Strategy Inc 8-K, filed Oct 30, 2024
Strategy Inc (MSTR)
About this 8-K
Strategy Inc filed this 8-K on October 30, 2024.
Items reported
- Item 2.02: Financial results
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): |
(Exact name of Registrant as Specified in Its Charter)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
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Trading |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. |
Results of Operations and Financial Condition. |
On October 30, 2024, MicroStrategy Incorporated (the “Company”) issued a press release announcing the Company’s financial results for the quarter ended September 30, 2024. A copy of this press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.
The information disclosed pursuant to Item 2.02 in this Current Report on Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01. |
Financial Statements and Exhibits. |
(d) Exhibits
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Exhibit |
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Description |
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99.1 |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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MicroStrategy Incorporated |
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(Registrant) |
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Date: |
October 30, 2024 |
By: |
/s/ Andrew Kang |
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Andrew Kang |
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Senior Executive Vice President & Chief Financial Officer |
Exhibit 99.1
Contact:
MicroStrategy Incorporated
Shirish Jajodia
Investor Relations
ir@microstrategy.com
MicroStrategy Announces Third Quarter 2024 Financial Results
Holds 252,220 BTC with BTC Yield of 17.8% YTD,
Announces $42 Billion Capital Plan
TYSONS CORNER, Va., October 30, 2024 - MicroStrategy® Incorporated (Nasdaq: MSTR) (“MicroStrategy” or the “Company”), the largest corporate holder of bitcoin and the world’s first Bitcoin Treasury Company, today announced financial results for the three-month period ended September 30, 2024 (the third quarter of its 2024 fiscal year).
“Our focus remains to increase value generated to our shareholders by leveraging the digital transformation of capital. Today, we are announcing a strategic goal of raising $42 billion of capital over the next 3 years, comprised of $21 billion of equity and $21 billion of fixed income securities, which we refer to as our “21/21 Plan.” As a Bitcoin Treasury Company, we plan to use the additional capital to buy more bitcoin as a treasury reserve asset in a manner that will allow us to achieve higher BTC Yield,” said Phong Le, President and Chief Executive Officer, MicroStrategy.
“Q3 2024 was another transformational quarter for MicroStrategy, as we raised $2.1 billion in equity and debt. Our proven track record of using intelligent leverage serves as the foundation to execute on our strategic three-year 21/21 Plan. Through our treasury strategy, we increased our bitcoin holdings by 11% in the quarter, increased our year-to-date BTC Yield to 17.8%, and reduced our total annualized interest expense by $24 million,” said Andrew Kang, Chief Financial Officer, MicroStrategy.
On August 7, 2024, the Company completed a 10-for-1 stock split of the Company’s class A and class B common stock. All prior period share and per share information presented herein has been retroactively adjusted to reflect the stock split.
Bitcoin Treasury Highlights
Q3 2024 Software Business Highlights
Other Q3 Financial Highlights
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 nine months ended September 30, 2024 and 2023. 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 “Q3 2024 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.
Conference Call
MicroStrategy will be discussing its third quarter 2024 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) is the world's first and largest Bitcoin Treasury Company. We are a publicly traded company that has adopted Bitcoin as our primary treasury reserve asset. By using proceeds from equity and debt financings, as well as cash flows from our operations, we strategically accumulate Bitcoin and advocate for its role as digital capital. Our treasury strategy is designed to provide investors varying degrees of economic exposure to Bitcoin by offering a range of securities, including equity and fixed-income instruments. In addition, we provide industry-leading AI-powered enterprise analytics software, advancing our vision of Intelligence
Everywhere. We leverage our development capabilities to explore innovation in Bitcoin applications, integrating analytics expertise with our commitment to digital asset growth. We believe our combination of operational excellence, strategic Bitcoin reserve, and focus on technological innovation positions us as a leader in both the digital asset and enterprise analytics sectors, offering a unique opportunity for long-term value creation.
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.
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 (loss) income and non-GAAP diluted (loss) earnings 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, gains and losses 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) gains and losses 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.
