GAAP operating margin is healthy, with subscription revenues climbing 29%. Our non-GAAP EPS stands at $1.72 per share, exceeding analyst estimates around $0.98 per share—substantial outperformance on the bottom line, compared to $0.60 a share from last year. We are pleased with the non-GAAP EPS results. As Phong pointed out, it was our best second quarter in six years. During this quarter, our CXO team operated like a well-oiled machine, achieving great effectiveness. We have decided to conduct a CFO search to allow Phong to focus more on the Presidential role. We have ambitious plans ahead and aim to continue aggressively growing the enterprise software business while maintaining enthusiasm for our Bitcoin strategy and welcoming a new member to our management team to maximize that opportunity. With that, I will open up the floor to questions from analysts and investors. Jeremy?

Thank you, Michael. We're going to jump right into questions. The first question is for Phong. First, congratulations on the great quarter. Have you seen any changes in the competitive landscape, and what impact do you expect the consolidation of BI and visualization tools to have on your business in the coming years? You are on mute, Phong.

Sorry. Rookie move, I was on mute there. Thanks, Jeremy. It's a good question. So thanks, we did have a really good quarter and we’re excited about it. I believe the changes in the competitive landscape are part of what's influenced the quarter. I mentioned a few of them, Mike noted others, particularly among large legacy BI vendors like SAP's BusinessObjects, IBM's Cognos, and Oracle's OBIEE. We are aware those companies are focused on transitioning their businesses to the cloud to compete with Google, AWS, and Azure and have de-invested in their BI platforms. We’re seeing an increase in inquiries and migration from those legacy BI platforms. In particular, large enterprises are logically looking for a full-scale enterprise platform, which aligns with what we offer. Additionally, on the lower end, some of the recent entrants to BI over the last five years with niche solutions that are not well-capitalized have become weaker, particularly over the last three years due to COVID and challenges on capital structure. There have been instances where they’ve been acquired or faded away. In those cases, we weren't competing directly, but we were competing for their market share. So with fewer players and consolidation tendency, this situation tends to be beneficial for us. We've seen a similar cycle back in 2008, coming out strong and growing. I think we're witnessing a comparable trend now. As long as we maintain our focus on our customers and our product, I believe we can continue to grow based on these trends.

Thanks, Phong. All right, the next few questions will be directed towards Michael. The digital asset environment is rapidly evolving. A couple of questions to consider: First, do you have thoughts on diversifying across other digital assets like Ethereum instead of concentrating solely on Bitcoin?

Our strategy is to focus on Bitcoin. We believe Bitcoin is digital property, the most compelling technical opportunity of this decade. Digital property signifies that 8 billion people with mobile phones can manage their property seamlessly. It represents a trillion-dollar opportunity for major companies like Apple, Google, and Facebook. Digital property addresses the cybersecurity and trust challenges faced by billions of people globally. Additionally, Bitcoin facilitates 100 million companies trading with each other on an open protocol at unprecedented speeds. Thus, Bitcoin stands out as a primary solution for these challenges. Other crypto assets have distinct roles in the landscape—digital currencies aren't investment vehicles and serve primarily as mediums of exchange, while platforms like Ethereum and applications such as the decentralized exchange Uniswap function as competing businesses. Each alternative has associated risks regarding competition, regulation, and technologies. Consequently, we do not intend to involve ourselves with other digital assets or crypto assets, as we are focused on Bitcoin.

Thanks, Mike. Additionally, regarding the financing in Q2, we are exploring the inherent value of Bitcoin on the balance sheet. This person wonders if you have any updates on how to further leverage the balance sheet to drive either the core business or advances in your digital asset strategy?

Our perspective on future balance sheet decisions is to account for market considerations while seeking accretive opportunities beneficial to our shareholders. Occasionally, we may find venues to achieve that.

Thank you, Michael. Phong, the next question is for you. Why didn’t the company issue the $1 billion in equity and buy more Bitcoin?

Yes. I believe we are referencing the issuance that allows for $1 billion in equity, which we announced on September 14, just before the quiet period commenced on September 15. During the quiet period until our next open period, we are unable to issue shares in the market.

