Slide 1: Q4 2022 Financial Results
Q4 2022 Financial Results February 2, 2023 Copyright © 2022 MicroStrategy Incorporated. All Rights Reserved.
Slide 2: Safe Harbor Statement
MicroStrategy Q4 2022 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 © 2022 MicroStrategy Incorporated. All Rights Reserved.
Slide 4: MicroStrategy's Two Corporate Strategies
MicroStrategy's Two Corporate Strategies Business Intelligence Bitcoin Who are we: MicroStrategy is the largest Who are we: MicroStrategy is the largest publicly independent publicly-traded business intelligence traded corporate holder of bitcoin in the world and company with the leading enterprise
Slide 5: Bitcoin Holdings Evolution
Bitcoin Holdings Evolution • In Q4, we increased our Approximate Number of Bitcoins Held at End of Quarter holdings by ~2,500 bitcoins for a net aggregate purchase 129,218 129,699 130,000 132,500 amount of $45 million or 124,391 ~$17,850 per bitcoin, inclusive 114,042 105,085 of fees and expenses 91
Slide 6: Bitcoin Price Evolution
Bitcoin Price Evolution • Bitcoin is volatile and has Bitcoin Price ($) fluctuated over the quarters $70,000 $60,000 • MicroStrategy principles $58,601 $50,000 $45,880 $45,603 • High conviction $43,535 • Risk-managed approach $40,000 $34,763 $30,700 $30,664 $29,181 $30,639 $30,137 $30,137 • Long-ter
Slide 7: Financial Highlights
Financial Highlights FY 2022 $499.3M $60.7M Total Revenues, a decrease of 2% Subscription Services Revenues, an YoY, or an increase of 2% on a increase of 41% YoY, or 46% on a constant currency basis constant currency basis $147.2M $77.0M Total Software Licenses Revenues(1), Annual Subscription Bill
Slide 8: MicroStrategy Software Strategy – 2023 Focus
MicroStrategy Software Strategy – 2023 Focus MicroStrategy One 1 • A single modern platform engineered for impact • Enterprise Analytics, Embedded Analytics, Cloud Transition Simplification and Growth Focus 2 • Simplify processes, grow pipeline, grow software licenses revenue 3 Cloud Focus • Provide
Slide 9: BI Innovation – MicroStrategy Insights
BI Innovation – MicroStrategy Insights Lean into the World of Augmented Analytics • MicroStrategy Insights provides artificial intelligence (AI) and machine learning (ML) powered augmented experiences to deliver actionable insights • Released Q3 2022, continued advancement Use Cases • Automated aler
Slide 10: Bitcoin Innovation – MicroStrategy Lightning
Bitcoin Innovation – MicroStrategy Lightning Vision: Not just a Lightning Wallet, a Lightning Platform Lightning Network is a decentralized payment channel network built on the Bitcoin blockchain Leverage MicroStrategy enterprise software experience by building a plug-and-play solution to enable new
Slide 11: MicroStrategy World 2023
MicroStrategy World 2023 May 1-4 | Orlando, Florida Business Intelligence Bitcoin for Corporations May 1-4 May 3 • Keynote with Bitcoin luminaries • Bitcoin corporate treasury, products and services, outlook • Strategic vendors and offerings • Trends in enterprise analytics, embedded analytics, clou
Slide 12: Financial Results
Financial Results Andrew Kang, Senior Executive VP & Chief Financial Officer Copyright © 2022 MicroStrategy Incorporated. All Rights Reserved.
