EX-99.1 6 mstr-ex991_10.htm EX-99.1

Exhibit 99.1

Contact:

MicroStrategy Incorporated

Investor Relations

ir@microstrategy.com

(703) 848-8600

MicroStrategy Announces

First Quarter 2020 Financial Results

TYSONS CORNER, Va., April 28, 2020 - MicroStrategy® (Nasdaq: MSTR), the largest independent publicly-traded business intelligence company, today announced financial results for the three-month period ended March 31, 2020 (the first quarter of its 2020 fiscal year).

“As the world faces uncertain times with the impacts of COVID-19, analytics has never been more essential for organizations. To help our customers—many of whom are on the front lines of this crisis performing mission-critical services—continue their operations, our technical support and cloud operations teams remain staffed 24/7 across the globe. Our enterprise-grade, governed, and secure platform provides intelligence and stability at a time when our customers need them most in order to make fast, data-driven decisions,” said Michael J. Saylor, CEO, MicroStrategy Incorporated. “We remain focused on executing on our strategic priorities around cloud, HyperIntelligence®, and upgrading customers, while prudently managing the business through this rapidly evolving economic situation.”

First Quarter 2020 Financial Highlights

| • | Revenues: Total revenues for the first quarter of 2020 were $111.4 million, a 3.4% decrease, or a 1.7% decrease on a non-GAAP constant currency basis, compared to the first quarter of 2019. Product licenses and subscription services revenues for the first quarter of 2020 were $20.6 million, a 19.2% decrease, or a 16.9% decrease on a non-GAAP constant currency basis, compared to the first quarter of 2019. Product support revenues for the first quarter of 2020 were $71.2 million, a 0.4% decrease, or a 1.2% increase on a non-GAAP constant currency basis, compared to the first quarter of 2019. Other services revenues for the first quarter of 2020 were $19.7 million, a 6.7% increase, or a 8.1% increase on a non-GAAP constant currency basis, compared to the first quarter of 2019.

| • | Gross Profit: Gross profit for the first quarter of 2020 was $86.9 million, representing a 78.0% gross margin, compared to a gross margin of 77.3% in the first quarter of 2019.

| • | Operating Expenses: Operating expenses for the first quarter of 2020 were $87.0 million, a 12.7% decrease compared to the first quarter of 2019.

| • | Loss from Operations: Loss from operations for the first quarter of 2020 was $0.1 million versus $10.4 million for the first quarter of 2019. Non-GAAP income from operations, which excludes share-based compensation expense, was $3.0 million for the first quarter of 2020 versus non-GAAP loss from operations of $7.4 million for the first quarter of 2019.

| • | Net Income: Net income for the first quarter of 2020 was $0.7 million, or $0.07 per share on a diluted basis, as compared to a net loss of $7.9 million, or $0.77 per share on a diluted basis, for the first quarter of 2019. Contributing to net income for the first quarter of 2020 was $1.9 million in net interest income.

| • | Cash and Short-term Investments: As of March 31, 2020, MicroStrategy had cash and cash equivalents and short-term investments of $539.2 million, as compared to $565.6 million as of December 31, 2019, a decrease of $26.4 million. During the first quarter of 2020, MicroStrategy repurchased 354,633 shares of its class A common stock for an aggregate purchase price of approximately $50.7 million. As of March 31, 2020, MicroStrategy had 7.7 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 GAAP to non-GAAP financial measures for the three months ended March 31, 2020 and 2019. An explanation of non-GAAP financial measures is also included under th e heading “Non-GAAP Financial Measures” below.

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 iPad, MicroStrategy Library for iPhone, or MicroStrategy Library for Android tablet and smartphone.

Recent Business Highlights

The following are some key business highlights from the first quarter of 2020 related to MicroStrategy’s customer focus, recognition, and product innovation:

| • | Customer Focus. MicroStrategy is helping its customers in multiple ways, including offering programs t hat encourage their upgrade to MicroStrategy 2020™ and teach new skills. These offerings consist of:

| o | Free support to its customers to upgrade to MicroStrategy 2020 through June 30, 2020.

| o | Free o nline education classes and certifications to its customers through May 15, 2020.

