MicroStrategy Announces Second Quarter 2021 Financial Results

MicroStrategy (Nasdaq: MSTR), the largest independent publicly-traded business intelligence company, today announced financial results for the three-month period ended June 30, 2021 (the second quarter of its 2021 fiscal year).

“MicroStrategy continued its strong 2021 by delivering an outstanding operational performance across the board and completing another successful capital raise to expand our digital asset holdings. We had one of our best operational quarters in our software business in years, highlighted by 13% revenue growth. Our success in the market is being driven by the investments we have made and the broad adoption of our innovative MicroStrategy platform,” said Michael J. Saylor, CEO, MicroStrategy Incorporated.

“We continue to be pleased by the results of the implementation of our digital asset strategy. Our latest capital raise allowed us to expand our digital holdings, which now exceed 105,000 bitcoins. Going forward, we intend to continue to deploy additional capital into our digital asset strategy.”

Second Quarter 2021 Financial Highlights

• Revenues: Total revenues for the second quarter of 2021 were $125.4 million, a 13.4% increase, or a 10.1% increase on a non-GAAP constant currency basis, compared to the second quarter of 2020. Product licenses and subscription services revenues for the second quarter of 2021 were $32.5 million, a 42.3% increase, or a 40.5% increase on a non-GAAP constant currency basis, compared to the second quarter of 2020. Product support revenues for the second quarter of 2021 were $71.0 million, a 1.4% increase, or a 2.1% decrease on a non-GAAP constant currency basis, compared to the second quarter of 2020. Other services revenues for the second quarter of 2021 were $21.8 million, a 23.3% increase, or a 19.0% increase on a non-GAAP constant currency basis, compared to the second quarter of 2020.

• Gross Profit: Gross profit for the second quarter of 2021 was $102.3 million, representing an 81.6% gross margin, compared to a gross margin of 78.3% in the second quarter of 2020.

• Operating Expenses: Operating expenses for the second quarter of 2021 were $516.6 million, a 543.6% increase compared to the second quarter of 2020. Beginning in the third quarter of 2020, operating expenses included impairment losses on MicroStrategy’s digital assets, which were $424.8 million during the second quarter of 2021.

• (Loss) Income from Operations: Loss from operations for the second quarter of 2021 was $414.2 million versus income from operations of $6.3 million for the second 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 $21.6 million for the second quarter of 2021 versus $8.6 million for the second quarter of 2020.

• Net (Loss) Income: Net loss for the second quarter of 2021 was $299.3 million, or $30.71 per share on a diluted basis, as compared to net income of $3.4 million, or $0.35 per share on a diluted basis, for the second 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 $16.7 million, or $1.72 per share on a non-GAAP diluted basis, for the second quarter of 2021, as compared to non-GAAP net income of $5.9 million, or $0.60 per share on a non-GAAP diluted basis, for the second quarter of 2020.

• Cash and Cash Equivalents: As of June 30, 2021, MicroStrategy had cash and cash equivalents of $56.4 million, as compared to $59.7 million as of December 31, 2020, a decrease of $3.3 million.

• Digital Assets: As of June 30, 2021, the carrying value of MicroStrategy’s digital assets (comprised of approximately 105,085 bitcoins) was $2.051 billion, which reflects cumulative impairment losses of $689.6 million since acquisition and an average carrying amount per bitcoin of approximately $19,518. As of June 30, 2021, the non-GAAP digital asset cost basis and non-GAAP calculation of the market value of MicroStrategy's bitcoin were $2.741 billion and $3.653 billion, respectively, which reflects an average cost per bitcoin of approximately $26,080 and a market price per bitcoin of $34,763.47. MacroStrategy LLC, a subsidiary of MicroStrategy, holds approximately 92,079 of the bitcoins.

• Senior Secured Notes: In June 2021, MicroStrategy issued $500.0 million aggregate principal amount of 6.125% Senior Secured Notes due 2028 (the “2028 Secured Notes”). The 2028 Secured Notes are unconditionally guaranteed, jointly and severally, on a senior secured basis by MicroStrategy Services Corporation, a wholly owned subsidiary of MicroStrategy and certain subsidiaries of MicroStrategy that may be formed or acquired on or after June 14, 2021. The 2028 Secured Notes bear interest at a fixed rate of 6.125% per annum, payable semiannually in arrears on June 15 and December 15 of each year, beginning on December 15, 2021. The 2028 Secured Notes have a stated maturity date of June 15, 2028, unless earlier redeemed or repurchased in accordance with their terms and subject to a springing maturity date of September 15, 2025 or November 16, 2026 under certain circumstances. The 2028 Secured Notes contain various customary covenants, including limitations with respect to indebtedness, liens, payment of dividends, investments, disposition of assets, mergers and acquisitions, and transactions with affiliates. The total net proceeds from the 2028 Secured Notes offering, after deducting initial purchaser discounts and issuance costs, were approximately $487.2 million. As of June 30, 2021, the carrying value of the 2028 Secured Notes was $487.3 million, net of unamortized issuance costs, and was classified as a long-term liability in the “Long-term debt, net” line item in MicroStrategy’s Consolidated Balance Sheet.

