Slide 1: Q3 2023 Financial Results
Q3 2023 Financial Results November 1, 2023 Copyright © 2023 MicroStrategy Incorporated. All Rights Reserved.
Slide 2: Safe Harbor Statement
MicroStrategy Q3 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 © 2023 MicroStrategy Incorporated. All Rights Reserved.
Slide 4: Financial Highlights
Financial Highlights Q3 2023 $129.5M $21.0M Total Revenues, an increase of 3% Subscription Services Revenues, an YoY, or 1% on a constant currency increase of 28% YoY, or 25% on a basis(1) constant currency basis(1) $45.0M $16.8M Total Software Licenses Revenues(2), Non-GAAP Current Subscription an
Slide 5: Our vision for Intelligence Everywhere
Our vision for Intelligence Everywhere Everywhere Business AI Intelligence Mobile BI Web BI Semantic Desktop BI Layer SQL Reports Nowhere 5
Slide 6: AI / BI: Smart and Precise
AI / BI: Smart and Precise AI SMART Natural Language Generation, Reasoning, Unstructured Data BI PRECISE Trusted Calculations, Secure, Structured 6
Slide 7: MicroStrategy ONE – Accelerating AI Adoption
MicroStrategy ONE – Accelerating AI Adoption Data access, Large Language Models Distribution of AI business calculations, (LLM) integration and solutions at scale definitions and security prompt engineering 7
Slide 8: MicroStrategy ONE – New Era of AI Capabilities
MicroStrategy ONE – New Era of AI Capabilities Architecting Authoring Support Consumption Auto SQL Auto Dashboard Auto Expert Auto Answer 8
Slide 9: Innovation in Cloud Architecture
Innovation in Cloud Architecture MicroStrategy Cloud continues to develop cloud-native capabilities that deliver trusted analytics at scale, embracing flexibility and elevating customer environments with AI-ready solutions Cloud Native Multi-Cloud Cloud Roadmap Monolith to Private Cloud GCP Deployme
Slide 10: Partnership Focus
Partnership Focus MicroStrategy is concentrated on strategically expanding our global partner program, focusing on transforming partner sales channels into growth catalysts within the AI/BI market sectors MicroStrategy’s enhanced Partner Program is also focused PARTNER SALES CHANNELS on creating fas
Slide 11: Financial Results
Financial Results Andrew Kang, Senior Executive VP & Chief Financial Officer Copyright © 2023 MicroStrategy Incorporated. All Rights Reserved.
Slide 12: Revenue Components
Revenue Components Q3 2023 ($ in Millions) Total Revenues Total Software Licenses Revenues(1) Subscription Services Revenues Q3 2023: +3% YOY Q3 2023: +16% YOY Q3 2023: +28% YOY Constant FX: +1% YOY Constant FX: +14% YOY Constant FX: +25% YOY $21.0 $132.6 $129.5 $45.0 $45.0 $19.9 $125.4 $121.9 $120.
Slide 13: Non-GAAP Billings Components
Non-GAAP Billings Components (1) Q3 2023 ($ in Millions) Current Software Licenses Billings Current Subscription Billings Q3 2023: +17% YOY Q3 2023: +17% YOY $61.0 $31.1 $42.7 $39.1 $23.1 $36.4 $28.7 $16.8 $14.4 $13.7 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 (1) Please refer to th
Slide 14: Cost Structure and Drivers
Cost Structure and Drivers Q3 2023 • Non-GAAP cost of revenues higher YoY primarily due to higher total cloud hosting costs • Non-cash digital asset impairment charge was higher due to bitcoin price fluctuations Non-GAAP Expenses By Type(1) ($ in Millions) Total: $102 Total: $138 Cost of Revenues Sa
Slide 15: Non-GAAP Operating Income (Loss)
Non-GAAP Operating Income (Loss) Q3 2023 ($ in Millions) • Non-GAAP operating loss was $8 million • Non-cash digital asset impairment charge was $34 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 $34 ($18) ($3
Slide 16: Growth in Bitcoin
Growth in Bitcoin • As of September 30, 2023, we Bitcoin Holdings held 158,245 bitcoins acquired for 158,400 158,245 a total cost of $4.68 billion, or 152,333 $29,582 per bitcoin 140,000 129,699 130,000 132,500 129,218 • In Q3, 124,391 114,042 • MacroStrategy purchased 5,445 105,085 bitcoins for $14
Slide 17: Bitcoin Price Evolution