MicroStrategy World™ 2020 hosted thousands of product experts, thought leaders, and MicroStrategy users for three days of inspirational keynotes, educational sessions, workshops, and customer and partner presentations. At the conference, MicroStrategy announced:

| o | Customer awards to Petco, Lowe’s, Sonic Automotive, and Ta-Ta Supermarkets for their HyperIntelligence-enabled, innovative, and impactful analytics solutions.

| o | Partner awards to Amazon Web Services (“AWS”), DataRobot, Datastrong, and T-Systems for delivering modern analytics to organizations using the MicroStrategy platform.

| • | Recognition. Numerous leading organizations, such as the General Services Administration, Pfizer, and Nu Skin, purchased HyperIntelligence during the quarter. MicroStrategy was also recognized in the following Gartner published research:

| o | MicroStrategy received the highest use case scores from Gartner in the Enterprise Analytics Use Case (4.86 out of 5) and Embedded Analytics Use Case (4.96 out of 5) in the Critical Capabilities for Analytics and Business Intelligence Platforms report(1).

| o | MicroStrategy was recognized as a Challenger in Gartner’s 2020 Magic Quadrant for Analytics and Business Intelligence Platforms report(2).

| • | Product Innovation. MicroStrategy continued to drive innovation in the following ways:

| o | In the first quarter of 2020, MicroStrategy announced the general availability of MicroStrategy 2020, its flagship platform. Highlights of MicroStrategy 2020 include design and performance enhancements to HyperIntelligence, enhanced AWS and Microsoft Azure support, new self-service authoring capabilities for Dossier®, improved Microsoft Excel experience through the M icroStrategy Office™ connector, and new data science connectors to Jupyter Notebook and RStudio.

| o | Published the Coronavirus Dossier so that people can stay current with the latest headlines and easily share relevant data and insights using the latest features of the MicroStrategy 2020 platform.

MicroStrategy Names Phong Le Chief Financial Officer

MicroStrategy also announced today that Lisa Mayr resigned from her position as its Senior Executive Vice President & Chief Financial Officer on April 23, 2020. In connection with her resignation, MicroStrategy appointed Phong Le, MicroStrategy’s Senior Executive Vice President & Chief Operating Officer, to succeed Ms. Mayr as its Chief Financial Officer, effective immediately. In addition to his new responsibilities as Chief Financial Officer, Mr. Le will continue to serve as MicroStrategy’s Senior Executive Vice President & Chief Operating Officer. Mr. Le will continue to report to Michael Saylor, MicroStrategy’s Chairman, President & Chief Executive Officer.

Conference Call

MicroStrategy will be discussing its first quarter 2020 financial results on a conference call today beginning at approximately 5:00 p.m. EDT. To access the conference call, dial (844) 824-7425 (domestically) or (716) 220-9429 (internationally) and use conference ID 8699165. A live and archived webcast will be available under the “Events” section on MicroStrategy’s investor relations website at https://ir.microstrategy.com/events-presentations. A replay of the conference call will be available beginning approximately two hours after the call concludes until May 5, 2020 at (855) 859-2056 (domestically) or (404) 537-3406 (internationally) using the passcode 8699165.

Non-GAAP Financial Measures

MicroStrategy is providing supplemental financial measures for (i) non-GAAP income (loss) from operations that excludes the impact of share-based compensation arrangements and (ii) 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 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 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.

About MicroStrategy Incorporated

MicroStrategy (Nasdaq: MSTR) is the largest independent publicly-traded business intelligence company, with the leading enterprise analytics platform. Our vision is to enable Intelligence Everywhere™. MicroStrategy provides modern analytics on an open, comprehensive enterprise platform used by many of the world’s most admired brands in the Fortune Global 500. Optimized for cloud and on-premises deployments, the platform features HyperIntelligence, a breakthrough technology that overlays actionable enterprise data on popular business applications to help users make smarter, faster decisions. For more information about MicroStrategy, visit www.microstrategy.com.

MicroStrategy, HyperIntelligence, Intelligent Enterprise, MicroStrategy Library, MicroStrategy 2020, MicroStrategy World, Dossier, MicroStrategy Office, and Intelligence Everywhere 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 co ntribute to such differences include: the extent and timing of market acceptance of MicroStrategy’s new offerings, including MicroStrategy 2020; impacts of the COVID-19 pandemic; the Company’s ability to recognize revenue or deferred revenue through delive ry 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 deve lop or ship new products; customers shifting from a product license model to a cloud subscription model; competitive factors; general economic conditions; currency fluctuations; and other risks detailed in the Company’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

(1) Gartner, Critical Capabilities for Analytics and Business Intelligence Platforms, Kurt Schlegel, James Richardson, Rita Sallam, Austin Kronz, Julian Sun, 17 March 2020.