Slide 13: Revenue Components
Revenue Components Q4 2022 ($ in Millions) Total Revenues Total Software Licenses Revenues(1) Subscription Services Revenues Q4 2022: -1% YOY Q4 2022: +1% YOY Q4 2022: +47% YOY Constant FX: +4% YOY Constant FX: +8% YOY Constant FX: +54% YOY $17.5 $134.5 $132.6 $45.0 $16.4 $122.1 $125.4 $44.4 $119.3
Slide 14: Billings Components
Billings Components Q4 2022 ($ in Millions) Current Software Licenses Billings(1) Current Subscription Billings(1) Q4 2022: +10% YOY Q4 2022: +28% YOY $61.0 $55.6 $31.1 $39.9 $24.3 $36.4 $20.1 $28.1 $14.4 $11.4 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 (1) Please refer to the Appen
Slide 15: Cost Structure and Drivers
Cost Structure and Drivers Q4 2022 ($ in Millions) Non-GAAP Expenses By Type Cost of Revenues Total: $259 Total: $309 Higher cloud customer hosting fees and personnel costs, partially offset by favorable FX $198 Sales & Marketing $147 Higher net capitalized commission costs and favorable FX R&D $40
Slide 16: Non-GAAP Operating Income (Loss)
Non-GAAP Operating Income (Loss) Q4 2022 ($ in Millions) • Q4 2022 non-GAAP operating loss was $177 million • Non-cash digital asset impairment charge was $198 million, net of gain on sale Non-GAAP Operating Income (Loss) Digital Asset Impairment Charges, Net of Gains on Sale $918 $425 $194 $147 $17
Slide 17: Bitcoin Holdings Carrying Value vs. Market Value
Bitcoin Holdings Carrying Value vs. Market Value ($ in Millions) Carrying Value Market Value $7,000 $5,893 $6,000 $5,707 $5,352 $4,965 $5,000 $4,000 $3,653 $3,127 $3,000 $2,451 $2,532 $2,850 $2,896 $2,194 $2,056 $2,406 $2,000 $1,947 $2,051 $1,988 $1,993 $1,840 $1,840 $1,000 $410 $1,054 $0 $381 Q3 20
Slide 18: Current Bitcoin Holdings
Current Bitcoin Holdings Q4 2022 132,500 63% 82,991 MacroStrategy: Unencumbered MacroStrategy: Collateralized MicroStrategy: Collateralized 34,619 37% 14,890 As of December 31, 2022 18
Slide 19: Solid Capital Structure Framework
Solid Capital Structure Framework • Sufficient liquidity through operating cash flows to service the interest expense • At-the-market (“ATM”) equity offering program with $453M remaining capacity Amount at Annual Interest Annualized Interest Principal Instruments Maturity Issuance ($M) Rate (%) Expe
Slide 20: 2023 Outlook
2023 Outlook Positive Sustained Continued Growth and Increase in Transition to Preserving Subscription Cloud Margins Billings 20
Slide 21: Strategy & Bitcoin
Strategy & Bitcoin Michael Saylor, Executive Chairman Copyright © 2022 MicroStrategy Incorporated. All Rights Reserved.
Slide 22: MicroStrategy Outperformance Since Adoption of Bitcoin Strategy
MicroStrategy Outperformance Since Adoption of Bitcoin Strategy Key Assets and Indices Big Tech Stocks Enterprise Software Stocks 117% 98% 64% 36% 29% 23% 21% 8% 11% -5% -16% -19% -13% -25% -24% -33% -42% Stock performance since August 10, 2020, when MicroStrategy adopted its bitcoin strategy. Sourc
Slide 23: Appendix
Appendix Copyright © 2022 MicroStrategy Incorporated. All Rights Reserved.
Slide 24: Balance Sheet – Principal Debt Maturities
Balance Sheet – Principal Debt Maturities (1) ($ in Millions) Expected Bitcoin Halving $1,050 (mid-2024)(3) $855 $205 $500 $650 $0 $0 $0 $0 2022 2023 2024 2025 2026 2027 2028 1) Bitcoin-Collateralized Loan 0.000% Senior 6.125% Senior Instrument 2) 0.750% Senior Convertible Secured Notes Convertible
Slide 25: Non-GAAP reconciliations: GAAP to non-GAAP income from operations
MicroStrategy Q4 2022 Earnings Call Non-GAAP reconciliations ($ in millions) Reconciliation of GAAP to non-GAAP income (loss) from operations Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Revenues $122.9 $125.4 $128.0 $134.5 $119.3 $122.1 $125.4 $132.6 Cost of Revenues $22.5 $23.0 $22.3 $24.0 $25.
Slide 26: Non-GAAP reconciliations: software licenses revenues to billings
MicroStrategy Q4 2022 Earnings Call Non-GAAP reconciliations ($ in millions) Reconciliation of total software licenses revenues to current software licenses billings Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Current Deferred Product Licenses Revenues $0.2 $0.5 $2.3 $1.0 $1.1 $0.8 $0.4 $2.8 Cur
Slide 27: Non-GAAP reconciliations: operating expenses
MicroStrategy Q4 2022 Earnings Call Non-GAAP reconciliations ($ in millions) Reconciliation of non-GAAP operating expenses Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 GAAP Operating Expenses $283.5 $516.6 $155.3 $248.0 $263.6 $1,015.0 $93.9 $299.5 Share-Based Compensation (1) $7.4 $10.6 $11.5 $1
Slide 28: Non-GAAP reconciliations: total non-GAAP expenses
MicroStrategy Q4 2022 Earnings Call Non-GAAP reconciliations ($ in millions) Reconciliation of total non-GAAP expenses Q4 21 Q4 22 GAAP Expenses Cost of Revenues $24.0 $26.7 Sales & Marketing $43.4 $41.4 Research & Development $30.9 $31.6 General & Administrative $27.1 $28.9 Digital Asset Impairment