MICROSTRATEGY Inc [MSTR] Filings

10-Q 1 mstr-10q_20220331.htm 10-Q mstr-10q_20220331.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 000-24435

MICROSTRATEGY INCORPORATED

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation or organization)

51-0323571

(I.R.S. Employer

Identification Number)

1850 Towers Crescent Plaza, Tysons Corner, VA

(Address of Principal Executive Offices)

22182

(Zip Code)

(703) 848-8600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class		Trading Symbol		Name of Each Exchange on which Registered
Class A common stock, par value $0.001 per share		MSTR		The Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 26, 2022, the registrant had 9,333,523 and 1,964,025 shares of class A common stock and class B common stock outstanding, respectively.

MICROSTRATEGY INCORPORATED

FORM 10-Q

TABLE OF CONTENTS

		Page
PART I.	FINANCIAL INFORMATION	1

Item 1.	Financial Statements (unaudited)	1

	Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021	1

	Consolidated Statements of Operations for the Three Months Ended March 31, 2022 and 2021	2

	Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2022 and 2021	3

	Consolidated Statements of Stockholders’ Equity as of March 31, 2022	4

	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021	5

	Notes to Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35

Item 4.	Controls and Procedures	36

PART II.	OTHER INFORMATION	37

Item 1.	Legal Proceedings	37

Item 1A.	Risk Factors	37

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60

Item 5.	Other Information	60

Item 6.	Exhibits	60

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

MICROSTRATEGY INCORPORATED

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

	March 31,			December 31,
	2022			2021
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	92,677		$	63,356
Restricted cash		6,265			1,078
Accounts receivable, net		126,930			189,280
Prepaid expenses and other current assets		21,116			14,251
Total current assets		246,988			267,965
Digital assets		2,895,619			2,850,210
Property and equipment, net		35,680			36,587
Right-of-use assets		64,637			66,760
Deposits and other assets		18,181			15,820
Deferred tax assets, net		377,282			319,782
Total assets	$	3,638,387		$	3,557,124
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable, accrued expenses, and operating lease liabilities	$	44,388		$	46,084
Accrued compensation and employee benefits		43,726			54,548
Accrued interest		10,544			1,493
Deferred revenue and advance payments		206,217			209,860
Total current liabilities		304,875			311,985
Long-term debt, net		2,361,865			2,155,151
Deferred revenue and advance payments		8,236			8,089
Operating lease liabilities		73,956			76,608
Other long-term liabilities		26,347			26,224
Deferred tax liabilities		109			109
Total liabilities		2,775,388			2,578,166
Commitments and Contingencies
Stockholders’ Equity
Preferred stock undesignated, $0.001 par value; 5,000 shares authorized; no shares issued or outstanding		0			0
Class A common stock, $0.001 par value; 330,000 shares authorized; 18,018 shares issued and 9,334 shares outstanding, and 18,006 shares issued and 9,322 shares outstanding, respectively		18			18
Class B convertible common stock, $0.001 par value; 165,000 shares authorized; 1,964 shares issued and outstanding, and 1,964 shares issued and outstanding, respectively		2			2
Additional paid-in capital		1,743,944			1,727,143
Treasury stock, at cost; 8,684 shares		(782,104	)		(782,104	)
Accumulated other comprehensive loss		(9,552	)		(7,543	)
(Accumulated deficit) retained earnings		(89,309	)		41,442
Total stockholders’ equity		862,999			978,958
Total liabilities and stockholders’ equity	$	3,638,387		$	3,557,124

The accompanying notes are an integral part of these Consolidated Financial Statements.

MICROSTRATEGY INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

	Three Months Ended
	March 31,
	2022			2021
	(unaudited)			(unaudited)
Revenues:
Product licenses	$	16,513		$	21,280
Subscription services		12,845			10,026
Total product licenses and subscription services		29,358			31,306
Product support		67,151			70,649
Other services		22,768			20,947
Total revenues		119,277			122,902
Cost of revenues:
Product licenses		477			488
Subscription services		5,410			3,628
Total product licenses and subscription services		5,887			4,116
Product support		5,191			4,812
Other services		14,599			13,621
Total cost of revenues		25,677			22,549
Gross profit		93,600			100,353
Operating expenses:
Sales and marketing		33,240			38,198
Research and development		33,523			29,483
General and administrative		26,706			21,729
Digital asset impairment losses		170,091			194,095
Total operating expenses		263,560			283,505
Loss from operations		(169,960	)		(183,152	)
Interest expense, net		(11,039	)		(2,396	)
Other income, net		2,225			1,264
Loss before income taxes		(178,774	)		(184,284	)
Benefit from income taxes		(48,023	)		(74,264	)
Net loss	$	(130,751	)	$	(110,020	)
Basic loss per share (1)	$	(11.58	)	$	(11.40	)
Weighted average shares outstanding used in computing basic loss per share		11,289			9,647
Diluted loss per share (1)	$	(11.58	)	$	(11.40	)
Weighted average shares outstanding used in computing diluted loss per share		11,289			9,647

(1)	Basic and fully diluted loss per share for class A and class B common stock are the same.

