MicroStrategy Announces First Quarter 2024 Financial Results; Now Holds 214,400 BTC

• 25,250 bitcoins acquired since the end of Q4 for $1.65 billion, or $65,232 per bitcoin
• 214,400 bitcoin holdings at a total cost of $7.54 billion, or $35,180 per bitcoin, as of April 26, 2024
• Total Revenues of $115.2 million, down 5% year-over-year
• Subscription Services Revenues of $23.0 million, up 22% year-over-year

TYSONS CORNER, Va.–(BUSINESS WIRE)–MicroStrategy^® Incorporated (Nasdaq: MSTR) (“MicroStrategy” or the “Company”), the largest corporate holder of bitcoin and the largest independent publicly-traded business intelligence company, today announced financial results for the three-month period ended March 31, 2024 (the first quarter of its 2024 fiscal year).

“As the world’s first Bitcoin Development Company, MicroStrategy is committed to the continued development of the bitcoin network through our activities in the financial markets, advocacy and technology innovation. It is through our unique bitcoin strategy and solid track record as an operating company that we now hold 214,400 bitcoins at an average purchase price of $35,180 per bitcoin. In the first quarter, our subscription services revenues and subscription billings both grew again at double-digit growth rates reflecting the continued successful transition of our software business to a cloud-native platform. We are very pleased with the continued global adoption of our cloud platform,” said Phong Le, President and Chief Executive Officer, MicroStrategy.

“In the first quarter we raised over $1.5 billion by executing again on our capital markets strategy including two successful convertible debt offerings. We acquired 25,250 additional bitcoins since the end of the fourth quarter, our 14th consecutive quarter of adding more bitcoin to our balance sheet. We believe that the combination of our operating structure, bitcoin strategy, and focus on technology innovation provides a unique opportunity for value creation for our shareholders. Year to date, the price of bitcoin appreciated significantly, spurred notably by the approval of the spot bitcoin exchange traded products which has increased institutional demand and resulted in further regulatory clarity,” said Andrew Kang, Chief Financial Officer, MicroStrategy.

First Quarter 2024 Financial Highlights

• Revenues: Total revenues for the first quarter of 2024 were $115.2 million, a 5.5% decrease, or a 5.7% decrease on a non-GAAP constant currency basis, compared to the first quarter of 2023. Product licenses and subscription services revenues for the first quarter of 2024 were $35.9 million, a 0.9% decrease, or a 0.9% decrease on a non-GAAP constant currency basis, compared to the first quarter of 2023. Product support revenues for the first quarter of 2024 were $62.7 million, a 4.3% decrease, or a 4.6% decrease on a non-GAAP constant currency basis, compared to the first quarter of 2023. Other services revenues for the first quarter of 2024 were $16.7 million, a 17.6% decrease, or a 17.9% decrease on a non-GAAP constant currency basis, compared to the first quarter of 2023.
• Gross Profit: Gross profit for the first quarter of 2024 was $85.2 million, representing a 74.0% gross margin, compared to a gross profit of $94.0 million, representing a gross margin of 77.1%, for the first quarter of 2023.
• Operating Expenses: Operating expenses for the first quarter of 2024 were $288.9 million, a 152.8% increase compared to the first quarter of 2023. Operating expenses include impairment losses on the Company’s digital assets, which were $191.6 million during the first quarter of 2024, compared to $18.9 million in the first quarter of 2023.
• Loss from Operations and Net (Loss) Income: Loss from operations for the first quarter of 2024 was $203.7 million, compared to a loss from operations of $20.3 million for the first quarter of 2023. Net loss for the first quarter of 2024 was $53.1 million, or $3.09 per share on a diluted basis, as compared to a net income $461.2 million, or $31.79 per share on a diluted basis, for the first quarter of 2023. Digital asset impairment losses of $191.6 million and $18.9 million for the first quarter of 2024 and 2023, respectively, were reflected in these amounts. Benefit from income taxes of $160.8 million and $453.2 million for the first quarter of 2024 and 2023, respectively, were reflected in net (loss) income, principally reflecting income tax effects from share-based compensation and our bitcoin holdings.
• Cash and Cash Equivalents: As of March 31, 2024, the Company had cash and cash equivalents of $81.3 million, as compared to $46.8 million as of December 31, 2023, an increase of $34.5 million.
• Digital Assets: As of March 31, 2024, the carrying value of the Company’s digital assets (comprised of approximately 214,278 bitcoins) was $5.074 billion, which reflects cumulative impairment losses of $2.461 billion since acquisition and an average carrying amount per bitcoin of approximately $23,680. As of March 31, 2024, the original cost basis and market value of the Company’s bitcoin were $7.535 billion and $15.220 billion, respectively, which reflects an average cost per bitcoin of approximately $35,164 and a market price per bitcoin of $71,028.14, respectively.
• March 2024 Issuances of Convertible Notes: In March 2024, the Company issued $800.0 million aggregate principal amount of 0.625% Convertible Senior Notes due 2030 (the “2030 Convertible Notes”). The 2030 Convertible Notes are senior unsecured obligations of the Company and bear interest at a fixed rate of 0.625% per annum, payable semiannually in arrears on March 15 and September 15 of each year, beginning on September 15, 2024. Holders of the 2030 Convertible Notes may receive additional interest under specified circumstances as outlined in the indenture for the 2030 Convertible Notes. The 2030 Convertible Notes are convertible into shares of MicroStrategy’s class A common stock at an initial conversion price of $1,497.68 per share. The 2030 Convertible Notes will mature on March 15, 2030, unless earlier converted, redeemed, or repurchased in accordance with their terms. The holders of the 2030 Convertible Notes have the right to require the Company to repurchase for cash all or any portion of their 2030 Convertible Notes on September 15, 2028 at a repurchase price equal to 100% of the principal amount of the 2030 Convertible Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the repurchase date. The total net proceeds from the 2030 Convertible Notes offering, after deducting initial purchaser discounts and issuance costs, were approximately $782.0 million.

