Slide 1: Q2 2023 Financial Results
Q2 2023 Financial Results August 1, 2023 Copyright © 2022 MicroStrategy Incorporated. All Rights Reserved.
Slide 2: Safe Harbor Statement
MicroStrategy Q2 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 © 2022 MicroStrategy Incorporated. All Rights Reserved.
Slide 4: Financial Highlights
Financial Highlights Q2 2023 $120.4M $19.9M Total Revenues, a decrease of 1% Subscription Services Revenues, an YoY, or flat on a constant currency increase of 42% YoY, or 44% on a basis constant currency basis $35.4M $23.1M Total Software Licenses Revenues(1), Non-GAAP Current Subscription an incre
Slide 5: MicroStrategy World 2023
MicroStrategy World 2023 Orlando, FL Business Intelligence Bitcoin and Lightning for Corporations 5
Slide 6: Cloud-Powered AI-Powered
Cloud-Powered AI-Powered Generative AI Deep Learning Machine Learning Trusted and Governed AI & Insights 6
Slide 7: The AI/BI Platform – MicroStrategy ONE
The AI/BI Platform – MicroStrategy ONE AI Solutions Mobile AI AI Analytics Embedded AI MicroStrategy is well positioned to let organizations build and deploy AI applications to users by leveraging the core capabilities in Deep Learning its leading BI platform. Much of the complexity of AI solutions
Slide 8: Innovation in Cloud Architecture
Innovation in Cloud Architecture MicroStrategy Cloud continues to develop cloud-native capabilities that deliver trusted analytics at scale, embracing flexibility and elevating customer environments with AI-ready solutions 1 Multi-Cloud Optionality 2 Containerized Microservices Architecture 3 Robust
Slide 9: Microsoft Azure Partnership
Microsoft Azure Partnership MicroStrategy One Amplified with AI – Swift, Secure, and Scalable Deployment to Thousands • Multi-year partnership expands integration of MSTR products with Microsoft 365, powered with Azure OpenAI Service Leading Enterprise Trusted Technology • AI-powered functionality A
Slide 10: Innovation in Bitcoin
Innovation in Bitcoin MicroStrategy Lightning Rewards is an enterprise platform that incentivizes employees and customers to take certain actions and rewards them with satoshis instantly. Announced at MicroStrategy World, we are targeting to make Lightning Rewards generally available in Q3. This is
Slide 11: Innovation in Artificial Intelligence
Innovation in Artificial Intelligence MicroStrategy One Amplified with AI – Swift, Secure, and Scalable Deployment to Thousands MicroStrategy ONE's Q3 upgrade brings advanced AI capabilities and a new dimension, MicroStrategy AI - empowering organizations to rapidly deploy secure, governed and trust
Slide 12: Bitcoin Holdings Evolution
Bitcoin Holdings Evolution • In Q2, we increased our holdings by 12,333 bitcoins for Approximate Number of Bitcoins Held at End of Quarter a net aggregate purchase amount of $347 million or 152,333 152,800 $28,136 per bitcoin 140,000 129,218 129,699 130,000 132,500 • As of June 30, 2023, we held 124
Slide 13: Bitcoin Price Evolution
Bitcoin Price Evolution • Bitcoin is volatile and has Bitcoin Price ($) fluctuated over the quarters $70,000 $60,000 • MicroStrategy principles • High conviction $50,000 • Long-term focused $40,000 • Risk-managed approach $30,000 $30,159 $30,700 $30,664 $30,639 $30,137 $29,803 $29,668 $29,672 $27,71
Slide 14: Financial Results
Financial Results Andrew Kang, Senior Executive VP & Chief Financial Officer Copyright © 2022 MicroStrategy Incorporated. All Rights Reserved.
