10-Q 1 mstr-20240930.htm 10-Q 10-Q
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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 September 30, 2024

OR

 

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 October 21, 2024, the registrant had 183,003,980 and 19,640,250 shares of class A common stock and class B common stock outstanding, respectively.

 


 


 

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

MICROSTRATEGY INCORPORATED

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

 

 

 

September 30,

 

 

December 31,

 

 

 

2024

 

 

2023

 

 

 

(unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

46,343

 

 

$

46,817

 

Restricted cash

 

 

1,862

 

 

 

1,856

 

Accounts receivable, net

 

 

107,169

 

 

 

183,815

 

Prepaid expenses and other current assets

 

 

30,668

 

 

 

35,407

 

Total current assets

 

 

186,042

 

 

 

267,895

 

Digital assets

 

 

6,850,879

 

 

 

3,626,476

 

Property and equipment, net

 

 

27,517

 

 

 

28,941

 

Right-of-use assets

 

 

55,308

 

 

 

57,343

 

Deposits and other assets

 

 

51,109

 

 

 

24,300

 

Deferred tax assets, net

 

 

1,172,726

 

 

 

757,573

 

Total assets

 

$

8,343,581

 

 

$

4,762,528

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable, accrued expenses, and operating lease liabilities

 

$

45,714

 

 

$

43,090

 

Accrued compensation and employee benefits

 

 

51,686

 

 

 

50,045

 

Accrued interest

 

 

5,800

 

 

 

1,493

 

Current portion of long-term debt, net

 

 

509

 

 

 

483

 

Deferred revenue and advance payments

 

 

184,402

 

 

 

228,162

 

Total current liabilities

 

 

288,111

 

 

 

323,273

 

Long-term debt, net

 

 

4,211,949

 

 

 

2,182,108

 

Deferred revenue and advance payments

 

 

6,344

 

 

 

8,524

 

Operating lease liabilities

 

 

57,495

 

 

 

61,086

 

Other long-term liabilities

 

 

5,676

 

 

 

22,208

 

Deferred tax liabilities

 

 

357

 

 

 

357

 

Total liabilities

 

 

4,569,932

 

 

 

2,597,556

 

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; 191,684 shares issued and 183,000 shares outstanding, and 157,725 shares issued and 149,041 shares outstanding, respectively

 

 

192

 

 

 

24

 

Class B convertible common stock, $0.001 par value; 165,000 shares authorized; 19,640 shares issued and outstanding, and 19,640 shares issued and outstanding, respectively

 

 

20

 

 

 

2

 

Additional paid-in capital

 

 

6,060,206

 

 

 

3,957,728

 

Treasury stock, at cost; 8,684 shares and 8,684 shares, respectively

 

 

(782,104

)

 

 

(782,104

)

Accumulated other comprehensive loss

 

 

(9,580

)

 

 

(11,444

)

Accumulated deficit

 

 

(1,495,085

)

 

 

(999,234

)

Total stockholders’ equity

 

 

3,773,649

 

 

 

2,164,972

 

Total liabilities and stockholders’ equity

 

$

8,343,581

 

 

$

4,762,528

 

 

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

 

1


 

MICROSTRATEGY INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Product licenses

 

$

11,087

 

 

$

24,045

 

 

$

33,311

 

 

$

56,979

 

Subscription services

 

 

27,800

 

 

 

20,974

 

 

 

74,846

 

 

 

59,662

 

Total product licenses and subscription services

 

 

38,887

 

 

 

45,019

 

 

 

108,157

 

 

 

116,641

 

Product support

 

 

61,015

 

 

 

66,860

 

 

 

185,440

 

 

 

198,422

 

Other services

 

 

16,169

 

 

 

17,583

 

 

 

49,162

 

 

 

56,714

 

Total revenues

 

 

116,071

 

 

 

129,462

 

 

 

342,759

 

 

 

371,777

 

Cost of revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Product licenses

 

 

769

 

 

 

342

 

 

 

2,130

 

 

 

1,320

 

Subscription services

 

 

11,454

 

 

 

8,028

 

 

 

29,618

 

 

 

23,100

 

Total product licenses and subscription services

 

 

12,223

 

 

 

8,370

 

 

 

31,748

 

 

 

24,420

 

Product support

 

 

8,572

 

 

 

5,531

 

 

 

25,312

 

 

 

17,115

 

Other services

 

 

13,554

 

 

 

12,760

 

 

 

38,239

 

 

 

40,188

 

Total cost of revenues

 

 

34,349

 

 

 

26,661

 

 

 

95,299

 

 

 

81,723

 

Gross profit

 

 

81,722

 

 

 

102,801

 

 

 

247,460

 

 

 

290,054

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

35,414

 

 

 

35,606

 

 

 

103,116

 

 

 

109,372

 

Research and development

 

 

33,301

 

 

 

29,660

 

 

 

92,795

 

 

 

90,372

 

General and administrative

 

 

33,505

 

 

 

29,223

 

 

 

104,300

 

 

 

85,959

 

Digital asset impairment losses

 

 

412,084

 

 

 

33,559

 

 

 

783,807

 

 

 

76,613

 

Total operating expenses

 

 

514,304

 

 

 

128,048

 

 

 

1,084,018

 

 

 

362,316

 

Loss from operations

 

 

(432,582

)

 

 

(25,247

)

 

 

(836,558

)

 

 

(72,262

)

Interest expense, net

 

 

(18,129

)

 

 

(11,006

)

 

 

(45,476

)

 

 

(37,031

)

(Loss) gain on debt extinguishment

 

 

(22,933

)

 

 

0

 

 

 

(22,933

)

 

 

44,686

 

Other (expense) income, net

 

 

(5,034

)

 

 

2,419

 

