UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 23, 2015
MICROSTRATEGY INCORPORATED
(Exact name of registrant as specified in its charter)
| Delaware | 0-24435 | 51-0323571 | ||
|
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
||
|
1850 Towers Crescent Plaza Tysons Corner, Virginia |
22182 | |||
| (Address of principal executive offices) | (Zip Code) | |||
Registrant’s telephone number, including area code: (703) 848-8600
(Former name or former address, if changed since last report)
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 ( see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02. | Results of Operations and Financial Condition. |
On October 26, 2015, MicroStrategy Incorporated (the “Company”) issued a press release announcing the Company’s financial results for the quarter ended September 30, 2015. 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 Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (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 or the Exchange Act except as expressly set forth by specific reference in such a filing.
| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Stock Incentive Plan Amendment
On October 23, 2015, the Company adopted Amendment No. 3 (“Amendment No. 3”) to the MicroStrategy Incorporated 2013 Stock Incentive Plan (as previously amended, the “Plan”), subject to stockholder approval, to increase the total number of shares of the Company’s class A common stock authorized for issuance under the Plan by 200,000, from 1,500,000 to 1,700,000.
Any award granted under the Plan, as amended by Amendment No. 3, prior to stockholder approval of such amendment will be terminated or forfeited if stockholder approval of such amendment is not obtained within 12 months of the award grant date, and no such award may be exercised or settled prior to such stockholder approval.
This summary of Amendment No. 3 is qualified in its entirety by reference to the full text of the amendment, a copy of which is attached as an exhibit hereto.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits |
|
Exhibit
|
Description |
|
| 10.1 | Amendment No. 3 to the MicroStrategy Incorporated 2013 Stock Incentive Plan | |
| 99.1 | Press release, dated October 26, 2015, regarding the Company’s financial results for the quarter ended September 30, 2015 | |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: October 26, 2015 | MicroStrategy Incorporated | |||||
| (Registrant) | ||||||
| By: |
/s/ Phong Le |
|||||
| Name: | Phong Le | |||||
| Title: | Senior Executive Vice President & Chief Financial Officer | |||||
EXHIBIT INDEX
|
Exhibit
|
Description |
|
| 10.1 | Amendment No. 3 to the MicroStrategy Incorporated 2013 Stock Incentive Plan | |
| 99.1 | Press release, dated October 26, 2015, regarding the Company’s financial results for the quarter ended September 30, 2015 | |
Exhibit 10.1
MICROSTRATEGY INCORPORATED
Amendment No. 3 to
2013 Stock Incentive Plan
Pursuant to Section 11(d) of the 2013 Stock Incentive Plan (as previously amended, the “Plan”) of MicroStrategy Incorporated (the “Company”), the Plan is hereby amended as follows:
Section 4(a)(1) of the Plan is amended to read in its entirety as follows:
“(1) Authorized Number of Shares . Subject to adjustment under Section 9, Awards may be made under the Plan for up to 1,700,000 shares of class A common stock, $0.001 par value per share, of the Company (the “ Common Stock ”), any or all of which Awards may be in the form of Incentive Stock Options (as defined in Section 5(b)). Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares.”
This Amendment shall become effective on the date it is adopted by the Board; provided that, to the extent required, no Award shall be made pursuant to the Plan (other than an Award that would have been authorized under the Plan as in effect prior to this Amendment) before stockholder approval of this Amendment, unless the Award is conditioned upon stockholder approval of this Amendment and the Award provides that (1) it will terminate or be forfeited if stockholder approval of the Amendment is not obtained within 12 months from the date of the grant of such Award and (2) it may not be exercised or settled (or otherwise result in the issuance of Common Stock) prior to such stockholder approval.