Important Information about BTC Yield KPI
BTC Yield is a key performance indicator (“KPI”) that represents the % change period-to-period of the ratio between the Company’s bitcoin holdings and its Assumed Diluted Shares Outstanding. Assumed Diluted Shares Outstanding refers to the aggregate of the Company’s actual shares of common stock outstanding as of the end of each period plus all additional shares that would result from the assumed conversion of all outstanding convertible notes, exercise of all outstanding stock option awards, and settlement of all outstanding restricted stock units and performance stock units. Assumed Diluted Shares Outstanding is not calculated using the treasury method and does not take into account any vesting conditions (in the case of equity awards), the exercise price of any stock option awards or any contractual conditions limiting convertibility of convertible debt instruments.
The Company uses BTC Yield as a KPI to help assess the performance of its strategy of acquiring bitcoin in a manner the Company believes is accretive to shareholders. The Company believes this KPI can be used to supplement an investor’s understanding of its decision to fund the purchase of bitcoin by issuing additional shares of its common stock or instruments convertible to common stock. When the Company uses this KPI, management also takes into account the various limitations of this metric, including that it does not take into account debt and other liabilities and claims on company assets that would be senior to common equity and that it assumes that all indebtedness will be refinanced or, in the case of the Company’s senior convertible debt instruments, converted into shares of common stock in accordance with their respective terms.
Additionally, this KPI is not, and should not be understood as, an operating performance measure or a financial or liquidity measure. In particular, BTC Yield is not equivalent to “yield” in the traditional financial context. It is not a measure of the return on investment the Company’s shareholders may have achieved historically or can achieve in the future by purchasing stock of the Company, or a measure of income generated by the Company’s operations or its bitcoin holdings, return on investment on its bitcoin holdings, or any other similar financial measure of the performance of its business or assets.
The trading price of the Company’s class A common stock is informed by numerous factors in addition to the amount of bitcoins the Company holds and number of actual or potential shares of its stock outstanding, and as a result, the market value of the Company’s shares may trade at a discount or a premium relative to the market value of the bitcoin the Company holds, and BTC Yield is not indicative nor predictive of the trading price of the Company’s shares of class A common stock.
As noted above, this KPI is narrow in its purpose and is used by management to assist it in assessing whether the Company is using equity capital in a manner accretive to shareholders solely as it pertains to its bitcoin holdings.
In calculating this KPI, the Company does not take into account the source of capital used for the acquisition of its bitcoin. The Company notes in particular, it has acquired bitcoin using proceeds from the offerings of the 2028 Secured Notes (which the Company has since redeemed), which were not convertible to shares of the Company’s common stock, as well as convertible senior notes, which at the time of issuance had, and may from time-to-time thereafter have, conversion prices above the current trading prices of the Company’s common stock, or as to which the holders of such convertible notes may not then be entitled to exercise the conversion rights of the notes. Such offerings have had the effect of increasing the BTC Yield without taking into account the corresponding debt. Conversely, if any of the Company’s convertible senior notes mature or are redeemed without being converted into common stock, the Company may be required to sell shares in quantities greater than the shares such notes are convertible into or generate cash proceeds from the sale of bitcoin, either of which would have the effect of decreasing the BTC Yield due to changes in the Company’s bitcoin holdings and shares in ways that were not contemplated by the assumptions in calculating BTC Yield. Accordingly, this metric might overstate or understate the accretive nature of the Company’s use of equity capital to buy bitcoin because not all bitcoin may be acquired using proceeds of equity offerings and not all issuances of equity may involve the acquisition of bitcoin.
The Company determines its KPI targets based on its history and future goals. The Company’s ability to achieve positive BTC Yield may depend on a variety of factors, including its ability to generate cash from operations in excess of its fixed charges and other expenses, as well as factors outside of its control, such as the availability of debt and equity financing on favorable terms. Past performance is not indicative of future results.
The Company has historically not paid any dividends on its shares of common stock, and by presenting this KPI the Company makes no suggestion that it intends to do so in the future. Ownership of common stock does not represent an ownership interest in the bitcoin the Company holds.