The tables at the end of this press release include a reconciliation of GAAP to non-GAAP financial measures for the three and six months ended June 30, 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 MicroStrategy’s “Q2 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.

CFO Search

With MicroStrategy’s management team focusing on two corporate strategies – growing its enterprise analytics software business and acquiring and holding bitcoin – and with the increase in its public profile and operational complexity, MicroStrategy plans to engage in a search for a Chief Financial Officer to complement the management team and allow Phong Le to focus on his role as President, running the day-to-day business of MicroStrategy.

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 long-term debt, and related income tax effects, (iii) non-GAAP digital asset cost basis as reported excluding cumulative impairment losses and a non-GAAP calculation of market value of MicroStrategy’s bitcoin holdings based on the market price of one bitcoin in its principal market at 4:00 p.m. Eastern Time on the last day of each period (see below for a more detailed explanation of the calculation and limitations applicable to this market value metric), and (iv) 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 long-term debt, and (iv) related income tax effects. The third set of supplemental financial measures provides MicroStrategy’s digital asset balances, as reported excluding non-cash cumulative impairment losses and discloses a non-GAAP calculation of market value of its bitcoin holdings based on the market price of one bitcoin in its principal market at 4:00 p.m. Eastern Time on the last day of each period (see below for a more detailed explanation of the calculation and limitations applicable to this market value metric). MicroStrategy believes this is useful to investors and analysts in comparing the value of its bitcoin holdings. The fourth 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 second 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, 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 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 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.

MSTR-F

MICROSTRATEGY INCORPORATED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2021				2020				2021				2020
		(unaudited)				(unaudited)				(unaudited)				(unaudited)
Revenues
Product licenses		$	22,151			$	14,816			$	43,431			$	27,400
Subscription services			10,342				8,021				20,368				15,989
Total product licenses and subscription services			32,493				22,837				63,799				43,389
Product support			71,027				70,038				141,676				141,196
Other services			21,831				17,709				42,778				37,423
Total revenues			125,351				110,584				248,253				222,008
Cost of revenues
Product licenses			419				514				907				1,184
Subscription services			3,810				3,792				7,438				7,856
Total product licenses and subscription services			4,229				4,306				8,345				9,040
Product support			4,862				6,837				9,674				13,555
Other services			13,947				12,846				27,568				25,939
Total cost of revenues			23,038				23,989				45,587				48,534
Gross profit			102,313				86,595				202,666				173,474
Operating expenses
Sales and marketing			40,321				34,951				78,519				74,469
Research and development			28,548				25,867				58,031				51,968
General and administrative			22,917				19,449				44,646				40,781
Digital asset impairment losses			424,774				0				618,869				0
Total operating expenses			516,560				80,267				800,065				167,218
(Loss) income from operations			(414,247	)			6,328				(597,399	)			6,256
Interest (expense) income, net			(4,401	)			563				(6,797	)			2,418
Other (expense) income, net			(897	)			(1,995	)			367				(1,561	)
(Loss) income before income taxes			(419,545	)			4,896				(603,829	)			7,113
(Benefit from) provision for income taxes			(120,198	)			1,509				(194,462	)			3,069
Net (loss) income		$	(299,347	)		$	3,387			$	(409,367	)		$	4,044
Basic (loss) earnings per share (1):		$	(30.71	)		$	0.35			$	(42.22	)		$	0.41
Weighted average shares outstanding used in computing basic (loss) earnings per share			9,746				9,739				9,697				9,858
Diluted (loss) earnings per share (1):		$	(30.71	)		$	0.35			$	(42.22	)		$	0.41
Weighted average shares outstanding used in computing diluted (loss) earnings per share			9,746				9,741				9,697				9,886