  In March 2024, the Company issued $603.8 million aggregate principal amount of 0.875% Convertible Senior Notes due 2031 (the “2031 Convertible Notes”). The 2031 Convertible Notes are senior unsecured obligations of the Company and bear interest at a fixed rate of 0.875% per annum, payable semiannually in arrears on March 15 and September 15 of each year, beginning on September 15, 2024. Holders of the 2031 Convertible Notes may receive additional interest under specified circumstances as outlined in the indenture for the 2031 Convertible Notes. The 2031 Convertible Notes are convertible into shares of MicroStrategy’s class A common stock at an initial conversion price of $2,327.21 per share. The 2031 Convertible Notes will mature on March 15, 2031, unless earlier converted, redeemed, or repurchased in accordance with their terms. The holders of the 2031 Convertible Notes have the right to require the Company to repurchase for cash all or any portion of their 2031 Convertible Notes on September 15, 2028 at a repurchase price equal to 100% of the principal amount of the 2031 Convertible Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the repurchase date. The total net proceeds from the 2031 Convertible Notes offering, after deducting initial purchaser discounts and issuance costs, were approximately $592.3 million.

  As of March 31, 2024, the carrying values (which are net of unamortized issuance costs) of the 2030 Convertible Notes and 2031 Convertible Notes were $782.2 million and $592.4 million, respectively, and were classified as long-term liabilities in the “Long-term debt, net” line item in the Company’s Consolidated Balance Sheet.

The tables provided at the end of this press release include a reconciliation of the most directly comparable financial measures prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) to non-GAAP financial measures for the three months ended March 31, 2024 and 2023. An explanation of non-GAAP financial measures is also included under the heading “Non-GAAP Financial Measures” below. Additional non-GAAP financial measures are included in MicroStrategy’s “Q1 2024 Earnings Presentation,” which will be available under the “Events and Presentations” section of MicroStrategy’s investor relations website at https://www.microstrategy.com/en/investor-relations.

Non-GAAP Financial Measures

MicroStrategy is providing supplemental financial measures for (i) non-GAAP loss from operations that excludes the impact of share-based compensation expense, (ii) non-GAAP net (loss) income and non-GAAP diluted (loss) earnings per share that exclude the impacts of share-based compensation expense, interest expense arising from the amortization of debt issuance costs related to MicroStrategy’s long-term debt, gain on debt extinguishment, and related income tax effects, and (iii) non-GAAP constant currency revenues that exclude certain foreign currency exchange rate fluctuations. These supplemental financial measures are not measurements of financial performance under GAAP and, as a result, these supplemental financial measures may not be comparable to similarly titled measures of other companies. Management uses these non-GAAP financial measures internally to help understand, manage, and evaluate business performance and to help make operating decisions.