Adopted by the Board of Directors on October 23, 2015
Approved by the Company’s stockholders
on , 20
Exhibit 99.1
Contact:
MicroStrategy Incorporated
Investor Relations
ir@microstrategy.com
(703) 848-8600
MicroStrategy Announces
Third Quarter 2015 Financial Results
TYSONS CORNER, Va., October 26, 2015 - MicroStrategy ® Incorporated (Nasdaq: MSTR), a leading worldwide provider of enterprise software platforms, today announced financial results for the three-month period ended September 30, 2015 (the third quarter of its 2015 fiscal year).
Third quarter 2015 revenues were $129.5 million versus $151.2 million for the third quarter of 2014, a 14% decrease. Product licenses and subscription services revenues for the third quarter of 2015 were $34.1 million versus $40.0 million for the third quarter of 2014, a 15% decrease. Product support revenues for the third quarter of 2015 were $71.4 million versus $75.0 million for the third quarter of 2014, a 5% decrease. Other services revenues for the third quarter of 2015 were $24.1 million versus $36.2 million for the third quarter of 2014, a 33% decrease. Foreign currency headwinds continued to have a negative impact on revenues for the third quarter of 2015.
Operating expenses for the third quarter of 2015 were $74.1 million versus $123.2 million for the third quarter of 2014, a 40% decrease. Third quarter 2015 operating expenses included $0.1 million in restructuring costs, as compared to $11.6 million in restructuring costs in the third quarter of 2014. In addition, MicroStrategy did not capitalize any software development costs during the third quarter of 2015, as compared to $2.3 million in software development costs capitalized during the third quarter of 2014.
Income from operations for the third quarter of 2015 was $30.7 million, as compared to a loss from operations of $7.0 million for the third quarter of 2014. Net income for the third quarter of 2015 was $23.9 million, or $2.06 per share on a diluted basis, as compared to a net loss of $0.8 million, or $0.07 per share on a diluted basis, for the third quarter of 2014.
Non-GAAP income from operations, which excludes share-based compensation expense and restructuring costs, was $35.4 million for the third quarter of 2015 versus $8.5 million for the third quarter of 2014.
As of September 30, 2015, MicroStrategy had cash and cash equivalents and short-term investments of $456.9 million, as compared to $345.5 million as of December 31, 2014, an increase of $111.4 million. As of September 30, 2015, MicroStrategy had 9.3 million shares of class A common stock and 2.0 million shares of class B common stock outstanding.
The tables at the end of this press release include a reconciliation of income (loss) from operations to non-GAAP income (loss) from operations for the three and nine months ended September 30, 2015 and 2014. An explanation of this non-GAAP measure is also included under the heading “Non-GAAP Financial Measure” below.
Conference Call
MicroStrategy will be discussing its third quarter 2015 financial results on a conference call today beginning at approximately 6:00 p.m. EDT. To access the conference call, dial (844) 824-7425 (domestically) or (716) 220-9429 (internationally) and use conference ID 57551320. A live webcast and replay of the conference call will be available under the “Events & Presentations” section on MicroStrategy’s investor relations website at http://ir.microstrategy.com/events.cfm . The replay will be available beginning approximately two hours after the call concludes until October 31, 2015 at (855) 859-2056 (domestically) or (404) 537-3406 (internationally) using the passcode 57551320. An archived webcast will also be available under the “Events & Presentations” section on MicroStrategy’s investor relations website at http://ir.microstrategy.com/events.cfm .
MicroStrategy’s Worldwide Symposium Series Sets Record Attendance
Throughout Q3 of 2015, MicroStrategy’s Worldwide Symposium Series events set record attendance on their tour around the globe, demonstrating that business and IT audiences have a keen interest in learning about the powerful capabilities of MicroStrategy 10 Secure Enterprise™. MicroStrategy enthusiasts gathered for keynote presentations, hands-on enterprise data discovery workshops, and live Q&A and networking opportunities with innovators from MicroStrategy’s leading customers, partners, and sponsors.
