Slide 1: Q4 2023 Financial Results
Q4 2023 Financial Results February 6, 2024 Copyright © 2024 MicroStrategy Incorporated. All Rights Reserved.
Slide 2: Safe Harbor Statement
MicroStrategy Q4 2023 Earnings Call Safe Harbor Statement FORWARD-LOOKING STATEMENTS Some of the information we provide in this presentation regarding our future expectations, plans, and prospects may constitute forward-looking statements. Actual results may differ materially from these forward-look
Slide 3: Operational Results
Operational Results Phong Le, President & Chief Executive Officer Copyright © 2024 MicroStrategy Incorporated. All Rights Reserved.
Slide 4: 2023 Year in Review
2023 Year in Review Bitcoin Holdings Subscription Services Revenues 190,000 $81.2M as of February 5, 2024 increase of 34% YoY • Acquired 56,650 bitcoin in 2023 for $1.9B at • First to market with AI + BI platform integration average price of $33,580 • Accelerated cloud transition • Total market valu
Slide 5: MicroStrategy is the world's first Bitcoin Development Company
“MicroStrategy is the world’s first Bitcoin Development Company” 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 financi
Slide 6: Bitcoin Development Company
Bitcoin Development Company MicroStrategy’s unique value proposition Bitcoin Development Company Bitcoin and Software Development 1 Bitcoin Holdings Excess Cash Cash Equity Debt Increase Bitcoin Holdings and Shareholder Value 1 Includes bitcoin acquisition, bitcoin advocacy initiatives, and software
Slide 7: 2024 Software Strategic Focus
2024 Software Strategic Focus Grow Cloud Innovate with AI Increase Profitability 7
Slide 8: Grow Cloud and AI
Grow Cloud and AI Multi-cloud | Cloud-native | Marketplace MicroStrategy Cloud MicroStrategy AI • Focus on customer migration & new • First to market in Q3 2023 business growth • Microsoft Azure OpenAI partnership • Accelerate subscription services • Embedded, customizable, AI-bot revenues growth in
Slide 9: Operating Profitability
Operating Profitability 2022A 2023A 2024 Targets Revenue $499M $496M Growing Non-GAAP ($1,212M) ($45M) $70-$90M(1) Operating Income Digital Asset $1,286M $116M N/A(2) Impairments (1) 2024 targeted non-GAAP operating income excludes any digital asset impairment charges for 2024. (2) Digital asset imp
Slide 10: Intelligent Leverage
Intelligent Leverage MicroStrategy is unique in acquiring bitcoin using excess cash on balance sheet and proceeds from issuances of equity and corporate debt Cash Equity Debt $726M total cash $2.2B in senior secured and ~$3.1B of equity issued on balance sheet invested convertible debt outstanding I
Slide 11: Financial Results
Financial Results Andrew Kang, Senior Executive VP & Chief Financial Officer Copyright © 2024 MicroStrategy Incorporated. All Rights Reserved.
Slide 12: Revenue and Billings
Revenue and Billings Q4 2023 ($ in Millions) Total Revenues Subscription Services Revenues Current Subscription Billings Q4 2023 +23% YOY increase Q4 2023 +33% YOY increase $124.5M $18.8 $19.9 $21.0 $21.5 $41.3 Q4 2023 Total Revenues $17.5 $31.1 6% YoY decrease $23.1 $496.3M $13.7 $16.8 FY 2023 Tota
Slide 13: Disciplined Cost Structure
Disciplined Cost Structure • Total Non-GAAP expenses for Q4 down 52% year over year • Headcount 10% lower YoY • Non-GAAP operating loss for Q4 of $23 million, which includes $39 million of non-cash bitcoin impairment charges Non-GAAP Expenses By Type ($M) Headcount Total: $309M Total: $148M $198 2,1
Slide 14: Growth in Bitcoin Holdings
Growth in Bitcoin Holdings MicroStrategy has acquired additional bitcoin in every quarter since Q3 2020 Bitcoin Holdings 189,150 190,000 • In Q4 2023 • 30,555 bitcoins purchased for 158,245 $1.2 billion using proceeds from 152,333 capital markets activities (Macro) 140,000 129,218 129,699 130,000 13
Slide 15: Bitcoin Holdings Carrying Value vs. Market Value
Bitcoin Holdings Carrying Value vs. Market Value • Aggregate cost of $5.9 billion and current market value of $8.1 billion • Carrying value of $3.7 billion, net of ~$2.3 billion in cumulative impairment charges ($ in Billions) Carrying Value Market Value $9.0 $8.0 $8.1 $8.0 $7.0 $6.0 $5.0 $4.6 $4.3
Slide 16: Use of Excess Cash to Acquire More Bitcoin
Use of Excess Cash to Acquire More Bitcoin Incremental bitcoin accretion per share through purchases using excess cash ($ in Millions) Operations Historical accumulated cash ~$726M ~48K Total Excess Cash Bitcoins Purchased with $490 Invested Excess Cash $120 $41 $38 $37 2020 2021 2022 2023 2024 YTD
