MicroStrategy^® (Nasdaq: MSTR), the largest independent publicly-traded business intelligence company, today announced financial results for the three-month period ended March 31, 2021 (the first quarter of its 2021 fiscal year).

“MicroStrategy’s first quarter results were a clear example that our two-pronged corporate strategy to grow our enterprise analytics software business and acquire and hold bitcoin is generating substantial shareholder value. We had one of our strongest operational quarters in our software business in years, highlighted by 10% revenue growth and continued improvement in non-GAAP profitability. The investments we have made in our platform in recent years are driving greater customer adoption of MicroStrategy, particularly in the cloud,” said Michael J. Saylor, CEO, MicroStrategy Incorporated.

“We continue to be pleased with our bitcoin strategy. We successfully raised more than $1 billion of additional capital in the quarter to expand our bitcoin holdings, which now exceed 91,000 bitcoins. We also hosted a very successful ‘Bitcoin for Corporations’ track at MicroStrategy World™ where we utilized our thought leadership in the cryptocurrency market to show how organizations can incorporate digital assets into their balance sheet management. We will continue to acquire and hold additional bitcoin as we seek to create additional value for shareholders.”

First Quarter 2021 Financial Highlights

• Revenues: Total revenues for the first quarter of 2021 were $122.9 million, a 10.3% increase, or a 7.6% increase on a non-GAAP constant currency basis, compared to the first quarter of 2020. Product licenses and subscription services revenues for the first quarter of 2021 were $31.3 million, a 52.3% increase, or a 49.8% increase on a non-GAAP constant currency basis, compared to the first quarter of 2020. Product support revenues for the first quarter of 2021 were $70.6 million, a 0.7% decrease, or a 3.4% decrease on a non-GAAP constant currency basis, compared to the first quarter of 2020. Other services revenues for the first quarter of 2021 were $20.9 million, a 6.3% increase, or a 3.1% increase on a non-GAAP constant currency basis, compared to the first quarter of 2020.

• Gross Profit: Gross profit for the first quarter of 2021 was $100.4 million, representing an 81.7% gross margin, compared to a gross margin of 78.0% in the first quarter of 2020.

• Operating Expenses: Operating expenses for the first quarter of 2021 were $283.5 million, a 226.1% increase compared to the first quarter of 2020. Beginning in the third quarter of 2020, operating expenses included impairment losses on MicroStrategy’s digital assets, which were $194.1 million during the first quarter of 2021.

• Loss from Operations: Loss from operations for the first quarter of 2021 was $183.2 million versus $0.1 million for the first quarter of 2020. Non-GAAP income from operations, which excludes share-based compensation expense and impairment losses and gains on sale from intangible assets, which include digital assets, was $18.7 million for the first quarter of 2021 versus $3.0 million for the first quarter of 2020.

• Net (Loss) Income: Net loss for the first quarter of 2021 was $110.0 million, or $11.40 per share on a diluted basis, as compared to net income of $0.7 million, or $0.07 per share on a diluted basis, for the first quarter of 2020. Non-GAAP net income, which excludes share-based compensation expense, impairment losses and gains on sale from intangible assets, which include digital assets, interest expense arising from the amortization of debt issuance costs, and related income tax effects, was $14.9 million, or $1.54 per share on a non-GAAP diluted basis, for the first quarter of 2021, as compared to non-GAAP net income of $3.9 million, or $0.39 per share on a non-GAAP diluted basis, for the first quarter of 2020.

• Cash and Cash Equivalents: As of March 31, 2021, MicroStrategy had cash and cash equivalents of $82.5 million, as compared to $59.7 million as of December 31, 2020, an increase of $22.9 million.

• Digital Assets: As part of MicroStrategy’s previously announced treasury reserve policy and bitcoin acquisition strategy, a total of approximately 20,857 bitcoins were purchased at an aggregate purchase price of $1.086 billion in the first quarter of 2021 for an average purchase price of approximately $52,087 per bitcoin. As of March 31, 2021, the carrying value of MicroStrategy’s digital assets (comprised solely of bitcoin) was $1.947 billion, which reflects cumulative impairment charges of $264.8 million since acquisition. As of March 31, 2021, the average cost and average carrying value of MicroStrategy’s bitcoin were approximately $24,214 and $21,315, respectively.
  
  
  
  Further, in the second quarter of 2021 to date, MicroStrategy has purchased approximately 253 bitcoins at an aggregate purchase price of $15.0 million for an average purchase price for such additional bitcoins of approximately $59,339 per bitcoin. As of April 28, 2021, at 4:00 p.m. EDT, MicroStrategy held approximately 91,579 bitcoins and the market price of one bitcoin in MicroStrategy’s principal market was approximately $55,492. In future periods, MicroStrategy may purchase additional bitcoins and increase its overall holdings of bitcoin or sell its bitcoins and decrease its overall holdings of bitcoin.

• Convertible Senior Notes: In February 2021, MicroStrategy issued $1.050 billion aggregate principal amount of 0% Convertible Senior Notes due 2027 (the “2027 Notes”). The 2027 Notes are senior unsecured obligations of MicroStrategy and do not bear regular interest. However, holders of the 2027 Notes may receive special interest under specified circumstances as outlined in the indenture for the 2027 Notes. Any special interest is payable semiannually in arrears on February 15 and August 15 of each year, beginning on August 15, 2021. The 2027 Notes are convertible into shares of MicroStrategy’s class A common stock at an initial conversion price of $1,432.46 per share. The 2027 Notes will mature on February 15, 2027, unless earlier converted, redeemed, or repurchased in accordance with their terms. Total net proceeds from the offering, after deducting initial purchaser discounts and issuance costs, were approximately $1.026 billion.
  
  
  
  As of March 31, 2021, the carrying value of the 2027 Notes was $1.026 billion, net of unamortized issuance costs, and was classified as a long-term liability in the “Convertible senior notes, net” line item in MicroStrategy’s Consolidated Balance Sheet. MicroStrategy early adopted 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”), effective January 1, 2021. ASU 2020-06 simplifies the accounting for convertible instruments and, as a result, MicroStrategy no longer separates the debt or issuance costs into liability and equity components. Upon adoption, MicroStrategy recorded a cumulative-effect adjustment related to the previously issued 0.750% Convertible Senior Notes due 2025 and increased its opening retained earnings balance by approximately $1.0 million.

The tables at the end of this press release include a reconciliation of GAAP to non-GAAP financial measures for the three months ended March 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 our “Q1 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 income from operations that excludes the impact of share-based compensation expense and impairment losses and gains on sale from intangible assets, which include its digital assets, (ii) non-GAAP net income and non-GAAP diluted earnings per share that exclude the impact of share-based compensation expense, impairment losses and gains on sale from intangible assets, which include its digital assets, interest expense arising from the amortization of debt issuance costs related to MicroStrategy’s convertible senior notes, 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 (i) 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 and (ii) significant impairment losses and gains on sale from intangible assets, which include MicroStrategy’s bitcoin. The second set of supplemental financial measures excludes the impact of (i) share-based compensation expense, (ii) impairment losses and gains on sale from intangible assets, which include MicroStrategy’s bitcoin, (iii) non-cash interest expense arising from the amortization of debt issuance costs related to MicroStrategy’s convertible senior notes, and (iv) 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 first quarter 2021 financial results on a live Video Webinar today beginning at approximately 5:00 p.m. EDT. 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, MicroStrategy World, 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 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.

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(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.

* Derived from audited financial statements.

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