More than 4,000 companies and organizations in the U.S., EMEA, and APAC rely on MicroStrategy to make sense of large data volumes, get answers in an instant, build stunning visualizations, and present a single version of the truth — securely, at scale, and on all standard devices. MicroStrategy’s customers who presented at the 2015 Symposium Series included AGBAR; Ahold; AIG; Amadeus Travel; Caisse d’Epargne; Carphone; Ceva Santé; Groupe BPCE; Hilton Worldwide; ING DIRECT España; Ipsen; Lottoland; McDonald’s España; McDonald’s UK; O2; Spar; Telefónica, S.A.; Weiler Corporation; and Zurich.
MicroStrategy 10.1™ Delivers New Features and Enhancements that Bolster Performance for Enterprise Data Discovery, Analytics, and Mobile
In September, MicroStrategy announced the general availability of MicroStrategy 10.1. The release included hundreds of new and improved features and a wide range of performance enhancements across the product platform. Further extending the self-service capabilities of MicroStrategy 10 Secure Enterprise, MicroStrategy Desktop™ 10.1 and MicroStrategy Web™ 10.1 added new enhancements for enterprise data discovery users, enabling data preparation and data wrangling across more data sources, while delivering a clean, new look with modern grid styles, navigation, and consolidated views and search. Other highlights included new capabilities for D3 visualizations, ESRI geospatial visualizations, and iOS 9 within MicroStrategy Mobile™ and custom Mobile Productivity Apps. To learn more about MicroStrategy Analytics™, visit: http://www.microstrategy.com/us/platform/whats-new .
The MicroStrategy 10.1 release came shortly after the release of MicroStrategy 10 Secure Enterprise, a groundbreaking enterprise analytics solution that combines traditional business intelligence functionality with data discovery, mobile analytics, and powerful enterprise security. MicroStrategy 10.1 builds on the version 10 foundation with a significant collection of new capabilities in speed, flexibility, and performance.
“Our customer focus has guided the development of MicroStrategy 10.1, helping to ensure that we continue to bring cutting-edge technology to the market,” said Paul Zolfaghari, President, MicroStrategy Incorporated. “Our new agile engineering development methods are resulting in new features and enhancements being rolled out to our global customer base on a more frequent basis. We are confident that 10.1 delivers an even higher level of analytics value for organizations and institutions around the world.”
MicroStrategy Connector to Presto Opens Door to Fast, Interactive Analytics for Big Data Exploration
In September, MicroStrategy announced that through its optimized Presto Connector, MicroStrategy 10 Secure Enterprise enables organizations with immense amounts of data to run thousands of quick, interactive analytic queries against multiple data stores. Developed by Facebook, Presto is an open source distributed SQL query engine for running interactive analytic queries against data sources of all sizes ranging from gigabytes to petabytes.
“The impact of having a JDBC connector to Presto is huge for the analytics community,” said Tim Lang, Senior Executive Vice President and Chief Technology Officer, MicroStrategy Incorporated. “MicroStrategy 10 Secure Enterprise’s optimized Presto Connector empowers our Big Data customers to query into their data quickly, interactively, at petabyte scale. It enables users to query and explore their immense amounts of data, sometimes spread across multiple data sources, without performance constraints. Having this connector in MicroStrategy Desktop and Web opens the door to build quick analytics for the masses who typically access Presto pragmatically and dump results in files or databases to connect with additional visualization tools.”
Targeted at analysts who expect fast interactive response times, Presto allows querying data where it lives, including Hive, Cassandra, relational databases or even proprietary data stores. A single Presto query can combine data from multiple sources, and Presto supports data exploration across an entire organization. Presto breaks the false choice between having fast analytics using an expensive commercial solution or using a slow “free” solution that requires excessive hardware.
Usher™ Achieves FIDO Alliance Certification for its Innovative Enterprise Mobile Security Solution
In August, Usher, MicroStrategy’s advanced enterprise security solution that is designed to replace vulnerable security measures such as passwords and keycards, was certified by The FIDO (Fast IDentity Online) Alliance . Usher passed a rigorous series of tests that measure compliance with the FIDO Universal Authentication Framework (UAF) and confirm interoperability with other FIDO Certified products and services that support FIDO 1.0 specifications.