(2) Gartner, Magic Quadrant for Analytics and Business Intelligence Platforms, James Richardson, Rita Sallam, Kurt Schlegel, Austin Kronz, Julian Sun, 11 February 2020.

Gartner Disclaimer

Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner's research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

The Gartner content described herein, (the "Gartner Content") represent(s) research opinion or viewpoints published, as part of a syndicated subscription service, by Gartner, Inc. ("Gartner"), and are not representations of fact. Gartner Content speaks as of its original publication date (and not as of the date of this Quarterly Report) and the opinions expressed in the Gartner Content are subject to change without notice.

MICROSTRATEGY INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

|  | Three Months Ended |
|  | March 31, |
|  | 2020 |  |  | 2019 |
|  | (unaudited) |  |  | (unaudited) |
Revenues |  |  |  |  |  |  |  |
Product licenses |  | $ | 12,584 |  |  | $ | 18,291 |
Subscription services |  |  | 7,968 |  |  |  | 7,144 |
Total product licenses and subscription services |  |  | 20,552 |  |  |  | 25,435 |
Product support |  |  | 71,158 |  |  |  | 71,450 |
Other services |  |  | 19,714 |  |  |  | 18,481 |
Total revenues |  |  | 111,424 |  |  |  | 115,366 |
Cost of revenues |  |  |  |  |  |  |  |
Product licenses |  |  | 670 |  |  |  | 519 |
Subscription services |  |  | 4,064 |  |  |  | 3,598 |
Total product licenses and subscription services |  |  | 4,734 |  |  |  | 4,117 |
Product support |  |  | 6,718 |  |  |  | 7,067 |
Other services |  |  | 13,093 |  |  |  | 14,989 |
Total cost of revenues |  |  | 24,545 |  |  |  | 26,173 |
Gross profit |  |  | 86,879 |  |  |  | 89,193 |
Operating expenses |  |  |  |  |  |  |  |
Sales and marketing |  |  | 39,518 |  |  |  | 48,760 |
Research and development |  |  | 26,101 |  |  |  | 28,215 |
General and administrative |  |  | 21,332 |  |  |  | 22,604 |
Total operating expenses |  |  | 86,951 |  |  |  | 99,579 |
Loss from operations |  |  | (72 | ) |  |  | (10,386 | )
Interest income, net |  |  | 1,855 |  |  |  | 2,566 |
Other income (expense), net |  |  | 434 |  |  |  | (596 | )
Income (loss) before income taxes |  |  | 2,217 |  |  |  | (8,416 | )
Provision for (benefit from) income taxes |  |  | 1,560 |  |  |  | (510 | )
Net income (loss) |  | $ | 657 |  |  | $ | (7,906 | )
Basic earnings (loss) per share (1): |  | $ | 0.07 |  |  | $ | (0.77 | )
Weighted average shares outstanding used in computing basic earnings (loss) per share |  |  | 9,976 |  |  |  | 10,328 |
Diluted earnings (loss) per share (1): |  | $ | 0.07 |  |  | $ | (0.77 | )
Weighted average shares outstanding used in computing diluted earnings (loss) per share |  |  | 10,031 |  |  |  | 10,328 |

(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)