(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)
		June 30,				December 31,
		2021				2020*
		(unaudited)
Assets
Current assets
Cash and cash equivalents		$	56,399			$	59,675
Restricted cash			1,205				1,084
Accounts receivable, net			131,516				197,461
Prepaid expenses and other current assets			19,338				14,400
Total current assets			208,458				272,620
Digital assets			2,051,039				1,054,302
Property and equipment, net			39,659				42,975
Right-of-use assets			70,340				73,597
Deposits and other assets			15,756				15,615
Deferred tax assets, net			239,107				6,503
Total Assets		$	2,624,359			$	1,465,612
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable, accrued expenses, and operating lease liabilities		$	41,236			$	45,119
Accrued compensation and employee benefits			50,944				49,249
Deferred revenue and advance payments			182,818				191,250
Total current liabilities			274,998				285,618
Long-term debt, net			2,150,927				486,366
Deferred revenue and advance payments			7,262				14,662
Operating lease liabilities			80,900				84,328
Other long-term liabilities			31,040				33,382
Deferred tax liabilities			1,813				8,211
Total Liabilities			2,546,940				912,567
Stockholders’ Equity
Preferred stock undesignated, $0.001 par value; 5,000 shares authorized; no shares issued or outstanding			0				0
Class A common stock, $0.001 par value; 330,000 shares authorized; 16,468 shares issued and 7,784 shares outstanding, and 16,307 shares issued and 7,623 shares outstanding, respectively			16				16
Class B convertible common stock, $0.001 par value; 165,000 shares authorized; 1,964 shares issued and outstanding, and 1,964 shares issued and outstanding, respectively			2				2
Additional paid-in capital			697,274				763,051
Treasury stock, at cost; 8,684 shares and 8,684 shares, respectively			(782,104	)			(782,104	)
Accumulated other comprehensive loss			(5,324	)			(3,885	)
Retained earnings			167,555				575,965
Total Stockholders’ Equity			77,419				553,045
Total Liabilities and Stockholders’ Equity		$	2,624,359			$	1,465,612

*

Derived from audited financial statements.

MICROSTRATEGY INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
		Six Months Ended
		June 30,
		2021				2020
		(unaudited)				(unaudited)
Operating activities:
Net (loss) income		$	(409,367	)		$	4,044
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization			5,997				5,828
Reduction in carrying amount of right-of-use assets			4,204				4,085
Credit losses and sales allowances			365				990
Deferred taxes			(197,383	)			273
Share-based compensation expense			18,807				5,337
Digital asset impairment losses			618,869				0
Amortization of issuance costs on long-term debt			2,977				0
Changes in operating assets and liabilities:
Accounts receivable			11,197				21,022
Prepaid expenses and other current assets			(4,080	)			(493	)
Deposits and other assets			(1,071	)			195
Accounts payable and accrued expenses			(7,633	)			(1,823	)
Accrued compensation and employee benefits			1,368				(8,708	)
Deferred revenue and advance payments			37,825				347
Operating lease liabilities			(5,147	)			(4,662	)
Other long-term liabilities			(253	)			86
Net cash provided by operating activities			76,675				26,521
Investing activities:
Purchases of digital assets			(1,615,606	)			0
Proceeds from redemption of short-term investments			0				10,000
Purchases of property and equipment			(1,342	)			(1,162	)
Purchases of short-term investments			0				(9,928	)
Net cash used in investing activities			(1,616,948	)			(1,090	)
Financing activities:
Proceeds from convertible senior notes			1,050,000				0
Issuance costs paid for convertible senior notes			(24,742	)			0
Proceeds from senior secured notes			500,000				0
Issuance costs paid for senior secured notes			(11,269	)			0
Proceeds from sale of class A common stock under exercise of employee stock options			24,098				1,902
Purchases of treasury stock			0				(61,875	)
Net cash provided by (used in) financing activities			1,538,087				(59,973	)
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash			(969	)			(1,154	)
Net decrease in cash, cash equivalents, and restricted cash			(3,155	)			(35,696	)
Cash, cash equivalents, and restricted cash, beginning of period			60,759				457,816
Cash, cash equivalents, and restricted cash, end of period		$	57,604			$	422,120