Investors should rely on the financial statements and other disclosures contained in the Company’s SEC filings. This KPI is merely a supplement, not a substitute. It should be used only by sophisticated investors who understand its limited purpose and many limitations.
Forward-Looking Statements
This press release may include statements that may constitute “forward-looking statements,” including estimates of future business prospects or financial results, our targets relating to our BTC Yield, 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; the availability of debt and equity financing on favorable terms; 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; the impact of the availability of spot exchange traded products for bitcoin and other digital assets; 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, related valuation allowance, and tax expense; other potentially adverse tax consequences, including the potential taxation of unrealized gains on our bitcoin holdings; 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)
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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(unaudited) |
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(unaudited) |
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(unaudited) |
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(unaudited) |
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Revenues: |
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Product licenses |
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$ |
11,087 |
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$ |
24,045 |
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$ |
33,311 |
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$ |
56,979 |
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Subscription services |
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27,800 |
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20,974 |
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74,846 |
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59,662 |
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Total product licenses and subscription services |
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38,887 |
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45,019 |
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108,157 |
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116,641 |
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Product support |
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61,015 |
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66,860 |
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185,440 |
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198,422 |
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Other services |
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16,169 |
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17,583 |
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49,162 |
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56,714 |
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Total revenues |
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116,071 |
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129,462 |
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342,759 |
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371,777 |
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Cost of revenues: |
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Product licenses |
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769 |
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342 |
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2,130 |
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1,320 |
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Subscription services |
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11,454 |
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8,028 |
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29,618 |
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23,100 |
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Total product licenses and subscription services |
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12,223 |
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8,370 |
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31,748 |
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24,420 |
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Product support |
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8,572 |
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5,531 |
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25,312 |
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17,115 |
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Other services |
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13,554 |
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12,760 |
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38,239 |
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40,188 |
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Total cost of revenues |
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34,349 |
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26,661 |
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95,299 |
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81,723 |
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Gross profit |
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81,722 |
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102,801 |
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247,460 |
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290,054 |
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Operating expenses: |
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Sales and marketing |
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35,414 |
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35,606 |
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103,116 |
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109,372 |
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Research and development |
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33,301 |
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29,660 |
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92,795 |
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90,372 |
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General and administrative |
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33,505 |
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29,223 |
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104,300 |
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85,959 |
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Digital asset impairment losses |
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412,084 |
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33,559 |
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783,807 |
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76,613 |
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Total operating expenses |
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514,304 |
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128,048 |
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1,084,018 |
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362,316 |
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Loss from operations |
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(432,582 |
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(25,247 |
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(836,558 |
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(72,262 |
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Interest expense, net |
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(18,129 |
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(11,006 |
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(45,476 |
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(37,031 |
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(Loss) gain on debt extinguishment |
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(22,933 |
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0 |
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(22,933 |
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44,686 |
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Other (expense) income, net |
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(5,034 |
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2,419 |
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(2,644 |
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726 |
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Loss before income taxes |
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(478,678 |
) |
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(33,834 |
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(907,611 |
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(63,881 |
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(Benefit from) provision for income taxes |
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(138,504 |
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109,607 |
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(411,760 |
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(403,876 |
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Net (loss) income |
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$ |
(340,174 |
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$ |
(143,441 |
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$ |
(495,851 |
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$ |
339,995 |
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Basic (loss) earnings per share (1) |
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$ |
(1.72 |
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$ |
(1.01 |
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$ |
(2.71 |
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$ |
2.91 |
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Weighted average shares outstanding used in computing basic (loss) earnings per share |
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197,273 |
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142,214 |
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182,695 |
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116,648 |
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Diluted (loss) earnings per share (1) |
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$ |
(1.72 |
) |
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$ |
(1.01 |
) |
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$ |
(2.71 |
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$ |
2.39 |
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Weighted average shares outstanding used in computing diluted (loss) earnings per share |
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197,273 |
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142,214 |
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182,695 |
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145,125 |
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(1) Basic and fully diluted (loss) earnings per share for class A and class B common stock are the same.