Slide 17: Capital Markets Activities to Acquire More Bitcoin
Capital Markets Activities to Acquire More Bitcoin Strong track record of accretive capital allocation strategy Capital Markets Activity ~$2.2B ~$3.1B ~142K Net Proceeds from Debt Net Proceeds from Equity Bitcoins Purchased with Debt & Equity Capital Raised for Bitcoin Purchases (Gross Proceeds in $
Slide 18: 2023 Value Creation from Bitcoin Activities
2023 Value Creation from Bitcoin Activities Unique to MSTR ($ in Millions) 12/31/2022 BTC Price Capital Raised BTC Price 12/31/2023 BTC Holdings Appreciation + Excess Cash Appreciation BTC Holdings Market Value (Prior Holdings) (2023 Purchases) (2023 Purchases) Market Value BTC Count 132,500 Additio
Slide 19: MicroStrategy Bitcoin Net Asset Value
MicroStrategy Bitcoin Net Asset Value Hypothetical scenarios in which bitcoin price increases – Illustrative Bitcoin Forward Price $43,000 $69,000 $100,000 $250,000 Spot Bitcoin Price - 60% 135% 480% MSTR (Current Leverage) - 85% 180% 660% MSTR (Incremental $0.5B Leverage) - 90% 190% 700% MSTR (Incr
Slide 20: Strategy & Bitcoin
Strategy & Bitcoin Michael Saylor, Executive Chairman Copyright © 2024 MicroStrategy Incorporated. All Rights Reserved.
Slide 21: MicroStrategy Outperformance Since Adoption of Bitcoin Strategy
MicroStrategy Outperformance Since Adoption of Bitcoin Strategy Key Assets and Indices Big Tech Stocks Enterprise Software Stocks 305% 260% 111% 97% 92% 81% 65% 48% 53% 45% 42% 17% 9% 11% 1% -18% -19% Stock performance since August 10, 2020, when MicroStrategy adopted its bitcoin strategy. Source: F
Slide 22: MicroStrategy – Bitcoin Development Company
MicroStrategy – Bitcoin Development Company Unique value proposition versus Spot Bitcoin ETPs MicroStrategy Spot Bitcoin ETPs Operating company Trust company 1 Company Structure Active control over capital structure Limited control over capital structure No management fee Non-zero management fee Abi
Slide 23: Appendix
Appendix Copyright © 2024 MicroStrategy Incorporated. All Rights Reserved.
Slide 24: Current Bitcoin Holdings
Current Bitcoin Holdings • 91% of our total bitcoin holdings are unencumbered as of February 5, 2024 190,000 158,400 173,069 91% 90% 142,514 10% 15,886 16,931 9% As of October 31, 2023 As of February 5, 2024 MicroStrategy: Restricted MacroStrategy: Unrestricted 24
Slide 25: ATM Equity Program and Principal Debt Maturities
ATM Equity Program and Principal Debt Maturities(1) • Received $1.2B net proceeds from issuances under the at-the-market (“ATM”) equity offering program in Q4; remaining ~$138M capacity • Total $2.2B debt outstanding at weighted average annual fixed interest rate 1.6%, ~$36M annualized fixed interes
Slide 26: Non-GAAP Reconciliations ($ in Millions)
Non-GAAP Reconciliations ($ in Millions) Q4 2023 Reconciliation of GAAP to non-GAAP income (loss) from operations Reconciliation of subscription services revenues to non-GAAP current subscription billings Reconciliation of subscription services revenues to annual subscription billings 26
Slide 27: Non-GAAP Reconciliations ($ in Millions)
Non-GAAP Reconciliations ($ in Millions) Q4 2023 Reconciliation of non-GAAP operating expenses (1) Reconciliation of total non-GAAP expenses (1) Share-Based Compensation shown reflects the amounts recorded to Sales & Marketing, Research & Development, and General & Administrative only. 27
Slide 28: Non-GAAP Reconciliations ($ in Millions)
Non-GAAP Reconciliations ($ in Millions) Q4 2023 Reconciliation of total non-GAAP expenses 28
Slide 29: Basic and Adjusted Diluted Shares Outstanding Calculation
Basic and Adjusted Diluted Shares Outstanding Calculation 6/30/2020 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Total Bitcoin Holdings - 70,470 124,391 132,500 189,150 Shares Outstanding (in '000s) Class A 7,651 7,623 9,322 9,585 14,904 Class B 2,035 1,964 1,964 1,964 1,964 (1) Basic Shares Outstand
Slide 30: Additional Information
Additional Information MicroStrategy is not an exchange traded product (“ETP”) or an exchange-traded fund (“ETF”) registered under the Investment Company Act of 1940, as amended, is not subject to the same rules and regulations as an ETP or an ETF, and does not operate as an ETP or ETF. In particula