“Achieving FIDO certification demonstrates MicroStrategy’s dedication to providing our customers and the marketplace with an innovative mobile security solution that ends the password nightmare,” said Jonathan Klein, President, MicroStrategy Incorporated. “Our customers can now use Usher to adopt the FIDO UAF standard in a matter of minutes—quickly making great improvements to their security. We encourage governments, businesses, and organizations to move beyond the antiquated password model and try out Usher’s robust and secure multi-factor authentication solution.”
Non-GAAP Financial Measure
MicroStrategy is providing a supplemental financial measure for income from continuing operations that excludes the impact of share-based compensation arrangements and restructuring activities. This financial measure is not a measurement of financial performance under generally accepted accounting principles in the United States (“GAAP”) and, as a result, this financial measure may not be comparable to similarly titled measures of other companies. Management uses this non-GAAP financial measure internally to help understand, manage, and evaluate business performance and to help make operating decisions. MicroStrategy believes that this non-GAAP financial measure is also useful to investors and analysts in comparing its performance across reporting periods on a consistent basis because it excludes a significant non-cash share-based compensation expense that MicroStrategy believes is not reflective of its general business performance and significant restructuring charges that we believe are not reflective of ongoing operating results. In addition, accounting for share-based compensation arrangements requires significant management judgment and the resulting expense could vary significantly in comparison to other companies. Therefore, MicroStrategy believes the use of this non-GAAP financial measure can also facilitate comparison of MicroStrategy’s operating results to those of its competitors.
About MicroStrategy Incorporated
Founded in 1989, MicroStrategy (Nasdaq: MSTR) is a leading worldwide provider of enterprise software platforms. The Company’s mission is to provide enterprise analytics, mobility, and security platforms that are flexible, powerful, scalable, and user-friendly. To learn more, visit MicroStrategy online, and follow us on Facebook and Twitter .
MicroStrategy, MicroStrategy 10, MicroStrategy 10 Secure Enterprise, MicroStrategy 10.1, MicroStrategy Mobile, MicroStrategy Analytics, MicroStrategy Desktop, MicroStrategy Web, and Usher 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 extent and timing of market acceptance of MicroStrategy’s new offerings, including MicroStrategy 10 Secure Enterprise; the impact on our business of the restructuring plan we adopted in the third quarter of 2014; the Company’s ability to recognize revenue or deferred revenue through delivery of products or satisfactory performance of services; continued acceptance of the Company’s other products in the marketplace; fluctuations in tax benefits or provisions; the timing of significant orders; delays in or the inability of the Company to develop or ship new products; competitive factors; general economic conditions, including economic uncertainty in the retail industry, in which the Company has a significant number of customers; currency fluctuations; and other risks detailed in the Company’s registration statements and periodic reports filed with the Securities and Exchange Commission. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release.