|  | March 31, |  |  | December 31, |
|  | 2020 |  |  | 2019* |
|  | (unaudited) |  |  |  |  |
Assets |  |  |  |  |  |  |  |
Current assets |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 429,276 |  |  | $ | 456,727 |
Restricted cash |  |  | 2,742 |  |  |  | 1,089 |
Short-term investments |  |  | 109,946 |  |  |  | 108,919 |
Accounts receivable, net |  |  | 124,935 |  |  |  | 163,516 |
Prepaid expenses and other current assets |  |  | 26,163 |  |  |  | 23,195 |
Total current assets |  |  | 693,062 |  |  |  | 753,446 |
Property and equipment, net |  |  | 47,623 |  |  |  | 50,154 |
Right-of-use assets |  |  | 82,690 |  |  |  | 85,538 |
Deposits and other assets |  |  | 7,757 |  |  |  | 8,024 |
Deferred tax assets, net |  |  | 18,139 |  |  |  | 19,409 |
Total Assets |  | $ | 849,271 |  |  | $ | 916,571 |
Liabilities and Stockholders’ Equity |  |  |  |  |  |  |  |
Current liabilities |  |  |  |  |  |  |  |
Accounts payable, accrued expenses, and operating lease liabilities |  | $ | 32,539 |  |  | $ | 33,919 |
Accrued compensation and employee benefits |  |  | 35,207 |  |  |  | 48,792 |
Deferred revenue and advance payments |  |  | 184,891 |  |  |  | 187,107 |
Total current liabilities |  |  | 252,637 |  |  |  | 269,818 |
Deferred revenue and advance payments |  |  | 3,660 |  |  |  | 4,344 |
Operating lease liabilities |  |  | 100,251 |  |  |  | 103,424 |
Other long-term liabilities |  |  | 31,273 |  |  |  | 30,400 |
Deferred tax liabilities |  |  | 24 |  |  |  | 26 |
Total Liabilities |  |  | 387,845 |  |  |  | 408,012 |
Stockholders’ Equity |  |  |  |  |  |  |  |
Preferred stock undesignated, $0.001 par value; 5,000 shares authorized; no shares issued or outstanding |  |  | 0 |  |  |  | 0 |
Class A common stock, $0.001 par value; 330,000 shares authorized; 15,891 shares issued and 7,729 shares outstanding, and 15,888 shares issued and 8,081 shares outstanding, respectively |  |  | 16 |  |  |  | 16 |
Class B convertible common stock, $0.001 par value; 165,000 shares authorized; 2,035 shares issued and outstanding, and 2,035 shares issued and outstanding, respectively |  |  | 2 |  |  |  | 2 |
Additional paid-in capital |  |  | 597,087 |  |  |  | 593,583 |
Treasury stock, at cost; 8,162 shares and 7,807 shares, respectively |  |  | (709,627 | ) |  |  | (658,880 | )
Accumulated other comprehensive loss |  |  | (10,198 | ) |  |  | (9,651 | )
Retained earnings |  |  | 584,146 |  |  |  | 583,489 |
Total Stockholders’ Equity |  |  | 461,426 |  |  |  | 508,559 |
Total Liabilities and Stockholders’ Equity |  | $ | 849,271 |  |  | $ | 916,571 |

* | Derived from audited financial statements.

MICROSTRATEGY INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

|  | Three Months Ended |
|  | March 31, |
|  | 2020 |  |  | 2019 |
|  | (unaudited) |  |  | (unaudited) |
Operating activities: |  |  |  |  |  |  |  |
Net income (loss) |  | $ | 657 |  |  | $ | (7,906 | )
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 2,756 |  |  |  | 1,657 |
Reduction in carrying amount of right-of-use assets |  |  | 2,053 |  |  |  | 2,007 |
Credit losses and sales allowances |  |  | 828 |  |  |  | 827 |
Net realized loss on short-term investments |  |  | 0 |  |  |  | 41 |
Deferred taxes |  |  | 957 |  |  |  | (1,694 | )
Share-based compensation expense |  |  | 3,111 |  |  |  | 3,017 |
Changes in operating assets and liabilities: |  |  |  |  |  |  |  |
Accounts receivable |  |  | 14,406 |  |  |  | 10,266 |
Prepaid expenses and other current assets |  |  | (3,295 | ) |  |  | (3,070 | )
Deposits and other assets |  |  | 84 |  |  |  | (134 | )
Accounts payable and accrued expenses |  |  | (154 | ) |  |  | (3,108 | )
Accrued compensation and employee benefits |  |  | (13,031 | ) |  |  | (12,195 | )
Deferred revenue and advance payments |  |  | 22,001 |  |  |  | 38,502 |
Operating lease liabilities |  |  | (2,238 | ) |  |  | (2,074 | )
Other long-term liabilities |  |  | 934 |  |  |  | 320 |
Net cash provided by operating activities |  |  | 29,069 |  |  |  | 26,456 |
Investing activities: |  |  |  |  |  |  |  |
Proceeds from redemption of short-term investments |  |  | 10,000 |  |  |  | 314,403 |
Purchases of property and equipment |  |  | (661 | ) |  |  | (6,011 | )
Purchases of short-term investments |  |  | (9,928 | ) |  |  | (138,099 | )
Net cash (used in) provided by investing activities |  |  | (589 | ) |  |  | 170,293 |
Financing activities: |  |  |  |  |  |  |  |
Proceeds from sale of class A common stock under exercise of employee stock options |  |  | 340 |  |  |  | 1,507 |
Purchases of treasury stock |  |  | (50,747 | ) |  |  | (48,244 | )
Net cash used in financing activities |  |  | (50,407 | ) |  |  | (46,737 | )
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash |  |  | (3,871 | ) |  |  | (1,133 | )
Net (decrease) increase in cash, cash equivalents, and restricted cash |  |  | (25,798 | ) |  |  | 148,879 |
Cash, cash equivalents, and restricted cash, beginning of period |  |  | 457,816 |  |  |  | 110,786 |
Cash, cash equivalents, and restricted cash, end of period |  | $ | 432,018 |  |  | $ | 259,665 |