MICROSTRATEGY INCORPORATED
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
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September 30, |
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December 31, |
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2024 |
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2023* |
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(unaudited) |
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Assets |
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Current assets |
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Cash and cash equivalents |
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$ |
46,343 |
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$ |
46,817 |
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Restricted cash |
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1,862 |
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1,856 |
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Accounts receivable, net |
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107,169 |
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183,815 |
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Prepaid expenses and other current assets |
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30,668 |
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35,407 |
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Total current assets |
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186,042 |
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267,895 |
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Digital assets |
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6,850,879 |
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3,626,476 |
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Property and equipment, net |
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27,517 |
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28,941 |
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Right-of-use assets |
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55,308 |
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57,343 |
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Deposits and other assets |
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51,109 |
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24,300 |
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Deferred tax assets, net |
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1,172,726 |
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757,573 |
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Total Assets |
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$ |
8,343,581 |
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$ |
4,762,528 |
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Liabilities and Stockholders’ Equity |
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Current liabilities |
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Accounts payable, accrued expenses, and operating lease liabilities |
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$ |
45,714 |
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$ |
43,090 |
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Accrued compensation and employee benefits |
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51,686 |
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50,045 |
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Accrued interest |
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5,800 |
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1,493 |
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Current portion of long-term debt, net |
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509 |
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|
483 |
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Deferred revenue and advance payments |
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184,402 |
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228,162 |
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Total current liabilities |
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288,111 |
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323,273 |
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Long-term debt, net |
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4,211,949 |
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2,182,108 |
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Deferred revenue and advance payments |
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6,344 |
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|
|
8,524 |
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Operating lease liabilities |
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|
57,495 |
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|
61,086 |
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Other long-term liabilities |
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|
5,676 |
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|
22,208 |
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Deferred tax liabilities |
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|
357 |
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|
357 |
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Total liabilities |
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4,569,932 |
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|
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2,597,556 |
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Stockholders’ Equity |
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Preferred stock undesignated, $0.001 par value; 5,000 shares authorized; no shares issued or outstanding |
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0 |
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0 |
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Class A common stock, $0.001 par value; 330,000 shares authorized; 191,684 shares issued and 183,000 shares outstanding, and 157,725 shares issued and 149,041 shares outstanding, respectively |
|
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192 |
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24 |
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Class B convertible common stock, $0.001 par value; 165,000 shares authorized; 19,640 shares issued and outstanding, and 19,640 shares issued and outstanding, respectively |
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|
20 |
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2 |
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Additional paid-in capital |
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6,060,206 |
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|
|
3,957,728 |
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Treasury stock, at cost; 8,684 shares and 8,684 shares, respectively |
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|
(782,104 |
) |
|
|
(782,104 |
) |
Accumulated other comprehensive loss |
|
|
(9,580 |
) |
|
|
(11,444 |
) |
Accumulated deficit |
|
|
(1,495,085 |
) |
|
|
(999,234 |
) |
Total Stockholders’ Equity |
|
|
3,773,649 |
|
|
|
2,164,972 |
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Total Liabilities and Stockholders’ Equity |
|
$ |
8,343,581 |
|
|
$ |
4,762,528 |
|
* Derived from audited financial statements.