 

 

(2,644

)

 

 

726

 

Loss before income taxes

 

 

(478,678

)

 

 

(33,834

)

 

 

(907,611

)

 

 

(63,881

)

(Benefit from) provision for income taxes

 

 

(138,504

)

 

 

109,607

 

 

 

(411,760

)

 

 

(403,876

)

Net (loss) income

 

$

(340,174

)

 

$

(143,441

)

 

$

(495,851

)

 

$

339,995

 

Basic (loss) earnings per share (1)

 

$

(1.72

)

 

$

(1.01

)

 

$

(2.71

)

 

$

2.91

 

Weighted average shares outstanding used in computing basic (loss) earnings per share

 

 

197,273

 

 

 

142,214

 

 

 

182,695

 

 

 

116,648

 

Diluted (loss) earnings per share (1)

 

$

(1.72

)

 

$

(1.01

)

 

$

(2.71

)

 

$

2.39

 

Weighted average shares outstanding used in computing diluted (loss) earnings per share

 

 

197,273

 

 

 

142,214

 

 

 

182,695

 

 

 

145,125

 

(1) Basic and fully diluted (loss) earnings 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.

 

2


 

MICROSTRATEGY INCORPORATED

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in thousands)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

 

(unaudited)

 

Net (loss) income

 

$

(340,174

)

 

$

(143,441

)

 

$

(495,851

)

 

$

339,995

 

Other comprehensive income (loss), net of applicable taxes:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

3,970

 

 

 

(2,205

)

 

 

1,864

 

 

 

(1,554

)

Total other comprehensive income (loss)

 

 

3,970

 

 

 

(2,205

)

 

 

1,864

 

 

 

(1,554

)

Comprehensive (loss) income

 

$

(336,204

)

 

$

(145,646

)

 

$

(493,987

)

 

$

338,441

 

 

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

3


 

MICROSTRATEGY INCORPORATED

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands, unaudited)

 

 

 

 

 

 

Class A

 

 

Class B Convertible

 

 

Additional

 

 

 

 

 

 

 

 

Accumulated Other

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Common Stock

 

 

Paid-in

 

 

Treasury Stock

 

 

Comprehensive

 

 

Accumulated

 

 

 

Total

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Shares

 

 

Amount

 

 

Loss

 

 

Deficit

 

Balance at January 1, 2023

 

$

(383,120

)

 

 

104,532

 

 

$

18

 

 

 

19,640

 

 

$

2

 

 

$

1,841,120

 

 

 

(8,684

)

 

$

(782,104

)

 

$

(13,801

)

 

$

(1,428,355

)

Net income

 

 

461,193

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

461,193

 

Other comprehensive income

 

 

738

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

738

 

 

 

0

 

Issuance of class A common stock upon exercise of stock options

 

 

6,750

 

 

 

445

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

6,750

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

Issuance of class A common stock under employee stock purchase plan

 

 

2,380

 

 

 

127

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

2,380

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

Issuance of class A common stock upon vesting of restricted stock units, net of withholding taxes

 

 

(514

)

 

 

38

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

(514

)

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

Issuance of class A common stock under public offerings, net of issuance costs

 

 

338,962

 

 

 

13,489

 

 

 

2

 

 

 

0

 

 

 

0

 

 

 

338,960

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

Share-based compensation expense

 

 

16,822

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

16,822

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

Balance at March 31, 2023

 

$

443,211

 

 

 

118,631

 

 

$

20

 

 

 

19,640

 

 

$

2

 

 

$

2,205,518

 

 

 

(8,684

)

 

$

(782,104

)

 

$

(13,063

)

 

$

(967,162

)

Net income

 

 

22,243

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

22,243

 

Other comprehensive loss

 

 

(87

)

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

(87

)

 

 

0

 

Issuance of class A common stock upon exercise of stock options

 

 

5,354

 

 

 

388

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

5,354

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

Issuance of class A common stock upon vesting of restricted stock units, net of withholding taxes

 

 

(242

)

 

 

62

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

(242

)

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

Issuance of class A common stock under public offerings, net of issuance costs

 

 

333,494

 

 

 

10,792

 

 

 

1

 

 

 

0

 

 

 

0

 

 

 

333,493

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

Share-based compensation expense

 

 

15,145

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

15,145

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

Balance at June 30, 2023

 

$

819,118

 

 

 

129,873

 

 

$

21

 

 

 

19,640

 

 

$

2

 

 

$

2,559,268

 

 

 

(8,684

)

 

$

(782,104

)

 

$

(13,150

)

 

$

(944,919

)

Net loss

 

 

(143,441

)

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

(143,441

)

Other comprehensive loss

 

 

(2,205

)

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

(2,205

)

 

 

0

 

Issuance of class A common stock upon exercise of stock options

 

 

2,113

 

 

 

95

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

2,113

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

Issuance of class A common stock under employee stock purchase plan

 

 

1,575

 

 

 

72

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

1,575

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

Issuance of class A common stock upon vesting of restricted stock units, net of withholding taxes

 

 

(747

)

 

 

40

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

(747

)

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

Issuance of class A common stock under public offerings, net of issuance costs

 

 

147,218

 

 

 

4,034

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

147,218

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

Share-based compensation expense

 

 

16,764

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

16,764

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

Balance at September 30, 2023

 

$

840,395

 

 

 

134,114

 

 

$

21

 

 

 

19,640

 

 

$

2

 

 

$

2,726,191

 

 

 

(8,684

)

 

$

(782,104

)

 

$

(15,355

)

 

$

(1,088,360

)

Net income

 

 

89,126

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

89,126

 

Other comprehensive income

 

 

3,911

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

3,911

 

 

 

0

 

Issuance of class A common stock upon exercise of stock options