MICROSTRATEGY INCORPORATED

REVENUE AND COST OF REVENUE DETAIL

(in thousands)

|  | Three Months Ended |
|  | March 31, |
|  | 2020 |  |  | 2019 |
|  | (unaudited) |  |  | (unaudited) |
Revenues |  |  |  |  |  |  |  |
Product licenses and subscription services: |  |  |  |  |  |  |  |
Product licenses |  | $ | 12,584 |  |  | $ | 18,291 |
Subscription services |  |  | 7,968 |  |  |  | 7,144 |
Total product licenses and subscription services |  |  | 20,552 |  |  |  | 25,435 |
Product support |  |  | 71,158 |  |  |  | 71,450 |
Other services: |  |  |  |  |  |  |  |
Consulting |  |  | 18,441 |  |  |  | 16,603 |
Education |  |  | 1,273 |  |  |  | 1,878 |
Total other services |  |  | 19,714 |  |  |  | 18,481 |
Total revenues |  |  | 111,424 |  |  |  | 115,366 |
Cost of revenues |  |  |  |  |  |  |  |
Product licenses and subscription services: |  |  |  |  |  |  |  |
Product licenses |  |  | 670 |  |  |  | 519 |
Subscription services |  |  | 4,064 |  |  |  | 3,598 |
Total product licenses and subscription services |  |  | 4,734 |  |  |  | 4,117 |
Product support |  |  | 6,718 |  |  |  | 7,067 |
Other services: |  |  |  |  |  |  |  |
Consulting |  |  | 11,428 |  |  |  | 12,985 |
Education |  |  | 1,665 |  |  |  | 2,004 |
Total other services |  |  | 13,093 |  |  |  | 14,989 |
Total cost of revenues |  |  | 24,545 |  |  |  | 26,173 |
Gross profit |  | $ | 86,879 |  |  | $ | 89,193 |

MICROSTRATEGY INCORPORATED

DEFERRED REVENUE DETAIL

(in thousands)

|  | March 31, |  |  | December 31, |  |  | March 31, |
|  | 2020 |  |  | 2019* |  |  | 2019 |
|  | (unaudited) |  |  |  |  |  |  | (unaudited) |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Deferred product licenses revenue |  | $ | 131 |  |  | $ | 481 |  |  | $ | 555 |
Deferred subscription services revenue |  |  | 16,567 |  |  |  | 16,561 |  |  |  | 15,641 |
Deferred product support revenue |  |  | 161,135 |  |  |  | 161,670 |  |  |  | 166,306 |
Deferred other services revenue |  |  | 7,058 |  |  |  | 8,395 |  |  |  | 7,568 |
Total current deferred revenue and advance payments |  | $ | 184,891 |  |  | $ | 187,107 |  |  | $ | 190,070 |
Non-current: |  |  |  |  |  |  |  |  |  |  |  |
Deferred product licenses revenue |  | $ | 262 |  |  | $ | 293 |  |  | $ | 479 |
Deferred subscription services revenue |  |  | 84 |  |  |  | 97 |  |  |  | 247 |
Deferred product support revenue |  |  | 2,789 |  |  |  | 3,417 |  |  |  | 3,231 |
Deferred other services revenue |  |  | 525 |  |  |  | 537 |  |  |  | 582 |
Total non-current deferred revenue and advance payments |  | $ | 3,660 |  |  | $ | 4,344 |  |  | $ | 4,539 |
Total current and non-current: |  |  |  |  |  |  |  |  |  |  |  |
Deferred product licenses revenue |  | $ | 393 |  |  | $ | 774 |  |  | $ | 1,034 |
Deferred subscription services revenue |  |  | 16,651 |  |  |  | 16,658 |  |  |  | 15,888 |
Deferred product support revenue |  |  | 163,924 |  |  |  | 165,087 |  |  |  | 169,537 |
Deferred other services revenue |  |  | 7,583 |  |  |  | 8,932 |  |  |  | 8,150 |
Total current and non-current deferred revenue and advance payments |  | $ | 188,551 |  |  | $ | 191,451 |  |  | $ | 194,609 |

* | Derived from audited financial statements.