MICROSTRATEGY INCORPORATED
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
|
|
Nine Months Ended |
|
|||||
|
|
September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
(unaudited) |
|
|
(unaudited) |
|
||
Net cash (used in) provided by operating activities |
|
$ |
(35,708 |
) |
|
$ |
11,528 |
|
Net cash used in investing activities |
|
|
(4,010,904 |
) |
|
|
(690,550 |
) |
Net cash provided by financing activities |
|
|
4,046,067 |
|
|
|
676,025 |
|
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash |
|
|
77 |
|
|
|
(997 |
) |
Net decrease in cash, cash equivalents, and restricted cash |
|
|
(468 |
) |
|
|
(3,994 |
) |
Cash, cash equivalents, and restricted cash, beginning of period |
|
|
48,673 |
|
|
|
50,868 |
|
Cash, cash equivalents, and restricted cash, end of period |
|
$ |
48,205 |
|
|
$ |
46,874 |
|
MICROSTRATEGY INCORPORATED
DIGITAL ASSETS – ADDITIONAL INFORMATION
ROLLFORWARD OF BITCOIN HOLDINGS
(unaudited)
|
|
Source of Capital Used to Purchase Bitcoin |
|
Digital Asset Original Cost Basis |
|
|
Digital Asset Impairment Losses |
|
|
Digital Asset Carrying Value |
|
|
Approximate Number of Bitcoins Held * |
|
|
Approximate Average Purchase Price Per Bitcoin |
|
|||||
Balance at December 31, 2022 |
|
|
|
$ |
3,993,190 |
|
|
$ |
(2,153,162 |
) |
|
$ |
1,840,028 |
|
|
|
132,500 |
|
|
$ |
30,137 |
|
Digital asset purchases |
|
(a) |
|
|
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 |
|
(b) |
|
|
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 |
|
(c) |
|
|
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 |
|
(d) |
|
|
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 |
|
Digital asset purchases |
|
(e) |
|
|
1,639,309 |
|
|
|
|
|
|
1,639,309 |
|
|
|
25,128 |
|
|
|
65,238 |
|
|
Digital asset impairment losses |
|
|
|
|
|
|
|
(191,633 |
) |
|
|
(191,633 |
) |
|
|
|
|
|
|
|||
Balance at March 31, 2024 |
|
|
|
$ |
7,534,798 |
|
|
$ |
(2,460,646 |
) |
|
$ |
5,074,152 |
|
|
|
214,278 |
|
|
$ |
35,164 |
|
Digital asset purchases |
|
(f) |
|
|
793,828 |
|
|
|
|
|
|
793,828 |
|
|
|
12,053 |
|
|
|
65,861 |
|
|
Digital asset impairment losses |
|
|
|
|
|
|
|
(180,090 |
) |
|
|
(180,090 |
) |
|
|
|
|
|
|
|||
Balance at June 30, 2024 |
|
|
|
$ |
8,328,626 |
|
|
$ |
(2,640,736 |
) |
|
$ |
5,687,890 |
|
|
|
226,331 |
|
|
$ |
36,798 |
|
Digital asset purchases |
|
(g) |
|
|
1,575,073 |
|
|
|
|
|
|
1,575,073 |
|
|
|
25,889 |
|
|
|
60,839 |
|
|
Digital asset impairment losses |
|
|
|
|
|
|
|
(412,084 |
) |
|
|
(412,084 |
) |
|
|
|
|
|
|
|||
Balance at September 30, 2024 |
|
|
|
$ |
9,903,699 |
|
|
$ |
(3,052,820 |
) |
|
$ |
6,850,879 |
|
|
|
252,220 |
|
|
$ |
39,266 |
|
* 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.
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, 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 |
|
March 31, 2024 |
|
|
214,278 |
|
|
$ |
38,501.00 |
|
|
$ |
8,249,917 |
|
|
$ |
73,835.57 |
|
|
$ |
15,821,338 |
|
|
$ |
71,028.14 |
|
|
$ |
15,219,768 |
|
June 30, 2024 |
|
|
226,331 |
|
|
$ |
56,500.00 |
|
|
$ |
12,787,702 |
|
|
$ |
72,777.00 |
|
|
$ |
16,471,691 |
|
|
$ |
61,926.69 |
|
|
$ |
14,015,930 |
|
September 30, 2024 |
|
|
252,220 |
|
|
$ |
49,050.01 |
|
|
$ |
12,371,394 |
|
|
$ |
70,000.00 |
|
|
$ |
17,655,400 |
|
|
$ |
63,462.97 |
|
|
$ |
16,006,630 |
|
* 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.