MICROSTRATEGY INCORPORATED REVENUE AND COST OF REVENUE DETAIL (in thousands)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2021				2020				2021				2020
		(unaudited)				(unaudited)				(unaudited)				(unaudited)
Revenues
Product licenses and subscription services:
Product licenses		$	22,151			$	14,816			$	43,431			$	27,400
Subscription services			10,342				8,021				20,368				15,989
Total product licenses and subscription services			32,493				22,837				63,799				43,389
Product support			71,027				70,038				141,676				141,196
Other services:
Consulting			20,622				16,578				40,333				35,019
Education			1,209				1,131				2,445				2,404
Total other services			21,831				17,709				42,778				37,423
Total revenues			125,351				110,584				248,253				222,008
Cost of revenues
Product licenses and subscription services:
Product licenses			419				514				907				1,184
Subscription services			3,810				3,792				7,438				7,856
Total product licenses and subscription services			4,229				4,306				8,345				9,040
Product support			4,862				6,837				9,674				13,555
Other services:
Consulting			12,438				10,168				24,770				21,596
Education			1,509				2,678				2,798				4,343
Total other services			13,947				12,846				27,568				25,939
Total cost of revenues			23,038				23,989				45,587				48,534
Gross profit		$	102,313			$	86,595			$	202,666			$	173,474

MICROSTRATEGY INCORPORATED RECONCILIATION OF GAAP TO NON-GAAP MEASURES INCOME FROM OPERATIONS (in thousands)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2021				2020				2021				2020
		(unaudited)				(unaudited)				(unaudited)				(unaudited)
Reconciliation of non-GAAP income from operations:
(Loss) income from operations		$	(414,247	)		$	6,328			$	(597,399	)		$	6,256
Share-based compensation expense			11,096				2,226				18,807				5,337
Digital asset impairment losses			424,774				0				618,869				0
Non-GAAP income from operations		$	21,623			$	8,554			$	40,277			$	11,593

MICROSTRATEGY INCORPORATED RECONCILIATION OF GAAP TO NON-GAAP MEASURES NET (LOSS) INCOME AND (LOSS) EARNINGS PER SHARE (in thousands, except per share data)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2021				2020				2021				2020
		(unaudited)				(unaudited)				(unaudited)				(unaudited)
Reconciliation of non-GAAP net income:
Net (loss) income		$	(299,347	)		$	3,387			$	(409,367	)		$	4,044
Share-based compensation expense			11,096				2,226				18,807				5,337
Digital asset impairment losses			424,774				0				618,869				0
Interest expense arising from amortization of debt issuance costs			1,805				0				2,977				0
Income tax effects (1)			(121,587	)			274				(199,671	)			436
Non-GAAP net income		$	16,741			$	5,887			$	31,615			$	9,817
Reconciliation of non-GAAP diluted earnings per share:
Diluted (loss) earnings per share		$	(30.71	)		$	0.35			$	(42.22	)		$	0.41
Share-based compensation expense (per diluted share)			1.14				0.22				1.94				0.54
Digital asset impairment losses (per diluted share)			43.58				0.00				63.82				0.00
Interest expense arising from amortization of debt issuance costs (per diluted share)			0.19				0.00				0.31				0.00
Income tax effects (per diluted share)			(12.48	)			0.03				(20.59	)			0.04
Non-GAAP diluted earnings per share		$	1.72			$	0.60			$	3.26			$	0.99

(1)

Income tax effects reflect the net tax effects of stock-based compensation expense, digital asset impairment losses, and interest expense for amortization of debt issuance costs.

MICROSTRATEGY INCORPORATED RECONCILIATION OF GAAP TO NON-GAAP MEASURES DIGITAL ASSET HOLDINGS
		As Reported																	Market Value
		Digital Asset Carrying Value (in thousands)				Add Back: Digital Asset Impairment Losses (in thousands)				Digital Asset Original Cost Basis (in thousands)				Approximate Number of Bitcoins Held					Market Price Per Bitcoin				Market Value of Bitcoin Held (in thousands)
Reconciliation of digital asset cost basis:
Balance at June 30, 2020		$	0			$	0			$	0				0				n/a				n/a
Digital asset purchases			425,000								425,000				38,250
Digital asset impairment losses			(44,242	)			44,242
Balance at September 30, 2020		$	380,758			$	44,242			$	425,000				38,250				$	10,706.00			$	409,505
Digital asset purchases			700,000								700,000				32,219
Digital asset impairment losses			(26,456	)			26,456
Balance at December 31, 2020		$	1,054,302			$	70,698			$	1,125,000				70,469				$	29,181.00			$	2,056,356
Digital asset purchases			1,086,375								1,086,375				20,857
Digital asset impairment losses			(194,095	)			194,095
Balance at March 31, 2021		$	1,946,582			$	264,793			$	2,211,375				91,326				$	58,601.28			$	5,351,820
Digital asset purchases			529,231								529,231				13,759
Digital asset impairment losses			(424,774	)			424,774
Balance at June 30, 2021		$	2,051,039			$	689,567			$	2,740,606				105,085				$	34,763.47			$	3,653,119