Slide 15: Revenue Components
Revenue Components Q2 2023 ($ in Millions) Total Revenues Total Software Licenses Revenues(1) Subscription Services Revenues Q2 2023: -1% YOY Q2 2023: +4% YOY Q2 2023: +42% YOY Constant FX: Flat YOY Constant FX: +7% YOY Constant FX: +44% YOY $19.9 $18.8 $132.6 $45.0 $17.5 $122.1 $125.4 $121.9 $120.4
Slide 16: Non-GAAP Billings Components
Non-GAAP Billings Components (1) Q2 2023 ($ in Millions) Current Software Licenses Billings Current Subscription Billings Q2 2023: -2% YOY Q2 2023: +15% YOY $61.0 $31.1 $39.9 $39.1 $23.1 $36.4 $20.1 $28.7 $14.4 $13.7 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 (1) Please refer to the
Slide 17: Cost Structure and Drivers
Cost Structure and Drivers Q2 2023 • Non-GAAP cost of revenues higher YoY primarily due to higher total cloud hosting costs • Non-cash digital asset impairment charge was significantly lower due to higher bitcoin price as of June 30, 2023 • Overall foreign exchange (FX) impacts favorable in Q2 Non-G
Slide 18: Non-GAAP Operating Income (Loss)
Non-GAAP Operating Income (Loss) Q2 2023 ($ in Millions) • Non-GAAP operating loss was $11 million • Non-cash digital asset impairment charge was $24 million (1) Non-GAAP Operating Income (Loss) Digital Asset Impairment Charges $918 $425 $194 $147 $170 $198 $44 $4$26 $65 $23 $1 $19 $24 ($18) ($37) (
Slide 19: Bitcoin Holdings Carrying Value vs. Market Value
Bitcoin Holdings Carrying Value vs. Market Value ($ in Millions) Carrying Value Market Value $7,000 $6,000 $5,707 $5,893 $5,352 $4,965 $5,000 $4,625 $4,455 $3,653 $3,986 $4,000 $3,000 $2,451 $2,532 $2,850 $2,896 $2,194 $2,056 $2,406 $2,000 $2,323 $2,337 $1,947 $2,051 $1,988 $1,993 $2,000 $1,840 $1,0
Slide 20: Strong Capital Structure
Strong Capital Structure • Issued $335M under the at-the-market (“ATM”) equity offering program in Q2; terminated the remaining ~$290M capacity • Initiated a new $750M ATM program; no shares issued under the new program to-date • Weighted average annual fixed interest rate 1.6%, approximately $36M a
Slide 21: ATM Activity
ATM Activity Q3 2021 to Q2 2023 • Issued equity for cumulative gross proceeds of $1,723M at an average issuance price of approximately $424 per share to date • Primary use of ATM proceeds has been to acquire bitcoin in all quarters of equity issuance as well as to repay debt in Q1 2023 (Gross Procee
Slide 22: Current Bitcoin Holdings
Current Bitcoin Holdings • 90% of our total bitcoin holdings are unencumbered as of July 31, 2023 152,800 140,000 89% 137,069 90% 125,110 11% 14,890 15,731 10% As of March 31, 2023 As of July 31, 2023 MicroStrategy: Collateralized MacroStrategy: Unencumbered 22
Slide 23: Balance Sheet – Principal Debt Maturities
Balance Sheet – Principal Debt Maturities (1) ($ in Millions) Expected Bitcoin Halving (Q2 2024)(2) $1,050 $650 $500 $0 $0 $0 2023 2024 2025 2026 2027 2028 0.750% Senior 0.000% Senior 6.125% Senior Instrument Convertible Convertible Secured Notes Notes Notes Maturity Dec 2025 Feb 2027 Jun 2028(3) (1
Slide 24: 2023 Focus
2023 Focus Positive Acceleration Innovation in Growth and in Cloud and Acquire and Native Cloud Preserving Subscription Hold Bitcoin and AI Margins Billings 24
Slide 25: Strategy & Bitcoin
Strategy & Bitcoin Michael Saylor, Executive Chairman Copyright © 2022 MicroStrategy Incorporated. All Rights Reserved.
Slide 26: MicroStrategy Outperformance Since Adoption of Bitcoin Strategy
MicroStrategy Outperformance Since Adoption of Bitcoin Strategy Key Assets and Indices Big Tech Stocks Enterprise Software Stocks 254% 145% 113% 78% 74% 61% 37% 31% 21% 19% 14% -3% -9% -14% -18% -15% -15% Stock performance since August 10, 2020, when MicroStrategy adopted its bitcoin strategy. Sourc
Slide 27: MicroStrategy Advantage
MicroStrategy Advantage Unique value proposition versus other bitcoin investment vehicles “Regulation for “Non-bitcoin “Borrow “Incremental “Risk “Performance” institutions” business value” competitively” bitcoin” management” Ease of Downside Intelligent Generate Healthy Tracking Access Protection L
Slide 28: Appendix
Appendix Copyright © 2022 MicroStrategy Incorporated. All Rights Reserved.
Slide 29: Non-GAAP Reconciliations ($ in Millions)
Non-GAAP Reconciliations ($ in Millions) Q2 2023 Reconciliation of GAAP to non-GAAP income (loss) from operations 29
Slide 30: Non-GAAP Reconciliations ($ in Millions)
Non-GAAP Reconciliations ($ in Millions) Q2 2023 Reconciliation of total software licenses revenues to current software licenses billings (1) Reconciliation of subscription services revenues to non-GAAP current subscription billings (1) Total Software Licenses Revenues is the “Total Product Licenses
Slide 31: Non-GAAP Reconciliations ($ in Millions)
Non-GAAP Reconciliations ($ in Millions) Q2 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. 31
Slide 32: Non-GAAP Reconciliations ($ in Millions)
Non-GAAP Reconciliations ($ in Millions) Q2 2023 Reconciliation of total non-GAAP expenses 32