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 |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
||||
Reconciliation of non-GAAP loss from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss from operations |
|
$ |
(432,582 |
) |
|
$ |
(25,247 |
) |
|
$ |
(836,558 |
) |
|
$ |
(72,262 |
) |
Share-based compensation expense |
|
|
19,377 |
|
|
|
16,806 |
|
|
|
57,789 |
|
|
|
49,855 |
|
Non-GAAP loss from operations |
|
$ |
(413,205 |
) |
|
$ |
(8,441 |
) |
|
$ |
(778,769 |
) |
|
$ |
(22,407 |
) |
MICROSTRATEGY INCORPORATED
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
NET (LOSS) INCOME AND DILUTED (LOSS) EARNINGS PER SHARE
(in thousands, except per share data)
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
|
(unaudited) |
|
||||
Reconciliation of non-GAAP net (loss) income: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net (loss) income |
|
$ |
(340,174 |
) |
|
$ |
(143,441 |
) |
|
$ |
(495,851 |
) |
|
$ |
339,995 |
|
Share-based compensation expense |
|
|
19,377 |
|
|
|
16,806 |
|
|
|
57,789 |
|
|
|
49,855 |
|
Interest expense arising from amortization of debt issuance costs |
|
|
3,832 |
|
|
|
2,199 |
|
|
|
10,231 |
|
|
|
6,599 |
|
Loss (gain) on debt extinguishment |
|
|
22,933 |
|
|
|
0 |
|
|
|
22,933 |
|
|
|
(44,686 |
) |
Income tax effects (1) |
|
|
(13,764 |
) |
|
|
(3,230 |
) |
|
|
(180,964 |
) |
|
|
2,538 |
|
Non-GAAP net (loss) income |
|
$ |
(307,796 |
) |
|
$ |
(127,666 |
) |
|
$ |
(585,862 |
) |
|
$ |
354,301 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Reconciliation of non-GAAP diluted (loss) earnings per share (2): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted (loss) earnings per share |
|
$ |
(1.72 |
) |
|
$ |
(1.01 |
) |
|
$ |
(2.71 |
) |
|
$ |
2.39 |
|
Share-based compensation expense (per diluted share) |
|
|
0.10 |
|
|
|
0.12 |
|
|
|
0.32 |
|
|
|
0.34 |
|
Interest expense arising from amortization of debt issuance costs (per diluted share) (3) |
|
|
0.02 |
|
|
|
0.02 |
|
|
|
0.06 |
|
|
|
0.01 |
|
Loss (gain) on debt extinguishment (per diluted share) |
|
|
0.12 |
|
|
|
0.00 |
|
|
|
0.13 |
|
|
|
(0.31 |
) |
Income tax effects (per diluted share) (3) |
|
|
(0.08 |
) |
|
|
(0.03 |
) |
|
|
(1.01 |
) |
|
|
0.03 |
|
Non-GAAP diluted (loss) earnings per share |
|
$ |
(1.56 |
) |
|
$ |
(0.90 |
) |
|
$ |
(3.21 |
) |
|
$ |
2.46 |
|
MICROSTRATEGY INCORPORATED
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
CONSTANT CURRENCY
(in thousands)
|
|
Three Months Ended |
|
|||||||||||||||||||||
|
|
September 30, |
|
|||||||||||||||||||||
|
|
(unaudited) |
|
|||||||||||||||||||||
|
|
GAAP |
|
|
Foreign |
|
|
Non-GAAP Constant Currency (2) |
|
|
GAAP |
|
|
GAAP % Change |
|
|
Non-GAAP Constant Currency % |
|
||||||
|
|
2024 |
|
|
2024 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2024 |
|
||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Product licenses |
|
$ |
11,087 |
|
|
$ |
(163 |
) |
|
$ |
11,250 |
|
|
$ |
24,045 |
|
|
|
-53.9 |
% |
|
|
-53.2 |
% |
Subscription services |
|
|
27,800 |
|
|
|
109 |
|
|
|
27,691 |
|
|
|
20,974 |
|
|
|
32.5 |
% |
|
|
32.0 |
% |
Total product licenses and subscription services |
|
|
38,887 |
|
|
|
(54 |
) |
|
|
38,941 |
|
|
|
45,019 |
|
|
|