MSTR-F
MICROSTRATEGY INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
|||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
|
Revenues |
||||||||||||||||
|
Product licenses |
$ | 27,511 | $ | 33,969 | $ | 77,634 | $ | 91,208 | ||||||||
|
Subscription services |
6,546 | 5,993 | 20,285 | 16,317 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Total product licenses and subscription services |
34,057 | 39,962 | 97,919 | 107,525 | ||||||||||||
|
Product support |
71,392 | 75,019 | 211,444 | 221,069 | ||||||||||||
|
Other services |
24,087 | 36,221 | 76,984 | 102,365 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Total revenues |
129,536 | 151,202 | 386,347 | 430,959 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Cost of revenues |
||||||||||||||||
|
Product licenses |
2,680 | 1,542 | 5,895 | 5,456 | ||||||||||||
|
Subscription services |
3,075 | 4,502 | 9,800 | 13,829 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Total product licenses and subscription services |
5,755 | 6,044 | 15,695 | 19,285 | ||||||||||||
|
Product support |
3,174 | 3,695 | 9,734 | 10,713 | ||||||||||||
|
Other services |
15,755 | 25,214 | 52,265 | 73,577 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Total cost of revenues |
24,684 | 34,953 | 77,694 | 103,575 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Gross profit |
104,852 | 116,249 | 308,653 | 327,384 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Operating expenses |
||||||||||||||||
|
Sales and marketing |
36,403 | 58,195 | 109,142 | 178,028 | ||||||||||||
|
Research and development |
17,789 | 28,659 | 48,051 | 89,469 | ||||||||||||
|
General and administrative |
19,843 | 24,811 | 63,071 | 76,376 | ||||||||||||
|
Restructuring costs |
86 | 11,578 | 261 | 11,578 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Total operating expenses |
74,121 | 123,243 | 220,525 | 355,451 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Income (loss) from operations |
30,731 | (6,994 | ) | 88,128 | (28,067 | ) | ||||||||||
|
Interest income, net |
116 | 53 | 129 | 133 | ||||||||||||
|
Other income, net |
766 | 4,928 | 2,601 | 3,336 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Income (loss) before income taxes |
31,613 | (2,013 | ) | 90,858 | (24,598 | ) | ||||||||||
|
Provision for (benefit from) income taxes |
7,720 | (1,168 | ) | 24,038 | (6,934 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Net income (loss) |
$ | 23,893 | $ | (845 | ) | $ | 66,820 | $ | (17,664 | ) | ||||||
|
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|
|
|
|
|
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|||||||||
|
Basic earnings (loss) per share (1): |
$ | 2.10 | $ | (0.07 | ) | $ | 5.89 | $ | (1.56 | ) | ||||||
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|||||||||
|
Weighted average shares outstanding used in computing basic earnings (loss) per share |
11,365 | 11,301 | 11,345 | 11,301 | ||||||||||||
|
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|
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|
|||||||||
|
Diluted earnings (loss) per share (1): |
$ | 2.06 | $ | (0.07 | ) | $ | 5.80 | $ | (1.56 | ) | ||||||
|
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|
|
|
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|||||||||
|
Weighted average shares outstanding used in computing diluted earnings (loss) per share |
11,589 | 11,301 | 11,521 | 11,301 | ||||||||||||
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|||||||||
| (1) | Basic and fully diluted earnings (loss) per share for class A and class B common stock are the same. |
MICROSTRATEGY INCORPORATED
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
|
September 30,
2015 |
December 31,
2014* |
|||||||
| (unaudited) | ||||||||
|
Assets |
||||||||
|
Current assets |
||||||||
|