One more for you, Phong. Subscription revenue growth appears modest, especially considering the continued increase in SaaS solutions. How is this trending against your expectations, particularly concerning the new hyper customers, both new and expansions from current ones?

Yes. Subscription revenues increased by 29% year-over-year, which we were pleased with. The reference you may be making is to subscription billings, which grew 13%. That’s five consecutive quarters of double-digit growth, yet it reflects a decline compared to prior quarters. The main reason is that in Q2, we no longer included contract values that were invoiced in the future, as we had previously. If we had followed our past approach, subscription billings would have seen growth of 42%. We thought this approach would provide a more conservative forecasting basis. Overall, normalizing suggests that the 42% growth in subscription billings was quite robust, and we project that level of subscription billings growth moving forward. We still anticipate significant growth in the cloud business overall.

Thank you, Phong. Michael, back to you. Can you explain some of the factors you evaluate when determining future debt or equity raises for Bitcoin? How much flexibility does the business have to raise additional debt/equity for Bitcoin purchases? And will MicroStrategy consider lending Bitcoin for yield?

We analyze numerous factors including the Bitcoin market, its pricing, trading patterns, historical performance, and the outlook. We also consider liquidity in debt markets, interest rates, and spreads. This includes evaluating convertible markets, equity markets, and the trading regarding our stock. Additionally, we look at the futures and options markets for Bitcoin. The state of the Bitcoin mining industry and institutional adoption levels are also key components in our assessment. We determine if any acquirers can enhance our operational abilities. The subprocess of how we assess opportunities includes considering stock buybacks to purchase Bitcoin, liquidating treasury assets, issuing convertible debt, and more. Ultimately, our decisions are influenced by market opportunity and our belief in shareholder value.

Thank you, Michael. Phong, the next question for you is about the reasoning behind creating a separate entity to hold your Bitcoin.

Yes. We established MacroStrategy LLC not only because it has a catchy name, but primarily to isolate the ownership of our Bitcoin holdings. When we issued our secured notes, they were secured against our BI business, thus we didn’t require our Bitcoin as collateral. Hence, we created a separate entity for those Bitcoin, segregating them from our BI operations.

Michael, looking toward the next one to two years, do you foresee institutional adoption stemming predominantly from founder-led, tech-savvy companies, or do you anticipate companies and other industries with diverse ownership dynamics will also start accepting cryptocurrency? What do you believe are the upcoming catalysts for broader adoption?

I anticipate institutional adoption will largely emerge from macro hedge funds that might have previously invested in gold or stable assets. Now that Bitcoin has demonstrated its superiority as digital property outperforming gold over several years, it has gained attention from these funds and investors. Family offices and high-net-worth individuals are beginning to recognize Bitcoin as a long-term asset preserving wealth for future generations. Though their activities often occur in silence, I consistently hear of growing interest through various channels. Goldman Sachs recently released a survey indicating significant family office engagement in Bitcoin. In terms of public companies, I expect the most enthusiastic embrace of Bitcoin will come from founder-led tech firms. Their visionary founders tend to comprehend the technical nuances, propelling them to quickly act out of competitive necessity. An excellent illustration is Square, which has achieved remarkable results by integrating Bitcoin into its mobile application, prompting PayPal to react accordingly. Over time, companies with mobile applications will likely wish to integrate Bitcoin, not only to become banks in cyberspace but also to leverage Bitcoin's capabilities as a digital value network, enhancing their cybersecurity measures. Thus, Bitcoin is crucial for the future of financial and digital security. Companies cannot afford to overlook that development. We will likely witness swift evolution in adoption over the coming months, particularly with the increasing number of public Bitcoin miners emerging in the markets.

Thanks, Michael. We have run out of time, so I will turn it back to you for closing remarks. Michael, your closing remarks?

Yes. Okay. I want to thank everybody for being with us for our Q2 2021 financial results webinar. We appreciate your support. To all of our shareholders, we couldn't do it without you. I look forward to speaking with all of you again in three months. Until then, take care.