-13.6 |
% |
|
|
-13.5 |
% |
Product support |
|
|
61,015 |
|
|
|
147 |
|
|
|
60,868 |
|
|
|
66,860 |
|
|
|
-8.7 |
% |
|
|
-9.0 |
% |
Other services |
|
|
16,169 |
|
|
|
76 |
|
|
|
16,093 |
|
|
|
17,583 |
|
|
|
-8.0 |
% |
|
|
-8.5 |
% |
Total revenues |
|
|
116,071 |
|
|
|
169 |
|
|
|
115,902 |
|
|
|
129,462 |
|
|
|
-10.3 |
% |
|
|
-10.5 |
% |
|
|
Nine Months Ended |
|
|||||||||||||||||||||
|
|
September 30, |
|
|||||||||||||||||||||
|
|
(unaudited) |
|
|||||||||||||||||||||
|
|
GAAP |
|
|
Foreign |
|
|
Non-GAAP Constant Currency (2) |
|
|
GAAP |
|
|
GAAP % Change |
|
|
Non-GAAP Constant Currency % |
|
||||||
|
|
2024 |
|
|
2024 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2024 |
|
||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Product licenses |
|
$ |
33,311 |
|
|
$ |
(265 |
) |
|
$ |
33,576 |
|
|
$ |
56,979 |
|
|
|
-41.5 |
% |
|
|
-41.1 |
% |
Subscription services |
|
|
74,846 |
|
|
|
70 |
|
|
|
74,776 |
|
|
|
59,662 |
|
|
|
25.5 |
% |
|
|
25.3 |
% |
Total product licenses and subscription services |
|
|
108,157 |
|
|
|
(195 |
) |
|
|
108,352 |
|
|
|
116,641 |
|
|
|
-7.3 |
% |
|
|
-7.1 |
% |
Product support |
|
|
185,440 |
|
|
|
27 |
|
|
|
185,413 |
|
|
|
198,422 |
|
|
|
-6.5 |
% |
|
|
-6.6 |
% |
Other services |
|
|
49,162 |
|
|
|
(12 |
) |
|
|
49,174 |
|
|
|
56,714 |
|
|
|
-13.3 |
% |
|
|
-13.3 |
% |
Total revenues |
|
|
342,759 |
|
|
|
(180 |
) |
|
|
342,939 |
|
|
|
371,777 |
|
|
|
-7.8 |
% |
|
|
-7.8 |
% |
MICROSTRATEGY INCORPORATED
DEFERRED REVENUE DETAIL
(in thousands)
|
|
September 30, |
|
|
December 31, |
|
|
September 30, |
|
|||
|
|
2024 |
|
|
2023* |
|
|
2023 |
|
|||
|
|
(unaudited) |
|
|
|
|
|
(unaudited) |
|
|||
Current: |
|
|
|
|
|
|
|
|
|
|||
Deferred product licenses revenue |
|
$ |
409 |
|
|
$ |
3,579 |
|
|
$ |
2,814 |
|
Deferred subscription services revenue |
|
|
74,164 |
|
|
|
65,512 |
|
|
|
45,737 |
|
Deferred product support revenue |
|
|
106,866 |
|
|
|
152,012 |
|
|
|
126,087 |
|
Deferred other services revenue |
|
|
2,963 |
|
|
|
7,059 |
|
|
|
4,529 |
|
Total current deferred revenue and advance payments |
|
$ |
184,402 |
|
|
$ |
228,162 |
|
|
$ |
179,167 |
|
|
|
|
|
|
|
|
|
|
|
|||
Non-current: |
|
|
|
|
|
|
|
|
|
|||
Deferred product licenses revenue |
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
9 |
|
Deferred subscription services revenue |
|
|
3,373 |
|
|
|
3,097 |
|
|
|
2,845 |
|
Deferred product support revenue |
|
|
2,635 |
|
|
|
4,984 |
|
|
|
4,304 |
|
Deferred other services revenue |
|
|
336 |
|
|
|
443 |
|
|
|
480 |
|
Total non-current deferred revenue and advance payments |
|
$ |
6,344 |
|
|
$ |
8,524 |
|
|
$ |
7,638 |
|
|
|
|
|
|
|
|
|
|
|
|||
Total current and non-current: |
|
|
|
|
|
|
|
|
|
|||
Deferred product licenses revenue |
|
$ |
409 |
|
|
$ |
3,579 |
|
|
$ |
2,823 |
|
Deferred subscription services revenue |
|
|
77,537 |
|
|
|
68,609 |
|
|
|
48,582 |
|
Deferred product support revenue |
|
|
109,501 |
|
|
|
156,996 |
|
|
|
130,391 |
|
Deferred other services revenue |
|
|
3,299 |
|
|
|
7,502 |
|
|
|
5,009 |
|
Total current and non-current deferred revenue and advance payments |
|
$ |
190,746 |
|
|
$ |
236,686 |
|
|
$ |
186,805 |
|
* Derived from audited financial statements.