The accompanying notes are an integral part of these Consolidated Financial Statements.

MICROSTRATEGY INCORPORATED

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

	Three Months Ended
	March 31,
	2022			2021
	(unaudited)			(unaudited)
Net loss	$	(130,751	)	$	(110,020	)
Other comprehensive loss, net of applicable taxes:
Foreign currency translation adjustment		(2,009	)		(1,836	)
Total other comprehensive loss		(2,009	)		(1,836	)
Comprehensive loss	$	(132,760	)	$	(111,856	)

The accompanying notes are an integral part of these Consolidated Financial Statements.

MICROSTRATEGY INCORPORATED

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, unaudited)

				Class A				Class B Convertible				Additional									Accumulated Other			(Accumulated Deficit)
				Common Stock				Common Stock				Paid-in			Treasury Stock						Comprehensive			Retained
	Total			Shares		Amount		Shares		Amount		Capital			Shares			Amount			Loss			Earnings
Balance at January 1, 2021	$	446,192			16,307	$	16		1,964	$	2	$	655,241			(8,684	)	$	(782,104	)	$	(3,885	)	$	576,922
Net loss		(110,020	)		0		0		0		0		0			0			0			0			(110,020	)
Other comprehensive loss		(1,836	)		0		0		0		0		0			0			0			(1,836	)		0
Issuance of class A common stock upon exercise of stock options		23,854			159		0		0		0		23,854			0			0			0			0
Share-based compensation expense		6,848			0		0		0		0		6,848			0			0			0			0
Balance at March 31, 2021	$	365,038			16,466	$	16		1,964	$	2	$	685,943			(8,684	)	$	(782,104	)	$	(5,721	)	$	466,902
Net loss		(299,347	)		0		0		0		0		0			0			0			0			(299,347	)
Other comprehensive income		397			0		0		0		0		0			0			0			397			0
Issuance of class A common stock upon exercise of stock options		244			2		0		0		0		244			0			0			0			0
Share-based compensation expense		11,087			0		0		0		0		11,087			0			0			0			0
Balance at June 30, 2021	$	77,419			16,468	$	16		1,964	$	2	$	697,274			(8,684	)	$	(782,104	)	$	(5,324	)	$	167,555
Net loss		(36,136	)		0		0		0		0		0			0			0			0			(36,136	)
Other comprehensive loss		(1,457	)		0		0		0		0		0			0			0			(1,457	)		0
Issuance of class A common stock upon exercise of stock options		7,282			50		0		0		0		7,282			0			0			0			0
Issuance of class A common stock under employee stock purchase plan		2,854			5		0		0		0		2,854			0			0			0			0
Issuance of class A common stock under public offerings, net of issuance costs		399,469			555		1		0		0		399,468			0			0			0			0
Share-based compensation expense		11,883			0		0		0		0		11,883			0			0			0			0
Balance at September 30, 2021	$	461,314			17,078	$	17		1,964	$	2	$	1,118,761			(8,684	)	$	(782,104	)	$	(6,781	)	$	131,419
Net loss		(89,977	)		0		0		0		0		0			0			0			0			(89,977	)
Other comprehensive loss		(762	)		0		0		0		0		0			0			0			(762	)		0
Issuance of class A common stock upon exercise of stock options		9,271			58		0		0		0		9,271			0			0			0			0
Issuance of class A common stock upon vesting of restricted stock units, net of withholding taxes		(4,754	)		11		0		0		0		(4,754	)		0			0			0			0
Issuance of class A common stock under public offerings, net of issuance costs		590,994			859		1		0		0		590,993			0			0			0			0
Share-based compensation expense		12,872			0		0		0

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10-K	[2016-02-26]
10-Q	[2015-10-29]
10-Q	[2015-07-30]
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10-K	[2015-02-26]
10-Q	[2014-10-29]
10-Q	[2014-07-30]
10-Q	[2014-04-29]
10-K	[2014-02-12]
10-Q	[2013-10-30]
10-Q	[2013-08-01]
10-Q	[2013-05-03]
10-K	[2013-02-13]
10-Q	[2012-11-02]
10-Q	[2012-08-03]
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