The amounts reported as “Market Value” in the above table represent only a mathematical calculation consisting of the price for one bitcoin reported in MicroStrategy’s principal market at 4:00 p.m. Eastern Time on the last day of each period multiplied by the number of bitcoins held by MicroStrategy at the end of the applicable period. The Securities and Exchange Commission has previously made findings that there has not been a demonstration that (i) bitcoin and bitcoin markets are inherently resistant to manipulation or that the spot price of bitcoin may not be subject to fraud and manipulation; and (ii) adequate surveillance-sharing agreements with bitcoin-related markets are in place, as bitcoin-related markets are either not significant, not regulated, or both. Accordingly, the Market Value amounts reported below 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, 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” indicated below, at the market price as reported in its principal market on the date of sale, or at all.

MICROSTRATEGY INCORPORATED RECONCILIATION OF GAAP TO NON-GAAP MEASURES CONSTANT CURRENCY (in thousands)
		Three Months Ended
		June 30,
		(unaudited)
		GAAP				Foreign Currency Exchange Rate Impact (1)				Non-GAAP Constant Currency (2)				GAAP				GAAP % Change				Non-GAAP Constant Currency % Change (3)
		2021				2021				2021				2020				2021				2021
Revenues
Product licenses		$	22,151			$	132			$	22,019			$	14,816				49.5	%			48.6	%
Subscription services			10,342				264				10,078				8,021				28.9	%			25.6	%
Total product licenses and subscription services			32,493				396				32,097				22,837				42.3	%			40.5	%
Product support			71,027				2,425				68,602				70,038				1.4	%			-2.1	%
Other services			21,831				763				21,068				17,709				23.3	%			19.0	%
Total revenues			125,351				3,584				121,767				110,584				13.4	%			10.1	%
		Six Months Ended
		June 30,
		(unaudited)
		GAAP				Foreign Currency Exchange Rate Impact (1)				Non-GAAP Constant Currency (2)				GAAP				GAAP % Change				Non-GAAP Constant Currency % Change (3)
		2021				2021				2021				2020				2021				2021
Revenues
Product licenses		$	43,431			$	457			$	42,974			$	27,400				58.5	%			56.8	%
Subscription services			20,368				454				19,914				15,989				27.4	%			24.5	%
Total product licenses and subscription services			63,799				911				62,888				43,389				47.0	%			44.9	%
Product support			141,676				4,342				137,334				141,196				0.3	%			-2.7	%
Other services			42,778				1,381				41,397				37,423				14.3	%			10.6	%
Total revenues			248,253				6,634				241,619				222,008				11.8	%			8.8	%

(1)		The “Foreign Currency Exchange Rate Impact” reflects the estimated impact of fluctuations in foreign currency exchange rates on international revenues. It shows the increase (decrease) in international revenues from the same period in the prior year, based on comparisons to the prior year quarterly average foreign currency exchange rates. The term “international” refers to operations outside of the United States and Canada.
(2)		The “Non-GAAP Constant Currency” reflects the current period GAAP amount, less the Foreign Currency Exchange Rate Impact.
(3)		The “Non-GAAP Constant Currency % Change” reflects the percentage change between the current period Non-GAAP Constant Currency amount and the GAAP amount for the same period in the prior year.

MICROSTRATEGY INCORPORATED DEFERRED REVENUE DETAIL (in thousands)
		June 30,				December 31,				June 30,
		2021				2020*				2020
		(unaudited)								(unaudited)
Current:
Deferred product licenses revenue		$	544			$	1,495			$	100
Deferred subscription services revenue			25,916				26,258				17,934
Deferred product support revenue			150,963				156,216				142,543
Deferred other services revenue			5,395				7,281				7,066
Total current deferred revenue and advance payments		$	182,818			$	191,250			$	167,643
Non-current:
Deferred product licenses revenue		$	76			$	139			$	168
Deferred subscription services revenue			712				8,758				90
Deferred product support revenue			5,920				5,055				5,152
Deferred other services revenue			554				710				500
Total non-current deferred revenue and advance payments		$	7,262			$	14,662			$	5,910
Total current and non-current:
Deferred product licenses revenue		$	620			$	1,634			$	268
Deferred subscription services revenue			26,628				35,016				18,024
Deferred product support revenue			156,883				161,271				147,695
Deferred other services revenue			5,949				7,991				7,566
Total current and non-current deferred revenue and advance payments		$	190,080			$	205,912			$	173,553

*

Derived from audited financial statements.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20210729005899/en/