Strategy Inc 8-K, filed Jan 28, 2020

Strategy Inc (MSTR)

8-K 2020-01-28 For: 2020-01-28

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Added on April 12, 2026

About this 8-K

Strategy Inc filed this 8-K on January 28, 2020.

Items reported

Item 2.02: Financial results
Item 9.01: Financial statements and exhibits

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Exhibit No.		Description

	99.1	Press release, dated January 28, 2020, regarding the Company’s financial results for the quarter ended December 31, 2019.

	104	Cover Page Interactive Data File (embedded within the Inline XBRL document).


Date: January 28, 2020	MicroStrategy Incorporated
	(Registrant)

	By:	/s/ Lisa Mayr
	Name:	Lisa Mayr
	Title:	Senior Executive Vice President & Chief Financial Officer


	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2019			2018			2019			2018*
	(unaudited)			(unaudited)			(unaudited)
Revenues
Product licenses	$	30,087		$	31,200		$	87,471		$	88,057
Subscription services		7,252			7,084			29,394			29,570

Total product licenses and subscription services		37,339			38,284			116,865			117,627
Product support		74,722			73,662			292,035			296,216
Other services		21,470			19,971			77,427			83,795

Total revenues		133,531			131,917			486,327			497,638

Cost of revenues
Product licenses		534			609			2,131			4,864
Subscription services		4,185			3,667			15,161			13,620

Total product licenses and subscription services		4,719			4,276			17,292			18,484
Product support		6,607			5,557			28,317			20,242
Other services		13,310			16,052			54,365			60,773

Total cost of revenues		24,636			25,885			99,974			99,499

Gross profit		108,895			106,032			386,353			398,139

Operating expenses
Sales and marketing		50,267			57,783			191,235			205,525
Research and development		25,987			28,028			109,423			102,499
General and administrative		23,013			22,378			86,697			86,134

Total operating expenses		99,267			108,189			387,355			394,158

Income (loss) from operations		9,628			(2,157	)		(1,002	)		3,981
Interest income, net		2,389			3,157			10,909			11,855
Other (expense) income, net		(2,361	)		981			28,356			4,646

Income before income taxes		9,656			1,981			38,263			20,482
(Benefit from) provision for income taxes		(2,511	)		(1,320	)		3,908			(2,019	)

Net income	$	12,167		$	3,301		$	34,355		$	22,501

Basic earnings per share (1):	$	1.19		$	0.30		$	3.35		$	1.98

Weighted average shares outstanding used in computing basic earnings per share		10,208			11,129			10,256			11,375

Diluted earnings per share (1):	$	1.18		$	0.30		$	3.33		$	1.97

Weighted average shares outstanding used in computing diluted earnings per share		10,301			11,151			10,328			11,412


	December 31,			December 31,
	2019			2018*
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	456,727		$	109,924
Restricted cash		1,089			862
Short-term investments		108,919			466,186
Accounts receivable, net		163,516			171,359
Prepaid expenses and other current assets		23,195			30,068

Total current assets		753,446			778,399

Property and equipment, net		50,154			51,919
Right-of-use assets		85,538			0
Deposits and other assets		8,024			8,134
Deferred tax assets, net		19,409			17,316

Total Assets	$	916,571		$	855,768

Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable, accrued expenses, and operating lease liabilities	$	33,919		$	33,684
Accrued compensation and employee benefits		48,792			48,045
Deferred revenue and advance payments		187,107			176,540

Total current liabilities		269,818			258,269
Deferred revenue and advance payments		4,344			6,469
Operating lease liabilities		103,424			0
Other long-term liabilities		30,400			61,262
Deferred tax liabilities		26			37

Total Liabilities		408,012			326,037

Stockholders’ Equity
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; 15,888 shares issued and 8,081 shares outstanding, and 15,837 shares issued and 8,552 shares outstanding, respectively		16			16
Class B convertible common stock, $0.001 par value; 165,000 shares authorized; 2,035 shares issued and outstanding, and 2,035 shares issued and outstanding, respectively		2			2
Additional paid-in capital		593,583			576,957
Treasury stock, at cost; 7,807 shares and 7,285 shares, respectively		(658,880	)		(586,161	)
Accumulated other comprehensive loss		(9,651	)		(10,217	)
Retained earnings		583,489			549,134