Cash and cash equivalents |
$ | 230,188 | $ | 146,919 | ||||
|
Restricted cash |
487 | 661 | ||||||
|
Short-term investments |
226,689 | 198,547 | ||||||
|
Accounts receivable, net |
55,039 | 78,633 | ||||||
|
Prepaid expenses and other current assets |
12,078 | 17,669 | ||||||
|
Deferred tax assets, net |
12,373 | 19,936 | ||||||
|
|
|
|
|
|||||
|
Total current assets |
536,854 | 462,365 | ||||||
|
Property and equipment, net |
68,862 | 77,852 | ||||||
|
Capitalized software development costs, net |
17,807 | 13,469 | ||||||
|
Deposits and other assets |
2,184 | 3,951 | ||||||
|
Deferred tax assets, net |
2,247 | 1,160 | ||||||
|
|
|
|
|
|||||
|
Total Assets |
$ | 627,954 | $ | 558,797 | ||||
|
|
|
|
|
|||||
|
Liabilities and Stockholders’ Equity |
||||||||
|
Current liabilities |
||||||||
|
Accounts payable and accrued expenses |
$ | 26,609 | $ | 35,458 | ||||
|
Accrued compensation and employee benefits |
38,570 | 50,588 | ||||||
|
Accrued restructuring costs |
98 | 2,284 | ||||||
|
Deferred revenue and advance payments |
115,504 | 108,413 | ||||||
|
Deferred tax liabilities |
395 | 557 | ||||||
|
|
|
|
|
|||||
|
Total current liabilities |
181,176 | 197,300 | ||||||
|
Deferred revenue and advance payments |
10,297 | 10,818 | ||||||
|
Other long-term liabilities |
20,166 | 22,679 | ||||||
|
Deferred tax liabilities |
7,803 | 3,529 | ||||||
|
|
|
|
|
|||||
|
Total Liabilities |
219,442 | 234,326 | ||||||
|
|
|
|
|
|||||
|
Stockholders’ Equity |
||||||||
|
Preferred stock undesignated, $0.001 par value; 5,000 shares authorized; no shares issued or outstanding |
— | — | ||||||
|
Class A common stock, $0.001 par value; 330,000 shares authorized; 15,734 shares issued and 9,329 shares outstanding, and 15,660 shares issued and 9,255 shares outstanding, respectively |
16 | 16 | ||||||
|
Class B common stock, $0.001 par value; 165,000 shares authorized; 2,035 shares issued and outstanding, and 2,055 shares issued and outstanding, respectively |
2 | 2 | ||||||
|
Additional paid-in capital |
525,632 | 506,727 | ||||||
|
Treasury stock, at cost; 6,405 shares |
(475,184 | ) | (475,184 | ) | ||||
|
Accumulated other comprehensive loss |
(6,047 | ) | (4,363 | ) | ||||
|
Retained earnings |
364,093 | 297,273 | ||||||
|
|
|
|
|
|||||
|
Total Stockholders’ Equity |
408,512 | 324,471 | ||||||
|
|
|
|
|
|||||
|
Total Liabilities and Stockholders’ Equity |
$ | 627,954 | $ | 558,797 | ||||
|
|
|
|
|
|||||
| * | Derived from audited financial statements. |
MICROSTRATEGY INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
|
Nine Months Ended
September 30, |
||||||||
| 2015 | 2014 | |||||||
| (unaudited) | (unaudited) | |||||||
|
Operating activities: |
||||||||
|
Net income (loss) |
$ | 66,820 | $ | (17,664 | ) | |||
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
||||||||
|
Depreciation and amortization |
16,172 | 19,305 | ||||||
|
Bad debt expense |
683 | 2,242 | ||||||
|
Unrealized net loss (gain) on foreign currency forward contracts |
1,641 | (926 | ) | |||||
|
Non-cash portion of adjustments to accrued restructuring costs |
(127 | ) | 165 | |||||
|
Deferred taxes |
11,015 | (12,337 | ) | |||||
|
Release of liabilities for unrecognized tax benefits |
(61 | ) | — | |||||
|
Share-based compensation expense |
12,503 | 8,561 | ||||||
|
Excess tax benefits from share-based compensation arrangements |
(963 | ) | — | |||||
|
Reclassification of foreign currency translation adjustment from other comprehensive income |
(280 | ) | — | |||||
|
Changes in operating assets and liabilities: |
||||||||
|
Accounts receivable |
19,511 | 23,488 | ||||||
|
Prepaid expenses and other current assets |
3,377 | (5,197 | ) | |||||
|
Deposits and other assets |
1,562 | 412 | ||||||
|
Accounts payable and accrued expenses |
(4,933 | ) | (2,757 | ) | ||||
|
Accrued compensation and employee benefits |