MicroStrategy believes that these non-GAAP financial measures are also useful to investors and analysts in comparing its performance across reporting periods on a consistent basis. The first supplemental financial measure excludes a significant non-cash expense that MicroStrategy believes is not reflective of its general business performance, and for which the accounting requires management judgment and the resulting share-based compensation expense could vary significantly in comparison to other companies. The second set of supplemental financial measures excludes the impacts of (i) share-based compensation expense, (ii) non-cash interest expense arising from the amortization of debt issuance costs related to MicroStrategy’s long-term debt, (iii) a gain on debt extinguishment, and (iv) related income tax effects. The third set of supplemental financial measures excludes changes resulting from certain fluctuations in foreign currency exchange rates so that results may be compared to the same period in the prior year on a non-GAAP constant currency basis. MicroStrategy believes the use of these non-GAAP financial measures can also facilitate comparison of MicroStrategy’s operating results to those of its competitors.

Conference Call

MicroStrategy will be discussing its first quarter 2024 financial results on a live Video Webinar today beginning at approximately 5:00 p.m. ET. The live Video Webinar and accompanying presentation materials will be available under the “Events and Presentations” section of MicroStrategy’s investor relations website at https://www.microstrategy.com/en/investor-relations. Log-in instructions will be available after registering for the event. An archived replay of the event will be available beginning approximately two hours after the call concludes.

About MicroStrategy Incorporated

MicroStrategy (Nasdaq: MSTR) considers itself the world’s first Bitcoin development company. We are a publicly-traded operating company committed to the continued development of the bitcoin network through our activities in the financial markets, advocacy and technology innovation. As an operating business, we are able to use cashflows as well as proceeds from equity and debt financings to accumulate bitcoin, which serves as our primary treasury reserve asset. We also develop and provide industry-leading AI-powered enterprise analytics software that promotes our vision of Intelligence Everywhere, and are using our software development capabilities to develop bitcoin applications. We believe that the combination of our operating structure, bitcoin strategy and focus on technology innovation provides a unique opportunity for value creation. For more information about MicroStrategy, visit www.microstrategy.com.

MicroStrategy, MicroStrategy AI, Intelligence Everywhere, Intelligent Enterprise, and MicroStrategy Library are either trademarks or registered trademarks of MicroStrategy Incorporated in the United States and certain other countries. Other product and company names mentioned herein may be the trademarks of their respective owners.

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,” “will,” or similar expressions. Forward-looking statements inherently involve risks and uncertainties that could cause actual results of MicroStrategy Incorporated and its subsidiaries (collectively, the “Company”) to differ materially from the forward-looking statements. Factors that could contribute to such differences include: fluctuations in the market price of bitcoin and any associated impairment charges that the Company may incur as a result of a decrease in the market price of bitcoin below the value at which the Company’s bitcoins are carried on its balance sheet; gains or losses on any sales of bitcoins; changes in the accounting treatment relating to the Company’s bitcoin holdings; changes in securities laws or other laws or regulations, or the adoption of new laws or regulations, relating to bitcoin that adversely affect the price of bitcoin or the Company’s ability to transact in or own bitcoin; a decrease in liquidity in the markets in which bitcoin is traded; security breaches, cyberattacks, unauthorized access, loss of private keys, fraud or other circumstances or events that result in the loss of the Company’s bitcoins; impacts to the price and rate of adoption of bitcoin associated with financial difficulties and bankruptcies of various participants in the digital asset industry; the level and terms of the Company’s substantial indebtedness and its ability to service such debt; the extent and timing of market acceptance of the Company’s new product offerings; continued acceptance of the Company’s other products in the marketplace; the Company’s ability to recognize revenue or deferred revenue through delivery of products or satisfactory performance of services; the timing of significant orders; delays in or the inability of the Company to develop or ship new products; customers continuing to shift from a product license model to a cloud subscription model, which may delay the Company’s ability to recognize revenue; fluctuations in tax benefits or provisions; changes in the market price of bitcoin as of period-end and their effect on our deferred tax assets and related valuation allowance; other potentially adverse tax consequences; competitive factors; general economic conditions, including levels of inflation and interest rates; currency fluctuations; and other risks detailed in MicroStrategy’s registration statements and periodic reports filed with the Securities and Exchange Commission (“SEC”). The Company undertakes no obligation to update these forward-looking statements for revisions or changes after the date of this release.

Contacts

MicroStrategy Incorporated

Shirish Jajodia

Investor Relations

ir@microstrategy.com

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