MICROSTRATEGY INCORPORATED
SEGMENT INFORMATION
(in thousands, unaudited)
|
|
Three Months Ended September 30, 2024 |
|
|
Three Months Ended September 30, 2023 |
|
||||||||||||||||||
|
|
Software Business |
|
|
Corporate & Other |
|
|
Total Consolidated |
|
|
Software Business |
|
|
Corporate & Other |
|
|
Total Consolidated |
|
||||||
Total revenues |
|
$ |
116,071 |
|
|
|
|
|
$ |
116,071 |
|
|
$ |
129,462 |
|
|
|
|
|
$ |
129,462 |
|
||
Total cost of revenues |
|
|
34,349 |
|
|
|
|
|
|
34,349 |
|
|
|
26,661 |
|
|
|
|
|
|
26,661 |
|
||
Gross profit |
|
$ |
81,722 |
|
|
|
|
|
$ |
81,722 |
|
|
$ |
102,801 |
|
|
|
|
|
$ |
102,801 |
|
||
Total operating expenses |
|
|
100,182 |
|
|
|
414,122 |
|
|
|
514,304 |
|
|
|
93,725 |
|
|
|
34,323 |
|
|
|
128,048 |
|
(Loss) income from operations |
|
$ |
(18,460 |
) |
|
$ |
(414,122 |
) |
|
$ |
(432,582 |
) |
|
$ |
9,076 |
|
|
$ |
(34,323 |
) |
|
$ |
(25,247 |
) |
|
|
Nine Months Ended September 30, 2024 |
|
|
Nine Months Ended September 30, 2023 |
|
||||||||||||||||||
|
|
Software Business |
|
|
Corporate & Other |
|
|
Total Consolidated |
|
|
Software Business |
|
|
Corporate & Other |
|
|
Total Consolidated |
|
||||||
Total revenues |
|
$ |
342,759 |
|
|
|
|
|
$ |
342,759 |
|
|
$ |
371,777 |
|
|
|
|
|
$ |
371,777 |
|
||
Total cost of revenues |
|
|
95,299 |
|
|
|
|
|
|
95,299 |
|
|
|
81,723 |
|
|
|
|
|
|
81,723 |
|
||
Gross profit |
|
$ |
247,460 |
|
|
|
|
|
$ |
247,460 |
|
|
$ |
290,054 |
|
|
|
|
|
$ |
290,054 |
|
||
Total operating expenses |
|
|
295,541 |
|
|
|
788,477 |
|
|
|
1,084,018 |
|
|
|
283,733 |
|
|
|
78,583 |
|
|
|
362,316 |
|
(Loss) income from operations |
|
$ |
(48,081 |
) |
|
$ |
(788,477 |
) |
|
$ |
(836,558 |
) |
|
$ |
6,321 |
|
|
$ |
(78,583 |
) |
|
$ |
(72,262 |
) |
MicroStrategy manages its business in one reportable operating segment which is engaged in the design, development, marketing, and sales of its software platform through licensing arrangements and cloud subscriptions and related services. Beginning in 2024, MicroStrategy has broken out a Corporate & Other category, which is not considered an operating segment, and includes the impairment charges and other third-party costs associated with its digital asset holdings.