Bitcoin Price Evolution Bitcoin Price ($) • Bitcoin price has stabilized in $70,000 recent quarters $70,000 $60,000 $60,000 • MicroStrategy principles $50,000 • High conviction $50,000 $40,000 • Long-term focused $40,000 $29,803 $29,668 $29,582 $29,586 • Risk-managed approach $30,000 $30,000 $30,159
Slide 18: Bitcoin Holdings Carrying Value vs. Market Value
Bitcoin Holdings Carrying Value vs. Market Value ($ in Millions) Carrying Value Market Value $7,000 $5,893 $6,000 $5,707 $5,352 $5,484 $4,965 $5,000 $4,625 $4,277 $3,653 $3,986 $4,000 $3,000 $2,451 $2,532 $2,850 $2,896 $2,194 $2,056 $2,406 $2,457 $2,000 $2,323 $2,451 $1,947 $2,051 $1,988 $1,993 $1,8
Slide 19: Strong Capital Structure
Strong Capital Structure • Issued $147M net proceeds under the at-the-market (“ATM”) equity offering program in Q3; remaining ~$602M capacity • Weighted average annual fixed interest rate 1.6%, approximately $36M annualized fixed interest expense Annualized Amount at Annual Interest Principal Instru
Slide 20: ATM Equity Activity
ATM Equity Activity Q3 2021 to Q3 2023 • Issued equity for cumulative gross proceeds of $1,870M at an average issuance price of approximately $419 per share to date • Primary use of ATM proceeds has been to acquire bitcoin in all quarters of equity issuance as well as to repay debt in Q1 2023 (Gross
Slide 21: Current Bitcoin Holdings
Current Bitcoin Holdings • 90% of our total bitcoin holdings are unencumbered as of October 31, 2023 158,400 152,800 137,069 142,514 90% 90% 10% 15,731 15,886 10% As of July 31, 2023 As of October 31, 2023 MicroStrategy: Collateralized MacroStrategy: Unencumbered 21
Slide 22: Balance Sheet – Principal Debt Maturities
Balance Sheet – Principal Debt Maturities (1) ($ in Millions) $1,050 Expected Bitcoin $650 Halving (Q2 2024)(2) $500 - - - - - - - - - - - - - - - - - - Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2023 2024 2025 2026 2027 2028 0.750% Senior 0.000% Senior 6.125% Senior Instrument C
Slide 23: Strategic Focus
Strategic Focus Revenue Acceleration Innovation in Growth and in Cloud and Acquire and Native Cloud Increasing Subscription Hold Bitcoin and AI Margins Billings 23
Slide 24: Strategy & Bitcoin
Strategy & Bitcoin Michael Saylor, Executive Chairman Copyright © 2023 MicroStrategy Incorporated. All Rights Reserved.
Slide 25: MicroStrategy Outperformance Since Adoption of Bitcoin Strategy
MicroStrategy Outperformance Since Adoption of Bitcoin Strategy Key Assets and Indices Big Tech Stocks Enterprise Software Stocks 242% 192% 88% 68% 62% 51% 25% 17% 19% 15% 2% -2% -18% -24% -15% -15% -16% Stock performance since August 10, 2020, when MicroStrategy adopted its bitcoin strategy. Source
Slide 26: MicroStrategy Advantage
MicroStrategy Advantage Unique value proposition versus other bitcoin investment vehicles “Investor “Operating company “Bitcoin purchases “Borrow “Non-bitcoin “Risk accessibility” structure” with cash flows” competitively” business value” management” 1. Ease of 3. Organic Bitcoin 4. Intelligent 5. D
Slide 27: Appendix
Appendix Copyright © 2023 MicroStrategy Incorporated. All Rights Reserved.
Slide 28: Non-GAAP Reconciliations ($ in Millions)
Non-GAAP Reconciliations ($ in Millions) Q3 2023 Reconciliation of GAAP to non-GAAP income (loss) from operations 28
Slide 29: Non-GAAP Reconciliations ($ in Millions)
Non-GAAP Reconciliations ($ in Millions) Q3 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 30: Non-GAAP Reconciliations ($ in Millions)
Non-GAAP Reconciliations ($ in Millions) Q3 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. 30
Slide 31: Non-GAAP Reconciliations ($ in Millions)
Non-GAAP Reconciliations ($ in Millions) Q3 2023 Reconciliation of total non-GAAP expenses 31
Slide 32: Non-GAAP Reconciliations ($ in Thousands)
Non-GAAP Reconciliations ($ in Thousands) Q3 2023 Reconciliation of non-GAAP constant currency revenues (1) (2) (3) (1) The “Foreign Currency Exchange Rate Impact” reflects the estimated impact of fluctuations in foreign currency exchange rates on international revenues. It shows the increase (decre