(10,275 | ) | (19,380 | ) | ||||
|
Accrued restructuring costs |
(1,940 | ) | 8,083 | |||||
|
Deferred revenue and advance payments |
11,153 | 11,723 | ||||||
|
Other long-term liabilities |
(2,415 | ) | 603 | |||||
|
|
|
|
|
|||||
|
Net cash provided by operating activities |
123,443 | 16,321 | ||||||
|
Investing activities: |
||||||||
|
Proceeds from redemption of short-term investments |
316,000 | 222,300 | ||||||
|
Purchases of property and equipment |
(3,352 | ) | (11,856 | ) | ||||
|
Purchases of short-term investments |
(344,033 | ) | (303,565 | ) | ||||
|
Capitalized software development costs |
(9,598 | ) | (2,254 | ) | ||||
|
Decrease (increase) in restricted cash |
113 | (1,013 | ) | |||||
|
|
|
|
|
|||||
|
Net cash used in investing activities |
(40,870 | ) | (96,388 | ) | ||||
|
Financing activities: |
||||||||
|
Proceeds from sale of class A common stock under exercise of employee stock options |
5,439 | — | ||||||
|
Excess tax benefits from share-based compensation arrangements |
963 | — | ||||||
|
Payments on capital lease obligations and other financing arrangements |
(1,430 | ) | (2,035 | ) | ||||
|
|
|
|
|
|||||
|
Net cash provided by (used in) financing activities |
4,972 | (2,035 | ) | |||||
|
Effect of foreign exchange rate changes on cash and cash equivalents |
(4,276 | ) | (2,063 | ) | ||||
|
|
|
|
|
|||||
|
Net increase (decrease) in cash and cash equivalents |
83,269 | (84,165 | ) | |||||
|
Cash and cash equivalents, beginning of period |
146,919 | 220,171 | ||||||
|
|
|
|
|
|||||
|
Cash and cash equivalents, end of period |
$ | 230,188 | $ | 136,006 | ||||
|
|
|
|
|
|||||
MICROSTRATEGY INCORPORATED
REVENUE AND COST OF REVENUE DETAIL
(in thousands)
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
|||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
|
Revenues |
||||||||||||||||
|
Product licenses and subscription services: |
||||||||||||||||
|
Product licenses |
$ | 27,511 | $ | 33,969 | $ | 77,634 | $ | 91,208 | ||||||||
|
Subscription services |
6,546 | 5,993 | 20,285 | 16,317 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Total product licenses and subscription services |
34,057 | 39,962 | 97,919 | 107,525 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Product support |
71,392 | 75,019 | 211,444 | 221,069 | ||||||||||||
|
Other services: |
||||||||||||||||
|
Consulting |
22,018 | 32,812 | 70,475 | 91,510 | ||||||||||||
|
Education |
2,069 | 3,409 | 6,509 | 10,855 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Total other services |
24,087 | 36,221 | 76,984 | 102,365 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Total revenues |
129,536 | 151,202 | 386,347 | 430,959 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Cost of revenues |
||||||||||||||||
|
Product licenses and subscription services: |
||||||||||||||||
|
Product licenses |
2,680 | 1,542 | 5,895 | 5,456 | ||||||||||||
|
Subscription services |
3,075 | 4,502 | 9,800 | 13,829 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Total product licenses and subscription services |
5,755 | 6,044 | 15,695 | 19,285 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Product support |
3,174 | 3,695 | 9,734 | 10,713 | ||||||||||||
|
Other services: |
||||||||||||||||
|
Consulting |
14,723 | 23,841 | 49,526 | 68,830 | ||||||||||||
|
Education |
1,032 | 1,373 | 2,739 | 4,747 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Total other services |
15,755 | 25,214 | 52,265 | 73,577 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Total cost of revenues |
24,684 | 34,953 | 77,694 | 103,575 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Gross profit |
$ | 104,852 | $ | 116,249 | $ | 308,653 | $ | 327,384 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
MICROSTRATEGY INCORPORATED
DEFERRED REVENUE DETAIL