Total Stockholders’ Equity		508,559			529,731

Total Liabilities and Stockholders’ Equity	$	916,571		$	855,768


	Twelve Months Ended
	December 31,
	2019			2018*
	(unaudited)
Operating activities:
Net income	$	34,355		$	22,501
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		16,699			3,701
Sales allowances and bad debt		124			1,912
Net realized loss on short-term investments		41			153
Deferred taxes		(2,614	)		(8,274	)
Release of liabilities for unrecognized tax benefits		(2,837	)		0
Share-based compensation expense		10,209			14,636
Changes in operating assets and liabilities:
Accounts receivable		(3,672	)		(8,357	)
Prepaid expenses and other current assets		6,415			(6,561	)
Deposits and other assets		761			(1,201	)
Accounts payable and accrued expenses		(7,321	)		3,378
Accrued compensation and employee benefits		(2,658	)		5,116
Deferred revenue and advance payments		20,836			(22,126	)
Operating lease liabilities		(8,620	)		0
Other long-term liabilities		(851	)		5,749

Net cash provided by operating activities		60,867			10,627

Investing activities:
Proceeds from redemption of short-term investments		684,356			491,800
Purchases of property and equipment		(10,182	)		(6,846	)
Purchases of short-term investments		(320,487	)		(694,018	)

Net cash provided by (used in) investing activities		353,687			(209,064	)

Financing activities:
Proceeds from sale of class A common stock under exercise of employee stock options		6,569			2,471
Purchases of treasury stock		(72,719	)		(110,977	)
Payments on capital lease obligations and other financing arrangements prior to the adoption of ASU 2016-02		0			(9	)

Net cash used in financing activities		(66,150	)		(108,515	)

Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash		(1,374	)		(3,444	)

Net increase (decrease) in cash, cash equivalents, and restricted cash		347,030			(310,396	)
Cash, cash equivalents, and restricted cash, beginning of period		110,786			421,182

Cash, cash equivalents, and restricted cash, end of period	$	457,816		$	110,786


	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)
	2019		2019			2019		2018		2019			2019
Revenues
Product licenses	$	30,087	$	(781	)	$	30,868	$	31,200		-3.6	%		-1.1	%
Subscription services		7,252		(15	)		7,267		7,084		2.4	%		2.6	%
Total product licenses and subscription services		37,339		(796	)		38,135		38,284		-2.5	%		-0.4	%
Product support		74,722		(924	)		75,646		73,662		1.4	%		2.7	%
Other services		21,470		(221	)		21,691		19,971		7.5	%		8.6	%
Total revenues		133,531		(1,941	)		135,472		131,917		1.2	%		2.7	%


	December 31,		September 30,		June 30,		March 31,		December 31,
	2019		2019		2019		2019		2018
Subscription services		69		66		62		54		56
Product support		219		231		234		224		202
Consulting		392		390		404		429		452
Education		38		38		40		50		47
Sales and marketing		597		616		637		675		707
Research and development		743		775		764		733		716
General and administrative		338		337		336		329		348

Total headcount		2,396		2,453		2,477		2,494		2,528


	Three Months Ended				Twelve Months Ended
	December 31,				December 31,
	2019		2018		2019			2018
	(unaudited)		(unaudited)		(unaudited)			(unaudited)
Reconciliation of non-GAAP net income:
Net income	$	12,167	$	3,301	$	34,355		$	22,501
Measurement period adjustment related to U.S. tax reform		0		0		0			(3,106	)
Gain from Domain Name Sale, net of tax		0		0		(21,778	)		0

Non-GAAP net income	$	12,167	$	3,301	$	12,577		$	19,395

Reconciliation of non-GAAP diluted earnings per share:
Diluted earnings per share	$	1.18	$	0.30	$	3.33		$	1.97
Measurement period adjustment related to U.S. tax reform (per diluted share)		0.00		0.00		0.00			(0.27	)
Gain from Domain Name Sale, net of tax (per diluted share)		0.00		0.00		(2.11	)		0.00

Non-GAAP diluted earnings per share	$	1.18	$	0.30	$	1.22		$	1.70