MICROSTRATEGY INCORPORATED

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

EXCLUSION OF SHARE-BASED COMPENSATION EXPENSE

(in thousands)

|  | Three Months Ended |
|  | March 31, |
|  | 2020 |  |  | 2019 |
|  | (unaudited) |  |  | (unaudited) |
Reconciliation of non-GAAP income (loss) from operations: |  |  |  |  |  |  |  |
Loss from operations |  | $ | (72 | ) |  | $ | (10,386 | )
Share-based compensation expense |  |  | 3,111 |  |  |  | 3,017 |
Non-GAAP income (loss) from operations |  | $ | 3,039 |  |  | $ | (7,369 | )

MICROSTRATEGY INCORPORATED

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

CONSTANT CURRENCY

(in thousands)

|  | Three Months Ended |
|  | March 31, |
|  | (unaudited) |
|  | GAAP |  |  | Foreign Currency Exchange Rate Impact (1) |  |  | Non-GAAP Constant Currency (2) |  |  | GAAP |  |  | GAAP % Change |  |  | Non-GAAP Constant Currency % Change (3) |
|  | 2020 |  |  | 2020 |  |  | 2020 |  |  | 2019 |  |  | 2020 |  |  | 2020 |
Revenues |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Product licenses |  | $ | 12,584 |  |  | $ | (541 | ) |  | $ | 13,125 |  |  | $ | 18,291 |  |  |  | -31.2 | % |  |  | -28.2 | %
Subscription services |  |  | 7,968 |  |  |  | (36 | ) |  |  | 8,004 |  |  |  | 7,144 |  |  |  | 11.5 | % |  |  | 12.0 | %
Total product licenses and subscription services |  |  | 20,552 |  |  |  | (577 | ) |  |  | 21,129 |  |  |  | 25,435 |  |  |  | -19.2 | % |  |  | -16.9 | %
Product support |  |  | 71,158 |  |  |  | (1,176 | ) |  |  | 72,334 |  |  |  | 71,450 |  |  |  | -0.4 | % |  |  | 1.2 | %
Other services |  |  | 19,714 |  |  |  | (255 | ) |  |  | 19,969 |  |  |  | 18,481 |  |  |  | 6.7 | % |  |  | 8.1 | %
Total revenues |  |  | 111,424 |  |  |  | (2,008 | ) |  |  | 113,432 |  |  |  | 115,366 |  |  |  | -3.4 | % |  |  | -1.7 | %

(1) | The “Foreign Currency Exchange Rate Impact” reflects the estimated impact from 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

WORLDWIDE EMPLOYEE HEADCOUNT

|  | March 31, |  |  | December 31, |  |  | September 30, |  |  | June 30, |  |  | March 31, |
|  | 2020 |  |  | 2019 |  |  | 2019 |  |  | 2019 |  |  | 2019 |
Subscription services |  |  | 63 |  |  |  | 69 |  |  |  | 66 |  |  |  | 62 |  |  |  | 54 |
Product support |  |  | 204 |  |  |  | 219 |  |  |  | 231 |  |  |  | 234 |  |  |  | 224 |
Consulting |  |  | 425 |  |  |  | 392 |  |  |  | 390 |  |  |  | 404 |  |  |  | 429 |
Education |  |  | 42 |  |  |  | 38 |  |  |  | 38 |  |  |  | 40 |  |  |  | 50 |
Sales and marketing |  |  | 594 |  |  |  | 597 |  |  |  | 616 |  |  |  | 637 |  |  |  | 675 |
Research and development |  |  | 721 |  |  |  | 743 |  |  |  | 775 |  |  |  | 764 |  |  |  | 733 |
General and administrative |  |  | 314 |  |  |  | 338 |  |  |  | 337 |  |  |  | 336 |  |  |  | 329 |
Total headcount |  |  | 2,363 |  |  |  | 2,396 |  |  |  | 2,453 |  |  |  | 2,477 |  |  |  | 2,494 |