(in thousands)
|
September 30,
2015 |
December 31,
2014* |
September 30,
2014 |
||||||||||
| (unaudited) | (unaudited) | |||||||||||
|
Current: |
||||||||||||
|
Deferred product licenses revenue |
$ | 13,155 | $ | 10,927 | $ | 10,010 | ||||||
|
Deferred subscription services revenue |
11,172 | 16,018 | 10,382 | |||||||||
|
Deferred product support revenue |
135,999 | 168,833 | 145,917 | |||||||||
|
Deferred other services revenue |
6,794 | 10,564 | 10,216 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Gross current deferred revenue and advance payments |
167,120 | 206,342 | 176,525 | |||||||||
|
Less: unpaid deferred revenue |
(51,616 | ) | (97,929 | ) | (55,818 | ) | ||||||
|
|
|
|
|
|
|
|||||||
|
Net current deferred revenue and advance payments |
$ | 115,504 | $ | 108,413 | $ | 120,707 | ||||||
|
|
|
|
|
|
|
|||||||
|
Non-current: |
||||||||||||
|
Deferred product licenses revenue |
$ | 6,344 | $ | 8,012 | $ | 7,700 | ||||||
|
Deferred subscription services revenue |
808 | 750 | 669 | |||||||||
|
Deferred product support revenue |
6,962 | 7,505 | 7,062 | |||||||||
|
Deferred other services revenue |
1,166 | 1,047 | 951 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Gross non-current deferred revenue and advance payments |
15,280 | 17,314 | 16,382 | |||||||||
|
Less: unpaid deferred revenue |
(4,983 | ) | (6,496 | ) | (4,903 | ) | ||||||
|
|
|
|
|
|
|
|||||||
|
Net non-current deferred revenue and advance payments |
$ | 10,297 | $ | 10,818 | $ | 11,479 | ||||||
|
|
|
|
|
|
|
|||||||
|
Total current and non-current: |
||||||||||||
|
Deferred product licenses revenue |
$ | 19,499 | $ | 18,939 | $ | 17,710 | ||||||
|
Deferred subscription services revenue |
11,980 | 16,768 | 11,051 | |||||||||
|
Deferred product support revenue |
142,961 | 176,338 | 152,979 | |||||||||
|
Deferred other services revenue |
7,960 | 11,611 | 11,167 | |||||||||
|
|
|
|
|
|
|
|||||||
|
Gross current and non-current deferred revenue and advance payments |
182,400 | 223,656 | 192,907 | |||||||||
|
Less: unpaid deferred revenue |
(56,599 | ) | (104,425 | ) | (60,721 | ) | ||||||
|
|
|
|
|
|
|
|||||||
|
Net current and non-current deferred revenue and advance payments |
$ | 125,801 | $ | 119,231 | $ | 132,186 | ||||||
|
|
|
|
|
|
|
|||||||
| * | Derived from audited financial statements. |
MICROSTRATEGY INCORPORATED
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(in thousands)
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, |
|||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
|
Reconciliation of non-GAAP income (loss) from operations: |
||||||||||||||||
|
Income (loss) from operations |
$ | 30,731 | $ | (6,994 | ) | $ | 88,128 | $ | (28,067 | ) | ||||||
|
Share-based compensation expense |
4,546 | 3,879 | 12,503 | 8,561 | ||||||||||||
|
Restructuring costs |
86 | 11,578 | 261 | 11,578 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Non-GAAP income (loss) from operations |
$ | 35,363 | $ | 8,463 | $ | 100,892 | $ | (7,928 | ) | |||||||
|
|
|
|
|
|
|
|
|
|||||||||
MICROSTRATEGY INCORPORATED
WORLDWIDE EMPLOYEE HEADCOUNT
|
September 30,
2014 |
December 31,
2014 |
March 31,
2015 |
June 30,
2015 |
September 30,
2015 |
||||||||||||||||
|
Subscription services |
61 | 57 | 43 | 37 | 33 | |||||||||||||||
|
Product support |
144 | 138 | 138 | 130 | 127 | |||||||||||||||
|
Consulting |
676 | 600 | 554 | 508 | 480 | |||||||||||||||
|
Education |
35 | 24 | 19 | 25 | 27 | |||||||||||||||
|
Sales and marketing |
827 | 662 | 577 | 515 | 507 | |||||||||||||||
|
Research and development |
965 | 645 | 580 | 508 | 464 | |||||||||||||||
|
General and administrative |
417 | 344 | 321 | 303 | 301 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Total headcount |
3,125 | 2,470 | 2,232 | 2,026 | 1,939 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||